Southern Maryland Real Estate Blog

Things to think about when buying a Foreclosure in Southern Maryland

Foreclosures are a great opportunity to get a home at a bargain price in Southern Maryland.  Home buyers need to be wary, however, because there are several easy to miss pitfalls and risks associated with buying a foreclosure.

    1.    Condition Dictates Value

This means that the condition of the home will affect what the home actually sells for.  If the house is in shoddy shape, the final sales price will affect that.  Look at comps when you go to place an offer and adjust your offering price accordingly.

    2.    Banks Aren't Giving Houses Away

If it looks to good to be true, it probably is.  When you find a listing for home priced significantly below the surrounding market or neighborhood, there is always a reason as to why.  The concept of buying a livable home in Charles County or Southern Maryland for less that $10,000 is simply not true.  You can find some excellent bargains, but don't expect to pay $200k for a home that is actually worth $600k.

    3.    Home Inspections are Critical

Think about it like this:  The foreclosure process in Maryland can take a year or more.  That's a full year where the homeowner has been unable to pay the mortgage.  If you are behind on payments and know that foreclosure is eminent, ZERO incentive to pay for upkeep and maintenance on the property.  After the foreclosure, the property then sits vacant and can develop issues related to it's abandonment.  Always hire an inspector to go over the property with a critical eye.

    4.    Great Deals Don't Last Long

You're not the only person out shopping for a home, and if a value priced property hits the market, you can bet there are lots of appointments be made to see it.  Make sure that your financing is in order before you start looking.  The last thing you want is to find the perfect house and then lose out to someone else who was able to get their offer in first.

    5.    Bank Owned (REO) Properties Are Sometimes "Under Listed"

This stinks, but banks have been known to list properties way below market value on purpose.  They may list a home for $200k, Knowing it's worth $275k, just to get a bidding war started between multiple offers.  They see it as a way to get the highest price possible, I see it as intentionally deceptive.  Agents occasionally refer to homes like this as "Liar Listings". 

How Do You Protect Yourself?

Get a buyers agent to represent you.  The listing agent on a foreclosure works for the bank, not you, and their job is to get the property sold while protecting their clients bottom line.  A buyers agent works at no cost to you, and their job is to help you make informed decisions and craft an offer that will save you the most money possible. 

Speak to your buyers agent about the best way to prepare yourself for buying a foreclosure.  They will be able to help you get in touch with a loan officer, ensure the property you buy will conform to your loan guidelines, and help you hire a home inspector who knows what to look for in foreclosures, among other things.

With the right people on your side,buying a foreclosure is as easy as buying any other home, and the value and savings can be tremendous!

LINK: Foreclosure List for Charles County, MD as of 5/20/2009  Need an Updated List?

Questions about buying a Foreclosure? Give me a call!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000 - office
301-653-8116 - cell

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5 Indictments in the Metro Dream Homes Scam!

Good news for people involved in the Metro Dream Homes Scandal!  The Department of Justice passed 5 indictments against major players in the company; and NBC 4 news in Washington, D.C. even interviewed me for their news video on it!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000 - office
301-653-8116 - cell

Charles County Real Estate Blog
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Is a piece of Maryland history about to be Foreclosed on?

 For years now, the old art-deco movie house has stood as a testament to a bygone era.  Aside from the occasional movie premiere, filling the 900+ seat theater has been a challenge.  Competition from your big 24 screen multiplexes is more efficient, and the Senator Theater in Baltimore, MD has had trouble paying it's bills recently.

1st Mariner Bank of Baltimore is now planning on Foreclosing on the historic theater at 10am on April 20th, 2009.  This is not the first time the Senator has faced financial difficulties, and as of March 16th, the theater has stopped showing movies until a resolution can be made.

In the meantime, the theater's management are desperately angling to save the theater.  Please donate to The Senator Community Trust, which is working to raise money to bring the loan current and eventually purchase The Senator.  The Senator is a cultural and historical landmark for Maryland, and it needs to be preserved!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000 - office
301-653-8116 - cell

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Charles County Foreclosures January 2009 Report

    Here's a quick look at the local Charles County Foreclosure real estate market.  From Waldorf to Newburg, if you're looking for a foreclosure in Charles County, MD, you need to talk to Team Benya!

How many foreclosures are available for sale in Charles County right now?

71 (See a free list of them here!) This list is sent out free every week to all of clients.  Ask to be added today by calling or emailing us!

How many foreclosures in Charles County are currently under contract?

29

How many foreclosures in Charles County have banks sold in the last year?

169 (See a free list here!)

 What is the Cheapest Foreclosure in Charles County right now?

$43,900- 32 Delta Place #32 Indian Head, MD-  A duplex in the Potomac Heights Subdivision, recently reduced $8,000!  These homes are Co-ops, which is similar to purchasing a Condo.  Although the prices are attractive, they have a Co-op fee  of more than $250/mo, which has to be factored in when purchasing a home there.

What is the most expensive foreclosure in Charles County right now?

$659,900- 8715 Hill Spring Drive La Plata, MD- This home is HUGE, sitting on 7 acres of land AND has an in-ground swimming pool!

Looking to buy a bargain?  Give Jonathan a call and put his team of foreclosure experts to work for you!  With Team Benya on your side, you can find out about fantastic foreclosure bargains BEFORE they even hit the market!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Charles County Real Estate Blog

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Fannie Mae will let renters stay

Mortgage giant Fannie Mae has made a major policy change for renters living in properties that they have foreclosed on.  Up until now, renters could be forcibly evicted from their home after a foreclosure occurred, often without any warning whatsoever.

Turns out that policy may or may not have been slightly unethical, dumb, and possibly illegal.  Remember when Fannie Mae took that gigantic government bailout check?  Turns out there were strings attached, and one of those strings was that "tenants in good standing" of properties they foreclosed on were to be allowed to remain in the property.

Did you miss that provision in the 451 page bailout bill?  Don't worry, so did Fannie Mae, but now that a couple of lawyers from Connecticut have pointed it out, Fannie has decided to comply rather than face a lawsuit.  I think it's great that SOMEONE is actually looking out for tenants rights, but the decision leaves me with two questions:

• Who is going to manage the tenants and rental properties?  Is this an internal management structure  being planned (bad idea!), are they going to contract it out to local third party management firms (good idea!), or do they even have a plan for this in place yet? (SUPER bad idea!)
• What sort of plans are in place to prevent fraud?  When some people get evicted, they damage the house on the way out.  The financial equivalent would be to rent the house to someone on a multi-year lease for $1/month.  Even more fraudulent would be to rent the house to an acquaintance(accomplice?) for $1/month and then sublet it back from him.  Now you've managed to not pay the rent in the 6-12 months, and you've got a fixed rent of $1/month, without even having to move after the foreclosure!  What is Fannie Mae doing to protect itself from that?

Unfortunately, I haven't found any good answers, yet.  The policy itself is excellent, it's all those pesky associated details that get in the way.  Bear in mind that while keeping these properties occupied will help protect the condition of the home AND neighborhood, it's also going to force the lenders to bleed even more red ink since the rental income is considerably lower than the sales value, which would skew their earnings statements further.

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Charles County Real Estate Blog

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Foreclosure Flipping in Southern Maryland

 I'm seeing an increase recently of investors looking to buy and flip foreclosures.  For the savvy investor there is a big opportunity to make a nice chuck of change, but it's not as easy as Flip This House makes it seem.  Selling a home is still tough in this market, but far from impossible if you're smart about what to buy.

Why More Investors Are Looking:

Local prices are down considerably.  Homes that sold for as much as $330,000 at market peak are now going for $275,000-$290,000.  Not only that, but the increase of available homes allows buyers to be picky.  Most buyers would prefer to purchase something that doesn't need work, and your fixer-uppers become harder to sell.  Tough luck for the seller, and music to the ears of a sharp investor.

What kind of Foreclosure are they looking for?

In a word, cheap!  The real estate market still has the most movement under $300k, and getting a home that can be flipped for less than $300k reduces the risk considerably.  For example, if you can find a foreclosure for $160k that needs $30k or less in work, can you sell it for $250k or more?  If so, you may have just found a potential flip!

Factoring in the market slump:

Remember that market depreciation averages 1% per month right now.  If it's going to take you 3 months to complete a flip, then you should be factoring in a 3% deflation in it's final value.

How do you find good foreclosure flips?

The key is to be searching, everyday!  I'm up every morning at 7:30 am and the first thing I do is update my list of new foreclosures and new properties that are on the market.  When something comes up, my computer automatically sends it to any investors who might be interested in the property, and if they like it, we go see if it might be worth the investment. 

It's important to move quickly, if a good deal hits the market, there is a good chance that others are looking as well, and you don't want to miss out.  Last week I wrote an offer on a property in Waldorf that had been on the market less than 24 hours.  I was already competing with 2 other bids!

In summary:

The three things that are most important to a successful foreclosure flip are:

1. Be quick about buying and selling the property
   
2. Make sure your profit margin is solid
3. Know what the sales conditions will be like when you're done.

If you've got that under control, you should be in good shape!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Charles County Real Estate Blog

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The Wile E. Coyote method of Foreclosures (and Rentals!)

I had a conversation with a fellow Realtor recently about the concept of banks renting their REO foreclosures rather than selling them outright, and you would have thought I had grown a third head!  "Banks can't do that!"  I was told, followed by a rather lengthy explanation.

Believe it or not, the fact of the matter is that banks CAN in fact rent out their foreclosed homes, and some banks are starting to do so!  I think back to the old Road Runner and Wiley Coyote cartoons, where some (seemingly) brilliant idea brought the Coyote one step closer to victory, until some unforeseen circumstance ruined the entire scheme.

In theory, the idea of renting a portion of your foreclosure portfolio can be very appealing.  It's much easier to rent than it is to sell (heck, you could rent it back to the people you kicked out!) in this market, so why not, right?  If they wanted to, they could just hold onto their property portfolio for years, renting out their foreclosures over and over again, reducing their overall loss while waiting for the market to improve.

The problem is that the properties in good enough shape to rent are the ones that have the best chance of selling, and the bank is taking on an increased risk by allowing renters into their properties.  As foreclosure rates continue to rise, banks are looking for ways to stop their books from bleeding red ink, and less people are able to purchase homes.

Here's where the bank becomes the Coyote:  They're looking for a way to shore up their losses, and they'll be able to find it through bank owned rentals, but what happens when a water pipe bursts at three in the morning after a heavy storm, or a tree falls through the roof?  It's the bank's responsibility to respond quickly to the tenants concern, and suddenly the bank finds themselves standing on thin air.  Just like poor Mr. Coyote, they have accidentally thrown themselves off of another financial cliff.

The real loser here is the renter.  It's hard to have too much sympathy for the bank, shouldn't they have known that a rocket and roller skates from ACME was a bad idea?  I've often wondered how banks can be so inept at handling real estate, and I know first-hand what it's like spending hours on the phone with the bank trying to get a simple question answered.  How can a renter expect a quick response?  Especially when they need the bank to open up their pocketbook?

It's a disturbing trend as I see more and more banks seriously considering the idea of becoming a landlord.  Perhaps the problem is that no matter how hard he tries to succeed, the Coyote has NEVER actually won!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Charles County Real Estate Blog

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Santa and the Grinch- Fannie Mae and Freddie Mac cause more trouble

 Looks like Fannie Mae and Freddie Mac have decided to play Santa Claus this year.  The two mortgage giants have decided to freeze all of their foreclosures that are scheduled to happen between now and the new year.

"The two companies say they will halt foreclosure sales between Nov. 26 and Jan. 9, while they evaluate whether borrowers qualify for a new loan modification program.

Fannie and Freddie's loan modification plan aims to help abate the foreclosure crisis by aiding homeowners who have fallen at least three months behind on their payments, but only if their loans are held by the two companies."

This qualifies as a brilliant PR move, but in reality actions like this are just as liable to do more harm than good.  Ask yourself two questions:

1. Is this going to stop people from getting foreclosed on, and allow them to renegotiate their mortgage? and...
2. Is this a benefit to the economy and the housing market?

Aside from the sentimental goodwill of it all, we've got some serious problems with this decision.  This is not a decision to stop the foreclosure, but rather a decision to delay it.  Delays which *should* help people renegotiate their note. 

Anybody know the percentage of people who successfully renegotiate their note after 3+ months of delinquency?  Or the percentage of re-negotiated notes that fail anyways?  (here's a hint, 50% of owners who get "modifications" end up getting foreclosed on anyways!)

If you're delinquent on your note by that much, there's a good chance you simply won't be able to afford getting current again....

Don't think this buys you more time to get your short-sale ratified, either.  If you've got something on the table with fannie/freddie, they've been known to delay foreclosure in order to let a deal settle,  so that may be extra time you could have asked for anyways.  BIG WHOOP.

So odds are that this won't really HELP many people save their home (and it won't help anyone who's working with a lender other than fannie/freddie), so will it stop them from being thrown out into the snow on Christmas Eve?  They didn't say they would halt eviction filings (Which typically take about a month) on homes they had foreclosed on, so it's still possible to get thrown out the week before Santa comes if you were foreclosed on at the beginning on November.  As Ebenezer Scrooge said:  Bah, Humbug!

It's obvious they've given the newsies a nice little holiday PR piece, but this is going to create trouble in the next few months.  This little stunt will make market inventory volume fall artificially, and make the market look like it's getting better.  Once they start foreclosing again, they'll be 2 months behind, which means a flood of properties on the market simultaneously, NATIONWIDE, and foreclosure rates and stats will spike again.  When foreclosures jump up, people panic, assume the worst, run around like headless chickens; you name it, they do it.

When the market is seen as more unstable (and prices fall harder than anticipated in Q1 '09) due to this freeze, you know who to thank.  While I understand the need for trying to modify so many of these loans, why are we risking the already weak housing market with another potential blow?  It's like a boiler building steam.  If you don't open the release valve, pretty soon it's gonna blow.

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Charles County Real Estate Blog

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Elegant Mansion in Columbia, MD

     This stately home, with over 10,000 finished square feet of living space, is available now for $1,599,000.  Situated on just under 2 acres in a picturesque location, this is a fantastic opportunity to purchase a fantastic foreclosure at an outstanding price!

     Please contact Jonathan Benya for all inquiries/information.

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog

Join The SOMD RE Blog Community and get free news and updates via email!

Buying A Charles County MD Real Estate Foreclosure?: Get It Inspected!

    There seems to be a common misconception about buying a real estate foreclosure in Charles County.  Banks are trying to get as much money as possible for the real estate they own, but they typically demand that their homes are sold "as-is" (What Does "as-is" mean in real estate?).

    This does NOT mean that you should skip the home inspection!  Quite the contrary, if you're trying to buy a primary residence, the inspection is absolutely crucial! 

    Don't believe me?  Well, would you buy a car without knowing it runs?  Buying a home without an inspection is the same concept.  Does the furnace still work?  Have the pipes burst?  Have termites eaten through the walls?  You just don't know without that inspection!  I can see the marketing slogan now:

Lovely home with rustic living (furnace is shot, bring blankets), In-ground pool possible (Basement is flooded), and lots of natural light (Termites were hungry)!

Danger Will Robinson, Danger!

     All you wanted was a great deal, and instead you end up with a money pit.  While the inspection won't fix the problems, you are saving yourself from possible FINANCIAL DISASTER by knowing what sort of problems (if any) may exist.  When it comes time to write a contract to purchase a foreclosure, bear this in mind:

1. The home is being sold as-is, and
2. The bank is not likely to do any repairs on the home, so....
3. The inspection is for "informational purposes only" (That's Legalese for: Don't even THINK of asking for repairs!)

    If you want to keep yourself protected, make sure that any inspection being done for "informational purposes only" has a "walkaway" clause.  This means that if you find something wrong with the inspection that you don't like, you can cancel the contract, get your deposit back, and find another property that suits you.

    Banks are doing everything they can to relieve themselves of liability.  As a buyer, you need to make sure that you and your Realtor are keeping your financial interests protected!

Got questions about buying a foreclosure?  Give me a call!

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog