The U.S. real estate market peaked between
2005 – 2007, depending on the exact locale. Since then nearly all national
reporting on real estate has been negative – with “Foreclosures“, “Short Sales“, “Falling Home Prices” and such dominating the headlines.

So, where is the good news about real estate? Apparently right here in Howard County, Maryland!

Howard County Home Prices “Stabilize”

As with the rest of the U.S., prices for Ellicott City, Columbia and other Howard County homes have fallen since the market’s peak. But, while average U.S. prices fell anywhere from 21% to 33%, depending on which reports you read, Howard County’s home prices had a “softer” drop: 17.8%.   Maybe small comfort to those who bought a home in Ellicott City or Columbia Maryland in ’06 or ’07, but still better than national averages.

Also, since 2009 Ellicott City and other Howard County home prices appear to have stabilized.  Average Howard County home prices peaked in 2007 at $455,464 and hit bottom (we hope) at $390,093 in 2009.  The past two years average Howard County home prices were up slightly in 2010 ($402,848, up 3.2%) and down slightly in 2011 ($401,535, down 0.3%).  (Statistics collected from Metropolitan Regional Information Services. Get more info on Ellicott City / Howard County MD homes for sale and Ellicott City real estate information from JohnAndAngela.com here).

BRAC Employment Helping

Over the past two years Howard County home prices had actually had a positive change in average prices – by 1.5% per year!  Not the stunning 23.7% increase we saw from ’03 to ’04, but still a danged sight better than the -11.3% from ’08 to ’09.  And better than the overall (continued) price declines most of the nation saw the past two years.

No doubt the beefed up employment at Ft Meade due to BRAC has been helping. While many area home owners had hoped BRAC would lead to huge increases in home prices, the overall slow economy and tougher lending standards just wouldn’t support this. But – any increase is better than what most of the nation has seen the past two years.

Near-term predictions?  One year ago I reported on the year/year 3.2% increase in Howard County home prices. At that time I made a “hopeful” pronouncement that we’d hit bottom, and predicted largely flat prices for the next few years.

For 2011 I was correct. The slight -0.3% decline is easily within my definition of “flat” prices (+/- 2%).  I believe we have another 2-3 years of continued flat home prices.  Yes, BRAC will continue to help on  the positive side, but a sluggish economy and restrictive lending standards will balance things out for continued price neutrality.

SELLER OR BUYER CONSULTATION – $349 VALUE – YOURS FREE. Click here to learn about our Free SELL-SMART™ Consultation [including our unique AccuPrice® market valuation of your home]. Or, request our BUY-SMART™ Consultation.  Including materials, both are valued at $349, and both are FREE as a courtesy to you for visiting the John And Angela blog.

Lord knows it’s been hard to find “good news” in real estate the past few years. So, when a cautious, financially conservative voice like the Wall Street Journal opines It’s Time To Buy That House, you have to believe there’s something to it. While the WSJ article focuses on national figures, we believe it applies quite well to Howard County Maryland real estate and Ellicott City home sales in particular.

The gist of the WSJ article is that, just like using a stock’s price/earnings ratio helps determine whether a stock is a “bargain”, a home’s price/rent ratio can likewise reveal whether it’s time to buy.   In either case a lower number indicates a better “bargain.”  Nationwide the price/rent ratio hit 18.5 at market’s peak. Today it’s down to 11.3.

Price/rent ratios aren’t available anywhere for Howard County or Ellicott City homes for sale, but we do have recent sale price statistics for Howard County and Ellicott City home sales. Monthly home sales for Howard County Maryland, September 2011 vs. September 2010, show Howard County home prices are stable:  the average price increased 0.2% and median price increased 0.33%.

Likewise, statistics for zip code 21042 (west Ellicott City) for September 2011 vs. 2010 reveal the average price dipped 2.47% ($549,225 to $535,666) but the median price rose 4.0% ($500,000 to $520,000).  Taken together, we read these figures to say Ellicott City home prices have reached “balance”.   Click here to request monthly updates of Howard County home sales or Ellicott City home sales.

So, the Ellicott City home you buy today will cost about the same as last year – but, the mortgage will cost much less. The cost of borrowing money is near all-time lows at just 4.25% for a 30-Year fixed rate according to WellsFargo.com.  For comparison on a $500,000 mortgage, an Ellicott City home buyer today would pay 22% less than if rates were at 6% (as many had predicted for fall 2011) - $2,460 today vs. $2,998/mo at 6%.

So, to paraphrase the WSJ, yes, it is time to buy that Ellicott City home.

Remodeled Centennial Beauty

If you’re looking to buy in the Centennial Lane Elementary school district there are currently 23 homes for sale. There are nine priced between $375,000 to $600,000, including the home to the right, a spacious-and-updated colonial on an over-sized lot priced below recent sales.  There are a total of 49 homes for sale in the entire Centennial High School district, including 28 priced between $180,000 to $600,000.

If you are looking for homes for sale in specific school districts, like Centennial High School or Marriotts Ridge High School, click here to set up an AccuSearch® home search. Now you can be the first to know when your dream home hits the market – and only AccuSearch® gives you the ability to include school district(s) as one of your search criteria.

Use our Contact Form to request regular market updates on Howard County Maryland real estate and/or Columbia Maryland or Ellicott City Maryland homes for sale, OR if you would like to speak with one of us about buying or selling a home.  Thanks!

Howard County Home Price Trends - 1978 to 2010

Howard County home buyers and sellers ask me all the time, “Where are home prices headed?” And, more bluntly, “When will Howard County home prices start going up again?”  All predictions are risky and, truth is, no one knows for sure. But I believe home prices in Howard County will  neither increase or decrease significantly over the next two to four years.  (We publish a print newsletter on Howard County real estate trends monthly. To receive future and/or past issues, FREE, click here).

There is downward pressure on our Howard County home prices based on history (this blog), and based on current and likely future mortgage changes (next blog).  However, the Baltimore/Washington regional economy is stronger than the national average, and the Ft. Meade economic boost to Howard County in particular (future blog) helps “balance” downward price pressure.

Howard County Home Prices – 1978 to 2010

To understand the future it’s good to know the past.  Using statistics from the Federal Housing Finance Agency, I developed the price chart above to track the change in home prices in Howard County from 1978 to 2010.  Using a base price of $100,000 in 1978, the wavy blue line tracts actual fluctuations, the thin red line tracts a fictitious straight-line appreciation rate of 5.6% per year (an average appreciation rate for the U.S. over the past 40 years).  Each of the colored panels represents a nine year period.

From 1981 to 1989 (the first green rectangle) Howard County home prices went both up and down. But, in the nine years overall actual price changes tracked perfectly with the 5.6% straight line appreciation level.

In the next nine years, 1990 to 1998, prices remained almost flat.  This was partly due to the recession of ’89 to ’93 as well as tax code changes affecting investment real estate.  In Montgomery county, to the south, homes lost value during this time – but Howard County merely had largely flat prices.

From 1999 to 2007 Howard County home prices shot off like a rocket, climbing 129.8% over nine years. In fact, in just six years ending in ’06 prices jumped 115%. If that rate of increase had continued another six years, the average home price in the county would have hit $1,000,000. This was obviously not sustainable.

The last pink rectangle shows Howard county home prices have falling 15.3% from the market’s peak in ’07 to ’10, which includes a slight uptick of 3.2% on prices in 2010.  While discouraging news to sellers, our decline has been less than the average decline in the U.S., estimated at 23.2%.  Our decline has also been softer than even some other local areas – parts of Prince George’s county have seen 45% – 52% price declines from the peak.

By the way, if you are “curious” about the current value and/or change in value in a particular Howard County home, either yours or one you are considering buying, you can get a general guestimate at FHFA.gov or get a more specific valuation free by email here.

History Will Repeat Itself… But Which History?

Will Ellicott City home prices repeat history from ’02 to ’05 in the next four years?  Will Columbia MD home prices repeat ’08 to ’10 the next three years?  The most likely “guess”, I believe, is that Howard County home prices in the next 2 – 5 years will look much like the 90′s in our area – with little up or down swing.

Even with the 15.3% drop already priced into today’s Howard County home prices, we are still above the staight-line 5.6% sustainable appreciation rate.  And, the types of mortgage changes being contemplated by the Feds (see my coming blog) will have, I believe, a stifling effect on potential price increases typical Ellicott City home prices similar to the effect the tax code changes had in the early 90′s.

Two additional factors keeping downward pressure on prices are present and future contemplated changes to the mortgage industry (my next blog).  But, the present and coming BRAC boost to Ft Meade employment, as well as the Balto/Washington regional economy in general, will have a positive impact on house prices (future blog) that will net out, I believe, to yield an overall flat home price picture over the next 2-4 years.

And, if you (or your FRIENDS!) are thinking of buying or selling a Howard County home in the near future, call me (410-772-5400 work, 443-420-7041 Google Voice) or click here.  Thanks for reading!

If you’ve tried searching for homes for sale in Howard County Maryland by school district you’ve probably been frustrated – finding homes from the wrong district as well as missing out on homes from the right district.  Why?

Most agents (and all online sites) search for school district by searching for matching words in the “school district” data field. The problem?  Agents are notorious for either putting in the wrong school name or skipping the data field entirely (seeing “Unknown School” in the school data field is almost as frustrating as seeing “No Photo Available” in the house photo field).   Searching Bad Data = Bad Search Results.

Our Accu-Search(TM) method

takes a completely different approach.  Let’s suppose you want to find a home in either the Centennial High School or River Hill High School district.   We don’t search for words that match “Centennial High School” or “River Hill High School” – because word-based searches are the ones prone to error.

Instead we create a search map, drawn to the exact boundaries given by the Howard County Public School System, for the school(s) you want.  Since property address is one data field agents always input correctly, our Accu-Search(TM) system gives you exactly the homes you want, and none you don’t.  Searching Good Data = Good Search Results.

At present the software that allows the creation of custom-map-based searches is not available on any consumer accessible websites – it can only by done by a Realtor(R) member of Metropolitan Regional Information Systems (“”MRIS”).  However, if YOU would like to have accurate home searches by school district, we can prepare these searches for you, free, and email all matching homes to you automatically.  Just call our office, 410-772-5400, or click here and fill out the information you want included in your home search.      Blessings, John

Buyer’s Agents: Giving Howard County Home Buyers A Fair Deal And Honest Advice

I confess I’ve been asleep at the wheel on my own blog.  Over the past few months I’ve written about topics I thought Howard county home buyers were most interested in these days – foreclosures in Ellicott City, short sales in Columbia, Maryland, and current home price trends in Howard County.  (See prior blog entries, or click here for a list of current foreclosures and short sales in Howard County). But I’ve forgotten to speak about using a “buyer’s agent” despite the fact that for over 20 years I’ve been a pioneer of buyer’s agency in Howard County. 

Forgive me.  I’ll do my best to succinctly address key issues concerning buyer’s agents in Howard County and in Maryland in general in this and the next few posts.

Definitions: Buyer’s Agents, Seller’s Agents, And Dual Agents

Traditionally all real estate agents worked for the seller’s best interests, either as “listing agent” (with a written listing agreement between agent and seller) or as a “sub-agent” (working with buyers but as a “sub-agent” of the listing agent of the home the buyer purchased and thus a seller’s agent).  Crazy, huh? Your agent emotionally bonds with you as home buyer, shows you tons of homes owned by sellers she’s never met, yet she owes 100% loyalty to them, 0% to you.  Wikipedia.org partly explains this system here.

It’s unclear exactly how this agents-always-work-for-sellers system came about. At least, no one has offered an explanation which I find fully satisfying. But it must have been due in part to the fact that, generally, the agent’s best interests are more naturally aligned  with sellers than with buyers.  Both seller and agent want the highest price – the seller to receive more money, and the agent to receive a higher commission.  Both seller and agent want few, if any, “escape clauses” in a purchase contract – because, once a deal has been agreed to, they both want it to go through despite any buyer concerns.

Regardless of how it came about, the fact remains that the basic legal framework in U.S. real estate for nearly a century has been that all agents worked for the seller.  This was certainly true for Howard County Maryland real estate sales.

Then in the late 1970′s and 1980′s some upstart real estate brokers introduced the concept of “buyer’s agency”, where the agent would actually commit in writing to break with the traditional, sellers-only, system and work for the buyer’s best interests. 

This was risky at the time, because “dual agency” – the act of representing both buyer and seller on the same transaction – was completely illegal in all 50 states. If Agent-A with ACME Realty represented the buyer and Agent-B of ACME Realty represented the seller in the same deal this was considered dual agency – representing conflicting interests in the same transaction – and was completely illegal in all 50 states.  Both agents and the broker could lose their licenses for committing just one act of dual agency.

The biggest brokerages, then, never offered buyer’s agency. If the firm had, say, a 25% share of the home listings in an area, there would be a 25% chance of dual agency if that firm represented buyers also.  Since dual agency was blatantly illegal, big firms never offered it to buyers.

This meant that, initially, buyer’s agency was only offered through small, innovative brokerages. Some were “Exclusive Buyer’s Agents”, or EBA’s, where the firm only represented home buyers with a 0% chance of dual agency.  Other small firms practiced “Single Agency”, where they would represent a handful of buyers and sellers, but never both on the same deal. If such a Single Agency firm represented, say, three home sellers out of 1,500 homes for sale in the area, there’d be a 0.2% chance of dual agency.

(If you can’t tell already, yes, I was one of those “innovative”, upity brokers that practiced buyer’s agency in Howard County Maryland as far back as 1989).

However, these small firms offering buyer’s agency apparently posed a threat to the big firms. Over a matter of a few years, from 1991 to 1997, all 50 states made major changes to their dual agency laws and most repealed them. Why? Well, it wasn’t because consumers demanded the “right” to work with “dual agents.”  Rather, it was because the big firms felt threatened by “buyer’s agency” and they wanted to be able to offer something they called buyer’s agency, even if it was simply a repackaged version of the old dual agency that had been illegal for a century.

Locally us ‘little guys’ lobbied against such big boys as Long & Foster, ReMax and O’Conner, Piper & Flynn (now Coldwell Banker). We didn’t want dual agency legalized, as it seemed a blatant ripoff of the consumer.  Alas I found it’s true: you can’t fight city hall (or, in this case, the Maryland Legislature and big brokerage houses at the Maryland Association of Realtors®).

Result Today?  Virtually every agent in Howard County claims to be a “buyer’s agent.”  But precious few will GUARANTEE in writing to give you 100% loyalty.  We do.

For 12 years we practiced Exclusive Buyer’s Agency in Howard County Maryland and for the past eight years we’ve practiced Single Agency for our Howard County home buyer and seller clients.  For reasons I’ll state in a future post, I find Single Agency more beneficial to our clients than even Exclusive Buyer’s Agency.

If you’d like copies of any of our buyer’s agency forms, including a copy of our written loyalty guarantee, click here and we’ll be glad to send it to you.

You can check my OLD website for more info on Buyer’s Agency In Howard County Maryland here (with apologies, it needs a bit of updating), or request our “Home Buyer’s Guide To Maryland Real Estate” here.

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Metropolitan Regional Information Services (“MRIS”) just released home sale statistics for Howard County in December 2008. What did we learn?

First and foremost, the “death knell” to home sales we saw in October and November was, indeed, short lived. The stock market crash in late September and October, and a nightly new barrage of terms like “economic meltdown” hammered car sales, Starbucks® sales and – yes, Virginia – home sales.

For most of 2008 we saw a monthly sales rate of 1-out-of-9: of 9 homes for sale each month, one sold and 8 didn’t. It would vary a bit (low of 7.2, high of 10.9), but in November the sales rate sank to 1-out-of-14.2!

In December, the rate of sales returned to a “normal” range (for 2008). Of the 1,622 homes for sale in the county 171 actually sold. While not a record setting pace, it yields a rate of 1-out-of-9.5 – pretty darned close to the yearly average. [For complete details of December's sales and/or a pdf file of prior months' Howard County home sales click here].

Where to next?

I am still awaiting the year-end results for 2008, which MRIS has yet to release (as of 1/26/2009). Figures will likely show that prices county-wide fell by about 9.4% and that, on average, each month only one home sold for every 9.2 “for sale” that month. I’ll publish those as soon as MRIS releases them, or click here to have these stats automatically emailed to you when they are released.

The coming year may be a transition year for local real estate. On the negative side, many of the factors that have driven prices down will still be in play this year. But on the positive side, the Housing Affordability Index is now close to an all-time high.(See National Housing Affordability Index and/or Maryland Housing Affordability Index).

This is due in part to recently falling prices and also to historically low interest rates (some as low as

4.875% fixed). (Check mortgage rates on WellsFargo.com here).

My predictions aren’t always accurate – though they were for November and December. I think this coming year may see prices decline a bit more for the first half, with a “bottom” in the second half and/or a possible slight rise in prices late in the year. For more info on Howard County homes for sale, including a list of the top 10 best priced homes currently, go to JohnAndAngela.com.

Metropolitan Regional Information Services (“MRIS”) just released home sale statistics for Howard County in October 2008, and home sales took their biggest hit of 2008.

Of 1,759 homes for sale last month only 124 sold – or 1 out of 14.2 – meaning we had a 14.2 month “inventory” level (it would take 14.2 months to sell all current homes on the market at last month’s sales level assuming no new homes came on the market).

That is a significant fall from October’s figure of 9.1 months.  For the homes that did sell last month the average time-on-market was 120.  The average sales price was 9.9% below the seller’s asking price.  [For complete details of November's sales and/or a pdf file of prior months' Howard County home sales click here].

What happened?

Although real estate trends tend to be complex with a variety of factors influencing the market, I think last month’s fall is pretty easy to understand.  The evening news, with a nightly drone of “economic meltdown” and “Great Depression II”, scared the living cr*p out of people! (MSNBC.com even has a new speciality section “The Economy In Turmoil”).

In October and November consumer spending on everything fell, and the bigger the price tag (big screen TV’s, cars) the harder sales fell. So, why wouldn’t home sales – the largest investment most people ever make – fall too?  So, while I don’t believe Howard County home sales will bounce back immediately to ’05 levels, neither do I believe last month is a true measure of the market.  Rather, I believe it was an over-reaction to the media’s over-reaction to some legitimate, but limited, economic bad news.

Where to from here?

Because of the strong employment corridor between Baltimore and DC, home sales in Howard County Maryland are not influenced much by seasons of the year. Rather, our home sales are influenced mostly by “economic mood”. 

And, there is a decent chance for an up-tic in economic mood. Partly it will be in public perception – the public is already getting “media fatigue” with the economy, and the media will soon shift it’s attention to Obama’s new administration and his first 100 days in office.

Also, there are substantive changes that will improve economic mood, at least in housing.  Interest rates had been climbing for most of 2008, but over the past 60 days rates have fallen a full percent. You can get a 30 year fixed rate loan for just 5.25%, and there is new the feds may push for even lower rates.  (Check mortgage rates on WellsFargo.com here).

True, go-go days of loose credit are gone forever – today people actually have to qualify in order to get a mortgage!  But, when rates fall the cost of buying falls and, with it, (usually) comes increased demand.

The stock market seems to be stabilizing, the public is tiring of the media’s negative drone on the economy, and the fundamentals for buying real estate are improving.

I’m not predicting a return to 2005’s peak performance – but I am saying November’s huge fall in Howard County home sales is not an indicator of things to come.  The market may well level off and find “balance” in ’09 for the first time in three years. 

For more info on Howard County homes for sale, including a list of the top 10 best priced homes currently, go to JohnAndAngela.com.

Summary. 

October’s sales stats for Howard County real estate sales, released by MRIS, show a “blending” of trends. Locally there had been signs that our market may have been approaching a “bottom”, but October saw sales of all big-ticket items falter, which lead to slower home sales locally. (Get a full print out of last 6 months home sale stats for Howard County here). 

Howard County Home Sales October 2008: The Numbers At-A-Glance

Total sales: 191

Total homes on market (unsold): 1896

“Inventory” level¹: 9.9 months (1896 divided by 191).  The trend is increasing, as it was 7.0 months in August and 8.0 months in September.

List-2-Sale Ratio²:    91.89% (about the same as prior month, 91.92%)

Days On Market: 110 days (about the same as prior month, 108).

Price Change: -8.71% over same month last year.

John’s Opinion

Leading up to October it looked like the declining real estate market was headed for a “soft landing.” In fact, in September the average price of homes sold in Howard County actually rose 3.25% from the same month in the prior year. But October saw the stock market get hammered, a giant $700 Billion bailout of the financial sector and – no surprise – huge unease about the economy everywhere.  All sales slowed: cars (including Toyota and Honda), Starbucks’ coffee (quarterly profits fell 97%) and – no surprise – housing sales fell during the month.   Was October a momentary blip or an omen of things to come? Probably neither.  Housing likely will remain “soft” through the cold weather months (typically slow anyway), but I don’t believe October’s financial sector blues are an indicator of a long-term trend in housing.  (Search active homes for sale in Howard County HERE) (Request monthly print out of Howard County Home Sales HERE)  

 _________

 1) INVENTORY: Total number of homes “for sale” divided by current rate of sale (or, how long it would take  to sell all homes currently on the market, at today’s sale rate, if no new homes came on the market.).  A six month inventory level = a “balanced” market, over six months = a “buyer’s market.”

So you’ve found the ‘perfect home’, but how do you negotiate the best deal? Let’s begin with making your initial offer.  You can also request our 92-page guide on How To Buy And Sell Homes Like A Pro here.

What Sellers Want

In my 20 years of selling Howard County real estate I have found that sellers basically want two things: (a) the most money possible; and (b) a “sure deal.”  In other words, a bird in the hand is worth two in the bush.  If your offer looks shaky, the seller will be less likely to lower his price. But, to the extent you can convince the seller that you are a strong buyer and that your offer has a very low risk of failure, he will be more likely to give you a bit more of what you want – a lower price.

A couple of keys to showing the seller yours is a strong offer are: Making a Complete Contract Offer; Showing Strong Financial Qualification; and Presenting a Professional Package

Full Written Contract

Never make “verbal” offers. If you want the seller to take you seriously, you need to take your own offer seriously by completely a full purchase contract for any offer.

Verbal communication is 10% words, 30% tone of voice, and 60% body language.  In my experience, this principle applies to written communication too – and especially to real estate offers.

Some buyers want to make verbal offers.  “Just ask the seller if he’ll take $30,000 less.”  Bad idea.  Not only would such an “offer” be unenforceable if “accepted” (legally real estate contracts must be in writing), but the “body language” of a verbal offer communicates all the wrong things to the seller.

The “body language” of a verbal offer says “I may or may not be a reliable person” or “I don’t take the process of buying your home seriously.”  This does not encourage a seller to deal with you, nor to give you the best price.  For this reason most Howard County home sellers and/or Howard County real estate agents would reject, out of hand, any “verbal” offers.

When I write offers for buyers I insist on a complete contract offer, including primary contract (MAR ver 10/08) and all necessary addenda (inspection(s), county notices, disclosure/disclaimer, etc.), and all forms are computer-printed to be legible and neat-looking. Uusally the seller has previsously created some of these forms (MD Disclosure/Disclaimer for example) and it is a good idea to ask for copies of these forms from the seller and to include them in your offer.

When your offer is complete, with no forms missing, and everything typewritten and neat, your paperwork’s body language communicates to the seller “I am reliable” and “I will pay attention to the details through out this transaction.”  When you communicate that, you give the seller “warm fuzzies” about the strength of your offer, which may help him adjust to the fact that he’s not getting the price he wants.

When forms are missing, it communicates to the other side that you don’t pay attention to details and may prove to be unreliable during the transaction.

By the way, we provide a full copy of all such contract forms to every home buyer at our first meeting, so that you can review them well in advance of making a purchase offer. You can request sample copies of all these forms here.

Showing Strong Financial Qualification

It used to be that giving the seller a lender pre-approval letter was optional. Today it is mandatory.  Without one, your offer will be heavily discounted if not rejected outright.

There are three “levels” of lender letter: pre-qualification, pre-approval, and commitment letter.  A commitment letter is the strongest possible lender letter which is great if you can get one. But you will probably want at least a pre-approval letter.

Also, Howard County realtors and Howard County home sellers will tend to want to see a letter from a local lender, and not an Internet-based company like Lending Tree.  Internet-based lenders have a horrible reputation in Howard County for making promises that they cannot keep, causing problems both for sellers (financing fails despite lender’s written promises) and for buyers too (hidden fees and undisclosed loan points jack their prices up beyond those of any local lender).  If you insist on using an Internet-based lender despite the risks, at a minimum you should also have a pre-approval letter from a local lender as a backup.

How “local” does your lender need to be? Here’s a rough rule of thumb. If they are close enough so that I can drive to their office and slash their tires when they lie about your loan – and/or close enough so that I can reward them by referring future buyers if they do a good job – then that’s close enough.

Seriously, any good Realtor or lender should get over 50% of their business by referral. Distant Internet-based lenders don’t have to worry about their local reputation and/or screwing up a loan, but local lenders do.  Get a list of top-ranked local lenders here.

Cover Letter

In my experience we negotiate a better price with the seller, not by denegrating the quality of his property, but by “selling” on your qualities and the high quality of your offer.  And, we do this in a professional cover letter.

In every professional cover letter I will include (a) a summary of the offer terms (price, settlement date, request for cash credit); (b) a statement about your financial qualifications (large down payment, pre-approval letter, etc.); and (c) a paragraph reciting all (and I mean ALL) the benefits your offer brings to the seller.

For example, if you don’t have to sell another home in order to buy this one, I emphasize that in the cover letter.  Yes, it may be true that 90% of other home buyers are also in that position – but I emphasize every benefit possible that you bring to the seller, so that he will think you are, in fact, a “great” buyer.

(We call this the “no water in our gas” theory.  If a gas station charged 10¢ more per gallon and then advertized “no water in our gas”, it would kind of make you wonder about the other stations, wouldn’t it?  When you bring any benefit to the seller, we want to emphasize those benefits – even if 90% of all other buyers bring them too).

Also, if we know some unique “wants” the seller has and we can meet them, we mention those in the cover letter too. For example, if the seller wants to settle very quickly (or not), we mention that we can accomodate that need.

Putting together a professional cover letter is the final touch to the “body language” of your offer. It is easy to do, but it’s easier not to, and it stuns me how many agents and buyers fail to take this simple, powerful step to negotiating a better price.  You can request a sample professional cover letter here.

Today MSNBC reports “Home prices fall by sharpest annual rate ever”.   The report cites a 16.6% average price drop in home values nationwide as revealed by the Case-Shiller Home Price Index.   The numbers reflect an average home price of $164,570 in August 2008 versus an average price nationwide of $197,370 a year prior.

Bad news for would-be home sellers, good news for home buyers, but what do our local numbers say?

For the same period, August 2007 versus August 2008, average home values in Howard County fell 7.05% according to the Metropolitan Regional Information Service (“MRIS”). Not great news for local home sellers, but less than half the average drop in home prices that the nation experienced as a whole. (Click here to request a monthly update of Howard County home sales – including average prices # of homes sold, # of homes unsold each month).

Why is Howard County holding its own in the current housing market?  Partly it is due to our strong local economy, including the coming B.R.A.C. (Base Reallignment Commission) job transfers to Ft. Meade.  Probably also due in part to the very strong Howard County public school system.   I believe it is also a reflection of the fact that “what goes up (less) must also come down (less).”  During the boom of 2002-2005 other area county’s prices went up higher and faster than Howard County’s, so it is only natural to expect our prices to “deflate” at a calmer pace too.

One other factor is that home foreclosures in Howard County are at a lower rate than other counties, meaning foreclosures and short sales are having less of an influence on prices here.  However, home foreclosures and short sales can still be found in Howard County HERE.