Ocean City Real Estate InformationRecently posted or modified blog postshttps://www.oceancitycondosandhomes.com/blog/Copyright OceanCityCondosandHomes.com2023-01-23T06:16:19-07:00tag:oceancitycondosandhomes.com,2012-09-20:12011Buyer's Market vs Seller's MarketWe get a lot of questions about a Buyer’s market versus a Seller’s market and what the demarcation line is for the Ocean City real estate market. In this article we will explain Buyer’s and Seller’s markets, how they are established and what to expect in each one.
Absorption rate will be referenced several times in this article. Absorption rate is the time it would take to sell all of the Ocean City homes currently for sale on the market at the current sales pace. The current sales pace is the average monthly sales for the most recent twelve month period.
Sellers Market
A seller’s market occurs when Buyer demand is greater than the supply of homes for sale. In the Ocean City real estate market, a Seller's market occurs when the absorption rate is less than five months.
Seller’s markets are competitive amongst Buyers. There will be multiple offers submitted on the desirable new real estate listings that come on the market. Buyers will compete based on offer price, as well as contract terms and contingencies.
Buyers Market
A Buyer’s market occurs when the supply of homes for sale is greater than Buyer demand. A Buyer’s market occurs in the Ocean City real estate market when the absorption rate is higher than seven months.
Buyer’s markets are less competitive than Seller's markets and are an ideal time to buy. Buyers will have more leverage in regards to offer price, contract terms and contingencies in a Buyer's market.
Neutral Market
A neutral market occurs when the supply of Ocean City homes for sale and Buyer demand are in balance. A neutral market occurs in Ocean City when there are five to seven months worth of inventory on the market.
Advantages in a neutral market will vary based on the property. If it is a desirable listing in a market area with low inventory, the Seller will have the negotiating advantage. If it is a listing in an area with ample inventory, the Buyer will have the negotiating advantage.
We have a variety of tried and true strategies that we have used to successfully navigate our clients through these various real estate markets. If you have any other questions or want to discuss the current real estate market in greater detail feel free to contact me directly anytime at 443-614-9179.
Contact Nicholas2022-03-09T11:12:00-07:002023-01-23T06:16:19-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:10220Seller's Guide - Contract and ClosingGetting the deal from contract to closing is where a real estate agent can provide a lot of value. Ocean City real estate transactions involve a lot of information, people and steps to manage. A good agent should have a plan in place to ensure you have a seamless transaction from start to finish and be able to handle any complexity that arises. Below you will find an overview of the typical steps that are involved in most Ocean City real estate transactions and how we manage them.
RATIFIED CONTRACT
Our transaction coordinators will distribute the ratified contract and all supporting documentation to all parties involved in the transaction, ensuring that everyone has the information they need to start the process.
MORTGAGE PROCESS
If the Buyer of your home is financing the purchase we will stay in regular communication with their Ocean City mortgage lender to ensure the mortgage process is moving along as it should.
PROPERTY INSPECTIONS
We will oversee all property inspections and can assist with coordinating any repairs that need to be made through our contractor connections.
APPRAISAL
In most transactions a property appraisal will be completed to verify the property’s value.
HOA REVIEW
If your Ocean City property is part of a homeowners or condo association you will be required to provide the Buyer with a resale package. We will assist in securing the resale package from the association and distributing the respective documents to each party involved.
COMMUNICATION
We will keep you up to date as to where things stand at all times and we are always available to respond promptly to any needs that arise from anyone involved with the transaction.
TITLE AND CLOSING
The title company will perform the title search and prepare all of the necessary documents for the Ocean City property transfer. We will provide them with all of the information they need and coordinate a settlement time and location that is convenient for you. Prior to closing we will review the final settlement statement with you and assist with utility transfers.
Should you have any other questions or want to discuss selling your home in Ocean City, MD or the surrounding areas feel free to contact me directly anytime at 443-614-9179 or via email below.
CONTACT NICHOLAS2021-07-26T10:47:00-07:002021-07-26T10:50:34-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:7618Property Inspection TypesHome inspections are an important contingency in Ocean City real estate contracts. There are several different home inspection contingencies you can choose to include in your real estate contract, which you will find outlined below.
AS-IS WITHOUT INSPECTIONS
Under this scenario you are purchasing the home or condo in its current condition without performing any type of property inspections. Purchasing a property "As-Is" provides the least amount of protection and the highest risk for the Buyer, but is the most attractive scenario for the Seller. Purchasing a property "As-Is" is only recommended as a last resort in markets with a lot of competition and for properties that are in relatively good condition.
AS-IS WITH INSPECTIONS
When you purchase a home or condo “As-Is with Inspections” you are acknowledging that you will purchase the property in its current condition, however you reserve the right to perform property inspections. Along with the right to perform property inspections comes the right to terminate the contract if the property inspections turn up issues that are unacceptable to you. "As-Is with Inspections" provides good protection to the Buyer, while also being attractive to the Seller. "As-Is with Inspections" can be utilized in a variety of scenarios where the property is in relatively good condition and you are ok with taking on some repairs.
CONTINGENT ON HOME INSPECTION
Making an offer “Contingent on Home Inspection” is the standard process and affords the Buyer the most protection. The sale will be contingent on a Buyer having property inspections performed and the satisfactory negotiation of any deficient items that are uncovered during the property inspections. “Contingent on Home Inspection” provides the most protection for the Buyer, but is the least attractive situation for the Seller. “Contingent on Home Inspection” is the recommended scenario for Buyers where possible, though it can present challenges in getting contracts accepted in competitive markets.
HOME WARRANTIES
Home warranties are service plans that help with the costs to repair or replace a home’s systems and appliances. When an item breaks in your home, you make a claim with the home warranty company and they will come out and repair the item. In the event they can not repair the item, they will replace it. Home warranties can provide protection in situations where you do not have property inspections performed or when you are purchasing an older property.
The inspection contingency you choose to include should be based on the condition and type of property you are purchasing, current market conditions (strong market vs. slow market) and your overall comfort level with the property and potential repairs and renovations.
If you have any other questions about real estate in Ocean City feel free to contact me anytime at 443-614-9179.
CONTACT NICHOLAS2021-04-02T11:50:00-07:002021-04-02T12:09:23-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:7347Escalation ClausesThere is currently a considerable lack of inventory in the real estate markets of Ocean City and the surrounding areas, which is leading to multiple offer situations on most new homes and condos listed for sale. Many of these offers are written higher than the listing price, which is necessary in a lot of situations in order to secure a deal.
There are several ways to structure deals in multiple offer situations, but the most effective way is with an escalation clause. An escalation clause is a way to automatically increase your offer in a multiple offer situation without paying more for the Ocean City property than you have to.
There are two parts to an escalation clause. The first part is the amount your offer will increase when a competing offer is at a higher price. The second part is the cap that you put on how high you are willing to take your overall offer price via the escalation clause.
The amount your offer will increase (escalator) will vary from situation to situation, however it is typically in the $500 to $1000 range. As an example, let's say you were in a multiple offer situation where you offered $300,000 and the competing offer was at $305,000. You put an escalation clause in your offer with a $500 escalator. In this situation your offer would automatically increase to $305,500 and likely secure you the deal.
The second part of the escalation clause is the price cap that you put on the offer. In the previous example, let's say you capped your escalation clause at $307,000. In the $300,000 and $305,000 offer situation nothing would have changed. Your offer would have increased to $305,500 and there would have been no reason to go higher. The escalation clause would have saved you $1500 in this scenario, hence its tactical efficiency. Let’s consider another scenario where the competing offer is $308,000. Your escalation clause would only increase your offer to $307,000 per the price cap and you would likely lose the deal.
There are a variety of factors to consider when choosing the price cap to put on the offer in the escalation clause. Key factors to consider are current real estate market conditions, the property’s market value, recent comparable sales, interest rates, property condition and real estate market forecasts.
In a multiple offer scenario where an escalation clause comes into play the Seller is required to provide signed, written evidence of the other offer.
Escalation clauses are useful tools that can help you compete and prevail in competitive real estate markets. There is a lot of strategy that goes into making them work effectively. I have had a lot of success using escalation clauses in assisting my clients secure attractive deals without overpaying. I would be glad to discuss escalation clauses in greater detail with you. Feel free to contact me directly anytime at 443-614-9179 or via email below.
CONTACT NICHOLAS2021-02-18T12:20:00-07:002021-02-18T12:27:41-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:2825Choosing a Realtor
There are hundreds of Realtors serving the Ocean City real estate market. You owe it to yourself to do your due diligence before choosing an Ocean City Realtor to assist you. The agent you choose to work with will have an impact on the value you get and the overall transaction.
1. Experience
There are few ways that a Realtor can gain experience other than by working with Buyers and Sellers to get deals done. While time in the real estate business helps, it doesn't necessarily equate to adequate experience. A real estate agent that has been in the business for fifteen years part-time may not have as much useful experience as someone who has been in the business full-time for five years and had success. Viewing an agent's track record of past sales and their agent ratings will always tell the full story.
2. Market Knowledge
Confirm the Ocean City real estate agent you choose has market knowledge and experience in the specific areas that are of interest to you. Even in a small area like Ocean City there can be considerable differences between property types and related items. If the agent you choose to work with is not familiar with these nuances it could make for a challenging transaction and large opportunity costs.
3. Tools and Systems
Does the agent have tools and systems that are going to streamline the overall real estate process and make life easier for you? If you are buying they should have tools to help you organize your search and make it more efficient. If you are selling they should have a listing portal setup for you so you know what is going on with your listing at all times and are being provided feedback from property showings. Once a purchase contract is secured they should have systems in place to assist in navigating from contract to closing with a minimum amount of hassles.
4. Support Staff
A typical Ocean City real estate agent is responsible for all aspects of their business, which can get overwhelming for both themselves and their clients. You want to look for an agent that has support staff in place to help them manage their business. Ideally they should have a transaction coordinator to manage property sales and a listing coordinator to manage listings. Having these staff members in place to assist the agent ensures that nothing gets overlooked and that you have a hassle free transaction from start to finish.
5. Responsiveness
Did the agent answer the phone the first time you called them? If they didn't, did they get back to you promptly? If you requested information from them did they deliver it to you in a timely manner? You must choose an Ocean City Realtor that is responsive in order to get the results you are looking for in today's competitive real estate market. Deals get done off of momentum and choosing an agent that is responsive and proactive keeps the momentum going.
6. Performance Guarantees
Experienced real estate agents will offer performance guarantees. These guarantees will provide easy exit options from the listing agreement or buyer agency agreement in the event that you are not satisfied with the respective agent's services or results. This likely won't be an issue if you choose an agent that possesses all of the skills and tools presented in this article.
7. Agent Ratings and Reviews
Check an agent's ratings and reviews from previous clients that they have assisted with buying or selling real estate. These reviews and ratings will provide good insight into the agent's effectiveness, responsiveness and overall ability. Additionally, you will want to look at the agent's record of past sales to ensure they have the experience necessary to assist you in the market areas that are of interest to you.
Contact Nicholas2019-02-20T12:37:00-07:002021-06-16T09:22:11-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:2780Contract and Escrow Phase
You made an offer to purchase real estate in Ocean City or the surrounding areas, the Seller accepted your offer and now you are under contract … what is next? Below is an overview of what you can expect as a Buyer as you work the escrow phase of the contract towards the property's settlement:
Mortgage Application
If you are financing your purchase the first step is to make official loan application with the mortgage lender you will be working with. Once you have made application the mortgage company will gather all of the required financial and supporting documentation from you, order the property appraisal, request necessary information from the homeowner’s association and then submit the complete loan package to underwriting for final loan approval. This process typically takes 30-45 days.
Title Work
While the lender is working through the loan process the title company will be researching the title and deed of the Ocean City property you are purchasing to ensure they are free and clear of any encumbrances. Additionally, they will account for monies such as taxes and association fees and prepare all of the necessary documents for the property transfer at closing.
Property Inspections
Once the steps above are initiated we will get the property inspections scheduled. A structural and mechanical inspection is the standard inspection that we order for all Ocean City property types. We can also order specialized inspections for items such as chimneys, crawl spaces, docks and other items as needed.
HOA Review
If the property you are purchasing is part of a homeowner’s association you have the right to a review of all of the governing and financial documents of the respective association. You will receive a resale package from the homeowner’s association of the Ocean City community you are purchasing in once you have a contract to purchase. You will then have ample time to review the documents and get any questions you may have answered to your satisfaction before moving forward with the sale.
Final Steps
As we get closer to closing you will get a final settlement statement from the title company and your lender for review. The settlement statement will outline and summarize all of the costs and charges associated with the Ocean City real estate purchase. I will provide you with all of the utility contact numbers so you can transfer them into your name. Prior to closing we will meet at the property for a final walk-through to ensure everything is as it should be and to confirm any requested repairs were completed.
As a real estate agent in Ocean City I walk my clients through this process and assist them at every step along the way. Buying a property “at the beach” should be a fun, enjoyable and stress-free process. I go to great lengths to ensure that happens for all of my clients and have reliable, experienced professionals that can assist with all of the steps above.
If you have any other questions or want to discuss the process of buying real estate in Ocean City or the surrounding areas in greater detail feel free to contact me directly anytime at 443-614-9179 or nick@coastallifeoc.com.
Contact Nicholas2019-01-16T15:27:00-07:002019-03-23T12:19:57-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1651Buying Timeframes
Once people find a property they want to purchase the next question is "How long will the process take?" The time it will take to get the property you are purchasing from accepted contract to closing will depend on a few factors, which I have outlined below.
Cash Purchases
If you are paying cash for your Ocean City real estate purchase the typical settlement timeframe will be around thirty days. This allows ample time to complete the property inspections, review the condominium association documents, coordinate the closing funds and have all of the necessary title work completed.
If it is your desire to settle sooner rather than later, cash purchases can be completed and closed within two weeks. I will need to call in some favors to get everything above completed in time, however it is feasible and I do it quite often. Fast settlements are attractive to a lot of Sellers and present the opportunity to get a good deal.
Financed Purchases
If you are financing your Ocean City real estate purchase the time from accepted contract to settlement will be in the thirty to forty-five day range. If you are buying a home in Ocean City settlement can occur within thirty days. If you are buying a condo the timeframe will be closer to forty-five days as there are additional steps in the financing process for condos. These timeframes allow sufficient time for property inspections, appraisals, loan application, underwriting, home owners association reviews and title work.
These are general timeframes that I see for most Ocean City real estate transactions. The timeframe that your specific deal moves along will ultimately be up to you.
Feel free to contact me directly anytime at 443-614-9179 or via email below if you would like to discuss this in greater detail or have other questions.
Contact Nicholas2017-11-16T09:21:00-07:002019-03-23T12:20:53-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1259Fast Paced Market
We are currently in a fast paced real estate market in Ocean City. Good inventory is low and well priced properties that are in good condition are selling withing a few days of hitting the market. If you are currently in the market to buy real estate in Ocean City there are a few things you can do to put yourself in a favorable position to capitalize on a good opportunity.
New Listing Alerts
In the current market you have to be aware of the new listings and price adjustments for properties that match your specifications as soon as they become available, otherwise they may be gone by the next time you run a property search. You can set these new listing alerts up on a variety of websites, however be aware that some are more accurate and do a better job than others. I provide my clients with a <a href="http://www.oceancitycondosandhomes.com/buyers/ocean-city-real-estate-updates/" title="New Ocean City Real Estate Listings">Property Updates Program</a> and email them the new listings and price adjustments as soon as they hit the market. The listing data is pulled directly from the Ocean City Multiple Listing Service (MLS), which is the most accurate and timely source of property information available. This service saves my clients a lot of time and effort, while also ensuring they do not miss out on a good opportunity.
Mortgage Pre-Approval
If you are going to be financing your Ocean City real estate purchase securing a pre-approval letter from your lender ahead of time is a good idea for a couple of reasons. First and most importantly, Sellers and their agents are requiring that pre-approval letters be submitted with virtually all purchase offers. If a pre-approval letter is not included with your offer it can potentially delay negotiations and open up the possibility for competing offers to emerge. Secondly, securing a pre-approval letter upfront will ensure your potential Ocean City real estate purchase fits in with your overall financial strategy. Securing a pre-approval letter is a simple process and only takes a few minutes. Mike Cirrocco with Universal Mortgage would be glad to assist you with this and can be reached directly anytime at 443-235-9283.
Preliminary Research
You will want to do as much research as possible ahead of time so you are in a position to make informed decisions once you begin looking at listings. If you are going to be renting your property you will want to look into rental histories and potential income for the properties that are of interest to you. Your Ocean City real estate agent should obtain preliminary settlement statements for the price range you are looking in so you know what to expect in terms of closing costs. Finally, in order to get a good feel for values you should research what similar properties to the ones you will be looking have recently sold for. Doing this research ahead of time will put you in a position to make informed, confident and decisive decisions, which is what it takes to get a good deal in the current faced paced market.
Choose a Proactive Agent
The agent you choose to work with can potentially have an impact on your transaction. If you choose a lacksidasical agent whom doesn't pay attention to the details you could lose out on a good opportunity, especially the better deals that have a lot of competition. You want to ensure you choose an experienced, full time Ocean City real estate agent that takes their business seriously. These agents will let you know immediately when a good opportunity becomes available and will have the necessary experience and knowledge to assist you in securing the deal under terms that are favorable to you. Additionally, they will have the necessary skills and systems in place to oversee your transaction from contract through to the closing.
We would welcome the opportunity to assist you with this process. Feel free to contact us anytime at 443-614-9179.
Contact Us2017-05-23T07:09:00-07:002019-03-23T12:21:39-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1255Condominium FeesAs you have been searching online for Ocean City real estate you have probably noticed the condominium fees that are noted on each listing. A majority of the Ocean City condos for sale have monthly condominium fees associated with them and there tends to be a lot of confusion surrounding them. This article will explain what they are and outline what they cover.
Condominium fees cover the operation, general maintenance and up-keep of the particular building the property is a part of. Basic condo fees cover building insurance, common area maintenance, professional property management, amenity usage and maintenance, reserve fund build-up, trash pick-up and water usage. A budget is determined for the building and then divided amongst the units that make up the condominium project. The amounts paid are based on the size of the particular property relative to the other units in the building. A three bedroom condo will usually have a higher condo fee than a one bedroom unit in the same building. This is largely because the three bedroom unit will warrant higher property and flood insurance costs, which are covered in the condo fee. All Ocean City condo buildings set up their own structure as to how they operate, however there are some common similarities that I have outlined below.
Property Insurance
A large portion of the annual condo fee covers your homeowners and flood insurance policies. There are master insurance policies in place that cover the building, condo units and common elements. The only insurance you are typically responsible for obtaining is content insurance (HO6 policy), which covers the interior of the unit, your furnishings and personal belongings. In the event there was an issue the master insurance policies through the condo association would rebuild the building and your HO6 policy would replace everything inside your condo.
Professional Property Management
A majority of the condominium associations in Ocean City hire a professional property management company to take care of the day to day affairs of the building. They will handle the accounting, bill paying, preparation of resale documents, property inquiries, scheduling of maintenance, coordination of condo association meetings, etc. Property management companies are experienced in these matters and make for a well run and proactive association. Some smaller buildings choose to self manage themselves and save on the property management costs.
Reserve Fund Build Up
A portion of the condo fee goes into reserve accounts for future maintenance projects, repairs and any unforeseen items that may arise. You want to find a building that has strong reserve accounts as it helps to alleviate the possibility of future special assessments and ensures the building remains in good condition, both of which ultimately preserve your Ocean City real estate investment. Mortgage companies will not lend on buildings that do not have adequate reserves or those that do not have funds allocated in the budget to build them up. As a general rule, lenders want to see 10% of the condo associations overall budget being allocated to the reserve accounts.
Common Area Maintenance
A portion of the condo fee goes toward the maintenance and up-keep of the buildings common areas. This will include landscaping, roof, walkways, fire suppression systems, railings, siding, etc. You are responsible for the mechanicals and interior of your unit, the condo association will take care of the rest.
Amenity Maintenance
Amenity maintenance will cover usage, repairs and replacement of pools, elevators, fitness centers, boat docks, bulk heading, tennis courts, etc. The more amenities a building has the higher the condo fees are going to be.
These are the similarities that we see across a majority of the condo buildings in town. Once you make an offer that is accepted to purchase a condo in Ocean City you will have a seven day review period per the Maryland Condominium Disclosure. This disclosure requires that the Seller provide a resale package from the condominium association to the Buyer within fifteen days of settlement. This resale package will included copies of the bylaws, building rules and regulations, master insurance information, budgets, minutes from the most recent association meetings, a resale certificate, reserve/maintenance studies and other applicable items. This allows you to review the building and condo association that you are buying in to ensure everything is in good order. Once you receive this resale package you have 7 days to review the information. During this period we can get answers to any questions about the building or association that you may have. Should there be something that is not acceptable to you and we can not get it resolved, you can then be released from the contract within this 7 day window. Your deposit will be returned and you can move on to pursue another property.
You don’t want a condo fee that is too high as the result of previous poor management. You also don’t want one that is too low that will lead to possible special assessments and a deteriorating building. As an experienced Ocean City Realtor I will assist you in reviewing the condo disclosures to ensure you are buying into a well run building that will provide the best investment.
If you want to discuss this in greater detail or have any other questions feel free to contact me anytime at 443-614-9179.2017-02-08T09:32:00-07:002019-03-23T12:24:57-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1254Non-Resident Withholding
When you sell real estate in Ocean City and are not a resident of the state of Maryland you need to be aware of the non-resident withholding tax. In 2003 the State of MD enacted code that provided for income tax withholding on the sale of real estate in Maryland by non-resident individuals or entities.
Many non-residents of Maryland were selling real estate in Maryland and never reporting the gain as they are required to do via a Maryland tax return. As a result the state of Maryland was losing out on substantial tax revenue. This was obviously not acceptable to the State of Maryland and the non-resident withholding tax is the result.
Settlement companies in the State of Maryland are charged with the duty of collecting the tax on the net gain at the time of settlement. The tax currently stands at 7.5% for individuals and 8.25% for entities (verify current tax rates at the time of reading). The way this works is the settlement company is required to collect the tax based off of the net proceeds from the settlement statement. As an example lets assume you sold a property for $500,000 and had $40,000 in closing costs and a payoff to your mortgage holder of $250,000. This would lead to net proceeds on the settlement statement of $210,000. The settlement company would then be obligated to collect $15,750 in non-resident withholding tax ($210,000 gain @ 7.5%).
Now the reality of the situation is that you likely paid more for the property than the $250,000 that you owe on the mortgage. Under the scenario above lets assume you paid $300,000 for the property. In addition you had closing costs when you purchased the property that were likely in the neighborhood of $15,000. This adds up to an adjusted costs basis of $355,000 (purchase price plus closing costs for the initial purchase and this sale). Subtracting this from the $500,000 sales price gives us a real gain of $145,000 and a non-resident withholding tax of $10,875.
An even worse scenario is if you paid cash for the property. Let's assume you bought a $300,000 property and paid cash. You then sell this property for $400,000 with $30,000 in closing costs associated with the sale. The settlement statement will have net proceeds to you of $370,000 and $27,750 of non-resident withholding tax will be collected. In reality you have a gain of approximately $55,000 factoring in the purchase price and closing costs for the initial purchase and this sale. The non-resident tax owed on this is $4125, which is far less than $27,750.
If a non-resident Seller does nothing prior to settlement the title company will be obligated to collect the withholding tax based off of the net proceeds from the settlement statement as outlined above. This can be avoided by filing for an exemption request with the Comptroller of Maryland prior to the property settlement.
The process for obtaining the exemption can not be started until you have an accepted contract on your Ocean City real estate and are proceeding towards settlement. Once you have a signed offer in place you can then fill out the necessary exemption forms. These forms will take into account what you paid for the property, closing costs for both your initial purchase and this sale and any improvements that you made to the home or condo. You will then package the forms together with the contract of sale and a preliminary settlement statement that I will have prepared for you and send it to the Comptrollers office for review. The Comptroller's office requests 21 days to get the process completed, which is usually ample time under most contract timeframes.
In most situations you can expect to get a partial exemption, meaning you will only be paying the withholding tax on the true net gain of the property. In order to qualify for a full exemption and pay no tax at the time of sale you must meet one of the following conditions:
Seller is a resident of the State of Maryland
Property is a primary residence
Property transfer is a result of foreclosure
Property is transferring at zero value
Property transfer is part of a 1031 tax deferred exchange
Once the exemption is granted the Comptroller will provide the title company that is conducting the property closing with a certificate authorizing the full or partial exemption.
In the event that your Realtor did not advise you of the MD Non-Resident Withholding Tax prior to settlement there is a process you can go through to retrieve any overpaid monies. There are forms that you will need to complete and file with the Comptrollers office 60 days after the property settlement date. You will essentially be going through the same process that was outlined above after the fact and the overpaid taxes will be refunded to you.
As an experienced Ocean City Realtor I deal with non-resident withholding taxes on a regular basis and would be glad to assist you with the process. I initiate this process for all of my listing clients as soon as they have a ratified contract in place for the sale of their property, then follow it through to completion. This allows ample time to get the exemption in place prior to closing.
If you would like to discuss this in greater detail or have any other questions feel free to contact me anytime at 443-614-9179.2017-02-07T07:41:00-07:002020-01-13T15:33:13-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1253Closing Costs - Buyers
One of the questions I am asked the most is ... How much are the closing costs and what do they cover? Closing costs are the charges and fees that are involved when buying real estate in Ocean City. Closing cost amounts will vary depending on the purchase price, property type and overall terms of your deal, however there are some common similarities that I have outlined below.
Transfer Costs
The largest portion of your closing costs will be the transfer and recordation charges. The state and county collect these charges on all transfers of real property throughout the State of Maryland. The total combined amount of these charges is 1.66% of the purchase price. Per the Maryland Residential Contract of Sale the transfer charges are split equally between the Buyer and Seller, however this is a negotiable item.
Prorations
Any items that are paid in advance such as property taxes, waste water bills, condo fees, etc. will be pro-rated down to the day of settlement and the seller will be reimbursed for the remaining portion. As an example, property taxes are paid a year in advance. Lets assume the taxes are $6000 per year and you settle three months prior to the end of the tax year, which is July 1st. At settlement you would reimburse the Seller $1500 and your taxes would be paid until the end of the current tax year. This process would be repeated for the condo fees, wastewater bills, etc.
Lenders Fees
You will be responsible for any fees your lender charges if you are getting a loan in conjunction with your Ocean City real estate purchase. These fees will cover the loan origination/application charges, credit reports, verifications, etc. These charges will vary by lender, however some common ranges are listed below:
Origination Fee $600 to $800
Credit Reports $25 to $50
Flood Certification $10 to $20
Condo Verification $100 to $150
Tax Service $75 to $100
If you intend to buy your interest rate down through points there will be additional costs associated. Additionally, if you are putting less than 20% down on your loan you will incur mortgage insurance which carries an additional cost.
Appraisal
Anytime you are obtaining a mortgage for your Ocean City real estate purchase the lender will require that an appraisal be performed to verify the value. The appraisal will be ordered by the lender and the appraisal fee is typically charged to the Buyer at the time the appraisal is performed. Appraisals for Ocean City properties typically range from $300 to $400 depending on the type and size of the property.
Inspections
You will be responsible for the costs of any inspections that you would like to have perfomed on the property you are purchasing. Your typical home inspection costs between $225 and $400 depending on the size of the property.
Title Company Fees
The State of Maryland uses title companies to perform closings for real estate sales. The title company will perform the title search on the property to ensure everything is in good order and will prepare the deeds that record the property transfer. Additionally, they will provide your mortgage lender with the necessary documents and disclosure information they need throughout the process and will offer you title insurance on the property at the time of closing. At the time of closing the title company will receive all of the documents from the lender and conduct the final property settlement. These fees vary depending on the purchase price, type of property and overall structure of the deal however some common ranges are outlined below:
Settlement/Closing Fee $100 - $200
Title Examination $400 - $500
Document Preparation $100 - $150
Title Insurance - Check with Lender
Escrows
If you are getting a loan to purchase real estate in Ocean City the lender will likely require that escrow accounts be set up for the property insurance and taxes. Escrow amounts will vary based on the purchase price, property type and time of year that you purchase. Once you have identified a potential property for purchase I can obtain an estimate of the escrow amounts for you.
As an estimate I advise my clients to expect their closing costs to be approximatly 3% to 4% of the purchase price, with the higher end being for less expensive properties. In some instances a credit from the Seller of up to 6% of the purchase price can be negotiated into the contract to cover these costs. I obtain preliminary settlement statements for all of my clients outlining these costs so they know what to expect heading into the deal.
If you want to discuss this in greater detail or have any other questions feel free to contact me anytime at 443-614-9179.2017-02-06T09:53:00-07:002019-03-23T12:27:02-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1252Property ConsiderationsThe search for Ocean City real estate can get a bit overwhelming with all the different property types and locations to choose from. To assist with this I thought it would be helpful to provide a list of the primary property features you should consider as you start your search for the perfect beach place.
Price Range
One of the first things to determine as you begin your property search is the price range that you would like to stay in. This price range will ultimately determine which locations and size properties will be available to you. At this point you will also want to consider if you are going to rent your Ocean City real estate as the potential rental income could impact this price range. I would be glad to provide you with rental estimates for the types of properties you are considering.
Property Size
The next thing to determine is what size home or condo will best suit your needs. You will want to determine this based on the number of bedrooms and bathrooms that you would like to have as opposed to square footage. Floor plans and layouts of Ocean City properties will be different from your primary home and can be deceiving. It is best to start with bedrooms and bathrooms and then eliminate the smaller options based on square footage.
Property Location
Now you will want to determine which of the various areas that make up the Ocean City real estate market you want to be in. These areas include direct oceanfront, indirect oceanfront, oceanside, ocean block, bayside waterfront, bayside interior and West Ocean City. Location options will largely be dictated by the price range you want to stay in and the property size you are looking for.
If you are considering renting your property its location will have a considerable impact on rental values and occupancy rates. As an example, property on the oceanside is more expensive than bay side property however the additional rental income it generates typically off-sets or exceeds the additional carrying costs.
Amenities and Property Features
Finally, you will want to determine any building amenities or property features that you "must have". This could be things such as a pool, elevator, first floor location, number of parking spaces, boat slip, etc. You will want to start with the "must haves" so you have a larger set of properties to begin your search with. From there you can adjust your search criteria accordingly based on the available property options.
I hope this provides you with some useful information to begin your Ocean City real estate search. Should you have any other questions or want to discuss this in greater detail feel free to contact me anytime at 443-614-9179. Additionally, I would be glad to set up some custom property searches for you, simply fill out this short <a href="https://www.oceancitycondosandhomes.com/buyers/ocean-city-real-estate-updates/" title="Ocean City Realtor">Property Information Form</a>.2017-02-04T09:28:00-07:002019-03-23T12:28:09-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1251The Rental ProcessOcean City has a strong rental market during the late spring, summer and early fall seasons that many property owners take advantage of. Some people buy Ocean City real estate purely as a rental investment. Others rent their properties out when they are not using them to offset some of their carrying costs. If you are interested in renting your real estate in Ocean City there are a few ways to go about it. You can hire a rental company to handle everything for you, you can do it all yourself or you can do a combination of the two. You will find these three alternatives outlined below.
Rental Companies
There are a number of rental companies in Ocean City that will handle everything in regards to renting your Ocean City real estate for you. They will handle all of the advertising, booking, check in/out, cleaning and maintenance on your behalf. You essentially give them the keys and they handle the rest. They will collect all of the monies and disburse them to you as they receive them. In the event there is a considerable maintenance issue they will contact you to see how you would like to handle it.
Depending on who you choose to work with the rental companies charge betwee 12% to 16% of the gross rental income for this service. You will also incur the costs of cleaning the unit in between each rental, which will vary depending on the size of the property. As an example, a typical 2 bedroom/2 bathroom unit costs approximately $70 to $80 to clean.
You often get what you pay for when choosing a rental company. The larger, more well established companies charge a higher fee, however they have the advertising reach and systems in place to ensure you get maximum occupancy and a solid return on your investment.
Rentals by Owner
With the proliferation of the Internet many folks have started renting their Ocean City real estate on their own through sites like HomeAway and VRBO. All of the rentals are booked online with payments and security deposits being made through Paypal. Access to the unit can be handled in a variety of ways, the best of which is ResortLock.com. For the cleanings the owners arrange a pre-set cleaning schedule with a local cleaning service for the check out days. There is a bit more work involved when renting the property on your own, however it can lead to substantial savings.
Hybrid Approach
Some rental companies will allow you to rent your property on your own, while they are also marketing the property and taking rental bookings. Once you secure a booking on your rental listing you can either block the rental period out and do everything yourself and save on the entire rental commission or you can forward the renter on to the rental company and they will handle everything at a reduced commission rate. Some of the rental companies will provide key and check in services to your tenants for the weeks that you rent out yourself for a reasonable fee.
This is a brief overview of the various ways you can go about renting your Ocean City real estate. Should you have any other questions or want to discuss this in greater detail feel free to contact me anytime at 443-614-9179.2017-02-02T14:15:00-07:002019-03-23T12:28:53-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1250Determining PriceIn order to successfully sell Ocean City real estate in today's market you must have a well thought out and researched pricing strategy. There is a lot of competition in the market and Buyers are more informed than ever. Properties that sell are the ones that are priced well relative to comparable sales, their respective condition and overall market conditions.
When I prepare market evaluations for prospective clients I factor in a multitude of factors. First I will evaluate all of the comparable property data that is available to determine a baseline valuation. I will then make adjustments to this valuation based on your properties condition, upgrades, views and any other unique factors. Finally I will factor in overall Ocean City real estate market conditions to determine an effective pricing strategy for your property. Below is an overview of this process.
Recently Sold Ocean City Real Estate
The first thing I look at are the comparable Ocean City properties that have recently sold. I will break this information down to a sold price per square foot based on property size, bedrooms, bathrooms, views and amenities. This price per square foot value will then be applied to your property to establish a baseline valuation. Adjustments will be made to this initial valuation to compensate for your property's condition, upgrades, unique features, etc. This is the most accurate way to value Ocean City real estate and will provide us with a solid pricing foundation as we move forward.
Pending Ocean City Property Sales
Next I will look at the comparable Ocean City properties that are currently under contract. We want to ensure the price range we derived above is in line with the these pending sales. There is a reason these properties sold and we want to leverage those advantages if possible. Additionally, these pending sales provide direct insight into what potential Buyers for your property are thinking.
Active Comparable Ocean City MD Real Estate Listings
Now that we have determined a price range based off of the recent comparable property data we will check it against the comparable properties currently on the Ocean City real estate market. We will want to ensure that the price range we have established is in line with these similar listings, assuming their pricing strategy is accurate. These are the properties we will be competing against and this step gives us an opportunity to make additional subtle adjustments if needed to compensate for any advantages or disadvantages.
Off Market Listings
Finally I will look at the Ocean City real estate listings that have either expired, been cancelled or pulled of the market for some other reason. There is a reason these properties didn't sell and we want to ensure we don't make the same mistakes. Properties not selling is usually the result of a poor pricing strategy, ineffective marketing or a property condition issue.
Setting the Listing Price
After all of this research has been completed I will provide you with an accurate price range and strategy. Where we list the property in this price range will ultimately be up to you and dictated by your motivation to sell, how many comparable properties are on the market and overall Ocean City real estate market conditions.
Monitoring the Price and Follow Up
Things are constantly changing in the Ocean City real estate market, especially in the market that we are currently in. I constantly monitor the market to ensure your listing stays properly positioned, otherwise the market could pass you by and days on market will start to accumulate. I will provide you with regular status reports updating you on the relevant recent comparable property activity. Additionally, you will be provided feedback from all of your property showings which provide valuable Buyer insight on price, condition, etc.
Property Valuation
I would be glad to prepare a market valuation report for you. Fill out the property information form below and I will get back to you promptly with a comprehensive valuation report for your Ocean City real estate. If you have any other questions or would like to discuss this in greater detail feel free to contact me directly anytime at 443-614-9179.
2017-01-27T09:23:00-07:002019-03-23T12:30:47-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1249Ocean City MortgagesA lot of things have changed in the real estate industry over the past few years and one of the biggest changes we have seen is the process for obtaining a mortgage to purchase real estate in Ocean City. Back in 2005 and 2006 if you could "fog up a mirror" you could get a mortgage. This contributed to the artificial run up in real estate prices and led to a considerable amount of the market instability we experienced.
As a result the banks are now making sure that every "i" is dotted and every "t" is crossed. Additionally, a lot of the programs that used to be available such as stated income loans for self employed individuals are now gone. The banks have plenty of money to lend and are eager to do so as that is how they make money, however now they are a bit more cautious and are ensuring that all Buyers are financially fit. This is ultimately a good thing as it will lead to market stability and ensure we don't return to the great recession of the late 2000's.
The key to navigating the mortgage process for buying real estate in Ocean City is finding a competent lender that is familiar with the process. They will be able to prepare you up front for what to expect and will ultimately make your life a lot easier. Buying a second home in a resort community will be a different process than the one you went through in purchasing your primary home. As a result I always suggest working with a local lender whom is familair with the process and its unique nuances.
One of the biggest changes that we have seen over the past few years is the condominium review process. Back in the good old days when you were getting a mortgage for real estate in Ocean City the lender was only concerned with approving the Buyer and quite frankly didn't care where or what you were purchasing.
During the boom years various condominium projects and homeowners associations throughout the country began having financial problems, which ultimately caused problems for the banks. As a result the banks/mortgage lenders now must approve the Buyer as well as the home owners or condo association that the property you are buying is a part of. This is a standard process for every applicant and one that I and all of the local lenders that I work with are familiar with.
A majority of the buildings and associations in Ocean City are well run and "warrantable" as the banks/mortgage lenders deem them. Some of the red flags that banks are leery of are condo projects with a hotel component, condominiums that have a lot of commercial space which the association is dependent upon, buildings with little to know reserves, condo buildings where one individual or group owns a significant portion and a variety of other situations. As an experienced Ocean City Realtor I am aware of which Ocean City condos present challenges and will make you aware of them up front. I deal with the condo review process everyday and once you identify a property for purchase I will oversee this process for you.2017-01-24T10:38:00-07:002019-03-23T12:31:31-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1248Closing Costs - Sellers
In the discussion of selling real estate in Ocean City with my clients I am often asked what closing costs will be involved and how much they are. Closing costs are going to vary from deal to deal, however there are some common similarities that I have outlined below. It is helpful to know what these costs are going to be in the beginning of the process so you can properly position and market your property accordingly.
Transfer Costs
Every time a property transfers in Maryland the state and local municipalities charge transfer taxes on the sale, which total 1.66% of the purchase price. As an example a $500,000 property sale would have $8,300 in transfer taxes associated with it. Per the Maryland Contract of Sale these transfer taxes are split equally between the Buyer and Seller, however they are a negotiable item.
Commissions
The Seller of real estate in Ocean City will typically be responsible for the commissions associated with the sale. Current commission rates range from 5% to 6% depending on the property and the Ocean City Realtor you choose to represent your listing. These commissions are not paid unless the property goes to settlement and are then collected from the proceeds of the sale.
Deed Release
The Seller is responsible for the costs associated with releasing the current deed so that the property can transfer. This cost will vary depending on the property and the title company doing the settlement, however it typically ranges from $125 to $150.
Prorations
You will be reimbursed for any items that you have paid in advance. This will be for items such as taxes, condo fees, waste water, etc. These items will be prorated down to the day of settlement and you will be reimbursed the unused portion. As an example, property taxes are paid in advance on July 1st of each year. Assuming you went to settlement on your Ocean City property on March 1st you would be reimbursed for 4 months of taxes.
Non-Resident Withholding Tax
The State of Maryland has instituted a withholding tax on sellers of Ocean City real estate that are not residents of Maryland. If an exemption is not filed for ahead of time title companies throughout the state are instructed to collect this withholding tax on the net proceeds number from your final settlement statement. In order to avoid this, once there is a ratified agreement in place for the sale of your property you can file for a non-resident withholding exemption. This is something that I handle for all of my out of state clients and would be glad to do the same for you.
These are the common similarities that I see across most Ocean City real estate transactions. Keep in mind that every deal is different and these terms can change based on the structure of the overall deal. I provide all of my clients with a preliminary settlement sheet at the time that I list their property so that they have an idea of what to expect. This puts them in a position to know what the real, bottom line numbers are before making any decisions regarding the sale of their property.
Should you have any other questions or want to discuss this in greater detail feel free to contact me anytime at 443-614-9179.
Contact Nicholas A. Bobenko2017-01-11T12:38:00-07:002019-03-23T12:32:20-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1247Rental Cost CoverageOne of the things I am asked about most frequently as a Realtor in Ocean City is the process of renting out real estate in Ocean City. Folks typically want to know how it works and and what type of income and carrying cost coverage they can expect. I recently wrote a post regarding the overall process of renting property in Ocean City. In this post I am going to provide an overview of rental income, associated costs and how much of your properties carrying costs you can expect to cover.
The question I am asked the most in regards to renting real estate in Ocean City is ... Will the rental income cover all of the carrying costs for the property?
The short answer is no. There are situations where this is possible, but they are few and far between and typically require a larger down payment. As a general rule I advise my clients to expect the rental income for their property to cover the mortgage principle and interest obligation. This is a conservative approach and in some instances (lower interest rates) you will generate additional income to help cover the taxes, condo fees. etc. Additionally, if you put down more than the typical 20% down payment you will have a smaller mortgage obligation and the rental income will help cover a larger portion of the other carrying costs..
To illustrate this I will breakdown a rental scenario for your typical two bedroom/two bath ocean block condo purchase:
Costs
Purchase Price: $230,000
Down Payment: $46,000
Mortgage Payment: $10,224 (Yearly principal and interest for a 30 year fixed mortgage @ 4%)
Income
Gross Rental Income: $14,000
Rental Commissions: $2,240
Cleaning Fees: $750 (10 weeks at $75 per clean)
Net Rental Income: $11,010
<br />As another example I will break down a three bedroom/two bath oceanfront condo:
Costs
Purchase Price: $525,000
Down Payment: $105,000
Mortgage Payment: $24,060 (Yearly principal and interest for a 30 year fixed mortgage @ 4%)
Income
Gross Rental Income: $30,000
Rental Commission: $4,800
Cleaning Fees: $1,020 (12 weeks at $85 per clean)
Net Rental Income: $24,180
*In addition to the mortgage obligation in both scenarios you will also have the condo fees and taxes to account for, which you will see noted on each listing report.
As you will see in both examples the net rental income covers the mortgage obligation. This is a conservative approach and only accounts for the prime weeks of the season. There are plenty of other rental opportunities in the shoulder months to generate additional income. Another way to generate more income is to rent the property on your own through websites like VRBO and Home Away.
I run similar rental breakdowns for my clients everyday and would be glad to do the same for you. Simply give me a call and let me know what type of property you are looking for and I will run the various scenarios for you. This can be helpful in determining a comfortable price range and what carrying costs you can expect.2017-01-11T07:33:00-07:002019-10-17T07:12:40-07:00Nicholas Bobenkotag:oceancitycondosandhomes.com,2012-09-20:1246Property InsuranceAs a Realtor in Ocean City I am often asked about property insurance and thought it would be helpful to put together an article outlining the basics. Insurance requirements will vary and the cost, type and amount of coverage you will need will ultimately be dictated by the location and type of property you purchase.
If you are buying an Ocean City property that is part of a condominium association your primary insurance coverage will be included in the condo fee that you see noted on each listing. The condo association has a master insurance policy in place to cover fire, flood, hazard and general liability insurance. The only insurance that your typically required to have in this situation is contents insurance, also known as an HO6 Policy. The HO6 policy covers the interior of the unit, your personal belongings, furniture and any improvements that you make to the property.
To illustrate how this would work, lets use a worse case scenario that a hurricane comes through and levels the building that you are an owner in (not likely!). The master insurance policy covered in the condo fee would rebuild the building to its original form and your content insurance would cover the replacement of the interior of the unit, your furniture, personal items and any improvements that you made to the property.
Contents insurance is relatively inexpensive. As a very general rule you can estimate $15-$20 per month for each bedroom that the unit has. If the unit has a lot of upgrades or more square footage than the average unit it will be on the higher end. Conversely, content insurance for bay side non-waterfront property is going to be less expensive than insurance for direct oceanfront property. Content insurance is typically obtained from the company that has the master insurance policy in place for the building. It is the least expensive option and in the event there is a problem you will only be dealing with one insurance company as opposed to several.
If you are buying a single family home or a townhome/condo that is not part of a home owners association you will be responsible for obtaining your own insurance. I typically recommend contacting your primary insurance provider first to see if they provide coverage in Ocean City. They will likely be able to give you the best rate based off of a multiple policy discount. Don't be alarmed if they won't provide the coverage as a lot of insurance companies will not insure properties in coastal communities. If that is the case you will need to reach out to a local Ocean City insurance company that specializes in coastal property insurance.
The amount of coverage you will need will largely be dictated by your lender if you will be financing your Ocean City real estate purchase. Needless to say we are surrounded by water so flood insurance will be required in a majority of instances, sometimes in places that you wouldn't expect. I would be glad to check into any property for you to see if flood insurance is required and what the current owners are paying. Even if you are paying cash for your purchase you will want to have adequate insurance in place to protect your investment and ensure that it can be rebuilt in the event there is a problem.
If you intend to rent out your Ocean City real estate you will need a separate policy in place as your standard home owners insurance will not cover incidents with renters. This is known as "rental to others coverage" and relatively inexpensive when purchased as a rider policy with your other coverages. If you intend to rent out several pieces of real estate in Ocean City or have additional liability concerns you may want to look into an umbrella liability coverage policy. This coverage will protect you against additional legal claims in the event that the limits are met on your primary liability coverage. In addition, these policies can provide some flexibility in how you set up multiple properties from an accounting, tax and legal standpoint. As with "rental to others" coverage, these policies are relatively inexpensive and often overlooked when dealing with multiple properties.
I hope that this provided you with a good starting point for property insurance information as it pertains to real estate in Ocean City. Feel free to contact me directly anytime at 443-614-9179 or by email if you would like any additional information regarding real estate in Ocean City.2017-01-02T17:13:00-07:002019-03-23T12:34:45-07:00Nicholas Bobenko