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What's Up Magazine

Real Estate Perspectives and Confidential 2017

Aug 25, 2017 09:00PM ● By James Houck

Industry experts share their opinions, advice, and even pet-peeves regarding the housing market, construction, amenities, and, even the tiny house movement

By James Houck

Your inbox is inundated with emails soliciting your home’s refi; offers abound on social media channels for the most innovative home products; and commercials endlessly extol the current real estate market. And perhaps you wonder…is everything as rosy as it seems? What are the insiders really thinking? Is the real estate market healthy?

Well we’ve done that homework for you and offer What’s Up? Media’s annual roundup of real estate and home industry expert answers to our many questions, including the trends they are experiencing first-hand. And while on the topic of trends and front-line experiences, new this year, we included a special section of confidential questions, to get everyone’s take on a few sticky wickets; like, “What is the most difficult client to work with?” and “What do you think of the tiny house trend, as seen on just about every home television network?”

In fact, let’s lead with those confidential questions. Why save the best part for last?

Confidential Q&A…

What home design trend (indoors or out) are you sick of seeing?

“When it comes to selling a home get rid of the family photos. Your kids are adorable but buyers aren’t there to see them.”

“White cabinets, ‘broker’ beige walls, vinyl fencing—wood will always look better to me if it’s maintained of course.”

“Two story great rooms. Popular with the McMansion trend, you will always lose square footage and possible 4th or 5th bedroom for a room that is very expensive to heat and cool and difficult to maintain (changing lightbulbs and dusting) not to mention loud!”

“Stars on houses.”

“None. I’m always curious about home improvements.”

“Subway tile. It’s everywhere and there are many more options for a creative backsplash.”

“Microwaves above the oven! It generally doesn’t serve as proper ventilation for the range or stovetop, and just isn’t all that pretty to look at.”

 “All white kitchens. Shiplap. Overdone wall murals.”

  “If people buy a home and there is clearly a door to what should be a deck, there should be a rule which requires a deck.”

How often do you get asked about “tiny houses” and what are your thoughts on this trend?

“We don’t often get asked specifically about ‘tiny houses’ but I currently have a home in the City of Annapolis listed that is only 668 square feet. We have had dozens of showings in the first couple weeks and expect a quick sale!”

“I get requests for ‘right sizing,’ but not specifically for tiny homes.”

“Actually, they are not allowed in Anne Arundel County.”

“As much as I find this trend fascinating, I feel that it is something that will never take-off in our immediate region. We deal with so many customers that are government employees or military that I feel that the appropriate fit is not there. I feel that it is geared to a Northwest, Midwest, and possibly upper East customer who is more settled. I have not encountered anyone with interest in the product.”

“I have not had anyone ask about tiny houses yet but I know they will not meet the guidelines for traditional home financing in most cases. I think the trend is cool and would love to have one by a river or the ocean.”

“Not often. I don’t think the trend is relevant in our market but I love the shows about them.”

“Never. I’m sure it’s on the horizon, however.”

“I’m never asked but I think it’s cool. My wife would kill me if I even discussed it.”

“Definitely a bold move for those who choose to do it, especially in a world where most just like to consume and own it all. We are seeing interest in downsizing but maintaining luxury.”

“Try to live in your garage for a day and then reconsider.”

How has the Internet both helped and hindered your business?

“The biggest help is how it enables us to reach potential home buyers outside our historical marketing perimeter. We can market to a larger pool of buyers and help them become more aware of our wonderful area, especially among international clientele.”

“Transparency and online reviews have helped distinguish us from our competition. To date, it hasn’t hindered our success.”

“The Internet is the most powerful sales tool we have if you know how to use it right. It can also be the number one time killer in the office. If we leverage the Internet, relationships with large sites like Zillow and Facebook, document processing sites like Dotloop, big data mining apps like CBx, and cloud sites to store and share our hi-quality photos and videos, we should be doing our work quickly and more efficiently and reaching the largest audience. But trying to be everywhere at one time online, as well as the daily distraction of social media can really bog you down.”

“Helped: It’s given us a wider range of people to service. It has made ordering and receiving items for customers easier and quicker. Navigation has allowed for quicker and more direct routes for our delivery fleet. While also keeping our drivers up to date with traffic incidents allowing for them to take alternate routes when able to. Just as in any business the overall speed of which things are done has been greatly improved. Hindered: The speed at which things are done has increased the expectations of the customers we have. In general, with everyone’s shorter attention spans, this has spilled into the home building industry. A lot of consumers want what they ordered yesterday. Also, due to the vast range of the Internet, we have a lot of customers that will show us a picture of something they found in Texas and want us to produce it. Sometimes certain products are only available in different regions therefore not something we can get.”

“The Internet has revolutionized real estate marketing. The downside is that for some buyers and sellers a little too much information can be dangerous. Zestimates and assessed values are usually not an accurate reflection of fair market value.”  

“The Internet has helped us tremendously with the ability to quickly and securely share information, underwriting and processing loans, and communication with clients. The only hindrance would be when the Internet goes down, we are completely reliant on it to do business. And, now there is so much info out there on the Net, and a lot of it is not true, that it confuses our clients. There are many mortgage companies that stretch the truth in their offerings online and we have to do a lot of re-education with buyers as to what is true and what is not.”

“Ah, the Internet…it is definitely a double-edged sword. Being that we are a small, family-owned business, we tend to be a little late to the game on a lot of the trends and technologies that are taking over. There is also an overload of businesses that all try to sell you on the same thing for social media, your website, virtual tours, video marketing, and so on and so forth. For those of us that are more ‘mom and pop’ shops, it’s exhausting trying to keep up! On the flip side, we are a very visual industry, and now that we have gotten the grasp of social media, it’s been beneficial to be able to showcase some of our work before, in progress, and the beautiful results! There are also several great venues online that are directed towards home industry professionals, and homeowners who may be embarking on a home reno project.”

What characteristics make-up the most difficult type of client to work with?

“These days, with some of the programs on DIY and HGTV, there are a lot of unrealistic expectations from anyone new to a home renovation project. That can be difficult to navigate. The best clients to work with have a ‘Team Mentality’ and understand that all involved want the same results—a project that fits their home and lifestyle, is carefully planned and executed, and is something everyone can be proud of.”

“Bad credit, undocumented income, and those that think they know the rules better than we do.”

“People who provide things at the last minute but want immediate answers. The process should be a smooth ride when collaborating with an advisor and observing timelines are paramount.”

 “Customer ‘know-it-alls’ who do not know much at all.”

“People that have an entitled sense to be the ‘winner’ in every transaction are the worst to have as clients. A lot of agents have that same attitude and most of them end up serving themselves instead of their clients.”

“Honesty goes a long way!”

“Indecisive buyers with unrealistic expectations. Sellers who let emotions get in the way of current market reality.” 

“Just like in any field, people who think they know more than we do about how to design or build the project they are coming to us to help them with. I’m not going to walk into a surgeon’s operating room and tell him how to cut someone open. So, I would expect the same if the surgeon was going to walk into our store and try and build a deck.” 

“An unrealistic customer is the hardest to deal with. They can be difficult or delightful in demeanor, it makes for a tough road when they are unrealistic about the cost of any project to be completed at their home.”

“Customers that have been burned by other contractors before because they now find it difficult to trust us now with their new project.”

How do you manage a client’s expectations versus reality; either good or bad situationally (for example, if they really love a property or trend, how do you settle them back down and vice-versa)?

“Every client is different, so you will need to know what their motivations are and where they want to end up. Educating them early and often can help minimize disappointments if they come along.”

“We identify what the customer wants to accomplish, design a system to meet those needs and then try to head off potential issues by being upfront about what our systems are capable of doing. We also provide a customer education sheet that each customer reads and signs.”

“We always set the right expectations up front, for good or for bad. We know the playing field for getting a mortgage in today’s heavy regulated financial world. Every client is different so we spend a considerable amount of time with our clients upfront to make sure that we understand their wants and more importantly, that we can help them achieve them.”

“It really comes down to the client’s ‘must-haves,’ which they may not even know going into a project. We go through [a project] step-by-step with the homeowner and discuss the advantages or disadvantages of different ideas. This can really help us work with the client to hone in on what they value in the space. Budget obviously plays a huge role, so it is important to discuss right up front.”

“The key to a successful client relationship is communication. Through communication you can show your appreciation for being considered for the job, making them excited, and complimentary about their property and their ideas but you must be honest and most importantly educate them on probability of things being in style, plants lasting, overall five year look, ten year look, and, of course, cost. If these components are discussed up front in a realistic way and a picture is painted of the project, then further steps will be smoother and overall client relationship will be long lasting.”

“A very simple rule; good news, bad news, or no news, always give them the news. Surprises are for birthdays.”

Regarding the Real Estate Market…

There’s a general perception that the housing market is healthy…what is your observation and opinion?

“The housing market is amazing. It will remain healthy as long as interest rates and inventory remain low.”—Creig Northrop, The Creig Northrop Team of Long & Foster Real Estate, Inc.

“There’s a high demand for homes, especially by people looking to move up. Couple that with low interest rates and, yes, I think the housing market is pretty healthy.”—Janice Hariadi, Berkshire Hathaway Home Services/PenFed Realty

“So far in 2017, the market seems very healthy at all price points. Supply is low in general and as a result accurately priced properties are selling quickly, often with multiple offers. The luxury market is also strong, however, there has been a recent increase in inventory above $3M and there are fewer buyers in our market in this price range.”—Travis Gray, Associate Broker, Coldwell Banker

“Nobody has a crystal ball, but I believe we will start to see the normal 2 to 3 percent increase per year that a homeowner has historically obtained in the very near future.”—Scott Schuetter, Century 21 New Millennium 

“Local housing demand is very strong, specifically in Anne Arundel County, where we primarily concentrate our services. More homes sold year-to-date in Anne Arundel than in 2016, and 2016 was the best year since 2005. We are seeing instances of multiple offers, but we are also seeing educated buyers steering away from homes they deem overpriced or not in sale-ready condition.”—Mike Murray, Realtor, The Murray Home Team, Coldwell Banker 

What are the most unusual home amenities that you’ve encountered and what are clients specifically asking for the most today?

“Most clients are seeking updated kitchens and baths and open floor plans, storage areas, garages, space between their new home and the neighbor’s, and, most often, a good community feel. We see unusual things all the time in our day-to-day listings and showings, but they typically aren’t home amenities, although we have seen a large uptick in rooms and bathrooms dedicated to pets. Usually the homeowner’s unique artwork or design items are what jump out, which is why we strongly insist to bring our professional stager into the process before we take photos.”—Mike Murray

“My favorite feature in one of my waterfront listings is a secret bookshelf door that leads to a home gym and spa overlooking the Severn.”—Travis Gray

“Most clients want an open floor plan with very little on their to-do list. They would rather pay a little bit more for the purchase rather than do a project later. Location will always remain the client’s top priority, rightfully so.”—Scott Schuetter

“These requests aren’t necessarily unusual, but more clients are requesting turnkey homes, low or no maintenance exteriors, and energy efficiency.”—Creig Northrop

Other than curb appeal outside and a fresh coat of paint inside, what are the best amenities and options that will help sell a home?

“Kitchens and bathrooms still sell homes, but outdoor living spaces seem to be more and more desirable. Location, location, location is more important than ever to buyers in our market.”—Travis Gray

“Though amenities are desirable I find the things that best help to sell a home are decluttering and professional staging to present the home at its best. This is especially important today when most buyers search online and the photos and virtual walk-through create the first impression.” —Creig Northrop

“If it’s not waterfront, I think most people agree that you have to start with the kitchen; it better be updated and have a clean open bright feel to it. From there, you move down in ranking to master bathroom, large closets, privacy, garages, and so on.”—Mike Murray

“The homes that are best taken care of while they are owned are truly the ones that show the best when it comes time to sell. You can’t create love and attention just for a sale.”—Scott Schuetter

What community amenities are most sought after?

“Buyers in this area are, of course, drawn to water access communities; neighborhoods that have boat ramps, community marinas, neighborhood swimming pools, and common playground areas. If you are going to commute to work in D.C. or Baltimore, but want to live around Annapolis, why not take advantage of all our water privileges?”—Mike Murray

“For most of my clients water access.”—Travis Gray

“Waterfront and water access is always very desirable. Additionally, a community swimming pool, tennis courts, and close proximity to shopping and dining is also sought after.”—Creig Northrop

Have you experienced an uptick in clients interested in adding “safe rooms” or “bunkers” in/on their potential properties?

“Not necessarily, but I recently toured a home with a large safe room accessed through a secret panel in the master closet.”—Travis Gray

“Not at all.”—Mike Murray

“I have had listings with a safe room / bunker but it is not something that buyers generally ask for; it’s definitely a niche amenity that works for certain buyers.”—Creig Northrop

Regarding Home Construction…

Within your line of business, what are the top trends you’re seeing and producing (products, style, etc.)?

“Most products are going to vinyl. Anything the industry can make that will not rot or decay, the industry is making. Exterior trim, decking, windows, door jambs, fence panels, and basically anything that is outside, most consumers are using vinyl. Another trend is Shiplap siding being used indoors. Either painted or stained; it really creates a cool look. You can always expect something on one of the HGTV shows will start a trend. One of the biggest needs or requests we receive I would say is people just looking for help with getting a project built. Whatever addition or remodel the homeowner is trying to make most of them ask for our guidance in finding a quality contractor who knows what they are doing and will treat them professionally. If they already have a contractor, we frequently are updating homeowners with what is going on in the industry now. A lot of homeowners haven’t done any renovations in years so we are constantly showing them how new products offer new warranties, longer lifetimes, and innovative new ways of doing things. Kitchens have come a long way in the last 10 years and, as I mentioned above, so have doors, windows, and decking.”—Jeff Johnson, The J.F. Johnson Lumber Company

“One of the biggest trends we are seeing is the use of metal, such as steel, aluminum, and copper, as a roofing material. It is being used both as accents on a home, such as a bay window or porch, and as the complete roof package. Metal’s longevity, durability, and aesthetics are making it a popular choice among homeowners. Another trend is with James Hardie fiber cement siding. It is rot, insect, and fire resistant, comes prefinished and in specialty colors. The combination of styles and colors are endless. Not only is it popular because of its durability, but also its attractiveness. Studies have shown that fiber cement siding has one of the highest returns on investment for home improvements. A third trend we are seeing is the use of fiberglass windows. They are extremely strong, last a very long time, are paintable, come in many styles and sizes—what’s not to love?”—Christine Fichtner, Fichtner Services Central, Inc.

The general perception is that 20 years is the lifespan for many major home elements (such as roofing)…are today’s technological advancements in materials and methods lengthening product lifespans?

“The lifetimes of various products have grown quite a bit with our newer technologies. PVC decking is warranted for 30 years now, but could and should last a lifetime. Windows depending on their species can be warranted for five years, 10 years, or lifetime. Fiberglass doors can also last a lifetime and are resistant to rot and denting. Many of the higher quality items (like the ones mentioned above) that go into building or improving a house are going to outlast the lifetime of the homeowner.” —Jeff Johnson

“The lifespan of a roof has increased significantly over the last several years. The manufacturing process of asphalt shingle roofing has improved so that the shingles will last 30 years or more. Manufacturers, such as GAF, are offering ‘lifetime’ warranties on both material and labor if installed by their certified installers. Standing seam metal roofs will last 75 years or more.”—Christine Fichtner

Regarding Home Finance/Tax…

Are there any new laws/regulations in place this year that home buyers should be aware of when entering loan negotiations?

“We received a lifetime’s worth of regulations after the financial crisis and these rules are still coming as a shock to many borrowers that have not applied for a mortgage in the past 10 years. The biggest surprise is usually the new Debt to Income Ratio (DTI) as determined by the CFPB. This new rule of being a ‘Qualified Mortgage’ removes common sense from the mortgage approval process and forces the main approval decision to be made based on Federal Tax Return reported income. It does not allow for assets and other compensating factors to be considered if the DTI is not within the determined maximum. It’s either in or out.”—Wesley S. Tower, Vice President, Atlantic Prime Mortgage

Similarly, how will a home purchase or sale affect my taxes when I file?

“The sale of your primary residence usually doesn’t affect your taxes. If you have a loss on the sale, you can’t deduct it from your income. If you make a profit, you can often exclude it. Interest paid on a primary home mortgage is typically tax deductible. So are points that are paid to lower the interest rate when obtaining the mortgage. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. Investment properties and second homes have different tax rules that should absolutely be referred to a CPA or tax expert.”—Wesley S. Tower

“There are potential tax benefits when purchasing a home such as mortgage interest deductions or writing off property taxes, but all final consultations should occur with your accountant. When it comes to selling a home, your tax liability depends upon the amount of time you have owned the property and other factors regarding the type of property that you are selling.”—Nicole Donegan, Severn Bank

What do I do if I disagree with the county’s tax assessment of my property?

“Residents who disagree with the assessed value of their home have until February 9th of the given year to appeal the assessment. Anne Arundel County home owners can check their property tax assessed value on the County’s web site. Further actions should be directed to the Supervisor of Assessments for Anne Arundel County, 3rd floor, 45 Calvert Street, Annapolis or by calling 410- 974-5709.”—Wesley S. Tower

“There are appeals processes available if homeowners contact their respective city or county officials, but documentation and other review may be required to honor the appeal.”—Nicole Donegan

I’m interested in purchasing a second home in Florida and wintering down there; how will that affect my taxes?

“If your second home is considered a ‘residence’ by the IRS, then the mortgage interest can be deducted and counted toward the $1,000,000.00 limit. In order for the home to be considered a residence by the IRS you must occupy the property for at least 14 days per year. Other considerations come into play if the property will be rented.”—Wesley S. Tower

Regarding Kitchen/Bath/Plumbing…

The general perception is that 20 years is the lifespan for many major home appliances and products…are today’s technological advancements in materials and methods lengthening product lifespans?

“Not necessarily, with new electronics and so many features there are even more opportunities for failures at some point. We have seen good old refrigerators and ranges last well beyond 20 years and newer models fail much sooner than expected. Generally, you can expect higher quality and longer life from high-end appliances, though that is not always the case. Sometimes the simpler cheaper units will last longer because there is less to go wrong.”—Mark White, Owner, Kitchen Encounters

“We find that the average lifespan of a conventional water softener used with the problematic water in Anne Arundel County is closer to 7 to 10 years. Hague International manufactures a patented 4-stage filtration system that allows us to protect the water softener from organic iron, thereby extending the life of the unit significantly.”—Brian Edwards, President, Hague Quality Water of Maryland 

What general trends are you seeing in your industry and what are homeowners’ biggest needs/requests when they come to you?

“Homeowners want equipment that works, and great service to back that equipment.”—Brian Edwards

“With the rise of all things technical, and most being in the palm of your hand, some appliances have come out with features that link directly to your phone. You can start your meal while sitting in traffic on the way home from work, or picking up the kids. Technology that we have seen in the kitchen more and more are having docking stations/drawers to plug in all your devices while in the kitchen. TVs are being installed in kitchens more as well.”—Jessica White, Kitchen Encounters

Regarding Landscaping…

What’s are some of the top landscape problems/issues that clients come to you for seeking help?

“Screening; people seem to be coming to us for this more and more. Whether it be screening from other homes, decks, pools, or busy roadsides, it seems to be a growing number of client leads looking for a more natural, softer, greener approach then just fencing which allows us to use a combination of evergreen and flowering trees and shrubs, thus not making an area so sterile looking.”—Janey Martinez, Landscape Designer, Homestead Gardens Landscape Division

Regarding Painting…

My HOA is a pain in the rear: what’s the law with regards to painting my house whatever color I want?

“The HOA bylaws regarding making alterations to the exterior of your home very vastly depending on the neighborhood. It is best to consult with the HOA president or board prior to starting an exterior work. Most HOAs that have restrictions relating to paint colors will provide a list of approved colors and materials.”—Brad Kappel, Vice President, Annapolis Painting Services

What are you seeing in the industry as game-changing?

“As of Jan 1st, 2017, the EPA invoked new laws in Maryland relating to VOC restrictions. Many of the types of paints that were commonly used are no longer available. There are new products that are VOC compliant; home and business owners should consult with a reputable painting company to determine which products would be the best for their specific needs.”—Brad Kappel

Regarding Pool & Spa Design/Service

I heard about saltwater pools; what’s the main attraction to them? Pros, cons?

“Main attractions: convenience and water quality. Salt systems allow you to generate and control your own chlorine production and reduce the need for most packaged chemicals. We’ve been installing them on our pools since the early 1990s with great long-term success. Only con would be the upfront investment.”—Danny Morris, AQUA Pools & Spas

What are some of the basic physical characteristics a property should have in order to do a pool install (square footage, perc compliance, etc.)? Are there any restrictions/limitations to building a pool?

“Every property will have unique requirements based on its location. Once all restrictions such as property setbacks, impervious surface requirements, flood zones, buffer management plans, et cetera are determined and satisfied the only limitations are available square footage and budget.”—Danny Morris

Check out our What's Up? Leading Real Estate Professionals of 2017 >>