Renting a property that is being sold. What happens next?

Tu Casa

By Nathalia N. Cruz-Edmonds

The market to buy a home is “sizzling” hot but for some reason you cannot do it at this time therefore you are renting.  You have lived inside your home for about a year and a couple of months and you love it.  Out of the blue, the owner asks to enter the property to do an inspection the next day.  The owner and other people enter your home, they tour the home and they leave.  A couple of weeks later you get the notification that someone new owns your home.  Now what?

In the state of Maryland, each county deals with a resale of an investment property differently.  But if you are living in Baltimore City, the owner of the home has to provide you with a “Baltimore City Exemption of Tenant’s Right of First Refusal”.  This form must be sent to you via certified mail within forty-eight (48) of the home going on the market.  Why do REALTORS have to do this?  Because in the government believes the Renter must be given a fair chance at buying where they currently live.  It gives a fair advantage to everyone, specially those who are currently living inside the property.  This form also provides the name, address and phone number of the Baltimore City Department of Housing and Community Development which can help you by providing you with information on how to buy that or other homes.

If you haven't’ received this form and you know the property you live at has been sold, please contact the Maryland Real Estate Commission.  They are located at 500 North Calvert Street 3rd Floor in Baltimore.  You can also call them at (410) 230-6230.  You may also visit their website at http://www.dllr.state.md.us/license/mrec/.

What happens if the Listing Agent did send the form and you decided to not buy the property?  There are many scenarios.  The Good Scenario is when the new owner decides to keep you as a tenant with the same terms.  Meaning, same rental price and same lease dates.  Perfect!  Have a new lease signed with the new owner and get the address of where you can make your rental payments.  Read your lease agreement well and ask questions if you do not understand.  If you paid a Security Deposit, you DO NOT need to pay a new one.  The Security Deposit must have been given to the new owner as part of the sale.

The Bad Scenario is when the new owners decide to let you complete the lease but provide you with a sixty (60) day notice to vacate sixty (60) days before your lease expires.  There is no law that protects you against this.  This is every landlord’s/owner’s right to do when the lease is about to end.  The Ugly Scenario is when the Landlord/Owner decides to file a “Wrongful Entry & Detainer”.  Unlike the “Tenant Holding Over” which is done after a tenant stays inside the property after the scheduled move out date, the Wrongful Entry & Detainer the new owner does NOT want any residents inside the property.  The Wrongful Entry & Detainer as well as the Tenant Holding Over work just like an eviction for failure to pay rent.

The Landlord or Owner must go to the District Court and fill out the proper documentation and pay a fee.  The Clerk’s Office then accepts the request, which is a lawsuit, and schedules a date.  A copy is sent to the house in question stating which date the case is.  The court might send the court date in the mail or the Sheriff might tape it to the door.  Once the court date arrives, if you do not show up because (1) you forgot or (2) you never got the notice, that will be in your disadvantage.  Some procedures provide you with a four day appeal but a judge still has to approve it.  Once the judge approves the judgement to have the request from the Landlord or Owner to remove you from their property the case will be transfer to the Sheriff’s office.  To get a date as to when the Sheriff will knock on your door and ask you to leave the premise can take up to an additional four (4) to six (6) weeks.  When the Sheriff knocks on your door, he will ask you to take your most valuable possessions and immediately leave the premises.  The new Landlord or Owner will then change the locks to the house.  If you  have furniture and clothes inside, in Baltimore City you will lose everything once the Sheriff ask you to leave the home.  In other counties the Landlord or Owner will bring people to remove your items for you and place them in the curb.  After twenty-four (24) hours have passed the Landlord or Owner can place any items in the curb inside the trash can.  Please seek legal advice if any of these two forms have been given to you.

Nathalia N. Cruz-Edmonds is a REALTOR with Berkshire Hathaway HomeService PenFed Realty.  To schedule a meeting call at (410) 350-5848, or at her office (410) 464-5500 or via email at nathalia.edmonds@penfedrealty.com.  To learn about available properties or read her blog please visit http://nathaliaedmonds.penfedrealty.com.  She is also the owner of Clearview Real Estate Management LLC a third party real estate management company in Maryland for more information visit http://clearviewREM.com.

Why should you hire a REALTOR?

With shows like BravoTV’s Million Dollar Listings New York, Los Angeles and Miami the perspective of a Real Estate Agent or REALTOR is pretty impressive.  Big houses, expensive clothes, fast cars and tons of money on commissions.  Last month, in the Baltimore Metro area the average sold price for a three bedroom townhome was $172,676.00 and for a 3 bedroom single family home was $244,773.00.  Out of 539 transaction of 3 bedroom single family homes sold, 24 were above $500,000.00!  That is only 4%!  

What does that mean?  REALTORS earn about the same as you do!  The difference is that our profession is about providing a home to our clients, or a business location for your growing business.  Like with anything, it’s about the effort you put into your work that will make the difference in your paycheck.  Like when buying an expensive item, such as the newest television or a car, you will do your research but ultimately you will ask the expert.  The expert that has been to the factory where the car or television that is being made.  For a REALTOR is the same BUT BETTER!  Why is it better?  Because the sale of real estate is regulated by the state and federal government for YOUR protection.

In the state of Maryland a REALTOR or Agent, must be licensed and affiliated with a licensed Broker.  Meaning the Agent cannot work on their own.  An Agent has to be affiliated with a company like Long and Foster, Coldwell Banker, ReMax or Berkshire Hathaway HomeService.  There are other real estate brokerage that are smaller that can and will provide the same services as the big national franchises.  The most important aspect when learning this information is that when you hire an Agent you are the Broker’s client, the Agent is a representative of the Broker to help you during your transaction.

For example, if you choose to hire me as your Agent when either buying or selling your home, I will represent you but you are a client of Berkshire Hathaway HomeServices PenFed Realty.  My Broker’s responsibility is to make sure I follow the law and represent you as best as we can.  Both the Agent and the Broker has to take classes in order to renew their license every two years and the Maryland Real Estate Commission oversee the rules and regulations of all real estate transactions in the state of Maryland.  This has been created in order to protect the public of anything and everything that can cause the client to lose money and to make the real estate profession an honest one.

Are the services of the REALTOR free?  If not, who pays for them?  A REALTOR is paid, a great number of times, by the seller.  Sometimes, the buyer pays the REALTOR.  Please understand that there is no law regulating how much you need to pay your REALTOR but you should NEVER EVER pay your REALTOR in advance.  A honest law abiding REALTOR will get paid when the transaction closes.  Meaning, when you get or give keys to the home at settlement.  Some brokerage firms ask for a “broker’s fee” which is typically between $250 up to $500 per transaction which covers the cost of doing business.  Again, this fee is also paid at settlement.  It doesnot matter if you want to see 100 houses and decide you will move out of state, you will NOT PAY ANYTHING UNTIL THE DATE OF SETTLEMENT!

You might ask yourself that if you can see houses for sale in the newspaper or in the Internet, why do you still need the assistance of a REALTOR?  Did you know the average contract is about 30 pages long?  Did you know that you may not be able to do a home inspection if you forgot to tell the seller you wanted to do one?  If you are buying a home, did you know you can ask the seller for closing cost help?  If you are either selling or buying a home do you believe your house is priced correctly?  Are you paying too much for a house?  Could you get a little bit more money if you sell your home now?

All these questions and more are answered by a licensed REALTOR.  We have access to accurate available listings in the state of Maryland.  The REALTOR we will write an offer for the house you want, as well guide you in explaining the contract.  We will make sure we protect you in making sure you have the right to inspections and inform you of any defects inside your future home.  Coordinate the home inspections as well as negotiate any repairs.  We will also assist you to get the house for the best pricing as dictated by the market.

Think about it this way, you own a pizza shop and a friend calls you and asks you to use your oven to cook their frozen pizza.  You are capable to buy or sell your home on your own but wouldn’t you rather hire an expert?

Nathalia N. Cruz-Edmonds is a REALTOR with Berkshire Hathaway HomeServices PenFed Realty.  To schedule a meeting call direct (410) 350-5848, at her office (410) 464-5500 or via email at nathaliaedmonds@gmail.com.  She is also the owner of Clearview Real Estate Management LLC a third party real estate management company in Maryland.

What are four types of different ownership and types of transactions in Real Estate?

Did you know that when buying a home there are four types of different ownership and types of transactions?  They are (1) Standard (2) Short Sale (3) REO/Foreclosure and (4) Auction.

When the ownership is “Standard” it means two things, (1) the person(s) on the title of the property own the property out-right meaning they paid their mortgage in full or have no mortgage; (2) the person(s) on the title are in good standing with their mortgage provider by paying their mortgage on time and the value of the property exceeds the loan amount.  

When dealing directly with the owner when buying a home it tends to be the easiest of all four transactions but like anything involving money, it can be stressful because you are dealing with the emotions of the seller.  The seller might be selling because they are moving to another state, or to live closer to family, might be downsizing or even because their current home is too small and need a bigger one.  They have an attachment because of either good or bad memories.  But it can also be financially beneficial to the buyer, because the seller can be in a position to assist the buyer with the cost of repairs and/or covering some or all closing cost.  These transaction can close between 45 to 60 days depending on what source of fund the buyer uses to buy the home.

A home that is labeled as a Potential Short Sale, the buyer will be dealing not only with the owner but with a Third Party, which is the bank who gave the first mortgage or even the two banks who gave the two mortgages.  There are times that a buyer can deal with THREE banks!  A short sale means the value of the property is lower than the amount of the existing loan.  A mortgage is when a bank lends you money to buy a home with the condition that the home you will be buying will be collateral or guarantee of repayment if you default from paying the loan.  The property is under your name BUT the bank owns the home until the loan is paid in full.  Catch-22 is that in order for the bank to re-sell the house to earn back what they lost, the property must have the same or better value of what the loan was originated for.  So, if your mortgage was for $100,000.00 but the value of the home is $75,000.00, if the bank approves the sale of the house, the house is a short sale, not a “standard” transaction because the bank did not recouped the value of the original loan.  

Short Sales usually happen predominantly because the homeowner can no longer afford the home or they have to relocate but they cannot sell the house at the price of the loan amount because the value of the property is lower.  A Short Sale is for someone that has time to move because it can take up to 60 days to close on the sale.

An REO means Real Estate Owned or also called Foreclosure.  These homes are owned by the bank that gave the mortgage but the owner stopped paying the mortgage and the bank assumed ownership.  Remember, when you get a mortgage on the house, the “real” owner is the bank, not you.  When the owner stopped paying the mortgage, the bank took back the house and the owners moved out.  

The REO/Foreclosed homes are interesting, because you have no idea what is inside unless you look.  These type of homes are sold “As-Is”,  meaning the owner, the bank, will not make any repairs.  For a first time home owner this is very difficult specially if they were approved to get a FHA loan.  In May’s edition we will explain the different types of loans available to buyers.  For this homes the owner must have a good amount of money saved in case there are hidden damages the buyer needs to fixed like a roof leak or structural issues.  A REO/Foreclosed transaction will settle in 30 days up to 45 days.

You can also buy your home through an Auction.  This houses are often sold site-unseen.  The owner will not make any repairs and the highest bidder is the one that gets the home.  These houses come available because the owner didn’t pay the county or city taxes, outstanding water bills and liens against the property.  

Buyers need to be very understanding of these types of ownership and transactions because just because a house is cheap doesn’t mean that you are getting a deal because of the extensive amount of repairs you will need to make in the end.  If you are not an investor with capital for the renovations, a first time homeowner should stay away from REO, Auctions and sometimes Short Sales.

For a detailed home buying presentation please contact Nathalia N. Cruz-Edmonds, REALTOR with the PS International Team of Berkshire Hathaway Homesale Realty by calling her directly at (410) 350-5848 or at the office (410) 583-0400 or via email at nathaliaedmonds@gmail.com.  Please visit our website at www.pitinastucky.com for a list of our current listings.  PS International Team speaks Spanish, English, French and Arabic.