Ocean City Real Estate Information

Condominium Fees

As you are searching through real estate in Ocean City MD and the surrounding areas you likely have noticed the condo and/or HOA fees noted on the listing reports.  I get a lot of questions regarding these fees and thought it would be helpful to put together and article explaining them.  Condo and home owner association fees are the monthly maintenance costs associated with a particular building or community. Each respective building or community prepares a budget each year and these costs are then split amongst the properties that make up the community.  While they all have their subtle differences there are some commonalities among them, which are outlined below.  Condo fees are a bit more involved so we will examine them first and then review HOA fees at the end.  Keep in mind that anytime you buy into a condo or home owners association you are entitled to a review phase per MD law.  You will be given the opportunity to review and assess the respective community that you are buying into and in the event that you are not satisfied with it you have the option of being released from the contract.

Insurance

Most condo fees cover your fire, flood, hazard and general liability insurance through a master insurance policy for the building. In essence, if something happened to the building the master insurance policy that is paid for through your condo fee would rebuild the building to its original grade.  The only insurance your responsible for is contents insurance or an HO6 policy.  In the previous scenario your HO6 policy would replace your furnishings, personal belongings and any improvements you made to the property above the original building grade.

Utilities

The condo fee will cover your water usage and trash pick up. In most situations you will be responsible for your electric, sewer, gas and cable bills. Some condo associations include basic cable in the condo fee and in the event...

Determining Price

There is a lot of money on the line for everyone involved as you consider selling real estate in Ocean City MD and the surrounding areas.  As a result of this you deserve a level of professionalism and experience that is unfortunately largely lacking in the Ocean City MD real estate market.  Selling real estate isn't rocket science, however there is a process that should be followed in order to ultimately get your property sold for the highest price possible in the shortest amount of time.  There are several factors that go into successfully selling real estate in Ocean City MD, Ocean Pines, West Ocean City, Bishopville or Berlin, however the three most important factors are:

  • The property's condition, location, upgrades, views, amenities, etc.
  • The marketing plan and experience of the real estate agent that is representing the listing.
  • The pricing strategy derived for the property.

Of these factors, price is the most important.  This does not mean that you have to be the lowest priced property, however you must ensure that your property is priced competitively relative to the recent comparable property sales and data.  You could have the greatest property in the world and it could be advertised during the superbowl, but if it is drastically overpriced it will not sell. 

The good old days of looking at what the last comparable property sold for, adding on a few percentage points to that price, popping a for sale sign on the property and waiting for the offers to roll in are long gone.  The current Ocean City MD real estate market requires a well researched pricing strategy in order to get your property sold for the highest price possible in the shortest amount of time.  Below I will outline the process that I go through in determining accurate and effective pricing strategies for my clients.

Recent Comparable Sales

The first step is to pull the listing...

Association Review

Anytime you buy a property that is part of a condo or home owners association you are entitled to a review phase of the respective community per Maryland law.  For your protection an addendum will be included in the contract of sale for this review contingency.  When buying into a condo association you are entitled to a seven day right of rescission and for a home owners association your are entitle to a five day right of rescission.  Once you have a ratified contract to purchase a property you will get a resale package from the building or community that you are buying into seven to ten days after the contract is ratified.  The Seller and their agent are responsible for ordering, paying for and delivering the resale package to us. 

Below are the items that are required to be included.  Some of the associations will also include minutes from the most recent board meetings, reserve studies and other applicable items.  The most important document is the resale certificate, which outlines the status and amount of the yearly association fees, whether there are any pending special assessments, amount of money that is in the building reserve account and the presence of any judgements or civil actions against the association.

  • Copy of Community Declaration and Bylaws
  • Copy of the Rules and Regulations
  • Resale Certificate
  • Statement of Unit Conformity
  • Master Insurance Policy Summary
  • Community Operating Budget
  • Financial Statements

During this phase I will get any questions you have answered and gather any additional information you would like to see.  The settlement company handling your closing and myself will also review the documents to ensure everything is as it should be.  If there are any red flags we will bring them to your attention and gather additional information regarding them.  In the event that you are financing your purchase...

Property Insurance

As a Realtor serving Ocean City MD and the surrounding areas I am often asked about property insurance. As with all real estate purchases, obtaining adequate property insurance will be a crucial step. Being in a coastal community we are susceptible to hurricanes, nor' easters and flooding in addition to all of the other potential hazards that come along with home ownership. Regardless of whether it is your primary home or second home real estate in Ocean City MD you want to ensure that you have adequate coverage. The type of property you purchase and your intended use of the property will ultimately dictate what type of coverage and policies that you will need to put in place.

Standard Home Owners Insurance

Standard Ocean City home owners insurance, also known as hazard insurance, combines various personal insurance protections including losses to ones home and its contents, liability coverage for any accidents that may occur, loss of use and subsequent living expenses and loss of personal possessions. Your standard home owners insurance policy requires that one of the named insured occupies the home as a primary residence. The cost of home owners insurance is typically determined by the costs that would be involved to rebuild the home in the event that a loss occurred and any additional insurance riders/protections that you have in place, such as flood insurance. A majority of insurance providers outside of our area, such as the one that has your primary residence policy, will not insure real estate in coastal areas. You will likely need to go with a local Ocean City MD insurance company and I would be glad to assist you with this. This is also beneficial in the event that there is a problem in that they are local and are familiar with claims that arise from storms, flooding, rental damage, etc. Standard home owners insurance policies would apply to Ocean City single family homes, Ocean Pines homes, West Ocean City homes and any other properties that...

Property Inspections

One of the most important phases of buying real estate in Ocean City MD and the surrounding areas are the property inspections.  In most situations your are going to want to have inspections performed on the property you are pursuing to ensure it is sound structurally and that all of the mechanical systems and appliances are in working order.  The cost for inspections for most averaged sized Ocean City area properties will be around $300.  This is pretty inexpensive "peace of mind" insurance considering the overall cost of these homes, condos and town homes.  There are two types of home inspection contingencies that can be made part of the contract of sale.  The first is your standard home inspection contingency and the other is an "AS IS" inspection contingency.  Each of these provides a contingency and related protections for a home inspection, however each handles the results of the inspection differently.

Standard Home Inspection

Your standard home inspection contingency is included in the agreement of sale and is made part of the contract on a separate addendum.  The first part of the addendum determines the time frame for when the inspections on the property will be performed, based off of the date of contract acceptance.  Typically this time frame is 10 to 15 days from the point which both buyer and seller have signed the contract.  The inspections are done right away so that in the event there is a problem that can not be solved you as the Buyer are not wasting your time and the Seller's property is not off of the market for a prolonged period.  These time frames are negotiable and can be structured based on your schedule, contract time table and your comfort level.

The next part of the home inspection addendum outlines the specific inspections that you will be having performed.  In a majority of property transactions the only inspection that is performed is a mechanical and...

Contract Phase - Sellers

Once we receive a satisfactory offer on your property we will then move into the contract phase, also known as the escrow phase.  During the escrow phase we will take care of all of the tasks required to get us to settlement which include property inspections, the mortgage process, title review, deed preparation, condo or home owner association reviews, utility transfers and more.  As experienced Realtors this is where we earn our money so to speak.  Any real estate agent can secure an offer on a property that is in good condition and priced well.  Only good and experienced Realtors can address and handle the situations that arise in today's real estate market that have the potential to cause a good deal to fall apart and keep it from going to settlement.

Property Inspections

After we get all of the paperwork sorted out and are officially under contract, the property inspections will be the first item to take care of.  For most real estate in Ocean City MD and the surrounding areas this will typically only entail a mechanical and structural inspection.  For some homes termite and mold inspections may come into play.  The Buyer will arrange and pay for the inspections and notify us of when they are going to be performed.  I will attend the inspection, personally see any problems that may arise and address them.  The Buyer will then review the inspection report and then may request that certain items be fixed as a condition of moving forward.  Once this is presented to us we will then review it and determine how we want to proceed.  We can agree to either fix the items, provide the Buyer with a credit at the time of settlement or decline to address some or all of the items.  In the event that we decline to fix anything to the Buyers satisfaction they then have the right to terminate the deal and the contract will be voided.  It is our goal to eliminate nit picky items and only deal with major...

Financing Beach Homes

The mortgage process has undergone some changes over the past few years and if you haven’t been through it recently there are some things you should be aware of.  While the banks are eager to lend money (this is after all how they make a profit) they are performing considerably more due diligence, ensuring every “i” is dotted and every “t” is crossed.  Additionally, there are a couple of additional steps when you are purchasing property “at the beach” that you need to ensure you and your agent are familiar with.  Below you will find an overview of the process and additional steps as they pertain to the purchase of real estate in Ocean City MD and the surrounding areas.

Pre-Approval

The first step as you consider purchasing real estate in Ocean City MD and the surrounding areas is to get pre-approved by a local lender.  This is a simple process that will ensure your potential purchase fits into your overall financial strategy.  Additionally, most Sellers will not formally respond to an offer contingent on financing without a pre-approval letter being submitted with the contract.  A strong pre-approval letter can also provide additional strength and leverage when negotiating a deal, especially if there are competing offers.

Loan Application

Once you find a property you are interested in and have an accepted offer we will initiate the loan process with your financial institution of choice.  They will start the process by gathering all of the required information from you, pulling credit reports and submitting a formal loan application.  The initial documentation required by most lenders is listed below:

  • Past 2 Years Tax Returns
  • Most Recent 2 Years W-2 Statements
  • Pay Stubs for Most Recent 30 Day Period
  • 2 Months Most Recent Bank Statements
  • 2 Months Most Recent Retirement Accounts (if applicable)
  • Most Recent Mortgage...

Seller Representation

This article below outlines the various agency representations that can occur in any given real estate transaction, viewed from the Sellers perspective.  Before we get into the details of these various scenarios lets first look at the basic rights and responsibilities you should be afforded regardless of your role in a real estate transaction as prescribed by the Maryland Real Estate Commission:

  • Real estate agents are obligated by law to treat all parties to a real estate transaction honestly and fairly.  They must exercise reasonable care and diligence and maintain the confidentiality of clients.  They must not discriminate in the offering of properties, they must promptly present each written offer or counteroffer to the property and they must answer questions truthfully.
  • Real estate agents must disclose all material facts that they know or should know relating to a property.  An agent's duty to maintain confidentiality does not apply to the disclosure of material facts about a property.
  • All agreements with real estate brokers and agents should be in writing and should explain the duties and obligations of both the broker and the agent.  The agreement should explain how the broker and agent will be paid and any fee sharing agreements with other brokers and agents.
  • You have the responsibility to protect your own interests.  You should carefully read all agreements to make sure they accurately reflect your understanding.  A real estate agent is qualified to advise you on real estate matters only.  If you need legal or tax advice it is your responsibility to consult a licensed attorney or accountant.

Seller's Agent

When you hire a real estate agent to list and sell your home they work for and exclusively represent you as a Seller's Agent, also commonly referred to as a Listing Agent.  Under this scenario they can only provide agency representation to you as the Seller...

Closing Costs - Buyers

Closing costs are the fees and charges associated with buying a particular piece of real estate, which are in addition to the purchase price.  Closing costs will vary from deal to deal depending on the purchase price and overall deal structure, however there are some common similarities that I have outlined below.

Down Payment

The largest portion of your closing costs will be the down payment on your mortgage.  When buying primary residences, second homes and investment properties most people put down at least 20% to 25% in order to get the best interest rates and loan programs available.  You can put down 10% and possibly less depending on a variety of credit factors, however you will likely incur mortgage insurance which carries additional costs.  If you are buying a primary residence their are FHA loan programs with attractive interest rates and terms that require as little as 3.5% down.  

Real Estate Transfer and Recordation Charges

Outside of the down payment the largest portion of the closing costs when buying real estate are typically the property transfer and recordation fees charged by the state and county.  The state and county charge these fees on all transfers of real property throughout Maryland.  The total combined amount of these transfer charges in Worcester County is 1.66% of the purchase price or $1.66 per $100 of purchase price.  The total transfer charges break down as follows:

State Transfer Tax ... 0.50%

County Transfer Tax ... 0.50%

Recordation Tax ... 0.66%

As an example, a purchase of real estate in Ocean City with a purchase price of $500,000 will have $8,300 in property transfer charges associated with it.  Per the MD Residential Contract of Sale these charges are then split equally between the buyer and seller, however like most everything else in a real estate deal these charges are a negotiable item.

Adjustments and Prorations

...

Closing Costs - Sellers

Seller's closing costs will vary from deal to deal depending on the sales price, overall terms of the contract and the real estate agent you choose.  There are some common similarities that you will find outlined below. If you have any other questions about selling real estate in Ocean City MD or want to discuss this in greater detail feel free to contact me directly anytime at 443-614-9179.

Property Transfer and Recordation Charges

The state and local municipalities charge transfer taxes and recordation charges on all of the property sales that occur in the state of Maryland. In the Ocean City real estate market area these charges total 1.66% of the subject property's sale price. As an example, on a $500,000 property sale there would be a total of $8,300 in transfer and recordation charges due at settlement. Per the standard Maryland contract of sale the transfer and recordation charges are shared equally between the Buyer and the Seller. Based off of the previous example each party would be responsible for $4,150 of transfer and recordation charges at the time of closing. As with just about everything else in a real estate transaction the handling of how these charges will be paid is negotiable depending on the overall terms and structure of the deal.

Commissions

Commission rates typically range from 5% to 6% depending on the Ocean City real estate agent you choose and the Seller is usually responsible for this fee. The total commission is then split (usually equally) between the Listing Agent whom represents the Seller and the Selling Agent whom represents the Buyer. The commissions are collected from the proceeds of the sale and paid at the time of closing. Assuming a 5% commission rate, 2.5% would go to the Listing Agent and 2.5% would go to the Selling Agent. There are some real estate agents that keep a larger portion of the total commission on the listing side. This is something that you want to watch out for as this practice can...

Selling Real Estate - The MLS

The Multiple Listing Service (MLS) is the primary database that is used by Ocean City real estate agents to research property information when assisting their clients.  Information on all properties that are listed for sale by real estate agents in the Ocean City area can be found in the Multiple Listing Service.  When a real estate agent is working with a Buyer client they will use the MLS to find properties that match their client's specifications and schedule appointments to view them.  Once a property is listed in the MLS a cooperation agreement is created that offers compensation to the Buyer's agent per the terms of the property's listing agreement.

The MLS is also the primary data feed for listing information on a majority of public real estate websites such as Zillow, Trulia, Realtor.com and others.  An agent will input the listing information (details, descriptions, photos, virtual tours, etc.) into the Multiple Listing Service and it will then get "syndicated" to all of these other websites automatically.  Any changes or updates to the listing in the MLS will automatically get pushed to the respective listing elsewhere.  Some sites do a better job of showcasing and updating your listing than others and you and/or your Ocean City Realtor have control over where it is displayed.

Any agent you hire in the Ocean City area is going to list your property in the Multiple Listing Service, however how agents go about this process varies greatly.  This is a crucial step in the overall marketing process of your property that gets taken for granted by a majority of Ocean City real estate agents.  Most agents haphazardly input the listing into the MLS with bits and pieces of information at a time.  First they will add the listing details with no description or photos.  Then they may add a half-hearted description coupled with some photos taken on their iPhone.  This is a huge missed opportunity and makes a poor...