Summertime Real Estate Tips

SMITH BRAIN TRUST — School ends Monday for children in Prince George’s County. Summer vacation already has started for students in other parts of the country, which means that families looking to relocate between academic years need to switch into high gear. Clifford Rossi, a mortgage risk expert at the University of Maryland’s Robert H. Smith School of Business, shares three tips for buyers and sellers in the seasonal real estate market.

1. Get ready to roll: Homes are selling fast in the current environment with relatively low fixed interest rates. “There’s just not enough inventory to keep pace with demand out there for homes,” says Rossi, former managing director and chief risk officer for Citigroup’s Consumer Lending Group.

He says buyers need to be ready to jump when they find a property they like. “If you’re out there and you’re looking to buy a home in this spring-to-summertime period, you’re going to need to have your prequalification in place,” Rossi says. “It’s almost a prerequisite now to be prequalified before you actually head out and start looking for homes.”

The checklist for prospective buyers includes cleaning up credit history errors and demonstrating assets in the bank. “The bank will want to see that when they make that loan approval to you,” Rossi says. “Then you can go with that piece of paper.”

Rossi says homebuyers should anticipate relatively tight credit standards. “Banks are erring on the side of requiring higher-than-normal creditworthiness in the form of credit scores,” he says. “They might want to see more down payment on the loan. And they want to see less debt-to-income ratio on that loan.”

Sellers also need to take care of potential obstacles that might come with inspections and appraisals. “You want to remove any kind of unknown contingencies from the deal,” Rossi says.

2. Find your “general contractor”: Online real estate marketplaces like Zillow, Trulia, Redfin and Realtor.com have revolutionized the industry in the last 10 years. “It’s almost pushed the real estate agent to the side,” Rossi says. “You can, as a prospective homebuyer, do an awful lot of your search and legwork ahead of time.” But rather than becoming obsolete, good real estate agents have found new ways to provide value. “They’ve had to remake themselves,” Rossi says. “They’re providing that tangible, personal service you’re not going to get from an online real estate provider.”

Instead of spending so much time finding listings for buyers, agents today can focus on connecting their clients with the right bankers, appraisers and inspectors. “They’re the general contractor of the deal,” Rossi says. “If there are hiccups in the process, they’re your people to remove all impediments.”

Especially on the seller side, Rossi says the biggest decision people in the market make is choosing their agent. He recommends a vetting process that drills down on certain questions: Do they know my area? Do they have experience in my price point? Do they have a record of selling homes at full price? “You want somebody who knows your property type in your area, who’s done that in and out,” Rossi says.

3. Give yourself wiggle room: Even with great preparation and a great agent, Rossi says buyers and sellers should expect glitches. “Things happen,” Rossi says. “It’s rare to find a situation where there isn’t some sort of hiccup in the process.” One sticking point is TRID, a truth-in-lending reform from the Consumer Financial Protection Bureau, which has shaken up the mortgage industry in recent months.

The regulation blocks any changes to a contract in the final days before settlement. If any last-minute problem comes up — such as a failed termite inspection — buyers and sellers must start the settlement process from scratch. “The clock starts over,” Rossi says.