FREQUENTLY ASKED QUESTIONS

Douglas Answers Your Inquiries

Do you handle rental properties?
Are there still opportunities to make money in the real estate market?
I see properties still reducing their prices. Does this mean the market hasn't hit bottom?
What exactly is a "short sale"?
Can you find me an investment property that will pay for itself?
Why should I use a realtor? Can’t I sell my property myself and save that money?
If I use Jewell Real Estate Agency to help me find a property to buy, do I have to pay you a commission?
So what exactly does the realtor do for me, as a Buyer?

Q: Do you handle rental properties?

A:Yes. We have weekly, seasonal, and yearround family rentals available in Diamond Beach, Wildwood Crest, Wildwood, North Wildwood, and West Wildwood. We are also always accepting new properties for our program. We answer our phones 6am to 9pm every single day of the year and on summer Friday and Saturday nights we're accessible by phone until 11pm. That gives landlords, tenants, and prospective renters the opportunity to get hold of us for inquiries and problem-solving at least 15 hours a day.

Q:Are there still opportunities to make money in the real estate market?

A: Absolutely! Remember all those folks who sold island properties back in 2003, 2004, and 2005 and made a substantial profit? They bought in the 1990s at bargain prices. Well, 2009 and 2010 is just like the late '90s. You can buy low right now - with interest rates at historic lows - then wait a few years for the next big upswing in the real estate market. The old adage is "buy low, sell high". This is the time to buy low, especially with prices $100,000 to $150,000 below 2006 prices.

Q:I see properties still reducing their prices. Does this mean the market hasn't hit bottom?

A:No. It's more an indication that the Seller set an unrealistic price in the first place. Many Sellers who bought in 2005 to 2007 paid more than the property is worth today. Their attitude is, "Well, I really don't have to sell the property", so they try to recoup their entire original investment. After the property sits on the market for six months or so with little or no interest from Buyers, the Seller realizes that's it's not going to sell at that price. So the Seller reduces the price knowing he'll take a loss. If that still doesn't get it sold, many Sellers will do a "short sale" and continue lowering the price at regular intervals until a Buyer is found.

Q:What exactly is a "short sale"?

A:A short sale is when the purchase price of a property is less than the mortgage amount owed to the back. The contract for sale requires the lender to approve the sales price before the transaction can take place.

As an example, suppose John Doe paid $250,000 for a property in 2007 and he financed $200,000. After a while on the market, he finally gets an offer of $175,000. The Seller and Buyer can sign the contract, but it isn't until the lender signs off on the deficient amount that the sale can go through. The lender then has three possible courses of action with regard to the Seller: 1.) Make them sign a personal note for the $25,000, 2.) give them a Form 1099 for the $25,000, or 3.) forgive the debt. Usually the bank forgives the debt and moves on.

Q: Can you find me an investment property that will pay for itself?

A: Probably not, unless you’re willing to put a lot of money down - more than I’d recommend.

Some Buyers come into the market searching for a property that will carry the mortgage and taxes through rental income, whether it’s a condo or a multi-family property. Putting a traditional down payment of 10-20 percent, that’s not going to happen. It will be necessary to fund some of the yearly expenses out of your pocket. That’s the reality.

That’s not to say that you can’t make money buying an investment property. However, your profit comes through the equity you build as prices steadily rise and you don’t realize that profit until you sell the property.

Q: If I use Jewell Real Estate Agency to help me find a property to buy, do I have to pay you a commission?

A: Absolutely not! All commissions are paid by the Seller. That commission amount has already been agreed to and signed by the Seller and his realtor back on the day the Listing Agreement was originally signed. You owe no commission and we charge you no fees whatsoever.

Q: Why should I use a realtor? Can’t I sell my property myself and save that money?

A: In some instances, Sellers do successfully complete a real estate transaction on their own. But they have to know the pitfalls, or else their attempt to save themselves money can actually end up costing them money.

One problem with selling your own property is that almost every potential Buyer immediately starts calculating what the commission would have been with a realtor involved, then they deduct that from their bid. They feel that amount is theirs to save, not the Sellers. So you are back to the same amount of money, but without the expertise of a realtor.

Also, most people are not good negotiators. So the Seller tends to buckle under at a lower price, make concessions that are unfavorable, or settle for terms weighted toward the Buyer. Even if the Seller gets his way, there are often hard feelings between the two parties that fester during the one to three month duration of the transaction.

Q: So what exactly does the realtor do for me, as a Buyer?

A: Let’s compare your transaction to a football team. You are the owner of the football team. The realtor is your quarterback. You are in control, but the realtor oversees the action and makes sure all the team members are performing as required and in a timely manner. Other members of your team are a mortgage person, title company, insurance company, surveyor, home inspector, pest inspector, and fire inspector, and sometimes a plumber, electrician, contractor or other service specialist.

Your relationship with a realtor begins with the search for a suitable property. Especially in a vacation home market like Cape May County, the realtor has valuable local knowledge that is especially helpful. The realtor knows what neighborhoods have good resale value, what floor plans are outdated and not functional, where new construction projects might take away that nice view or a strip mall might change the character of an area. There are dozens and dozens of things that your realtor – who lives locally and follows local land use decisions in the newspapers – knows that can save you much heartbreak and sorrow. You can’t put a price on that information!

Once you and your realtor find that right property, it’s time to put in a bid. Your realtor knows how to structure that bid so that the terms are favorable to you and your circumstances, without going overboard and offending the Seller. The negotiations proceed between your realtor and the Seller’s realtor, with each realtor reporting to his client every step of the way. The Buyer and Seller often never meet until the day of closing, and without the strain of having negotiated face-to-face the parties usually have an amiable transfer of title and part friends.