FREQUENTLY ASKED QUESTIONS

Douglas Answers Your Inquiries

Do you handle rental properties?
Have I missed my opportunity to make money in the real estate boom?
I see properties reducing their prices. Doesn’t that mean prices are going down and the good times are over?
I own a vacation property in the Wildwoods. Should I sell?
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: No, we discontinued managing rental properties after the 2003 summer season. At that time, we were handling about 110 units and had two full-time maintenance men on our staff plus several real estate agents. It was overwhelming and we basically had no life of our own in the summer time.

After some soul searching, we decided that we had veered away from our original mission to provide “individual, personal service”. So, we dropped our rental program, reduced our staff, and got back to concentrating on real estate sales.

Q:Have I missed my opportunity to make money in the real estate boom?

A: Only if you think you have.

In 2003 and 2004, property values in the Wildwoods and much of Cape May County were rising about three percent per month, or by about one-third each year. Many folks bought in the beginning and sold later at a significant profit. By 2005, that dramatic escalation had slowed. Now, in 2006, property values are rising at a more stable one percent a month, or about 12 percent a year. That’s still a good investment.

Q: I see properties reducing their prices. Doesn’t that mean prices are going down and the good times are over?

A: No. It’s more an indication that the Seller set an unrealistic price in the first place.

Let’s use a fictitious example. John Doe’s property was worth $150,000 in 2001, before the boom. By 2003, it had jumped to $250,000, then $330,000 in 2004. So John Doe decides to list his property after the summer of 2005. After listening to advice from his neighbors and Uncle Harry, he figures it’s now worth $440,000, so he lists it at $475,000. That’s way too high. It’s only going to fetch $370,000. Hence, you see an eventual price reduction when the Seller is getting no action on his property.

Q: I own a vacation property in the Wildwoods. Should I sell?

A: Often, the answer is NO. It all depends on what your next move would be. Are you leaving the island forever? Are you heading to the mainland to get more bang for your buck? Are you going from condo to single family home, or vice versa?

A common scenario is someone trying to sell their existing property, which may be outdated or in need of repairs, with the expectation that they can take those proceeds and buy a new condo or townhome and have no mortgage. That’s unrealistic. A lateral move on the island is going to cost you money. If you are not willing to accept $100,000 to $200,000 in debt, you shouldn’t sell. You won’t sell your existing property for the same amount as you’ll need to purchase new.

Selling that same unit with the hopes of finding a property on the mainland - which offers much more land, a garage, and room for a swimming pool - while not having to carry a mortgage, is possible. In that case, yes, put your property up for sale.

There are other good reasons to sell: 1.) you are looking to buy a vacation home in the mountains or another state, 2.) you don’t use your vacation home down here much anymore, 3.) you’re tired of lawn work and want a condo, 4.) you miss having a yard and are tired of the restrictions of condo life, or 5.) you like the prospect of selling this property and using that money to eliminate the mortgage on your primary home.

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.