Home Buying FAQ & Tips for Ocean City, MD and surrounding MD & DE Beach areas
As a home buyer in Ocean City, Maryland, and the surround MD & DE Beach areas, there are probably a lot of questions you might have about the market. That's why we have put together a list of the most Frequently Asked Questions (FAQ) when it comes to buying a home in Ocean City, MD, Ocean Pines and at the Delaware beaches. Hopefully you'll pick up some important home buying tips from the answers to these questions and you'll be able to make a more informed buying decision.
Which Ocean City, MD communities have the most affordable homes? Which areas have the most expensive homes in Ocean City?
The nice thing about Ocean City, MD real estate is that there are condos, townhomes, and single-family homes that fit most budgets. The pricing of a property has many different factors such as location, number of bedrooms, view and amenities. As one would expect, the direct oceanfront condos and homes are generally the most expensive properties at the beach. Some direct bayfront properties can also be some of the higher priced properties because of the awesome bay views. Typically the most affordable properties are located on the bayside block, which is on the west side of Coastal Hwy. In addition, there are some ocean block properties that can offer a good value if you prefer to be closer to the beach and ocean, but don't necessarily need to be located directly on the beach.
Why is it important to work with a local Ocean City Realtor?
Choosing to work with a local Ocean City, MD REALTOR® is one of the most important decisions you'll make when you're looking to buy Ocean City homes for sale, in addition to which property you decide to purchase! A local REALTOR® like myself, lives, works, and enjoys everyday life here at the beach year round. So, it's only natural that I would know the Ocean City real estate market, Ocean Pines and Delaware beach real estate market better than a REALTOR® who does not live here. Considering that there are over 1,000 different condo buildings in Ocean City alone, an experienced local Realtor will know what amenities the condo buildings will have to offer and which locations or specific buildings may fit your family needs.
Also, an Ocean City real estate agent has knowledge of many little-known facts, such as if a building has timeshares in it (that would exclude it from Conventional Financing) or is the building a seasonal building (these buildings can close down 2-4 months of the year). An Ocean City REALTOR® will also fully understand the Ocean City real estate market dynamics, which will help the buyer be able to negotiate the best price possible when purchasing.
If you represent me as my Buyers Agent, do I pay you a commission?
The short answer is no, you do not pay a commission. When an owner decides to sell, they can hire a REALTOR®, which now becomes their sellers agent. The owner and sellers agent agree on a listing commission amount prior to listing the property for sale. Through the Multiple Listing Service (MLS®), the Sellers Agent Brokerage offers a portion of the listing commission to the Buyers Agent Brokerage. So, the buyers are not responsible for paying their buyers agent commission because it is paid by the sellers thru the MLS®.
What do Condo fees cover?
In general for Ocean City condos and Delaware condos, the condo fee covers the Building Insurance & Flood Insurance, upkeep of the common elements and amenities (pool, elevator, walkways, hallways, cleaning, etc.), water usage, property management fees and Reserve Fund. Any money set aside in a Reserve Fund may be used for unforeseen major repair/expense or capital improvements such as a new roof, parking lot repaving, painting the building, etc.
Keep in mind that the condo owners are in control of what the money is spent on and how it is spent. This is typically decided by the condo membership voting on how to proceed (each unit gets 1 vote). Every condo association is different and after a buyer gets an Ocean City condo under contract, they will receive the Condominium Resale Documents to review.
What are Condominium Resale Documents?
Commonly referred to as Condo Docs, these are the documents about the condo association a buyer is required to receive once under contract (per Maryland Condominium Law & Delaware Law). Included will be the Declaration & Bylaws, copy of the rules or regulations of the condominium, the financials of the condo association, including any reserves, resale certificate that has some additional info and sometimes minutes of the last meeting is provided. When a buyer receives the Condo Resale Documents (via email or hard copy), they will sign an Acknowledgement of Receipt of Information. For Ocean City condos, anytime within 7 days following receipt of the condo documents, the buyer has the unconditional right to rescind the contact of sale in writing and no reason needs to be provided.
Beside the condo fee, what else am I responsible for?
In Ocean City & Delaware, in addition to the condo fee, a condo owner is responsible for paying their mortgage, property taxes, insurance for the inside of the condo (called a HO-6 policy), electric, gas, cable, internet, phone and sewer. Some condo associations may include cable and internet in the condo fees, but most do not.
What do Homeowner Association (HOA) fees cover?
Homeowner Associations can vary greatly depending on size of the community and amenity package, so it really depends on each HOA what the fee actually covers. In general, fees can cover items such as upkeep of amenities (pools, tennis & basketball courts, pickleball courts, exercise areas, clubhouse), common areas, landscaping, snow removal, and trash removal. Also, many HOA's will set monies aside in a long term reserve fund. The reserve fund can help cover the cost of future planned renovations and updates for the community. Maryland Law provides that a buyer has a 5 day unconditional right of rescission to review the HOA resale documents and may rescind the contract with no reason required.
What's the difference between being pre-approved and pre-qualified for a mortgage?
A mortgage pre-approval is a more in depth review than that of a pre-qualification and therefore holds a bit more weight. Pre-qualification means a general financial picture has been submitted to a lender and they've done a basic preliminary review to determine if a borrower qualifies for a loan. Pre-approval would entail that all credit documents such as pay stubs, tax returns and bank statements have gone to the lender and an in depth review of these items has occurred.
What are the major financing differences between buying a primary home and a second home or vacation home?
The biggest difference between buying a primary home and a second home is that there are more loan programs available to a primary home buyer (FHA, VA, USDA for example) that cannot be used on a vacation purchase. Additionally, primary home buyers can get by with a lower down payment whereas vacation home buyers need at least 10% down and are almost always going with conventional financing.
Why should I use a Mortgage Professional that is local to the Ocean City & Delaware Beach areas?
Ocean City and Delaware beach properties are a niche market in that it's a resort beach town filled with condominiums. Condominium's require an additional layer of underwriting in that the Condo project itself must be reviewed and warranted to meet Fannie Mae standards. Typically, an out of area lender spends the majority of their time financing single family homes and therefore is not familiar with how to go about getting a project warranted, what the red flags may be and how to handle those. Local lenders also have a good relationship with the Condo management companies making the process smoother and less painful for the buyer.
If I buy a property that has weeks already booked with rentals, do I need to keep the rentals?
If you purchase an Ocean City property or Delaware property and there are already weeks rented, you will have to honor the dates that are already booked. This can be a good situation if a buyer was planning on renting the property because they can buy into a property that already has established rentals. If a buyer is purchasing early in the season and there are only 1 or 2 weeks booked, there might be an opportunity to have those weeks moved so you would not have to honor them and an experienced Ocean City REALTOR like myself can help you navigate through that situation.
What Ocean City & Delaware Beach locations offer the best rental potential?
As most people would expect, the direct oceanfront properties will offer the best rental potential and total number of weeks rented. Typically the next best option to generate rental income would be for ocean block properties. Finally, if the property is on the bayside area of Coastal Hwy and Rt 1, the weekly rental amounts and number of weeks rented, generally will not be as consistent as oceanfront and ocean block real estate. But, if you choose to purchase a bayside property and rent it, having a pool and being within a few blocks of the ocean can help your rental potential.
Do I need insurance for inside of condo?
Yes and it's called an HO-6 policy. The HO-6 policy is very similar to your home owner insurance policy. It includes HAZARD coverage and LIABILITY coverage. In addition, the policy includes LOSS ASSESSMENT coverage. It is necessary to purchase this policy because it not only replaces your furnishings in the event of a loss but the policy provides coverage if you were to get sued.
Why should I use a local Insurance Professional?
It just makes sense. There are so many variations of policies that only local insurance agents would be aware of, for example the rental endorsement or the loss assessment coverage. Many companies will not write policies on the beach because they have contingency plans filed with the State that prohibit them from writing policies, but not all agents that work for these companies are aware of these contingency plans – only to find out on your settlement date that your agent's company can't insure your property.
Many agents have 1 other insurance company that they deal with to insure properties that don't fit their "normal" business. A local agent would typically have multiple companies that can insure your property on the beach which are reasonably priced.
What is the difference between a foreclosure and short sale?
A short sale may happen when a property is being sold in which the proceeds from the sale will not cover the mortgage payoff amount, thus creating a "short." The short sale can proceed to closing if the owners lender agrees to accept less than the payoff amount due. A foreclosure is a situation in which the owners lender legally takes possession of the property because of non payment of the mortgage. Once the bank repossesses the property, they generally list it for sale in in the MLS.
Are there many foreclosed homes for sale in Ocean City and at the Delaware beaches?
Many people ask this question because the Ocean City real estate market and Delaware beach market is mainly a vacation and second home market. Therefore, many think that there would be a lot of foreclosed properties available. Surprisingly there are not many foreclosures that come up for sale in Ocean City and the Delaware beaches, but when they do, they can sell quick.