COAKLEY QUARTERLY by lonyoo

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									COAKLEY QUARTERLY
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H A S T H E PE N D U LU M S W U N G TO O FA R ? By Rory S. Coakley, President
During the last two years, real estate values have gone through the roof. Just when we see a price go beyond what is reasonable, another purchaser comes along and sets a new benchmark. Prospective sellers see these new heights and set the prices accordingly. It is not uncommon for a property to sell within a few days after hitting the market. Anxious and sometimes desperate buyers are poised to submit the strongest contract possible with the fewest contingencies. Some sellers are reaping tremendous profits from this real estate feeding frenzy. Is this a healthy environment? Probably not. Why? Because someone will be left holding the bag sooner rather than later. The spiraling prices are going to flatten out and head in the other direction. Properties will take longer and longer to sell and the leverage will shift to the purchasers. The next round of sellers will have a warped perception of the value of their property. Selective amnesia will set in, as the seller will only be capable of remembering the record sales prices that were achieved only a few short months ago. Time for a reality check. Just like other real estate recessions, there will be an increase in foreclosures and sellers coming to the settlement table having to write a check. Not a pleasant thought. If you purchase a property with ten percent down and property values decline five to ten percent or more, you’ve got a problem. Selling expenses are typically at least seven percent not including seller concessions, which have been absent in the current seller’s market. You can do the math.

INSIDE THIS EDITION
Has the Pendulum Swung Too Far? . . . . . . . . . . . Pg 1 Historic Properties . . . . . . . . . . .Pg 2 Escalator Clauses . . . . . . . . . . .Pg 2 Buying A Place In The Country . . . . . . . . . . .Pg 3

If you are currently selling or contemplating taking advantage of this incredible bull market, do not wait long. The game of musical chairs will soon end. If you are considering a purchase, do so with caution. Coakley Receives Utilize every available resource at your disposal and plan for an eventual downturn. If you are Award for making a long-term investment, you won’t have much of a problem. Community Service The short term or unexpected . . . . . . . . . . .Pg 4 sale is where there will soon be some bloodletting. Good luck to you as we maneuver through the turbulent waters that lie ahead. If we can help you with any of your Real Estate needs, contact me at 301-340-8700 x101 or my email address rscoakley@aol.com. Visit us online @ www.coakleyrealty.com

COAKLEY REALTY, INC. IS YOUR ONE SOURCE FOR COMMERCIAL AND RESIDENTIAL REAL ESTATE

This home is located just off of Glen and was sold by Rory S. Coakley.

Purchasing, selling, leasing or managing a property requires the service of an experienced real estate professional. We can guide you through this decision making process and the associated tax, financial, and legal considerations. The real estate industry’s constantly changing, and Rory S. Coakley Realty, Inc. is there to assist you in making a prudent real estate decision. Our Services Include: Sales & Leasing • Real Estate Tax Appeals • Appraisals & Consulting • Feasibility Analysis Litigation Support • Property Management • Development Management • Relocation Services

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H I S TO R I C P RO PE RT Y S PE C I A L I S TS : By Dick Stoner
Coakley Realty’s agents have sold, leased and managed numerous Historic Properties in Rockville, and elsewhere in central Maryland. The attached photo is of 212 Reading Avenue, an 1890’s home which has been managed by Coakley Realty since 1997 and was sold to a new owner in August 2001. The home is number 152 on Rockville’s Register of Historic Properties. This means that it is located within one of the Historic Districts and has been identified as being historically significant. Many owners think that a property must be on the National Register of Historic Places, in order to qualify for tax benefits, but many properties are eligible for Maryland’s new 25% Tax Credit — a credit against your state income tax — if they are within a locally designated district and are deemed historically significant. Coakley Realty can guide you through the proper steps to obtain this important tax credit of 25% of maintenance and renovation costs. And for commercial, income producing properties, there is a Federal Tax Credit of 10% of renovation and maintenance costs. Coakley Realty Agents are active members of the following organizations and associations: Peerless Rockville, Montgomery Preservation Associates, and Washington County Historic Society.

At issue is what effect such “escalation” clauses have and whether they bind a Buyer and Seller to a contract. The essential elements of a contract require that there be mutual assent by the Buyer and Seller, of an offer and acceptance. In order for an offer to be accepted there must be the expression of a promise, there must be certainty and definiteness in the essential terms, and it must be communicated in a form that is acceptable,which in the case of real estate contracts means that it must be written.

U S E O F E S C A L ATO R C L AU S E S IN RESIDENTIAL REAL E S TAT E CO N T R AC TS : By Casey Aiken, Esquire
Starting in 1998, this area begun to experience an upswing in the demand curve for residential properties that hasn’t abated or slowed down. Real Estate agents began reporting that there would be multiple offers to purchase properties that were listed for sale. With the atmosphere bordering on an auction mentality, of sealed bids and only one opportunity to make an offer, how does a prospective buyer ensure that their offer is chosen by a homeowner to negotiate and accept. The most common response has been the use of “Escalator Clauses” as part of the offer. The most common sales price escalation clause typically states that “In the event that prior to Seller’s ratification of the Contract, the Seller receives one or more additional written bona fide offers to purchase the Property with terms acceptable to the Seller, and from this offer, then this Contract sales price shall automatically increase by X number of dollars above any other Offer, not to exceed a maximum sales price of Y dollars, (usually the contract price plus the automatic increase).”

The requirement that the offer be certain and definite in the essential terms creates the most common issue with respect to whether escalation clauses are enforceable. It can be quite difficult in some instances to evaluate the “net” price which the Seller is to receive, particularly where the Seller may be selling the property themselves, or there is a wide divergence in settlement dates. Nonetheless, in the overheated market that exists today, any offer to purchase that does not contain some type of escalation clause, runs the risk of not being taken as a competitive offer. Because, no matter how difficult it may be to calculate the Net amount due to the Seller, this amount is quantifiable. It would be far worse to have a terrific offer ignored because on first inspection it did not appear to be competitive.

Casey Aiken, Moses & Aiken, LLC (301) 881-4860

Dick Stoner Real Estate Services – in Maryland and the District of Columbia. Call Coakley Realty, Inc. at (301) 340-8700, ext. 105

Custom Portraits – Made on Location! • Publicity Photographs Coverage of Corporate and Social Events

(301) 441-1623
www.markgregory.com

Coakley Realty is a Satisfied Customer!

Just listed in the Rockville Historic District! 415 W. Montgomery Avenue. Call Kathleen with any questions: (301) 379-3826.

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B U Y I N G A P L AC E I N T H E CO U N T RY: By Dick Stoner
Many people maintain a dream of someday living in a rural area where the pace of life is somewhat slower or where there is more elbow room for day-to-day living. If you’re one of those people, please read on for some tips on selecting that perfect property. Where to Buy: Like any real estate decision, the locations you consider will generally be based upon the constraints of your work location and schedule and your personal preference of the rural activities you are adding to your lifestyle. Because commuting considerations weigh heavily for most people, the distance between your primary home and your “rural vacation home” will be very important. From the Washington, D.C. metro area, truly rural communities can be a close as 45 minutes to one hour (nonrush hour) or 2 hours or more in almost any direction. Some rural buyers are hoping to make good land investments that will appreciate as the housing markets continue to expand outward. Others are looking for a bucolic setting that is more likely to stay that way. Luckily, many rural counties are now included in the regional multiple listing service, the MRIS, and as Realtors, we, at Coakley Realty, can find numerous farm and land properties which are listed throughout Maryland, Virginia and Pennsylvania. You can also find information on websites like www.homesdatabase.com and www.Realtor.com and then contact us for a more detailed file from the MRIS system. “How Much Land is Right For Us?” Many people feel that more of anything is better; and when looking at rural land, buyers find that they can often buy 100 acres or more for the price of their suburban home. While it is great to talk about how many acres you can buy, once you own it there are maintenance elements to

D.C., don’t assume that you have to find an Agent in that area to start your search. Considerable information is available now through the broad area MLS system as well as through www. Sites. Call Coakley Realty for assistance in your land search or just to see what the prices are in an area that you may have been considering in rural Virginia, Maryland or Pennsylvania. And be prepared for an adventure! c o n s i d e r. M o w i n g , f e n c i n g , w o o d cutting and trimming are just some of the considerations. If you are looking at truly farmable land, then some of the maintenance costs can be offset by the rental value of tillable acres, pasture or even woodland. While some buyers want to spend weekend time on a tractor mowing pasture land, or taking care of livestock, most buyers are best served when contracting with a local farmer who can incorporate the fields into his or her farming business. The rental value of most farmland is generally not enough to support the cost, but does serve to offset upkeep, and the farming itself keeps the land in better shape than if it is left to grow up in weeds. Buying a Farm House vs. Raw Land: For many people, part of the dream of a rural property is the opportunity to fix up an old farm house into a weekend retreat. For others, it is the dream of being able to someday build a weekend or retirement home on that beautiful vista. There are many opportunities to buy either, in most rural areas, but the buyer should be sure to investigate permits and the cost of bringing utilities, especially electricity to the the farm house or building site. In some cases the costs can be considerable. Conclusion: If you are considering rural property within several hours of Washington,

Dick Stoner is a licensed Agent at Coakley Realty’s main office in Rockville, MD, who regularly works with Buyers and Sellers in Frederick and Washington Counties in Western Maryland.

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Cruises, Family Vacations, Weekend Getaways, Golf Packages, Spa Holidays, Disney Packages

Call (301) 441-1623
Coakley Realty is a Satisfied Customer!

COAKLEY REALTY is Your One Source for Commercial and Residential Real Estate
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COA K L EY R E C E I V E S AWA R D F O R CO M M U N I T Y S E RV I C E
Rory Coakley, President of Coakley Realty receives Community Service Award from Executive Director, Mansfield Kaseman and Father William George, President of Georgetown Prep. One of the highlights of the evening was the presentation of Community Service Awards. Retiring Rockville Mayor, Rose Krasnow was honored for her outstanding service to CMR and the Rockville community. Robert Jackson, who is retiring after six years as Director of the Rockville Emergency Assistance Program, was honored and thanked for his dedicated and faithful service. Rory Coakley, President of Coakley Realty, and past president of the Rockville Chamber of Commerce was recognized for his many contributions

and dedicated service to the Rockville community.

She is a graduate of University o f Delaware. Jonathan (J.T.) Triandafilou, a 30 year resident of Rockville, to Coakley Realty. Jonathan (J.T.) is a seasoned professional with over 15 years experience in land acquisition, development and building. He has experience in both residential and commercial development. J.T. has a proven track record and has completed impressive list of community development projects.

Left: Executive Director, Mansfield Kaseman Center: Rory Coakley, President of Coakley Realty Right: Father William George, President of Georgetown Prep

W E LCO M E J OA N N E A N D J . T.
Joanne Mistove joins Coakley Realty as Vice President of Business Development. She brings with her over 10 years experience in sales and marketing.

RO RY S . COA K L EY R E A LT Y, I N C .
20 Courthouse Square Suite 106 Rockville, Maryland 20850 Visit us online @ www.coakleyrealty.com

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COAKLEY REALTY is Your One Source for Commercial and Residential Real Estate


								
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