You have probably been hearing about the ongoing property assessment process here in Delaware and wondering how this might impact your primary residence, vacation home, or rental property. To help you navigate this, we’ve distilled some of the most important points of this process below to help provide clarity on the issues that may affect you the most: The reassessment process will not increase the annual, aggregate tax receipts to Sussex County (pursuant to state law, the county can increase its tax base by up to 15% through the reassessment process, however Sussex County has confirmed that the reassessment will be net neutral). Current assessed values for property tax purposes are retroactively assessed to 1974 values, and the reassessment will bring assessed values for tax purposes to 2023 amounts. This is a one-time adjustment, and it certainly could be another fifty years until it happens again. Do not be afraid - this is not the start of a parade of annual tax increases. The most an individual tax bill can increase or decrease as a result of the reassessment is forty percent (40%), and from what we have seen in other counties thus far, the maximum increase/decrease (40%) is very rare. The increases and decreases we are commonly seeing is +/- 10-15%. Again, this is a net neutral process so for every ten percent increase in tax bills there is a corresponding ten percent decrease in tax bills. Property owners will receive a ‘Notice of Tentative Property Reassessment Values’ from Tyler Technologies with your new proposed assessed value. If you disagree with this assessed value, contact Tyler Technologies immediately upon receipt to schedule a discussion/appeal. Do not wait for your annual tax bill to file a tax appeal with Sussex County. Tyler Technologies will sit down with you and go over every detail of the reassessment. The reassessment is now on track to be reflected in this upcoming tax assessment from Sussex County (period July 1, 2025 -June 30, 2026), which is billed late Summer 2025. For residents seeking to add or remove an owner from title to a property that does not otherwise qualify for a transfer tax exemption (i.e. conveyance from husband to wife or from parent to child), you will want to have this completed before the upcoming tax bills are issued so that you pay transfer taxes on the 1974 assessed value as opposed to the 2023 value. Noteworthy: Given the quite low property taxes in the State of Delaware, even a 40% increase on a $1,500 tax bill translates to an additional $600 annually — still rather nominal in comparison to other surrounding state taxes. Action Item #1:Should you feel that your recent assessment does not reflect your home's true market value, contact me for a Comparative Market Analysis as soon as possible. I welcome the opportunity to discuss your property's position in today's quickly evolving local real estate market. Action Item #2:In the event you find discrepancies in your personal property tax assessment, immediately call Tyler Technologies to discuss any issues or potential reporting errors. They are quite reasonable in taking homeowners’ views and information into account quickly. The contact at Tyler Technologies is: Mary M. NoldyTyler Project Supervisor302-854-5274sussexcountyDE@tylertech.com Action Item #3:We have been working closely with Tom Carney of Sussex Law Offices to interpret and better understand the assessment process. Tom has proven to be exceptionally knowledgeable on this topic and has provided valuable insights throughout our collaboration. If you feel that additional information or professional services are necessary, I would highly recommend reaching out to Tom for consultation. His expertise in this area could be a great resource to ensure all aspects of the process are thoroughly addressed. -Henry

As we approach the end of the year, now is a prudent time to review your real estate investments and ensure you're taking full advantage of available tax strategies. Proper tax planning can reduce your taxable income and position you for continued growth in the coming year. Let's look at some of the top tax planning strategies for real estate homeowners and investors. Observing the landscape Monitoring taxation policy is essential to make the most informed financial decisions. Ongoing legislative and administrative changes will impact your real estate portfolio. For instance, the expiration of tax breaks or new tax laws will likely alter your tax liability and strategy. Working closely with your tax advisor is vital to stay aware of developments that will influence your plans for the year ahead. Economic considerations and evaluating your portfolio Tax planning is an essential element in managing and maximizing the value of your real estate portfolio. Consider factors including property appreciation rates, rental income, and market trends. When assessing your assets, adjusting your holdings based on market conditions could yield significant tax benefits. For example, selling underperforming assets before year-end to offset capital gains from stronger investments might be a prudent move. Leverage depreciation to reduce taxable income Real estate depreciation is a powerful tool for reducing taxable income. Even though your property might be appreciating, the IRS allows you to take annual deductions based on the perceived "wear and tear" of the property. For residential properties, the depreciation period is 27.5 years, while for commercial properties, it's 39 years. Coastal Delaware homeowners and investors can benefit by working with a tax professional to optimize their depreciation schedules and accelerate deductions where possible. Take advantage of bonus depreciation Although the Tax Cuts and Jobs Act allowed for 100% bonus depreciation on eligible property improvements, it's important to note that this benefit is now halfway phased out. As of 2024, bonus depreciation is down to 60% and will continue decreasing each year until it phases out entirely by 2027. If you're considering renovations or significant improvements, it's wise to act now to maximize this benefit before it diminishes further. Utilize 1031 exchanges to defer capital gains A 1031 exchange allows you to defer capital gains taxes when you sell a property and reinvest the proceeds into a similar property. This strategy is advantageous if you want to upgrade or diversify your portfolio. For example, you could swap a rental property in Rehoboth Beach for a commercial property in Bethany Beach without paying taxes on the appreciation. The key is to follow the IRS's strict guidelines, including completing the exchange within 180 days. Explore tax credits for energy efficiency and historic rehabilitation Investors and homeowners in Delaware may be eligible for tax credits by making energy-efficient upgrades to their properties. These credits can help offset the cost of installing solar panels, energy-efficient windows, and other sustainable improvements. Additionally, if you own a historic property, consider utilizing the Delaware Historic Preservation Tax Credit Program, which offers substantial credits for approved rehabilitation projects. This program can significantly reduce the overall cost of restoring and maintaining historic properties. Retain professional advisors to maximize your benefits Navigating these strategies requires a solid understanding of real estate and tax law. Consulting a real estate attorney, tax advisor, and financial planner can help ensure your investments are structured in a tax-efficient manner. I'm here to provide insights and connect you with local professionals who can help you optimize your year-end tax planning. With the right strategy, you can minimize tax liabilities and keep more of your hard-earned wealth. Contact me if you have any questions- Henry

The average supply of inventory over the past five years is 2.7 months. Our current month's supply is 4.1 months. Still a seller's market by historical standards but this change is noteworthy. A balanced market is generally considered to have a supply of four to six months. As interest rates continue to decline, we anticipate a continued increase in active inventory along with a resurgence of buyer interest. When selling a home, setting the right price is among your most important decision. For many buyers, price is the most crucial consideration — next to location and amenities. Pricing is an art and science that requires careful thought, research, and data analytics. Let's look at a few tips and strategies to determine the ideal selling price that will help you achieve your objective: 1. Understanding what makes luxury homes unique Luxury homes, with their custom-built elegance and unique amenities, sometimes challenge standard pricing models. These properties are distinguished by their location, architectural significance, and the lifestyle they offer. From sprawling estates with panoramic views to architectural marvels with unique amenities, each luxury home tells a story that significantly influences its market value. These one-of-a-kind characteristics can present valuation challenges. 2. Observing market trends Staying attuned to the latest market trends and buyer preferences is essential to position your home to sell at a favorable price. Market research involves harnessing detailed market insights through local news, real estate articles and blogs, and regional and national listing services. When you’re aware of the dynamics at play, you can tailor a pricing strategy that resonates with today's luxury buyers on the coast. Realtors are a reliable and often complementary source of market insights. 3. The role of the CMA At the core of effective pricing strategies is the Comparative Market Analysis (CMA). This familiar tool allows you to compare similar properties in your neighborhood, considering factors such as size, condition, amenities, and recent sales data. A well-conducted CMA provides a solid foundation for pricing strategies, ensuring your home is competitively and fairly priced. 4. Appraisal insights Trained and seasoned local appraisers objectively analyze your home's value and the many contributing factors. A professional property valuation can be helpful however, you shouldn't necessarily count on home appraisals to provide an accurate valuation. Appraisals can be subjective and completed by appraisers that may not be experts in our market. An appraiser also might not have enough comparable homes to provide accurate pricing. In certain situations, appraisals can be helpful to ensure your property's price reflects its Fair Market Value, facilitating a smoother transaction and helping potential buyers secure financing without underwriting objections. 5. Leveraging professional input Collaborating with a real estate professional, you can navigate the pricing landscape with precision, care, and less stress and risk. Our goal is to set a price that reflects your home's intrinsic value and captures potential buyers' interest. Flexibility and adaptability are essential as we respond to buyer feedback and adjust the pricing strategy to ensure your home stands out and keeps momentum on the market. As your advisor in Coastal Delaware's luxury real estate market, I'm here to guide you through this process and ensure your home achieves its optimal sales value and goes under contract (and closes) in a time frame that matches your expectations. -Henry

Whether you own a stunning waterfront property or a portfolio of investments, protecting yourself from legal and financial risks is a priority. A good friend recently ran into some legal issues with an investment property that could have been easily avoided with proper asset protection. This month, let's look at essential asset protection strategies to secure your investments. Insurances Insurance is probably the most important and practical form of asset protection. In addition to standard homeowner's insurance, consider policies such as umbrella, flood, and title: Umbrella insurance offers extra liability protection beyond your existing policies, which is imperative for high-net-worth individuals. Flood insurance is critical in coastal areas prone to flooding, such as Delaware, given rising sea levels and increased storm activity. Title insurance protects against potential disputes over property ownership if unrecorded encumbrances (deeds, loans, liens, etc.) are discovered post-purchase. Ownership and legal structures The structure of property ownership significantly impacts asset protection. Here's an overview of the most popular strategies: Holding properties in an LLC can shield personal assets from lawsuits or creditors. LLCs are a popular choice among Delaware investors due to the state's favorable business laws. Holding each property in a separate LLC can further limit liability exposure. Segregating assets prevents a legal issue with one property from affecting others. Family limited partnerships help distribute ownership among family members to protect assets and can also help with estate planning and tax benefits. Trusts are another valuable tool in the investor's tool kit. Trusts provide privacy, protect assets from creditors, and can be tailored to ensure properties remain within the family. Equity stripping Equity stripping reduces the equity in your property by borrowing against your home to make it less of a target to creditors and litigators. Using lines of credit to secure equity and limit exposure is particularly useful in high-value markets. You can use these funds to make improvements or fund other ventures. Homestead exemptions Homestead exemptions protect a portion of your home's value from creditors. In Delaware, the homestead exemption is $125,000, which can be doubled for married couples, providing a substantial safeguard for your primary residence. Retaining advisors Consulting experts ensures your strategies are appropriate and compliant. At a minimum, seek counsel from: Real estate attorneys specialize in property law and asset protection and can provide crucial guidance on structuring deals and protecting assets. Financial advisors provide insights into optimal financial structures and insurance needs. Accountants ensure tax efficiency and compliance with state and federal regulations, particularly with Delaware's specific tax laws. I'm here to guide you through these asset protection strategies and tailor them to your needs. You can secure your investments against unforeseen risks with careful planning and the proper advisement. Contact me if you have any questions. -Henry

We are pleased to introduce the 2024 Mid-Year Luxury Outlook℠ report by Sotheby's International Realty, which outlines the industry trends and happenings across high-end residential markets. This year, policy shifts and global elections across nearly 80 countries are likely to impact property markets as voters hit the polls. The trajectory of U.S. interest rates remains a key watchpoint for buyers, sellers, and international observers. We know you are eager to make wise financial decisions, and staying informed is key to making that happen. To explore, visit the following link: Luxury Outlook Report Link Our latest market reports for Coastal Delaware and Coastal Maryland are now available. These reports offer insight into the factors driving current sales trends throughout our region. Click the following link to view our Q2 Market Reports: Report Link We are thrilled to share the latest edition of The Key magazine, our exclusive lifestyle guide for those interested in the very best of living in the Mid-Atlantic region. From local treasures, to travel and practical property tips, this edition is designed to articulate the essentials for a fulfilling life in our vibrant area. To explore our digital magazine, visit the below link: The Key Magazine Link As always, we are here to answer any questions regarding the market locally or assist in connecting you with a Sotheby's International Realty professional throughout the world! -Henry

Sales volume has increased 16% year-over-year and we continue to see a steady increase in inventory. We anticipate this trend continuing throughout the summer but our market still only has 1/4 the number of active listings during the same time of year prior to the pandemic (June 2019).As we approach the presidential election later this year, many homeowners and investors are concerned about its impact on the real estate market. Elections bring about discussions on policy changes and economic shifts that influence the housing sector. However, there are several positive aspects to consider that could benefit our markets.Economic stability and growthPresidential elections often prompt conversations regarding how economic policies enhance market stability and growth. Candidates typically propose measures to stimulate the economy, which increases consumer confidence. This optimism encourages investment in luxury real estate as buyers feel more secure about their financial future.Potential tax incentivesDuring election seasons, candidates almost always propose tax incentives to appeal to voters. These incentives usually include favorable property tax rates or deductions for real estate investments. Luxury homeowners and investors benefit from such policies, making high-end properties even more attractive investments.Infrastructure developmentElection campaigns frequently highlight plans for infrastructure improvements. Enhanced transportation networks, improved public services, and beautification projects significantly boost property values. Coastal Delaware, known for its scenic beauty and prime location, stands to gain from such developments, increasing the appeal of luxury properties.Increased market activityElection years tend to increase real estate market activity as buyers and sellers push to finalize transactions before potential policy changes take effect. This heightened activity can lead to a more dynamic market, providing opportunities for luxury homeowners to sell at premium prices and for investors to find attractive deals.Long-term investment opportunitiesElections bring about dialogue and platforms on long-term economic strategies and development plans. Investors looking at luxury real estate benefit from understanding these plans and identifying regions and properties poised for future growth. Coastal Delaware's unique charm and strategic location make it an excellent choice for those seeking long-term investment opportunities.I'm here to guide you through the potential impacts of the upcoming election. Staying informed and proactive, we can capitalize on the opportunities that arise and ensure your investments thrive. Contact me if you have any questions. -Henry

Selecting a contractor with a proven track record ensures quality expertise, transparent pricing, and a stress-free experience. The same principle applies when selecting a moving company. Lately, we have witnessed some unfortunate situations with untrustworthy movers, which prompted me to write about it!All movers want you to think they are trustworthy, but the statistics say otherwise — in 2022, the Federal Motor Carrier Safety Administration (FMCSA) received almost 5,000 complaints about moving companies.Additionally, the Better Business Bureau (BBB) averages about 13,000 complaints or negative reviews annually in referance to the policies or practices of moving companies.Clearly, the moving industry has its share of dubious or fraudulent companies.What can you do to protect yourself?Here are 6 steps to take before you allow a mover to drive off with your belongings:1. Verify that the company is properly licensed. If you’re moving to another state, ask for their U.S. DOT (Department of Transportation) number so you can find them in the FMCSA system. If you’re hiring a local mover, verify the company is registered with the Secretary of State’s office or similar licensing agency for your state.2. Make sure they carry liability insurance for your items. Federal law dictates that most moving companies carry “basic insurance” for your items. This guarantees you receive a portion of the value for anything that is damaged or lost. For an extra charge, many companies offer “full value protection.” Verifying the options beforehand can prevent headaches or the need for you to purchase full-value insurance from a third party.3. Verify they provide workers’ compensation for their employees. The “material movers” and “light truck drivers” categories consistently rank among the top 5 categories of the U.S. Bureau of Labor Statistics (BLS) list of workplace injuries. To protect yourself and the moving crew, make sure the moving company provides workers’ compensation insurance.4. Carefully check for reviews. Check the FMCSA and BBB sites for obvious difficulties. Then look at other places online. Check for reviews on their website, or on Google, Yahoo, or another search engine. Moving.com’s Moving Company Directory also provides reviews for hundreds of moving companies. Reviews are so critical today that reputable companies will work hard to make sure they get good ones.5. Check their pricing policies. You’ll need several answers here. What’s the basic fee? Do they charge extra for heavy or bulky items? Are their price quotes firm? Prices that seem too good to be true usually are.6. Review their shipping policies. What exact services does the contract with this company cover? Do they handle all your move details in-house, or do they contract parts — like packing or loading — to other companies? Are there any items — like pianos, firearms, or expensive heirlooms — they won’t ship?If you know you’re going to need a moving company, reach out to us for referrals. We can provide you with names of companies we trust to move the things that matter. -Henry

In conjunction with inventory rising by 24% throughout the first quarter, we also observed heightened buyer demand across many of our markets. Recent listings have frequently sold swiftly, often attracting multiple offers, particularly when competitively priced relative to market value. This underscores the importance of pricing in today's market as a crucial factor. Certain submarkets and communities still contend with historically low inventory, contributing to sustained upward pricing trends. Our current market absorption rate is 2.8 months, which is higher than during the pandemic boom, but remains low compared to pre-pandemic standards. Historically, new listings show a rapid increase month by month as spring progresses. Inflation has moderated since mid-2022 but remains above the Federal Reserve's preferred levels, leading the Fed to maintain a holding pattern since August. Our market isn’t as interest rate sensitive as other areas, but anticipated reductions will only strengthen our market. Stock markets reached new highs in March, playing a substantial role—particularly for wealthier households—in bolstering wealth, consumer confidence, and the capacity to make all-cash purchases for homes. Closed sales, active listings, days-on-market, and months of available supply are key indicators as we look to the summer real estate market. Our latest market reports for Coastal Delaware and Coastal Maryland are available below. These reports offer insight into the factors driving current sales trends throughout our region.Click Here to review updated reports for each Coastal Delaware market. If you are considering a real estate purchase or sale, I welcome a discussion to review your objectives. As always, I'm here to help. Don't hesitate to call to discuss any questions you may have. -Henry

As we navigate the early months of 2024, Sussex County homeowners and investors are exploring property taxes and how the increased assessments will be allocated.A closer look at property reassessments Delaware's initiative to reassess property values statewide is making significant strides, with Sussex County in the spotlight. This effort is aimed at ensuring an equal distribution of the property tax burden for maintaining our local taxation system. This means reassessments will soon reflect more current property values. Property owners are currently assessed based on 50% of a property's 1974 appraised value. The reassessment, initially scheduled for completion by 2024, has been extended to February 15, 2025. The reassessment project will encompass over 181,600 properties, including residential, farm, commercial, apartments, and utility facilities. The outcome of the reassessment will be reflected in the tax bills issued in late summer 2025. This adjustment period allows for a smooth transition to the new assessed values, mitigating the impact on homeowners. Your tax bills: Stability in times of change Despite the reassessment, Sussex County's fiscal year 2024 has greeted homeowners with a sense of stability. The primary goal of this reassessment is not to increase taxes but to distribute the tax burden more equitably among property owners. The law mandates that the reassessment be revenue-neutral, meaning it should not result in a net increase in tax revenue. However, individual outcomes may vary, with approximately one-third of properties expected to see a tax increase, one-third a decrease, and one-third remaining the same. Data collection and appeals Property owners will receive mailers to verify property data, and Tyler Technologies will conduct site visits, identifiable by their bright yellow vests and county-issued ID badges. The reassessment process includes provisions for property owners to appeal their new assessments if they believe they do not accurately reflect the market value. Informal hearings and reviews will be available to address discrepancies and ensure fairness. Investing in our community's future The revenue collected from property taxes is funding essential services from wastewater infrastructure and public safety enhancements to supporting our local schools. We encourage you to explore more about your property taxes and the services they support. For detailed information and resources, please reach out to me. -Henry P.S.: Mark your calendars for the Great Delaware Kite Festival on March 29th. This family-friendly event promises a day filled with joy, color, and the thrill of kite flying.

As part of a partnership that began last fall, we are proud to announce that we have taken the next step in our collaboration by unifying our identities under the Monument Sotheby's International Realty name. This change allows us to provide an elevated client experience to our buyers and sellers on either side of the Bay Bridge. We now have 12 offices and over 300 sales associates serving the Mid-Atlantic region. Our listings will still carry that beautiful blue sign and clients will receive all the benefits of the Sotheby’s International Realty brand, the global leader in luxury real estate and most recognized real estate brand in the world, now backed by the enhanced marketing support of our larger organization. I’d like to bring your attention this month to a May 2023 ruling by the Supreme Court of the United States (SCOTUS) that could affect you and your property. In Sackett v. EPA, SCOTUS favored an Idaho couple who wanted to build a house on their lake-front property. The EPA objected to the Sacketts’ plans to fill a section of their property that had been qualified as wetlands. But in its recent ruling, SCOTUS greatly narrowed the definition of what constitutes protected wetlands. Previously, properties that contained a “significant nexus” to larger bodies of water, such as rivers or oceans, were protected under the EPA’s Clean Water Act. The nexus — or connection — did not have to be “continuous,” just “significant.” Critics of the act had long opposed the vagaries of its wording and conflicting interpretations in courtrooms, but EPA officials and other groups had maintained that waterways are connected in ways that are not always visible. The new ruling requires that to receive protection, a wetland must have a “continuous surface connection” with larger “commercially navigable” bodies of water. By this reclassification, wetlands without a continuous connection to these larger traversable waters are no longer under EPA jurisdiction. EPA officials, nonprofits, and private watchdogs are understandably concerned. They estimate that the latest judgment puts hundreds of thousands of acres of wetlands at risk of water pollution by developers or individuals who are no longer obligated to comply with EPA water pollution standards. Conversely, private wetland owners see the court’s decision as a win. Now, they have much greater discretion over how to use their property. Still, the ramifications of finding in favor of the Sacketts will be felt differently across the country. For instance, Delaware has more vested interest in this ruling than most states do. While wetlands cover 5.5% of the 48 contiguous states, almost 25% of the land in Delaware is wetlands. Additionally, 80% of Delaware’s wetlands are owned privately. If you’re considering developing part of your property that may be in question, or are evaluating the potential of a future investment, I’m here to help work through the decision and ramifications. -Henry

Selling a home or investment property is generally a straightforward task. However, a common challenge is determining what renovations are worth the effort and expense to optimize marketability — so you can get top dollar and make a profit. A recent Realtor.com survey shows that more than half of homeowners consider renovating and readying their homes for the market as their least favorite aspects of selling a home. Although sometimes exhausting and with economic ramifications, both steps are crucial. Each year Remodeling Magazine publishes the Cost vs. Value Report, which analyzes the ROI homeowners gain for specific renovations to their homes. The report is a valuable resource for homeowners committed to maximizing their returns. The 2023 edition revealed both consistencies and surprises in the home renovation market. The below graphic summarizes the findings and here are the highlights.• Overall, exterior projects generate a higher ROI than interior projects, as consistent with data published in every previous Cost Vs. Value Report. To put into context, seven of the top 10 projects with the highest ROI reported in this year’s issue are exterior projects. An indication that home buyers see real value in having new exterior doors, garage doors, and windows. They also appreciate an updated exterior; vinyl siding, fiber cement siding, and brick veneer additions all made the top 10 — and should recoup at least 61% of their cost.• Even budget renovations could generate a decent return on your investment. The two least expensive projects — entry door replacement and garage door replacement — placed fourth and second, respectively, on the list of 23 jobs that were ranked.• This year, mid-range major room remodels are expected to yield ROI that surpasses their upscale counterparts. This estimation extends to kitchens and bathrooms in both categories. Similar superior economic performance is also anticipated for bathroom additions. In other words, for 2023, mid-range is better than upscale.• Government mandates or directives affect homebuyer’s expectations. The renovation surprisingly at the top of the list — converting the HVAC system to electricity — is a priority concern for many, especially if they live in or near one of approximately 100 cities that either mandate or incentivize them to convert to electric heating, cooling, and cooking systems. Buyers are willing to pay a premium for homes whose owners have been proactive about this switch.Reach out to me for additional insights and referrals to optimize your property’s marketability.Furthermore, if you need help deciding which are the best renovations for your particular situation, consider contacting the folks at Renovation Sells. They can help you design, construct, and finance the renovations that can yield a strong ROI. Renovate wisely- Henry

As we begin 2024, we continue to see a lower than average inventory of existing homes for sale. Home prices rose faster in December than they have in more than a year. Falling mortgage rates brought more buyers into the market in December, but they faced the same challenges for the past two years, a lack of homes to choose from. Some of our markets are beginning to experience a slight uptick in listings, which is good news for the buyers who have been patiently waiting for inventory to increase. Closed sales, active listings, days-on-market, and months of available supply are key indicators as we look to the spring real estate market.The Sotheby’s International Realty 2024 Luxury Outlook Report provides an overview of industry trends in high-end residential markets around the world and highlights what you can expect in the year ahead. As buyers are acclimating to the new normal of higher interest rates, high-end home seekers are expanding their searches to more parts of the globe. In this report, we explore topics from emerging markets including Saudi Arabia and Mexico City to the newest tech tools currently influencing the real estate industry. We know buyers and sellers want to spend—and earn money—wisely, and staying well-informed is just the way to do it. I hope that this compilation of research and industry perspectives helps you as you look to invest your equity wisely in the year ahead.READ THE REPORTOur latest market reports for Coastal Delaware and Coastal Maryland are available below. These reports offer insight into the factors driving current sales trends throughout our region.COASTAL DE MARKET REPORTSAs always, I'm here to help. Don't hesitate to call to discuss any questions you may have or assist in connecting you with a Sotheby's International Realty expert in another part of the country or world. -Henry    

The summer season is just about in full swing but sales are still down significantly. When compared to pre-pandemic times, it was common to have about 4x the number of homes on the market this time of the year. The year-over-year median purchase prices have increased by 17% but sales would certainly be higher if our market had more inventory. This month's article might interest you if you're considering subdividing your current property, evaluating lots to subdivide, or just curious about how developers in our market subdivide land for new developments. Since there's a lot of new construction in our market, buyers often ask how the subdivision process works. Why would someone want to subdivide land? Breaking up a parcel is a practical way to create value. Provided there's a market, you can make a worthwhile return. You also may want to develop the land, e.g., build homes or commercial space, to generate a short-term return or passive cashflow. Here's a quick overview of the flow of events and things to watch for: • Outline your objective and plan — get started early and plan accordingly, as the process can take as much as a year. • Conduct a feasibility study: - Ensure there is a market or demand for the location and type of lot you're offering.- Determine how much the lots will sell for, likely time on the market, and approximate costs of subdividing in your town.- Evaluate development costs and timeline.- Check the availability of utilities — present, planned, proposed, and possible.- See what improvements will be required by planning authorities.- Consult an attorney to discuss any legal implications.- Work with a title company to research the deed and tax records; ensure there are no easements or encumbrances that could adversely affect the marketability of the title. • Hire a surveyor to mark the property's boundaries and prepare a plat map. • Submit application and plan, attend the open or closed hearing, and get approval or denial. • If denied, determine the cause and then reapply. Most issues are simple to resolve when you conduct due diligence in advance. That's the high-level view. If you have land or are considering purchasing land as an investment, connect with me to learn more about the process. -Henry

My wife and I recently took our children to the Caribbeans and our fantastic tour guide said something that I hope our kids never forget: "We have no problems, mon. Just situations, and we take care of them before they become problems." In 2002, I started my real estate career in the commercial office brokerage sector. The terms of each transaction were unique and often complex. Each deal required a high level of sophistication and typically involved separate attorneys negotiating each aspect of an agreement before terms were finalized. Comparatively, residential real estate transactions are straightforward, and our state contracts are usually negotiated without an attorney. We strive to create a smooth process throughout, but situations inevitably arise. Navigating and providing creative solutions is essential to achieve a successful outcome. Here are some of the top situations we see: Hidden/Latent Defects After the close of the transaction, buyers may find damage that wasn't previously visible: mold, foundation issues, termites, plumbing — the list goes on… Who's responsible? It can be tough to determine and costly to remediate. Tips: • Sellers: Get your own appraisal and inspection (including for pests) to know the property's condition and minimize your liability. Always disclose known defects — no matter how minor. • Buyers: Before submitting the offer or reaching the closing table (prior to the contingency period expires), hire an appraiser and/or inspector you trust. Breach of Contract Sometimes it's inevitable that one of the parties in the purchase agreement will need to breach the contract. Though it's generally done so with careful consideration and good intentions, both parties need to be prepared for the consequences and take steps to avoid the situation in the first place. Tips: • Ensure the agreement includes everything you want and contingencies to protect your interests (your Realtor will guide you here). • Be prepared to lose your deposit if you're the buyer or to return the deposit as a seller. • Communicate openly with the other party and your Realtor and address issues as soon as they arise. Title Issues It can happen that the seller isn't aware of encumbrances (loans, liens, or other deed claims) against the property, throwing a sizeable wrench into the gears at or after closing. These can be discovered before closing (preferred) or after (the buyer and lender could be liable). Tips: • Sellers: Pay for a comprehensive title search before listing the property. • Buyers: Conduct a title search with a reputable company. Get title insurance to protect yourself from third-party claims that may arise in the future. Lenders generally require this. Make sure to get coverage if you're paying all cash or buying a property out of probate or that's been inherited. Financing Challenges What if the buyer can't qualify? The situation can become tenuous and the transaction may fall through if it's close to closing. This is a common situation and best addressed in advance: Tip: • Sellers and buyers: Require or obtain a pre-qualification and proof of funds before accepting/submitting an offer. Ensure the buyer is aware of how interest rate increases may affect affordability and approval potential. There are plenty more situations that would take too long to delve into here. If you're considering buying or selling, reach out to me to discuss potential issues that might come up in the transaction. After working through hundreds of successful closings, my team knows what warning signs to watch for before and during escrow. -Henry

If you're evaluating real estate in a trust, refinancing, considering a sale, or need to know the value of your home for other purposes, an appraisal is in your future. To ensure the appraisal goes smoothly and your property is valued fairly, you'll want to do a bit of preparation. Depending on the situation and your level of motivation, the amount of work it will take to get ready for the valuation will vary, but it's better to exercise what control you can over the process to obtain the best outcome. Here are a few strategies to consider: • Provide the appraiser with comps but be respectful. Identifying properties that are 'comparable' to yours in terms of condition, location, and amenities will help you asses the value. • Simply note the address and share it with the appraiser. The less you push, the better. The appraiser may or may not consider your suggested comps, but it can help. It may also allow you to highlight some of the features and improvements of your property and how they support a strong valuation. • Valuing homes isn't a glamorous position, so make the appraiser's job easier by cleaning up clutter and making it convenient to access every room and take measurements. Aggravating your appraiser won't help your case, and they may not be as generous with their valuation, particularly if they're distracted or impeded during the process. Is it necessary to invest money in repairs and upgrades? If you have the resources and time, and it fits the situation, making improvements will increase value. However, ensure the repairs and upgrades you pursue carry the greatest perceived (and actual) value in the local market. Ironically, the appraiser is the most qualified person to make that determination, so it may be beneficial to consult one before putting in any money. On a related note, don't bother with 'lipstick' improvements. While helpful for buyer viewings, quick cosmetic improvements are generally transparent to a keen appraiser and won't substantively affect value. The best thing to do is clean up and be open about the home's condition. Every appraiser has their perspective on the market and strength in a particular region. If you have the option of selecting the appraiser, look for one that specializes in your property type and lives in or focuses their work in your community. Every area has unique demand factors, property features, and buyer trends that the appraiser needs to understand and have experience with to value your home accurately. If the appraiser is assigned by an appraisal management company or other organization and they're traveling from out of the area, you're entitled to inquire regarding their expertise and, if appropriate, dispute their selection. My team and I can provide more insights on the appraisal process and getting prepared. We're also here to help you estimate the value of your home and find suitable comparables. -Henry

With high inflation (though it's cooled a bit) and rising interest rates, the cost to buy or build a home is an issue of concern. Let's explore the comparative cost and advantages of building a custom home vs. buying a pre-built, conventional or modular build. A study by NAHB (National Association of Home Builders) found the cost to build a home in the median-value range is $34K greater than buying a pre-built home (Houzeo). However, a recent StorageCafe (Yardi) study reported that the cost to build a new single-family, median-value home in Delaware is on average, $96K less than to buy, making it the 6th most cost-effective state for homebuilding. Generally, developers have a cost efficiency due to the scale of their operations. Though this isn't always the case, as the research above suggests. Developers have the leverage to buy everything involved in large quantities or at wholesale value. Whereas, if you're building a house, you may have to pay more for many aspects of the project, including: • Architectural and engineering fees.• Land acquisition.• Permitting and surveying.• Construction labor and management.• Materials. Luxury home construction typically ranges between $400 to $600 per square foot. Of the total development costs, you can generally expect to pay about 30-60% for labor, 40-50% for materials, and ~10% for design, permitting, and other soft costs. On top of that, it's a good idea to reserve a 20% cushion to cover unexpected expenses. Another thing to consider is time. If you're looking for a first-time or replacement primary residence or moving from out of state, time may be of the essence. Depending on the size of the home and labor availability, it could take 6-12 months or more to complete the build. If you need to move quickly, buying a pre-built home is likely the best option, costs aside. For time- and cost-efficiency, modular homes are a viable option to look at. As the components of the structure are already pre-designed and factory built, the manufacturer can pass on the savings afforded by the scale/volume of their operations. Once the foundation is laid, the home can be assembled in a short amount of time. Yet another alternative is buying an existing home that needs improvements and renovating it. While your design options might be a little more limited than spec (custom) building, renovating can take less time, consume fewer materials (supporting sustainability), and cost less to finish. Additionally, some loan programs allow you to roll these costs into the purchase with favorable terms and interest rates compared to construction financing. Another benefit is that local and federal tax incentives could be available for green renovations and historic reuse. There are advantages of buying pre-built or customized homes from a new home builder. If the house isn't already in existing inventory, new home builders can typically put together your house with your preferred options in less time than it takes to spec build a home. Builders often offer price breaks, financing incentives, and free upgrades depending on demand factors. With interest rates on the rise, there may be opportunity to negotiate favorable terms and pricing. All these strategies are feasible, and the best approach is unique to the home buyer's needs, preferences, and goals. My team and I have experience with each option and will guide you toward the right fit and give you an idea of relative cost and time requirements. Reach out to me for an informal consultation. View our active listings below. I'm available if you have any questions or wish to schedule a meeting. -Henry

A growing issue in our market that owners and buyers should be aware of is title fraud (also called title/deed theft). It's not extremely common, but it does happen and can be devastating when it does. The crime occurs when a fraudster steals your personal information and uses it to file a fraudulent/forged purchase agreement and deed, transferring your property into their name. They may then resell the property, rent it out, or take out financing against it. Who's most at risk? Owners that have non-owner occupied residences, such as long-vacant homes or vacation rentals, with low or no debt on the asset are the most likely victims of title fraud. When the owner isn't attending to a property and related mail, scam artists can steal their property months or years before they find out. Once this happens, getting your property back if you're the owner or reclaiming your deposit/purchase funds if you're the buyer can be legally challenging and costly. There are a few sensible things to do to protect yourself from title fraud as an owner or buyer. The first is purchasing an 'enhanced' title insurance policy that will guard you against loss in the event of an unauthorized transfer. The next thing to do is request that the county recorder or register of deeds put an alert on your deed to notify you if a transfer is requested. Additionally, ensure mail is monitored, and keep an eye on your credit report for any unusual information, inquiries, or loans. Finally, be wary when buying a house that's been vacant for an extended period and where the deal is too good to be true. One more thing: Always work with a Realtor. We adhere to a code of ethics, have the experience to spot suspicious activity in a transaction, and will make sure your interests are fully protected. -Henry

As we observe what has been a shifting market here at the beach for the last few months, the outlook for buyers is starting to tilt in their favor. However, there are still pockets of high demand areas and our market has historically been less sensitive to interest rate volatility. Furthermore, real estate continues to be an excellent hedge against inflation. I'd like to follow up on our previous article about appraisals by digging into 'forced appreciation.' It's one of the tools investors use to boost the value of a property without waiting for the market and natural appreciation to increase appraised value. The principal way this works for income-generating (i.e., rental properties — both commercial and residential) is by increasing the net operating income (NOI). NOI is one of the figures used to calculate the market value of a property according to the prevailing capitalization rate (investors' expected rate of return given risk). How do we increase NOI? Here are a few popular and effective strategies leveraged by investors: • Bring rent/lease rates up to market.• Reduce management and operational expenses.• Renovate/reposition to increase appeal and demand.• Create additional cash flow streams (ancillary revenue). Depending on the type of property and the investor's budget, some combination of these strategies will work to increase value under nearly any market conditions. These are particularly effective when the market is stagnating or in recession, and investors can't rely on economic growth to drive value. Such is the case currently with the Fed tamping down on inflation through monetary policy. Fortunately, some of these strategies work well for non-rental properties as well, though value creation is based on comparable value rather than income. To render a valuation in this case, appraisers use the substitution method to compare the perceived and statistically extrapolated value of the individual and combined features/qualities of your home to similar on-market and recently sold properties in your community. While income driving strategies do not apply here, making your home more energy efficient attracts potential buyers and promises lower ownership and operating costs. Additionally, all buyers appreciate properties in top condition with excellent curb appeal and amenities. You have the power to control the value of your home — much more so than other types of passive assets, such as securities. Another approach to consider if you have a vacant property on your hands, such as a second or vacation home by the beach that you don't use often or at all, is to convert it to a vacation rental. Reach out to us to receive a rental analysis to determine if your property has greater value potential as a short-term rental, long-term (conventional) rental, or a non-income generating property. As always, I'm here to help you devise the best strategy based on your objectives and preferences. -Henry Jaffe