Monroe Street After Blizzard

Monroe Street After Blizzard,
originally uploaded by Mr. T in DC.

This is indeed what it looks like around here … isn’t is gorgeous?!?!

How to win in a hot market

photo on Flickr, courtesy of Matteo Favi

And this IS a hot market right now.

So all you Arlington VA home buyers out there, please pay attention:

• Real estate never sleeps. If you’re trying to buy a hot property, you have to move quickly, or you will lose it.

• Properties in good shape are rare, and they don’t stay on the market for long.

• It’s the market that determines the value of a house.  Try not to fixate on the list price of a house, but rather the fair market value (an estimate of what a buyer would pay a seller for any piece of property).

• You must have your financing in place before you look because houses are bought and sold overnight. You could lose your dream property waiting to secure the financing.

• When a renovated house is priced low, it is a sign that the owners are looking for a bidding war — they want to get as much money as possible out of the sale.

• Don’t judge a book by its cover. Same goes for a house. Go inside and look around before making a decision.

• When you are looking at a house, you have to have a wish list, but you have to understand that no house is going to be perfect.

The key to success when buying a home is to trust the experts.  That should include your agent first and foremost, your lender, and your home inspector.

I’m starting to bore myself …. but this is VERY important news

FHA again.  I’ve been procrastinating a few days on this post, but there’s no escaping it.

Things keep changing, and it’s really important to keep up.  Two big FHA changes happened recently in quick succession.

There’s good news and there’s bad news.  First the good, then the bad.

1. Now an investor can use an FHA loan to rehab a property and flip it.  That’s a big change, and hopes are that some of the deteriorated properties will be fixed up and get off the market.  Some of my buyers would really like to get involved in this, and now it’s possible.  Some of my other buyers don’t want to mess with fixing up that sort of property, but want to purchase it after it’s done.  Now more people should be happy.  I like that.
2. In order for a buyer using an FHA loan to purchase a condo, that condo building had to be approved by the FHA.  Approval is based primarily on the ratio of owners to investors in the building.  Used to be that even if a building wasn’t FHA-approved, the lender could investigate the building and issue a “spot approval.”  Many of my condo buyers used a spot approval to get the FHA loan through.  No more.  The entire building must have gone through the process to get approved, and be on “the list.”  Not on the list?  Sorry, no FHA loan will get you in the door.  Bad for both buyers and sellers.  Hopefully the management at a condo buildings across Arlington and Fairfax will take it upon themselves to pay the time (5-7 days) and money ($500-$1000) to get their building approved.   In the long run this change will actually be good, since there will be no uncertainly about whether or not a building will pass a “spot approval” but right now it does limit some options for both home buyers and home sellers.

Dave Stevens sure has been a busy guy since he left my brokerage and went to work for FHA.

Fannie to Offer Closing Cost Aid on Foreclosures

Fannie Mae, the largest provider of residential home funding in the United States, announced that it would pay the closing costs on purchases of foreclosed homes in its inventory. The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.

The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.

“Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover,” said Terry Edwards, executive vice president for credit portfolio management, in a statement.

Ya think?

Source: Reuters News, Al Yoon (01/28//2010)

It’s an Arlington rave

I often rave about the excellent Arlington County services, and here’s one of the main reasons why. Everyone’s talking about the new pool at Washington-Lee High School.  For good reason.  I highly recommend going there this weekend and then posting a review on Yelp.

Just not on Sunday from 1-4, that is.  I’d rather you visit my upcoming Open House in Barcroft.

new pool at Washington Lee High School

Monday Market Moment: the importance of rentals

The rental and sales markets of a region are inextricably linked. Someone looking for a place to live will (or should) consider this trade-off very carefully.  A lot of people looking for a rental home in the Arlington area are often surprised at just how expensive a decent rental can be, and are disappointed that they face both high property sales prices and rental prices.

However, the folks at Forbes Magazine did an interesting analysis of this rental/purchase decision, looking at the gap or spread between rental and purchase price in real estate markets across the U.S.

For people who want to own a home, the premium to buy—the spread between what they’d spend to rent and what they’d pay for a mortgage—is much lower than the 15-year average in many cities.

  To determine what cities are smart buys, Forbes magazine computed the premium and also identified locales where economists predict home prices will go up the most over the next five years.

Here are the top 10 cities the magazine chose as the best places to buy right now:

1. Boston-Cambridge-Quincy, Mass.
2. Charlotte-Gastonia-Concord, N.C.-S.C.
3. Chicago-Naperville-Joliet, Ill.-Ind.-Wis.
4. Cincinnati-Middletown, Ohio-Ky.-Ind.
5. Denver-Aurora-Broomfield, Colo
6. Minneapolis-St. Paul-Bloomington, Minn.-Wis.
7. Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.
8. Portland-Vancouver-Beaverton, Ore.-Wash.
9. San Francisco-Oakland-Fremont, Calif.
10. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.

The important bit of information that Forbes brings out about our Washington DC area is that we have JOBS.  This is very important, and always has been in this area.  I wrote about the importance of the local employment numbers a year ago.  Still sayin’…

A present for you

Uncertainty and restraint are the order of the day in this economy, and that sense of caution is reflected in home owners’ return on their investment in remodeling projects, according to REALTORS® in 80 metropolitan markets surveyed by Remodeling magazine for this year’s Cost vs. Value Report.  read more here…

I’m not bragging or anything

Arlington County Virginia was named one of Top 7 Intelligent Communities of the Year, through an award granted by The Intelligent Community Forum.  We were one of just two U.S. communities cited by the group.  Read on…

Is it any coincidence that Arlington County Board Chairman Jay Fisette and I went to the same undergraduate AND graduate schools (even the same grad school program), at the SAME TIME?  I think not!

Maybe, though, it all begins in kindergarten.  On Jan 12 Governor Tim Kaine announced  that Arlington Science Focus Elementary School, Arlington Traditional School and McKinley Elementary School have earned the 2010 Governor’s Award for Educational Excellence. The award is the highest honor under the Virginia Index of Performance (VIP) incentive program created by the Board of Education in 2007. The VIP program promotes advanced learning and achievement.

Change is constant

In an effort to “strengthen the FHA’s capital reserves,” the Federal Housing Administration Commissioner David Stevens  announced big changes yesterday:  the FHA will raise the up-front Mortgage Insurance Premium from 1.75% to 2.25%, the second time in two years they have increased the rate.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens (Long and Foster alum).

AND now, if borrowers want to qualify for the 3.5% down program, the new minimum FICO score is 580, and for those under 580, they’ll be required to put down at least 10 percent. The FHA will also reduce allowable seller concessions from 6% to 3%, forcing borrowers to have skin in the game.

The FHA has gone from insuring 3% of loans to 40% and they are now below their required reserves.  First time home buyers should be watching these development carefully, since FHA loans are the most popular choice these days for people trying to get a foothold in real estate, primarily because of the low downpayment requirement.

Let’s face it

Short sales and foreclosures will be with us for a long time yet.  At least through this year, and probably longer.

I’m currently working with a client who bought a condo (directly from the builder) in 2006.  Life happens, and now she has to move out of the country for a few years.  She’ll be back, though, so we’re considering whether to rent or sell her condo.  Either way, it’s an outflow of money.  Take your pick — a slow and steady drip, or a quick and fierce loss but be done.

If you find yourself in this same situation, or know of someone else who is, here are some steps to follow if you wish to sell the property:

1. Find a real estate agent who you feel comfortable working with to list your home for sale and manage the transaction.
2. Work with your agent to prepare a net sheet. A net sheet estimates the net proceeds of the sale. It takes into account the anticipated sale price, fees (including the brokerage’s commission) and outstanding loan balances. In a short sale, the net must equal $0 or less, because the seller may not receive cash at closing. If the net sheet does show cash due the seller at closing, you may have less drastic options than a short sale.
3. Write and submit a letter of hardship to the mortgage company. Not all banks require that a homeowner be behind in payments before approving a short sale, but all banks do require the owner to document a hardship that renders the home unaffordable.
4. Write an authorization letter or sign a form letter from your real estate agent granting the bank permission to discuss your account and sale with your agent, attorney and other relevant individuals.
5. Gather your financial records. You’ll need at least two months’ worth of pay stubs and bank statements, and two years’ worth of tax returns with their accompanying documentation, including W2s.
6. Review the comparative market analysis or broker’s price opinion your agent will prepare for you in order to decide on a list price.
7. Market the property, and let the games begin!  In this area, short sales and foreclosures are hot, hot, hot.  People love a bargain, and many think the words “short sale” and “foreclosure” are code for “bargain.”  They aren’t always, but perception is reality.

It may take some time because of bank delays, but this property will sell.  And the homeowner will have a new start.  That’s a good thing.

There are definitely things an agent can and should do to sell this house.  Too many agents are overwhelmed by the workload and do just the minimal things to get the property on the MLS.  I take a different approach.  Please encourage your friends and neighbors who are struggling to give me a call.  I can help.