Archive for the 'Buyers Corner' Category
Condo Special Assessments-A New Twist in Today’s Market
July 3rd, 2008 Categories: Auctions & Foreclosures, Buyers Corner
When most people think of special assessments for condos they think major common area improvements. In the Northern Virginia area condo owners often see them when it is time to repair the balconies, upgrade the amenities or redo the lobbies but in today’s real estate market we also see special assessments for another reason.
Delinquencies and foreclosures are sapping associations of much needed income to keep current on the everyday bills. A few years ago condos in Arlington and Alexandria were flying off the market faster than they could be built. Unfortunately among the buyers who were excited about a new home close to the metro there was a large group of investors out to make a few dollars with a quick flip.
When the market made its dramatic turn the first properties to be hit were condos. Hundreds of flippers suddenly found themselves with units worth less than the paid for them even at pre-construction prices. So what is the first thing they stop paying? They stopped paying the condo dues resulting in large deficits for the associations. Associations in desperation to try and collect some of the dues hire attorneys to put liens on the condo in hopes of collecting some of the past due funds.
However this just adds to the money worries by larger legal bills. Putting a lien on the property isn’t going to do the association any good. When the property goes to foreclosure there isn’t any money to pay the back dues and the lender isn’t responsible for any past dues. When the property is sold the lender will pay the dues from when they owned the property but while it sits on the market the debt continues to rise.
For a buyer today looking at a condo purchase they need to pay careful attention to the association budget. They need to make sure that the see the latest budget that shows the real numbers. Most lenders will not pay a special assessment and a buyer could get a surprise after closing to find themselves with fees to be paid that they weren’t expecting. Today’s market is full of twists and turns. A special assessment because your neighbors aren’t paying their bills is a new one to watch out for.
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What is Hot in Northern Virginia Besides the Weather?
June 13th, 2008 Categories: Auctions & Foreclosures, Buyers Corner, Focus on Prince William, Local Market Updates
Sales in Prince William County would be the answer. Sales may be stagnant in other parts of Northern Virginia but buyers are flocking south to Prince William to take advantage of the lower prices and great bargains in the area.
Check out the total sales comparisons between 2007 and 2008 in two zip codes in Prince William County.
So why the sudden interest in Prince William County? Obviously it is due to the significant price drop which has happened over the past year.
Neighborhoods in 22191 include both the newer subdivisions of Port Potomac, Belmont Bay, Rippon Landing and River Oaks. Older neighborhoods such as Georgetown Village, Marumsco Woods and Newport have been some of the hardest hit with foreclosures. Neighborhoods in 22193 include Dale City, Lake Terrapin, Winding Creek Estates and Pearsons Landing.
Does this mean that Prince William County is out of the woods yet? No as there are still a significant number of properties for sale and there is anticipation that more foreclosures will be coming on the market through the summer. However as new properties are listed the expectation is that we will see additional price reductions in certain neighborhoods in Prince William County creating even more values for savvy home buyers.
For investors, who are looking to buy and hold for a few years, and particularly buyers who are looking for a new home that falls well within the limits of a FHA or VA loan there are terrific homes and neighborhoods to explore. From the starter home in Lake Ridge to the luxury mansion in Haymarket you can find a deal in Prince William County.
If you are interested in exploring your options in Northern Virginia give me a call. I’ll travel the highways and back roads of Prince William County looking for a deal for you.
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Another Get Rich Quick Real Estate Scheme
June 10th, 2008 Categories: Auctions & Foreclosures, Buyers Corner
This morning in one of those can’t sleep moments I turned on the TV and the latest infomercial on how to make a fortunate buying foreclosures was running. It was one of the many that the unsuspecting public hears everyday. The premise in all of them is the same. Approach a homeowner facing foreclosure and save them by buying their home for what they owe. To make them feel better about their financial situation tell them “you aren’t in foreclosure your house is.” Then you can turn around and sell the home and pocket an enormous sum of money in 30 days.
Anyone who has worked with a “pre-foreclosure” knows what is owed on the property is often more than the current market value of the property. So the idea that you can walk away a short time later with a profit is simply ludicrous. Second if the home is in “pre-foreclosure” in order to buy it at less than owed is called a short sale and it requires lender approval. The property is not being sold for pennies on the dollar but at today’s market value. There is no huge profit waiting for you when you lock up the property and there isn’t another buyer you can assign the contract to, the bank won’t allow it.
Now I’m all for anyone who wants to make money in this market. I’m an investor and am on the lookout for properties that would bring positive cash flow as an investment and a positive return on my money in the long term. In today’s market this is the strategy that is going to make buyers millionaires. It won’t happen overnight and it won’t happen in a year. It happens one property at the time over period of time. It is a strategy that involves finding a good value in an area where you want to live in or where you can see a positive cash flow as a rental property.The infomercial gurus aren’t getting rich flipping properties in today’s market. They are getting rich selling books and workshops. Don’t be misled about how to make money in buying foreclosures. Talk to an agent who is in the trenches in your area. Talk to a financial advisor or an accountant. Don’t buy into the infomercial hype. You could end up being the next homeowner facing foreclosure and when your house is in foreclosure you are too!
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One Bad Apple Doesn’t Spoil the Whole Bunch-Or Does It?
May 21st, 2008 Categories: Auctions & Foreclosures, Buyers Corner, Focus on Prince William
On a regular basis the local press focuses on the negative aspects of the current market in Prince William County. Buyers call to ask about the area and say we have heard the Prince William County is a “bad place to live.” It is an assumption that keeps many people from making an exploration through the great neighborhoods and communities that stretch across the entire county.
For those that aren’t familiar with Prince William County, the first thing to realize is how big the county is. It stretches from the Potomac River at the eastern border and to the west the start of the Blue Ridge Mountains. That is a total of 348 square miles. To put this in perspective Prince William County is about ¼ the size of the entire state of Rhode Island. To try and say that the entire county is a bad place to live would be a stretch of grandiose proportions.
So how do you put a “bad market” in perspective in a county as large as Prince William is? You break it down into small and manageable sections and then you start to decide if the market is really bad or is it a great opportunity for a smart buyer to find a nice home at a reasonable price? Every buyer has a choice to make. They can wait for the market to “hit bottom” not knowing where the bottom is, they can stay closer to town and pay more for smaller space or they can decide that a deal is a deal and look past the press.
In the past few weeks my buyers have found great deals in Prince William County, in neighborhoods that have been overlooked by other agents because of the “stigma” attached to the county. Buyers are not only buying foreclosures but they are also buying new construction and waterfront condos too. It isn’t an all or nothing proposition when it comes to what you can find.
So in the case of Prince William County the bad press makes potential buyers relocating to the county think that the entire 348 square mile area should be avoided. This is as far from the truth as still believing that the world is flat. With its rich history, diverse neighborhoods and substantial commuting options buyers need to consider whether they may be shorting changing themselves by not taking a look around. Don’t let the press scare you away. It might not be the place you decide you want to live but you might be surprised by what you find.
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An Optimists View Of Northern Virginia Short Sales
April 3rd, 2008 Categories: Auctions & Foreclosures, Buyers Corner
Yes Virginia short sales do get to closing. Is it the easiest route to homeownership? No the easiest way is to find an owner who is aware of the current market conditions in Northern Virginia and prices their home to reflect the market. Can a short sale work for buyers who are looking for a good deal and have patience to work through the process? Absolutely!
As an agent who has worked both sides of short sales there are some tips that I’ve learned along the way. For buyers who are considering making an offer on a short sale you need to be aware that no matter what you include in the Virginia Regional Sales Contract the lender will have their own addendums which will supersede just about everything you put in the contract. This doesn’t mean that you shouldn’t write a contract with the terms and conditions that meet your circumstances but it does mean you need to be prepared to be flexible about closing dates, inspections and closing cost credits.
If you are firm that it is your way or no way because this is a “buyer’s market” then a short sale will leave you feeling frustrated and angry. The processors handling short sales don’t really care about what you want. They are running the numbers to see how much they can walk away with at the end of the deal. It is strictly about the bottom line for them.
For agents who are thinking about making an offer on a property listed as a short sale there are a few key questions to ask before you write the offer.
Does the agent have permission from the owner to talk directly to the lender?
Has the agent been in touch with the lender and have appropriate contact numbers?
Has the owner completed the short sale package from the lender?
Has the owner prepared their hardship letter?
How many loans are currently on the property?
If more than one loan are they from the same lender?
Who is the lender (s)?
Have you done a pre-settlement statement for the lender?
How long do you estimate that the lender will take to provide an answer?
While buying a home listed as a short sale may be more time consuming in the end you will get a home a good price without some of the problems associated with properties already owned by the lender. If you are interested in learning more about purchasing a short sale or have a home that you are considering listing for sale give me a call. I’ll be glad to talk to you about the process and see how my team can help.
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Slight of Hand-How long has that home been on the market?
February 28th, 2008 Categories: Buyers Corner, FAQ's
How long has that Northern Virginia house really been on the market? That is a question every buyer should be asking before they formulate an offer on a property. In Minnesota one agent has gone on national TV to clearly state that he is manipulating the data in the local MLS to make a home feel fresh. In fact his listings have been on the market for much longer and he isn’t the only one trying this sleight of hand. In Northern Virginia a number of agents employ this tactic and a few others to try and hide the reality that the house has been on the market for awhile by deleting the tax id from the listing.
For buyers who are working with an experienced Realtor® this slight of hand is a waste of the listing agent’s time. However for buyers who have decided to go it on their own this manipulation of MLS data could cost them big time when they overpay for a home. While the average days on the market in Northern Virginia varies slightly between counties and type of property the average in our area has climbed from a nanosecond in 2003 to between 60 to 120 days in 2007 and 2008. So unless a property has been languishing on the market for 6 months or more the fact that it has been on the market for a couple of months shouldn’t shock anyone and isn’t a reason to withdraw it from the MLS and then reentered it five minutes later.
The MLS in our area has two fields that a buyers agent knows to check when looking at how long a property has been on the market. The first is DOM (Days on Market) and the second is DOMP (Days on Market Property). The second field is the cumulative days the property has been on the market continuously even if the seller has lowered the price, changed agents or withdrawn and re-listed the property within 90 days. As a buyer when you are looking at data across various websites you may only see the DOM field and not the DOMP field.
Many times buyers think they will get a better deal if they go right to the listing agent and bypass having their own representation. Not only can an experienced buyers agent help you navigate the correct information in the MLS but guide you every step of the way from finding the right financing, the right home, navigating the complex contract process and make sure that when you get to the settlement table that you have had an advocate protecting your interests.
So if you are starting the process of looking for your new home, make sure you find your own agent. You may save thousands of dollars and a lot of heartache making one of the largest single financial purchases in your life.
| Discussion: 5 Comments »
Will This Affect the Resale Value of My Home?
February 18th, 2008 Categories: Buyers Corner, Selling Thoughts
Buyers today are often thrown for a loop when they look around a neighborhood and see so many FOR SALE signs. The sign riders advertising foreclosures or short sales don’t help. However in the case of some buyers it has nothing to do with the home values in the neighborhood, they can see past the market today and know that in the Northern Virginia area prices do recover. What throws them for a loop is whether the large utility right away, electric poles and water towers will affect the value of their home when they go to sell.
My answer is always YES. Now some may disagree with that answer but if a buyer is asking the question today, then other buyers will ask the same question when the house comes up for sale again in the future. Given a choice to buy a home without the power lines running through the backyard or not then I will always advise a buyer on the side of NOT. Now if the poles can only been seen in the dead of winter perhaps there is another answer but when they are what you will look at 365 days a year. NOPE.
Today while looking through a neighborhood with plenty of options on homes for sale I came across a home that made me stop and wonder, how will they be able sell the property in the future? Perhaps the developer made them a deal they couldn’t refuse, perhaps they thought that during the next big drought they would have a secret stash of water or perhaps they didn’t have a Realtor® looking out for their best interests. Whatever the reason their resale value has a big red question mark around it.
So buyers if you are out driving around a neighborhood and see a home that catches your attention, stop and look carefully around you. If what you see is something you can fix then keep the home on your must see list. If what you see is something that you can’t change like a power line or water tower then you might want to consider another property.
If you aren’t currently represented by a Realtor® and are interested in learning more about buying a home in Faifax County, Prince William County or anywhere in Northern Virginia give me a call. I’ll help educate you on the home buying process, what to consider when buying your home and protect your interests both for today and into the future.
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2008 Is Just Around the Corner and the Questions are Still the Same
December 31st, 2007 Categories: Buyers Corner
As the year draws to a close Northern Virginia buyers are still asking the same questions as they were earlier in the year:
“Should I buy now?”
If I had my Magic 8 Ball it would be so much easier to answer that question. It seems the only way to still answer the question is still with “It Depends.”
Let me see if I can explain this in relation to Northern Virginia. In Northern Virginia there are good deals in different neighborhoods and different price points. If you are buyer who is planning on staying in your home for five years or more then this may be a good time to buy.
“But has the market reached the bottom yet?”
No one has the answer to this question. We can all say hindsight is 20-20. There are plenty of people who didn’t buy a home in early 2000 and then found from 2002-2006 that they couldn’t afford to buy a home. Now prices are lower, sellers are willing to negotiate on closing costs and interest rates on loans are competitive. Buyers who have looked at their finances and done the numbers are starting to buy their new homes.
While other buyers are waiting for the market to find a “bottom” the investors are quietly starting to buy properties and will be the landlords for those who decide to wait for another twelve months to eighteen months. The biggest uncertainty is not whether homes will appreciate, even in our slow markets in the 1980’s and 1990’s homes appreciated, but what will happen with interest rates.
Think about the trade off. If the price goes down another 10% but interest rates on mortgages go up to 8% where will you be? The last piece of the puzzle is the tax advantages of homeownership. No one will argue that they don’t exist. How they will apply to you depends on your circumstances and your income but they should be considered as part of your decision process.
“When Shouldn’t I Buy?”
Northern Virginia has a lot of relocation traffic, with military and private sector, moving every three years. If you know you are going to leave in that time frame then it might not be a good time to buy. You might have enough appreciation in your home to break even but when you figure in state taxes and transfer fees you may find yourself on the short side of the deal. There are some nice homes for rent in the area and most landlord will be glad to cut you a deal for a longer lease.
“So What’s My Next Step”
If you aren’t working with an agent give me a call. We will meet and talk about your situation and what you are looking for. Then if it makes sense for you to buy then we will get in touch with a lender. They will talk to you about your finances and what you are qualified for. We will also make sure that you understand the difference between what you are qualified for and what makes sense for your lifestyle. They are not always the same! Then let’s take a look at some homes in areas that meet your criteria. If it makes sense then let’s negotiate a good deal to get you into your new home and let the landlord find someone else who is going to wait and see!
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I’s that easy. At least that is what the speaker said at the “How to Make Money in Foreclosures” seminar offered in Northern Virginia this weekend. Whipping out a twenty dollar bill and asking for a ten in exchange he began to explain if you are decisive you can make money in today’s foreclosure market. Of course to understand how to do that you need to part with your own hard earned money and come to the BIG THREE DAY seminar that would give you all the details of their great program. Today we will tell you all the great stories of how other people just like you made thousands of dollars on flipping foreclosures.
First all the title of the seminar is wrong as it focuses on acquiring pre-foreclosure properties not foreclosure properties. There is a difference. A pre-foreclosure property is one where the mortgage holder has given notice to the homeowner that if they don’t catch up on their over due mortgage payments in the next 90 days then they will take the house from them. A foreclosure property is one where the mortgage holder has already taken the house back from the owner and is now looking to sell.
The seminars suggest you buy a property that has just had the pre-foreclosure notice announced (via courthouse records or online services) make an offer to purchase the property, assign the contract and then sell it before the hammer falls from the bank or auction company. They suggest that you get the owner to sign a quit claim deed over to you and then you flip the property for market value.
Not mentioned during the seminar are that most loans made in the last 5 years have a “due on sale clause” so when the current owner signs the deed over you have to be able to come up your own mortgage on the property and if the property was purchased within the last three years the amount owed may be more than today’s current market value.
Looking around a room full of people you could see the some of them being sucked in to the get quick rich mentality being touted. This is the same mentality that many of the owners of homes now in foreclosure had. Instead they own a home they can’t sell and have ruined their credit for the next 10 years. Don’t get sucked into thinking that the foreclosure market is the next get rich quick scheme. If you want to invest in real estate then talk to a financial advisor, an agent and an attorney about the right way to invest in real estate.
This isn’t the market for FIND IT*FUND IT*FLIP IT*
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This isn’t a story about the three little pigs and since all of the houses are brick you don’t have to worry about them being blown over. Instead it is a story about choices that buyers in today’s market have to consider every day. All of the houses are in the same Northern Virginia neighborhood.
The first house is new construction. When you walk in the door of the model you can’t help but be impressed. With granite counters, hardwood floors, soaring ceilings and much more it is everything today’s homebuyer could ask for. The builder is offering the “deal of the century” if you buy today and can deliver your new home in 45 days. The base price of the home is $628,000 and the builder is offering $15,000 in closing cost incentives.
The second home is a resale property and the owners have been in the home close to 2 years. They had many of the builders upgrades installed when they bought the home and have put up curtains or blinds in all of the bedrooms, installed a deck off the main level and have nicely landscaped the yard. The owners can move whenever you are ready just make them an offer. The resale property is listed at $799,000 and is offering 3% of the sales price as an incentive.
The last house is an REO (foreclosure). It is has of the upgrades of the builders model and a fully finished walk-out basement. The landscaping is done, the yard is fenced and the blinds are on the windows. It could use a good cleaning and a fresh coat of paint. The property is vacant and winterized and you will have to buy it “as is” but it is still covered by the builder’s structural warranty. The list price for the REO home is listed for $480,000.
Now this would seem to be an easy decision for a buyer. The REO property is almost $150,000 less and a professional cleaning and painting crew won’t set you back anywhere near that amount. But wait, a little additional digging in the tax records turns up that the last sales of the builder’s model have actually ranged between $500,000-$543,000. So the differential in price between the REO property and the builder’s model is not really $150,000 but closer to $25,000. So now what do you think about the REO property?
With many Northern Virginia buyers thinking that REO properties must be the best buy, this example shows you that the answer isn’t that simple. If you are looking in an area where you have a choice between new, resale and REO, there may be a better deal in a new property (in this neighborhood the resale property is clearly overpriced.) So don’t be fooled into jumping headfirst into the murky water of REO properties without the help of an experienced buyer’s agent. You don’t want to discover later that there was a better deal on a brand new home just down the street.
More Information on Northern Virginia Foreclosures
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