Archive for the 'Real Estate Ramblings' Category
Northern Virginia Market Reports-Get the Data Right
October 7th, 2008 Categories: Buyers Corner, Local Market Updates, Real Estate Ramblings
We hear the doom and gloom on the real estate market everyday on the news. We remind ourselves and our clients regularly that all real estate is local and what they read in the Wall Street Journal may not translate to their neighborhood. So when we make the decision to post a market report about our own area don’t we have a duty to make sure that the data we post is accurate? Will our market reports picked up by Google and spread throughout the blogosphere create more concerns if they are inaccurate?
Recently I’ve been doing some “fact checking” on local market reports posted on a variety of blogs across the Northern Virginia area and found some major discrepancies in market data. We tend to forget that most of the data we have access to ourselves is also now available to the average person with a computer. So not only can other agents “fact check” our market reports but so can a savvy buyer or seller. I often check the MLS sales data against the local county tax records something that anyone can do. Not all sales are reflected in the MLS at the time they happen. New home sales may not appear until the end of the year, if an agent was involved and never if there was no agent involved. The same is true with FSBO transactions. Then you get into the naming conventions in a neighborhood. Not all agents know that what might look like one neighborhood in a basic MLS search might actually be multiple sections of a neighborhood with different names.
If we are going to post a market report are we ready to stand behind our data. If a consumer reads our reports and asks the question how accurate is our report can we provide the data to back it up? If market reports are close then it would be easy to say that it was the time that the agent compiled their data but if they are significantly different how do they decide who is right? Recently I came across a market report that showed only one townhouse sale in a Prince William neighborhood in 2008 and only two currently on the market. Since I had sold a townhouse in the neighborhood I knew that data wasn’t correct. In fact 18 townhouses have sold in the neighborhood in 2008 and 4 under contract. That is not an insignficant difference in data.
If as agents we want to help stem some of the fears of our clients and our prospective clients then we need to be diligent that the data we post is accurate. No one is expecting us to be statisticians and get every analysis dead on. I took two semesters of statistics in graduate school and there is not way I’m going to even come close to knowing all the formulas needed to compile 100% accurate variables. However, consumers do rely on us for basic accurate information and if we don’t get that right then we need to be ready for a long cold winter.
| Discussion: No Comments »
Don’t Lock Today’s Buyers Out of Homeownership
September 17th, 2008 Categories: Buyers Corner, Real Estate Ramblings
It seems that down payment assistance programs (DPA) create a genuine divide among real estate professionals. Some think they should be eliminated and others have seen value they bring to a buyer today. Hopefully everyone can agree that no seller has to accept an offer that contains the use of a DPA or any seller concessions. If a seller is uncomfortable with them then by all means advise them on other alternatives or wait for an offer from a more “qualified” buyer.
The press seem to be lumping together the use of legitimate DPA’s with the entire sub-prime mortgage mess. During the hot Northern Virginia real estate market between 2001-2005 most sellers flat out rejected any offer that asked for closing cost assistance. You had to fight tooth and nail to get a seller to even consider an FHA or VA loan as they were opposed to contributing the few hundred dollars in fees that those programs required in seller contribution.
There were some unscrupulous lenders and agents who were back-ending down payment assistance by manipulating offers and appraisals to be significantly higher than the asking price. They then requested the overage amount back under the table to fund the buyer’s down payment. These are not the down payment assistance programs we are talking about today. The buyer’s attempting to use those programs were not qualified to buy homes then and they wouldn’t be qualified to buy a home today. These programs were the result of an unregulated mortgage industry fueling by corporate greed and bad business practices.
Today’s buyers attempting to use DPA’s are a different set of buyers. They are buyers who qualify to buy a home. They are buyers who want to improve neighborhoods not make a fast buck and run. These are buyers who have jobs with verifiable income and have tax returns that can be checked. They have credit scores that make sense and a credit history that goes beyond a cell phone bill. What these buyers haven’t done in an economy with rising costs for everything from food to fuel is save a significant amount of cash to apply towards a down payment and closing costs.
So the politicians who sit on Capitol Hill have decided that these buyers, who sat on the sidelines during the sub-prime mortgage crisis, are the ones that should be punished by eliminating DPA programs. These are the first time buyers who are teachers, fire fighters, military men and women (who aren’t eligible for VA) and young professional who work hard everyday. Someone said to me recently “if they haven’t saved for a down payment then they shouldn’t own a home.” Apparently the idea that home ownership is the best way to build long term financial stability is only available for those who are able to live frugally on a teacher’s salary until they have socked away $20,000 to cover their down payment and closing costs.
Let’s be real. If a buyer can qualify for a 30 year fixed mortgage under today’s tighter lending standards, then providing them the means to have their down payment funded through legitimate DPA programs is the right thing to do. If the programs need more oversight to make sure that they are being utilized properly, then set the checks and balances in place. If the buyers who use these programs default on their loans in 3-5 years then make them accountable for repaying a portion of the assistance they received. Stop letting today’s homeowners walk away with no penality and start making them accountable for their actions.
Don’t lock today’s buyers out of the chance of homeownership because of mistakes made by the mortgage industry and unqualified buyers from five years ago. Give the buyers who want to help dig us out of the housing crisis a chance to become the responsible homeowners of the future.
| Discussion: 1 Comment »
The latest edition of the Washington Business Journal (WBJ) has named Town of Occoquan and the Occoquan River Communities in the top 13 communities to watch in the DC Metro area in the future.
Having recently posted about New Urbanism in Northern Virginia it was interesting to see the WBJ cover some of the same thoughts expressed in my post. Stating that Gen X and Gen Y buyers are looking to finding live, work and play neighborhoods with good transportation options to Washington DC.
Occoquan was selected due to its historic charm and it’s location between Fort Belvoir and Quantico. In addition to the Town of Occoquan itself the WBJ recognized Belmont Bay and Lorton as smart growth developments which are contributing to the success of the area. With multiple Virginia Rail Express stations close by, the area is ready to grow with the new jobs (BRAC) slated to move to the area.
As a member of the Occoquan River Communities it is nice to see our vision for the area being recognized. We are meeting with economic developers and community leaders to continue our mission of making Belmont Bay, Lorton and the Town of Occoquan the next destination that residents of Northern Virginia will want to call home.
| Discussion: No Comments »
Do You Disclose Mold in Your MLS Description
August 13th, 2008 Categories: Auctions & Foreclosures, Real Estate Ramblings
This might be considered a rant by some but it could also be a serious issue for agents who are listing homes with “environmental hazards.” Last night was a miserable night for me with a severe headache and coughing. Today the symptoms include a runny nose and sneezing. But even worse is the fact that my clients are suffering from the same symptoms. The reason is simple. Yesterday we toured five foreclosure properties each of them with a wet and moldy basement.
None of the listings for these properties mentioned mold and there were no notices published on the properties or at least on doors leading to the basement. None of the listing agents thought it was important to warn potential buyers that they were being exposed to a toxic situation and none of the agents provided masks at the property to help protect potential buyers from exposure to an unhealthy situation.
Now many will blow this off and say listing agents shouldn’t be worried about the health of prospective buyers or other agents. Perhaps this is true but there are agents who do list in the MLS that the home has mold and to enter at your own risk. Those agents are smart enough to realize that mold is a serious health issue and understand the potential of liability if they don’t warn others about the risk.
So the questions raised after yesterdays experience are:
When agents are doing the pre-listing BPO do they check the box that says “environmental hazards” when they find the presence of mold?
Should banks be required to do mold abatement prior to listing a property?
Should agents as representatives for the banks be required to disclose environmental hazards to prospective buyers in the MLS listing?
How long will it be before an agent is the target of a board complaint or a lender sued by a prospective buyer for not disclosing the presence of mold in a home?
My foreclosure tool kit that rides in the trunk of my car is now expanding. Besides the hand sanitizer, flashlight and flea spray it is now going to include disposable masks as well. I know well enough that I need to protect my clients. Hopefully other agents will realize that they need to protect them as well.
| Discussion: 1 Comment »
Where Does All the Money Go?
August 8th, 2008 Categories: Auctions & Foreclosures, Real Estate Ramblings
Touring foreclosure properties can bring up a lot of emotions. Sometimes seeing what a family leaves behind can be sad and other times seeing the condition of a home can make you angry.
Yesterday while showing Northern Virginia foreclosures we caught a glimpse of where thousands of dollars can go instead of toward the mortgage. Rooms full of discarding magazines. Suitcases full of magazines. Bookshelves full of magazines. With the cost of these magazines averaging about $6.00 a pop it didn’t take long to see at least one mortgage payment that had been spent at the local bookstore.
Looking at all of the money wasted in this home made me wonder about credit counseling. Not the late night we can fix your credit type of counseling but true budgeting and accountability type of credit counseling. How many families who are facing foreclosure are getting any type of help to look at where their money goes? Actually the answer is fairly obvious, very few of them.
Part of the new Foreclosure Prevention Act of 2008 included a provision for pre-foreclosure counseling funds:
“S. 2636 would help to keep struggling families in their homes by:
· Increasing pre-foreclosure counseling funds. Title III of S. 2636 would provide $200 million in additional funding that would help housing counselors continue their outreach to families at risk of foreclosure. These added funds would help as many as 500,000 additional families connect with their mortgage servicer or lender to explore options that will keep them in their homes.”
This is one of the parts of the new Foreclosure Act of 2008 that makes good sense but there are some serious unanswered questions.
How are the lenders going to connect with homeowners to let them know about the service?
Do the homeowners have to know to call to ask for help? Are the lenders going to set up counseling centers in the areas hardest hit by foreclosures?
Once an owner is in the counseling program will the lenders extend the timeframe before foreclosure to try and give them time to work out their finances?
The amount in the bill that was set aside for the counseling isn’t nearly enough to make an impact for the families who need help now. However if the lenders and the housing counselors work hand in hand perhaps a few families might be able to stay in their homes and learn that spending thousands of dollars on magazines is not good money management.
| Discussion: No Comments »
A while ago I penned a post Should I add Burglar to my Business Card after a round of issues with gaining access to a property. This week I discovered that other agents just leave the breaking and entering to their clients.
So here is the scenario. What would you have done?
My clients and I attempted to view a house that was #1 on our must see list. There were keys in the combination lockbox that worked one lock but not the other. Then I spied an electronic lockbox and discovered a different key inside. That key fit the backdoor locks but didn’t open the door. After all three of us tried to open the door with no success I put in a call to the agent (got VM) and we decided to head on to view other properties. When we didn’t get a return call from the agent we decided to call it a day and hopefully be able to see the property the following day.
On a whim, after grabbing a bite to eat my clients drove back by the property and saw someone coming out the front door. They stopped and said they had been by earlier with their agent but couldn’t get in. The agent said they couldn’t get in either with the keys but her client found an unlocked window, crawled in and came around and unlocked the door. The agent then handed my clients the keys and LEFT! Drove away, gone, bye-bye.
My clients called me and said “guess what we are in the house.” When they explained how they had gained entry I told them to leave. We figured out how they could lock the house for us to get back in and arranged to meet back at the property in an hour.
I don’t know if the other agent had tried the electronic lockbox so there might be a record of who it was but I’m shocked that an agent would just casually drop the keys to a property into two stranger’s hands and walk away without any concern whatsoever.
No matter how much my clients want to see a house I’m never going to resort to breaking and entering. I’m will never hand over keys to someone without an agent who just shows up at the door of a house no matter what their story. This agent can count themselves lucky that my clients did the right thing.
Combination lockboxes with the code in the MLS provide no way of tracking who has been in the property. This is eventually going to lead to a serious incident. Hopefully our local boards and the lenders who suggest the use of them will wise up and put a stop to the practice before it does.
| Discussion: 2 Comments »
How Did the Banks Get Agents to Shoulder the Load?
July 6th, 2008 Categories: Auctions & Foreclosures, Real Estate Ramblings
In Virginia when you sign a listing agreement with a seller it states that the “seller retains full responsibility for the property, including all utilities, maintenance, physical security and liability until title of the property is transferred to purchaser.” Seems simple enough or is it in today’s market?
When an agent goes to meet with a prospective seller to talk about listing their home it would never cross the sellers or our minds to suggest that we will have all of the utilities transferred to our name to make it easier for the owner. Nor would we agree to take on the responsibility for cleaning their home or keeping the yard mowed. However, every day lenders are asking agents to do this and agents are saying YES.
Why? We don’t own the property or have any financial interest in it and still agents are willingly taking on the financial burden just because the banks ask them to. Many agents I’ve talked to who handle a large numbers of foreclosures are shelling out thousands of dollars in expenses to maintain a property. In some cases reimbursements are slow and if work needs to be done they are required to call the lenders “preferred” contractor. If an emergency repair is needed and the preferred contractor isn’t available they risk not being reimbursed by the lender unless they can verify the gravity of the emergency.
On top of the out of pocket expenses, the listing agent often has to wait until the end of the transaction to find out if the lender is going to ask them to reduce their commission to help the lender meet their NET. How did this trend start? Was it one agent who said yes and then the banks began to play the other agents one against another for a cut of the business? Was it an entire brokerage that agreed to it and then everyone else had to follow suit?
If lenders require that the utilities be on (at minimum electricity should be on for safety reasons) then why don’t they set up corporate accounts with the major utility companies in the area where they have large pockets of foreclosures? Why don’t they have a direct 30 day billing cycle with their approved contractors? Why are they relying on agents to take on the accounting and financial burden of selling their properties for them?
The practice is contradictory to our own listing agreements and yet hundreds of agents across our area are willingly taking on the burden. It shouldn’t be a Realtors® responsibility to go into debt in order to sell a foreclosure listing. Wouldn’t it be better if ONE MILLION plus Realtors® would stand up and say “we’re mad as hell and aren’t going to take it anymore” and let the lenders take the responsibility of paying the bills on the properties they own?
| Discussion: 8 Comments »
This post strays from my usual posts geared to buyers and sellers in Northern Virginia. The information may be of interest to you as well but it is geared to other agents who may think that they have found a new niche in today’s market
I just finished reading the umpteenth blog on how real estate agents should be marketing themselves as short sale specialists in order to generate more business. As an agent who has successfully completed a few short sales and have a few more in the works it seemed this might be a good time for a reality check.
Going back over the call logs on my current short sale listings started me thinking of all of the other components connected to a short sale that an agent stepping into their first short sale may not consider.
Time spent gathering and reviewing the short sale package
Time on hold with the loss mitigation department
Time on the phone with the loss mitigation department
Time spent of the phone with the negotiator
Time spent of the phone with the appraiser/BPO agent
Time on the spent with agents answering questions
Time on the phone with buyers explaining a short sale
Time spent talking to buyer’s lenders
Time spent gathering HUD-1’s to go with offers
Time spent processing offers
Notice the list doesn’t include the normal tasks associated with a listing which are required in order to attract buyers. Those tasks need to be added on top of the time spent specifically on short sale tasks. Add on top of this the fact that lenders are notorious for slashing commissions at the end of the negotiations process and an agent working with a short sale may find that instead of making X commission they are only getting Y for all of the extra hours of work.
Considering the National Association of Realtors® shows that the average agent earns $35,000 per year, deciding to be a short sale specialist means an agent seriously needs to consider the old adage time is money. Agents, especially newer agents, who might be considering advertising themselves as a short sale specialists might first want to get out their calculators and figure out the value of their time. You may be surprised that the time it takes to finish a short sale transaction only leaves you enough to fill your car with gas and not much more.
| Discussion: 11 Comments »
Northern Virginia doesn’t have the worst traffic in the US but sometimes local and federal politics get in the way of making smart decisions about future road and railway expansions.
For months now there has been a debate in the area about whether to allow private enterprise the option to build HOT (high occupancy toll) lanes starting in Stafford County Virginia and coming north to Washington DC. Having just watched the extension of the metro rail system flounder, flop and die leaving the congestion in the Tysons Corner area to grow worse by the day, the idea of allowing unaccompanied drivers the opportunity for a $1.00 per mile to drive into DC on special lanes is well ludicrous.
Our current HOV (high occupancy vehicle) lanes work well for commuters who are smart enough to realize the value of car pools, van pools and bus rides. However every day as those drivers reach DC they run into the problem that anyone on the HOT lanes will face. Eventually you have to drive over the 14th Street Bridge and so far no one has included in their plan an expansion of the bridge. In London a drive into the city requires you to pay a congestion charge which was instituted to try and cut down on congestion and raise funds for public transportation. As far as I can tell if private enterprise is in charge of this operation then none of the money raised by tolls would actually benefit anyone else who has the smarts to use the HOV lanes, the metro system or VRE.
By creating another way for drivers in our area to bypass public transportation or car pool options government officials are overlooking the long term issues. If the congestion in the area is already creating a bottleneck getting into the city then how are the HOT lanes going to eliminate that problem? Wouldn’t more incentives for the use of public and mass transportation be a better idea? Wouldn’t figuring out more public transportation options be transportation official’s time? If private enterprise has millions to spend why not have them spend it on systems that will be beneficial to everyone and not just those who have the deep pockets of cash to bypass what we already offer in the area.
This is one of those situations where you have to have to say “what are they thinking?”
| Discussion: 1 Comment »
Home Equity-Is it Real or Is it Memorex?
December 9th, 2007 Categories: Real Estate Ramblings, Selling Thoughts
Yesterday while talking to a prospective client the discussion turned to the “equity” they had in their home. They had purchased their current home in Northern Virginia in 2002 and over the five years the value of their home has of course appreciated from their original purchase price.
They were however distraught that they had not sold their house last year when they could have walked away with $250,000 but now the best they could hope for might be $175,000. Since they are interested in buying a larger home the prospects of a higher mortgage due to the loss of equity was worrisome for this young family.
This isn’t the first time this conversation has happened over the last few months. With the value of homes in Northern Virginia having decreased over the last year there are many families thinking the same thing about their equity. It is interesting to listen to the rationalization of how much money they have lost by waiting to make the decision to move.
Of course the equity that they have “lost” isn’t real. It is the same concept that follows traders in the stock market. When you see the stock price is up you think of all of the money you have and when it is down you think of all the money you have lost. However until you sell you haven’t done either. It is all imaginary.
The good news for homeowners in Northern Virginia is that even though you may not have the same amount of equity that you had a year ago the price of the home you want to buy has also come down. As a result most likely the deal is a wash. Today’s equity will go as far as it did a year ago and in some cases it might even go farther depending on the neighborhood where you want to buy.
So don’t let the idea that you have lost money keep you from making the decision to sell your home. If it is the right time to make a move then let’s get to work to get your house on the market and SOLD. If it isn’t time to make a move don’t spend your days fretting over the latest housing reports. They don’t mean anything to you until you actually sell your home and are holding your HUD-1 in your hand.
| Discussion: 5 Comments »