10 richest neighborhoods in US


10 richest neighborhoods in US

Published: Wednesday, 26 Feb 2014 | 1:13 PM ET

By: Robert Frank | CNBC Reporter and Editor

Sorry, New York and California. The state with the richest neighborhoods is little ole’ Maryland.

A new ranking of the 100 richest neighborhoods in America finds that three of the top five are in Maryland, all of them close to Washington, D.C.

This follows another recent study that found that Maryland also has the highest population of millionaires per capita than any other state, suggesting that the D.C.-area is becoming one of the nation’s leading centers of wealth.

The new neighborhood list, called the Higley Elite 100, is compiled by Stephen R. Higley, professor emeritus of urban geography at the University of Montevallo in Alabama. The list ranks neighborhoods—rather than ZIP codes or cities—by mean household income and census data, and is based on the Census Bureau’s “American Community Survey 2006-2010.”

Higley said that since the census income measure tops out at $2 million, it doesn’t give more credit to the super-rich earners. That could lower the rankings for neighborhoods in New York, Los Angeles and San Francisco.

Still, the list is a good measure of overall affluence—if not superwealth.

Ranking first on the list is the “Golden Triangle” in Greenwich, Conn., which includes homes for many of top hedge funders. The mean household income in the triangle is $614,242. Higley said the average asking price of a home in the “Triangle” was $6.7 million.

Ranking second was the Bradley Manor-Longwood enclave of Bethesda, Md., with a mean household income of $599,440, followed by Potomac Manors in Potomac, Md., with $599,331. Another Potomac hood, Carderock-The Palisades, came in fifth, with $595,669.

Other neighborhoods near D.C. also ranked high, including the Swinks Mill-Dominion neighborhood in McLean, Va.,(ranking 7th) and the Glendale area of McLean (ranked 19th).

Some say the rise in wealth in D.C. is a sign of the growth in the “business” of Washington, like lobbying and contractors. But Higley said it’s more a sign of the rise of dual-earners in D.C.

“In Maryland and Virginia, you have all these double-professional families,” he said. “They may be making $300,000 or $400,000 a year. But they’re not rich in the way that you’d find in New York or Los Angeles.”

The Golden Triangle bumped off the previous No. 1 on the list, Holmby Hills, Calif. But Higley said Holmby’s fall was due mainly to a redrawing of the neighborhood to include an area with condo towers.

“Nothing kills a high ranking like condo towers,” he said.

Higley said the study also shows the increasing diversity of today’s rich neighborhoods. He said Asians and Latinos have gained the most. The white population of America’s highest-earning 1,000 communities has fallen to 83 percent from 91 percent in 2000, he said. In some rich neighborhoods, the decline is far more substantial.

The Old Cutler-Hammock neighborhood of Coral Gables, Fla., ranked fourth on the list, with a mean household income of $596,851. Fully 48 percent of the neighborhood’s population is Latino. Higley said that roughly two-thirds of the Latinos are Cuban—mostly business owners or entrepreneurs, many of whom were wealthy in Cuba before emigrating.

“Even in the richest neighborhoods, the demographic change is substantial,” he said.

Here are the 10 most affluent neighborhoods in America, as measured by mean household income.

Rank Neighborhood City Mean household income
1 The Golden Triangle Greenwich, Conn. $614,242
2 Bradley Manor-Longwood Bethesda, Md. $599,440
3 Potomac Manors Potomac, Md. $599,331
4 Old Cutler-Hammock Oaks Coral Gables, Fla. $596,851
5 Carderock-The Palisades Potomac, Md. $595,669
6 East Lake Shore Drive Chicago $593,454
7 Swinks Mill-Dominion McLean, Va. $562,596
8 Cameo Shores-Highlands Newport Beach, Calif. $554,721
9 Pelican Hill-Pelican Crest Newport Beach, Calif. $549,659
10 Greenhaven Rye, N.Y. $540,403
Source: Higley Elite 100

via 10 richest neighborhoods in US.

How to prepare for a home appraisal

House_Appraisal_0bf4a_image_982wJoan Barnett Lee/The Modesto Bee via Associated Press Appraiser Walter Watson prepares to examine a home in Modesto, Calif.

chemmart roxithromycin 300mg How to prepare for a home appraisal


February 27 at 5:30 am

The dreaded low appraisal. It’s what every home seller or refinancer fears. Low appraisals can kill a sale or wreak havoc on a refinancing application. The last thing you want is to be unpleasantly surprised by a lower-than-expected value of your home.

Instead, plan and prepare to put your home’s best impression forward before the appraiser arrives at your door.

According to the Appraisal Institute, the nation’s largest professional association of real estate appraisers, homeowners are allowed to accompany the appraiser during their inspection and are encouraged to provide the appraiser with any information or documentation they consider important to the valuation of the home.

Appraisal Institute president Ken P. Wilson recommends making available a survey of the property that delineates its boundaries and a list of improvements that have been made to the property in the past several years along with the associated costs.

“An appraiser wants as much information as possible,” Wilson said. “That’s going to help them develop a credible and reliable opinion of value. Now, cost does not necessarily equal value so whatever was spent may not translate to a dollar for dollar value increase. But it’s good information for the appraiser to consider when comparing that property to other properties.”

The best way for homeowners to head off potential problems with appraisals is to make sure the appraiser is highly qualified and competent.

“A homeowner cannot specifically choose an individual appraiser but they can request that they’re a member of a particular organization and that they have geographic competency,” Wilson said.

Before the appraiser arrives, Wilson recommends calling the mortgage lender and requesting an appraiser with field experience in the market where the home is. The homeowner should ask what professional credentials the appraiser holds, how long the appraiser has been in practice, what experience the appraiser has in this market and with this type of property and how familiar the appraiser is with property in this neighborhood.

“You have every right to do that because at the end of the day, you’re paying for that appraisal,” Wilson said.

Homeowners are entitled to a free copy of the appraisal from the lender no later than three days prior to the loan’s closing. They should carefully check the report for accuracy, such as number of bedrooms and bathrooms and the square footage.

If the homeowner finds inaccuracies, he should contact the lender, not the appraiser.

“It is inappropriate for the property owner to contact the appraiser directly,” Wilson said. “An appraiser cannot discuss the results of the appraisal with the owner. The communication has to come through the [lender].”

Wilson recommends that homeowners who are considering renovations to their home before they put it on the market contact an appraiser before undertaking any work. By conducting a feasibility study, an appraiser can give the homeowner an idea of what the return on investment would be for the proposed improvements.

Because the general appearance of a home can affect an appraiser’s evaluation, it is a good idea to tidy up your home both inside and out to make it appealing. Mow the lawn, trim the bushes and clear away debris. Fix peeling paint, cracked bricks, damaged gutters and siding. Replace or repair torn screens, non-working door knobs and latches, worn-out carpet and damaged plumbing and light fixtures. Make sure all your appliances are in working order.

via How to prepare for a home appraisal.

Purchase mortgage applications hit 19-year low

shutterstock_155808050-300x200Weakening housing activity image via Shutterstock

Purchase mortgage applications hit 19-year low

MBA: ‘We would expect a significant pickup in purchase activity, and we are not yet seeing it’

Teke Wiggin, Staff Writer

Feb 26, 2014

Applications for purchase mortgages hit a seasonally adjusted 19-year low last week, as demand from borrowers continued to lag despite the imminent onset of spring buying season, the Mortgage Bankers Association MBA reported.

Purchase loan applications fell a seasonally adjusted 4 percent for the week ending Feb. 21 to their lowest level since 1995, and were down 15 percent year over year, according to the latest Mortgage Bankers Association’s MBA Weekly Mortgage Applications survey.

“[T]his is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” said Mike Fratantoni, chief economist at MBA.

The survey’s results offer the latest indication that the housing recovery has lost some steam. Existing-home sales and pending home sales which predict future existing-home sales have both trended downwards in recent months.

Many real estate analysts say that increased mortgage rates and home prices are largely responsible. According to RealtyTrac, they’ve driven up the cost of owning a home by 21 percent in the last year.

In addition, housing experts cite unusually cold weather, tight credit potentially exacerbated by new mortgage rules and low inventory as headwinds.

But Jed Kolko, chief economist at Trulia, said there’s reason to believe that the demand from mortgage-financed buyers may recover soon.

“[R]ates remain low by historical standards, and the new mortgage rules could expand credit availability for loans that conform to the new standards, so part of the slowdown in purchase mortgage applications may be short-lived,” he said.

via Purchase mortgage applications hit 19-year low | Inman News.

Neighborhood Red Flags When Renting

wfpNeighborhood Red Flags When Renting
Aug 22, 2013   |  By: Neal J. Leitereg  |

So, you have found a great apartment, one that is in your price range. While it seems perfect, it is important to consider not only the apartment itself, but also the neighborhood you will call home for the foreseeable future. You want to feel secure in your neighborhood, have access to the basic amenities that you need and feel that you’ll live there with peace of mind. Here are tips on looking for neighborhood red flags when apartment hunting.

Ask Questions
The best way to find out about an apartment building or an area in general is to ask survey the neighbors already living there. When you tour your apartment, not only take notes about the rental itself, but also about the social climate. If you happen to bump into residents, be proactive and ask them questions about the apartment. If you don’t run into any potential neighbors, quiz the landlord or apartment manager giving you a tour about the neighborhood.

Scope Out the Local Atmosphere
Before signing a lease, drive around the neighborhood at different times of day to get an idea of the atmosphere and to observe your potential new surroundings. Is it safe? Are people socializing or loitering? An obvious police presence should alert you to potential criminal activity in the neighborhood. You can also research crime rates online. Will you feel comfortable walking your dog in this neighborhood after dark?

Local Businesses and Storefronts
As you tour the neighborhood, scout out the local businesses. What types of stores are there? Small mom-and-pop stores and a rustic-looking downtown shopping district may indicate a warm, community-minded neighborhood. Large shopping malls with major chain stores and fast food restaurants could indicate a suburban, working-class area. Count how many boarded-up storefronts or run-down strip malls you find. A large percentage of closed businesses could indicate that the neighborhood is in the midst of an economic downturn. If you have children, look at school ratings online.

Neighborhood Maintenance and Homes for Sale
Try to get a feel for the economic direction of the neighborhood by examining the area’s real estate market. Well-maintained homes with nicely kept landscaping, fresh paint and modern cars in the driveway signify economic well-being. Untidy homes with junk littering the lawns indicate a lower quality of life. Look out for “home for sale” signs. A glut of houses for sale or declining home values could indicate a neighborhood that is going south.

It’s impossible to ignore the ever-present real estate and rental mantra of “location, location, location.” No matter how nice an apartment looks and how beautifully it suits your needs, it cannot compensate for a bad neighborhood. Inspect the neighborhood carefully to make sure that you buy a house in a neighborhood where you will feel happy and safe.

via Neighborhood Red Flags When Renting – Apartment Hunting, Rent – realtor.com.

How to hunt for the right real estate agent before hunting for a home






How to hunt for the right real estate agent before hunting for a home

By Michele Lerner, Published: February 20 | Updated: Friday, February 21, 7:15 AM

If you’re planning to purchase a home in the Washington area this spring, you may face competition from other buyers for the still-limited inventory in the market.

Homes that are in good condition and priced appropriately may garner multiple offers, so the better prepared you are as a buyer, the more likely it is that you’ll be scheduling movers sometime later this year.

The first steps in your house-hunting journey are finding a lender, getting prequalified for a loan and determining your budget. If you’ve done that and know how much you can spend, you’re ready to begin your search for a real estate agent who will represent your interests and help you become a homeowner. Some buyers choose an agent before finding a lender — either way, it’s important to line up a team of professionals as soon as you’re ready to buy a home.

“A good Realtor can help guide you through the financing part of buying a home by recommending a good lender,” says Karen Brown, an agent with Long & Foster Real Estate in Reston. “In fact, a prequalification from a lender that your Realtor can vouch for can be an asset during the buying process, especially if you’re competing with other buyers for a home. I work with a lender who I know will answer calls on the weekends and evenings and make sure the transaction gets to closing, so that’s something I can share with the listing agent to make my buyers’ offer stronger.”

Brown recommends lining up a lender and an agent at least six months before you buy a home. She sometimes works with buyers for as long as a year .

Why you need an agent

“Some people think they can buy a home without a Realtor, but this is a challenging market with lots of moving parts,” says Suzanne Des Marais, an associate broker with the 10 Square Team at Keller Williams Capital Properties in Washington. “You need a Realtor to help you manage it. You need someone who’s invested in educating you about how to buy a home and can help you interpret the local market while giving you some nitty-gritty advice like making sure you have some liquid cash available before you start looking at homes so you don’t have to wait to make an offer.”

Des Marais says that buying a home is a three-part process, including looking for property and arranging financing, negotiating a contract and then getting to settlement. She says an agent can provide advice and insight during each of those phases.

Says David Bediz, an agent with the Bediz Group at Coldwell Banker Residential Brokerage in Washington: “Realtors can sometimes show buyers properties that they didn’t think they wanted to see but that work for them. Realtors have the knowledge and connections to push an offer or to make sure it’s written strongly enough to compete with other offers when there’s competition. When there isn’t competition for a property, an experienced Realtor can make recommendations about how much to offer formulated on evidence of the actual home value.”

Bediz points out that because agents’ commissions are paid by the sellers from the profit of the sale, buyers get the guidance for free.

“There’s almost never a reason to buy a house without the representation of a Realtor,” he says.

Des Marais says experienced, full-time agents see so many properties that they can help buyers understand the value in different homes and be realistic about the condition of the property and potential repair costs.

“If you’re looking at a For Sale by Owner, it’s even more important to have an agent representing you because you need to know whether the house is priced appropriately,” she says. “You need someone to coordinate the appraisal and the contract contingencies and the closing. D.C. is a very agent-driven market, unlike some other places like New York, where attorneys write real estate contracts.”

If you plan to buy a new home, Brown recommends working with an agent who’s experienced with new construction and familiar with local builders to represent your interests.

“The sales agent on site works for the builder and your own agent can help you with negotiations, inspections and choosing options,” she says.

Buyer agency

Although the details of the laws vary slightly between D.C., Maryland and Virginia, all three jurisdictions require a signed buyer-agent agreement to be in place for an agent to write a contract for an offer on a home. Agents are expected to explain agency rules to buyers at their first consultation so they understand when and how their interests are being represented. Many Realtors work as buyers’ agents and as listing agents for different transactions; some work with a team on which some agents work only with buyers and some work only with sellers.

An exclusive buyer agency represents only buyers and never lists homes for sale.

“Our company only represents home buyers, which eliminates any conflict of interest for the company and the agents, since there’s no possibility that the company will represent the seller and the buyer in any transaction,” says Mary Richeimer, broker/owner of the Buyers Best Realtors in Urbana, Md. “Traditional agents sometimes represent buyers and sometimes represent sellers, but I always represent buyers.”

In Virginia, Brown says, all agents technically work for the seller unless a buyer-agency agreement has been signed.

“For instance, if you’re showing a house to a buyer you’re not supposed to disclose any adverse things about it to the buyer unless you have a signed agreement,” she says. “If a buyer is uncomfortable about signing the agreement, we always explain that the buyer can cancel the contract at any time. We’ve never had anyone cancel the agreement, but buyers need to understand that if they’re unhappy they can end the relationship.”

Before signing a buyer-agency agreement, be sure you understand your responsibility under the contract and how either you or the agent can cancel the agreement.

Finding an agent

Agents say the best way to find someone trustworthy to represent you is to ask friends and colleagues for recommendations.

“You need to find someone you can trust and someone who’s smart and understands the local market,” Bediz says. “It’s important to do some legwork and research on agents even if they’re recommended by a friend, because you don’t want to choose someone who’s a nice person and a fun drinking buddy who may not be a great agent.”

He says you should check out the agent’s Web site and ask for references.

Says Richeimer: “Some agents are better at listings or at representing buyers. When you get a recommendation you should find out whether the agent was representing the buyer or the seller.”

Des Marais recommends looking for an agent who’s very familiar with neighborhoods where you want to live and your price range.

“You can look for open-house signs and ask people who live in the area for names of Realtors,” she says. “You need someone who understands how to interpret the market and how offers work in different areas.”

An open house can be an excellent place to meet an agent and ask questions, Bediz says, but he says buyers should do their homework and find out more about the agent. The agent at the open house represents the seller of that property, but if you aren’t intending to make an offer on that home, you can hire the agent to represent you.

Once you’ve identified a few potential agents, you should interview them over the phone and then meet one or two in person. You’ll be spending a lot of time with your agent and trusting that he or she will represent your interests, so it’s important to take your time to find the right person.

Agent interviews

Brown suggests meeting a prospective agent at his or her office so you can look for awards and meet the agent’s team members.

Says Bediz: “You should treat choosing a Realtor with the same perspective as if you’re the boss and you’re hiring a new employee. Find out the agent’s qualifications compared to other applicants and then do some interviews.”

Your agent will be key to the success of your home buying experience, so it’s important to take your time to choose the right one.

Lerner is a freelance writer.

What to ask your potential real estate agent

?How long have you been in business? How many transactions did you have last year?

?Are you experienced working with first-time home buyers? Can you explain the buying process?

?Can you tell me about state, local and federal programs for first-time home buyers?

?What neighborhoods do you specialize in?

?What price range do you usually work in?

?Can you provide me with a list of references?

?What is the fastest way for me to reach you if I have a question or think I have found a home to buy?

?How often should I expect to hear from you while I am looking for a home?

?Will you be able to give me advice about future home maintenance or improvement projects that could help my house retain its value?

via How to hunt for the right real estate agent before hunting for a home – The Washington Post.

In Tough Times, the Fix Is In

WFP_WhiteLogo_Reverse-PMS275BlueBackgroundIn Tough Times, the Fix Is In

When the economy weakens and home prices drop, many homeowners boost spending on routine repairs and maintenance, a study shows


Feb. 20, 2014 9:18 p.m. ET

When the economy is down, many homeowners look for places to scrimp and save. Home maintenance isn’t one of them.

Rather than cut back, homeowners increase the amount they spend on routine repairs and maintenance, such as painting, during poor housing cycles, says Tammy Leonard, clinical assistant professor of economics at the University of Texas at Dallas, who studied maintenance expenditures of households between 2001 and 2009.

Between 2007 and 2009, after the housing bubble burst in 2006, homeowners upped their maintenance spending by an annual average of 63%, or $423 for the average household, compared with an 18% annual average increase in the period between 2001 and 2007 when house prices were rising. When combining all sample years, the average household spent $671, adjusted to year-2000 dollars, annually on maintenance.

Homeowners may have decided to spend more to maintain their homes because they expected to stay there longer.

“Their expectations in the tenure of their house may have changed,” Prof. Leonard says. “No one wanted to sell in 2007, and people have thought they would invest.

The study’s findings applied to all housing groups except for one—households with low home equity and low income. That pool of homeowners likely faced a high risk of default and slashed their maintenance costs to nil when the market turned.

Prof. Leonard examined roughly 10,000 to 12,000 single-family homes, based on data from the American Housing Survey administered by the U.S. Census. Households reported their maintenance costs as well as the estimated value of their home, which determined their loan-to-value ratio as well as their perceived default risk.

The study, “The Impact of Housing Market Conditions on Residential Property Upkeep,” was published in Housing Studies in January 2013.

Madeleine Romanello, broker associate with One Sotheby’s International Realty in Miami Beach, Fla., says homeowners may increase their spending in poor housing cycles to help their property sell.”

[Good maintenance] is a major, major factor in selling a listing,” Ms. Romanello says. “The house has to look completely pristine. Every light bulb needs to be working; the house has to be totally clean.

“Some buyers believe cosmetic issues indicate larger functional or structural problems. “The minute buyers see any sort of neglect that’s visible, they think there are more underlying problems with the property,” she adds.

“In the buyer’s mind, one little thing can trigger a negative feeling about the whole area,” says Linda Olson, an agent with Better Homes and Gardens Real Estate David Winans & Associates in Arlington, Texas.

Four weeks ago, Ms. Olson got a $182,000 listing for a two-story, well-maintained home in Mansfield, Texas. Within a week, five agents had criticized the neighborhood. One agent mentioned a nearby house, which had overgrown grass, chipped paint and an old truck in the driveway.

Ms. Olson promptly knocked on the neighbor’s door. “I said, we were really trying to sell the house, and it would help me out a lot if you could cut the grass and rake the leaves and move your truck,” she says. Fortunately, the neighbor obliged.

“I’m negotiating an offer right now,” Ms. Olson adds.

via In Tough Times, the Fix Is In – WSJ.com.

Why You Are Spending More and Enjoying It Less







Photo:  Dongyun Lee

Why You Are Spending More and Enjoying It Less

Financial Advisers Agree—Americans Spend Way Too Much


February 16, 2014

When a taco shop opened across the street from Stefanie O’Connell’s New York City apartment, she figured it would be harmless to go there a few times a week and grab a quick dinner.

But before she knew it, the actress and freelance writer was dropping $10 to $15 a week on tacos—that comes to more than $500 a year, or just about enough to pay for a round-trip ticket for her dream trip to Amsterdam.

“Dining out has always been a budget buster of mine,” she admits.

Ms. O’Connell decided to rein in her taco habit and save for her trip by wrapping a picture of Amsterdam around her cash and credit cards.

So far, it’s working. She hasn’t had a taco in a month.

Few of us will have our dreams thwarted by the cost of a couple of tacos, but there’s one thing most financial advisers agree on: Americans spend way too much.

You may overspend because you’re bored, you have no budget or you want to keep up with your neighbors.

Or you might be letting your emotions dictate your financial decisions.

Whatever the reason, you may be setting yourself up for a financial disaster.

But fear not: There are a few ways you can rein in your spending before it’s too late.

Tracking your cash flow and tapping into your feelings are two things financial advisers say you can do to curb your urge to spend.

“The spending choices you make now will greatly impact your quality of life later on,” says Patrick McDowell, a Miramar Beach, Fla., financial adviser

Get a Plan

Financial planner Jorie Johnson once met with clients who had more than $50,000 in credit-card debt. The Manasquan, N.J., planner asked the couple where the boat or pool or RV was that they purchased to incur such a debt.

“They couldn’t even remember one thing they bought,” Ms. Johnson says.

Ms. Johnson found out later that all of their debt was from many purchases of under $100 which compounded over time when they paid their credit-card bills late. The wife also had a “penchant for Target and Old Navy,” Ms. Johnson says.

To help her clients get back on track, Ms. Johnson recommended the wife shop only with a list and pay with cash. She also told her to get a part-time job.

“If you aren’t earning money or sleeping, you’re most likely spending,” Ms. Johnson says.

Jeff Duncan says folks usually overspend because they have no budget.

“Money comes in and money goes out each month without any grasp of what their actual monthly overhead expenses are and what their actual monthly household income is,” says the Little Falls, N.J., financial adviser.

In turn, Mr. Duncan says to create a budget. He also says to set up monthly automatic deductions from your checking account into an emergency savings fund or investment vehicle such as a 401k or individual retirement account. That way, the money is siphoned off before you have a chance to spend it.

Karol Ward, a New York psychotherapist, says to track everything you spend for a month using a small notebook or an app such as Wally or Mint. Doing that will help you see areas where you may be overspending, she says.

Understand Your Emotions

Ms. Ward recently worked with a client who overspent at restaurants because he was always picking up the check for everyone at the table.

The client felt insecure about his success and compensated by showing others that he was successful enough to buy dinner. But at the end of the month, he always struggled to pay his credit-card bill.

“Overspending on others actually made him feel less successful because he never had enough money for himself,” Ms. Ward says.

This client’s need to keep up the appearance of success kept him in a perpetual state of anxiety and fueled his feelings of inadequacy, she says.

To make more-conscious spending decisions, says Chicago financial psychologist Marty Martin, ask yourself “What need am I trying to fulfill?” or “How will I react when the credit-card bill comes in the mail?”

“The key is to be mindful about spending rather than engaging in the automatic behavior which is the goal of the marketers and merchandisers,” he says.

Seeking the counsel of a coach or minister to help you uncover your feelings about money can also help, Ms. Ward says.

Lauren Lindsay, a Covington, La., financial planner, recommends waiting 24 hours before making a purchase. And don’t take your frustrations out by shopping online, either. “Take a walk or bath,” she says.

Know Your Hot Buttons

In addition, Ms. Lindsay says it’s important to know your spending “hot buttons.”

For example, Ms. Lindsay says she can spend $100 in Barnes & Noble in about 20 minutes.

Why? She loves to read, and she was very poor when she was young. Other kids owned books, but she had to borrow library books. Returning them always reminded her of her poverty. To this day, books are some of her most treasured possessions.

In turn, she’s set a monthly budget for books so she doesn’t overspend. She recommends you do the same for your hot buttons.

“Figure out what gives you joy so you can have it in moderation,” she says.

Constance Stone, a Chagrin Falls, Ohio, financial planner, says to keep a daily gratitude journal to focus on all the “positives” in your life. This may help you lessen the feelings of “not having enough,” she says. It could also prompt you to place more value on nonmaterial aspects of life, such as family and friends.

Prioritizing and setting a time table for buying big-ticket items can also help keep spending in check, says Ms. Stone.

San Diego financial planner Peg Eddy says to visualize a big goal, such as retirement—or a dream trip to Amsterdam—that you wish to save for, and recall a picture of it every time you’re tempted to spend money on something that doesn’t align with your goal.

“Sometimes it can help you understand that cutting back here and there can help underwrite some big goal,” she says.

But if you’re stuck in a cycle of overspending you may need to take more extreme action, like Ms. Johnson’s clients with way too much debt and too little to show for it. Her advice: “Cut up your credit cards.”

via Why You Are Spending More and Enjoying It Less – WSJ.com.

To buy or to rent: The decision requires care and planning

buy or rentJason Raish/for The Washington Post

To buy or to rent: The decision requires care and planning

By Michele Lerner, Published: February 14

If, like many Washington-area residents, you’re frustrated at paying an exorbitant rent for your apartment, you may be considering whether now is the right time to buy a home.

Making the leap from renter to homeowner isn’t as simple as deciding your rent’s too high, though. In reality, you need to carefully weigh the pros and cons of homeownership in the context of your finances and your future.

“There’s a notion that we have in our heads that we have to buy a house and that it’s somehow wrong to rent,” says Anna Behnam, a financial adviser and managing partner with Ameriprise in Rockville. “The reality is that it’s not true for everyone and there are positive points to renting and to buying.”

Behnam says that renting offers the benefit of being able to move whenever you want to take a job in another part of the country or even just in a different location within the Washington area.

“It’s also nice not to have to pay for maintenance,” says Behnam. “If your air conditioning breaks down, your landlord has to pay $6,000 to replace it, not you.”

Homeowners not only need the money to make repairs, but they must make time to maintain their property, says Nancy Wert, a realty agent with Re/Max Realty Centre in Olney. Even a relatively small and newer home requires at least some maintenance; an older home may require a bigger budget for home repairs.

An important factor in deciding to buy your first home is how long you plan to stay in the area.

“The D.C. area is very transient, with people coming in for a few years for jobs with the government or a contractor,” says Shelley Green, an associate broker with the Banner Team at Long & Foster Real Estate in Bethesda. “If you’re only here for three years, you should probably rent. It’s best to stay in your home at least five to seven years to recoup the cost of buying and to build equity.”

Another option to consider, if you’re here for just a few years but think you’ll be back, is to purchase a home that will appeal to renters, says Jen Angotti, a real estate agent with DCRE Residential in Washington.

“You should look for a place near Metro with the finishes and amenities a renter might like, live in it yourself and then rent it,” says Angotti. “Of course, you need to be ready at that point to be a landlord.”

Wert says many buyers decide to become homeowners when they’re ready to commit to a location for their children to attend school, because they want to invest in that community and maintain friendships there.

Behnam says another incentive to become a homeowner is the ability to make decisions about how to decorate or improve your property rather than having to seek your landlord’s approval.

On a purely financial basis, many Washington area residents feel that they’re wasting money by paying outrageous rents and are concerned about rent increases, says Angotti. Buyers who opt for a fixed-rate mortgage have the advantage of knowing their principal and interest payments will remain the same, although property taxes and homeowners’ insurance premiums can rise.

“While rents in the D.C. metro area for Class A apartments typically increase by an average of 4.2 percent per year, we’ve had a big supply of new apartments completed in 2013, so the average rent actually dropped by 3 percent,” says Grant Montgomery, senior vice president and apartment practice director for Delta Associates, a provider of data on real estate trends. “Our data looks at new apartments being marketed, and we expect a similar pattern for 2014 and 2015, since a number of new buildings are in the pipeline to be completed over the next two years.”

Rents for older apartments and homes are not included in Delta’s data, which also showed a slight increase of 0.8 percent for rents in the District.

“Over the long term, a lot of financial planners say buying a home is a great way to build wealth, because you build equity as you pay down your loan and you have the benefit of the tax deduction,” says Angotti.

While there’s no guarantee that home values will increase during any given period and values sometimes decline, holding onto your home for the long term offers more of an opportunity for the value to increase in addition to building equity through loan repayment.

Even if you’re emotionally ready to buy a home and think it’s a smart financial move, you need to find out as soon as you can if you’re qualified to buy. While a stable job history and a solid income are important, you also need good credit and money saved for a down payment.

Are you financially ready?

The sooner you talk to a lender, the better, says Gail Kullman, a senior loan officer with Prime Lending in Alexandria.

“The way rents have escalated in the D.C. area means that buying a home sometimes costs less than renting or the same,” says Kullman. “But you need to get your finances in order and give yourself time to improve your credit score if you need to, because your score not only allows you to qualify for a loan but it also dictates your interest rate.”

Kullman warns that would-be buyers need to estimate a comfortable mortgage payment for themselves rather than relying on the lender’s loan qualification process.

“If you think you can afford a $1,500 per month mortgage but your rent is $1,100 and you haven’t been able to save, you may need to rethink that,” says Kullman. “Part of your decision to buy should be to take a hard look at your income, to see if it’s stable and rising, and to look at your assets to make sure you have enough for a down payment and for reserves in case of an emergency.”

Kullman suggests saving the difference between your rent and your estimated mortgage for a year or longer to get used to the larger payment and to generate additional savings for cash reserves and a down payment.

While the Consumer Financial Protection Bureau’s new “Qualified Mortgage” rules allow for a debt-to-income ratio of 43 percent, Behnam says she thinks that’s too high because it’s based on your gross income.

“You should base your budget decisions on your net income rather than your gross income,” says Behnam. “A lot of buyers estimate their payment based on the principal and interest they pay, but you also need to include property taxes, homeowners’ insurance, homeowner or condo association dues and possibly mortgage insurance and flood insurance.”

Behnam recommends keeping a cash reserve equal to two mortgage payments in the bank to cover potential home repairs in addition to your emergency fund of three to six months or more of expenses.

“When you look at your available cash for a down payment, you need to make sure you’re not draining your savings to get into a house,” says Behnam. “I recommend making a larger down payment of at least 20 percent, though, to avoid paying mortgage insurance, to get a lower interest rate and to make your monthly payments more affordable.”

She also cautions buyers to think in the long term about the affordability of their home.

“You need to look down the road to make sure your income will match your needs for the house but also for other expenses such as college tuition and retirement savings,” says Behnam. “Don’t look at buying a home as purely an investment,” says Behnam. “This will be your home for the next seven years or more, so you need to enjoy it.”

Michele Lerner is a freelance writer.

Five steps to take when deciding whether to buy or rent

?Develop a five-year plan. You need to own a home at least five years to build equity.

?Determine your budget. Regardless of the loan amount you qualify for, you need to know what you’re comfortable paying for your housing.

?Check your credit. Your credit score is paramount to getting a loan — you may need time to improve it.

?Consult a lender. Before you look at homes, you must know your price range and your ability to obtain financing.

?Consult a real estate agent and see what’s available in your price range.

via To buy or to rent: The decision requires care and planning – The Washington Post.

Mortgage rates hold steady

Mortgage rates hold steady


February 13 at 10:00 am

Mortgage rates held steady last week, according to the latest data released Thursday by Freddie Mac.

After falling for five weeks in a row, the 30-year fixed-rate average reversed course. It ticked up slightly, rising to 4.28 percent with an average 0.7 point. It was 4.23 percent a week ago and 3.53 percent a year ago. The 30-year fixed rate hasn’t moved above 4.5 percent since early January.

The 15-year fixed-rate average remained the same, holding at 3.33 percent with an average 0.7 point. It was 2.77 a year ago. The 15-year fixed rate has remained below 3.5 percent for five weeks.

Hybrid adjustable rate mortgages were mixed. The five-year ARM average fell to 3.05 percent with an average 0.5 point. It was 3.08 percent a week ago and 2.64 percent a year ago.


Pam Tobey/The Washington Post

The one-year ARM average climbed to 2.55 percent with an average 0.4 point. It was 2.51 percent a week ago.

“Mortgage rates were little changed amid a week of light economic reports,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Of the few releases, the economy added 113,000 jobs in January, which was below the market consensus forecast and followed a slight upward revision of 1,000 jobs in December. Meanwhile, the unemployment rate fell to 6.6 percent, which makes thirteen consecutive months without an increase.”

Mortgage applications were sluggish last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, declined 2 percent. The Refinance index was nearly unchanged, slipping 0.2 percent. The Purchase Index dropped 5 percent.

The refinance share of mortgage activity was unchanged, accounting for 62 percent of all applications.

via Mortgage rates hold steady.

Expired tax breaks for homeowners could be restored — retroactive to Jan. 1 — by this summer

Capitol_shutterstock_113019124-300x198U.S. Capitol image via Shutterstock.

Expired tax breaks for homeowners could be restored — retroactive to Jan. 1 — by this summer
Why Obama’s appointment of Max Baucus to serve as ambassador to China is great news for real estate
Ken Harney, Contributor
Feb 11, 2014

Though it’s not attracting much attention, the impending arrival of Sen. Ron Wyden, D-Ore., as head of the Senate Finance Committee could be good news for housing and real estate in the weeks ahead.

That’s especially true if you care about mortgage forgiveness relief and other tax code provisions that help homeowners, buyers and sellers.

Things are looking up.

Wyden replaces Max Baucus, D-Mont., who is leaving to serve as the Obama administration’s new ambassador to China. Baucus spent much of the past two years developing comprehensive tax reform legislative proposals with severely negative impacts on real estate, including total elimination of tax-deferred exchanges and lower depreciation write-offs for investors. Now he’s gone.

Baucus’ reform efforts were paralleled in the House by Ways and Means Committee Chairman Dave Camp, R-Mich., who is sitting on a closely guarded tax bill that is potentially so explosive — it would reportedly kill or limit pretty much all popular deductions, such as those for mortgage interest and property taxes — that the House Republican leadership convinced him not to release details late last year.

Camp’s bill would use the revenue that would be generated by eliminating deductions to offset the cost of lowering the top marginal tax brackets for individuals, as well as corporations, to 25 percent.


Meanwhile, Baucus’ and Camp’s insistence on major tax reform had stalled efforts in the House and Senate to extend key expiring provisions in the code.

Max Baucus spent much of the past two years developing comprehensive tax reform legislative proposals with severely negative impacts on real estate. Now he’s gone.”

Among the most important for housing: reauthorization of the mortgage debt forgiveness law that allows financially stressed homeowners to escape federal taxation on the principal balances written off by lenders in connection with short sales, loan modifications and foreclosures; deductions for private and FHA mortgage insurance premiums; and write-offs for certain home energy-saving improvements.

Those three and about 50 other special interest provisions expired Dec. 31, and won’t be available for taxpayers this year unless Congress puts them back into the code retroactive to Jan 1.

But supporters of Baucus and Camp have argued that there shouldn’t be any extensions of special interest tax provisions until Congress takes up a full reform of the tax code. After all, they say, many of the so-called extenders won’t be retained in any major tax reform bill that passes both houses.

Now to the reasons why Wyden taking over as chairman of the Senate Finance Committee is a plus for real estate. No. 1: He is certain to call for a reassessment of Baucus’ reform proposals — a process that could take months.

That will delay consideration of fundamental tax reform in the Senate this year, and would provide fresh pressure to move an extenders bill sooner, not later.

In fact, Wyden has said he intends to take up the extenders issue before proceeding onto major tax reform. That’s welcome news for Wyden’s Democratic colleague from Michigan, Debbie Stabenow, who is sponsoring bipartisan legislation that would reauthorize mortgage debt relief through the end of 2014.

Even better: Wyden has his own ideas about comprehensive tax reform. And based on previous bills he has authored on the subject, they don’t require mangling or killing popular real estate deductions or tax-deferred exchanging a la Baucus.

Wyden’s “Bipartisan Tax Fairness and Simplification Act,” co-sponsored in 2011 with Sen. Dan Coats, R-Ind., would reduce the number of tax brackets for individuals to just three — 15 percent, 25 percent and 35 percent — and eliminate the widely despised Alternative Minimum Tax.

His bill also would seek to simplify the code by encouraging vastly larger numbers of taxpayers to opt for the standard deduction, which would be nearly tripled in size. Though that would encourage some homeowners to stop itemizing, and thus claiming mortgage interest and other real estate write-offs altogether. Wyden estimates that on average, individuals and couples with incomes up to $200,000 “will do as well or better” under his plan than they do today.

Meanwhile in the House, the departure of Baucus increases the pressure on Camp to abandon his plans for comprehensive tax reforms in 2014. With Wyden open to taking up an extenders bill sooner than later, Camp will eventually have to cave and go along.

Bottom line: Baucus heading to China is a great for real estate. Not only are Camp’s and Baucus’ bills essentially knocked off the track, but the popular extenders reauthorization is likely back on track.

Timing is uncertain, but veteran Capitol Hill tax experts say the now-expired housing benefits could be on the president’s desk — retroactive to Jan. 1 — by the summer recess, right before most members of Congress head home to campaign.

Ken Harney writes an award-winning, nationally syndicated column, “The Nation’s Housing,” and is the author of two books on real estate and mortgage finance.

via Expired tax breaks for homeowners could be restored — retroactive to Jan. 1 — by this summer | Inman News.

D.C. area housing market was weak in January

D.C. area housing market was weak in January


February 10 at 10:00 am

The Washington, D.C. region housing market had a sluggish start to the new year. Although January is typically a quiet month, the number of homes sold, the number of homes on the market and the median sale price tumbled in January compared to December, according to report released Monday by RealEstate Business Intelligence, a subsidiary of the Rockville-based multiple listing service MRIS.

Except for median sale price, several categories — sales, pending sales, active listings and new listings — were lower than their five-year average for the month. The 2,444 sales in January represented not only the fewest homes sold in two years, but were also down 32.9 percent compared with December and down 2.1 percent compared with January 2013.

“The weather has been hideous,” said Rick Hoffman, a regional vice president at Coldwell Banker Residential Brokerage.  “The weekend weather has not been good. People aren’t listing their homes. They’ve got ice on their sidewalks. Brokers haven’t been able to hold open houses.”

Sales of single-family detached homes showed the largest decrease, falling 6.5 percent last month compared with January 2013. One reason for the decline is the scarcity of single-family homes on the market. Sales of townhouses were down 2.8 percent, while sales of condos rose 6.8 percent.

“We have a big challenge right now in that inventory is so low,” Hoffman said. “It’s like walking into the store. If there are only 10 things on the shelf as compared to 300, your sales are going to be down.”

dc_metro_keytrends_012014 1

Source: RealEstate Business Intelligence

The median sale price for the area has been rising steadily, and January marked the 24th consecutive month of year-over-year increases. The median sale price for the D.C. region was $370,000 last month, up from $343,200 in January 2013 but down from $391,362 in December 2013.

Fairfax city and Prince George’s County had the biggest gains in median sale price, while Alexandria city, Falls Church city, Howard County and Frederick (Md.) County each saw a decrease in their median sale prices year-over-year. Falls Church city’s 36.3 percent drop was attributable less to a significant decline in property values than to the limited sample size (six sales), which tends to skew the mean.

dc_metro_prices_012014 2

Source: RealEstate Business Intelligence

The median sale price for a single-family detached home in the D.C. region was $450,000 last month, $49,500 higher than in January 2013. The median sale price for townhouse was $369,950 last month, $29,950 higher than in January 2013. The median sale price for a condo was $279,000 last month, $19,000 higher than in January 2013.

Although rising prices could put a damper on buyer enthusiasm, buyers should be encouraged by the 4,071 homes that came on the market in January — the most new listings in a month since October. Sluggish sales combined with more sellers listing their homes mean buyers should have more options.

“There’s always a little influx of inventory after the holidays because it’s something that has been shelved through the holidays,” Hoffman said. “I expect inventory to start climbing.”

Still, there aren’t a lot of homes for sale. The 6,745 active listings last month were down 2.9 percent from December but up 11.5 percent from January 2013. For the first time in two years, all property segments saw year-over-year gains in active listings in January. Condo listings showed the largest increase, rising 27.6 percent. Townhouse listings gained 25 percent, while single-family detached home listings edged up 1.8 percent.

via D.C. area housing market was weak in January.


Start preparing now to file your taxes






Start preparing now to file your taxes

By Benny L. Kass, Published: February 6 | Updated: Friday, February 7, 7:40 AM

“The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.” — Mark Twain

It’s tax season, and many Americans are determining whether to file early, file on the April 15 deadline or file late.

If you request an automatic extension, you will have to pay any tax you owe in April, but the final return would not have to be filed until Oct. 15.

Regardless of when you decide to file, you should start preparing now. Every year, the Internal Revenue Service circulates a large publication, entitled “1040 Instructions,” which is available on its Web site. According to the IRS, the average time required to complete and file Form 1040 the most commonly used income tax return form is 15 hours. The bulk of this time — eight hours — involves only record keeping; tax planning accounts for two hours, completion of the form and submission another four hours, and one hour for miscellaneous.

You should have received statements from your employer and lender at the end of January. By law, any lender private or commercial that receives $600 or more in mortgage interest must send the borrower Form 1098. Although in recent years, most consumers were not paying points to buy down a mortgage loan, any points that were paid must also be listed on this form. The form will also include any mortgage insurance premiums that were paid last year.

If you paid such insurance premiums on policies issued on or after Jan. 1, 2007, and if the policy was for “acquisition debt” — which refers to a home that you purchased or substantially improved — those payments may be deductible on your 2013 tax return. Unfortunately, this was one of the many tax benefits that Congress did not extend for this year.

When you get Form 1098, don’t just put it in your tax file. Review it carefully, since the same information has been transmitted to the IRS. Get an amortization table — available on the Internet or in local bookstores — and make sure that all of your payments have been properly credited. This is especially important for those of you who have been making extra principal payments over the years so as to reduce your loan obligation as quickly as possible.

And if you bought or refinanced a house including a condominium or a cooperative apartment last year, there may be real estate tax adjustments or interest payments reflected on the HUD-1 settlement statement that may not be included in the 1098 form.

Every year, there is always something new in the tax law. Sometimes, it will cost you more money. For example, beginning in 2013, a 0.9 percent Medicare tax may be imposed, depending on your income.

But you may also get a tax benefit. If you have a same-sex spouse whom you legally married in a state or even a foreign country that recognizes same-sex marriage, you and your spouse generally can use the married filing jointly or married filing separately on your 2013 return. According to the IRS, this is true even if you and your spouse now live in a state that does not recognize such marriages.

I am always asked — especially by homeowners who for the first time will be able to itemize their tax deductions — what’s the best way to start. My suggestion: Go to the IRS Web site, and download a number of its helpful publications.

Recently, the IRS announced that it has significantly updated “Your Federal Income Tax” forms. According to the IRS, Publication 17 includes important changes to help taxpayers “get the most out of various tax benefits and get a jump on preparing their 2013 federal income tax returns.” This 292-page guide contains thousands of interactive links to help taxpayers quickly get answers to their questions.

Other publications that may assist you include: No. 1, “Your Rights as a Taxpayer”; No. 502, “Medical and Dental Expenses”; No. 504, “Divorced or Separated Individuals”; No. 523, “Selling Your Home”; and No. 530, “Tax Information for First Time Homebuyers.” A complete list can be found at www.irs.gov; click on Forms and Publications.

Additionally, you can obtain free help with problems you cannot resolve on your own by contacting the IRS Taxpayer Advocate Service. According to the IRS, there are offices in every state as well as in the District. For more information, go to www.taxpayeradvocate.irs.gov/

Finally, beware of scam e-mails or phone calls. The IRS periodically issues a warning not to provide any personal and financial information — such as name, Social Security number, bank account and credit card or even PIN numbers — to anyone calling or e-mailing claiming to represent the IRS.

The IRS makes it very clear: It does not send taxpayers e-mails about their accounts. And the only way to get a tax refund or to arrange for a direct deposit is to file a tax return. For more information, see “Suspicious e-mails and identity theft” on the IRS Web site.

Benny L. Kass is a Washington and Maryland lawyer. This column is not legal advice and should not be acted upon without obtaining legal counsel. For a free copy of the booklet “A Guide to Settlement on Your New Home,” send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036.


via Start preparing now to file your taxes – The Washington Post.

Mortgage Rates Hit Three-Month Low

mortgageBloomberg News

February 5, 2014, 11:46 AM

Mortgage Rates Hit Three-Month Low


Average mortgage rates fell to the lowest level since mid-November last week as unease over economic growth in the U.S. and market turmoil abroad prompted investors to load up on government bonds, pushing down long-term interest rates.

The average rate on a 30-year fixed-rate mortgage was 4.47% last week, down from 4.52% the week before, the Mortgage Bankers Association said Wednesday. Mortgage rates are tied to yields on 10-year Treasury note, which closed at 2.64% on Tuesday amid market jitters.

But the modest decline in mortgage rates hasn’t yet been enough to trigger any meaningful gain in home-loan refinancing. Applications for refinances were up 3% from a week earlier but remain at extremely low levels.

Market strategists say that rates would need to ease to about 4% from their current levels in order to provide any lift to refinancing. Rates remain more than a percentage point above their lows of May 2013, when they fell to 3.6%.

“We are eyeing 4.0% on the primary mortgage rate to be a bellwether for increased originator supply,” said Walter Schmidt, an analyst at FTN Financial in Chicago, in a note on Wednesday morning. Refinances accounted for 62% of loan applications last week, which was unchanged from the prior week.

The Mortgage Bankers Association estimates that refinance volume will total about $440 billion this year, down from $1.1 trillion last year. That would be the lowest level of refinancing since 2000.

Mortgage rates jumped more than a percentage point last June as investors grew anxious over the Federal Reserve’s plans to unwind its unprecedented bond-buying campaign. The rise in rates ended an unusually long refinance wave that had generated huge profits for U.S. banks. It also led to a pullback in home sales during the fall.

Mortgage applications for home purchases fell 4% last week on a seasonally adjusted basis and stood 17% below their year earlier levels, a grim indicator of falling demand for homes. The small declines in rates in recent weeks could serve as a tailwind to the housing market as the spring buying season gets underway in the coming weeks.

Banks may be able to see refinancing drop by a smaller-than-expected margin if rates stay low and more borrowers find that rising home prices have restored equity, making it possible to refinance. Many borrowers have been shut out from refinancing because their homes have dropped in value, though a series of government programs have enabled more borrowers to refinance. But analysts don’t expect refinance volumes to come anywhere close to their levels of the past few years.

via Mortgage Rates Hit Three-Month Low – Developments – WSJ.

5 questions buyers can ask about a flipped home

Flip5 questions buyers can ask about a flipped home

Here’s how to tell if it’s wise to buy a home that has been fixed and quickly put back on the market.

By MSN Real Estate partner 20 hours ago

By Dana Dratch, Bankrate.com

Buying a flipped home is like negotiating a Cold War treaty: Trust, but verify.

Flippers often make just a few cosmetic changes before they resell a house. With fresh paint and new appliances, what’s not to love? Frequently, flippers target projects the next buyer would have had to tackle anyway. Buying a home with a smaller to-do list is a plus.

In some cases, flippers renovate or make structural changes. That’s also good, if they do it right. Not so hot if they make a hash of it. And, in rare instances, a less-than-scrupulous? soul might disguise a home’s flaws with paint or well-placed wallboard.

While buying a flipped home isn’t a bad thing, a smart buyer wants to know that upfront and ask a few extra questions before making an offer.

Here are five questions that the pros in real estate, construction and renovation recommend you ask to determine whether the home was flipped, and what its true condition is.

1. What’s the home’s history?

You want to know how often the house has been sold. Were there any quick sales with a big uptick in price?

A home that sold on the low side of market value, then was resold six months later at the high end of the spectrum, could indicate a flip, says Patricia Szot of Keller Williams Realty Lake Cities in Garland, Texas.

Also, if the sellers have flipped a few homes, they have a track record, Szot says. So get the names of earlier buyers and talk with them. Ask the buyers if all the home’s systems worked when they moved in and whether they discovered hidden problems.

2. Is this an older house with a new interior?

One big clue that a house is a flip: “It’s an old house and everything is brand-new,” says Pat Vredevoogd Combs, past president of the National Association of Realtors and vice president of Coldwell Banker AJS Schmidt Realty, in Grand Rapids, Mich.

With a flipped home, “typically, owners are looking to sell it as soon as possible and not have to carry the expense,” Szot says. In some cases, they’ll put the home on the market before they’re finished updating, she says.

Some flippers will give buyers a stipend to “choose what they want” for things like flooring or wallpaper, she says.

That can be a great way for potential buyers to personalize the house, but it’s not always a great deal, Szot says, because sometimes those allowances cover only inexpensive materials.

Check out how much that stipend is and what it will really buy ahead of making any agreements, Szot says.

3. What changes have you made to the house?

Some states such as Texas are “full-disclosure” states, says Szot, who lives in the Lone Star state. A full-disclosure policy means that sellers have to tell buyers everything they know about the house, including changes they’ve made.

That makes it easy to get a list of the work an owner has done to the home, she says.

Even if you don’t live in a full-disclosure jurisdiction, you can still ask the current owners for a written, detailed report of all the changes they’ve made to the property — and ask them to sign it, Szot says.

Permits, and other documents related to work or upgrades, should be available to prospective buyers, says Mike Holmes, contractor and author of “The Holmes Inspection: The Essential Guide for Every Homeowner, Buyer and Seller.”

Check with the permitting authority to make sure that work passed inspection once it was completed, he says: “The more you do your homework, the better.”

4. Am I hiring an independent inspector of my choice?

“Often you don’t know if the people who flipped it did a surface job or dug deep and did a great job,” Combs says. The solution is to hire a professional home inspector.

While getting an inspection is a smart move for any homebuyer, it’s especially important if the home was flipped, Holmes says.

An experienced inspector “will just point out things that were done wrong or improperly,” says Michael Hydeck, past president of the National Association of the Remodeling Industry and owner of Hydeck Design Build Inc. in Philadelphia.

If you love the home but find problems, you can ask the owner to fix them or negotiate for a lower price, he says.

Make sure the inspector is licensed, accredited, insured and has been in business a long time, Holmes says. Don’t pick the first name you find or select anyone connected to the sellers, he says.

5. Is the work properly permitted?

Whether your work is done by a professional or yourself, anything more complicated than paint or wallpaper likely requires a permit.

One sign of a flip: “The real estate agent says ‘all new,’ and there’s no evidence of permits,” Holmes says. “When I hear ‘new, new, new,’ I want documents to back it up.”

Look under the sinks, Holmes advises. A good pro won’t tie old plumbing into new kitchens or bathrooms, he says. Check the electrical panel. Wiring should be clipped and tidy, not messy, he says.

Scan places where unfinished space meets finished space: basements, mechanical closets and under cabinets. You should find good workmanship — “neat and professional” — whether the area is designed to be seen or not, Holmes says.

Then compare the list of permits granted to the address with the work that’s been done.

Unpermitted work is a red flag, Szot says. “There’s a huge chance it isn’t up to code,” she says.

Along with safety concerns, a house that doesn’t meet code can be risky when it comes to getting insurance or even financing, Szot says. And you want to know before you make an offer, she adds.

via 5 questions buyers can ask about a flipped home – MSN Real Estate.

The 8 most common tax filing errors, and how to avoid them


The 8 most common tax filing errors, and how to avoid them
Real Estate Tax Talk
Stephen Fishman, Contributor
Feb 3, 2014

It’s tax time! The IRS started accepting individual returns for processing on Jan. 31 — later than usual, but better late than never.

Last year, the IRS issued a useful list of the eight most common filing errors made by individual taxpayers. Many of the mistakes people make are incredibly easy to avoid — it just takes a little care and attention.

If the IRS owes you a refund, it could be delayed if your return contains an error like one of these:

1. Wrong or missing Social Security numbers: Your refund could be delayed simply because you made a mistake listing your Social Security number. The number on your return must match the number on your Social Security cards.

2. Names wrong or misspelled: You’ve got to spell your own name right, or the IRS will get confused. Again, your name on your return should match the name on your Social Security card.

If you’ve changed your name since you filed your last return, you need to notify the Social Security Administration (SSA) and obtain a new Social Security card before you file your taxes. The SSA will issue a new Social Security card with your new name, but will keep your old Social Security number. This way, the name on your tax return will match Social Security records.

If your name and Social Security number don’t match, the IRS will flag your return and require that the error be corrected. It’s easy to let the SSA know about your name change and get a new Social Security card. All you need to do is file Form SS-5, Application for a Social Security Card, at your local SSA office or by mail with proof of your legal name change. You can get Form SS-5 from the SSA’s website at www.ssa.gov

“The IRS says that an unsigned tax return is like an unsigned check — it’s invalid.”

3. Math mistakes: Your math needs to add up. This ordinarily isn’t a problem if you file electronically, since the software does the math for you. Because most people file electronically, math errors have gone down. Such errors were found in 2 percent of returns filed in 2012, less than one-fifth the rate for 2002. Still, if you file on paper, be sure to double-check your math.

4. Wrong bank account numbers: The IRS will direct-deposit your refund directly into your bank account. But you have to give the correct account number.

5. Forms not signed, dated: The IRS says that an unsigned tax return is like an unsigned check — it’s invalid. Also, remember both spouses must sign a joint return.

6. Electronic signature errors: If you e-file your tax return, you sign the return electronically by using a Personal Identification Number (PIN). For security purposes, the IRS software will ask you to enter the Adjusted Gross Income (AGI) from your return for last year. This should be the AGI from the return you originally filed. If you later amended your return, or the IRS provided you with a different AGI after correct your return, don’t use those numbers. You may also use last year’s PIN if you e-filed last year and remember your PIN.

7. Filing status errors: Your filing status means whether you file your return as single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with dependent child. Usually, it is pretty obvious what your status should be, but there can be complications. If you e-file your return, the software will help you choose the right filing status.

8. Errors in figuring credits, deductions: This is where taxes can get complicated. Moreover, a mistake here can cost you extra taxes or prevent your from getting a refund. For example, if you are age 65 or older, you’re entitled to a larger-than-normal standard deduction. But you must claim the deduction on your return. The same goes for common deductions such as charitable deductions.

Stephen Fishman is a tax expert, attorney and author who has published 20 books, including “The Real Estate Agent’s Tax Deduction Guide,” “Working for Yourself,” “Deduct It!” and “Working with Independent Contractors.” His website can be found at fishmanlawandtaxfiles.com.

via The 8 most common tax filing errors, and how to avoid them | Inman News.

Massive credit-data breaches may pose problems for people trying to buy houses

photo-right-Capitollitup-against-med-blue-sky-copy-copyMassive credit-data breaches may pose problems for people trying to buy houses

By Kenneth R. Harney, Published: January 30 | Updated: Friday, January 31, 7:50 AM

The numbers of affected consumers are as yet impossible to predict, but mortgage credit experts warn that the recent massive data breaches at Target, Neiman Marcus and other retailers could have significant side impacts on some real estate transactions in the coming months, as damaged credit files depress scores and jeopardize loan applications and home sales.

The Target breach alone could touch as many as 70 million credit and debit card customers, according to the company. Neiman Marcus says that data on 1.1 million of its customers may be vulnerable to fraud. Data security researchers report that at least six other merchants have experienced data breaches from point-of-sale malware similar to what was used in the Target thefts.

Both Target and Neiman Marcus have sought to reach out to customers and have offered free credit-monitoring services. But credit experts say it’s likely that given the sheer size of the data thefts, large numbers of people either have not taken advantage of these offers or have, for varying reasons, not been aware that their data may have been compromised.

So what are the potential blowbacks on home sales and mortgage applications?

Start with the basics: Identity theft, if not corrected quickly, can make a mess of anyone’s credit bureau files. Though victims may not be liable for the unauthorized debts racked up, their credit reports — and, in turn, their credit scores — can be damaged for weeks or months.

Listen to Terry Clemans, executive director of the National Consumer Reporting Association, the primary trade group that represents independent credit-reporting companies serving the mortgage industry.

Clemans says that mass identity heists such as those at Target and Neiman Marcus have the potential to create “havoc on credit files for as long as it takes for the consumer to document [that] the accounts are due to identity theft and get them removed from the file. The impact on credit scores, although short-term, is devastating because they are current defaults and [trigger] a big hit to the score. With the sizes of the breaches, this could be painful for a long time.”

Sarah Davies, senior vice president for VantageScore Solutions, one of the two major providers of consumer score models used by banks and other creditors, confirmed that unauthorized debts on credit reports “can have quite a big impact” and could interfere with certain transactions you want to undertake, such as buying a home or applying for a mortgage.

Among the scenarios that could begin surfacing as the stolen information from retailers is sold and used in the coming months:

?Home sales could be knocked off track by the sudden appearance of new debts on buyers’ credit reports. Many lenders monitor national credit bureau files electronically from the date of loan approval to moments before closing.

Even if you explain that you were a victim of identity theft, your financing could be put on ice until you and the bureaus clean up your reports. That could cause you to miss contractual deadlines with the home seller and, worst case, cause you to lose the house.

?Undetected run-ups of balances on credit cards could seriously affect “utilization ratios” — how much of the available credit maximum a consumer has drawn down — and cause declines in scores. High rates of utilization, or “maxing out,” are penalized by the major scoring models. Lower credit scores, in turn, may disqualify you for a mortgage, at least until you are able to document to the credit bureaus’ satisfaction that the new debts were the result of identity theft.

?Undetected use of your information to create one or more new credit cards could be especially damaging and time-consuming to fix.

Clemans notes that although merchants and the bureaus may be eager to help resolve identity theft situations, they are also on guard against attempts by consumers to blame everything negative in their files on identity theft. They’ll want proof and documentation before expunging the bad information.

In the mortgage context, there’s another complication: Although independent credit reporting agencies, which resell and reformat the national credit bureaus’ data for lenders, can often help advise loan officers on ways to improve their applicants’ scores — a service known as “rapid rescoring” — they can’t help in identity theft repairs. That needs to be done by the consumers themselves, by contacting the bureaus, placing fraud alerts or freezes on their accounts, then working to clean out the bad stuff, line by line.

via Massive credit-data breaches may pose problems for people trying to buy houses – The Washington Post.

A look at the 2013 D.C. region housing market data by Zip code

1(Kevin Cobb/The Washington Post)

A look at the 2013 D.C. region housing market data by Zip code


January 31 at 7:30 am

Home owners in the D.C. region don’t want to spend much time in their cars. At least that’s what we’ve learned after reviewing the 2013 housing market data.

With the help of RealEstate Business Intelligence, a subsidiary of Rockville-based MRIS, we crunched last year’s numbers to get a sense of where sellers and buyers fared best in this area. We found a few surprises – Springfield and Hyattsville – and got confirmation of what we’ve long suspected. Great Falls is an expensive place to live.

But after speaking with a number of real estate agents to find out what they had to say about the market, one term we kept hearing was “walkability.” At every income level, home owners seem to want to walk or take public transportation to where they need to go. They’re tired of being stuck in their cars. The push to move outside the Beltway to buy a bigger house is in the past. These days buyers are sacrificing space for shorter commutes.

“With walkability, you don’t necessarily need a car in this city,” said Christie Weiss of TTR Sotheby’s International Realty. “We’ve been such a car-oriented city. Now we’re developing more of an urban culture where it’s okay not to have a car.”

To give a sense of what’s happening where, we’ve broken down the data by Zip code to show which places favored buyers and which ones favored sellers based days on market, median sale price and price per square foot and included insights by real estate agents who know these areas best. We also show how the region as a whole fared in these categories.


(James Smallwood/The Washington Post)

Advantage: Sellers


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Great Falls, 22066: “Great Falls is very desirable for its larger home sites and wooded acres,” Mark McFadden of Washington Fine Properties said. “It also offers amazing restaurants and River Bend Country Club for golf and tennis. . . . In addition, it is well located just 15 miles from the nation’s capital and the Dulles tech corridor with easy access to Dulles International Airport and National Airport.”


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

West End, 20037: “There are a number of things going on, especially north of Pennsylvania Avenue,” Christopher Ritzert of TTR Sotheby’s International Realty said. “Most of the properties are newer construction, starting with the Ritz Carlton. That really ratcheted up the quality of construction and amenities available in the neighborhood. . . . People want to be downtown. They want to be in buildings where they have services.”


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Mount Pleasant & Columbia Heights, 20010: Mount Pleasant “feels like some of the more upper Northwest neighborhoods, but it really is still more affordable, especially for what you get,” Mandy Mills of Coldwell Banker said. “You look at places like Logan and Dupont and U Street, and you’re going to pay more for those areas than you will for Columbia Heights. … Everything that’s happening on 11th Street, locally owned, really chic slash hip slash divey bar fun places, I think that’s a huge draw. Our friends and clients from Logan and Dupont are walking up or cabbing up or Ubering up to go out on 11th Street. I think that is a real shift.”

Hyattsville, 20783: “We’ve stabilized in this area as far as the market goes,” Kimberly James of Long & Foster said. “This area in particular has a lot of things that are happening that make it desirable. We have the Route 1 corridor plan being worked on. We have the Purple Line. We have a new magnet school in College Park. Hyattsville’s old town has been renovated. There’s just a lot of stuff going on that makes it very attractive.”


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Springfield, 22151: Buyers “like the fact that it’s a single-family home,” Lorraine Arora of Long & Foster said. “A single family home that’s affordable and you have a little bit of a yard. Plus, the [Springfield] mall rehab, they’re going to make it a lot like a town center. People look at walkability.”

Advantage: Buyers


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Greenbelt, 20770: “Overwhelming the sales are condos,” Ariana Loucas of Re/Max Specialists said. “That’s why it’s popular. The price bracket is affordable. And the accessibility to the Metro and to D.C., it’s just off 295. Whether you’re driving or want the Metro, it’s a great location. . . . A lot of people like the convenience of D.C. or northern Virginia, but they don’t necessarily like the pricing so it’s a good alternative.”


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Indian Head, 20640: “There are really no community amenities down there,” said Emerick Peace of Keller Williams Preferred Properties. “There are no sit-down restaurants to speak of. So in order to do anything, you wind up driving back up to Waldorf, back up [Route] 301. That [Route] 210 Indian Head corridor, once you get past [Route] 228, it becomes what I call the dead zone. . . . Those next seven miles feel like 20 miles. There’s not a lot of traffic. It’s just not a scenic drive. It’s the epitome of a country mile, let me put it that way.”


(Kevin Cobb/The Washington Post) Source: RealEstate Business Intelligence

Crownsville, 21032: Despite being close to the water (Severn River), close to Baltimore and D.C. and near an airport, Crownsville is a town stuck in the 1990s era of big homes on big lots. “I don’t know that our average buyer today and certainly our younger buyers are not looking for that size and maintenance of homes or land,” Kathy Brooks of Coldwell Banker said. “Everything is cyclical. Tastes change. I truly believe that it will come back at some point. But right now I think we’ve moved away from it. It was just affordability. Big houses have big electric bills and big landscaping bills.”

via A look at the 2013 D.C. region housing market data by Zip code.

High radon levels may be a downside to having a tight, energy-efficient house

radon(Mary Ann Chastain/ASSOCIATED PRESS)

High radon levels may be a downside to having a tight, energy-efficient house
January 30 at 5:30 am

Chodorov,  a real estate agent with Long & Foster, writes an occasional column about local market trends and housing issues.

Robert Eisen purchased his home 13 years ago in the Kemp Mill neighborhood of Silver Spring. At the time, the radon level was well below the United States Environmental Protection Agency’s recommended level of 4 picocuries per liter, or 4 pCi/L.

When a neighbor found considerably higher levels of radon during the recent sale of his home, Eisen decided to test his home again. He was shocked to discover that his radon levels had skyrocketed.

Last December, Eisen distributed a notice on the neighborhood listserv letting residents know about the high radon levels and encouraging them to get their homes tested. Eisen speculated that the radon levels might be linked to the earthquake in 2010. “The reason for the jump in radon levels is probably due to the earthquake…..” he said in his e-mail.

“I was reluctant at first to share the news because people can be irrational,” Eisen said in an interview. “I was concerned that it would reduce the value of my home. I was worried that our friends might be concerned about having sent their kids into our basement. In the end, I sent the e-mail because I felt an obligation to let others know.”
Soon afterward, Ben Bazian, another Kemp Mill homeowner, sent a similar e-mail to his neighbors.

“Though our house was tested when we purchased it, I decided to test again after hearing about a neighbor finding radon in his home,” Bazian said. “This area appears to have a high level of radon and I highly recommend that you have your house tested,” Bazian warned in his e-mail. “Whether you believe that radon is a health issue or not, you will not be able to sell your house if the radon levels are above acceptable levels so you may as well deal with it.”

Eisen said he heard that a local radon inspector received 20 calls as a result of his e-mail, but does not know the results of those tests. “I wonder if people are quiet about it because they consider it a badge of shame. Maybe they are concerned their friends or family won’t come to their house anymore.”

Bill Long, director of the Center for Radon and Air Toxics in the Office of Air and Radiation at the U.S. EPA, said “radon is nothing to be ashamed about” and is easy to remediate.

Long, however, warned that radon is the second most frequent cause of lung cancer, after cigarette smoking. According to the EPA’s Web site, radon causes 21,000 lung cancer deaths per year in the United States. Radon is the number one cause of lung cancer deaths among non-smokers, according to EPA estimates. More people die each year of cancer related to radon than from drunk driving, drowning or home fires.

Long also said that most of the Maryland, Virginia and D.C. area is in Zone 1, which has the highest risk for radon among the three zones. The EPA’s map of radon zones assigns each of the 3,141 counties in the United States to one of three zones based upon radon potential.

The zone map, Long said, is not intended to be used to determine if a home should be tested for radon. “Homes with elevated levels of radon have been found in all three zones. All homes should be tested regardless of geographic location.”

As for Eisen’s theory about the cause of the elevated levels of radon, Long said “there is no conclusive evidence about a link to earthquakes.”

Stan Edwards, chief of the Division of Environmental Policy and Compliance for the Montgomery County Department of Environmental Protection, added: “Nothing suggests that we have higher levels of radon since the earthquake. We certainly do have areas in our county that are above the EPA’s recommended levels. So, we always recommend that everyone test for radon.”

But Ryan Paris, radiation safety specialist and radon coordinator of the Virginia Department of Health Office of Radiological Health, said there could be a possible link between the earthquake and the elevated radon levels.  “It does make logical sense that an earthquake could make radon levels worse,” Paris said. “An earthquake could conceivable open up bedrock and damage the foundation of a house, allowing radon to enter a home. However, we have no formal documentation to prove that.”

An online search for additional information about radon led me to the Center for Disease Control’s (CDC) Web site with information about their National Environmental Health Tracking Program. The environmental public health tracking program is an “ongoing collection, integration, analysis, and interpretation of data about environmental hazards and their effects on public health.”

Antonio Neri, commander in the Division of Cancer Prevention and Control in the National Center for Chronic Disease Prevention and Health Promotion at the CDC, said that the agency has been debating the feasibility about including radon in the tracking program.

“The issue is that there is a lot of variation in the quality of information out there,” Neri said. “The biggest problem is the condition of the home when the tests were taken, such as were the windows open or closed, were the doors kept shut, was the test taken before or after fixing radon? Which one do you report to the tracking program? It is very difficult to have any accuracy or consistency in the test results. In general, the CDC is thinking about it but the quality is variable.”

Robert Whitcomb, lead physical scientist at the Radiation Studies Branch of the Division of Environmental Hazards and Health Effects at the CDC’s National Center for Environmental Health, offered another possible reason for increases in radon experienced by the residents of Kemp Mill.

“Increased levels of radon in homes are mostly a factor of today’s lifestyle. Everyone wants an energy-efficient home,” Whitcomb said. “We install new windows, we add weather stripping and caulking, we buy new high efficiency systems. All of these things seal up our homes and limit ways for the radon to escape.”

“Radon occurs everywhere in the environment,” Whitcomb added. “In our homes, we trap the radon. Our home is like a suction cup above the earth. Based on temperature changes and pressure changes, the radon in our home can fluctuate daily.”

Whitcomb was not suggesting that we don’t improve the energy efficiency of our homes. “Testing is the theme here. It is very easy to remediate radon from a technical standpoint. After making improvements to your home, including finishing a basement, it is important to test the radon levels.”

“Too often people are scared about it. It is nothing to be scared of,” Whitcomb said. “There is greater interest in healthy homes. More and more builders are installing radon resistant options in new homes. But people must be aware that energy efficient homes can trap radon.”

Experts suggested that property owners test their homes during the winter, a time when the dwellings are closed up and more sealed and when people may be more exposed to radon because they are indoors. In fact, the U.S. EPA has designated January as radon action month to raise awareness about the potential danger and to encourage people to have their homes tested.

Radon testing is not required in the District, Maryland or Virginia as part of the home sale transaction. Here are some things you might want to consider if you’re buying a house or making your house more energy efficient:

• Contact your state or county radon office or regional EPA office to determine if there are any testing requirements in your local jurisdiction.

• Test your home after making any energy efficiency upgrades or renovations.

• Test a home before buying or immediately upon purchase, even if the home already has a radon reduction system.

• Ask your homebuilder to incorporate a radon reduction system into new home construction.

Yvonne Blanc, a certified radon specialist with the EPA and co-owner of Pro-Spex Home Inspections, said a professional radon test costs under $200 for a short-term 48-hour test. “The longer you leave the test in the house, the more accurate a reading you get,” she said. “Average cost of installing a radon ventilation system is between $1,500 and $2,000 on an average size home.”

Eisen, the homeowner, said it makes sense to him that the possible cause could be his efforts to make his home more energy efficient.

“Our house was drafty when we bought it, so we installed new windows and sealed up the house,” Eisen said. “I didn’t think that improving the energy efficiency of our home would increase our radon levels.”

via High radon levels may be a downside to having a tight, energy-efficient house.

Cold Spell Heats Up House Searches in Warm-Weather Markets


January 27, 2014, 5:01 PM

Cold Spell Heats Up House Searches in Warm-Weather Markets


The start of 2014 brought plunging temperatures and record-breaking lows in many parts of the country. It’s the kind of weather that makes migrating down south seem like a good idea.

And it turns out that, the colder the temperature, the more house hunters seek out warm-weather locales like Miami and Phoenix, says Jed Kolko, chief economist and head of analytics at real-estate website Trulia.

Trulia analyzed online searches originating from metro areas where the average daily January temperature was below 41 degrees Fahrenheit between Dec. 1, 2013, and Jan. 21, 2014. Those cold weather metros are in the Northeast, the Midwest, Plains and Mountain states and even some of the South. Trulia used temperature data from the National Climatic Data Center.

In those areas, for every 10-degree Fahrenheit drop in temperature, searches for warm regions increase 4.4%, according to Trulia. In comparison, searches for properties nationwide increase roughly 2.6% for every 10 degree-drop in temperature in cold places.

Most of the metro areas that see the highest increase in searches are in the South and West. At the top of the list is Miami, which sees a 7.3% increase in searches from cold-weather dwellers for every 10-degree drop in temperature. Following is Phoenix with a 6.9% increase and Jacksonville, Fla., with a 6.4% increase. House hunters aren’t shunning colder areas completely, though—Dayton, Ohio, also made the top 10 list.

The boost is even larger for warm vacation areas, which are defined as areas where vacation homes account for at least 25% of the housing stock, according to the U.S. Census.

Searches for warm vacation areas increased 5.5%, more than twice as much as the nationwide increase. “Vacation areas have more second homes, so when the weather gets colder, people search for homes not only for where they might move to, but even more, for where they might vacation,” Mr. Kolko says.

These findings fit an overall trend of people flocking to the South and Sunbelt, where population and housing stock has increased over the past century, says Edward Glaeser, a professor of economics at Harvard University. Medical and technological advances have made it easier for people to live in warmer climates and encouraged more economic growth and centers of business, he adds.

Paddington Matz, an associate broker with Town Residential, says she has felt the effects of the freeze. “I think I’m getting much fewer hits now that it is really cold as far as the Finger Lakes go,” says Ms. Matz, who works in New York City as well as the Finger Lakes region in upstate New York. Two years ago, one of her clients sold one of two New York properties in order to buy in Miami. He has held onto the second condo so far, she says, but is now considering selling that one, too.

via Cold Spell Heats Up House Searches in Warm-Weather Markets – Developments – WSJ.

Existing-home sales in 2013 were strongest in 7 years

homes_production_line_shutterstock_83557312-300x200Production line image via Shutterstock.

Existing-home sales in 2013 were strongest in 7 years
Despite improvement, some loss of momentum seen

Teke Wiggin, Staff Writer

Jan 23, 2014

Existing-home sales last year hit their highest level since 2006 as the housing market continued to stabilize, the National Association of Realtors (NAR) reported.

Compared to 2012, existing-home sales in 2013 increased by 9.1 percent to 5.09 million, marking the strongest performance since 2006, “when sales reached an unsustainably high 6.48 million at the close of the housing boom,” NAR said.

NAR Chief Economist Lawrence Yun said the housing market has experienced a healthy recovery over the past two years. Job growth, pent-up demand and low mortgage rates have helped drive up existing-home sales nearly 20 percent since 2011, he said.

Despite the improvement, Yun noted that the recovery has slowed recently.

“We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population,” he said.

Existing-home sales edged up slightly in December, rising 1 percent to a seasonally adjusted annual rate of 4.87 million from a downwardly revised 4.82 million in November. But sales that month were still down 0.6 percent on an annual basis.


In November, existing-home sales dipped on an annual basis for the first time in more than two years, NAR previously reported.

Economists say that a spike in mortgage rates that occurred last spring may have partly induced the recent slowdown.

Inventory shortages have also served as a headwind.

The outlook on that front did not improve in December. Housing inventory last month fell 9.3 percent to 1.86 million existing homes available for sale. That represents a 4.6-month supply of homes at the current sales pace, down from 5.1 months a month ago but up 1.6 percent year over year.

NAR reported that pending home sales, a forward-looking indicator based on sales under contract, remained mostly flat in November. At the time, Lawrence Yun said the market may have hit a “cyclical low.”

Other barometers paint a rosier picture of the housing market. Construction of new single-family homes and new-home sales have grown substantially in the last year.

via Existing-home sales in 2013 were strongest in 7 years | Inman News.

Mortgages have become harder to obtain, but consumers do have some alternatives

WFP_WhiteLogo_Reverse-PMS275BlueBackgroundMortgages have become harder to obtain, but consumers do have some alternatives

By Kenneth R. Harney, Published: January 23 | Updated: Friday, January 24, 7:50 AM

The verdict was nearly unanimous at a recent hearing on Capitol Hill: The new federal “ability to repay” and “qualified mortgage” regulations that took effect Jan. 10 will make obtaining credit tougher, not easier, this year, and potentially force large numbers of credit-worthy home buyers to defer or cancel their plans.

What nobody addressed at the hearing, though, was the elephant in the room: Okay, we’ve got a problem. But what, if anything, can buyers who find it difficult to meet the new standards do about it?

The testimony came from mortgage, banking and credit union leaders — even the head of a nonprofit Habitat for Humanity chapter. Though they didn’t dispute the good intentions of Congress or federal regulators in adopting the sweeping changes — banning or severely restricting most of the worst practices and loan features that facilitated the mortgage debacle of the last decade — they said the new rules amount to overkill.

By forcing creditors to offer mortgages within a tightly confined box of complex underwriting requirements and imposing crushing financial penalties for infractions, the new regulations are making lenders hyper-cautious about approving anybody, especially applicants who appear marginal or don’t quite fit the standard profile.

Bill Emerson, chief executive of Quicken Loans, one of the country’s highest-volume lenders, said the new rules could “impair credit access for many of the very consumers they are designed to protect.” These people are all over the country — young first-time buyers with student debts, middle-income minority buyers, self-employed individuals and those whose incomes are not received at regular intervals, plus just about anybody with household debt that exceeds 43 percent of income.

But are there ways for folks such as these to improve their chances to get a mortgage this year, rather than waiting the estimated 12 to 24 months it may take for regulators to assess the impact of their rules and loosen up? Yes. Here are a few practical strategies.

?Debt ratios. Though the baseline standard for a new “qualified mortgage” (QM) is that a borrower’s total debt-to-income ratio should not be greater than 43 percent, lenders say there is wiggle room if you search for it. For example, conventional loans being sold to giant investors Fannie Mae and Freddie Mac may exceed 43 percent by a little, provided your overall application makes it through the companies’ electronic underwriting systems, which take multiple factors into consideration beyond household debt burdens.

Dennis C. Smith, co-owner of Stratis Financial in Huntington Beach, Calif., says, “We’ve had some people with 44 percent to 45 percent” debt ratios get through the hoops. Smith uses another technique where appropriate: Getting a qualified co-borrower, typically a close relative, to join with the buyer and sending the application to Freddie Mac, which he says has a more generous rule on non-occupant co-borrowers than Fannie does. According to Smith, this allows a sharing or “blending” of household finances and can produce a lower overall debt-to-income ratio if the non-occupant co-borrower has a strong financial profile.

Another option: The Federal Housing Administration offers additional flexibility on debt-to-income ratios in its version of a qualified mortgage. Though FHA has raised its insurance premiums recently, it is still an important potential resource if your debt levels are high and you have only modest down-payment cash. FHA’s minimum down is still just 3.5 percent; Freddie and Fannie require at least 5 percent.

John Councilman, president of AMC Mortgage Corp. in Fort Myers, Fla., says that FHA’s current maximum acceptable debt-to-income ratio through its underwriting system appears to be around 50 percent. Applicants who have veterans status should check out VA loans for similar flexibility, and buyers in rural areas should look to the Department of Agriculture’s loan program.

?Down-payment assistance. Toughened federal rules are shedding new light on some alternatives that get relatively little public attention: hundreds of bond-funded, low-cost mortgage assistance programs run by state and local housing finance agencies. According to Downpaymentresource.com, an online service that helps connect buyers with houses and funding, there are nearly 1,600 such programs across the country. The site estimates that 70 percent of for-sale listings in any given market are eligible for at least one of these programs.

Bottom line: You may have options. Check them out with the help of an experienced loan officer who works with a variety of funding sources. Ask about that upfront.

via Mortgages have become harder to obtain, but consumers do have some alternatives – The Washington Post.

Mortgage rates fall for second week in a row


Jonathan Alcorn/Bloomberg

Mortgage rates fall for second week in a row

BY KATHY ORTONJanuary 23 at 10:07 am

Mortgage rates fell for the second week in a row, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average sank to 4.39 percent with an average 0.7 point, its lowest level since late November. It was 4.41 percent a week ago and 3.53 percent a year ago.

The 15-year fixed-rate average edged down to 3.45 percent with an average 0.7 point. It was 3.45 percent a week ago and 2.81 percent a week ago.The 15-year fixed rate was below 3.5 percent for only the second time in the past six weeks.

Hybrid adjustable rate mortgages were mixed. The five-year ARM average rose to 3.15 percent with an average 0.5 point. It was 3.1 percent a week ago and 2.7 percent a year ago.

The one-year ARM average moved for the first time in four weeks, dropping to 2.54 percent with an average 0.5 point.

“Mortgage rates were flat to down a little this week amid reports that inflation remains subdued,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The Consumer Price Index was up to 0.3 percent in December after being unchanged in November. For the year as a whole, consumer prices rose just 1.5 percent in 2013.”

Meanwhile, spurred by falling interest rates, mortgage applications showed an uptick last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, rose 4.7 percent. The Refinance index grew 10 percent, while the Purchase Index increased 2 percent.

The refinance share of mortgage activity rose to its highest level in two months, accounting for 64 percent of all applications.

via Mortgage rates fall for second week in a row.

Economic mobility hasn’t changed in a half-century in America, economists declare

photo-right-Capitollitup-against-med-blue-sky-copy-copyEconomic mobility hasn’t changed in a half-century in America, economists declare

By Jim Tankersley, Published: January 22 | Updated: Thursday, January 23, 12:01 AM

Children growing up in America today are just as likely — no more, no less — to climb the economic ladder as children born more than a half-century ago, a team of economists reported Thursday.

Even though social movements have delivered better career opportunities for women and minorities and government grants have made college more accessible, one thing has stayed constant: If you are growing up poor today, you appear to have the same odds of staying poor in adulthood that your grandparents did.

The landmark new study, from a group led by Harvard’s Raj Chetty, suggests that any advances in opportunity provided by expanded social programs have been offset by other changes in economic conditions. Increased trade and advanced technology, for instance, have closed off traditional sources of middle-income jobs.

The findings also suggest that who your parents are and how much they earn is more consequential for American youths today than ever before. That’s because the difference between the bottom and the top of the economic ladder has grown much more stark, but climbing the ladder hasn’t gotten any easier.

Those findings add up to a surprising take on the status of the iconic American Dream, and they cast Washington’s roiling debate about the consequences of economic inequality in a new light.

The paper suggests that “it is not true that mobility itself is getting lower,” said Lawrence F. Katz, a Harvard economist and mobility scholar who was not one of the paper’s authors but has reviewed the findings. “What’s really changed is the consequences of it. Because there’s so much inequality, people born near the bottom tend to stay near the bottom, and that’s much more consequential than it was 50 years ago.”

Americans have always placed great faith in economic mobility, the idea that any child born into poverty can grow up to be middle class, or that a middle-class kid can grow up to be rich.

As the country struggles through the slow recovery from recession and decades of middle-class stagnation, politicians including President Obama and Rep. Paul Ryan R-Wis. have lamented that mobility is getting worse; that it is getting harder to climb out of poverty or into wealth.

Previous research has suggested that that might be true, particularly work by Bhash Mazumder, a senior economist at the Federal Reserve Bank of Chicago who found mobility declined as inequality increased in the 1980s.

Chetty and his colleagues — Nathaniel Hendren of Harvard, Patrick Kline and Emmanuel Saez of the University of California at Berkeley and Nicholas Turner of the Treasury Department’s Office of Tax Analysis — examined millions of anonymous earnings records and found that mobility has not changed appreciably since the 1970s.

(The authors looked at records for parents at a set age and for their children once they reached adulthood. For the most recent generation of children, many of whom have not yet started working, they measured college attendance, which correlates with higher earnings).

Incorporating results from a previous study dating back to the 1950s, the authors concluded that “measures of social mobility have remained remarkably stable over the second half of the twentieth century in the United States.”

That finding implies mobility is stuck at a low rate, at least compared to other wealthy nations: It is much harder for a poor child born in America to climb into the rare air of the country’s highest earners than it is for a similar child in, for example, Canada or Denmark.

Several economists who study mobility and inequality expressed surprise at that stasis — starting with Chetty, the lead author. “I am really struck by how stable it seems to be,” he said in an interview. “I would not have expected that, because many things have changed over time.”

Heather Boushey, who heads the Center for Equitable Growth, a new inequality-focused think tank, said the findings were “making me rethink” her previous belief that mobility may be declining, particularly for men.

David Autor, an MIT economist who writes frequently about issues related to inequality, called the findings “a sort of Rorschach” test that will support many economists’ preconceived notions about the effectiveness of government programs in providing opportunity.

Some could view the results as a failure of programs such as Pell grants, Head Start and nutritional supplements for children that are intended to promote mobility. Or, he said, “you can view this as: Social policies have fought market forces to a draw.”

Another leading voice on mobility issues, Manhattan Institute economist Scott Winship, said in an interview that he has found a similar trend in mobility — no change for children born in the 1980s compared to those born in the 1940s — using a different data set.

The findings from Chetty and his co-authors are likely to set off a new round of debate over mobility and inequality, which Obama recently called “the defining challenge of our time.”

There’s something in the paper to challenge both political parties’ converging approaches to the issue. It suggests that both sides are wrong to talk about mobility declining. It explicitly calls into question the “Great Gatsby Curve” invoked by the Obama administration, the idea that widening inequality will depress mobility over time.

But the findings also suggest that Republicans are wrong to downplay inequality and focus solely on improving mobility.

Companion work by the Chetty team suggests that geography may be a critical factor in the pursuit of the American Dream. That research shows that some parts of the country, particularly the Southeast, have experienced persistently lower mobility over time than other parts, such as the Mountain West.

via Economic mobility hasn’t changed in a half-century in America, economists declare – The Washington Post.

CFPB’s new ‘qualified mortgage’ rule now in effect

wfpCFPB’s new ‘qualified mortgage’ rule now in effect


January 22 at 5:30 am

Last week, the Consumer Financial Protection Bureau’s CFPB new qualified mortgage also known as the ability-to-repay rule went into effect.

The new rule is about helping borrowers understand the true costs of the mortgage they apply for. On the flip side, it is designed to keep lenders from lending money to borrowers who can’t afford to make those payments over time.

If it works out the way the CFPB has planned, the number of foreclosures should drop in the coming years, and, hopefully, some of the conditions that helped create one of the biggest real estate bubbles in U.S. history will be eliminated.

To be considered a qualified mortgage, a lender may not charge excessive upfront points and fees capped at 3 percent of the loan, and the loan cannot be longer than 30 years in length say goodbye to 40-year mortgages.

Also, interest-only loans also known as zero-down payment loans and negative amortization loans where the monthly payment doesn’t cover the true cost of the interest, so the total amount of the debt grows each month will not be considered qualified mortgages.

No-doc loans, also known as stated-income loans because the loan officer would just write down how much the applicant said he or she earned and not verify that information, have been eliminated. Starting this week, if you apply for a mortgage, you have to be able to prove that you can afford to repay it in full.

In addition, the loans must fall into one of three categories: The monthly loan payment plus the borrower’s other debt payments cannot exceed 43 percent of the borrower’s gross monthly income; the loan must qualify to be purchased or guaranteed by a government-sponsored enterprise such as Fannie Mae or Freddie Mac or to be insured or guaranteed by a federal housing agency; otherwise, the loan must be made by a smaller lender that keeps the loan in its portfolio and does not resell it.

As the CFPB Web site puts it: “The ability-to-repay rule is intended to prevent consumers from getting trapped in mortgages that they cannot afford, and to prevent lenders from making loans that consumers do not have the ability to repay. It’s that simple.”

So, of course, the nonprofit real estate and mortgage trade associations, which represent the housing industry’s interests in Washington, are up in arms. They claim that self-employed individuals, small business owners and many others will have a harder time qualifying for loans. They also say that loans will cost more.

Perhaps. But while lenders may offer other sorts of nonqualified mortgages provided they verify that the borrower can repay that loan, if a loan doesn’t fall into the qualified mortgage category, it will not receive the same sort of legal protections.

And after the billions spent to pay off the housing crisis, lenders may be inclined to primarily offer qualified mortgages.

Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free 800-972-8255 any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.

via Real Estate Matters | CFPB’s new ‘qualified mortgage’ rule now in effect.

More Developers Want Your Next Home to be a Micro-Unit

2014-01-11 Micro Unit(Roger K. Lewis for The Washington Post)

More developers want your next home to be a micro-unit

By Roger K. Lewis, Published: January 16 | Updated: Friday, January 17, 7:45 AM

Given the potential market for affordable apartments, particularly in urban locations, developers increasingly are interested in building “micro-unit” projects.

Near the District’s Logan Circle, developer Brook Rose is planning an eight-story apartment building containing 38 units, of which 32 are micro-units ranging in size from 280 to 350 square feet. Rising behind three existing rowhouses on Church Street NW, the project might not include parking if the Board of Zoning Adjustment approves — in which case any tenant with a car will not receive a street parking permit.

The former Latham Hotel at 30th and M Streets in Georgetown might be transformed into a mixed-use building containing more than 100 micro-units. And the JBG Companies, according to a company source, is exploring several future projects in which micro-units would be included.

You might be thinking that “micro-unit” is just another term for “efficiency apartment.” Why this new, trendy terminology?

A micro-unit is, in fact, a very small apartment, typically smaller in floor area than a one-bedroom apartment and smaller than many efficiency and studio apartments. A micro-unit can be comparable in size to a hotel room.

One-bedroom apartments rarely are smaller than 500 square feet, while efficiency apartments usually range in size from 350 to 450 square feet. Micro-units commonly encompass 250 to 350 square feet. It’s worth noting that under District regulations, the floor area of a dwelling in a multi-unit building generally must be at least 220 square feet.

Clearly, compactness characterizes the micro-unit trend. But other attributes differentiate micro-unit development from conventional apartment development.

As a Google-based mosaic of images shows, micro-unit interiors can be more inventively configured and elaborately designed than many efficiency apartments. Intended to accommodate one and perhaps two individuals, micro-units often include built-in furniture and storage systems, plus a complete bathroom and efficiently configured kitchen. With greater-than-average ceiling height, a micro-unit can feel relatively spacious and offer a sleeping loft floating above a small portion of the space.

But the most noteworthy attribute is the potential for prefabricating micro-units entirely in factories, then transporting them to a building site. There they would be lifted into place to form new apartment buildings or attached-housing structures. Such a construction technique can save time and money and ensure quality, but only if micro-unit designs are standardized and production volume is sufficiently high and reasonably steady.

The micro-unit market is basically the same as the efficiency apartment market: singles of all ages, but especially younger generations preferring to live near the heart of a city, or well-adjusted couples who can amicably cohabit cheek-by-jowl. Residents make do with minimal wall space, virtually no free-standing furniture and limited resources for at-home entertaining. They must be willing to accept less space in return for a favorable location and lower rent.

In light of the limited dwelling space, thoughtfully conceived buildings composed of micro-units need to include communal areas — including cooking and catering capability — where residents can informally socialize, organize events or host parties. And a shared business office for the building, with a couple of copy machines, wouldn’t be a bad idea.

Of course, affordability drives the market: A 250- or 300-square-foot unit will cost considerably less than one with 500 or 600 square feet. However, a micro-unit will cost more than half the price of an apartment twice its size because it still requires a bathroom and kitchen, a relatively fixed cost for apartments of all sizes. And micro-units with more built-in storage cabinetry entail an additional building cost.

Is there a micro-unit in your future? Not if you have furniture you can’t live without, love the artwork displayed on your current home’s walls and throw frequent dinner parties If that’s the case, you’ll need to consider other options.

Roger K. Lewis is a practicing architect and a professor emeritus of architecture at the University of Maryland. To view his cartoon, go to washingtonpost.com/realestate.

via – The Washington Post.

New federal rule on appraisals will be useful to home buyers

Photo credit: Photos.com

New federal rule on appraisals will be useful to home buyers

By Kenneth R. Harney, Published: January 16 | Updated: Friday, January 17, 7:50 AM

A new federal rule could give millions of home buyers insights they’ve never had before about a crucial element of their mortgage application: the appraisal, including the electronic cross-checks and reviews now used by lenders to determine the amount of the loan they’ll approve.

The new rule will also give buyers the time and ammunition to challenge appraisals they suspect contain errors. Starting this weekend, lenders nationwide will be required to inform mortgage applicants that they can receive a free copy of whatever appraisals, reviews, computer valuations and other data are used in the transaction. You’ll be entitled to see this material “promptly” after the appraisal report is completed, or three days before your loan closes, whichever is earlier. The lender will have to inform you of your new rights within three business days after receipt of your mortgage application.

This contrasts with the current system, where lenders don’t have to provide you a copy of the appraisal unless you request it. The additional valuation data — which may include follow-up review appraisals by a second appraiser, multiple “automated” valuations and “broker price opinions” provided at low cost by realty agents — currently are not subject to disclosure.

Now everything will be mandatory. You must be provided any significant information that was integral to the valuation of the property, even if you had no idea it existed and didn’t ask to see it.

The new rule implements changes to the Equal Credit Opportunity Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It will be overseen by the Consumer Financial Protection Bureau. Unlike earlier rules, the disclosure requirements will be limited to mortgages that are first liens on a home, including reverse mortgages and construction loans. If you’re applying for a second mortgage or second-lien home equity credit line, the bank will not have to provide you appraisal materials, although you are still free to ask.

So what might this mean to you in practical terms? Potentially plenty. Say your appraiser works for a management firm that uses low-cost, inexperienced appraisers. By chance it turns out that your appraiser lives 80 miles away and is not familiar with local real estate trends. Then the valuation comes in low because the appraiser used inappropriate “comparable” properties, including a house that sold at a depressed price because the owners were in financial distress.

Under the new rule, your lender will have to send you a copy of the full appraisal report, soon after receiving and reviewing it, including exhibits and attachments. Your realty agent and other advisers should have time to spot errors, challenge the apprasial’s validity and demand corrections.

Among the questions you might ask: Why did the appraiser select one or more comparables that bear minimal resemblance — lot size, square footage of the house, age, location, view, interior improvements — to the house you’re buying? Why were the physical dimensions of the property inaccurately measured? Why did the appraiser add no extra valuation credit for the solar panels on the roof and the extensive energy-conserving equipment throughout the house?

For their part, experienced appraisers generally welcome the new mandatory transparency for consumers. Some of them have fought for years against lender overreliance on poorly trained appraisers who receive only a modest portion of the $450 to $500 that lenders charge consumers at settlement. The rest goes to the management company, and some portion may be pocketed by the lender itself.

“I am thrilled,” says Pat Turner, a senior residential appraiser in the Richmond area, “to have my appraisal stuck beside an [automated valuation] or a broker price opinion,” which will now be mandatory. “Let everyone see the clear distinction of time, effort, expertise and accuracy of a truly professional appraisal.”

But there’s some potential quicksand for unwary borrowers. The rule allows you to waive your right to receive your appraisal materials early on, and instead get them on the day of the closing.

That’s not a smart move. Why give up your guaranteed opportunity to carefully review the appraisal shortly after it’s completed — when you can do something about errors — rather than rush through it during a paper blitz when your eyes are glazed over?

Ken Harney’s e-mail address is kenharney@earthlink.net.

via New federal rule on appraisals will be useful to home buyers – The Washington Post.

With home buying, planning ahead will make the multiple-step process easier

With home buying, planning ahead will make the multiple-step process easier

financesBrian Taylor illustration for The Washington Post – Planning ahead and getting your finances in order will make the home-buying process less challenging.

By Michele Lerner, Published: January 16 | Updated: Friday, January 17, 7:30 AM

If you’re planning in the spring to buy your first house, you already may be feeling a bit overwhelmed about what can often be a complicated and convoluted process. ¶ The good news is that you have plenty of time to learn the myriad steps to buying a home and getting prepared for the endeavor. ¶ Many experts say that — even before finding a real estate agent — the first things you should do are to get your finances together and to find a lender who can get you prequalified and advise you on how much house you can buy.

Scott Davis, a senior loan officer at McLean Mortgage in Fairfax, says buyers should never start searching for a home without speaking first with a lender. This will help you avoid falling in love with a home you can’t afford. Plus, a lender can advise you on how to prepare for a mortgage application.

“Applying for a mortgage is actually counterintuitive,” Davis says. “Things that might be good for you financially can actually hurt your chances of getting a mortgage approved. For instance, some people think it’s really smart to take all their cash and pay off their debt, then close their current credit card accounts and open a zero interest card. The problem is, you won’t have enough cash reserves for a deposit, a down payment and an emergency fund. You’ve also dropped your credit score from 800 to 600 if those closed credit cards had a good payment history. Now your score is based on a history of about 30 days.”

Even before you contact a lender, there are a few steps you should take as far in advance as possible before making an offer on a home, including checking your credit, developing a budget, saving money and getting your cash in place.

Steven Cohen, vice president at First Place Bank in Rockville, says prospective borrowers should request their own credit report to check for errors. A 2012 Federal Trade Commission study found that 20 percent of all consumer credit reports have mistakes. You can get a free copy of your credit reports annually from AnnualCreditReport.com. You don’t have to get all the credit reports at once; you can request one from Equifax, TransUnion and Experian at different times of the year to keep on top of your credit profile. You can also pay a small fee to get your credit score.

“You should make sure that everything is reported correctly, such as any late payments that you actually made on time or a debt that you don’t actually owe,” says Craig Olson, vice president of mortgage operations at Pentagon Federal Credit Union in Omaha. “I had an account that showed up twice.”

Cohen recommends that each credit card account have a balance of less than 50 percent of the limit. He says it’s better to have two or three accounts with smaller balances than one card with a high balance. Your credit score will be higher if you limit your credit card balance to less than 25 percent of the limit.

Get your cash ready

Olson says first-time buyers often come to him without an idea of their own budget. He recommends sitting down for a few minutes at your computer or with pen and paper to draw up a quick plan that shows your income and expenses.

“You can find calculators online that can help you estimate what your payment will be under different scenarios,” Olson says. “You can use those numbers as a starting point and figure out your own comfort level with different payments.”

Depending on the loan program you choose, you’ll need at least 3.5 to 5 percent or more for a down payment, plus you may need cash for closing costs unless you can negotiate to have the seller pay those fees. You should have been saving for a down payment, but there are some other options for cash, such as a gift or borrowing from your retirement account if you’re employer allows it.

“Some people may be depending on gift money from their parents, but you need to get an idea of how much to expect,” Cohen says. “Someone may think they’re getting $20,000 when the parents are thinking $2,500.”

Davis says that Federal Housing Administration loans allow for the entire down payment to come from gift funds, but conventional loans require borrowers to have at least 5 percent of their own funds for the down payment.

“If you’re receiving a gift or moving funds from one account to another, you should put the funds into an account at least 60 days before you apply for a mortgage,” Davis says. “Lenders are required to look at two months of bank statements during the application process, so any money placed in your account earlier than that becomes your money and you don’t have to provide a source for the funds.”

Olson says that while you’re consolidating your funds, you should begin to gather the paperwork you’ll need for a loan application, including:

?Two most recent W-2 forms.

?Two most recent pay stubs.

?Two months of bank statements.

?Two months of investment/retirement account statements.

?Two years of tax returns.

Consult a lender

Once your paperwork is in order, then you can meet with a lender to discuss your loan options. If you’ve already identified a real estate agent to work with on your home purchase, he or she can suggest several reliable lenders. You can also ask trusted friends and colleagues for recommendations and then interview two or three lenders.

“Interviewing a lender should be a lot like a job interview,” Davis says. “I think it’s important to have a face-to-face meeting because you need to find someone you can trust and form a relationship with. You can ask if they’ve worked with a lot of first-time buyers, but I think it’s more important to find someone you can trust to work with you regardless of your price range. You want to work with someone who’s driven by building a relationship, not by earning a commission.”

A lender can help you wade through the options for various loan programs and then use your paperwork and loan application to preapprove you for a loan.

“Some lenders offer a ‘prequalification’ for a loan, which can be a good starting point for learning about the mortgage process,” Cohen says. “A prequalification is based on your verbal statements about your income and assets and an estimate of your credit score. A loan preapproval, which many Realtors require before they’ll work with a buyer, means that the lender has verified your credit, your employment, your income and assets, and determined how much you can borrow based on that information.”

The preapproval letter can be used as part of your offer when you’re ready to buy a home to prove that you can afford the property. Cohen says a preapproval letter is generally valid for three months and can be renewed with a quick update of your credit profile.

Loan programs

“There are a lot of factors that go into a loan approval,” Davis says, “which is why every prospective buyer should consult with a lender to see where they stand.”

Many first-time buyers opt for FHA financing, because this program requires a down payment of only 3.5 percent. While the FHA says borrowers must have a credit score of 580 or higher to qualify for a low-down-payment loan, most lenders require a minimum credit score of 620 or 640 or above, Cohen says.

“FHA loans are less popular now, though, because they carry heavy mortgage insurance that lasts for the life of the loan if you make the minimum down payment,” Cohen says.

Cohen says that a down payment of 20 percent is ideal because you won’t have to pay private mortgage insurance (PMI) and you’ll pay the lowest interest rates, particularly if you have good credit. He says borrowers with a credit score of 740 and above pay the lowest interest rates for conventional financing. Most conventional lenders offer loans with a down payment of 5 percent, although there are some special loan programs available with a lower down payment. Veterans Administration loans, available to veterans, do not require a down payment.

In addition to your credit score, an important element of your loan qualification is your debt-to-income ratio.

The federal government’s new “qualified mortgage” rule, aimed at toughening standards to prevent another foreclosure crisis, “requires a maximum debt-to-income ratio of 43 percent,” Cohen says. “If you make $120,000 a year, your gross income would be $10,000 per month, so your maximum payments for your housing plus the minimum payment on all other debt, such as your car, credit cards and student loans, would have to be $4,300 or less.”

Home buyer programs

In addition to consulting a lender, most first-time buyers can benefit from taking a home buyer education class that helps them establish a budget and prepare for homeownership. The Consumer Financial Protection Bureau offers a list of government-approved housing counselors that offer free programs; state and local governments also offer home buyer education.

The DistrictMaryland and Virginia offer home buyer assistance for down payment funds or low-cost loans, provided the buyers meet specific criteria. Some programs are limited by income or exclusively for first-time buyers.

A strong understanding of your finances is an important first step on the path to homeownership.

Michele Lerner is a freelance writer.

Mortgage terminology

Here are definitions of several terms you will encounter as you confer with lenders:

Adjustable-rate mortgage (ARM): A mortgage loan with an interest rate that periodically changes.

Annual percentage rate (APR): The yearly interest rate paid on a loan. Federal law requires that this rate is disclosed as part of the truth-in-lending documents.

Conventional mortgage: A mortgage offered by a lender that will probably be bought on the secondary loan market by Fannie Mae or Freddie Mac; these loans have an upper limit of $625,500.

Federal Housing Administration (FHA): A government agency that offers low-down-payment loans along with housing information.

Fixed-rate mortgage: A mortgage loan in which the interest rate remains the same for the entire length of the loan.

Good faith estimate: An estimate of the entire cost of buying a home, including all down payment, interest payments and closing costs associated with a loan; to be provided by the lender within three days of a loan application.

Jumbo loan: A mortgage loan above $625,500; these loans sometimes carry a higher interest rate and require a higher down payment and higher credit score than smaller loans.

Loan origination fee: A fee charged by the lender for administering and processing the loan; also sometimes called a “point” and is equal to 1 percent of the loan amount.

Mortgage insurance: Insurance that protects the lender against loss if the borrower defaults on the loan.

Points: A fee charged by the lender equal to 1 percent of the loan amount; points can be paid at the closing to lower the interest rate on a loan.

Preapproval: A qualification for a mortgage by a lender based on proof of your income, assets and credit score that states the maximum loan that you can qualify for; final loan approval also requires an appraisal on the property, which demonstrates that the value of the property is more than the loan amount.

Prequalification: An estimate of your ability to qualify for a loan given by a lender based on your credit worthiness, income and assets but without a complete proof of all assets.

via With home buying, planning ahead will make the multiple-step process easier – The Washington Post.

How to get your finances in home-buying shape

wfpHow to get your finances in home-buying shape

January 15 at 5:30 am

Money makes the world go around. And every year we make resolutions to save more of it, invest it more profitably and spend more wisely.

The good news is that the economy truly seems to be on an upswing. The third quarter GDP number hit 4.1 percent, suggesting faster growth than we’ve seen in years. Distressed properties seem to be a much smaller part of home sales, and real estate prices are up. The stock market is on a tear.

Whether it is real or not, we feel better about our money and generally richer. So now’s a perfect time to make some personal finance resolutions that will help you save more, spend less, avoid getting ripped off and invest intentionally in 2014.

In other words, it’s time to focus on you. Mortgage interest rates are at or near a historic low, and housing affordability is near a record high. Let’s start a conversation about how to make your finances real estate-ready and get your credit in home buying shape.

This year, resolve to:

• Put yourself and your family on a budget you can afford. We hate the word budget, and from the studies we’ve seen, so do most of you. But even if the word “budget” turns your stomach, we’d like you to think about being a smart spender.

Here’s how it works (and there’s no real magic here): Spend less than you earn. Buy in bulk (if it’s cheaper), at sales, and in advance of when you’ll actually need something. (If you wait until the last minute, it’ll generally cost you more to get the same item.) Cook at home more often, and use coupons if you can. Avoid takeout foods and save restaurants for special events.

Ilyce’s favorite money-saving game is called “trading down.” Here’s how to play: Each week, try to find a simpler and less expensive way to do the same thing. If you drink a bottle of $25 wine each week, try to find one you like at around $8 to $10 per bottle. If you’re eating out twice a week in restaurants, cut back to once a week or once every other week. If you’re spending $200 per night out (babysitter, dinner, theater, movie, transportation, etc.), cut that to $100 per night.

The savings are enormous. Ilyce had a caller to her radio show who said they liked to eat out but just gave up ordering beverages, alcoholic or other. They saved $10,000 in a single year.

Just cutting back a little in a bunch of areas will give you plenty of ways to set real cash aside for your down payment.

• Pay off your charge card debts. The average American has around $8,000 in credit card debt. And most of those have a mortgage, car loan and some sort of student loans to pay off as well. College graduates leave school with nearly $20,000 in credit card debt on top of federal and private student loans. No wonder the rate of student loan defaults has gone through the roof.

While Americans are paying down more credit card debts, the savings rate has been falling as well. Last year, Americans were saving roughly 4 percent of their income. Now they’re saving 3 percent. That number should be higher.

By paying off your debts, you’ll have more free cash each month to sock away for something more important — like a down payment. It’ll also help you sleep better at night knowing that you don’t have to worry about whether there’s enough cash in your checking account to make good on all your bills.

Finally, while you’re paying off your charge cards, remember to pay them on time. Paying on time, over time, is the surefire way to improve your credit history and your credit score.

• Pay myself first and last. This kind of common-sense advice seems overplayed — everyone hears it, but most don’t follow through.

Again, it’s not hard to do, but take $50 or $100 out of your checking account at the beginning and end of the month and sock it away in a savings account. If the cash isn’t in your account, you won’t spend it. (And if you have trouble keeping cash in your wallet without succumbing to temptation, don’t take cash out of the ATM.)

The higher-tech way to do this, of course, is to have your bank or financial investment company electronically pull the money out of your checking account each month and send it to a different account. And we’re all about using technology to make you a savvier spender and saver.

Open another savings account at your bank and set up a regular automatic transfer of the cash into that account. Then, watch it grow and grow until you’re ready with the 20 percent you’ll need for a cash down payment. Now, that’s a game worth playing.

via Real Estate Matters | How to get your finances in home-buying shape.

Higher interest rates will slow housing market growth in 2014

Higher interest rates will slow housing market growth in 2014
January 14 at 5:30 am
2013 real estate

(Jonathan Ernst/REUTERS)

David Charron,  president and CEO of Rockville-based multiple-listing service MRIS, writes an occasional column about the Washington-area real estate market.

If 2013 was the year of stabilizing the housing recovery, then 2014 will be one of slower, steady growth.

Last year strongly favored sellers over buyers and is a trend we expect to continue, albeit with a softening of several critical factors. Inventory, home equity, days on market and interest rates are four of the major market components we’re tracking closely as we begin 2014 and will determine the relative health of the real estate market.

The dominant story line for 2013 was the shortage of inventory for buyers in the middle and lower price ranges. The combination of homeowner reluctance to list their property due to low equity plus lower interest rates led to strong buyer demand for much of the year.

Accordingly, this led to an increase in prices as the year went on and many zip codes within the MRIS geographic footprint saw home prices the highest they had been in the past five years. We fully expect home prices to continue increasing but the rapid rise that we saw in recent months is not sustainable. Thus, the pace of growth for both list prices and final sales prices will slow considerably in 2014.

As prices increased, homeowners began to regain equity in their houses and consequently more of them decided it was a profitable (or at least an affordable) time to list. This trend should continue into the new year so the inventory shortage will not be as much of a burden to the market in 2014.

However, there remains such pent up buyer demand in the Washington region it is unlikely enough homes will enter the market to meet all of the willing buyers. As a result, conditions will continue to favor sellers for most of 2014.

Along with strong buyer demand in 2013 came a drastically decreased length of days on market (DOM). Houses moved off the MRIS system in record numbers, with some of the more popular neighborhoods — such as Zip code 20005 in D.C.’s Logan Circle; Zip code 20851 in Rockville; and Zip code 22032 in Fairfax — seeing a median DOM of less than two weeks during the peak buying periods of spring and summer.

Days on market will likely lengthen in 2014 due to the expected increase in asking prices for homes in middle and lower price ranges, while high-end priced properties won’t see much change.
Besides inventory, the biggest driving factor of the market will be the rise in mortgage interest rates. They have shown an upward climb over the past year starting off around 3 percent and are nudging up toward 5 percent as we begin the new year.

We fully expect the interest rates to continue a slow climb through 2014, with several periods of time when they remain unchanged to prevent any volatility in the market. The increase could result in a stronger turnout of buyers earlier in the year than usual so they can take advantage of interest rates when they are at their lowest for the foreseeable future.

The Washington metropolitan area weathered the housing crash of a few years ago relatively well compared to the rest of the country. However, it was not without a few setbacks such as government shutdowns.

With the signing of the two-year budget deal, buyer confidence should be higher and bring back stabilization for the D.C. metro area. As the economy and employment rates continue to improve, this will, hopefully, allow millennial workers (many of whom are living with their parents or renting) to purchase their first home and boost first-time homeownership levels which actually fell last year.

The positive growth that took place during 2013 was healthy, stable and free from any major swings in market forces. All signs point to 2014 being a solid year for real estate.

via Higher interest rates will slow housing market growth in 2014.

Fewer homes in financial distress in the U.S.

houselifepreserverraftunderwatersaved-304Jan 13, 2014, 8:11am CST

Fewer homes in financial distress in the U.S.

Olivia Barrow, Staff Reporter-Dayton Business Journal

In an encouraging sign for the U.S. economy, a new report shows that fewer homeowners across the country are underwater with their mortgages.

In December, 9.3 million U.S. homes were underwater, meaning their value was at least 25 percent less than the mortgages and loans on the property. That figure represents 19 percent of all mortgage properties at the time of the report, published by RealtyTrac, a housing data source.

In September, the number of underwater homes was 10.7 million, and in January the figure was 10.9 million, showing a steady decrease in homes in financial distress.

“During the housing downturn we saw a downward spiral of falling home prices resulting in rising negative equity, which in turn put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss,” said Daren Blomquist, vice president at RealtyTrac.

“Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event.”

via Fewer homes in financial distress in the U.S. – Birmingham Business Journal.

Washington D.C. area housing market improved in 2013

Washington D.C. area housing market improved in 2013


January 10 at 10:00 am

The D.C. metro area housing market made solid gains in 2013, according to a report released Friday.

Data provided by RealEstate Business Intelligence, a subsidiary of Rockville-based multiple listing service MRIS, showed that the median sales price, the number of homes sold and the number of homes for sale were all up compared to a year ago and that the slowdown in the housing market as a result of the federal government’s partial shutdown in October was just a speed bump on the road to recovery.

Although the median sales price for the metro region fell for the fifth time in the last six months, it was nearly 10 percent higher last month than in December 2012. Since tying its record high of $440,000 in June, the median sales price for the D.C. area has fallen nearly $50,000 to $391,362. Still, last month’s median sales price was more than $30,000 higher than December 2012 and the highest December-level in six years.

The median sales price for the D.C. region in 2013 was $399,900, a 9.6 percent gain from 2012.

housing trends metrics

(RealEstate Business Intelligence)

Every jurisdiction saw its median sales price increase compared to 2012. Prince George’s County made the biggest leap, rising to $197,000 in 2013 from $170,000 in 2012, a nearly 16 percent increase. Falls Church City, the District, Prince William and Frederick also experienced double-digit increases.

median sales price by jurisdiction

(RealEstate Business Intelligence)

The number of homes sold in the region climbed 9.3 percent in 2013 compared to 2012. After the government shutdown put the brakes on home sales in November, they rebounded last month. There were 3,644 homes sold in December, nearly 19 percent higher than the previous month.

Rising prices encouraged more people to put a home up for sale in 2013 than the previous year. There were 64,618 homes listed for sale last year, an increase of more than 9 percent from 2012. Last month also saw an increase in the number of active listings compared to December 2012, the third consecutive month they increased year-over-year. The 2,565 new listings in December were driven mostly by an increase in condos coming onto the market. The number of condos for sale grew by nearly 16 percent.

Home sellers in Falls Church didn’t have to wait long to sell their home in 2013, while those in Frederick had to have a lot more patience. The median days on market for a home in Falls Church was 10; in Frederick, it was 26. Half the homes sold in the D.C. metro area were on the market for 15 days or less.

median days on market

(RealEstate Business Intelligence)

Low inventory – the number of homes listed for sale is down nearly 75 percent from the September 2007 peak – led to a seller’s market in the D.C. region last year. The average sales-to-original-list-price ratio rose 2.2 points to its highest annual level since 2005. The District led the region at 98.8 percent, while Prince George’s County had the biggest jump, rising to 97.6 percent last year from 93.1 percent in 2012.

avg sales to original list price ratio


(RealEstate Business Intelligence)

via Washington D.C. area housing market improved in 2013.

New mortgage rules aim to prevent risky loans

WFP_WhiteLogo_Reverse-PMS275BlueBackgroundNew mortgage rules aim to prevent risky loans

Julie Schmit, USA TODAY

7:21 p.m. EST January 9, 2014

Here’s a look at what they do and why they matter to potential home buyers.

New mortgage-lending rules take hold Friday that federal regulators say will guard against the risky lending practices that fed the housing bubble, which led to the greatest collapse in U.S. home prices since the Great Depression. For most home loan borrowers, the change will have little or no impact on whether they can actually get a mortgage, experts say, but they may have to show even more proof that they can afford one. Here’s a look at the rules, what they do and why they matter.

Q: What are the new rules, and where did they come from?

A: There are several terms to know. The first is the “ability-to-repay” rule. It was required by the 2010 Dodd-Frank financial overhaul legislation as a response to the financial crisis. The rule was crafted by the Consumer Financial Protection Bureau, which will oversee its enforcement.

Q: What does it do?

A: It requires mortgage lenders to make sure borrowers can actually afford their loans, over the long term, by weighing their income, assets, savings and debt against their monthly house payments. “It really is pretty basic,” says Richard Cordray, head of the CFPB. He calls the changes a “back to basics” approach for mortgage lending.

Q: What else is new?

A: Another term you need to learn is “Qualified Mortgage” or QM. A QM meets new guidelines, and borrowers who get them are presumed to meet the ability-to-repay requirements. If lenders make QM loans, they have more protections against future lawsuits should the loans later go sour.

Q: What are the QM guidelines?

A: QM loans cannot:

• Contain risky features, such as terms that exceed 30 years, interest-only payments or payments that are less than the full amount of interest so that the home loan debt grows each month.

• Carry more than 3% in upfront points and fees for loans above $100,000.

• Push a borrowers total debt load above 43% of his or her monthly income, unless the loan is eligible to be backed by Fannie Mae or Freddie Mac, or a federal housing agency such as the FHA, or is made by a small lender that keeps the loan on its books.

Q: Can lenders still make loans outside those guidelines?

A: Yes, but they’ll still have to make sure borrowers can afford the loans, and theyll have less protection against future legal challenges if the borrower fails — even if they resell the loan after they first make it.Bank of the West, for instance, says itll continue to do interest-only loans. Many borrowers in high housing-cost areas also frequently have debt-to-income ratios that exceed 43% and lenders will likely keep making home loans in those areas, too.”Were seeing a lot of lenders say they’ll keep making” non-QM loans that are “perfectly sound,” Cordray says.

Q: How many mortgages are likely to fall under the QM definition?

A:The CFPB estimates that 92% of mortgages in the current marketplace meet the QM requirements.

Q: Why is this needed at all?

A: Lenders weren’t always so careful. Goldman Sachs estimates that 50% of recent home loan defaults could have been prevented had the QM rule been in place when the loans were made, largely before the housing bust.

Over time, should the housing market get superheated again, the new rules will “serve as a barrier,” against risky loan practices, says Ira Rheingold, executive director of the National Association of Consumer Advocates.

Q: Will the rules make it harder for some people to get home loans?

A: That’s not clear. Goldman Sachs says it may be tougher for borrowers to qualify if they have difficult-to-validate incomes, including those for whom tips, bonuses, commissions, rents or investments constitute a big part of their total income. One in nine Americans are also self-employed, and that income is harder to substantiate than is wage income, Goldman says.

Borrowers above the 43% debt-to-income level will also face more hurdles, but mostly in terms of documentation, says Wendy Cutrufelli, Bank of the West vice president.

That’s because lenders have to be able to prove that they exercised extreme due diligence in making such loans, she says. Borrowers should expect to have to produce even more tax records, pay stubs and bank and investment account information.

The 43% standard may also prevent some borrowers from qualifying for the loan needed to buy the house they want, says Roelof Slump, managing director of Fitch Ratings. Others may need bigger down payments to stay within the 43% standard, he says.

Q: What’s going to be the required minimum down payment?

A: The rules don’t set any down-payment requirements.

Q: Will the rules mean it’ll take longer to get home loans approved?

A: They may, especially early on, says Keith Gumbinger, mortgage expert with HSH Associates. It’ll still take lenders more time to get systems up and running that track and handle new documentation requirements. While lenders have had months to prepare, he still expects that loan officers, underwriters and compliance offers will need more training.

“It’ll be a muddy mess until the rules settle in,” he says.

Q: What are the downsides to these changes?

A: Critics say minimum-down-payment requirements would be a good thing. Goldman Sachs’ analysis also shows that eliminating loans with risky features would have prevented 59% of defaults that occurred in loans issued in 2007; it also would have prevented 30% of the loans that didn’t default, too.

via New mortgage rules aim to prevent risky loans.

Home prices rise slightly in November

wfpHome prices rise slightly in November

Julie Schmit, USA TODAY

8:51 a.m. EST January 7, 2014

-Prices rose 0.1% from October
-Home prices are up 11.8% from a year ago
-Rising mortgage rates slowing home sales, economists say

Home prices finished 2013 up 11.5% for the year, marking the best performance since 2005, market researcher CoreLogic predicts.

Its latest data shows prices were 11.8% higher in November year over year and up 0.1% from October.

However, prices will dip slightly in December from November, it says.

With last year’s strong gains, home prices are now at new peaks or within 10% of previous peaks in 21 states and Washington D.C., according to CoreLogic.

Many economists predict smaller home price gains for this year, as credit remains tight, interest rates rise and as new mortgage rules take hold.

In November, the five states with the highest home price appreciation were Nevada, up 25.3% year over year; California, up 21.3%; Michigan, 14.4%; Arizona, 13.5% and Georgia, 13.3%.

The only state to show depreciation was Arkansas, down 1.1% year over year.

CoreLogic’s figures aren’t adjusted for seasonal variations, such as cold winter weather that slows sales.

via Home prices rise slightly in November.

When a ‘prelisting’ appraisal or inspection is worth the trouble

inspector_shutterstock_11864818-300x200Home inspector image via Shutterstock

When a ‘prelisting’ appraisal or inspection is worth the trouble

Insights from experts can help agents and sellers price a property, but buyers will want second opinions

Hank Miller, Contributor

Jan 8, 2014

Does having a home “pre-appraised” or “pre-inspected” make a difference? Is this money well spent by the average seller?

Do buyers and buyer agents care, or are “prelisting” appraisals and inspections not considered credible?

Should a seller-provided appraisal be accepted as impartial by a buyer?

What is your natural reaction to being told something is worth X? Do you say to yourself, “It might be worth that to you?”

A few things immediately come to mind when a seller-provided appraisal is pushed front and center:

-What is the relationship of the agent to the appraiser? Seller to the appraiser?

-What was the stated purpose of the appraisal?

-What is the background of the appraiser?

-When was the appraisal completed and what are the trends in the area?

-Who paid the appraiser?

-Was the appraisal completed as an underwriter would expect?

It’s interesting how frequently prelisting appraisals are above list price: “Appraised at $450,000 and reduced to $380,000.”

It’s reduced because the market — buyers — don’t agree. Saying it appraised higher is idiotic. The market indicates value.

“There isn’t an appraiser on Earth that can pinpoint what a home might sell for when listed. At best they can offer a value range.

But shouldn’t this be something that a competent agent can do as well?

Are agents bringing in appraisers as a crutch — perhaps because they don’t want to offend a seller and lose a listing? In the so-called “recovering” market, are listing agents afraid to level with buyers that are convinced values have increased?

Clearly there are times to bring an appraiser in — if a home is truly unique, or the listing agent is genuinely stymied, for example –  but those occasions should be infrequent.

Prelisting inspections are also a debatable call for sellers, though not nearly as much as appraisals.

At least half of any report is obvious. Homes constantly need maintenance, and every home will benefit from cleaning gutters, controlling surface water, changing filters. Is an inspector needed for that?

But unless it’s obvious, who is to say that repainting, a new roof, or major mechanicals are needed? A prelisting inspection will outline repairs that enhance appeal. But is a buyer looking at a stained and weathered roof going to rest easy because the seller pulls out a report that says it’s fine?

Appraisals and inspections are opinions. Buyers are finally getting smart, and don’t want to be told what to think based on something provided by the seller.

Is there a role and use for both of these real estate professionals? Yes. But more as aids during the listing; buyers and lenders want “their experts” to offer opinions, not the seller’s.

Appraisers may serve as consultants during the selling process, working with sellers and agents to establish a list price, advising them on pricing strategies while the property is listed, and preparing an information packet for the buyer’s appraiser, for example.

Inspectors can play an effective role by detailing the less obvious issues and working with the seller to evaluate the buyer’s inspection report.

Sellers can save money by making obvious repairs and by using experienced agents that can look at the data like an appraiser.

If required, bring in experts and use them as the situation dictates. IF is the operative word.

Hank Miller is an associate broker and certified appraiser in Atlanta, Ga. The lead agent for HMT Atlanta, he’s known for his candid opinions and real estate expertise.

via When a ‘prelisting’ appraisal or inspection is worth the trouble | Inman News.

What home sellers can expect in the market this year





What home sellers can expect in the market this year

January 7 at 5:30 am
A year ago, we saw far fewer “For Sale” signs. And this year, there are even fewer.

The surprising thing about the real estate market is its resiliency. It never fails to surprise how decisively a market turns. When it’s time, it’s time. And it’s clear to us that 2014 is looking very good for real estate.

There are a few troubled spots on the horizon: Mortgage interest rates are at least one percentage point higher than they were a year ago. And home prices are higher. That means homes are less affordable than they were, particularly since incomes haven’t risen, in real terms, in years.

That’s good news, and not so good news for sellers. It’s great that home prices are rising. In part, homes that were in foreclosure or listed as short sales, have closed and now prices are rising again. But rising interest rates (depending on how high they go) mean fewer buyers can afford to pay those higher prices.

At the end of 2011, mortgage interest rates reached 3.7 percent, before falling back. In 2012, mortgage interest rates were about 3.3 percent on a 30-year fixed-rate mortgage. We ended the year with mortgage interest rates around 3.5 percent for a 30-year fixed rate loan. In 2013, we ended at 4.3 percent for a 30-year fixed rate mortgage. (If you’re wondering, we think these rates are still great from a historical perspective.)

The Federal Reserve has indicated it will now pull back its monthly spend of $85 billion in mortgage-backed securities and Treasury securities, which it did to keep interest rates at historic lows through 2015, or when the employment rate falls to 6.5 percent. The economy is improving. Third quarter 2013 GDP numbers were revised upward to 4.1 percent. The economy hasn’t grown that fast in years.

So, with low inventory, still low mortgage interest rates, and modestly rising prices, here’s what you need to do to get your home in selling shape for 2014:

• Overcome any possible objections a buyer would have.

Buyers are always looking for a reason not to purchase your house. Your job as a seller is to eliminate any potential objections that would stand in the way for a buyer to make an offer.

If you really want to sell quickly, you’ll work hard to exceed the buyer’s expectation of your home as well. If your home is competitively priced, and your home’s condition exceeds a buyer’s expectations based on other homes in the neighborhood, you’ll get an offer — even if it isn’t the offer you want.

• Get your home into selling shape.

Cleaning your home is a must. After that, you should consider hiring a stager to give your home the television-worthy polish so many buyers expect today. (Yes, they want your home to look like something they’d see on HGTV.) Assess what other sort of work needs to be done, such as fixing things that don’t work, touching up paint, or cleaning or replacing your carpets.

Decide if you need to update your landscaping, and paint, clean or tuck point your home’s exterior. And if you’re selling in January, clear out the holiday decorations as quickly as possible.

• Invite at least three agents to create a comparative marketing analysis (CMA).

Often, sellers simply call the agent who sold them their home to list it. While you may wind up hiring that person, you’ll be doing yourself a favor if you invite a couple of other agents in from different firms. That’s because each will bring different ideas to the table about how much your house is worth and what kind of marketing plan will work. They’ll all have different experiences to draw on and have different buyers in mind who may want to make a quick offer.

• Understand what it will take to sell your home.

If you live in an area littered with foreclosures, you may have to meet that price point in order to sell. Is it worth it? Probably not, but you’ll have to really evaluate price and timing in order to get the most for your property. If homes have begun to appreciate, you might be pleasantly surprised. Again, a CMA will be incredibly helpful.

• Be realistic about the market.

Find out what types of properties are selling in your area and how many days they’re sitting on the market. Accept the reality of your local market and make sure you price your home realistically.

Don’t blame your broker if you don’t get three offers over your list price within 24 hours of putting your home on the market. Sellers who set sky-high (or even pretty high) prices could wait months or years for an offer (one of my neighbors has been trying to sell his overpriced home for years) and may wind up with the same price they would have had if they’d priced their home correctly the first time — or a lot less.

In this real estate market, one of the worst things you can do is overprice your home from the start. The more realistic you are, the better off you’ll be.

• Rent if you can’t sell and buy at the same time.

We don’t recommend putting in an offer on another property until you have some serious interest in your current property or unless you have enough cash to cover the expenses of both properties for six to 12 months.

It’s fine to start researching other neighborhoods, but if you’re not sure what you want to do, consider renting on a short-term or month-to-month lease. While a double move is a pain, and does have some added costs, it’s a lot cheaper than carrying two mortgages for two years.

• Read all documents thoroughly before you sign them.

Why would someone sign a legal document he or she hasn’t read? I’m not sure, but home sellers do it every day. If you’re going to sell (or buy) in the coming year, promise yourself that you’ll take the time to read and understand the listing contract, offer to purchase and loan documents for your next purchase.

(If you’re taking back a loan for the home buyer, have an attorney prepare the documents so you are sure to be protected.) Unless you’ve got cash to spare, a mistake in these documents and the warranties they contain could seriously affect your finances.

• Don’t be greedy.

One big mistake many sellers make is to get a little greedy, particularly if the first offer is above the minimum acceptable price you’ve set. Then the negotiation becomes a game of how much you can get.

Remember, a successful sale means everyone walks away feeling happy. If you get so greedy that the buyer walks away, you’ve let the deal get the best of you. Resolve to be reasonable and you’ll end up shaking hands with the buyer at the closing. You should also know that there aren’t unlimited buyers out there, and if you lose one it might take you quite some time to find another.

via Real Estate Matters | What home sellers can expect in the market this year.

Bring in the Drones – Real Estate From Above


One of Scott Gerami’s Drones

Photo courtesy of Scott Gerami

Drones Could Be Next Tool for Real Estate AgentsReal Estate News

Jan 2, 2014

By: Erik Gunther

Scott Gerami says he’s always “had a passion for gadgets and technology,” and after 26 years in real estate he’s still looking for an edge to make his listings stand out in a crowded marketplace. Over the past year, the REALTOR® and managing broker of RE/MAX in Naperville, IL, has been tinkering with a camera-equipped drone aircraft to make his real estate photography really soar.

Folks in the Chicago suburb shouldn’t be alarmed if they see Gerami standing outside a home with a control panel, piloting one of his do-it-yourself flying machines overhead.

The intrepid Gerami is not alone. According to The New York Times and Chicago Tribune, the next trend in real estate photography is being deployed in increasing numbers to capture new angles on high-end homes for sale.

While regulatory issues on these unmanned aircraft are still being sorted out, the birds-eye views are enticing to agents such as Gerami. “I’m looking for unique ideas to set myself apart,” he said.

After watching one of Gerami’s drone-driven videos, you’ll get a sense of how the next wave in real estate photography is taking flight. He first built a couple of “rough and crude” devices “from the ground up,” but he’s continued to make refinements that have allowed him to explore new ways of deploying his flying machine.

He said his latest model, his fourth, cost him about $1,200 to build.

Gerami said he wants to give potential homebuyers “a different, fresh perspective of a home’s nearby amenities and the relative proximity of schools, parks and trails.

“Why not highlight close schools or a pool or a nearby park?” he said. “Showing where everything is in proximity to each other could be the key to a buyer’s decision.”

While Gerami admits that integrating drone photography into listings isn’t for every agent, he’s encouraging the 60 agents in his office to consider using the technology that he’s built.

“All agents should be thinking about this as a tool,” he said. “Aerial photography has a wide appeal. It’s not just for luxury properties.”

In addition to the videos he shoots, he also uses still photos that he’s captured from above.

“I’ve been using still shots of my aerial photography and incorporating them into my MLS listings,” he said. “It’s an eye-catcher. A buyer may be looking at 100 home listings and say ‘Whoa!’ when they see mine. It’s a differentiator.”

For now, Gerami’s waiting for the harsh Illinois winter to end while he continues to tinker with his drone.

“For some houses that are big enough, I might play around with it this winter and work on using it for interiors,” he said. “Interiors could be interesting.”

via Bring in the Drones – Real Estate From Above.

5 Tips to Manage Snow & Ice This Winter

Man removing snow from a driveway5 Tips to Manage Snow & Ice This Winter

DECEMBER 30, 2013
By Bob Vila

If it hasn’t already found its way to your home, it no doubt will. Winter is here, and if you live in a part of the country where snow and ice are likely — an increasingly larger swath of the country these days — then you’ll be shoveling, salting, deicing, scraping and blowing or throwing snow on your property soon. Here are 5 tips to help you prepare for whatever winter sends your way.

No. 1: Upgrade your snow shovel

There are a surprising number of snow shovel designs — including one that looks like a unicycle! Basic rules, however, apply. Don’t buy a snow shovel with a wide blade if your idea of a workout is watching a football game. A small scoop may lengthen snow removal sessions, but it will help save your back and keep your cardiologist happy. Choose a shovel with a securely fastened, comfortable D-shaped grip. Some models come with an auxiliary grip that reduces the need for you to bend your back, which can cause back strain. Look for a sturdy steel or wooden handle. The blade’s edge should be reinforced with galvanized steel.

Plow-style shovels or snow pushers, some of which come with wheels, allow users to push snow out of the way instead of lifting and tossing it. These are ideal for long, straight runs and for clearing decks. With blades up to 3 feet wide, however, strength and endurance are required.

No. 2: Buy a good windshield scraper

Treat yourself to the sturdiest scraper you can find. Cheap ones break when you need them most. Opt for one that includes a handle that’s at least 2 feet long and that has a brush or squeegee on one end. If your vehicle is large, get one that extends to 3 feet. The Thor ice scraper includes a squeegee and double scraper that removes ice on both the push and pull strokes. The stainless steel handle extends to 3 feet and includes an extra grip for improved leverage.

No. 3: Stock up on ice melter

The best ice melters contain magnesium chloride or calcium chloride. They melt ice at temperatures near 0 degrees Fahrenheit and are generally less harmful to the environment. Rock salt is slightly less expensive, but it melts ice more slowly, ceases to be effective below 20 degrees Fahrenheit, and may damage concrete, lawns and plantings. It may even be harmful to animals. That said, not all “green” melts are safe around pets (and wild animals), so look for a salt-free ice melter or a product that is made from magnesium chloride. Typically, such products will be labeled “pet friendly.” Sand or kitty litter, although not an ice melter, is useful for improving traction on icy surfaces too.

No. 4: Invest in a roof rake

If you’re plagued with ice dams, despite keeping your attic insulated and ventilated, consider a snow rake. Ice dams often form on roofs, such as a cathedral ceiling, under which there is no attic. Use the rake to remove snow buildup from the lower 3 or 4 feet of your roof, so that melting snow can drain off before ice dams have a chance to build up. Snow rakes are typically fitted with a 2-foot-wide blade that’s perpendicular to the handle. The handle may be telescoping or extendable with snap-on sections. Better models have wheels that protect roof shingles as you push and pull the rake. Handle lengths range from 15 to 22 feet. An innovative “rake” design that doesn’t fit the mold is called the Avalanche. Its blade cuts through snow accumulation instead of pulling or pushing it. As chunks of snow break loose, they slide to the ground on the plastic sheeting attached to the bottom of the blade.

If you’re too late in preventing an ice dam, and it’s beginning to back up and leak inside your home, it’s usually best to call a pro. Some homeowners, however, have had success tossing a pair of calcium chloride-filled pantyhose across the dam at 6-foot intervals. Ice melt tablets formulated for roofs may also be effective, depending upon temperature and your ability to safely place them near the ice dam.

No. 5: Consider a snow blower or thrower

Snow throwers and blowers are an attractive option if you live where average annual snowfalls reach 3 feet or if you are physically impaired. Otherwise, most people get by without them. The initial cost, maintenance, fuel and storage space required for such units is simply not worth it. Choose a snow thrower for small- and medium-size clearing, and a snow blower for larger areas. Snow throwers, also called single-stage snow throwers, are smaller both in width and vertical intake. They remove and throw the snow in one continuous motion. Snow blowers, also called two-stage snow blowers, scoop up snow with an auger that feeds it to an impeller. The impeller allows snow blowers to throw snow much farther than snow throwers.

For lighter-duty snow removal, consider an electric snow shovel or an electric snow thrower. The former are typically able to handle 4-inch depths; the latter can handle 10-inch depths. The nice thing about these machines is that maintenance is significantly reduced. Electric snow throwers are available both corded and cordless.

However you deal with the snow and ice, follow good common sense, and stay safe. And, remember spring is only a couple of months away.

via 5 Tips to Manage Snow & Ice This Winter | Zillow Blog.

With interest rates likely to rise, hybrid mortgages may be a good option for 2014

focus-interest-ratesWith interest rates likely to rise, hybrid mortgages may be a good option for 2014

By Kenneth R. Harney, Published: January 2 | Updated: Friday, January 3, 9:50 AM

Higher mortgage rates for 2014? Count on it. Could this be the year to check out hybrid mortgages, which haven’t been popular lately? Maybe.

You can count on interest rates going higher because:

?The Federal Reserve intends to continue reducing its monthly purchases of mortgage bonds and Treasury securities, which will have the side effect of raising rates.

?The national economy finally appears to be picking up steam, based on the latest quarterly data. Higher growth rates in turn will increase demand for available credit and probably nudge rates higher.

?New federal regulations for mortgage lenders aimed at avoiding another bust take effect Jan. 10. Not only will loan officers and underwriters scrutinize applicants’ income, debt ratios and credit extra carefully, they will also probably charge more to borrowers whom they see as a higher risk. Some mortgage economists predict that conventional 30-year fixed-rate loans could go to 5.5 percent before year-end.

So what does this mean for you if you’re thinking about buying or refinancing a house and you want to nail down the most favorable interest rate and terms? Should you shop primarily for a traditional mortgage product that guarantees you a specific rate for 15 to 30 years?

Or should you check out hybrids? These are loans that provide you a guaranteed fixed rate for a predefined period — say, five, seven or 10 years — then convert to a rate that can change annually.

The case for sticking with a traditional, fixed-rate mortgage is straightforward. Though 30-year rates are more than a percentage point higher this month than they were a year earlier, they are still not far off multi-decade lows. Bruce A. Calabrese, president of Equitable Mortgage Corp. in Columbus, Ohio, is adamant: “My advice for home buyers,”he says, “is to lock [early] into a 30-year fixed” while rates are still under 5 percent. “Take a 30-year fixed at 4.75 percent and be happy,” because that’s still far below average rates over the past several decades.

Paul Skeens, president of Colonial Mortgage Corp in Waldorf, agrees. “If fixed [rates] are under 5.5 percent and you are going to live in your home for five years or more, they are still a great deal,” he says. “I’m very partial to fixed rates, since I remember when anything under 7 percent was a great deal.”

To illustrate the historical point made by Skeens and Calabrese, consider these 30-year fixed rates: In 1974, they averaged 9.19 percent nationwide, according to mortgage investor Freddie Mac. By 1984, they were at 13.88 percent. In 1994, fixed rates averaged 8.38 percent; in 2004, 5.84 percent.

But what if you say: I don’t care about what rates were in previous decades. That was then. I’m here and now. I’m more concerned about being able to afford today’s housing prices given today’s income and household expenses.

Jeff Lipes, a lender in the Hartford, Conn., area and former president of the Connecticut Mortgage Bankers Association, believes that hybrids with fixed rates for between five and 10 years “are fantastic options for borrowers” in 2014, and can lock in rates that are one or more percentage points below competing 30-year fixed loans.

“Most first-time buyers purchase a home that will be sold when the family income increases or the family outgrows the house,” Lipes says. “That usually occurs in the first 10 years, so that is why a [hybrid] is a great option. The borrower saves a lot of money” — sometimes hundreds of dollars a month — “paying a lower rate.”

A check of Bankrate.com’s online rate monitor in late December found five-year hybrids averaging around 3.4 percent nationwide, seven-year hybrids at 3.81 percent and 10-year hybrids at 4.16 percent. Thirty-year fixed rates averaged 4.63 percent.

Ted Rood, senior mortgage consultant with Wintrust Mortgage in St. Louis, says he’s already seeing a shift in demand toward five- and seven-year hybrids. He just closed a seven-year at 3.5 percent on a house in Wyoming for a borrower who fully understood the risk that he could face higher rates at the conversion point in late 2020.

Bottom line for you if you’re in the market: Check out all the options on the menu. If you are comfortable with the potential risks, and if the monthly savings advantages of a hybrid are substantial, go for it.

Ken Harney’s e-mail address is kenharney@earthlink.net.

via With interest rates likely to rise, hybrid mortgages may be a good option for 2014 – The Washington Post.

Follow the mortgage money: Why 2014 should be a good year for housing

money_spigot_shutterstock_142147576-300x229Money spigot image via Shutterstock.

Follow the mortgage money: Why 2014 should be a good year for housing

Look for Fannie and Freddie’s new regulator to push for looser underwriting, down payment requirements

Ken Harney, Contributor
Dec 17, 2013

Disclaimer upfront: I live and work in America’s most dysfunctional political and bureaucratic environment — inside the Beltway, Washington, D.C. So I have to admit that my ability to make predictions is handicapped by the inherent unpredictability of the key actors here.

Outcomes are often determined by deeply partisan politicians who sometimes, but rarely, decide to come together to solve tough problems, and federal regulators who see laws like Dodd-Frank as providing mere starting suggestions for the rules they ultimately write according to their own whims.

Remember the original qualified residential mortgage (QRM) regulation, which as proposed would have required that lenders retain a share of the risk in mortgages made to borrowers putting less than 20 percent down? Invented out of whole cloth by bureaucrats who regulate banks.

That said, here are a few fearless forecasts for 2014 and beyond.

For really big housing issues like comprehensive tax reform and replacement of Fannie Mae and Freddie Mac, forget about 2014. There’ll be smoke, there’ll be a lot of talk and campaign promises. But think 2015 or maybe the post-presidential-election 2017 session of Congress for any real action. Until then it’s hard to see how either gets done. The players are simply not up to it.

Both House Ways and Means Committee Chairman Dave Camp, R-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., have spent the past year meticulously examining the federal income tax code. They’ve been looking for ways to streamline and simplify current deductions, credits and special interest preferences, with the goal of possibly lowering maximum tax brackets for individuals and corporations.


They held hearings, commissioned staff studies and produced draft legislative proposals that are guaranteed to upset virtually every major industry — real estate and housing, in particular.

Though Camp has not yet disclosed what’s in his package, the word is that it seeks wholesale cutbacks in deductions and credits — mortgage interest, capital gains, property tax write-offs among many others — in order to partially pay for lower tax brackets and other simplifications.

When and if Camp actually introduces his bill, he’ll get kudos for his courage to address such a complex issue. Then watch as the Republican leadership backs away like it’s a dead skunk, too unpleasant to handle in an election year. Baucus is likely to meet a similar fate in the Senate.

Serious consideration of broad-based tax reform will have to wait until the next election sweep — House, Senate and White House — by one or another of the parties. The earliest that could happen is 2016, assuming the Republicans retain the House and Democrats the Senate in 2014.

With a new president, figuring out how to streamline the code will take at least another year, even with one party in charge. Mortgage interest, capital gains and other key real estate provisions should be safe until then.

The fates of Fannie and Freddie may well be the same story: Though committee hearings were held this year in both the Senate and the House on how to phase them out and create a replacement secondary mortgage market system, the bills that have emerged are philosophically so far apart that the gap cannot be bridged in the 2014 election year.

Republicans in the House want little or no federal role in mortgage finance other than a pared-down Federal Housing Administration. Senate Democrats insist on a strong federal financial backup for the mortgage market, and more than a few would like to retain something along the lines of Fannie and Freddie, perhaps combined.

Meanwhile, Fannie and Freddie are generating surpluses, and appear set to keep minting money by the billions for the federal Treasury. In an era of ballooning budget deficits, who’s going to stop that?

Certainly not the new head honcho for oversight of Fannie and Freddie, Mel Watt, who is replacing Ed DeMarco. Watt won’t take long to install the Obama administration’s agenda at the Federal Housing Finance Agency, which oversees the mortgage giants.

Even before his arrival as director, Watt has had an impact: DeMarco canceled cuts in Fannie and Freddie maximum loan limits that he had already scheduled. He knew full well that Watt would reverse them anyway (with DeMarco on his way out, the FHFA on Monday announced that it was seeking public comment on a plan to reduce loan limits in October).

Once in office, Watt is likely to open the door for the first time to principal reductions for Fannie-Freddie borrowers who have trouble affording their loans. DeMarco had long resisted White House demands that he allow such debt reductions on agency mortgages, angering the president and liberal Democrats.

Watt is also likely to look for ways — consistent with his legal role as conservator — to open conventional financing to broader segments of the homebuying public by easing up on credit score and other underwriting standards and possibly cutting current 5 percent minimum down payment requirements.

In other areas:

  • Get ready for some exceptionally bumpy mortgage market conditions in the first half of 2014 as lenders to figure out how to comply with the new qualified mortgage and other rules taking effect, beginning in January. Look for longer processing times, more rejections on QM grounds, all complicated by likely increases in mortgage interest rates as the Federal Reserve’s “tapering” of its securities purchases begins to phase in. More contracts written on home purchases are likely to fall through, and applicants are certain to find early 2014 a more challenging marketplace than they would have encountered in 2013.
  • After 18 months of cordial working relations with industry groups, look for the Consumer Financial Protection Bureau to take more of a bare-knuckles approach on key issues for Realtors, builders and lenders, such as the Real Estate Settlement Procedures Act (RESPA), equal credit opportunity and mortgage servicing complaints. The bureau is now likely to pick up on the Obama administration’s emerging second-term shift to the left in domestic policy, and go for the jugular on real estate issues such as affiliated business arrangements.
  • For the overall real estate market, 2014 is likely to be the first relatively “normal” year in terms of sales, inventory and price changes, since the bust in 2008. Rock-bottom inventories in multiple markets, especially California, helped push up prices abnormally in 2013. But listings should be less of a problem in most parts of the country in 2014.

Sellers have more confidence they’ll get fair pricing, plus millions of previously underwater owners have crossed over into positive equity status in recent quarters, giving them a shot at selling. Unless rates spike or Wall Street sees a 20 percent-plus correction, the better balance between supply and demand should make 2014 a good year.

Ken Harney writes an award-winning, nationally syndicated column, “The Nation’s Housing,” and is the author of two books on real estate and mortgage finance.

via Follow the mortgage money: Why 2014 should be a good year for housing | Inman News.

2014: drones, stock in top producers, a mystery acquisition and more

new_year_2014_shutterstock_151448366-300x225New year image via Shutterstock.

2014: drones, stock in top producers, a mystery acquisition and more
10 predictions from Inman News Publisher Brad Inman

Brad Inman, Publisher
Dec 26, 2013

1. A drone accident masterminded by a maverick real estate agent will make national news.

2. The private secondary mortgage market will be back in full force this coming year (though later in 2014), giving a fresh but sustainable lift to the housing market.

3. Interest rates will be higher, but housing demand will be fierce, squeezing the inventory and driving up home prices.

4. An investment opportunity to buy equity in individual top-producing real estate agents will unfold, like what is being done with stock offerings for individual athletes. Buyer beware.

5. Stung by some contentious investments in the tech sector back in the day, Realogy will come out of its shell and make at least one big technology move.

6. Institutional investors who bought blocks of foreclosed single-family homes will begin unloading later in the year as prices rise, giving the market some much-needed inventory and participants a handsome return.


7. Redfin will have a successful IPO. CEO Glenn Kelman will be wealthy and his investors will be very happy.

8. The amount of venture capital and private equity pouring into the real estate sector will reach record levels, driving innovation and experimentation in new business models, software and hardware.

9. Zillow and Trulia will make a horde of acquisitions. Zillow will make one masterstroke purchase or business model move that will be controversial.

10. HUD Secretary Shaun Donovan will resign (not under a cloud), and FHA Commissioner Carol Galante will replace him.

BONUS prediction: We have not heard the last of making agent performance data transparent.

Happy New Year! May the market be with you.

Brad Inman is the founder and publisher of Inman News.

via 2014: drones, stock in top producers, a mystery acquisition and more | Inman News.

As home prices and interest rates rise, more home sales are cash deals

All-cash-dealsSource: RealtyTrac

As home prices and interest rates rise, more home sales are cash deals

RealtyTrac: Proportion of all-cash deals has doubled since May, to 42 percent

Paul Hagey, Staff Writer

Dec 20, 2013

The proportion of all-cash home sales has doubled since May, making up 42 percent of all deals done in November, RealtyTrac reports — the largest proportion of cash sales since the data aggregator began tracking the stat nearly three years ago.

RealtyTrac had previously reported that cash deals made up 45 percent of sales registered in August, but the firm has since revised that tally down, citing a revision it made to methodology.

Regardless, the data — and the raw numbers behind it — does not indicate a greater raw number of investors, RealtyTrac Vice President Daren Blomquist told Inman News. What it shows is that rising home prices and rising mortgage rates have diminished the pool of buyers using a loan to buy a home.

The number of homes purchased with a mortgage fell 40 percent from October to November, to 135,154 — the lowest monthly total of financed home sales in the three years RealtyTrac’s been keeping the data. The raw number of all-cash deals in November was also down 31.2 percent from October, to 98,030.

The number of homes purchased with a loan has dropped steadily each month since May, when rates began to ratchet up. Mortgaged home sales totaled 360,227 in May, shrinking in June 338,650, July 317,002, August 288,094, September 250,026, October 225,076 and November 135,154.

Yesterday, the National Association of Realtors reported that all-cash deals made up 32 percent of existing-home sales, up from 31 percent in October. However, that number is likely not as accurate as it could be because of methodology issues that are being addressed, NAR spokesman Walt Maloney told Inman News in August.

RealtyTrac’s tally show a much lower percentage of cash deals than a Goldman Sachs Group report earlier this year that showed more than half of all the transactions in the 18 months between January 2012 and June 2013 were completed with nothing but cash.

The RealtyTrac report also revealed that institutional investors snatched up 7.7 percent of all the residential homes sold in November.

The methodology change that led to the revision of RealtyTrac’s previously reported all-cash sales data produces a more accurate portrayal of what’s actually happening on the ground with such deals, Blomquist told Inman News.

The firm calculates the percentage of all-cash deals in a month by comparing the records of home sales from deeds filed at county courts throughout the U.S. to loan data it has in the same areas. After discovering that it actually did not have loan data in a few locations where it mistakenly thought it had the data, RealtyTrac revised the methodology, Blomquist said.

For example, in addition to August’s downward revision, in October, RealtyTrac had all-cash deals making up 49 percent of September’s transaction total, which now stands at 37 percent.

via As home prices and interest rates rise, more home sales are cash deals | Inman News.

Mortgage rates rise on Federal Reserve’s decision to pull back on stimulus

mortgagePhoto:  Pam Tobey/The Washington Post

Mortgage rates rise on Federal Reserve’s decision to pull back on stimulus


December 19 at 10:00 am

Mortgage rates began to wander upward again just as the Federal Reserve announced that it would start winding down its stimulus program early next year.

Before Wednesday’s announcement, mortgage rates already had started to climb, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average rose to 4.47 percent with an average 0.7 point. It was 4.42 percent a week ago and 3.37 percent a year ago. Since spiking to 4.58 percent in late August, the 30-year fixed rate has bounced between 4.57 percent and 4.1 percent.

The 15-year fixed-rate average jumped to 3.51 percent with an average 0.6 point. It was 3.43 percent a week ago and 2.65 percent a year ago. The 15-year fixed rate had remained below 3.5 percent since late September.

Hybrid adjustable rate mortgages also increased. The five-year ARM average edged up to 2.96 percent with an average 0.4 point. It was 2.94 percent a week ago and 2.71 percent a year ago.

The one-year ARM average went up to 2.57 percent with an average 0.5 point. It was 2.51 percent a week ago.

“Mortgage rates rose slightly leading up to the Federal Reserve’s policy announcement,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The statement indicated that the central bank would begin to trim its bond buying program. The Fed noted that the economy expanded at a modest pace, but the unemployment rate remains elevated. In addition, housing starts in November rose to a seasonally adjusted annual rate of 1,091,000, the highest rate since February 2008. Permits were at a seasonally adjusted annual rate of 1,007,000 in November, 7.9 percent higher than in November 2012.”

Meanwhile, mortgage applications took a downturn last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, dropped 5.5 percent. The Refinance index fell 4 percent, while the Purchase Index declined 6 percent.

“Mortgage applications fell further last week, with the market index falling to its lowest level in more than a dozen years,” Mike Fratantoni, MBA’s vice president of research and economics said in a statement  “Both purchase and refinance applications fell as interest rates increased going into [Wednesday’s] Federal Open Market Committee meeting.”

The refinance share of mortgage activity rose slightly, accounting for 65 percent of all applications.

via Mortgage rates rise on Federal Reserve’s decision to pull back on stimulus.

Mortgage applications hit 12-year low as refi boom dries up

percent_up_arrrow_shutterstock_47355832-300x300Percent sign image via Shutterstock

Mortgage applications hit 12-year low as refi boom dries up

Applications for purchase loans are also down 12 percent from a year ago

Teke WigginStaff Writer

Dec 18, 2013

Mortgage applications fell to their lowest level in more than 12 years last week as interest rates increased in advance of the Federal Open Market Committee Meeting that began on Dec. 17 and ends today, the Mortgage Bankers Association MBA reported.

Applications for purchase loans during the week ending Dec. 13 were down a seasonally adjusted 6 percent from the week before and 12 percent from the same time a year ago, to the lowest level since December 2012. Requests to refinance were down 4 percent from the previous week, continuing their long downward trajectory.

During the housing downturn and recovery, the Fed’s purchases of Treasurys and mortgage-backed securities helped push mortgage rates to record lows. While mortgage rates are still low by historical standards, many homeowners who were eligible to refinance have already done so.

Trulia Chief Economist Jed Kolko tweeted that increased mortgage rates — which jumped in the spring after the Fed signaled it was preparing to dial back its stimulus program — have “whacked” refinance applications, and the housing recovery has been too weak to fill the gap with purchase loans.

Joel Lobb, a senior loan officer at Louisville, Ky.-based American Mortgage Solutions, said that in all his 18 years as a loan officer he’s never seen it this slow.

“Refinances are pretty much not existent in the loan pipeline anymore, with a lot of mortgage refi shops closing,” Lobb said.

But purchase loan demand has dried up, too, he said. After hitting a three-year peak in early May, purchase loan applications have dropped by 21 percent, according to MBA data.

In addition to elevated interest rates, Lobb said fewer people are seeking to purchase homes with mortgages or refinance because the Federal Housing Administration FHA has both increased the mortgage insurance premiums that it charges borrowers and tightened its underwriting requirements.

“Once you figure those premiums in, it is very costly to refinance or buy a home,” Lobb said of FHA insurance premiums. “The private mortgage insurance market is supposed to supplement the government-insured mortgage market, but it is still very restrictive with higher credit scores requirements usually being at least 660 or higher.”

At the Fed committee meeting, officials are discussing when to begin tapering the central bank’s stimulus program, which has helped keep interest rates low in recent years. Some analysts expect the Fed to begin winding down the program as early as this month, a move that could spark erratic activity across financial markets and potentially drive up interest rates.

Market activity in recent months has illustrated investors’ sharp sensitivity to the status of the stimulus program. Mere anticipation of a Fed pullback has helped push up 30-year fixed-rate mortgage rates by around 1 percentage point since the spring.

via Mortgage applications hit 12-year low as refi boom dries up | Inman News.

Congress’s inaction on real estate issues leaves homeowners and investors unsettled

wfpCongress’s inaction on real estate issues leaves homeowners and investors unsettled

By Kenneth R. Harney

Published: December 12 | Updated: Friday, December 13, 9:50 AM

For one of the least productive congressional sessions in modern history, the final word about tax reform last week was entirely in character: Nothing’s happening.

But is that good news or bad news for homeowners, buyers and small-scale real estate investors? A bit of both.

When House Ways and Means Committee Chairman Dave Camp (R-Mich.) announced that he not only will not reveal the details of his long-awaited comprehensive tax reform bill this year but also will not seek passage of a so-called “extenders” bill for expiring tax code benefits, it was a sweet and sour mix for real estate interests.

Camp’s big reform bill, which would attempt to lower individual and corporate income tax rates to a maximum of 25 percent, is expected to call for significant cutbacks in — possibly elimination of — prized real estate deductions for home mortgage interest, local property taxes and other write-offs in order to pay for lower marginal rates. With major changes such as these now pushed back well into 2014 for even preliminary debate — in the middle of a reelection year for Congress — homeownership advocates are at least moderately relieved.

But there’s a key negative here as well: The failure of tax writers to put together an extenders bill means that important Internal Revenue Code provisions affecting large numbers of homeowners — especially relief from taxation on mortgage debt forgiveness by lenders in most states, along with current deductions for mortgage insurance premiums and energy-saving home improvements — will lapse Dec. 31. California owners are not affected by the debt-forgiveness expiration because state law exempts them from taxation when lenders cancel mortgage principal debt as part of short sales. The IRS has announced that it will not levy taxes on such transactions in California even if the federal exemption for owners elsewhere expires.

Complicating matters even more: Though they were tucked away in eye-glazing discussion drafts and attracted little attention before Thanksgiving, Senate tax writers’ reform-bill proposals for real estate should be unsettling for anyone owning residential investment property, such as rental houses.

Senate Finance Committee Chairman Max Baucus (D-Mont.) would terminate one of the oldest financial planning techniques used by real estate investors: tax-deferred exchanges under Section 1031 of the code. In a 1031 exchange, property owners can defer taxes indefinitely when they swap “like kind” investment real estate within time periods specified by IRS regulations. Under current law, investors can exchange rental real estate without incurring immediate tax liability even if they’ve racked up huge paper gains on their properties. Taxes generally are not due until the investors actually sell their real estate for money.

Baucus also would sharply increase the depreciation period for residential investment real estate from the current 27.5 years to 43 years. Stretching out the depreciation schedule means investors would be able write off less per year on their properties than at present.

On top of that, the Senate reform proposal would tax so-called “recapture” of depreciation — where the IRS requires payback of a portion of an investor’s earlier write-offs — at property owners’ ordinary income tax rates, rather than at lower capital gains rates, as at present.

Under Baucus’s plan, mom-and-pop real estate investors — people who have purchased a small portfolio of rental houses or condos — could be hit hard. Besides the depreciation-deduction stretch-out, the inability to exchange properties tax-free for others of similar or greater value would put a severe crimp in their ability to grow and manage their investments over time.

William Horan, president of Realty Exchange Corp. of Gainesville, Va., says that “if Section 1031 of the code is repealed, then small investor owners would be facing massive taxes and most likely would not sell their properties. [Real estate] values for everyone would be lowered by removing vital investors from the market.”

A more immediate concern for homeowners, however, is Congress’s inability — or unwillingness — this year to extend key tax laws. Tops on the list is the mortgage debt forgiveness law. Unless Congress agrees to a retroactive extension, large numbers of owners could face big tax bills following short sales, foreclosures or loan modifications next year when lenders cancel a portion of the balances owed them. To bring that home: A $100,000 debt cancellation could lead to $28,000 in additional taxes for a short seller — solely because Congress could not get its act together to extend a popular, pro-consumer law.

Ken Harney’s e-mail address is kenharney@earthlink.net.

via Congress’s inaction on real estate issues leaves homeowners and investors unsettled – The Washington Post.

10 Best-Kept Secrets for Selling Your Home

10 tips






10 Best-Kept Secrets for Selling Your Home

Tricks of the trade to help you get top dollar when selling your home.

Selling Secret #10: Pricing it right Find out what your home is worth, then shave 15 to 20 percent off the price. You’ll be stampeded by buyers with multiple bids — even in the worst markets — and they’ll bid up the price over what it’s worth. It takes real courage and most sellers just don’t want to risk it, but it’s the single best strategy to sell a home in today’s market.

Selling Secret #9: Half-empty closets Storage is something every buyer is looking for and can never have enough of. Take half the stuff out of your closets then neatly organize what’s left in there. Buyers will snoop, so be sure to keep all your closets and cabinets clean and tidy.

Selling Secret #8: Light it up Maximize the light in your home. After location, good light is the one thing that every buyer cites that they want in a home. Take down the drapes, clean the windows, change the lampshades, increase the wattage of your light bulbs and cut the bushes outside to let in sunshine. Do what you have to do make your house bright and cheery – it will make it more sellable.

Selling Secret #7: Play the agent field A secret sale killer is hiring the wrong broker. Make sure you have a broker who is totally informed. They must constantly monitor the multiple listing service MLS, know what properties are going on the market and know the comps in your neighborhood. Find a broker who embraces technology – a tech-savvy one has many tools to get your house sold.

Selling Secret #6: Conceal the critters You might think a cuddly dog would warm the hearts of potential buyers, but you’d be wrong. Not everybody is a dog- or cat-lover. Buyers don’t want to walk in your home and see a bowl full of dog food, smell the kitty litter box or have tufts of pet hair stuck to their clothes. It will give buyers the impression that your house is not clean. If you’re planning an open house, send the critters to a pet hotel for the day.

Selling Secret #5: Don’t over-upgrade Quick fixes before selling always pay off. Mammoth makeovers, not so much. You probably won’t get your money back if you do a huge improvement project before you put your house on the market. Instead, do updates that will pay off and get you top dollar. Get a new fresh coat of paint on the walls. Clean the curtains or go buy some inexpensive new ones. Replace door handles, cabinet hardware, make sure closet doors are on track, fix leaky faucets and clean the grout.

Selling Secret #4: Take the home out of your house One of the most important things to do when selling your house is to de-personalize it. The more personal stuff in your house, the less potential buyers can imagine themselves living there. Get rid of a third of your stuff – put it in storage. This includes family photos, memorabilia collections and personal keepsakes. Consider hiring a home stager to maximize the full potential of your home. Staging simply means arranging your furniture to best showcase the floor plan and maximize the use of space.

Selling Secret #3: The kitchen comes first You’re not actually selling your house, you’re selling your kitchen – that’s how important it is. The benefits of remodeling your kitchen are endless, and the best part of it is that you’ll probably get 85% of your money back. It may be a few thousand dollars to replace countertops where a buyer may knock $10,000 off the asking price if your kitchen looks dated. The fastest, most inexpensive kitchen updates include painting and new cabinet hardware. Use a neutral-color paint so you can present buyers with a blank canvas where they can start envisioning their own style. If you have a little money to spend, buy one fancy stainless steel appliance. Why one? Because when people see one high-end appliance they think all the rest are expensive too and it updates the kitchen.

Selling Secret #2: Always be ready to show Your house needs to be “show-ready” at all times – you never know when your buyer is going to walk through the door. You have to be available whenever they want to come see the place and it has to be in tip-top shape. Don’t leave dishes in the sink, keep the dishwasher cleaned out, the bathrooms sparkling and make sure there are no dust bunnies in the corners. It’s a little inconvenient, but it will get your house sold.

Selling Secret #1: The first impression is the only impression No matter how good the interior of your home looks, buyers have already judged your home before they walk through the door. You never have a second chance to make a first impression. It’s important to make people feel warm, welcome and safe as they approach the house. Spruce up your home’s exterior with inexpensive shrubs and brightly colored flowers. You can typically get a 100-percent return on the money you put into your home’s curb appeal. Entryways are also important. You use it as a utility space for your coat and keys. But, when you’re selling, make it welcoming by putting in a small bench, a vase of fresh-cut flowers or even some cookies.


via 10 Best-Kept Secrets for Selling Your Home : Decorating : Home & Garden Television.

How wise agents get appraisers to see what they see

frustration_shutterstock_143418421-300x200Photo:  Frustration image via Shutterstock.

How wise agents get appraisers to see what they see

Data speaks louder and more effectively than anything you can say

Hank Miller, Contributor
Dec 13, 2013

Appraisals continue to be a potential issue with every contract. It doesn’t need to be this way.

Of course, there will always be situations where a genuine value challenges exists. But for the most part, better preparation by agents can alleviate the majority of problems.

A key component of that preparation is an understanding of what an appraiser does and how they operate. This can quash issues before they arise.

Appraisers have no interest in “killing a deal.” They get paid to complete reports. Appeals or contested reports waste everyone’s time, and no appraiser goes out looking to waste time.

Agents would do well to understand that the appraiser is not their enemy, but simply one of the many people involved in the sale. Appraisers report the market — they don’t create it.

The agent-appraiser relationship can be contentious, mainly due to a lack of understanding. Appraisers have little idea of how much time can be invested with a client, and agents have little understanding of the requirements appraisers work under.

Agents can be a huge asset by providing comps an appraiser can use. Learn what is required. Don’t just toss data that’s largely useless at an appraiser and say, “Here you go!” Opinions are good, appropriate data that supports them is great.

The appraiser could care less if you are a ‘top agent.’ They are there to complete the appraisal. Be a peer and be helpful, then leave.”
It’s important to note that appraisals are a “look back.” While consideration is given to active and pending comps, closed sales are given most support.

Areas where the market is very fluid and on the rise presents a challenge for all. Remember that underwriters hold the reins with appraisals.

Most appraisals are written for underwriters. Requirements are clearly stated, and appraisals that don’t comply are sent back for edification. Despite the fluid housing market over the last few years, underwriting is still rather stiff with regard to adjustment percentages, closing date, distance and other parameters.

The real estate crash was especially hard on the appraisal industry. Management companies drove many experienced appraisers out, and those who remain must increase volume to earn what they did before the crash.

There are less-than-perfect appraisers out there just as there are less-than-perfect agents. The wise agent makes it easy for the appraiser to see what they see. Here are key points to consider:

-Understand the appraiser’s role, requirements and what underwriters expect. If nothing else, understand what they are required to look for when considering comparable data for the report.
-Meet the agent at the listing if possible. Agents can talk with an appraiser, but they cannot exert undue influence. Give the agent an info packet on the area, home and the contract, and include appropriate comps that might be considered. Leave a packet of info if you don’t meet them.
-No discussion should last more than five to 10 minutes. Everything you touch on should be in the packet you give them. Do not sell the appraiser — just point out things that might not be obvious. Be certain to leave your contact info and respond as/if needed.
-Don’t try to exert any type of authority or expertise. The appraiser could care less if you are a “top agent.” They are there to complete the appraisal. Be a peer and be helpful, then leave. The data speaks louder and more effectively than anything said.

There is no agent-appraiser nirvana. Real estate by its very nature operates in an environment of distinctiveness and unpredictability.

But agents and appraisers should recognize they have a common objective: to complete a transaction that satisfies the client and the lender. An antagonistic approach based upon preconceived notions benefits no one.

Not every deal will end up working. The data obviously has to be there, but it’s far better to try with a unified front than to grasp at straws. Something about flies and honey comes to mind.

Hank Miller is an associate broker and certified appraiser in Atlanta, Ga. The lead agent for HMT Atlanta, he’s known for his candid opinions and real estate expertise.

via How wise agents get appraisers to see what they see | Inman News.

The D.C. suburbs dominate the list of wealthiest U.S. counties


Photo:  Census

The D.C. suburbs dominate the list of wealthiest U.S. counties


December 12 at 2:00 pm

The Census Bureau has confirmed that, once again, the Washington region dominates the list of the most affluent places in the United States.

Among more than 3,000 counties across the nation, Loudoun County is the richest, with a median household income last of almost $119,000. Maryland’s Howard County and Virginia’s Fairfax, Arlington and Stafford counties also made it into the top 10. Three New Jersey counties outside New York City also were among the well-off top 10.

The Census Bureau listed the city of Falls Church, where the median income is $121,000, as the richest location, but that’s just because of a quirk in how the census ranks independent cities in Virginia alongside much larger counties instead of with cities or towns. Montgomery County and Prince William County fell just below the 10 wealthiest counties. Also in the top 30 were Charles, Calvert, Anne Arundel and St. Mary’s counties in Maryland, and the city of Fairfax in Virginia.

The Washington area has reigned at the top of the most affluent counties for years, in large part because it has so many residents with college degrees working at professional jobs. That gives the region a disproportionately large share of two-income households in which both adults have well-paying jobs.

Here’s the Census Bureau list of the counties with the highest median incomes (including tiny Falls Church):

1.  Falls Church city, Va. $121,250

2.  Loudoun County, Va. $118,934

3.  Los Alamos County, N.M. $112,115

4.  Howard County, Md. $108,234

5.  Fairfax County, Va., $106,690

6.  Hunterdon County, N.J. $103,301

7.  Arlington County, Va. $99,255

8.  Douglas County, Colo. $98,426

9.  Stafford County, Va. $95,927

10.  Somerset County, N.J. $95,574

11.  Morris County, N.J. $95,236

12.  Montgomery County, Md. $94,365

13.  Prince William County, Va. $93,011

via The D.C. suburbs dominate the list of wealthiest U.S. counties.

Open floor plans are prevalent in new home designs


Miller & Smith’s Tribeca model features a contemporary loft-like open floorplan with dining and living areas open to the kitchen, which has an oversized center island.

Photo:  Jim Kirby

Open floor plans are prevalent in new home designs

By Michele Lerner, Published: December 5

If you’ve toured a newly built model home recently, you may have noticed a few things missing: a formal living room or the once-popular two-story family room.

Today’s new homes are a bit more practical and reflect the way people live: in their “family center” — an oversized, open great room with a center island kitchen, a casual dining area and a family room.

Washington area residents prefer traditional homes, but local builders and architects say that even though exteriors remain mostly traditional, buyers increasingly are looking for more contemporary interiors with open floor plans.

Now that new home sales are making a comeback along with the rest of the housing market, builders are incorporating these new ideas into their home designs.

“Builders scaled back home sizes and features right after the housing crisis in order to be at a particular price point, but now they’re bringing back larger homes in order to meet buyer demand,” says Debbie Rosenstein, vice president of the Christopher Companies, a local builder based in Oakton, Va. “But buyers are a little different now. They’re looking at values more carefully.”

Kim Ambrose, vice president of marketing for Miller & Smith in McLean, says builders now use every possible square foot as efficiently as possible, without any two-story spaces but with an open feeling from 9- and 10-foot high ceilings that are standard in many new homes.

The most notable trend in new home designs is the contemporary style open floor plan, ideally with an unobstructed view from the front of the house to the back. The best option would include view of a porch or sunroom since people want to see outdoor space if they can, says Michael Kingsley, principal of KTGY, an architecture and planning firm in Tysons Corner.

“One way to bring the outdoors inside is to build a covered outdoor corner room within the footprint of the home and accessible through glass doors to the family room or kitchen,” says Kingsley. “It’s an efficient way to create an outdoor living area without adding an appendage to the house.”

Linda Ellington, vice president of sales and marketing for Mitchell & Best Homebuilders in Rockville, says the company offers an integrated outdoor living space as an option on some of their models with glass openings to the space from the family room since that’s where most people entertain and spend time with their families.

Even if the lot configuration doesn’t allow for an outdoor room, most new home designs focus on creating an open primary living space rather than on formal rooms.

“Buyers want an open kitchen with space to spread out and entertain,” says Lauri Chastain, vice president of marketing for Stanley Martin Homes in Reston. “Even if we don’t have space for an enormous kitchen, we design one that’s well laid-out with an ample island and a walk-in pantry if possible.”

A living room is a rare find in all but the largest new homes, but some still offer a separate dining room for buyers who want a more formal space for entertaining.

In addition to open, contemporary floor plans, some of the other trends in new home designs include:

Flexible rooms. “There’s usually a flexible space set aside in single-family homes on the first floor for a library, a parlor or a home office,” Kingsley says. “In smaller homes people like to have a little office space near the family room instead of a separate home office. People don’t really need a big office anymore, so this is more natural.”

At One Loudoun, Miller & Smith offers an optional studio space above the rear attached garage that has both an interior and an exterior entrance.
“The studio has a bedroom, a full bath and a little kitchenette,” says Ambrose. “We were surprised that about 25 percent to 30 percent of our buyers are choosing it, but some people want it for boomerang adult kids and for extended family visits.”

Mitchell & Best offers a second level loft that can be wired for a homework center, used as a traditional sitting area/library or closed off for a formal office.

Miller & Smith offers a loft with its three-bedroom designs and has also introduced floor plans with four bedrooms and a loft that can be used as a study space or recreation room for children.

First floor bedrooms. Most builders offer an optional first-floor bedroom with a full bath, but few offer a first-floor master suite because of space requirements.

“More people are asking for a first-floor bedroom, but they don’t want to lose the great room space, so that’s one reason it’s nice to have the flexibility of a den that can be converted to a bedroom,” says Rosenstein.

Family entrances. One of the more practical changes in new floor plans is an emphasis on efficient use of space, particularly the family entrance from the garage. Instead of a mudroom, this space often has multiple options for customization for sports equipment, a charging station for cellphones and tablets, and backpacks, Rosenstein says.

Ellington says they offer personalized family entrances for every floor plan, including things like a computer station and sometimes a second powder room.

Efficient designs. “We try to make sure there’s no wasted space at all, so we design homes without two-story spaces and with the main stairs moved out of the foyer,” says Chastain. “This gives us the opportunity to add more space for smarter living like more ample space in the mudroom and to meet our goal to have a walk-in closet in every bedroom.”

Extra customization. “Most small builders, including the Christopher Companies, offer more flexibility to move things around [such as] non-load bearing walls,” Rosenstein says. “It’s much more prevalent now than it used to be to ask for customization. People want to be able to say they’re not in a cookie-cutter home and to express their individuality.”

Smaller but more luxurious master baths. “Consumers prefer more space in the master bedroom closet instead of one of those huge ‘dance hall’ bathrooms where you could host a party,” says Chastain.

Kingsley says “gallery-style” baths that are elongated and have more windows rather than square master baths have become more popular because they offer more efficient use of space.

“We’re also designing more spa baths with a shower and separate tub cordoned off with glass wall,” says Kingsley.

Ambrose says more buyers want an oversized shower in the master bath instead of separate tub and shower, particularly among younger families buying in their Loudoun County communities.

Deemphasized garages. On single-family homes, it’s becoming more popular to recess the garage so that it’s less of a feature, Rosenstein says.

At Maple Lawn in Howard County and Poplar Run in Silver Spring, Miller & Smith is building single-family homes with rear entry garages. Ambrose says their research shows that people prefer attached garages rather than detached, even when they are behind the house.

New materials and designs for exteriors. “The D.C. area still isn’t a contemporary market, especially for exteriors, but we’re seeing a little innovation with arts-and-crafts style exteriors,” says Rosenstein. “We still have a lot of brick, but we’re seeing more stone and Hardiplank cement siding in more price ranges.”

Ambrose and Ellington both say they offer a variety of brick, stone and siding combinations so that the homes look different and the streetscapes are interesting.

“We’ve seen a nice change in the past few years with people being more willing to embrace new ideas and move away from the focus on traditional design,” says Kingsley. “These more open floor plans make a home feel better, even when it’s smaller; especially when you have nice sight lines and high ceilings.”

While the majority of D.C. residents may not be ready for ultra contemporary homes, the trend toward lighter and more open homes with smart, efficient design elements seems to be a growing preference in this area.

Michele Lerner is a freelance writer.

via Open floor plans are prevalent in new home designs – The Washington Post.

Every foot matters when it comes to real estate near Metro, researchers say

Every foot matters when it comes to real estate near Metro, researchers say

WRITTEN BY Jonathan O’Connell


Developers are gobbling up land near Metro stations and much of the new construction in the area, whether apartments, condos, offices, shopping or hotels is near Metro stations.

For instance, of the 5.5 million square feet of office space under construction in the region at the moment, about 4.6 million of it, or 84 percent, is within a quarter mile of a Metro station.

So sure, real estate near Metro is more valuable, but measuring by miles may be using too big of a ruler. Researchers from the real estate services firm Cushman & Wakefield recently looked at real estate values in one of the region’s hotter markets for development, Arlington’s Rosslyn-Ballston corridor, and found that even among properties that are less than a third of a mile from a station, there is still a pretty well defined scale for how much property is worth, and the closer to the station the better.

For instance, looking at office properties near the five Rosslyn-Ballston stations, through which the Orange line runs, researchers found that offices within one-20th of a mile 264 feet of Metro earn a more than 30 percent premium over those that are a quarter of a mile from a station.


Office rents in the Rosslyn-Ballston corridor. (Cushman & Wakefield)

This is no small sample size. There are now 101 office properties totaling 20.2 million square feet near the Metro stations in Rosslyn, Courthouse, Clarendon, Virginia Square and Ballston, 92 percent of it within a quarter mile of a station.Washington commuters may walk faster than most, but if one assumes that the average walking speed for someone headed to work is around 3 miles an hour, walking a quarter of a mile takes five minutes, while walking a 20th of a mile takes one minute.

Is saving around four minutes of walking time per trip really worth paying that much more for real estate? Do executives think their companies perform better or attract and retain better talent because of that proximity? Apparently they believe they do.

“People don’t like to walk more than 10 minutes,” said Paula Munger, managing director of research for Cushman & Wakefield. “So being farther out just doesn’t attract the tenants that being near Metro does. People don’t want to take a shuttle. They want to walk to their office and preferably not even go outside, which is why if you’re on top of the station there is even more of an advantage.”

Munger and her team also looked at the rents that apartment buildings collect near Metro stations. There is more variance, likely due in part to the variance that newer, well-managed apartment buildings can achieve over older ones that have fewer amenities are more dated design.


(Cushman & Wakefield)

Apartment buildings right on top of stations or nearly so within a 20th of a mile still command a premium, one that Cushman estimated at 23 percent over average rents for the area.

Properties more than a quarter mile from Metro, meanwhile, are available at an 18 percent discount off of average rents. “Investors know this. So that’s why they are buying properties that are on or near Metro, so they can command those higher rents,” Munger said.

Word to the wise: Realtors and brokers favor saying the properties they advertise are “steps” from Metro, but every one of those steps matters.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz

via Every foot matters when it comes to real estate near Metro, researchers say – The Washington Post.

Green groups push consumers to healthy building materials

GreenGreen advocates are encouraging consumers to buy low and no VOC paints, which are healthier for people and widely available. (Andrea Bruce Woodall/THE WASHINGTON POST)

House Watch | Green groups push consumers to healthy building materials


December 9 at 5:30 am

GreenBuild is the United States Green Building Council’s annual exposition to showcase the latest and greatest in green building. The spotlight at this year’s conference held recently in Philadelphia was on health, a cornerstone of the original green building mandate but one that so far has received relatively little attention.

Discussion on the broader level centered on creating built environments that encourage residents to incorporate exercise into their daily routine because the distances to shopping, local schools, public transportation and even one’s workplace are walkable or bikeable.

On a narrower scale, discussion focused on indoor air quality and healthy building materials.

As buildings become tighter to save energy, mechanized ventilation is needed to bring in fresh air; for houses, a continuously operating bathroom fan will often suffice. Specifying healthy building materials turns out to be much more complicated because most manufacturers do not disclose what is used to make their products.

But this is about to get much easier.

A big push within the green building community has led to the creation of the Health Product Declaration Collaborative, an organization that is developing standard disclosure forms so that consumers can easily make comparisons as they select building products. The list of large, mainstream building material manufacturers working with the HPD Collaborative is a good indication that the idea of disclosure has legs.

In the meantime, what can homeowners do?Bill Walsh, of the Healthy Building Network, who has worked on health-related aspects of building for the last 13 years, and his colleague Jim Vallette offered the following suggestions:

• Use plumbing pipes made of polypropylene or PP. This type of plastic piping has been used for plumbing in Europe for more than 30 years. It does not leach into the water, has a long life and it can be recycled to make new pipe so it won’t end up in a landfill.

It is often used in combination with acrylonitrile butadiene styrene or ABS, another type of plastic piping. Neither of these types of plumbing pipes creates the environmental problems associated with piping made of polyvinyl chloride or PVC, the type most commonly used in residential construction in the U.S.

Among other issues, a byproduct of PVC manufacture is dioxin, a carcinogen for which no exposure level is safe. Through wind and water, dioxin from PVC manufacture has been dispersed across the globe; it has been found in the tissues of every mammal on the planet, including humans.

• Use low VOC or no VOC paints. Almost all paint manufacturers now make products which release very small amounts of volatile organic compounds or no volatile organic compounds, known as VOCs, into the air after they have dried.

Of the many VOCs that can be released, the one of largest concern has been formaldehyde, which has been declared a known carcinogen by the World Health Organization and the U.S. Environmental Protection Agency.

• Avoid building products with asthma-causing chemicals. Chemicals that can cause asthma to develop are often referred to as asthmagens, and these are found in many building products, including flooring. With carpeting, asthmagens are used in the backing and installation glues.

Homeowners can avoid the glue exposure by specifying “dry tack” installation typically done for residential work, but not always. As yet there is no asthmagen-free backing for residential carpeting, but some carpet manufacturers use it in their commercial lines.

Linoleum and vinyl have asthmagens in their top coating commonly known as the wear surface, but the amount in linoleum is miniscule .03 percent; by comparison, vinyl has about 50 times as much 15 percent. Wood flooring is commonly finished with polyurethane; the asthmagen-free alternative is a traditional oil wood finish.

Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Ann Arbor, Mich. If you have questions or column ideas, she can be contacted at salanthousewatch@gmail.com or http://www.katherinesalant.com.

via House Watch | Green groups push consumers to healthy building materials.

Buying a new home? An experienced real estate agent is essential.



Buying a new home? An experienced real estate agent is essential.

By Katherine Salant, Published: December 5 | Updated: Friday, December 6, 9:45 AM

When you buy a new house, do you need the services of an experienced real estate agent?

The answer is yes, and here’s why.

When you buy an existing house, what you see is what you get for the asking price. When you buy an as-yet-unbuilt house, what you see in the builder’s furnished model is not what you get for the advertised base price.

That’s because a furnished model is filled with beguiling features that enhance the basic house. The to-die-for kitchen, the four-foot extension that makes the family room feel so spacious, the classy Brazilian cherry hardwood floors, and the bay windows that give character to the front rooms and look swell from the street are all optional upgrades. When their cost is added in, the seemingly affordable $400,000 advertised base price quickly balloons out to $500,000, far more than you can afford.

When you check out a more affordable version of the model — a nearly completed house down the street that has only $30,000 worth of upgrades — it’s not the same house that has become the stuff of your dreams.

Had you been working with an experienced real estate agent, you would have avoided such a disheartening experience, because the agent would have directed you to new construction that fit your budget in the area where you want to live. As you toured models together, the agent would have helped you distinguish the upgrades from the basic house and pointed out the options that are prudent choices, said David Zadareky, the broker/owner of Re/Max Evolution in Alexandria.

Though option choices never come up in a resale transaction, they are central in a new-home purchase because the basic house is almost always very spare, Zadareky said. The challenge is to keep option choices to an affordable limit, which he caps at 15 to 20 percent of the base price. If your total budget is $400,000, as in the example above, you should be looking at houses that are base-priced about 15 to 20 percent lower, or about $320,000. That would give you $80,000 for options, an amount that would seem to cover everything you might want, but, in fact, will not go very far. “If you’re not careful, the final sticker price that you are trying to keep at $400,000 will quickly balloon up to $440,000 or even $480,000,” he said.

When choosing specific options, Zadareky advises his buyers to get features that will be difficult or costly to add later; in our earlier example, this would be the four-foot family room extension and the bay windows on the front. The to-die-for kitchen and the hardwood flooring can be future remodeling projects, and some options should be nixed outright because they will not translate into a better resale price. “No one will pay extra for a fireplace in the master bedroom,” he said.

In addition to helping buyers negotiate the purchase, Zadareky said he nudges them to budget for the cost of new-home ownership — a concern a builder’s agent is unlikely to mention. For example, once you move in, you’ll realize that you’ll have to purchase window treatments because the neighbors will be closer than you realized.

And he raises critical issues that do not occur to most buyers, such as finding out what is planned for the acreage adjacent to the community where they want to buy.

Why don’t most new-home buyers use real estate agents to help them navigate a brand-new house purchase?

It requires planning ahead, and most new-home purchases begin spontaneously when the buyers chance upon a “Grand Opening” for a new-home development and stop to take a look. When asked to “register” by the model sales agent, they fill out a card with their name and contact information. Should the buyers then decide to bring an agent on board, the builder will demand that the buyer pay the agent’s fee, usually 2 to 3 percent of the base price. (For the $320,000 house noted above, the fee would be $6,400 to $9,600.)

To get the real estate agent’s help and have the builder pay the agent’s fee, the agent must register the buyers on their initial visit. But if you visit the model and decline to register, you should be able to return later with an agent in tow, Zadareky said.

Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Ann Arbor, Mich. If you have questions or column ideas, she can be contacted at salanthousewatch@gmail.com or www.katherinesalant.com .

via Buying a new home? An experienced real estate agent is essential. – The Washington Post.

Mortgage rates increase for second week in a row




Photo:  Pablo Martinez Monsivais/Associated Press

Mortgage rates increase for second week in a row


December 5 at 10:00 am

Mortgage rates continued their climb on the heels of strong economic reports, according to the latest data released Thursday by Freddie Mac. After bouncing around the past couple of months, fixed rates increased for the second week in a row.

The 30-year fixed-rate average spiked to 4.46 with an average 0.5 point. It was 4.29 percent a week ago and 3.34 percent a year ago. The 30-year fixed rate has remained below 4.5 percent since late September.

The 15-year fixed-rate average jumped to 3.47 percent with an average 0.4 point. It was 3.3 percent a week ago and 2.67 percent a year ago. The 15-year fixed rate has stayed below 3.5 percent since late September.

mortgage(Image: Pam Tobey/The Washington Post)

Hybrid adjustable rate mortgages were mixed. The five-year ARM average rose to 2.99 percent with an average 0.4 point. It was 2.94 percent a week ago and 2.69 percent a year ago.

The one-year ARM average fell to 2.59 percent with an average 0.4 point. It was 2.60 percent a week ago.

“Fixed mortgage rates increased this week following stronger than expected economic data releases,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Private companies added 215,000 new jobs in November according to the ADP employment report, well above the consensus. In addition, revisions added 54,000 jobs in the prior month. Lastly, new home sales rose 25 percent in the month of October to a seasonally adjusted 444,000 annual pace, though this followed a weaker than expected September report and downward revisions over the summer months.”

Meanwhile, mortgage applications tumbled last week, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, fell 12.8 percent during the Thanksgiving-holiday shortened week. The Refinance index sank 18 percent, while the Purchase Index dropped 4 percent.

The refinance share of mortgage activity dipped to 63 percent. In early September, the refinance share had sunk to 57 percent, its lowest level since April 2010. Refinances had accounted for more than 80 percent of applications earlier this year.

via Mortgage rates increase for second week in a row.

New-home sales skyrocket in October

home-inventory-supply-price-increase-300x200image via Shutterstock

New-home sales skyrocket in October

Purchases up 21.6 percent from year ago

Teke Wiggin, Staff Writer

Dec 4, 2013

Sales of new single-family homes skyrocketed in October, ending a three-month slump that began in July and providing evidence that elevated mortgage rates have not seriously hobbled the housing recovery.

New-home sales leaped 25.4 percent from September to October to a seasonally adjusted annual rate of 444,000, according to data released today by the U.S. Census Bureau and the Department of Housing and Urban Development HUD. On an annual basis, sales of new single-family homes increased by 21.6 percent.

While the jump in mortgage rates that occurred last spring may have temporarily stymied home sales, any blow to the market was “entirely transitory,” according to research firm Capital Economics. October’s new home sales were about equal to those recorded between January and June of this year, despite the fact that average mortgage rates were 60 basis points higher in October.

“To our minds, this lends further support to our view that higher mortgage interest rates will not derail the housing recovery,” the firm said in a report.

At the same time, Trulia Chief Economist Jed Kolko cautioned not to assign too much value to the numbers in a tweet, saying that month-over-month changes in new home sales are “hugely volatile” and that home sales over the last three months are only 5 percent higher than they were during the same stretch a year ago.

The Census Bureau estimated that 183,000 new houses were for sale at the end of October. That represents a 4.9-month supply of homes at the current sales rate, down sharply from the 6.4-month supply measured for September.

While new-home sales increased substantially, existing-home sales in October fell for the second straight month, a decrease attributable to tight inventory, according to NAR.

Month over month, they dropped 3.2 percent to a seasonally adjusted annual rate of 5.12 million in October from 5.29 million in September, but increased by 6 percent on annual basis, NAR said.

During the same period the existing-home inventory shortage eased slightly, but today’s numbers indicate that a drop in new-home supply may have partly offset that increase.

via New-home sales skyrocket in October | Inman News.

Tax breaks real estate pros and their clients should be prepared to do without in 2014

taxesPhoto by Shutterstock

Tax breaks real estate pros and their clients should be prepared to do without in 2014
Real Estate Tax Talk
Stephen Fishman
Dec 3, 2013

Dozens of tax laws are set to expire at the end of 2013. Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.

The situation is complicated by the fact that both the White House and Congress want to enact serious tax reform in 2014. Key members of Congress and the Obama administration have proposed that extending or making permanent some of these expiring provisions be made part of the overall tax reform process instead of being done piecemeal though special tax extension legislation.

The expiring provisions of most importance to the real estate industry include:

Mortgage insurance premiums deduction: Since 2007, qualifying homeowners have been able to deduct premiums for mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance. Homeowners whose incomes are not too high can treat such payments the same as mortgage interest payments. (IRC Sec. 163(h)(3)(E).) Unless the law is extended, no deduction will allowed for amounts paid or accrued after Dec. 31, 2013.

Discharge of indebtedness on principal residence exclusion: Since 2008, homeowners have been allowed to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure. (IRC Sec. 108(a)(1)(E).)

Unless this provision is extended, the exclusion will not apply to indebtedness discharged after 2013. If this provison does expire, the impact will vary from state to state. See our previous column, “Good news for California homeowners facing short sales.”


Tax credit for qualified energy efficiency improvements to principal residence: Homeowners have been able to claim a maximum lifetime tax credit of up to $500 for installing energy efficiency improvements in their main homes, including the cost of insulation, windows, doors and roofs. The credit expires at the end of 2013.

Section 179 expensing deduction: IRC Section 179 allows small-business owners to deduct the cost of business property in a single year instead of depreciating the cost over several years. Section 179 is subject to an annual dollar limit. During 2010 through 2013, the annual limit was $500,000. The limit is scheduled to go down to $25,000 in 2014.

Bonus depreciation: Since 2007, businesses have been able to take advantage of special “bonus depreciation” rules that permit them to deduct in a single year 50 percent of the cost of qualifying business property. (IRC Sec. 168(k).) Bonus depreciation will end on Dec. 31, 2013, unless extended by Congress.

Energy-efficient commercial buildings deduction: Since 2006, a special deduction has been available to commercial building owners who upgrade their existing buildings to make them more energy efficient, or design more energy-efficient new structures. A deduction of up to $1.80 per square foot was available for energy upgrades to a building’s interior lighting system, ?heating, cooling, ventilation, and hot water system, or building envelope. This deduction ends in 2013, unless extended. (I.R.C. § 179D.)

Credit for construction of new energy-efficient homes: Since 2006, certain contractors have been allowed an efficient-home credit of $1,000 or $2,000 for constructing or manufacturing qualifying energy-efficient homes. Like the other energy efficiency deductions, this is set to expire at the end of 2013. (IRC Sec. 45L(g).)

A list of all the expiring tax laws is available in a report from the Joint Committee on Taxation.

Stephen Fishman is a tax expert, attorney, and author who has published 20 books, including “The Real Estate Agent’s Tax Deduction Guide,” “Working for Yourself,” “Deduct It!,” and “Working with Independent Contractors.” His website can be found at fishmanlawandtaxfiles.com.

via Tax breaks real estate pros and their clients should be prepared to do without in 2014 | Inman News.

Mortgage lenders get C+ in customer service survey

Home Buyers Ahead Of MBA Mortgage Applications Figures

Andrew Harrer/Bloomberg

Real Estate Matters | Mortgage lenders get C+ in customer service survey


December 3 at 5:30 am

If you borrowed money from a mortgage lender last year, odds are you’re fairly happy with the experience.

Overall customer satisfaction is at a seven-year high, according to the latest J.D. Power and Associates’ annual ranking of mortgage lenders. Lenders scored an average of 771 out of 1,000, or about a C+.

Every year, J.D. Power asks customers of the 25 largest lenders in the country to rate their experience with four parts of the mortgage origination process, including the application/approval, the customer’s loan representative also known as the loan officer, the closing experience and the contract.

In this year’s survey, for the fourth year in a row, Quicken Loans came out on top, earning 841 points out of the 1,000. Quicken is the only lender that passed the 800 mark, though BB&T came close with 798, followed by U.S. Bank 783, PNC Mortgage 778 and Chase 773.

The results were skewed slightly toward refinances, which made up a larger volume of response. Customers who refinanced tended to be happier with their lender than those completing their first home purchase simply because those refinancing are more familiar and comfortable with the process, said Craig Martin, director of the financial services practice at J.D. Power and Associates.

Because first-time homebuyers aren’t as clear about their loan options as repeat home buyer or refinancing customers, they need more old-fashioned hand-holding to have a good experience.

“What that [first-time home buyer] requires of the lender is to focus on over-communicating with those individuals, because you have to assume they aren’t going to fully understand” the process, Martin said. “Folks may be shy about asking questions and they’re going to agree to things in the end that they do not fully understand.”

Mortgage financing has become somewhat commoditized, and many lenders are offering similar loan programs at similar interest rates. Because it’s hard for lenders to differentiate themselves with interest rates so low, they’re trying to focus on improving the customer’s experience to gain new business.

“One of the things we noticed is that … problem prevention is an opportunity,” Martin said. “The most common problems are things like customers not being called back in a timely manner or customers not being able to get a hold of their loan representative.”

Good communication was a key factor for all the lenders that scored well because the highest ranked lenders are proactively communicative, Martin said, meaning they make calls to follow up with customers quickly, provide them with information as the process continues and are readily available.

All this is really good news for consumers, who should expect a better customer experience with top-ranked mortgage lenders, particularly because the market is so competitive right now. With refinance volume dropping, lenders have to replace that business with borrowers who are buying new homes rather than refinancing existing properties.“

Borrowers should feel empowered to ask questions, especially about the process” of getting a loan, Martin said.

He recommends that borrowers ask who they will be working with and how they will be updated on the process. Just asking those questions will “give you a good sense of what your experience will be like,” he added. “You have to feel comfortable that they will give you good information on a regular basis. It’s really about reducing your stress and feeling comfortable in the process.”

Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free 800-972-8255 any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.

via Real Estate Matters | Mortgage lenders get C+ in customer service survey.

Capitol Hill mansion converted into new residences




Town Square | Capitol Hill mansion converted into new residences
December 2 at 5:30 am

The former Friendship House is being converted into new condominiums.

William Mayne Duncanson, an Englishman who came to Washington in the late 18th century to establish an East India trade, built a mansion in Capitol Hill called the Maples between 1795 and 1797.
Now the historic estate at 619 D St. SE near the Eastern Market Metro station is being transformed into condomininums.
Altus Realty Partners is converting the manor house, carriage house, school and stables into one-, two- and three-bedroom condos, six of which are duplexes.
Much of the manor house, including the front porch, is being restored. Other features, such as the windows and the roof, are being replaced. Four- and five-bedroom townhomes also are being built on the property.
The townhomes and condos will include high-end finishes. The complex will contain an underground garage. The homes, which are priced from the $400,000s to $1.65 million, are anticipated to be ready for occupancy in the fourth quarter of 2014.
For more information, visit www.themaplescapitolhill.com or call (202) 580-6001.

Rendering of the Lyric Apartments (Capital Pixel)

New D.C. apartments friendly to people and pets

The new Lyric apartment building offers a variety of high-end amenities — for tenants and their pets — in Northwest Washington’s Mount Vernon Triangle neighborhood.
Called a pet-friendly development, the 234-unit building at 440 K St. NW has dog-walking services.
For people, the building has valet dry cleaning, a 24-hour front desk, a fitness center, WiFi, gated access to an underground parking garage and a bike storage room. The landscaped roof deck includes a fire pit, water features and an indoor social space, plus a two-tier infinity pool. The second floor of the building features a tranquility garden and an outdoor fireplace.
The apartments have floor-to-ceiling windows; Italian Porcelanosa tile flooring; a full-size washer and dryer; and a gourmet kitchen with double sinks, granite counters, stainless steel appliances, espresso cabinetry and a built-in wine rack. Some units include a private balcony or courtyard.
The one-bedroom units start at $1,990 per month, while the one-bedroom and den homes start at $2,600. Two-bedroom units range from $2,800 to $3,600 per month. For more information, contact the sales center at www.Lyric440.com or at (202) 777-0740.

House tour to support St. Albans School

The annual St. Albans School Christmas House Tour, a tradition for 31 years, will showcase five homes along Woodland and Normanstone drives in Massachusetts Avenue Heights on Friday and Saturday.
The homes will be decorated for the holidays by local florists.
This year’s tour includes two Georgian brick homes, a former ambassador’s residence, a Mediterranean style villa and a newly constructed house. One property was previously owned by former Treasury secretary Henry M. Paulson Jr.; and former senator Jon S. Corzine (D-N.J.). Another home has an original White House marble mantel on display.
In addition to the house tour, St. Albans is hosting a holiday market with items from more than 50 boutiques and a luncheon. The holiday market will be open from 9:30 a.m. to 5 p.m. and the tour runs from 11 a.m. to 4 p.m.
Tickets can be purchased at www.stalbansschool.org/CHT.

cabidoorThe Cabidor storage unit. (Giovanni Photography)

Tip of the week

If you’re lacking storage space, a new product called the “Cabidor” may offer a solution.
Unlike racks and hooks that hang over a door, the Cabidor attaches to the hinges of any door to create storage space. The Cabidor, which has the storage capacity of more than five medicine cabinets, can be customized with adjustable shelving and a retention rod system. You can use it for extra pantry space, craft or office supplies, jewelry, bathroom supplies, pet supplies, laundry or utility room materials.
The Cabidor, produced by Ingenuity, won best product awards at various houseware shows.
The Cabidor can be attached and detached easily, so it can be used by homeowners, renters, office workers or college students in their dorm rooms. The product, which ranges in price from $129 to $199, can be ordered at www.cabidor.com.

Lerner is a freelance writer. To pass on a tip or news item, contact us at realestate@washpost.com and put “Town Square” in the subject line.

via Town Square | Capitol Hill mansion converted into new residences.

10 Decorating Tips to Help You Outsmart the Holiday Season


10 Decorating Tips to Help You Outsmart the Holiday Season

If youd love to maximize holiday style and save money while doing it, these tips will help get your home ready for all your celebrations, big and small.

Courtesy of Chase Freedom®

1. If you love receiving holiday cards but never know what to do with them, transform a large bulletin board into a holiday display that can be used year-round. Secure ribbons to it in a square or crisscross pattern, and then tuck cards and party invitations in between. Once the holidays pass, keep or swap the ribbon and use it to hold favorite pictures, reminders, design ideas, birthday cards, etc.

2. Make your place even more fun to decorate by rearranging the furniture to accommodate holiday decorations like the tree or multiple trees. Add some new lamps, holiday-colored accent pillows and throws to reflect your current style. Get the whole family involved as this simple change of scenery for the holiday season will help everyone appreciate your home in a new way.

3. The holiday season is a crazy time of year; dont let it get the best of you and plan ahead for fun! Its the perfect time for DIY home decor projects because you can enjoy your family and get great new holiday decorations. Wreaths, glittered banners and painted ornaments are three of the easiest crafts to try and their supplies can be simple and affordable.

4. Be strategic about the limited time you have to prepare for the holidays by inviting friends over to help you decorate and do the same for them if theyre interested. Even if its just a short visit to catch up and get some new perspectives and ideas for your decorations this year, itll be fun and productive.

5. If you get a little sentimental this time of year when looking at catalogs, it isnt accidental. Take a design tip from your favorite retailers pages by shopping for old wooden sleighs and skis, wool mittens or ice skates. Prop them outside your door, near the fireplace or on the hearth for inexpensive nostalgic style.

6. As with most special occasions, candles help set a holiday mood. Plus, they make everyone look great! Take advantage of these low-cost decorating powerhouses to create a warm, welcoming atmosphere. Light an abundance of unscented tea lights and votives in matching holders for an inside forest of flickering fire light.

7. Take a fresh approach with color. Some of the latest trends include soft pastels, fuchsia, lots of silver and gold plus frosty blue. A refresh doesnt have to mean all-new items so punch up your existing favorites with some updated ornaments, a tree topper, stockings, dishes for entertaining, updated lighting or an advent calendar.

8. Expand your holiday decorating opportunities with the ever-increasing number of battery-operated outdoor holiday decorations. From elegant to whimsical, retailers continue to offer a wider assortment each year, enabling you to decorate anywhere you want without cords. Sync your holiday music with remote-controlled outdoor lights for a fun, festive display.

9. If its been a while, exchange some of your old holiday lights for LED ones, which last longer so you save over the years. Look for all the latest options like nets for hedges and bushes and ribbons for tree trunks.

10. Find low-priced holiday decorations and craft supplies by shopping at second-hand stores and thrift shops. Look for wreaths that can be updated with some DIY tweaks like new ribbons and lights, and vintage glass ornaments. You never know what youll find!

via 10 Decorating Tips to Help You Outsmart the Holiday Season : Holidays and Entertaining : Home & Garden Television.

When marketing to families, a staged listing should evoke lived-in feeling

stagingWhen marketing to families, a staged listing should evoke lived-in feeling

If prospective buyers cant picture living in a particular home, theyll walk away

Nov 22, 2013

Originally published by Debbie Reynolds, broker at Prudential PenFed Realty, on ActiveRain.

While showing homes to a young couple with two small children I discovered a house can look too perfect. Since I just met the buyers as they had arrived in town, I didn’t have much time to schedule appointments and make my showing schedule. Some of the sellers had only a couple hours’ notice to prepare for the showings. Even with the short notice, these sellers have extremely neat homes. There was not one child’s toy left out, or book, dish, wrinkled pillow or toothbrush out of place.

The buyers kept commenting about how neat these homes were and even questioned if these occupied homes had real people living there. The houses looked too perfect. I know for a fact that one of the homes was professionally staged because the listing agent always requires her sellers to stage their homes. Some of the other houses may or may not have been professionally staged.

Staging — when done right — can help a home sell. I have seen some wonderful staging jobs. But a couple of these homes lacked that warm, lived-in feeling. This turned off the young couple with the two small children. I saw them squirm and cross their arms. They made generic statements about how this is nice and that looks pretty, but not buying-sign comments.

We saw some vacant homes and some new construction, too. Seeing these homes empty did not seem to bother the buyers, as they could see the real potential the homes offered — a clean palette, so to speak.

I showed another home that was occupied where the sellers left it neat but with a lived-in feeling. You could feel it the moment you stepped in the door. The buyers responded very favorably and started seeing themselves living there. They wanted to linger and ask questions. Yes, there were some personal family photos around, toys in the corner, things on the kitchen counter. The beds were made and the house was clean, but it felt lived in by a happy family.

When the house is too perfect, it can work against a seller. I saw it happen with these buyers. The too perfectly staged homes lacked warmth and the feeling of a real home. I saw the buyers wiggle and become uncomfortable. They made comments to the fact that the homes even felt cold and too perfect.

The last occupied home, the one that felt warm and like a happy home, will likely be the one that gets the offer. They have crossed the other occupied homes off their list.

When selling a family a home, most families want to feel like it is a warm and welcoming environment. Yes, they want it neat and in good condition, but still looking like a real home. When the house is too perfect and has too much staging, it can take away the warmth and friendliness of the home and turn the buyers off. I saw this very thing happen with these buyers.

Remember: Don’t remove the warmth from the house when getting it ready to market.

via When marketing to families, a staged listing should evoke lived-in feeling | Inman News.


Forged document calls into question condo ownership


Real Estate Matters | Forged document calls into question condo ownership


November 26 at 5:30 am

I bought a condominium in Washington in 2008 and received a summons by the “real” owner stating that the sale of the condominium was void because of forged documentation. What does this mean and what can I do? I’ve been paying mortgage for the last five years on a property that I now find out doesn’t belong to me.

We certainly hope that you obtained an owner’s title insurance policy. If not, you’re not going to like this answer.

Let’s start at the top. Even if you’ve been the victim of fraud, your lender may not have much to fear because just about every lender in every residential loan transaction obtains a new lender’s title insurance policy. That lender’s policy protects the lender in exactly your situation.

If you have an owner’s title insurance policy, you too should have some financial protection from this fraud. If you obtained the policy, you must follow the instructions in the policy to file a claim with the title company. The title company, in turn, can try to settle with the rightful owner or will have to settle with you.

You will need to make sure you follow the procedure set forth in the title policy for filing your claim, including how you notify the title insurance company.

If you don’t have a title insurance policy, the lender’s title insurance company will end up settling with the lender. The title company could settle with the rightful owner and you could in turn benefit from their actions. However, if they don’t settle with the owner but instead pay off the lender, you will be out of luck.

You will need to vacate the condominium and any moving expenses and money you put down toward the condominium will be lost. As with any other fraud or theft, if you find the thief and discover that he or she has assets, you can try to go after them.

Unfortunately, the fraud you are going through is one in which you might have a hard time finding the perpetrator.

Even if you do have title insurance, you may still lose money. The title insurance company’s liability is usually limited to the amount of the policy. If you purchased the condominium for $200,000, the title company usually has a maximum obligation to pay out your loss up to $200,000. Since your loss is total and you have moving expenses into the condominium and would have expenses to move out along with other costs, you might still be out of pocket some or all of these costs.

Go through your closing documents and see if you obtained a title insurance policy, then file your claim with the title company. Since you have described a fraud, you probably should report the fraud to your local police department. Whether they decide to do anything about it, the crime should still get reported. Good luck.

Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free 800-972-8255 any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.

via Real Estate Matters | Forged document calls into question condo ownership.

Photo:  Michael S. Williamson/THE WASHINGTON POST

Town Square | Luxury apartments arrive in Alexandria

TOWNSQUARETown Square | Luxury apartments arrive in Alexandria


November 25 at 5:30 am

The site of the Belle Pre Bottle Factory in Alexandria has been transformed with two new apartment buildings surrounding a public plaza with a commissioned sculpture by artist William Cochran.

The luxury development, built by Equity Residential, will have 360 apartments and 9,700 square feet of retail space one block from the Braddock Street Metro at 800 North Henry St. in Old Town Alexandria.

Community amenities include a landscaped rooftop with a swimming pool; fire pit and grilling stations; a lounge for residents with a theater, a private dining room and multiple games; and a fitness center with a yoga studio.

The development will have 70 floor plans ranging in size from 534 to 1,348 square feet. The apartments have hardwood flooring, an open kitchen with granite counters, a tile backsplash and stainless steel appliances. The one- and two-bedroom and loft units also have oversized windows, some with views of the downtown D.C. skyline.

The first of the two buildings is available for occupancy, with one-bedroom units renting from the mid $1,600s and up and two-bedroom homes starting in the mid $2,400s.

For more information visit www.equityapartments.com or call the leasing office at 703 229-1366.

Mortgage rates projected to jump in 2014

Freddie Mac Chief Economist Frank E. Nothaft wrote in his Executive Perspectives Blog that he expects interest rates to gradually rise throughout 2014, reaching 5 percent by the end of the year.

In addition, he anticipates that home values will rise on a national level by 5 to 6 percent in 2014, although he says price increases are likely to be higher in areas that were hardest hit by the housing crisis.

Nothaft wrote that inventory will likely remain tight during the year because new home construction isn’t able to keep pace with homebuyer demand and many would-be sellers still lack enough home equity to put their homes on the market.

New resource for homebuyers

Singles have become accustomed to using matchmaking sites such as Match.com and eHarmony to find a life partner and now house hunters can use similar technology to find a home.

Redfin Matchmaker, a new software technology available to Redfin real estate agents, uses algorithms to track potential buyers’ and other users’ activity on the company Web site.

Redfin says the combination of the agent’s knowledge of the client’s preferences and the technology provided by the software can bring up different listings and neighborhoods to broaden the home search.

For instance, if a buyer is looking for a specific style and size of home in Georgetown, Matchmaker might suggest a home in Cleveland Park that could match the buyer’s wish list. The software makes it easier for the agent to expand the property search and then use his or her insight into the customer’s preferences to evaluate the match.

Holiday bazaar to feature home décor

EastBanc and Jamestown, which own commericial real estate properties in Georgetown, are hosting an open marketplace holiday bazaar in Georgetown’s Cady’s Alley, a destination for upscale home design shopping.

The 8,000-square-foot, split-level pop-up Cady’s Alley Bazaar, which began earlier this month, features Zestt, a contemporary home accessories store with textiles, decorating and entertaining items and Victoria Road, which features handcrafted gifts, home décor and accessories from small businesses in emerging markets around the globe.

The bazaar, located at 3330 Cady’s Alley off Wisconsin Avenue near the western edge of Georgetown, will be open through Jan. 5. Visit www.Cadysalley.com for bazaar hours.

Lerner is a freelance writer. To pass on a tip or news item, contact us at realestate@washpost.com and put “Town Square” in the subject line.

via Town Square | Luxury apartments arrive in Alexandria.

Photo:  SK&I Architecture

Baby boomers enhance the empty nest

Bethesda Bungalows

Baby boomers enhance the empty nest

By Deborah K. Dietsch, Published: November 21

The kids are grown. The mortgage is paid. The nest is feeling big and empty.

The next logical step is to sell the family home and buy a smaller, less expensive house or condominium unit, right?


Many baby boomers, the generation born from 1946 to 1964, prefer to stay put and enhance their homes rather than relocate.

“I don’t want to move,” says Bethesda homeowner Maureen O’Bryan, 59, a retired nurse. “I like our home’s proximity to grocery shopping, Metro and bus lines.”

Rather than downsize, she and husband, Ray O’Bryan, 55, a trade association executive, decided to upsize their 1950s brick rambler.

Part of the reason, they say, is the high price of real estate in the region, leaving little money left over for retirement or renovations after buying another home.

“We looked around at other houses in the area, but they were so expensive,” Maureen O’Bryan says. “That’s when we decided to get everything we wanted in this house and stay in the neighborhood.”

Research shows that most boomers are reluctant to move from their dwellings. Nearly seven in 10 of the 2,260 adults age 45 to 65 who participated in AARP’s 2011 Boomer Housing Survey said they want to age in place. More than eight in 10 said they want to stay in their homes because they like their communities.

The O’Bryans added on to create “me” spaces, the kind of personal luxuries passed over while raising their three kids. They turned their attic into a second floor to accommodate a spacious master suite, his-and-her walk-in closets, a convenient laundry room and a home office.

On the main floor, they expanded to create a family room opening to a new kitchen in what had been their daughter’s bedroom. The living room was turned into the dining room, and the basement remodeled to create a TV room and bedroom suite.

“I love to cook and entertain, and the house wasn’t conducive for that before since the family room was in the basement and the kitchen was small,” Maureen O’Bryan says. “We frequently entertain five to six people for dinner and have more formal dinner parties of eight to 14. That has become so much easier in the new space.”

In enlarging the home, Bethesda architect Jim Rill and builder David Clark of Woodhaven Contractors in Ijamsville, Md., created the look of a Craftsman bungalow with a spacious front porch and an outdoor stone fireplace at the rear. Aidan Design of Bethesda reworked the kitchen to incorporate top-of-the-line appliances, a breakfast bar, an island and a walk-in pantry.

“Most boomers have been through a remodeling at least once, and they are very specific about what they want this time around — easy maintenance and organization above all. They don’t want froufrou,” says kitchen designer Nadia Subaran, co-owner of Aidan Design. “Aesthetically, they want a more modern look and are open to less traditional finishes.”

Potomac boomers Marcia and Dave Gelfand reflect this embrace of contemporary decor in the upsizing of their family home. They bought their 1980s house in 2004 but didn’t remodel until their two sons had graduated from college.

via Baby boomers enhance the empty nest – The Washington Post.

9 things to do in the D.C. area on the weekend of Nov. 22-24


Tiesto brings his floor-shaking set to Echostage on Friday and Saturday. (Doug Van Sant Photography)

9 things to do in the D.C. area on the weekend of Nov. 22-24

November 21 at 11:07 am

The weekend’s best in nightlife, music and art.

Friday: The Newseum marks the 50th anniversary of the assassination of President John F. Kennedy on Friday with JFK Remembrance Day, with gallery talks, panels and film screenings. The event, which is free with museum admission, also includes a chance to see 90 minutes of vintage CBS News footage of the events of Nov. 22, 1963.

Friday: Beaujolais Nouveau celebrations don’t get much classier than Beaujolais and Beyond, an event the Alliance Francaise and French-American Chamber of Commerce are throwing at the French Embassy’s La Maison Francaise. Snack on food from local French restaurants, drink unlimited wine (with non-Nouveau selections from France, Italy and the U.S.), participate in a blind wine-tasting contest, test your smarts in a trivia contest or dance to a DJ in the ballroom. The evening has a Roaring ’20s theme, so dress accordingly. General admission tickets are $60; get them here.

Friday-Saturday: Tiesto, the world’s biggest trance DJ has expanded his repertoire in recent years, adding dubstep and electro to his high-energy sets, several of which have been released as part of his “Club Life” live series. The Dutchman still fills soccer stadiums and festivals around the world, so expect two packed nights at Echostage, the city’s largest dance club. Tickets are $50, and they’re sold out, but tables were still available at press time.

Friday-Sunday: “American Voices,” the Kennedy Center’s three-day festival of songwriting and musicianship is a chance to see masters at work. Watch Alison Krauss, Dianne Reeves, Eric Owens, Ben Folds and others coach young artists during the weekend’s “master sessions,” or catch their performance together with the National Symphony Orchestra during an all-star concert Saturday at 8 p.m. The handful of remaining tickets for the American Voices concert are $29-$225 and can be had here.

Saturday: The Quidditch Mid-Atlantic Regional Championship is real, and this weekend, the game loved by Harry Potter and the rest of the young wizards at Hogwarts comes to the muggle world. Some minor changes have been made (sorry folks, no one goes soaring through the air) for Saturday’s game at Loudoun County’s soccer park in Leesburg, but the familiar snitches, bludgers and quaffles abound. For this event, 23 teams — including representatives from University of Maryland and the University of Virginia — will compete for the chance to go to the World Cup. In addition to cheering on the teams, children can tryout kidditch, a non-contact version of the game.

Saturday: It’s fitting that H Street NE, long a scenester outpost where a tattoo and excellent mustache can serve as kind of a passport, is playing host to a Movemberfest festival. Purchase a wristband to take advantage of food and drink specials at 13 bars and restaurants on the strip from 1 to 9 p.m., including the H Street Country Club, the Argonaut, Cusbah and Dangerously Delicious Pies. There will be free activities for kids at the Big Board and a late-night dance party with the funky Sinister Sound Set at the new RedRocks. All proceeds from ticket purchases benefit Movember and its partners, the Prostate Cancer Foundation and Livestrong. Buy tickets online to save $3, then pick them up Saturday at Big Board or the Queen Vic.

Sunday: Rapper Danny Brown has been the darling of critics for only a couple of years, when the Detroit native with the idiosyncratic nasal flow, skinny jeans and shock of hair caught the rap world on fire with “XXX.” But it’s funny the difference time makes; the one-time raunch king — who was embroiled not that long ago in a controversy involving an on-stage sex act — has mellowed considerably on his new album, “Old,” in which he’s reflective about a world that wants him to never change. After a sold-out show at the Rock & Roll Hotel this spring, he’s moving to bigger digs, the Howard Theatre, on Sunday.

Sunday: Jake Shimabukuro’s unique ukelele style draws from classical, flamenco and even rock guitar techniques to create songs that alternate between gorgeous and jaw-dropping. In concert, Shimabukuro sometimes uses special effects to loop his ukelele and perform with himself, but even when there’s no electronic trickery, his instrument produces a beautiful and compelling sound. See him at Lisner Auditorium on Sunday; get tickets, priced at $35, here.

Through Jan. 5: Can we officially get in the holiday spirit? Last week, Ice! officially returned to National Harbor, and there’s o better time than now, before the post-Thanksgiving crush, to check out this temperature-controlled world in which nearly everything from the nativity to a functioning slide is carved from cold stuff — two million pounds of it, in fact. The effect is glittering, and, despite the exhibit-issued parka, punishingly cold. (It’s just 9 degrees inside the tent.) This year, exhibit’s rooms tell the story of the theme of “The Night Before Christmas.”

via 9 things to do in the D.C. area on the weekend of Nov. 22-24.

Say goodbye to the incandescent bulb

2013-Wash-Post-Blog-LED-Update-Philips-New-A19-LED_Open-View-207x300BY KATHERINE SALANT
November 19 at 5:30 am

Jan. 1 will mark the end of residential lighting as we know it.

As of that day, the manufacture of the 60-watt incandescent bulb, the most widely used light bulb in America, will cease. In response, the U.S. lighting industry is working mightily to persuade U.S. consumers to purchase a near-equivalent: light emitting diode bulbs, known as LEDs.

Like most electronics, the first LED 60-watt equivalents, introduced several years ago, were expensive. But, as competing manufacturers continually introduce “new and improved” versions, prices are rapidly falling.

Though some firms have priced their LED 60-watt equivalents at $22, others are charging only $11 and in areas of the country where local utilities are offering rebates, the cost per bulb can be as low as $5. (In the Washington area, utilities in Maryland and the District are currently offering rebates on some brands of LEDs).

Five dollars is still more than five times the current cost of most incandescent bulbs, but the LED 60-watt equivalents last more than 22 times as long (yes, that’s 22 times) and they are far less costly to operate (about $1.14 a year versus $7.23 a year for the old-style 60-watt bulb when used for three hours a day at 11 cents per kilowatt hour).

Though the LEDs are not exact equivalents of the 60-watt bulbs they replace, they are close enough that most consumers will not, in my estimation, experience much of a change (when I tried several in my own house, my husband didn’t notice a thing).

Based on my home testing, and rating five LED 60-watt equivalents for both price and performance, the two that seemed the best bet for most homeowners are CREE’s “Soft White LED 60 watt Replacement” and Philips “11w – 60w,” (available at Home Depot for $12.97 and $14.97 respectively). They are both Energy Star rated, which means that they are both eligible for rebates when local utilities offer them.

In addition to a pleasing color of light (they each are 2700 degrees Kelvin, close to the 2800 degrees for an incandescent 60-watt bulb), both bulbs have excellent “light distribution.”

That is, when switched on, the light shines both up and down, making these suitable for reading as well as for general use.

Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Ann Arbor, Mich. If you have questions or column ideas, she can be contacted at salanthousewatch@gmail.com or http://www.katherinesalant.com.

Photo by Philips

via House Watch | Say goodbye to the incandescent bulb.

Buyer demand continues into October, pushing up prices on scarce inventory


Realtor.com: Buyer demand continues into October, pushing up prices on scarce inventory
Listing data defying seasonal patterns
Inman News
Staff Writer
Nov 19, 2013

An analysis of listings data released today by realtor.com suggests that homes continued to turn over quickly in October, in defiance of seasonal patterns and in spite of price increases driven by inventory shortages in many markets.

The 1.9 million homes listed on realtor.com during October had been on the market for 94 days on average — up slightly from 93 days in September, but down 11.3 percent from a year ago, indicating demand for housing remains strong. Realtor.com rival Zillow reported a similar trend last week.

With inventory down 1.5 percent from a year ago, the median list price of homes listed on realtor.com was up 7.6 percent, to $199,000.

Although the country is still experiencing “significant supply shortages,” inventories are “stabilizing” compared to the dramatic year-over-year declines seen earlier this year, realtor.com said in releasing October data.

Realtor.com said the number of markets where inventories were down by 5 percent or more from a year ago declined from 102 in June to 65 in October. Inventory grew in 49 markets in June, up from 22 in June.

Among the top 10 metros with the shortest days on market, only Washington, D.C., saw age of inventory decline from September to October. Phoenix remained flat, and the other eight markets saw increases in average time on market.


Top 10 metros with shortest days on market

Market Days:

Oakland, Calif.     30
San Francisco      48
San Jose, Calif.     48
Denver      48
Stockton-Lodi, Calif.      48
Washington, D.C.-Md.-Va.-W.Va.      49
Phoenix-Mesa, Ariz.      50
Detroit      52
Sacramento, Calif.      54
Seattle-Bellevue-Everett, Wash.      55

Source: realtor.com

“This demonstrates that the overall strength of the national housing market is determined partly by inventory availability,” said National Association of Realtors Chief Economist Lawrence Yun in a statement. “We expect rising home price conditions to continue through the balance of the year.”

Price appreciation instills confidence in buyers and helps lift homeowners out from “underwater,” allowing them to put their homes up for sale without taking a loss. Data aggregator CoreLogic has estimated that at the end of June, 7.1 million homeowners owed more on their mortgages than their homes were worth.

This year, limited inventories have kept a lid on sales. For real estate agents and brokers, home sales are the critical number.

According to the most recent figures from NAR, the inventory of existing homes for sale in September remained flat at 2.21 million, representing a five-month supply of homes. Existing-home sales declined 1.9 percent from August to September, to a seasonally adjusted annual rate of 5.29 million.

Earlier this month, Yun forecast that home prices will continue to post gains next year, but that sales of existing homes will be flat due to factors including declining affordability, limited inventory and tight mortgage lending standards.

When the final numbers for 2013 are in, NAR’s top economist expects sales of existing homes will be up 10 percent from last year, to 5.13 million, but will hold steady at 5.12 million next year. Yun is forecasting that there will be inventory shortages again next spring, because builders would have to boost housing starts by 50 percent to meet underlying demand.

Homes repossessed by lenders could also ease inventory shortages in coming months as loan servicers clear backlogs in “judicial foreclosure” states where courts handle the process.

The number of properties headed to the auction block climbed for the 16th month in a row in October, according to the latest report from foreclosure data aggregator RealtyTrac.

via Realtor.com: Buyer demand continues into October, pushing up prices on scarce inventory | Inman News.

Supply and demand image via Shutterstock.

Unrecorded mortgage from ‘Bank of Mom’ fails to qualify for interest deduction


CEO of “The Bank of Mom” image via Shutterstock.

Real Estate Tax Talk
Stephen Fishman
Nov 18, 2013

One of the greatest tax benefits of homeownership is the home mortgage interest deduction, which permits homeowners to deduct the mortgage interest for a home loan or loans up to $1 million as an itemized deduction.

You don’t have to borrow the money from a bank or other financial institution to qualify for this deduction. Interest paid on money borrowed from other sources, such as relatives, can also be deductible.

However, certain technical requirements must be satisfied to get this deduction. If you fail to dot all your i’s and cross all your t’s, you could lose your entire deduction.

That’s what a Massachusetts couple named Christopher and Jennifer Gross recently discovered. They borrowed $427,333 from Jennifer’s mother to purchase a home in Northampton.

They weren’t legal experts, but they did their best to ensure that the interest they paid on the loan qualified for the home mortgage interest deduction. They all signed a document described as a “mortgage note” promising to pay Jennifer’s mother $427,333 — plus interest — in return for the loan.

The Grosses did in fact pay the interest to Jennifer’s mother — they paid $19,230 in 2009, and deducted this amount on their taxes as a payment of home mortgage interest.

The IRS never questioned the validity of the loan itself. It was clearly not a disguised gift or otherwise fraudulent.

Nevertheless, the IRS denied the mortgage interest deduction — and the Tax Court agreed. What went wrong?

The Grosses failed to comply with a simple technical requirement. For home mortgage interest to be deductible, the home loan must be secured debt. Secured debt means a debt that is on the security of any instrument (such as a mortgage, deed of trust, or land contract):

– i. That makes the interest of the debtor in the qualified residence specific security of the payment of the debt,
– ii. Under which, in the event of default, the residence could be subjected to the satisfaction of the debt with the same priority as a mortgage or deed of trust in the jurisdiction in which the property is situated, and
– iii. That is recorded, where permitted, or is otherwise perfected in accordance with applicable state law. (Reg. § 1.163-10T(o)(1).)
Unfortunately, the Grosses failed to record their mortgage or otherwise “perfect” it. Thus, it did not qualify as “secured debt.”

They lost a $19,230 deduction because they failed to spend the $20 or so to record a few pieces of paper with their county recorder.

However, the Tax Court took a little pity on the Grosses, ruling that they were not liable for a 20 percent accuracy-related tax penalty that the IRS had imposed. Noting that they were not tax experts, the court said it would not have been apparent to taxpayers that the interest on an otherwise bona fide home mortgage would not be deductible unless it was recorded. (Defrancis v. Comm’r, TC Summary Opinion 2013-88.)

The moral of the story is that relatives who loan money to each other to purchase homes should seek legal or other expert assistance to help them properly draft and record their mortgage documents.

Stephen Fishman is a tax expert, attorney, and author who has published 20 books, including “The Real Estate Agent’s Tax Deduction Guide,” “Working for Yourself,” “Deduct It!,” and “Working with Independent Contractors.” His website can be found at fishmanlawandtaxfiles.com.

via Unrecorded mortgage from ‘Bank of Mom’ fails to qualify for interest deduction | Inman News.

NAHB’s Housing Market Index flat, but remains positive despite political uncertainty, construction costs


Home builders remain confident in housing market

Kent Hoover
Washington Bureau Chief

Home builders remain kind of confident in the market for new single-family homes, despite policy uncertainties in Washington, D.C., and rising construction costs.
The Housing Market Index compiled by the National Association of Home Builders remained at 54 in November. This marked the sixth consecutive month that more home builders viewed market conditions as good rather than poor.

That’s “an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline,” said NAHB Chief Economist David Crowe.

The survey asked builders to rate current sales, sales expectations, and traffic of prospective buyers.

Current sales conditions stayed at 58, while expectations for future sales fell one point to 60. Buyer traffic was the index’s worst-performing component, dropping one point to 42.
“Given the current interest rate and pricing environment, consumers continue to show interest in purchasing new homes, but are holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road,” said NAHB Chairman Rick Judson, owner of Evergreen Development Group in Charlotte, N.C. “Meanwhile, builders continue to face challenges related to rising construction costs and low appraisals.”

via NAHB’s Housing Market Index flat, but remains positive despite political uncertainty, construction costs – The Business Journals.

Photo by Ron Bath

Skepticism about proposed changes to the District’s zoning laws is unfounded

dc office of planningSkepticism about proposed changes to the District’s zoning laws is unfounded

By Roger K. Lewis, Published: November 14 | Updated: Friday, November 15, 9:50 AM

Washington is not what it was a generation ago. It has evolved because of changing economic, socio-demographic, cultural, technological, environmental and regulatory conditions.

But Washington’s static zoning laws, enacted decades ago and so forceful in shaping the city, have not kept pace with the District’s evolution. Which is why the zoning ordinance is at last being updated to reflect 21st century circumstances and enhance urban livability for future generations.

To this end, the D.C. Office of Planning has spent the past several years analyzing the District’s complex, decades-old zoning code and drafting revisions it believes necessary to update the code. Proposed revisions, based on current data and projected needs, would apply only prospectively.

The District’s zoning update process has entailed countless meetings and participatory work sessions with citizens, civic groups, consultants and other agencies to explore and critique diverse ideas leading to the Office of Planning’s proposals. This fall, the D.C. Zoning Commission is conducting multiple public hearings focused on various aspects of the zoning rewrite.

Yet despite all the outreach, three of the proposed zoning revisions in particular have elicited skepticism: reducing parking requirements deemed unnecessarily excessive, primarily in areas well served by transit and for new commercial and residential projects downtown; allowing accessory apartments — one per house — associated with homes in residential zones; and allowing small, convenience-style corner stores in rowhouse and apartment building neighborhoods.

Reducing parking requirements reflects a behavioral shift. A growing number of Washingtonians, as well as commuters, use transportation modes — Metro, bus, taxi, carpool, short-term rental car, bicycle — other than private cars. Telecommuting also is on the rise. People are walking more in the city and will walk even more as the District’s walkability increases. The Office of Planning projects that, in the future, our children and grandchildren will need and own fewer cars and will drive them less often.

Legalizing accessory apartments in house basements or attics, or atop detached garages, serves a worthy social and economic purpose without threatening neighborhoods. Allowing accessory apartments limited in size and occupancy increases affordable housing opportunities, enables multi-generational families to live together and adds value to residential real estate.

Corner stores in certain urban locations would provide much needed convenience shopping for neighborhood residents who would come to the store on foot. No parking would be required. Restricted in size and function, corner stores would be allowed only on city blocks containing rowhouses or apartment buildings. Contrary to what some homeowners believe and fear, corner stores would not be permitted within single-family detached home neighborhoods.

District homeowners are nervous because they fear these zoning changes would lead to development that would adversely affect real estate values, jeopardize neighborhood quality and make parking spaces scarce and expensive.

Cynical, conspiracy-minded citizens suspect less-than-honorable motives behind zoning changes. They believe that public officials and private developers seek zoning amendments only for financial gain rather than for achieving worthy planning, preservation and development goals in the public interest.

Such fears, suspicions and cynicism are unwarranted. Zoning in Washington, and in many metropolitan regions, too often deters desirable growth and progress. Zoning can obstruct rather than enable justifiable new development and redevelopment. It can make providing affordable housing difficult, unduly increasing construction and other real estate costs.

Cities and suburbs are shaped by legislated zoning ordinances coupled with economic and other unregulated forces. The latter are constantly in flux, but not zoning. Therefore, citizens see zoning laws as stable, long-lasting and protectionist, the first line of defense against unwanted physical intervention.

Zoning constrains and separates land uses, restricts density, establishes minimum lot sizes and yard dimensions, and designates parking requirements. But it rarely addresses proactively and holistically how a neighborhood, street, open space or building should look, function or relate visually to the surrounding urban context.

Thus, the effort to rewrite the city’s zoning code is a commendable, although hardly radical, attempt to correct this deficiency. The rewrite could have gone further. Nevertheless, in the interest of making the ordinance less obsolete and politically more palatable, the Zoning Commission, Mayor Vincent C. Gray (D) and the D.C. Council should adopt the Office of Planning’s proposed changes.

Roger K. Lewis is a practicing architect and a professor emeritus of architecture at the University of Maryland.

via Skepticism about proposed changes to the District’s zoning laws is unfounded – The Washington Post.

Homeowner tax benefits seem unlikely to get Congress’s attention before they expire


Homeowner tax benefits seem unlikely to get Congress’s attention before they expire
By Kenneth R. Harney, Published: November 14 | Updated: Friday, November 15, 9:45 AM

Haven’t we seen this movie before? On Capitol Hill for the second year in a row, key federal tax assistance for homeowners is heading for expiration within weeks. And there’s no sign that Congress plans — or has the minimal political will — to do anything about it.

In fact, the prospects for extension of popular mortgage-forgiveness debt relief and deductions for mortgage insurance payments and home energy efficiency improvements appear to be more dire than they were last year at this time, when at least there was a formal bill pending to extend them.

This year there is none at the moment. The House and the Senate are spending their time trying to figure out a budget but are also considering overhauling the entire federal tax system, which could mean that a long list of special-interest tax preferences — including for housing — might be sucked into the tax reform vortex and never revived if they expire as scheduled on Dec. 31.

Robert Dietz, vice president for tax policy issues at the National Association of Home Builders, says the name of the movie is “Groundhog Day,” the Bill Murray classic about deja vu all over again. Remember last year’s New Year’s Eve “fiscal cliff” game of chicken that wasn’t resolved until the wee hours of Jan. 1? The tax benefits for homeowners were ultimately extended, but only for a year. Whether that’s possible again in late December is in doubt.

What’s at stake here? Begin with tax treatment of mortgage debt relief. Before Congress changed the law in 2007, any borrower who had a debt canceled by a creditor would have to report the amount forgiven as ordinary income, subject to federal taxation. If a mortgage lender chose to reduce a homeowner’s principal balance as part of a loan modification — say, by cutting $50,000 off the mortgage balance — the IRS would treat that $50,000 as fully taxable income.

That’s despite the fact that the owner never actually received $50,000 in cash and despite the fact that it was highly likely the owner was already in distress on the loan, facing financial challenges that made payments on the previous balance difficult.

Congress carved out a special exception for owner-occupied housing for five years, and that exception was later extended through Dec. 31.

What happens if it expires? It would mean that thousands of people who are in the process of doing short sales on their homes but won’t close until 2014 may be subject to income taxes on the amounts their lenders cancel as part of the transaction. Underwater owners who sign up for short sales in 2014 — or owners who receive cancellation of debt as part of loan modifications — would all be subject to harsh taxes on their phantom “income.”

Elizabeth A. Weintraub, a real estate broker in Sacramento, who specializes in short sales, has a client who illustrates the problem. The client faces a $60,000 tax bill from the federal government on a $400,000 mortgage debt if a short sale is not completed before the Dec. 31 deadline. Though Weintraub says “we are pushing” a short sale vendor working for Bank of America to get the deal done in time, it may not happen because “they move at their own speed” — far beyond Weintraub’s or her client’s control.

But mortgage debt relief is hardly the only real estate tax benefit set to disappear at the end of December. Also scheduled to terminate unless extended:

-The 10 percent credit currently allowable for energy-saving improvements you make to your house, including qualified insulation, high-performance windows, doors and roofs. The credits have a lifetime cap of $500.

-The $2,000 credit for newly constructed homes that meet federal standards for energy efficiency.

-The mortgage insurance premium write-off for anyone who takes out a home loan with a down payment of less than 20 percent. This includes conventional Fannie Mae-Freddie Mac loans, Federal Housing Administration insured loans and VA guaranty fees. This may be particularly important next year for new buyers who use FHA loans because that agency has recently raised its insurance premiums significantly and withdrawn its previous rule that allowed borrowers to cancel their insurance premiums, as is standard in private mortgage insurance.

Best advice for anyone counting on one or more of these tax benefits in early 2014: Don’t. This time around, it’s possible that some of them may not come back.

Ken Harney’s e-mail address is kenharney@earthlink.net.

via Homeowner tax benefits seem unlikely to get Congress’s attention before they expire – The Washington Post.

What buyers and sellers need to know about the end-of-year housing market

End of YearWhat buyers and sellers need to know about the end-of-year housing market
November 11 at 5:30 am

(Jonathan Ernst/REUTERS)

David Charron, president and CEO of Rockville-based multiple-listing service MRIS, writes an occasional column about the Washington-area real estate market.
It’s a stubborn truth about the real estate market that nobody has a crystal ball.
If only we could see exactly what was coming down the road, and adjust accordingly, our jobs would be much easier. Similarly, everything looks remarkably clear when viewed through the rear-view mirror.
Broadly speaking, this spring was a tough one for D.C.-area homebuyers, with not a lot of homes to choose from and lots of competition to buy.
It seems in retrospect that the combination of enormous pent-up demand and record low interest rates led to homes receiving multiple offers and being snapped up quickly. In the next year, the situation should normalize and come more into balance, with things easing up for buyers while being slightly less favorable to sellers. And while it’s never as simple as saying we anticipate a “good” or “bad” market in any given season, demand is still very high, which should make for a pretty brisk fall sales season.
Here are some of the developing trends we at MRIS are tracking this fall, and how we think they will impact the market:
• Demand will diminish. It’s no secret that the fourth quarter of the year is, comparatively speaking, a slower time of year for home sales —  typically a good 15 percent lower than the third quarter. While there is often a small end-of-summer, back-from-vacation uptick in new contracts in the fall, November and December traditionally show very modest contract activity.
You can’t compare the “apples” of modest November sales to the “oranges” of brisk May sales. That said, if you are a serious buyer, opportunities will present themselves.
• Interest rates will rise. The fall/winter 2013 housing market in our area could definitely be impacted by interest rates, which are almost certain to continue to creep up.
But even if they rise another full point, which could happen by the end of next year, they are still going to be at historic lows. Rising interest rates will require committed buyers to reset their expectations. If buyers are stretching every penny they have to get a house, they’re going to have to dial back their notion of how much home they can afford.
If buyers have a little more flexibility, they’re going to have to be willing to pay a little more each month to land the home they want. This small increase in monthly payment, however, may knock a small segment of the buying population out of the market completely.
• Inventory, though improving, will remain tight. Over the past five years, the D.C. metro area has had an average of 12,000 homes for sale at any given time.
Inventory levels have declined in this area for years, but are finally creeping back up. After dropping by an average of 8.6 percent per month between April 2011 and March 2013, new listing activity showed double-digit percent increases from April through August of this year, which may represent a turning point.
Since fewer homeowners are underwater, they now are able to extract equity when selling, making sales more attractive. Thus, I believe, inventory will continue to stabilize in the coming months. The active listings registered at the end of August were 10 percent lower than August 2012, but represented a much lower year-over-year gap than at the beginning of this year in March, when active supply was a good 40 percent lower than it had been in the same period of 2012.
• Days on the market will rise. There are currently more buyers than sellers in the market, which means that homes tend to sell quickly. We are seeing DOM numbers — indicating the number of days homes stay on the market before being sold — comparable to where they were back in 2005.
Townhouse sales have had the greatest activity, with a median of only nine days on the market, while condos typically sell in 13 days and detached homes in 16. But supply and demand is a simple concept: As more sellers enter the market and the number of available properties goes up, DOM will inevitably rise as a result in the next few months.
The real estate market dynamics are always changing, and no matter where you are in the buying/selling cycle it is important to understand your housing and financial position to make the best decision in any housing market.
Today, we are in unchartered territory with the recent government shutdown. The results from the fourth quarter will be telling in terms of the repercussions of the government budget issues.

via What buyers and sellers need to know about the end-of-year housing market.

Why Are Mortgage Rates Going Up?

why-are-mortgage-rates-going-upWhy Are Mortgage Rates Going Up?
Author: RealtyPin
November 14, 2013

Supply, demand, the overall economy, and the government are all integral parts of the mortgage industry. Some buyers feel some levels of frustration with the process, because they never know when the right time to buy is. While it’s not a perfect science, there are concrete reasons why mortgage rates are going up. Understand them, and you’ll know how to plan for the future.

Make no mistake, lenders are business owners. Since they’re trying to maximize their profits, they’re going to set their mortgage rates based on the supply and demand of the housing market. Lenders closely follow buying trends, since there is, obviously, a direct relationship between high levels of buyer demand and the subsequent need for a mortgage. Since there are so many buyers entering the market right now — and have been for months — the need for mortgages is also at a high level. That means lenders can set higher rates because they know hungry buyers will be willing to pay them.

And, with America’s overall economy slowly but surely improving, there’s room for rates to rise. After all, the better the economy is doing, the more buyers there are entering the housing market. Once again, that means more buyers are hitting the market, and the rates are increasing to match.

While no one wants to pay more for their mortgage, it is actually a good sign that rates are going up, because it’s a sign that the economy is getting better. While lenders have the final say when it comes to setting rates, they use several indicators to make a decision — including the federal fund rate, the Consumer Price Index, and the Producer Price Index. If these things weren’t improving, mortgage rates wouldn’t be going up like they are.

The government also has an effect on mortgage rates. Remember, when the economy crashed, the Federal Reserve began purchasing billions of dollars’ worth of bonds every month, in an effort to keep interest rates low — and, thus, encourage people to make big purchases, like homes. The plan worked, because the low rates sparked a home buying frenzy. These artificial rates won’t last forever, though. The Fed has already announced that the bond buying program (called “Quantitative Easing”) will end at some point. When it does, rates will go up even more.

The hope, of course, is that America’s economy will continue to improve, but that also means that the chances of mortgage rates going down significantly in the near future is not great. As long as the economy keeps making strides, mortgage rates will continue to go up.

So, how much have they risen so far?

According to Freddie Mac, the average rate for a 30-year fixed mortgage was up to 4.16%, compared to 4.10% the week before. A year ago during the same time period, the same mortgage had a rate of 3.4%. While a 0.7% difference may not seem like a lot, those numbers actually add up to a lot of money over the life a loan! Even that slight change could cost you thousands of extra dollars, which is why it’s so important to take advantage of lower rates while they’re still here. And, unless the economy hits some major speed bump, those rates will likely only get higher in the months to come.

Bottom line — mortgage rates will always continue to rise and fall based on many factors, and there is no single, surefire way to know if they are going to keep going up or start heading down a bit. So, if you’re thinking about buying a home, buy when YOU’RE ready, because it’s almost impossible to predict when the “perfect” mortgage rate will be available!

This article is brought to you exclusively by RealtyPin.com

via Why Are Mortgage Rates Going Up? – Real Estate News – RealtyPin.com.

Are We in Another Housing Bubble?

another-housing-bubbleAre We in Another Housing Bubble?
Author: Daniel Torelli
November 11, 2013

The latest S&P/Case-Shiller Home Price Index has been released, and the data has many experts questioning if we are currently in the beginning stages of another housing bubble. According to the report, home prices in August experienced their highest annual increase in 7 years, climbing 12.8% from the same month one year ago.

That’s a good thing, right? Not necessarily.

The index looks at home prices in 20 of the nation’s largest metropolitan areas and then forms a national average. The latest statistics show that home prices (not seasonally-adjusted) haven’t been this high since 2004, and they haven’t climbed this much in a year-over-year comparison since February 2006, which was right at the peak of the housing bubble. In fact, the latest data indicates that home prices are currently only 20% lower than their peak during the housing bubble.

The index also releases seasonally-adjusted figures, since spring and summer are usually the busiest times of year for sellers, and the statistics include both national average and individual data for each of the 20 metros. On all accounts, the information shows that home prices are skyrocketing, but experts don’t think that means the market is recovering as the statistics might suggest.

For example, in Las Vegas, home prices increased 29% from August 2012 to August 2013. However, Nevada has the nation’s highest unemployment rate, so it’s unlikely that a majority of those home purchases were made by traditional buyers. Instead, investors are probably the key spenders in this metro.

San Francisco also saw a significant increase in its home prices over the last year, climbing 25.4%, but again, it’s likely investors who are buying these properties. In fact, experts say the average resident in the area can’t afford to purchase a home at current rate based on their income levels!

Another alarming trend revealed by the latest S&P/Case-Shiller Home Price Index is that the number of homes being purchased is falling, while the average selling price per property is climbing. This likely means that more luxury, high-end homes are selling — meaning that they are distorting the median sales price across the 20 metros included in the index.

Some analysts speculate that investors are buying all the properties available, both the expensive ones and affordable homes that traditional buyers would usually purchase. They are beating out traditional buyers by making all-cash offers on the homes, and it’s gotten to the point that many would-be buyers have all but given up hope of owning a home and are instead now content with renting a home from an investor owner.

So what does all this mean?

Plain and simply, it shows that the statistics for home prices are distorted because investors are still making such a big chunk of the purchases. Since traditional buyers are still struggling to find affordable homes to purchase, we can’t truly say the market is recovering.

If a full recovery is going to happen, the housing industry needs homeowners who are interested in owning a home for a long period of time as their primary residence, instead of investors who are stockpiling properties until the time is right to sell. Until that occurs, we as a country can be happy that home prices are increasing, but we must also take the information with a grain of salt.

And, if investors are holding onto homes until the time is right to sell, they may dump all of their properties at the same time — essentially flooding the market and potentially causing it to collapse again. So as you can see, everyone who has an interest in the housing market should move forward with cautious optimism!
This article is brought to you exclusively by RealtyPin.com

via Are We in Another Housing Bubble? – Real Estate News – RealtyPin.com.

The Top 6 Outside-the-Box Home Selling Tips

outside-the-box-home-selling-tipsThe Top 6 Outside-the-Box Home Selling Tips
Author: Daniel Torelli
November 12, 2013
Even in a sellers’ market, it’s still important to be over-prepared when you go to sell your home. Everyone knows that you need to have a neat and clean home and that you need to market your home online, but there are a few secrets that you might not be quite as aware of.

We’re spilling the beans with the top 6 outside-the-box home selling tips:

1.  Write a seller’s list

A seller’s list is similar to a Frequently Asked Questions sheet for home buyers so that they have access to all of the pertinent information you want to highlight about your home. This information could include the school district, specifics about the neighborhood, or anything else that a buyer might want to know about. These sheets are easy to make, and they’re easy to have lying around when potential buyers come to check things out. In fact, have an entire stack sitting out so that each buyer can take it home with him.

2.  Accept constructive criticism

Everyone who looks at it will have an opinion about your home, and they won’t all be positive. The purpose of asking for feedback is to help you look at your home from the buyer’s eyes and make small improvements if you can. Instead of being offended, you can use every showing as a learning experience!

3.  Take advantage of social media

Many people don’t make use of their social media accounts when they are selling their home, but if you don’t, you could be missing huge opportunities. Even if one of your friends, followers, or connections isn’t currently looking for a new home, chances are they might know someone who is. It’s an easy way to get the word out, and it’s free, so make sure you let all of your social media contacts know you’ve got a home for sale.

4.  Work with other sellers

If there are other sellers in the neighborhood, talk to them to see if all of you can bring buyers into the neighborhood together. One option could be to plan all of your open houses at the same time to encourage more traffic. It may seem like counterintuitive to help the competition, but by pooling your resources, you could bring in opportunities you might not otherwise have.

5.  Always be available

If someone wants to see your house, let them. It may be a pain to be available all of the time — and to have to keep your house in tip top shape 24/7 — but people like instant satisfaction. If they can’t see your home right when they want to see it, you may risk losing them as a buyer all together. Make sure your home is always ready to show, and make sure your realtor is open to showing it when any requests arise.

6.  Be flexible

Not only do you need to be flexible with your showings, you also need to be flexible in the closing of your home. If you have many contingencies associated with selling your home, people may be hesitant to try and jump through all of your hoops. Be as easy and flexible as possible to attract the most buyers to make an offer on your home.

This article is brought to you exclusively by RealtyPin.com

via The Top 6 Outside-the-Box Home Selling Tips – Real Estate News – RealtyPin.com.

Americans Prefer to Live in Mixed-Use, Walkable Communities | realtor.org

mixed useWASHINGTON (November 1, 2013) – Choosing a community is one of the most important factors for consumers as they consider buying a home, and research by the National Association of Realtors® has consistently revealed that Americans prefer walkable, mixed-use neighborhoods and shorter commutes. According to NAR’s 2013 Community Preference Survey, 60 percent of respondents favor a neighborhood with a mix of houses and stores and other businesses that are easy to walk to, rather than neighborhoods that require more driving between home, work and recreation.

The survey findings indicate that while the size of the property does matter to consumers, they are willing to compromise size for a preferred neighborhood and less commuting. For example, although 52 percent of those surveyed prefer a single-family detached house with a large yard, 78 percent responded that the neighborhood is more important to them than the size of the house. Fifty-seven percent would forego a home with a larger yard if it meant a shorter commute to work, and 55 percent of respondents were willing to forego a home with larger yard if it meant they could live within walking distance of schools, stores and restaurants as opposed to having larger yard and needing to drive to get to schools, stores and restaurants.

“Realtors® build communities and care about improving those communities through smart growth initiatives. Although there is no one-size-fits-all approach, smart growth is typically characterized by mixed-use development, higher densities, and pedestrian friendly streets that accommodate a wide diversity of transportation modes,” said NAR President Gary Thomas, broker-owner of Evergreen Realty, in Villa Park, Calif.  “Growth patterns, economic development and quality-of-life issues are inextricably linked to the success of communities and residents.”

When asked to identify their ideal community, the most popular choice was a suburban neighborhood with a mix of houses, shops and businesses. The least popular was a suburban neighborhood with just houses.

As for transportation concerns, 41 percent said improving public transportation would be the best solution, while 29 percent would prefer the development of communities where people do not have to drive long distances to work or shop, and 20 percent would choose building new roads.

The survey of 1,500 adult Americans was conducted by American Strategies and Meyers Research from September 18-24, 2013.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

via Realtors® Report Americans Prefer to Live in Mixed-Use, Walkable Communities | realtor.org.

Investing in Curb Appeal Pays Off

BY DIAN HYMER – Inman News

curbappealIt might seem counterintuitive to invest money in a home you’re selling. Wouldn’t it be better to save that money for improvements on your next home?

Even though the home sale market has improved impressively, buyers still pay more for homes they can move right into without having to do work. This is not to say that buyers won’t buy homes that need updating, but they need to be able to see the potential. And the property needs to be priced right for the market, taking into account work that needs to be done.

For example, recently a home was sold in the desirable Crocker Highlands neighborhood in Oakland, Calif. It was owned by one family for more than 50 years. The property had deferred maintenance and a dated décor.

If the listing had been put on the market before it was partially updated, it would have been harder to sell and would have sold for less than it did with the repairs and tasteful upgrades.

Before the sellers ordered a structural pest control (“termite”) inspection, they had some obvious defects corrected. This kept the cost of the remaining repairs down. It also improved the appearance of the house. A back porch that was in poor condition and was easily visible was rebuilt. A pink vinyl bathroom floor was replaced with a neutral vinyl.

The most dramatic change was achieved by removing the heavy dark draperies, dark furnishings and the dark flocked wallpaper in the foyer. The draperies were left off to expose the beautiful wood windows. The house was transformed from a dark, outdated home to a light-filled home with a lot of potential.

After all the personal property was out of the house, the shag carpet was removed to expose the hardwood floors that were then refinished. The interior was completely painted, and the house was professionally staged with furniture, artwork and accessories.

The house showed beautifully, even though the kitchen and bathrooms were old. The listing sold in one week with multiple offers for well over the asking price.

HOUSE HUNTING: Improving curb appeal, i.e., the way a house looks from the street, usually pays off. For some buyers, curb appeal is so important that they won’t even look at a listing that lacks good street presence.

Enhancing curb appeal can often be done inexpensively. Trim overgrown plants to a size that allows buyers to see the architectural detail of the house. If the landscaping has been unkempt for years, remove dead plants and add colorful plants before the house goes on the market. A new lawn adds to the allure of a property.

Kitchens and bathrooms are important to today’s homebuyers. However, it wouldn’t be prudent to do a complete remodel just before you put your home on the market. You usually can’t recoup the investment. Generally, fix-up-for-sale projects should be limited to cost-effective improvements like new paint, replacing outdated light fixtures and replacing worn floor coverings.

In the listing described above, the old bathrooms were given cosmetic upgrades. Toilets and pedestal sinks were replaced inexpensively. The original tub in this 1920s home was reglazed to look like new. Reglazing was also applied to the unattractive brown tile walls and shower in another bathroom. It turned an eyesore into a bathroom that buyers could live with until they remodeled.

You can improve the look of a dated kitchen with new stainless steel appliances, paint, updated light fixtures and a new floor, if necessary.

It’s sad but true that most homes never look as good as when they’re for sale. Resolve to keep your next home in good shape to increase your enjoyment.

Read more about the importance of pre-sale prep here:

What Should You Expect in a Home Inspection?

Author: Daniel Torelli – RealtyPin.com

home-inspectionWhat Should You Expect in a Home Inspection? – A home inspection is an important part of the buying process that all buyers should invest in before they get the keys to a new home. Even though it is not required by law, an inspection can save you thousands of dollars by identifying problems that are not necessarily seen with the naked eye.

But what exactly are you getting when you pay an inspector to come into your home-to-be?
First off, be careful not to confuse a home inspection with an appraisal. Your appraisal will determine the value of the home, while the inspection will determine the stability of the home in its current condition. The inspection will alert you to any current problems or any problems that you may run into in the near future. Everything will be done by a certified home inspector who specifically looks for any problems that might not be blatantly-obvious during your walk-through.

What is your inspector looking for?
He’ll start by checking out the HVAC system to make that it’s working properly. From there, he’ll move onto the house’s structure, the foundation, the electrical system in the home, the plumbing, the roof and any other installed systems in the home.  Home Inspectors may differ in their services and although most will definitely check these things, it’s important to thoroughly discuss what is included in the service before hiring the inspector. Even though it’s a thorough process, it’s completely non-invasive, and it won’t cause any damage to the home.

It’s important to note that home inspectors typically don’t check for termites or mold. Luckily, though, good inspectors will alert you of anything suspicious they discover during the process. After the home inspector finishes all of his work, he’ll type up a written report of all his findings.  This report will tell you all about the current condition of anything in the home that needs repair, and it typically focuses on things that could be big expenses down the road.

Because the inspection essentially only benefits the buyer, the buyer pays for the home inspection. Although the typical cost of $300-500 may seem like an annoyance right now, it’s something you can’t afford to skip. Not only will it alert you to any potential problems, but it can also be a very valuable negotiation tool.

After you receive the findings of the inspection, it’s up to you what you do with them. Should there be anything troubling in the report, you’ll have to decide how to proceed.  You can ask the homeowner to fix the problem, or you can use those findings to negotiate down the price.  In some cases, you may discover such a major problem that you won’t want to proceed with the purchase at all. (In fact, a good realtor will tell you to make your offer contingent on the home passing an inspection!)

A home inspection is an important part of the buying process. Even if the home turns out A-OK, you’ll get valuable peace of mind about your new home. And, if things don’t go so well, you may be able to save a ton of money on future repairs.

So, how do you find a great inspector to look at your home?
You can find a qualified and certified inspector in your area by visiting the American Society of Home Inspectors’ website at www.ashi.org.
via What Should You Expect in a Home Inspection?.

5 Worst Home Selling Mistakes

Author: Daniel Torelli – RealtyPin.com

mistakesThe Top 5 Home Selling Mistakes – Selling your home is an exciting (and sometimes overwhelming!) experience. Even when the housing market isn’t at its peak, you can still get a good price for your home.  Unfortunately, many people sabotage this chance by making big mistakes.  Have you been guilty of any of these?

1. Listing too soon
Selling your home isn’t something you want to rush. Many times people get so excited that they list their home before it’s ready to go. However, the presentation of your home can mean the difference of thousands of dollars in your selling price! Take the time to browse online or go to open houses in the area to see the upgrades in other homes. Maybe it just means a fresh coat of paint or if your kitchen is grossly out of date, it may be an upgrade you consider before listing your home. But don’t go overboard! That leads to our second mistake…

2. Over-improving your home
If you live in a modest neighborhood, adding a new kitchen, a marble foyer, and a new pool to your home will not get you the money back that you are expecting. Instead, your best bet is to match the comparable’s upgrades or other homes in your neighborhood. You won’t get the return on your investment by outshining everyone else on your block.

3. Emotional Selling
Leave emotions at your front door. To most people, a home is not just an investment or a mortgage, but instead it represents memories, hard work, time and energy. That’s why, when coming up with an asking price, lots of people let those emotions drive up the price. Unfortunately, though, overpricing your home can leave it on the market far longer than you want or can afford. Find out what your home is worth, and price it competitively. Your house will be on the market for less time, and chances are good that with a competitively-priced home, you can get more than one offer driving the final price up even higher!

4. Being Unprepared for Showings
Clean! Clean! Clean! We can’t tell you enough how important it is to have a clean, uncluttered home for every showing. Consider each showing as a tough inspection. Dirty carpets or even dishes in the sink can turn off potential buyers.
And even though the furniture in your house most likely will being going with you, having a cluttered living room or an over-decorated bedroom can make those rooms feel smaller. During this time, make sure you are highlighting your home in its best possible form.

5. Foregoing a Realtor
You may be hesitant to enlist a realtor, but consider every opportunity a realtor gives you. For example, did you know that the vast majority of home buyers begin their search on the web. Do you know on which websites you should list your home? A realtor does! Not only do realtors handle the marketing of your home, they also help with the negotiation and many times will prequalify buyers. There is nothing worse than going through the whole process only to find that the buyer can’t get approved for a loan. In the same category, when hiring a realtor, find a professional you can trust. Although it may be tempting to use a friend-of-a-friend or a cousin who just got their license, your home is too big of an investment to not use a professional with years of experience!

Don’t get caught making these costly mistakes. Spending the time preparing your home and enlisting the help of a realtor can easily cut down the time your house is on the market and will get you the money your home is worth!
via The Worst Home Selling Mistakes.

25 Quick, Cheap and Easy Home Selling Tips

for sale tipsIf you want to get a home sold quickly and inexpensively, you should review these home selling tips.


Even with rising values and reduced inventory in certain markets, selling a home remains challenging. Buyers expect not just a shiny new stainless sink but pruned hedges, freshly painted walls, glistening hardwood floors, and more. Making everything look great can cost a pretty penny, and many sellers won’t be able to afford all the suggestions you might make.

You can help them prioritize based on the condition of what’s needed most, what buyers in the area typically request, what competing houses offer, and — of course — cost. Here’s a list of 25 affordable, easy-to-make changes from top design and real-estate pros:

  1. Add power outlets with USB ports in rooms that lack them, especially in the kitchen, bathrooms, and bedrooms where they’re most needed. “Younger, more tech-savvy couples and individuals love them,” says Tyler Drew, broker and property investor with Anubis Properties Inc. in Los Angeles.
  2. Eliminate acoustic popcorn-style ceilings since they look dated and tacky.
  3. Remove exposed posts and half walls. Today’s buyers want more space, and partial walls and posts gobble up room. The only walls that should remain are those that offer privacy or conceal electrical wires or plumbing stacks.
  4. Update wiring for the Internet and flat-screen TVs. You don’t have to run CAT-5 through walls, which can be costly and require opening and closing and repainting walls. Instead, find a place to put a wireless router, Drew says.
  5. Clean carpets and wood floors since they’re often the first part of a room that buyers check out; you don’t need to replace them unless they’re in terrible shape. A good carpet steam cleaning or wood floor waxing can be relatively inexpensive, sometimes less than $200.
  6. Expand a small kitchen to make it work better and look larger. Two quick fixes: Change the backsplash by adding mirrors, stainless steel, or paint, which will introduce light and views; and add an island, which requires only 30” between counters and the island to pass through comfortably. If there’s not enough room for an island, bring in a rolling cart with pull-out shelves underneath and a wood top, says Libby Langdon, an interior designer, author, and expert with Liebherr Refrigeration..
  7. Clear out and clean a garage, a big selling feature.Power wash the floor or paint it if it’s in bad shape, remove dated cabinets, and remove all junk that’s been stored there, so prospects can see how much space they would have for their stuff.
  8. Change out corroded or dented door knobs and levers. The replacements don’t have to be expensive but they should look new and clean, Chicago architect Allan J. Grant suggests.
  9. Pay attention to landscaping, which can add 7 to 15 percent to a home’s value, according to HabitatDesign.com principals Jessy Berg and Bonnie Gemmell. Focus on mowing grass, removing crab grass, and eliminating dead plants and tree branches. “I’d rather have dirt and the potential to paint a picture for the buyers’ mind than a backyard full of dead plants,” Drew says. But if you have extra funds, consider Sacramento, Calif.-based landscape designer Michael Glassman’s ideas: Add lots of seasonal color through blooming annuals and perennial plants and remove problems like too much noise from traffic or neighbors by installing an inexpensive fountain with trickling water.
  10. Paint exterior windows, doors, gutters, downspouts, and trim, then go inside and paint the home’s trim, doorways, and walls that are in need of freshening. Don’t worry about the colors but consider those that veer toward quiet and comfort such as Benjamin Moore’s Yosemite Sand, Edgecomb Gray, or Carrington Beige. “Gray is a hot interior color now,” says Manchester, Vt.-based designer Amy Thebault. Painting rooms other, lighter colors such as white, yellow, and beige help to bounce and reflect sunlight and use more natural and less artificial light, according to Chris Ring, vice president at ProTect Painters, a professional painting source. But in cooler months, Ring says, dark colors such as deep brown and blue absorb sunlight, thereby reducing heating costs. And don’t forget ceilings, which can be a “fifth wall.” You can improve them with paint or old-style metal or faux-metal tiles, says Beverley Kruskol, a general contractor and owner of MY Pacific Building Inc. in Los Angeles.
  11. Remove outdated wallpaper, replacing it with paint and preferably a neutral color, says Shelley Beckes, ASID, CID, a designer with Beckes Interior Design in Los Angeles.
  12. Remove, store, or discard excessive accessories on tabletops and walls and in cabinets. “Less is more, and you want the house to be seen by prospective buyers without the distraction of too many personal items,” Grant says. Some suggest following the rule of three: Leave out only three things on any surface.
  13. Get the house inspected before it’s listed to know its condition and identify any structural issues that could derail sales. Many problems can’t be detected by an untrained eye, including those in a basement, crawl space, or attic, says BillJacques, president-elect of the American Society of Home Inspectors. “There might be roof damage or a plumbing leak. Many inspectors take photos and provide a detailed report,” he says. “And if home owners have repairs made, they should be handled by a qualified licensed contractor, so the home owner can get problems corrected.”
  14. Outfit closets for extra storage to make rooms look larger and less cluttered, but don’t redo all closets and elaborately. Top contenders for redos are an entry closet for a good first impression, kitchen pantries where storage is key, and a linen closet to keep sheets, towels, and other stuff neat, says Ginny Snook Scott, chief design officer at California Closets Co. “The costs needn’t be excessive. A linen closet can be fitted with baskets and cubbies for between $500 and $600, an entry closet for between $400 and $700, each dependent on closet size and features,” she says.
  15. Tighten a home’s “envelope” to improve energy efficiency and savings. Put money and effort into well-insulated double-paned windows, sealed furnace ducts, energy-efficient appliances, the newest programmable thermostats, LED and compact fluorescent lights, and a smart irrigation box on a sprinkler to cut water usage, says Kate Latham, energy consultant withWattzON, a service based in Mountain View, Calif., which analyzes home energy use to pare costs. “After a few months, sellers can show buyers how costs have dropped. They also should put together a green manual to show which features they added,” she explains.
  16. Improve a home’s healthfulness by using paints and adhesives with low or no VOCs. Point out these changes to prospective buyers in another list or manual, Latham says.
  17. Use what you have, and arrange each room in a conversational way if possible. Don’t set all furnishings in a family room so they face a TV, since most potential buyers like the idea of an open-room milieu for socializing.
  18. Remove and replaced faded draperies, fabrics, and rugs, or leave windows and floors bare to avoid showing lack of attention, Thebault says. Slipcovers, which can cover worn furniture can also provide an affordable decorative feature, changed for each season, says Hugh Rovit, CEO of Sure Fit, a manufacturer and distributor of ready-made slipcovers and other accessories. The company’s slipcovers range from $49.99 to $149.99, based on fabric and treatment.
  19. Replace old, dated, or worn bedding. Before any showing, fluff up pillows and covers, and make all beds neatly. Affordable choices can be found at stores like Target and Web sites likeOverstock.com.
  20. Toss out old magazines. “You don’t want a People magazine from a year ago; it looks like nobody lives in the house or cares,” Thebault says.
  21. Check smells regularly. Besides getting rid of bad odors from pets and mildew, introduce nice fresh fragrances, but don’t go heavy on scents from candles. A light lavender or citrus spray is smart and inoffensive. Open windows before showings to bring in fresh air.
  22. Make rooms lighter and larger for showings with good lighting. Thebault prefers warm, cool colors rather than fluorescents. Additionally, 60-watt bulbs are a good choice, even though they’re not as energy-efficient.
  23. Go with plants rather than flowers indoors since they last longer, but either choice can add vivacity to a room.
  24. Pay attention to your bathrooms. Specifically, make sure you have freshly laundered towels, new soap in soap dishes, spotless mirrors, and no mildew in view.
  25. Be sure your house is priced competitively with the current market and homes in your area. In most regions, it’s still the No. 1 “fix” to sell quickly. Go a bit under the market price, and you may even bring forth multiple offers that are higher than expected, says Jill Epstein, a REALTOR® with Nourmand & Associates in the Los Angeles area.

via 25 Quick, Cheap and Easy Home Sale Tips | Realtor Magazine.

The Dangers of Selling your Home without a Realtor

Author: Daniel Torelli – RealtyPin.com

realtor-importanceSince a realtor is going to get a percentage of your total selling price, you might be inclined to keep those thousands of dollars in your own pocket and try to sell the home on your own, by doing a For Sale By Owner (FSBO) transaction. Many people believe that they are fully capable of doing everything themselves. However, there are plenty of dangers that can arise when you sell your own home, so think twice before you take on this daunting task!

If you choose to forego a realtor, there are several things you’ll need to be prepared for. You will need to stage your home, be available to show the home at a moment’s notice, prepare marketing materials for potential buyers, and negotiate an offer. On top of all that, you must be prepared to be objective about your home and accept the criticism that potential buyers are inclined to give.

Your first obligation is preparing your home. Although you may love the bright red paint in your kitchen, it could turn off potential buyers. The nostalgia you feel when seeing the mural your children drew on the basement wall will most likely be an eyesore for the next person who plans on living there. A professional realtor has seen hundreds (or even thousands!) of homes and will know exactly what needs to be done to make it attractive to buyers and what will help it sell quickly and at the right price. Be honest – do you know how to do that?

Next comes figuring out the perfect price. Although FSBO sellers have access to some websites that can determine what nearby homes have recently sold for, those websites are no match for the information that a professional realtor can dig up. And, if you list your home for the wrong price, you may miss out on valuable money – or overprice the home so that no one wants it!

And then comes the marketing. Realtors have a large list of contacts, their networks, and the MLS (Multiple Listing Service) to get the word out about your home. They also know how to take the most flattering photos, design flyers, and where to post your home on the web so that it fetches the most traffic possible. These tasks may seem fun at first, but they can quickly become annoying chores – especially if you aren’t an expert!

After all of this, you’ll need to have a thick skin if you decide to go realtor-less. That’s because potential buyers tend to be brutally honest when searching for homes, and it may be tough to hear how someone feels about your personal taste. If you can’t leave emotion out of tours, pricing, and negotiations, you’re not ready to be your own realtor.

And, remember, just because you’re choosing not to have a realtor does not mean your buyer isn’t using one. The money you think you’re saving can be easily lost when you have to negotiate against a trained professional! So, while it may seem like a cost-effective idea at first, you’ll probably soon discover that selling your own home just isn’t worth the time or the stress. After the sale, you may also find that you didn’t even save as much money as you thought you would from using a professional realtor. Bottom line – when it comes time to sell the most valuable asset you have, it’s best to leave it to the experts!


via The Dangers of Selling your Home without a Realtor.

Thinking of Selling? Don’t delay – list today!


DC area home salesMany homeowners are waiting until the Spring ‘buying season’ to list their homes for saleHere are five reasons why that might not make sense this year:

1.) Demand Is High

Homes are selling at a pace not seen since 2007. The most recent Existing Home Sales Report by theNational Association of Realtors(NAR) showed that annual sales in 2012 increased 9.2% over 2011. There are buyers out there right now and they are serious about purchasing.

2.) Supply Is Low

The monthly supply of houses for sale is at its lowest point (4.4 months) since May of 2005. The current month’s supply is down 21.6% from the same time last year. Historically, inventory increases dramatically in the spring. Selling now when demand is high and supply is low may garner you your best price.

3.) New Construction Is Coming Back

Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. These ‘shiny’ new homes will again become competition as they are an attractive alternative to many purchasers.

4.) Interest Rates Are Projected to Inch Up

The Mortgage Bankers’ Association has projected mortgage interest rates will inch up approximately one full point in 2013. Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

5.) Timelines Will Be Shorter

The dramatic increase in transactions caused many challenges to the process of buying or selling a home in 2012. We waited for inspections, dealt with last minute appraisals and prayed that the bank didn’t ask for ‘just one more piece of paper’ before issuing a commitment on the mortgage. There are fewer transactions this time of year. That means that timetables on each component of the home buying process will be friendlier for those involved in transactions over the next 90 days.

These are five good reasons why you should consider listing your house today instead of waiting.

via 5 Reasons You Should List Your House TODAY!.

Home Relisting Advice

RealtyPin.com – Author: Daniel Torelli

cassified-adsHome Relisting Advice – What Should You Do If You Took Your Home Off the Market? – Many homeowners hoping to sell their home take it off the market during the holidays, only to relist it once the New Year rolls around. After all, there are less buyers actively looking to purchase a home during November and December. And, many sellers simply don’t want to rearrange their holiday plans if a prospective buyer wants to tour the home. If you took the “For Sale” sign out of the front yard and want to relist your home, here are some tips you need to follow first:

1. Make all necessary repairs
While it is true that more prospective buyers start looking after the holidays, many actually wait until March or April. Market experts say that’s because consumers rack up credit card bills over the holidays, and spend January and February trying to pay down the balance. So, since you’ve got some time, use it to make sure your home is in perfect condition!

2. Meet with several realtors
If you already have a realtor picked out, great! But if you don’t, take the time to interview two or three before selecting who is going to be your real estate agent. While this may seem time-consuming to you, realtors know that home sales pick up in the spring, so they’ll make sure to fit you into their schedule. Each will tell you why they believe they are the perfect agent to list your home, all in hopes of getting the listing, selling it, and earning a paycheck. Remember, they don’t get paid until your home sells, so time is of the essence for them as well!

3. Make sure the price is right
Nope, we aren’t talking about the game show that Bob Barker hosted for so many years! But similar to contestants on “The Price Is Right” who have to guess the retail price of an item, you need to make sure that you accurately estimate the worth of your home. If your home was listed for several months last year without selling, ask each realtor you meet with why they think the home didn’t sell. Be prepared for the honest truth, but know that they are only telling you so that you can make the necessary changes in order to sell the home this time around. Most times, selling problems are a direct result of the price tag. Too many homeowners overvalue their home, and then have to reduce the price after it doesn’t sell. By listing it at the correct price, your home is much more likely to sell than the overpriced one down the street. In addition to asking your realtor or hiring an appraiser to do an appraisal, compare your home’s price with similar sized ones in your neighborhood, or surrounding subdivisions that consist of homes of the same age, value, and size.

4. Take your local market into account
The health of the local housing market varies from city to city, but in many towns across the country, there is currently a lack of home inventory. This plays to sellers’ advantage because an increase in eager buyers, coupled with a decrease in the number of homes for sale, means bidding wars. If this is the case in your local community, the time to list is now! If there is a larger inventory in your local market, perhaps you can wait a few weeks to see if the market suits you better down the road. However, if your home is in good shape and is priced correctly, any time of the year should be a good time to relist.

Good luck, and hopefully you’ll sell your home soon!

via Home Relisting Advice.

Why Should You Be Happy About Real Estate Right Now?


happy-about-real-estateWhy Should You Be Happy About the Housing Market Right Now? – A new year always ushers in optimism. Watching the ball drop in Times Square on New Year’s Eve is like watching all of your troubles “drop” away, and instead, you get to turn to a new page on your calendar that’s full of new possibilities. But why should you be convinced that 2013 is full of new possibilities about America’s housing market?

1.  Builders are happy
Construction companies aren’t going to open up their wallets, roll up their sleeves, and get to work unless they think there’s a really good chance that people are going to come along and buy the finished product. So, the fact that builders are going out, applying for permits, and breaking ground on new homes is a very big deal. It’s proof that they have done their homework, assessed the market, and figured that things are healthy enough that hungry buyers are waiting for the end product.
As a matter of fact, buyers haven’t been this happy about the state of America’s housing market since May of 2006!

2.  There are numbers to back up the talk
If you’re a little skeptical of everyone telling you that the housing market is getting better, that’s OK. Instead of just taking people’s word for it, take a look at the numbers! The number of home sales around the country was 2.1% higher in October than it was in September. When you compare October 2012 to October 2011, the increase is a whopping 10.9%!
But why are we using October numbers?
If the inner-skeptic in you is curious about the October references, that’s OK. There’s a perfectly legitimate reason. Typically, home sales during November and December aren’t a true measure of the housing market because so many people are focused on the holiday season, instead of buying and selling homes. So, in order to give you the most accurate information, we decided to use October’s numbers. (But, just for the record, November and December’s sales numbers weren’t completely down in the dumps. In fact, many areas actually saw bidding wars!)

3.  Inventory is low
This might not seem like reason to celebrate at first, but let us explain! Although low inventory isn’t something that you see in a healthy housing market, it’s something that can give America’s market a boost in the short-term.
It’s a case of basic supply and demand. If you have fewer homes for sale – but still have plenty of hungry buyers – those buyers will be willing to pay more in order to land their dream home. That means the low inventory will be directly responsible for increasing selling prices. Then, as homeowners see that prices are going up, they’ll be more open to listing their own homes for sale. See how that cycle works?

4.  Two big incentives are still in place
In addition to the three strides we’ve already talked about, there are two big incentives that are still in place – high rental prices and low mortgage rates.
Since landlords don’t seem to have any plans to dramatically lower their prices anytime soon, many renters are looking for a more cost-effective solution. And, thanks to the low inventory/price increase cycle, those renters can see that their home purchase will actually gain value immediately – something that hasn’t been the case in awhile. And, since mortgage rates are still so low, it gives potential buyers a strong incentive to move forward – before those rates go back up.

via Why Should You Be Happy About Real Estate Right Now?.

6 Reasons Why This Winter Is a Great Time to Sell


sell home in winterForget the myth that winter is a bad time to sell real estate. While sales usually inch lower in the cooler months, some real estate pros are saying this winter in particular may be a great time to sell a home.

Here’s why:

1. Mortgage rates are near record-breaking lows.

2. Home prices are starting to rebound in many markets across the country. The National Association of REALTORS® reported that home prices in December were 11.5 percent higher than a year earlier.

3. Homes still remain a good deal: Prices are rising but remain mostly below 2007 highs, and in many areas, the cost of buying is cheaper than renting.

4. Distressed homes that typically sell at big discounts — up to 20 percent off — are still widely available. Short sales and foreclosures accounted for 22 percent of all existing home sales in November.

5. Household demographic changes: Many buyers used to want to wait until the end of a school year before moving, but households are changing and moving schedules are less tied to school terms. That’s because households with children are making up a smaller part of the mix nowadays. According to William Frey with the Brookings Institution, 80 percent of all households in the U.S. do not include children. has declined.

6. Household formation is growing. “Many people who ran into tough economic times several years ago are again looking at real estate ownership,” says Wendy Forsythe, executive vice president with Atlantic & Pacific Real Estate. “Enough time has passed so that many of these individuals have re-built credit, built up their savings and now qualify for FHA, VA and conventional financing.”


via 6 Reasons Why This Winter Is a Great Time to Sell | Realtor Magazine.

Eight ways to improve your home appraisal

By Lou Carlozo, Reuters

home_appraisalWhen Kellie and Michael May decided to refinance their home in the New York suburbs, they wanted to take advantage of historically low interest rates. But before landing a new 30-year fixed-rate mortgage, they had to get through a home appraisal.

“It was a major stumbling block,” says Kellie May, who has owned the 4-bedroom, 3-bath colonial for seven years. Not that she and her husband were unprepared; they’d been through an appraisal for another refinance in 2010, so they knew to point out improvements they’d made to the 3,400 square foot home, and supply prices for other neighborhood properties that had sold recently.

But the appraisal came back roughly $70,000 less than the $1,230,000 the Mays were expecting, and too low to support their new loan.

They responded with a paperwork arsenal aimed at their lender, asserting that the appraisal had been based on faulty recent sales data. The loan squeaked through, after the bank crafted an exception for the Mays. It was able to do that because their loan was a jumbo loan, not subject to the more rigid underwriting standards they would have encountered if it were a conventional loan aimed at secondary buyers like Fannie Mae and Freddie Mac.

Low appraisals are becoming a bigger problem for many would-be buyers and refinancers as home values have started to stabilize and rise in some markets.

In Leesburg, Florida, for example, low appraisals have caused the cancellation of as many as 15 percent of home sales for local real estate broker Gus Grizzard.

“We are seeing higher price appreciation and are starting to run into appraisal problems,” said Charlie Young, chief executive officer of ERA Franchise Systems, a firm with a national network of real estate brokerage offices, including Grizzard’s. The National Association of Realtors reported on Tuesday that inventories of homes were low and the median price a home resale was, at $180,800 in December, up 11.5 percent in a year.

Appraisals are based on recent sales prices of comparable properties. And in rising price markets, those sales prices might not be high enough to support the newest deals. Young said there were many places in California reporting appraisal problems.

On Friday, the federal government issued new rules aimed at improving the appraisal process as it pertains to high-interest mortgages on rapidly appreciating homes.

But those rules don’t go into effect for a year, and don’t apply to most conventional loans. It pays to protect your own loan before the bank even thinks about sending that guy with the clipboard over to your house.

“The reality is that the appraiser is only there for 30 minutes at most,” says Brian Coester, chief executive of CoesterVMS, a nationwide appraisal management company based in Rockville, Maryland. “The best thing a homeowner can do to get the highest appraisal possible is make sure they have all the important features of the home readily available for the appraiser.”

Here are eight ways you can bolster your appraisal:


Is the appraiser from within a 10-mile radius of your property? “This is one of the first questions you should ask the appraiser,” says Ben Salem, a real estate agent with Rodeo Realty in Beverly Hills, California.

He recalled a recent case where an appraiser visited an unfamiliar property in nearby Orange County and produced an appraisal that Salem said was $150,000 off. “If the appraiser doesn’t know the area intimately, chances are the appraisal will not come back close to what a property is really worth.”

You can request that your lender send a local appraiser; if that still doesn’t happen, supply as much information as you can about the quality of your neighborhood.


Provide your appraiser with at least three solid and well-priced comparable properties. You will save her some work, and insure that she is getting price information from homes that really are similar to yours.

Websites including Realtor.com, Zillow and Trulia offer recent sales prices and details such as the number of bedrooms and bathrooms in a home.


If you’re going to do minor renovations, start with your kitchen and bathrooms, says G. Stacy Sirmans, a professor of real estate at Florida State University. He reviewed 150 variables that affect home values for a study sponsored by the National Association of Realtors. Wood floors, landscaping and an enclosed garage can also drive up appraisals.


If you’ve put money into the house, prove it, says Salem.

“Before-and-after photos, along with a well-defined spreadsheet of what was spent on each renovation, should persuade an appraiser to turn in a number that far exceeds what he or she first called out.”

Don’t forget to highlight all-important structural improvements to electrical systems, heating and cooling systems – which are harder to see, but can dramatically boost an appraisal. Show receipts.


If your town has recently seen exciting developments, such as upscale restaurants, museums, parks or other amenities, make sure your appraiser knows about them, says Craig Silverman, principal and chief appraiser at Silverman & Co. in Newtown, Pennsylvania.


Many homeowners covet that refinished basement, but that doesn’t mean appraisers look at it the same way. “Improvements and additions made below grade, such as a finished basement, do not add to the overall square footage of your house,” says John Walsh, president of Total Mortgage Services in New York. “So they don’t add anywhere near as much value as improvements made above grade.”

According to Remodeling magazine, a basement renovation that cost $63,000 in 2011-12 will recoup roughly 66 percent of that in added home value. That’s not as good as an attic bedroom, which will recoup 73 percent of its cost. Even similar bedrooms typically count for more if they are upstairs instead of downstairs.


Even jaded appraisers can be swayed by a good looking yard. “Tree trimming, cleaning up, a few flowers in the flower beds and paint touch up can all help the appraisal,” says Agnes Huff, a real estate investor based in Los Angeles.

That advice holds true indoors, too. “Get rid of all the clutter in your home,” says Jonathan Miller, a longtime appraiser in New York. “It makes the home appear larger.”


Don’t follow the appraiser around like a puppy. “I can’t tell you how many homeowners or listing agents follow me around in my personal space during the inspection,” he says. “It’s a major red flag there is a problem with the home.”

And while you’re at it, make the appraiser’s job as pleasant as possible by giving your home a pleasant smell. At a minimum, clean out the litter box. Baking some fresh cookies and offering him one or two probably won’t sway your appraisal, nor should it. But it couldn’t hurt.

via Eight ways to improve your home appraisal | Reuters.

3 Ways to Turn Off Your Home’s Buyer


turnoff1. Hanging out when buyers are viewing your home: Buyers stalk properties online and off, checking obsessively for price reductions and the like.  But buyer-side home stalking is unobtrusive to sellers. On the other hand, buyers can feel personally stalked and stifled in their ability to fully explore or verbally process their impressions of a home when you, seller, hang out inside your home while it’s being shown.

As soon as a buyer sees you in the house, it instantly becomes much more difficult for them to”
(a) envision themselves living there (it’s your house, after all),
(b) be comfortable opening up drawers, closet doors, etc., and
(c) express their thoughts about how this house might be exactly what they’re looking for, if they can knock out that wall and get rid of those cukoo murals you so lovingly painted in your children’s rooms.

Sellers: If you want to sell your home, it’s best to not be around when buyers are looking. Give them some breathing space and a chance to truly walk around and consider what they like and/or dislike about your home without lurking and looming (and, let’s be real – eavesdropping) nearby.

2. Showing a messy house: Life gets hectic, and it’s easy for things like laundry, dishes and other house cleaning tasks to fall by the wayside. It’s also difficult to keep the home in which you and your 4 kids, 3 gerbils and 2 Labrador Retrievers live perfectly spotless for months at a time, while you’re waiting for an offer. But when you decide that you’re going to sell your home, it’s imperative that you make a pact and a plan with yourself and your family that the place will be in tip-top shape when buyers come knocking.

Remember: your home is competing with dozens of others, as well as with buyer’s HGTV-infused visions of what their next home should look like, so first impressions really count.

Sellers: Stuffing the closet is not the answer. (Buyers will be opening that closet door, after all.) Pack up your personals like you were moving (best case: you are), and put all but the essentials in storage, if needed. Get the carpets cleaned, do the dishes, make the beds, mow the lawn, dust, sweep and mop. Ask your agent to give you a gut check on whether your idea of clean is clean enough (better yet – ask them for the number of a house cleaner who you can engage to get the job done to showable standards).

This might all seem obvious, but agents and buyers alike are constantly amazed at the condition of some of the homes they walk into. Take my word for it; I’ll spare you the ‘ewww’-inducing stories.

3. Overpricing your home: Buyers already have lots to do before making the largest purchase of their lives. They have to wrangle their finances into order, jump hoops to qualify for a loan, collect the cash for down payment and closing costs, and invest sometimes hundreds of hours into market research and house hunting. With all of this already on their plates, the prospect of trying to negotiate down a crazily high asking price is just too much work (and too outside their comfort zones) for most buyers to deal with. The average buyer won’t even bother looking at your home if the asking price is clearly high and off base compared with other similar, nearby homes for sale; they’d rather sit tight and wait .

 This post brought to you by Tara-Nicholle Nelson in California.



Smart DC Area Home Sellers will list now rather than waiting for the Spring Market #dc#moco#RealEstate

DC area home salesPrices are up, inventory is down and DC Area homes are selling quickly.  Historically, winter is a slow time for real estate sales. This season, prices are up over 10% across the region, inventory is the lowest it’s been in five years and the volume of sales is about the same as we saw in March and April of this year.  With a 3 month average of 3360 residential sales per month and a total of 7830 homes on the market, there is currently a 2 month supply of homes available for sale in the DC Metro area.  This represents a strong sellers’ market.

Price is determined by the relationship between supply and demand.  As long as demand remains high, smart sellers will list when supply is low rather than waiting for the spring market, when supply is expected to increase.

The DC area added over 23,000 jobs in the past 12 months. That’s an average of just under 2000 new jobs per month in the area.  With jobs continuing to rise and a commitment by the Fed to keep interest rates low, demand for DC area homes is steady.

What does this mean for sales of DC Area homes?  Historically, buyer demand has dropped off in winter and picked up again in the spring.  This trend has not been the case this year.  Smart sellers will list now, while supply is low, rather than waiting until spring, when more homes come on the market.

Demand and inventory can vary considerably from neighborhood to neighborhood.  Track your neighborhood here.

Keep an eye on the unemployment rate and the rate of inflation.  The Fed is using these numbers as “guideposts” to know when to raise interest rates.  Read more about the Fed’s plans here: http://www.usatoday.com/story/money/business/2012/12/12/fed-buys-treasuries/1762459/


Data provided by MRIS.

Is Now a Good Time to Sell?


The supply of homes for sale in the DC Metro area is at it’s lowest point since 2005. Interest rates are at historic lows. We have lots of jobs in the area and people are moving here.  New contracts are up 22% over the 5 year January average.  My memory of Economics 101 is that when supply is low and demand is high, prices go up and that’s exactly what I’ve been seeing in the market. The last 4 out of 5 offers I’ve written have been on properties with multiple offers.

What does this mean for a seller? It mean’s that it’s a great time to put your house on the market.  Perhaps the best time we have seen in years.  The traditional thinking that houses sell best in spring may not hold true this year.  If you want to sell your home quickly, with favorable terms and for top dollar, list it now!


Read all the details here: http://www.rbintel.com/blog/lowest-january-inventory-level-2005-dc-metro-area

Selling a House for Top Dollar: Read This First

Selling a House: What you must know

The Importance of Prep and Pricing when selling a house…

Selling a house? Read this to understand how important prep and pricing are.

When a house goes on the market, it has the most exposure to the largest number of ready, willing and able buyers in the first week.  If those buyers do not perceive value in what you are offering, it will take 6 weeks for an equal number of ready, willing and able buyers to see your home.  For each day that passes without an offer, your house becomes less valuable to those buyers.  On any given day, there are educated buyers who are ready to buy now – if they perceive value.  These buyers have been house shopping for at least 4 weeks, have seen everything on the market, have access to a lot of sales data online, know what homes are selling for and recognize a good value when they see it.  A savvy seller will be able to capture the attention of these buyers and sell their house quickly, for top dollar, with a minimum of contingencies. “How?” you ask.  The key to selling a house for top dollar is to prepare and price your house properly.

First, a few words about preparation:  Most buyers in the greater Washington area put less than 20% down on the purchase of their home.  They may have had to bring cash to the table to sell their previous home or they may be just starting out and not have a lot of cash saved.  This means that after they pay closing costs, they will not have a lot of cash to make improvements to their new home.  This simple fact presents an opportunity for the savvy seller.  As a buyer tours a house, they make a mental list of what they will need to do to make the house work for them.  The smaller the list, the more desirable the house is.  Yard cleanup, de-cluttering, de-personalizing, neutralizing and updating before putting your house on the market will go a long way toward maximizing your home’s appeal.

Now, let’s look at pricing.  I can’t over state the importance of taking your personal bias out of the process when you price your house.  Of course you think it is the best house in the neighborhood and you think the water tower next door makes the best possible neighbor and you think the road noise sounds like waves crashing on the beach – it’s your house!  The problem is that those ready, willing and able buyers may not see the same value that you do.  With all the data available to a buyer, there is no excuse for them to overpay for a house and they won’t.  They also recognize value and they want it!  If you want to sell your house (as opposed to just “list” it), it is impossible to under price it.  That pool of well educated, ready, willing and able buyers will not let that happen.  I can assure you they will not politely say to each other, “Oh, please, you take this house.  You have been looking longer than we have.”  They will compete with each other to get your house.  They will write the best offer they can, with the fewest contingencies and the highest price they can afford. If you follow this rule, you will get top dollar out of the market when selling a house.

One of the best examples of the power of prep and pricing is illustrated by the following story.  These are 2 actual homes in a popular Bethesda neighborhood.

House one listed  for 649,000.  It had 5 bedrooms and 3 full bathrooms and a walk out basement.   The lot size was 9027 square feet and it had about 1872 square feet of living area.  The owners purchased a home warranty that transferred to the buyers.  They cleaned up the house but did not spend any money preparing the house for sale.  The sellers were not in a hurry to sell.  They were willing to wait for the right offer.  After being on the market for 30 days, they reduced the price to $625,000.  It went under contract 1 week later, 41 days after it went on the market.  The sale was contingent on the purchasers completing a satisfactory home inspection, getting their financing approved and the house appraising for at least the sales price. During the home inspection, the purchasers found some minor items that needed to be repaired and the sellers gave them $300 to pay for the repairs.   Settlement was 70 days after it went on the market.  The final sales price was $600,000.  The seller’s net after the cost of repairs was $599,700, $49,300 UNDER their original asking price.

House 2 was right next door.  It listed for $599,000.  It had 5 bedrooms, 4 full and 1 half bathrooms and a walk out basement.  The lot size was 8269 square feet and it had approx 1,722 square feet of living area.  The sellers purchased a home warranty that transferred to the buyers and spent about $4500 painting, re- finishing the floors and professionally staging the home for sale.  There were over 120 people at the 2 open houses that were held on Saturday and Sunday, the first weekend.  5 days later, the sellers received 12 offers.  The sellers were able to choose the best offer out of 12.  They received a non-contingent offer for 32,500 over the asking price.  The buyers offered to purchase the house “as-is”.  The sellers did not have to make any repairs because there was no inspection contingency.  This house went under contract 7 days after it went on the market.  Settlement was scheduled for 28 days after it went on the market.  The final sales price was $631,500.  The sellers net after the $4500 they put into the prep and professional staging was $627,000, $28,000 OVER their asking price.

Here is a summary of the 2 transactions:

Bedrooms 5 5
Bathrooms 3 4 ½
Year Built 1956 1959
Lot Size 9027 SF 8269 SF
Living Area 1872 SF 1722 SF
Home Warranty YES YES
List Price $649,000 $599,000
Days on Market 41 7
Number of offers 1 12
Contingencies Financing, Appraisal, Home Inspection NONE
Sales Price $600,000 $631,500
Preparation Costs (Cleaning, Painting, Refinish floors, Staging) $0 $4,500
Cost of Repairs $300 0
Net Sales Price $599,700 $627,000

Which seller would you like to be?

The key to receiving multiple offers when selling a house is to make the house so valuable that buyers will fight over it.  An experienced agent who knows how to do a thorough market analysis is an invaluable asset to the savvy, well-educated seller.

Want More Information About Pricing Your Home?

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