Fed step toward stalling foreclosures?

January 27, 2009

Here’s a Reuters piece on the Federal Reserve action announced today. Personally, I think it isn’t going to help much at all – it’s fluff to make people think something is being done.8ball

WASHINGTON (Reuters) – The Federal Reserve on Tuesday took a step toward easing mortgage foreclosures threatening millions of Americans, announcing that it would write down troubled mortgages to keep people in their homes.

In a bold effort to unscramble complex mortgage-backed securities at the heart of a financial crisis sparked by the housing market decline, the Fed said it would encourage mortgage servicers to modify loans at risk of default. It will also “assist” the loan servicer in making modifications, according to a document made public by the Fed on Tuesday, entitled “Homeownership Preservation Policy for Residential Mortgage Assets.” The Fed said it would consider reducing the interest rate paid on mortgages at risk of default, extending the term of the loan, and accepting “a deferral or reduction of the outstanding principal balance of the loan,” according to the Fed document.

Fed Chairman Ben Bernanke said the initiative would specifically include $74 billion of assets held in connection with the bailout last year of Bear Stearns and American International Group.

“The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank,” he said in a letter to Rep. Barney Frank, chairman of the House of Representatives financial services committee.

The Fed was instructed by the law last year that authorized a $700 billion bank bailout with public money that it must do what it can to minimize foreclosures.

Frank, a Massachusetts Democrat, has been among U.S. lawmakers pressing the Fed and the government to do more to prevent mortgage foreclosures and he said the decision by the Fed was a “major breakthrough.”

Here’s the problem:

  • You have to be at least 60 days late. So hurry up and get 60 days late?
  • You have to be able to make the payments on the modified loan, but not on the existing loan.
  • Loan modification eligibility requires that the modified loan has a greater net present value than the foreclosure. So if you want to keep your home, but it’s not worth their effort, the Fed says, “Nahhh . . .” 
  • It only applies to mortgages the Fed wholly owns or controls, which at the moment are those it took over from Bear Stearns, JP Morgan Chase and AIG, a small subset of the millions forecasted by RealtyTrac to be entering foreclosure proceedings this year. If your mortgage is part of a Mortgage-Backed Security or Collateralized Debt Obligation pool – and it probably is – the Fed can only “encourage the servicer for such securities to implement a loan modification program that is consistent with this policy.” Presumably, such “encouragement” can only include the tactics specified in the US Army Field Manual, but no more.
  • There is no way for homeowners to figure out if their mortgages are being held or controlled by the Federal Reserve. So you have to wait until somebody – anybody – eventually calls you. Hope you can pay your phone bill.

 

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service

Advertisements

What’s My Home Worth?

January 27, 2009

The first question a potential home seller has is undoubtedly, “What’s my home worth?”homesaleprice

A real estate professional will establish the likely selling price by doing a comparative market analysis (CMA) – comparing your home to others like it that have sold recently. We would include market conditions, such as the inventory of homes for sale and the ease of purchase (interest rates, mortgage availability).

Ideally, your agent will be looking for homes

  • of similar size;
  • in similar condition;
  • in the same or a nearby neighborhood; and
  • sold in the past three months.

In a large subdivision or condo complex with many recent sales, this can be fairly easy. If your home is very similar to several recently closed sales, except for the level of improvements, adjustments can be made for the various differences.

It is more difficult to establish market value when there are few or no comparable sales (“comps”). Sometimes your home is unique compared with nearby homes sold recently. In this situation establishing a reasonable market value will also be a matter of adjustments, but the adjustments will be trickier.

The most important factor is location, so up to a point we would tend to favor closer homes over more recent sales from a distance. On the other hand, if we can locate several recent sales of similar model homes by the same builder in a distant neighborhood, we can adjust for location.

mcmansionAdjustments may be made for the home’s “fit” in the neighborhood. A home that “sticks out like a sore thumb” – either too fancy or too big compared to nearby homes, or relatively small or unimproved relative to the neighborhood – will require more up or down adjustment. If the comps are in a more highly sought after school district than your home – or vice versa – it will be necessary to adjust for the schools.

Occasionally we might try multiple approaches. For instance, in addition to pricing recent sales of similar homes from other neighborhoods,  we can also research sales in your neighborhood from previous years and then adjust for what has occurred in the local market since then. By establishing the value from several perspectives, a more accurate price range for your home will become clear.

Finally, when a property sells, it’s not just about the price. There are other factors that influence what a buyer will pay and how much a seller will accept:

For example, terms such as these might induce a seller to take less money:

  • an all-cash offer (no mortgage contingency to worry about);
  • an as-is offer (no concern about repairs);
  • a fast closing or a longer closing, depending on what the seller prefers; or
  • a free rent back, to allow the seller time to complete his move at a more leisurely pace.

And these terms might make the seller demand more money:

  • seller financing all or part of the purchase price;
  • seller paying for closing costs; or
  • offer contingent on sale of buyer’s home.

If you would like to know the likely market value of your home, please contact me. I’ll be happy to help you evaluate your property’s value.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service


It Depends . . .

January 27, 2009

askingpriceWorking with prospective home buyers, I often find that early in the process they are inclined to suggest an offer price based on the listed price – as though they should always offer X% or $XXX less than the list price.

I can understand why they would make that assumption, if they’ve been looking at market averages or listening to people who do.

But basing your offer on the list price is a big mistake. Some are ridiculously high. Some are tantalizingly low. And until I do a Comparable Market Analysis (CMA) – investigating the sales price and terms of recently sold similar homes in the area – I can’t know if the asking price is anywhere near market value.

Some agents might toss out a number when you ask them while touring the home. They would not be the best agents.

Here’s an example:  A home is listed for $399,000. You love it, but you firmly believe that you should offer 10% under list, and your offer of $360,000 is accepted! Wow, you’re a great negotiator . . . until you find out that similar homes sell for about $345,000.

Example 2:  A home is listed for $399,000. You love it, but you you firmly believe that you should offer 10% under list, and your offer of $360,000 is rejected without a counteroffer. Someone else got your dream home! THEN you do your homework, and learn that similar homes sell for $425,000 and the asking price was intended to attract multiple offers, or even ignite a bidding frenzy.

I will not give my opinion on price until I do my research. In the first example, if you know the likely sales price of a home is $345,000, and it is listed for $399,000, your agent might suggest an offer of say $325,000 with other terms that might pique the interest the seller – and you’d be pleased to get the home for $335,000.

In the second scenario, if the house you love is listed at $399,000, but research reveals that similar homes typically sell for $425,000, your agent can help you construct a winning bid. If yours is the accepted offer at $415,000, you did great!

It’s all about doing your homework. When negotiating, you can’t really know where to begin until you know the market value of the home.

 

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service


Engineering Change?

January 25, 2009

 

Because two of my kids – and most of their friends – are engineers.

Henry Petroski in today’s Washington Post:engineering

“We will restore science to its rightful place,” President Obama declared in his inaugural address. That certainly sounds like a worthy goal. But frankly, it has me worried. If we want to “harness the sun and the winds and the soil to fuel our cars and run our factories,” as Obama has decreed, we shouldn’t look to science. What we need is engineering.

To be fair, Obama’s misconception is a common one. Most people who aren’t scientists or engineers seem to think that science and engineering are the same. They’re not. Science seeks to understand the world as it is; only engineering can change it.

That’s not what most high-school teachers or even college professors tell their science students. But the truth is that full scientific understanding isn’t always necessary for technological advancement. Take steam engines: They were pumping water out of mines long before a science of thermodynamics was developed to explain how they worked. The engines were what prompted researchers to look into the nature of steam power in the first place.

This may make me a heretic, but I’ll take the argument a step farther: Science can actually get in the way of technology. In the 19th century, some scientists were convinced that even the largest steamship couldn’t carry enough coal for transatlantic trips. Only when skeptical engineers designed ships that made this supposedly impossible task possible were the naysaying scientists forced to reconsider.

And think about the Wright brothers, who refused to believe that only birds were meant to fly. If Wilbur and Orville had waited for the publication of a sophisticated textbook on aerodynamics, they might never have left their bicycle shop in Dayton for the dunes of Kitty Hawk. Engineering, not science, enabled them to develop propellers that worked in the air the way a ship’s propeller spins through water.

Steamships and flying machines may seem like things of the past, but the ingenuity behind them couldn’t be more relevant today. Some of our greatest energy challenges require engineering breakthroughs, not scientific discoveries. The principles that explain how a battery works, for example, are old news. But a lightweight and cost-effective battery pack with enough juice to power a car over long distances remains an elusive goal.

The same is true of fuel and solar cells. Scientists established long ago that natural processes involving chemicals and sunlight can produce electricity. We need engineers to make the cells lean enough to compete with coal and oil. Science alone is never enough.

The president and his green team — particularly Energy Secretary Steven Chu — appear to understand the urgency of the world’s energy problems. I’m not so convinced that they accept that science, for all its beauty, is not the best place to seek practical fixes. Obama should keep his promise to “restore science to its rightful place” — and put engineering on at least an equal footing.

Henry Petroski is a professor of civil engineering and history at Duke University.


Kim & Janet Visit Charleston

January 22, 2009

We spent Inauguration Weekend in Charleston, South Carolina, partly because it was crowded and cold in NoVa, partly because we had a four-day weekend, but mostly because we had always wanted to visit Charleston. Vicky was here with the Girl Scouts 10 years ago, but she spent her visit with sailors on the USS Yorktown aircraft carrier moored in the harbor. (I suspect that’s where she must have picked up her salty tongue – it certainly wasn’t from me.)

“Why would Kim write an article about visiting Charleston in his Northern Virginia real estate blog?” you may well ask. And I will tell you:

  1. There is real estate in Charleston. Really expensive real estate.
  2. Parallels may be drawn between Charleston real estate and that of Northern Virginia areas such as Old Town Alexandria (barely).
  3. The interesting and entertaining blog article will attract visitors to my blog, and may cause them to read other informative articles, which will impress them with my knowledge, ability and personality to such an extent that they will develop a deep-seated and entirely understandable desire to contract with me to use my real estate services, and to tell all their friends, neighbors, relatives, and colleagues to do the same. At least, that’s my plan, and I’m sticking to it.
  4. Thus, the trip will be largely tax-deductible.

First, a word about the accommodations. I am a big fan of Trip Advisor, because it has a wealth of traveler-supplied information (to which vendors may respond), so my first go-to when planning a trip is that website for hotel opinions. Though Charleston is rife with hotels – about 6 dozen hotels and B & Bs in and around  the historic area – the Holiday Inn Historic District was ranked #3 by travelers. A Holiday Inn! Not because of the rooms, or the food, or the view, or the location – it’s not as close to the district as many others – but because of the concierge, Kevin McQuade.

headslap

Wow! I coulda had a concierge!

I will admit that I am not into asking strangers to guide me. I much prefer to do my own research and preparation, or ask knowledgeable friends. Thus I tend to walk right past the concierge in most hotels, barely acknowledging his or her existence. (Plenty of people think that about real estate agents, dontcha know? Allow me to publicly slap myself upside the head. Ow.) Nonetheless, because I was  intrigued by Kevin’s press clippings, they got our business. Recent examples (there are scores):

  • “We had an amazing time in Charleston and it was made all possible by the suggestions of Kevin McQuade.”
  • “Everything that has been said about Kevin is dead on!”
  • “Kevin clearly loves to share his city with his guests. If there seems to be a wait to talk to him, don’t worry. The wait is worth it.”

It was a brilliant move on my part, thank you very much.

2meeting

2 Meeting Street Victorian B & B

We’d prebooked Magnolia’s online on a friend’s recommendation, but Kevin changed the reservation so we could go to Virginia’s On King on a night they were open. He got us into Cru Cafe that Saturday evening by pulling a reservation out of his pocket. He set up two walking tours (see below) and made some other recommendations we turned down because of the weather (it was relatively cold and threatened rain – and we will get back). He suggested several other restaurants we might like to try if we got a chance, and two we did – Hominy Grill for breakfast (twice) – and Poogan’s Porch for brunch. He whipped out menus from the restaurants, and gave us cards with walking and driving directions and his personal favorite meal suggestions on the back. By the way, we nearly ate ourselves into oblivion – this is a terrific restaurant town.

Chevaux-de-Frise

Chevaux-de-Frise is an iron bar projecting wicked-looking iron spikes. It was used on many of Charleston's gates and fences after the Denmark Vesey slave revolt conspiracy of 1822.

I imagine other concierges have tricks like this up their sleeves, too. But they won’t then tell you how unique Charleston is at night, and offer to take you on a private tour (he can’t do this for everyone, obviously, so he has to guess which visitors might be “hard-core” enough). They won’t meet you at 10:30 PM and walk you through practically deserted residential streets and alleys for two hours pointing out the lit gardens and courtyards, and the Chevaux-de-Frise. They won’t lie on their backs on the ground to get a photo of you standing in front of a romantic Victorian B & B. They won’t interrupt their conversation with another client the next evening to catch you getting on the elevator to ask how your day’s tour was. And they sure as hell won’t refuse your offer of payment.

The Holiday Inn facilities were certainly nice enough (breakfast was kinda ordinary), and all of the staff were very friendly and competent . . . but Kevin McQuade is truly something special. If my clients were as happy with me as we are with Kevin, I’d be a very wealthy real estate agent. I must have some work to do in that respect, because there don’t appear to be scores of reviews online telling everyone how spectacularly fabulous I am . . . yet.

edgrimball

Ed Grimball

So, we were up at 4:15 AM, on the road by 5:30, and walking the streets of Charleston with Kevin at midnight, having dined well at Cru – the mac and cheese is wonderful – and into bed ASAP, because the next morning we were going for a long walk with Ed Grimball. Ed is a Charleston native of 60+ who’s been doing his tour for about 15 years and really knows his stuff – and loves questions. He meandered with our small group around the historic part of Charleston focusing partly on history and partly on architecture, for the better part of three hours.

rainbowrow

Rainbow Row

We learned a bit about the colorful Rainbow Row, how the Charleston piazzas – not pizzas – are oriented to shade the homes, the history and wealth of The Battery, and how Charleston came to be the city it is today. Turns out that 20 influential and determined people in 1931 managed to get a law – now The Law – passed, requiring any building reaching the ripe old age of 75 years to be preserved (or something to that effect). Sort of a gigantic and powerful HOA, which has turned out pretty well for Charleston, it seems to me.

piazzas

Piazza - Colonnaded Porch or Walkway

The next day we met up with Tommy Dew, who took us around the same area for two more hours. However – and Kevin clearly knew this when he booked both of them – Tommy’s focus was on political history with additional insights on geology and climate. Our walk with Tommy was filled with commentary on how the events leading up to the Civil War (in Charleston – as in much of the South – it’s not the Civil War, but the War Between The States, Mr. Lincoln’s War, or the Late Unpleasantness), the war itself, and the aftermath of the war shaped Charleston as it is today. Sometimes provocative, always well-spoken, Tommy’s Southern perspective is rarely heard north of Richmond.

porcher-simonds

Porcher-Simonds House on The Battery

 

We’re going back, that’s for sure. We didn’t get to any of the plantation homes or gardens, Fort Sumter, or the Morris Island lighthouse, among many potential sights; and there are at least a hundred restaurants remaining to be reviewed. Janet hit the local shops while I wandered into Starbucks and located a nest of College of Charleston coeds, amongst which I happily cocooned until Janet returned to “rescue” me.

 

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service


Family Update

January 15, 2009

Just a quickie to update interested parties:family

  • Brendan’s 28th birthday is (was) yesterday – we are celebrating at Fogo De Chao (I think it’s Portuguese for “Festival of Meat”) next week;
  • Chris is planning a trip to Budapest next month;
  • Vicky is home for the next 8 weeks or so student-nursing at INOVA Alexandria Hospital; and,
  • Janet and Kim are visiting Charleston, South Carolina this weekend to escape the cold and traffic!

Buying A Fixer-Upper

January 14, 2009

fixerupperIt just needs a little TLC, right? If you’re willing to put in some elbow grease, buying a fixer-upper can be worthwhile. And there are plenty of them around, given the foreclosure epidemic. But there’s a substantial commitment of time and effort, and long periods of time when you will be living in chaos and sawdust. If you’re still up for the challenge, it can be a rewarding experience.

  1. Be prepared for an extensive search. Many fixer-uppers–particularly those in especially bad shape–don’t command much attention, so you may have to hunt around.
  2. Keep in mind that “location, location, location” is always the mantra of real estate purchases. Steer away from properties in areas that are looking rundown in general. Is the asking price of that fixer-upper favorable, compared with the prices of other homes in the neighborhood? Make sure the fixer-upper is in an area of reasonably solid house values. That way, your house will be worth even more when your repairs are completed, rather than less because of worsening market conditions in the neighborhood. Try to meet some of the neighbors who might give you some information on what’s been going on in their block.
  3. Look for the words “fixer-upper,” “needs TLC,” “handyman special” or “diamond in the rough” in your ad or MLS searches. If it’s a foreclosure, you can generally expect it to be.
  4. Review local listings of foreclosed properties. When banks have to take ownership of a property, they’re generally very motivated to hand it off quickly. Contact a good real estate agent to ask about possibilities and to get your own representation.
  5. Watch for properties that need mostly cosmetic improvements. Houses that could use new paint, flooring and/or appliances offer the fastest potential turnaround. Bigger problems such as bad roofs or faulty foundations are often prohibitively expensive and beyond the capabilities of most weekend warriors.
  6. If you find an appealing property with seemingly reasonable repair needs, confirm. Have the home professionally inspected. Specify that the final sale is contingent on a satisfactory complete inspection.
  7. Accompany the inspector when he or she goes through the house for a blow-by-blow account. You may also need to get additional inspections of particular important systems, such as HVAC and well/septic.
  8. Get a formal appraisal ($200 to $400) of the home’s value and have your agent work up comparables. If possible, have the appraiser estimate how much the home should sell for after it is restored to good condition.
  9. Get several bids from contractors of how much it will cost to fix what needs to be fixed. Be sure to check zoning requirements and include permit fees. A rule of thumb would be that the home’s value should increase at least twice as much as you spend on improvements. Calculate the potential value of the house after renovations and be sure that it isn’t higher than comparable houses on the block. Be realistic about repair costs.
  10. Look for a mortgage that includes funds for home renovation, such as the Federal Housing Authority 203(k) program.

Other Tips:

  • Be patient. Unlike the folks on TV who make it sound as though renovations happen within a few weekends, fixer-uppers can take a long time to find and much longer to spruce up, particularly if you’re holding down a day job.
  • Timing is often more important than the state of the house. If you sell during a hot market, price appreciation can help offset the cost of your improvements.
  • Don’t be taken aback by properties that have been on the market for a long time. It’s not unusual for some fixer-uppers to be up for sale for a year or more, depending on market conditions.
  • As a general rule, improvements that are invisible to the average home buyer or merely bring the home in line with expected minimum standards don’t add to the resale value. If you make the wrong improvements, such as enlarging a closet or converting two bedrooms into a master suite when you only had three bedrooms to begin with, you won’t see much, if any, return on your investment. Another potential pitfall is over-improving the home compared to other homes in the neighborhood.
Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service