Stupid Home Buyer Tricks

I’ve been a real estate agent in Springfield, Kingstowne, and Fairfax for several years, and for the most part I have found that Northern Virginia buyers are pretty bright. But I have seen some prospective home buyers do things that make me wonder what they were thinking (or smoking, if you get my drift).

For instance, wouldn’t you think it pretty important that you understand how much you are able to afford before you start looking for a home? Maybe you would want to consult with a good lender (or two?) to help determine that you can qualify for a mortgage, and for how much?

And then there are so many different types of real estate loans – 15-year, 30-year, even 40-year fixed rate – FHA guaranteed – VA no money down – local down payment assistance – 3, 5, 7 or 10-year fixed/adjustable – wouldn’t it be a good idea to understand your mortgage choices? A competent real estate lender will recommend the best financial product for your needs. I have seen way too many of those quickie print-it-yourself “You’re Prequalified!” letters from Internet mortgage “brokers” who promise you whatever they think it will take to get your money. Please, speak with a lender you trust, and ensure that you have been fully approved for your mortgage and that you understand it. If you don’t know a lender, ask your agent for referrals to some good ones.

What?! You don’t want to work with a real estate agent? How many homes have you bought/sold/negotiated lately? It’s one thing to be bright, but entirely another to think you know everything about everything. Oh, you don’t want to pay a commission? Perhaps you didn’t know that as a home buyer, you ordinarily will not pay any commission. The seller pays the commission to their agent, and they share that commission with the buyers’ agent. You can choose to be “represented” or “assisted” by the seller’s agent, but that’s the same as not being represented at all. Get your own agent to make sure your interests are protected! We’ll wait . . .

So now you (and your agent – hint, hint) are out looking at homes. You’re a people person, so naturally you strike up a conversation with the sellers or their 

agent, or maybe their neighbors. Smile, but shut up, already! Everything you say, especially to a well-trained ear, gives them some information you may think is innocuous, but might undercut your negotiations later. You talk to your real estate agent, and let your agent get the answers. After the contract is ratifiedyou can jabber all you like. We encourage it.

Ooh, look – here’s the most expensive house on the block! Let’s get this one, honey! Who cares about later resale value? Most of the time, the highest priced home in the neighborhood will appreciate more slowly than others. Get the pool, the big sunroom, or other costly amenity if you really want it, but don’t expect to get your investment back when you sell unless that “extra” is common in the neighborhood.

Neighborhood? What about the neighborhood? Looked OK when you wrote the offer on Sunday afternoon! Of course, that’s when the 12 guys living in the frat house across the street were sleeping. Take a drive around the neighborhood at different times of day and evening. How’s the commute to your job?

Contract, shmontract, they’re all the same. It’s all about the bottom line, right? Well, no. Designing and presenting a persuasive offer while keeping your options open is a skill born of experience and research. Formulate the offer with your real estate agent. Present yourself as a strong and committed buyer by being approved by a lender and having a competent real estate agent put the offer together with you.

You didn’t request a home inspection? Nah, your uncle is a plumber, so you don’t need no steenkin’ inspection. Every home should be inspected by a qualified home inspector. If you are buying in Virginia, a termite inspection is required. And, if you are considering a home with a septic system – as you might find in Clifton, Fairfax Station or other western and southern parts of Fairfax County – insist on a county inspection of the system.

OK – we’re all set. Settlement in two weeks. Hey, let’s buy a new car for our new garage! And while we’re at it, darling, go right ahead and quit your job so you’ll have time to pack your stuff and move! I have had buyers do something like this – well, not quite that bad – in the weeks prior to settlement, only to find that their chosen lender will recheck employment and credit just two days before the expected settlement date. No verification, no loan. Oops!

Buying a home in Springfield, Kingstowne, Fairfax or anywhere else can be stressful and there are many pitfalls. Let yourself be guided by a real estate professional you trust and respect, who has YOUR best interests at heart.

Yup – like me.

Kim’s Big Johnson College Bowl Mania Is Here!

Get In On Kim’s Big Johnson College Bowl Mania!!!

You know if it has three (!!!) exclamation points, and is written in red, it’s gotta be good.

This contest involves choosing the winning team for each of the 34 (yes, now it’s 34!) upcoming college football Bowl Games, to be played between December 20 and January 8. In addition to choosing the winning teams, you have to assign a Confidence Points factor of 1 to 34 to each game – your personal view of how certain you are of the outcome of each game. If you have high confidence in your choice, you give that game a high value; conversely, if you have no idea which team might win, you would assign a low value. If the team you pick wins, you get the points you assigned. For a tiebreaker, you have to guess the score of the BCS Championship game.

The contest will feature a small prize of some sort – probably involving chocolate – to everyone who beats me, and an engraved 8GB iPod Nano (your choice of color) to the top scorer. Second prize is a 1 pound tin of Mrs. Hanes Moravian Sugar Crisp Cookies. Mmmmmmm . . .

If your entry is really hot, you might win something from ESPN, too, but who cares? The Big Johnson is special!

You enter the contest by going to the ESPN website and follow the instructions below. There is no cost. You are welcome to invite your friends – any friend of yours is a friend of mine.

Let me know if you have any other questions.

How To Play College Bowl Mania the Big Johnson Way

Step 1 – REGISTRATION

To enter, fill out the free game registration at the ESPN website. A valid ESPN member name and password will be used as an identifier to sign in to game play, and to keep track of your entry’s score and standing. If you are already a registered ESPN account holder, you do not need to go through the registration process. If you’ve had an ESPN account in the past but forgot your password, visit Member Services and have your account information sent to you.

Step 2 – GAME SETTINGS

After you have signed in, you will be prompted with a screen with a “Create Entry” button. After you click on the button you will be automatically redirected to the “Entry Settings” page where you will be asked to name your entry and decide whether you would like email reminders.

• Name your entry: Use the text box to determine how your entry will be displayed in the game. Use your imagination. Please. 
• Scoring system: Use the radio buttons to select Confidence Points (required for our game).
• Email Reminders: Use the radio buttons to select whether or not you’d like to receive email reminders from ESPN pertaining to game locks and game rules. I will send emails through the ESPN system to the participants about the game, so be sure to read the email account you use to register!

Once you have completed your game settings, click on the “Submit Entry Settings” button.

Step 3 – JOINING THE BIG JOHNSON GROUP

To join the Big Johnson group after you submit your entry settings, click on the words Create Or Join A Group. Search for the group named Big Johnson, and join the group using the password, “kimsentme” (get it? Kim Sent Me?). You can join the group as soon as you create your entry – you don’t have to make any picks first. Let me know if you have any problems getting into the group.

Step 4 – MAKING YOUR PICKS

You won’t be able to make your picks for the games until all the bowl game contestants are known – probably by Wednesday, December 10. Then you will be able to pick your winner for each game, and predict the final team scores of the National Championship Game as the game’s primary tiebreaker. To select the team you think will win, click on the table cell containing the team name or the checkbox next to the team name. Once you’ve made all of your picks, you can “click and drag” the game up or down in the list to change the assigned Confidence Value for that game. The higher the confidence you assign to a bowl game, the more points you will earn if you have selected the winning team. Each game must have a different confidence value assigned to it from 1 to 34. To predict the final team scores of the National Championship Game, enter your predictions in the fields designated as “Score Guess.” Once satisfied with your selected picks, the confidence values for those picks, and the championship game’s score guess, click the “Submit Your Picks” button to enter them.

Register and submit your entry no later than the first kickoff of the first game of the college football bowl season (Saturday, December 20, 2008 at 11:00 am ET) at which point the game will lock and no additional picks can be made. If you change your mind about a game, you can go back and change your picks until the first game starts.

Step 5 – SCORING

In the Confidence scoring system, the higher the confidence you assign to a game, the more points you will earn if you have selected the winning team. If your chosen team wins, you get the points you assigned to that game. You do not lose points for incorrect picks.

Step 6 – JOINING ANOTHER GROUP

You can join up to three (3) different groups with the same entry, not that you will give a hoot. Once you have enjoyed the Big Johnson, all the others are, well, kinda puny. Each user may have up to three (3) different entries – but only ONE entry in the Big Johnson.

Midtown Springfield On Hold?

The Midtown Springfield proposal, 9+ acres now occupied by a motel, closed discount wine store, near-vacant office tower, abandoned veterinary clinic and two restaurants, appears to be off the table. Last July, the Fairfax County Board of Supervisors received a letter from the developer (Kettler/KSI) saying that efforts to resurrect the sagging project had failed. The Fairfax County Planning Commission has indefinitely deferred its decision to approve the project.

Kettler/KSI lawyer Gregory Reigle wrote in the letter, “Our belief was [that] the combination of additional time and continued partnership with the community and county would provide the opportunity to resolve the remaining issues and deploy still evolving county revitalization policies and programs.” But, the letter continued, “These efforts were not successful. Rather than pursuing a diluted plan that does not respect community expectations, there is no practical alternative than to withdraw the rezoning.”

The proposal called for three towers of 21 to 28 stories with 800 apartments and condominiums, a 160-room hotel, 40,000 square feet of offices and up to 100,000 square feet of retail space, all surrounding a central public plaza and gallery or auditorium. Parking garages and landscaping were to buffer the buildings from I-95 and the huge flyover ramp that looms behind the site.

However, with ongoing developments in and around Springfield such as the Fort Belvoir base realignment, and revitalization of Springfield Mall, I can see this one springing back onto the drawing board pretty quick. Like other developers in the current economy, Kettler has had to pull back. They have ongoing major projects in Reston (Midtown Reston Town Center), Woodbridge (Port Potomac/Potomac Club/County Center), Manassas (Piedmont), Arlington (West Village, The Metropolitan), Alexandria (Midtown Alexandria), and that’s only scratching the surface. It made sense to back off on one that was not yet underway. But if Kettler doesn’t do it, someone will!

Check out the artist’s rendition:

Here Comes Springfield Town Center!

Springfield Mall – that disgusting blob of concrete, styrofoam and asphalt – is going to be a hot destination again. Really!

Vornado Realty Trust, which bought the 36-year-old mall in 2006, is converting the building from a closed-over big box into one that brings the outside in. Shops will face outward. Large windows will bring more light inside. Meanwhile, there will be courtyards and small parks connected by wide walking and biking trails. Later plans also include 2,200 homes, 1.5 million square feet of office space, a new multi-screen movie theater and a 225-room hotel above 175,000 square feet of new retail space. Total retail space will be about 2 million square feet.

The first thing to go will be the name “Springfield Mall” – now immortalized by The Simpsons. It’s now the Springfield Town Center. The first phase of the renovation has been planned for a fall 2010 opening. Interior mall renovations, which would gut the entire existing structure, are underway. The new mall interior will present shoppers with a long, single corridor featuring a new movie theater and a food court. The ceilings along the corridor will feature larger skylights, brightening up the interior. Outdoor plazas and public spaces with cafes and restaurants are included in Vornado’s plans. Every major corridor will have a special entrance, with some having glass-paneled walls and cascading waterfalls.

The second phase of the plan, requiring county approval, includes construction of hotels, office buildings, restaurants, townhouses and apartment complexes along Spring Village Drive beginning as early as spring 2010. The groundwork has been laid, with the unanimous approval from the Fairfax County Planning Commission and Board of Supervisors on the comprehensive plan amendment. The entire multimillion dollar mixed-use project will take anywhere from 10 to 15 years to complete. Sounds like a lot, but Reston Town Center was rezoned in 1989 and it is still under construction!

“It’s comparable to Tysons,” said Mark Looney, with Cooley Godward Kronish, the law firm representing Vornado, “in that you are taking something that is suburban development and making it urban. It’s going to be a 24-hour, seven-days-a-week place.”

Supervisor Jeff McKay (D-Lee), whose district includes the mall, called Vornado’s plans not only the “single-most-important” development project in Springfield, but in all of Fairfax, trumping the plans for Tysons Corner. “People already want to go to Tysons,” he said. “But Springfield Mall needs an immediate change. It can’t wait 20 or 30 years. There is a sense of urgency with this mall.”

The changes, he said, will not only revitalize an aging mall, but also help turn Springfield into another hub of business in the county. “We can’t put all of our eggs in Tysons and the Dulles Corridor,” he said. “I expect Springfield to be a major employment center in Fairfax County, like a miniature version of Tysons.”

Local business owner Bob Stockton (he cuts my hair!) welcomes the mall’s makeover, and says Springfield “is bound and determined” to blossom in growth just like Tysons. “We have all the transportation Tysons wishes it has,” he said. “Eventually, developers are going to realize that.”

Keep up with all the plans and details at the Vornado website for Springfield Town Center!

Pasadena

As I mentioned the other day, my family is visiting Pasadena this week to see my son Chris, whose first “real job” with eSolar is here. I must say, despite the rain (yes, it can rain in southern California), it is one of the nicest small cities we have had the pleasure of touring. The streets are clean, the town is eminently walkable, there are beaucoup places to shop and eat, and of course the climate is absolutely seductive.

Real estate is in the same boat as in the northern Virginia area, but it will recover well, I believe. I continue to urge Chris to buy – perhaps after the first of the year – and take advantage of the current pricing and mortgage rates. If you happen to be looking in the Pasadena area, I can recommend Chris’s agent Irina Netchaev and her website Pasadena Views.

Want To Buy A Home, But Can’t Afford To Fix It Up?

I hear this a lot:

“I’d like to buy a foreclosure because I can get a great deal, but almost every one I see looks like crap – dirty carpet, missing or broken appliances, lots of cosmetic repair work – and I don’t have much cash after the down payment, so how am I supposed to fix all this stuff?”

It’s certainly true that in looking for a great deal on a foreclosure, you are going to encounter a lot of homes that have not been cared for very well. As you can imagine, when folks can’t make their mortgage payments, they have little money or incentive to maintain the property as well as they otherwise might. If you do manage to come across a foreclosure in good condition, you can be sure it will sell quickly, and the buyer will pay close to market price. Not the great deal you were looking for, right?

FHA has a loan program that is designed precisely for this situation, and makes it as easy as possible to get qualified and get the repairs done. The loan program is called the FHA 203k Streamline program and it allows homeowners to finance improvements costing up to $35,000 into the original mortgage. (For those homes that need major rehabilitation, there is also a full FHA 203k loan which will allow more than $35,000 worth of rehabilitation work to be done, but is much more complex. This post covers only the “Streamline 203k” – for more info on the “full 203k” see here.)

Because the 203k Streamline is an FHA program, all standard FHA guidelines apply when qualifying for the loan – low down payment, etc.

The maximum Streamline 203k mortgage amount is the lesser of:

• The maximum (statutory) mortgage limit for area
 (Northern Virginia is $625,500 for 2009).
• The “As is” value (usually the purchase price or outstanding debt in case of a 
refinance transaction) plus cost of rehabilitation
.
• 110% of “After Improved” value; Condominiums are limited to 100% of “After Improved” value.
• If the borrower has owned the property for less than one year, the acquisition cost is the maximum.What improvements are eligible under the new Streamlined (k) program?

The Streamline 203k program is for uncomplicated improvements to a home for which plans, consultants, engineers and/or architects are not required. It includes the improvements shown below:

• Repair/Replacement of roofs, gutters and downspouts 
• Repair/Replacement/Upgrade of existing HVAC systems 
• Repair/Replacement/Upgrade of plumbing and electrical systems
• Repair/Replacement of flooring 
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior 
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens 
• Accessibility improvements for persons with disabilities 
• Lead-based paint stabilization or abatement of lead-based paint hazards 
• Repair/Replace/Add exterior decks, patios, porches
• Basement finishing and remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement

That’s an extensive list of the sorts of things that need doing on most foreclosures. What properties are not eligible?  If they require the following sorts of work, you’ll have to use the “full” 203K:

• Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall; 
• New construction (including room additions);
• Repair of structural damage; 
• Repairs requiring detailed drawings or architectural exhibits; 
• Landscaping or similar site amenity improvements;
• Any repair or improvement requiring a work schedule longer than six (6) months; or
• Rehabilitation activities that require more than two (2) payments per specialized contractor.

Under the 203k Streamline guidelines, you must use contractors to complete the work unless you can provide documented proof that you can perform the work yourself (for example, if you are a licensed plumber or electrician) and the lender will verify your contractors’ credentials in the loan process. The contractor will also have to provide licensing, bonding and insurance documents and professional estimates. However, for the 203k Streamline program a general contractor is not required, so you can line up your contractors yourself.

Once the loan is approved and closed, the repair funds are held in escrow until payment is made to the contractors. You will have up to 3 months from your closing date to complete the work and no more than 2 payments (first payment and final payment) may be paid to each contractors. The first payment is limited to a maximum of 50% of the total cost, and all payments are disbursed to the contractor unless you are performing the work. In that case you have to provide receipts for materials and of course your labor is “free.”

For more information, you should speak with an FHA-approved mortgage professional. I can recommend a couple of good ones if you like!