Foreclosure Pricing – Real or Pretend?

Excerpt from one of my favorite Real Estate bloggers, Kris Berg in San Diego:

We are finding ourselves spending a whole lot of time explaining lender pricing methods to buyers. This week we saw another bank-owned listing priced a full 20% below one active listing and two in escrow – all identical homes within two blocks of the perpetrator. Now, one can argue this is a brilliant strategy for ensuring a speedy-quick sale, and one might even argue that the price will tend to float toward something more in line with true values. Both arguments are valid, but is blatant and gross under-pricing moving toward an ethical gray area? And, what about an agent’s fiduciary responsibilities? Lenders are clients, if not people, too, and pricing a property using a dreidel could be considered negligent. Finally, there is the confusion among buyers that this causes.

Pretend prices – This is what the prices we see attached to many of the foreclosure homes on the market actually are. Most of these homes are knee-deep in offers numbering double-digits before the sun goes down on the first day of showings. Unfortunately, this is a difficult concept to explain to buyers. “Yes, the home is priced exactly at the amount for which you are approved and, no, you cannot buy it.” This is a bitter, even seemingly incredulous message to swallow, and so often a buyer will need to go through the exercise once or twice before they take my word for it.

There is a bigger issue  . . . the one of uber-low pretend prices becoming a popular “lead generation” tool for the agents representing the listings. In a world where buyers are doing their own searches, a too-good-to-be-true carrot can sure make that phone ring. And it leaves the rest of us who use real numbers with a lot of explaining to do.

Read the whole post at the San Diego Home Blog  – Kris’s writing is pretty good, by the way.

This is happening here too. Buyers call me excitedly about a home they have seen in their real-estate-search-engine-of-choice, supposedly in their price range – “Wow! Can we go see this one NOW???” Sure. If you can get past the hordes of other buyers waving offers. You can make an offer, too . . . and let me show you the “escalation clause” addendum, because you are going to need it.

No such thing as a free lunch.

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®

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.

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Organizing Can Be An Emotional Thing

Stuff. Most of us have waaaaay too much of it. If you know my wife, you will understand who keeps stuff organized in our house. She spent a good part of this weekend moving cookbooks, camera and various electronic gizmos from one cabinet to another, tossing things we haven’t been using, and getting some new things put away. It’s certainly not me – you should see my desk right now. I am not the best person to talk about decluttering, though it’s definitely a mantra of mine when talking to sellers! So that’s why I asked for professional help in writing this piece, and Aimee Saldivar obliged:

Do you feel bad throwing out every greeting card you receive? Or do you feel the need to save every toy your children owned to hand down to their children someday? Keeping these toys and remembrances can add up, especially if you don’t have the space to store them. If you save the toys’ original boxes or perhaps the toys that are slightly tattered, they’ll be of no value if your children decide to buy their kids new toys altogether. Get rid of them! One way to keep that precious toy close to your heart is to take a picture of it and create a digital album for you and your children to cherish tomorrow. Those pictures would make a great hardback album for a holiday gift, or can be used to create a scrapbook. It will not only take up less room, be cost effective and environmentally friendly, but it will allow more room for you to use today.

I recently finished a book by Peter Walsh, professional organizer and motivational speaker, called “It’s All Too Much: An Easy Plan For Living a Richer Life With Less Stuff.” He makes some great points about happiness: more material things don’t really measure success, having more possessions may be more suffocating than liberating, and the stuff we own ends up owning us. When we feel like we have too much stuff, we buy more containers; but in reality we aren’t cleaning out clutter, we’re just storing it away. Eventually this will build up and take over our space.

We have more winter ahead of us, but it’s a great time to start planning our organization. Here are few ideas to get you started without being overwhelmed by the task:

1. One room at a time. Focus on a room rather than your entire home. A smaller goal cuts down your anxiety and helps you stay focused. Prioritize each room according to either your budget or the time you have to spend. This will help you plan your project more effectively and will keep you on track to organizational success.
2. Think about what you want to achieve out of that room. If you’re planning to put your home on the market, you may want to consult a professional stager or organizer to create a “punch list.” An extra set of eyes can’t hurt, and they know creative ways to minimize clutter and maximize your sale price without going overboard. If you’re looking simply to organize, store away those keepsakes into one box you can bring out when you want to reflect, and keep the room livable without feeling cramped and cluttered.
3. TIP:  In today’s economy, second-hand and consignment stores are becoming the hot place to shop. If have you some great items that you feel guilty about giving away, consignment shops are a great way to get rid of them without having to host a yard sale or post them in the classifieds online. Remember, one man’s junk can be another man’s treasure – at less than half the price! [Followup tip from Kim:  Drop off your stuff and drive away quickly, or you will come home with more than you took in!]
4. If you haven’t used in the last year – GET RID OF IT! Some things we own may be seasonal items, which is okay; however, if you’re still thinking that the one item you’re saving may go back in style, dump it. If it comes back someday, there will plenty of options to choose from. Many times we get so wrapped up in how much we paid or how much we saved on a particular item when, in reality, it was probably an impulse buy at the time. We may also keep something “in case we need it.” Unless you are talking about fire extinguishers and the like, if we haven’t used it in a year, then we don’t need it, and we’ve probably forgotten about it.
5. TIP:  Getting rid of dust collectors such as books, lampshades and dried flowers can help alleviate dust for people with allergies. You may continue to dust the shelves, but not the books on the shelves or the dried flowers you are saving from a special occasion. It rarely occurs to people that dust build-up on these items is overlooked and can make matters worse for people with allergies. Once you finish reading a book, trade it for a new one or donate it. Donating books to your local public library is a very simple process and is a tax write-off for you next year.
6. The more you can eliminate, the better. Linen closets become an emotional trap for us since they house blankets and linens we don’t want to part with. This is usually where Grandma’s hankies and table linens end up. Instead, think about storing them in a dedicated keepsake box from Grandma, or framing and hanging them in a guest bedroom (if they go with the theme). Once you make room for the linens you actually use, you won’t have to shuffle through mismatched sheet sets and torn towels. If you have different sizes of sheet sets for different rooms and/or family members, a great way to keep them organized  is to color-code them. Buy a different color of two-inch grosgrain ribbon rolls for each size or family member to keep the sheet sets together for “grab and go.” It adds a nice touch to your linen closet, too. NOTE:  When you have your home on the market, prospective buyers look through everything, especially closets – they’ll be impressed.
7. A great way to pay tribute to a loved one after they have passed would be to dedicate a space or a room for their items. If they were in the military, one way to pay tribute would be to frame their military medals along with their uniform jacket. Or if you are having a hard time parting with their collected items, perhaps you could sell them and donate the money in their memory to an organization or educational institution they would have appreciated.

Many thanks to Aimee Saldivar, professional organizer and home stager. She also offers special occasion set-up such as table setting and arranging. You can find before and after pictures on Facebook by looking up Ladybug Staging and Organization.

If you mention this article, Aimee will provide a free consultation when you sign up for a service. Plan ahead and call today for an estimate at 703-856-3404 or email ladybugstaging@gmail.com.

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®

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.

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Ready To Be Stimulized?

It’s a fine mess when Mr. Language Man has to make up words (“stimulized?”). But it’s a pretty messy bill our elected representatives just passed. I’m sure President O would have just preferred to get $800 bill to spend as he needed, when he needed, on whatever he thinks will work. But, nooooo.

I am sure there will be no shortage of articles and blogs on this subject. Still, since I want you to read my blog, here’s a summary of some of the provisions that might be of interest to you:

Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). “Refundable” means that even if you don’t owe any taxes at all, or owe less than the amount of the credit, you will receive the difference in cash after filing.

The new bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000 ($4,000 for a married person filing separately), and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase.

Another important change for our area: reinstatement of the increased conforming loan limits for high cost areas. You may recall that our local conforming loan limits rose from $417,000 to $729,750 last year, giving purchasers of higher end homes an important break on interest rates for loan limits up to that amount. At the end of 2008, the temporary limit expired and it dropped to $625,500. This stimulus bill reinstates that $729,750, which should make it easier to get larger loans which now qualify for Fannie, Freddie and possibly FHA guidelines, which translates to lower rates.

Sales Tax Deduction for Vehicle Purchases. The bill provides all taxpayers with a deduction for State and local sales and excise taxes paid on the purchase of new cars, light truck, recreational vehicles, and motorcycles through 2009. This deduction is subject to a phase-out for taxpayers with adjusted gross income in excess of $125,000 ($250,000 in the case of a joint return).

Tax Credits for Energy-Efficient Improvements to Existing Homes. The bill would extend the tax credits for improvements to energy-efficient existing homes through 2010. Under current law, individuals are allowed a tax credit equal to ten percent (10%) of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during the taxable year. This tax credit is capped at $50 for any advanced main air circulating fan, $150 for any qualified natural gas, propane, oil furnace or hot water boiler, and $300 for any item of energy-efficient building property. For 2009 and 2010, the bill would increase the amount of the tax credit to thirty percent (30%) of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements during the taxable year. The bill would also eliminate the property-by-property dollar caps on this tax credit and provide an aggregate $1,500 cap on all property qualifying for the credit.

“American Opportunity” Education Tax Credit. The bill would provide financial assistance for individuals seeking a college education. For 2009 and 2010, the bill would provide taxpayers with a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year. Under this new tax credit, taxpayers will receive a tax credit based on one hundred percent (100%) of the first $2,000 of tuition and related expenses (including books) paid during the taxable year and twenty-five percent (25%) of the next $2,000 of tuition and related expenses paid during the taxable year. Forty percent (40%) of the credit would be refundable. “Refundable” means that even if you don’t owe any taxes at all, or owe less than the amount of the credit, you will receive up to 40% of the credit in cash after filing. This tax credit will be subject to a phase-out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly).

A fairly decent 19-page PDF summary of the whole bill – THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 – is available from the Senate Finance Committee website.

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®

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.

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Things That Make You Say, “Hmmmm . . .”

Looking at the January 2009 data for the housing market in Northern Virginia (Fairfax and Arlington Counties; Falls Church, Fairfax and Alexandria Cities), the year-over-year trends of the past several months are continuing – sales are up (+39%), active listings are down (-16%), pending sales are up (+23%) and sales prices continue to run 20-25% below those of a year ago, and -30% from two years ago. Average days on market is declining but is still in the 100 range (for sold homes).

The absorption rate has picked up from December’s 5-month figure – we have about 7.5 months of homes on the market now, in the low “buyer’s market” range – largely, I think, because a sizable number of sellers were waiting until after the holidays to put their homes on the market.

There is a lot of action in the sub-$300,000 detached home market. Here are some interesting numbers: 

Detached Homes for sale under $300,000:

• January 2008   =   55
• January 2009   =   436

Detached Homes sold under $300,000:

• January 2008   =   8
• January 2009   =   90

Here’s another interesting number:

Homes financed through FHA/VA:

• January 2008   =   39
• January 2009   =   328

So the government guaranteed the mortgages of over 33% of all homes sold in January 2009. In the entire year of 2006, FHA/VA loans totaled 253, or only 1% of sales in Northern Virginia. Wow.

The mortgage market has been volatile and will continue to be, though the federal government will do all it can to hold it down until the economic outlook improves. Rates are now in the 5.4% range for 30-year fixed. The chart from Bankrate.com shows the last 3 months’ rate movements in Virginia.

The government has a lot of things going on – from Congress to the Treasury to the Federal Reserve to Fannie Mae and Freddie Mac. So many are up in the air that it would be foolish to write about them today.

All the more reason to subscribe to my blog!

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®

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.

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Let’s All Think About DRAINAGE!

Spring is on the way, and it will probably bring a fair amount of rain. Combine that with melting snow – assuming we get any – and we might start to think about drainage. Some of us cringe at the sight of rainfall, looking outside to see half of the yard engulfed in water. Others relish the fact that we live uphill from the neighbors or have handled the run-off with no problem in previous years. Regardless of which scenario in which you find yourself, drainage control is a major priority in every landscape.

Proper drainage control reduces or eliminates excess water in your landscape, which can help to protect your home from water damage and eliminate mosquitoes and other bugs that breed in the still water in your yard. There are several different options that can help to solve drainage problems. The difficult part for the homeowner is choosing the solution that will work best for their unique landscape. Here is a quick overview of several available options:

Dry Creekbed

POSITIVE GRADING
Positive grading uses the existing land contour or a manipulated version of existing contour to direct the water to a specific location. This is one of the most helpful solutions. However, manipulation of the site may require it to be accompanied by one of the other solution types.

CREEKBEDS AND SWALES
Creekbeds and swales are a more recent solution to correcting drainage problems. They’re filled with various-sized stones, and a few large boulders are added for additional aesthetics. Water is allowed to flow through creekbeds and swales, helping to control flooding and erosion.

PIPING

French Drain

Piping is typically used with downspouts or in “French drains” (also known as “freedom drains” during the W administration). This solution takes the water from a specific problem area and pushes it through a pipe to another location. At the new location, either positive grading takes over to disperse the water, or a collection area is developed to handle the water (see Sustainable Solutions).

Sustainable System

SUSTAINABLE SOLUTIONS
Sustainable solutions are the up-and-coming answer in drainage control. They reduce the flow of water to storm drains from homes and businesses. Typically, these solutions work well in locations where water can be collected (and sometimes filtered) to be used for additional purposes throughout the landscape. Sustainable solutions not only reduce or eliminate excess water in your yard, but also benefit the environment by preventing pollutants from entering our watersheds.

Remember, each landscape is unique and may require a different solution or a combination of solutions to properly correct drainage problems.

Many thanks to Jeff Findley, our Landscape Designer from Professional Grounds

 

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®

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.

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Fed step toward stalling foreclosures?

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.

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®

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.

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What’s My Home Worth?

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

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.

Adjustments 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®

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 . . .

Working 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®

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

Buying A Fixer-Upper

It 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

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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.

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IN and OUT For 2009

No, I’m not referring to the West Coast burger chain (which can’t match up with Five Guys). I’m talking about home buyers!

What’s IN

1. Sidelined home buyers. Family or lifestyle additions or changes made in buyers’ households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, it’s time for our family to buy the home that suits our new needs. 
2. Home uplifts. Not a big renovation, but some new finishes that can work for stay-put home sellers. Not a “gut rehab to the studs” new kitchen, but new flooring, countertops and appliances. 
3. Collaborative home pricing. The old days of home sellers configuring a home’s price are out. What’s new is that the seller with their agent will look at closed comparables, set a price, then the buyer and their agent agree or disagree, but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction. 
4. Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the ‘doom and gloom” residential real estate market headlines don’t apply to all markets. What’s been lost in the foreclosure hype is that there are still homes selling in short market times (in as little as 1 day), homes selling at full price and some selling with multiple contracts on the table. Existing home sales will be 5.02 million versus 5.652 million for 2007, a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market – plus a realistic view that over five million people purchased a home despite the headlines in 2008. 
5. Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease to own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market. 
6. Real estate agent as a housing resource not salesperson. New-age real estate agents help consumers through the home sale or purchase process, which takes a skilled agent who is not driven by sales, but instead provides resources to help the consumer determine if they should buy or sell a home. Home ownership is not for everyone. Factors such as a job move in 3 years or less, marginal credit, or lack of interest in home maintenance can be reasons for a resource-driven agent to advise their client not to buy. 
7. Architectural overhead garage doors. After years of bland vanilla garage doors, the architecture has permeated the door most people look at the most. Traditional styling has arrived with mullioned windows, faux wrought iron hinges and latches that provide the original non-overhead garage door look. Contemporary looks now include the adjacent siding applied over the door for a seamless look, much like the panels installed on refrigerator doors to complement cabinets in a kitchen. 
8. Loveseats. A pair or trio is gaining acceptance as the functional way to rearrange a living or family room. Consumers appreciate the ease at which they can rearrange them, move an extra one to another room, or provide long-term furniture flexibility in future homes. Plus, they’re tired of sitting miles away from others on over-sized sectional sofas. 
9. The master bed as a throne. With consumer spending down and more nesting at home, home owners are focusing on making their bed like an at-home luxury hotel experience. Posh linens, pillows and mattresses create a getaway without leaving home. 
10. Older war-horse appliances. Collectable, working appliances from the 1940’s through the late 1980’s have found a new niche among homeowners who appreciate their rock-solid construction and durability. Harvest gold double ovens from the 1970’s (we had a great one in Almond) have been repainted a metallic red and go from boring to bold. A Coldspot refrigerator from the 1950’s refinished in sky blue perks up the butler’s pantry in a suburban home. And, the early 1960’s dryer that looks like it’s from a Jetson house – painted pink – punches up the in-unit laundry room in a condominium. 
11. Dining chairs that don’t match. With consumers watching their non-essential spending closely and electing to stay home to entertain friends, many have found a quick pick-me-up for their dining room suite, mismatched pairs or single chairs. Feedback from friends and family has been favorable to this easy and cost-effective way to say welcome to my cutting edge table. 
12. Obama-era paint colors. The President-elect will add a fresh, younger and forward-looking feel to residential interior paint decor in the spaces at The White House when he and future First Lady Michelle have a say. Look for parchment whites, cashmere yellows, bright optimistic blues and radiant golds. Depressing Bush-era colors such as plum, chocolate brown, rusty mustard and pale sage will happily be replaced by more optimistic colors in American homes.

What’s OUT

1. Fixer-upper homes. With larger down payments required by mortgage lenders, and credit cards maxed out, home buyers want a home in move-in condition. The DIY days are on the wane as buyers want new kitchens and bathrooms from the get-go. 
2. Foreclosure fluff. The foreclosure rate nationally in 2008 was just under 3 percent. In the Great Depression it was just over forty-percent. 
3. Home buyers endless “circling” prospective short-list properties. Overly optimistic thinking by buyers to circle a preferred property indefinitely, often for months, waiting for further price reductions or to wear out long weary sellers. This practice has backfired for buyers who practice this style of pre-negotiating. They often lose their short-list dream home and frustrate savvy price-right sellers. Ditto the bottom-feeder buyers. 
4. Home staging. A recently over-used low cost marketing band-aid for vacant or occupied homes with longer than normal market times. Buyers have said enough of the non-professional usage of assorted leftover props placed around a for-sale home to make it supposedly homey. Buyers say, market it as it is and clear out the tired silk flowers and stale potpourri. 
5. Indoor-outdoor carpet. The staples of quick-fix home sellers for basements, balconies, screened porches and lanai’s, buyers have said enough. Many have told agents that inexpensive indoor-outdoor carpet is visual pollution and often masks flaws in a home. 
6. Track lighting. Thought of by homeowners to be a quick way to get an art gallery look, many prospective buyers usually take them out and discount their appeal. As one Gen-X home buyer said, “Why do sellers install them when they don’t really have any interesting artwork or architectural features to spotlight? They bring undue attention to nothing.”

Thanks to Mark Nash. Originally published in Realty Times 12/31/2008