Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across this week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)
Thursday, December 27, 2007
Top real estate stories of 2007
Top real estate stories of 2007
Downturn, downturn, downturn
Thursday, December 27, 2007
Inman News
"Downturn," "subprime," "foreclosures" and "credit crunch" are the top phrases that come to mind when looking back at the year in real estate news. 2007 will be remembered as the year the subprime mortgage market collapsed, causing a credit crunch whose effect on the broader economy is still to be determined. The credit crunch has caused everyone to wonder whether the housing market will now play a role in tipping the economy into recession in 2008. But even while housing markets were slowing substantially in some parts, a boom in online activity and innovation in real estate was happening this year. 2007 was marked by an explosion in real estate blogging along with some major media interest in a few newer online business models.
Here are our picks for the most memorable real estate stories of 2007:
1. Subprime market implodes; housing downturn worsens. Subprime lenders started going belly up this year as they lost access to funding in an avalanche of delinquencies and foreclosures on loans that were packaged and sold to Wall Street investors. Each week brought more bad news in the mortgage and financial markets as more lenders and securities firms started reporting losses stemming from delinquencies and foreclosures. Congress has held numerous hearings on plans to help relieve some of the fallout from the resulting credit crunch (see #4 below). This story was by far the most important one for real estate in 2007 and will continue to unravel throughout 2008. (See Inman News special report, "Subprime Tsunami.")
2. Blogging runs deeper in real estate's blood. If 2006 was remembered as the year real estate blogging really took off, then 2007 will be known as the year that real estate bloggers went deeper, passing "sport" status and placing the practice officially under the heading of "business plan." Many milestones converged to make this possible: Those who figured out blogging were gaining more and more business from it; ActiveRain, the social network for real estate professionals centered around blogging, saw its membership skyrocket, reaching 62,000 members by year end; and the slower market may have prompted many more agents to try blogging since its low cost of entry means there's not much to lose. Many of real estate's star bloggers came together for the first Bloggers Connect conference in August. (See Inman News special report on blogging.)
3. Foxtons closes shop. Foxtons, a discount real estate brokerage company that operated in New Jersey, New York and Connecticut, put a notice on its Web site on Oct. 2 announcing its intent to file for voluntary Chapter 11 bankruptcy and place its property listing agreements with another brokerage company. The bankruptcy court judge handling the case later allowed the company to auction off about 4,300 listing agreements in New York and New Jersey to the highest bidders, which included Maplewood Homebuilders LLC and Brooklyn-based Fillmore Real Estate. (See initial Inman News story and follow-up article.)
4. Foreclosure problem worsens; Bush announces rescue plan. The Bush administration on Dec. 6 rolled out a much-anticipated agreement with mortgage lenders and loan servicers to refinance or freeze the interest rates on up to 1.2 million subprime adjustable-rate mortgages for five years. The plan aims to help reduce the impact of the housing downturn on the economy and communities affected by foreclosures. The plan has met criticism from consumer advocates who say it won't help enough borrowers and warnings from some in the lending industry who say a rate freeze could discourage investors from financing future loans. The plan has the backing of the American Securitization Forum, which represents companies that issue mortgage-backed securities, as well as investors, loan servicers and rating agencies. (See Inman News story.)
5. Redfin and "60 Minutes" of fame. CBS' well-known "60 Minutes" television news program tackled the issue of real estate commissions, discounters versus full-service companies, and industry competition in a segment, "Chipping Away at Realtors' Six Percent," that aired May 13, 2007. The segment, which focused heavily on Seattle-based discount brokerage company Redfin, caused an uproar within the industry. After spending a lot of time with the show's producers explaining the Justice Department's ongoing antitrust lawsuit, the National Association of Realtors felt it got the "empty chair" treatment by not being shown interviewed in the segment. Many others said the portrayal of traditional broker and agent fees was biased and unfair. The primetime appearance was a clear win for Redfin, which saw an increase in activity in the days following the show. (See Inman News story. Watch an InmanTV analysis of the report here.)
6. Trulia and Zillow get booted from Prudential Real Estate convention. To the dismay of some of the company's brokers, Prudential Real Estate barred two of the biggest names in online real estate -- Trulia and Zillow -- from exhibiting at the company's annual convention in San Diego in March. Both companies had booked booths at the show and flew executives to Southern California to rub elbows with Prudential brokers, only to be told at the last minute they were not welcome. Trulia co-founder Sami Inkinen reported the incident on the company's blog, saying they were told that their business model was in direct competition with a partnership between Prudential Real Estate Affiliates and Yahoo! Inc. (See Inman News story.)
7. Realogy goes private. An affiliate of private equity firm Apollo Management LP in April completed the purchase of Realogy Corp., about a year after Realogy was formed as an independent publicly traded company that broke off from Cendant Corp. Realogy owns real estate franchise brands Coldwell Banker, Century 21, ERA, Sotheby's, Better Homes & Gardens and Coldwell Banker Commercial. The transaction was valued at about $8.5 billion. (See Inman News story.)
8. Well-known real estate writer dies. Beloved real estate advice columnist Robert Bruss passed away on Sept. 26, leaving a legacy behind that won't soon be replaced. For more than 20 years Bruss wrote weekly real estate columns that appeared in hundreds of newspapers across the country answering complicated real estate questions submitted by his loyal readers. He was the most prolific writer in the industry, a consumer advocate who wrote from experience and expertise honed from his years of real estate investing, teaching and attorney work. His columns were syndicated by Inman News, and the staff here considered him a close friend and mentor. (See Inman News story.)
9. NAR's Gateway project announced. The National Association of Realtors in May revealed a somewhat vague plan to develop a massive national property information database. An advisory group charged with conceptualizing the project said in November that the database would be accessible to varying degrees by consumers, agents, brokers, appraisers and government agencies. This so-called Gateway system could include information on all types of properties, including for-sale-by-owner and agent-represented active for-sale listings. The group has been careful not to call the project a national MLS. NAR's group says industry participants are demanding such a system to expand property information that is at their disposal. The project could hit one snag as NAR's current agreement with Move Inc., which operates Realtor.com, would prevent consumer access to such a database and would have to be restructured. (See Inman News story.)
10. FHA goes modern. FHA modernization was a hot topic throughout 2007 as lawmakers volleyed back and forth on how to bring FHA loan programs more in line with market prices so that more borrowers would be able to use them. Senate lawmakers in December passed legislation that would reduce but not eliminate down-payment requirements, allow for a smaller increase in the maximum-size mortgage eligible for FHA backing, and place a one-year moratorium on a plan to introduce risk-based pricing. The bill would allow the Federal Housing Administration to guarantee loans of $417,000 or more in high-cost areas, the conforming loan limit for loans eligible for repurchase by Fannie Mae and Freddie Mac. The Bush administration supports the modest increases in FHA loan limits put forward by the Senate, advocating raising limits from $362,000 in high-cost areas to $417,000, and from $200,000 in lower-cost areas to $271,000. (See Inman News story.)
Downturn, downturn, downturn
Thursday, December 27, 2007
Inman News
"Downturn," "subprime," "foreclosures" and "credit crunch" are the top phrases that come to mind when looking back at the year in real estate news. 2007 will be remembered as the year the subprime mortgage market collapsed, causing a credit crunch whose effect on the broader economy is still to be determined. The credit crunch has caused everyone to wonder whether the housing market will now play a role in tipping the economy into recession in 2008. But even while housing markets were slowing substantially in some parts, a boom in online activity and innovation in real estate was happening this year. 2007 was marked by an explosion in real estate blogging along with some major media interest in a few newer online business models.
Here are our picks for the most memorable real estate stories of 2007:
1. Subprime market implodes; housing downturn worsens. Subprime lenders started going belly up this year as they lost access to funding in an avalanche of delinquencies and foreclosures on loans that were packaged and sold to Wall Street investors. Each week brought more bad news in the mortgage and financial markets as more lenders and securities firms started reporting losses stemming from delinquencies and foreclosures. Congress has held numerous hearings on plans to help relieve some of the fallout from the resulting credit crunch (see #4 below). This story was by far the most important one for real estate in 2007 and will continue to unravel throughout 2008. (See Inman News special report, "Subprime Tsunami.")
2. Blogging runs deeper in real estate's blood. If 2006 was remembered as the year real estate blogging really took off, then 2007 will be known as the year that real estate bloggers went deeper, passing "sport" status and placing the practice officially under the heading of "business plan." Many milestones converged to make this possible: Those who figured out blogging were gaining more and more business from it; ActiveRain, the social network for real estate professionals centered around blogging, saw its membership skyrocket, reaching 62,000 members by year end; and the slower market may have prompted many more agents to try blogging since its low cost of entry means there's not much to lose. Many of real estate's star bloggers came together for the first Bloggers Connect conference in August. (See Inman News special report on blogging.)
3. Foxtons closes shop. Foxtons, a discount real estate brokerage company that operated in New Jersey, New York and Connecticut, put a notice on its Web site on Oct. 2 announcing its intent to file for voluntary Chapter 11 bankruptcy and place its property listing agreements with another brokerage company. The bankruptcy court judge handling the case later allowed the company to auction off about 4,300 listing agreements in New York and New Jersey to the highest bidders, which included Maplewood Homebuilders LLC and Brooklyn-based Fillmore Real Estate. (See initial Inman News story and follow-up article.)
4. Foreclosure problem worsens; Bush announces rescue plan. The Bush administration on Dec. 6 rolled out a much-anticipated agreement with mortgage lenders and loan servicers to refinance or freeze the interest rates on up to 1.2 million subprime adjustable-rate mortgages for five years. The plan aims to help reduce the impact of the housing downturn on the economy and communities affected by foreclosures. The plan has met criticism from consumer advocates who say it won't help enough borrowers and warnings from some in the lending industry who say a rate freeze could discourage investors from financing future loans. The plan has the backing of the American Securitization Forum, which represents companies that issue mortgage-backed securities, as well as investors, loan servicers and rating agencies. (See Inman News story.)
5. Redfin and "60 Minutes" of fame. CBS' well-known "60 Minutes" television news program tackled the issue of real estate commissions, discounters versus full-service companies, and industry competition in a segment, "Chipping Away at Realtors' Six Percent," that aired May 13, 2007. The segment, which focused heavily on Seattle-based discount brokerage company Redfin, caused an uproar within the industry. After spending a lot of time with the show's producers explaining the Justice Department's ongoing antitrust lawsuit, the National Association of Realtors felt it got the "empty chair" treatment by not being shown interviewed in the segment. Many others said the portrayal of traditional broker and agent fees was biased and unfair. The primetime appearance was a clear win for Redfin, which saw an increase in activity in the days following the show. (See Inman News story. Watch an InmanTV analysis of the report here.)
6. Trulia and Zillow get booted from Prudential Real Estate convention. To the dismay of some of the company's brokers, Prudential Real Estate barred two of the biggest names in online real estate -- Trulia and Zillow -- from exhibiting at the company's annual convention in San Diego in March. Both companies had booked booths at the show and flew executives to Southern California to rub elbows with Prudential brokers, only to be told at the last minute they were not welcome. Trulia co-founder Sami Inkinen reported the incident on the company's blog, saying they were told that their business model was in direct competition with a partnership between Prudential Real Estate Affiliates and Yahoo! Inc. (See Inman News story.)
7. Realogy goes private. An affiliate of private equity firm Apollo Management LP in April completed the purchase of Realogy Corp., about a year after Realogy was formed as an independent publicly traded company that broke off from Cendant Corp. Realogy owns real estate franchise brands Coldwell Banker, Century 21, ERA, Sotheby's, Better Homes & Gardens and Coldwell Banker Commercial. The transaction was valued at about $8.5 billion. (See Inman News story.)
8. Well-known real estate writer dies. Beloved real estate advice columnist Robert Bruss passed away on Sept. 26, leaving a legacy behind that won't soon be replaced. For more than 20 years Bruss wrote weekly real estate columns that appeared in hundreds of newspapers across the country answering complicated real estate questions submitted by his loyal readers. He was the most prolific writer in the industry, a consumer advocate who wrote from experience and expertise honed from his years of real estate investing, teaching and attorney work. His columns were syndicated by Inman News, and the staff here considered him a close friend and mentor. (See Inman News story.)
9. NAR's Gateway project announced. The National Association of Realtors in May revealed a somewhat vague plan to develop a massive national property information database. An advisory group charged with conceptualizing the project said in November that the database would be accessible to varying degrees by consumers, agents, brokers, appraisers and government agencies. This so-called Gateway system could include information on all types of properties, including for-sale-by-owner and agent-represented active for-sale listings. The group has been careful not to call the project a national MLS. NAR's group says industry participants are demanding such a system to expand property information that is at their disposal. The project could hit one snag as NAR's current agreement with Move Inc., which operates Realtor.com, would prevent consumer access to such a database and would have to be restructured. (See Inman News story.)
10. FHA goes modern. FHA modernization was a hot topic throughout 2007 as lawmakers volleyed back and forth on how to bring FHA loan programs more in line with market prices so that more borrowers would be able to use them. Senate lawmakers in December passed legislation that would reduce but not eliminate down-payment requirements, allow for a smaller increase in the maximum-size mortgage eligible for FHA backing, and place a one-year moratorium on a plan to introduce risk-based pricing. The bill would allow the Federal Housing Administration to guarantee loans of $417,000 or more in high-cost areas, the conforming loan limit for loans eligible for repurchase by Fannie Mae and Freddie Mac. The Bush administration supports the modest increases in FHA loan limits put forward by the Senate, advocating raising limits from $362,000 in high-cost areas to $417,000, and from $200,000 in lower-cost areas to $271,000. (See Inman News story.)
Thursday, December 20, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across this week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)
Fed Proposes New Restrictions on Subprime, Alt-A Loans
Sen. Dodd says legislation still needed to rein in abusive practices
Tuesday, December 18, 2007
By Matt CarterInman News
The Federal Reserve proposes imposing some restrictions that currently apply only to very costly loans -- including a ban on most prepayment penalties -- to subprime and some Alt-A loans.
The product of a series of hearings, the proposed changes in how the Fed implements the Truth In Lending Act, or TILA, are intended to protect consumers from unfair or deceptive home mortgage lending and advertising practices.
While the proposed regulations drew a mixed reaction from lenders, Connecticut Democrat Sen. Chris Dodd issued a statement slamming them as "deeply disappointing," and "a clear signal that legislation is necessary to help protect homeowners from abusive and predatory lending practices."
The proposed amendments to Regulation Z, which spells out the Fed's implementation of TILA, would require lenders making "higher-priced" mortgage loans to:
Verify a borrower's ability to repay a loan with an adjustable-rate mortgage after a payment reset, including property taxes, homeowners insurance and other expenses.
Document income and assets, using a borrower's Internal Revenue Service Form W-2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer's income and assets.
Establish escrow accounts for taxes and insurance, which borrowers could opt out of after one year.
The new regulations would also ban prepayment penalties on higher-priced loans unless the consumer's debt-to-income ratio does not exceed 50 percent of verified monthly gross income, and the source of the prepayment funds is not a refinancing by the same lender or its affiliate.
Only higher-priced mortgage loans on a primary residence -- including home-purchase loans, refinancings and home-equity loans -- would be subject to those provisions in the new regulations. Mortgages on vacation properties, open-end home-equity plans, reverse mortgages, or construction-only loans would be exempt, and loans to investors are, for the most part, not covered by TILA.
Higher-priced loans would be defined as first-lien mortgages with an annual percentage rate (APR) of 3 percent or more above the yield on comparable Treasury notes, or 5 percent for second mortgages.
In addition to extending some provisions of the Home Ownership and Equity Protection Act (HOEPA) to subprime loans, the proposed regulations would also create some additional new requirements for all loans, including:
Written agreements between borrowers and mortgage brokers collecting yield spread premiums, before the consumer applies for the loan or pays any fees.
Prohibitions on coercing appraisers to inflate property valuations.
New requirements for loan servicers, including crediting consumers' loan payments to the date of receipt and providing a schedule of fees to consumers upon request.
Dodd criticized the proposed language requiring lenders to evaluate a borrower's ability to repay a loan difficult to enforce, because regulators would have to show a "pattern and practice" of violations. The Connecticut lawmaker called the language a "significant step backwards" from existing guidance on the topic from regulators.
He said allowing borrowers to opt out of escrow accounts after one year could provide unscrupulous lenders a "tool to 'flip' borrowers into another, wealth-stripping refinance."
While the proposed measures don't go as far as some consumer groups and lawmakers had wanted, they represent a significant departure for the Fed, which has come under fire from critics who say it has failed to use its authority under the Truth in Lending Act to prohibit abusive lending practices during the boom.
Lenders have argued against stricter regulations, saying market forces have put an end to many of the most egregious practices and that new restrictions could worsen the credit crunch.
"There is much to commend and much to worry about in the proposed rules," the American Bankers Association said in a statement on the proposed Regulation Z changes.
While the ABA welcomed "uniform, national standards" that will apply to all lenders and target abuses by unregulated or lightly regulated nonbank lenders, the group warned that "replacing important lending flexibility with rigid formulas might also limit lending to some creditworthy borrowers."
Some consumer groups wanted the Fed to simply lower the thresholds that trigger existing HOEPA requirements. Both first-lien loans with an annual percentage rate (APR) more than 8 percent above the rate on Treasury securities of comparable maturity and second-lien loans with APRs more than 10 percent higher are covered by HOEPA.
Among the most feared provisions of HOEPA are the rights it gives borrowers to sue lenders who violate its requirements, allowing them to recover statutory and actual damages, court costs and attorneys' fees. Borrowers also have up to three years to cancel a loan that is subject to HOEPA if they can show the requirements weren't followed.
A bill introduced Dec. 12 by Sen. Dodd, The Homeownership Preservation and Protection Act, would lower HOEPA thresholds to a range of 6 to 10 percent for first mortgages, and 8 to 12 percent for seconds. Loans in which total points and fees exceed 5 percent would also trigger HOEPA requirements under Dodd's bill.
Opponents have warned that lowering HOEPA thresholds to cover subprime loans could discourage investors from buying mortgage-backed securities on Wall Street, further reducing the flow of investment capital into mortgage lending and increasing the cost of borrowing for home buyers.
"Any federal law that begins with amendments to existing HOEPA likely will be freighted with HOEPA's effects," industry lawyer and lobbyist Donald Lampe told members of the House Financial Services Committee in May. "Hardly anyone … in the secondary market funds or purchases HOEPA loans."
Instead of lowering the threshold for triggering HOEPA requirements, the Fed proposes to create a new class of higher-priced loans that would be subject to new regulations.
Lenders who followed the rule that they verify and document a borrower's ability to repay a loan would be granted "safe harbor" from lawsuits if they had a reasonable basis to believe that borrower would be able to make loan payments for at least seven years.
The proposed definition of a higher-priced loan -- 3 percent above comparable Treasury notes for first mortgages, or 5 percent for seconds -- is already used to collect data under the Home Mortgage Disclosure Act.
The definition is intended to "capture the subprime market, but generally exclude the prime market," staff members of the Fed's Division of Consumer and Community Affairs said in a Dec. 12th memo summarizing the proposed changes. There is no uniform definition of prime and subprime markets, however, the memo noted, and the proposed thresholds "would capture at least the higher-priced portion of the alt-A market."
The Fed is requesting comment on whether different thresholds, such as 4 percent for first-lien loans, "would better meet the objective of covering the subprime market and excluding the prime market," and on ways to "limit creditor circumvention" of the thresholds.
The lending industry has argued that prepayment penalties can benefit borrowers by allowing lenders to charge lower interest rates.
But critics say many consumers aren't very good at factoring in their potential cost into the price of a loan, which is not included in the annual percentage rate. Studies have shown most borrowers with adjustable-rate mortgage (ARM) loans seek to refinance before their interest rates reset, and prepayment penalties can decrease a borrower's home equity and increase their loan balance when financed into a new loan.
The new tougher restrictions on prepayment penalties "should allow the vast majority of subprime borrowers to refinance their mortgages without paying a prepayment penalty before the first payment increase takes effect," Fed staff members said in a memo to the Board of Governors.
Dodd questioned the adequacy of provisions intended to limit the use of prepayment penalties and yield-spread premiums, which he said are used to put borrowers in more expensive loans than they qualify for.
All in all, the proposal "raises serious questions as to whether the Federal Reserve is the appropriate institution to house consumer protection functions," Dodd said in a statement. "This is a clear signal that legislation is necessary to help protect homeowners from abusive and predatory lending practices."
The House of Representatives on Nov. 15 approved a bill, HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, which would limit prepayment penalties, set minimum standards for all mortgages that lenders assess a borrower's ability to repay, and expand HOEPA restrictions.
***
Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.
Copyright 2007 Inman News
Tuesday, December 18, 2007
By Matt CarterInman News
The Federal Reserve proposes imposing some restrictions that currently apply only to very costly loans -- including a ban on most prepayment penalties -- to subprime and some Alt-A loans.
The product of a series of hearings, the proposed changes in how the Fed implements the Truth In Lending Act, or TILA, are intended to protect consumers from unfair or deceptive home mortgage lending and advertising practices.
While the proposed regulations drew a mixed reaction from lenders, Connecticut Democrat Sen. Chris Dodd issued a statement slamming them as "deeply disappointing," and "a clear signal that legislation is necessary to help protect homeowners from abusive and predatory lending practices."
The proposed amendments to Regulation Z, which spells out the Fed's implementation of TILA, would require lenders making "higher-priced" mortgage loans to:
Verify a borrower's ability to repay a loan with an adjustable-rate mortgage after a payment reset, including property taxes, homeowners insurance and other expenses.
Document income and assets, using a borrower's Internal Revenue Service Form W-2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer's income and assets.
Establish escrow accounts for taxes and insurance, which borrowers could opt out of after one year.
The new regulations would also ban prepayment penalties on higher-priced loans unless the consumer's debt-to-income ratio does not exceed 50 percent of verified monthly gross income, and the source of the prepayment funds is not a refinancing by the same lender or its affiliate.
Only higher-priced mortgage loans on a primary residence -- including home-purchase loans, refinancings and home-equity loans -- would be subject to those provisions in the new regulations. Mortgages on vacation properties, open-end home-equity plans, reverse mortgages, or construction-only loans would be exempt, and loans to investors are, for the most part, not covered by TILA.
Higher-priced loans would be defined as first-lien mortgages with an annual percentage rate (APR) of 3 percent or more above the yield on comparable Treasury notes, or 5 percent for second mortgages.
In addition to extending some provisions of the Home Ownership and Equity Protection Act (HOEPA) to subprime loans, the proposed regulations would also create some additional new requirements for all loans, including:
Written agreements between borrowers and mortgage brokers collecting yield spread premiums, before the consumer applies for the loan or pays any fees.
Prohibitions on coercing appraisers to inflate property valuations.
New requirements for loan servicers, including crediting consumers' loan payments to the date of receipt and providing a schedule of fees to consumers upon request.
Dodd criticized the proposed language requiring lenders to evaluate a borrower's ability to repay a loan difficult to enforce, because regulators would have to show a "pattern and practice" of violations. The Connecticut lawmaker called the language a "significant step backwards" from existing guidance on the topic from regulators.
He said allowing borrowers to opt out of escrow accounts after one year could provide unscrupulous lenders a "tool to 'flip' borrowers into another, wealth-stripping refinance."
While the proposed measures don't go as far as some consumer groups and lawmakers had wanted, they represent a significant departure for the Fed, which has come under fire from critics who say it has failed to use its authority under the Truth in Lending Act to prohibit abusive lending practices during the boom.
Lenders have argued against stricter regulations, saying market forces have put an end to many of the most egregious practices and that new restrictions could worsen the credit crunch.
"There is much to commend and much to worry about in the proposed rules," the American Bankers Association said in a statement on the proposed Regulation Z changes.
While the ABA welcomed "uniform, national standards" that will apply to all lenders and target abuses by unregulated or lightly regulated nonbank lenders, the group warned that "replacing important lending flexibility with rigid formulas might also limit lending to some creditworthy borrowers."
Some consumer groups wanted the Fed to simply lower the thresholds that trigger existing HOEPA requirements. Both first-lien loans with an annual percentage rate (APR) more than 8 percent above the rate on Treasury securities of comparable maturity and second-lien loans with APRs more than 10 percent higher are covered by HOEPA.
Among the most feared provisions of HOEPA are the rights it gives borrowers to sue lenders who violate its requirements, allowing them to recover statutory and actual damages, court costs and attorneys' fees. Borrowers also have up to three years to cancel a loan that is subject to HOEPA if they can show the requirements weren't followed.
A bill introduced Dec. 12 by Sen. Dodd, The Homeownership Preservation and Protection Act, would lower HOEPA thresholds to a range of 6 to 10 percent for first mortgages, and 8 to 12 percent for seconds. Loans in which total points and fees exceed 5 percent would also trigger HOEPA requirements under Dodd's bill.
Opponents have warned that lowering HOEPA thresholds to cover subprime loans could discourage investors from buying mortgage-backed securities on Wall Street, further reducing the flow of investment capital into mortgage lending and increasing the cost of borrowing for home buyers.
"Any federal law that begins with amendments to existing HOEPA likely will be freighted with HOEPA's effects," industry lawyer and lobbyist Donald Lampe told members of the House Financial Services Committee in May. "Hardly anyone … in the secondary market funds or purchases HOEPA loans."
Instead of lowering the threshold for triggering HOEPA requirements, the Fed proposes to create a new class of higher-priced loans that would be subject to new regulations.
Lenders who followed the rule that they verify and document a borrower's ability to repay a loan would be granted "safe harbor" from lawsuits if they had a reasonable basis to believe that borrower would be able to make loan payments for at least seven years.
The proposed definition of a higher-priced loan -- 3 percent above comparable Treasury notes for first mortgages, or 5 percent for seconds -- is already used to collect data under the Home Mortgage Disclosure Act.
The definition is intended to "capture the subprime market, but generally exclude the prime market," staff members of the Fed's Division of Consumer and Community Affairs said in a Dec. 12th memo summarizing the proposed changes. There is no uniform definition of prime and subprime markets, however, the memo noted, and the proposed thresholds "would capture at least the higher-priced portion of the alt-A market."
The Fed is requesting comment on whether different thresholds, such as 4 percent for first-lien loans, "would better meet the objective of covering the subprime market and excluding the prime market," and on ways to "limit creditor circumvention" of the thresholds.
The lending industry has argued that prepayment penalties can benefit borrowers by allowing lenders to charge lower interest rates.
But critics say many consumers aren't very good at factoring in their potential cost into the price of a loan, which is not included in the annual percentage rate. Studies have shown most borrowers with adjustable-rate mortgage (ARM) loans seek to refinance before their interest rates reset, and prepayment penalties can decrease a borrower's home equity and increase their loan balance when financed into a new loan.
The new tougher restrictions on prepayment penalties "should allow the vast majority of subprime borrowers to refinance their mortgages without paying a prepayment penalty before the first payment increase takes effect," Fed staff members said in a memo to the Board of Governors.
Dodd questioned the adequacy of provisions intended to limit the use of prepayment penalties and yield-spread premiums, which he said are used to put borrowers in more expensive loans than they qualify for.
All in all, the proposal "raises serious questions as to whether the Federal Reserve is the appropriate institution to house consumer protection functions," Dodd said in a statement. "This is a clear signal that legislation is necessary to help protect homeowners from abusive and predatory lending practices."
The House of Representatives on Nov. 15 approved a bill, HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, which would limit prepayment penalties, set minimum standards for all mortgages that lenders assess a borrower's ability to repay, and expand HOEPA restrictions.
***
Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.
Copyright 2007 Inman News
Friday, December 14, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across this week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!)
Understand Your Credit
Buyers often ask our team how their credit score will affect their home purchasing power, here is a quick lesson from the Realtor.com website:
Understand Your Credit
By John Adams Homestore.com
Thinking about buying a house? Then think about your credit history...the folks who lend money do!
How well you have handled your credit obligations in the past is of utmost importance to lenders today. The good news is that this information, for the most part, is available to you.
Your credit history is maintained by three different private companies called credit reporting agencies: Equifax, TransUnion and Experian. You can order your report by phone and charge it to your major credit card if you like. It usually takes about a week to arrive. Or you can order your report online and view it within seconds.
It's a good idea to get a copy of all three reports, because if an error exists on even one of the reports, it may negatively affect your chances of getting the loan you want. Your credit report lists all the consumer credit that has been extended to you over the past seven years. It will show what your highest balance has been and what your current balance was on the date last reported by the creditor. It will also show how many payments you made on time and how many late payments were late. Late payments are grouped into categories showing how late you were. For example, if your credit card payment was over 30 days late one time, it might not be considered too serious. But if payments were over 60 days late four times, over 120 days late two times and over 180 days late one time, you have had a serious problem. That problem is going to impact your ability to borrow money.
It just makes sense to find out about your credit and correct any errors now. Regardless of how many credit problems you have had in the past, there are two good points to remember.
First, negative credit information can be reported in your credit file for only seven years. After that, it drops out and cannot even be considered. The one exception is bankruptcy, which can be reported for 10 years. But after that you start with essentially a clean slate.
Second, lenders are much more concerned about how you have handled your credit recently than with what happened several years ago. Even if you have had a bankruptcy, if you have kept your nose clean and paid your bills on time since then, it is possible you could qualify for a loan after as little as two or three years.
One of the best developments in the world of lending has been risk-based pricing. That's a five dollar term for the ability of lenders to offer higher priced loans to borrowers based on their demonstrated ability to repay. In other words, even if you have slightly fractured credit, you can still likely get a loan. It just may cost you a little more.
Understand Your Credit
By John Adams Homestore.com
Thinking about buying a house? Then think about your credit history...the folks who lend money do!
How well you have handled your credit obligations in the past is of utmost importance to lenders today. The good news is that this information, for the most part, is available to you.
Your credit history is maintained by three different private companies called credit reporting agencies: Equifax, TransUnion and Experian. You can order your report by phone and charge it to your major credit card if you like. It usually takes about a week to arrive. Or you can order your report online and view it within seconds.
It's a good idea to get a copy of all three reports, because if an error exists on even one of the reports, it may negatively affect your chances of getting the loan you want. Your credit report lists all the consumer credit that has been extended to you over the past seven years. It will show what your highest balance has been and what your current balance was on the date last reported by the creditor. It will also show how many payments you made on time and how many late payments were late. Late payments are grouped into categories showing how late you were. For example, if your credit card payment was over 30 days late one time, it might not be considered too serious. But if payments were over 60 days late four times, over 120 days late two times and over 180 days late one time, you have had a serious problem. That problem is going to impact your ability to borrow money.
It just makes sense to find out about your credit and correct any errors now. Regardless of how many credit problems you have had in the past, there are two good points to remember.
First, negative credit information can be reported in your credit file for only seven years. After that, it drops out and cannot even be considered. The one exception is bankruptcy, which can be reported for 10 years. But after that you start with essentially a clean slate.
Second, lenders are much more concerned about how you have handled your credit recently than with what happened several years ago. Even if you have had a bankruptcy, if you have kept your nose clean and paid your bills on time since then, it is possible you could qualify for a loan after as little as two or three years.
One of the best developments in the world of lending has been risk-based pricing. That's a five dollar term for the ability of lenders to offer higher priced loans to borrowers based on their demonstrated ability to repay. In other words, even if you have slightly fractured credit, you can still likely get a loan. It just may cost you a little more.
Friday, December 07, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Thursday, November 29, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
RealAstute.com Team Member Earns Esteemed Realtor Certification
For Immediate Release
Contact: Kevin Shirley (Kevin@RealAstute.com)
RealAstute.com Home Team Member Earns
REALTOR e-PRO® Certification
November 26, 2007 – Michael Dillon, the top producing agent at Long and Foster’s Capitol Hill Office and the RealAstute.com Home Team has successfully completed the REALTOR e-PRO course to become one of a select few real estate professionals to earn the prestigious certification offered through the National Association of REALTORS.® Kevin Reid Shirley, Michael’s business partner on the RealAstute.com Home Team has already been an e-PRO for several years.
The REALTOR e-PRO certification course is an educational program unlike any other professional certification or designation course available, comprehensive and interactive. It is specifically designed to provide real estate professionals with the technology tools needed to assist consumers in the purchase or sale of a home.
With more than 70% of consumers beginning their real estate research on the Internet, e-PRO certified agents have the experience and expertise to meet the demands of today’s buyer and seller.
“The real estate industry has undergone a fundamental change over the past several years,” said Michael Dillon of Long and Foster. “A majority of consumers are taking the time to conduct their own research prior to contacting an agent. In turn, real estate professionals must be knowledgeable of how technology can assist them in serving the needs of the buying and selling public.”
The exclusive REALTOR e-PRO certification course is presented entirely online and certifies real estate agents and brokers as Internet professionals. Because of its innovative design, students are able to complete the course at their own pace, when and where they want, via any Internet connection. The course is designed to help REALTORS stay at the leading edge of technology and identify, evaluate and implement new Internet business models.
Once completed, the e-PRO certified real estate professional joins the ranks of a special community of highly skilled and continuously trained professionals who provide high quality and innovative online-based real estate services. Consumers can identify the e-PRO through the exclusive e-PRO Internet Professional logo.
Both the content and the delivery platform were created by San Diego-based technology company InternetCrusade®. The course instructs participants in the professional use of e-mail, the development of an interactive Web site, and the use of online research tools. Graduates use the skills they've acquired to provide clients information on properties for sale, local communities, and the local real estate market.
For more information or help with your personal real estate needs, please e-mail Michael Dillon at Michael@RealAstute.com, call him at 202-369-9821 or visit the RealAstute.com Home Team website at http://www.realastute.com/.
Contact: Kevin Shirley (Kevin@RealAstute.com)
RealAstute.com Home Team Member Earns
REALTOR e-PRO® Certification
November 26, 2007 – Michael Dillon, the top producing agent at Long and Foster’s Capitol Hill Office and the RealAstute.com Home Team has successfully completed the REALTOR e-PRO course to become one of a select few real estate professionals to earn the prestigious certification offered through the National Association of REALTORS.® Kevin Reid Shirley, Michael’s business partner on the RealAstute.com Home Team has already been an e-PRO for several years.
The REALTOR e-PRO certification course is an educational program unlike any other professional certification or designation course available, comprehensive and interactive. It is specifically designed to provide real estate professionals with the technology tools needed to assist consumers in the purchase or sale of a home.
With more than 70% of consumers beginning their real estate research on the Internet, e-PRO certified agents have the experience and expertise to meet the demands of today’s buyer and seller.
“The real estate industry has undergone a fundamental change over the past several years,” said Michael Dillon of Long and Foster. “A majority of consumers are taking the time to conduct their own research prior to contacting an agent. In turn, real estate professionals must be knowledgeable of how technology can assist them in serving the needs of the buying and selling public.”
The exclusive REALTOR e-PRO certification course is presented entirely online and certifies real estate agents and brokers as Internet professionals. Because of its innovative design, students are able to complete the course at their own pace, when and where they want, via any Internet connection. The course is designed to help REALTORS stay at the leading edge of technology and identify, evaluate and implement new Internet business models.
Once completed, the e-PRO certified real estate professional joins the ranks of a special community of highly skilled and continuously trained professionals who provide high quality and innovative online-based real estate services. Consumers can identify the e-PRO through the exclusive e-PRO Internet Professional logo.
Both the content and the delivery platform were created by San Diego-based technology company InternetCrusade®. The course instructs participants in the professional use of e-mail, the development of an interactive Web site, and the use of online research tools. Graduates use the skills they've acquired to provide clients information on properties for sale, local communities, and the local real estate market.
For more information or help with your personal real estate needs, please e-mail Michael Dillon at Michael@RealAstute.com, call him at 202-369-9821 or visit the RealAstute.com Home Team website at http://www.realastute.com/.
Thursday, November 15, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Michael Attends Condo Auction in DC
On Tuesday afternoon I attended an auction for 3 condo units in NE DC’s Deanwood neighborhood. I am familiar with the Deanwood neighborhood because I already own some investment property there. I think it’s a smart investment because of the convenience to Capitol Hill and the rest of the city, with easy access both by road and by the Deanwood Metro Station. There is talk of a trolley or light rail eventually connecting Deanwood both to Benning Road as well as the retail and historic areas of Anacostia. The city’s Office of Planning has been working this year to create a comprehensive plan for Deanwood. In late September they had their latest public meeting about opportunities in Deanwood and other parts of Ward 7. Click here to see the encouraging development report.
The auction on Tuesday was conducted by Fox Residential Auctions LLC and took place on the steps of the condo building. Fox Residential Auctions LLC has a strategic partnership with Long and Foster in the Baltimore Region. They conduct residential and commercial property auctions primarily in Maryland, but also in the District and Pennsylvania. You can see both past and future auctions and learn about their auction process at their website at: http://www.fox-residential.com/.
Some people believe that property auctions are just for foreclosed properties or tax sale properties when in fact anyone can choose to sell their property at auction. In the case of these 3 condo units I was told that the owner had decided he was tired of waiting on buyers in this market and wanted to finish selling off the final units in the project before the end of the year.
The condo buildings where this auction took place were at 4200 and 4202 Grant Street, NE. These condo buildings have a total of 12 units, 6 units in each building. They have been sold over the last two years for between $154,000 and $170,000. They are each 1 bedroom units around 500 square feet completely renovated with central heat and air, granite counters, Berber carpet and washer/dryers in the unit.
Property auctions come in many different shapes and sizes, for instance an auction can have a “reserve” number or they can be “absolute” auctions. When an auction has a reserve number the seller has established a minimum dollar amount they will take for the property. If that amount is not reached during the auction the auctioneer does not have to sell the property to the highest bidder. For example, if a seller asks an auctioneer to sell a house valued at $500,000 he or she may set a “reserve” of $400,000 in order to insure a certain profit margin at the sale. If the highest bidder only reaches $380K the seller can tell the auctioneer to refuse the sale.
In an absolute auction, there is no reserve meaning the property will absolutely be sold to the highest bidder, no matter how high or low the winning bid may be. This is a risk for the seller and a huge advantage for the buyer. At the auction on Tuesday 2 of the condo units were being sold with a reserve number, but one of them was being sold absolute. I am guessing that the auctioneer encouraged the seller to sell one unit in absolute as a come-on to get people to the auction, assuming they would bid that unit up to a similar price as the reserve units.
I was surprised that they decided to start the bidding on the absolute unit. After everyone who was interested in bidding had proven they had $5000 in cash or certified funds they were issued a bid card and asked to gather in front of the building for the bidding. If you haven’t been to an auction like this before, I would highly recommend attending one. Even if you aren’t interested in buying the property the people watching is terrific. There must have been nearly 50 people hanging around by the time the auction started. Of those gathered there were less than 10 folks with bid cars participating in the auction. There were neighbors, police, investors, friends and even a homeless man who tried to bid at one point by raising his brown bag 40 oz beer as if it were a bid card!
I was there to try and purchase the unit being sold in absolute for between $50K and $80K. My investment partners and I decided that was a good range that would allow us to make a slight profit if we rented the unit out and probably wait a few years to build equity and for the market to perk up a bit before re-selling for a profit. When you go to an auction like this you need to have a concrete number that you will not go above where you will stop bidding. Each investor has a different number they are comfortable bidding up to based on their own investment strategy. If you are ever interested in pursuing this type of investment please let me know (Michael@RealAstute.com) and I would be happy to help you run comps and help you determine the right number for you and your investment.
The auctioneer started the bidding for the absolute unit at $175K. You could hear the crickets chirp. I actually chuckled when he said that number. Finally someone in the crowd hollered $10,000. The auctioneer laughed, but he had to proceed with that number for the bidding since this was an absolute auction. Needless to say the bidding ran up quickly to $50K, then me and 3 other bidders quickly ran the bids up to $75K at which point I was fairly certain by the lack of bidding that I would be the winning bidder and would be getting a great deal on one of these condos. Sadly, I was mistaken!
Just as the auctioneer prepared to award me the condo for $75K a gentleman just a few feet away took the bid to $77,500. I went to $80K. Then my competition went to $82,500 and like a smart investor I turned to my competition and congratulated him and started walking to my car parked along the side of the building. Even though you can get wrapped up in the bidding you must remember that you have a cap and you don’t want to go over that cap. I knew that my fellow investors trusted my judgment and would be pleased that I didn’t get carried away and pass our cap.
Once we passed my cap I was disappointed but I know there will be many more auctions and opportunities and this one was simply not meant to be. The auctioneer was quite funny and actually called out to me to stay and keep bidding by saying, “You know it’s still a steal at $100K, don’t leave yet.” But it was too late; I pulled off and headed back to the office, with a quick stop at McDonalds for a Big Mac!
If you think you or someone you know, or even a group of investors you want to put together might be interested in learning more about this type of auction I am happy to share my knowledge. My small investment team has successfully purchased property through the annual DC tax sale as well and I am happy to advise my clients on how to navigate that process. Further, there are more and more auctions every week with foreclosed properties being sold at discounted prices. Next Tuesday I am planning to attend one of these foreclosure auctions and I will share what I learn on upcoming blog posts.
Michael Dillon
Michael@RealAstute.com
The auction on Tuesday was conducted by Fox Residential Auctions LLC and took place on the steps of the condo building. Fox Residential Auctions LLC has a strategic partnership with Long and Foster in the Baltimore Region. They conduct residential and commercial property auctions primarily in Maryland, but also in the District and Pennsylvania. You can see both past and future auctions and learn about their auction process at their website at: http://www.fox-residential.com/.
Some people believe that property auctions are just for foreclosed properties or tax sale properties when in fact anyone can choose to sell their property at auction. In the case of these 3 condo units I was told that the owner had decided he was tired of waiting on buyers in this market and wanted to finish selling off the final units in the project before the end of the year.
The condo buildings where this auction took place were at 4200 and 4202 Grant Street, NE. These condo buildings have a total of 12 units, 6 units in each building. They have been sold over the last two years for between $154,000 and $170,000. They are each 1 bedroom units around 500 square feet completely renovated with central heat and air, granite counters, Berber carpet and washer/dryers in the unit.
Property auctions come in many different shapes and sizes, for instance an auction can have a “reserve” number or they can be “absolute” auctions. When an auction has a reserve number the seller has established a minimum dollar amount they will take for the property. If that amount is not reached during the auction the auctioneer does not have to sell the property to the highest bidder. For example, if a seller asks an auctioneer to sell a house valued at $500,000 he or she may set a “reserve” of $400,000 in order to insure a certain profit margin at the sale. If the highest bidder only reaches $380K the seller can tell the auctioneer to refuse the sale.
In an absolute auction, there is no reserve meaning the property will absolutely be sold to the highest bidder, no matter how high or low the winning bid may be. This is a risk for the seller and a huge advantage for the buyer. At the auction on Tuesday 2 of the condo units were being sold with a reserve number, but one of them was being sold absolute. I am guessing that the auctioneer encouraged the seller to sell one unit in absolute as a come-on to get people to the auction, assuming they would bid that unit up to a similar price as the reserve units.
I was surprised that they decided to start the bidding on the absolute unit. After everyone who was interested in bidding had proven they had $5000 in cash or certified funds they were issued a bid card and asked to gather in front of the building for the bidding. If you haven’t been to an auction like this before, I would highly recommend attending one. Even if you aren’t interested in buying the property the people watching is terrific. There must have been nearly 50 people hanging around by the time the auction started. Of those gathered there were less than 10 folks with bid cars participating in the auction. There were neighbors, police, investors, friends and even a homeless man who tried to bid at one point by raising his brown bag 40 oz beer as if it were a bid card!
I was there to try and purchase the unit being sold in absolute for between $50K and $80K. My investment partners and I decided that was a good range that would allow us to make a slight profit if we rented the unit out and probably wait a few years to build equity and for the market to perk up a bit before re-selling for a profit. When you go to an auction like this you need to have a concrete number that you will not go above where you will stop bidding. Each investor has a different number they are comfortable bidding up to based on their own investment strategy. If you are ever interested in pursuing this type of investment please let me know (Michael@RealAstute.com) and I would be happy to help you run comps and help you determine the right number for you and your investment.
The auctioneer started the bidding for the absolute unit at $175K. You could hear the crickets chirp. I actually chuckled when he said that number. Finally someone in the crowd hollered $10,000. The auctioneer laughed, but he had to proceed with that number for the bidding since this was an absolute auction. Needless to say the bidding ran up quickly to $50K, then me and 3 other bidders quickly ran the bids up to $75K at which point I was fairly certain by the lack of bidding that I would be the winning bidder and would be getting a great deal on one of these condos. Sadly, I was mistaken!
Just as the auctioneer prepared to award me the condo for $75K a gentleman just a few feet away took the bid to $77,500. I went to $80K. Then my competition went to $82,500 and like a smart investor I turned to my competition and congratulated him and started walking to my car parked along the side of the building. Even though you can get wrapped up in the bidding you must remember that you have a cap and you don’t want to go over that cap. I knew that my fellow investors trusted my judgment and would be pleased that I didn’t get carried away and pass our cap.
Once we passed my cap I was disappointed but I know there will be many more auctions and opportunities and this one was simply not meant to be. The auctioneer was quite funny and actually called out to me to stay and keep bidding by saying, “You know it’s still a steal at $100K, don’t leave yet.” But it was too late; I pulled off and headed back to the office, with a quick stop at McDonalds for a Big Mac!
If you think you or someone you know, or even a group of investors you want to put together might be interested in learning more about this type of auction I am happy to share my knowledge. My small investment team has successfully purchased property through the annual DC tax sale as well and I am happy to advise my clients on how to navigate that process. Further, there are more and more auctions every week with foreclosed properties being sold at discounted prices. Next Tuesday I am planning to attend one of these foreclosure auctions and I will share what I learn on upcoming blog posts.
Michael Dillon
Michael@RealAstute.com
Dump This House: Unloading Your Property in a Slow Market
GETTING GOING
Dump This House: Unloading Your Property in a Slow Market. It could be the kindest cut of all.
Look at the prices of homes getting sold, and the property market's decline seems no worse than a rough day in the stock market. Look at the number of unsold homes, and you realize there's a world of financial pain out there.
True, these unsold homes may eventually get bought at decent prices. But in the meantime, the owners are often bleeding money -- and many of them would be smart to slash their asking price and go for the quick sale.
Taking time. As you can see from the accompanying chart, home prices are down just 4.5% from their July 2006 peak.
Yet even as prices appear pretty much unchanged, the number of unsold homes has soared. At the current pace of sales, it would take more than 10 months to clear this backlog, according to the National Association of Realtors.
Sure, it would be emotionally draining to have your home on the
market for more than 10 months. But it probably wouldn't be a financial disaster -- as long as you're still in the house and you can comfortably cover the mortgage.
Maybe, however, you have an adjustable-rate loan that's now unaffordable. Maybe you're trying to unload a vacation home. Maybe you moved cross-country for a new job, but your old house still hasn't sold.
The monthly cost of carrying a vacant home could equal 1% of a home's value, figures Charles Farrell, an adviser with Denver's Northstar Investment Advisors. After all, you still have to pay utilities, insurance, property taxes, maintenance and, of course, the mortgage.
What if the mortgage is paid off? There's still an opportunity cost. The equity in your home could instead be invested in, say, bonds yielding 5%.
To make matters worse, "prices could be lower a year from now," Mr. Farrell warns. "There's also the risk of owning a physical asset. I'm thinking about things like fire, broken pipes, theft."
Cutting deeply. Despite all this, sellers are loath to cut their asking price, which is the reason prices have barely budged -- so far.
"People focus on what their home was worth two years ago, or how much they've sunk into it, or on their desire not to bring a check to the closing," notes financial adviser Bert Whitehead, author of "Why Smart People Do Stupid Things With Money."
His advice: Ditch these emotional hangups -- and unload your property now. "If you really want to sell your house, you have to cut deep," Mr. Whitehead says.
"If there are 2,000 houses on the market and 200 houses sold last month, that means it's taking 10 months to sell a house," Prof. Mayer says. "That's pretty simple math, but nobody ever does it. If you price your house like everybody else, it might take 10 months to sell it."
Suppose you price your home like everybody else and it does indeed take 10 months to sell. Figure out how much you would be out of pocket over that stretch, either because your home is vacant or because the mortgage has become unaffordably large.
Spend your Sunday going to open houses in the neighborhood. That should give you an indication of what you need to ask if you want to get your home sold now. Given the cost of carrying your home and the risk prices will fall further, would it be cheaper to slash your asking price?
If you're going to lower your price, Prof. Mayer advises doing it right away -- or waiting until early next year. He notes that very few houses sell between Thanksgiving and mid-January.
"The best scenario is that prices fall through the spring and then stabilize," Prof. Mayer says. "But I'm more pessimistic than that. I would sell now.
The Wall Street Journal
November 7, 2007
By Jonathan Clements
Dump This House: Unloading Your Property in a Slow Market. It could be the kindest cut of all.
Look at the prices of homes getting sold, and the property market's decline seems no worse than a rough day in the stock market. Look at the number of unsold homes, and you realize there's a world of financial pain out there.
True, these unsold homes may eventually get bought at decent prices. But in the meantime, the owners are often bleeding money -- and many of them would be smart to slash their asking price and go for the quick sale.
Taking time. As you can see from the accompanying chart, home prices are down just 4.5% from their July 2006 peak.
Yet even as prices appear pretty much unchanged, the number of unsold homes has soared. At the current pace of sales, it would take more than 10 months to clear this backlog, according to the National Association of Realtors.
Sure, it would be emotionally draining to have your home on the
market for more than 10 months. But it probably wouldn't be a financial disaster -- as long as you're still in the house and you can comfortably cover the mortgage.Maybe, however, you have an adjustable-rate loan that's now unaffordable. Maybe you're trying to unload a vacation home. Maybe you moved cross-country for a new job, but your old house still hasn't sold.
The monthly cost of carrying a vacant home could equal 1% of a home's value, figures Charles Farrell, an adviser with Denver's Northstar Investment Advisors. After all, you still have to pay utilities, insurance, property taxes, maintenance and, of course, the mortgage.
What if the mortgage is paid off? There's still an opportunity cost. The equity in your home could instead be invested in, say, bonds yielding 5%.
To make matters worse, "prices could be lower a year from now," Mr. Farrell warns. "There's also the risk of owning a physical asset. I'm thinking about things like fire, broken pipes, theft."
Cutting deeply. Despite all this, sellers are loath to cut their asking price, which is the reason prices have barely budged -- so far.
"People focus on what their home was worth two years ago, or how much they've sunk into it, or on their desire not to bring a check to the closing," notes financial adviser Bert Whitehead, author of "Why Smart People Do Stupid Things With Money."
His advice: Ditch these emotional hangups -- and unload your property now. "If you really want to sell your house, you have to cut deep," Mr. Whitehead says.
"If there are 2,000 houses on the market and 200 houses sold last month, that means it's taking 10 months to sell a house," Prof. Mayer says. "That's pretty simple math, but nobody ever does it. If you price your house like everybody else, it might take 10 months to sell it."
Suppose you price your home like everybody else and it does indeed take 10 months to sell. Figure out how much you would be out of pocket over that stretch, either because your home is vacant or because the mortgage has become unaffordably large.
Spend your Sunday going to open houses in the neighborhood. That should give you an indication of what you need to ask if you want to get your home sold now. Given the cost of carrying your home and the risk prices will fall further, would it be cheaper to slash your asking price?
If you're going to lower your price, Prof. Mayer advises doing it right away -- or waiting until early next year. He notes that very few houses sell between Thanksgiving and mid-January.
"The best scenario is that prices fall through the spring and then stabilize," Prof. Mayer says. "But I'm more pessimistic than that. I would sell now.
The Wall Street Journal
November 7, 2007
By Jonathan Clements
Friday, November 09, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Real Estate Costs Keep Politicos Down
The 100 block of D Street Southeast just next to the House office buildings, has long had a reputation for being home to fun-loving Republicans.
Former Congressmen Clay Shaw (R-Fla.), Mark Foley (R-Fla.) and Chris Chocola (R-Ind.) used to be known not only for their conservative credentials but also for their fab block parties.
That all came crashing down with the 2006 Democratic sweep, and the partying Republicans were forced to give up their pads.
But Washington’s housing values have more than doubled since 2000, so don’t feel too bad for the former lawmakers.
In fact, you can call them “the 900 Club.”
Shaw, for instance, was able to sell his house for $900,000. It’s unclear from tax records how much the three-bedroom, two-bath home cost when he bought it in 1997, but based on prices at the time, he probably paid around $300,000.
Former-congressman-turned-former-CIA-Director Porter Goss sold his three-bedroom abode, which he’d owned since 1990, for $950,000. Foley, who purchased his house in 1995, sold for $899,000.
Chocola appears to have gotten into the market a bit late, buying his place in 2002 for $640,000. Still, by the time he lost his bid for reelection in 2006, he got $799,000 for it.
For rank-and-file members who are struggling to get by on their current salaries of $165,200, the D.C. housing boom of the past decade has meant that for those who could afford to buy, serving the public good has served them exceptionally well.
One of the best — albeit tainted — deals appears to have been had by former Rep. Jim Ryun (R-Kan.). Ryun has been the subject of allegations that he received a sweetheart real estate deal from a nonprofit group tied to disgraced former lobbyist Jack Abramoff and the GOP’s former “Hammer,” Tom Delay (R-Texas).
Ryun bought his D Street town house for $410,000 in 2000 from the U.S. Family Network, even though that group — allegedly a front for shady fundraising by a former DeLay aide — had bought the house two years earlier, in the midst of the property boom, for $19,000 more.
Either way, Ryun, who has denied any improprieties and said he has substantially improved the house, is sitting on a golden egg.
The three-bedroom, two-bath brick row house is currently valued at $920,870, according to D.C. property records.
Ryun’s house was at the high end, given its proximity to the Capitol.
The average going price for a house near the Capitol is $750,000 — up from about $330,000 in 2000, according to information from Coldwell Banker Real Estate. Real estate values in the rest of the District have risen even more.
Of course, many lawmakers, particularly in the House, don’t have the funds or the will to buy in Washington.
For members who have come here in the past few years, the housing boom has its downsides, said former Rep. Pat Schroeder (D-Colo.).
“It has certainly priced people out of the market. I think you find more and more members doubling up, sharing apartments,” she said.
Veteran Washington real estate observers are familiar with horror stories about California Democratic Rep. George Miller’s D Street group house.
His three roommates, a revolving line of Democrats, are said to return home after a hard day of handshakes and filibustering to sit around in their underwear, eating Cheetos and cereal.
Then there are the five members who all share a C Street town house, paying little rent ($600 each) and living in bipartisan harmony, united by their Christian faith.
The owner of the house is a group called the “Fellowship” and is described in press reports as a “secretive religious organization.”
So what makes a member want to buy?
“Most want to get a cycle or two behind them before they make that kind of investment,” said Donald Denton, who runs the Capitol Hill office of Coldwell Banker. During the early 1990s, he said, “the whole class couldn’t afford, or didn’t want, to buy up here, so they all rented.”
Even so, buying a house can put a member of Congress in an awkward situation. Members generally want to be within eight blocks of the Capitol, 12 at most.
That means they are looking at spending three-quarters of a million dollars and up.
That can be a difficult expenditure to explain to voters back home for members eager to portray themselves as plain folks, particularly those who represent rural or low-income districts.
As a result, many members simply prefer to rent, said Denton, a former Appropriations Committee staffer who went into real estate in 1979.
“They don’t want the bad press back home.”
An example of someone who ran into trouble is Democrat Tom Daschle, the former Senate majority leader who lost his reelection bid in 2004, largely because he was perceived as too much of a Washington insider.
His and his lobbyist wife Linda’s purchase of a $1.9 million house on tony Foxhall Road in 2003 apparently didn’t play well with South Dakota voters, who ousted him.
Oh, well. According to tax records, it’s gained more than $1 million in value since then.
Schroeder remembers that when she came to Washington in 1972, she was staggered by the prices but finally found a home in the Northern Virginia suburbs.
“I used to live in mortal fear that somebody would take a picture of my house and write what we paid for it, and people in Colorado would think I was out of my flaming mind,” she said.
The house, purchased for $55,000 in 1972, sold several years ago for $300,000.
For the members who have graduated to, or come from, the Washington establishment, Capitol Hill is often left behind for more exclusive digs in Georgetown, Kalorama or McLean.
“Most of those people who are experienced don’t want to live above the store, so to speak,” said Jim Bell of Washington Fine Properties.
Bell, who specializes in the Kalorama area, said that the average home price in the area is $2.5 million, with some going as high as $10 million.
Denizens of the area, according to Bell, include Democratic Sen. Edward M. Kennedy of Massachusetts, whose house has doubled in value since he purchased it in 1998 for $2.7 million, and House Science Committee Chairman Bart Gordon (D-Tenn.).
Other power players include former Defense Secretary Donald Rumsfeld; John Podesta, former chief of staff to President Bill Clinton; and socialite/lobbyist Juleanna Glover Weiss.
For lawmakers-turned-lobbyists, especially Republicans, McLean is the preferred destination. The New Republic called the area “the new Georgetown” and “middle-American nouveau riche.”
McLean residents include former Sen. Don Nickles (R-Okla.), who has his own lobbying firm (and a $2.7 million home); former Energy Secretary Spencer Abraham (with a home valued at $2.9 million — up $1 million from when he purchased it four years ago); and former House Speaker Newt Gingrich, whose $1.5 million manse has doubled in worth since he purchased it in 2000.
Other members appear to be taking advantage of the booming D.C. property market by purchasing investment properties.
These include Rep. Jane Harman (D-Calif.), the House’s wealthiest member, who owns six properties in the D.C. area, in addition to her residence, according to congressional personal disclosure forms.
Other members have made more modest real estate investments. Rep. Barbara Lee (D-Calif.) reports on her disclosure forms she made as much as $200, for “rental income from [a] parking space” in her apartment building.
Click Here to view more on the Politico Website.
Thursday, November 08, 2007
How Historic Is Chevy Chase D.C.? Residents Split on Designation for Area of Eclectic Architecture
By Paul Schwartzman
Washington Post Staff Writer
Thursday, November 1, 2007; DZ01
Chevy Chase residents recognize that they live in one of the District's oldest planned suburbs, a place founded a century ago as a bucolic escape from the bustle of downtown.
But whether "old" is synonymous with "historic" is a question that has provoked contentious debate in a neighborhood otherwise known for peaceful streets, charming homes and civil discourse.
Fearful of developers razing houses and replacing them with mansions, preservationists are lobbying the city to designate Chevy Chase D.C. as a historic district, thereby regulating how property owners can alter the exteriors of their homes.
But their campaign has provoked heated opposition among residents who worry that new regulations would create additional bureaucratic review and financial burdens if they seek to replace roofs or windows or build additions.
"In the last five years, it is the most controversial proposal we have faced," said Jerry Levine, chairman of the local Advisory Neighborhood Commission that encompasses most of the area. "On this one, every home is affected."
David Maloney, the District's state historic preservation officer, said that because of the neighborhood's history and reputation, "it doesn't take a rocket scientist to know that it has a good chance of meeting the designation criteria."
"The sense I get is that most people are not contesting that," Maloney said. "They agree it's a wonderful suburb. What they are contesting is whether it's something they want to deal with in their daily lives. And that is an issue for us."
The District has designated 26 neighborhoods as historic districts, including Dupont Circle, Capitol Hill, Georgetown, Shaw, Cleveland Park and Anacostia. In many cases, residents have nominated their neighborhoods, a nomination ultimately decided by the District's Historic Preservation Review Board.
When a neighborhood is deemed historic, property owners seeking to demolish buildings or make exterior alterations first must obtain permission from the D.C. Planning Department's Historic Preservation Office, which subjects proposed construction to a design review.
Historic Chevy Chase D.C., a community group, initiated the campaign to designate the neighborhood, an area of more than 900 residential and commercial properties, roughly bounded by Western Avenue to the north, Harrison Street to the south, Reno Road to the west and Chevy Chase Parkway to the east.
In recent years, as real estate values have soared, property owners have built additions or torn down homes and replaced them with mansions that loom over neighboring properties, particularly in the portion of Chevy Chase that is in Montgomery County.
Although preservationists acknowledge that far fewer homes have been razed in Chevy Chase D.C., they say the neighborhood needs legal protections to ensure the future of its eclectic mix of Tudor and Colonial Revival houses homes, many of them built in the early 1900s.
"We're seeing McMansions, in considerable numbers, in Maryland, and in Arlington, and every close-in residential neighborhood is at risk," said Richard Teare, acting president of Historic Chevy Chase D.C. "We would like to forestall it here. We like what we have, we value it, and we want to see it preserved."
But opponents of the designation say that landmark status would saddle them with additional government oversight and costs if they seek to renovate their homes. In historic areas, for example, the District can require that homeowners use wooden windows, which cost more than vinyl replacements.
Allen Seeber, a neighborhood resident who opposes the historic designation, said that Chevy Chase's architectural styles are too varied to draft a set of design regulations. "There's no consistency here," he said. "How do you make rules about an eclectic collection of structures?"
Furthermore, he added, the encroachment of McMansions "is a threat, not a reality. There are some, but I'm not going to faint when I walk by them."
Although community meetings devoted to the issue have drawn large turnouts, neighborhood leaders want to ensure that all Chevy Chase property owners get the chance to express their views. The two Advisory Neighborhood Commissions that include Chevy Chase plan to poll residents on whether they support or oppose historic designation.
The commissions had planned their survey for September. But District officials asked for a six-month delay so they can study the neighborhood's housing styles and issue broad design guidelines, which they hope will answer questions about how property owners can alter their buildings.
Although a historic designation is primarily based on architecture, the District government also takes into account the views of neighborhood residents. In Brookland, for example, the District rejected an application for landmark status after residents raised objections.
"We don't impose them on neighborhoods that don't want them," Maloney said.
Referring to Chevy Chase, he said, "We need to make sure that there is broad community support. The question is, 'How do you know?' My stock answer is I know it when I see it. It's usually pretty obvious. In Chevy Chase, it's not clear yet."
Washington Post Staff Writer
Thursday, November 1, 2007; DZ01
Chevy Chase residents recognize that they live in one of the District's oldest planned suburbs, a place founded a century ago as a bucolic escape from the bustle of downtown.
But whether "old" is synonymous with "historic" is a question that has provoked contentious debate in a neighborhood otherwise known for peaceful streets, charming homes and civil discourse.
Fearful of developers razing houses and replacing them with mansions, preservationists are lobbying the city to designate Chevy Chase D.C. as a historic district, thereby regulating how property owners can alter the exteriors of their homes.
But their campaign has provoked heated opposition among residents who worry that new regulations would create additional bureaucratic review and financial burdens if they seek to replace roofs or windows or build additions.
"In the last five years, it is the most controversial proposal we have faced," said Jerry Levine, chairman of the local Advisory Neighborhood Commission that encompasses most of the area. "On this one, every home is affected."
David Maloney, the District's state historic preservation officer, said that because of the neighborhood's history and reputation, "it doesn't take a rocket scientist to know that it has a good chance of meeting the designation criteria."
"The sense I get is that most people are not contesting that," Maloney said. "They agree it's a wonderful suburb. What they are contesting is whether it's something they want to deal with in their daily lives. And that is an issue for us."
The District has designated 26 neighborhoods as historic districts, including Dupont Circle, Capitol Hill, Georgetown, Shaw, Cleveland Park and Anacostia. In many cases, residents have nominated their neighborhoods, a nomination ultimately decided by the District's Historic Preservation Review Board.
When a neighborhood is deemed historic, property owners seeking to demolish buildings or make exterior alterations first must obtain permission from the D.C. Planning Department's Historic Preservation Office, which subjects proposed construction to a design review.
Historic Chevy Chase D.C., a community group, initiated the campaign to designate the neighborhood, an area of more than 900 residential and commercial properties, roughly bounded by Western Avenue to the north, Harrison Street to the south, Reno Road to the west and Chevy Chase Parkway to the east.
In recent years, as real estate values have soared, property owners have built additions or torn down homes and replaced them with mansions that loom over neighboring properties, particularly in the portion of Chevy Chase that is in Montgomery County.
Although preservationists acknowledge that far fewer homes have been razed in Chevy Chase D.C., they say the neighborhood needs legal protections to ensure the future of its eclectic mix of Tudor and Colonial Revival houses homes, many of them built in the early 1900s.
"We're seeing McMansions, in considerable numbers, in Maryland, and in Arlington, and every close-in residential neighborhood is at risk," said Richard Teare, acting president of Historic Chevy Chase D.C. "We would like to forestall it here. We like what we have, we value it, and we want to see it preserved."
But opponents of the designation say that landmark status would saddle them with additional government oversight and costs if they seek to renovate their homes. In historic areas, for example, the District can require that homeowners use wooden windows, which cost more than vinyl replacements.
Allen Seeber, a neighborhood resident who opposes the historic designation, said that Chevy Chase's architectural styles are too varied to draft a set of design regulations. "There's no consistency here," he said. "How do you make rules about an eclectic collection of structures?"
Furthermore, he added, the encroachment of McMansions "is a threat, not a reality. There are some, but I'm not going to faint when I walk by them."
Although community meetings devoted to the issue have drawn large turnouts, neighborhood leaders want to ensure that all Chevy Chase property owners get the chance to express their views. The two Advisory Neighborhood Commissions that include Chevy Chase plan to poll residents on whether they support or oppose historic designation.
The commissions had planned their survey for September. But District officials asked for a six-month delay so they can study the neighborhood's housing styles and issue broad design guidelines, which they hope will answer questions about how property owners can alter their buildings.
Although a historic designation is primarily based on architecture, the District government also takes into account the views of neighborhood residents. In Brookland, for example, the District rejected an application for landmark status after residents raised objections.
"We don't impose them on neighborhoods that don't want them," Maloney said.
Referring to Chevy Chase, he said, "We need to make sure that there is broad community support. The question is, 'How do you know?' My stock answer is I know it when I see it. It's usually pretty obvious. In Chevy Chase, it's not clear yet."
Monday, November 05, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Friday, November 02, 2007
Mortgage Rates Drop to Five-Month Lows
Mortgage rates have fallen to lows not seen in five months, according to the latest weekly report from Freddie Mac. The average interest for 30-year fixed loans was 6.26 percent, compared to 6.33 percent a week ago; and this was the lowest level since rates averaged 6.21 percent during the week of May 17.
"Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks," according to Frank Nothaft, chief economist at the mortgage finance giant.
Also, rates on 15-year fixed products fell to 5.91 percent from 5.99 percent last week; rates on five-year adjustable rate mortgages declined to 5.98 percent from 6.03 percent; and rates on one-year ARMs slipped to 5.57 percent from 5.66 percent a week ago.
Source: Chicago Sun-Times, Martin Crutsinger (11/02/07)
"Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks," according to Frank Nothaft, chief economist at the mortgage finance giant.
Also, rates on 15-year fixed products fell to 5.91 percent from 5.99 percent last week; rates on five-year adjustable rate mortgages declined to 5.98 percent from 6.03 percent; and rates on one-year ARMs slipped to 5.57 percent from 5.66 percent a week ago.
Source: Chicago Sun-Times, Martin Crutsinger (11/02/07)
Thursday, October 25, 2007
Feeling Nosy About DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
New-Home Sales Are Mixed Despite September Jump
By Reuters 25 Oct 2007 10:47 AM ET
Sales of new single-family U.S. homes rose 4.8 percent in September but sales in August were revised down sharply, painting a mixed picture of the battered housing sector.
New single-family home sales set an annual rate of 770,000 units in September, up from a downwardly revised rate of 735,000 in August, the Commerce Department said. Analysts had expected a 10,000 drop from the previously reported 780,000.
While sales were weak, the inventory of homes fell and the median sales price rose.
In September, the median sales price of a new home rose 2.5 percent to $238,000 from $232,100 in August, a month that saw the slowest sales pace in 11 years.
There were 523,000 new homes for sale at the end of the month, a 1.5 percent drop from August. It would take 8.3 months to clear that inventory at the current sales pace, down fromthe 9 months supply reported in August.
Sales for the month were off 23.3 percent from a year ago. Across the regions, sales were mostly down although the West did see a 37.7 increase. In the Midwest, sales were off 19.5percent and down 6.6 percent in the Northeast. Sales were up 0.5 percent in the South.
The report comes a day after a realty trade association said sales of previously owned homes fell 8 percent to a record low 5.04 million unit pace amid troubles in the subprimemortgage market.
Copyright 2007 Reuters.
Sales of new single-family U.S. homes rose 4.8 percent in September but sales in August were revised down sharply, painting a mixed picture of the battered housing sector.
New single-family home sales set an annual rate of 770,000 units in September, up from a downwardly revised rate of 735,000 in August, the Commerce Department said. Analysts had expected a 10,000 drop from the previously reported 780,000.
While sales were weak, the inventory of homes fell and the median sales price rose.
In September, the median sales price of a new home rose 2.5 percent to $238,000 from $232,100 in August, a month that saw the slowest sales pace in 11 years.
There were 523,000 new homes for sale at the end of the month, a 1.5 percent drop from August. It would take 8.3 months to clear that inventory at the current sales pace, down fromthe 9 months supply reported in August.
Sales for the month were off 23.3 percent from a year ago. Across the regions, sales were mostly down although the West did see a 37.7 increase. In the Midwest, sales were off 19.5percent and down 6.6 percent in the Northeast. Sales were up 0.5 percent in the South.
The report comes a day after a realty trade association said sales of previously owned homes fell 8 percent to a record low 5.04 million unit pace amid troubles in the subprimemortgage market.
Copyright 2007 Reuters.
Thursday, October 18, 2007
Feeling Nosy About DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Thursday, October 11, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Your Credit Score Has to Be Good, but Not Perfect
By Off The ShelfSunday, October 7, 2007; F06
Whether you're considering buying a new home or refinancing an existing mortgage, credit scores matter more than ever. To find out what consumers need to know about their credit reports and scores to get the best deals, The Post's Mary Ellen Slayter recently spoke with personal finance columnist Liz Pulliam Weston, author of "Your Credit Score: How to Fix, Improve and Protect the 3-Digit Number that Shapes Your Financial Future." An edited transcript of the conversation follows.
Q: What's the most important thing consumers need to understand right now about credit scoring and mortgages?
A: Higher scores are always better. It used to be that if you had a bad score, you could still get the loan, you just had to jump through a few hoops. That's not as likely now. Standards have tightened all the way across the board, but they also seem to be changing on a day-to-day basis. The minimum score is higher. Until very recently, subprime was 620 and below. Some lenders are now setting that minimum at 660.
What's the target number that consumers should be aiming for right now, to get the best loans?
Try to get over 720 if you can. Half of the American adult population has a credit score of 700 or above, according to Fair Isaac Corp., which calculates the most commonly used score. If your score is 720 or above, you practically have your pick of loans. That's really the sweet spot. For a home-equity line, the best deals go to those with scores of 760 or above.
Keep in mind that there are different scoring formulas, including those generated by the credit bureaus themselves. Those are not the same as FICO scores, which are the ones that matter in terms of lending.
Also, you don't need a perfect score, which would be an 850 on the FICO scale. About half the calls Fair Isaac receives are from people wanting to know why they don't have perfect scores. If you're over 720, you're golden. Don't lose any sleep over it.
Is there a number below which you would say flat-out that someone should stick with renting?
I used to think that there was, but now I think everybody's situation is a little different. If you are under 660, think about what you can do to improve your score and overall finances before buying. It's not that I don't think those people should buy, I just have a feeling that people in that bracket are going to wind up in much worse situations, with less favorable loans. We're seeing vividly what happens when someone buys a house he can't afford.
When the market was booming, people would quickly get priced out of the market. There was a real risk in waiting. The penalty for waiting now is simply being able to afford more house.
How about for borrowers of jumbo loans?
I wouldn't want to say absolutely stay on the sidelines, but they might want to. Waiting a few months might get them a better deal. But as long as their credit is in good shape -- not in the 600s -- they're probably okay. The loans I know have gone away are the jumbo, subprime, stated income, 100 percent financing -- the ones that never made sense in the first place.
If someone is looking to buy in the next six months, what's the most important thing to do?
Mainly, don't wreck your credit. That means no late payments. Pay any credit card balances down and use your cards lightly. Most people don't realize that their credit reports show the balances, even if they pay them off each month. If you're using a card heavily, such as for business expenses or to earn rewards, ask for higher credit limits or make two payments a month, just to get that percentage down.
One other option -- and I am not generally a big fan of these loans -- is to borrow against your 401(k) to pay down those debts. 401(k) loans don't show up on your credit report. They're kind of off the books, as far as your credit report is concerned. Retirement funds should really be left alone, but this is a technique that can work if it's used responsibly.
One thing you should not do is close any accounts. There's this huge myth that persists that closing accounts can help your score. It can't, and it may hurt it. There's this idea out there that if you have too much credit, lenders will turn you down, but if a lender wants you to close an account, it will tell you.
And definitely don't open any new accounts -- not even a Target credit card -- until the mortgage is closed. Then you can you can go out and have a credit spree.
Thursday, October 04, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Short Sales Not for the Faint of Heart!
Last week I attended a presentation on Short Sales and Foreclosures, taught by settlement attorney Judith M. Nixon of the law firm of Darby, Nalls, Smyth, Nixon and Muldoon in Rockville, Maryland. I was amazed to learn that 9 months ago most lenders wouldn’t even entertain a short sale, but for the last 6 months or so they have changed their outlook and are now allowing for short sales.
What is a short sale you ask? A short sale is when a seller’s lender will have to accept less than the amount due on the seller’s mortgage. Right now there are many short sales showing up in the DC, MD and VA market. We can generally tell when a listing in the MLS is a short sale because the remarks will contain a disclosure that reads “subject to third party approval”.
Thus far none of our clients have approached us about selling their home in a short sale. However, our buyers are starting to find the listings as they search the MLS. Some have emailed and called to ask if they should pursue purchasing homes that are being offered as short sales. My advice is that it is not for everyone. If you are interested in a home that is being offered as a short sale the most important trait that the buyer must possess is PATIENCE.
Because lenders are bureaucracies, and because the number of short sale cases has increased, there are simply not enough people at the lender’s office to address all the short sales that need attention. For our clients, that means that once you decide to write a contract on a short sale property you could be looking at literally months of waiting just to see if your offer is even accepted. As anyone who has purchased a home can tell you, waiting to hear a response to a written offer can be a very anxious time.
With that in mind, I certainly wouldn’t recommend writing an offer on a short sale property to our first time buyers. I think the more appropriate buyer for a short sale is an investor or move-up buyer who is happy in the house they are in and has been through the process before and can sustain the extensive waiting. Of course, if a first time buyer came to us with a strong desire to write an offer for a short sale property we would do everything we could to assist them. However, we would want them to know from the very beginning of the process that they will need lots of friends to help them keep their sanity as they wait and wait for the lender to respond to their offer.
As the market continues to change, I am pleased to learn and share more and more about the different types of sales we can expect to encounter in this unique housing market. If you would like to learn more about short sales, feel free to email me at Michael@RealAstute.com and we will delve even further into this interesting topic.
What is a short sale you ask? A short sale is when a seller’s lender will have to accept less than the amount due on the seller’s mortgage. Right now there are many short sales showing up in the DC, MD and VA market. We can generally tell when a listing in the MLS is a short sale because the remarks will contain a disclosure that reads “subject to third party approval”.
Thus far none of our clients have approached us about selling their home in a short sale. However, our buyers are starting to find the listings as they search the MLS. Some have emailed and called to ask if they should pursue purchasing homes that are being offered as short sales. My advice is that it is not for everyone. If you are interested in a home that is being offered as a short sale the most important trait that the buyer must possess is PATIENCE.
Because lenders are bureaucracies, and because the number of short sale cases has increased, there are simply not enough people at the lender’s office to address all the short sales that need attention. For our clients, that means that once you decide to write a contract on a short sale property you could be looking at literally months of waiting just to see if your offer is even accepted. As anyone who has purchased a home can tell you, waiting to hear a response to a written offer can be a very anxious time.
With that in mind, I certainly wouldn’t recommend writing an offer on a short sale property to our first time buyers. I think the more appropriate buyer for a short sale is an investor or move-up buyer who is happy in the house they are in and has been through the process before and can sustain the extensive waiting. Of course, if a first time buyer came to us with a strong desire to write an offer for a short sale property we would do everything we could to assist them. However, we would want them to know from the very beginning of the process that they will need lots of friends to help them keep their sanity as they wait and wait for the lender to respond to their offer.
As the market continues to change, I am pleased to learn and share more and more about the different types of sales we can expect to encounter in this unique housing market. If you would like to learn more about short sales, feel free to email me at Michael@RealAstute.com and we will delve even further into this interesting topic.
Tuesday, October 02, 2007
Multiple Offers Sign of Faltering Buyers Market
By M. Anthony Carr
I've talked with four agents this week who have had contracts beat out by competing buyer offers. This news surprised me, but it shouldn't have. With last month's meltdown in the mortgage industry (actually, more of a purifying), it seems that buyers are starting to come out of the woodwork with good financing in hand to compete with other buyers for houses that are in good shape and priced right.
There are tales of multiple contract offers (when the seller actually gets to choose between offers, instead of beg for one); the use of escalation clauses once again; and sellers holding the line on subsidies to buyers.
This isn't across the whole market, but we're seeing pockets of neighborhoods where if a house comes on the market in great condition and priced at the last sale, the buyers are moving in like chickens after the proverbial flock of June bugs.
Is the buyers market over? Not yet. In fact, in the Washington, DC market area, where last year more than 22,000 houses sold around the District, Virginia and Maryland, there were plenty of homeowners who are walking away with large sums of gain from a market that has doubled in value over the last five years. Nevertheless, they are still having to price right and put the house in marketable -- nay -- “wow-ness” condition to sell them to a group of finicky buyers.
With that said, we are starting to see well-financed buyers put in full-price offers for homes that fit the definition of great condition and pricing. The challenge now is for those real estate agents who don't know how to survive in a buyers market to keep the lights on during this transition market -- which isn't disappearing just yet.
To determine if a market is turning from buyer to seller, you have to look at the same statistics you would research to see if the opposite is true -- a buyers market turning into a sellers market.
The first two stats would be for listings (inventory) and sales (how many sold). Is the inventory retreating over year-to-year numbers? If it is, then how are the sales holding up? With sales maintaining last year levels or moving upward, then the trek up the seller's market mountain has begun.
This doesn't mean sellers can now wait for a better offer, it just means the days on market will start tumbling, which is what has happened month after month in the DC market since February 2007 at 108 days to just 75 days on average in August. The days on market rate has been growing month after month for nearly two years, till it peaked in February, when it started its slow slide town to where it is today.
We'll have to see what happens with the DOM as a result of August's mortgage trials, but if this last week is any indication, the buyers who can qualify for a good mortgage are jumping off the fence, brushing off their jeans and hopping on the Bull.
We've been watching the market turn slowly but surely in the DC area for the last several months, starting with housing sales on Capitol Hill and moving out from there into the Virginia suburbs. The average home sales price in Washington has edged up from $416,000 in January of this year to $516,000 in August. Arlington County, the first county outside the District, is in a thriving market right now, as well.
In Arlington, the average sales price from August to August is up 18 percent, while days on market are clipping along at a spring-like pace at 49 days (barely a month). (The median sold price is up 25 percent).
Is it a buyers market? Yep. But not for long.
Thursday, September 27, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Real Estate Search Engines Keep Growing
Daily Real Estate News September 24, 2007
Real Estate Search Engines Keep Growing
Housing search engine Web sites are enjoying a boom in business despite a slowing market.
Trulia.com is outpacing all but Google and Yahoo! search engines in sending traffic to real estate companies nationwide, the company said, basing its claim on data from Hitwise, which measures how people interact with Web sites.
Trulia says it sends an average of 11 percent of all the traffic being directed to major real estate firms, including Coldwell Banker Real Estate, Century 21 Real Estate, ERA Franchise Systems, Keller Williams Realty, Weichert, and others.
Meanwhile, Zillow.com announced that it has landed $30 million in additional investment from Legg Mason Capital Management to support an expansion of its staff of 155, including a 20-person national advertising sales team.
“We believe Zillow is well on its way toward becoming a market-leader in a huge, and untapped online category of online tools and information for homeowners," said Bill Miller, chief investment officer at Legg Mason.
— REALTOR® Magazine Online
Real Estate Search Engines Keep Growing
Housing search engine Web sites are enjoying a boom in business despite a slowing market.
Trulia.com is outpacing all but Google and Yahoo! search engines in sending traffic to real estate companies nationwide, the company said, basing its claim on data from Hitwise, which measures how people interact with Web sites.
Trulia says it sends an average of 11 percent of all the traffic being directed to major real estate firms, including Coldwell Banker Real Estate, Century 21 Real Estate, ERA Franchise Systems, Keller Williams Realty, Weichert, and others.
Meanwhile, Zillow.com announced that it has landed $30 million in additional investment from Legg Mason Capital Management to support an expansion of its staff of 155, including a 20-person national advertising sales team.
“We believe Zillow is well on its way toward becoming a market-leader in a huge, and untapped online category of online tools and information for homeowners," said Bill Miller, chief investment officer at Legg Mason.
— REALTOR® Magazine Online
Thursday, September 20, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Professional Inspector Provides Relief for the Anxious New-Home Buyer
By Benny L. Kass
Saturday, September 15, 2007
F04 The Washington Post
Q: We are considering buying a new home from a builder. We like the neighborhood, and the price on the house has been reduced. The builder is also throwing in a number of extras, including paying all of our closing costs. However, we don't know the reputation of this builder, and we'd like to have the home inspected before we go to closing. Is this possible?
A: I think it's a good idea, but builders often reject such arrangements for a number of reasons. Some builders claim that this will void their insurance policy and are afraid that someone will get hurt during the inspection. Other builders don't want their employees bothered by too many questions from the inspector, and other builders just say, "We will provide you with a house that has been approved by the county inspectors, so you do not have to worry."
But you are smart to worry. Frank Lesh, president of the American Society of Home Inspectors, said, "Even new homes have defects that only a professional can detect."
Keep in mind that in many counties, the government inspectors are busy and do not have time to carefully look at all aspects of the new home. Often, by the time the county inspector makes a site visit, your builder may already have put up the drywall, thereby covering up the electrical and plumbing systems.
I have been involved in a number of new-home warranty issues, many of which could have been avoided had the buyer been given the right to inspect the home as it was being built. In one case, the homeowner kept hearing pipes knocking every time the upstairs bathroom sink was turned on. The homeowner forced the developer to open the walls, at the developer's expense, and found that some of the pipes were not properly affixed to the wall. The building inspector hired by the homeowner determined that this was "water hammer."
In this case, the builder acknowledged that had there been a periodic inspection, the problem would have been detected earlier, at a significant cost savings to the builder.
ASHI recommends a three-pronged inspection: before pouring the foundation, before putting in insulation and drywall, and before the final walk-through.
Tell the builder that you want the right to have an inspector of your choice, and at your expense, conduct these inspections. Your sales contract should clearly spell this out.
Remember that a new home has many components, including the roof, the foundation, the electrical and plumbing systems, and the heating and air-conditioning systems. I recently heard of a situation in which a homeowner complained that a new house was not being adequately cooled. When a professional inspected the system, he discovered that the builder had made a mistake. A system designed for a smaller house had accidentally been installed.
Again, the developer had to spend a lot of money to correct the situation, money that could have been saved had there been periodic inspections.
It often amazes me that when consumers buy a new car, they inspect it carefully, even to the point of kicking the tires. But when they buy a new house, they are more concerned about how many bedrooms there will be and what size television they will be able to put in the family room.
If you do not have a referral for an inspector, you can find one by going to the Web site of either ASHI ( http://www.ashi.org/) or the National Association of Certified Home Inspectors ( http://www.nachi.org/).
When you contact a home inspector, inquire about his or her qualifications and background.
Many states have laws governing certification of home inspectors, and the full list of these state laws can be found on the ASHI Web site.
If you decide to hire an inspector, get a copy of the inspector's contract before you formally commit. Read it carefully, and make sure that the inspector will be doing the job you want.
There is one controversial provision in most home inspectors' contracts, called an "exculpatory clause." This states that should the inspector make a mistake and negligently fail to pick up problem areas in the house, your only remedy is to get a full refund of the contract price.
This clause has been upheld in Maryland. Recently, however, the D.C. Court of Appeals held that these exculpatory clauses will not be enforced "when a party to the contract attempts to avoid liability for intentional conduct of harm caused by 'reckless, wanton or gross behavior.' " ( Carlton v. Home Tech, decided June 15, 2006.) This was a modest fix, but unless you can prove that the inspector was engaged in such behavior, the exculpatory clause will be enforced.
While not every home inspector will agree to delete this clause, it certainly is worth trying.
Buying a new home creates significant anxiety among many home buyers. Why not get an inspector to relieve you of at least part of it?
Benny L. Kass is a Washington lawyer. 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. Readers may also send questions to him at that address or contact him through his Web site, http://www.kmklawyers.com/
Saturday, September 15, 2007
F04 The Washington Post
Q: We are considering buying a new home from a builder. We like the neighborhood, and the price on the house has been reduced. The builder is also throwing in a number of extras, including paying all of our closing costs. However, we don't know the reputation of this builder, and we'd like to have the home inspected before we go to closing. Is this possible?
A: I think it's a good idea, but builders often reject such arrangements for a number of reasons. Some builders claim that this will void their insurance policy and are afraid that someone will get hurt during the inspection. Other builders don't want their employees bothered by too many questions from the inspector, and other builders just say, "We will provide you with a house that has been approved by the county inspectors, so you do not have to worry."
But you are smart to worry. Frank Lesh, president of the American Society of Home Inspectors, said, "Even new homes have defects that only a professional can detect."
Keep in mind that in many counties, the government inspectors are busy and do not have time to carefully look at all aspects of the new home. Often, by the time the county inspector makes a site visit, your builder may already have put up the drywall, thereby covering up the electrical and plumbing systems.
I have been involved in a number of new-home warranty issues, many of which could have been avoided had the buyer been given the right to inspect the home as it was being built. In one case, the homeowner kept hearing pipes knocking every time the upstairs bathroom sink was turned on. The homeowner forced the developer to open the walls, at the developer's expense, and found that some of the pipes were not properly affixed to the wall. The building inspector hired by the homeowner determined that this was "water hammer."
In this case, the builder acknowledged that had there been a periodic inspection, the problem would have been detected earlier, at a significant cost savings to the builder.
ASHI recommends a three-pronged inspection: before pouring the foundation, before putting in insulation and drywall, and before the final walk-through.
Tell the builder that you want the right to have an inspector of your choice, and at your expense, conduct these inspections. Your sales contract should clearly spell this out.
Remember that a new home has many components, including the roof, the foundation, the electrical and plumbing systems, and the heating and air-conditioning systems. I recently heard of a situation in which a homeowner complained that a new house was not being adequately cooled. When a professional inspected the system, he discovered that the builder had made a mistake. A system designed for a smaller house had accidentally been installed.
Again, the developer had to spend a lot of money to correct the situation, money that could have been saved had there been periodic inspections.
It often amazes me that when consumers buy a new car, they inspect it carefully, even to the point of kicking the tires. But when they buy a new house, they are more concerned about how many bedrooms there will be and what size television they will be able to put in the family room.
If you do not have a referral for an inspector, you can find one by going to the Web site of either ASHI ( http://www.ashi.org/) or the National Association of Certified Home Inspectors ( http://www.nachi.org/).
When you contact a home inspector, inquire about his or her qualifications and background.
Many states have laws governing certification of home inspectors, and the full list of these state laws can be found on the ASHI Web site.
If you decide to hire an inspector, get a copy of the inspector's contract before you formally commit. Read it carefully, and make sure that the inspector will be doing the job you want.
There is one controversial provision in most home inspectors' contracts, called an "exculpatory clause." This states that should the inspector make a mistake and negligently fail to pick up problem areas in the house, your only remedy is to get a full refund of the contract price.
This clause has been upheld in Maryland. Recently, however, the D.C. Court of Appeals held that these exculpatory clauses will not be enforced "when a party to the contract attempts to avoid liability for intentional conduct of harm caused by 'reckless, wanton or gross behavior.' " ( Carlton v. Home Tech, decided June 15, 2006.) This was a modest fix, but unless you can prove that the inspector was engaged in such behavior, the exculpatory clause will be enforced.
While not every home inspector will agree to delete this clause, it certainly is worth trying.
Buying a new home creates significant anxiety among many home buyers. Why not get an inspector to relieve you of at least part of it?
Benny L. Kass is a Washington lawyer. 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. Readers may also send questions to him at that address or contact him through his Web site, http://www.kmklawyers.com/
Thursday, September 13, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Tuesday, September 11, 2007
State of the Market for First Time Homebuyers
Recently, one of our prospective first-time home buyers posed the following question: “To be honest with you, I'm feeling a little apprehensive right now about the market. I know that houses are getting to be more affordable, but I'm concerned that I will have trouble getting a mortgage, or at least, a mortgage that I could afford. Do you think it would be wise to wait until I have a bit more cash on hand and then start looking? What do you think?”
We asked one of our favorite lenders, Connie Echeverria at Bank of America, to answer this question. Her excellent answer is below:
Hello there,
I would be happy to answer any questions that you may have regarding the state of the market. You can call me anytime-info below…
However, I find the simplest way to sum up what is happening/happened is that banks that were lending money to buyers that could not really afford to buy are no longer being allowed to do so. And buyers that were put in homes above their price point are no longer able to pay their mortgages, and so those banks are going under, and foreclosures are up.
Bank of America invested in neighborhoods that needed tax infrastructure (Bank of America’s Community Commitment Program) and we diversified our assets (bought LaSalle , MBNA, sponsors NFL, charity organizations, playgrounds, universities) to such a degree, that we were actually able to stabilize the mortgage market by purchasing several billion worth of Countrywide stock (we lent them the original $75,000 to start the bank J), amongst other things.
Mind you, we were never into the exotic type of loans that many brokers used to qualify buyers, so now, when everyone’s regulations are changing, we seem very exotic, simply because ours have stayed the same. Really, we are just stable…and we deliver consistently across the board.
My advice to you would be the following:
If you are curious about whether or not you should buy a home, now or in the future, ask yourself whether or not researching that prospect would be a worthwhile investment of your time. There is no monetary investment; your buyer orientation with Kevin and Michael is free; your pre approval and dialogue with me is…free. At the end of it all, you will have more knowledge, experience and comfort with something that may seem foreign to you now. Why wouldn’t you learn something new and look at pretty places where you may one day want to live while empowering yourself with knowledge?
Lastly, EVERYONE will want to give you advice on this subject. However, if YOU are the one to do the leg work, and in the end make the decision that it is NOT the right time for you, no matter what anyone else’s argument may be, you will never feel as if you may have missed out on something. You will be certain you made the right choice for you AND you will be prepped for another choice at any time…just keep reading and brushing up on what is going on, and when you are ready…that’s it. win-win...my favorite scenario!
Best of luck to you,
Cheers,
Connie Echeverria
Mortgage Loan Officer
The Krista Ellis Group
Bank of America Mortgage
3 Bethesda Metro, Suite 950
Bethesda, MD 20814
301-571-1407 direct
301-571-1444 fax
202-285-3937 cell
Connie.Echeverria@BankofAmerica.com
Yo Hablo Espanol
We asked one of our favorite lenders, Connie Echeverria at Bank of America, to answer this question. Her excellent answer is below:
Hello there,
I would be happy to answer any questions that you may have regarding the state of the market. You can call me anytime-info below…
However, I find the simplest way to sum up what is happening/happened is that banks that were lending money to buyers that could not really afford to buy are no longer being allowed to do so. And buyers that were put in homes above their price point are no longer able to pay their mortgages, and so those banks are going under, and foreclosures are up.
Bank of America invested in neighborhoods that needed tax infrastructure (Bank of America’s Community Commitment Program) and we diversified our assets (bought LaSalle , MBNA, sponsors NFL, charity organizations, playgrounds, universities) to such a degree, that we were actually able to stabilize the mortgage market by purchasing several billion worth of Countrywide stock (we lent them the original $75,000 to start the bank J), amongst other things.
Mind you, we were never into the exotic type of loans that many brokers used to qualify buyers, so now, when everyone’s regulations are changing, we seem very exotic, simply because ours have stayed the same. Really, we are just stable…and we deliver consistently across the board.
My advice to you would be the following:
If you are curious about whether or not you should buy a home, now or in the future, ask yourself whether or not researching that prospect would be a worthwhile investment of your time. There is no monetary investment; your buyer orientation with Kevin and Michael is free; your pre approval and dialogue with me is…free. At the end of it all, you will have more knowledge, experience and comfort with something that may seem foreign to you now. Why wouldn’t you learn something new and look at pretty places where you may one day want to live while empowering yourself with knowledge?
Lastly, EVERYONE will want to give you advice on this subject. However, if YOU are the one to do the leg work, and in the end make the decision that it is NOT the right time for you, no matter what anyone else’s argument may be, you will never feel as if you may have missed out on something. You will be certain you made the right choice for you AND you will be prepped for another choice at any time…just keep reading and brushing up on what is going on, and when you are ready…that’s it. win-win...my favorite scenario!
Best of luck to you,
Cheers,
Connie Echeverria
Mortgage Loan Officer
The Krista Ellis Group
Bank of America Mortgage
3 Bethesda Metro, Suite 950
Bethesda, MD 20814
301-571-1407 direct
301-571-1444 fax
202-285-3937 cell
Connie.Echeverria@BankofAmerica.com
Yo Hablo Espanol
Thursday, September 06, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Area Housing Price Gains Still Outpace National Average
Washington Business Journal - 12:48 PM EDT Thursday, August 30, 2007
by Jeff Clabaugh
Staff Reporter
A government report Thursday says housing price appreciation has slowed to the slowest pace in a decade, but price gains in the Washington area continue to outpace the national average.
The Office of Federal Housing Enterprise Oversight (OFHEO) says average prices of a single-family home last quarter were up 3.2 percent from year-ago prices. Maryland, D.C. and Virginia, all consistently in the top 10 for housing prices gains for years, have slipped further down the list in recent quarters.
In the second quarter, single family home prices in Virginia were up 3.7 percent from year ago levels, ranking 32nd in the nation for price gains. Maryland ranked 21 last quarter, with year-over-year price gains of 4.72 percent. The District ranks 24 with prices up 4.62 percent.
All three jurisdictions had quarterly price gains of less than 1 percent.
The Washington area ranked 201 out of cities for price gains, up 1.16 percent from a year ago. The OFHEO say Washington metro housing prices fell an average of 0.23 percent from the previous quarter.
Home prices in Utah surged 15.1 percent from year ago levels, ranking it top on the list of pricing changes. Nevada was at the bottom of the list, with a price decline of 1.45 percent over year ago levels.
by Jeff Clabaugh
Staff Reporter
A government report Thursday says housing price appreciation has slowed to the slowest pace in a decade, but price gains in the Washington area continue to outpace the national average.
The Office of Federal Housing Enterprise Oversight (OFHEO) says average prices of a single-family home last quarter were up 3.2 percent from year-ago prices. Maryland, D.C. and Virginia, all consistently in the top 10 for housing prices gains for years, have slipped further down the list in recent quarters.
In the second quarter, single family home prices in Virginia were up 3.7 percent from year ago levels, ranking 32nd in the nation for price gains. Maryland ranked 21 last quarter, with year-over-year price gains of 4.72 percent. The District ranks 24 with prices up 4.62 percent.
All three jurisdictions had quarterly price gains of less than 1 percent.
The Washington area ranked 201 out of cities for price gains, up 1.16 percent from a year ago. The OFHEO say Washington metro housing prices fell an average of 0.23 percent from the previous quarter.
Home prices in Utah surged 15.1 percent from year ago levels, ranking it top on the list of pricing changes. Nevada was at the bottom of the list, with a price decline of 1.45 percent over year ago levels.
In the Thick of A Resurgence On the Hill
Building Salvaged From Neglect
By Ruben Castaneda
Washington Post Staff Writer
Saturday, September 1, 2007; Page T05
Although she's lived in suburban Maryland for most of the past 20 years, Yvonne Johnson found herself spending more time in the District in recent years. So much time that she decided she may as well live there.
This spring, she moved into a three-story brick building on 15th Street SE in Capitol Hill.
It was a good choice, Johnson said. "I enjoy living in the city."
The Stadium-Armory Metro stop is a short walk away, and, though her job as a real estate agent is in Waldorf, the commute is relatively easy. "I'm going in the opposite direction of traffic . . . so it's a breeze," Johnson said.
Now, in her spare time, Johnson walks to such venerable Capitol Hill haunts as the Banana Cafe and Marty's, two of the many restaurants on Eighth Street SE. Johnson has become a regular at nearby Eastern Market and takes Metro whenever she can.
But life in and around Johnson's building wasn't always so pleasant.
In the late 1990s and the early part of this decade, the building was in disrepair, some of its 17 units were unoccupied, and others were occupied by squatters, said Joan Simon, who with her husband, Joel Simon, bought the building for about $500,000 at a foreclosure sale in December 2001.
Some of the people who lived in or hung around the building then sold drugs, Simon said. The front door was not secure and was often broken.
When she and her husband bought the building, the legal tenants received federal Section 8
vouchers and other help finding new homes, Joan Simon said.
Then the Simons went to work, spending hundreds of thousands of dollars to renovate the units and the building's common areas.
Among the new features: a secure front door, an intercom system, security cameras in the front and back entrances and in the hallways, and a fenced parking area behind the building with a remote-controlled gate.
Joan Simon updated the landscaping, planting shrubs, small trees and colorful flowers. The Simons reached out to D.C. police, who, she said, were responsive. "The police and I became best friends," Joan Simon said.
Their hard work paid off. By August 2002, the first new tenants had moved into the renovated building. By December of that year, the building was completely rented, the Simons said.
The building's comeback is part of a broader neighborhood resurgence; housing prices and rents have soared in Capitol Hill in recent years. Most of the other buildings on the block are rowhouses inhabited by families, and there's a new condominium building going up a few doors from the apartment building.
Joel Simon estimated that his building dates to the 1930s or 1940s. There are coin-operated washers and dryers in the basement, and there is no elevator. Although the kitchens in each of the units were modernized in the renovation, the apartments have a film-noir feel, with arched doorways, asymmetrical angles and hardwood floors.
Tenants said Yarmouth Management, which manages the building, is friendly and responsive whenever they call for service. Johnson said that when she moved in, the remote control for the gate around the parking lot wasn't working, and she called the management company. "They got on it right away, and by the next day it was done," she said.
Johnson and other tenants said they knew before they moved in that crime was a problem for some parts of Capitol Hill but that they feel secure in their building and haven't had any problems in the neighborhood.
Michael John Casey, an actor, moved into a one-bedroom unit with his fiancee in late April. "I've never felt any kind of danger since we've moved here," Casey said.
Casey praised the convenience of the neighborhood, noting that he can walk to Eastern Market, the restaurants and shops on Eighth Street SE, or a nearby Safeway in a matter of minutes. Casey said his fiancee, Colleen Delaney, an actress, walks to a theater group's rehearsal hall on Eighth Street.
Kathleen Barr, a lobbyist for a nonprofit group, lives in an efficiency in the building. She described the neighborhood as welcoming, noting that there is usually no shortage of quiet activity on the street, such as people walking their dogs or tending to their front yards. "I like the laid-back atmosphere," Barr said.
By Ruben Castaneda
Washington Post Staff Writer
Saturday, September 1, 2007; Page T05
Although she's lived in suburban Maryland for most of the past 20 years, Yvonne Johnson found herself spending more time in the District in recent years. So much time that she decided she may as well live there.
This spring, she moved into a three-story brick building on 15th Street SE in Capitol Hill.
It was a good choice, Johnson said. "I enjoy living in the city."
The Stadium-Armory Metro stop is a short walk away, and, though her job as a real estate agent is in Waldorf, the commute is relatively easy. "I'm going in the opposite direction of traffic . . . so it's a breeze," Johnson said.
Now, in her spare time, Johnson walks to such venerable Capitol Hill haunts as the Banana Cafe and Marty's, two of the many restaurants on Eighth Street SE. Johnson has become a regular at nearby Eastern Market and takes Metro whenever she can.
But life in and around Johnson's building wasn't always so pleasant.
In the late 1990s and the early part of this decade, the building was in disrepair, some of its 17 units were unoccupied, and others were occupied by squatters, said Joan Simon, who with her husband, Joel Simon, bought the building for about $500,000 at a foreclosure sale in December 2001.
Some of the people who lived in or hung around the building then sold drugs, Simon said. The front door was not secure and was often broken.
When she and her husband bought the building, the legal tenants received federal Section 8
vouchers and other help finding new homes, Joan Simon said.Then the Simons went to work, spending hundreds of thousands of dollars to renovate the units and the building's common areas.
Among the new features: a secure front door, an intercom system, security cameras in the front and back entrances and in the hallways, and a fenced parking area behind the building with a remote-controlled gate.
Joan Simon updated the landscaping, planting shrubs, small trees and colorful flowers. The Simons reached out to D.C. police, who, she said, were responsive. "The police and I became best friends," Joan Simon said.
Their hard work paid off. By August 2002, the first new tenants had moved into the renovated building. By December of that year, the building was completely rented, the Simons said.
The building's comeback is part of a broader neighborhood resurgence; housing prices and rents have soared in Capitol Hill in recent years. Most of the other buildings on the block are rowhouses inhabited by families, and there's a new condominium building going up a few doors from the apartment building.
Joel Simon estimated that his building dates to the 1930s or 1940s. There are coin-operated washers and dryers in the basement, and there is no elevator. Although the kitchens in each of the units were modernized in the renovation, the apartments have a film-noir feel, with arched doorways, asymmetrical angles and hardwood floors.
Tenants said Yarmouth Management, which manages the building, is friendly and responsive whenever they call for service. Johnson said that when she moved in, the remote control for the gate around the parking lot wasn't working, and she called the management company. "They got on it right away, and by the next day it was done," she said.
Johnson and other tenants said they knew before they moved in that crime was a problem for some parts of Capitol Hill but that they feel secure in their building and haven't had any problems in the neighborhood.
Michael John Casey, an actor, moved into a one-bedroom unit with his fiancee in late April. "I've never felt any kind of danger since we've moved here," Casey said.
Casey praised the convenience of the neighborhood, noting that he can walk to Eastern Market, the restaurants and shops on Eighth Street SE, or a nearby Safeway in a matter of minutes. Casey said his fiancee, Colleen Delaney, an actress, walks to a theater group's rehearsal hall on Eighth Street.
Kathleen Barr, a lobbyist for a nonprofit group, lives in an efficiency in the building. She described the neighborhood as welcoming, noting that there is usually no shortage of quiet activity on the street, such as people walking their dogs or tending to their front yards. "I like the laid-back atmosphere," Barr said.
Thursday, August 30, 2007
Feeling Nosy about DC? MD? VA?
Ok, I know you're probably not planning on moving this very second, but here's this week's list of interesting-looking listings that have just come on the market. Mind you, they may not actually be my personal listings --- just intriguing properties I've come across that week.
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
Feeling nosy about the District of Columbia?
Feeling nosy about Virginia?
Feeling nosy about Maryland?
If you know someone who might be interested in this list, please forward it on to him or her. And if there's a listing that you're curious about yourself, just let me know ... and I'll show it to you ... just for the hell of it ... no obligation ... *I promise*. Really. (One of the perks of being the friend of a real estate agent ought to be that you get to freely snoop around other peoples' homes!
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