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!
Thursday, June 28, 2007
Road to a Retail Makeover
Road to a Retail MakeoverD.C.'s Plan to Revive Shopping Areas Leads Through H Street NE
By Ylan Q. MuiWashington Post Staff WriterMonday, June 25, 2007; D01
On H Street Northeast, there are hipster bars that draw weekend crowds large enough to rival those of U Street. There is a dance studio that teaches ballroom, ballet and Afro-Caribbean. A massive red-brick luxury condo building is rising on the western end, touting the slogan "DC's next great quarter."
The corridor once infamous for race riots and crime is in the midst of an urban revival. But one critical piece is missing: the shopping.
A few veteran mom-and-pop stores have survived the decades of neglect. A handful of national chains, such as Payless ShoeSource and Rite Aid, have staked out ground. But retail along H Street has not caught up with the rest of the development. Check-cashing stores, tax preparers and liquor stores dominate.
The District is looking at the street as one of the first places where it can influence the shopping landscape. Recently, Mayor Adrian M. Fenty (D) and Planning Director Harriet Tregoning said the District will develop a citywide plan to keep and attract retail, and stem the $1 billion in sales tax they say is leaked to surrounding jurisdictions. The plan will target 20 neighborhoods where stores have failed to take hold.
H Street is on the list, along with Georgia Avenue, Shaw, M Street SE, Nannie Helen Burroughs Avenue, East Capitol Street and Bladensburg Road. The other neighborhoods have not yet been identified.
Each faces its own challenges. Some require redevelopment from the ground up, others resemble suburbia. But H Street is perhaps the closest to a turnaround.
The community hopes the city's plan will create a better environment to attract retail. Among their requests are tax breaks for restoring old buildings, an expedited permitting process and cleaner streets.
"They talked about H Street in the theoretical and now we're here," said Joe Englert, who owns several popular bars in the neighborhood. "Now they've got to get in a different mind-set."
During a bumpy van ride through the corridor, Tregoning and Neil O. Albert, deputy mayor for planning and economic development, spoke about their visions of higher-quality stores on the street.
Over the next 10 years, the city thinks the neighborhood could support 300,000 square feet of retail. Through its Great Streets program, the city plans to spend $27 million sprucing up the corridor with wider sidewalks, more trees, flattering lighting, bike racks and signs for community attractions. There are plans for a trolley to ferry residents along the 1 1/2 -mile stretch.
Build it and they will come seems to be the prevailing philosophy. There are hopes for more apparel retailers, a jewelry store, book shop, pet store. The blocks from 7th to 12th streets are designated as the retail epicenter. To the west is the residential neighborhood that, with any luck, would feature a grocery store like Trader Joe's. To the east is the arts-and-entertainment zone, ending at Hechinger Mall.
"You can almost never begin with retail first, because retail wants customers," Tregoning said.
About 40 to 45 of the street's 300 buildings are vacant, according to Anwar Saleem, head of the city's Main Streets initiative on H Street, which aims to spur business. That's an improvement from the roughly 150 that were empty four years ago, he said. A slew of new businesses have moved to the area -- clothing boutique and salon Stella Bleu, coffee shop Sidamo, a gym called WillPower that advertises pilates classes. There's also a Subway, Rainbow clothing store and GameStop.
Retailers that can keep up with the $2 million condos going up down the street are still several years away by the most ambitious estimates. A strip shopping center called H Street Connection dominates the corridor's retail district -- not quite the historic feel that residents and city officials envision.
Henry Fonvielle, executive vice president of the Rappaport Cos., which owns the center, said he just now is starting to think about remodeling.
He would eventually like to raze the building and replace it with a mixed-use development with retail on the bottom floors and residences above. But rents have to rise substantially to make it worth the effort, he said.
Still, Fonvielle said he is excited by the changes underway. It's all a matter of timing.
"Every time a storefront turns over on H Street, it's going to be a turnover for the better," he said. "It's just an evolutionary process."
High Costs of Change
City officials say they envision a shopping district on H Street populated with lots of small, unique shops and a few national retailers. But independent businesses have struggled to gain footholds in the corridor because of the age and poor conditions of many of the buildings, as well as their small footprints.
Englert was one of H Street's pioneers, opening several trendy bars and restaurants in the past two years. Englert estimated that he spent $500,000 to get Rock and Roll Hotel off the ground -- nearly double the cost to open his businesses in more upscale neighborhoods such as Dupont Circle and Cleveland Park. Most of the money went to rehabilitating the building, with $85,000 for the heating and air-conditioning system.
"It's like you need an advanced degree or an incredibly astute permit person to get the littlest thing," he said. "In reality, you're not going to get a lot of breaks."
But Englert helped prove that people would make H Street a destination. Now he is planning a Belgian restaurant with mussels and frites in the 1200 block of H Street, and an indoor mini-golf place in the 1300 block.
"I know we're going to do well there when all's said and done," he said. "But you have to be a realist and say that's tough going. Really tough going."
Space is another issue. Many of the properties are small and narrow, with the tiniest at about 1,250 square feet -- too small for most national retailers to even consider. The average restaurant needs at least 2,000 square feet. A drug store such as CVS is generally 5,000 to 9,000 square feet. Even a small grocery store such as Trader Joe's claims about 40,000 square feet.
That means most property owners are searching for small, independent retailers to lease the space. But as property values rise, so do taxes -- and rent. And many merchants have found it difficult to sell enough merchandise in their small spaces to pay off the growing rents.
There have been several casualties as well. The pet shop. The bookstore. The women's specialty store, all felled by high rents and slow sales.
"What can you do about that?" Saleem said. "If they can't pay the rent, they aren't coming."
Smokey Maye has owned the building that houses his barbershop, at 1338 H St. NE, since 1999. It's been in business at the same location since 1966. People in the neighborhood know him by name.
In 2005, Maye said, his property taxes were $2,100. Last year, they more than doubled to $5,400. At this rate, he figures he will have to increase his prices by a few dollars just to stay in business.
Still, he said, he is glad that change is coming to H Street.
"It's bringing people down here," he said. "It's just been a few businesses down here for so long."
'I Don't Want to Evolve'
Developer Jim Abdo is building Senate Square, a luxury condo building on 3rd and H streets NE that will begin to deliver this fall. He said the corridor is strikingly similar to 14th Street NW.
Abdo watched change come slowly to the businesses on 14th Street, like the liquor stores that once sold 40-ounce beers and switched to stocking expensive wines instead. They adapted to the needs of the new residents.
"This is a whole new level of buying power that we're bringing you," he said. "Look at ways to respond to that to allow your business to grow, not leave the neighborhood."
But not everyone wants to change. One H Street merchant, who spoke on condition of anonymity for fear of jeopardizing his business, said his core clientele are low-income residents. He said it is easier to leave H Street and follow them than to rethink his business model.
As for the residents moving to H Street? They don't want to shop at the stores there now, he said, even though they might carry products they need. The new folks want stores that look fancy, he said. His is not among them. He figures he can last seven to 10 years.
"I don't want to evolve," he said. "It's the haves and the have-nots, and they would like the have-nots to please leave."
Saleem is trying to bridge that gap. He grew up in the neighborhood, and his parents, family and friends still live there. He doesn't want the moms-and-pops who stuck with H Street during the hard times to leave. But he also wants to see new life breathed into the corridor.
"You may not get what you want today. But they may morph into what you want tomorrow," he said. "It's a whole lot better than it was."
By Ylan Q. MuiWashington Post Staff WriterMonday, June 25, 2007; D01
On H Street Northeast, there are hipster bars that draw weekend crowds large enough to rival those of U Street. There is a dance studio that teaches ballroom, ballet and Afro-Caribbean. A massive red-brick luxury condo building is rising on the western end, touting the slogan "DC's next great quarter."
The corridor once infamous for race riots and crime is in the midst of an urban revival. But one critical piece is missing: the shopping.
A few veteran mom-and-pop stores have survived the decades of neglect. A handful of national chains, such as Payless ShoeSource and Rite Aid, have staked out ground. But retail along H Street has not caught up with the rest of the development. Check-cashing stores, tax preparers and liquor stores dominate.
The District is looking at the street as one of the first places where it can influence the shopping landscape. Recently, Mayor Adrian M. Fenty (D) and Planning Director Harriet Tregoning said the District will develop a citywide plan to keep and attract retail, and stem the $1 billion in sales tax they say is leaked to surrounding jurisdictions. The plan will target 20 neighborhoods where stores have failed to take hold.
H Street is on the list, along with Georgia Avenue, Shaw, M Street SE, Nannie Helen Burroughs Avenue, East Capitol Street and Bladensburg Road. The other neighborhoods have not yet been identified.
Each faces its own challenges. Some require redevelopment from the ground up, others resemble suburbia. But H Street is perhaps the closest to a turnaround.
The community hopes the city's plan will create a better environment to attract retail. Among their requests are tax breaks for restoring old buildings, an expedited permitting process and cleaner streets.
"They talked about H Street in the theoretical and now we're here," said Joe Englert, who owns several popular bars in the neighborhood. "Now they've got to get in a different mind-set."
During a bumpy van ride through the corridor, Tregoning and Neil O. Albert, deputy mayor for planning and economic development, spoke about their visions of higher-quality stores on the street.
Over the next 10 years, the city thinks the neighborhood could support 300,000 square feet of retail. Through its Great Streets program, the city plans to spend $27 million sprucing up the corridor with wider sidewalks, more trees, flattering lighting, bike racks and signs for community attractions. There are plans for a trolley to ferry residents along the 1 1/2 -mile stretch.
Build it and they will come seems to be the prevailing philosophy. There are hopes for more apparel retailers, a jewelry store, book shop, pet store. The blocks from 7th to 12th streets are designated as the retail epicenter. To the west is the residential neighborhood that, with any luck, would feature a grocery store like Trader Joe's. To the east is the arts-and-entertainment zone, ending at Hechinger Mall.
"You can almost never begin with retail first, because retail wants customers," Tregoning said.
About 40 to 45 of the street's 300 buildings are vacant, according to Anwar Saleem, head of the city's Main Streets initiative on H Street, which aims to spur business. That's an improvement from the roughly 150 that were empty four years ago, he said. A slew of new businesses have moved to the area -- clothing boutique and salon Stella Bleu, coffee shop Sidamo, a gym called WillPower that advertises pilates classes. There's also a Subway, Rainbow clothing store and GameStop.
Retailers that can keep up with the $2 million condos going up down the street are still several years away by the most ambitious estimates. A strip shopping center called H Street Connection dominates the corridor's retail district -- not quite the historic feel that residents and city officials envision.
Henry Fonvielle, executive vice president of the Rappaport Cos., which owns the center, said he just now is starting to think about remodeling.
He would eventually like to raze the building and replace it with a mixed-use development with retail on the bottom floors and residences above. But rents have to rise substantially to make it worth the effort, he said.
Still, Fonvielle said he is excited by the changes underway. It's all a matter of timing.
"Every time a storefront turns over on H Street, it's going to be a turnover for the better," he said. "It's just an evolutionary process."
High Costs of Change
City officials say they envision a shopping district on H Street populated with lots of small, unique shops and a few national retailers. But independent businesses have struggled to gain footholds in the corridor because of the age and poor conditions of many of the buildings, as well as their small footprints.
Englert was one of H Street's pioneers, opening several trendy bars and restaurants in the past two years. Englert estimated that he spent $500,000 to get Rock and Roll Hotel off the ground -- nearly double the cost to open his businesses in more upscale neighborhoods such as Dupont Circle and Cleveland Park. Most of the money went to rehabilitating the building, with $85,000 for the heating and air-conditioning system.
"It's like you need an advanced degree or an incredibly astute permit person to get the littlest thing," he said. "In reality, you're not going to get a lot of breaks."
But Englert helped prove that people would make H Street a destination. Now he is planning a Belgian restaurant with mussels and frites in the 1200 block of H Street, and an indoor mini-golf place in the 1300 block.
"I know we're going to do well there when all's said and done," he said. "But you have to be a realist and say that's tough going. Really tough going."
Space is another issue. Many of the properties are small and narrow, with the tiniest at about 1,250 square feet -- too small for most national retailers to even consider. The average restaurant needs at least 2,000 square feet. A drug store such as CVS is generally 5,000 to 9,000 square feet. Even a small grocery store such as Trader Joe's claims about 40,000 square feet.
That means most property owners are searching for small, independent retailers to lease the space. But as property values rise, so do taxes -- and rent. And many merchants have found it difficult to sell enough merchandise in their small spaces to pay off the growing rents.
There have been several casualties as well. The pet shop. The bookstore. The women's specialty store, all felled by high rents and slow sales.
"What can you do about that?" Saleem said. "If they can't pay the rent, they aren't coming."
Smokey Maye has owned the building that houses his barbershop, at 1338 H St. NE, since 1999. It's been in business at the same location since 1966. People in the neighborhood know him by name.
In 2005, Maye said, his property taxes were $2,100. Last year, they more than doubled to $5,400. At this rate, he figures he will have to increase his prices by a few dollars just to stay in business.
Still, he said, he is glad that change is coming to H Street.
"It's bringing people down here," he said. "It's just been a few businesses down here for so long."
'I Don't Want to Evolve'
Developer Jim Abdo is building Senate Square, a luxury condo building on 3rd and H streets NE that will begin to deliver this fall. He said the corridor is strikingly similar to 14th Street NW.
Abdo watched change come slowly to the businesses on 14th Street, like the liquor stores that once sold 40-ounce beers and switched to stocking expensive wines instead. They adapted to the needs of the new residents.
"This is a whole new level of buying power that we're bringing you," he said. "Look at ways to respond to that to allow your business to grow, not leave the neighborhood."
But not everyone wants to change. One H Street merchant, who spoke on condition of anonymity for fear of jeopardizing his business, said his core clientele are low-income residents. He said it is easier to leave H Street and follow them than to rethink his business model.
As for the residents moving to H Street? They don't want to shop at the stores there now, he said, even though they might carry products they need. The new folks want stores that look fancy, he said. His is not among them. He figures he can last seven to 10 years.
"I don't want to evolve," he said. "It's the haves and the have-nots, and they would like the have-nots to please leave."
Saleem is trying to bridge that gap. He grew up in the neighborhood, and his parents, family and friends still live there. He doesn't want the moms-and-pops who stuck with H Street during the hard times to leave. But he also wants to see new life breathed into the corridor.
"You may not get what you want today. But they may morph into what you want tomorrow," he said. "It's a whole lot better than it was."
Thursday, June 21, 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!
Developers, Managers See Green Building Perks
Daily Real Estate News June 20, 2007
The real estate industry — most notably the commercial side — is slowly but surely embracing sustainable business practices and green technologies, according to an analysis of the industry by Progressive Investor, monthly newsletter that’s focused on sustainable investments.
"The benefits will make green ubiquitous over the next two years," says George Caraghiaur, vice president for energy services at Simon Property Group, owner of 300 shopping malls.
Developers are using green construction in their projects, real estate consumers and tenants are showing a preference for sustainable buildings, and it’s becoming more affordable to make earth-friendly choices, the newsletter says. What’s driving the trend? Progressive Investor identified these factors:
Energy prices are rising. Developers and building owners are feeling the crunch of high energy and water costs, which, according to the Building Owners and Managers Association (BOMA), constitute 28 percent of operating costs for downtown office properties, and 30.4 percent for suburban properties. They see the quick payback and cost savings energy efficiency and other green building upgrades offer.Construction costs are coming down. Building green no longer costs more. Turner Construction's 2005 Green Building Market Barometer shows it costs a just 0.8 percent more for basic LEED certification, easily recouped through lower operating costs.
Tenants are demanding it. Increasingly, clients and tenants show a preference for green buildings, which have been proven to increase productivity, retain employees and lower absenteeism. The combination of reduced operating costs and more satisfied occupants translates into 3.5% higher occupancy rates, 3% higher rents, and a 7.5% increase in building value, says the McGraw-Hill 2006 SmartMarket Report.
Green gets visibility. Corporations with sustainable business policies are building highly visible green headquarters including Bank of America, Toyota, Goldman Sachs, Hearst, IBM, JPMorgan Chase and Herman Miller. The Freedom Tower, which replaces the World Trade Center, will be LEED-certified.
States are requiring it. Green building is increasingly being mandated. Nine states and 40+ municipalities have passed legislation mandating LEED-certified buildings. Six percent of commercial developments are LEED-certified, and it’s projected to jump to 10 percent of the market by 2010.
REITS Fill Demand for Green Investments
Because there are more green buildings, there also are more choices for investors who want to put there money into an environmentally friendly funds. Some 41 percent of the 300 U.S. real estate investment trusts (REITs) are actively pursuing energy efficiency and green building upgrades and another 27 percent plan to do so.
For now, U.S. investors can gain exposure to the sector through the Forward Progressive Real Estate Fund (FFREX), the first SRI REIT mutual fund, and through about two dozen individual securities, including Simon Property Group (NYSE:SPG) , Weingarten Realty Investors (NYSE:WRI) , Prologis (NYSE:PLD) and SL Green Realty (NYSE:SLG) .
Outside the U.S., leaders include Investa Property Group (IPG.AX), Australia's largest owner of prime grade office space, Lend Lease (LLC.AX), Land Securities (LAND.L), British Land (BLND.L) and SEGRO (SGRO.L), in the UK.
Progressive firms are increasingly focused on urban infill buildings rather than suburban greenfields and incorporating advanced energy efficiency measures, as well as recycled building materials, gray water systems, rainwater capture and green roofs, the report says.
— REALTOR® Magazine Online
The real estate industry — most notably the commercial side — is slowly but surely embracing sustainable business practices and green technologies, according to an analysis of the industry by Progressive Investor, monthly newsletter that’s focused on sustainable investments.
"The benefits will make green ubiquitous over the next two years," says George Caraghiaur, vice president for energy services at Simon Property Group, owner of 300 shopping malls.
Developers are using green construction in their projects, real estate consumers and tenants are showing a preference for sustainable buildings, and it’s becoming more affordable to make earth-friendly choices, the newsletter says. What’s driving the trend? Progressive Investor identified these factors:
Energy prices are rising. Developers and building owners are feeling the crunch of high energy and water costs, which, according to the Building Owners and Managers Association (BOMA), constitute 28 percent of operating costs for downtown office properties, and 30.4 percent for suburban properties. They see the quick payback and cost savings energy efficiency and other green building upgrades offer.Construction costs are coming down. Building green no longer costs more. Turner Construction's 2005 Green Building Market Barometer shows it costs a just 0.8 percent more for basic LEED certification, easily recouped through lower operating costs.
Tenants are demanding it. Increasingly, clients and tenants show a preference for green buildings, which have been proven to increase productivity, retain employees and lower absenteeism. The combination of reduced operating costs and more satisfied occupants translates into 3.5% higher occupancy rates, 3% higher rents, and a 7.5% increase in building value, says the McGraw-Hill 2006 SmartMarket Report.
Green gets visibility. Corporations with sustainable business policies are building highly visible green headquarters including Bank of America, Toyota, Goldman Sachs, Hearst, IBM, JPMorgan Chase and Herman Miller. The Freedom Tower, which replaces the World Trade Center, will be LEED-certified.
States are requiring it. Green building is increasingly being mandated. Nine states and 40+ municipalities have passed legislation mandating LEED-certified buildings. Six percent of commercial developments are LEED-certified, and it’s projected to jump to 10 percent of the market by 2010.
REITS Fill Demand for Green Investments
Because there are more green buildings, there also are more choices for investors who want to put there money into an environmentally friendly funds. Some 41 percent of the 300 U.S. real estate investment trusts (REITs) are actively pursuing energy efficiency and green building upgrades and another 27 percent plan to do so.
For now, U.S. investors can gain exposure to the sector through the Forward Progressive Real Estate Fund (FFREX), the first SRI REIT mutual fund, and through about two dozen individual securities, including Simon Property Group (NYSE:SPG) , Weingarten Realty Investors (NYSE:WRI) , Prologis (NYSE:PLD) and SL Green Realty (NYSE:SLG) .
Outside the U.S., leaders include Investa Property Group (IPG.AX), Australia's largest owner of prime grade office space, Lend Lease (LLC.AX), Land Securities (LAND.L), British Land (BLND.L) and SEGRO (SGRO.L), in the UK.
Progressive firms are increasingly focused on urban infill buildings rather than suburban greenfields and incorporating advanced energy efficiency measures, as well as recycled building materials, gray water systems, rainwater capture and green roofs, the report says.
— REALTOR® Magazine Online
Thursday, June 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 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!
How Home Buyers Can Make Sure They Get the Best Mortgage
By Ruth Mantell, MarketWatch
RISMEDIA, June 14, 2007-(MarketWatch) - Think you're getting a good deal from your mortgage broker? Try looking at the fine print.Your mortgage broker could be getting paid by a lender to sell you a loan. The practice is perfectly legal.
It's also controversial. Critics complain that brokers looking for a fat check from a lender can lead consumers into unnecessarily pricey loans.
"One thing that consumers need to understand is that a broker's interest is not always aligned with theirs," said Ira Rheingold, general counsel with the National Association of Consumer Advocates. "You need to be very wary. Despite what the broker may say about getting the best loan for you."
Here's how mortgage brokers get paid: They can get a fee from you. Brokers can also collect a premium from a lender that is based on the rate of the loan — the higher the rate the more they make.And that's where the trouble begins, consumer advocates say. Brokers describe themselves as independent contractors, meaning that they provide services to consumers, as well as lenders. Critics charge that brokers sometimes push a pricey product to pocket higher fees.Borrowers don't need to despair, though. Experts say there are ways to make sure you're getting a good deal from your mortgage broker.
1. Do your homework
Some fees and rates are negotiable — so don't say yes to the first deal you hear.
"My first advice would be to shop around. Check with a variety of lenders," said L. Jean Noonan, a partner at law firm Hudson Cook and former associate director for credit practices in the Federal Trade Commission's consumer protection bureau.
Also, consumers should be wary if their broker is offering a nontraditional mortgage that doesn't require full documentation of income and assets.
"Those mortgages almost always carry a high interest rate, and the consumer should be very sure that that's the right mortgage for them," Noonan said. "If they are able to document their income and assets, it's almost always worth doing that and getting a more favorable rate.
"It's important to understand all of the fees, as well as the interest rate, associated with a loan."
An inexperienced or fast-talking broker may not explain it well. A good broker understands his business is largely referral business, and unhappy customers don't give referrals," Noonan said.
2. Bring a buddy
Get help from someone you trust — other than the broker.
"It's fine to bring someone with you who can help stand up for you if you're feeling pressured," Noonan said.
The key is to ask for help from someone who isn't getting paid. You can turn to a home-ownership counselor, or friends and family with professional expertise or at least experience in real estate."Consumers should not rely on brokers, when all is said and done, to find them the best loan to take. They ought to turn to experienced professionals who can give them candid and informed advice," said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America.
3. Don't be shy
It's important to ask questions, experts agree.
"You want to look for the loans that best meet your needs and budget," said Carole Reynolds, a senior attorney with the Federal Trade Commission's financial practices division.
You need to know whether the loan has a fixed or adjustable interest rate, whether it includes a balloon payment, and how soon you could face an interest-rate adjustment.
"You should understand these points before you become obligated because otherwise you may end up in a mortgage that is not truly right for you and that can lead to a payment shock," Reynolds said.And, perhaps most important: Be wary of terms such as "no cost" and "no fees."
"You really need to look into the loan," Reynolds said. "You should be comfortable and understand the terms before you sign."
4. Don't sign under pressure
Take a deep breath, and remember that you are in charge of choosing the best mortgage for yourself.
"When brokers use high-pressure tactics, if a broker presses them to sign a contract, that should be a telltale sign that this broker is someone they should be wary of," Fishbein said.
Don't sign a contract you don't understand just to get the process over with.
"You are paying for settlement services and you shouldn't sign the papers and leave before you understand everything," Noonan said. "Don't rush to the settlement. When a purchase is hanging in the balance, they can still walk away but it is much harder to do. There's a time pressure to close by a certain date."
It's easy to be intimated at a closing. After all, there are many pages of loan documents to review, and some of the language is cryptic or in small type.
"They may feel that they are slowing things down, or they appear dumb if they ask questions," Noonan said. But don't let fear get the better of you when it comes time to choose a loan.
5. Know the score
Before you enter negotiations, look at your credit score. That way you can research loans ahead of time and find out what sort of rates you qualify for. You can get the information from an array of Web sites.
Also, credit scores can be wrong."If you see problems with your credit report, you need to get that fixed," Rheingold said.
Ruth Mantell is a MarketWatch reporter based in Washington.RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Friday, June 08, 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!
The State of the Market
By Jack Guttentag
The Washington Post
Saturday, June 2, 2007; F23
Over the past two weeks, I have explained that the immediate cause of turmoil in the subprime market has been the halt in house price appreciation and that the underlying cause has been a myopic tendency by lenders to make loans that worked only if prices continually rose. What's the state of the market now?
The pain is uneven. The dozens of subprime lenders that have failed have garnered little sympathy. Put simply, they gambled and lost. Some borrowers fall in that category as well because they were trying to profit from house price appreciation. Instead, they face foreclosure.
Investors in securities issued against pools of subprime mortgages have also felt pain as the market value of these securities has declined. Lehman Brothers estimates the decline at $19 billion. Most of it is concentrated among the riskiest securities, which promised the highest yields. (Few tears are being shed for those investors, either.) Securities rated AAA, which are first in line to be repaid and last in line to take losses, have been hurt very little.
Mortgage brokers have not been significantly affected. A few have lost access to subprime lenders, but most have been able to replace defunct lenders with other lenders.
The big losers are those borrowers who, as unwitting victims of hype and deception, took out mortgages that were unworkable if house prices stopped rising. Now, with values stagnant, many of these borrowers are waiting for the next shoe to drop. They have adjustable-rate mortgages on which the rate will reset to a much higher level.
The subprime market remains open. This is the good news, and it should not be taken for granted. When the international banking crisis erupted in the early 1980s, the market adjustment stretched over a decade, during which there was almost no new lending.
The subprime lenders who remain are the more cautious ones. They are also more likely to be affiliated with other firms with deep pockets, which will help them ride out future market disturbances.
Of course, the profit potential in subprime lending is not what it was. Investors require a higher yield than before, especially on the riskiest securities. This has caused tightening of underwriting requirements, which has effectively lopped off the riskiest segment of the market.
Underwriting requirements are more restrictive. Underwriting requirements are the conditions that borrowers must meet to be eligible for a loan. They are significantly more restrictive now than they were a year ago. One of the most important shifts is the near-disappearance of the 100 percent (no-down-payment) loan.
Periodically, I receive an advertisement from a subprime wholesale lender rep advertising what is available from his firm. (He thinks I am a mortgage broker.) One came to me on April 19, showing that a borrower with a credit score of 620 (which is low) could qualify for a loan of $650,000 with a down payment of 10 percent. In my records, I found a message from the same rep dated June 20, 2006. At that time, he was offering the borrower with a 620 score a loan of $1 million with nothing down.
The 2006 offer was insane, a product of the euphoria created by steadily rising real estate prices. The current rules are no longer based on the inevitability of rising prices.
The prospects for some are poor. If house prices begin to rise again this year, the problems of the subprime market will go away. In 1998 and 1999, we had a similar episode, in which as many as 20 subprime lenders failed. But in 2000, house prices took off, the problems disappeared and few people today even remember the episode.
This time, however, the prospects for a quick revival of house price appreciation are poor. A further weakening is much more likely. Under these conditions, there is an ominous cloud on the horizon: Subprime borrowers who took out 2/28 ARMs in 2005 and 2006 will have their interest rates and payments reset to much higher levels this year and next. A significant number will not be able to make the new payments and won't be able to refinance because the equity in their houses is not sufficient to meet the new underwriting requirements. They will face foreclosure.
Next Saturday, I will discuss what if anything should be done about that.
Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania. He can be contacted through his Web site, http://www.mtgprofessor.com.
Copyright 2007, Jack Guttentag
Distributed by Inman News Features
The Washington Post
Saturday, June 2, 2007; F23
Over the past two weeks, I have explained that the immediate cause of turmoil in the subprime market has been the halt in house price appreciation and that the underlying cause has been a myopic tendency by lenders to make loans that worked only if prices continually rose. What's the state of the market now?
The pain is uneven. The dozens of subprime lenders that have failed have garnered little sympathy. Put simply, they gambled and lost. Some borrowers fall in that category as well because they were trying to profit from house price appreciation. Instead, they face foreclosure.
Investors in securities issued against pools of subprime mortgages have also felt pain as the market value of these securities has declined. Lehman Brothers estimates the decline at $19 billion. Most of it is concentrated among the riskiest securities, which promised the highest yields. (Few tears are being shed for those investors, either.) Securities rated AAA, which are first in line to be repaid and last in line to take losses, have been hurt very little.
Mortgage brokers have not been significantly affected. A few have lost access to subprime lenders, but most have been able to replace defunct lenders with other lenders.
The big losers are those borrowers who, as unwitting victims of hype and deception, took out mortgages that were unworkable if house prices stopped rising. Now, with values stagnant, many of these borrowers are waiting for the next shoe to drop. They have adjustable-rate mortgages on which the rate will reset to a much higher level.
The subprime market remains open. This is the good news, and it should not be taken for granted. When the international banking crisis erupted in the early 1980s, the market adjustment stretched over a decade, during which there was almost no new lending.
The subprime lenders who remain are the more cautious ones. They are also more likely to be affiliated with other firms with deep pockets, which will help them ride out future market disturbances.
Of course, the profit potential in subprime lending is not what it was. Investors require a higher yield than before, especially on the riskiest securities. This has caused tightening of underwriting requirements, which has effectively lopped off the riskiest segment of the market.
Underwriting requirements are more restrictive. Underwriting requirements are the conditions that borrowers must meet to be eligible for a loan. They are significantly more restrictive now than they were a year ago. One of the most important shifts is the near-disappearance of the 100 percent (no-down-payment) loan.
Periodically, I receive an advertisement from a subprime wholesale lender rep advertising what is available from his firm. (He thinks I am a mortgage broker.) One came to me on April 19, showing that a borrower with a credit score of 620 (which is low) could qualify for a loan of $650,000 with a down payment of 10 percent. In my records, I found a message from the same rep dated June 20, 2006. At that time, he was offering the borrower with a 620 score a loan of $1 million with nothing down.
The 2006 offer was insane, a product of the euphoria created by steadily rising real estate prices. The current rules are no longer based on the inevitability of rising prices.
The prospects for some are poor. If house prices begin to rise again this year, the problems of the subprime market will go away. In 1998 and 1999, we had a similar episode, in which as many as 20 subprime lenders failed. But in 2000, house prices took off, the problems disappeared and few people today even remember the episode.
This time, however, the prospects for a quick revival of house price appreciation are poor. A further weakening is much more likely. Under these conditions, there is an ominous cloud on the horizon: Subprime borrowers who took out 2/28 ARMs in 2005 and 2006 will have their interest rates and payments reset to much higher levels this year and next. A significant number will not be able to make the new payments and won't be able to refinance because the equity in their houses is not sufficient to meet the new underwriting requirements. They will face foreclosure.
Next Saturday, I will discuss what if anything should be done about that.
Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania. He can be contacted through his Web site, http://www.mtgprofessor.com.
Copyright 2007, Jack Guttentag
Distributed by Inman News Features
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