Types of Sales Seen in Today's Market

This post is intended to help you understand the types of sales in today's marketplace. Whether you are a first time home buyer, or it is just one of many times you've purchased real estate, today's market is simply not the same as yesterday's. Read on to understand what you might find once you start your great house hunt.....

Traditional Sales If the prices are right, these are the best transactions! This is when "Joe the Plummer" is selling his home, and there is no third party involved on the seller side of the transaction. The contract is more “normal” in nature, allowing reasonable negotiations between the parties. Each party genuinely hopes for the sale to be completed and therefore works together to meet deadlines and ensure everything is resolved to the mutual satisfaction of all parties. Each party is likely only conducting one or two real estate transactions at a time, which are usually the largest financial considerations in that particular moment in time ~ therefore, each party gives this transaction his priority attention, and the process goes more smoothly as a result.

Considerations

• Generally, private homeowners can not compete with the aggressive pricing strategies of a bank/seller.
• Properties are often in better condition, requiring less fix up. Owners may also complete some repairs.
• Private owners generally do not consider a cash offer more valuable than common financing terms.

Short Sales In these sales, the Seller must negotiate with their lender(s) for approval before selling. They may be asking for full or partial debt forgiveness or a note payable for any deficit. Banks agreement to these sales are dependent on the ability of the family to repay the debt, and the circumstances that have changed since the loan was originally approved. This process can take several months, and sometimes does not result in a closing. Considerations:

• How many lenders are involved?
• What is the hardship/ability of the owners to repay?
• Will they be asking for debt forgiveness or a note payable?
• Who is negotiating with the bank and what is their experience level?
• Which bank is it; what is their process and has it been started?

Contract considerations:

• Longer contract periods with floating deadlines, all based on the approval timeline of the bank.
• Banks generally will not agree to a below market sale – this is determined based on an independent appraisal they conduct.
• While owners may consider doing some repairs, generally contracts are “AS IS”.
• Inspections are usually OK, but buyer can not ask for any repairs; their only choice is to terminate the contract.
• Cash offers are considered favorably, but not to the extent they are with bank owned properties.

Bank Owned (Post Foreclosure) Properties: These tend to be some of the best deals available in today’s market. Contract considerations:

• Banks are pricing aggressively, and when they do, often there are multiple competing offers for properties. You may consider submitting an escalation addendum in these cases, although some banks will not consider escalation addendums during negotiations and simply come back and ask for “best and final”, or accept an alternative offer.
• Cash is king! Banks realize the struggles and risks involved in some buyers obtaining financing. In addition, they are aware of property condition guidelines from FHA or other types of loans, which might REQUIRE repairs prior to closing… and they want to avoid this.
• By targeting homes which might not qualify for government financing, and making cash offers, you may be able to buy at a more reduced rate.
• If you are using a government loan to purchase, be prepared to have offers on REOs rejected.
• Often properties are in “fixer upper” condition, and properties are sold strictly AS IS.
• Inspections are usually OK, but buyer’s only recourse is contract termination.
• Banks require that you agree to the terms in their addenda, with NO CHANGES.
• Some banks require certified funds as deposit and/or specify who will hold the deposit.

Banks are like the military – it’s “hurry up and wait”. The timeline looks something like this:

Offer Submission

• 3-10 days later, Offer “Acceptance” (verbal or email)
• 1-2 days later, Counter Offer sent w/bank addendum
• Within 1 day – resubmit offer w/ acceptance of bank terms
• 3-10 days later, Ratified Contract.

Closing is as specified in the counter offer, which is generally a fixed date. Challenges here become getting utilities turned on to complete the home inspection; completing title searches; & obtaining HOA docs within the time frame permitted by the contract.

Banks will close AFTER you, and you will not get possession until they’ve signed off on everything. This can cause delays, I have seen more than 1 take over 2 weeks. I suggest attempting to negotiate a penalty to the banks should this occur.

Read more about Buying Post Foreclosures/REOs HERE.

Auctions: Public Auctions/Courthouse Steps: These are the foreclosure auctions. The vast majority of these are purchased by the bank who owns the mortgage/lien, which is generally more than the current market value. There are some opportunities here, but they are more limited than many expect. There are also more challenges in these transactions. Generally, no contingencies are allowed. Should your financing fall apart, you will be considered in default and not able to recover your deposit. Private Auctions/Ballrooms or at property: These are often done by banks (or other parties) and most commonly are done with a RESERVE. Again, there are sporadic opportunities here. Terms are very similar to those by any Bank Owned Homes. Be sure to understand the purchase agreement, as there may or may not be allowances for contingencies.

Read more about Real Estate Auctions HERE.

These are the primary types of sales we are seeing today... depending on your specific circumstances, you can decide which of these types of sales are ones that you would like to consider for purchase; and now you have at least some idea what you might encounter.

The "STATE" of the Market

The Virginia Association of REALTORS released it's third quarter sales report. Most consumers will be shocked to hear that, overall, sales prices are UP 1% compared to last year, and sales activity (closed sales) is down only 9.2% for the state.

But, as the National Association of REALTORS is constantly trying to explain, real estate is regional. And, in reviewing this report, it is clear. Some areas have found the "bottom" of the market and have stabilized, and even started recovering. I expect other areas are still in need of deflation in pricing before they will stabilize. Clearly, price is king in today's economy.

Look at these tidbits:

For the third quarter of 2008, when compared to the same quarter in 2007....

• Prince William County's median price is down 42%, but sales activity is up 145%.
• Lexington/Buena Vista's median price is down 38%, sales activity is up 70%.
• Greater Piemont's median price is down 28%, sales activity is up by 19%.
• The Dulles Area's median price is down 23%, and sales activity is up by 27%.
• Northern Virginia's median price is down 19% and sales activity is up by 15%.

On the other end of the spectrum:

• Chesapeake Bay & Rivers median price is UP 19%, but sales activity is down 52%.
• Roanoke Valley's median price is down only 4%, but sales activity is still down 26%.

Prince William County leads the state with most improvement in sales activity, reflected as closed sales for the quarter (3128 transactions), and pending sales (3894). Northern Virginia (defined as Fairfax & Arlington Counties), and the Dulles Area (Loudoun County) closely follow. These stats show us that once the submarket finds its correct pricing, buyers are out in force again.

The lesson to sellers here is - if you are in an area with declining sales activity, then your prices will be declining, soon. Price AHEAD of the curve, below the last sale... you must attract a buyer, and quick, before you lose even more value. Sellers in these markets thinking that instead they will "wait out the market" need to be prepared for a long wait -several years.

The lessons to buyers is - if sales activity is up, the prices will soon follow. Buy now. Get off the fence. Buy quick. It seems you may have missed the bottom of the market, and if you wait to try to buy at the "bottom" of the market again, you may be waiting many years... and you could miss it again. With interest rates favorable, the combination of affordable home prices and availablity of good loans means that this is an incredible time to be a buyer.

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To read the entire report - click HERE.

For information about sales activity in your neighborhood, sign up for a free (automated) market snapshot here. If you put in your email address and physical address, this report with detailed sales activity will be emailed to you monthly (you can unsubscribe at any time). I am also available to complete a complimentary Comparative Market Analysis for you if you are considering selling in the next 3 to 6 months.

To search for available homes and land in the Northern Virginia area, click HERE, this search links directly to a live feed from the local MLS.

Appraisals, Assessments - What's the Difference?

There is a difference between "appraisals" and "assessments" although the words are commonly used interchangeably. A educated consumer knows the differences: Assessments

• Completed using an automated valuation program.
• Generally done once per year.
• Used to determine real estate taxes.
• Should be within a margin of error of +/- 10%.

Appraisals

• Done by licensed appraiser who looks at the home, and comps.
• Values property "real time" (as of the date of the report).
• Used to support sales prices or loan amounts.
• Should be as close to Fair Market Value as possible.

Fair Market Value is what a willing buyer will pay for a property of a willing seller in an arms length transaction. Fair Market Value is determined SOLELY by the buyer and seller, and will be reflective of the market conditions. If a seller is stuck on obtaining an unrealistic price for their property, it will not sell. If a buyer is stuck on purchasing below reasonable values for the market conditions, then he will not buy. When these two parties meet in the middle they will find Fair Market Value, and each will accomplish his goals.

Appraisals are often part of the sales process, but usually after a price has been agreed to between buyer and seller... appraisals attempt to support the price of the purchase so that financing can be obtained. Assessments are not part of the equation, except when the purchaser attempts to estimate his costs to own the home, and he is determining the taxes due for the property.

Lender or Mortgage Broker? What's the Difference?

Attention: Buyers and Borrowers There IS A DIFFERENCE!

A lender is a specific lending institution, often times a bank, that lends their OWN money. When they pre-qualify you they are using the actual, real time standards that institution has in place. A pre-qualification means something. An approval means something. It means the person that has the money has agreed to give it to you. A mortgage BROKER does not have any money to lend. A pre-qualification means that they THINK they can get a loan for you SOMEWHERE. The approval from the actual lender will generally come at the very last moment, and when it does the loan program may look very different than what you originally discussed. When getting loans was easy, using a mortgage broker offered an advantage because they could look at all the products available on the market, and (theoretically) find you the best loan available - no matter who was offering it. But, today, with loans being harder and harder to obtain, and guidelines and programs changing by the minute, you need to be talking to someone as close to the source of money as possible. When lenders change guidelines or discontinue a loan program, it is their own people who learn of the changes first; and their own people who have opportunities to close loans in progress under those programs. Any broker planning to use the same exact loan program runs a higher risk of not being told as changes are taking place, and of the programs vanishing before the loan can be securely placed and approved. Plus, many banks are considering brokered loans higher risk, since they do not know if that broker operates under the same standards that their employees do. In my opinion, with our current climate, I do not recommend attempting to get a loan through any mortgage broker. And, only use reputable lenders. I recommend you speak to your real estate agent to get a referral... even if you're not buying, but just refinancing - ask your favorite real estate agent for a referral to their most trusted lenders. Remember, without a good lender, a real estate agent may never close a deal. They need to keep lenders who are trustworthy and knowledgeable very, very close to them. Conversely, those loan originators work hard for those agents that are sending them business....they know that messing up ONE loan could cost them the potential of a lot of future business from that agent. As the consumer, you can benefit from that relationship.

Buying at a Real Estate Auction

If you are considering purchasing a home or investment property through a real estate auction, read these posts... they will demystify most of the process for you.

• Introduction to our "What Buyers Should Know About Auctions" series
• Part 1: Where is the Auction Held?
• Part 2: Types of Auctions?
• Part 3: What happens at a Foreclosure Auction?
• Part 4: "Retail" Real Estate Auctions
• Part 5: What Agent Should I Hire?

There are many variables, but hopefully after reading through these posts you are able to understand the processes most commonly in use right now... please don't hesitate to contact me with questions; or for referrals to local auctioneers or REALTOR/auction specialist buyer agents in your area.

Did you know?

• Approximately 25% of properties that are listed for auction are sold PRE-auction.
• Approximately 30% of properties that are listed for auction are sold AT the auction.
• Approximately 30% of properties that are listed for auction are sold POST auction.
• Approximately 15% of properties that are listed for auction DO NOT SELL as a result of the auction.

Auctions Part 5: What Agent Should I Hire?

The last critical post in our series about Real Estate Auctions is about hiring a buyers agent to assist you.

Unless you are extremely savvy and experienced, I suggest you seriously consider hiring a buyers agent. But, let's face it, unless you hire one with experience with auctions, you've done yourself a disservice.

Your agent's role is to:

~Help you do your homework before the sale:

1. To find out the type of auction, and the details about the auction.
2. To make sure you and your inspectors have access to the property to do a full assessment.
3. To get a copy of the Purchase Agreement, make sure you understand it and coordinate you getting any legal advise that may be necessary.
4. To coordinate the RIGHT financing, including facilitating any needed appraisals.
5. To give you comps and educate you (and himself) on the market. To give you a price opinion.
6. To find out if you can make an offer pre-auction, and if so, help you determine if that is in your best interest.
7. Guide you in determining what offers you are, or are not, willing to make to win the property.
8. To help you understand auction requirements (if you most pre-register, if it is live bid only, what deposit is required, etc.)

~Help you stay focused in the quick moving auction environment. It's easy to lose focus and get caught up in the emotion. Your agent will keep you focused and remind you of the commitments (price and terms) you made to yourself when you were thinking clearly.

~To coordinate the after contract process...including lending, appraisals, inspections, scheduling contractors (if needed), ordering title work, hiring the settlement agency, and coordinating any other related details, and to help you keep your head throughout the process.

While it doesn't sound too hard, you'd be surprised. As they say "the devil's in the details". One false move and you'll lose. Your agent should be your best friend, guiding you through the process and making it seem easy. If, at the end of the transaction you are thinking "wow, that was easy, why did I decide to pay for an agent? I could have done THAT myself", that means you hired a fabulous agent. And, the first chance you get, you should hire that agent again. Auctions are tricky.

Ask for recommendations. Hire an "auction specialist"- either someone who is a certified auction specialist (if you can find one), one who's been on both listing and buying sides of auctions, or one who's been an auctioneer AND a real estate agent (and be careful, because sometimes these agents are technically great, but they won't give you the personal comfort level and assurances you want moving through a major financial transaction).

Once you've decided who to hire, make sure you sign a buyer agency agreement so you know the terms of the agreement... how they will represent you, what you must pay, how and when, and what you can expect for that money. Then, check AGAIN on the day of the auction. Unlike traditional sales, not all auctioneers compensate the buyer's agent; and some only pay a portion of what a strong agent will require. Beware of agents charging below market fees - often, you get what you pay for. The right agent will also help you understand how, if at all, that might affect your loan.

Look for, and hire, the right agent; and be willing to compensate that agent fairly.

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I am happy to provide a personal referral to a buyers agent in your area. I have contacts throughout the country. Just contact me directly... Vchrisner@kw.com

Auctions: Part 4 - Retail Auctions

The next in a series about Real Estate Auctions, this post discusses what I call "retail" auctions. These are the ones you see advertised in the late night infomercials, on signs, in magazines, etc. They're held in ballrooms, convention centers, or perhaps at a property. While they may be single property auctions, multiple property auctions are more common, and sometimes have only one owner - a bank, who hopes to dispose of multiple properties at a single event.

These are private auctioneers, hired by sellers (today this is mostly being used by banks to dispose of their post foreclosure holdings). These auctioneers are selected for their promises of grand marketing campaigns. Logic dictates that the more exposure you have, the better your chances of selling a property. Further, with auctions, you create something that has largely been missing from our marketplace, a sense of urgency. That urgency is created by the auction deadline.

These auctions work under the assumptions that the higher number of people in attendance, the better prices the properties will bring. They get consumer attention by giving the impression that banks are pricing them well below market and willing to sell at any price. The auctioneers and sellers hope that once you get the potential buyers in a crowded room they will compete against one another to increase the price. Buyers hope that price is well below market value. Sellers hope it will be well above. The auctioneers really just want it to sell (that part is a secret).

To get attention, the advertisements will say "opening bid $20,000" for a property that is clearly worth $200,000. Since we know the difference between an "opening bid" and a "minimum bid", we know that does not mean that the bank is willing to sell the property for $20,000. When you call the auctioneer, you'll likely be told (only if you're educated enough to ask) that the auction is a "reserve" auction. This frustrates consumers. But, I wish they understood that the auctioneer doesn't just facilitate the transaction, he represents the owner. The auctioneer has a contractual obligation to the owner to hold certain information in confidence, including the minimum selling price. It is in the best interest of the owner that the potential purchaser does not know the minimum selling price until he's made his best and final offer.

In any case, headlines like "Bank sale of foreclosed properties! Hundreds to be sold! Minimum Bid $20,000!" will bring out all sorts of buyers who think they smell blood. And, if you play your cards right, you could be one of them! (lol)

Although it is my goal to dispell myths here, I don't want people to think that the entire thing is a scam. It's not, it's a marketing tool. The sellers (in my examples, the banks) DO want to sell the properties. If they get the right price, they will. While the price is not $20,000... it may be lower than you think.

Before showing up at the auction, do your homework:

• Review the purchase agreement, get advice on it.
• You may need to have your financing lined up (and may be risking your deposit if your financing falls apart after the sale). Check that purchase agreement for financing contingency language. Some allow financing contingencies only if you're getting financing through their preferred lender, which often will be the seller.
• You are likely to have to do any home inspections and perhaps appraisals in advance of the auction. This information, too, is available by reviewing that purchase agreement. Find out (and attend) one or more open house/inspection opportunities.
• You will need to know what money you'll be required to present in order to bid (this is usually a set amount in the form of a cashier's check).
• I recommend getting a broker's price opinion AND an appraisal. Hopefully, the two are fairly close, and then you'll know what your maximum purchase price should be.
• Understand how, if at all, your real estate agent will be compensated by the auction company. They may not be compensated at all, and you may have to pay the agent out of your pocket at the settlement table. It's worth it, but talk to your lender and make sure it does not mess up the ratios required for the purchase.
• Ask if there is a "buyer's premium" and how much. Confirm that the sales price shown on the purchasing agreement will be the "gavel" price plus the buyer's premium, and make sure your lender is comfortable with how that will affect your loan.

Once you get to the auction, you'll be registered to bid, given a brochure and told approximately when the property will be auctioned. Other vendors are likely to be present, perhaps a mortgage company, maybe a title company, etc. who may be able to answer your questions and solicit their services. When your property is called, be ready. Things move quickly. You will have no time at all to think through what you wish to bid. If you are to remain competitive, you must continue to bid. If you need to think about it, you'll lose. Again, your agent can assist you with this process, help you keep your focus. Then, it's done.

The highest bidder wins, if they meet the minimum reserve set by the bank. Assuming there is one, the winner has more paperwork to do, and then you're done. That's it. By the time you realize whether you won or lost, they've auctioned off 2 more properties.

If the highest bid does not meet the minimum reserve required by the bank, but it's pretty close, the bank will often continue to negotiate with the purchaser after the auction...and sometimes, will reach an agreement. You see, the auction is a process, it is not a day.

If there is no satisfactory buyer that produces a bid the seller is willing to take, the property will likely be re-listed again with a "regular" listing agent and marketed through conventional means. This time, the bank's been able to reevaluate the pricing strategy they have, based on the bids received at auction. If the bank had previously priced the property at $210,000, and they had 2 registered bidders producing a high offer of $160,000; then the bank may have the property re-appraised, and may lower the asking price to $175,000; and here they usually pay your agent's fees for you, and allow reasonable financing, inspection and appraisal contingencies, with more time to think about each decision. It's a better process for the buyer, but still has it's own headaches. For more information on purchasing REOs, read my previous posts.

Auctions: Part 3 - What Happens at Foreclosure Auctions

Continuing to dispell myths about real estate auctions, this post talks about What Happens At Foreclosure Auctions....

Leading up to a foreclosure auction, someone who has a lien against the property has exercised their right to foreclose. Guided by state laws and contractual obligations, the lienholder has taken all required steps to hold the auction, including posting the notice in the newspapers in the PUBLIC NOTICE section.

The day of the auction, the auctioneer steps to the courthouse steps, reads a particular script, describes the property and opens bidding. The lienholder often presents a bid in advance, or may send someone to physically present the bid. The auctioneer will announce that bid, which is typically what they are owed, inclusive of late, legal and collection fees. In today's market, it is usually an amount that is higher than the market value. The bank wins the auction, as no one else is foolish enough to bid higher than that, and the property is sold.

It's rather anti-climatic, and buyers who had hoped to buy that property for an amount that is under the current market value are shocked to see that the property is selling well ABOVE the current value.

While there are exceptions, this is what is happening in large numbers at today's foreclosure auctions. Remember, that in the overwhelming amount of cases, if someone can not pay their mortgage, if they have equity in their home they will be able to sell it and/or refinance it into a loan that they CAN pay. So, with few exceptions, most homes that are going to foreclosure are because there simply is no equity left in the property, and homeowners are "upside down" with the debt against the home.

Foreclosure auctions can be great opportunities for acquiring properties below market; but the well educated and well studied investors devote a great deal of time into being able to identify those prime opportunities, and they all show up to compete at the auction. Even then, you may get a "good deal" but it is still representative of fair market value considering that it is a distress sale, and with any distress sale comes some red tape and some level of risk.

In today's market, there are "deals-a-plenty" with less risk involved. I do not recommend that many people purchase at foreclosure auctions.

Despite that, should you decide you wish to, I recommend that you hire consultants to help you, and consult the trustee to learn the required terms of sale. Your team should include a real estate agent who is knowledgeable in the area and with auctions and a real estate attorney who can help you understand the risks involved in these types of sales, including any possible right of redemption the current homeowner might have after the sale. (Yes, that's right, in some cases, the person that lost the home to foreclosure may be able to get the property back - it's called a right of redemption - and the laws vary from state to state.) The real estate agent can assist you with determining an appropropriate value, and help you plan for whatever disposition or long term hold goals you may have (meaning evaluate opportunities to "fix and flip" and/or hold the property as a rental). All costs to conduct due diligence (inspections, appraisals, price opinions, title searches, etc.) are your responsibility.

In the next post, we'll talk about what I call "retail auctions", where privately hired auctioneers are hired to conduct auctions on site or in ballrooms or convention centers, or perhaps an alternative site.

Auctions: Part 2 Types of Auctions

Continuing our series on Real Estate Auctions, this post focuses on the three types of Auctions:

Absolute:

Absolute auctions are what most consumers think of when they hear the term "Auction". It means that once the auction is opened and bidding starts, the property MUST be sold to the highest bidder, regardless of what that bid is. A million dollar property could, theoretically, be sold for $2. It's not likely... but it could happen. Generally, foreclosure auctions are absolute... but be sure to stay tuned for more information; it's not likely that you'll get your Million dollar property for $2, and we'll be explaining why in the next post.

Minimum Bid: With these auctions, the seller has agreed to sell only if the auctioneer can obtain at least a minimum price; and that price is disclosed to buyers. It may be included in the advertising or may be disclosed only upon direct questioning from the buyer or his agent. If the auctioneer cannot obtain that price, then the seller is under no obligation to sell.

Reserve Bid: Here the seller has set a minimum bid, but the auctioneer is NOT PERMITTED to tell anyone what that minimum bid is. We are currently seeing a lot of these types of auctions. After banks foreclose on properties, they will often put a portfolio of properties together and take them all to auction somewhere.

See the next post in our series: What happens at foreclosure auctions.

Auctions: Part 1 - Where is the auction being held?

The first thing any buyer should ask is "where is the auction being held?" We are seeing real estate auctions in many arenas:

• Courthouse Steps
• At the Property
• In Ballrooms, Convention Centers and other Large Meeting Spaces

Are they all the same? The answer is - NO. By understanding where the auction is, you'll understand the intention behind the auction itself.

Auctions done at the courthouse steps are generally ordered by a judge and/or a pre-arranged condition of a contract. In other words, judges charged with determining final disposition of marital estates for a divorce, personal estates following someone's death, or liquidation of someone's assets for collection or bankruptsy proceedings may order an auction on the courthouse steps. In addition, foreclosure auctions are done at the courthouse steps.

You map also see advertisements in the local newspapers, online, on billboards and in informercials for other auctions, held by privately hired auctioneers. These are very different.

Auctions done at the courthouse steps are advertised through public notices in the newspaper. They are "Absolute" auctions (see next post), and rain or shine, the property will be auctioned that day. The auctioneer is under no obligation to do anything special to attempt to get the highest price for the seller. The auctioneer has only the same public information that is available to you if you do your research.

Auctions done at the property and in ballrooms are done by private auctioneers, hired not just for their auctioneer license, but also for their marketing skills and advertising program. They are expected to advocate for the seller. If, on the day of the auction, there are not many registered buyers, or the auctioneer, for ANY reason, feels that the auction is not in the best interest of the seller, the auctioneer has not only the right, but the obligation, to postpone the sale.

In our next post, when we'll will explain the 3 types of auction.

What Buyers Should Know About Auctions

Real Estate Auctions are just one more tool, which can be good for both buyers and sellers in today's market. As they are being used with increasing frequency, I get more and more questions... buyers assume all the wrong stuff. Sadly, I also hear inaccuracies about auctions and intimidation with the auction process, even from real estate agents. So, as a Certified Auction Specialist, and an agent who works with both buyers and sellers, I will make an effort to educate the public on the process. As it is a large topic, I will attempt to share what I know through a series of posts...which are intended to educate buyers, sellers and the general public. Our first post is "Auctions, Part 1: Where is the Auction Held?" . By understanding where the auction is, you automatically know certain things about how the auction will be promoted and run. Stay tuned....

Loudoun's Sales Volume Remain Strong!

Since May, the number of home sales in Loudoun have been up considerably when compared to the same month in the prior year. Check out this chart, showing the number of sales (month by month) for 2007 compared to 2008 (courtesy of the Dulles Area Association of REALTORS):

As of October 31st, for homes priced under $500,000; the inventory level rose to a 5.5 month supply. For homes priced between $500,000 and $700,000, the supply level is holding steady at approximately 9 months. For homes priced above $700,000; the market continues to remain stagnant; rising to an 18 month supply. And for homes with prices of seven digits or more, there is an overwhelming 36 month supply of homes. Post Election Comments....

The last couple of weeks of October, it certainly felt to me like our local activity level slowed a bit as neighbors were drawn to the television wondering what bank would fail next, what the stock market would do and which Presidential Candidate would solve the economic problems of the world.

Now that the election is over, I heard agents across the country breathing a sigh of relief, almost immediately, as they reported an increase in buyer traffic to their listings. I am getting more calls from buyers, and suspect that the year will finish strong, although I still feel hesitancy in many sectors of the market.

Here in Loudoun and neighboring areas, we expect to be hit with a large activity level as the "changing of the guards" takes place over the next few months. Northern Virginia always has high activity levels following elections, especially when there is a change in party. At the same time, I expect buyers to focus on buying homes that suit their needs, foregoing unnecessary luxuries. Families making over $250,000 have seen much of their perceived wealth disappear with the changes in the economy, and many fear coming tax changes promised by President Elect Obama. This will keep them from spending more than necessary on homes; and further delay recovery in the top sector of the market.

MORE RESOURCES...........

See comments on previous months' stats in Loudoun County:

• September 2008 Market Statistics for Loudoun
• August 2008 Market Statistics for Loudoun
• July 2008 Market Statistics for Loudoun
• June 2008 Market Statistics for Loudoun
• May 2008 Market Statistics for Loudoun

Click HERE to view the reports as published by MRIS. Click on News and then on Market Statistics.

To see the graph and other historical reports as published by the Dulles Area Association of Realtors, simply click HERE. Reports are available starting from 1997.

Order a personalized Market Snapshot to give you specific information about the sales activity in your Loudoun County neighborhood! Just Click HERE! This report links to the MLS and reports live data in a personalized format. It takes only about 10 minutes for the report to be calculated and emailed to you once it's ordered.

Short Sales ARE Selling!

Some homeowners being forced to sell today are faced with a challenge because their value may be lower than the mortgage they owe. In these cases, agents, attorneys and other professionals are stepping in to assist homeowners in negotiating with their banks to permit the sale. For months, banks failed to realize the advantage to working with these homeowners and their agents. But, finally, the tides are slowly turning and short sales are being approved! This is reducing the number of home loans in default and offering options to foreclosures.

In cases where there has been a hardship (forced relocation, death or disability of a family member, divorce, job loss, etc.) and where the homeowners are truly indigent and unable to pay, lenders are forgiving the remaining debt. In other cases they are permitting the mortgage deficit to be paid in installments after the sale. But, for every successful short sale, banks are controlling their losses.

Buyers are getting good deals in return for the added patience these sales require. Sellers are able to sell and get out from under a mortgage they would not have been able to continue to pay. Neighbors and communities are avoiding another foreclosed home which may sit vacant for months, racking up unpaid taxes and HOA fees, and becoming a liability to the community as a whole.

Successful short sales ARE a win for everyone. For more information about how you can be a winner, whether buying or selling, please contact me.

The Kind of Neighbors You Want

On Halloween night, I lost my keys. I was in the Leesburg Parade, and was convinced I had lost them somewhere along the parade route. After days of trying to find them, I finally resolved myself to the thought that they were gone forever. I was thinking of the hassle and money it would cost to replace those silly fobs and tokens, car remotes, changing the locks on my house...ugh.

This morning, my husband came back from taking my daughter to the bus stop, and he had a notice in his hand. It was a posting about a set of keys that had been found. Even though I was convinced that the keys had not been lost in my own neighborhood, I called. Sure enough, a neighbor had my keys! Coincidentally, it was the neighbor that moved into a house on the other end of my street, one I sold just a few months ago. In talking to her, she said she had newspaper ads coming out this week... she was so worried about returning those keys to the rightful owner (who she assumed was a stranger). Knowing what is involved with losing a set of keys like that, she was determined to find the rightful owner. Wow, these are the kinds of neighbors you want.

I was really touched... you simply don't see people taking that much time to worry about a stranger. Yet again today, I had another reason to be thankful for the people that touch my life.

It reminded me of our first weekend in this neighborhood, 8 years ago. We didn't have cable hooked up yet, so we had rented movies from Blockbuster. Apparently, while getting the kids in the car to run errands, my husband placed the movies on the top of the SUV, and forgot them. When he drove away, they fell into the street behind him. After getting to Blockbusters, and realizing he didn't have the movies, he was confused. He returned to the house to search high and low for the now missing movies(and, remember, we'd just moved, so the house was total chaos). He found them nowhere. Retracing his steps, we realized he must have left them on the top of the SUV, but they were gone now. On Monday, my husband went to Blockbuster with his tail between his legs to beg forgiveness and pay the fine. Imagine our surprise when he was told someone had returned them, and on time! (This was amazing because in those days, the movies had to be returned by noon to be "on time" and we didn't leave the house until 11 that morning.) A random person, a stranger to us then (years later we found out who it was), had gone out of their way to return the movies on our behalf.

In the 8 years we've lived here, many such episodes have occurred. And, yet, when I am selling homes in my very own neighborhood, I've yet to figure out how to truly convey to people that, somehow, we here in Ashton Downs live in a sort of oasis. Everyone - and I mean EVERYONE here is just good. They're the kind of neighbors you want. How can you put that into a property brochure or explain it to a buyer? I still haven't found the right approach, but I am trying.

Halloween in Leesburg

When we moved to Leesburg, no one told us how different Halloween would be. Here, on “All Hallowed Eve”, children dress in their costumes, lining the streets of downtown Leesburg, to collect treats thrown to them from passing parade floats. The parade is put on by the local Kiwanis club, and this year, everyone in attendance was asked to bring a canned food item to help fill our local food banks. Most floats are sponsored by local businesses, who are having a little fun promoting their business and giving back to the communities they serve. I’m told that the Leesburg Halloween parade is the longest running in the country, which I think is kind of neat. I love to see old traditions remain strong. Here in Leesburg, I see no danger of this tradition ever going out of style. Every Halloween, if you live in Leesburg, you go the parade. EVERYone’s there. You’re IN the parade or AT the parade, but you’re there. Now that we’ve been here 8 years, we’re finally getting the hang of it. In fact, the last 2 years, I’ve been IN the parade; on a float with my brokerage office, Keller Williams Realty of Leesburg. Last year, I drove our float - and it was among the most frightening halloween experiences I've ever had! You try driving a float while dodging 5 year olds who are playing chicken with your truck to get a Reese’s!

This year, I opted to walk along side the float, giving out candy, being careful to reward those children that obediently stood by their moms, despite the greatest of temptations. So, did you see us? What did you think? We didn’t win any awards… but we thought it looked great.

Can you believe our broker (Rick Cockrill) actually had these houses “lying around” as leftovers from a 4-H project he’d done with his son? It was a very easy assembly for us… and special thanks to local J & M Market on Rt 15 (think Pumpkinville) who donated all pumpkins, mums, corn stalks and more. This year, our float was promoting a new web site launched by own of our very tech savvy agents, Steve Lieby. If you haven’t seen it, you should check it out… http://www.callloudouncountyhome.com/. I can not imagine how cool it would have been to have this parade experience as a child. My 2 and 5 year olds left the scene with bags FULL of candy! Pre-teens and teenagers can still get candy without being those annoying kids without costumes at your door on Halloween. I think it's fabulous.

By the time we returned home, two year old Spiderman was done for the night. Hanna Montana, on the other hand, had to take to the streets to see her fans.

Lucky for her, trick or treating in Leesburg starts AFTER the parade. Lucky for me, it doesn’t last long.

Renters Beware!

Imagine this: You're at home, having a weekend cookout with friends. There's a knock at your door. It's a real estate agent. He explains your landlord lost the property when the bank foreclosed. He wants to know how quickly you can move. He offers you a hundred dollars if you can move by next weekend, if you can't, they'll start the eviction process immediately. What? Eviction? Wait! You've been paying your rent. You have a lease. The owner never said anything. What's going on? This scenario is happening with increasing frequency. Renters are shocked to learn that even if they pay their rent, landlords have no obligation to use that money to pay the mortgage payment. In most cases, the renters can forget trying to recover their security deposit. What can you do to protect yourself? First, consider renting from a professional, established owner/landlord. For example, apartment or other rental communities are usually a safe bet, plus they often offer other services and amenities not found with privately owned homes. If you can not find a rental community that fits your needs, I suggest you contact a real estate agent who can help you evaluate the risks associated with renting from private landlords. You run a lower risk of running into this situation if the property was recently purchased by the current owner or if the property has been an investment property for many years. If the owner had listed the property "for sale" or "for rent", beware! These are desperation moves by an owner. Owners in this situation have been unable to sell their home and are usually in financial distress. After you've moved in, keep your eyes peeled for other signs. If an owner fails to conduct maintenance on the property, if the landlord seems to be dodging your calls, or you see bank notices addressed to him, these could all be a sign of problems to come. In the "good ole' days" the landlords screened the tenants. Today, smart tenants are screening their landlords, too; and a professional tenant's agent can help you.

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Search for homes for rent or sale using the Home Search tool on my home page: http://www.vickychrisner.com/ and let me know how I can help you!

REOs, Short Sales, Foreclosures! Oh, My!

These buzz words abound within our real estate market today. Headlines about our economy, politics and global affairs keep you from sleeping at night. If those things are not directly impacting your daily life you, you know you’re just waiting your turn. You find yourself wishing you were Warren Buffet or Donald Trump. And then, late at night, when you turn on the TV, hoping to find some mindless show that will help you drift off to sleep, you end up watching a “get rich quick” infomercial… and THEN you can’t sleep because you’re wondering if you ARE missing your opportunity to become the world’s next real estate billionaire. So, what’s the truth?

Well… it depends. It’s true that some people take high risks and make a mint. Other people take high risks and lose, big. I recently received an email from a financial planning consultant that said his firm’s recommendations in today’s economy were to make no decisions based on fear, panic or greed. Good advice, I think, especially when it comes to real estate.

Real estate decisions should be based on the lifestyle you’re trying to create for yourself and your family.

• If you’re ready to settle down, buying a first home can be the best investment you’ll ever make.
• If you’re already stable in your family and financial life, and thinking of moving up, it’s true that selling your current home can be daunting … but you will also get an amazing deal on your next home, so it’s all relative.
• Perhaps you’re considering investing. To the true (well capitalized and long term) investor, I say “go for it”. The rental market is strong right now, and properties can be purchased with positive cash flow from day one. But, with each of these tidbits of advice come warnings.

It’s often said that real estate is a LOCAL business, but I feel it’s a personal business. Buying or selling in any market condition can be a good decision or a bad one, and more important than timing the market, is understanding how these decisions will impact your life and your family - today, tomorrow and for years to come.

If you have an opportunity to buy a home for a rock bottom, absolutely fabulous, amazing deal…if you can not afford the mortgage payments, then you should not buy. Even if the home you’re considering is a terrible financial deal, but you can afford the mortgage payments and you will love every moment of every day of your life because of your new home, then it is well worth it.

Hire the right real estate consultant. I can help you understand the short term and long term risks and benefits of buying or selling, help you make financing choices, and to educate you on the local market place. You'll learn all the terminology in today’s market – like REOs, Short Sales and Foreclosures.

If you’re buying, we’ll help you understand the risks and benefits of buying any of these types of properties so you can make the decision that’s best for you.

If you’re selling, we’ll help you understand if these sales are likely to impact your sale, and how; and help you evaluate the pros and cons of taking the “wait out the market” approach. Let me assist you in evaluating your options in the real estate world today.

More information about me is available at http://www.vickychrisner.com/.

Check out other blog posts to learn the answers to common questions like What is a Short Sale? What do I need to know about buying an REO? and Updates on Market Statistics.

Just follow the links… and, there’s good news for Loudoun County – check it out!

Please note the date of this blog post.  Please get updated information from me personally or at least by reading more current posts.  The market is forever evolving, and therefore, so is my advice!

Homes Sales UP in Northern Virginia!

MRIS reports an increase of 53.92% in the number of home sales in Northern Virginia (Fairfax & Arlington Counties and the cities within them) when compared to the same month last year!

It seems that much of the market has finally corrected, with home prices in September down about 22% from the prior year. In general, it seems that the sellers that sold dropped their prices about 10% in September, and buyers managed to bid them down ANOTHER 8%, from their listing prices.

Also fueling the urgency this past month was the change in legislation requiring any buyers planning to buy "no money down" through the FHA and seller funded down payment assistance programs to be fully approved by October 1st. Over 50% of the homes that sold in this area sold using an FHA loan. Although there is not a quick reference report that would be able to show how many of those buyers used this program, I would venture to guess there were A LOT.

Knowing the transactions I had this past month, and those of other agents and lenders that I work closely with, I'd guess that about 50% of those FHA buyers were using the seller funded down payment assistance programs. That means on top of the 10% price drop, and the 8% further reduction in the selling price, the NET to the sellers was even less - probably another 5% on average. That's a buyer's market!

Even so, many sellers are just happy to have sold. And, with good reason. With the current economic news, many potential buyers in Fairfax & Arlington will be putting things on hold for a while. On an up note, with elections come "changing of the guards" and those of us who have been living in the shadow of the Nation's Capital for awhile know that means real estate activity... homes being bought, sold and rented, especially if there is a change in parties. So, stay tuned for more news affecting the real estate market. See the MRIS reports, available by region, county, and zip code at http://www.mris.com/reports/stats/monthly_reti.cfm. For the most specific and detailed report impacting YOUR HOME... order a FREE, AUTOMATED MARKET SNAPSHOT by clicking here. You will need to enter your real physical address, as that is used as the geographic point of origin for the report. It takes 5-30 minutes to generate, and it will be automatically sent to the email address you use to log in. ======================================

Note: Effective October 1st, FHA buyers must have a down payment, and effective January 1st, the minimum down payment increases. I am happy to help you learn about FHA or other financing options. I can be reached at 703-669-3142.

Loudoun Sales up 56.6%!

Finally, a good news headline! MRIS published their regional statistic reports this morning; and they actually showed that, in September 2008, sales in Loudoun were up 56.6% when compared to the number of sales in September 2007. I had predicted a continued increase in sales activity; but I will admit that this number exceeded even my own expectations. A contributing factor to the increased volume of sales is the change in FHA, with a large number of buyers trying to take advantage of the final opportunity to use the seller funded down payment assistance programs. This change required that all loans be fully approved by September 30, and most lenders were requiring the loans close by that deadline, too. As of October 1st, FHA buyers must contribute a minimum of 3% as a down payment, and as of January 1st, that minimum increases to 3.5%. These changes began adding urgency to the first time home buyer market in August. In September, the number of FHA purchases were approximately 35% of the sales. THE TALE OF TWO MARKETS -There is a distinct price point at which homes in Loudoun are selling. Under $500,000, we have only about a 4 month supply of inventory available. These homes are seeing fast contracts, and multiple offers which sometimes result in a sales price higher than the asking price. One might say that for a seller of a home priced in the lower half of the market, it has been a seller's market for the last several months. For mid-priced homes in the $500,000 to $700,000 range, we have almost a 9 month supply. For higher priced homes, above $700,000, the supply level increases to almost 22 months. It's definately a buyer's market at those price points. The message here is that there is a definate benefit to "trading up" in this market; where you can sell a $400,000 home and buy a $600,000 home and have the advantages of market conditions in your favor on both transactions! EXPECTATIONS FOR THE NEAR FUTURE You can't miss the headlines everyday, one scary thought after another. What will happen in the short term to our overall economy? I really can't even guess. But, I have a lot of faith; and I know, long term, it will all work out. As for how all of this will impact the real estate market, here's my prediction... I suspect we'll still close what we have on the books for October, but the number of new contracts will be reduced. I think after the elections - regardless of which candidate will be our next president - with the media's focus switched, the public will feel a renewed sense of cautious optimism; and people will slowly start thinking about moving and investing in real estate again. That is always somewhat deterred by the holidays, and my prediction - for the moment - is that January will be our next BIG month in real estate locally. Watch and see; and I'll keep you posted.

Sign up for an automated, and personalized Market Snapshot by clicking here.

The Real Estate Whisperer: August Market Update for Loudoun

The Real Estate Whisperer: August Market Update for Loudoun

August Market Update for Loudoun

Reports continue to show stabilization within Loudoun County. Since prices adjusted (down about 25% from last year as of the end of August), activity levels continue to be on the rise.

MRIS reports a 28.47% increase in the number of closed sales in August 2008 compared to August 2007. This has been a trend for several months (up 8% in July, 19% in June, 12% in May, when compared to the same months in 2007), and is a very positive indicator that Loudoun, at least for now, seems to have reached the "bottom" of the market and is improving. I have even seen recent transactions where an investor purchased a home from a bank a few months ago, and has flipped the property, quickly, making no improvements and raking in a handsome profit. Although I do NOT recommend this investment strategy in a volital market, it is very nice to see that we may be experiencing not just stabilization, but perhaps some recovery in limited areas.

The 37 cash purchases in August (about 7% of the closed transactions) indicate investors support the theory that Loudoun's market in strengthening.

And, with 37% of the transactions being financed with FHA and VA loans, we know that first time home buyers are seeing opportunities in the market of newly affordable homes available, coupled with historically low interest rates. I anticipate September will show further increase in FHA loans as those using the seller funded down payment assistance programs will rush to complete their transactions before the program disappears (CLICK HERE TO LEARN ABOUT THIS CHANGE). We may see a "lull" in October as first time home buyers, real estate agents and loan officers scramble to learn about other low/no money down options to keep a steady flow of these buyers entering our market.

Currently, Loudoun has a little less than a 5 month inventory of homes on the market. The National Association of REALTORS suggests that a 6 month inventory is indicative of a "balanced" market, with higher inventory levels being a "buyers market" and lower inventory levels indicating a "sellers market". I am not certain I would call this a "seller's market" considering how far prices have dropped compared to previous years. However, sellers who are pricing RIGHT when their listings enter the market place ARE seeing multiple offers and quick sales. The MRIS report shows that 30% of the homes that went under contract did so in the first 30 days on the market, and another 18% got a contract within the first 60 days. What happens to sellers "testing" the market with unrealistic pricing expectations? Those would be the listings that remain on the market well beyond the "average" of 103 days of marketing time.

So, what's next? With the Fed taking control of Freddie and Fannie, Lehman Bros filing for bankrupsty, Merill Lynch being purchased by Bank of America, and the seller funded DPA's disappearing, what's to come over the next few months? Stay tuned as I work to provide you with insights on this ever changing market.

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MRIS publishes new statistics monthly, around the second week of the month. The public can access these reports from MRIS.com. They are published by region, county, city, and even zip code. A qualified agent can help you understand the information contained in these reports.For an even closer look at market conditions, order a personalized Market Snapshot by clicking HERE. Type in the information about your home, and your email address... a personalized report will be sent to you in a few minutes, detailing information about the geographically closest homes which are for sale and have recently sold.

August Stats Show Stabilizing Market in Northern Virginia

In reviewing the latest statistics published by the local MLS system, I continue to feel cautiously optimistic about the stabilization in our market place. Northern Virginia includes Fairfax & Arlington Counties and all of the cities within those areas. Highlights of the report include: - Inventory this month is down from 11956 active listings to 9191 active listings as of the end of August. - With 1887 newly recorded contracts last month, that indicates an inventory of approximately 4.87 months supply (NAR considers 6 months inventory a balanced market). - We continue to see confidence in the market place by investors and first time home buyers, indicated by the number of cash transactions (about 8% of purchases) and those financed with FHA and VA loans (about 27% of purchases). - Perhaps the best statistic in all of this is that the number of units sold was up about 6% compared to the same time last year. Northern Virginia is a large area.

Arlington has not followed the trends of the other sub-markets. Arlington has remained relatively stable, with prices and activity level being extremely similar when compared year to year; and inventory levels hovering around the 4 month level.

Conversely, Fairfax has seen dips, and seems to be showing signs of recovery. The prices in Fairfax are down about 20% compared to last year, with the number of solds up more than 10% from August 2007. The inventory level in Fairfax County is now at about 5 months.

Personally, I am concerned about Arlington. When everything around the area is adjusting, it seems odd that one area would be able to weather the storm without showing wear. I believe that gas prices have kept that area stronger, as people wanted to live close to the city to save on gas. In addition, Arlington has been "built out" for much longer with no significant new development to increase inventory. However, as the suburbs seem to have adjusted to the new market, Arlington will not appear a value compared to things just a few miles away. In order to keep demand high, I expect to see price drops in Arlington in the coming months. Only when the entire area has "rebalanced" will be able to move to the next level, "recovery".

================================================================= MRIS publishes new statistics monthly, around the second week of the month. The public can access these reports from MRIS.com. They are published by region, county, city, and even zip code. A qualified agent can help you understand the information contained in these reports. For an even closer look at market conditions, order a personalized Market Snapshot by clicking HERE. Type in the information about your home, and your email address... a personalized report will be sent to you in a few minutes, detailing information about the geographically closest homes which are for sale and have recently sold.

No. Va. Shows Continuing Signs of Stabilization

In the last few months, I have mentioned positive trends in the real estate market within Northern Virginia, and I am pleased to say that the statistics continue to back up my statements. The region is showing signs of stabilization. July's statistics (published by MRIS) show that Northern Virginia (defined as Fairfax & Arlington Counties including the cities of Fairfax, Falls Church and Alexandria) indicate the following: * While prices are down about 13% compared to last year, sales prices took their biggest hit in January of 2008, and since then seem relatively stable with only minimal changes in average sales prices each month throughout 2008. * There is currently a 4.86 month supply of inventory (down slightly from last month). The National Association of REALTORS says that a 6 month inventory is generally indicative of a "balanced" market. This is down from 6.19 months of inventory in July of last year. * The number of units sold is relatively the same as this time last year, with a less than 1% difference. * We can tell first time home buyers are entering the market, as FHA and VA loans financed about 24% of the closed sales in July. * Investors have re-entered the market, demonstrated by the increase in cash transactions, loan assumptions and other creative financing options - these transactions made up about 11% of the transactions last month. Please remember that this shows statistics for the No. Virginia area as a whole. Within this area, there are many submarkets. Your agent can assist you with further determining the situation in the submarkets that will most affect you. Look for more summary reports on Fairfax & Loudoun Counties in the next few days. OTHER TOOLS AND REPORTS: A great tool for sellers to understand the market that is geographically closest to them is the Market Snapshot - order your automated report from the home page of my web site (http://www.vickychrisner.com/) . You will need to put in a real email address and real physical address, as the tool uses your physical address to determine the area for the report, and then emails the report to you. The MRIS reports are posted by region, county and zip code each month. These reports are available to the public at http://www.mris.com/

A Market Shift In Loudoun

Could the "Whisperers" be right (click to see original post)? June's month end reports for Loudoun suggest that may be the case. Although sales prices are down about 17% from last year; market activity is UP, with a 19% increase in the number of homes going under contract compared to the previous year. NAR says a "balanced market" carries about a 6 month supply of homes (meaning that at the current absorption rate, it would take 6 months for all the homes to go under contract). In Loudoun, as of the end of June, we're at just over a 5 month supply. It's also important to look for indicators of affordability and renewed confidence in the real estate market, like signs of investors and first time home buyers entering the market. One of the best indicators for this is the type of financing being used. - In June 2007, 94% of purchases where financed with conventional loans; with less than 1 percent being financed with a government backed loan like FHA or VA (typically used by first time home buyers); and just over 5% of the purchases were via loan assumptions or cash transactions (often indicators of investor purchases). - Comparatively, in June 2008, only 55% of the purchases were using conventional loans; over 30% were FHA or VA; and nearly 13% were purchased with cash or by loan assumption. Before you decide to buy or sell, contact an expert who can give you even more specifics about your area. But in general, in Loudoun, there are definately measureable signs of stabilization! A few words of caution.... A stabilizing market does not mean that prices will start to rapidly appreciate immediately. So, sellers, please don't convince yourself that by next year you'll be able to get more for your home than you can this year. To keep abreast of the sales going on closest to you, visit this web site to get a free market snapshot (it works throughout No. Va, regardless of your zip code) -www.20175homesales.com - you will need to enter your actual address and email so that the report can be properly generated and emailed to you automatically, and it will be updated monthly and resent until you unsubscribe or increase the frequency of updates you're receiving. There is no charge or obligation, and this is all handled automatically through the software program. The information is pulled straight from the MLS. And, buyers, don't put off that purchase since you think prices won't be increasing immediately - the lending world is changing daily and investors and first time home buyers are finding it harder and harder to be deemed worthy of a loan. Costs of some loans are going up and if you are paying more to borrow the money, then your "buying power" is reduced. Any first time home buyers hoping to get in "no money down" should be moving quickly. Recent legislation will be taking away the most popular national no money down program - a seller funded down payment assistance program combined with FHA. Those programs disappear if you have not closed on your new home by October 1st of this year - so move quickly! (You can read more about this at http://therealestatewhisperer.blogspot.com/2008/07/take-action-now-save-down-payment.html Call or email anytime with questions or comments - vchrisner@kw.com 703-669-3142 Visit my web site at www.VickyChrisner.com for many more resources.

REOs - Everything you need to know

UPDATE:  Thanks for coming to my blog.  Regardless of how you got here, this series was written in 2008.  The market is ever evolving and hopefully you will find this information outdated.  A better source of CURRENT information about buying an REO can be found by clicking HERE:  REOs in 2010. 

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Buying "foreclosures" remains a major consumer focus; so I wanted to outline the series I finished up last month on the process. I broke it into several parts, all of which you'll want to read if you're thinking about jumping into the game! 

As all of these posts are very serious, informative and specific... first, I want to give you a humorous look at what you might encounter.

Yes, when you are planning to buy, it CAN feel like this.  The good news is you are taking good steps which will enable you to get through this: (1) Educate yourself  (2) Get (and keep) a sense of humor (3) Hire an agent that knows what they are doing!

The TRUTH about REOs

http://therealestatewhisperer.blogspot.com/2008/06/whats-reo.html 

Ready to Buy

http://therealestatewhisperer.blogspot.com/2008/07/ready-to-buy.html 

The Great House Hunt

http://therealestatewhisperer.blogspot.com/2008/07/great-house-hunt.html 

Making an Offer - PRICE

http://therealestatewhisperer.blogspot.com/2008/07/making-offer-on-reo-part-1-price.html 

Making an Offer - FINANCING 

http://therealestatewhisperer.blogspot.com/2008/07/making-offer-on-reo-part-2-financing.html 

Making an Offer - DEADLINES 

http://therealestatewhisperer.blogspot.com/2008/07/making-offer-on-reo-part-3-deadlines.html 

Contract to Close - TITLE COMPANY

http://therealestatewhisperer.blogspot.com/2008/07/contract-to-close-process-for-reo-part.html 

Contract to Close - Everything "else"  

http://therealestatewhisperer.blogspot.com/2008/07/reos-contract-to-close-pt-2.html 

I am successfully helping investors, first time home buyers, and those "moving up" find great deals in the market every day. So many of the homes are post foreclosure REOs, and they can be great deals - after all, they SHOULD be if you have to know all of this, AND MORE to buy one! I can help you navigate the murky waters of today's market - please give me a call!  

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Update note 5/29/09: Thank you to all that continue to contact me expressing appreciation for this blog. For those of you that would like a copy of the addendum I reference in these posts; please see http://therealestatewhisperer.blogspot.com/2009/05/reos-addendum.html. 

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Vicky Chrisner Keller Williams Realty 

703-669-3142 vchrisner@kw.com 

Start your home search today at: http://www.vickychrisner.com/

Thinking of Selling? Some Facts about Northern Virginia

So, you're thinking of selling... wondering what the market's like? Here are some interesting statistics, published through the end of last quarter (June 2008)... and a bit of information about how to interpret it: In Northern Virginia (No. Virginia is defined by MRIS as Fairfax Co. & City, Alexandria, Falls Church and Arlington) * Prices of SOLD home are down about 15% from last year. * The number of homes sold are down about 5% from last year. * The average number of days a home stays on the market is 83. * The SOLD prices of homes is, on average, 93% of asking price. Who the buyers are: Looking at how people are financing homes gives us some clue about who the buyers are: * 65% finance with conventional loans. This requires a 20% down payment, which usually signifies someone OTHER than a first time home buyer. * 23% finance with FHA or VA loans - these are typically first time home buyers. * 10% pay cash, assume a loan or use seller financing - these are typically investors. Compared to last year, there is a huge difference. Last year more than 90% of the purchases were paid for with conventional loans, only about 1% were FHA or VA loans, and less than 5% were paid for with cash, loan assumptions or seller financing. What does this mean? Well, it says that the No. Va. region is showing some signs of stabilization. When you see an increase in first time home buyers and investors entering the market, that is a good sign. Further supporting this, is the supply ratio - last year this time, we had a 5.7 month supply of available homes; this year, it's down to 4.96 months. That might not sound like a big adjustment, but it is measurable. There are signs of stabilization in the market place. Having said all of this, what's going on in Northern Virginia does not tell you what your area is like. Some areas are showing even stronger levels of stabilization, where other neighborhoods have indicators that seem to suggest further price decline in the coming months. If you're trying to decide what your next step should be, call me. I will be happy to run reports and help you analyze the data that is most critical to you. But, for you "do-it-yourself-ers" out there, feel free to use these resources to help you learn more: * If you follow this link, you are welcome to run the same reports for anywhere that MRIS services. You can run them by area or by zip code. There are a lot of numbers on these reports, but I have shared with you some of the greatest industry markers available to us. New statistics are published around the 10th of each month for the preceding calendar month: http://www.mris.com/reports/stats/monthly_reti.cfm * On the home page of my web site is a Market Snapshot tool, it links to the MLS with live data and will tell you the prices and other information of homes that have sold or that are on the market that are closest to your home. Please note, the report will be automatically generated and emailed to you - so you must include a REAL email, or you will not receive the report. You must also include the specific address of the property so that tool can function - since it is looking for the closest addresses to yours, if it does not know where you live, it will not be able to determine who is closest to you. Once you've entered the information, you'll get monthly updates automatically. You can also choose to get information more often. If you have any difficulties or would like assistance obtaining or analyzing this information, my team and I are here to serve you. Don't hesitate to ask!

No Money Down Options - Gone?

Buyers - do you know that "no money down" programs are disappearing?

The most popular of these programs used with FHA is the Seller Funded Down Payment Assistance program. Recent legislation says the program will begin being phased out on October 1st. There is little guidance, and we're not sure when you'll have to close, but you MUST have a ratified offer and FULLY APPROVED LOAN by 10/1 in order to take advantage of this program.

Thinking of buying in Northern Virginia? Follow this link and click on the Home Search Option (www.VickyChrisner.com). Thinking of buying in another area - contact me for a referral to a great agent in your area, you can email me at vchrisner@kw.com. If I can help you learn more about taking advantage of this program while it lasts, please call me 703-669-3142.

REOs - Contract to Close Pt 2

Thank you for reading my blog. This post was written in 2008 and the real estate market is ever evolving. It is now 2010 and the real estate world is very different, especially in the Northern Virginia area. If you're considering purchasing a bank owned home now, please refer to the updated series found by clicking HERE.

========ORIGINAL POST==========

Okay - so this series started in June... we talked about what an REO is, learning the market, looking for a home, a 3 part series on making an offer, and why you should choose your own title company. That's the interesting stuff... so let's wrap this up. You picked the house, you wrote & negotiated the offer, you ratified, you chose your title company... now what? First, send the ratified contract to the lender, and do whatever they tell you. Send the ratified contract to your title company and check in with them if they don't check in with you about progress. Call your insurance agent and find out about getting home owner insurance. Then, schedule your home inspection (I hope you kept that in the contract, right?). Do your home inspection, but remember, you may not ask for the bank to make any repairs. Well... you can ask, they probably won't dignify your request with a response. The REO is offered "take it or leave it" and that's all they want to know - are you taking it? Often, there will be difficulties getting the utilities on, so your home inspection may be delayed. If this is the case, make sure your agent knows how to preserve your right to be able to complete the home inspection without the time limit running out. Lately, we are seeing banks even refuse to turn on the gas so that a true inspection can be completed. At that point, the risk level gets even higher if you decide to proceed with the purchase. If you have to replace every gas appliance in the home, are you still getting a good deal? If so, then you might be OK taking on that risk. If not, then you may have to move on and look for another home. Chances are that other than the financing, appraisal, title and home inspections you have no contingencies. If you have other contingencies... see them through. In Virginia, if the home has an HOA, then you are entitled to receive a copy of the home owners documents and review them - make sure you do, and look to see if there are violations currently. If there are, you are taking on responsibility to have those things fixed or incur fees until they are repaired. Make sure you can live with the rules of the HOA - they are non-negotiable, so this is a package of paper to read. Now, while we've been doing this, what's going on with the lender? Did the appraisal come in? If it is FHA appraisal, you may have to negotiate to have to have repairs completed. What's going on with the title company? There are usually liens against these properties - HOA fees, county fees for having to mow the grass, perhaps repair fees incurred at some point, tax liens, the list goes on... and they will all have to be cleared before closing. This can take a long time. Manage it. Do not, I repeat, DO NOT start putting stuff in the moving truck until after you've seen the seller signature on the HUD and deed. Sometimes that comes a week or more after you sign everything. You do not get access in most cases until the seller has signed everything. The last few closings I did it took weeks for the seller to sign the paperwork. I don't know how successful I will be, but for my next trick, I shall attempt to negotiate a per diem fee for my buyer clients if the bank doesn't sign everything with 2 business days of the buyer side closing. I think it is only fair- the buyer is paying a mortgage on a property they can not use. I will let you know how that works. In the mean time, just be prepared.

REOs - Contract to Close Pt1

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.

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It's taken you months, learning the market, looking for homes, perhaps putting in offers and being rejected, nervously signing the bank addendum, and, after all this time you finally have a ratified contract. Congratulations. So long as you know what to expect from this point, you're on easy street. If it's not already done (or even if it is), the first thing to do is select a title company (in Virginia, this is also known as the settlement company or closing company). This small post is on the title insurance company. Most banks want you to use their title company. Sometimes they try bullying you into it, sometimes they attempt to entice you into it by offering free owners title insurance. If you are scraping pennies together to settle, you might decide to take their offer. Otherwise, in general, I encourage you to hire your own title insurance agent. Why? Several reasons... In general, when your agent selects a title company (or if you do enough real estate business you know one you like), the company is being chosen based on performance, timeliness, honesty, communication, fairness of fees, and service. Sometimes brokerages have an affiliated business relationship with a title company (if so, they must disclose this to the consumer). True, the brokerage (occaisionally the agent, but usually just the brokerage office) gets some financial benefit from referring business to a particular title company. However, that brokerage could have formed that relationship with anyone - they picked this title company for a reason. If the title company was not performing well, your agent would not take you to that title company. Of this, I feel certain. The bank owners of REOs form relationships with title companies, too. But, it is not based on service. It is based on price, and some internal grading scale, and sometimes just a fluke. They flood these title companies with work, way more than most can handle. However, in order to make a profit, they must do it with volume of work. So, they are, quite honestly, too busy to pay attention to your little case, and they certainly do not care if they please you or your agent throughout the process. When you choose your own settlement agent/title company, you won't completely avoid being impacted by the seller's title company, however, you'll have one more agency in your corner, working to see to it that the deal closes, per the contract, as it should. Read this memo from a local attorney. He'll tell you the legalities behind your ability to choose your own agent, and he's offering to sue, on your behalf, if you've been bullied or coaxed into using a title company of the sellers choosing... It's worth a read. http://h1.ripway.com/vchrisner/PlofchanLetter.pdf

Making an Offer on an REO - Part 3: Deadlines

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010.
* * * * ORIGINAL POST BELOW * * * * *
In Part 1 of this series, we talked about PRICE -the thing most people are interested in. In Part 2, we talked about FINANCING - the thing people become most interested in when they are in the negotiating process, or after they've had an offer or two turned down. So, here in Part 3, we're going to talk about what can be a huge stress and series of pitfalls - timelines and deadlines. Here is how an offer goes... you write, you submit, you wait and wait some more. After a few days - 2-10 business days - you get a response... they call it a "counter offer". If you are not up against multiple contracts their agent may tell you they need some changes in price or terms to accept it. If they are in a multiple offer situation, you will not get this opportunity. If they suggest those changes, and you accept, this is when you will typically get the "bank addendum". These are terribly, scary documents, and they override your contract. So, read carefully. Some will say you can not do a home inspection. I strongly suggest you do not waive this right. DO a home inspection, but understand the bank does not plan on making repairs. So, if you find that the AC doesn't work, you will have to decide if you will buy the house anyway, for the same price, or if you will move on to your next house. These are your only options. Some will say you have a definitive time for financing contingency and appraisal contingency, and if you do not meet those deadlines there will be no extension. If, after that date, you have a financing/appraisal issue, beware - you will likely be considered in default. The most common remedy the bank will use is to refuse to refund your deposit. Theoretically, however, there may be other remedies for default. Each bank is different - as Forest Gump would say they are like "a box of chocolates, you never know what you're gonna get". Do not sign these blindly. Remember it is better to walk away from a good deal and talk about the "one that got away" than to get into a bad deal. Every addendum I have seen removes the typical "X days from ratification" contingency periods in most standard REALTOR forms, and replaces them with exact dates. But, be careful. Let's say you are signing the paperwork on June 15, with a goal to settle July 15. Your contract, according to the bank addendum, gives you until June 30th to complete your home inspection, get financing lined up and have the appraisal back. But, here is what is not obvious to someone new to this process - you may not have a signed contract back until June 28th. You COULD end up with 2 days to complete all of these requirements. So, I recommend a different addendum that you create that says, for example, "Financing and Appraisal contingencies will expire the later of June 30th, or 15 days from the date of ratification of contract. Closing shall be the later of June 15th, or 30 days from the date of ratification." I have created an addendum like this, and if you email me, I will share it with you. This builds in protections for delays caused by the banks, and protects you from dealing wtih the per diem penalties that most bank contracts call for if there are delays in closing, which can quickly get steep. Be ware - every listing agent I've presented this to tells me the "bank will not accept this"... and then I ask them to present it, and every bank has accepted it. The listing agents don't think the banks will, but they don't know, because no one's every tried it before. Once you've signed the bank addendum, and anything else that will be submitted along with it, expect it to take double the amount of time that the original response took. If the bank took 4 days to acknowledge your offer, it will likely be 8 business days before you get a final ratified contract. If the original acknowledgement took 10 business days, it could be 15-20 business days to get to ratification. At that time, the race begins. If you were smart, and anticipated this process, you'll have plenty of time... of course, you may be moving in August, and not July. But, these are the risks with purchasing REOs. All of this goes back to the posts where I warned you to not just focus on REO purchase, and if you are going to buy one, to make sure you are getting a good deal - one that makes it worth a little risk, that makes it worth the frustration, and that makes it worth not being able to move in when you expected. As you can see, someone must have EXPERIENCE with buying REOs in today's climate. Few buyers will be able to anticipate and navigate this process themselves. And, quite honestly, few REO agents wish to deal directly with a buyer, or to deal with an inexperienced agent. If you, or your agent, do not know what you are doing, your offer may not be presented for acceptance, or if it is, the listing agent will say to the asset manager "this one will be trouble", and your otherwise great offer will not be accepted. The lesson here - hire an agent with experience in this arena; and do hire an agent. Your cousin who just got her license should not be attempting to guide you through the murky waters of today's real estate climate.... and even if you DO know what you are doing, believe me, there is no financial incentive to you, the buyer, to deal with this yourself.

You will prove yourself to be much wiser to hire a buyers agent to represent you and advise you. Even the listing agents agree.