Fair Season

This time of year, on any given weekend, if I'm not working you're likely to find me at one of the local fairs!  To me this is as good as entertainment gets!  The price is always right and I get to indulge my passion for animals of all kinds, ride the midway, eat fair food and meet and greet my neighbors.  It's hard to see how you can improve on that!

Being raised on a farm in agricultural country, the county fair was always the highlight of our summer.  We were always exhibiting animals and various 4-H projects.  We prepared for that fair for months ahead of time and savored the successes far into the fall!

In case you're as crazy about these events as I am I'd like to provide you with a list and dates for some of the areas finest fairs.  Go see for yourself where your food comes from.  Go see a tractor pull or enjoy some great musical entertainment under the stars in the grandstand. I'd love to hear about your favorite local fairs and what you like best about them.  Eat something on a stick for me!

Fauquier County Fair         July 13-16

Orange County Fair           July 20-23

Culpeper/Madison/Rappahannock Farm Fair  July 27-31

Prince William County Fair  August 11-19

Rockingham County Fair    August 14-19

Clarke County Fair             August 13-19

Shenandoah County Fair    August 25-September 2

VA State Fair                       September 28-October 8th

See you there!

New Construction Rant

It's time to talk about buying new construction.  A large number of home buyers like new construction.  And, what's not to like?  Once you walk into one of those beautiful models, decorated impeccably nothing else ever looks quite as good!

But from my perspective it's never good news when a buyer says they want to buy new construction. My clients who buy new construction are most likely to end up unhappy with the transaction.  And since the vast majority of my business comes from referrals from satisfied clients that's very bad news for me.  Even worse from my perspective I'm less able to control almost any aspect of the transaction in new construction. That starts with a contract written by the builder to protect the builder's interest. That contract is different than the standard regional contract used in this area.

Many builders are very good at over promising and under delivering. My only way of controlling this is working to properly set my clients' expectations.  That means telling them to not take as gospel truth dates the builder gives them on when they will move into their new home. In the typical new construction purchase I deliver an awful lot of bad news! While it's part of my responsibilities to my client, like every other normal human being, I hate delivering bad news!

Buyers of new construction are buying it because it's new and they have the expectation of perfection when they walk into their newly completed home.  That's pretty much never the case. Let's face it, builders and the people who work for them are all human beings and fallible and I've never seen a completely perfect home from any builder. Some builders are very good at taking care of whatever problems arise.  But an astonishing number of them are not. Again, I've now got an unhappy client and very little control over satisfying them.

Part of my reluctance to sell new construction is no doubt due to the fact that I'm a control freak.  I know that repeat business and referrals depends on the quality of the experience of each and every client. In every transaction there are things I can't control.  But I work hard to minimize that and to implement quality control of everything else!

So, I'd be happy to help you buy your next home, even if it's new construction!  But, don't say you haven't been warned about the potential for a bumpy ride!

Appraisals

It seems like a good time to talk about appraisals since they've come up in several recent transactions.

First of all, as a seller you should know that in most cases, regardless of the contract price, you will need the house to appraise at that price or you potentially do not have a deal. This is Virginia and if you're reading this blog from another state, there will probably be some differences in local regulation and customs as well as in contractual language.  But here, in most contracts, the language states that if the appraisal is less than the agreed upon sales price, the two sides must come to a mutual agreement with regards to price.  And, if the buyer does agree to pay above the appraised value, in most instances he must have cash in order to do that.  So, you can price your home above what the market is likely to bear, find a patsy willing to pay that price, and still end up without that money in your pocket!

You should also know that when an appraiser does his or her job, they are only allowed to use properties that have actually sold, not those still on the market.  If you use homes currently for sale as a guideline in how to price your home you should be aware that if everyone else overpriced their home you're setting yourself up for a problem down the road with the appraiser.

I had an incident with a recent appraisal where I received a phone call on a Friday evening from a gentleman who said he was about to be hired to do an appraisal on a home I had listed.  He wanted me to know that there was no way the home could appraise.  When I inquired as to whether he'd actually seen the home he told me that he had not.  But said he knew the neighborhood well enough to know it was impossible to justify the sales price.

This was a huge red flag.  Like REALTORS, appraisers also abide by a code of ethics.  That code prohibits them from forming an opinion as to the value of a property before doing the work of the appraisal.  This gentleman was clearly in violation of that rule.

I immediately called the selling agent, who called the lender, who was able to get this appraiser pulled from the job. This all happened within minutes after the phone call on Friday evening.  If myself, the selling agent or the lender had elected to wait until Monday morning we would have been told that we had no recourse and were stuck with the appraiser.  Lenders have put in strict policies, understandably, to make sure that none of the parties who stand to profit by the transaction are allowed to influence the choice of appraiser.  And once this one had been officially hired we'd have had a real problem.

As it turned out we had a happy ending here!  The next appraiser approached the job professionally and in so doing, the property did indeed appraise at or above sales price.  And who doesn't like a happy ending?!

Buyers Are Golden

In a market that's changed fairly rapidly to favoring buyers, there's lots of leverage to be had.  And that's probably more true than you know.  Besides the daily begging e-mails from builders offering me all kinds of incentives to bring them buyers, many listings in the Multiple Listing Service offer me bonuses if my buyer buys a particular house.

Now there is certainly nothing unethical in offering such bonuses.  In fact, if they work, the agent has done a good job for their seller.  But I see a potential conflict of interest if the existence of these offers isn't disclosed to the buyers.  While most real estate agents are fine, upstanding human beings, there will surely be some that would push a particular property over another based on the bonus.  And some of these bonuses are substantial.

But if the buyer knows which properties offer which bonuses, they can judge for themselves whether the agent is acting in their best interests.  As in so many areas of real estate, disclosure again seems to be the key.

I go a step further.  Any bonus offered to me for selling a particular property is disclosed to my clients and if they decide on that particular property, we'll write into the contract that the offered bonus goes to the buyers.  While I don't think it's necessary to do this from an ethical standpoint, disclosure would seem to be all that's required. I've told my clients up front what my fee is.  As long as that fee is covered, I see no reason to keep the bonus for myself.

Perhaps the most important thing for buyers to keep in mind, though, is how much the market has changed here locally and how much leverage they now have.  If you're price limit for buying a home is, say $450,000, I'd be looking at properties up to $500,000 if they've been on the market for a lengthy period of time and if the listing gives indications of desperation!  Push the envelope!  While you're goal is always to negotiate your best deal, you haven't had this kind of opportunity to do this in our market in a very long time!  Take advantage of it!