Strutt Your Mutt

Each year at this time the Rappahannock Animal Welfare League hosts the Strutt Your Mutt fundraiser. This event raises fund for the Rappahannock County Animal Shelter. And, it's a lot of fun!

The event is being held tomorrow, October 28th from 10-3 at Mountain View Dog Training in Amissville. Directions can be found on the RAWL web site: http://www.rawldogs.org

This is one of the few events you'll find where you're actually encouraged to bring your dog! There are contests for both of you, including  The Speedy Strutt for the fastest walkers, The Ultimate Challenge, an obstacle course and The Costume Hunt. There's a Biscuit Catch Championship and a Popcorn Toss Tournament. If you don't have your own dog you can borrow one of the shelter dogs to compete in the events.  And, if you fall in love, you can adopt one and take him or her home!

Food will, of course, be available, as will live music. Bare Witness and Tommy G will provide the non-canine entertainment. So, get out and enjoy a beautiful fall day in Amissville and help support this great charity!

(Sunday, October 29th, is the rain date.)

Too Many Agents

As this blog is designed for consumers, not real estate agents, I try to stay away from the navel gazing! After all, it's always too easy to focus on internal industry matters that don't matter at all to you!

However, there's something I came across today that definitely has a bearing on you as a consumer as well as on the industry and on me! This letter was released recently by the Minnesota Association of REALTORS to their agents members.

http://mnrealtor.hhpubs.com/1p_10112006/index.html

This letter makes the case that there are simply too many real estate agents. The volume of business can clearly not support that many agents. It's bad for the industry but it's also bad for the consumer.  And, since this is focused on you, the consumer, I'm going to focus there.

The average real estate agent clearly does this as a hobby.  If they do, say, an average of 3 deals per year, clearly they're not making a living at this. The problem is that a real estate transaction is an increasingly complex deal. Someone who does three deals a year is not well prepared for the bumps in the road, the inevitable obstacles that occur. Now, should you use a hobbyist as your agent and you have a deal that goes smooth as silk, you'll probably never know. But that's a pretty large risk to take with a financial transaction of this size! Three transactions in a year is less than a lot of professional agents do in a month!

It gets scarier! The amount of training required to get into real estate is woefully inadequate. Most agents have their license and do not know how to write a real estate contract! And, while they work under a supervising broker who should have the knowledge and experience to help, there's often too little supervision. And, the system usually puts the burden of asking for help on the agent. Let's face it; some people are great about asking for help as soon as they need it and some will wait until they're drowning! If it's your transaction they're drowning in, that's a problem!

And, it's a problem for me on many levels. If you have a bad experience with one of these agents, it will color what you think of my profession. And, when I work on a transaction with an inexperienced agent representing the other side, it can make my job a lot harder!

We as an industry should definitely continue to encourage people who are not serious about this to move on. We should also be working to require higher levels of education prior to entry into this profession.  But this affects your wallet too!  And the consumers should absolutely be screaming for higher standards!

I'd love to hear what you think of this Minnesota article and if you've had any experiences that reinforce what it's saying!

Centex Pull Out

We've talked here before about proffers.  Perhaps the largest proffer ever was recently offered and then rescinded by Centex Homes as part of a development in Warrenton.

Word is out today that the proposed development has been cancelled. The handwriting was on the wall for this one for some time in my opinion.  This was a deal that made no sense even in a hot real estate market, never mind the cooler one we're currently in.

The development would have featured homes for individuals and couples who were at least 55 years of age.  The prices of these homes was to start at somewhere around $850K-$900K.  In return for the rights to proceed with this development, Centex offered to pay Warrenton $23 million dollars!

First of all, ask yourselves how many retirees, or people approaching retirement are looking for $900K homes? And, $900K homes in Warrenton, Virginia???  As nice as Warrenton is, I believe that price for this community would have always been unsustainable. And to offer $23 million to have the chance to build this money-losing development seemed truly foolhardy!

The only question remains, what in heavens name made them think this was ever a good idea in the first place! And maybe the other question is does this person still have a job at Centex?!

Media and The Real Estate Market

Several times now I've heard a real estate agent or broker say "The media killed this market!"

They're referring to the press accounts saying that the market is dead or that the bubble has burst, or some other exaggeration.

I think this is absurd. The media didn't cause the hot market we experienced in the last few years.  They may have helped feed the frenzy a little! But I'm not buying "The newspaper made me do it!"

Heaven knows there are a vast range of opinions in "the media" at any given time about any topic at all.  And that's just as true with real estate.

And, by the way, the market is not dead, it didn't crash and the bubble didn't burst! We are definitely in the midst of a market correction that is painful for a lot of sellers. Market corrections are a normal part of the cyclical nature of real estate.

Now there are uninformed consumers out there who only perhaps only make use of one source of information.  And, if that source told them that market was crashing, they may have believed it. But the fact that people don't take the time to do the research and get the full story is certainly not the fault of "the media".

I'm also not a big believer in the blame game, ever. Look at the facts, figure out how you got here, what you're going to do about it and move on!

Finding Money For Your First Home

One of the toughest part of trying to buy your first home is finding the funds for a down payment and closing costs. So, I thought it made sense to talk a little bit here about some of the options that are available to help you do that.

First of all, you should know that there are mortgage programs out there that will allow you to finance the entire purchase with no down payment at all. The availability of these programs to you will depend on your credit scores and the lender you choose. But I'd also like to make the point that perhaps people who have no money for either a down payment or closing costs should wait before buying a home. Once you buy that home and don't have a dime to your name, what happens if you have a large, unexpected expenditure? What happens if you unexpectedly lose your job? Life can change suddenly and it can make sense to wait to take on a mortgage commitment until you have some reserves for emergencies.

If you're fortunate enough to have family in a comfortable financial situation, many loan programs allow them to provide you with a gift of cash to help. There are IRS limitations as to the amount they can give you.  And you'll need to disclose to your lender that you're getting the gift. Or, your family may be able to give you a loan to help with the down payment. Again, this will need to be disclosed to the lender. And the amount they can loan you will vary depending on the lender and the loan program.

If you've been working for some time you may have a 401K that you can borrow money from for the purchase of your first home. There are obviously consequences to taking money set aside for your retirement and using that to purchase a home. And you should seriously weigh the pros and cons before doing this.

But I'd also like to suggest a very old fashioned idea, saving money until you have a down payment. Saving money is out of fashion these days! We live in a very materialistic culture that is constantly sending us messages to buy, buy, buy!  But taking a counter-culture approach to this can be very financially rewarding! After all, study after study suggests that all of our stuff is not making us any happier. In fact, the freedom to quit a job you absolutely hate is much more likely to make you happy than that Plasma TV! And there are some organizations that now exist to help you design a life with more financial freedom.

One of those is The Center for a New American Dream. They've got a bumper sticker that says "More Fun, Less Stuff!" I think that could a great motto as you work to build your down payment! Check out their web site for lots of information on how you can find ways to enjoy life more and spend less! http://www.newdream.org  Their newsletter features the slogan "Live Conciously. Buy Wisely. Make A Difference." It's not a message that you're going to hear much from all those credit card companies and retailers hoping to capture your money!

Another great web site for helping you have more with less money is http://www.freecycle.org  Here you can ask local individuals if they have things you need that they'd be willing to part with at no cost. Or, you can get rid of your excess stuff so you don't need as big a house!

However, you go about finding the money to buy your first home, I am a firm believer that buying a home is one of the smartest financial moves you can make! Feel free to share your ideas here on other ways to find that money!

Choosing an Agent

I was at a training session this last week and an agent in the area stood up and told how she gets lots of business by showing up for appointments in a new Mercedes Benz and a $3,000 custom suit.  It's an interesting marketing plan, if not one that provides a whole lot of benefits to the customer/client!

If you're wondering, I'm never showing up at your house in a $3,000 suit, even if I'm the richest woman on earth! My frugal ancestors would roll over in their graves! I was definitely not raised for conspicuous consumption!

But I did think that this might be an opportune time to talk about how you should go about choosing a real estate agent. I would argue for substance over style in this choice, although who you feel comfortable with is also a large consideration. After all, you may be spending a lot of time with this person and you'll certainly be trusting them for advice with one of your largest financial transactions.

So, here are some other criteria you might think about when choosing a realtor.

1. Is this your full time business?

2. Do you have references available?

3. How long have you been in the business?

4. Are you a REALTOR, bound by the NAR code of ethics?

5. What additional designations, certifications do you have and what do those mean for me?

6. What is your communication plan for working with me?

7. What benefits does your firm offer to buyers/sellers?

These are questions that will apply whether you are buying or selling a home. There are also questions that will be specific to if you're buying or selling. In this blog, we'll talk about some of the sellers questions. I'll leave the buyers questions for another day.

1. What is your list price to sales price ratio?

2. What is your average DOM for your listings?

3. What is your marketing plan for my home?

4. What will you do to market my home on the internet where most buyers now start their home search?

5. What else do you do for me besides market my home?

6. Will you represent only our interests or do you do dual agency?

7. What happens if I am unhappy with your services?

And, here's one question you should not base your decision on:

How much will you list my home for?

Anyone can give you a number that will make you happy! But if your home won't actually sell for that amount, you're just buying trouble for yourself.  And you will ultimately net much less by overpricing your home at the beginning.

As always, comments regarding these suggestions are welcomed! Do you have questions you've used with agents that have gotten you vital information that helped you make a wise decision? Share them with us!

And, if you'd like to ask me these questions, get in touch! Julie@JulieEmery.com is my e-mail address and you can find out more about me at http://www.JulieEmery.com

Days On Market

Buyers are always interested in how many days a property has been on the market. Buyers assume that the longer a property has been on the market, the more negotiating leverage they have.  And, generally speaking, that's probably true. That assumes, of course, that the seller really does need and/or want to sell!

Sellers, in this market, are very sensitive to days on market as well, and are worried about the perception buyers have as they see that Days on Market number increase.  Again, this is perfectly reasonable. They don't want to give buyers the impression they have more leverage, even if it might be true! No one wants to give away information that might hurt their negotiating position.

Sellers are asking more frequently how they reset the counter to show their property as newly on the market.  Many times they believe that if they withdraw their house from the market for a few days and then put it back on, that will reset the counter. Some believe that if they relist with a new agent the counter will go back to zero. Generally, what I tell them is that this doesn't work. But the full answer is a little more complex than that and this seems like a good place to go into a little more detail.

The Multiple Listing Service that we use in this area actually carries to Days on Market numbers for every listing.  They are shown as DOM-M and DOM-P. They stand for Days on Market-MLS and Days on Market-Property. The first one, DOM-M, does reset when you relist your home with a new agent. Or, if your listing expires and then is put back on the market a week or two later. But the second category, DOM-P does not reset unless your home is off the market for at least 180 days. Since both of these fields are available to both agents and consumers in the data they see, it's pretty hard to fool anyone about how long your home has been for sale.

As with almost everything in life, prevention is the way to go here! Price it properly, make sure it shows well and odds are most homes will sell within the average days on market for this area.

Proffers

A proffer is an offer of a fixed amount of money from a builder to a county or community, intended to offset the cost of increasing infrastructure to handle the expanding population associated with a new residential development. The amount of proffers varies by county here in Virginia, but here is a sampling:

COUNTIES	PROFFER AMOUNTS*
Chesterfield	$15,600
Caroline	$17,632
Goochland	$15,803
Hanover	$14,240
Isle of Wright	$11,189
Loudon	$37,660
Prince George	$12,387
Prince William	$37,719
Spotsylvania	$35,295
Stafford	$39,000

*For single-family detached dwellings

In theory, proffers are voluntary. In practice it's easy enough for a county to find another reason to turn down a request from a builder for a new subdivision if they don't like the proffer.

Proffers have been in the news here lately because of the largest proffer ever by a builder to a county. Fauquier County briefly thought they'd won the lottery with a $22 million proffer. But that was subsequently withdrawn and negotiations are ongoing.

Proffers are a mixed blessing. Someone does, indeed have to pay for the infrastructure to support all the additional people that move into the new subdivision. There will need to be more schools, hospitals, sewers, firefighters and improved roads. But the builders are businesspeople, not charities, and will likely pass most of that cost on to the ultimate consumer, the purchaser of the home. This drives up the costs of homeownership and hurts affordability. But if not proffers, how do we propose to pay for the infrastructure? I'm not seeing anyone lined up to ask for increases in property taxes!

I'd love to hear your thoughts on this. It's a hot issue in Virginia and here locally. Who pays for the costs of development and how? Let me know your opinions!

Third Party Approval

One of the current listings I have has now been shown twice to the same individual. The second time this person brought their father to see it.  I've been told that there will be a third showing with Mom coming to see it as well.

It's not unusual for a buyer to want family and, sometimes, even close friends to take a look at a house they're serious about buying.  This is more true with first time buyers, but I've seen it with people downsizing to a retirement condo as well. None of us ever outgrow the desire for Mom & Dad's approval completely!

What most buyers are not aware of is that there is a contingency written into the contract that is designed for this possibility.  It's called a Third Party Approval contingency and basically says that the contract is contingency for X number of days so that a third party (parents, friends, siblings, spouse, etc.) can take a look at the place before you've really, irrevocably bought it!

I've seen this used most often when a family is relocating and only one spouse can get here for the initial house hunting trip. Sometimes they want an out if the spouse shows up and just hates the place they've put an offer on. And, this can work very effectively to get you a house you really want, but where you also want some confirmation from family and friends.

There are a lot of ways for buyers to protect themselves when writing an offer on a home. This is just one of them. If you're in the process of looking for a home, contact me at Julie@JulieEmery.com for more help. Or go to my web site at

http://www.JulieEmery.com and take a look at all the information available to buyers there!

Turning The Corner?

The latest market statistics again show that inventory is decreasing in Fauquier, Culpeper, Rappahannock, Prince William and Fairfax. Those are the counties I've looked at so far, but I'd be surprised if other counties weren't also reflecting this trend. 

Given that the number of sales is still way below last year's rate, which was slightly below the 2004 rate, the inventory is not decreasing because of increasing activity by buyers!  People are taking their homes off the market.

While I'd be more excited about a big jump in the number of buyers out there, this is very good news! The only way to stop some of the downward pressure on prices is for inventory to fall. 

The decline in inventory is not dramatic and so I don't expect to see much immediate impact on the market.  If you're a seller, you're still going to be feeling the pressure on sales prices.  If you're a buyer you've still got lots of negotiating leverage.

But, this is a hint that we might be starting to turn that corner. If inventory continues to decline at its current rate, I still believe it will take until at least next spring to truly start to see a more balanced market.

One thing that could speed that up is decreasing interest rates.  There are hints this week that the Fed is contemplating lowering rates.  And 30-year fixed mortgage rates have been coming down for about six weeks now.  If we continue to see that we may also see more buyers jumping into this market. And that's something every seller is definitely hoping for!