Why Sell Now

There are a lot of sellers sitting out there wondering whether to try and sell now or to hold off, at least until spring, in the hopes of seeing a better market then.

There's some data to suggest you might as well bite the bullet and do it now. The S&P/Case-Shiller index of home prices shows that the last real estate downturn, in the late 80s and early 90s, it took about seven years for the market to recover enough the prices began to rise again.

We're only a couple of years into this one. And, this downturn may play out differently. There are certainly plenty of interested parties, especially in an election year, who would like there to be some good news on the real estate front. But it seems unlikely that two years or maybe even three will be enough to move us back to rising prices given the amount of inventory out there.

And, you'll see an increase in the number of homes selling, I suspect, long before you see that begin to push up the prices of those homes.

So, if you're wondering whether to put your house on the market now or wait for the spring market the answer is that it probably makes very little difference in terms of the price you'll get for your home. What you should consider is that, as in most years, I expect the inventory to jump tremendously in the spring and the competition for the buyers will be much fiercer.

Maybe the real question is how will your home fare against the increased competition?

Early Christmas Presents

In what's been a pretty gloomy year for real estate in general, it's now raining gifts!

There are reports surfacing that President Bush has made a deal with several very large mortgage lenders, including Wells Fargo and Countrywide, the two biggest, to freeze interest rates on a number of their loans. These reports are unconfirmed and there are obviously no details, but what a delightful and intriguing possibility! This has the potential to have a huge impact on the 2008 market.

The Fed has done everything it can, short of taking out an ad in the New York Times, that it's going to cut interest rates again in December. While this does not directly impact mortgage rates, it does have implications for the entire credit market. And, since one of the problems plaguing the housing market right now is the greatly reduced lack of credit, this is also potentially very good news. The important thing here is not so much the rate cut itself as the recognition of the Fed that there's a serious problem and that they're committed to working to fix it.

And, speaking of the credit markets, the infusion of cash into Citigroup, courtesy of Abu Dabi is also a good thing. There appear to be other countries with large amounts of cash also contemplating stepping in and buying into some major financial institutions. This will all help in easing the credit crunch.

The stock market has had a great week. Again, there's no direct impact on the real estate market. But all these bits of good news impact consumers impressions of what's ahead for the economy. (By the way, I suspect that it's no accident that this is all happening during the Christmas shopping season!)

So, enjoy this unexpected plethora of gifts. May visions of sugar plums dance in your heads all weekend!

Rappahannock County Growth

There's an article on the Times Community Newspaper's web site regarding Rappahannock County and growth, or rather, the lack thereof.

It's an interesting piece and it makes a good place to jump off to a discussion about why the real estate market is so different in Rappahannock County.

While this county has also seen a slowing in the market, the effect is more muted here. Since there was never quite the "boom" you saw in surrounding counties, there's not likely to be the same level of downturn here either.

As this article points out, while Culpeper was the fastest growing county in the region with Madison and Fauquier not far behind, statistics suggest that the population growth in Rappahannock County is actually negative. While John McCarthy points to a small increase in population, what I've seen suggests that most of those additional people are weekenders and not full time residents. I don't believe there are any numbers available on the percentage of the population that are full time residents vs weekenders, but I suspect that the trend is for more part-timers.

All of which contributes to a very different real estate market. Average days on market can often be longer in Rappahannock County. But you see less variation over all. The prices are a little less "squishy" than in surrounding areas. There's less elasticity of demand, in part, because people who are selling second homes rarely feel the same pressure for a quick sale that someone does who's selling their primary dwelling. Most people don't have to sell in a hurry so they can get to the next house, job, etc.

Meanwhile, the debate about growth does continue in Rappahannock County. But John McCarthy is right in that no one is looking to turn this into the next Culpeper in terms of growth!

Television Advertising

Another agent asked me awhile back what you do for advertising if you're not going to do print ads. It was a good question and I believe I ruminated on that previously in this space.

But a new option has presented itself recently. And I'd like to ask for your input on this one.

My broker has worked hard to negotiate some amazing rates for TV commercials through a local cable provider. The rates are low enough that they do truly make it affordable.

The question is, how effective is it? Do you still watch TV commercials? I know at our house, ever since TIVO came in the door, TV commercials are out! (Although we still stop it for the Apple Mac ads!) I suspect we're not the only ones who have changed their TV viewing habits.

And, let's face it, affordable means we're definitely not airing these in prime time.

My understanding of any form of advertising is that only with repetition can you truly expect an ad to have any impact. While these are affordable, how many would you have to run in order for it to really register in people's minds?

The big upside I see here is walking into a listing appointment and telling a seller that I can put their home on TV. Sellers like big, splashy marketing ideas, often regardless of effectiveness. (Let's face it, there's a fair amount of desperation out there right now!)

I'm still trying to determine whether to take advantage of this opportunity. But, meanwhile, I'd appreciate your input. What do you think? I'd welcome your input!

Lender Letter

As part of the contract on a home, there's a section of the offer where the buyer indicates whether their lender will provide a letter, after a certain number of days, certifying that the buyer is now fully qualified for a mortgage. The contract is very specific about this letter and what it needs to say. There are six mandatory items:

1. Purchaser is approved for the Specified Financing.

2. A Ratified Contract has been received.

3. A written application for the financing has been made.

4. Income, asset and liability documentation on Purchaser have been received.

5. Purchaser's credit has been reviewed, and

6. The application has been reviewed and meets underwriter and investor guidelines.

The buyer and seller negotiate how many days will be allowed for this letter to be received. 14 days is a number I see fairly often so we'll use that for our discussion here.

If, at the end of that 14 days, the letter is produced, and, if, subsequently, the lender does not honor the lender and does not fund the loan, the buyer is considered in default and may be at risk for losing their earnest money deposit. This is a good reason for choosing your lender carefully!

What I continue to see is this section of the contract completed indicating the letter will arrive in 14 days. And, the 14th day comes and goes with no letter.

The seller's options at that point are to continue to wait and hope they get a letter, or to void the contract. Let's face it, the chances of any seller voluntarily voiding a contract in this market are slim and none!

So, essentially, this is another toothless provision. And, the entity responsible for producing this letter in a timely fashion, suffers absolutely no consequences for failing to do so. The lender won't lose any earnest money. There's no penalty to them for failing to deliver on the promise that's been made on their behalf. Fair enough, since they didn't sign off on this. But then, why bother putting it in the contract.

This is a contract that was written for a hot seller's market. Provisions like this are essentially useless right now. And, agents need to be carefully explaining that to the sellers to make sure their expectations are realistic.

The truth with this, and any contract, is that the language is only binding to the extent that there's sufficient leverage to enforce it. This is a waste of paper and ink!

EcoBroker Certification

For about the last six months I've been working on my EcoBroker certification. It's a certification from the National Association of REALTORS that focuses on both more healthful homes (knowledge of radon, mold, indoor air quality issues, etc.), more energy efficient homes and more environmentally friendly homes. It's a terrific course and I can't tell you how excited I am about everything I've learned.

But you're probably wondering what this does for you!

If you're a buyer, I can help you find homes that are more comfortable, energy efficient and friendlier to the environment. Energy efficient is going to become a larger and larger issue for families as the costs of heating and cooling a home continue to rise. Lower utility bills can mean better cash flow and more money to spend on getting the house you want. We're also seeing more and more health issues, including a rise in asthma and worries about the dangerous gasses released by many of the materials used in new construction. I can help you figure out what the important issues are for your family and how we find you the right house while keeping those in mind.

If you're a seller, I can help you market those aspects of your property likely to appeal to buyers who are concerned with environmental, health and energy issues. Whether it's noticing how well-designed your home is from a passive solar perspective or marketing the fact that all your appliances are Energy Star, there are a whole host of possibilitiess. And, in a market this tough on sellers, every edge helps!

I also look forward to providing a lot more in-depth information on these topics here. If there's something in particular you'd like to hear about, please let me know.

And, if you're looking for some help in making your current home more "green", I'd be happy to help you find the right resources!

I'm the only certified EcoBroker in this region and one of a handful in Virginia. I'm looking forward to continuing to learn more and finding new ways to bring you better information!

Finding a Good Contractor

Whether you've just bought your new home and want to make some changes or are working to get the place in shape before you sell it, finding the right contractor can be the hardest part! Most people don't have an extensive list of every kind of contractor they might need. And looking at phone book ads or a bulletin board full of business cards really doesn't make you feel warm and fuzzy.

The Federal Trade Commission has a web site that's a great guide to finding and choosing a contractor. It can tell you how to check references how to pay them and just about everything else you'd want to know about how to get the right person for the job.

Check it out. And don't forget to give me a call or send me an e-mail if you're at a loss. I recommend professionals all the time and usually have a short list of people I've used or my clients have used and recommended. And, any time you've used someone and are really happy with the experience, I'd love to know. You can't have too many good workmen on your list!

Virginia Foreclosure Prevention Task Force

Governor Tim Kaine has just announced the formation of the Virginia Foreclosure Prevention Task Force. The task force has four major objectives:

1. Collect and analyze data to assess foreclosures in Virginia and determine level of homeownership preservation needs.
2. Identify and review financial and programmatic resources available to homeowners to minimize the number of foreclosures.
3. Recommend outreach, counseling and educational programs and activities that focus on foreclosure prevention and support to homeowners.
4. Review existing Virginia laws and regulations and recommend appropriate revisions, including legislative actions if needed

First of all, let me say that this is good news. While foreclosures in Virginia are nowhere near the rates we see in places like Florida or California, there's definitely a problem here and it's a growing one. And whether you're in danger of foreclosure yourself or not, this has the potential to impact your property values. So three cheers for Governor Kaine for stepping up on this one.

I haven't yet seen who the members of this task force will be. But I think it's clear that there needs to be representation from local officials, lenders, real estate professionals and those who provide financial counseling to families in trouble.

One of the specific things I'd like this task force to work on is persuading lenders to proactively renegotiate these adjusting mortgages BEFORE there's a problem. In spite of the urgings of the federal government, including the President, too many lenders are still refusing to talk with homeowners until their situation gets so dire they are late on house payments. Homeowners who are proactive should be met with an equally proactive stance from their lender.

I'll be watching for information on what the task force is working on, and what kind of a difference they're able to make in the situation. I'll share that all with you as I get the scoop.

Listings Needed

It's a strange problem to have in this market, but I find myself in need of more listings! I've got very little inventory left after a very active 30 days. I've either sold or rented (where that made more sense for my clients) most of my listings. On a few of them I provided my clients with the information they needed to decide that it was not in their best interest to sell in this market.

One way or another, I'm in need of more listings. And, so I'm making a rare personal appeal here! If you know people who really, really need to sell and either haven't yet listed their homes or have tried and failed to sell their homes, I'd love to help them!

You might want to tell them to take a look at my blog so they have a better idea of who I am, how I work and what I can do for them.

And, thanks for putting up with this brief interruption in useful real estate information! Back to our regularly scheduled programming tomorrow!

Windows and Energy Costs

It's the time of the year when you're going to be turning on the heat soon, if you haven't already! And, like most of us, you're probably a little concerned about what this heating season will bring in terms of costs. Oil prices don't seem to be plummeting at the moment!

Windows are a good place to look if you're worried about losing that heat you're paying so much for! Newer windows can be a lot more energy efficient than the ones from 10, 20 or 30 years ago. Technology has greatly improved the efficiency of what's available in windows.

When you talk about the efficiency of a window you're talking about several different items. R-factor is what measures the window's ability to prevent heat loss. R-factors generally fall into a range between .90 and 3.00. The higher the number the greater the window's resistance to heat loss.

U-Values are the reciprocal of R-values, meaning that the lower the number the better. U-values range from 1.1 to .3.

If you'd like in-depth information on window styles, types and how to choose one with energy efficiency in mind, check out this web site:

https://maxvps027.maximumasp.com/V027U37YVE/userdef/PDFs/eewindows.pdf

All window should now be labeled with the numbers to allow you to make an informed decision. But the labels can be confusing if you don't know what all those things mean. For more information on how to read those labels, check out this web site:

http://www.nfrc.org/label.aspx

Finally, if you'd like to take a look at a map showing what the recommended range for the numbers on those labels are for our area, take a look at the Energy Star web site:

http://www.energystar.gov/index.cfm?c=windows_doors.pr_crit_windows

All of this should give you everything you need to replace those old, inefficient windows!

Prince William October Numbers

PRINCE WILLIAM COUNTY MARKET STATISTICS

OCTOBER, 2007

MONTH	ACTIVE	NEW LISTINGS	NEW CONTRACTS	SOLD
02/06	3354	1443	637	513
03/06	4015	2078	780	699
04/06	4686	2000	681	608
05/06	5227	2042	709	661
06/06	5481	1884	647	732
07/06	5559	1616	537	567
08/06	5348	1410	529	530
09/06	5061	1267	446	470
10/06	4770	1222	479	434
11/06	4248	959	386	411
12/06	3695	710	463	457
01/07	3739	1336	474	391
02/07	3928	1172	488	360
03/07	4527	1764	508	418
04/07	5073	1668	471	427
05/07	5431	1698	509	432
06/07	5703	1539	454	456
07/07	5621	1418	463	418
0807	5654	1530	382	419
09/07	5674	1345	339	305
10/07	5629	1356	419	327

Rappahannock October Statistics

RAPPAHANNOCK COUNTY MARKET STATISTICS

OCTOBER, 2007

MONTH	ACTIVE	NEW LISTINGS	NEW CONTRACTS	SOLD
02/06	42	10	3	4
03/06	49	16	7	3
04/06	58	17	6	5
05/06	68	21	5	7
06/06	68	16	7	2
07/06	70	12	2	5
08/06	74	19	3	3
09/06	78	19	8	4
10/06	84	25	5	5
11/06	81	8	6	7
12/06	75	6	5	6
01/07	64	10	5	5
02/07	64	13	5	3
03/07	66	10	3	5
04/07	81	22	3	3
05/07	80	10	2	2
06/07	79	16	7	4
07/07	83	14	0	3
08/07	87	12	4	2
09/07	84	13	3	4
10/07	75	9	7	3

A Good Day's Work

Negotiating a short sale, where the homeowner owes the mortgage company more than the house will sell for, is much different than your typical home sale. And, in these days where first and second mortgages are the norm, it's even more complicated.

So today I was happy to get verbal approval from a lender on a short sale for one of my clients. Negotiating with this many parties is a slow and painful process. But when you get a result in the end that's good for everyone it's a very satisfying thing!

There are a lot of very discouraged sellers and a lot of sellers on the verge of foreclosure. With an aggressive plan, implemented early enough, that usually doesn't have to happen.

I love happy endings!

Also, a brief note here that the detailed Fauquier and Culpeper county market statistics are now available in the categories for those counties as well as in the Local Market Conditions category.

Rappahannock and Prince William will be posted there tomorrow.

Fauquier October Market Numbers

FAUQUIER COUNTY REAL ESTATE STATISTICS

OCTOBER, 2007

MONTH	ACTIVE	NEW LISTINGS	NEW CONTRACTS	SOLD
02/06	489	149	64	54
03/06	610	296	91	61
04/06	692	254	94	77
05/06	732	237	107	87
06/06	781	218	78	90
07/06	816	190	62	54
08/06	823	206	79	79
09/06	794	162	62	61
10/06	821	197	51	55
11/06	723	105	59	44
12/06	643	71	36	54
01/07	656	171	60	42
02/07	676	135	71	53
03/07	723	212	94	62
04/07	804	217	66	68
05/07	867	206	53	55
06/07	865	171	65	65
07/07	805	142	71	58
08/07	823	157	49	60
09/07	832	164	42	38
10/07	787	140	56	44

Culpeper October Numbers

CULPEPER REAL ESTATE MARKET NUMBERS

OCTOBER, 2007

MONTH	ACTIVE	NEW LISTINGS	NEW CONTRACTS	SOLD
02/06	465	133	65	49
03/06	556	204	74	58
04/06	592	177	70	67
05/06	689	226	72	65
06/06	738	183	53	64
07/06	759	140	48	43
08/06	751	151	43	40
09/06	723	138	64	44
10/06	705	121	32	44
11/06	625	81	39	38
12/06	612	80	30	38
01/07	640	165	41	19
02/07	623	91	48	36
03/07	643	145	54	52
04/07	740	211	53	32
05/07	788	165	37	40
06/07	784	113	47	31
07/07	803	145	39	40
08/07	814	154	50	32
09/07	823	134	26	27
10/07	816	160	41	27

October Real Estate Market Numbers

The numbers for October are out. And, overall, they don't show a tremendous amount of change. The total number of solds remain low. In most counties the number of new listings was up. But the overall inventory showed a very slight decrease almost everywhere.

Clearly the inventory decrease has to be due to something other than houses being sold. Some of the homes were taken off the market. A lot of them were rented as that market remains much healthier than the market for sales.

The brightest spot in all of this is that the number of contracts written spiked up a fair amount this month. And that bears out the anecdotal evidence I've seen and heard. We've known there's some pent up demand out there. At least some of those buyers have made the decision that this is the time. I'm guessing a lot of them would like to be in their new homes for Christmas.

I'm also receiving an increasing number of inquiries from buyers who want to start looking now but don't intend to buy until the spring. I'm hoping that what I'm seeing there is also part of a larger trend.

Over the next couple of days, I'll post the detailed charts with the numbers for Culpeper, Fauquier, Rappahannock and Prince William Counties. If you have a special request for the inventory for another county, e-mail me or post a comment here and I'll get you the information. I have the data for just about every county in the northern half of Virginia.

Bottom line on all the data is that there's a little bit of increased activity and still a long way to go to get this inventory back to a manageable level!

Fauquier Times Democrat Article

The Fauquier TImes Democrat this week features an interview with local real estate broker, Joe Allen. It was an interesting article and I found much to agree with there.

In fact, it was interesting that Joe Allen's words very closely matched those of Washington Mutual's head of their mortgage department who yesterday said this market was unlike any he'd ever seen. Joe says it's the worst housing slump he's seen in his 34 years in the business. And, that seems consistent with what I'm seeing and the sentiment of many of those who've been in this business for many years.

And, I share his skepticism about NAR's 2008 forecasts. But you should also remember that those are national forecasts and real estate is very, very local.

And while he's right that there are always buyers I would have like to see a more in-depth discussion about how many buyers it's going to take locally to pull us out of this slump and what might be discouraging those buyers right now. There was no mention of the unique local factors that we face.

Still, all in all, a good interview. Joe's been around a long time and his opinions are usually worth listening to!

Indoor Air Quality

While there are many buyers who absolutely positively want new construction; there are others who are less enamored with new homes. One of the reasons could be an increasing concern with Indoor Air Quality (IAQ).

The EPA now says that the air quality in a newly constructed home can be 10 times more polluted than outside air! There are a variety of reasons for that and some of them can be avoided or mitigated if you're aware of the potential hazards up front.

New cabinets can be a major source of indoor air pollution through something called "outgassing". Basically, cabinets are often built using formaldehyde. That formaldehyde is then part of the cabinets and the fumes are released into your new home over many years. That "new home smell" that you're craving is actually a symptom of serious indoor air pollution!

Other sources of indoor air pollution can be new carpeting, paints and finishes on flooring. VOC's or Volatile Organic Compounds are the culprits here. They can have a variety of health effects and you should do your homework so you can make knowledgeable decisions for yourself and your family.

There are products available now that can eliminate or reduce these harmful gasses. One good source of information on Indoor Air Pollution in general is at the EPA.

Whether you're contemplating purchasing new construction or doing major remodeling at home, it's worth checking out.

Subprime Mortgage Map

The New York Times has an interesting map showing the percentage of subprime mortgages by county throughout the US. I took a look at the rates for this area and the good news is that it could look a lot worse!

Here are some of the rates:

Fauquier County: 24%

Culpeper County: 33%

Rappahannock County: 21%

Prince William County: 33%

Warren County: 29%

Loudon County: 22%

This puts us in pretty good shape relative to some of the hardest hit states, such as Florida, Nevada and California. And, some of the counties with the worst numbers are in places where they did not experience the extraordinary surge in home values.

It's also not much of a surprise to see Culpeper and Prince William Counties among the hardest hit. In Culpeper especially, I expect there's still a lot of pain to come.

Estimated Net Proceeds to Sellers

When you sell your home and finally get that check it will not be for the full sales price amount. Even if you own your home free and clear of any mortgages, there are still fees that will be taken out before you see any money.

The agent who lists your house should go over these charges with you when they first talk to you about listing your home. You need to know what kind of money you'll walk away with (and IF you'll walk away with any) so that you can make plans for where you'll be going next.

This estimate should then be redone when you get an actual offer on the house. Especially in this market, there can be a substantial difference between what you originally listed for and what the house eventually sells for. It's in everyone's best interest to make sure there are no ugly surprises at the settlement table.

Some of the things you should expect to see on the list of estimated charges are closing fees paid to settlement companies or attorneys. This is the money they charge for preparing all the documents, communicating with your mortgage company about the payoff and for actually conducting the settlement and recording the deed.

You will pay transfer charges which are essentially a tax levied by the government on the sale of your home. In general, in our area right now, that will be $1 for every $1000 of sales price. So, if you sell for $400,000 that tax will be $400.

You will pay a commission to both the listing agent and to the agent representing the buyer.

If you have a mortgage, you'll not only pay off the existing balance, you'll also pay a partial month's interest. Because interest is paid each month in arrears, meaning in February you're paying the interest for January, there will be interest due from the partial month in which you close. How much that is will depend on what day of the month you settle.

Other charges you may pay include termite inspection fee (typically $50-$70), Closing Cost Assistance for Purchaser, and fees for well and septic inspection.

There may also be other expenses out of your pocket before settlement that you'll need to know about. If you live in an HOA there will be a charge for obtaining a copy of the homeowners association documents. (Typically about $100.) If there is a home inspection by the buyers, there may be repairs you're required to make as a result. A good estimate will attempt to give you some idea of what those might run.

This will be an imperfect document. There's never any way to know precisely each and every piece of this. But it's a great source of satisfaction to me when I get really close to that final number.

By the way, in my opinion it's a good idea to estimate on the high side. No one has ever complained at closing that they walked away with too much money! But a seller who expects more and takes away less can be a problem!