Tougher Lending Standards

I saw this article on Friday, but I hate to go into the weekend on a bad news note! So, I saved it for Monday! Just what you needed, right?!

There are still buyers out there. There will always be buyers out there!

The pool is small and you're going to have to knock yourself out to get them to your house. And, if they're not coming to your house, it's over priced!

And, this article from the New York Times will probably interest buyers and sellers. The numbers here are national. (Our local numbers are worse.) But I think the letter to sellers is a good idea. Sellers, given the inventory in Culpeper, Rappahannock, Fauquier and Warren counties, I don't think I'd try the letter to the buyer. They really do have all the cards right now!

Passion

I hope this is who I am and what I bring to every real estate transaction.

Tom Peters on Passion! from Tom Peters on Vimeo.

(But I bring the experience with it!)

A rare Saturday post as birthdays put me in a reflective mood! (And, clearly a self-indulgent one!)

Referral Fees

My colleague in Charlottesville, Jim Duncan, has a great post about how referral fees work.

One of my problems with referral fees is that they're almost never disclosed to the buyers and sellers. The person who refers you to another agent doesn't want you to know that they got a referral fee (kickback?) from doing that. The person who gets the referral fee often feels disgruntled about paying it. Service can definitely suffer as a result.

It paints with too braod a brush to say that the best agents won't work with referrals, especially corporate relocations. But there are reasons that some of them run from this business. You do more work for less money. That's hardly ever a successful business strategy! Relo companies want paperwork and lots of it. If you are a listing agent for a home where the owners are being relocated, you may be responsible for winterizing the house or for lawn maintenance during the summer.

That being said, personally, I love corporate relocation buyers! It's fun to help families learn about their new community! I get to be the "first friend" for a lot of newcomers to our area. I'm honored by that! And, generally speaking, it's a pretty good bet that these buyers will actually buy and will make a quick decision. That's always good for business! (The exception is the couple of families I've worked with who came, saw, got sticker shock and turned down the job offer!)

So, referrals are a mixed bag. Full disclosure is part of making sure referral fees don't get in the way of good customer service. In my opinion, referral fees are one more symptom that the current economic model for real estate is broken. But that's a rant (er, I mean, post) for another time!

Have a great weekend!

Local Government Role

The Fauquier Times Democrat had an editorial this week that was right on the mark. This is a great opportunity for local governments to address affordable housing.

The editorial talks about what's being done in Prince William and Fairfax counties. The Prince William model may work better here. But maybe there's a third way.

I'd like to see a public/private partnership between Fauquier County and Habitat for Humanity. The two groups together could certainly do more than either group could on its own. And, while I mention Fauquier County here, because that's what the editorial addressed, this solution could just as easily be applied to Culpeper.

There's a growing inventory of vacant homes in the area. These vacancies hurt all existing homeowners. And, there's a huge pool of potential home owners that have been driven out of the market because of lack of affordability.

Seems to me there are potential solutions here for everybody!

400 and Counting

I'm going to take a moment today to acknowledge that this is my 400th blog post here! I've enjoyed every minute of it and have learned more than I would have thought possible!

It's been fun hearing from you. All of you are the reason this blog exists. The purpose remains the same now as it was at post number one. This is here to give you, the consumer, more access to information on real estate in general and on the Fauquier (Warrenton), Culpeper, Prince William, Rappahannock and Warren county real estate market.

The occasion of the 400th post is prompting some reflection and analysis and watch for some adjustments going forward that will hopefully make this blog even more relevant.

And, because I wanted today's post to have an upbeat feel, here's an article on what I believe is ultimately a very positive sign for the real estate market overall. Work outs for troubled mortgages have not been happening in anywhere near he numbers they need to. This points to better systems and processes to make that happen.

And, one more milestone occurs later this week. Next weekend I'll turn 50!

YeeHaw!

The End of Cathedral Ceilings

I've never wanted a house with those enormous ceilings. I love looking at them, but living in them and paying the utility bills to heat and cool them never made any sense to me.

According to the Wall Street Journal, I'm not alone. According to a recent article, between the added utility costs, wasted space and noise, these will soon be a remnant of the past.

If you're in the market to buy, this is one factor I'd keep in mind! What you buy now may determine whether you sell in the future! It will definitely determine how much you'll sell for and how quickly you'll sell.

Answering Your Questions

One of the things I enjoy most about blogging is the interaction with readers. Whether it's your comments or your questions, I enjoy hearing what's on your mind. I thought I'd take a little time today to respond to some of what you've been saying.

Someone used the Meebo functionality on the right side of the page to chat with me about Fauquier County tax assessments. The question was has the county delayed the assessments so as not to take a revenue from the reduced values of area homes.

According to the County Commissioner of Revenue's office, the assessments have been done every four years, for at least the last 20 years. Prior to that assessments were done every six years. So it appears there's no change in policy at this time. The next assessments would be done in 2009 with the new rates to go into effect in 2010. The problem with that, of course, is that current values are no where near current assessments. There's a case to be made for appealing your current assessment.

"Sarah" recently reminded me that while the decline in home prices is bad for sellers, it's a great thing for buyers. That's very true. In every market there are winners and losers.

To be honest, I probably feel the sellers pain now more than I felt the buyers pain when they were desperately trying to buy a house and were one of 20 offers (or more)! The truth is I wasn't worried about them being thrown out on the street. I did worry that some of them were taking out mortgages that weren't in their best interest, but I was usually told that they knew what they were doing. These days, some of the sellers I work with are in very serious difficulty and I do worry about them!

So, if as a potential buyer you don't feel I'm sufficiently celebrating your ability to buy a house at a more affordable price, never fear! Prices actually still need to come down more. I'll do a post next week on affordability in our area. But I rejoice for every buyer who gets a great deal on the home they want!

And for my fellow agents who read this and keep me honest, thanks!

Keep those comments coming!

Disclaimers and Blogs

I had a chance to catch up on some reading this last week and was reading the March issue of REALTOR magazine published by NAR (National Association of REALTORS).

There was an article on blogging called "Is Your Blog Legal?" Before I bash one piece, let me say there was some good stuff. It was written by an attorney and their inclination is to be cautious and I get that.

But this advice rubbed me the wrong way: "Include a disclaimer that you assume no responsibility for the accuracy of any information."

It's a lawsuit happy world out there and I understand why someone might want to include such a disclaimer. But the truth is, I am responsible for what's on MY blog. Who else, exactly, would you hold responsible for the words I write?

I am a fallible human being and I surely make mistakes. One of the beauties of blogging is that readers will jump in and tell me when that happens!

But the buck does stop here. I hope you'll all continue to point out when I get it wrong. That pushes me to continue to work better at what I do!

Cancelled Projects Equals Good News

The Culpeper Star Exponent reports that two condominium projects slated for Culpeper have been pulled due to current economic conditions as well as the state of the local real estate market. It's not that Culpeper wouldn't be better off with more condominiums in the housing mix, but it's definitely the wrong time. For weary sellers, less competition is good news!

And, that's only a small piece of the good news in the real estate market.

Fannie Mae and Freddie Mac have dropped their "declining markets" indicator. Since just about every local jurisdiction had been labeled a declining market that's big! This indicator meant buyers had to come up with more cash to buy homes in this area. In a market already starved for buyers, this was not helping! Don't expect a flood of new buyers as a result of this, but it should help out a few buyers who were short that extra cash.

And, let me leave you with one more piece of good news. No housing market is completely depressed or completely robust. There are always pockets that are thriving even in the toughest markets. One of those areas here is the rental market. Rentals that are well-priced and in good condition are moving, sometimes pretty quickly. The summer season should be a good one for the rental business. And some sellers might be well-advised to consider renting out their properties that aren't selling.

Zillow is Coming!

Zillow made a big splash when they first showed up a few years back. Mostly it grabbed people because it was so much fun to enter your neighbors' addresses and see what Zillow said their homes were worth. Mind you these days that exercise is mostly depressing! And, those "zestimates" were never very accurate.

I told sellers then, and still believe, that you need to know what Zillow says about your house. Because there's a pretty good chance that potential buyers will know.

And, an article in today's Realty Times emphasizes why Zillow is continuing to gain in importance. REALTOR.com has been the big boy on the block forever. But from a technological perspective it's been a long time since they had anything approaching a technological edge. And, while, theoretically, REALTOR.com exists to serve me as a member of the National Association of REALTORS (NAR), for most of us it feels like it exists to gouge us!

While Zillow (and other sites) will allow me to upload unlimited photos, virtual tours and other good stuff, all for free. REALTOR.com charges me for everything, including having my name on my own listings! For example, to link a virtual tour (using VisualTour.com) REALTOR.com charges me $19.95. But linking that same tour to Zillow is free!

Consumers still prefer REALTOR.com, but only because not enough agents are taking advantage of the free stuff at Zillow. Trust me, that's going to change!

So, if you're a consumer and haven't yet checked out Zillow, you should. And, if you're an agent and haven't checked it out, what are you waiting for?

3rd Annual Alternative Energy Expo

There's lots to talk about today.

Saturday, in Warrenton, is the third annual Alternative Energy Expo. It runs from 9:30 a.m. to 4:30 p.m. at the Fauquier County Fairgrounds. Admission is $5. If you've been thinking about making your home and/or your life more "green" this is a great place to get ideas, talk to people who can help and get inspired! It's bigger and better than ever this year!

Most of you should have received in your mailboxes this week a circular called "Northern Piedmont - Buy Fresh - Buy Local". The Piedmont Environmental Council sent this to residents of Culpeper, Fauquier, Orange, Madison and Rappahannock counties. In it you'll find a guide to buying almost everything you eat locally from produce to meat, from farmers markets to CSAs to buying right on the farm. Great publication!

The WSJ has run a couple of very interesting real estate articles this week. First up was an article called "As Dues Dry Up, The Neighbors Pay" about how as no one is paying the HOA dues on vacant/foreclosed houses, other homeowners are having to swallow large increases in dues. It's another things buyers need to take a careful look at prior to buying.

The other article in WSJ was "Will Upgrading Your Home Help You Sell It?" and the results are clearly mixed. In a declining market I'd always argue that while you want your house to shine, you should never put in expensive upgrades. This article has some interesting details.

Misconceptions

People talk to me all the time about real estate. Obviously customer and clients do that. But people who barely know me but know I'm an agent also do that. That's a good thing! I like hearing what's on people's minds and how they're seeing the current market.

Lately I've been hearing some things that don't quite ring true. So I thought I'd set the record straight.

First of all there's the current chart topper "I know that a bank will take any offer just to get rid of a foreclosure." It's a lovely thought, but just not true. In fact, there is quite a range of policy on this among the various lenders. While, in theory, no bank wants to hold a property a day longer than they have to, each lender has its own policy as to what's an acceptable offer. That may be a percentage below the listing price or it may be based on a percentage loss they are willing to absorb. It may be a combination of factors, including how long the property has been on the market.

Unfortunately, no one hard and fast rule covers this. But be assured, I've seen banks reject lowball offers, even perfectly reasonable ones!

Here's what sellers tell me a lot these days. "I know you're probably right about the price, but I just want to try it at this higher price for a little while."

Here's the problem. Prices are declining. So, while you're sitting on an overpriced listing that no one comes to see, prices have gone down further. Now, just to catch up to the market, you need to come down further in price than where I originally suggested. All you've done is reduce your likely profit.

And, of course, real estate agents have their own misconceptions. The one you'll hear most often these days is "It's a great time to buy a house." One agent last week told me he's never stopped saying that! I'm guessing his clients who listened to him a year or two ago may not be thanking him now!

It's a great time to buy a house if you're likely to stay in it at least five years. Given current market conditions and where I think we're going, I still won't guarantee anybody will make money in five years. But I think, if you include the tax advantages, you have an excellent chance of breaking even or even a little better.

If you're likely to get transferred in a year or two, it is clearly not a good time to buy! If you're looking to flip a house for a quick profit it is definitely a very bad time to buy! If you're looking for a long term investment, say a rental income property, it's a very good time to buy.

And, as always, what you buy and where you buy make a huge difference!

April Numbers

The April numbers are finalized.  I did a sneak preview for you about ten days ago, before the numbers were official. And, the picture hasn't changed much.

In every county, the pattern is the same. Inventory has risen again, as has the number of new listings. After a dismal month in terms of sales in March, April looks better, both in terms of new contracts written and sales closed. But the number of houses sold is not keeping pace with the new listings coming on the market.

Fauquier, Culpeper are each showing about 16 months of inventory. Warren is looking worse at 24 months. Prince William is in the best shape at only 9 months. Rappahannock, being a special place, has about 3 years worth of inventory. But, again, the numbers generally don't give a very realistic picture of Rappahannock.

The more interesting comparison, of course, is year over year. Since real estate is very seasonal, that's always true. In general, inventory is higher than it was a year ago and sales are slower. There are some exceptions, but it's too soon to say if those are a blip or a true change in market conditions.

No bottom in sight would be my reading of current conditions. There is nothing to suggest we've turned a corner. (Although I remain hopeful that I'm wrong!)

Local Representatives Vote No

Last week, in the House of Representatives, they finally voted on the "Foreclosure Prevention Act of 2008". This bill is designed to help stem the tide of foreclosures. It would not only help people who are in danger of losing their homes, but also their neighbors who are tired of seeing the value of their own homes plummet.

It is very interesting to note that the counties hardest hit by the foreclosure crisis, not one of the representatives from Virginia voted to support this bill.

Representatives Cantor, Davis, Wolf and Wittman all voted no on this bill.

Let's be clear about what they voted against.

This bill would have allowed homeowners to stay in their homes, restructured their mortgage to reduce the amount owed to more accurately reflect actual values and guaranteed those loans through the FHA. It would have rewarded buyers of foreclosed properties with tax credits, thus helping all homeowners.

It's tough to see what could possibly have induced them to vote no. That's especially true when their Republican counterparts in other hard hit areas of the country crossed party lines to support the bill.

I know the argument about not wanting the people who were responsible to suffer to help those who were not. But NEWS FLASH: if you were very financially responsible and because of all the foreclosures in the area your home prices are plummeting you're still paying the price.

The question isn't whether those of us who were responsible pay for those who weren't. The question is do all of us want to preserve the value of our homes?

So, does party loyalty count more than constituent pain?

Another Victim of the Housing Downturn?

There's a lot of fall out from the real estate market beyond what you read in the headlines. Sure, families are losing homes. Homebuilders are going broker or laying people off in droves. And, all the tradesmen who work on those homes are scrambling as well.

But there are some less visible casualties as well.

Newspapers are hurting. The big papers have gotten the press attention, papers like the Star Tribune from my home state of Minnesota. A lot of revenue for newspapers comes from the real estate agents and real estate companies who advertise with them. The truth is, a lot of that advertising should have been disappearing eons ago given how much less effective a medium it is these days for attracting buyers. But hard times has forced most agents and companies to cut back their advertising substantially, or, in some cases, stop it altogether.

And, while the big papers make the news when they're in trouble, the small, local papers are not immune.

The Times Newspapers here locally have cut staff. (Full disclosure: I'm a blogger for the Times Newspapers and a former columnist.) If you get the Fauquier Times Democrat or the Rappahannock News you've seen the size of your paper considerably reduced. In fact, given that the two reporters for the Rappahannock News are gone, the editor is leaving soon and the population of the county is not growing, how long can the paper continue to be economically viable?

We're not to the end of the carnage from this mess yet. The damage is more widespread than most people realize and hits industries no one has really thought about.

Ignoring a Potential Buyer

I was showing a home to a client a couple of days ago. We had just finished and were getting in our cars when someone drove up. He got out of his car and asked if I was the real estate agent. I told him I was "a" real estate agent, but not the listing agent for this property.

This gentleman went on to explain that he's been calling and leaving messages for the listing agent for months, trying to get in to see the house. All his calls have gone unreturned.

Have I mentioned that this house has been for sale for more than 450 days?

Real estate agents get discouraged too. I understand that. But a potential buyer who is this determined would certainly seem worthy of a returned phone call.

I wonder if the owner knows there's a potential buyer who's having trouble getting to see the property.

By the way, this is one more reason (if you needed one) to never, never call the listing agent on a property!

Recycle Your House

More and more homeowners are electing to recycle as much of the material as possible when tearing down a house (deconstruction) or doing a major remodel. This Wall Street Journal article tells one homeowner's story.

In addition to helping save the planet, recycling what you can makes economic sense. Materials you can reuse in your new house can help reduce costs there. And, materials that are donated, say to a Habitat Restore, can provide a tax deduction.

There are a number of places locally to recycle these materials. Some operate for profit. Some, such as Habitat for Humanity's Restores are used to fund charitable organizations.

To find other businesses that help you recycle, check out this previous blog post.

Culpeper Foreclosure Pain

There was a story in yesterday's Culpeper Start Exponent about a couple in Culpeper county who are losing their home to foreclosure. It's just one of the many painful stories out there. This couple is right in saying they're not alone. Not even close!

The article also briefly discusses where the foreclosures are concentrated. As you'd expect, most of them are in the recent developments in Culpeper. Lakeview, the largest of those developments, is the hardest hit. But the other new developments along 522 aren't far behind.

Nobody's Playing Outside

There's an interesting article in Slate, the online magazine about the disappearing lawn. I thought this exerpt was particularly interesting.

Where Are the Move Up Buyers?

I walk talking to a colleague a couple of days ago about how the lower end of the market is where all the deals are being done right now. A house under $300K has a significantly better chance of selling than anything above it does. (Of the 41 houses sold in April in Fauquier County, half were below $300K. Another 10 were between $300K and $400K.)

She said that's good, because then the people who sold those houses will move up and so on and so forth. That's how the cycle works. And, I agreed initially. But as we discussed it further it occurred to me that the cycle seems to be broken right now.

There are still quite a few first time home buyers out there, and, an increasing number of investors. Typically the houses they buy are starter homes and then the sellers of those home move up the rung to a larger home.

But almost every home I show these days is empty. And, a large number of them are bank owned or on their way there. There are no owners living in those homes to move up to the next level of home ownership. They've already left and, in most cases, it was to go back to renting.

There are some empty homes where the owners got transferred and are gone because they're buying another home in another community. But a lot of the sales of starter homes are not producing the normal "move up" buyer that we usually see.