Robert Bruner, the Dean of Darden School of Business at UVA has a blog that I often find interesting. His latest entry is based on a quote by the famed investor Bernard Baruch "If you have made a mistake, cut your losses as quickly as possible."

He talks about the difficulties of doing that in the business world, specifically using the AOL/Time Warner merger as an example. But one of the points he makes about why it's so difficult seems applicable in real estate as well.

He talks about "sunk cost" thinking. In other words, a seller says "I bought this place for $400,000. I'm not selling it for less than that."

The problem becomes that if you really do need to sell there's no guarantee you can hold out long enough for prices to go back up, or even to stabilize. If you're a seller who's moved on and you're paying two mortgages, how long can you continue doing that?

If you refuse to lower the price or let an offer get away for $10,000 difference, what happens when it's still on the market six months from now and you've paid that much more out in mortgage payments and prices have continued to fall?

Sometimes, cutting your losses is the best advice, in business and in real estate!

It's always interesting to find someone who isn't caught up in the crowd and parroting whatever the conventional wisdom is. Ben Stein, I think, has it about right in this Yahoo column.

Ben says he's a buyer in this real estate market! (Although I'm betting a thoughtful, selective buyer!)

Maybe this will become the new conventional wisdom?!

There's a constant refrain here. And, I know I sound like a record stuck in a groove. But May numbers continue to reinforce that we've still got too much inventory.

Culpeper County shows we're only eight units off where we were last year at this time. The good news is that sales jumped substantially this month. And, I'm not using month over month comparisons, but year over year. Both new contracts and closed sales took a big jump. But that pace is going to need to continue for months in order to start to see the reduction in inventory we need in order to stabilize prices.

In Fauquier County last year at this point in time we hit our highest number ever for inventory. Unlike Culpeper, we've come down substantially. A year ago there were 867 homes for sale and now it's only 764. The contracts written and the sales closed are both also up, if not quite as much as in Culpeper.

Prince William County actually has a large increase in inventory. While contracts and sales are up, the increase in inventory means no firming up of prices there any time soon. Since Prince William County is one of the hardest hit counties in Virginia for foreclosures, this will likely take some time to resolve itself. But bargain hunters are out there.

Rappahannock County remains a place apart. The market is almost exactly where it was a year ago. Days on market are longer there as well, inventory is higher than it was several years ago. But it's a very different market than what we're seeing in the other three counties.

Our numbers reflect the national numbers pretty well. New contracts are up across the nation. The numbers you hear from NAR and from most of the national media are primarily comparing May, 2008 to April, 2008 and of course the numbers are going to go up. The more meaningful number is always year over year.

We've got some good signs out there. There are buyers out there. They're looking for bargains. They've got the right market for it.

I know! You think I drank the kool-aid, finally! Or, you're worried that my brain has finally shorted out! (Or, maybe THEY got to me!)

I assure you none of the above is true!

Ignore all the hype from the real estate industry about now being a great time to buy. That's not what this is about. It may or may not be a great time for any specific individual or family to buy any specific house!

But, historically, a buyer has never had more power than they do today! And, I believe that's news. That's a good news story that we should all be able to get behind.

With the internet-based tools available to buyers today, they've never had the opportunity to be more well-informed. They have access to tax records and GIS from localities. They have access to maps from Google that make map fanatics like me drool! There are places like Zillow where you can get a "Zestimate" which, although flawed, is still a pretty amazing development. There are new sites such as FranklyMLS.com that are marrying Wiki functionality with MLS capabilities.

There's even more information available to help you choose an agent, whether that's reading their blog or checking out their ratings on sites such as QSC.

In fact, the buyer has so many tools these days that I suspect a lot of them are suffering from data overload. Data without thoughtful analysis can be more of a burden than a help!

Still, the tools are amazing! Regardless what prices do in the local market, a real estate buyer anywhere in Virginia has never before had the opportunity to negotiate from a stronger position!

Today, finally, I'll get around to talking about the numbers for Warren County.

Inventory in Warren County has stayed relatively stable month over month. There were 560 homes listed for sale in February and 567 in March. No significant difference there. Surprisingly enough, Warren County is the one county where there's very little difference year over year in this number. In March of 2007 there were 558 homes listed.

93 new listings came on the market in February. March was up slightly with 98. There's a significant difference in last year's numbers, however. In March of 2007 there were 161 new listings.

We do start to see some differences with contracts, month over month. In February there were 22 new contracts. In March that jumped up to 34. Of course, that's less impressive when you consider that a year ago there were 52 new contracts.

There were 24 closed sales in March, 22 in February and a year ago there were 39.

Overall, the patterns are similar to what we've seen in the other counties.

Prices in Warren County are down almost 17% year over year. It's worse than Fauquier, Culpeper or Rappahannock, but not as bad as Prince William.

Next week I promise an end to all these boring statistics for awhile!

We're going to look at Prince William County statistics today.

Prince William is different than the other counties I look at here. Its numbers are better by far in almost every category. If you were only looking at Prince William you could be forgiven for thinking things had definitely turned around.

There are 5757 properties currently for sale. And, inventory is one of the few indicators that show the market headed in the wrong direction. Last month there were 5573 homes for sale. In March a year ago there were only 4527 homes available. 1631 new listings came on the market in March. Last month there were 1595. A year ago in March we saw 1764 new listings.

502 sales closed in March of this year. That's up 49% over last month! And, if we look a year ago, when 418 houses sold, we're up 20%. Again, year over year numbers are the more meaningful statistic.

Even better are the number of new contracts written. 820 new contracts were written in March of 2008 as opposed to 698 in February. That's a 17 percent jump. Again, I don't give that a lot of weight because things should be getting better. It's spring! But the really good news is that last year at this time there were only 508 sales. That's a whopping 61% year over year increase.

Now, here's why! Prices have dropped dramatically. The average sales price in March of this year was $299,586. The average sales price a year ago was $408,574. That's a price drop of 26%. Compare that the Fauquier County average sales price of $318K and you begin to see some of the reason homes aren't selling as well there. Do you want to commute those extra miles with gas prices headed towards $4 a gallon and traffic getting worse?

Also, keep in mind that one of the reasons prices have dropped faster there is the larger number of foreclosures. Banks will do what they need to do to get the houses sold and off their books.

The number of new construction listings is substantially down frm last year. The number of sales of new construction is relatively flat.

More than any other local county, there are signs of hope in Prince William County. Yes, the price drops are steep, but it's getting the market moving. Sellers in other counties should take note.

Today I'm going to talk about March's numbers for Fauquier county.

There is very little difference between the numbers in February and March. The total number of properties for sale in February was 730 and at the end of March we showed 734 available properties. That, actually, is good news. Many other counties continue to show substantial increases in that metric. 140 new listings were added this month as opposed to 153 in February. Again, at least it's moving in the right direction. There were 56 contracts written this month and only 44 in February. This is the biggest change in the month over month numbers. The number of houses sold last month rose from 32 in February to 35 in March. Not a huge difference, but an improvement.

Again, I think it's much more telling to look at year over year numbers.

Unlike Culpeper County we have not seen an explosion in inventory over last year, although we are up. That 734 homes for sale number is slightly higher than 723. We see a lot less homes coming on the market 212 last year as opposed to 140 this year. Unfortunately, that's where the good news ends. The number of new contracts written has fallen almost in half, 94 a year ago down to only 56 now. The same story applies to closed sales. In March of 2007 there were 62 closed sales. In March of 2008 only 35.

Year over year it's hard to see any signs that this market is turning around. The flatter inventory numbers do give me some hope,  however.

Prices continue to drop. The average sales price in Fauquier county a year ago was $368,565. The average sales price now is $318,249. That's a 15% drop in one year. That's significant. There's no sign that prices are stabilizing either.

We're not seeing an increase in new construction listings. And, new construction sales are almost non-existent. There was 1 last month.

Overall, there's not much here to raise your hopes if you're a seller. But there is lots of continued good news for the buyers!

I've got February's market numbers. I'll give you the scoop on Culpeper, Fauquier, Rappahannock, Prince William and Warren Counties. If anyone is interested in information on any other counties, contact me and I'll be happy to provide.

In general, what we're seeing across the board is a jump in inventory. This being March, that's not a surprise at all. The increase in inventory will continue for the next several months.

In three out of the five counties the number of closed sales was flat. Rappahannock had one sale in both January and February. Warren had 22 each month. And Fauquier actually fell from 33 in January to 32 in February. As I said, flat.

Prince William showed a huge increase in the number of contracts written, from 498 in January to 698 in February. This may have something to do with the steeper price drops we've seen in that market. They may have finally broken the stalemate between buyers looking for a deal and sellers determined to hang on to every dime of equity they can, even if it means not selling!

Warren showed a nice increase in contracts, up by about 25% from last month. Rappahannock went from 0 last month to 1 this month.  Culpeper was up just slightly from 47 written last month to 51 written this month. Fauquier actually fell from 53 to 44.

Most of the counties are sitting at around 2 years worth of inventory on the market right now. Prince William is an exception with only about 16 months of inventory. The numbers for Rappahannock are pretty meaningless, but if you're interested the math shows a 70 month supply!

Across the board prices are still falling. And, I expect that to continue throughout 2008. This will vary a lot by neighborhood. In some neighborhoods, you may see some stabilization. In some neighborhoods, there's still a lot of adjustment needed. I'd be shocked if anyone found a single neighborhood where prices increase over the next year.

That's the scoop for February! If anyone needs me to dig deeper into any of these numbers I'm happy to help. Just send me an e-mail.

I got a call from a lender yesterday on a deal we're working on together. She's got some potentially bad news for my clients and wanted to let me know the scoop. It's the kind of heads up I very much appreciate!

But she also proceeded to tell me that she wasn't going to call my clients with this information for a couple of days. She wanted to research all the options and have every potential question answered before she called them.

I understand that instinct. It's hard to call someone and know they'll have questions and know you won't instantly be able to answer all of them.

But, I have a basic belief that I shouldn't know something about your transaction that you don't. This is NOT part of the canon of ethics for the National Association of REALTORs. There are plenty of other agents who think this goes a step too far and that in some cases we should be protecting our clients from things they don't really need to know.

But, I don't necessarily appreciate it when other people decide what I should and shouldn't know. I can't believe most of my clients would appreciate that.

In this instance, it's not permanently hiding information from anyone. It's just a couple of days delay in relaying the information. We're not talking about someone doing something immoral or unethical.

Still, it's the kind of thing I struggle with.

So, what do you think? If you're a consumer, do you want to know everything I know as soon as I know it? Would you rather I only told you things when I think you must be informed and that I spare you some of the scary details? If you're an agent or broker,  how do you deal with this question?

Last night I attended the Tranzon auction in Fairfax. Since most of you will probably never attend one, but many of you are probably interested, I thought I'd give you a report.

There were originally 19 auction lots to be sold. (Auction lots as opposed to parcels of land.) Ten of those 19 lots were from our area. They also had a half dozen DC properties and some land parcels in Clifton and Chantilly. I believe the proportion of local properties is representative of how much tougher the real estate market is as you move further away from DC.

Four of those 19 properties were pre-sold prior to the auction. In addition, one of the lots was three Culpeper townhouses. Two of those were pre-sold as well.

It was interesting that not one of the parcels of land met the reserve price. There were bids. But the seller had set a minimum price at which they'd accept an offer and none of the bids on any land parcel met that reserve. Land prices are always less elastic than residential homes and this confirmed that. And, since many of the bidders on land were builders, it's pretty clear that they're being very cautious right now. (If they weren't they'd be bankrupt, not bidding at auctions!)

I was at the auction with a buyer client so I had that hat on. So, I'll give my impressions from the buyer side first.

While the auction prices on some of these properties were attractive, there were no "steals" here. The ultimate sale prices overall were not far off current market prices. That tells me the people in that room had done their homework and weren't going to overbid. It also tells me that the heat of a bidding competition got some of them to bid a bit more than they really wanted to.

It was a cautious crowd overall. (And a large crowd.) For example, on the first property of the evening, a large colonial in Manassas on a 1.18 acre lot, the auctioneer tried to start the bidding at $700,000. He ultimately had to go down to $400K to get the first bid. The final sale price was $530K.

I was also struck by some of the comments by Tranzon, both the auctioneer and the gentleman providing the descriptions of each property. Comments like "You know this is going to be worth $350K in a year or two" and "The value on this can only go up" were shocking to this REALTOR who has been trained to never misrepresent value. And, the interesting thing is that I think those kind of statements were actually counterproductive. You could hear some of the scoffing after these comments as the potential buyers seemed to be reminded of the current state of the local real estate market and the folly of such predictions.

From a seller's perspective, this is not an unattractive way to sell a home. None of the residential properties failed to meet the reserve price. They all certainly sold faster than they would have under normal circumstances. And, I don't believe there was a significant decrease in the net in the seller's pocket. Remember that all of these properties are sold as-is with no inspections, appraisals, etc. And, settlement must take place within 30 days. I wouldn't hesitate to help a seller use an auction to sell their property. In this market, it's probably a method more sellers and their agents should seriously consider.

It was a very educational evening. If you're interested in more information on either buying or selling at an auction, let me know and I'd be happy to help!

I heard a story on Marketplace last week about the National Association of Home Builders.

Apparently, they've decided to withholding donating any money to political candidates this year because they believe that Washington has not done enough to take care of the housing crisis.

I applaud their actions while completely disagreeing with their rationale.

Here's hoping every PAC feels the same way and stops donating!

Don't let anyone kid you, PACs donate money in the hopes of influencing policy. Anyone who tells you otherwise is also likely to try and sell you the Brooklyn Bridge. And, if you look at the history of how politicians vote, it's pretty rare to see one vote against the interests of those who have donated large amounts to their campaign.

As far as NAHB's belief that the government has not done enough to help them, I'd be interested in seeing their proposals for what the government should be doing on their behalf.

I believe the government has a role to play in this crisis. I believe they need to make sure that the credit markets stay liquid. I believe it's in everyone's best interests for them to try and help families stay in their homes, so long as they can truly afford them. But I don't see bailing out individual businesses as either desirable or necessary in the current climate.

If the government does what it can on the above two items, if it works to put a floor under the real estate market, the builders, like everyone else in the industry will recover over time.

So, NAHB, please do keep your money, and not only this year! Now if only we can convince some of the other PACs to do the same!

Tomorrow is the Virginia presidential primary. Whatever your political persuasion, please take time to vote.

I was raised in a family that believed that voting was a responsibility. And, I still believe that!

So, please, go do your patriotic duty tomorrow!

And, yes, this is related to real estate. Whoever ends up in the White House will certainly still be dealing with fallout from the subprime debacle!

And, if you don't participate, don't be complaining to me about our government!

Back to topics more directly related to real estate tomorrow!

The January numbers are out and there's more good news to report. This is starting to feel and look like more than an anomaly. (Knock on wood!) But there are still danger signs as well. Let's talk about all of it.

Culpeper county continues to see inventories decline. Actually across the board we're seeing declines, but perhaps most significantly in Culpeper. This is the lowest we've seen inventory in a year. And, while closed sales were down in January, the number of contracts written more than doubled. A good sign going forward. Given how busy I am with both buyers and sellers the past couple of weeks, I believe we'll see an increase in contracts again in January.

Here's the bad news; new listing jumped back up. New listings in December were 91. New listings last month were 161. Year over year, we're holding steady. In January of '07 we saw 165 new listings. Expect that number to increase again in February. Again, my personal experience with new listings coming up would seem to confirm that.

In Fauquier we saw many of the same trends, but dialed down. Inventory decreased very slightly, from 703 to 699. Inventory still remains above where we were a year ago. As in Culpeper, sales were down, contracts were up. New listings jumped significantly. By the way, this is not unusual. Especially in a tough market, it makes a lot of sense to beat your competition to market. And the spring will likely see a flood of new inventory.

In Prince William all the above trends hold with no significant differences.

Warren County is clearly still struggling. Inventory is down only slightly. New listings increased almost threefold and while new contracts increased, it was not by much. 

Rappahannock County seems to be looking a little more anemic right now. But the volumes are so tiny in Rappahannock that you'd be in sane to try and determine trends from such scanty data. There were no new contracts written and only one sale last month. Inventory decreased very slightly and the number of new listings doubled from the month before.  It'll be interesting to see how the spring market unfolds here.

So, let's see what the increased activity I'm seeing now does to these numbers next month!

I've been wrestling with the question lately about how to use the visual tools available to advertise listings.

First of all, there's absolutely no question that high quality photographs are essential to marketing a listing. The National Association of REALTORS (NAR) own numbers show that listings with six or more photos are viewed 299% more often than those with fewer. That's a very significant number! Which makes you wonder why another study by NAR shows that only 23% of its members own a digital camera! But I digress!

And, don't underestimate the importance of the quality of those photographs. I'm always amazed when I see photos of cluttered countertops and piles of dirty clothes in the middle of the floor! Most of us have heard for years about the importance of curb appeal. It's been important because it was the first impression the potential buyer had of your home. But now that first impression is online. Curb appeal now applies to the whole house!

Virtual tours have become important, although I suspect that, like me, most buyers find it easier to just look at a large number of photos without all the pretty music and panning back and forth!

Now we're starting to see some videos incorporated into some listings. To be honest, what passes for videos is, for the most part, nothing more than a slide show narrated by the agent with maybe a few seconds showing the agent talking. Again, really what you're getting are just photographs of the home but in a format suitable for putting on YouTube.

It's too early for there to be any hard numbers on the effectiveness of this form of advertising. But I am wondering if buyers find it any more useful than a large number of high quality still photographs.

So...I'm asking for your input. What's your preference? Do you want a YouTube movie with a series of narrated slides? Are still photographs just as effective? More effective? If you're a buyer, what works for you?

Thanks for helping me figure this out!

The recession fears are overwhelming any inflation fears at the moment. And that means good news on mortgage interest rates. The 30 year fixed rate right now is hovering right around 5.5%. That's great news for buyers and if you're looking to buy in the next 3-6 months it's worth crunching some numbers to see if this might be the time to jump.

But today I wanted to focus on refinancing. It's not something I touch on much, because I don't typically get involved when my clients refinance. Once awhile they'll call for help in recommending an appraiser or finding some papework, but generally a refinance doesn't require a real estate agent's involvement.

However, if you've never done this before and are looking for some help. Here are a couple of hints.

1. Try an online mortgage calculator. A Google search will provide a slew of them. Be careful of the ones that are too basic. And make sure it tells you how many months it will take to recoup your costs. There will be fees associated with refinacing. While you may save money each month with lower interest, if you move in six months and it takes a year to break even based on the fees you haven't really gained anything.

2. Don't choose your mortgage lender solely on rates. It should be clear to everyone by now but not all financial institutions are created equal. Go with someone reliable! Get recommendations from people you trust.

3. Read the fine print. This should be obvious by now as well, but make sure you undestand the mortgage you're getting. Ask whether there are pre-payment penalties. Make sure you know if your rate is fixed or adjustable. And, if you choose to go adjustable make sure you understand completely how that adjustment process works and what your payments are going to be two years or three years or five years from now.

All that said, it's a great time to take a look at your mortgage and see if it makes sense to refinance.

It's time to go out on a limb! With the new year fast approaching, I'm going to give you my version of what to expect in 2008. I am humbled before I even begin by looking at some of the weightiest minds in the industry and how their 2007 predictions worked out. Dr. Steven Fuller is one of the most knowledgeable real estate gurus in the greater DC area. But he was way off base in his optimstic 2007 predictions. But then I remember Mark Twain's quote about economists "If you laid all the economists in the world end to end, they still couldn't reach a conclusion." So, how badly could I do?!

I'm going to start with what I see overall for our area. Then I'll single out a couple of counties for some specific comments.

First of all, I see no huge market swings in either direction. There will be relative stability, although not the kind most sellers are looking for.

Prices - In our area we'll see some additional price declines. There are two ways to look at price declines. If you look at sold prices, which is how this statistic is usually generated, the decline will be larger. That's because while a large number of homeowners have already significantly lowered their prices, those homes generally haven't sold yet. As they sell, we'll start to see that really reflected in the statistics. But a lot of that decline has already happened. There are specific neighborhoods where the word hasn't quite gotten through yet and prices will need to fall more. If you're looking to buy, make sure you ask your real estate agent about overall market statistics for that specific neighborhood.

If you look at the average list price, I don't believe you'll see huge drops. Again, much of that price cutting got done in 2007.

Volume - I expect this number to be only slightly better than 2007. Any larger influx of buyers will have to wait for greater overall economic confidence. My prediction is that we won't see much of that in 2008.

Inventory - Flat initially, a big jump in early spring, and then a gradual decline the rest of the year. I believe we'll end 2008 with inventory slightly lower than in 2007. I'll really go out on a limb here and say that I see a much larger inventory reduction in 2009.

Interest rates - I know there's a lot of hope out there that mortgage interest rates will drop significantly and bring hoards of buyers out. The economic indicators I see don't lead me to believe there will be much if any drop in interest rates in 2008. Inflation worries seem likely to continue to plague us all year. That doesn't mean I think we'll experience huge inflation. But it will worry the Fed and other policy makers and that means not much relief on interest rates.

A couple of special notes. These predictions are what I see for the counties where I do most of my business: Fauquier, Prince William, Warren and Loudon. The other two counties I serve, Rappahannock and Culpeper are deserving of special note.

Culpeper county will suffer for a very long time. The overbuilding in Culpeper county is the stuff of legend. We'll still be talking about this 20 years from now. Unfortunately, prices will continue to decline deeper and faster here than anywhere else. Unless there is a huge new employer in Culpeper County very soon, we're looking at several more tough years.

Rappahannock County is on the other end of the spectrum. Since construction is almost non-existent and since it remains a highly desirable location for many people, the real estate market has generally been more stable. We've seen some softening in this market too, but I don't expect much additional softening in Rappahannock. The biggest factor affecting the market here right now is the credit crunch and I believe that situation will improve significantly in 2008.

There's my prediction. What do you think?