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March 2010

Video The Way It Should Be

Date: Mar. 28, 2010
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The vast majority of videos or virtual tours of listings do not impress me at all. I think most of them are no more impressive than if you'd taken really good photographs.

This shows how it could/should be done:


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Broadband Needs

Date: Mar. 28, 2010
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There's been a lot of talk in these parts for quite awhile about the lack of broadband once you get outside the towns. Many of you reading this blog are still in very rural areas where broadband simply is not available.

Broadband is critical for economic development now and in the future. Rappahannock County, in particular, has a serious problem in this area.

The FCC recently came out with a plan to expand the reach and speed of broadband in this country. As part of their efforts in this area they are trying to map what is available now around the country. You can test your connection at this site and add that data to what they've already collected. Please do this!

And, let's do a little data collection here. Let me know what your results are and where you're at. Let's see what we can find out about the area. Pass this link along to your friends and have them report here as well.

Here are my results for Amissville in Rappahannock County:

Download speed: 1001 Kbps

Upload speed: 252 Kbps

Latency: 753 ms

Jitter: 85 mps

By the way, if you're looking for definitions of each of these, they're also available on the FCC site.

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Area Still Growing

There was an article in the Washington Post this week that talks about the region's population growth. The good news (if you're looking to sell your home) is that this region continues to grow.

The area grew 3% in the last few years. That's faster than any place else on the Eastern seaboard.

It gets more interesting from my perspective when you look at the local populations trends.

Every local county, except for Rappahannock has continued to grow. We're not seeing the big population jumps that we saw in 2004 and 2005. But the trend is definitely slow but steady growth.

Culpeper County has grown the fastest in the last decade. It's 35.7% growth between 2000 and 2009 make it the 17th fastest growing county in the nation.

Fauquier County has grown at 23% over the same period. And, if you look around you notice that there aren't as many new subdivisions in Fauquier. (Not that there aren't still plenty!)

Rappahannock actually lost about 1% population over the last decade. The county continues to hover around the 7000 mark. It's hard to see anything changing that in the short term. It wouldn't surprise me to see Rappahannock at almost the same population a decade from now.

Prince William County grew almost as fast as Culpeper. The 34.8% growth rate also made it one of the fastest growing counties in the country. Prince William County benefits from the proximity to DC, VRE access and lower housing costs than the inner suburbs. In fact, while growth in Culpeper and Fauquier has slowed considerably since the 2004/2005 time frame; Prince William County is growing at almost the identical rate now as then. Buyers trying to buy in Prince William County have definitely noticed! New construction has definitely not kept pace with that kind of growth.

The continuing influx of new residents will eventually begin pushing prices up again at a faster clip. I don't predict any return to the craziness we saw in the last bubble. But there's also clearly no reason to expect a second drop in prices in this area.


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The Problem With Voluntary

The government has once again announced a big plan to help struggling homeowners. It will feature principal reduction on mortgages and, once again, relies on voluntary compliance by lenders.


Forgive my lack of enthusiasm.

I believe in the ability of government to do good things for and on behalf of its citizenry.

But I've looked at every program the government has rolled out to address the foreclosure issues, both in this administration and the previous one and they've all been pretty pathetic.

What they have in common is that they are all voluntary. Lending institutions have the ability to participate if they choose. There are some token "carrots". But really, the effort is to use moral suasion to persuade them to do the right thing.

News flash: For any corporate entity profits mostly triumph over doing the right thing. Actually, I'd suggest for many people as well.

If the IRS said: "Pay your taxes if you want. If you don't we'll shake our finger at your but there are no real consequences." My hunch is most people would not pay their taxes.

If the mortgage company told you when they made the loan that there were really no consequences for not paying your mortgage every month, even though it'd be really nice if you did, would you do it? You'd have the best of intentions. You'd probably pay sometimes. But a month would come when you would probably say, I've got better things to spend that money on this month.

The lenders don't want to see that red ink on their books. Voluntary programs aren't going to change that. Well, not until pigs fly anyway.


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BOA Writes It Down

The "IT" in this case is the principal amount you owe on your mortgage.

This is a very big deal, in one sense, because no bank has publicly announced they're willing to do this. And, Bank of America is the largest mortgage holder since they acquired Countrywide a couple of years ago.

So, here's how the program is supposed to work. If you owe the bank more than 20% more than what your home is actually worth, you may qualify. Keep in mind that this is a pilot program and will only initially be offered to 45,000 homeowners. For the homeowners chosen, up to 30% of the principal would simply be wiped out.

So, let's say that you owe BOA $300,000. But you could only sell your home for $220,000 in this market. Bank of American could, theoretically, reduce your loan balance by $100,000. Your mortgage payments would presumably be lowered to match this new lower loan amount.

Let's say, for the record, that I'm skeptical. Partly we'll blame that on having seen too many programs announced that did little or nothing to help most homeowners. Partly it's having had too many ugly dealings on short sales that involved Bank of America, an institution that has a well-deserved reputation for being among the worst to deal with.

But there's also some reason for optimism. If Bank of America is willing to take this step, we may see movement from other banks. And I honestly believe that reducing the principal on mortgages will mean more homeowners will get to keep their homes.

Let me also be clear as to why Bank of America is likely taking this step. An increasing number of borrowers have proven that they're willing to walk away from their homes and mortgages. This is a new phenomena and a very troubling trend if you're a lending insitution. The more this happens and the less stigma that surrounds those who take this action, the more other homeowners will see this as a viable option. That equates to a lot of red ink on the balance sheet!

I hope this is the beginning of a trend among banks. I hope this is the beginning of the end of the foreclosure crisis. And, I hope my skepticism is proven wrong!

Washington Post has a story with more details.

NPR's Morning Edition has an interesting analysis as well.


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Short Sale Success Stories

Admit it. You saw the title of this blog and thought "no way"!

I understand that kind of thinking! Short sales are hard. I talk about that all the time on this blog. But it's time to look at some success stories. Hard doesn't mean impossible. And, it doesn't mean you should avoid a short sale like the plague.

Here are the stories of three sellers and their successful short sales.

Note: Success is defined here as the clients believe it was successful and they achieved what they wanted from the short sale.

The first story is a young couple with a house in Bealeton. They were upside down on the house and their interest rate was about to reset. They would be unable to afford the new payments. They wanted to preserve their ability to rebuild their credit and buy again in the future as their family grew. They were one of the early short sales in this area. It took time, but the short sale was approved. They had great credit before the short sale and did everything they could to maintain that afterwards. Now, nearly three years later they're once again in a position to talk to a lender about buying a home.

Another young couple owned a townhouse in Remington. They bought it just before they got married. Their growing family had made the townhouse much too small for them. They initially rented out the townhouse. But when the renter stopped paying, decided it was time to try a short sale. Not only did the short sale get approved and the deficiency forgiven. The lender in this case actually gave the sellers a small check after the sale. Even more important to this couple, their credit has been almost unaffected. I can't guarantee it'll work this way for everyone. But they saw only a 1 point reduction in their credit score.

The third short sale is a townhouse in Culpeper. The owners were transferred out of state. They initially rented the townhouse out. But the rent they received didn't begin to cover the mortgage. When the tenants moved on, they decided to try a short sale rather than go to foreclosure. Their goal was to avoid a foreclosure and it's greater damage to their credit. This one took almost a year. It featured four different buyers, six different lenders and required the patience of Job! But in the end, these sellers also succeeded.

If you are upside down on your mortgage and don't know what to do, you owe it to yourself to at least discuss the possibility of a short sale.


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The Certification Racket

The real estate business and market is constantly changing and it's almost a full time job just to keep up! Fortunately, I love learning so that part of my job is fun.

But part of the real estate education business is a racket, to say the least. I stumbled across Elizabeth Newlin's take on designations this week and thoroughly enjoyed it.

Most NAR (National Association of REALTORS) designations require you to pay to take a course. That seems perfectly reasonable. Then they charge you an annual fee to keep that designation. No additional coursework is required. It's not about making sure you have up to date information. It's just a way to gather $$$s from the real estate community as far as I can tell.

I'm not sure if all that learning is going to leak out of my brain if I don't pay.

Does this mean a real estate agent with additional certifications adds no benefit? Not at all. It's at least some evidence that you have that they care about continually learning and getting better at what they do.

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Real Estate Investors Going Green?

Here's an interesting blog post suggesting that real estate investors should be embracing green as a way to improve their bottom line. And they should definitely be taking the free government money to do it!

Smart idea!

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