I’m not a mortgage broker or a lender in Charlottesville, but I know folks who are.

Guest post by Matt Hodges with Compass Home Loans:

FHA has picked up much loan volume that the sub-prime world vacated – so much so that for every ten new purchases, FHA insures three. This isn’t to say that FHA isn’t a great product – it is. I’ve used it for eleven years, but it’s now sustaining losses for which the up-front Mortgage Insurance Premium (UFMIP) is paying. The UFMIP helps to pay future claims on bad debt, i.e. foreclosures of FHA insured loans.

FHA tells us it’s time to pay the piper. For all new case numbers (FHA’s mechanism to keep track of loans they insure) assigned on April 5, 2010 or later, the UFMIP will increase from 1.75% to 2.25%. While this isn’t a huge change to qualifying standards, it does show that FHA is looking at underwriting standards a bit closer and refilling their coffers. If a new FHA loan was originated for $100,000, currently the total loan amount with UFMIP would be $101,750. On April 5th, it will become $102,250.

To be implemented in the summer, FHA proposes to change down payments for sub-580 credit score borrowers from 3.5% to 10%. Most lenders won’t touch a sub-620 score for FHA right now, so I don’t see an immediate problem with this either. This is potentially beneficial for FHA, as it will provide additional equity in the case of foreclosure, mitigating losses.

Probably our biggest concern right now is the proposed change from 6% seller concessions down to only 3%. But, Matt, you argue, 3% is a lot of money for the seller to pay. It might be at a $200,000 loan, but at $100,000, most borrowers will expend at least $3000 in closing costs, pre-paid items and points. Remember, FHA is the loan for those who are cash-strapped.

For more detail on all three changes, review HUD’s release.

More often than not, FHA borrowers come to the table with just over 3.5% required down payment. If HUD removes the ability to get seller concessions at the lower loan amounts, they will be directly affecting the housing recovery and effectively be discriminating against poorer borrowers, who can only afford lower priced homes.

Virginia is considered a “high-cost” state, meaning closing costs are relatively higher than other states. Perhaps HUD can modify this proposed rule to accommodate for different loan sizes in different states and make the program continue to work. This is your time to voice concerns for or against this rule change NOW while HUD welcomes your comments.

–

So, what does this mean for homebuyers in Charlottesville?

It means that buying a home in Charlottesville – with an FHA loan – is going to get a bit more expensive, and is another reason that I have been advising clients – both buyers and sellers – that if they choose to buy or sell now, time is of the essence. For some, $1000 may be a make-or-break number.

Right now, for the Charlottesville MSA the FHA loan limit is $437,000 for single-family homes, so this affects the most crucial segment of the Charlottesville real estate market.

More:

- Upcoming Changes to FHA Home Loan Guidelines = Higher Costs to Home Buyers
- FHA Changes Make FHA Loans More Expensive
- FHA Guidelines Scheduled to change this Spring and Summer

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Transcription:

Good morning. Jim Duncan with Nest Realty and  thinking about buyer broker agreements in Charlottesville.

I tend to use buyer broker agreements with all of my buyer clients fairly early on in our buyer client realtor relationships and this reason is this: first and foremost it lays out my fiduciary duties to my buyer clients. It’s three and a half or four pages of how I work with my clients. It also lays out my buyer clients’ responsibilities to me. We are making a contractual agreement to work with each other. It professionalizes the relationship as well. It lays out exactly how we’re going to work together.

I don’t do this the first two meetings. I approach it as something that I will be asking for, but the first couple of meetings is sort of a time of dating of us feeling each other out and seeing if we are good matches, if we want to work with each other.

Buyers and Realtors tend to spend a lot of time with each other, anywhere from six to 1,000 hours together looking for houses and home inspections and just time in the car and meeting the kids. It’s a professional relationship, but also one that has to be based on trust, caring, and kindness as well as professional ability to negotiate and manage transactions, etc.

So the buyer broker agreement is something I’m happy to share. I’m happy to negotiate certain items in it.

Predominantly I will always talk about the single agent dual agency clause which takes up almost a page of four pages. So pretty much if you need a page to explain the perils of why dual agency is bad, really, you might want to get rid of it altogether, but I write in all my buyer broker agreements that I will not do single agent dual agency.

So that’s that. There’s more to the conversation about buyer brokerage and why it’s good for buyers. But that’s a good starting point. If you have any questions, ever, please give me a call (434) 242-7140 or www.realcentralva.com Thank you very much. Jim Duncan in Charlottesville. Have a good day.

—

Further, read this post at Jay Thompson’s site in which he questions Charlotte Realtors’ attempts to hide Realtors’ compensation from their “clients”.

Another key point of working with a buyer-broker agreement is that it lays out my buyer clients’ compensation to me. Simple. As I said at Jay’s site:

See, I don’t get why folks don’t use buyer-broker agreements. I don’t like my commission *ever* being dependent on what some third-party with whom I don’t have a contractual/client relationship.

My fee is what it is, whether that’s lower or higher than what is being offered through the MLS.

Sometimes my fee is higher than is being offered through the Charlottesville MLS, sometimes it’s lower. But it’s determined via a conversation (or two) between my clients and me. Simple.

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I know this – my buyer clients will appreciate being able to compare Good Faith Estimates from lenders on “apples-to-apples” forms … And make it easier for me to help them identify junk fees.

If you’re thinking about buying a house in 2010, the following are two forms with which you will become well-accustomed.

Read more at HUD’s site, and take a look at these PDFs – the New Good Faith Estimate and the New HUD-1 form for Borrowers.

Get this – the new Good Faith Estimate (GFE) – actually explains things. Here is an example … financially it is usually better for buyers to close near the end of the month due to the daily interest. The GFE explains this on page 2:

10. Daily interest charges This charge is for the daily interest on your loan from the day of your settlement until the first day of the next month or the first day of your normal mortgage payment cycle. This amount is __ $ per day for __ days (if your settlement is __)

More from Rhonda Porter at Rain City Guide.

Even more from Rhonda -

Good Faith Estimate and more.

Simply put, it doesn’t matter what anyone thinks about these forms. They’re here and we need to understand them.

Scott Rogers says at VARBuzz:

The new Good Faith Estimate (GFE) is now a standard form across all lenders. In the past a borrower would receive a GFE with a different format from each lender that they visited —- each having a slightly different set of disclosed loan terms, or vocabulary for referencing such terms. Now, a buyer can compare two proposed mortgage scenarios from two different lenders and be able to quickly and easily compare the exact same terms from each. I see this as a huge improvement for the financing process (for buyers), as in the past there has often been much confusion about how to determine which proposed loan program is better than the other.

Hopefully this will make things a little more simple … but I’m sure there are plenty of unintended consequences we’ll discover by mid-2010. (Like this one pointed out by Rhonda Porter:)

The new Good Faith Estimate may wind up being a huge set back for independent escrow companies and smaller independent title agencies who will most likely lose any relationships they have forged with loan originators who happen to work for one of the big banks.

By the way, if you are planning on selecting your escrow and/or title provider. You may want to start researching prior to your prequalification process with the mortgage originator.   You may find that effective January 1, 2010 most mortgage originators will not want to pr

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I love my readers.

Jim: One thing I looked at when comparing properties was if the subdivision had more than one access; I was surprised at how many were dependent on one way in/out. Thought you would want to mention it along with other insights. Enjoy your blog even long after stopping to look for houses.

This isn’t something I’ve ever thought about, but in light of the snowpocalypse, it’s a pretty good idea.

One thing I do tell my clients relocating to the Charlottesville area from other regions is this – when considering the “sub regions” within Charlottesville and Albemarle, consider this -

Crozet is the only area with two major roads – 250 and 64 – accessing it.

Think about it -

29 North – has 29

Pantops – has 250 and 64, but they converge about a mile too early.

20/29 South – Same as 29 North

View Charlottesville Areas in a larger map

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Transcription:

Hey, Jim Duncan with RealCentralVA.com and Nest Realty Group here in Charlottesville, Virgina.

It is the first week of December, 2009 and that means one thing to me at least. It means that people are starting to think about buying and/or selling homes in the Spring. Now is the time when people really start to talk about these things in earnest, so here is the thing: if you’re thinking about buying a house, it’s a great time to buy! Just kidding. It could be depending on what your goals are.

It could be a really smart time to buy a house or two if you’re an investor. I do think that this is one of the best times to buy a house or houses that we may ever see from an investment point of view.

But if you’re thinking about buying in the Spring:

- now is the time to start researching.

- Drive through neighborhoods, see how they’re decorated if that interests you or if it disinterests you. It’s good to know what you might be getting yourself into.

- Start scouting things out, ask questions, search for homes and find a realtor (I am one) and start looking for vacant houses so you have a feel for what you’re going to see come Spring when houses come on the market.

- Prices now are starting to moderate even more. We’re starting to see homes come on the market now seem to be priced more in line with what they should be and sellers are becoming more realistic. So I think that, granted we’ve been saying that for a couple of months now, if not six to nine, but it is true. So in short, if you’re thinking about buying a house in the Spring, start looking now. Start interviewing buyers agents, ask questions, because when you’re talking about interviewing buyers agents, you’re really talking about spending a lot of time with somebody who is hopefully going to be someone you like, trust, and is a professional who is experienced. In my case, the Charlottesville real estate market. So that’s it.

If you have any questions, give me a call or an e-mail.

Update 16 December 2009: If you’re just starting to search for a home in Charlottesville, please take a look at these two stories, which have proven to be excellent resources for my clients.

You’re going about it all Wrong – Or how to Search for Homes in Charlottesville (Without a Realtor)

Post with Enduring Interest – Just for Buyers

Best headline of the year? – If You Don’t Buy a House Now, You’re Stupid or Broke

Well, you may not be stupid or broke. Maybe you already have a house and you don’t want to move. Or maybe you’re a Trappist monk and have forsworn all earthly possessions. Or whatever. But if you want to buy a house, now is the time, and if you don’t act soon, you will regret it. Here’s why: historically low interest rates.

As of today, the average 30-year fixed-rate loan with no points or fees is around 5%. That, as the graph above—which you can find on Mortgage-X.com—shows, is the lowest the rate has been in nearly 40 years.

In fact, rates are so well below historic averages that it should make all current and prospective homeowners take notice of this once-in-a-lifetime opportunity.

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The Blog Wayback Series plugs on …

From January 2006: What is a Buyer’s Broker?  

I read this at UrbanDigs, thanks to Curbed, and thought it worth republishing (with permission, and a few edits to make it applicable to the Central Va market) -

My Definition of a Buyer Broker: A broker who represents the buyer and has a fiduciary responsibility to the buyer in finding a property that meets their needs on all levels (price, location, size, condition, style, and living quality). A buyer broker should look to find the best value for their client and negotiate on their behalf during the bidding process to get the lowest possible purchase price from the seller. In times of bidding wars, the buyer broker should advise their client on how high over ask the buyer should bid without overvaluing the property or putting their client in financial risk.

In addition to these services a Buyer Broker will prepare the client for the real estate transaction in a number of ways:

1. Assist the buyer in finding a mortgage broker if one is needed. A good buyer broker will ask their client what their strategy is with their investment and advise their client on possible mortgage products that could be used. Ultimately, the mortgage broker is the professional you should rely on for the final product to use.

2. Co-ordinate visits to the property for contractors as needed and accompany the client on the final walk-through prior to closing to fully inspect the property based on the contract of sale’s terms and conditions. All electrical, plumbing, and appliances should be in working order (or not, per contract – JD).

Most buyer brokers, also known as Real Estate Salespersons or Agents, are in real estate as their full time profession which does not mean they know what they are doing. It is up to the buyer to determine whether or not their buyer broker is responsible, knowledgeable, and privy to the current housing market prices and developments.

I can tell you that as a broker (aka, Real Estate Salesperson) there is a ton of competition out there and very little loyalty. The more experienced brokers understand the need to ’set themselves apart’ by offering their clients exceptional service in the most professional manner possible. My thinking is:

I am going to find you the highest quality property that meets your needs for the lowest possible price, and do it in a way that makes this transaction a positive experience for you that you will refer my services to all of your friends and family when they need to satisfy their real estate needs. (I have referred to this in the past as Raving Fan service – JD)

As a buyer you should be especially vigilant that your buyer broker is really out there to assist you, and is not just trying to make another sale. Is your broker showing you properties in your price range? Is your broker going out of their way to accommodate your schedule? Is your broker constantly showing you properties that are away from your desired neighborhood? These are the things you should ask yourself when analyzing your broker.

In the end its not about the deal, its about finding you the best home possible and making you happy with your new home and investment!

What he said.

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I learned something new on Friday* – apparently homebuyers can finance up to $200 of the cost of a home inspection.

This, from a new (to me) form I read in a closing on Friday:

HUD DOES NOT WARRANT THE CONDITION OF A PROPERTY. It is important for you to have a home inspection performed on the property if you wish to purchase (sic) in order to purchase in order to identify any possible defects. Up to $200 of the cost to perform the inspection may be financed into your mortgage. Names of home inspection companies can be found in the yellow pages of your telephone directory under the heading "Home Inspection Services."

A few thoughts –

1 – This was a plain vanilla, nothing crazy loan and transaction.

2 – The Yellow Pages? Really?

3 – Now is the time – at the closing table – to be "advising" purchasers that they may finance part of the home inspection?

4 – Yet another poorly-written government document.

5 – If you have to finance "up to $200" of the cost of a home inspection – perhaps the best $300-$500 you will ever spend – maybe you should continue to rent.

6 – Check out Page 3 – "I acknowledge that I have received and read  a copy of this Notice before signing the sales contract to purchase my property." We saw this at the closing.

200 Dollars Home Inspection Copy

* Closings on Fridays should be avoided at all costs; I’ll explain why in a forthcoming post.

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(Click Through for Video)

A comment on Charlottesville’s Bubble Blog the other day is the inspiration for this video.

There are houses out there, with people willing to sell them. take your time be patient, research, make and offer you know you can afford and do not be afraid to start well below asking. Also do not always listen to your realtor, no matter how long the have been in the business… We found even though we had a long time realtor with a great reputation, in the end our work and focus on what we wanted made the deals work. No knock on the realtors, but when making a purchase this big, it pays to educate yourself.

When it comes down to it, I consider myself very good at what I do, and I want my clients who hire me as their Buyer Broker or to help them market their homes in Charlottesville to trust me. But … I also see a big part of my job as educating my clients.

Ultimately, my clients have to choose whether to accept my guidance and advice. I’m not the one spending hundreds of thousands of dollars.

Update 26 May 2009; I will be transcribing these for the foreseeable future:

—-

Hey Jim Duncan, Nest Realty and RealCentralVA.com. I was reading Charlottesville’s Bubble Blog blog the other day and a recent successful buyer in the Charlottesville market said that they liked their Realtor and they trusted their Realtor, but their advice was not to trust everything the Realtor said. I couldn’t agree more. I expect my buyers and I want my buyers and sellers to trust everything I say, but I also expect them to do their own research and do their own due diligence. As much as I have the utmost confidence in the advice that I give, I also expect that my people are going to be Googling and researching and vetting everything that I say. When it comes down to it, my advice is valuable, but I’m not the one who is borrowing hundreds of thousands of dollars and making a commitment right now buying a house.

So yes, I want my clients to trust me and I want my clients to listen to me, but I want my clients to push back when they don’t necessarily believe what I have to say. That makes me better personally as a Realtor at what I do because it forces me to defend my actions and my advice and back up what I say with facts.

Often times I will say to my clients: “Trust me, my gut says this is the right move,” or “My gut says this is a bad move.” But I also try to back it up with facts.

So when you’re doing your research for a Realtor in Charlottesville or anywhere, ask questions, trust them, and as Regan said, “Trust, but verify.”

Thanks and have a good day!

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Blog Wayback Series Continued …

From March 2009:

You’re Going about It all Wrong – Or How to Search for Homes in Charlottesville (Without a Realtor)

How do you search for homes? In Charlottesville or anywhere else?

I got a call recently from a buyer who was searching homes.com and found one of my listings. Unfortunately, the listing was actually under contract (and had been for a while). I first thanked her for telling me that one of my listings was inaccurately displayed on Homes.com and asked how I could help.

She expressed her frustration – that she had been searching online for a home for a while; that whenever she found a home she was interested in, she would call the agent to go see it. Real estate search is fragmented, and it’s likely to be that way for a while. I’m frustrated, too. There is no credible aggregator of all the homes for sale – whether they be “marketed”

To which I said – “I think you’re going about this the wrong way.”

- First – pick an agent who will be able to guide you through the process (for instance, tell you where to search for homes online).

- When you call a sellers’ agent to show you the house, that agent is not representing your best interests – that agent is representing the seller and the sellers’ best interests.

How do you pick a good Buyer’s Agent – for you?

Once you have an agent who is able to guide you through the process, search well and search often.

How do I learn about how my clients and others are searching for homes? I ask. (I’m not afraid of either asking or saying “I don’t know”)

This is one of my clients’ search processes – and this is my public “thank you!” for sharing and allowing me to publish your work -

How do you search for homes in Charlottesville?

1. Your IDX site- Browse the map for affordable homes in places I want to live. Or, check the local MLS for new listings and then look on IDX to see if there is more information there.

2. Look up found home on City Assessment (Ed note: or Albemarle County or Fluvanna, etc.) website to find:

a. Tax Assessment price (editor’s note:In my opinion, assessed values have little to no correlation to what a property’s actual market value would be)

b. Who owns it? Does the owner live there? This often leads to another search on the City Assessment website for the owner’s name to see how many properties the owner has. Do the owners seem to be in good financial shape or have they made a lot of bad decisions (i.e. may need to get rid of the property to stay above water)?

c. Check for any inconsistencies in square ft, room numbers, etc between MLS listing and tax assessment. d. Look at picture to see how different the home looked a few years back (pics usually taken in 2002 or 2003). (ed note: this leads to a separate rant about Realtors stripping the MLS of photos of their listings when the listing expires/sells – this kills the accuracy and historical context of the MLS)e. Study transfer information to see when house was last sold, what it sold for, when it may have had work done, etc.

3. Use Google Maps to see what surrounds the house. Is the street tree-y? Industrial? How far is the nearest park? How far to downtown, UVA, etc? (ed note: check this out)

4. Google the street address + Charlottesville to get more information about the neighborhood. For example: Grove St. plus Charlottesville clued me into the Grove Square development (which I was unaware of because I’m new to C’ville). (ed note: don’t forget to visit Charlottesville Tomorrow for the most in-depth reporting on growth, development and politics in Charlottesville/Albemarle)

5. Google the complete address of the house to see if anyone has written anything about the house. Search the address of the house on Real C’ville Bubble blog to see if people have been blogging/laughing about the home’s asking price.

6. Lastly, physically drive or walk by the house the old-fashioned way.


For readers – what improvements would you like to see in the search process? What do you like about how you search for homes?

For Realtors – if you’re not using the MLS photo capacity – 50 pictures – you’re often doing your fellow Realtors, prospective buyers, and most importantly, your clients – a remarkable disservice.

For Sellers – do you check your home’s listing online to make sure your Realtor is putting sufficient pictures online? (I assume that the very first visitor to the listing online is going to be my client – and that they will tell me if they thing I’m doing something wrong. In fact, I ask for and encourage their feedback – it’s one of the ways I improve.

I’ll help you search – that’s why I provide what I perceive to be the best ways to search for homes here/here – but when you want representation, let me know.

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.

There is a challenge, regarding the pending announcement from Nest. I mentioned it on Twitter:

Nest is about to make a huge announcement. A *really* huge announcement. Stay tuned.

And it is a big one. But …

Here’s the challenge:

We need to define how and why this matters to potential buyers and sellers in Charlottesville and Albemarle and Central Virginia, because it absolutely does matter. Realtors will get it, but I and we are more concerned about how we can convey the how and why to our existing and potential clients.

We know it matters, we can feel it, and can describe it in a thirty to sixty minute conversation, but we need to distill this conversation into a more communicable message; and we will.

Being a partner in Nest is, to use the word in the truest sense, awesome. Communicating that sense, our story, and most importantly how our clients benefit is next.

As Keith said in his post about the pending announcement:

I will go more into this listing in future blog postings, but there is one thing for certain. I would not have this listing if we had not started Nest. I’d like to think I’m that good, but it is about my team and the vision that we share together. It is how that vision is playing out in our actions, our marketing, our space, and our clear and directed philosophy. That is why we as a team have this listing.

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Another packed hour with Coy Barefoot on Charlottesville Right-Now! last week – I love doing radio. The time always seems to fly by so fast –

- The referenced discussion with Michael and Greg.
- Search site is fixed (it was broken)
- The Charlottesville real estate market update for 1st Quarter 2009
- Charlottesville does seem to be tracking about six to twelve months behind the Northern Virginia market – take Loudoun County for example.
- What do we need to know to know that the current, possible market is stable? We need 18 months of hindsight.
- Regarding assessments’ relation to market value: there are three valuations – appraisals, assessments, market value – they all have different customers and different goals.
- Days on Market in Charlottesville area trending downward (likely due to seasonality)
- Short sales, foreclosures and pride – pride stings for a little while, but you’re not alone. Be honest with yourselves and your Realtor.
- One of my all time favorite stories – Sold Comps Matter Less.
- What Sellers and Buyers absolutely must do in this market.
- How to search for a home in Charlottesville without a Realtor – an awesome post by one of my buyer clients.
- A plug or two for Nest Realty Group.
- The referenced Zillow study about under water homeowners.
- Sellers need to check the MLS and check up on their Realtor representation …
- A good discussion about real estate video … of which I’m doing a lot more of now – neighborhood tours, property previews, marketing sellers’ homes …

More to come about the off-air phone call regarding pricing homes based on the property assessment, using video to market homes and neighborhoods, foreclosures and short sales …

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Editor’s note: This is a post I have been sitting on for a few months now, but the HooK’s story last week about Ryan Homes’ market dominance  spurred me to publish. It is written by a local Realtor who works for a local builder. I have made a few edits here and there to anonymize and generalize it as much as possible. If there are any factual inaccuracies, please let me know in the comments or offline.

From the HooK –

At a time when local stalwarts like R.D. Wade Builder and Church Hill Homes have fallen by the wayside, Ryan’s 24 percent market share of all new residential construction in Charlottesville and its surrounding counties is by far the largest of any builder in the area.

How does Ryan do it? Economies of scale.

“They’re like Wal-Mart,” says Keith Davis, a local realtor and real estate commentator. “Since they are a big national company, building homes all over the east coast, they’re able to buy their materials in bulk.”

This lets Ryan, to use the the pitchman vernacular, pass the savings on to you. Davis says this approach, unprecedented in the Charlottesville area, has allowed Ryan to be wildly successful selling mid-range homes to first-time home buyers.

Without further ado -

I just finished reading your article about the outrageous contracts now being used by some builders and I am amazed any buyer would sign them. I thought it was great you were pointing out these areas buyers should be aware of and advised not to do.

As you know I represent and work for a local builder and never think of requiring such language in our purchase agreements.

I am hoping you may choose to give a positive spin on the value to buyer agents and their clients to working with a local builder who contributes to a community.

We give firm absolute delivery dates on all contracts.

We invite, encourage and ask buyer agents to participate in our final walk through just prior to closing.

We invite and encourage buyer agents to be present at all meetings and are always kept informed to every step involved from initial meeting to closing.

We recognize buyer agents as the “most valued clients” we have. We work hard to make sure buyer agents and their clients want to do business with us again.

We give a construction key to our purchasers at time of contract so they can access the home we are building them on a daily basis.

We allow purchasers to have multiple home inspections at the different stages of construction it they desire.

We obtain our construction financing locally, we buy all of our materials locally, we hire only local subcontractors, our buyers are encouraged to obtain the mortgage financing locally, we love working with the CAAR Realtors and value their business. We pay Realtor buyer agents commissions on the homes’ final sales price after all upgrades, selections and options are chosen and not pay on a “bogus” base price that is much lower than the final sales price, we love contributing to the Charlottesville area and market by offering a great value and quality product and we offer outstanding warranty, customer service and prompt follow-up.

Some do not bank locally, they do not buy building materials locally, they do not us local subcontractors, they require buyers to obtain financing from their out of town lender, they do not like to work with Realtors and make every effort they possibly can to sell to the public directly, they pay Realtors on a “bogus” base price that is always much lower than the final sales price, they have very strict walk through policies as you described in your blog and do not encourage or allow buyer agent participation in the final walk through and offer very very minimum warranty and customer service follow up after sales. They actually are a drain on a community like Charlottesville unlike a local builder who contribute to the community.

Jim, I truly enjoy reading what you write on Real Central Virginia. I hope someday you may give consideration to writing on the VALUE of working with quality reputable local builders who contribute to a community as opposed to being a drain on a community.

Done. In my opinion, if you do not have a buyers’ agent representing your best interests when building/buying a new home, you may be asking for trouble.

(Bear with me, I’m testing something …) To search for homes built since 2008 in Charlottesville and Albemarle:

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.

It’s True. I said on Twitter:

Granted, the above responses are all from Realtors, but they are the ones who will have the “boots on the ground” experience.

Locally in the Charlottesville real estate market, buyer activity seems to be increasing – in some cases, significantly so. I’m not saying that there are “lots of buyers who are buying,” but there do seem to be “lots of buyers” who are kicking the tires, and some of them are writing offers (and believe it or not, some of these offers are becoming Contracts).

Take the following anecdotal evidence for what you will -

1 – I’m busy (and still taking on new clients), showing a lot of houses all over the City of Charlottesville and Albemarle County (for some reason, my clients seem to cluster, no one in Waynesboro or Fluvanna yet this year)

2 – A Real Estate III agent told me that she had fourteen groups of interested folks through one of her public open houses last weekend – all with no advertising.

3 – A Montague Milller Realtor told me that on a recent Sunday open house, she had nearly twenty groups of interested people* through on a Sunday open house.

* Note that I am not saying “buyers” but “interested parties” because I have no way to determine whether they were were ready, willing and able buyers. That said, that people are looking is a good sign.

4 – Showings are up.

Look – I am under no illusions that we have hit bottom – I have been consistent with my calls for patience with regards to calling bottom – we need eighteen months of hindsight before we can point to a bottom. But … it’s hard to deny that recent buying activity is starting to show an uptick.

Here’s the takeaway -

I’m cautiously optimistic. (of course, I said this last year, too)

It’s too early to draw any conclusions, but I am going to post an early analysis next week on Wednesday, when I will be on the Coy Barefoot show on WINA.

** Follow me on Twitter **

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I randomly and fortuitously met some potential clients last week. As I was finishing a showing, a couple drove by and asked if we were having an open house. My client assured me that we were finished, she introduced me to them, (as a “great Realtor,” thankyouverymuch) and we had an interesting conversation about their impending move to the area.

One of the best things that came from the discussion was this – they had asked several people in Virginia this question – “if you could live anywhere in Virginia, where would it be?” The repeated answer was, “Charlottesville.” Clearly, broadband is the new infrastructure.

Coming to a new area is daunting, and having a knowledgeable advocate/guide/Realtor is, in my clearly biased opinion, crucial to successfully navigating the market.

Google’s great, but being able to ask someone questions and get answers – in the context of the local market – is mighty helpful.

Search for homes here

A relocation map of Charlottesville/Albemarle I did last year


Market Data/Statistics - start here to get a grasp on the market.

We discussed ways to tap into the Charlottesville area – moving to a new area without an existing support structure can be an isolating experience.
It seems that the Charlottesville area has a club for everything.


Clubs/Networks (just a sampling)

Charlottesville Young Professionals

Charlottesville Sports and Social Club

The next three came from my curiosity – I started typing in “Charlottesville [blank] club” into Google and quickly figured that there’s likely a club for anything and everything (seriously be creative when you try it!) -

Charlottesville Track Club

Charlottesville Hiking Club

Charlottesville Drinking Club

Rentals - For most people relocating blind to the area (having only been here once or twice) I would much rather we take a “rent now, buy later approach” (although this is certainly not “one size fits all” – each person and situation is different). For this task, start here -

My search site (just select “rentals”)

These are the best sites I have found to search for rentals.

- The HooK (one of the two free weekly newspapers)
- C-Ville (one of the two free weekly newspapers) *
- Daily Progress - the daily newspaper
- Blue Ridge Apartment Council
- Charlottesville Craigslist

-Jobs in Charlottesville

Network, network, network.

I’d start with the groups above, and troll the classifieds in the C-Ville (http://www.c-ville) and the HooK – (http://www.readthehook.com)

* Notice the deftly political way of not saying “one of” and then “the other” – thereby keeping both on equal footing in an attempt to alienate neither?

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This is what I tell my clients – a radon mitigation system accomplishes at least three things -

1) Provides peace of mind – for homeowners and buyers

2) Can be an asset when you sell your home – it’s one less potential objection from the buyers

3) It provides for a safer environment in which to live.

Radon is a colorless and odorless gas that may cause lung cancer.

Do we have it in the Charlottesville area?

In my experience, about 50% of the houses I sell have “actionable” levels of radon – described by the EPA as being more than 4 pCi/L.

What does this mean to me as a buyer?

You may want to have the house you’re considering buying tested for radon. If the levels come back high, you may be able to negotiate with the seller to have the radon mitigated.

How much does it cost?

Painting with a broad brush – testing generally costs between $125 and $150. Mitigation generally costs between $1200 and $3000.

Everything I’ve been told is that the short-term test was designed specifically for the real estate transaction; long term tests are supposedly more accurate.

Often, at the time of sale, it is desirable to know a building’s potential for radon exposure, independent of how the building is currently used. Short-term tests are typically conducted over a two or three day period. Results of short-term tests represent the radon potential of the home, rather than the actual exposure encountered under normal living conditions, unless residents keep the home’s windows and doors closed year-round. That’s because EPA guidelines for short-term radon tests require “Closed-House Conditions,” to promote maximum radon concentration during the brief test period.

Also, if it rains while the test is in place, the results may come back high.

In most buildings 95% of the radon entering the structure comes from the rock and soil under it. The radon is pulled into the building by air pressure differentials. These differentials are created by natural and mechanical ventilation. Natural ventilation occurs because of stack effect (hot air rising in the home), wind, and temperature differences between inside and outside air. Rain and low barometric pressure can also increase radon entry. Exhaust fans in the home, as well as negative pressure relative to the outdoors caused by heating systems also increase radon entry.

Start your research at the EPA’s site.

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First in an occasional and developing series …

Step one is demonstrating value.

Assuming that I, as a real estate professional, have built a trusting relationship with my clients and potential clients, what is the best way to compensate a good Realtor?

One giant stipulation for this somewhat hypothetical discussion is this – in this make-believe world of fairies and unicorns, the buyer pays the buyer’s agent and the seller pays the seller’s agent – in other words, we have succeeded in rending total control of the buyers’ agents’ compensation from the seller and the sellers’ agents. (hint: we’ve divorced the commissions). Or, as the inimitable Kris Berg said in ‘07:

No coop means that buyers will finally be asked assign a value to the their representation. Buyer’s agents will finally have to demonstrate their value and earn their fee. And when the agents representing the buyers have nothing to give away but conversely have to place a price on their services and actually charge their clients directly, the associated accountability will only benefit the buyer…

So let’s assume that the buyer is willing to pay her buyer’s agent.

- Straight commission – Buyer’s agent is paid a commission only if the buyer successfully purchases a house/land/condo. The buyer agent works on a contingency basis, with the incentive being a successful closing. The benefit to the buyer is that no matter how much time is required – from start of the showing process to the finality, the pay is the same. This is the “it all evens out over the course of the Realtor’s career” philosophy; in other words, the easy transactions make up for the extraordinarily difficult transactions.

- Buyer pays an hourly rate, paid only at closing. But … the hourly fee structure is facing challenges in the law profession.

Many have called for the end of the billable hour. Have you seen any indication it could really happen?

Our firm has been doing alternative-billing arrangements. But you have to have an agreement with clients who are interested in doing it. At the end of the day, clients have the power of the purse.

- Buyer pays an hourly rate, in a pay-as-you-go scenario, with an up front retainer – in blocks of three or five. So … if you, the buyer, see three houses you pay for that time. If you see seventeen, you’re paying for that time.

- Some combination of the above, or something completely different.

For the vast majority of buyers’ agents, the commission they are paid is set by whatever the seller is offering through the MLS* – and the buyer is most often not given an opportunity to set the value for whomever she hires (assuming that buyers’ agent is actually using a Buyer-Broker Agreement). As an aside, those who say to buyers, “hire me, it’s free! are doing themselves, their profession and their customers/clients a great disservice. Nothing is free. Ever.

Here’s one of the flaws of the current system. Rookies (and I was one too) are usually compensated the same as veterans. Good Realtors are paid the same as bad ones (and no, longevity does not ensure competence).

This must change.

Is the public ready, willing and able for a change? Would clients be willing to pay directly for Realtors’ services?

Part of regaining the public’s trust is embracing transparency in all facets of this profession. Compensation is a start.

Are Realtors ready?

* The foundation of the MLS is a contractual offering of compensation and cooperation between Sellers’ Agents and Buyers’ Agents.

* I categorized this post as “Politics” as well as “Buyers” because there is no way this type of seismic shift will happen without engaging the political realm – both within and without the Realtor structure.

* Interestingly, a visitor found RealCentralVA this morning following this search term – buyer’s real estate commission myth.

Update 03 February 2009: Jonathan Dalton writes at Agent Genius today about Seven Basic Truths regarding real estate commissions

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People want to buy homes, they really do.

Interestingly, more people answered the “why are you considering purchasing” poll (65) than did the why are you not buying question (42) – can I draw the conclusion that more people are interested in buying than are not?

I’m trying to find the bridge between the results – clearly people want to buy homes, but is the possible self-fulfilling prophecy of “expecting the market to decline” more powerful? We absolutely have a crisis of confidence right now – in virtually every facet of our lives – and I’m certainly not advocating “buying a home” to strengthen the economy. But – don’t let fear be the sole motivator of the decision-making process.

Buying a home is logical, psychological and emotional – keeping those traits in check is vital.

Will the house you buy today be worth less tomorrow? In the short term, I would be lying if I said anything other than “probably.” But – in five to seven years, will that same house be worth more? Most likely. Again, we need to look at the benefits of homeownership that extend beyond equity. The ability to paint the walls whatever color you want, add on to the back, put as many nail holes in the wall that you want … how does one quantify intrinsic value?

Why are you considering purchasing?

“Other” Votes:

- Moving to the area

- Just moved, currently renting

- Need more space and a yard

I am contacted by buyers all the time who are interested in buying homes in the Charlottesville area – many are affiliated with UVA, others are professionals who are likely to remain in the area for several years, still more are in the position of downtownenvy -

Personally, we want a 4 bedroom downtown with a yard because we have a large and possibly growing family. We want a house this size because we plan on living in it for at least the next 30 years, and don’t feel like doing a small starter home for 5-10 years, and then purchasing a “move up” home. Therefore, we have decided to bank our downpayment, eliminate all debt, and watch for the greatest deal we can get. We know which school district and neighborhoods that we insist on limiting our search to, and most importantly, we are willing to rent and wait. We love our rental home. If we had purchased it instead, we would be paying four times what we pay now. No thanks.

But who are willing to make that 7-10 year purchase decision and then move to the next house. The spectrum is wide. There are no judgements here, but observations; buying right now, or five years ago, or five years from now, is a personal decision – one size does not fit all.

As I said in the comments of Part 1, my intent with these two posts is not to cajole or convince anyone to buy or wait, but to encourage them to allow the thought of buying to enter the conversation – even if only over dinner.

People are selling, and people are buying – the apocalypse is not yet upon us.

*Disclaimer – I’m not a pollster, just someone trying to figure out the market. If it’s ok with you, I’m going to take some solace, if not comfort, in the fact that 23 more people responded that they are considering buying than not.

** You can still take the polls.

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Seriously. If you are financially stable, have good credit, and plan to stay in the Charlottesville area for the next four to seven years, at least think about buying.

This comment thread on Real Cville got me to thinking (excepting the used car salesman preface):

DK, make your offer and just buy the house if its the one you want. Paying 5% for 300,000 is roughly the same monthly payment as 7.5% for 200,000. Just be prepared to stay in the hosue (sic) for awhile, maybe even a long while

Simple top-level mortgage math, excluding Taxes and Insurance and including Principal and Interest – (and assuming 100% financing for simplicity’s sake – not something I advise) -

If the house you want today is $300,000, assuming you get a 5% interest rate* -

Now, if rates go up later in the year -

And think about this subsequent comment -

Yes, let’s encourage everyone to wait for the bottom. Not the bottom, but the low, low bottom, in a year or two. This way the companies who maintain nice neighborhoods are out of business, HOA are crap, sidewalks and streets in those neighborhoods fall apart with only banks to maintain them (HA-HA – yeah right…..) and the quality of life in Charlottesville will have gone way, way down for all.

Charlottesville IS unique in that there are 3 industries that will survive this mini-depression. We have: Education, Health, and Government jobs. All statistics show those industries will be the least affected. Yes, they will decline or freezes in employment will take place, however, our town will never completely collapse, like others in our country will.

Do I think there are too many fingers in the real estate pie? Absolutely. Do I think there has been too much development? Absolutely. Do I think the banks are as much at fault as builders or developers? Yes. Do I think there has been false information and false hopes for the future spewed by so-called “professionals”? Absolutely.

But, do I think our town can save itself in some way, yes, I do. People need to wake up and smell our world’s new reality. I think people in C’Ville are in major denial that it’s happened here….

I’m not saying that everyone should buy, nor that everyone should seriously consider buying … but at least allow the thought to enter the conversation for a minute or two. The fear in this market is very real, palpable and often justified. But fear should not guide one’s life.

Part 2, coming Tuesday, will look at the results of last week’s poll.

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What follows are some notes from a recent meeting with new buyer clients. I have expanded on my notes quite a bit as I think that many first-time homebuyers have similar questions and conversations.

- Meet with a lender to ensure that your credit is in good shape, go through the pre-approval process and understand the process.

- Start here - Posts with Enduring Interest – Just for Buyers. This post from last year has links to stories about choosing the right Buyer’s Agent, Top 5 Questions Buyers ask, Why I ask all of my clients to sign Buyer-Broker agreements and more.

- Why take a Realtor to new construction? Read this first. And this second.

- What is Dual Agency, and why am I so against it? In a nutshell:

Dual Agency – Who benefits? The Realtor.

- Work on deciding what you want/need to be “close to” – this is one of the most important questions you can ask yourselves. Where do you go every day? You’re buying a lifestyle. Every week? Where do you think you will be going every day/week – in two years? Four years? Will you have kids? Will your job have changed? Will the kids be playing soccer? Doing ballet? What do you value being close to? Grocery store? Coffee shop? Park? Gym? Soccer field?* Schools? What is “close” to you? For my clients from Northern Virginia, California, New York, “close” means under 45 or 60 minutes. For me, having lived in Charlottesville for 20 years, “close” means less than fifteen minutes and preferably five minutes.

- Ask Questions – lots and lots of questions. As I said on WINA radio recently, I expect everything that I say to be Google and vetted through family, friends, Facebook, LinkedIn … now is the time to ask questions.

- There are no stupid questions … even though I call them “stupid questions.” Let me explain – my profession and expertise is real estate. If I were educating myself on whatever your profession is, I would have my own “stupid questions.” I guess I could say “basic” or “rudimentary” but the term “stupid questions” – with the caveat that I’m not being condescending – usually conveys the intended concept.

Doing things methodically helps to reduce the stress of the home-buying process. Start slow. Ask lots of questions – better to ask them now than halfway through the contract process.

* As an aside, my soccer team is desperately seeking a goalie – we have been for a couple of years. If you’re interested in playing, please let me know.

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Two questions, the answers to which will help drive a future post. Your answers (you can add your own, too) will be greatly appreciated. These questions are specifically targeted at buyers in the Charlottesville area market.

And …

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