Original Story from January 2011.

I wrote this story in January of this year, but think it’s as relevant now as it was then for those who are wondering, “when should I start thinking about putting my house on the market” or “when should I contact a Realtor to start my home search in earnest?” (if this is the question, I hope you’re already searching all the homes on the market via my search tool).

In other words, if you’re thinking about buying or selling, start now.

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(hint: the real answer is “priceless”)

Not e that this isn’t a bitter, woe is me post; it’s a legitimate question.

A few weeks ago, I spent a full day with prospective Charlottesville residents, wonderful people who were evaluating whether Charlottesville is right for them. Ultimately, with my help, guidance, expert advice and insight, they decided that Charlottesville is not the right place for them. (that’s ok, Charlottesville’s a great place to live, but we can’t be everything to everyone!)

Thank you so much for spending the day with us in Charlottesville. You should be hired by the Chamber of Commerce, you are absolutely a great cheerleader for your town. Unfortunately, it appears that Charlottesville does not have our primary requirement …

My question is – what is coming to that decision worth?

Every meeting with a new potential client is a job interview in which we each are respectively evaluating whether we want to work together; that is the nature of a commission-based business. But … what’s it worth to have a professional real estate agent help you determine that the impressions you had gleaned from the inter webs might not be completely on point. That you probably won’t be as happy here as you thought.

Would it be reasonable to set a consultation fee or retainer?

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Listen to the podcast of my discussion with Coy Barefoot as we look back at the 2011 Charlottesville real estate market and a look forward to 2012.

Attitudes of Young Americans Bode Ill for Housing Recovery (Forbes) – This is something that is going to affect all real estate markets, not just Charlottesville’s, for years (decades?).

The lack of assets isn’t the only encumbrance to housing: Echo Boomers value education, people and leisure more than other American generations.  Of the Echo Boomers I spoke with, 13% were homeowners, yet less than a third reported interest in owning a home someday (with female Echo Boomers wanting homes more than male Echo Boomers).  They preferred graduate degrees, living in social areas (not suburbs) and freedom instead of homeownership.  A few of these Echo Boomers will need a decade to pay off their student loans after which another large loan, like a mortgage, might lack appeal.  And while suburbs seem to offer community and safety, they also add transportation costs with a lack of social diversity.

Goodbye, 0-5 Buyer -OR- Finance a House or an Education? (RealCentralVA)

People are staying in their homes longer – whether by choice or necessity. If selling is not a viable option, you need to fall in love with your house all over again.

Residential Remodeling Index at new high in October (Calculated Risk)

Now in Vogue: Practical Remodeling (Wall Street Journal)

UVA Credit Union’s Power Saver Loan-

These new PowerSaver loans will offer qualified homeowners up to $25,000 to make energy-efficient improvements of their choice, such as replacement doors and windows, metal or asphalt roofs, HVAC systems, water heaters, insulation, duct sealing, solar panels, ground source heat pump systems and more.

Interest Rates are still historically low – and they won’t start to matter until they rise.

Shadow Inventory – What will it’s affect be on the Charlottesville real estate market?

(thanks to KCM Blog for pointing this out)*”So far” is defined as 1/1/11 – 12/1/11 vs 1/1/10 – 12/1/10.

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1 – When do homes come on the market in Charlottesville? Short answer: Spring. Longer answer: look at the data.

2 – Preparing to Sell a House in Charlottesville – Step one: start the process now. (get the right representation)

3 – Preparing to buy a home in Charlottesville – Step one: ask questions. Step two. Get representation.

There is sooo much more to write, (I’m approaching the 7 year anniversary of this little blog) but I picked these three because they offer good starting points.

* I’m a real estate agent.

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This phase of the process was all about eliminating geographical areas of Charlottesville-Albemarle. Once we accomplished that phase, we were able to have a much more productive time in the car.

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Condominiums are a challenge to finance through FHA.  Condominiums had a brief period when lenders overlooked eligibility and approved every loan, as long as the borrower was qualified – that period ended some four years ago.  

Today, condominiums are one of the most difficult forms of residential real estate to finance, perhaps with manufactured housing more difficult. Using a search of “Charlottesville” condominiums in the FHA search tool, 19 condominium complexes appear. Hey, good news, right? Not so quick. Eight of those complexes have expired and four more will expire in the next three weeks. So, the list of available condominiums is shrinking and lenders are not taking advantage of the DELRAP process to approve condominiums – only one of the approved list was certified by a lender.

What makes a project approvable? In addition to the expected – insurance, acceptable budgets, contingencies – commercial space can not exceed 25%. The City of Charlottesville is big on pushing mixed use residential. Realize that this makes a condo MORE difficult to finance. At least 50% of the units must be owner-occupied and 10% of the units can not be controlled by one company or individual. No more than 15% of all of the units can be delinquent on their condominium association fees. Other requirements exist as well, but those are the biggies.

This pool of eligible condo complexes is shrinking. What is a buyer to do? There is very little that an FHA buyer can do, other than check with his or her loan officer to make sure that the unit that they are seeking to purchase qualifies. Townhouses do not fall in this category, so that’s an alternative. If a buyer has access to a larger down payment, conventional lending opens up possibilities of non-approved complexes, assuming that the complex generally has 70% or greater owner-occupancy.

What’s a seller to do? I’ve had this discussion with a condominium owner on the condo board of his complex. The most important piece of advice to him was to make sure the complex paid attention to their rules regarding percentage of owner-occupied, in order to maintain their approvable nature.   Do not let one unit owner break the rules and thus, put everyone at jeopardy of future sales and more importantly, the value of those units.

A word of warning – even if the complex appears on the approved FHA list, it may still be denied, because a change of any number of items, but most specifically the 50% owner-occupancy. That condo list is only a guide, not gospel.   

Thanks, Matt.

Now for my two cents:

FHA buyers and financing make up a significant portion of the buyers in the Charlottesville area. I don’t know how to find out exactly what percentage (I’ve called FHA and HUD in the past and they’ve been quite unhelpful).

First – there are some condo developments in the Charlottesville are that deed-restricted with respect to renter-occupied units, meaning that some units are non rentable. This cuts both ways; on one hand, this is good because it limits the percentage of tenant-occupied units. On the other hand, it limits the buying pool as a lot of people either want to buy a unit as an investment or want the option to rent.

Second – More than ever, doing due diligence is crucial in the buying and selling process. Really and truly, hiring professional help is a good idea.

For condo buyers:

1 – Work with a good lender who knows to check a condo’s FHA eligibility. You’d be surprised how many don’t.

2 – Be aware of this early on.

3 – Be aware that condos come with risks that are outside your control – percentage of owner-occupancy, budget, other owners’ paying their bills …

4 – Work with a good Realtor who knows what questions to ask and to whom to direct them. (I am one of these, you know)

5 – Be aware of the questions Matt raised and more – as they will affect your resale value.

For condo Owners/Sellers:

1 – Make sure your condo has FHA eligibility.

2 – If it doesn’t do what it takes to get it.

3 – Be aware that if your condo doesn’t have FHA eligibility, you’re likely to have fewer qualified buyers to market to. Fewer buyers typically means less marketability which typically means lower values.

4 – Seek professional guidance and advice early on in the process. I’m working with quite a few potential sellers now who are planning to put their houses on the market in the spring.

* Disclosure: I have recommended Matt to my clients for nearly 10 years and have found him to be one of the most competent and knowledgable lenders in Charlottesville.

** Thanks to VAR Buzz for posting the story that generated my asking Matt for his input.

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Answer: Quite a bit.

I was with a a customer a few weeks ago and and we had an interesting conversation about the differences between a customer and a client.

Some basic definitions … from the Code of Virginia:

“Customer” means a person who has not entered into a brokerage relationship with a licensee but for whom a licensee performs ministerial acts in a real estate transaction. Unless a licensee enters into a brokerage relationship with such person, it shall be presumed that such person is a customer of the licensee rather than a client.

“Client” means a person who has entered into a brokerage relationship with a licensee.

“Licensee” means real estate brokers and salespersons as defined in Article 1 (§ 54.1-2100 et seq.) of Chapter 21 of this title.

“Ministerial acts” means those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee’s own judgment. (bolding mine)

If I meet you at one of my listings, I will explain to you that I don’t do single agent dual agency. (Guess who benefits from single agent dual agency?)

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From a client:

All of this debt ceiling nonsense has me a little freaked out that no matter what those fools in Washington wind up doing, the interest rates on mortgages are going to climb and I fear they will climb a lot by next spring…

I know I’m not alone in having unsettled clients thanks to Congress’ incompetence.

The short answer is that no one has any idea what’s going to happen – the politicians seem more interested in brinkmanship and one-upping each other in an interminable game of us-v-them and not realizing that their (in)decisions have significant impacts on real people. 

The M Report says:

Not everyone agrees about the potential for a debt default, but economists and analysts across the board say the scenario would trigger sharp increases in one- and five-year Treasury yields, forcing mortgage rates to soar and break up a still-brittle housing recovery.

“Do I think the [U.S.] will default on [its] debt? No. But if they don’t start making substantial progress soon we should look for interest rates to start to moving higher,” a Bankrate article reports Bob Walters, chief economist for Quicken Loans, as saying. “And that could happen before Aug. 2.”

Hat tip: Varbuzz

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It’s simple: go to my search for homes page and you should be given the option to redirect to the mobile-optimized page. Feedback welcome.

* Is it really a “phone” anymore? My Droid is so much more; I think we need a new name for our “phones”.

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Lesson #1: Read the HOA Docs and any neighborhood Covenants and Restrictions before you buy a home.

Lesson #2: an awful lot could be solved and avoided if people would just talk to each other.
Lesson #3: Homeowners’ Associations can be overly restrictive; if you don’t like it either don’t buy there or buy and get involved to change the rules.

From a Charlottesville-area neighborhood’s Covenants and Restrictions: (bolding mine)

Article VII, Section 4. Signs. Except as may be required by legal authority or proceedings, no sign shall be erected or maintained on any Property by anyone including, but not limited to, an owner, a tenant, a realtor, a contractor, or a subcontractor, until the proposed sign, size, color, content, number of signs, and location of sign shall have been approved in writing by the Company. Refusal or approval of size, color, content, number of signs, or location of sign(s) may be based by the Company upon any ground, including purely aesthetic considerations, which in the sole and uncontrolled discretion of the Company seems sufficient. The Company further reserves the right to promulgate and amend from time to time uniform sign regulations which shall establish standard design criteria for signs, including but not limited to, real estate sales signs, erected upon any Property in (this neighborhood) . Company reserves the right to prohibit various classes of signs.

The Company and its agent shall have the right, whenever there shall have been placed or constructed on any Property in (this neighborhood) any sign which is in violation of these restrictions, to enter immediately upon such Property where such violation exists and summarily remove the same at the expense of the Property Owner.

A family in Louisiana is being sued by their HOA for not taking down a sign honoring their son’s service in our military:

The Gardens of Southgate filed the suit this month against Timothy and Jodi Burr, a Bossier City couple who have lived within the subdivision since 2006. The Burrs placed a large multi-colored banner with a picture of their 20-year-old son, Marine Corps Lance Cpl. Corey Burr, and the phrase “Our son defends our freedom” in January after Corey Burr was deployed to Afghanistan.

Note that Virginia Code grants the Purchaser three days to review HOA disclosures and terminate the Contract for any reason whatsoever – carte blanche to cancel.

A. Subject to the provisions of subsection A of § 55-509.10, a person selling a lot shall disclose in the contract that (i) the lot is located within a development that is subject to the Virginia Property Owners’ Association Act (§ 55-508 et seq.); (ii) the Act requires the seller to obtain from the property owners’ association an association disclosure packet and provide it to the purchaser; (iii) the purchaser may cancel the contract within three days after receiving the association disclosure packet or being notified that the association disclosure packet will not be available; (iv) if the purchaser has received the association disclosure packet, the purchaser has a right to request an update of such disclosure packet in accordance with subsection H of § 55-509.6 or subsection C of § 55-509.7, as appropriate; and (v) the right to receive the association disclosure packet and the right to cancel the contract are waived conclusively if not exercised before settlement.

Lesson #2 from the above-mentioned story: an awful lot could be solved and avoided if people would just talk to each other.

The Burrs responded initially by requesting a meeting with the association to discuss the issue. Burr said they never got a response about when it could take place. And instead, she received a visit from a HOA representative who wanted to discuss the violation and again request the sign be removed.

I have a feeling that next year’s presidential election (it sure does feel like it’s this year, doesn’t it?) is going to lead to a lot of political signs in neighborhoods and that there may be some conflicts – in this particular neighborhood and elsewhere.

Should an HOA have the ability/right to override the First Amendment?

When was the last time you read the Constitution and its Amendments?

Photo courtesy of.

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One of the favorite and most-referenced-in-conversation posts I have written since 2005 is “You’re Buying your Monday Mornings.”

You’re not buying your home just on the Tuesday afternoon between 3 and 3:30 when the neighbors are at work. You’re not buying your home just on the Friday morning from 9 to 1 when the home inspection is done. And you’re not buying your new home just for the thirty minutes when we’re doing the final walkthrough on the morning of closing.

You’re buying your home every day of the week, month and year.

Finding out that the neighbors have a yappy dog, loud parties, boisterous truck, a rooster, proclivities towards parking every which way on their yards, or that traffic really, really sucks on Wednesday mornings when the bus stops to get the kids.

My advice:

When you like a home or a neighborhood or area, spend time investigating that home. Ask your friends who live there, yes, but spend time walking around, walk your dog or kids, talk to the neighbors (you’d probably do that after you buy, why not before?)

You’re buying a home in a neighborhood/community – you owe it to yourself and your family to figure out before you buy if you like it.

One of the most common questions buyers ask me:

Does a seller have to disclose a bad neighbor?

Short answer: NO. The Residential Property Disclosure statement doesn’t cover neighbors, and generally not much of anything beyond the four corners of the property they own.

(there’s more to evaluating a house when evaluating its value)

Do your due diligence; no one is going to do it for you. (I’ll guide and advise from my capacity as a buyer’s agent, but ultimately, you need to do your homework)

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Get Rich Slowly – Buying a Home – Pay Attention to the Home Inspection

All this being said, this year I have been recommending more inspections beyond the typical home inspection, including:

- Septic inspections (this has saved my clients more often than not)

- Radon – but keep radon in context –

Phil Price, a physicist at Lawrence Berkeley National Laboratory in California, has spent a lot of time studying radon. He is willing to accept the government’s rough estimate that radon causes about 21,000 deaths from lung cancer each year. But, he says, people should know something about that number.

“A large fraction of those estimated deaths are thought to be among smokers,” he says. “One way to think of it is it’s just one of the things that goes along with smoking, is that it increases your chance of radon-related lung cancer.”

- Sewage line from the house to the street

- Trees

- Some other kind of inspection that I haven’t found yet.

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- How long are you planning to be in the Charlottesville area?

- Are you qualified?

- What are your life plans? (do you have kids? Plan to? Will you grow out of the space in under four years?)

- What would the house/house type you’re looking for rent for? What would its mortgage be? ie: if it would rent for $2300/month and the mortgage would be $1500/month, it might make sense to purchase. If the math works the other way around, you might be better off renting.

- Do you know where you want to live?

- Is stability important to you? Is knowing where you’re going to live for more than a year or two important?

If you’re new to the Charlottesville area and are planning to buy a home, please, please, please consider renting first. You’ll be a better educated buyer, consumer and client.

Note: Online mortgage calculators can only get you so far; when you’re serious about looking and possibly buying a home, it’s best to talk to a lender to get pre-approved.

* This post derived from our radio appearance on WNRN on 29 May 2011. It was a good show, and I recommend listening to the whole thing.

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Related:

- Being Selective (with Buyers)

- Why Use a Buyer Broker Agreement

- How Much is the Buyer Broker Fee?

Found this video at Agent Genius that succinctly describes some of the benefits of a buyer agency agreement (in Canada):

Transcript:

Hey there, Jim Duncan with Nest Realty and realcentralva.com here in Charlottesville talking about buyer representation.

I ran into a customer several weeks ago with whom I had met several times. I had shown him around to different properties and such and we had reached a point in our relationship where, in my world, it was important to exercise a buyer/broker agreement. So I sent him a buyer/broker agreement and followed up and never heard back from him. This was a year ago. Then I ran into him at a meeting and he came up to me and said, “Why didn’t we ever work together?” And I said, “Well, I didn’t hear back from you about the buyer/broker agreement.” And he said, “Well I would never sign one of those.” And I said, “And that’s why we didn’t work together.”

And he went off and he got representation from somebody and never signed a buyer/broker agreement.

But in my world, if my clients are not willing to commit to me, how can they feel that I’m going to commit to them? I’m not a salesperson. I am a representative for my buyer’s best interest. I want people to know that what I do is serious and I take it seriously and I take what I do as a profession rather than as a salesman. I’m not going to sell you. I will represent your best interest.

Jim Duncan, Charlottesville, Virginia, (434) 242-7140.

(Did you know that you can subscribe to updates from RealCentralVA? It’s easy to subscribe.)

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1 – Allows for an As-Is Sale

2 – Removes one phase of negotiations from the process.

3 – Allows for fewer emotions clogging the negotiating process. The home inspection negotiation is often the most emotional, vindictive, painful and difficult periods of the negotiation; a pre-offer inspection removes phase.

4 – It’s cleaner, procedurally.

Risks:

- Even in this market, homes are selling; some are selling with multiple offers and buyers can lose properties if they opt for the pre-offer inspection path

- Some sellers don’t want to allow these; they want assurances that a buyer is really committed before allowing a home inspection.

As with every question and answer in real estate, whether a pre-offer inspection is right for you is situationally dependent. One must evaluate all factors involved, some of which are the buyers, the sellers, the buyers’ agent, the sellers’ agent, the respective companies, the days on market, market activity to name a few …

Transcript:

Hey, Jim Duncan with Nest Realty and realcentralva.com here in Charlottesville, Virginia talking about pre-offer inspections. I’ve done several pre-offer home inspections, (or I’ve attended, I don’t do them) several times in this market and I think that it’s actually a really, really good thing.

The slower market allows for this sort of luxury from a buyer’s standpoint, but also from a seller’s aspect, it makes the transaction potentially much smoother. The buyer has the home inspection, determines what the home is worth to them, ascertains the repairs, conditions, etc. and makes, frequently, an offer where it lays out what their expectations are from a price or repair standpoint and just removes one realm of negotiations from the equation and that’s a really, really good thing because in my experience, I’ve found that the home inspection negotiating phase is actually a second tier negotiation and often times can be the most emotional, the most divisive and the most horrible part of the negotiations because this toilet has been leaking for four years and we’ve always lived with it. How dare these buyers come in and expect something different. Have a pre-offer inspection works out in everybody’s interest.

Now if and when the market turns to where time is not a luxury that we all have, I might have a different opinion on it, but right now, if the market is where it is, I think that it’s certainly a wise thing to consider, to have for a buyer to contract to have a pre-offer home inspection.

Any questions, give me a call anytime. My name is Jim Duncan in Charlottesville, Virginia, (434) 242-7140, realcentralva.com.In other words:

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One of my favorite searches is the one I set up that sends me results via RSS for homes with at least a 10% price reduction over the past 30 days.

Step One:

Visit my Detailed Charlottesville Home Search Page

Step 2:

Search by School District (which remains the best way to search for homes in Charlottesville with a geographical limiter)

- Check your school district before you buy

- School Values and Housing Prices

Step 3:

Set your price drop criteria

Step 4:

View the search results

Step 5:

Save the Search. This is important. Figure out how you want the results delivered to you – email, RSS. Why register to save?

• Unrestricted access to all properties
• Receive property updates for your searches via Email
• Save your favorite properties
• Add your own notes to listings
• Create and save your personal searches
• Keep track of properties you’ve viewed
• Receive updates through a RSS reader

.

Now, Check out the Listing Price History on your results

As always, if you have questions, please contact me anytime.

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“The fact is, you just can’t have it all,” Westfall said. “You can’t have the big yard, the top-line updates and all that in a starter home. You’ve got to compromise somewhere or else you’ll never buy anything.”

 

The question is – as a homebuyer, what are you willing to concede? Where are you willing to compromise?

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“Home buyers who want everything their way”

Not all buyers do, but it’s certainly a common perception.

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You’re going to have to give up something when you’re buying a new home. Whether that is square footage, yard size, number of bedrooms, kitchen appliances, layout, ceiling height, style, price … determining what that fatal flaw is that you’re not willing to compromise is crucial to working through the home search process. Even if you build your own home from dirt up, you’re going to forget something, wish you’d done something differently. One of the keys to the “finding a new home” process is determining what the “must-haves” are, what the “I’d like to haves” are, and figuring out which ones really are the things that you absolutely, non-negotiably must have.

Distance matters, but not nearly as much as schools.

Schools Still Matter.

Fact: Housing prices are impacted by school quality. Buyers know this.

From the report (bolding mine):

More than a third of respondents said that they did not make any compromises when purchasing their home. However, 19 percent of buyers reported that they compromised on the price of the home, and 19 percent said they compromised on the size of their home. First-time buyers and unmarried couples are the most likely to make comprises when purchasing a home. Those with children under the age of 18 are more likely than those without children to make comprises when buying a home.

No kidding. Those of us with kids make compromises?

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