Do Sellers in Charlottesville Pay Buyers’ Closing Costs?

Sometimes a post in which I pull data to answer a question becomes a bit more than intended. This is such a post.

- Do sellers pay closing costs? – Are we at a sustainable volume of closed transactions? – FHA is helping foreclosed buyers.

Do the sellers pay closing costs? Is one of the more common questions I get, whether I’m representing buyers or sellers.

A quick look at 2013 so far, 1991 homes have sold in Charlottesville, Albemarle, Fluvanna, Greene, Louisa, Nelson. Of those, 518 have something entered into the “seller concessions” field in the Charlottesville MLS, so presumably, about 26% of transactions this year have had some sort of seller concessions.

Last year those numbers were 1,864, 556 and 29%, respectively.**

But really .. what do “seller concessions” mean?

- The seller “paid” the buyers’ closing costs. (not really)

- The buyer is financing the closing costs over the life of the loan.

in other words:

- The seller is accepting a lower net offer

- The buyer is paying a higher net offer.

For example – if a seller is asking $450k and the buyer offers $440k with the seller “paying” $10k towards the buyers’ closing costs, the seller is looking at a net offer of $430k. The seller doesn’t care how that’s structured; they’re looking at a net offer of $430k.

** Just because I’m naturally curious, I looked at the number of closed transactions in the Charlottesville MSA in the January – August timeframe in 2007 … 2,336. And 2006 … 2,824. So, from a pure volume perspective, our market is down 30% from the peak. As noted in 2012 – I’ll Know Housing Recovery in Charlottesville When I’ve Seen It

Transactions – volume of transactions – what is normal volume of sales transactions in the Charlottesville MSA? I don’t know; homeownership rates are declining. Last year, 1755 single family homes sold in the Charlottesville MSA (including Louisa). In 2002, 2479 single family homes sold. I’d put the “sustainable” rate of single family home sales somewhere in between those two numbers.

We might be getting close to a sustainable recovery.

One sign of the recovery that I called years ago? Those who were foreclosed on are now eligible for new loans – a year after foreclosure.

What’s a Pocket Listing? And Why Should Consumers Care?


I’ve been a real estate agent in Charlottesville since 2001 and I’ve never seen this volume of pocket listings. Is it due to the ubiquity of the internet, the sellers’ market (for some segments) or both?* As a consumer, how does this matter to you?

Pocket listing: pocket |ˈpäkət| listing |ˈlistiNG|


A listing for a property that is held by an agent in his or her pocket, marketed quietly (but not surreptitiously), usually within his sphere or brokerage.

Quality homes for sale in some segments of the Charlottesville market remain in very high demand and seemingly equal low supply, and sales in some micro-market segments are up.

A brief look at inventory levels and sales in the City of Charlottesville and County of Albemarle, year-over-year -

Inventory Levels for Charlottesville and Albemarle

Some insight into what I’m seeing with respect to pocket listings in Charlottesville:

- I get at least one email every other day either marketing a pocket listing or seeking a specific home type for sale from an agent within my firm or from an agent from another brokerage
– I pitch a short-term pocket listing process to many of my seller clients when we deem it appropriate

- More and more, pocket listings – at least for a short period of time – make sense. In other words, they’re working.

- I like how Steve Harney lays out some of the advantages and disadvantages of pocket listings.

Advantages to pocket listings that I tell my clients:

- Sellers can test the market – as in, if you put the house on the pocket market for $450,000 and initial feedback reveals that $425,000 is where the price should be, then we’re able to list the house in the MLS for $425k and the wider market doesn’t see that price reduction.

- Often, the seller doesn’t have to have the full “list of things that need to be done” completely finished – a room or two can be left unpainted or in-process – as the listing agent can vet and prep the agents showing the house during the pocket listing period.

- Don’t have to go through the full invasive experience of having your house shown. (selling a house usually sucks; it’s invasive, sellers need to keep the house spotless and it alters schedules remarkably). In other words, how does one quantify sanity and quality of life through the home sale process? I can see some sellers valuing not having to their home open to the public, as it were, at $10k, others $50k, some notsomuch. There is rarely a one-size-fits all answer.

- For the seller – this is an opportunity to test drive the selling process.

- For the buyer – they get access to a property that other buyers don’t.

Disadvantages -

– Seller doesn’t get full exposure to the market by not listing in the MLS. By not exposing the house to the entire market, the seller might realize a lower sales price.
– The MLS is a less accurate thing if the sales aren’t entered into the MLS – less accurate for searching for homes for sale as well as researching prices for comps and sold homes.

- This practice could be a means by which cooperative compensation’s usefulness is minimized.
– The risk for single agent dual agency may be greater. (only one party benefits in this situation – it’s not the client)

- Buyers – may pay a higher than market value as the market is so small and the demand is (artificially(?)) higher.

- More closed markets – some neighborhoods and price points seem to be more amenable to the pocket listing route – with seemingly few agents who have access to what’s going on in this sub-market.

So … what’s a consumer to do?

- Buyer or seller – Understand the inefficiency of the market.
– When interviewing your buyer’s agent (you do that, right?) – ask how tapped into the quiet market they are.
– If you’re a seller – have the conversation with your prospective representative about single agent dual agency, and discuss what happens if the agent procures a buyer. (my answer: I’d either have the buyer be unrepresented or have send them to another competent agent)

- If you’re a buyer – determine what it is that you’re looking for. “I’m looking for a four bedroom home in Crozet or Brownsville between $450k and $500k on less than an acre” is a better email to send to agents than “I need a house in Albemarle that my clients will like” :)

Some Segments of the Charlottesville – Albemarle Market Have Turned

At least, after showing dozens of houses over the past few days and seeing many desired homes go under contract before my clients could get to them, this is my conclusion: Some segments of the Charlottesville – Albemarle real estate market have turned.

Not all. Maybe not most, but several, possibly even many micro-segments of the Charlottesville real estate market are seeing remarkably low, unhealthily low levels of inventory.

For example:*

In the Baker-Buter and Hollymead elementary school districts:

There are currently 36 single family homes under contract.

- 26 of those have continuous days on market of less than 30.

- 19 have continuous days on market of less than 7!

In Crozet and Brownsville elementary school districts:

There are currently 63 single family homes under contract.

- 44 of those have continuous days on market of less than 30.

- 36 have continuous days on market of less than 7!

In the City of Charlottesville:

- There are currently 69 homes listed as being under contract.

- 32 have continuous days on market of less than 30.

- 17 have continuous days on market of less than 7!

For Charlottesville + Albemarle:
– There are currently 323 homes under contract.- 121 have continuous days on market under 7. Holy. Cow.- But. 68 of those 323 homes have days on market of at least 180. - YOUR market will vary.

What does this mean?

For buyers – get ready. Be prepared (to be frustrated as well as ready to move fast). Be pre approved. Identify your target micro market, and be ready to act quickly. Bidding wars are happening. Houses are going under contract in days rather than weeks. Scheduling showings on Monday for a Saturday showing is no longer an option.

For sellers – now could be the best time in 7 years for you to sell. But … you might not have a place to move into.

* Excluding new construction. If you want new construction in Charlottesville or Albemarle, it’s everywhere; you can get it.

Albemarle County Real Estate Tax Assessments are Out

Photo courtesy of

Title edit: when I posted this this morning, assessments weren’t out. Now (3:45 7 February) I just received the press release from the County. Click through to read the whole thing. (but they’re still late :) )

I don’t know that there’s a “must have these sent by X date” for the release of the Albemarle County real estate tax assessments, but over the past few years, Albemarle assessments have been released by the end of January.

In 2012, I noted the new assessments on 27 January; many (most) property values had declined. I’m thinking that 2013 is going to show a measured response – anywhere from 3% down to 1.5% up.

5 Reasons why real estate assessments matter:

1) The County bases their budget on property tax revenue.

2) The assessed value is the value upon which property owners pay taxes.

3) Buyers look at assessed values as a measure of market value … but really, it’s a point in the equation, but are neither a definitive point nor a necessarily accurate one.

4) Also – “Virginia, unlike some other states, by Statute requires localities to assess property at 100% of fair market value, based on an objective analysis of the property’s fair market value…”

5) Sellers look at assessed values and wonder if buyers will think that the assessment means their home is worth X (it doesn’t).

Curious – what’s the over/under for how assessments will come out?

Low Housing Inventory Stinks – in Charlottesville – Albemarle

Charlottesville Sunset

If you’re a buyer in the Charlottesville market, you know that right now, inventory is low. Quality inventory is lower. Depending on your market segment, much lower.

Be prepared to wait. And then, be prepared to move quickly when the right house comes on the market. Now is the time to start your education on and about the Charlottesville real estate market, so that when January comes, you’ll be ready. (Seriously; if you’re looking, ask me what the first steps are)

There are a lot of reasons for this low inventory, starting with time of year/seasonality of the market, number of transactions (broadly) are up – see the bottom of this post -, reduced foreclosures and a few other reasons, but I have a working theory on why we’re going to see this type of reduced inventory for a few years. Starting with an example that lends credibility to my hypothesis:

I was showing houses this weekend (I’m a real estate agent donchaknow) and we saw a house in Charlottesville.

Asking price is $550k, slightly reduced from its initial asking price nearly a year ago.

House sold in 1993 for $290k

Sold in 2001 for $380k

Sold in 2007 for $570k.

Worth (in my opinion) significantly less than what they paid in 2007.

Not many people have accrued ~ $50k – $100k to get out of a house. And this homeowner isn’t alone.

I propose that we still have a ways to go to get through the inventory of homes owned by those who still can’t afford to sell … and with the fact that getting a mortgage after foreclosure is easier than ever, the business decision of walking away still makes sense for some (many?)

In short, I think we’re going to see low levels of quality housing inventory – for homes that many buyers want to buy – at low levels for years to come. This low level is going to lead to some interesting trends I’m starting to see; more on this in another post.