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By Kim, January 21, 2010

The Federal Housing Administration (FHA) just announced a set of policy changes to strengthen the FHA’s capital reserves, which have declined to dangerous levels. FHA will take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce maximum seller concessions to 3%, from the currently allowed 6%; and implement measures to enhance enforcement of FHA policies on lenders.

The changes directly impacting home buyers and sellers using the FHA program include:

• The mortgage insurance premiums (MIP) will be increased to build up capital reserves.
  • The first step will be to raise the up-front MIP by 0.5% to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge. If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP. This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing. The initial up-front increase will go into effect on April 5, 2010.

• Update the combination of FICO scores and down payments for new borrowers.
  • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

• Reduce allowable seller concessions from 6% to 3%
  • The current level exposes the FHA to excessive risk by creating incentives to inflate the appraised value of the home. Private lending standards have limited seller concessions to 3% for many years. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

The increased enforcement on FHA lenders includes, for example, publicly reporting lender performance rankings, enhanced monitoring of lender compliance with FHA guidelines and standards, and enhancing  the enforcement of indemnification provisions. This would require all approved lenders to assume liability for all of the loans that they originate and underwrite.

What does all this mean for homebuyers? Well, first off, if you don’t want to pay the higher mortgage insurance premium, buy before April 5! Check with your lender, but my understanding is you have to have a property identified before a FHA case number can be assigned, and that’s the critical action to beat the April 5 deadline. As for the FICO score minimum of 580 to get the 3.5% down payment, most FHA lenders already require scores of 600 to 620. And, allowable concessions from the seller being reduced to 3% really just reflects the realities of the Northern Virginia market – sellers are not going to accept such an offer, because they know that the appraisal will be too low to support the higher sales price they would have to get to compensate for it. And if you need a low down payment, you probably don’t have the cash to waive the appraisal.

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By Kim, January 21, 2010

1,349 homes sold in December 2009, an 11% decrease from December 2008 home sales of 1,510. I believe this was the result of two specific circumstances: (1) there was a huge push for buyers to complete their purchases by November 30 under the $8,000 tax credit act (which was extended at a very late date to the end of April 2010) and (2) the available homes for sale (“inventory”) is astonishingly low.

Active listings decreased by over 29% from last year, with 5,421 active listings as of December 31, compared with 7,688 homes available in December 2008. In fact, it’s the lowest end-December inventory we’ve seen since December 2004’s ridiculous 1,645. And I suspect, with the tax credit extended (and a new credit available for move-up buyers), we are going to see hot sales and low inventory numbers for the next 4 months at least. If interest rates (see historical chart) stay under 6%, buyers are going to be facing even more multiple-offer situations than we have now, which would be saying something.

The average days on market for homes in December 2009 decreased by 38% to 57 days, compared with 92 days a year ago. No surprise there. And 58% of homes sold in under 30 days.

Sales prices rose compared with last year. The average sales price in December increased by about 12% to $474,104, and the median price also rose in December to $385,000, an increase of 13% from last December’s $340,000.

I cannot emphasize this strongly enough – those who need or want to sell must get their homes ready and on the market no later than March.

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By Kim, December 14, 2009

Sales continued to be brisk in the Northern Virginia housing market in November. The problem is that inventory – the number of homes available to sell – continues to decline as sellers aren’t getting the word that it’s time. Inventory is down to less than 4 months’ worth of sales. I only can see it getting even shorter as we hit the holidays and cold months (brrrr!) – but will there be an explosion in March/April as the tax credits reach their inevitable end?

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By Kim, November 5, 2009

Congress just passed – and President Obama is expected to sign immediately – the tax credit extension and expansion to higher income levels, and further enhanced the credit by allowing a credit of up to $6,500 to buyers who have owned a home for 5 of the past 8 years. Here is a chart reflecting the old and extended/enhanced provisions:

The National Association of Realtors also provided the following Q and A about the extended and enhanced tax credit:

Q.  Existing homeowner credit:  Must the new house cost more than the old house?
A.  No.   Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Q.  I am an existing homeowner.  On October 25, 2009, I signed a contract to purchase a new home.  I have lived in my current  home for more than 5 consecutive years and am within the new income limits.  I will go to settlement on November 20.  If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
A.  Yes.  The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed).   There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Q.  I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009.  I will be covered, however, by the new income limits.  If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
A.  Yes.  The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date.  So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).

Q.  I am an eligible existing homeowner.  I have a fair amount of equity in my home.  I have found a home with a non-negotiable price of $825,000.  Will I be able to use any of the $6500 tax credit?
A.  No.  The $800,000 cap on the cost of the purchased home is firm at $800,000.  Any amount above $800,000 makes the home ineligible for any portion of the credit.  The $800,000 is an absolute ceiling.

Q. I owned my home for 10 years, but sold it two years ago year and have been renting since.  If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
A.  Yes.  Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit.  For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be  eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight, what he did since 3 years doesn’t impact eligibility.

Q.  I am an eligible first-time homebuyer.  I entered into a contract to purchase on November 1, 2009.  Do I have to go to closing before December 1?  How does the extension date affect me?
A.  You do not have to close before December 1.  Once the legislation has been signed, it will be as if the Nov 30 date had never existed.  Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

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By Kim, October 21, 2009

. . . by ripping off in almost it’s entirety today’s post from Young House Love, which Sherry Petersik in turn got most of from “Evan the all-knowing homemade cleaner guy:”

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Clean Up Your Act: All Natural Homemade Cleaners

And now we’ll continue the cleaning chit-chat with this handy little homemade cleaner breakdown. When we talked about getting even greener and experimenting with homemade cleaners in year three of YHL, an expert in that very area offered up a few of his favorite formulas. And we jumped at the chance to learn how all natural and totally eco-friendly cleaning materials are easy and effective- and sometimes way cheaper than paying for the more toxic stuff that can hurt pets, kids, people in general and the planet at large. Here’s what Evan the all-knowing homemade cleaner guy passed along:

This has become an obsession for me. If you think of your home as a sanctuary you want it to be not only beautiful but safe for your health! Store bought chemicals and cleansers can not only be toxic, poisonous or cause other averse health effects (no wonder they have all those warnings and skull & crossbone images on them) but they can also be expensive, completely unregulated, bad for the environment and full of excess packaging that ends up in landfills every day. They often come with big bold warnings that say things like “danger”, “caution”, “corrosive”, “irritant”, and even “chronic health hazard” which by definition can mean anything from “chemicals that destroy tissue” (corrosive) to “causes sterility and birth defects” (chronic health hazard). And even those that just say “danger” or “caution” can be attached to warnings that say “may be fatal or cause blindness if swallowed” or “highly toxic, flammable, poisonous and corrosive.”

Well Evan, when you put it that way, the toxic store bought cleaners bearing those labels (which can commonly be found on everything from basic toilet bowl cleaners to oven and drain solutions) sound pretty terrible. Tell us more.

By contrast, some non-toxic and all natural ingredients like baking soda and vinegar are not only not corrosive, poisonous, or hazardous to your health in any way, they’re actually completely safe if ingested (after all they’re found in the kitchen and they’re 100% edible!).

• Baking Soda is a great naturally abrasive ingredient with mild alkaline properties, it’s also a natural deodorizer and stain remover, and it rinses easily, is completely non-toxic (no more dangers for kids and pets licking surfaces that you’ve cleaned) and it’s extremely affordable (you can grab a 12lb bag at Costco for next to nothing).
• Vinegar is an all natural and mild acid, it’s also a known disinfectant that can remove stains, sanitize, and it’s also completely non-toxic and inexpensive (you can also grab a giant jug of it at Costco for an extremely reasonable price). It should be noted that it shouldn’t be used on stone surfaces or acetate fabrics but there are many other natural cleaning methods that work for those surfaces.
• Hydrogen Peroxide is also non-toxic (learn more about it and it’s many uses here) and is known to be a natural bleaching agent with disinfectant and stain removing properties. It’s also extremely inexpensive (just $1 for three bottles at Walgreen’s).
  
• All Natural Tea Tree Oil And Grapefruit Oil (which have known antibacterial properties) And Lemon Juice (which naturally cuts grease and leaves a totally fresh scent) are also extremely helpful to have in your all-natural cleaning arsenal.
• Liquid Castile Soap (like Dr. Bronner’s, sold at Target, Trader Joe’s, etc) is a vegetable based soap as opposed to a petroleum based one, which makes it completely non-toxic so it can be used on your face and body but will also work well when it comes to cleaning your home. It’s not quite as inexpensive as baking soda or vinegar, but a large 32 oz container is just $8.99 at Trader Joe’s.

But how do you put them all together? Here are some of Evan’s favorite all-natural homemade cleaning formulas:

Surface Spray:

• 16 oz spray bottle
• 2 tsp. borax
• ¼ tsp. liquid castile soap (like Dr. Bronner’s)
  
• hot water

All Purpose Liquid Cleaner:

• 1 gal. hot water
• 1 tbsp. baking soda
• 2 tbsp. liquid soap (like Dr. Bronner’s)

All Purpose Abrasive Cleaner:

• liquid soap (like Dr. Bronner’s)
• 2 tbsp. baking soda
  

Mix to make a foamy paste.

Refrigerator Cleaner:

• 2 tbs. baking soda in 1 qt warm water

Wipe down inside and out and rinse with a clean wet cloth.

Oven Cleaner:

• Dampen with water
• Sprinkle liberally with baking soda
  

Leave 20 minutes, then scrub until clean.

Microwave Cleaner:

• ½ c. vinegar
• 2 c. water
  

Combine in microwave safe bowl, heat on high for 3-4 minutes, remove bowl and wipe down inside of microwave.

Dishwasher Detergent:

• 2 c. borax
• 2 c. baking soda
• 4 little packages of unsweetened lemon Kool-Aid (or generic)

Mix together and store. You can substitute ½ c. of citric acid for the Kool-Aid but it’s harder to find.

Gorgeously Green All-Purpose Spray:

• 32-ounce plastic spray bottle
• 2 cups water
• 1/2 cup distilled white vinegar
• 1 teaspoon pure castile soap (peppermint)
• 3/4 cup hydrogen peroxide
• 20 drops tea tree oil
• 20 drops of lavender essential oil

Fruit and Vegetable Wash:

• 1 cup water
• 1 cup white vinegar
• 1 tbsp. baking soda
• 20 drops grapefruit seed extract

Spray on produce, rinse after 5 minutes.

Fruit and Vegetable Wash #2:

• 1 cup water
• 1 tbsp. lemon juice
• 1 tbsp. baking soda

Spray on produce, wipe after 5 minutes.

Drain Cleaner:

• 1 c. baking soda first
• 1 c. white vinegar second
• 1 gallon boiling water

Allow to foam for 5 minutes before adding water.

Window, Glass and Chrome Cleaner:

• 5 parts water to 1 part white vinegar, OR
• 1 c. water, 1 c. vinegar, ½ tsp. castile soap (like Dr. Bronner’s)

Toilet Bowl Cleaners:

• Liquid castile soap (like Dr. Bronner’s)
  
• Baking soda or borax

Scrub with a toilet brush.

Tub And Tile Cleaner:

• Apply vinegar full-strength to a sponge and wipe
• Scour with baking soda

Soft Scrub for Fixtures:

• ½ c. baking soda
• Castile soap
• 10 drops of antibacterial essential oil (optional)

Add enough castile soap until you have a frosting like consistency. Scrub, then rinse with water.

Mildew/Germ Killer:

• 2 c. water
• 25 drops of tea tree oil
• 25 drops of lavender oil

Spray on tile and do not wipe off.

Mildew/Germ Killer 2:

• 16 oz spray bottle
• 1 part hydrogen peroxide
• 2 parts water

Spray, let sit. Rinse after 1 hour.

Wood Floor Cleaner:

• ¼ c. vinegar
• 1 gal. warm water

Mop or rag should be slightly damp for cleaning.

Linoleum Floor Cleaner:

• 1 c. vinegar
• 2 gal. warm water

Mop or rag can be fully wet for cleaning.

Carpet Stain Remover:

• 1 part borax
• 10 parts warm water

Combine in spray bottle. Spray on stain, wait 5 minutes, blot with clean rag.

Carpet Stain Remover:

• vinegar
• baking soda

Mix vinegar and baking soda into a paste. Gently work into stain with a toothbrush. Let dry then vacuum completely.

Carpet Deodorizer:

• Baking soda
• 10 drops of essential oil (optional)

Mix together then sprinkle generously on carpet, wait 15 minutes and vacuum.

All-Purpose Carpet Cleaner:

After vacuuming first,

• 1 c. white vinegar
• 3 c. boiling water

Blot mixture onto nap of rug with a wet rag, Dry and air thoroughly. Vacuum.

Air Freshener:

• 2 parts water
• 1 part rubbing alcohol
• Essential oil

Mix in spray bottle, don’t spray on silks or delicates. Experiment with how much oil to add, but start with 5 drops.

Air Freshener 2:

• 1 tsp. baking soda
• 1 tsp. vinegar or lemon juice
• 2 c. hot water

Mix in spray bottle, don’t spray on silks or delicates.

Dusting:

• Slightly dampened microfiber cloth

Furniture Polish:

• ½ tsp. olive oil
• ¼ c. vinegar or lemon juice

Mix in a glass jar. Dab a soft rag into the solution and wipe onto wood surfaces.

Scratches:

• 1 part lemon juice
• 1  part vegetable oil

Rub into the scratches and polish.

Rust Remover:

• Sprinkle area with salt
• Squeeze lime onto salt

Leave sit for 2-3 hours, then scrub w/ lime rind.

Metal Polish (copper and brass):

• 2 tbsp. salt

Add vinegar until you make a paste. Rub on metal with a clean rag. Wipe clean.

Powdered Laundry Detergent:

• 1 c. grated Fels Naptha soap
• ½ c. washing soda
• ½ c. borax

For light load, use 1 tablespoon. For heavy or soiled load, use 2 tablespoons.

Liquid Laundry Detergent:

• 3 pints water
• 1/3 bar Fels Naptha soap, grated
• ½ c. washing soda
• ½ c. borax
• 2 gallon bucket
• 1 quart hot water

Mix soap in saucepan with 3 pints of water. Heat on low until dissolved. Stir in soda and borax until thickened. Remove from heat. Add 1 quart hot water to bucket, then soap mixture, mix well. Fill rest of bucket with hot water, mix and let sit for 24 hours. Use ½ c. per laundry load.

Laundry Pre-treatment:

• ½ c. ammonia
• ½ c. white vinegar
• ¼ c. baking soda
• 2 tbsp. liquid soap or laundry detergent
• 2 quarts water

Mix in spray bottle. Spray spot.

Laundry Pre-treatment 2:

• 1 tsp. liquid laundry detergent
• 2 tbsp. ammonia
• 1 pt. warm water

Mix in spray bottle. Spray spot, let sit for 20 minutes.

Fabric Softener:

Add ½ – 1 c. vinegar to your softener dispenser

Bleach Alternative (Laundry):

• ¼ c. hydrogen peroxide

But wait, Evan has even more ideas to keep things green and clean around your casa:

Run your dishwasher late at night without a heat-dry setting and let things air dry overnight instead

Replace sponges with washable and reusable items like microfiber cloths and dishrags

Premix large batches of cleaning formulas so they’re always on hand and you’re never tempted to buy store stuff again

Set your washer to cold/cold for the most eco laundry you can get

Have people take off their shoes when they enter the house and wipe down the shower after each use (these preventative methods will really keep the house cleaner and cut down on your work)

And just because he’s such a pro, Evan even included his resources so you can learn more or see where he got his facts. Gotta love a guy who’s so thorough AND considerate: Consumer Reports, Nat’l Geographic, The Green Guide, Do It Green, Frugal Living, The Vinegar Institute, EarthEasy, Coyne and Kutzen “The Urban Homestead.”

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There, now I can feel better about not having tossed up any “green” posts to date. And as for Young House Love, read all about how their purchase of an old brick rancher in Richmond turned into Sherry’s full-time design/how-to/makeover job (plus part-time for John, a TJHSST grad) and got them featured month after month, it seems, in various home and design media. And their little dog, too . . .

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By Kim, October 10, 2009

In the Humor-We-Wish-But-All-Too-Common category, from Kris and Steve Berg at San Diego Castles:

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By Kim, July 25, 2009

Another piece on buyer’s agents from Greg Swann:

Are home-buyers best served by the vigilant efforts of an experienced buyer’s agent? Consider a transaction we have in play right now.

The buyers are a young couple, about to be married. They have about $10,000 in cash. With a conventional loan, they could put 20% down on a dismal starter home. Or, with Private Mortgage Insurance, they could put 10% down on a nicer home.

But with an FHA loan, $10,000 is 3.5% down on a $285,000 home. We can argue the wisdom of making so small a down payment, but the FHA loan program is the path to homeownership for millions of Americans. And $285,000 is too much house for our buyers. They found a nice lender-owned two-story home in the suburbs selling for $169,000. The down payment on that home would be $5,915. But the closing costs would probably run to another $5,000 — which comes to more money than they have.

They qualify for the $8,000 first-time home-buyer tax credit, but they won’t get that until they file their tax return. They also qualify for a state-funded grant program that will contribute up to 22% of the purchase price — but which can’t be used for the down payment or the closing costs.

Here’s the deal we put together. We offered $175,000, $6,000 over list price. In exchange, we asked the seller to contribute 4% of the full purchase price [$7,000 — FHA allows up to 6%] to defray the buyer’s closing costs. The down payment will be $6,125, leaving the buyers $3,875 in cash to pay for the endless expenses of moving into a new home.

And there will be about $2,000 left over after the closing costs are paid. This will be used to buy down the interest rate. The buyers will end up with just over 25% equity in the property for a cash outlay of $6,125 — all at a very low monthly payment. And they’ll still have their $8,000 tax credit to look forward to.

This is the kind of outcome a skilled buyer’s agent can achieve.

Right again, Greg. There are so many ways a knowledgeable agent can help you get a better deal, that is right for you, even when you pay full price or more.

Kim Hannemann, Samson Properties

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4.5% Listings with First-Class Service — Cash Back to My Buyers!

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By Kim, July 24, 2009

From agent Greg Swann in the Arizona Republic:

Here’s an intriguing question: Given that it’s so easy to search for homes on the internet, why do you need a buyer’s agent?

Face it, if you use the MLS search tool on my web site, you’re seeing exactly the same listings I see. And you know better than I ever could what you like and what you don’t like.

By now, the home search process is at best a partnership between the agent and the buyer. In some cases the buyer and I will work together to perfect our search criteria. But many buyers simply search the available inventory on their own, emailing me the MLS numbers of the homes they want to see.

So why do those buyers need a buyer’s agent?

Realtors hoarded the MLS data for so long that even they came to believe it was the source of their value to buyers. But this is very far from the truth.

You don’t need me to search for listings, although I’m happy to do that. And you don’t need me to open lock-boxes. You need a buyer’s agent to guide you through what is in fact an arcane and perilous process — potentially a financial disaster. You might not need me to find your next home, but you need me to make sure that you get it — or that you pass on it, if that is what is truly in your best interests.

A skilled buyer’s agent will write the kind of purchase contract that will prove surprising to you at every turn, with every term and condition tailored to achieve your best advantage. Your agent will supervise the inspection process and negotiate the optimal solution to the repair issues. Your agent will be prepared for every pitfall in the escrow process.

If you bought and sold houses every day, you could do all these things yourself. It’s because you don’t — and because the seller and the listing agent are looking to take advantage of your naivete at every turn — that you need a skilled buyer’s agent as your steadfast champion in the home-buying process.

Greg’s post is right on the money. Personally, I like to help my clients search for homes, but that’s largely because as an agent I have access to information that can tell me, for instance, whether or not the property is already under contract even though it’s still listed as “Active” in the search they are using. I’m also looking for certain things that clients – no matter how savvy they may be – will not notice or understand. Still, it’s what comes after finding the property that is going to make a bigger difference to my clients, and makes my involvement crucial for them.

Kim Hannemann,  Samson Properties

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4.5% Listings with First-Class Service — Cash Back to My Buyers!

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By Kim, May 18, 2009

Saturday’s Washington Post Real Estate section featured an article by Ken Harney entitled, “New Appraisal Rules Come With Costs,” in which he posits the following scenarios:

• The real estate appraisal that used to cost you $325 now costs $450, even though the appraiser doing the work is getting only $175 or $200.
• Your appraisal-related charges may now be subject to add-on fees – such as $50 to $100 extra in “no show” penalties if you get stuck in traffic and miss your appointment with the appraiser, or an extra $50 to $150 if the property is worth more than $500,000.
• Your mortgage loan officer requires you to pay for the appraisal upfront with a credit or debit card, rather than including the fee with the usual lender origination costs at settlement. Your card may be charged more than the anticipated cost of the appraisal – leaving debit-card holders in a potential overdraft situation.
• The person conducting your appraisal may be new to the field – willing to work for a cut rate – and may not be as familiar with local value trends and pricing adjustments as an appraiser with more experience.
• If your mortgage application is denied by one lender, you could be forced to pay for a second full appraisal because the new lender may not accept the first one.

The “new appraisal rules,” which go by the name Home Valuation Code of Conduct, were imposed May 1 by Fannie Mae and Freddie Mac, and are intended to improve the accuracy of appraisals by eliminating pressure on appraisers from loan officers. The code pushes most large lenders to use third-party “appraisal management companies” that contract with networks of independent appraisers around the country who thus are not in direct contact with retail loan officers or mortgage brokers. The Code came about as a result of an agreement made between the Federal Housing Finance Agency and the New York State Attorney General. The intent of the agreement was made to enhance the independence of appraisers. The most relevant part of the code seems to be the following:

The lender or any third party specifically authorized by the lender (including, but not limited to, appraisal companies, appraisal management companies, and correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The lender will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents)

It used to be that a mortgage professional – whether working for a specific lender or as a broker – might have a “stable” of appraisers he or she could call on to provide services. Most of them just wanted a reliably thorough and competent job. However, and this is the reason for the new rules, some only wanted appraisers who were willing to find the right “comps” to hit a specific valuation necessary for the loan to go through. Under pressure to produce that number or perish, many appraisers buckled.

But are the new rules helpful or harmful to the more ethical mortgage lenders and brokers out there? Are they seeing big increases in appraisal costs? How about appraisal quality, now that they can’t choose one of their go-to guys? I asked several of the mortgage professionals I work with every day in Northern Virginia to give me their impressions about whether they find the scenarios suggested in Harney’s article to be happening here:.

We’ve actually been working under these rules for many years . . . All appraisals have been ordered through a 3rd party management company, and while we did have some communication with the appraiser (although not encouraged), we cannot any longer . . .

This is actually a good thing that is happening. Too many times appraisers have been bullied by agents, mortgage lenders and borrowers for not having the same opinion. This [code] will take that opportunity away. This does NOT mean that you can’t call the appraiser, still meet them at the home, etc . . . this is so that lenders cannot contact the appraisers directly – even for a status, as this is seen as undue pressure. These appraisers are professionally trained, educated and have to uphold ethical standards just like all of us; yet no one challenges our decisions like these people.

[The fees and time requirements] are the same, for now. I bet the appraisal costs will go up, and they should. The appraisers can’t live on a “cut” and they have been required to do so many more compliance checks etc . . [Turnaround times] are longer due to volume.

This won’t change the quality . . . if anything the quality will improve because the lenders and agents are now separated from any undue influence.

Jennifer Duplessis, Prosperity Mortgage

Interesting article and I am happy to say we have not had the issues mentioned. [Local] appraisers have only added $25.00 to their fees due to some additional addendums that required extra research. Appraisal fees have ranged from $350 to $375 and now are $375.00 to $400.00 for under $1 million sale price, and they have always charged more for above $1 million – that is not new. Yes, loan officers are no longer allowed to directly pick the appraiser – it is an automated random selection of a pool of known appraisers in our local area.

I think the worst [problem] is the extreme pressure the appraisers are [receiving from the lenders] to include the foreclosures and short sales when determining values. During the recession In the early 90’s foreclosures and short sales were considered distress sales and discarded as [comparable to a] homeowner selling their property. In my opinion, this change in [guideline] has escalated the erosion of home prices. They should have allowed for an adjustment upward on the distress sale, but they did not, they are requiring the appraisers to use them thus providing for lower and lower values – how unfair to the normal seller is that?

Shirley Jones, First Savings Mortgage

I haven't experienced any true horror stories yet, but the new system will definitely change things. I think the appraisers will feel empowered to bring in property values at whatever they feel the value is, regardless of what it may mean for the transaction. The old system had a conflict of interest where (I believe) appraisers didn't want to ruin too many deals with a low appraisals since they were hurting their referral sources (potentially their future income) by bringing in the low appraisal. This new system will potentially change that, which ultimately will be a good thing, but could be painful. I think that will be the biggest change. I believe we will see more low appraisals (meaning appraisal comes in below contract price).

In the past we could choose appraisers and go with ones that we felt were "good appraisers." We now have less of a say. It also adds a layer to the process which usually means more time. I do agree with what the article said about the costs of the appraisals being higher. Mortgage brokers definitely kept costs down with the old system. Appraisals have gone up by about $100 over the past year I believe. I haven't noticed a big difference in the quality of appraisal, but it is still early in the process.

Overall I don't love the new system but the old system definitely had it's flaws also. I'm not sure I would want to go back to the old system even if we could.

Kevin Haddon, Wells Fargo Home Mortgage

So on balance, it seems, in the Northern Virginia area the new rules are seen in an overall positive light by people who I believe to be in a position to know. Yes, costs my have increased slightly, and there may be a somewhat longer turnaround – especially as the system gets established – but I think the horror story scenarios drawn by critics are not reflected in the actuality. I do agree with Shirley's view about separating the distress sales from the normal sales – it's unreasonable, but it's not a part of the new rules, just a lender-imposed requirement. Appraisers should be able to reflect adjustments for condition, given the lousy condition of most foreclosures, but it's unlikely to fill the gaps.

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By Kim, May 1, 2009

The other day, I was out with a first-time buyer client and blathering on about cherry trees, house styles and what have you when she stopped me cold with a very important question I couldn’t answer right away:

“In your experience, how much should we budget for maintenance?”

It’s a great question. And not easily answered. “That depends!” is an answer of sorts, and it’s true, but not helpful. I Googled “home maintenance costs” when I got home, and from the usual 2,456,871 hits, I managed to sort out a few useful nuggets.

So, Jennifer, here are a whole bunch of great sources you can use to try to budget for maintenance:

Life Expectancy of Home Components is a 2007 study from the National Association of Home Builders, sponsored by Bank of America. It has a lot of good information on you guessed it, components and systems of a typical home, occupied by a typical family with 1.8 children no doubt.

Among the findings of the study:

• Appliances. Of the major appliances in a home, gas ranges have the longest life expectancy, at 15 years. Dryers and refrigerators last about 13 years. Appliances with the shortest life spans are: trash compactors (six years), dishwashers (nine years) and microwave ovens (nine years). Some appliances don’t meet their life expectancy, however, because changes in styling, technology and consumer preferences may make newer products more desirable. Also, how long they last depends on how much they are used. [Duh.]
• Decks. The life span of these can vary significantly according to different climates, but they should be around for a good 20 years under ideal conditions.
• Faucets and Fixtures. Kitchen sinks made of modified acrylic will last 50 years, faucets will work properly for about 15. Bathroom shower enclosures can stick around for 50 years, although the shower doors could be in a serious state of decline in about 20 years. Showerheads last a lifetime, as will toilets, although tank components require some maintenance. The durability of whirlpool tubs ranges fairly widely – from 20 to 50 years – depending on use.
• Flooring. All natural wood flooring, and marble, slate and granite will last for 100 years if they are well taken care of. Vinyl floors will endure for up to 50 years, linoleum about 25 years and carpet between eight and 10 years, depending on traffic and care.
• Garages. Garage doors last 10 to 15 years, and light inserts for 20.
• Home Technology. A built-in audio system will last 20 years, but security systems and heat and smoke detectors will only be around for five to 10. Wireless home networks and home automation systems are expected to work properly for more than 50 years.
• Heating, Venting and Air Conditioning. HVAC systems need proper and regular maintenance in order to work, but even when they are pampered most of their components last only 15 to 25 years. Furnaces live for 15 to 20 years, heat pumps for up 16 years, and air conditioning 10 to 15. Tankless water heaters last more than 20 years, while an electric or gas water heater has a life expectancy of about 10 years. Thermostats usually are replaced before the end of their 35-year life span because of technological improvements.
• Paints, Caulks and Adhesives. Interior and exterior paints can last for 15 years or longer, although home owners tend to repaint more often.
• Roofing. Slate, copper and clay/concrete roofs have a 50-year life expectancy; asphalt-shingle roofs, 20 years; fiber cement shingles, 25 years; and wood shakes, 30 years. However, the life of a roof depends on local weather conditions, proper building and design, material quality and adequate maintenance.
• Siding and Accessories. Outside materials typically last a lifetime. Brick, engineered wood, both natural and manufactured stone and fiber cement will last as long as the house. Exterior wood shutters are expected to last 20 years, depending on the weather. Gutters made of copper can last 50 years, of aluminum, 20. Copper downspouts last 100 years or more; aluminum, 30 years.
• Windows and Skylights. Aluminum windows last between 15 and 20 years, while wooden windows can last upwards of 30 years.

Home Tech offers an interactive Remodeling Cost Estimator that generates an estimate of your remodeling project based on regional cost and pricing information. You enter your zip code and select from a variety of project types. The estimator then takes you through a series of questions about measurements, quality level of components, and so on, before delivering a dollar amount that in my estimation was on the high side. Your mileage may vary.

My friends at US Inspect give us US Inspect House Facts, a great resource for learning about all that stuff in your house you currently know nothing about, and how to maintain and even repair much of it yourself. It’s a terrific one-stop home information resource.

Lastly, I can strongly recommend a home warranty for those of you who want good control of your budget and relative peace of mind when it comes to major home repair costs. A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home system components and appliances. I always arrange to get a home warranty for my buyers, and try to have my sellers offer one to reassure prospective buyers. It’s a no-brainer.

Most home warranties cover your home’s air conditioning system, central heating unit, ductwork, electrical system, ceiling fans, plumbing system, water heater, refrigerator, built-in dishwasher, built-in microwave, oven/range, garbage disposal, built-in trash compactor, washer, dryer and more.

How it works: the homeowner calls the warranty company, who arranges for the service call. The homeowner pays a service call fee – from $50 to $100 depending on the policy – but repairs and/or replacement (company’s decision) of the broken item are covered.

The most common complaints about these policies are that they don’t let you choose your own service company, and they occasionally question whether the problem was pre-existing (i.e., the appliance was broken before coverage was purchased). A recent report from a recognized home inspection service is usually accepted as proof to the contrary, if necessary.

There are several reputable home warranty companies who offer policies in Northern Virginia. Costs range from $350 to $500 per year, depending on coverage and deductibles. Try AHS – who has good home maintenance tips on the website; 2-10; or HMS.

If all else fails, try humor. I recommend Dave Barry – either The Taming of the Screw (hilarious illustrations by Jerry O’Brien) or Homes and Other Black Holes, illustrated by the late Jeff MacNelly.

It’s Good To Have A Friend In The Business®

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

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