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By Kim, July 8, 2010

There was a Dilbert cartoon a few days ago that was so good I decided to grab the punchline panel and write a post around it. So here it is.

Contracts can be dangerous things. Now, most people don’t deal with contracts on a regular basis, and for those who do – like lawyers – it’s usually their employer’s or client’s money on the line, and it’s their business. In my business, I have to work with contracts for residential real estate every day, but go beyond that and I’m stretching my legal abilities. Not to mention the matter of practicing law without a license, which the state allows me to do in a very, very limited way.

Often one of the greatest challenges even the best Realtors face is managing the transaction once a contract is achieved. Most buyers and sellers have no idea how much work is involved in getting from there to an actual closing. It is difficult to juggle the demands of gathering the necessary documents, maintaining communication with your client and managing the other parties. The 10-page DC area contract is just the beginning. There’s a 6-page addendum for Virginia, plus multiple disclosures and optional addenda on top of that. This creates an unbelievable amount of paperwork to maintain, deadlines to track and requirements to be met. Additionally, licensing requirements make it way too easy for the less-than-professional person to be an agent, further increasing the challenges.

I tell people that every time something goes awry with a contract in Northern Virginia, we get another form, or at least another paragraph in an existing form. Most of my contracts are at least 25 pages of stultifying fine print, a lot of which simply serves as CYA material. Occasionally, however, there occurs a situation proving the importance of knowing exactly what’s in there.

Case in point: I have been working with some very nice people who want to buy a home, but need to sell their own home. According to their lender, they could qualify to carry both mortgages – to which they say, “Sure, but we like to have food with our meals.” They contracted to buy a new home, but because the owners wouldn’t agree to it, they did not include a contingency requiring that they sell their own home. They did, however, include home inspection, appraisal, and financing contingencies, and the state of Virginia requires a contingency for reviewing homeowner association (HOA) rules and finances (that’s important, as it turns out).

They quickly put their home on the market and we (they, me, and the other agent) thought it was so nice we would surely get an offer right away. Two weeks went by with a total of 5 visitors. My clients are getting more nervous by the day, and our contingencies are running out – home inspection’s done, the financing is not a problem, and the appraisal is not within our control. But wait – the HOA packet has not appeared!

The seller’s agent (of 30 years’ experience) was going to drop off the packet on June 16, but for some reason she was delayed or forgot. We received it on June 24 instead, thus giving us until 9 PM on June 27 to back out. On June 25 we received a too-low offer and tried to counter it, but the prospective buyers refused to respond within 48 hours to the counter. The sellers refuse to give my buyers a home sale contingency at this point – perhaps they thought we were bluffing? So, given the constraints, my clients had to use the HOA contingency, inadvertently extended by their seller’s agent, to back out of a contract for a home they dearly wanted. I’d warned the other agent about it, and gave her two days’ notice that we were looking for alternatives, but she still claimed to be “shocked” that we used the HOA contingency to back out when there was nothing wrong with the HOA. Her sellers were upset too, of course – but after the warning we gave them and the opportunity they had to hang on to the contract, I couldn’t be very sympathetic. They had to put their home back on the market, with a month less to sell before they move, not to mention all the negotiations and inspections they would have to put up with all over again.

Fortunately for all concerned, my sellers did get a contract they could work with, and they did come to agreement on a new contract with their sellers (at the same terms), so we made it through that mess unscathed except for deep psychological scars. But it was a very near thing.

In contracts there are some things we can’t control, but we must pay attention to those things we can.

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By Kim, June 18, 2010

A “reverse mortgage” allows you to trade equity in your home for cash, access to cash through an equity line of credit, or a monthly income, that you never have to pay back. You can use your current home or buy a new home or even a vacation home using a reverse mortgage.

Got your attention?

The catch—you have to be 62 or older. But hang on, kids, there are potential advantages for you too, if you’re on the good side of, ahem, those “mature individuals distinguished by their vast experience.”

Reverse mortgages, or as FHA calls them, Home Equity Conversion Mortgages (HECM), have been available for seniors for many years. The basic deal was that they use the equity in their primary residence as a source of cash, they can live in the home as long as they want without paying anything back, and the mortgage is paid off when the home is sold, with the owners or the estate getting the difference. If there isn’t enough money from the sale for the payoff, FHA eats the difference, not the estate or heirs.

Now comes the HECM for Purchase Program. The FHA developed the program because it saw that seniors were selling their homes, buying smaller, more affordable homes and then taking out reverse mortgages on the new properties. That meant they were paying closing costs twice—first on the purchase closing, and a mortgage if they needed one, and then again when they switched to a reverse mortgage. But the new program allows seniors to buy a home directly with a reverse mortgage—paying closing costs only once. A sale of an existing home is not necessary and is not part of the transaction.

The program allows seniors to use a reverse mortgage to buy a home or a small multifamily residence, and allows them to convert some of the equity in their existing home to cash. They never have to make a single payment. Instead, they can collect monthly payments out of the equity on a tax-free basis as long as the home serves as their principal residence. If they do not sell their previous home, they could get additional income out of renting that property. Under the plan, you can choose to take the money either in monthly payments, as a lump sum, a combination of the two or even in a line of credit that you can access whenever you need cash.

This year, seniors can access up to $625,500. In 2011, unless Congress changes its mind, the amount reverts to $417,000. Most reverse mortgages range from 35 percent to 55 percent of the home’s equity.

You must agree to pay your taxes and make any necessary home repairs. No credit check or income verification is required. To qualify for the reverse mortgage, a senior, age 62 or older, must:

• Agree to live in the reverse-mortgaged house as a primary residence.
• Own the home outright or have enough equity to pay off any existing mortgages and equity lines with the proceeds from the reverse mortgage. Those with more equity may be able to access even more cash.
• Not be delinquent on any federal debt.
• Participate in a consumer information session given by an HUD-approved counseling agency or HECM counselor.

Generally, three factors will affect the amount you can borrow:

• The value of your equity (the higher the better).
• Your age (the older the better).
• Interest rates (the lower the better).

Here are some hypothetical examples of how it can work:

1. Problem—you want to buy a new one-level home for $450,000 with no mortgage payment. You cans sell your colonial in Springfield with net proceeds of $300,000. Solution—you take out a reverse mortgage on the new home for $275,000, paying $150,000 of your cash for the balance. Instead of a $150,000 mortgage to pay, and no cash, you have $150,000 in cash left to invest, and no mortgage payment!
2. Problem—you own your Springfield home worth $500,000 and want to keep it as your principal residence. You have no mortgage, or a small one. You would like to buy a $300,000 vacation condo in Ocean City, but on your teeny retirement income you can’t afford a regular mortgage on either the condo or your main home. Solution—you take out a reverse mortgage on your main home for $250,000, paying $50,000 cash from other sources for the balance. You just bought your vacation condo for $50,000, and no mortgage payment!
3. Problem—you want to keep your current home, but it needs remodeling and updating to fit your changing needs. Solution—use your equity to take out a reverse mortgage for remodeling. No mortgage payments.
4. Kids, pay attention here! Problem—you want to help your son and his family buy a new home. You could take some cash out of the equity in your own home—but you can’t afford the additional mortgage payments. Solution—use your equity to take out a reverse mortgage to gift their down payment.

One added cost to a reverse mortgage is an extra insurance premium, usually more than a conventional mortgage, which has to be paid by the homeowner to insure the lender against the possibility the homeowner lives longer than anticipated. The insurance guarantees you will never pay more than a stated amount despite increased borrowing costs over time. You can finance this premium into the mortgage itself.

Interest rates on reverse mortgages today are similar to conventional mortgages. Fixed rates I’ve seen quoted by Wells Fargo recently are 5.4% fixed, or 2.5% adjustable (monthly adjustment tied to LIBOR). Of course, since you aren’t paying it, how much can it matter?

Here is the link to the HUD/FHA site for all the straight info.

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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, 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.

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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By Kim, May 15, 2009

April 2009 home sales activity for Fairfax and Arlington counties and the cities of Alexandria, Fairfax and Falls Church and the towns of Clifton, Herndon and Vienna:

• A total of 1,544 homes sold in April 2009, an increase of 6% over April 2008, and the ninth consecutive month of higher year-over-year sales. Terrific, but look at this – pending home sales, based on signed contracts, are 2,692, up 25% from last year! Pending sales have been up double-digits year-over-year for 13 consecutive months.
  
• Active listings – homes on the market – decreased by 23% from last year, with 8,234 active listings at end-April. Fewer homes on the market usually means prices are poised to start rising. The supply of homes remains in the less-than-six-months “seller’s market” range.
• Another sign of strong activity – the average days on market (DOM) for homes in April 2009 decreased by 15% to 85 days, compared with 100 days in April 2008.
• Sales prices continue to remain lower than those realized last year. The average sales price in April fell 16% percent from April 2008 to $405,514, while the median price was $356,750, a decline of 14%. The average and median sale prices are again both higher than last month, however.
• Agents continue to see a lot of multiple-offer situations on attractive well-priced homes in good condition, particularly in price ranges under $475,000. If you are looking for such a home, be prepared to act decisively.

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.

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

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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.

Here is 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.

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

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By Kim, April 15, 2009

March 2009 home sales activity for Fairfax and Arlington counties and the cities of Alexandria, Fairfax and Falls Church and the towns of Clifton, Herndon and Vienna (this sounds like a weather alert, doesn’t it?):

A total of 1,384 homes sold in March 2009, an increase of 11% over March 2008. That’s great, but look at this – pending home sales, based on signed contracts, are 2,306, up a fantastic 33% from last year!

Active listings – homes on the market – decreased by 20% from last year, with 8,069 active listings in March, compared with 10,123 homes available in March 2008. Fewer homes on the market usually means prices are poised to start rising. The supply of homes has again fallen into the under-six-months “seller’s market” range.

Another sign of strong activity – the average days on market (DOM) for homes in March 2009 decreased by 18% to 89 days, compared with 109 days in March 2008.

Sales prices continue to remain lower than those realized last year. The average sales price in March fell 17% percent from March 2008 to $395,512, while the median price was $335,000, also a decline of 17%. Interestingly, though, the average and median sale prices are both about 5% higher than last month.

Agents are reporting a considerable number of multiple-offer situations on foreclosures, and on attractive well-priced homes in good condition, particularly in price ranges under $425,000. If you are looking for such a home, be prepared to act decisively – and, if the home is right for you, don’t let yourself be outbid.

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.

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

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By Kim, March 15, 2009

February 2009 home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church and the towns of Vienna, Herndon and Clifton:

A total of 1,067 homes sold in February 2009, a 10 % increase above February 2008 home sales of 969.

Active listings decreased by 18 % from last year, with 7,811 active listings in February, compared with 9,497 homes available in February 2008. The average days on market (DOM) for homes in February 2009  to 109 days, compared with 116 days in February 2008.

The average sales price in February fell by 21 % from February 2008, to $380,077, compared with last February’s average of $479,320. The median sales price of homes sold in Northern Virginia in February was $318,000, which is a decline of 23 % compared with February 2008′s median price of $410,500.

The February pending home sales data, based on signed contracts, is bucking the national trend – 1,817 contracts are pending compared to February 2008 when 1,526 were pending, an increase of 19 %.

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By Kim, March 4, 2009

The US government’s Making Home Affordable plan was released this morning. Millions of homeowners wanting to see if they qualify under the plan for either a refinancing or a loan modification will be eager to check out this program.

You might qualify for refinancing under the plan:

• If the home you want to refinance is your primary residence; and
• The loan on your home is controlled by Fannie Mae or Freddie Mac; and
• You’re current on your mortgage payments (not more than 30 days late on your mortgage in the last 12 months); and 
• You have sufficient income to support a new mortgage.

You can owe between 80-105% of the current value of your home, but no higher than 105%.

If you think you might qualify to refinance, you’ll need to give the following documents to your mortgage lender:

• Your monthly gross (before taxes) income of your household, including recent pay stubs.
• Your last income tax return.
• Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
• Account balances and minimum monthly payments due on all your credit cards.
• Account balances and minimum monthly payments for all your other debts, like student loans or car loans.

You might qualify for a loan modification (first mortgage only) under the plan: 

• If you originated your mortgage before Jan. 1, 2009; and
• You are an owner-occupant; and
• You have an unpaid balance that is equal to or less than $729,750 (for a single-family home); and
• You have trouble paying your mortgage due to financial hardship – perhaps because your  mortgage payments increased, or your income was reduced, or you suffered a hardship (such as medical problems) that increased your bills, or you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship; and,
• Your monthly mortgage payment must be more than 31% of your gross (pre-tax) monthly income.

You must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.

The idea is for your monthly payments (not including private mortgage insurance) to reach 31% of your pre-tax monthly income. The monthly payments are defined as payments on the principal, interest, taxes, insurance (not including mortgage insurance) and homeowners association/condo fees. First, the lender will reduce the interest rate to no less than 2% on the loan, so that the monthly payments are less than 38% of your monthly income. Then, the Treasury will match further reductions, dollar-for-dollar, with your lender, to bring the monthly payments down further, to 31% of your monthly income.

If you keep your payments on time after the modification, the government will pay up to $1,000 each year in the first five years toward reducing the principal on your mortgage.

After five years, the interest rate on the loan will start to increase by no more than 1% per year, but can’t go higher than what the market rate was on the day your loan was modified.

The amount you owe versus the current value of your home doesn’t matter for this program.

The foreclosure process will stop while you’re being considered for the program, or for any alternative foreclosure prevention option.

The borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report. The company that services your loan will get a an incentive fee of $500 for each modification they do. Once your lender modifies your loan, they’ll be paid a $1,500 incentive.

Gather these required loan modification documents:

• Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources;
• Your most recent income tax return;
• Information about your assets;
• Information about any second mortgage on the house;
• Account balances and minimum monthly payments due on all of your credit cards;
• Account balances and monthly payments on all your other debts such as student loans and car loans;
• A letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.).

Then call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives will motivate them to participate.

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.

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

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By Kim, February 16, 2009

Stuff. Most of us have waaaaay too much of it. If you know my wife, you will understand who keeps stuff organized in our house. She spent a good part of this weekend moving cookbooks, camera and various electronic gizmos from one cabinet to another, tossing things we haven’t been using, and getting some new things put away. It’s certainly not me – you should see my desk right now. I am not the best person to talk about decluttering, though it’s definitely a mantra of mine when talking to sellers! So that’s why I asked for professional help in writing this piece, and Aimee Saldivar obliged:

Do you feel bad throwing out every greeting card you receive? Or do you feel the need to save every toy your children owned to hand down to their children someday? Keeping these toys and remembrances can add up, especially if you don’t have the space to store them. If you save the toys’ original boxes or perhaps the toys that are slightly tattered, they’ll be of no value if your children decide to buy their kids new toys altogether. Get rid of them! One way to keep that precious toy close to your heart is to take a picture of it and create a digital album for you and your children to cherish tomorrow. Those pictures would make a great hardback album for a holiday gift, or can be used to create a scrapbook. It will not only take up less room, be cost effective and environmentally friendly, but it will allow more room for you to use today.

I recently finished a book by Peter Walsh, professional organizer and motivational speaker, called “It’s All Too Much: An Easy Plan For Living a Richer Life With Less Stuff.” He makes some great points about happiness: more material things don’t really measure success, having more possessions may be more suffocating than liberating, and the stuff we own ends up owning us. When we feel like we have too much stuff, we buy more containers; but in reality we aren’t cleaning out clutter, we’re just storing it away. Eventually this will build up and take over our space.

We have more winter ahead of us, but it’s a great time to start planning our organization. Here are few ideas to get you started without being overwhelmed by the task:

1. One room at a time. Focus on a room rather than your entire home. A smaller goal cuts down your anxiety and helps you stay focused. Prioritize each room according to either your budget or the time you have to spend. This will help you plan your project more effectively and will keep you on track to organizational success.
2. Think about what you want to achieve out of that room. If you’re planning to put your home on the market, you may want to consult a professional stager or organizer to create a “punch list.” An extra set of eyes can’t hurt, and they know creative ways to minimize clutter and maximize your sale price without going overboard. If you’re looking simply to organize, store away those keepsakes into one box you can bring out when you want to reflect, and keep the room livable without feeling cramped and cluttered.
3. TIP:  In today’s economy, second-hand and consignment stores are becoming the hot place to shop. If have you some great items that you feel guilty about giving away, consignment shops are a great way to get rid of them without having to host a yard sale or post them in the classifieds online. Remember, one man’s junk can be another man’s treasure – at less than half the price! [Followup tip from Kim:  Drop off your stuff and drive away quickly, or you will come home with more than you took in!]
4. If you haven’t used in the last year – GET RID OF IT! Some things we own may be seasonal items, which is okay; however, if you’re still thinking that the one item you’re saving may go back in style, dump it. If it comes back someday, there will plenty of options to choose from. Many times we get so wrapped up in how much we paid or how much we saved on a particular item when, in reality, it was probably an impulse buy at the time. We may also keep something “in case we need it.” Unless you are talking about fire extinguishers and the like, if we haven’t used it in a year, then we don’t need it, and we’ve probably forgotten about it.
5. TIP:  Getting rid of dust collectors such as books, lampshades and dried flowers can help alleviate dust for people with allergies. You may continue to dust the shelves, but not the books on the shelves or the dried flowers you are saving from a special occasion. It rarely occurs to people that dust build-up on these items is overlooked and can make matters worse for people with allergies. Once you finish reading a book, trade it for a new one or donate it. Donating books to your local public library is a very simple process and is a tax write-off for you next year.
6. The more you can eliminate, the better. Linen closets become an emotional trap for us since they house blankets and linens we don’t want to part with. This is usually where Grandma’s hankies and table linens end up. Instead, think about storing them in a dedicated keepsake box from Grandma, or framing and hanging them in a guest bedroom (if they go with the theme). Once you make room for the linens you actually use, you won’t have to shuffle through mismatched sheet sets and torn towels. If you have different sizes of sheet sets for different rooms and/or family members, a great way to keep them organized  is to color-code them. Buy a different color of two-inch grosgrain ribbon rolls for each size or family member to keep the sheet sets together for “grab and go.” It adds a nice touch to your linen closet, too. NOTE:  When you have your home on the market, prospective buyers look through everything, especially closets – they’ll be impressed.
7. A great way to pay tribute to a loved one after they have passed would be to dedicate a space or a room for their items. If they were in the military, one way to pay tribute would be to frame their military medals along with their uniform jacket. Or if you are having a hard time parting with their collected items, perhaps you could sell them and donate the money in their memory to an organization or educational institution they would have appreciated.

Many thanks to Aimee Saldivar, professional organizer and home stager. She also offers special occasion set-up such as table setting and arranging. You can find before and after pictures on Facebook by looking up Ladybug Staging and Organization.

If you mention this article, Aimee will provide a free consultation when you sign up for a service. Plan ahead and call today for an estimate at 703-856-3404 or email ladybugstaging@gmail.com.

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