State of the DC Area Real Estate Market: June 2009

The Spring market is hopping, but some recent changes are making it difficult to predict what's around the corner. Here's what's going on in the local real estate world:

Interest Rates Jump: Mortgage rates took a significant jump in the past few weeks. The short story is that optimism about the economy combined with fears about inflation are pushing rates up. But if you want the long story, you can read more about the relationship between the bond markets and MBS markets here.

Foreclosures and short sales continue to be a very active segment. Banks have finally figured out that the trick to selling foreclosures quickly is to price them ridiculously low and get a bidding war going. It's not uncommon to have dozens of offers in during the first few days for entry-level price points ($200-300k). Short sales continue to be a source of frustration for buyers, as noted in this good NPR story.

The area's inventory remains flat (Arlington and DC) to declining (NoVA)

--check out the significant decline in Northern Virginia inventory here.

Case-Shiller is still reporting significant price declines year-over-year, but here's a good article explaining why, if you read the data more carefully, the news is much less ominous.

New Appraisal Code Scuttles Deals: The new Home Valuation Code of Conduct was implemented in May, and is wreaking havoc with deals. This Code created intermediaries to manage the appraisal process, and some argue that quality has dropped. Many appraisals are coming in low, opening the door to a secondary round of price negotiations in many transactions.

Monetization of Tax Credit: Of significant note to first time buyers is the emergence of programs that will allow a buyer to "monetize" the $8000 tax credit. VHDA has developed a program to structure a second trust of $8000 with no principal or interest payments due during the first 12 months. Details are still evolving, but it is expected that a buyer could use this $8000 second trust as part of their downpayment.

If you are a first time buyer hoping to take advantage of the $8000 tax credit - start your search NOW! The lack of "good" inventory may make it difficult to find something that fits your needs and your price range. Settlements must occur by November 30 to file for the credit, and with the current volume of lending and refinancing banks are backed up. No doubt this backlog will increase for both lenders and settlement companies as we approach November 30 - plan ahead! Contact me to start your search - I'd love to help you!

And finally, just for fun: For all you Arlingtonians and those who want to be an Arlingtonian -- check out this rap.

As always, please let me know if I can do anything to help you or your friends with your real estate needs.

Northern Virginia Inventory Sees MASSIVE Drops

Update 5/9/09: Looks like I've got some investigating to do - the final MRIS numbers are published (updated graphs now available at my website here - click on the "Market Stats" in the left sidebar) and they aren't even close to the "live" data I ran on the last day of the month. Not sure what's going on -- seriously, how can hundreds of listings be not there on the last day of the month but then appear retroactively 9 days later? I'll look into it and post results here when I get them. The short story is that inventory didn't drop in most cases--just a tiny increase of about 2% over last month for NoVA, for example. Still surprising but not nearly the big story the initial data hinted at. Contracts are up about 12% over last month, so the buyers are definitely biting! Obviously with an increase in contracts disproportional to the slight increase in inventory, it still indicates a shift in the market, just perhaps not that dramatic a shift as originally indicated.

In the meantime, here are some excellent charts detailing real estate inventory levels that illustrate my points and appear to be using the "live" data just as I had.

Original Post:
This. Is. Big. News. Typically in the Spring (from February through June) we see run ups in inventory as sellers prepare their homes for market. The final numbers aren't out just yet, but I think both buyers and sellers are going to be shocked by April's real estate statistics.

Let's take a look at the Arlington numbers I ran from today's MRIS (the consortium that owns our area's multiple listing service.) The spring run up looks like this for January through April: 875 - 925 - 986 --------and 793 for April! What?! That is the lowest number of homes available since February 2007. A 21% DROP in inventory in Arlington?! During SPRING?

And Northern Virginia as a whole: 7545 - 7811 - 8069 ------ and 5435!
A WHOPPING 33% DROP and the lowest number of homes for sale in NoVA since August 2005! Remember August 2005? When buyers were running around bidding things up like crazy because there weren't enough homes to go around?

What's going on?? First, buyers are getting it! Low prices, the lowest interest rates in 50 years, and the $8000 first time buyer tax credit have them out in droves. Just in the past week I had 3 of 4 buyers who submitted offers get outbid on properties in various locations.

To add insult to inventory, potential sellers are waiting to put their homes on the market because they don't want to have to take low offers. Much of the inventory, especially in the suburbs, is "distressed" (foreclosures and short sales) and many are in such poor condition that they will not sell for a very, very long time. So the level of "good" inventory (that is, will realistically sell within the next few months) is even lower than the numbers show. Homeowners who are on the fence about selling don't want to be lumped in with distressed comps, so aren't putting their homes on the market.

Finally, the 'moratorium' on foreclosures in the first quarter contributed to a lack of new distressed inventory coming on the market. But if there's another wave coming, it's not in the pipeline yet: a review of "preforeclosure" filings in Arlington listed just 73 properties, and Fairfax County showed 1000 (a big number, no doubt, but not enough to make up for the 2500 drop in inventory from March to April.)

What are the implications of this?

Buyers: Unless there's a big wave in May, you're going to have a lot less to choose from, especially if you want something that is 'move in ready.' Less inventory means more competition for the 'good' listings -- expect to pay closer to list price for those, and be ready to move quickly when you see one you like. Chances other other people are circling it too. Hope for a big bump in the coming weeks - otherwise it may be a tough road if you're trying to buy before November 30 to take advantage of the tax credit. Typically inventory peaks in June, with another much smaller bump in Sept/Oct.

Get started with your search:
Sign up to attend a free first time home buyer class or search the MLS

Sellers: If you are on the fence about selling, go ahead and get it on the market asap, especially if your home is a good option for a first time buyer. Make sure you put your best foot forward with some sprucing up, staging, multiple photos taken by a professional, a home warranty, and an extensive web presence as part of a comprehensive marketing plan. And it still needs to be priced right, of course. If you're wondering what the comps are for your neighborhood, contact me or visit my sellers resource center.


Source for all data: MRIS as of 5/1/2009. Data deemed accurate but not guaranteed

Six Myths About Choosing a Real Estate Agent to Sell Your Property

When I meet with sellers, I often hear some variation of the same "myths"...

I need to choose my “neighborhood specialist.”

Typically buyers look in more than one neighborhood, so in fact you may have more success with an agent who understands what buyers are looking for and where else they might find it. A good agent will know more than just your neighborhood—they will know all the neighborhoods where your competition will be, and where buyers will be looking! "Neighborhood specialists" often don't even live near the area in which they claim to be 'specialists'--that's just where they choose to send their postcards. Always interview at least one agent besides your 'neighborhood specialist' to compare services being offered, and think about whether you would be more comfortable with an agent who, when a buyer comes calling, represents only YOUR home rather than yours, and the guy's down the street, and the woman's down the block - all your competition!

I should choose the agent who puts the highest value on my home.

Some agents will quote a higher listing price just to win your business, but even with the very best marketing plan, if the home is overpriced it will NOT sell. You'll end up chasing the market down via price reductions. If an agent is recommending a significantly higher list price than other agents, ask them about their history of price reductions. If you choose to work with me, I will conduct a comparative market analysis prior to recommending an asking price range for your home. I will explain how I arrived at the range, but ultimately the decision is up to you.

Open Houses are just for “looky loos” and nosy neighbors, so I've been told I shouldn't do them. Most of today’s buyers start their search on the internet, and the majority either haven’t yet selected an agent or are planning to represent themselves. For those buyers, they have no way of seeing your home other than contacting the listing agent or going to an open house. Most people are too intimidated to call “off the sign” and so open houses are more important than ever before to get the most potential buyers through your home as possible.

I need to make sure the agent I choose advertises my home in XYZ publication.

When asked where they first learned about the home purchased, 34 percent of buyers said a real estate agent; 32 percent the Internet; 15 percent from yard signs; 7 percent from a friend, neighbor or relative; 7 percent home builders; 3 percent a print or newspaper ad; 2 percent directly from the seller; and 1 percent a home book or magazine. In today’s technology era, print advertising is not where you’re going to find the buyers.

I need to choose the agent who has sold the most homes in the past year.

Every agent is an independent contractor, and therefore the variety of services offered can fluctuate dramatically even within a single brokerage. You need an agent who has enough time to attend to the details of your transaction, without farming it out to a junior assistant. Ask about which services they actually provide their clients, and who does them. Does it include professional photographers? Dedicated web sites? Professional stagers? Agent paid home warranties? Quantity does not equal quality.

I need to choose a “broker” instead of an “agent.”

After gaining some years of experience in real estate sales, a sales person may decide to become licensed as a real estate broker in order to own, manage, or operate his/her own brokerage. Brokers typically take on management or ‘back office’ duties. Agents, on the other hand, focus exclusively on their clients. If you are dissatisfied with your agent, you always have the option of contacting their supervising broker.

If you are looking to sell your home, please contact me - I'd love to detail for you the services that I provide to my clients!

What Should I Be Doing Now To Sell My Home This Spring?

Spring is going to come early to the DC area.

No, not the weather (well, I hope so, but we'll see.) I mean the Spring real estate market. Buyers are out there, even now. Low prices, low rates, and the imminent expiration of the $7500 first time home buyer credit have them circling and looking for the right property, in the right condition, for the right price. And for those properties that are positioned and marketed properly, this could be your best shot at a smooth and quick transaction.

But putting your home on the market takes a significant amount of preparation. The first 30 days your home is on the market is absolutely critical, because those buyers who are circling will come look—once—and if your property is not exactly right then they will just continue their circling, and likely will never return to your property. You will anxiously watch the days on market tick up, and the price tick down. Buyers ARE buying, but they expect a property to be in pristine condition right out of the gate.

To catch the biggest buyer waves, typically you should plan on putting your home on the market in March or April. This year, however, I think there’s a strong argument to go out early for the reasons outlined above—buyers ARE out there. However, you can’t just throw your home into the MLS and expect the buyers to pounce. Your first chance is your best chance.

Here’s a short list of things you should be doing now to get your home ready:

• De-clutter. I can’t stress this enough. If it’s not something you use every day, get it out of sight. Put away out of season clothing. No collections of knick-knacks, no personal photos, no college degrees or awards. You want the buyer to be able to imagine themselves in the property, and trust me, buyers are easily distracted by your personal items. Don’t pile things into closets and cabinets—buyers look there too, and if everything is crowded they thing there won't be enough room for their things. Get things out of the property and into storage if you have to. Same for extra furniture pieces. Less is more. Doing this right takes weeks (or for some people, months). Start now!
  
• Paint & Clean. A fresh coat of paint does wonders, and is cheap. And clean like you’ve never cleaned before, especially the kitchen and bath.
• Make all minor repairs. The buyer is going to make you do them anyway and it will be cheaper for you to do it now.
• Start monitoring the market, both broadly and in your specific neighborhood. Pricing is absolutely critical, and you need to be realistic. Don’t get stuck chasing the market down. Work with an agent to start getting property updates now.

When you’re ready to put your home on the market:

• Consult a stager. I hire both an interior stager and an exterior landscape consultant for all of my listings. They look at your property with fresh eyes and have extensive training in how to create a neutral, yet welcoming canvas for buyers.
• Photos, photos, photos. Buyers start their search on the internet, and if you don’t have photos they will skip your house completely. Use professional photographers, or at a minimum, a wide-angle lens if you (or your agent) insist on taking them personally. If you have photos of the exterior of the home during Spring or Summer, consider using them to show your yard in its greenest state.
  
• If your home has unique features, consider how to best market them. For example, if the house has an unusual floorplan or is bigger than it looks, consider including professionally drawn floorplans in with the photos. (I do this for some of my listings.) Using an agent that has worked with a lot of buyers might help in this area--they know what buyers want and how they react. (That's not to say that you should use an agent that engages in dual agency, that is, where they will represent both the buyer and the seller in a same transaction. I feel VERY strongly that using a dual agent is a TERRIBLE idea, but that's a subject for another post.)
  

If you’re interested in hearing more about how to get your home ready, or want to learn more about the home selling process, register for my free home seller class, or just contact me for an appointment. The market is still very volatile, and the story complex. Contact me if you're interested in an in-depth view of market conditions in your neighborhood.

Read More: Seller Resources

Read More: Working with Katie as Your Listing Agent

December 2008 Market Stats Available

MRIS (the consortium that owns our regional multiple listing service) has published the December 2008 stats, and I've updated graphs at my website (click on links below).

Arlington Market Stats - Arlington continues to post strong numbers. Only 4.91 months of inventory available, and of the homes that sold in December, an amazing 40% sold in under 1 month! Days on market held steady at 70, and average price increased slightly from the prior month.

Northern Virginia Market Stats - Of note here is the 37% increase in sales in December vs November, and an 8% decline in inventory, bringing the months of inventory down to 5.09 (6 months is considered a balanced market.) December 2007 was a 7.3 months inventory level.

DC Market Stats - Average price dropped significantly from prior month and prior year, which perhaps contributed to the amazing 34% increase in sales in December over November. And when it's good, it's good...almost 40% of the homes that sold in December had contracts in under one month.

Montgomery County Market Stats - MoCo continues to be a strong buyer's market, with the average price almost 20% below the same month in 2007. And the buyers responded--sales increased 22% over the prior month.

The big picture: Still a buyer's market in terms of price and selection, but drops in inventory and huge increases in contracts means the buyers are out there, circling, and ready to jump on good properties quickly if necessary.

If you're thinking about listing your home for sale, contact me to discuss how we can make your home one of those that sells in 30 days. Or sign up for a free Selling Your Home class.

If you're a buyer, give me a ring to talk about the stats in the specific neighborhoods you're looking. Or sign up for a free first time home buyer class.

Search the MLS

Home Seller Classes Now Available in Northern Virginia

Equipping Home Sellers to Make Better Decisions

Our home seller classes are educational sessions designed to give an overview of current market conditions and the home selling process. We cover a recap of the market, current trends and market stats including days on market, average sales prices, and inventory levels.

We'll also discuss how to price your home, marketing channels, staging and showing your home, real estate fees and commissions, and how to choose an agent.

There's never any cost or obligation to attend our classes.

Home Seller Classes in Arlington County
The first classes of 2009 are now scheduled at Arlington County Library. As in the past, there is absolutely no cost or obligation to attend this one hour educational session where we will recap the current market conditions, discuss the future outlook, and provide an overview of the home sale process. Simply email katie@katiewethman.com to register so that we may have materials available for you. Details are as follows:

Tuesday, February 17, 2009
6:00 pm - 7:00 pm
Arlington County Library
1015 N Quincy St, 2nd Floor Mtg Room
Ballston (Orange Line)

Though there is no cost to attend, you must contact us to register since seating is limited.

Read More: Seller Resources
Read More: What to Expect when Working with Katie as your Listing Agent

Home Seller Classes in Maryland and DC
The class schedule for 2009 has not yet been determined. Classes will begin in February and will be held at various sites in Montgomery County and the District of Columbia.

We're always happy to meet with first time buyers over coffee to give a quick overview (with no obligation) if the class schedule does not fit your needs. Just drop us a line!

Contact us to be notified of the class schedule when available.

Read More: Seller Resources
Read More: What to Expect when Working with Katie as your Listing Agent

PMI Risk Index: 80% Chance of Rising Prices in Next Two Years

PMI Mortgage Insurance Co released its latest U.S. Market Risk Index, which ranks likelihood of declining prices for the nation’s 50 largest metropolitan statistical areas (MSAs). PMI Mortgage Insurance Co is one of the largest providers of PMI in the US, so you better believe they spend a good chunk of time studying the market, prices, and defaults.
The bad news is that the decline in national prices accelerated in the first quarter of 2008. The more interesting news for our area is that the Washington-Arlington-Alexandria MSA had a risk rank of just 3 (of 5) and risk index score of 21.4, down from 29.1 last year.

This risk index reflects the probability that prices will be lower in two years. So if you're planning on waiting to buy because you think prices will drop, this report is estimating that there is a 1 in 5 chance that you will make out better if you wait two years; said another way, there is a 4 in 5 chance that prices will go up. This is no doubt tied to our area's continuing low unemployment rate of 3.6%, the lowest of all 50 MSAs.

Buyers: 80% chance prices will go up...you might want to start your search soon.

Sellers: Hold on a little longer...your odds are improving.

Read the full PMI report report here.

How do you know if your listing agent is doing a good job?

I was out showing homes this weekend and I went to a community to see 3 townhouses on the same street. I reviewed the showing instructions. The first house had instructions to call a showing service, which I did, to receive the combination to the lockbox. (As an aside I HATE combo lockboxes…it’s such a disservice to the seller…there’s no record of who came by and when, and no way to tell how many people have the combination. But I digress.) The other two were labeled ‘show anytime, electronic lockbox’. I dutifully took my buyer—who, by the way, is pre-approved and ready to write an offer as soon as she sees something she likes—only to find that the two ‘electronic’ lockboxes were actually combination lockboxes. No combination listed in the MLS printout. I called both agents and got voicemail. We walked around the community for a few minutes, then left. Later that day I got a call from one of the agents with the combination. I never did hear from the second. And my client? She decided to buy somewhere else.

It’s really too bad that there isn’t a standard level of service provided to—and expected by—sellers. Here is a short list of questions to ask and ways to check up on your quality of service:

1. Does your property have multiple pictures in the MLS? Have you looked at them? Too many times I see a picture taken with a point-and-shoot that is really a picture of the furniture rather than the room. You can’t get wide enough angles from a run-of-the-mill camera. Buyers DEMAND pictures. I work with a LOT of buyers, and they assume that something is wrong with the property if there are no pictures.
2. Is there an electronic lockbox (this is for the seller’s safety)? Does it open properly (Ask your agent to check periodically...I tried to show one last week and the box wasn’t working so we weren’t able to get the keys.) Are there keys in it? (Yes, I’ve had this happen, too, when trying to show a property to a buyer.)
3. Web Site – Does your property have its own website (e.g., www.1225NStreet.com) These sites aren’t for search engine ranking, but rather for your marketing materials—the brochures, the open house ads, the signs. Buyers want as much information as possible. Buyers DO look at these sites (my listings get dozens of hits per day), and they show them to their friends for opinions, and I want buyers spending as much time as possible looking at information about my listings versus others.
4. Open Houses – I’m a big fan of open houses. (See my open house post here.) Any agent who says “No one buys off an open house” is WRONG. I’ve had several of my buyer clients buy a house that they saw for the first time when it was held open, and I sold one of my listings to someone who saw it at an open house. Do you want to be denied that chance? Make sure the ad in the paper has your property’s web address (see #3) in it – buyers are more likely to make the time to see your home if they’ve seen it online and the pictures are good—see #1. See how all of these fit together to form a marketing strategy?
5. Updates – Make sure you get a full market analysis from your listing agent at least every week. Market conditions change, and it’s important that you know what your competition—those other listings—is doing.

This is just a brief list of some of the most common mistakes (or, dare I say, lack of effort) that I see out there. Make sure you optimize your chances of selling by demanding the best from your agent.

To discuss what I do in addition to the above for my sellers, email me.

Read more: Open Houses and Route Optimizer

Read more: 5 Mistakes Listing Agents Make

Buyer FAQ: Do I need to hire an attorney?

In Virginia, buyers have the right to choose their own settlement attorney. The settlement attorney represents neither the buyer nor the seller though. So buyers often ask me if they need to hire their own attorney as well. Marcus Simon of Ekko Title, a well respected settlement attorney in the area, has written this special "guest post" to address the ins and outs of attorneys during the real estate process here in the DC area. (I highly recommend Marcus for anyone looking for a real estate attorney, by the way!)

Many real estate sellers and purchasers wonder if they need to hire an attorney to represent their legal interests during the course of the transaction. The answer - predictably - is it depends.

In some parts of the country it is routine for both parties to a real estate transaction to engage counsel. I know this because clients coming from New York and Boston expect to need a lawyer. In California and other west coast states, the real estate transaction is treated more like a financial transaction and there is little attorney involvement, with closing or "escrow" services provided by the bank or mortgage lender.

In the Washington D.C. Metropolitan area a sort of middle ground approach as evolved over the last 20 years or so. Most real estate settlements are handled by non-attorney Settlement Companies or Title Companies. Most of these companies affiliate with law firms to provide certain necessary legal services, like the drafting of Deeds, Powers of Attorney, and other legal documents.

In the vast majority of cases, neither the Purchaser or Seller hires their own attorney, but both agree to allow the Title Company’s affiliated attorney to provided certain legal services and acknowledge the potential that legal conflicts of interest may arise. Contract negotiations, both before and after ratification, including home inspection and other issues, are handled by the Real Estate agents. Occasionally issues arise that the agents cannot resolve without attorney involvement. For instance, there may be a difference of opinion about whether a lien on the property is a cloud on title that would allow the Purchaser to get out of the contract, or what responsibility a Seller has to remedy an encroachment shown on their house location survey. In those cases, the Title company attorney should have provided a list of three independent attorneys for the parties to engage.

In some cases attorneys are engaged from the start. In many Estate cases, for instance, attorneys are hired to handle the sale of property where there are a number of heirs involved in the transaction and there will be additional documentation require to convey clear title. In commercial transactions the parties almost invariably use attorneys throughout the process to draft contracts (as opposed to form contracts usually used in residential transactions) deeds and loan documents.

For most sales, however, from the $300,000 condominium, to the $3 million mansion, the parties rely on their real estate agents and an experienced, competent, and professional Title Company attorney to guide them through the process and help mediate any issues before they become disputes.

Marcus Simon

Founder, Ekko Title

Partner, Leggett, Simon, Freemyers & Lyon, PLC

FAQ: Seller Subsidies/Contributions to Closing Costs

I'm often asked how seller subsidies, (also known as “seller contributions” or “closing cost assistance,” work. When a buyer purchases a property, he can expect closing costs of about 3% of the transaction price. (This varies widely by jurisdiction—consult a local REALTOR for more details.) The closing costs are a combination of (1) fees to lenders, brokers, appraisers, and attorneys, and (2) prepaid expenses, e.g., paid-in-advance property taxes or hazard insurance. Many of the prepaid charges vary depending on the day and month in which you settle. For example, if you settle on the 25^th of the month, you typically pre-pay 5 days of interest, whereas if you settle on the 10^th of the month, you typically pre-pay 20 days of interest. For this reason, if a buyer needs to keep closing costs low, it sometimes pays to negotiate an end-of-month settlement. As a general rule, buyers cannot finance closing costs, so a buyer needs to show up at settlement with funds for both their down-payment as well as their closing costs.

Closing costs come off of the seller’s “net” or the amount of proceeds after expenses. Let’s say the seller is listing his home for $450,000 and his selling expenses (fees, etc.) are equal to 8% of the transaction. If he were to receive his full asking price, his “net” would be 92% of the total, or $414,000. In this example, the buyer would need to pay $13,500 in closing costs (3%) + his down-payment.

One negotiation tactic that is very common in this buyer’s market is to ask the seller to pay a buyer’s closing cost ($13,500 in our example), so that the buyer minimizes the amount of cash they need to spend to get into the house. The buyer may actually have the cash, but might prefer to hold onto it as savings, or apply to his down-payment, remodel a bathroom, to buy furniture, or whatever. Tip: You may see “seller contribution” clearly advertised in a listing—don’t let this drive your decision too much—in this market, almost any seller would be happy to contribute to your closing costs whether they advertise it or not. By stating it in a listing, though, in essence these sellers are simply saying “I’m willing to take less than list price.”

Now, getting back to our example, let’s say that a buyer wants to make an offer on that $450,000 home, but after discussing it with his agent, wants to pay only $430,000. (And for purposes of this example, let’s assume that the seller wants to “net” the fair market value of $430,000.) The buyer may offer less, or may ask for closing cost assistance, or a combination. So if the buyer wants his closing costs paid for, he might offer $443,500 and ask for a seller contribution to closing costs of $13,500. The seller then nets $430,000. The buyer would borrow the full $443,500—in essence “financing” his closing costs across the life of the mortgage—but would only need to write a check for the down-payment at closing.

Taking it one step further, if a buyer were to ask for both a price concession AND closing cost assistance, the seller would apply both to his net. In our example, it’s unlikely the seller would accept an offer of $430,000 AND provide a full $13,500 contribution because his net would only be $416,500 rather than the market value of $430,000.

From a buyer’s perspective, asking for closing costs is a good way to minimize cash out-of-pocket in the short term, but the trade off is that the buyer is paying interest (via the higher mortgage) for potentially years. Be careful, though—many lenders have a limit of how much a seller can contribute; they want you to have some “skin in the game” in today’s market! Additionally, review your contract carefully—sometimes any excess contribution is returned to the seller.

From the seller’s perspective, the financial difference of giving a price concession or a closing cost contribution is usually immaterial—the impact to the net is essentially the same. (The only difference is that any fees that are based on a percentage of the transaction price will be slightly higher; in our example, they would be based on the $443,500, and not the net of $430,000. Still likely a very small price to pay to get a buyer to the table!)

Attention Sellers: 5 Mistakes Listing Agents Make

Sometimes I'm shocked by the lack of attention to detail on the part of listing agents, and unfortunately sellers usually don't even realize it. There are at least 10-15 significant ways that a listing agent can differentiate themselves--and, by extension, the listed property, and they do not all involve spending more money. In fact, sometimes it's the activities that require time, not money, that get a property more attention. I work with a lot of buyers, so I see exactly how buyers react, and as their agent, I know which inconveniences I'm willing to tolerate to still show your home. Believe me, it's not enough just to list the property in the MLS!

Here are a few "quick hits" that sellers can easily check for themselves. If your property is currently listed, see if your listing meets these criteria. Though they may seem obvious and easy, you'd be surprised at how many listings don't do these simple things that encourage easy showing of your home. As your agent (or check for yourself) to see if your property is "buyer-friendly." In a market where there are so many options for buyers to choose from, combined with buyers who are part of the internet's "instant gratification" generation, it may make the difference between getting your house shown and not.

Obviously you want to make sure your property is listed. But ask your agent to send you the listing (or even just search for it yourself on any of the major broker or agent sites, like this one. Here's a sample of what a property will look like in the MLS (this is one of my recently sold listings.) There are 5 simple yet very important things to check:

1. Photos - Does the listing have multiple photographs (either via still shots or a "virtual tour")? On the top left corner of the sample listing, you can see a small camera with a number next to it (the stills) and a movie reel (the virtual tour). I'm partial to the stills because they load more quickly, which is critical for the internet-savvy buyer. There are also some really bad virtual tours out there that focus more on the music and zooming rather than actually showing the property. A lot of photos is an absolute must--buyers assume something is wrong with the property if there is just an outside shot (or even worse, no photo at all!)
2. Directions - You'd be shocked how often directions are incorrect. I often send my buyers on a "drive by" of properties before we go see it together. If the directions are wrong, and they're already out driving and can't easily mapquest it, they will quickly give up on your property. (A corollary to this: if your agent is doing open houses for you, check the ad that runs on the day of the open house.)
3. The description ("Remarks") - What does your agent say about your property? Is the description accurate? Do you think it presents the most positive features? Are there typos or spelling mistakes? What does that say about their attention to detail?
   
4. Showing Instructions - This isn't publicly viewable so you will have to ask your agent to print out their own version of the listing for you. It tells a buyer's agent where and whether to call before showing, and where to find the lockbox. It's important that it not be too difficult to arrange viewings (e.g., "Call two owners and agent prior to showing. Show only M-F 9-5pm.") If I have to make 3 phone calls to coordinate a visit--not to mention coordinating my schedule and my client's--versus the unit across the street from yours that says "Go anytime," which one do you think will be the one we will visit when we just have time for one or two showings? Or if a client calls at the last minute--as they often do--to say "Do you have time today to show me some units in X development?" Also, ask your agent where the lockbox is, and if it's on a fence with 10 other lockboxes, as is often the case of a condo building, make sure it's clearly labeled as belonging to your agent and/or your unit. Better yet, go check out that fence yourself and make sure you can tell which one goes to your unit. If you can't, chances are a buyer and their agent can't either. If you can't find the box and the key, then how can the person that wants to show it to a buyer? It's so frustrating to have planned all week to spend the afternoon with a client, then we can't find your lockbox. I call your agent but get their voicemail. If I can't find the box and key, unfortunately I have no choice but to move on, as there are plenty of other units out there.
5. Online presence - is your home listed on sites other than the MLS? There are dozens of places that agents can list your home for free, if they take the time to do it. Go to Craigs List, Yahoo real estate, GoogleBase, Trulia, and other sites and search for your home. Study after study show that the majority of homebuyers start their search on the internet, so you want to cast as wide a net as possible. If you can't find it, ask your agent why not.

These are just a few of the ways you can make sure that you raise the expectations bar for the quality of services you receive. To hear more about how listings agents can differentiate themselves, please contact me.

Listings & Dedicated Websites

Most people don't realize that agents have basically complete control over how they market--or don't market--their clients' listings. It's important to ask your agent what, exactly, you'll be getting from them. Of course anyone who works with a reputable broker has the usual fluff--listing in Multiple Listing Service, realtor.com, Broker "X" websites. Unfortunately most of the sites they list automatically populate from the MLS. You need a broader exposure on the web, where 80% of buyers begin their search.

I have a host of standard services that I provide to my listings, including

- Multiple photos in the MLS (Agents used to have to pay for these, but now up to 20 photos are FREE...yet, it's embarrassing to the industry how few agents take the time to upload them.) Almost every buyer I work with says that if there are no photos, they skip the listing, assuming that the seller is hiding how bad the house must be.

- A home warranty that transfers to the buyer. Buyers are nervous, and want to know that the home's systems won't fail right after they move in.

- Postcards to the neighborhood and/or area renters announcing the listing.

- A professional photographer. The majority of agents have neither the equipment nor the training that a professional photographer has, and you need your home showcased in the best possible light.

- Professional printing of brochures. A xerox copy isn't going to stand out amongst 20 other brochures the buyer picked up that day.

- Professional staging consultation. I don't try to be a "jack of all trades." I hire professionals to do a professional job.

- And my newest service, dedicated websites. Check out one of my sold listings at www.eastview914.com . These sites provide a showcase for your home beyond the 3 lines of text in the MLS.

If you're thinking about listing your home, contact me for information about some of the OTHER services I provide to my listings, too!

What Happens at Settlement?

Honestly, very little. Mainly you sign your life away to the bank that gave you the purchase money. But having a good settlement attorney can certainly make your life--and your home purchase--a lot easier. Here's a good article from the Post.

Buyers have the right to choose the transaction's settlement attorney, who represents neither the purchaser nor the seller. (I know, it's a little weird...the attorney represents the transaction itself.) I know in some states it's common for buyers and/or sellers to hire their own attorneys, but I haven't been to one yet in this area where that's been the case.

A good agent should have relationships with one or more reliable settlement attorneys. And yes, there are often "relationships" between the large brokerages and settlement firms, as noted in this article. I wish I knew more about the fee sharing -- I know I don't see a dime of it, and I'd be crazy to risk a good client relationship over something like that anyway. Who wants to work hard for months on a deal only to risk having it blow up at settlement?? I recommend settlement attorneys based on their thoroughness, reliability, and availability to answer questions along the way, (and of course fees.)

You designate your choice of settlement attorney when you write the offer, though, so it pays to be educated on this topic earlier than later in your home-buying process. And, as always, it helps to be working with an agent you trust who can recommend qualified people for your "team."

Tax Benefits of Home Ownership

With tax day quickly approaching, I want to give a quick overview of the tax benfits of homeownership--perhaps when you see that big check you're writing to the IRS you'll start exploring that home ownership idea again!

Most people know there are financial benefits to owning over renting, including the deduction of mortgage interest. But few people really understand how to calculate that savings, and fewer are aware of some of the other financial benefits and tax incentives. I'll cover rules of thumbs on how to calculate the tax-deductibility of interest in a future post, but I'll lay out here a few of the less commonly discussed tax benefits.

Buying a home provides lots of deductions. Mortgage interest (up to $1 million on a first and second home, subject to certain limitations), as well as real estate taxes. Points paid in connection with a mortgage to purchase, construct, or improve your main home are also tax deductibe. Seller-paid points are deductible, too, but the amount deducted reduces your home's basis.

Basis is the amount you've spent on your home. It includes the purchase price, plus improvement costs (though not repairs) you incur while you own it. Minor repairs don't need to be tracked, but improvements which are more permanent in nature (likely to last beyond one year), should be carefully tracked and receipts kept. If you make the same improvement more than once, only the most recent ones adds to your basis. Receipts and records of improvements such as: Room additions, fences, exterior lighting, storm windows/doors, wiring upgrades, built-in applicances, new carpets, bathroom and kitchen upgrades, landscaping, security systems, roofs, HVAC systems, lighting fixtures, water heaters, insulation, and flooring should be catalogued and added to the basis of your home.

When you do sell, if you've lived in the property 24 of the last 60 months (note: you do not need to own the property for 60 months), then $250,000 of profit ($500,000 if you're married) are tax-free. Yes, tax-free! How many other investments do you know that the federal government doesn't tax?! And you don't even have to "roll over" the profits into another home (though many people do.) To calculate your gain, subtract your basis (purchase price + improvements) from the net sales price (sales price net of selling costs like commissions). So tracking receipts can save you big bucks on taxes if you're close to the threshold.

As an aside, unfortunately, a loss on the sale of your home is not tax dedcutible, so you're on your own for that one. So if the value of your home (less selling expenses) is not enough to pay off your mortgage, the government is not going to help subsidize that loss.