Are's Blog

Woodburn Village Sales Statistics 2009 YTD

Mon, 17 Aug 2009 13:15:27 -0500

There has been a high level of activity in Woodburn Village this year. Unfortunately, a majority of the sales are foreclosures and short sales. In the few regular re-sales that did take place the prices and appraisals were heavily influenced by the distressed sales. 19 homes sold to date this year. 3 were regular re-sales, 11 were bank sales and 5 were short sales.

Homes on average sell for 95.4% of the original list price. They sell for 97.4% of the final list price. So, if you are looking to purchase in Woodburn odds are that you will be paying close to the current asking price.

Woodburn Village Sold YTD: http://matrix.mris.com/Matrix/Public/Email.aspx?ID=32375742559

If we look at the number of pending home sales in Woodburn Village as of 08/10/2009 we get a number of 10. They range in asking price from $125,000 to $220,000. 7 of these are short sales that may or may not close - the success rate for short sales seem to have gone up a bit lately though.

Four homes are currently available for sale in Woodburn Village. They range from a 2 bedroom short sale at $125,000 to a three bedroom short sale listed at $210,000. If you would like the current list of homes for sale, please email me.

To get a better understanding of the overall price development in the neighborhood I have put together a small graph with the various models separated out. This makes it much easier to see what the trend is as the mix of homes sold continuously changes skewing the min, max and average sales price.

As can be seen from the above graph, the average sales price is trending downwards and are back to 2003 levels. Based on the last few sales, the number of pending properties and the limited supply I do not see the prices currently going much lower. Rather, if the current market conditions persists towards the end of the year, the price should trend upwards (average for the year will still be down quite significantly.) This could change if there are a lot of foreclosures coming up and would also depend upon whether appraisals will keep coming back low.

Looking at the upcoming foreclosures on Realist I found 2 pre-foreclosure, 4 upcoming auctions and 6 bank owned properties. Most of the bank owned ones may already have been listed or already be under contract/sold.

Moving on to rentals the prices have gone down a bit on average. There are currently 4 properties listed for rent ranging from $1,095 for a 1br/1ba to $1,500 for a 2br/1.5ba. As can be seen on the below graph, the rents for most of the units went down a bit this year. Rents are pretty seasonal so the average for the year could change by the time we get towards 2010.

For investors the GRM is getting better and better. The rents may be stagnant but with the price fall the first few months this year the ratio of rents to purchase price are now back to 2002 levels.

Woodburn Village is a great neighborhood and the prices have not been this low in many years. Coupled with the low interest rates and the potential to qualify for the $8,000 tax credit this is an excellent time to buy. If you would like to discuss selling or purchasing in Woodburn Village please give me a call.

Are Andresen
Broker, Soldsense Realty LLC
"Your sixth sense in real estate"

SHOULD I PAY MY MORTGAGE?

Tue, 23 Jun 2009 22:09:16 -0500

Just found this great article on how to approach a possible short-sale or foreclosure. A long article but extremely useful.

Via Richard Zaretsky, Florida Real Estate Attorney (Richard P. Zaretsky P.A. ):

This seems to be THE NUMBER ONE question I get. Unfortunately there are several answers and which is correct for you depends on the Circumstances. I will address the common scenarios in this article.

Policy in my office is to never "tell" - as in "instruct" - our borrower client to pay or not to pay their mortgage. Paying or not paying has a lot of collateral effects and the borrower needs to know what they are before making the decision. We don't make the decision for the borrower (our client) because the effects of paying or not paying are not going to affect me - but they will affect the client, so it is the client that must make the final decision.

Let me make one issue clear - when we are hired to help facilitate a short sale or loan modification it is far easier for us to negotiate with the lender if the payments are late, but it is almost never a requirement. The exceptions to which will be discussed later in this article. Additionally, internal rules change at the banks constantly. A new client came in totally frustrated. They called their bank to help with a modification and the bank said they could not address their situation until they were at least 60 days late. So the near perfect (800+) credit score couple stopped paying for 60 days and then called the bank back. Now the bank says that because they are 60 days late they cannot speak to them about a modification! The point is, if you don't have to be late then why voluntarily create a late payment credit history that will adversely affect your credit-dependent life almost immediately and for years to come?

SO LET'S GET INTO IT - Danger - this is a long article and it covers a lot of ground!

Short Sale:

A borrower that is current and contemplating a short sale wonders if they should stop paying their (first) mortgage. They are upside down and until now they have been current. However they are paying the mortgage at a cost of not paying other bills. (Other or different facts may be that they are paying all their bills but taking the money from savings or a pension fund to make those payments, or they are borrowing money from another equity loan).

Generally, it is not a good idea to get into debt to pay your mortgage, unless you have a solid plan to both (i) keep the mortgage current and (ii) repay the additional indebtedness you are creating. It is not like taking from one pocket to put into another - it is more like taking from someone else's pocket to pay your bills. This would include credit card loans as the source of funds. It all has to be paid back, so if you don't have a plan to pay it back, don't borrow it in the first place! You are only digging a bigger hole for yourself and making it harder to get out of the hole.

If you are taking from your pension or savings money, again you better have a rock solid plan to get that money back into those accounts, or there is no sense in giving up that hard earned and usually irreplaceable retirement money, especially considering these are monies that are usually protected from creditors' judgments including those your mortgage lender could obtain (deficiency judgment)..

Of course the "amount" of money you have "in reserve" comes into consideration. If you have 2 million dollars in reserve and you decide to spend 10% of it to keep the loans current until you can short sale the property, that plan has a basis that the 10% is not going to make a difference in the way you run your life over the remaining time you have left as a mere mortal.

Sometimes, but rarely, we run into a lender that says they won't approve a short sale or modification because the borrower is current with his payments. When we have encountered this it is in most cases associated with a government backed loan, (but later on we will show you why this may be motivated by plain greed on the part of a loan servicer). A properly compiled financial snapshot of the borrower should show why they are current and what will happen if the short sale or modification is not approved.

Your decision on how to proceed should be based on what goal you are trying to accomplish and how you plan to get to that goal (see how to determine your goal).

Mortgage Modification:

Apart for some voluntary government programs regarding (Fannie Mae or Freddie Mac) government involved mortgages, I know of no lender that absolutely will not deal with a borrower who is current with their mortgage payments. Lenders deal with all sorts of situations and "absolutely not" is just not in the vocabulary. A typical borrower calling a lender may hear that they must be late, but that is more of a "vetting" statement than an absolute policy.

The exceptions are some government program guides for modification. The first step to seeing if your loan comes within this exception is to see if it is a Fannie Mae or Freddie Mac loan. You can do this online at the Making Home Affordable site. Many servicers and lenders whose loans are not "government backed" are now choosing to follow this government plan (known as the Home Affordable Modification plan or more affectionately called the "Obama Plan" - see below) for the simple reason that they are being compensated by the government for each successful modification they execute within its guidelines, and either the servicer or lender receive a residual bonus for the loan staying current under the modification. In these cases we have seen non-government backed loans insist on the borrower being late to qualify for modification as well. What is confusing on this point is that when the plan was introduced it included modifications (and compensation for such) for current loans as well. However, we are told time and time again from the lenders directly that they must be late to qualify. There is no such rule in the guidelines.

While this is contrary to what has been published by the government about the plan, keep mind that following the plan and any of its various aspects is entirely voluntary and up to the Lender or servicer. They can pick and chose from this plan as they see fit for their own internal reasons. Here is a more interesting twist - a servicer that modifies a delinquent loan is paid more under this incentive plan than if the borrower were to modify while the loan is current! If the borrower is current, the servicer can receive up to $3,500 in incentive fees from the government. If the borrower is delinquent, the servicer can receive up to $4,000 in incentive fees from the government. Thus it seems that it pays ($500 to)the servicer to encourage a borrower to be delinquent!

We often see a client that fits the profile for modification under this government plan. Some of these plans are said to require that to be qualified the borrower must be late 60 days (see Guidelines page 5 at bottom). But in fact, being late is not a requirement, but only one factor of many (see Guidelines page 16 at the top - "However, a NPV (net present value) positive result is not necessary to qualify a loan for a Home Affordable Modification"). If the goal is to qualify under such a plan as put in place by the lender at that time, then to accomplish that qualification the borrower may need to make themselves late, but that cannot be determined in a 2 minute telephone call with a lender representative. I cringe when we go this route because just like these "plans" came into existence, I can see them change the plan thus leaving the now 60 day late borrower with ruined credit scores that occurred needlessly.

Generally about a quarter of our modification clients never go late and still get a modification offer from the lender. However, keep in mind that nearly all lenders put up as their first line of defense the policy that going late is a necessity to qualify. We can only speculate this is done to deter the enormous inflow of loan modification requests from borrowers that would come in if this was NOT said to be a requirement. It also helps address those in the most dire amount of need first.

The Pro's and the Con's:

The general rule of thumb we use is if you can pay your mortgage and maintain your life's necessities, you may consider keeping the loan current, taking the points in this article into account. However, if you need to choose between buying food or medications and paying the mortgage, the decision that should be made is clear: your life necessities take precedent.

Here are the pro's to consider when in the short sale or modification process. Keeping the loan CURRENT has the following benefits:

a) Your credit score is not dinged until the short sale transaction occurs (and not at all in most loan modifications) and your overall credit score reduction will be minimized, and b) You will remain in good standing with your lender without worry of penalties, fines, or a foreclosure.

The "con's" of keeping the loan current are that:

(a) You will be out of pocket for the monthly mortgage payment (monies which you may or may not need to survive), and

(b) Your lender may question the sincerity of your claimed hardship, and you may be spending funds that would otherwise be potentially (but rarely) forgiven by the lender. In addition, occasionally the lenders in a short sale may require a lump sum payment above the sale amount from the borrower to forgive the debt. Coming up with that money is sometimes the difference between a deal or no-deal. If you can put your mortgage payments aside and stockpile them, it will help you cover that potential lump sum.

A similar pro/con approach applies to GOING DELINQUENT with your mortgage. In favor of going late is being able to keep the unspent mortgage payments in your pocket (or applied towards other necessities as the case may be) in which event your hardship may appear more sincere to the lender. On the other hand, there are very real consequences to going late with your mortgage payment:

a) You WILL incur late fees and other penalties on the late interest. Usually this is not a large issue as it is part of the forgiven debt in a short sale and usually forgiven in a modification, but it is something to consider,

b) Your credit score downgrade will be harder as you will compound the short sale hit with a 30 day late, 60 day late, etc, (and if this is a modification you will make a non-negative credit score event turn into a negative credit score event), and

c) You will eventually cross a threshold (typical industry standard of 90 days late) where the lender will initiate a foreclosure action in State court.

Going Late on Your Second Mortgage:

Often a borrower comes to us and says that they are late on the first mortgage but current on the second mortgage. The second mortgage is almost always totally upside down with no equity left in the property to secure that financial obligation. The borrower says they paid the second mortgage because they had the money for the smaller payment (second) mortgage but not the larger amount first mortgage. Our answer - if you don't pay the first mortgage they are going to foreclose it and then paying the second mortgage is not going to save your house.

Lately we have seensecond mortgage lenders with 90 day late mortgages skipping the foreclosure process (since if they cause a sale of the house it is sold subject to the first mortgage, and thus any buyer still has to pay the first mortgage, which usually makes no economic sense). Instead the second mortgage lender sues the borrower on the promissory note only and gets a money judgment that they can keep for a long time (20 years in Florida).

So if a client says they are paying the second mortgage but not the first mortgage, we usually suggest they look at the common sense approach and what are they likely to gain or lose by doing so.

Effect of Non-Payment / Late Payment on Credit Score:

This is a big question and nowhere is the answer clear cut. Definitely if you get a report on your credit that you were "late" (in mortgages that means 30 days or more late) then your credit has been "dinged" and your credit score is adversely affected.

Credit scores are used for many purposes, including the amount of credit you can get on a credit card, the interest rate you get on credit cards, car loans and mortgages, your ability and price of life and disability insurance and even car or house liability insurance, your ability to get a certain type of job, or to establish business relationships, and your ability to rent a place to live, to name a few. So credit scores are important. If you want to better understand credit scoring you can see the Federal Reserve Board's Report to Congress from April 2008.

How much your credit score is affected by a 30, 60 or 90 day late report depends on a lot of other factors about your financial well being, your past credit history and myriad other issues. Generally though we have our clients reporting drops of as little as 50 points for a no late payment short sale or up to 150 points for a short sale with multiple late payment reports. We have seen an 800 go to 720 and we have seen a 740 go to 500. It all depends on too many uncontrollable credit issues to be able to give a formula that works for everyone. For a discussion on credit scores this our past article.

Confused?

Rightfully so. The fact of the matter is that we are in uncharted waters and there is no industry standard for Short Sales or Loan Modifications, which makes pinning down exactly what the Lenders may do near impossible. Pile on the fact that there are a large number of lenders out there and each have their own internal policies which change as readily as the tides. The best anyone can hope to do is make an educated decision, set a plan, and be ready for anything.

Copyright 2009 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at SHORT SALE AND LOAN MODIFICATION TABLE OF CONTENTS

Idylwood Towers Market Update 2009

Tue, 09 Jun 2009 13:27:36 -0500

It seems investors and homeowners are finally realizing the value of Idylwood Towers this year. There has been 6 homes sold in the first 5 months of 2009. The lowest price was a 1br/1ba at $190,000. The maximum price was an updated 3br/2ba property at $315,000.

The average price YTD for a 1 bedroom unit is $190,000. The average price YTD for a 2 bedroom unit is $206,250. As mentioned earlier, a 3 bedroom unit sold for $315,000.

Homes on average sell for 89.8% of the original list price. They sell for 96.7% of the final list price. So, if you are looking to purchase in Idylwood Towers it is important that you work with a Realtor that knows the buildings and can help you determine if the asking price is reasonable.

Idylwood Towers Sold YTD: http://matrix.mris.com/Matrix/Public/Email.aspx?ID=31189727011

If we look at the number of pending home sales at Idylwood Towers as of 06/03/2009, we get a number of 4. Two of those are 1 bedroom units and two are 2 bedroom units. One of those appears to be a short sale.

Three homes are currently available for sale in Idylwood Towers. They are all 1-bedrooms ranging in price from $165,000 to $225,000. If you would like the current list of homes for sale, please email me.

To get a better understanding of the overall price curve in the neighborhood we can take a look at the sales history of the various models. As there has been few sales of the 1 and 3 bedroom units, the price trend is probably most accurate for the 2 bedroom units.

As can be seen from the above graph, the average sales price is still trending downwards and are back to pre 2004 levels. The three bedroom model seems to keep its value well but will need more sales to see what the long-term difference is in price between that and e.g. the 2 bedrooms. There is interest in units for sale in Idylwood Towers and reasonably priced units do sell quickly.

The current market situation could change if there are a lot of foreclosures coming up, so looking at the upcoming foreclosures on Realist, I found 1 pre-foreclosure, 0 upcoming auctions and 0 bank owned properties. Some bank owned properties have already been listed and sold over the last few years. So, there does not seem to be a flood of foreclosed on units coming up over the next few months.

Moving on to rentals, the prices have come down a bit from last year. 4 properties rented so far this year. There are currently 6 properties listed for rent ranging from $1,200 for a junior 1br/1ba to $1,850 for a 3br/2ba. As can be seen on the below graph, the rents have declined for all the models (remains to be seen for the Jr 1br.) Rents are typically a bit higher in the summer so we may see a bump in the average by the time we get to the end of the year.

For investors the GRM is flattening out. Even though prices have kept falling the rents have also fallen.

Idylwood Towers is a great place to call home and the prices are now lower than what they have been for a long time. Coupled with the low interest rates and the potential to qualify for the $8,000 tax credit this is an excellent time to buy. If you would like to discuss selling or purchasing in Idylwood Towers please give me a call.

Are Andresen
Broker, Soldsense Realty LLC
"Your sixth sense in real estate"

Gates of McLean Market Update Summer 2009

Thu, 04 Jun 2009 13:26:44 -0500

There has been a reasonable market activity at the Gates of McLean this year. It seems investors and homeowners are realizing the value of the community - on the last few homes I inquired or put in offers on we have competed with multiple offers with the sales price ending up at or above asking price. There has been 7 homes sold in the first 5 months of the year. The lowest price was a 1br/1ba at $195,000. The max price was a 3br/2ba property with granite countertops at $354,750.

The average price YTD for a 1 bedroom unit is $207,500. The average price YTD for a 2 bedroom unit is $301,600. As mentioned earlier, one 3 bedroom unit sold for $354,750.

Homes on average sell for 91.1% of the original list price. They sell for 94.2% of the final list price. So, if you are looking to purchase in Gates of McLean, it seems that you will be able to get a slight break in price. However, the market has picked up lately and unless you are willing to purchase one of the units up against I-495, you may have to pay closer to the asking price than the statistics indicate.

Gates of McLean Sold YTD: http://matrix.mris.com/Matrix/Public/Email.aspx?ID=31159444269

If we look at the number of pending home sales at the Gates of Mclean as of 06/02/2009, we get a number of 3. Two of those are 1 bedroom units in the low $200's. One of those appears to be a short sale.

Four homes are currently available for sale at the Gates of McLean. They are two 1-bedrooms at $240,000 and two 2-bedrooms in the low $300's. If you would like the current list of homes for sale, please email me.

To get a better understanding of the overall price curve in the neighborhood we'll need to do some comparison on a model basis. As there has been two sales of the Danielle model(1br) and two sales of the Dalton model (2br) I put together a graph showing those sales in the neighborhood over the last couple of years. It makes it much easier to see what the trend is as the mix of homes sold continuously changes skewing the minimum, maximum and average sales price. I left out the 3 bedroom model as the price has varied a lot on that model.

As can be seen from the above graph, the average sales price is trending downwards and are back to pre 2004 levels. One bedroom models could be purchased from the developer from the low $200's back in 2003, so many are upside down at this point. There is interest in the Gates of McLean homes for sale and reasonably priced units away from I-495 do sell quickly and with multiple offers.

The current market situation could change if there are a lot of foreclosures coming up, so looking at the upcoming foreclosures on Realist, I found 0 pre-foreclosure, 3 upcoming auctions and 4 bank owned properties. Some of the bank owned properties have already been listed or are already under contract/sold. So, there does not seem to be a flood of foreclosed on units coming up over the next few months.

Moving on to rentals, the prices have remained pretty steady, especially for 2 bedroom units. 20 properties rented so far this year. There are currently 16 properties listed for rent ranging from $1,200 for a 1br/1ba to $2,400 for a 3br/2ba. As can be seen on the below graph, the rents for one bedrooms has declined while it has increased slightly for 2 bedroom units. Rents are typically a bit higher in the summer so we may see a bump in the average by the time we get to the end of the year. Due to the large amount of non-owner occupied units (likely more than 50%) there will continue to be a competitive rental market at the Gates.

For investors the GRM is getting better and better for 2 bedroom units. Due to the 1 bedroom falling rents the GRM is about unchanged from last year despite falling prices.

Gates of McLean is a great neighborhood and the prices are now often lower than what the developer sold them for back in 2003. Coupled with the low interest rates and the potential to qualify for the $8,000 tax credit this is an excellent time to buy. If you would like to discuss selling or purchasing at the Gates of McLean please give me a call.

Are Andresen
Broker, Soldsense Realty LLC
"Your sixth sense in real estate"

Pimmit Hills Summer 2009 Update

Wed, 03 Jun 2009 12:34:22 -0500

There has been reasonable activity in Pimmit Hills this year. It seems like investors and homeowners are realizing the value of the community. The last few offers I made on Pimmit Hills homes competed with multiple offers from other competing agents with the sales price ending up at or above asking price. There have been 16 homes sold in the first 5 months of the year. The lowest price was a 3br/1ba rambler at $279,900. The max price was a 5br/4.5ba new construction foreclosure at $720,000. The average price for all homes sold was $374,646.

Homes on average sell for 94% of the original list price. They sell for 99.3% of the final list price. So, if you are looking to purchase in Pimmit Hills odds are that you will be paying close to the current asking price.

Pimmit Hills Sold YTD: http://matrix.mris.com/Matrix/Public/Email.aspx?ID=31152557099

If we look at the number of pending home sales in Pimmit Hills as of 06/02/2009 we get a number of 22. This indicates quite a jump in the activity as the average closing time is in the 45 day range. 10 of these are short sales though, so the majority of these may not be closing. On the other hand the success rate for short sales seem to have gone up a bit lately.

Eleven homes are currently available for sale in Pimmit Hills. Of these only three are listed below $400,000. If you would like the current list of homes for sale, please email me.

To get a better understanding of the overall price curve in the neighborhood we need to compare apples to apples. I have therefore tracked sales of 3br/1ba 1 level ramblers in the neighborhood over the last couple of years. It makes it much easier to see what the trend is as the mix of homes sold continuously changes skewing the min, max and average sales price.

As can be seen from the above graph, the average sales price is trending downwards and are back to 2003 levels. Based on the last few sales, the number of pending properties and the limited supply I do not see the prices currently going much below $300,000. Rather, if the current market conditions persist, the price should trend upwards. This could change if there are a lot of foreclosures coming up, so looking at the upcoming foreclosures on Realist I found 1 pre-foreclosure, 3 upcoming auctions and 6 bank owned properties. Most of the bank owned ones have already been listed or are already under contract/sold.

Moving on to rentals the prices have remained pretty steady. There are currently 7 properties listed for rent ranging from $1,700 for a 4br/1ba to $5,500 for a 6br/8ba(...). As can be seen on the below graph, the rents for a typical 3br/3ba 1 level rambler has remained at about $1,550. Rents are pretty seasonal so the average for the year should get back to normal when we get some good summer months in to bump the average a bit.

For investors the GRM is getting better and better. The rents may be stagnant but with the price fall the first few months this year the ratio of rents to purchase price has been getting better and better and are now back to 2002 levels.

Pimmit Hills is a great neighborhood and the prices have not been this low in many years. Coupled with the low interest rates and the potential to qualify for the $8,000 tax credit this is an excellent time to buy. If you would like to discuss selling or purchasing in Pimmit Hills please give me a call.

Are Andresen
Broker, Soldsense Realty LLC
"Your sixth sense in real estate"

The $8,000 free money bonanza

Mon, 23 Mar 2009 12:10:55 -0500

Based on some websites I have run into lately, there seems to be some misunderstandings in regards to the $8,000 homebuyer credit.

The confusion may have been fuelled by Mrs. Barbara Corcoran on NBC's Weekend Today last Sunday. On the program she stated to Jenna Wolfe that the $8000 could be used as part of the down payment of a qualifying purchaser.

While creativity is all well and good, this is incorrect. You have to have closed on the home and be the new owner (or have moved into a home you are building) BEFORE you can claim the credit (see section 3 below.)

Don't mean to rehash the rules again here - plenty of places doing that already like http://www.tracyrealestateblog.com/2009/02/first-time-buyers-get-8000-tax-credit.html

But, a couple of clarifications:

1) There is NO MINIMUM DOWNPAYMENT required. In earlier versions of the bill (that was not enacted), there were provisions that a minimum of 5% down payment is required. The bill that was passed in the end did not have such a requirement. So, no problem using FHA and get the credit (after closing...)

2) It is a TAX CREDIT, not a deduction. If you don't pay any taxes and purchase a home, you can get up to $8,000 back in the form of a check. If you closed on the home before January 1, 2009 you may still qualify for the earlier $7,500 tax deferral. However, as it implies, that money has to be paid back over time.

3) The possibility of a sizable check from the United States Treasury has made some get a bit, ehm, "creative". So, they apparently have filed their taxes, taken the deduction AND received their money BEFORE they purchase the home - even using it as a down payment. NO NO NO - YOU CANNOT DO THAT!!!! Please look at the IRS form and read the very clear instructions. From the 5405 form:

Enter the date you acquired the home. This is the date you purchased it (or the date you first occupied it if you constructed your main home).

(Yes, there are special rules that may allow you to purchase a home this year and get the deduction on your 2008 tax return...)

5) You will have to keep your home at least 3 years.

6) If you make too much money you will not qualify (if you make above $75,000 per individual/$150,000 per couple, your credit will be reduced and quickly goes to $0 as you move up the pay scale.)

There are lots of other rules and exceptions. Contact me for more details.

Can't pay or won't pay?

Tue, 24 Feb 2009 14:16:27 -0600

From The Economist Feb 21^st article title "Can't pay or won't pay?":

"Some 5M homes have entered foreclosure in the past three years. Credit Suisse estimates that over 9M more will enter the process in the next four years. (In normal times, new foreclosures run less than 1M a year.) Mr Obama predicts his plan will prevent up to 4M foreclosures. In a separate initiative, up to 5M borrowers will be able to refinance their mortgages at lower rates even if their equity is less than the 20% usually required by Fannie Mae and Freddie Mac, the now nationalized mortgage agencies.

Previous, less ambitious, efforts have flopped. George Bush's first plan aimed to help 240,000 delinquent subprime borrowers refinance their debts into government-backed fixed-rate mortgages. Only 4,000 did so. A Democrat-inspired $300 billion plan to guarantee 400,000 mortgages attracted just 517 applications, as lenders balked at the requirement that they first write down the principal. Private-sector programs have achieved higher numbers, but their success is mixed. Of 73,000 loans modified in the first quarter of last year, 45% were again delinquent eight months later."

As the article puts it later - the question is not only if borrowers can afford the payments on their mortgage - it is if they want to make the payments at all. With millions of homeowners having negative equity, and few or no ramifications for non-payment, homeowners that can afford the payments are defaulting and walking away as well (see my Buy and Bail blog entry.) A lowered credit score does not seem to be deterrent enough these days - and with a spouse there may be ways to work around the damage.

My solution is simple:
Set up a task force to prosecute criminally real estate agents, mortgage brokers, lenders and homeowners that aided in and committed loan fraud (remember those notices on the mortgage papers about it being a federal crime to lie on the application?) For people that can afford the mortgage but choose to walk away, convert the outstanding loan balance to a judgment against the person and their other possessions. For people that were mislead, defrauded or is in a bad situation due to unforeseen circumstances, show compassion by allowing all or part of the remaining debt to be forgiven or deferred after a foreclosure or personal bankruptcy.

A bankruptcy court should be allowed to (and probably already is allowed to) discharge the remaining balance on a loan after a foreclosure if the person subsequently files for bankruptcy. The bankruptcy court can also force the sale of a home I believe. The nonsense that a bankruptcy judge should be able to write down the balance on an existing loan (and then keep the home) goes against all contractual law and what capitalism is about.

Enough nonsense - No to more bailouts and yes to larger sticks to make sure the unethical individuals among us have incentive to behave. The market will take care of the rest.

Woodburn Village Sales Statistics 2008

Tue, 13 Jan 2009 20:37:28 -0600

Woodburn Villageis located about where Gallows Road intersects with I-495, tucked behind Fairfax Hospital. It is convenient to major roads like I-495, I-66, Rt-29 and Rt-50. The nearest metro stop is up Gallows Road to the Dunn Loring/Merrifield metro. Metrobus is available from Gallows Road and Fairfax Hospital.

Woodburn Village was built in the late 1960's and is a garden style community. Throughout the community and nestled between the buildings are landscpaed grounds with grill and picnic areas, paly areas and walking paths. There are about 600 condominium units total. Tennis courts, basketball courts and a swimming pool.

The community has 1, 2, 3 and 4 bedroom units. The buildings are 4 stories with a common laundry room and individual storage units in the basement. The reasonable condominium fees include all utilities.

In 2008, a total of 42 units were sold in the MLS. 4 units sold were one bedroom units, 31 units sold were two bedrooms units, 5 units were three bedroom units and 2 four bedroom units sold. The price range of solds start at $118,000 for a 2 bedroom and tops out at a 4 bedroom unit sold for $265,000.

Like most places in the area, the prices have kept dropping steadily over the last few years. There were quite a few foreclosures in 2008. Due to the lower prices and the convenient location the community still offers a great value.

At Woodburn Village a typical rent for a 1 bedroom unit is in the $1,100-$1,200 range and 2 bedrooms at $1,300-$1,400.

For more detailed information on each sale, please click on Sales Details 2008 for Woodburn Village or send me an email at are@tysonsliving.com .

As you can see from the GRM graph - now is a great time to purchase investment real estate. With falling prices, stable/increasing rents and low interest rates the time is better now than in many years.

Are Andresen, Broker
Soldsense - your sixth sense in real estate

Pimmit Hills Sales Statistics 2008

Tue, 13 Jan 2009 20:09:10 -0600

Pimmit Hills is ideally located in Falls Church minutes from where you want to be. Minutes to the north is Tysons Corner with great shopping and entertainment. It is also one of the major employment centers in the area with major presence of financial and defence companies (Capital One, SAIC, MITRE, Fannie Mae etc.)

Pimmit Hills is further surrounded by popular destinations like McLean and Falls Church. Washington DC is less than 10 minutes away and Dulles airport is about 15 away via the Dulles Toll Road (Rt 267.)

Built in the 1950's, the 1,500+ single family homes typically have a quarter acre lot. Home prices range from the low $300's for a rambler with 3 bedrooms and 1 bathroom and upwards to $1M homes.

In 2008, a total of 45 homes were sold in the MLS. They took an average of 112 days to sell. The sold homes range from a 4br/1ba rambler at $281,000 to a 6,300 sq/ft, 5br/4.5ba colonial that sold for $935,000.

Like most places in the area, the prices have dropped steadily over the last few years. The community still offers a great value in an excellent location. If you want an affordable home with a yard and want to live close to Tysons Corner, Pimmit Hills is probably your best bet.

In Pimmit Hills, typical rent for a 3br/1ba rambler is in the $1,500-$1,600 range.

For more detailed information on each sale, please click on Sales Details 2008 for Pimmit Hills or send me an email at are@tysonsliving.com.

Are Andresen, Broker
Soldsense - your sixth sense in real estate

Fountains at McLean Sales Statistics 2008

Tue, 13 Jan 2009 19:41:21 -0600

Fountains at McLean is located in McLean, Virginia. Located in Tysons Corner, it is ideally situated next to one of the major employment centers in the area.

The Fountains at McLean consists of multiple buildings of two styles: mid-rise and garden. The mid-rise style has controlled building access and underground parking available. The garden-style has open hallways and there is surface parking only. There are numerous 1 and 2 bedroom models available.

In 2008, a total of 22 units were sold in the MLS. 15 units sold were one bedroom units and 7 units sold were two bedrooms units. The price range of solds start at $215,000 for a 1 bedroom and ends at a 2 bedroom unit sold for $357,000.

Like most places in the area, the prices have kept dropping steadily over the last few years. The community still offers a great value in an excellent location.

At the Fountains at McLean, a typical rent for a 1 bedroom unit is in the $1,200-$1,400 range and 2 bedrooms at $1,600-$1,700.

For more detailed information on each sale, please click on Sales Details 2008 for Fountains at McLean or send me an email at are@tysonsliving.com .

Are Andresen, Broker
Soldsense - your sixth sense in real estate

Gates of McLean Sales Statistics 2008

Tue, 13 Jan 2009 19:23:17 -0600

Gates of McLean is located in McLean, Virginia. Located in Tysons Corner, it is ideally situated next to one of the major employment centers in the area. A new metro station is planned within walking distance.

The community is gated and has well kept grounds. There is a clubhouse, exercise room, pool, walking paths, a sports court and picnic areas. The Gates of McLean consists of multiple buildings of two styles: mid-rise and garden. The mid-rise style has controlled building access, heated hallways and underground parking available (does not come with all units.) The garden-style has open hallways and there is surface parking only. There are numerous 1, 2 and 3 bedroom models available. All the units have an open floor plan with open kitchens and they typically come with a full-size washer and dryer.

In 2008, a total of 20 units were sold in the MLS. 6 units sold were one bedroom units and 14 units sold were two bedrooms units (one was a 3 br unit converted to a 2 br.) The price range of solds start at $223,000 for a 1 bedroom and ends at a 2 bedroom unit sold for $365,000.

Like most places in the area, the prices have kept dropping steadily over the last few years. The community still offers a great value for the well maintained grounds and convenient location.

At the Gates of McLean, a typical rent for a 1 bedroom unit is in the $1,300-$1,400 range, 2 bedroom $1,650-$1,750 and 3 bedroom units at $1,900-$2,000.

For more detailed information on each sale, please click on Sales Details 2008 for Gates of McLean or send me an email at are@tysonsliving.com.

Are Andresen, Broker
Soldsense - your sixth sense in real estate

Idylwood Towers Sales Statistics 2008

Tue, 13 Jan 2009 18:41:41 -0600

Idylwood Towers is located on Pimmit Drive in Falls Church, half a mile off Leesburg Pike (Rt 7) and a few minutes down the road from Tysons Corner. In 2008, 18 total units were sold. 10 units sold were one bedroom units and 8 units sold were two bedrooms units. The price range of solds start at $146,000 for a Junior 1 bedroom and end at a 2 bedroom unit sold for $255,000.

Idylwood Towers consists of two apartment buildings with about 14 floors each. The building has concrete between the floors, and units are large compared to current building standards. Units are allowed to have their own washer and dryer. Amenities include things like landscaped grounds, tennis courts, exercise rooms, party rooms, extra storage units and a swimming pool. Parking is by permit and is located outside. Extra storage space is also available in the basement for the individual units. Both buildings have controlled access entry with a 24 hour receptionist and security guards.

Like most places in the area, the prices have kept dropping steadily over the last few years. The community still offers a great value for the size of the units and the convenient location.

At Idylwood Towers, 1 bedroom units currently rent in the $1,300-$1,500 range and 2 bedroom units rent in the $1,600-$1,800 range.

For more detailed information on each sale, please click on Sales Details 2008 for Idylwood Towers or send me an email at are@tysonsliving.com.

Are Andresen, Broker
Soldsense - your sixth sense in real estate

Buy and Bail

Wed, 03 Dec 2008 23:13:44 -0600

As part of the market dynamic in "good times", younger purchasers generally move-up as they age (condo->townhome->single family detached) and then downsize when children are moving out and when nearing retirement. These days, those two overlap more and more, but I digress...

Real estate agents, I included, often advice clients keep their existing homes and rent them out instead of selling them when moving up or downsizing. This enables my clients to slowly build a real estate portfolio with owner financing terms (better interest rates, smaller down payment.) As the average homeowner often stays in their home 5-7, a savvy individual could amass quite few investment homes over time. This is a great retirement strategy for many people.

The last few years, many upside-down homeowners try the same strategy. It enables them to move without bringing cash to the closing table, or at least delay it for a few years. Traditionally, lenders have been ok with this as long as the borrower has enough income to carry the new mortgage as well as pay for any negative cash flow on the old home (typically, the lender will credit only 75% of the rental income against the expenses.) Even though the owner may have to subsidize the mortgage payments for the old home, they do not have to sell and come up with a potential large amount to pay off the negative equity to the bank when selling. They can also purchase a new home in a different location or in a different price range, avoid renting and benefit from tax write offs and long term appreciation.

A typical transaction would go something like this:

1) Make all payments on the existing mortgage
(To get a new loan you better be making the payments on the old one...)

2) Have a Realtor help you locate a new home
In the current market you can get the same house as you currently have for a lot less money and hence a lower monthly payment. Or, you may want a smaller home to reduce your monthly payment. Or, you can go all out and purchase that McMansion you always wanted as your payment possibly will remain the same as for your current home.

3) Contact a lender and get qualified for a loan

4) Get a lease for your existing home
In most cases you will need a ratified lease on your old home before your mortgage can be approved for the new one. You should find real tenants with a Realtor, but if you have a shady agent or mortgage broker they may look the other way or even help you commit fraud by making up a fake lease.

5) Close on the new home
Your (hopefully real) tenants will be moving into your old home and pay most of your old mortgage. You will be living in your new home paying a new mortgage.

Now, this all seems pretty straightforward and smart up to this point (apart from the occasional fake lease part.) However, with the declining market it turns out that some otherwise solvent homeowners look at their $100's of thousands of negative equity and has decided they don't like it (go figure...) Mind starts churning and the upside down homeowner thinks about years of long days and hard work to make up the lost equity. At the same time they see people snap up foreclosures down the street of similar homes at half the price they paid...So what to do?

Well, they do like the idea of buying another property at a low price. However, they really would like to not pay for the old one. Before I forget, I need to add a 6^th last step to the above 5 step list...

6) Keep paying the mortgage on your old home!!!

Yepp, you guessed it. As soon as the upside down homeowners are in their new home they just stop paying the old mortgage. Don't want the house anymore and don't want to make the payment - want to return the house to the bank. They may have a new tenant in the old home (hey, we'll take your rent until you get kicked out by the bank - too bad for you!) or may just leave it vacant to deteriorate (without heat, freezing pipes, flooded basement without sup pump etc) for half a year before the old bank gets around to finish the foreclosure. Generally, the only asset the bank will go after is the old home through a foreclosure. The credit of the owner will be ruined, but for many people $100,000 or $200,000 is a small price to pay for 5 years of horrible credit. And, they are still homeowners in their brand new dream home!

Unethical? Absolutely. Illegal? Probably not. Proving intent or fraud is hard and banks are generally too overwhelmed these days to run after foreclosing homeowners. Who knows though - they may get around to attaching liens to other assets of homeowners.

The lenders are onto this scheme though, and FHA now requires at least 25% equity in an existing home if you want to purchase another and keep the old one. Countrywide has apparently also changed their rules, requiring purchasers to qualify for both homes and not counting any of the rental income on the old home.

There are people legitimately trying to build wealth through this strategy and that intend to keep paying the mortgage - this option has now been taken away from most of them due to the greed of others.

There are people that through circumstances beyond their reasonable control can no longer afford to pay their mortgage (negative equity would not be what I am talking about here.) They appreciate and need the forgiving foreclosure rules in this country. The current system allows needy people to start over without being hindered the rest of their lives with debt they are unable to pay (in India families are sent to salt mines for generations to repay debt.) This debt forgiveness may at some point be taken away and the remaining home mortgage balances could become personal liabilities - that would be a shame for people that truly deserve a break.

Honor and integrity used to be values that people strived to uphold and looked for in others. What would your parents or grandparents do in the current market? What would they say if you told them you could genuinely afford your current mortgage but had chosen to walk away from your old home and mortgage and purchased a new one?

Some in my own profession see this strategy as legitimate financial planning - see this article. I disagree.

How to spend a million dollars!

Tue, 25 Nov 2008 21:48:01 -0600

If I had a million dollars sitting around, I would buy real estate. I would buy it with all of it. This may seem counter-intuitive with the current state of the real estate market. However, currently you would be able to get lots of units for a million dollars at a great discount from the market high.

For example, in Herndon Virginia, you can get a 3br/2ba foreclosed townhome for about $150,000 these days (if you are lucky, you may even get some 4 bedroom/3bath end units at that price.) Most of them need a little work to get them up to a rentable shape. On average, you would probably spend about $30,000 per unit. For that amount you can refurbish the kitchen and baths as well as repaint and re-floor everywhere.

Investor financing has gotten a bit harder over the last few years, so you will definitely need to have a 20% Downpayment on any property you purchase. For a $150,000 property you would therefore need another $30,000 per property. At a cash cost of $60,000 per property you would be able to buy about 16 properties (there are other loan qualification issues, but we'll assume those can be worked out.)

On average, these townhome properties would rent for $1,400 in today's market. If you look at a quick cash flow analysis, the properties would about break even from day one in the current market. That may not seem like such a great deal at first glance - a million dollar is a lot of money to tie up in an illiquid asset like real estate. Just breaking even wouldn't really make the endeavor worth the risk.

Just a few years ago, investors would have done anything to get their hands on a property breaking even on a cash-flow basis at 20% down. When the market was hot, speculation drove the prices sky high while rents remained pretty flat. So, since about 2001/2002 it has been nearly impossible to purchase an investment property breaking even on a cash-flow basis paying 20% down in the Northern Virginia area. Until now, that is.

The nice thing about real estate is something called leverage. Leverage allows you to buy with borrowed money and realizing the gain on the full amount (your down payment + the borrowed money.)

With federal spending on the rise, it is not unreasonable to assume that we will keep having inflation. We can further assume that you borrowed with a 30 year fixed loan at about 7%. Rents should increase with the rate of inflation (rents are actually a large part of some of the inflation indexes) while your mortgage amount and interest rate would remain the same.

So, let's assume an inflation of 5% per year and no appreciation in property value and see what happens over the next 10 years for the $1,000,000 investment in 16 properties:

	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Total Monthly Rent	$22,400	$23,520	$24,696	$25,931	$27,227	$28,589	$30,018	$31,519	$33,095	$34,749
Monthly Surplus	$67	$1,187	$2,363	$3,597	$4,893	$6,255	$7,684	$9,185	$10,761	$12,415
Yearly	$804	$14,244	$28,356	$43,164	$58,716	$75,060	$92,208	$110,220	$129,132	$148,980
Return on $1M	0%	1.4%	2.8%	4.3%	5.9%	7.5%	9.2%	11%	12.9%	14.9%

While you do get a theoretical return of 14.9% in the 10^th year, I doubt many investors would be happy with it taking 5 years before the return catches up with the assumed 5% inflation. Also, the 14.9% adjusted for the assumed inflation of 5% would be 9.9% - not too bad. But when you account for the negative return the first few years and add in the whole money now versus sometime in the future thing, it doesn't seem that it would be wise to purchase these properties based on cash flow alone. There are obviously some tax write-off advantages, but we have partially accounted for those already.

So, for this to make sense, we will have to assume some appreciation. With the current market it is hard to think about prices going up again, but over the long term, real estate has appreciated by about 5% annually. Assuming that real estate will appreciate by 5% per year over the next 10 years (following inflation) we get something like:

	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
1 property Loan Amount	$120,000	$120,000	$120,000	$120,000	$120,000	$120,000	$120,000	$120,000	$120,000	$120,000
1 property Fixup Amount	$30,000	$30,000	$30,000	$30,000	$30,000	$30,000	$30,000	$30,000	$30,000	$30,000
1 property value	$150,000	$157,500	$165,375	$173,644	$182,326	$191,442	$201,014	$211,065	$221,618	$232,699
All properties loan amt	$1,920,000	$1,920,000	$1,920,000	$1,920,000	$1,920,000	$1,920,000	$1,920,000	$1,920,000	$1,920,000	$1,920,000
All Properties Fixup Amount	$480,000	$480,000	$480,000	$480,000	$480,000	$480,000	$480,000	$480,000	$480,000	$480,000
All properties value	$2,400,000	$2,520,000	$2,646,000	$2,778,300	$2,917,215	$3,063,076	$3,216,230	$3,377,041	$3,545,893	$3,723,188
Equity Buildup	$ -	$120,000	$246,000	$378,300	$517,215	$663,076	$816,230	$977,041	$1,145,893	$1,323,188
Return %	0%	12.00%	24.60%	37.80%	51.70%	66.30%	81.60%	97.70%	114.60%	132.30%

Those returns look much better! Some may think that the return would be 5% per year like the inflation, but as you get the appreciation on 100% of the value and you put down only 20% as your investment, you get to keep the full appreciation. The numbers don't take into account the equity buildup as the 30year fixed mortgage is paid down over time (we just assumed that mortgage balance would remain the same.)

If we combine the equity buildup and the cash flow, we get your estimated return:

	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Rental Income	$804	$14,244	$28,356	$43,164	$58,716	$75,060	$92,208	$110,220	$129,132	$148,980
Equity buildup	$ -	$120,000	$246,000	$378,300	$517,215	$663,076	$816,230	$977,041	$1,145,893	$1,323,188
Total Return	$804	$134,244	$274,356	$421,464	$575,931	$738,136	$908,438	$1,087,261	$1,275,025	$1,472,168
Return % on initial investment	0%	13%	27%	42%	58%	74%	91%	109%	128%	147%

Now, that's what I call an investment! Smart investors are doing this right now as we speak.

100% financing taking its last breath?

Fri, 05 Sep 2008 16:59:11 -0500

With all the foreclosure talk and the reasons behind it, it may come as a surprise to some that 100% financing still is alive and well. While conventional lenders have abolished straight 100% financing, the Federal Housing Administration (FHA) loan has again become the favorite loan program for home buyers everywhere.

Long the last choice of borrowers, FHA financing has gotten hugely popular due to the continued availability of 97% financing (allowing purchasers to bring just 3% of their own money.) Borrowers will have to pay PMI, but most people gladly accept these terms in return for the reduced amount of money required.

Of course, even a 3% down payment may be a stretch for some wanting to live the American dream of home ownership. Hence, demand dictated that the market would try to find a way to cater to such borrowers. The solution was the Downpayment Assistance Program (DAP).

So, how does DAP work? It starts with a purchaser with no money finding a seller willing to give 3% or 6% (amounts allowed vary) of the home sales price as a donation to a non-profit DAP company. The DAP company in turn gives an equivalent amount of their "existing and different funds'" as a gift to the borrower. FHA allows gift funds as long as they are not from the seller, so going through a 3^rd party non-profit organization as described above was found to be a legal way around the current rules (info here.)

About 40 percent of the monthly FHA loan origination volume utilizes DAP these days...

So, what is the problem with this you may ask? (It has after all been found to be legal.) Even though you may not have heard of Ameridream, Nehemiah and others, they have all contributed to almost bring the whole FHA mortgage insurance program to its knees. According to HUD, FHA loans purchased with the help of DAP programs are 3 times as likely to default as for a traditional FHA loan (where the purchasers have put 3% into the property.) Allowing DAPs to continue would require a raise in the overall insurance rate for all loans and/or a federal subsidy according to HUD.

Not wanting the FHA program to go away, the mortgage rules will change effective October 1, 2008. President Bush signed H.R. 3221 Housing and Economic Recovery Act of 2008 into law on July 30, 2008. Included in this bill was the elimination of DAPs. The bill also increased the minimum amount of money a purchaser would need for FHA loans to 3.5%.

As an aside, downpayment assistance is not going away totally. Purchasers will still be allowed to receive gifts for the full 3% downpayment from 3^rd parties which includes family members and government entities like local city, county and the state. Apparently, the default rate on those is almost as high as those where the funds come indirectly to the seller.

Personally, being a Realtor working a lot with sellers, the new law will affect some of my own clients. In many neighborhoods, down payment assistance has been a part of a large portion of the offers received over the last year. The DAPs have allowed "regular" people to buy in at the bottom of the marked despite the stricter lending standards. It has also allowed my sellers to trade up into more expensive homes. As a consequence of DAPs going away, I do expect the market to slow on the lower end and for the slowdown to ripple up towards the higher price ranges.

However, in the long term requiring borrowers to bring at least some money (lets face it, 3.5% is still a low amount to bring in historic terms) should reduce the number of foreclosures and help strengthen the real estate market overall.

Some Realtors are vocal and unhappy with the changes. That is understandable as Realtors that specialize in helping cash-strapped first time homebuyers will find it harder to help their clients purchase a home. That may not be a bad thing - renting may be the prudent thing to do until a down payment can be saved.

One of the reasons we got into the current foreclosure mess was that purchasers with no or little financial discipline were allowed to purchase homes they could not reasonably be expected to afford. The housing market will recover and will be stronger - coming up with 3.5% of the purchase price doesn't seem to be too big of a minimum requirement.

Using tax payers money to shore up the program so people can buy a home with no stake in it (and just walk away when times get tough) does a disservice to responsible homeowners everywhere.

If a private bank or private investor wants to take the risk of providing 100% financing, be my guest. Just don't turn around and try to sell it off as AAA+ rated securities again...

Neighborhood Spotlight: Brittany Parc

Wed, 16 Jul 2008 21:05:00 -0500

July 16th, 2008 9:48 PM
Brittany Parc is a peaceful enclave minutes from the busy and happening Tyson's Corner. It was built in 2001-2002 by Centex Homes on a wooded site near a popular shortcut called Idylwood Road (it is a popular way with locals to bypass the crowded Rt. 7 and the HOV restricted I-66 during rush hour.) If you are familiar with the area, it is located behind Idylwood Towers at the end of Pimmit Drive in Falls Church, Virginia.

The 42 homes are what some would call "city style" homes - tall and stately with brick fronts in a colonial style. Most homes back to either green space or common areas. There are no common area amenities per-se, but there is a common area between the homes that the homeowner association is looking into making some sort of park. The community is well maintained with an active Homeowner Association. Landscaping is still being put in and a community-wide sprinkler system is in the process of being put to use. To make sure the community appears well kept, the homeowner dues include lawn care.

The community is perfect for a quiet evening walk. Well kept yards with lanscaped and open front yards on three quiet culd-de-sacs. If you stroll though the community in May, you may happen upon the popular yearly community picnic and see a large group of friendly people at all ages and different origins.

There are three primary floor plans. Most are of the Lexington and Saxony type with about 10 Oxfords to choose from.

The Lexington is your typical modern colonial with a step up master bedroom, tall ceilings in the family room and a large halfway open kitchen. The top floor has 4 bedrooms, making this a 5 bedroom home if the owner chose the 5^th bedroom option in the basement. It is more traditional and formal than the Saxony.

The Saxony is a popular model as it has a very open floor plan. If you like a large kitchen, you will love the Saxony. There is no staircase on the outside of the home (great in the winter), so you enter into a three story foyer instead. Downstairs has a game room and often a full bath and bedroom. On the main level, you will be amazed at the amount of light being allowed into the room. There is basically one wall on the floor - separating the living/dining room from the kitchen. Some of the homes have a three level extension adding a sunroom to the main level and a sitting room to the master bedroom.

The Oxford is the largest model. It has a main level even entry with few or no stairs. All the Oxford's are on the right side on Brittany Parc Court as you enter the community. Over three levels, it has a lot of space - especially if the walkout basement is finished. The floor plan is modern - though it does have a formal feel with the kitchen in the rear together with the family room.

There are a few other floor plans but those homes are one-offs and rarely come up for sale.

At Brittany Parc everything is close. Within walking distance is the Tyson's Station shopping center with Whole Foods, Starbucks, Trader Joes and a US Post Office. The Pimmit Library and a small park is just a few blocks up the road as well. To eat, you have Zagat rated Idylwood Grill, Tara Thai, Ledo's Pizza, Subway and a Jason's Deli. The W&O trail is also minutes from the community. Tyson's Corner Mall is up the road minutes away with world class shopping and dining.

Easy access is an added bonus. Within minutes you can access I-495, I-66, Rt. 50 and Rt. 29. The White House (don't have time to go there much these days) and Dulles Airport are both just 15-20 minutes away. If you prefer to use mass transit, you can walk the 1.5 miles to the West Falls Church metro or take the 3T bus to the station in a matter of minutes.

Pricewise, Brittany Parc homes these days sell in the mid $800's. At the top of the market in 2005, they went for the mid $900's. So, while other communities in Northern Virginia have gone down 20-30-50-100% (Herndon anyone?), Brittany Parc has kept its value very well and confirms yet again that location matters.

In short, Brittany Parc is a wonderful place to call home. If you would like more information or are looking for a home at Brittany Parc,

Tysons Corner location among Best Places to Live

Mon, 14 Jul 2008 14:02:31 -0500

According to Money magazine, Hunter Mill VA is among the best places to live in the United States. It was ranked as number 19.

The the CNN article emphasizes the spaciousness of the community, the central location and the uniqueness of Wolf Trap park, "the nation's only national park for performing arts."

Hunter mIll is truly a great area. There are hones for sale in all price ranges from the $400's to multi-million dollar homes. To see a few available click here.

So, you want to buy a foreclosure?

Fri, 30 May 2008 11:47:03 -0500

While home sellers curse the occurrence of foreclosures in their neighborhoods, home buyers have slowly realized the upside to the increasing number of cheap homes on the market. Regular home sellers are usually limited by the equity in their homes when setting the sales price - banks have no such limitation. Banks can, and will, reduce the price until the home sells - the sales price of a home 3 years ago is pretty much irrelevant to the bank.

While investors have been snatching up foreclosures for the last couple of years, regular homeowners and first time homebuyers have been mostly sitting on the fence. Reasons for the hesitation range from the notion that prices will fall even further (turned out to be true) to difficulty in obtaining financing in general, and lastly, and unfamiliarity with the process in general.

I often get excited calls from first time homebuyers asking to see a short sales or foreclosure listings they saw online at amazing prices. Let me comment quickly on short sales: they are a waste of time. Most of the time they don't work out - your time is better spent on pursuing foreclosures. If you love a specific house that is a short-sale, just wait a few months. Odds are that it will be relisted as a foreclosure.

Back to foreclosures... What most potential purchasers don't realize is that a foreclosure is cheaper for various reasons. They are generally all As-Is - that means truly as-is, as in no termite inspection, mold inspection, home inspection and no guarantee that plumbing, electricity or HVAC is working or even existing. Complicating things further is that the utilities will be off, and in many cases, remain off during a home inspection, if you can get the bank to agree to a home inspection "for information purposes only".

Yes, you can do the inspections before you submit the offer - and many investors do. However, buyers that are not investors usually don't want to spend $500 on inspections on a house they may or may not get (as someone else can submit an offer while they do the inspections).

Also, as utilities won't be turned on in most cases - meaning there is quite a bit of risk that a first time homeowner will have a hard time mitigating due to limited funds. Yes, they may get that house they couldn't otherwise afford - but that is not much help if they cannot afford to finish missing or broken plumbing or repair a broken foundation slab or deal with a mold infestation ...

There are many areas in Northern Virginia where you can get great deals on foreclosures. If you do your research you will be able to get prices 50% off 2005 prices or more! Rents have remained pretty constant, so you can even break even with 20% down if you pick the right property. Millionaires will be made over the next years by people that realize the potential and have the capital to mitigate the risks.

If you are looking to buy a foreclosure for investment or as a home, please give me a call!

Do It Yourself Tenant Screening

Wed, 23 Apr 2008 14:07:45 -0500

So, you managed to finally find a tenant for your rental. Congratulations - only thing left is to hand over the keys and then it is just smooth sailing from there, right?

For some, that is the extent of their tenant qualification - tenant seemed nice and had a prefilled lease ready for me, said they would help fix the place up, gave me a personal check at move-in for two months rent and the current landlord gave glowing reviews. Excellent - no problems - being a landlord is great!

For the people that snicker, you know where I am going with this and probably won't need to read this article. For those that see nothing wrong with the above, please please please read on.

So, it is great that you managed to find a tenant. I would suggest calling the person a prospect for the time being though. There are lots of different people renting from Craig's list, so it is imperative that you check out the prospective tenant thoroughly. If you are renting out your place yourself, you are really putting yourself up as a target - problem tenants will seek out first time landlords that are lax in their tenant verification and qualification.

To weed out the riff-raff, try adding something like the following to your craigslist ad. You won't get as many responses, but those that do contact you know that you mean business:

"Sufficient credit, income, employment & rental references are required and will be verified. All adults living in the property will have to be on the rental application. $32 application fee per adult."

Make sure all prospective tenants fill out an application form and that they submit a copy of their drivers license or other valid id as well as paystubs etc. Some rental applications:

http://www.independent-pm.com/Blank%20Rental%20Listing%20_%20Rental%20Application%20(14)%20-%2008-01.pdf

http://mrlandlord.com/rentalapplication/app1.pdf

For Qualification and Verification Purposes, I suggest landlords make sure they do at least the following:

a) Run credit on the tenants (have them order it online themselves and email you the login and password - i.e. on creditreport.com ) Print it out for your records and compare with copy of drivers license. Make sure they don't have outstanding judgments, late payments, bankruptcies etc.

b) Be clear on who and how many will be staying in the apartment, pets etc. All adults should apply and have their references and rental history checked.

c) Be sure to get at least 1 month's rent and one month security deposit up front (in certified funds if you don't have at least 2 weeks before you hand them the keys). DO NOT accept people that cannot afford to pay you the whole amount up front.

d) Verify their employment (call supervisor/HR) + get copies of recent W-2's

e) Get copies of their drivers license so you know they are who they say they are and the same person as on the lease.

f) Make sure they understand they have to pay utilities. move-in fees, trash fees or whatever else is required.

g) If they have dogs/cats, make sure they understand the building rules and that they pay you for example a $500 move-in deposit.

h) Call the last 2 landlords. If they are problem tenants, the current landlord will probably lie just to get rid of them.

i) Don't make friends with your tenants. You should be courteous and friendly, but if you are looking to keep your rentals an investment, don't mix business and pleasure.

j) Don't let your tenants paint or make improvements. They may not finish, may feel you are indebted to them and ask for slack when they are late or may just do a bad job.

k) Verify all information - income, employment, name on credit report/social security number etc.

l) Use a great lease.

m) If you don't want to go through the trouble of qualifying your tenants, use a realtor and a property manager. It will save you money and lots of grief.

Plenty of leases online you can look at:
http://www.besthomeagent.com/forms/deed_of_lease_tenant.pdf

http://www.legal.sga.vt.edu/LEASE_VRLTA_2006.doc

http://www.arlingtonva.us/Departments/CPHD/housing/housing_info/page57910.pdf

http://www.rainespropertymanagement.com/pdf/Sample%20_%20Residential%20Lease%20(11)%20-%2008-04.pdf

http://astorpropertiesllc.com/forms/sample_lease.pdf

Among additional things, make sure you provide the renter with the led based disclosure/disclaimer form as well as the led based paint pamphlet(info and download from http://mrlandlord.com/lead/.) Their may be other forms necessary from your homeowner association, local jurisdiction and state.

You will want to get a book on how to become a landlord - plenty of good ones at Barnes and Noble to help you learn how to qualify tenants and managing them for maximum profit! Also, you should have an attorney review your lease and paperwork to make sure you comply if rules and regulations.

The above may seem like overkill to some, but it takes only one bad tenant to give you unlimited hours of wasted time, destruction and lost income. So, please make sure you take the time to read up online and in books on how to find and manage good tenants.

So, what was wrong with the prospect at the beginning of the story? Well, tenants that prefill in a lease and bring to the showing is generally trying to run the show having the owner skip some of their usual due-dilligence. Never take personal checks when giving the keys - they may bounce and after you have given the keys your legal standing is diminished. The glowing reference from the current landlord? If you had a nightmare tenant that wasn't paying - and a new landlord called you for a reference - how far would you go to get rid of that tenant? (not saying you should lie - just saying that some/many would) Then, the fixing up part - yet again sometimes a ply to make the landlord be entustiastic about a less than ideal tenant - woow, he/she will fix up my place for free!

Ok, hope the above helps some of you get started.

Do It Yourself Tenant Screening

Wed, 23 Apr 2008 14:07:34 -0500