Were you late to the party and now you're so sad that the federal first time homebuyer tax credit passed you by?  Don't dispair!  Come on down to DC!  We still have a $5,000 first time buyer tax credit.  Are you buying a primary residence?  Is this the first house you've owned in the District in the past year?  If you answered "YES!" to both of these questions, then you likely qualify.  Unlike the federal first time homebuyer credit, this one is non-refundable.  That means if you don't use it all, you don't get the remainder back in the form of a refund.  However, you can carry the excess forward to a future tax year.  The credit phases out at $90,000 in modified adjusted gross income for individuals, and $130,000 for married couples filing a joint return.  Why make the long commute from the suburbs every day AND miss out on five grand?  Bring it on down to DC today.  Give me a call and let's talk!

                                                                       You really want to sell your home.  Like yesterday.  How are you shopping for   EVERYTHING now days?  On the interwebs, of course.  Seriously, HOW does Amazon know what I want to buy before I even know I need it?!  But be careful when signing the listing agreement with your agent.  In the listing agreement (for DC, on page 3) there is a category called "Marketing/Virtual Office Websites," and you're all like, "Huh?  Yeah, I want it online.  Duh."  Oh, but read closer (cue scary music):

Question 2 asks if you authorize your listing address to be displayed online.  For most, this is not a problem.  However, for many people in this area, depending on what type of job you have (CIA, FBI, DOD, DOJ, etc.), you may need to be careful about selecting that option. 

More importantly, question 3 says you authorize the display of an "automated estimate" of value to be displayed.  Understand, when we as agents put a listing into the MLS, sites such as Zillow, Trulia, etc., pick it up, often through no prompting by the listing agent.  Do you really want some mindless auto machine without decision-making capabilities assigning a value to your home based on the piece of crap tear-down that sold next door a year ago?  Your home has class!  Your home has stainless steel!  Your home has parking!  Your home has paint from Crate and Barrell!  No.  You don't want Zillow's autotron telling everyone and their grandma what your house is worth.  Especially when the good people at Zillow don't even BOTHER to come over and see your castle.  Check "no." 

Lastly, question four asks if you authorize the display of unedited comments or reviews of the property on MLS participants' websites.  This means that agents can blog about your listing (fine), and others can post comments to that blog.  So, OK, you had a FEW too many last Halloween and decided to TP the house of that lady down the street with the dog that barks all night.  Well, she's been lying in wait and biding her time to avenge her trees, and now she finds your house on a blog and comments that it's haunted and there were 12 murders there last year and YOU might be the culprit (dude, it was a Halloween party, and that was my weird Uncle Bob, not a ghost, he's just really old).  Anyway, be careful about allowing the general public to comment on your house any and every where they feel the urge.

Bottom line, you want your house to have as much exposure as possible, but make sure it's accurate, safe, and in good taste.

So, I sat through a three hour "short sale seminar" taught by Bank of America yesterday, wherein I had hoped to get detailed information on the new Home Affordable Foreclosure Alternatives (HAFA) program - which was implemented April 5th - and the ever-changing short sale process.  The presenter however, just kept reiterating in so many words how BOA sucks less now than they used to because they are using a new organizational program for short sales called Equator, meanwhile saying he wasn't going to get into details.  SO, I decided to research the details myself so I could bring them to you. 

First, using HAFA means the current homeowner does not get to stay in their home.  This is different from HAMP, wherein your lender does a payment modification for 3-6 months in order to keep a family in their home during a financial hardship.  This is for people who are not able to make a modified payment and who qualify under HAMP to help them avoid foreclosure.  Essentially, it speeds up the short sale process tremendously.  The bank approves the short sale BEFORE the home goes on the market (for a minimum of 120 days), and even tells the borrower how much it will accept in net proceeds.  This eliminates the long 90+ day waiting period on the part of the buyer and seller when a contract is ratified and sent to the bank to see if it will even be accepted.  So, the short sale terms are pre-approved BEFORE the home goes on the market.  If a borrower makes an effort to sell the property and is not able to, they can return the property to the bank for a deed in lieu of foreclosure.  They basically turn over their keys and have 30 days to vacate.  In either situation, the bank must fully release the borrower from any financial obligation connected with their first trust mortgage.  It also provides $3,000 in moving assistance to borrowers, as well as incentives to investors for negotiating arrangements with second trusts and other lienholders so the property can be sold. The bank may not require the borrower to make any cash contribution or sign a promissory note in connection with the short sale or DIL under HAFA.

In order to qualify for HAMP, and therefore HAFA, you must meet the following requirements:

• Home must be your primary residence
• Balance owed on first mortgage must be less than $729,750
• You have suffered a hardship that makes it difficult to pay your mortgage (i.e. loss of job, increase in mortgage payment, reduction of income, etc.)
• You must have taken out your current mortgage prior to January 1, 2009
• Payment on your first mortgage (PITI) must be more than 31% of your current gross income

11.3 million people in this area have negative equity in their homes, and another 2.3 million have less than 5%.  It's easy to see how this could happen even to someone who used conventional financing with a 20% downpayment 5 years ago.  Declining values have added to this problem - not just sub-prime lending.  If you need help, talk to your lender, a HUD counselor, or a realtor today.

Sometimes it seems like getting straightforward answers about how this whole process works is harder than sneaking into a White House party, and believe me, that is HARD! For most people at least!  

Once you make the decision to place an offer on a home, first you need to figure out what a reasonable offer price is.  Your agent should pull sales data for the comparable sales that have taken place, typically over the past 90 days.  90 days is usually how far back an appraiser will look.  They should pull information on homes that are the same size, in the same area, same amenities, etc.  Using the sales price of similar units that have sold, you should come up with a price you are comfortable with and begin there.  

You will also need to determine how much earnest money you are going to put down.  Essentially, this is the sellers' incentive for entering into a contract with you and taking their home off the market while you attempt to purchase it, and it is their insurance policy against the buyer defaulting on the contract.  This is usually a minimum of 1% of the intended sales price.  The larger your earnest money deposit, the more seriously your offer will be considered, because you have more on the line to lose.  This money goes into an escrow account and is held there until closing.  It is taken off the total amount of cash you need to bring to closing. When you submit your offer, you will submit a copy of this check, along with the prequalification letter you should already have from your bank, to the sellers. You will likely have negotiations back and forth, and when all parties agree to all terms, sign off, and return the fully signed document to both the buyer and seller, the contract is considered ratified at this point.  

Generally, your agent will build a few contingency periods into the contract to protect you.  The first and most common is a home inspection contingency.  A standard time frame for this is 7 to 10 days after ratification, which means you have that amount of time to have an inspector come in and tell you if anything is wrong with your potential new home.  As a buyer, you should focus on the big stuff - let the little stuff go - but if there is something serious like leaks, cracks, foundation problems, non-working items, you go back to the seller during this period and negotiate repairs or credits.  If an agreement cannot be reached, as long as you are within your contingency time frame, you may void the contract without being in default and obtain your earnest money deposit back.  

The second most common contingency is an appraisal contingency.  Typically these are around 14 days long, which means the bank has 14 days from the date of contract ratification to send an appraiser out to the property to make sure that the agreed-upon sales price reflects current market value.  If the appraisal comes back lower than the sales price, typically the seller must adjust the sales price or the buyer has the option to void the contract.  Occasionally, a buyer will make up the difference between the sales price and the appraised value by bringing additional cash to settlement.

The third most common contingency is the financing contingency and unless you are purchasing the property with all cash, your contract should contain this clause. It is usually around 21 days, and says that from the time the contract is ratified through the contingency you will get all required information to you lender and make a final loan application with them.  It is your responsibility during this time to make sure your loan officer gets your W-2s, bank statements, and any other information they need to finalize your loan.  They will then issue you a final loan commitment.  If this does not happen within the contingency period and it is because you, the buyer, dropped the ball, you could be considered in default.  However, if during this time frame your loan is denied after reasonable efforts, you are covered. 

In DC, if you are purchasing a condo or property in a home owners' association, you have 3 days from the day you receive the condo documents or HOA docs to review them.  If there is anything within them that is a red flag for you, you have the option to void the contract at this point as well - as long as you are within that three day period.

There are several other contingencies that are slightly less common: radon inspection, lead-based paint, sale of buyer's home, to name a few.  If you have further questions on these, please don't hesitate to contact me.

Once you have cleared all of the above, settlement can generally take place in 30 days from the date of contract ratification.  You will have closing costs through your lender and title company to cover the title search, loan origination fees, transfer and recordation tax, etc.  These generally amount to around 3% of the sales price, and you should be prepared with cash to cover them.  In certain situations, you can negotiate with the seller to give you a credit to offset some or all of this expense as well - depending on the market in which you are purchasing.  The settlement company will provide you with a HUD-1 settlement statement a few days before settlement which will let you know how much cash you need to bring with you to settlement in the form of a cashiers check or wire transfer.  Your lender will wire the financed portion to the settlement company as well.

This is a very quick, in-a-nutshell explanation.  For more details, I would be happy to answer any questions you may have.

I encounter many buyers on a regular basis who have a fear of commitment worse than any ex-boyfriend I ever had.  This phobia is understandable after experiencing the "service" some real estate agents provide (i.e.: never returning phone calls, never being available, lack of knowledge and training, lack of focus on the "service" aspect, general lack of desire to work hard).  What the general public may NOT understand is that 99% of real estate agents essentially operate their own individual businesses under the LOOSE guidance of a broker (company) whose broker's license their salesperson's license hangs with.  Just like there are bad dry cleaners that break all your shirt buttons, bad grocery stores with rotten produce (I'm looking at you, Dean & Deluca), bad mechanics who misdiagnose your car and charge you an ungodly amount to fix it, even bad doctors, dentists (thinking of one in particular), and lawyers (are there any good lawyers? lol), there are bad real estate agents.  I get it.  And you, as a buyer, do NOT want to get stuck being forced to work with one of these yahoos for 180 days.  So, your train of thought is: avoid commitment at all costs.

However, this is not in your best interest, as all agents represent and have a fiduciary duty to the sellers of any houses they show you UNLESS YOU HAVE A SIGNED BUYER AGENCY AGREEMENT WITH THAT AGENT.  This means that, without a Buyer Agency Agreement, no agent has any responsibility to you whatsoever.  No duty to protect you as a consumer or your best interests.  No obligation to keep the things you tell them confidential.  No need to advise you on making the decisions which would be most beneficial to you.  You have no protection in the murky waters of the home buying process.  Conundrum!

What to do?  Ask around and find friends, family, and acquaintences who have had a good experience with their agent and interview a couple to find one that you can work well with.  They may want you to commit to a long Buyer Agency Agreement, and maybe you don't quite feel comfortable with that yet, since you're just getting to know each other.  It's kinda like asking someone to move in on the first date.  Maybe it's a little much at first, but still, you do like the person.  Try to understand: the agent is trying to protect themselves.  What you may NOT know is that agents get screwed ALL THE TIME.  Many buyers are crafty or devious and want to play the field, like so many players you've dated.  Buyers don't want to commit to working with us, but want our full commitment to them.  We show them houses, answer questions, act as a liaison in their financing approval, drive them all over, spend our own gas money, help them write contracts, multpile phone conversations, research comparables, neighborhoods, etc., etc.  This is our business and our livlihood, and most of us love what we do.  However, we only ever get paid at all when a deal goes to settlement, and often, after doing months of work, we find our buyer decided last minute to work with another agent.  Or our buyer changes their mind and makes different plans.  Or our buyer wants us to give them money out of our own compensation, out of our own pockets.  So, we quite often never get paid for our work and time.  As a result, we try to protect ourselves with Buyer Agency Agreements.

What does a Buyer Agency Agreement really say?  It says that BOTH parties have resposibilities - not just the agent.  The buyer's responsibilities are:

• To work exclusively with the broker during the term of the agreement.
• To furnish financial and personal information to the broker to reasonably establish their ability to purchase a property (sorry, we don't get paid for being tour guides - you actually have to be qualified to purchase a home to get in our car and take advantage of our expertise, gas and time).
• To call us first when you see a for sale sign or a property you're interested in, rather than contacting the listing agent or seller, and WE will provide you information and make arrangements to show you the home.
• To not visit new home builders' models or sales offices or go to open houses without first discussing with us so we can make arrangements with the other agents (otherwise, they may technically be entitled to our commission).
• To pay us for our time and service (usually a percentage of sales price, sometimes a flat rate).  Most of the time this fee is covered by the seller, however if you decide you want to puchase a property that is For Sale By Owner and they are not using a listing agent, then the compensation for your agent's time is paid by you.

PLEASE NOTE: IF YOU SIGN A BUYER AGENCY AGREEMENT WITH MULTIPLE AGENTS, NOT ONLY IS THIS A VIOLATION OF THE AGENCY AGREEMENT, BUT YOU MAY BE ON THE HOOK TO PAY A COMMISSION TO ALL OF THEM - NOT JUST THE AGENT WHO EVENTUALLY SOLD YOU THE HOUSE.  So, while the seller may pay for the compensation of the agent who helps you buy that particular house, you have agreed to pay any agent you enter a buyer agency agreement with (if you purchase while that agreement is active), and so may be obligated to pay them all.  This is a legal agreement which can be upheld in a court of law.

Pretty serious stuff.  So, you want representation, and your agent wants to CYA, but you don't want to commit to working with someone you don't know that well for 6 months, right?  How about a happy medium?  Sign a buyer agency agreement for 2 weeks or 30 days, so that you have an opportunity to work with the agent a few times and make sure you actually want to use them for the purchase of your home.  If, after 2 weeks or so, you decide this is not the agent for you, move on: no harm, no foul.  If you decide your agent kicks booty (the majority of us do!), then sign a new, longer agreement.  This way, your agent is confident they will get paid for any work they do for you, and you are confident that if they suck, you aren't tied to them for the better part of the next year.

The Sun Gazette has realized what I have known since I set foot in the McLean office of Keller Williams: there's just something about us!  This office was started less than two years ago and has now grown to 100 agents thanks to the tremendous support of our office leaders and the great atmosphere of helpfulness, honesty, hard work, and support they have created.  I have never seen such an enthusiastic bunch of agents and all are at the top of their game and willing to share anything and everything they know to help a fellow agent.  We have the best training program I have ever seen and are on the cutting edge of technology, which is a huge benefit to our clients.  And our business model is unlike any other brokerage firm today.  Check out this great article!  Then come join us!

http://www.sungazette.net/articles/2010/03/23/fairfax/real_estate/bareal32c.txt

Effective April 22nd, 2010, all renovations performed by contractors on homes or buildings built before 1978 must be performed under the new guidelines set forth by the EPA.  These guidelines include requiring the firm and the renovator to be certified in lead-safe work practices by the EPA under the Lead-Based Paint Renovation, Repair, and Painting Program.  This program applies to residential houses, apartments, and child-occupied facilities such as schools and day care centers built before 1978. 

All contractors are required to distribute a lead pamphlet before starting any renovation work.  In general, any activity which disturbs paint in an area greater than 6 square feet indoors or 20 square feet on the exterior of a building is subject to this program, including remodeling, repairs/maintenance, electrical work, plumbing, painting, carpentry, and window replacement. Exceptions to this are housing built after 1978, housing for the elderly or disabled, studio apartments/dormitories, or housing declared lead-free by a certified inspector. 

As part of this program, contractors must test for lead-based paint using an EPA acceptable test kit, post informational signs noting the extent of the renovations, contain work areas to prevent the spread of lead paint dust and debris, prohibit certain work practices such as open-flame burning and the use of power tools without HEPA exhaust control, and perform a thorough clean up followed by a verification procedure to minimize lead paint exposure.

How will this potentially affect you?  When you hire a contractor to perform a renovation on your home, they will be required to test for lead based paint if it was built before 1978.  If lead paint is discovered, you could be required to disclose this fact to any potential buyers when you go to sell (depending on which state you live in - in DC and Maryland, you WOULD be required to disclose this fact).

If you're like me, your pets are regular four legged members of your family. It's important when you are looking for your next home to remember that not all buildings in the area are pet-friendly, and that should be a question you ask before placing an offer on your new condo.  It is also a factor to consider for re-sale value, as having pet restrictions limits the number of people that can purchase your condo when you are ready to move on.  In that vein, here are the pet policies of some area buildings:

CATS ONLY BUILDINGS

3900 Tunlaw Road NW

4000 Tunlaw Road NW

Dumbarton Court (1657 31st Street NW)                                                         

Gateway (2500 Q Street NW)

SIZE RESTRICTED BUILDINGS

2610 Tunlaw Road NW

3825 Davis Place NW

4545 Macarthur Blvd. NW

Bryn Mawr (4555 Macarthur Blvd. NW)

The Colonnade (280 New Mexico Avenue NW)

Flour Mill (1015 33rd Street NW) < 25 pounds

Observatory Building (2111 Wisconsin Avenue NW)

The Sheffield (2320 Wisconsin Avenue NW) <40 pounds

PET FRIENDLY BUILDINGS

2325 42nd Street NW

2501 Wisconsin Avenue NW

3014 Dent Place NW

3925 Davis Place NW

4481 Macarthur Blvd. NW

4840 Macarthur Blvd. NW

22 West (1177 22nd Street NW)

The Archbold (2725 39th Street NW)

James Place (1077 33rd Street NW)

Sheridan Garage (2516 Q Street NW)

Washington Harbor (3030 K Street NW)

Winchester Fulton (3901 Tunlaw Road NW)

Don't forget to ask your agent to check into the pet policies of each building you view!