DC Real Estate News

If you read my last post; you are seeing a trend.  Well it is not just a trend in what is on my mind this week, but a trend on what is happening in the Real Estate market in general.

Appraisers determine how much the home is worth and how much of a loan the bank will give.  Well in much of the DC Metro area; we are moving away from the crazy buyers market and homes are in fact selling.  Well; they are going under contract.  The "selling" part is what is the problem.

Low Appraisals are killing deals all over the place.  Buyers can't get financing, sellers can't drop the price to the low appraised value because of little equity - deals are falling apart.

Appraisers use comparable sales.  I get that.  But let's look at this senerio:   House for sale... in the 1st week they get 2 offers at (or damn close to) full 

price.  The seller selects an offer and the Appraiser swoops in.  He sees 3 homes in this neighborhood that sold for 20k less than this sales price and says "Poof" your home is worth 20k less.  Not what these 2 buyers were willing to pay (fair market value); but what the last homes sold for.  The seller lowers the price and this home sells for the lower price.

The house next door goes on the market.  Gets 2 offers; appraiser says "Nope" - it's only worth what your neighbor got.   

and so on  and so on ...

How do the prices ever change then ???

When the Appraiser can appreciate the fact that a home is getting multiple offers while new to the market.  Maybe - JUST maybe - he can consider "Fair Market Value".

Just my 2 cents.....

Contact James Downing of the Downing Real Estate Group, if you are selling, buying or have questions!

Office: 202-362-5800   Cell: 703.244.3971

Licensed in Washington DC, Virginia & Maryland.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100 * Washington DC 20016

As an experienced Realtor, this should be an easy question - right?  Well not-so-fast.

From Wikipedia:  Fair market value is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay ti a knowledgeable, willing, and unpressured seller in the real estate market.

The amount of money a knowledgeable, willing, and unpressured buyer would pay....

Well I can assure you; most buyers are willing, knowledgeable and unpressured in THIS type of Real Estate market!

From Business school to real-world use, I have always looked at the Fair Market of a good or service (or a house) as what a consumer is willing to pay.  The problem is, as we are all aware - is that banks and lenders are backing loans for these purchases.  In order to protect them - the banks charge a $400-$500 fee to the customer for an appraiser to assess if the buyer is paying too much and thus determines how much of a loan the bank will grant.

(Can you imagine what would happen if credit card companies did this for durable goods?  I'm sorry ma'am those Jimmy Choos are only worth $30 not $300 - you will need to use cash).

The Problem:

Stricter (and needed) lending standards have put in place a much more random system with regards to Appraisers.  Instead of Mr. Loan Officer calling the appraiser he always uses in NW DC; he "orders it" from a 3rd party.  The 3rd party then at random picks an appraiser to come out and tell the bank (and the customer) how much its worth.

So the likelihood of getting an appraiser from the burbs, who is not as familar with this neighborhood is MUCH greater.  Well does that make a difference?

Think about your own neighborhood you live in now.  Now think of a similar home a mile or two away in a different neighborhood.  Your home can look alike; be about the same size - but is the value the same?  Probably not - but you know that because why? You LIVE there - you KNOW the areas and you ARE an educated buyer or seller.

So here is a stranger who may be an expert on appraising a home - but does he 'know' the neighborhood differences?  Let's hope so - because he is one who decides what your home is worth.

So perhaps 2 blog posts in a row about big lenders being bad is a bit much.  But when I have clients completely Sc%$@*d by a bank - I tend to get a bit "annoyed".

After Bank of Everywhere - threw customer service out of the window and made my clients stay in a hotel for the weekend; I have stricken that bank from my list of "recommended lenders".  

So I won't mention their exact name - because; while I have a very true story about their lack of service and overall incompetence - I am sure Bank of Everywhere would use some of their Tarp money to make a lonely blogger take down a post that hurt their already tarnished reputation.

You see; any good Real Estate Agent - has "recommended" lenders.  We recommend them because they make our job easier through communication and customer service.  In essence - they make our jobs easier and make our clients get to closing without monster headaches.

So when my favorite Bank-of-Everywhere Loan Officer completely dropped the ball (because the big behemoth of a bank can't deliver) - I went to another favorite loan officer with Big City bank.  He is doing another loan for me and is doing a great job.  I tell him - he is going on my "Top 3 List: of lenders".

Then he says to me,,,"Shhh - I am am leaving to Bank of Smallville".  It seems that Big City bank is going the way of Bank of Everywhere.  They will move their underwriters to a central place - which is sure to make things a giant MESS.

It seems that my New "Top 3" Loan Officers are with small - local (well-established) lenders.  Sadly; there are some excellent Loan Officers out there - that won't get a hint of a referral from me - because their companies have decided to replace any semblance of customer service or meeting deadlines with a slow-moving; central system with little to no sense of speed of service.

Contact James Downing of the Downing Real Estate Group, if you are selling, buying or have questions!

Office: 202-362-5800   Cell: 703.244.3971

Licensed in Washington DC, Virginia & Maryland.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100 * Washington DC 20016

As we all know - in years past; just about anyone could get a mortgage.  Of course there were standards; but they pretty darn loose.  A mediocre credit score; very little cash and even shaky job history - would get you qualified for a mortgage.

The Pendulum had swung so far - that my dog could have been pre-approved to buy a home!

Now things have changed.  DRASTICALLY !

I have had clients will PLENTY of CASH.  GREAT job history.  GOOD - even GREAT Credit.  But the hoops they are now having to jump through is getting simply - CRAZY !

Many of the agents in my office joke about buyers needing to supply a DNA sample when applying for a loan.  It's almost the truth.  Banks and their underwriters are being super-cautious when approving loans for people.  

The Pendulum is now at the opposite EXTREME!

Some things Borrowers Need to know:

- Work with a reputable lending institution.  With so many changes in lending standards - make sure you are using the best in the business.  Remember: Biggest is not usually Best.

-Get your loan officer every single piece of paper he/she asks for immediately.  Not quickly - but immediately.  They need every hour; every day to get things processed.

- Be ready for last minute requests.  An old tax form; an old check stud - keep all your important papers close at hand.

- DON'T move money around.  Large deposits or withdraws are big old RED flags to underwriters.  If you need to transfer money for closing.  Do it as soon as you can and preemptively send your loan officer documentation as to where the money was transfered from and where it was transfered to.

- The Banks are backed-up.  Period.  They have cut staffs and now are overwhelmed as the volume of sales and re-fi's are increasing. For many of the large banks - be prepared for long hold times and overall lousy service.  Even lenders whom I have worked with for years are victims by their own banks lack of resources and personnel to process the loans.

- The closing date - with so many delays and last minute requests from the underwriters - don't bank everything on moving the day after closing.  Expect a couple of day delay.

Lastly - be patient.  Easier said than done; especially in a big move; but it is the way things are today.

Contact James Downing of the Downing Real Estate Group, if you are selling, buying or have questions!

Office: 202-362-5800   Cell: 703.244.3971

Licensed in Washington DC, Virginia & Maryland.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100 * Washington DC 20016

No one can seem to agree what do to with the economy.  There are good ideas, bad ideas and crazy ideas.  However, some of the things I heard today sound like Great Ideas!

Who knows what exactly will get passed in this new Legislation; but some of the tax incentives they are talking about just might do the trick.

First-Time Home Buyer Tax Credit

- Last year there was a $7500 tax credit put into place.  However it must be paid back.  This new plan works like the DC 1st Time Home Buyer Tax credit; where the credit does NOT have to paid back.  More importantly, the Senate wants it at $15,000.  WOW.  Now that's an incentive!

4% Interest Rate Buy-Down

- The second thing being considered that is directly related to Real Estate is a federally subsidized Interest Rate Buy-Down to 4% for a 30-Year Fixed Rate.  Wow - would that help folks?  Would this get buyers off the fence?

One of the big issues that these do not solve is the home owners who are in trouble.  Those who cannot afford their loan.  So if we offer them a 4% Interest Rate - that would, in many circumstances, allow them to save their home.  It should lower their payment significantly.  HOWEVER - they can't refinance if the are UPSIDE DOWN.  

This is a start - but will it work?  For some maybe to help buy.  But not those who are already struggling.

Read Stories about the Stimulus Bill.  

Associated Press

Wall Street Journal

Call James for all your Real Estate needs and questions; servicing Virginia, Maryland and the GreaterWashington DC area.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100
Washington DC 20016
202-351-5800 Main Office
Licensed in DC,MD,VA

While my Motto is: I refuse to participate in this Recession;  I am cutting back on some things.  I thought it would be a good idea to do regular posts about how to save $$$.  Every dollar helps; especially for families struggling to pay their mortgage and buy groceries.

Save on your Credit Cards:

Credit Card Companies LOVE to charge the consumer for everything.  One day late on a payment, monthly interest charges and those "Annual Fees".  Well I simply refuse to give them a cent.

Now I pay my bills on time.  I am a good customer of the credit card companies - except that well - I never carry balance.  They HATE THAT!  But they do make money from the Store or Merchant with every charge I make.  I charge EVERYTHING!  Why?  Miles !  Points !  Cash Back Bonus !  I love the "perks".  As long as you don't carry a balance - its not a bad deal.  Plus I have an easy statement every month which sooo helps me at Tax Time!

About a year ago, I received an offer for a crazy amount of FREE Frequent Flyer Miles from a Major Air Carrier/Major Credit Card Company.  In the fine print it read, "$50 Annual Fee waived for the 1st year".  Yes, but I could still use it for a year for free and get all those miles!  I have trips to take after all!

So a year passes and I start looking for this "Fee" to show up.  Sure enough - there it was. $50 Annual Fee.  So I do what anyone with smarts does.  I called the credit card company and explained that I had "No use for a card with an annual fee!".  The lady apologized and said she would transfer me to the Closing Department.

Well here is a clue - the closing department isn't just about closing accounts - its about saving them.  The man on the phone pulled my account and asked; why do you wish to close it?  I explained I was not about to pay an Annual Fee.  I had other credit cards with no fees.
He quickly apologized and said he could easily switch me to a different "no fee" card.  Same miles - same perks - no fee.  Same account number - just a "different" card and type of account.

Done Deal.  He of course also removed the $50 fee from my account with his apologies and that was that.

Another secret: 

Lets say you have a Credit Card with a balance and a high interest rate.  While you "could" open a new account with a (limited time) zero percent interest rate.  You don't really want ANOTHER credit card do you?  No.  

Call your credit card company and tell them you have an offer from another bank for a lower interest rate.  Ask them to lower your rate or you will leave.  If you are a good customer with a decent credit rating - Shazam! Done.  I once did this on a card I didn't even have a balance on.  It was lowered from 12.9% to 6.5%

How do you get this deal?  ASK!

Call James for all your Real Estate needs and questions; servicing Virginia, Maryland and the GreaterWashington DC area.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100
Washington DC 20016
202-351-5800 Main Office
Licensed in DC,MD,VA

A few weeks ago I was so proud of myself for doing a Refinance on my Primary home.  I wasn't sure the rates would stay where they were (that was at 5.5%).  Now the rates are even lower!

This may be a sign of a bad Real Estate market; but only a fool should pass up these fantastic Interest Rates!  I am hearing of 4.75 to 5% for a 30 year fixed loan.  AMAZING !!!!  If this keeps up; I'll have to refinance again!

Here is a great Article from BankRate.com about the Mortgage Rates Approaching Record Lows

Call James for all your Real Estate needs and questions; servicing Virginia, Maryland and the Greater Washington DC area.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100
Washington DC 20016
202-351-5800 Main Office
Licensed in DC,MD,VA

Many people ask me how hard it is to get a Mortgage these days.  I simply say: As long as you have good credit; and a small down-payment (3-3.5%); you should no problem obtaining a mortgage.

So what DOES Your Credit Report look like?  Have you checked it lately?  Why not ?!?!  It's FREE !!!

EVEN IF YOU ARE NOT PLANNING ON BUYING A HOME.... You still need to check your credit at least once per year.  Mistakes can happen.  Identity Theft can also happen.

I highly recommend AnnualCreditReport.com   This is the ONLY site sponsored by ALL 3 Credit Reporting Agencies; TransUnion, Equifax, and Experian.  There are many sites out there that if you "google" credit report; will pop up.  Many of these sites want to charge you a fee or have you sign up for Credit Report 

Guard; or some such service with fees associated.

Now what you won't get for free is a 'Credit Score'.  Each agency gives you the option to a obtain a score; you will need to pay between $6 and $8.  The score will be displayed as soon as you punch in your credit card number; along with 5 reasons why your score isn't better (even if you have an excellent score).  However this score is not a "FICO" score; (the score used to obtain loans and mortgages); but it will give you an excellent idea of where you sit.

You can get your FICO Score from MyFicoScore.com for $16 (from 1 agency) or $48 (from all 3 agencies). 

What you need to keep in mind is that when you obtain a mortgage; lenders use a 'Tri-Merge' score to get your 'FICO Credit Score'.  Basically they use scores from all 3 agencies and use the middle score.

I don't believe there is any need to run 3 scores.  If all the information on your report is correct; the scores should not vary considerably.  The key rate is 760 - that will get you some of the best interest rates.

Check your credit; make sure it's right and if it needs some work; fix it BEFORE you decide to go shopping for a home.

Call James for all your Real Estate needs and questions; servicing Virginia, Maryland and the GreaterWashington DC area.

Coldwell Banker Residential Brokerage - Chevy Chase
5028 Wisconsin Ave NW  Suite 100
Washington DC 20016
202-351-5800 Main Office