On one, we had to arrange for a well and septic inspection on short notice for a client who was relocating to the Northern Virginia area. Ever try to arrange a septic inspection with a over a foot of snow still on the ground?  Not very straightforward.  Our team hit the phones.

On another, there was a problem with a buyer client’s appraisal — the value was acceptable but underwriting was overruling the value and declining the loan anyway.  A real problem for our client, who wanted the condo and had already given notice on her apartment. I combed through my list of lenders looking for options.

There were a half dozen other phone calls about topics I can’t even remember. Nothing extraordinary.  Just part of the list of a hundred things that an agent manages between contract and close. There were calls to our team’s client care manager, calls to my partner, calls to an inspector, to several lenders, and then back through another round of calls to coordinate what we had each learned, and finally two 30 second voicemails to clients with the conclusions that it had taken three of us an hour to research.

Finally my flight was boarding and I packed up my electronic paraphernalia.  A woman had been working across from me for most of the hour said to me as I got up: “I have a whole new respect for real estate agents after listening to you for the past hour.”

I laughed and mumbled something about ‘all in a day’s work’ and we boarded the plane. And it occurred to me that she had a rare glimpse into the 90% of the workload that our clients don’t see. They see the 10%: the opening of lockboxes, the filling in of blanks in an offer, and me sitting next to them at the settlement table. The tip of the iceberg.

But 90% of an iceberg is underwater and never seen. That’s the 90% that really counts in real estate. The 90% that knows how to work a network to find a loan that will help a client get that condo when the original lender backs out and now it’s a ‘problem loan’; that knows who to call to get a last minute inspection to beat a deadline that an unreasonable seller demanded following a blizzard; that can get a real estate attorney on the phone at 8:00 at night because our response is due by 9:00 and there’s an issue; that knows how to amend the contract to protect our client’s deposit in case a deadline can’t be met. You want an agent that knows the parts that you don’t see — the other 90% of the business.

So I’ve concluded that a good real estate agent is very much like an iceberg. Our clients see the 10%, but a good team knows the other 90% that is behind the scenes, and that’s the part that makes the transaction seamless.

If you want to work with a team that understands the complexity of today’s real estate market, please contact us. We’d love to talk to you about our approach to real estate.

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Though average days on market for Northern Virginia is hovering in the 60-80 day range, you can observe this “two market” phenomenon partly in the histogram shown at the bottom of this page of my website (where I monitor these stats each month).  The histogram breaks out how many days a property was on the market before it sold; so rather than an average, it shows you how many of the sold properties sold in the first month, vs those that sold in the 2nd, 3rd, 4th, or later than 4th month on the market.  I explain this phenomenon of pricing a home well and getting an offer in the first 30 days more in this post.

Serious buyers who spend time looking at properties are not surprised that some properties seem to fly off the market, sometimes selling even before the first open house (yes, I’ve seen this many times in the past few weeks.) So it’s clear that if a buyer sees a property that is “inthe market” that they like, they need to be prepared to make an offer quickly.

So the question I get from buyers is:  If a property is new to market, can I bid below asking price and, if so, how far below?

Well the first part is easy: of course you can bid below asking price.  You can bid whatever you’d like, but the seller doesn’t have to accept your offer and the mere act of putting an offer in invites competing offers. When they receive your offer, good listing agents will call everyone who expressed interest and tell them “We have an offer; would your client like to put an offer in as well?”  Fence-sitting buyers are often a lot more motivated once they see someone else wants the property.  And subsequent buyers assume your offer was a competitive one, and more likely than not will put in their own very competitive offer.  So if you bid too low you invite competition.

To answer the second part, I did some research on the past 30 days of sales in Northern Virginia.  I pulled data from our Multiple Listing Service for all sales that were on the market fewer  than 21 days when they sold.  I think this is the best way to see, on average, what price a seller was willing to accept if a property was “in the market” such that it attracted an offer early.  Here is what I found:

Average List Price: = $397,399

Average Sold Price = $395,714

Average List-to-Sales-Price Ratio = 99.6%

The lesson for Sellers: If you price it right, it will sell for very close to asking price within 30 days.

The lesson for Buyers: If you see a property you think is “in the market” and meets your needs, you need to move quickly, and you need to make a realistic offer.

Source: MRIS as of 3/6/10.  Data deemed accurate but not guaranteed.

More Resources:
Attend a Free First Time Home Buyer Class
Review Orange Line Condo Prices
Search for a Condo

When you’re ready to start your Arlington condo search, please contact us. We’d love to meet you over coffee and see if it makes sense to work together.

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Interested in a building you don’t see here?  Give us a call and we’ll find out!

More Resources:
Attend a Free First Time Home Buyer Class
Review Orange Line Condo Prices
Search for a Condo

When you’re ready to start your Arlington condo  search, please contact us.  We’d love to meet you over coffee and see if it makes sense to work together.

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Brokers came together and created a ‘listing service’ which advertised their listings across all brokers, along with an offer of compensation if another agent brought a buyer to their listing. Hence, the ‘multiple listing service.’ The MLS provides any descriptive information provided by the listing broker, along with some information on each property such as the tax record and maps. Brokers must agree to participate in the MLS and abide by its rules, including making all homes available to show (via lockbox or other means) to each participating agent. MLS is a generic term for systems like this across the country.

Our local MLS is operated by the Metropolitan Regional Information System (MRIS), and it is the largest MLS in the country. Often you’ll hear agents refer to “checking the MRIS listing” by which they mean they’re going to check the MLS.

Flash forward to today, when the MRIS allows its data feed to be shared by brokers, and then brokers post the feed onto their websites, making the data available to the public (though not every field.) And so that’s how agents like me are able to show you all the homes listed in the MLS, and everything in the MLS is included in the search tool on my site here.

Talk about a technology shift that changed an industry! Can you imagine going back to the days when brokers owned the data and wouldn’t let buyers or sellers see it??

Today’s successful agents realize that it’s not ownership of the data that makes a trusted advisor–it’s the skills to interpret that data, and the ability to educate their clients about both the market and the process so that buyers and sellers can make their own decisions.

If you’re thinking of buying or selling a home, and looking for a consultative approach, please call us. We’d love to talk to you about how we do business.

More resources:

Click here to search for a home in the MLS

Find the value of your home

Attend a free first time home buyer seminar

Photo courtesy of: http://www.flickr.com/photos/scottkinmartin/ / CC BY 2.0

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Source: MRIS as of date of blog post. All data deemed accurate but not guaranteed. Stats exclude retirement communities and co-ops.

Sign up for weekly market conditions report: http://www.northarlingtonhousevalues.com

See market data for all of Arlington.

See more Buyer Resources

See last month’s post on Orange Line Condo prices.

Ready to start your search?  Sign up for a free first time home buyer class in Arlington (registration required).

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Consider these home buying statistics from NAR:

• Single female buyers accounted for nearly twice as large a share as single male buyers for both first-time buyers (24 and 12 percent) and repeat buyers (17 and 9 percent).
• Twenty percent of recent home buyers were single females, and 10 percent were single males.
• More women (15.5 million) than men (11.8 million) lived alone. Among these, women were more likely than men to own their homes (56% vs. 47%).

But is the home purchase process different for women? What about with other financial decisions like choosing a mortgage, or investment and retirement planning?  How should a single woman prioritize?  How does she protect her assets going forward?

Come hear from an expert panel of women professional in the fields of financial planning, mortgages, real estate, and conflict resolution. Learn from the experiences of others, discover your options at any stage of life, and make wise financial decisions.

Women, Wisdom & Wealth

Wednesday, March 10, 2010  6:30 – 7:30 pm

Pimmit Hill Regional Library, Falls Church, VA

** This is an educational seminar. There is no cost or obligation; however, you must be registered.  Contact us to register for the session. **

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Examples of this commercial space may be a grocery store or restaurant on the bottom floor of the building or a convenience store as part of the lobby…all of which is very convenient, however, may create difficulties for obtaining the loan you want.  Under current Fannie Mae and Freddie Mac guidelines, financing becomes an issue if the commercial space is more than 20% of the entire project.  If it’s more than 25%, you cannot do an FHA or VA loan either.

After finding what seemed to be the perfect condo for one of our buyer clients in Alexandria, it was disappointing to learn a Whole Foods occupied 43,000 square feet (28.6%) of the building, taking some popular financing options off the table for our buyer.

Ilyce Glink  has this to say on the new financing rules for condo buyers:

Developers who built multi-use properties, with commercial, retail or restaurants on the first floor and condo units above may find that their properties will not be approved for financing.

Fannie Mae guidelines require that no more than 20 percent of a building’s floor area ratio (FAR) can be commercial. So if the building has 3,000 square feet, with a 1,000 square foot shop on the first floor and two 1,000 square foot condos above it, the property will likely not be “approved” and a buyer will not be able to get financing.

All this is bad news for condo buyers. Buyers who didn’t close before the end of 2009 may now find themselves rejected for financing if they are buying in a condo building that has not been approved or can’t be approved. Can you imagine the headaches this will cause?

Lenders say that buyers who need a loan to close on their purchase should ask whether a building is approved for financing before bothering to go for a showing.

She continues…

While there are some waivers being granted, condo buyers all over the country will find it more difficult to finance their purchases. These days, if you can’t finance a property, the number of prospective buyers will decline, and the property value could tumble.

What does this mean for buyers?   Expect headaches, long waits, bigger down payments and higher interest rates if you’re buying a condo in a mixed use building that has too much commercial space–assuming you can get financing at all! And if you’re thinking of putting an offer in, it’s wise to do some legwork on the building and with your lender before you go through the effort.

This is all thanks to the “tightening” of the credit markets that’s been going on since the bubble burst.  Will some of these rules loosen in the future?  I hope so.  Otherwise, current owners in buildings with high percentages of commercial space need to be prepared to wait it out.

This information deemed reliable but not guaranteed.  Every situation is different and you should check with your agent and a lender about specific properties.

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The approved database remains in place and is the easiest option, but the new rules scrap the whole Spot Approval system completely, and now require condos to go through a lengthy and expensive HRAP (HUD Review and Approval) or DELRAP (D.E. Lender Review and Approval) process. The good news is that once a community is through the HRAP or DELRAP process, their approval will potentially remain in place for several years and applies to the entire building, and future buyers can simply coast in on that approval.  You need only to check the database.

The process is much more cumbersome than the previous spot approval application, though, and these rules are all new.  As a result some lenders are deciding it’s not worth the time (4-6 weeks) or cost (several thousand dollars per review) to jump in to this arena just yet.  Some are letting other lenders “bite the bullet” on this one and will jump in later, after more condos are through the process and they can ride the coattails of lenders before them.

So what effect will this new hurdle in obtaining FHA financing have on Arlington’s condo market?

In the past 30 days, according to MRIS statistics, financing for sold condos (excluding retirement communities) was as follows:

Surprisingly, more than HALF the sales used Conventional financing!  This would indicate that the condo market isn’t going to come to a screeching halt after all.  But is there a difference based on price point?

Financing Used in Arlington Condo Sales by Price

Clearly there is heavier dependence on FHA in the under $300K and $300-500K price points, but I’m surprised it isn’t even heavier that this data indicates.   This indicates to me that the lower priced condos (under $300k) are going to be disproportionately affected, but also are unlikely to completely halt.  And look at the high percentage of all cash deals in that segment!

So it may take us a few weeks, or even months, to get the majority of condos through this painful new HRAP/DELRAP process, but hopefully in the long run it will be easier for everyone.  While we’re going through this initial launch phase, keep in mind that settlement times will be MUCH longer (remember that June 30 $8000 credit settlement deadline?) and buyers may incur thousands of dollars in extra cost if they’re the unlucky “first mover” in a building trying to do FHA.

* If you know you are going to use FHA to buy a condo, being under contract by April 30 is NO guarantee that a currently ‘unapproved’ condo can get through this process by June 30. *

*My advice is to get under contract EARLY if using FHA to buy a condo if you’re trying to beat the tax credit deadline.  *

And for those who can’t or won’t do FHA, remember ‘cash is king’ and you’ll likely need at least 10% as a down payment for a conventional loan.

And here’s another tip: If you’re looking at condos priced above $400,000 or so, contact me to discuss an important option that you may be completely missing in your search that would completely eliminate this issue!

To start your condo search, contact us — we’d love to help you!

Learn More: Attend a free First Time Home Buyer Class

Search Homes for Sale in the MLS

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Wenesday, March 3

7:00pm – 8:15pm

Arlington County Library

1015 N Quincy St 2nd Floor Mtg Room

Ballston (Orange Line)

We cover a recap of the market, current trends and market stats including days on market, average sales prices, and inventory levels. We’ll also discuss home purchase process, the tax credit, common pitfalls, financing basics and a how to get started checklist.

Specific topics covered:

- Northern Virginia, DC, and Montgomery County market analysis

- Mortgage basics: rates, points, fees

- Financing basics: FHA, Conventional, Conforming, and “Jumbo” loans

- Calculating the tax benefits of homeownership

- Short Sale, Foreclosure/REO/Bank Owned basics

- Search tips

- Fees and closing costs

- Buyer agency and choosing an agent

There’s never any cost or obligation to attend our classes.  Register for this free first time home buyer class here so that we may have materials available for you. More info at www.newhomebuyerclass.com

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