Hi! My offer for a short sale was accepted by the seller over a month ago. The seller's agent started negotiating with the bank a few days ago to accept the offer. How much longer should I expect for a decision to be made? What percentage of short sales go through? Finally, what's the latest date I'd be able to quality for the house purchase govt credit? Thanks!
Hi there! Let's tackle the only question with a certain answer first. You have to be under contract--with bank approval--by April 30, and close the deal byJune 30 to qualify for the tax credit. As of now, there's no telling how long the bank has to dither over your offer. But, as of April 5, if the bank is a participating lender (and most of the big ones are) and if the seller has tried the government's mortgage-modification program, the bank is supposed to give you a decision within 10 days of the offer. Be persistent on this one -- the clock is ticking.
For someone totally unfamiliar with the D.C. area, where would you recommend someone graduating from college with a wife seek to live upon obtaining entry level employment? In other words, what are affordable neighborhoods for young college graduates?
Hi, Lancaster. That's a lovely part of Pennsylvania. But you'll be in for a double-barreled shock when you come to DC. Housing prices and commute times will both be higher than you're used to. I absolutely recommend that you try out rental housing when you first arrive. Once you have employment, you can figure out a realistic budget--and commuting strategy. But you'll find more of the affordable choices a bit farther out from the Beltway. The Maryland suburbs have some affordable spots, especially in Prince George's County, Howard County or Frederick County. But commutes can be tough--and costly. In Virginia, areas from Springfield south along I-95 become more affordable. Look into commuter rail in both instances. And in the District there are some affordable spots--but they won't be in the fancy condos closest to downtown employment centers.
I'm just throwing my own two cents out here, but I'm predicting that housing will slow down again significantly once the $8000 tax credit expires.
There will likely be a bump, particularly at the national level, but perhaps not in the National Capital region. The credit may have already used up most of its potential, and at some point natural market forces need to get re-established. The credit coming off in the Spring - when there is higher demand - and with the depths that the market has been through over the past two years, the market here will probably ride through that bump and get us back to normal duirng 2010.
Dr. McClain, Thanks for making your analysis available at www.cra-gmu.org. I've found it informative and helpful. What is your advice for how to sort through all of the economic data from seemingly competing sources and derive something that is useful for someone buying/selling in an specific neighborhood/zip code? There is analysis or data at the national level, at the biggest city level, at the local government level and at the zipcode level. (Unfortunately, the Post's online data is typically so outdated as to be useless-- the "Housing Review 2009" is still posting date from 2007 and 2008.) Even when the data is current, the results of analysis from different sources often seems contradictory. For example, the latest Case-Shiller analysis reported in the Post predicts further price reductions in the D.C. area through the fall, while your analysis is that all indicators are in a positive direction and prices are returning to normal. How is the reader to reconcile such differences? Is it really possible for the individual buyer/seller to derive some useful information about what is or will be happening in their area from all this seemingly contradictory economic analysis or are we better off relying on recent neighborhood sales data provided by our local realtors?
There is a lot of information available from many sources, and none of it is "wrong" or "right". My approach to understanding the markets is to track the same source and measures over time so that I understand the trends and directions. A caution in this particular market is that we are in uncharted territory to a great extent - we haven't had this experience in the past. For an indivual buyer/seller, my advice is educate yourself as much as you can about your area/neighborhood trends, and then to use an experience RE professional to help .
Housing reviews, by nature, are a bit outdated by the time they're published. We had some retrospective of the 2009 market in an early January story by Renae Merle. I'll see if we can find it for you.
I've been out of work since December. For the time being I still have enough money to pay my mortgage, but I don't want to deplete all my savings just to stave off an eminent short sale. I have a foreberance until May 30th. How many points does a short sale take off your credit score? 100? 200? More than that? How long should I expect a property worth about $80K-120K to stay on the market? I'd prefer to pay my mortgage up to the day the short sale closes to avoid the late payment hits to my credit, especially seeing that its going to be trashed anyway.
That's a tough spot you're in -- and you've got plenty of company. In cold, hard financial terms, it doesn't make sense to keep paying on a home that you will ultimately lose. If your loan modification has been through the government's HAMP program, you might be a candidate for the new short-sale rules--which would protect your credit score. Are you getting any nibbles onthe short sale effort?
How much weight do local foreclosures have on the sale price of a townhouse? My complex has a few that have gone in to foreclosure, but some that have sold at market value. Perhaps I have answered my own question here, but any insight you can give me would be greatly appreciated.
Foreclosures have become so common in today's market that they don't have the stigma they used to. If houses in your area are selling at market value, that is a sign that demand exists. Some foreclosures are resulting from the financial/mortgage system, and not the normal reasons.
Good afternoon. We have been living in our first home for 10 years, and have decided that it's time to move up. Any tips for how to navigate the process of trying to align buying/selling, since we'll need the equity from home #1 to get into home #2? What comes first - putting our house on the market or shopping for #2?
For such specifics, I think you need counsel from a professional. They will want to look at the market situation of the house you are selling as well as the one you want to buy in.
Would you advise people to sell their house before purchasing a new home or going ahead with a purchase and carrying two mortgages for a bit? I could carry the two mortgages for a while but the slow market makes me nervous that that could drag on for quite a while.
I have done the two mortgages for a short time bit and it is NOT FUN. It was only a month or two of overlap, but it sure felt like a long time. And it makes you want to jump at any offer that comes your way, too. Especially in this market, I suggest you sell and then buy, even if you have to spend a little time in a rental in between.
I like your chats. I'm the one who came into the lobby of my top of the line rental and found the homeless man asleep on the floor next to his cellphone. Wondered, I've lived in 12 buildings locally and it occurred to me lately not one of them has provided any services, just basically some box to live in. Is that fairly common?
Thanks, Washington. I'm glad you're here. DC is not really the big doorman-style rental market that, say, New York, is. You find some services if there's a pool or gym or community room. I mean someone has to at least vacuum those things. But the more service-laden situation tends to be more among condos--and then at the high end.
I am looking at purchasing in an area of NE that is very metro accessible but as of right now seems to be very overlooked. There are two housing complexes that are supposedly approved and should begin work in the area. I am hoping to be able to put off buying for another year or two, however, I am afraid that once people start realizing how accessible the area is it will become very popular and I might become priced out. In other areas (such as Columbia Heights, Gallery Place, etc.) that used to not be so desirable but now are extremely popular, how long did that transformation take? Over the last 5/10 years what has the average appreciation rate of Columbia Heights been?
I don't know about the stats for that particular neighborhood offhand, but here are a few more ingredients for the soup: There's not a whole lot of anything getting built right now, and having zoning or a building permit doesn't mean it's going to be built anytime soon. Just don't count on it. Recession has slowed the gentrification (for want of a better word) of neighborhoods. BUT there's still good interest in affordable neighborhoods close to downtown. (Lancaster chatter--I'm talking to you!). And..with any neighborhood, walk around at various times of day. Is there a reason buyers are avoiding that neighborhood?
One trend we are seeing in the region's housing market is that area's closer in and with good accessibility seem to be more in demand and have had more sustainable and even increasing prices. It indicates that there is a higher premium on location than there used to be - perhaps because buyers are more aware of gas/energy costs and are taking that more into account.
Mr. McClain, how much is a Montgomery vs. Prince George's County address worth? My townhouse is near the line, and friends on the other side bought for 50% more than an appraisal I got at the same time.
There is not a real good answer to your question. Some research indicates that one of the key variables in prices is the public school system, and that might be the case for your observation. Schools, public services and other benefits provided by governments mean more taxes, but may also mean more value for housing.
Hello! New to town and looking to buy. Dupont is out of my price range, but what can I expect to pay for a well-maintained one bedroom in Logan Circle or U St?
I can't keep prices in my head--and there's no need to, anyway. An easy way to check out neighborhood price trends is to play with one (or more) of the online real estate sites like trulia.com, realtor.com, redfin.com or sawbuck.com. A lot of them let you glide over a map and see pop-ups of recent sale prices. Play with them all until you find your favorite site.
Mr. McClain, I used to do real estate feasibility analysis and would love to return to that work. I'm thinking of beefing up my education. What is your degree in? Economics?
City Planning, which includes a lot of urban economics.
My husband and I are looking for a house and I can't believe we can't find much of anything. I thought we'd be seeing tons of houses coming on the market but less than six have come on in March that we want to see. We're not looking for a starter house, we've seen plenty of those. We're ready for our second and it just floors me how little I see in the $400k range in Rockville (that have a basement and are large enough to hold teenagers.) Plenty of small houses in the $300s, a few in the $500s. But regardless of our specific criteria, I thought we'd see a TON of houses coming on the market this spring.
Well, I think the snow did slow everybody down. Some agents have told me that it set us back 2 weeks in terms of the pre-sale fix-up period, and that makes sense to me. Also, a lot of people wait to list their home until the trees start to flower and the grass greens up. But--I suspect it's also the case that the people who would be selling those houses--and moving into more-expensive ones--are still sitting out the recession.
Probably true and this is also part of normal market recovery...there's caution about putting houses on the market, supply is down, so demand catches up.
Hi Elizabeth - We recently got our D.C. tax assessment for next year, and it looks like they have devalued our house again - we're now down 40k below what we payed when we bought last March, at least according to the District. We are first-time home buyers (and thus kind-of clueless about many things). While obviously this is good for us in terms of what we will pay the city, what does it mean for our resale value? The place is so small, and expanding is prohibitively expensive: if we want to have a second child (and I think we do, although not right away), we will have to sell and move, so this issue is on my mind.
Hi. The good news for you is that tax assessments often are a bit lower than appraised values. One reason is that appraisals happen more frequently than tax assessments (which are never more than once a year, sometimes less frequent). And nobody appeals a low tax appraisal to make it increase. So be glad for the lower taxable value. (Watch what happens to your tax rate, though. Lots of jurisdictions are raising the rate to recover some of the revenue they're losing to lower assessments.) And...not a real estate question, but as a mom, I can vouch for the fact that an infant doesn't take up much room--at least for a while.
We underbought about 10 years ago, have aggressively paid off our mortgage, and are in a position to be mortgage-free in about 5 years. Now we've got the bug to buy something a little bigger and closer to a Metro station just outside the beltway. Are we crazy to take on additional debt and move from a house that's finally getting into the shape we want it to be?
One factor in your situation is that if you want to do this and take additional debt - that debt will cost you less than it used to and very likely less than it will in a year or two. Interest rates continue to be very low, but will start to rise when the economy gets rolling again in the coming business cycle.
Hello! For the poster who was wondering about the order of buying/selling when wanting to move up, my husband and I are in the process of doing this right now. We first started looking before our place was on the market thinking (ha!) that someone would accept our contingent offer, but no luck in Arlington and we lost out on 2 houses we really liked. We sucked it up and put our S. Arlington townhouse on the market and got it under contract in 2 days! Once we had a ratified contract with our buyer, we got out there and started looking. Luckily we found a house fairly quickly and had our offer accepted. Even though we're still technically under the contingency of the sale of our place I guess it makes it easier for the seller on the other end to swallow since we have a contract on our place. So it can be done and I really would recommend not looking until your place is on the market so you don't set yourself up for that heartbreak. Good luck!
Ah, good advice! Thanks for chipping in.
Hello. I was the one who wrote in last time about how to get through selling my home in Herndon. You gave me excellent advice, but I did not get a chance to use it. My house went under contract in under 3 days. I was not expecting my house to go that fast. However, the person who wants to buy my house is using a Va. loan and the loan appraiser is coming this Monday. I heard they tend to be harsher when it comes to appraisals. Is this true? How do I present my house to get a better appraisal? Thanks.
Appraisals for VA and FHA will take a harder look at basic home-quality issues like structural integrity, the quality of the roof and gutters, etc. The best way for you to get through it is to have a home that's in good repair. If need be, get your hammer out, pronto.
After considering my options with my interest only, no down payment, adjustable rate mortage (I know, I know, horrible way to buy a condo), I am in the beginning process of doing a short sale on my condo. Assessed at $79,900 and owe $198,000. I will retire soon and my pension will be condiserably lower than my current income and interested in moving to a warmer climate. Do you believe the new law effective April 5 requiring banks to accept/decline offers in 10 days is realistic?
I really don't know if it's realistic. But we're going to find out fast enough, aren't we? You're the kind of owner--under water, facing a reduced income--who, unfortunately, looks to be headed toward foreclosure. And that foreclosure avoidance is exactly what the new program is trying to avert. I hope it all works out for the best.
I'm preparing to rent my house in the next few months and wondering about the pros and cons of using a real estate agent. Of course I'd rather not fork over the money, but I realize it will be helpful in showing the home while I'm working, etc. My biggest concern is that I want renters who will take care of the house (as much as can be expected). If credit reports and financial info look good, will realtors take into account those other x-factors of potential renters? I know we can't judge a book by it's cover, but I'd rather have a professional couple living in my house, then a couple guys straight out of college. I wish I could hand-pick renters, but know that's not possible. Appreciate the advice.
Well, most homes are not rented out by real estate agents. They're really necessary if you're an out-of-town landlord, but most locals manage rentals themselves. Be careful about those "x factors" of potential renters. That can land you a housing discrimination complaint. Rules about making rental housing available to anyone who has the money and credit necessary to be a good renter are particularly stringent in the District and Maryland. Learn the rules before you rent.
It if goes down, they wring their hands about resale value (even though they have no intention of moving for 5 years); if it goes up they complain about taxes. Talk about an underappreciated career!
True. Then again, tax collectors of any sort haven't ever been the most popular guys around.
Do you think it is a good time to put a house on the market in Annapolis, Maryland (historic district)?
I suggest you consult a RE agent in the area. The housing market in the region is beginning to recover and interest rates are still low which should attract buyers - but each decision to put your house on the market needs to consider very local/neighborhood factors as well.
What are your thoughts on the revamping of SW Waterfront? Do you think they are making progress and turning the area into a safe area?
I think that the SW waterfront will become a very desirable location in the future, but I'm not sure of the timing and don't know specifics of what the city is planning. But from a location and amenity standpoint, it should become a very desirable area over time.
We are new to this neighborhood (VA), just renting right now, but really like the area. A neighbor stopped by and talked to my husband and mentioned that they were putting their house on the market in the Spring to move south where their family is. We were really excited! Thing is, we've only seem them once. My husband didn't ask too many questions about their house, but from what we've seen in person from the outside, and online (county records), we are interested in possibly pursuing this. We do know they are going to be using a realtor - that part they did mention. Thing is, we're not sure how. Do we go to them and say, "Hi. We'd like to talk to you about buying your house before you put it on the market." But, what if they don't want to go that route? Or, we really don't like it inside - that would be awkward. We're also afraid of offering a price and then they decide to go higher. Any suggestions on how we can do this? We will be working with the realtor who sold our house, but without knowing what realtor they're using, there's not much our realtor can do. I've also tried to find out some details without being too nosy, but I don't want to put anyone off. We haven't lived here long, a lot of people have been here for many years, so I'm being cautious about coming across as too obtrusive and/or nosy. Thank you!
Oh, please. Go and ring their doorbell this beautiful weekend. Why wouldn't they welcome your interest? You simply say that you've admired their home for ages, and might consider buying it. If you've already signed on with an agent, you need to mention that, because the agent will expect a commission if you buy. You can talk those details later. Ask if there's a time when you could take a peek inside. If you don't like it, you chalk it up to some practical reason -- not enough/too many bedrooms. Then you can talk price, and real estate agents. They would be fools not to welcome you.
Elizabeth, I read about a study that was done about 10(?) years ago that found not one Washington Post staffer (reporter, columnist, editor, or other content provider) had a child in D.C. public schools. Do you know if anyone's looked into this again recently?
I don't know of any such study or allegation, but I certainly know staffers who have children in DC public schools. What's your point?
It's strange to me that you'd suggest outside the beltway for this poster. Young, recent college grads would probably prefer city living, or at least the close-in suburbs with more to do in their "downtowns". For this poster I'd say that for affordable living inside the beltway, I'd choose areas like Takoma Park, MD, Silver Spring, some parts of Arlington, Va. (Columbia Pike area) and Hyattsville/College Park. If you'd prefer to live in the city and can't afford Dupont Circle or U Street, I would check out east Capitol Hill, east Columbia Heights, Shaw, Petworth, etc. You can also find affordable apartments in popular areas like Adams Morgan, Mt. Pleasant, and Woodley Park if you you are willing to put up with window-unit AC and a small 1BR. I work for a non-profit and most of our 20-something recent college grads live in Columbia Heights, Adams Morgan, and Capitol Hill. At least they have the advantage of being able to split the rent on a 1BR - something that will get them into a nicer apartment than most single people can afford.
Thansk for the suggestions. The fact that our Lancaster chatter is married shaped my reply. Most married folks don't want a roommate. But, seriously, Woodley Park?
They would LOVE it if they could sell it to you without a realtor. If they don't, come on over to Alexandria. I'm putting mine on the market and would love to sell it to you without paying a realtor's commission. I'm praying I find someone who wants it before I list it.
There you go. And they did just happen to mention they were going to sell, didn't they? Sounds like an engraved invitation with RSVP card to me.
My husband and I both owned homes before we were married. Mine is now an income property. Since rates were low we decided to refi both houses. It's been a nightmare -- not because we have problem credit or terrible current loans or anything like that -- but because of constant errors and delays from the bank (we're both going through the same bank, but have different processors). My husband was supposed to close on his loan on March 1. With various delays and drama, it finally got sked for this past Wednesday but they got the amount wrong(!!) so they told him they would resked it Monday, then they call today to resked to next Friday. I have no idea when my loan will close, can't get a straight answer. We're too far in to turn back now, but I'm here to tell you, Bank of America has gotten too big.
The answer you need to demand is that it will close before your rate lock expires. Rates have been quite stable lately, but that could change. Look at your loan documents and see when the expiration date is. Get them to extend it or to close your loan. They may be putting off your refinance business in favor of purchase deals, which are more time sensitive. But they're likely to get more busy, rather than less, as spring goes by and that June 30 tax credit deadline nears.
Just a comment...My husband and I are looking for a under 1 million dollar home right now in a particular school district. We have the twenty percent to put down, but not enough to buy down the mortgage to $729,750, which is the most that most mortgage companies will loan. However, all of the reasonable houses in that district are in the 1.1 million dollar range, and I see that these houses are moving a lot slower if at all.
Thanks for the report from the field!