Navigating the housing market

Mar 12, 2013

Phil Di Ruggiero, co-founder of Greenline Real Estate, takes your questions about buying and selling a home in the Washington D.C. region.

Good afternoon!  I'm excited to get started... This is a tricky market, so I'll be happy to answer your questions about the current trends and strategies for buying and selling that are working out there.

Since the DC region has largely been insulated from the housing recession and many middle-income people still feel priced out of the local housing market, is the sequester really the only hope for prices to come back down to more reasonable levels?

Sequester... Sequester.. Sequester...  We hear it all the time.  People want to know if this is the foil to the escalating prices.  I don't think so.  What has been driving the price increases of late, more than anything is a slim inventory coupled with the low cost of borrowing - interest rates.  People are worried that the impact of cuts from the sequester will be falling employment.  Truth is that the effects won't be immediate - if the steep cuts go through.  Employers are still hiring - though at a lesser pace and the overall local economy is strong.  I think rising interest rates and the realization that Sellers can get more for their homes will drive an uptick in inventory once people have a sense of increased equity in their homes.

I keep hearing and reading that the D.C.-area market is back, but this is far from uniformly true. Sales in my condo community (close-in Arlington, <1mi from Metro) remain stuck at a bottom they hit in early 2010. Can we really call this a seller's market, or are results too patchy for that?

The definition of a Seller's Market is when the "average" property stays on the market for less than 90 days.  The region's average days on the market has dropped like a stone in the last year - down 21% to an average of 82 days on the market.  That includes all listings - ugly ones that sit on the market and prime properties where there are multiple contracts and it sells in hours.  But there is no doubt that real estate values are dicated by micro-markets within neighborhoods and specific buildings... yours may take some time to come up in value, but the trend lines are there.

So I am a semi young professional working in the DC area (live in MD). I am originally from India and wanted a house that is similar to the construction style that we use back home. I also wanted a nice backyard so that I can have a big vegetable garden. Most of the ready built homes do not appeal to me. I was thinking of buying a fixer upper and then updating it or buy a piece of land and build a house from the scractch. What would you recommend in this area? I have never bought a house, so all suggestions are welcome. I hope you take this question. Thanks!

That is ton's of fun.  Fixer uppers are a great way to build equity.  They allow you to skip the premium that many are paying for a completely done up or new home and to build up your "sweat equity"... thing is, not everybody is good at or has the ability to manage a contruction site.  Be careful not to bite off more than you can chew... who wants to brush their teeth in the kitchen sink for a year while their master bath is done over?  Not most of us...  Kitchens and baths get the most bang for your buck, but adding and preserving charm is also a fun and crafty way for an inexperienced renovator to make the place shine.

  Buying a fixer uppper is a great way to buy in a neighborhood that you might not otherwise be able to afford.

Help! Our family is in a quandary. We have two growing teenagers and we are stuck in a tiny 1100 sq ft. house that has still not recovered the value of what we paid for it in 2007. We really want to move up to a more reasonable sized home before it is too late and our kids have left home. But we need to sell our home for a good price in order to recover enough cash for a down payment. We don't have a large amount of cash sitting around. Any suggestions for how to sell high and buy low in order to move up in this market?

The buy-low-sell-high business plan is certainly what everybody wants when they need to make a move.  The thing is that you are trying to do so in the very same market... usually, if prices are high when you go to buy they are also high when you go to sell.  You will be able to take more money with you to the new place... it's just that you may have to put it right back down on the downpayment.  The good news is that lenders, faced with an improving market and low interests rates, are now offering lower downpayment options than they have in recent years.  100% down financing is largely a thing of the past, but with FHA financing widely available now, 3.5% downpayments are available and there are also some good low downpayment conventional loan products too... 3%, 5% or 10% down.

Will DC metro ever have a 'normal' real estate market again, with a balance of buyers and sellers? And a market where things are relatively affordable. One bedroom condos near $400,000 is not affordable. I don't see an end to DC metro's real estate being overvalued. Thanks.

This the new normal.  Here is the calculation that many buyers are going through.  In a $400,000 condo with 10% downpayment and a 3.5% interest rate, the monthly payment including condo fees, taxes and insurance will be somewhere around $2,200/month.  That is certainly not cheap, but just look on Craigslist to see how strong the rental market is here.  You can easily pay that much or more for a rental in the same area... Why pay someone else's mortgage when you could be paying your own?  


Hot tip:  In Washington DC, there is a Transfer & Recordation Tax that both the Seller and the Buyer pay...  If the property is under $400,000 the rate is 1.1% of the purchase price charged to each side of the transaction.  If it's over $400,000 then both sides pay 1.45%.  If you find yourself negotiation around that number, make sure to keep it in mind and point it out to the other side that you both can save if you drop the price a dollar.

For those who are putting a house on the market, any particular strategies that are working well? I mean other than decluttering, cleaning and general sprucing up?

Good question!  You can easily go overboard and spend more than you will get back.  My favorite is refinishing hardwood floors.  Nothing gleams like a shiny new floor and even that polyeurethane smell can take the place of a "new car smell" getting people interested.  


Don't forget gardening!  With the weather cracking people want to get out and see new places... Greet them at the sidewalk with your curb appeal looking sharp.


Also, go neutral... New paint: good.  New pink paint everywhere: not so much.

How is the best way to deal with possible multiple offers on a house? Thanks. - charles

Multiple offers are becoming more common, and in some neighborhoods and projects, they are the norm.  Other than paying 200% of the list price in cash delivered in a Samonite briefcase, here are some ways to get ahead if you want the same house as everybody else:

Limit the Length of your Contingencies:  As a buyer you may well be wary of eliminating all protections from contingencies the contract.  That's fine.  Just limit the time and scope of them.  Sellers will be more willing to accept contingencies when they feel they that their house won't be tied up for a long period of something goes wrong.  Often, the other buyers who lost out are waiting in the wings to pounce if you back out.

Escalation Clauses:  These are a way for a buyer to put down a base price in a contract that only raises if there is another "bona fide" offer that escalates your price.  If the list price is $500,000 and your agent tells you that there are multiple offers, there is a pretty good chance that the price will go up from there.  Pick a number that is just a bit over an obvious price break... i.e.: Escalating to $551,000 rather than $550,000.  It's not an exact science, but you might get it.


Ask what the Sellers want:  This may seem obvious, but sometimes a Seller wants more time in their home and does not value a 2 week settlement that you might have put in to show you are serious.  If you don't ask then you won't know and sometimes you might be surpised what they are looking for


I bought a house in NE a few years ago under a 203k Renovation loan. That loan enabled me to make important structural/fundamental updates to the house (all new electrical, updated-ish kitchen, repointing, etc). While I think my house turned out great, it is still a far cry from the houses bought by investors in my neighborhood who perform flips. How can I compare my home to nearby comps? I have the end unit, and my house is considerbly larger than any home on my block. One four doors down from me was bought by a construction firm and re-sold in 6 months to a tune of 450k. All-in I'm probably 300k into my house. Would you suggest "testing the waters?" I'm about to turn 30 and the idea of starting out my 30s more financially secure, without being tethered to DC is a nice prospect... however I'm debating whether or not I should sit on my property and hope home prices continue to rise. Any thoughts?

It sounds like you are viewing this as an investment.  The good news is that it also sounds like you have equity in your home.  If you like the idea of the cash and the freedom VS. being house-rich-cash-poor then SELL.  Have you heard to get when the getting is good?  Well, the getting is good.


If a fully renovated home went for $450 and yours is an end unit with some more modest improvements, I'd press the value play to buyers that they can come in without the premium for that other type of home.

Bring a real estate agent by, like one of our GreenLine Real Estate agents, and have them present you with the full market analysis.  You'd be surprised how many buyers there are out there for products just like you described.

I would like to buy a first home in NoVa but I'm not sure if I can afford it. All of the sites I see ask about calculating how much you can afford ask for the cost of insurance/taxes. If I knew that, I wouldn't need the calculator! Can you recommend resources for finding insurance amounts, taxes, avg HOA fees?

The first step is to apply with a mortgage loan officer.  I know that many people want to know what they can afford before they officially find out from a lender, but that is really the best way.  An online morgage calculator like will give you an idea, but a local lender is aware of the tax rates, typical insurance premiums in the areas you want to buy in and can help you figure that out too.


Make sure you asks what the HOA fees include.  They are not always the same and sometimes cover many expenses you would otherwise have to pay out of pocket... sometimes they are just high.

Yes, but to get to that $400,000 condo with 10% down, you need to have $50,000 in cash, no small feat for most. Plus, with only 10% down, I assume I would be dealing with an additional monthly PMI fee. Banks are still fussy. And 20% down for $400,000 one bedroom is out of most people's leagues, I believe.

Point taken.  But real estate is an investment and banks require equity from the buyer to qualify.  You have to pay to play.  If you only put down 5%, your payment, in this scenario, would go up by about $100/month.  


There are 1BRs under $400K too...  We just put one under contract in a new building this morning for $300K.

Hi! We are in a very similar situation to "Dreaming of Moving Up" - we bought in '08, and have JUST now come to the point where we are no longer underwater. We have very little equity however (not enough to even refinance). We have a growing family and would love to move up to a single family home (we're in a townhouse in Howard County at the moment). I have been saving as much as possible for a down payment, but I was also considering maybe a discount broker when we sell our townhouse. Is this a viable option? If so, where to look for a good one? Also, I was under the impression that no lender would even talk to you without at least 10% down (what we are aiming for) but you mentioned some conventional loans for 3% or 5% down? That is (great) news to me! Can you recommend a link and/or resource for more information?

Here is an important thing for all of you Home Sellers out there...

ALL REAL ESTATE COMMISSIONS ARE NEGOTIABLE!  That is not to say that you get the same quality of marketing and service from every real estate agent, but you typically get what you pay for.  A discount broker is discounting their rates because they are offering less services than a full service broker.  This is not to say that you won't be happy with the sale or the price you get, but just that your agent will be less involved pushing , marketing and negotiating the deal.

Some brokerages, like us at GreenLine Real Estate, do more comprehensive marketing of real estate, with video tours, internet ads etc.  This usually drives up exposure and helps the Sellers.

Good questions!  I hope you all found this informative.  If I missed anything or if any of you need our help buying or selling your home, give us a shout!  

Phil Di Ruggiero

202.525.5236 | 

Once again, we had more questions than we had time for. We'll try to answer some of those we didn't get to on the Where We Live blog. Next week, Craig Strent, CEO and founder of Apex Home Loans in Rockville, will join us to answer all your mortgage-related questions. 

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Phil Di Ruggiero
Phil Di Ruggiero is co-founder of Greenline Real Estate in Washington, D.C. He can be reached at 202-725-2250 or through his Web site,
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