Real Estate Live

May 14, 2010

Post Real Estate editor Elizabeth Razzi will discuss the local housing market -- from condos and investment properties to contracts and mortgages on Friday, May 14 at 1 p.m. ET.

Hello, everyone! I'm glad to have you back. Let's see what direction you folks drive this conversation this week. But, I'm wondering, how are things going in the race to close home sales  by June 30 to qualify for the tax credit?

Hi, Elizabeth, I'm a long-time reader and I just wanted to put in a plug for neighborhood events as a great way to find out about a neighborhood you may be considering. If I had a penny for every time someone on this chat has asked for an affordable safe neighborhood close to the metro...., I'd be rich! This Sunday afternoon, for instance, is Hyattsville's annual Historic House Tour (yes, yes, shameless plug). But, seriously, I've met so many neighbors who had never set foot in the community before this event and said it was seeing the housing stock, but more importantly, talking to the current residents who are walking house to house that really gave them a feel for the place.

Shameless plug or not, that's a great idea. Summer festivals, garden tours, concerts in the park etc. give you a great opportunity to get out and mingle. I also recommend riding a bicycle around neighborhoods that might interest you. And shop the grocery stores! They're a demographic gold mine. Have fun with your historic house tour.

My mother in law is selling her house. She got an offer, it was accepted, it assessed for what she was selling it for, and things were looking good. Then, the mortgage underwriter denied the assessor's findings and said it was worth less than the mortgage. This is because a house down the street (smaller than hers, not nearly as nice) sold for less than she was going to sell her place for. The underwriter has never even seen her place. She is really upset about this, but, according to her real estate agent, the only thing she could do is pull the house off the market and hope that the next underwriter is more generous. Does she really not have any choices? Is there no appeal or way out?

If the buyers are still interested in the house at that price, your mother should ask her loan officer to order another appraisal. (That would cost her a couple of hundred dollars.) And she should point out to the appraiser (who may or may not listen to her) the quantifiable differences between the two properties. That is, differences in square footage (which you can get from tax records), lack of garage or air conditioning, etc. "Nicer" is not objective enough to really sway the appraisal. But the other property's lower selling price may mean she has to settle for a lower price.

We need to move into a house by the end of July. We're looking in the Woodbridge/Dumfries area and are really surprised that there aren't a lot more Open Houses coming up this weekend, and that more people aren't selling SFH (4 BR, 2.5 BA) around here. Is it just the area? We're thinking we might have to go for a 3 BR, but we really would prefer at least a 4 BR.

Is May the best time? Well, I just hope you didn't sit out April waiting for May to roll around. It takes a lot of looking to find the right house, especially if you're looking for something bigger than the typical 3 BR. And lots of homes got sold early this spring to meet the tax credit deadline. There is a big "parade of homes" advertising/open house push focusing on new construction this weekend in Northern Virginia, if that interests you. Good luck.

Elizabeth, I've been in my condo for five years now. I never thought I'd have to stay five years. I have never been crazy about the place but with its depreciating value (I owe what its worth), I'd have to come up with thousands to sell it. I thought about renting it out and then renting a place to live that is more agreeable to me. To rent my place, I would probably have to rent it for a few hundred less than my monthly mortgage. Are there any financial repercussions in doing this other than digging into my pocket to cover some of the tenant's monthly rent? Would it be better to just sell and lose the money all at once? Thoughts? I need another perspective. P.S. I have an ARM that I can't refi so my mortgage payment can change every year.

Hi, Sorry you got stuck in a place you don't like much. Look at your budget carefully to see how long you could afford to take a cash-flow loss as a landlord. But it would be wise to get a quick consult with an accountant to go over the bottom line. As a landlord, you would be able to deduct business expenses, including depreciation, advertising, insurance and others, from your rental income. But losses can be deducted against investment income...I believe only rental income, though I'd have to check. On the plus side...the rent you could charge might go up over the years. If you can hang on,  it might prove to be a nice little investment.

Should a buyer be concerned if he knows the seller did renovations on a condo without a permit from the DC government or approval from the condo board? What kind of liabilities might the new buyer have?

You least if the renovations were the type that require a building permit. Swapping out old appliances for new ones, or replacing carpet typically don't require a permit. But condo boards might squawk if you replace carpet with noisy hardwood. In either case, the new buyer may be forced to bring the home into compliance with the zoning or condo rules. The buyer might try to sue the seller for the expense, but that's hardly a fun prospect, is it?

I am posting early in hopes you get to my question while I am in a meeting. I was talking to a mortgage professional the other day and he mentioned a way to avoid a monthly PMI charge even if I do not put down 20%. I have 10% to put down on my loan, and he mentioned that if I pay a onetime upfront PMI charge, of about $3500, then I would avoid paying the PMI fee every month. I would eventually break even as long as I stay in the house for about two years. On the surface, this sounds like a pretty good trade off, but am I missing something? What do you think about the upfront PMI fee in order to avoid the monthly PMI charge? Thanks!!

Upfront PMI can work, if you have the cash to spare at closing. But is the interest rate higher than what you would pay on a traditional mortgage? If it is, then you'll be paying more for PMI the longer you keep the loan.

In response to a contractor who posted to the last chat about the new lead laws impairing his ability to use contractors for hire and otherwise find qualified understanding was that only one person on the job site had to be certified in the new techniques. I could be wrong, but I thought that's what I read in the Post. Everyone has to follow them, but only one person has to have been certified, so this shouldn't really impact someone's ability to find staff if they themselves are the GC managing the job on site.

Here's what I just found on the web site for the Maryland Dept. of Labor, Licensing and Regulation:

At least one individual working on any project must be a certified renovator who has received training from an EPA-certified provider. Contractors also are required to provide consumers proof of their certification and training as a "certified renovator" before they begin work. The EPA may fine individuals up to $37,500 per violation.

What's not clear to me is if that means a certified worker must be on site at all times, or if only the General Contractor must have certification.


You might also be able to do a FSBO, especially if the price you need is attractive. Still going to have some expenses (closing costs and a attorney), but nothing like 6% to tour guides.

Absolutely -- very good point. This person might be an ideal FSBO candidate.

We've been looking for a house in Fairfax/Fairfax Station for the past 3 months. Price range $650k-$750k. Have been very discouraged at the number of choices - inventory appears to be very low. Do you expect the number of homes on the market to pick up anytime soon?

I don't know. School will be getting out soon, and a lot of families will be focusing more on vacations.  So I wouldn't typically expect a surge of new listings at this time of year. But with people getting more optimistic about the economy now, maybe this year won't follow typical patterns. Anyone out there want to offer their best guess on this?

I have a question for chatters, if you don't mind. I'm just wondering--not proposing anything, mind you. But how does our Friday afternoon chat time work for you folks? Would you prefer a different day? Let me know what you think--and why!

That question killed me, since we are selling our 4 BR, 2.5 BA for sale in Woodbridge. Of course, there is a big difference between a 250k 4BR house and a 550k 4 BR house, so I don't even know that that person might be looking for.

Yeah -- like $300k, which can pay for some pretty nice remodeling, if they're game for that! They may want to open their search to a lower price range, just to open up possibilities. Of course they would have to be careful not to make the house the most expensive one in the neighborhood.

Why do so many people in DC oppose affordable housing? I see a lot of derisive comments in your chats and blog posts as well as general opposition to anything that isn't marketed as luxury (overpriced for many average people in this area). Where would they have working people and even a fair number of professionals live? Perhaps this is just proof that D.C. people are obnoxious elitists.

Obnoxious elitists? Well, okay. Your words; not mine. For one thing, just because something is marketed as luxury doesn't necessarily make it so. I've got some "luxury" iced tea on my desk at the moment. It's just tea. And I suspect some folks throw around derisive comments about affordable housing just to be snarky and  bait the reasonable ones among us into a snark war. But I think it is fair to say that most people do fear that anything built near them has a potential to lower their home's value (especially after this housing bust we've endured). And then you have your occasional old-fashioned bigot chiming in, too. 

Do you see more rental housing near Metro stations being built in an effort to reduce traffic congestion and promote walkable living? BTW-when is the Post going to bring back a rental/apartment chat?

Well, the smart-growth fans are advocating more rentals and condos near Metro. But not much of ANYTHING is getting built now because the lenders just don't have the appetite for making those loans yet. And to really cut congestion, the apartments would need to have decent services within walking distance. Alas, for a rental chat, I don't think that's in the works. But please feel free to direct this conversation that way whenever you like. It's your chat--not mine.

I am extremely aggravated with the online real estate site Zillow, which lists "zestimates" of house value. I live in a 4-bedroom house in Loudoun County on a corner lot with hardwood floors in all public rooms, granite countertops, stainless steel appliances, deck and paver patio, etc.  It lists a "zestimate" of $500,000. Then my neighbor two doors down, in a 3-bedroom house built by the same builder at the same time, on a smaller lot with no deck or patio, little hardwood and an un-updated kitchen has a "zestimate" of $530,000, because that's what it sold for a few weeks ago.  And it was a short sale. Why are these real estate sites allowed to do this? My house was recently professionally appraised at $575,000. If I decide to sell, won't potential buyers see the Zillow site and think we are overvaluing it? What is the public's recourse?

Well someone could assign your home a value based in units of bleu cheese, but nobody has to believe them. The "zestimates" are just not that precise. If they were that good, appraisers would be out of business. You do have the option of claiming your own home on Zillow. Then you can correct data and assign your own "Make Me Move" price. I did that -- assigning a ridiculously high price, because I really don't want anyone to tempt me into moving.

It's when someone is selling a house that you like, at a price you can live with. (Or, if you ask any realtor, it's right now.)

Ding. Ding Ding. Good answer!

I am thinking of moving to D.C. but it will depend on a few things. I need some advice on how much I would need to earn to afford to live close in and be able to buy a one-bedroom condo. I know D.C. is very expensive and I am moving from Eastern, Wash., where the cost of living is low but jobs are few. Just looking for some input from you or chatters. I would have about 10K for a down payment and want to avoid those "exotic loans". Thanks in advance for the help.

Welcome to DC! But, please, please plan on renting for at least a year once you get here. Investigate our lovely neighborhoods. Try out the bike trails and parks. (See the earlier post about visiting local festivals!). Adjust to our crazy cost of living--and tough commutes. Oh, and see what that new job pays. Then look for a place to buy.

After owning two properties, one of which was a true albatross, I am tired of owning. I think the "value" of owning is truly overblown. I am renting a house in my location of choice, and am not going to be responsible for repairing the roof or rebuilding when a tree falls on it. Been there, done that!

To each his own. I wish you stable rent and attentive landlords.

this chat time works great for me, it's one of few times I don't have to be somewhere and my internet use is not tracked.

Gotcha. Thanks!

We're interested in researching the feasibility of city crash pad for weekends; a pied a terre in D.C.  close to museums, Ken-Cen, etc. Studio or 1BR. Any pointers on how to locate such a place? Thanks.

Let your wallet be your guide. Keep in mind the closer you are to all of that great culture and nightlife, the bigger the ding to the wallet. Oh...and weigh the cost against hotel bills.

I am the one who asked about May being a good time to buy a house. We have been looking for awhile, saw some that looked promising, but weren't the right house for us. One is off the market now, one's under contract, one's still available. No regrets on those. But, we did get excited and thought more would come up. We are looking around $400K, so it might be we need to just lower our expectations. We aren't expecting "everything", but something that we can be proud of. I know that's relative to the poster...

The right house may get listed tomorrow. Who knows? There also tends to be a little burst of listings right after Labor Day.

I can see people not wanting housing projects in their neighborhood, but those haven't been built since the '60s and most affordable housing is tax credit-based now, not all that affordable and usually mixed with more market priced units. Perhaps people around here got used to the 20% appreciation in prices every year, but I guess you have to realize that housing can't increase that much when wages are flat. Something had to give there.

Okay. I see where you're going. You have ideas, based on wage growth, about what housing SHOULD cost. It seems to me that the market doesn't often listen to what people think things should cost. It goes for what they will pay.

That question about the underwriter saying the price was too high has me worried. A couple of houses on our block seem to be empty, and we think they may be in default and we're worried that it might affect our sale price, but we can't find anything about foreclosure on the county web sites. Is there somewhere where we can find houses that are in default but haven't yet been foreclosed upon? A Google search for "preforeclosure" brings up a list of sites that want you to pay for the information, and Montgomery County has almost everything online, including all permits.

If they're vacant, but haven't been foreclosed on or re-sold yet, it's going to be hard for anyone to determine what their price would be.  You might ask a local real estate agent for scuttlebut--but it's going to be hard to find a good database on that.

Hello! A friend recently asked me this question, and I wasn't sure of the answer. Her lender is saying that she must purchase home insurance for entire loan amount, but the insurance company only wants to ensure it for the price of the estimate to rebuild the house - minus the value of the land. They say it is illegal for the lender to request insurance for a higher amount. Although I've purchased homes in the past, I've never run into this situation. Any insight?

Her lender is wrong. Property insurance is only supposed to cover rebuilding expense. If the lender insists, she should apply for a new loan elsewhere. And demand to be refunded the application fee. I don't know that you'd get it back, but I would enjoy that fight, myself.

I really look forward to Fridays with you and Carolyn. It rounds out the week nicely and you don't have to wait too long for Saturday's Real Estate Section.  I just wish they'd let you chat every week!

Thanks very much. And I'm with you in being a big fan of Carolyn. Every week....I can't promise, though.

What is the general price to renovate a kitchen for a condo (new appliances, new counters, new cabinets, nice tiling on walls)? In terms of making a good investment, is it worth it to buy a place that needs some work, or better to buy a place with the kitchen work already done?

You really need to price out renovation costs with a couple of contractors. Beer tastes or champagne? And pricing out expenses (at least through a good long trip to Home Depot or Lowes, making note of the prices of things you'd want) can help you decide which would be the better deal. And...only you know how frugal/wild you might go with renovation, which changes the equation.

In your view, what is the market like in terms of renting v. owning (1- or 2-bedroom apartments or condos) in this market?? How does one know that it is time to make a move from renting to owning? Any insight you might have about how to make the decision about whether to buy would be appreciated. Thanks.

Based on the market analyses I've read from Delta Associates, there could be a shortage of rental and condo units by 2012-2013. That would drive up prices for both. How do you know the time is right to own? Other aspects of your life (job/partners/schooling/kids, etc.) are stable enough that you can reasonably expect to stay in one spot five years or longer. And, of course, your budget can handle it without much of a stretch.

I've never chimed in on this issue, but I understand the beef. There's a very large swath of middle- to upper-middle class D.C. residents who have good jobs and pay their bills on time and frankly can't afford anything more expensive than a basement apartment or a tiny 1-bedroom. Yet, they look down the street and see neighbors with "low incomes" (however that's defined) living in 2- and 3-bedroom rowhouses with subsidized mortgages. There's a patent unfairness there.

Thanks for that perspective.

From whom can I get candid advice about the local real estate market here in D.C. (whether it's a good time to buy, whether it's a good time to wait)? Real estate agents have an obvious incentive to sell or say it's a good time; no one on this chat seems to be willing to give an answer (presumably not wanting to worry or anger buyers or sellers!). Where can I find this advice? I want to be an educated homebuyer. Please help -- I feel like I've looked everywhere.

Oh, seriously. Everyone knows agents will always tell you it's a good time to buy. That's their job--and they believe it.  You already have the power to answer that question, Dorothy. Click your red heels..... Nobody can really predict the market accurately. You have to look at your own needs, plans and budget. Let your own budget educate you and you won't go wrong.

We just did one in our old beater of a house, and here are some guidelines: Granite: $40/sq. ft. installed Backsplash tile: $10/sq. ft., easy to install Home Depot Cabinets: $100/linear foot, plus easy install Appliances & Whatnots: whatever you want, including Craigslist

Thanks for sharing.

Building off the earlier condo kitchen renovation question, my kitchen doesn't have a tile backsplash, and I think I want to add one. The space is about 12 inches high, and maybe 36 to 40 inches long. I think I just want to do something simple like white subway tile. The problem is, I have no idea how much that would cost, so getting estimates isn't that helpful, because I won't know if they're reasonable or not. Do you have any sense? Thanks!!

You find out if they're reasonable by getting complete quotes from three contractors. It's exactly like shoe shopping, just with different stores.

Thanks, everyone, for contributing to the chat! Drop by the Local Address blog whenever you'd like to catch up. Have a great weekend.

In This Chat
Elizabeth Razzi
Razzi authors the Local Address blog and is the editor of The Washington Post's Real Estate section. She is the author of two consumer-advice books: "The Fearless Home Buyer" (2006) and "The Fearless Home Seller" (2007).
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