Potomac Yard | Del Ray | Old Town Alexandria Real Estate News

May 14, 2007

Protect Yourself From Predatory Lending (Part 2)

One of the things that made DC Metropolitan area such a breeding ground for predatory lending was the fact that there was such a shortage of housing, that buyers were willing to do anything to 'Get That House' that came on the market. Strategies such as waiving home inspections, and waiving appraisals were the norm.

Also, buyers accepted exotic loans as an alternative because it seemed like if you didn't go that route, you simply would not own a home. Buyers were enticed by 'teaser' rates. Teaser rates are low introductory interest rates that are fixed for a short period of time, usually 1-6 months. After the initial period, the interest rate could adjust monthly, and many loans offered buyers the option of paying a certain portion of the required payment, and tacking on the difference to the principal.

A recipe for disaster for those households were already walking a fine line when it comes to financial discipline. Add increased fuel costs, and you have the makings of a real estate market breakdown.

But wait a minute, was it always the lender's fault? It is ultimately the buyer's responsibility to read all of the documents pertaining to the loan...including the fine print. All buyers should understand exactly what their mortgage payment will be prior to closing. Buyers should also prepare themselves financially so that they have the means to pay their mortgage during the adjustment periods. These are some of the things that buyers learn during the initial consultation with the buyer agent, and the chosen lender. And all buyers have the right to receive their Good Faith Estimate of closing costs within three days of loan application. If the chosen lender does not provide this, then that should be a red flag.
In the Washington DC real estate market, a lot of buyers either sink or swim. Nobody likes sitting in traffic, so people are willing to pay more to live closer to the city. On the flip side, if you're spending $400,000 in Arlington, you're looking at condos and older townhomes that need work, whereas in Prince William and Stafford Counties, $400,000 equates to a single-family detached home with a 2-car garage, and yard space. What's a family of four to do?

One of the requirements for demand is scarcity. And we were facing a housing shortage. Homes were being bid up, and for many buyers, that meant stepping out of the traditional 30-year fixed mortgage, into an interest-only loan so to increase the purchasing power. Mortgage companies had to offer creative loan products just to stay competitive.

In many areas, we are starting to see sellers who are upside down on their mortgages, meaning that when they sell, they will be bringing money to the table. Also, many sellers can't afford to offer incentives such as buyer paid closing costs, which can increase time on the market. This, however, will open the door to pre-foreclosures, short sales, and bank-owned properties making their way into the open market. Where are the investors?

Posted in Uncategorized
April 20, 2007

Protect Yourself From Predatory Lending

The hot sellers market in the recent past had a lot of buyers asking me, "How can so many people afford these high priced homes?"

It was hard for a lot of buyers, particularly first-time buyers and military buyers to compete with multiple offers, and offers without a home inspection. During these times, it was normal to write anywhere from 4-7 contracts per client.

If you're keeping up with real estate news, you are aware that not only is there a rise in foreclosures, but the government is cracking down on companies and people who prey on individuals with predatory lending practices.

In case you're new to the term, Freddic Mac explains predatory lending to include:

  • Excessive cost – charging interest rates and/or fees that far exceed reasonable compensation for a lender's costs or risks.
  • Equity stripping – lending at a high interest rate, then repeatedly refinancing at a lower interest rate to strip the borrower’s equity in order to pay new points and fees.
  • Failure to report borrower credit information – limiting the ability of borrowers to obtain the lowest interest rate available based on the borrower’s complete credit history.
  • Steering to higher-cost mortgages – referring borrowers to high-cost loans when they are eligible for lower cost financing.
  • Credit insurance products that are financed upfront – including single premium credit insurance that is paid in a single premium or financed in the loan amount.

In this age of information, there are real estate and mortgage websites that include pop-up advertising for low and no cost mortgages. As a consumer looking for a 'good deal', here are some ways to protect yourself, your wallet, and your credit:

  1. Know your rights as a borrower! Here is a link to HUD's website which includes the RESPA (Real Estate Settlement Procedures Act) Bill of Rights for borrowers.
  2. Understand what closing costs are involved with your loan.
  3. Get it in writing. If a lender will not give you a Good Faith Estimate of your closing costs, this is a red flag, no matter how enticing the interest rate.
  4. Get at least three estimates from reputable, local lenders.
  5. Make sure that you understand the mortgage that you have chosen before finding a new home. If your mortgage rate adjusts, you have to make sure that you can still afford to pay the mortgage, insurance, and property taxes, in addition to your other living expenses.

As a Realtor, I've witnessed first hand buyers who have come to me with an internet pre-approval, only to learn that they need thousands more than anticipated to close the loan, or that their loan has a pre-payment penalty, or that their interest rate will increase next month. It's very disappointing and discouraging, but it can be prevented.

Aligning yourself with a reputable real estate agent AND mortgage lender will go a long way in ensuring that you are not a victim of predatory lending.

Posted in Uncategorized
March 16, 2007

Market Statistics

Don't let the rainy weather get you down. Remember, there's always a rainbow after the storm, and I can help you find your pot of gold by using real estate as your treasure.

From our MLS provider the Metropolitan Regional Information System (MRIS),
"In his Chief Economist’s Commentary, NAR’s David Lereah explains why 2007 brings cautious confidence and hopefulness, as his forecast calls for modest quarterly gains throughout this year.
NAR Economist Ken Fears traces mortgage rates and the psychological effect of “payment shock” experienced by potential buyers in his Trends report. Are the most homes being sold in the middle price ranges or in the lower price ranges? The Trends chart lets you see for yourself. And, the Economic Monitor provides a good overview of home inventory levels, housing starts, and impact from the job market."

Click the following link to view the Watch Report and to see specific statistics by area:http://www.mris.com/reports/marketreport/index.cfm.

After a storm of increasing prices and bidding wars, we are still experiencing a slight calm. Is it the calm before another storm? The real estate market works in cycles, so only time will tell. As an experienced professional writing contracts and viewing homes every day, I can tell you that there are a lot of deals to be made right now. So, don't just sit on the fence...own one!

Posted in Uncategorized
March 7, 2007

In Like A Lion?

Historically speaking, the spring time has been the best time to sell your house, but what if you are looking at buying? Will you be able to find any good deals? Will prices start to creep up beyond your reach?

Here are five ways that buyers and sellers can get the most bang for their buck this spring selling season:

Sellers: This window of opportunity is like a pendulum. In order to attract ready, willing, and able buyers, it’s all about price. Remember, pricing too high could cause your listing to die a slow death of price reductions, and low ball offers. A competitive price will entice multiple offers, and competitive offers with fewer concessions and contingencies.

  1. Buyers: Don’t be afraid to make an offer, even if you feel the home is overpriced. On January 1 of this year, 323 listings in Northern Virginia expired. This means that these homes went off the market because they did not sell during a specific period of time. The majority of these homes were indeed overpriced, but many of these sellers would have been willing to negotiate with you.
  2. Sellers: Do what you can to prepare your home for the spring market. Take advantage of my offer for either a 10% off coupon for your purchase at Lowes, OR a FREE DVD from ‘Designed To Sell’. Save money on purchasing the materials you need to spruce up your home, or see first hand ‘before’ and ‘after’ effects from the pros on how you can get your home ready for the buyer’s eye.
  3. Buyers: Get your pre-approval now. It’s always free and there’s no obligation. My preferred lenders are always ready to help you. With your pre-approval you are informed of your credit score and alerted to any discrepancies that may exist. The higher your credit score, the more attractive your loan program and interest rate.
  4. Buyers and Sellers: Don’t make a decision without a Realtor! You don’t know what you don’t know, and my job is to provide you with the tools and information so that you have everything you need to make an informed decision. Knowing what your neighbor’s home sold for, knowing the comparables so that you know how to structure your purchase offer, knowing what inspections to obtain, knowing how to save money on closing costs are just some of the ways that I can help!

 

My professional prediction is that we will see a large number of homes enter the market this spring. Sellers who were unsuccessful in getting their home sold during the winter months are on the sidelines in hope of getting a better price. But with more competition…comes better pricing, which should bring more buyers out into the marketplace.

 

Posted in Uncategorized
Feb. 21, 2007

Double Dutch - Part 3 of 3

The last couple of weeks I have been comparing tracking and chasing the real estate market to learning how to jump rope double-dutch style. Finally, I'm going to show you where to look on the internet to help you do your due diligence when contemplating investing in real estate in any part of the country.

Here are some good sources for market statistics, demographics, and other information that will help you determine which areas would be a financial fit for your investing goals:
In Northern Virginia: http://www.nvar.com/ and click 'Market Stats'.
In Northern Virginia: http://www.MRIS.com/reports/stats and select your report from the drop-down menus

Nationally: http://www.realtor.org/ and click 'Research'
Nationally: http://money.cnn.com/ and under 'Real Estate', 'Best Places to Live', 'Best Places to Retire', and 'Home Prices'
Nationally: http://realtytimes.com/rtcpages/buyersadvice.htm
Nationally: http://www.freedemographics.com/
Nationally: http://www.census.gov/
Nationally: http://www.nahb.org/generic.aspx?sectionID=728
College Towns: http://www.collegerealestate.com/A+collegerealestate.htm
College Towns: http://www.forbes.com/lifestyle/realestate/2004/09/
03/cx_bs_0903home.html?partner=rss, and click the link at the bottom for top areas
I would highly recommend that you create a folder for bookmarks called "Real Estate Investing" and bookmark all of these links.

Also, try to 'salami slice' your investment goals. Set realistic, attainable goals, and work your way up. It's not as hard as you think!

If you have any other links that you'd like to share, please send them. Surrounding yourself with people with the same goals as you, makes it easier to bounce ideas, and network with those who can lend you a helping hand. Look for a local investing group in your area, or perhaps your church.

Now, you have the information you need to know when to jump in and out of the different real estate markets! Are you ready to JUMP IN?

Note: the following link contains sound:
http://pbskids.org/dragonflytv/show/doubledutch.html

Posted in Uncategorized
Feb. 6, 2007

Double-Dutch Part 2

Last week I compared tracking and chasing the real estate market to learning how to jump rope double-dutch style. This week, I'm going to show you how to watch the market (the ropes) in different areas, so that you have the information you need to know when to 'jump in' (buy) and when to 'jump out' (sell) and make a clean break.

If you can learn how to use the internet to your advantage, you can align yourself with updates and information to monitor real estate activity in Northern Virginia, or any other part of the country.

Any search engine, but particularly Google or Yahoo, is a good place to start. Think in general terms, write them down, then force yourself to carve out the fat and trim your search down to more specific terms.

For example, typing in 'real estate investing' returns hundreds of sites with get rich quick methods of investing in real estate. Remember, you're looking for information that you can use to help you make a decision. Delete your search, and type 'hot growth areas' OR 'hot job markets'. This will return specifics on areas that are currently experiencing an upswing in the market and have a stable local economy.

Another example, search for Fortune 500 companies, and try to find out where they are opening new offices, plants, stores, etc. Our own local Washington Business Journal (http://washington.bizjournals.com/washington/) is a premier place for businesses to make their announcements to Northern Virginia and the DC Metro area. Remember, Virginia was cited as the #1 place for business in 2006!

Are you retiring within the next five years and leaving the area? Research where you plan to move, and do your due diligence to see if it makes sense to purchase your next home now as a rental property, and rent it out until you're ready to move-in. That way when you move in, your mortgage will be based on today's value as opposed to the future appreciated value.

Well, what are you waiting for? Start your search! Next week, I'll tell you the BEST sites to bookmark for staying on top of trends anywhere and everywhere.

Email me and let me know what you've found out, and if you're one step closer to investing in real estate! If you thought of a very unique search phrase that provided you with astounding results, please share!

Posted in Uncategorized
Jan. 31, 2007

Double Dutch

After 10 years of selling real estate, this is my second buyers market.

The major difference is that technology has come a long way in helping to educate consumers, and keep them informed. One month after becoming licensed, the MLS system upgraded from three-ring binder notebooks in individual real estate offices, to a computerized system where every broker could input listings, and the information could be accessed by any member of the MLS. Wow, what a concept!

However, the thought of using a computer every day was unimaginable to many agents, and several left the business. I had a background in technology, so I welcomed the change. Having everything systematized meant accessing the data quicker, and also being able to provide the information to consumers quicker.

Even when I purchased my first condo, I tried to convince many of my friends to buy homes. Many were fearful, but a few did decide to buy. As the years went by, and property values increased, a lot of us reaped the benefits of buying in a buyers market.

Timing the real estate market is like playing double-dutch jump rope. Two ropes constantly go around, and you have to time it just right so that you know how and when to jump in. I remember how frustrating it was when I was learning, but once I got the rhythm, it was easy to learn when to get in, and when to get out.

Are you going to be one of those people who buys in a sellers market, and sells in a buyers market? You don't have to be. As your real estate guide, let me help you learn how to time the market so that you know what to expect, and how to use different sources of information to make wise decisions about your future.

Next week, I'll show you where to look to help you time this real estate market, and markets throughout the country...so stay tuned!

Posted in Uncategorized
Nov. 21, 2006

Spend Well This Holiday Season

Happy Tuesday, I hope your week is off to a fantastic start and that you're looking forward to a bountiful holiday season.

We're about to enter the time of year where the pressures of the holiday season can entice people to make some poor financial decisions that will affect them in the coming year.

Don't wait until January 1 to start working on your wealth plan for 2007, start right now. Did you know that for many people, it can take until March to pay off the debt that they incurred from the previous holiday season? If you have a long list of gifts that you think you're obligated to buy, here are some helpful tips to encourage you to stay in control of your finances:

* - Write out your list ahead of time. This will tell you exactly who's on your list, and no matter who has been naughty or nice, you can plan ahead.
* - Next to each name, write the amount that you'll spend for each gift. This helps you to establish your spending limit.
* - Set aside the days that you'll go shopping. If you wait until the last minute, you might be forced to make impulsive decisions about purchases.
* - Purchase gift cards...no sales tax!!!
* - Don't charge it!!! If you can't pay cash, then don't buy it. It's too easy to whip out that charge card, and forget how much you've actually spent.

If you're renting now, consider a home purchase for the holiday season. Sellers who have their homes on the market now are very serious about selling, and willing to entertain all offers and negotiate. Closing costs contributions and other selling incentives can enable buyers to find an affordable home even though there may be months remaining on an existing lease.

We'll be around this week for your real estate needs!
Have a Happy Thanksgiving!

Posted in Uncategorized
Nov. 9, 2006

FREE Mortgage With New Program

I wanted you to be the first to know about a new mortgage program being offered by Prosperity Mortgage!

With this program, any Northern Virginia area homebuyer can buy a home and have three, six, or even nine months with NO MORTGAGE PAYMENT. This program can be used for any conventional loan, and it can be used to purchase any home, no particular subdivisions or neighborhoods to target, but any home.

How it works, the program allows for a maximum seller contribution of up to 6% of the sales price. Any money left over for closing costs, will be held by the mortgage company in a separate account, and will be paid directly from the account and applied to your principal and interest payment for your new mortgage.

For example, on a $350,000 home, the average closing costs are roughly $7000. However, when negotiating your sales contr act, if the seller agrees to pay 6% of the sales price toward your closing costs, or $21,000, then the remaining $14,000 will be set aside for your mortgage payment.

Assuming you have a zero down payment, and a 6.5% interest rate, your principal and interest payment are approximately $2213 per month. With $14000 left over, that money will be paid directly to your mortgage company, and you will have SIX MONTHS WITH NO MORTGAGE PAYMENTS!!!

What does it take to qualify?

  • Stable employment history
  • About 6-9 months at your current job
  • A minimum credit score of 620, and
  • You must settle on your new home after November 15, 2006.

More information about this new program will be available upon request. If you would like more information, just email me, and we will answer all of your questions about this phenomenal new mortgage program.

I've also just set up a special Toll-Free number specifically to provide more information on this program. If you'd like to tell a friend, the Toll Free number is 1-800-728-1885 x2824 and it is available 24 hours a day!

Posted in Uncategorized
Oct. 12, 2006

The Boomerang

With Monday being a Federal holiday, the week is definitely going by quickly, and I hope you're enjoying yours.

This week, I'd like to provide additional links to keep you posted on the housing market, both locally and nationally. For a national perspective, it seems like things are balancing out. Those buyers on the sidelines for a 'time-out' might be still on the bench once things pick up again.

I remember the drama of the sellers market, and how tough it was to get those buyer contracts accepted. And more often that not, I heard, "Man, I wish I would have bought when the market was slower." If you're one of those people who tries to buy in a seller's market, and sell in a buyer's market, give us a call so that we can provide you with the right tools to help interpret the market.

Here is an article from Lew Sichelman - Real Estate Market Turndown Nearing End... http://realtytimes.com/rtcpages/20061011_downturnend.htm

For housing reports for other metro areas: Click Here

For local statistics, visit the Northern Virginia Association of Realtors website at http://www.NVAR.com and click the 'Market Stats' link.

For free updates on whenever a home sells in your Northern Virginia neighborhood, or where your Northern Virginia rental property is located: http://www.FreeNeighborhoodUpdates.com

We already know that the land is scarce. So once the new construction builders have finally sold their loads of 'Immediate Delivery' homes at rock bottom prices, who's going to hold the cards...the homeowners, because they'll have the goods, and housing will be in demand again!

It's a great time to add real estate to your long-term portfolio! The time to buy real estate with little or NO money down, closing costs paid, and interest rates bought down...is NOW.

We'll be around this week for your real estate needs.

Posted in Uncategorized