Use a Smart Strategy

This “Step One” concept actually came to me after trying to buy a mini-van at a car dealership.

With good intentions, my wife and I brought our toddler into a Ford dealership to buy a (dreaded) mini-van for our growing family. But after 2 1/2 hours of car dealership bull sh t crap, we walked out the door with a crying child (hunger pains) and no car. So, where did they go wrong?

A valuable real estate lesson

It may seem obvious to me, but most prospective real estate buyers who I meet with over coffee are pleasantly surprised in the first fifteen minutes because I cover costs or expenses. Back to the guys at the dealership, they could not answer my questions about costs (something about smoke-in-mirrors) that killed their sale.

Covering an estimated HUD-1 Settlement Statement makes sense because it will demonstrate all of the expenses, show the down payment amount, the cash due at closing, and a monthly payment estimate.

• Review HUD-1 Worksheet

That step may seem elementary to savvy real estate people, but these days the standard real estate apps assume you know what the heck you are doing. Right? You have probably found out that boring information some where else while they just want to show you what the WalkScore is or how the elementary school ranked.

Picture, for a moment, your ideal scenario

If you are just starting the process of buying a home, knowing the end number is going to help you forty five days from now when you go to closing, or next week when you are putting together an offer on your dream home in Vienna.

Let’s look into the future for a minute: You found the house and beat out five other offers (because you are from Milwaukee too) and now the Settlement is on Thursday. The 20% down payment is in your brokerage account or your Orange Account, and you contact them about getting the $134,000 that you need to close.

“Sorry Mr. Starbuck, your account has limits and we can only send you $100,000 at a time.”

or

“Sorry Mr. Starbuck, when you asked for the proceeds we mailed you a check. You should have it in 10 days.”

or

“Sorry Mr. Starbuck, your account hasn’t been set up to wire your proceeds.”

Although it must be sounding repetitive, but your first step has to be getting an understanding of the costs involved in your real estate contract. Once you know that, then you must control how you will get the needed funds to the Settlement on the day of closing. In Virginia especially, where I work, in order to get the keys to your new house, you are going to need to bring money to the closing table… one way or another.

The funds you are using for a down payment can’t just appear out of thin air. It is okay if Mom or Dad, Aunt Sue or the Starbuck Family Trust are providing the funds, simply understand that they need to be documented.

Transparency is essential in mortgage approvals these days. If any sum outside normal activity is going to hit your account, have it wired in rather than depositing a check. Wiring is very transparent unless it is coming in from an off-shore account (you know what I mean).

In the end, it all comes down to the the numbers. In my opinion, Step One needs to be a review of those numbers which will make it all happen.

But you want to know, “why didn’t the seller respond to my offer?”

It is best to start from the beginning because negotiation techniques typically recommend that you add a drop-dead date so the seller can’t shop your offer or drag things out forever. In a textbook world this strategy makes sense, but real estate sales are far from a typical “business” negotiation simply because there, most often, is an emotional tie to the property. And a house sale is often the first time a person is a real seller of anything substantial.

Real Estate deadlines can feel like “the hard-sell”

The truth is that most people (including Realtors) are not good negotiators. The emotional attachment runs deep, and to be a good negotiator then you have to be ready to walk away from the deal at any moment. If you want to include deadlines in your offer then understand that the other party (buyer or seller) may perceive that as a hard-sell.

I’m sure all of the attorneys out there are rolling their eyes, but it is true that Ma and Pa, Aunt Judy, or you are the ultimate decision maker here in this real estate deal. And, if some guy insists that you respond by 5:00pm or he is declaring his offer void, then are you going to feel pressured to sign?

Maybe if you neeeeed the money, are facing foreclosure, or are 2,000 miles away and the house has been on the market for 93 days, well, then heck, you may sign by 3:35!

The Impact of a Seller’s Market

The real estate market where I work in Vienna, Virginia has been a seller’s market 90% of my last 22 years in the business. Yes, really. Although there have been slight blips along the way, demand has always outpaced the supply.

The 2013 real estate market has been a seller’s market since January 1, 2013 and does not appear to be slowing down. The result have been multiple offers, flash sales, escalation clauses and frustrated home buyers. Maybe you?

Have a self imposed deadline for responding to counter offers

Sellers have been setting deadlines as to when they will review any offers. (Sound familiar) A home going on the market on Thursday may state that “the Seller shall review offers, if any, after 3:00 on Monday”. Knowing this type of deadline is actually helpful because buyers can take a step back, see other homes, and put together a “best offer” before the deadline understanding the seller isn’t going to make a decision prior to Monday afternoon.

Remember, a Seller’s Market requires home buyers to respond quickly to any sort of counter offer. Speediness is the essential strategy here on both sides of the transaction, and tools like DocuSign, Smart Phones, email and texting can be critical.

A good Buyer’s Agent will have access to tools like these and explain the benefits to you when reviewing a strategy. From day one, a self imposed deadline for responding to counter offers is essential. From a negotiating stand point, a quick response show decisiveness and good will. There are plenty of scenarios that could be written here, but it is important to know that counter offers can be withdrawn if they aren’t agreed to in writing. Yes, time is of the essence.

 My advice: understand the impact of your deadlines

My two cents here… if you want to put a hard deadline in your offer to buy a home then understand that the seller already owns the real estate, and really still has the upper hand.

The grilles were fired up!

The second annual Taste of Vienna went off successfully at the Vienna Volunteer Fire Station on Saturday April 27, 2013.

This is such a fun event where local eateries showcase their culinary skills and offer “bites” – for a buck, two or four. Proceeds go to the Vienna Volunteer Fire Department, and they lucked out with a wonderful spring day. There were probably 300 people eating when I went around 2:00. (scheduled to go to 8:00)

Just a short walk from the Community Center and W&OD Trail, the VVFD parking lot was rocking with live entertainment and approximately 25 restaurants.

Vienna is now a Foodie destination

Okay, my unofficial winner was the pulled pork slider from Chef Geoff’s. These slow roasted pork sliders are a staple of the famous “Bacon Bar”, and were served on a fresh roll and topped with colorful, crisp peppers.

Vienna now has a good number of small restaurants that offered everything from Italian fare to Thai, and an interesting selection of pastries and gourmet deserts. For an average foodie want-to-be like me, it was fun to sample and meet the people from these local restaurants.

Chef Bazin at Taste of Vienna 2013

Thinking of everything, the VVFD had corporate sponsors for tables under tents so folks could sit and enjoy their food. Although this community event provided a good time for many and highlighted the exciting tastes of Vienna, the VVFD has served an essential need to our community for over 100 years. Remember, VVFD host Bingo every Sunday night in the Flame Room in the Fire House on Center Street starting at 7pm.

To find out how you can best contribute, visit VVFD.org right now!

UPDATE: This home is now under-contract.

Welcome to this updated Nantucket style garage town home in the heart of Ashburn VA. We hoped that this video brochure will give you a good idea of what the homeowners have done over the past few years to make their home more livable, inviting and to bring the outdoors inside.

The rear deck was rebuilt a few years ago and it is perfect for an evening grilling and sitting with friends outside!

If you are interested in taking a look at my “working pics” then you can see them here on Google Plus. There are over 100 photos and some are duplicates… and I will be adding more.

This home located in Ashburn Farm. Read more about the three pools in Ashburn Farm and this exciting planned community.

Priced at $359,900

Listed by Doug Francis of RE/MAX Presidential, 703-304-6827

Home in Vienna VA  (Photo credit: DougFrancis)

With all the media regurgitating the stale news that “real estate inventory is low”, it’s time everyone understands what it is like being a home buyer these days.

It can suck!

For example, yesterday a new listing popped up in Vienna Woods that seemed too good to be true. So, after they finished work, I met some clients at the house for a little look-see.

Understand that yesterday was Wednesday (not a weekend day) and there were  already six business cards on the dining room table at 5:30 from well trained agents. I say that because some real estate agents don’t leave cards behind in an effort to be stealthy.

I had read about them on the Internet… and this resembled a flash-sale.

Anyway, after taking a look and considering the house a good prospect, I gave the seller’s agent a call. (yes, a real conversation) She had been fielding calls from agents all afternoon and quickly delivered her spiel.

She indicated that they planned to keep it available until Saturday night when they would review any offers. (part of strategery)

I conveyed that information to my clients, but, after careful consideration, they decided not to pursue the home.

March Madness x Bidding Wars = Flash-Sales

At 1:00 today the seller’s agent calls me to tell me an unbelievable offer had been presented and her clients were planning to accept it tonight. And, do my client want to make a competitive bid? There was a sense of urgency in her tone…

Yes, flash-sales have hit Vienna Virginia as home buyers frustrated with getting out-bid on homes get super aggressive.

Multiple offers seem so… so, January.

It’s March Madness for goodness sakes and it’s winner takes all!

Multiple offers seem so… so, January

These events really have been giving me flashbacks to 2006 when the market was hot too. The biggest difference that I see today is that lenders are not approving every loan, appraisers are not rubber stamping appraisals, and the builders have far less product to sell.

This time around I don’t feel that it is Realtor hype because the wounds lessons of 2009, 2010, and 2011 are still very fresh.

But even Warren Buffett thinks owning a home is worth your time and money… really.

On CNBC recently, Buffett said “If I knew where I was going to want to live the next five or 10 years I would buy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.”

In my opinion, home buyers need to recognize value quickly and be willing to set a top limit when putting together an offer, especially when a flash sale mentality takes over the market. There are values out there and not every home will get a stellar offer in 20 hours.

Let’s be careful out there.

Image via CrunchBase

Don’t be so intimidated to ask your Realtor to explain terminology.

Yes, I know you TiVo HGTV so you can watch House Hunters with breakfast but I also understand that some jargon remains a mystery.

If there is something, then leave me a note or suggestion. Don’t be cryptic please.

But, before that excitement, read some of the questions people asked me recently.

The real estate “Kick-Out Clause”

A client in Vienna recently asked about the term “Contract with no kick out” which he saw stated on Zillow or Realtor.com .

There is always some confusion with this statement because buyers, typically, can void a contract after a home inspection or radon test. Voiding a contract isn’t the kick-out that they are referring to above.

The Regional Sales Contract that NVAR members use have established kick-out clauses that are used when a home buyer has a home to sell herself.

For example, Bob agrees to sell his home in Vienna to Kathy, but Kathy has a condo to sell in Ballston first. He accepts her contract with the written agreement that he can still market his home hoping to find a non-contingent buyer

If non-contingent Steve puts in an offer on Bob’s home which Bob accepts, then Bob will have to give Kathy Notice that she has 72 hours to remove her her contingency or Bob will kick her contract out and sell his house to Steve.

That “Notice” is the official Kick-Out.

I hope that explains the scenario a little, if not then let me know.

Jargon in real estate marketing is just confusing

I also stopped by a client’s home, again in Vienna, and she showed me a postcard from an agent proudly announcing a new listing on her street. The postcard was in black and white, had no photo of the house, and included a typo (oy vey), and the agent also included a little Realtor jargon.

Okay, if you are putting a $800,000 home on the market and mailing a postcard to the neighborhood touting your credentials as a “Neighborhood Specialist”, then why not spend some money on a color postcard? And why not have your friend read over the copy before you send it to Kinkos for printing?

So he added a description of the house as being “updated and having a gourmet SS kitchen…”.

Of course I read it as a stainless steel kitchen.

But my client had read it as some sort of code for a brand that she didn’t know.

That’s a Realtor-Jargon-backfire!

 Alert Me to Jargon!

What is your pet peeve Realtor jargon that you see on HGTV? Let me know and I will write a future blog post on it.

Check Writing (Photo credit: CarbonNYC)

The real estate market in Northern Virginia has been very competitive recently. And if you are a home buyer here,  then you know it’s actually Über-Competitive.

It is easy to understand that anyone selling their home wants the highest price, but I thought I should share some strategic buyer tips that will help your offer be even more impressive.

 ~ What Home Sellers Want ~

• Earnest Money Deposit Check
• Time Frames
• Down Payment
• Approval Letters from lenders

Earnest Money Deposit: If you are making an offer on a home you will need to write an EMD. Home sellers want that deposit to be a large number.

I remind my clients that the check will be deposited (within three days of contract acceptance) only if the offer is accepted and there is a ratified contract with the seller. The deposit will show up on your HUD-1 Settlement Statement as a credit toward your down payment or expenses. If you have 100% financing then it will be applied to just closing costs, and any excess is returned to you.

So, what is the right number? It depends on your price-point… but a good rule of thumb is higher is better. $10,000 is okay but $25,000 is really putting your money where your mouth is!

Time Frames: There are many opportunities to establish reasonable time frames for contingencies or responses. Home sellers want short time frames.

If you are a really serious home buyer, completing a home inspection in five days shows organization and smart decision making. Buyers can control these activities easier than having an appraisal or loan approval, so, get your controllable activities done in a fast time frame and the seller will be impressed.

Down Payment: In the Northern Virginia real estate market, most accepted offers have down payments beyond 20%. Home sellers want to see you have enough cash on hand.

Most of the financial gurus out understand that having a large mortgage for thirty years at 3.5% is amazing for the average person, but home sellers can view a large mortgage as having more risk when getting approval from the mortgage underwriter. Like you, they are reading blogs about selling their home which warns them of deals falling apart – right or wrong, understand they just want to get their house sold.

If it is possible, you may want to show you are putting down 25% or more to demonstrate your financial strength.

Approval Letter from Lenders: When you put together an offer on a home, then you need to have a letter from a mortgage lender that states that you are qualified for financing. Home sellers want to see a third party statement that you are legit. And a lender letter that has a recent date on it too, please.

There really isn’t a set “lender-letter” out there, but there are a few things you can do to craft a better than average lender letter. Start the process with a well known, local lender that the seller will recognize — for example, a faxed letter from Bob’s Mortgage Enterprises of Kensington may just raise a red flag.

Your letter should clearly show an approved price range, type of loan, that a credit report has been reviewed, that income or assets have been verified, and maybe that your application has been reviewed by an underwriter. Again, you want the letter to look professional, come across as organized, no BS, and show you are able to go to Settlement.

Having a strategy that works in your favor gives you a better opportunity to be the offer a seller selects to work with. In a recent multiple bid situation in Ashburn there were four offers (my client won) and in one in Vienna there were nine offers (my client was the seller). In each case I saw a variety of scenarios presented to sellers who had to make a very hard decision – keep that in mind.

Let me know if you have questions here on the blog or send me an email to set up a one-on-one conversation.

photo by Doug Francis

UPDATE: If you are a home owner who is getting ready to sell your home, know that this video was seen over 525 times according to Google Analytics when it ran. Call me for more details. ~

Welcome to this remodeled California style rancher in the heart of Vienna Virginia. New on the market, we hoped that this video brochure would give you an idea of what the owners have done over the past few years to make their home more livable and open.

The gourmet kitchen really is for the social chef who wants to be the central focus of the party!

If you are interested in taking a look at my “working pics” then you can see them here on Google Picassa. There are over 100 photos and some are duplicates… and I will be adding more.

This home located just up Beulah Road about half way to Wolf Trap Performing Arts Center and is near the W&OD trail. A super location for anyone working in Tyson or Reston, and future users of the Metro’s Silver Line.

Priced at $825,000 ~ This home is now “SOLD”

If you want to know the final SOLD price, or how I can sell your home too then give Doug a call…

Listed by Doug Francis of RE/MAX Presidential, 703-304-6827

boomerang (Photo credit: pwkpwkpwk)

Anyone trying to get a mortgage these days is jumping through hoops like never before. Even those folks with good jobs, have had a mortgage, who are essentially “platinum level” are getting migraines navigating the new underwriting gauntlet.

Yes, welcome to The Mortgage Labyrinth.

After passage of the Dodd-Frank Act, there were many new regulations put in place to protect consumers from the mayhem experienced during the real estate bubble of 2005-2007ish. Back then, many mortgage lenders were flush with “Wall Street Money” that didn’t require all the red-tape associated with government backed loans. Those loans were bundled up and sold to investors around the world in an elaborate fraud/conspiracy. Author Michael Lewis wrote an interesting book on the topic ~ read Boomerang.

Well, those days are over. and Dodd-Frank has everyone crossing every “t” and dotting every “i”.

Today, applicants often have to provide documentation that they provided documentation.

Recently, in a conversation with Kerry Hogan over at SunTrust Mortgage in Falls Church, he mentioned that people still have many of the same old financial problems as before the extra layer of rules and regulations were put in place:

• late payments
• insufficient credit
• collections
• tax liens
• over extended credit (too much debt)

Ken Harney’s article in The Washington Post on February 23, 2013 pointed out that many people are now dealing with high student loan debt. In fact, it is much higher than for any previous generation, and that extra debt can put a borrower over the rigid qualifying ratio.

I always tell my real estate clients that finding the house is the easy part. It is the financing part of the process that can be grueling, so, getting control of your financial picture a few months before you start the process of house hunting is essential.

The obvious place to start is reviewing your credit report, check it for errors or high balances, and then taking the time to correct them. It doesn’t make any sense to close old accounts because “age” can be positive. Credit scores have to “season” so your adjustments or corrections may not show up for a month or two. Read up on the topic and get cracking!

With a little hard work, you may navigate the mortgage process a little easier.

Mr. Blandings Builds His Dream House (Photo credit: Wikipedia)

Anyone deciding to buy a lot to build a new home on really needs to consider some important factors which may seem daughting to a novice. If at the end of this article you decide this is the case, you may want to consider looking at some of the builder “spec” inventory that I see across Northern Virginia. Sorry folks, that “spec” inventory is going to start at $1.2 million.

Okay then, back to lot selection criteria.

You will need to put together a plan which should include a budget first and foremost. Then determine what type of house you want to build. You might want to stop reading right now, pick up a pencil (yes, designs change) and sketch it out… but please read on.

While you have that in mind, start a list of locations that will fit the bill. Are there other potential teardowns in a particular up and coming area? Some people want schools, and others want restaurants and coffee shops. What do you want your future lifestyle to look like?

Now that you have sketched out your design, what type of lot is going to fit that house plus give you room for… a yard, a vegetable garden, a swimming pool or a garage for your classic car collection? Do you want a flat lot or one with a slight incline? I ask because some people want a deck while others want a slate patio with a sitting wall or built-in gas grille.

The width of your lot is going to be an important factor too because you will need to be within county set back rules. And in some places like the Town of Vienna Virginia where I live, your house and driveway can only cover 25% of your lot. Keep that in mind too.

I think you’ll need a bigger lot

Who is going to build your dream house? That is going to be worth investigating now because you may find someone who already builds a floor plan close to what you want and using their existing plan can save you design fees. And the builder may tell you how big a lot is needed to fit your dream home. By the way, most builders like it when you already own the lot.

Deciding on a lot that doesn’t have public water or sewer is going to add to your expenses too. Remember that sewer systems still depend on gravity so they will need a proper pitch.

If you are looking at infill properties like where you will tear down an older house, you need to consider the sewer that is in the street. Your new sewer lateral really needs to go all the way out into the street to avoid a future issue. Plus, some basements can be too deep and require a sewage ejection pit/system. That’s a topic for another day.

One of the great unknowns is what lies beneath the soil. There could be a rock ledge, sandy soil or a spring (See “Mr. Blandings Builds his Dream House – 1948“). Anyway, you may want to watch that old film for some corny pointers.

There are many factors that go into lot selection and sometimes it comes down to simple things like exposure to the sun, but at the end of your project, I know that you want a house that exceeds that vision you have today.