Basically, expect an aircraft to fly overhead (click to enlarge)

One of the benefits to living in Northern Virginia is that you can get a flight almost anywhere in the world at one of the local airports. Each of these “local airports” qualifies to be in the top-tier of U.S. airports for passenger traffic and daily flights.

Recently, when a real estate client from Texas asked me about airport flight paths over Vienna , I had to say the area is covered with overlapping flight paths. We have Dulles International, Reagan National, Andrews AFB, and plenty of helicopters going wherever helicopters can land!

I happen to live in one of the overlapping areas where I can see planes on approach to National to my right, on approach to Dulles to my left, on approach to Andrews overhead, and hear a medevac helicopter en route to Fairfax Hospital. The helicopter wins out in the noise department since the airplanes, for the most part, have low sound output on approach.

On the map above, I did not include BWI Airport which is outside Baltimore and a major Southwest Airlines hub because those planes don’t touch our airspace.

40 million passengers equals plenty of flights

You should know that Washington Dulles International handles over 23 million passengers a year, and Reagan Washington National Airport handles over 16 million passengers a year. Added up, that’s a lot of flights.

Although most residents can’t tell the difference, flights on approach to Andrews Air Force Base (in Maryland) make a final approach over Northern Virginia. And one morning at my son’s early morning soccer game in Alexandria VA, I counted ten Air Force C-17′s  gaining altitude.

yes, helicopter flight paths too

Helicopter traffic is significant and includes medevac choppers to the hospitals, every imaginable military helicopter, Coast Guard helicopters, Fairfax County Police helicopters, U.S. Park Service helicopters, and the TV News choppers out searching for “news”.

In reality, living here isn’t quite as noisy as I may have depicted here. Really!

It’s just going to be impossible to find a home in Northern Virginia that isn’t near a potential flight path.

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Up to $100,000... but there's a catch

When a real estate client came to me all pumped up because his Credit Union was offering to pay up to $100,000 of his closing cost, I thought we should sit down and review the typical expenses for a home buyer worksheet again.

I’m sure you can understand why he was so excited since $100k is considered a big chunk of change… even for those in the top 1%!

$100,000 is a rather excessive number

Our first stop was to look at their online estimate and then the fine-print in the offer.

Their online “closing cost estimator” had a nice breakdown and their estimate was reasonably close to my estimate.

In his case the estimated amount was about $14,500.

The fine print states:

Closing cost offer only good for 5/5 Adjustable Rate Mortgages (ARMs)**. You must use one of our preferred title companies to get closing cost credits. Closing cost offer is limited to $100,000 per loan. If application is withdrawn or does not close, the borrower pays all applicable fees. For New York properties borrowers are required to pay title insurance premiums and may use any title company to obtain the closing cost credit of up to $100,000. Includes lender’s fees, title fees, recording fees, and recording/transfer taxes. We do not pay optional owner’s title insurance.

One of the first items that I cover with my Vienna home buyers and sellers are typical transaction expenses. Spending time going over my cost estimate worksheets always puts the process in perspective and answers some tough questions.

But, you have to agree, an offer to pay $100,000 is going to get anyone’s attention.

Developing a winning negotiating strategy is part of the reason why I cover expenses, because you can include having the seller pay some of your closing costs in your offer to buy their home. This is perfectly normal in the Northern Virginia real estate market where homes are expensive (our average price in 2011 was $483,160) but, remember, you can only use the amount as allowed by the lender’s predetermined “normal” transaction costs.

In my real estate practice, having a consistent negotiating strategy is essential for my client’s success. But when this lender then suggested to my client that he ask the seller to give a closing cost credit then steam started to come out of my ears. Wait a minute, didn’t their advertising get him interested in their program because they were willing to pay the closing costs?

And now they are suggesting he get the seller to pay some… ?

wait a minute, this is BS.

This is a fairly complicated switcheroo-ski if you ask me. Keep in mind, if there is a seller credit then that amount will be used first before the lender steps up with their $100,000 credit. That credit goes to closing costs and not to escrows, pre-paids or the down payment. If the credit is too much then the seller gets to keep her funds.  In this case, I recommended to remain focused on the Sales Price without the distraction of a seller credit.

Besides wanting my clients to get treated fairly, I also want them to get the best deal and maximize their mortgage options. As a licensed real estate agent, I understand the FTC regulations restricting real estate agents about giving mortgage counseling… but I will do my best to point out a rotten egg if I smell one.

Have you reviewed the typical expenses of your real estate transaction?

Related articles

• Price is not all that matters in real estate sales (reallyhome.wordpress.com)
• C is for Closing Costs! (realtorkaera.wordpress.com)
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A home in Vienna, Virginia | Doug Francis via Flickr

For many folks, as the clock strikes 2012, careful plans to sell their home or to buy one go into action. Setting new goals is an important way of improving your life and making each new year more meaningful than the last. Our lives are short and knowing that you are personally responsible for the life you lead right now (this instant) can be an awakening. Owning a home can be an important pillar of that plan.

A 2012 real estate resolution?

If you have made a real estate resolution for 2012 then here are some of my top tips for both sellers and buyers.

Top 5 home seller tips:

• Minimize – Even if you live in a grand mansion, you want your home to appear as spacious as possible. Some common themes include removing a chair from the living room, clearing off the kitchen counters, or taking 30% of your clothes out of every closet.
• Paint – A fresh coat of paint can really transform a room at a very low cost. Instead of the white that we used to recommend, using a classic color that is in style will appeal to today’s picky home buyer.
• Flooring – Nothing will turn off a buyer faster than flooring that’s in poor condition. Most hardwood floors can be refinished or super-cleaned (even 50 year old hardwoods). Carpets can be swapped out in a day. And vinyl floors cab be replaced.
• Landscaping – Home buyers started to assess your home as they pull up, so you want to make sure your yard, plantings, driveway and front door are looking their best. Handles, door knockers, doorbells and front a mat all set the stage for what they see next.
• Appliances – Home buyers look closely at kitchens, and seeing an old range, fridge or dishwasher can be a deal breaker. Laundry machines, hot water heaters and AC units are systems that are factored in when making a decision to buy one home over another.

Top 5 Home Buyer Tips

• Price Range – Your mortgage lender will pre-approve you for a maximum price range, but it is up to you to decide how much you really want to spend.
• Long-term Needs – Buying or selling a house is expensive, so it is essential to consider what your situation will be like in five years. Will you have children, be retiring from your job, or relocating out of the area? Any of these factors need to be calculated into making your home selection today.
• Quick Decisions – Being able to make decisions quickly can especially help you in the active Northern Virginia real estate market. Get to know the sales contract and the process for putting in an offer quickly when you find a home that fits your needs.
• Flexibility – Your willingness to compromise will help you be successful. For example, buyers looking at Vienna VA homes often make a compromise on smaller homes because of pricing and commuting times.
• Teamwork - This process will easily involved fifteen important people who are all working on deadlines, and each can easily disrupt the flow of the process. Online home searching is the easy part of the process. You should view your real estate agent as the project manager helping you understand your options, meet deadlines, be a resource and ultimately achieve your goal of buying a home.

If you have made a resolution for 2012 to buy or sell a home in Vienna, VA or virtually most of Northern Virginia, you can start be meeting me here on my blog and then having me over to see your home to see what it is worth, or to meet to discuss your plans to buy a home and how I can help achieve your goals. Send me an email at doug@DougFrancis.com and I will follow up from there.

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Okay, we got a problem!

Although every home buyer wants a home inspection, there really isn’t any set criteria to help them know what to expect.

If you are a home buyer, an inspection typically takes place after a contract has been accepted or ratified by you and the seller. There will be a set contingency period when you will hire a professional home inspector to make a visual inspection of the major systems in the house. It is an example of home-schooling because most buyers learn more in three hours than they ever would otherwise.

Your home inspector should provide you with a complete, written report of the systems that he was able to get a look at. It should note how old appliances are, give you an idea on the condition of the home, and make recommendations for repairs or future replacements. Remember, a home inspection can’t possibly catch everything, but keep in mind that you are hiring a “trained eye” who looks critically at homes every day.

I always recommend a couple of good inspectors, but you can easily Google local home inspectors or look on Angie’s List or Yelp. Online reviews are good but you’ll need to contact them and ask a very specific question.

Skipping the photos is a risky shortcut

My easy tip for home buyers: ask your potential inspector if his report will  include digital photos?

It is going to be essential for Northern Virginia home buyers to have thorough reports that provide good documentation including digital photos in their home inspection reports. In my opinion, the new NVAR Regional Sales Contract is going to put greater emphasis on home inspections.

Even if you aren’t working with me, please make sure your home inspector uses a digital camera.

If you are just starting the process of finding a home to buy then check out my Home Buyer Tips , or you send me an e-mail at doug@dougfrancis.com to discuss your plans.

Good home, cheap!

If you are lucky enough to be able to buy a home, I’m sure you are looking for an incredible deal. There hasn’t been a week recently when someone hasn’t mentioned making a lowball offer and how I can help them get a steal deal.

Typical tips are to look for homes that have been on the market for a few months, don’t get emotional, to be ready to walk away from an unresponsive seller, and to make sure your written offer looks professional.

I have seen home buyers make lowball offers on my client’s homes, had their agent call me to tell me the price is too high (usually unsubstantiated), and then get pissed when my seller client told them  “no”. There have been a ton of rookie mistakes, so here are some tips to help put together a better lowball offer.

Are you ready for some insider secrets?

• Make your offer “as-is” – One concern that home sellers have is that the home buyer or home inspector will ask for a bunch of repairs be made prior to closingto the house. Realistically, most homes have issues, so look closely at the house before making your lowball offer taking note of to the overall condition as a key factor. Your offer taking the home “as-is” will give you a strategic negotiating advantage.

• Close on the sale quickly – Home sellers are hoping to get the equity or cash out of the house. If you can go to closing in two weeks then many sellers may jump at your lowball offer. Time is a valuable commodity, and if you possibly let the seller stay in the home for a period after closing then it becomes more appealing.

• Eliminate the Appraisal Contingency – You already know if you can get this home at your price then it’s a deal. Crossing out the need for an appraisal will really raise the bar and increase your chance of acceptance. Appraisals can be an item many sellers are having to sweat out since most media outlets have them believing all appraisals are coming in low.

• Pay Cash – Have you ever heard the expression that “cash is king”? The fact that you don’t need a mortgage is very attractive when making lowball offers because, as we all know, banks often cause delays.  I know one builder who writes up offers as “cash” on Vienna Virginia tear downs but then signs a mortgage at the closing table.

It is very important that you know what a good deal is on the house you hope to buy. An offer considered lowball is sometimes only 10% off the asking price depending on your market. And if your first offer is rejected, then consider making an improved one. You should be doing your research in advance and have the ability to evaluate a home quickly.

It may be like playing poker

One risk that you should be aware of when you make a lowball offer needs to be discussed up front: The home seller could be so insulted with your lowball offer that she may refuse to ever sell her house to you, even if you come back with a 100% offer. I have seen it happen, so don’t say I didn’t warn you!

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Helmet not required

When a Facebook friend posted a link to an MSN article that ranked Vienna Virginia the #5 Best Housing Market in America, I just had to cringe since those statements never hold true for long.  Most articles on MSN come from somewhere else and I quickly discovered that the article originated from Bloomberg BusinessWeek — based on data provided by Zillow.com .

Our Headline Economy

I cringe because when I read headlines like Best in America then I know we are in for a soft patch… a soft patch that’s good for home buyers.

You need to know that your average real estate agent is a “boots-on-the-ground”, muddy grunt of a business person. In the trenches, feeling the day-to-day breath of their local market based on what they are hearing from current clients. Seriously, an agent like Fran Bailey in Chicago probably has a far different take on the real estate market right now than Kris Berg in San Diego.

And I have a different take here.

Any real estate market can go through a personality change in 14 days

If you asked us to discuss our real estate markets based upon data from Zillow then you would probably get a good laugh. To gauge an active real estate market on data compiled from county tax records is guaranteed to be wrong.

So let’s look at Vienna, Virginia 22180 just like in the Bloomberg BusinessWeek article except using data provided by our MLS, the Metropolitan Regional Information System and the RealEstate Business Intelligence unit .

The way I see the Vienna real estate market

MRIS is using data that it compiles daily. Take a look at the chart and notice how nicely the Actives, the Pendings and the Solds paralleled each other up to May and June 2011. Then you will notice a distinct change in the market. This trend actually spills over to all Northern Virginia real estate so it isn’t unique to Vienna stats.

As a “grunt”, I feel there has been a shift that favors home buyers. The inventory of Active homes has been rising while the number of Pendings and Sales has dropped. Home buyers need to recognize this trend because it works naturally with the recent drop in long term mortgage rates.

The only “Bad News” is that the number of sales is slowing if you are a home seller, but this is “Good News” if you are a Vienna home buyer because there are more homes to look at to buy.

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About 30% cash buyers

Condo buyers that pay cash are typically savvy real estate investors looking to cash in on the current low prices with plans to rent out the properties. Although there are many places where that plan is a good bet, places such as Reston, Virginia may be a whole other story.

You see, Reston is an ideal location for investors because a Metrorail line is being built from Reston to Washington DC. Reston also has an impressive workforce clustered around the Town Center and Dulles Corridor – so there is continuous demand.

This scenario sounds pretty good to me as well, but there area lot of people who want to get on that train too and are willing to do anything to get onboard.

Are you missing the big picture?

Owner occupants getting loans for condos have to jump through some extra hoops meant to protect (the lender) from placing a residential loan in a “commercial” building. A commercial residence is defined as having a larger ratio of non-owner occupied units to owner occupied units. Also, they tend to look at F.H.A. approvals and other financials.

Last week’s conversation on CNBC about real estate and cash buyers really got me thinking about what I was seeing right here in the Reston condo market with cash buyers (investors) often out bidding owner occupants.

Luckily, condo buyers paying cash don’t need all that nonsense!

Again, about 30% cash buyers

Well, it isn’t all nonsense…

So what is the Investor Ratio?

Although you may be well intentioned as a real estate investor, it is important for you to understand how many other well intentioned investors are in your building. This figure will be especially important when you plan to sell (cash out) and buy something in the future. If the ratio is too high then it may be difficult for perspective buyers who need financing.

Is the property F.H.A. approved?

Although the F.H.A. has made it tougher to maintain approval, many condos that had approval have not renewed their status. Again, this may factor into your plans when you plan to sell (cash out) and put your cash into another investment. Another investor may  impact your condo’s resale market if one investor owns more that 10% of the units.

By the way, take a look at those two charts and notice how few FHA loans were placed each month. To check on approvals, click here for F.H.A. and here for Fannie Mae lists.

How solid are the condo’s cash reserves?

Although you are going to pay your monthly condo fees, you need to know how the finances look right now because, if 10% of the building is behind on their payments, then you may want to reconsider the building. It is a slippery slope when that badly needed cash flow dries up and reserve requirement aren’t being maintained. So, examine the financials.

Read the Condominium Disclosure Documents

These will give you plenty of financial details, but look to see if there is a self imposed cap on rental properties. I know one condo where there is a very restrictive cap on rentals – at 20%. Better yet, they are at the max already so you will need to apply for a spot when it comes available. Sorry, it’s in the bylaws!

Have an exit strategy

Remember that getting your money from this type of investment is not easy, especially if you are buying it with partners. This is a trend I’m seeing since so many people are earning 0% in their money market accounts and the cash flow from a rental is appealing. It is your principal that is locked up until you sell. If you don’t have a plan then you may get stuck with a lemon for a long time.

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Image via Wikipedia

There isn’t anything worse than waiting for an answer.

Yes or No. Come on man, just let me know!

The tip that I give my Northern Virginia real estate clients is to respond to any type of offer quickly, and to take every one seriously. Speed is very powerful when negotiating.

In real estate, a quick response is powerful

If that answer is too vague and you need just a little more structure, then maybe these guidelines will help:

• in by 10:00 a.m then respond by noon
• in by 1:00 p.m. then respond by 5:00 p.m.
• in after 6:00 p.m. then waiting until 9:00 a.m. is okay (you can sleep on it)
• Communicate if there is a delay… and stick to that time frame

Problems happen when an offer comes in and then one party doesn’t respond back in a reasonable amount of time. In the Cold War days, it was acceptable to be a slow responder like if you were behind the Iron Curtain or if you were on the QE2 sailing to Sydney.

Here is the warning: When the submitting party has to wait,  festering begins. Are they “shopping my offer?” they ask. Are they using it to “leverage some other offer?” they ask. “Did they even get our offer?” they ask. Recently, clients negotiating on a house in Vienna broke off negotiations because the seller was dragging his feet and they, justifiably, were insulted.

Today it is just too easy to respond quickly using secure digital signatures on any laptop or iPad. A few years ago I started to use DocuSign after a client couldn’t fax his paperwork to me from Austin. This service alone has helped my clients respond quickly in competitive situations, and it actually comes across as much more professional considering so many companies have adopted digital signatures too.

DocuSign uses e-mail to secure your signature and “the cloud” to merge the completed document then delivering it back to me. Even if you are in your office in McLean, it is so easy that you will be able to respond instantly.

Remember, respond to real estate offers quickly for the best results.

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Yes, graded 1 to 10

Are home buyers obsessed with school ratings on real estate web sites?

In 2011 they are!

Most real estate sites now have data on local schools and show ratings from 1-10 on the overall performance (test results) and then give summaries and some parent comments on actual experiences. Take a look at the FranklyMLS site links or Redfin pages for information from GreatSchools.org (which does seem to have plenty of advertising).

Living in Vienna Virginia, my personal experience has been with Fairfax Schools but some of my clients have had children go to Arlington Schools, Falls Church City Schools and Alexandria City Schools with really great results.

If you really want to do your “due diligence” on a particular school so that you can be truly confident that you are buying a home in the best possible neighborhood, then please use these ratings as guides and then check out the school yourself. Fairfax Schools all have web sites now (as every school must have these days) so go and check them out. Investigate the PTA link which probably has after school info or planned events for the year.

Here are my home buyer tips regarding schools:

• Check out the individual school web sites
• Drive by the schools and look at the buildings and location,
• Give a call to the office, and then set up an appointment with the Principal (only 15 minutes)
• Look at PTA activities and events planned on their web site (if they have one)
• Pick out two or three schools and then focus your home search on those communities

So plan to do a little more work than just requiring that the school must have an 8 or above rating because your experience will only be as good as your involvement in your child’s experience.

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Those are the people who are in the dirt, actual real estate buyers and sellers.

Hey, these people are organic

Going only on my “hunch”, I looked into the real MRIS Northern Virginia real estate data and recognized that a subtle shift had occurred! Yes, I confirm my hunch.

Let’s look at Fairfax County real estate trends first

Do you see that subtle shift in the June numbers in Fairfax County? The number of “active listings” slopes up as the number of “pendings” takes a dip. I can’t find that happening in the last two years worth of data.

I think that my professor back at Boston University called it an inflection point (as will, one day in the future, the statisticians at Yale when they finally see this blog post) in my very boring statistics class.

Let’s look at Arlington County real estate too

The same trend hits the Arlington County real estate market too!

My read is that we hit a very hot summer season starting in June. If you drive around on Saturday or Sunday, it is apparent that lots of folks have left town and gone to the beach. But know that there are plenty of home buyers out there and that they are carefully looking through the available listing and aren’t feeling the pressure that they did in March.

You will have to wait until September 2011 to see if I am right, but late July and early August are the time to make your best Northern Virginia real estate deals.

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