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Vacation Homes: Is Now the Time to Buy?

Patricia Kime — 2010-09-15T12:43:00 00:00

Deborah Rehyer of Vienna, Va. had just one requirement for buying a vacation home: It had to be waterfront.

Her search began in a region 90 minutes from her home, in Virginia's Shenandoah Valley. And her search ended on the opposite side of the state with a six-acre parcel on a tidal pond just off the Chesapeake Bay.

"Waking up in the morning is the best. I take my coffee out to the floating dock and watch the world wake up," Rehyer says of her vacation property.

Many of us visit vacation spots and wonder what life would be like to live there. Often, we pick up the real estate brochures searching for a cheap vacation home or the luxury house of our dreams.

Even as the national real estate market remains stagnant, professionals and experts say that the market for vacation homes may be the most attractive it's been in years, with prices down and interest rates low.

"If you're looking at getting a recreational home or a home where you think you want to spend most of your time in -- maybe the next portion of your life -- it's doable now. You can get in the door," says Tom Kelly, syndicated real estate newspaper columnist and co-author of "How a Second Home Can Be Your Best Investment."

The number of vacation-house purchases rose slightly in 2009, up 1 percent from 2008, according to the National Association of Realtors' 2010 Investment and Vacation Home Buyers' Survey. Although the number is still down from the vacation-home-sales heyday of 2005 and 2006, buyers are returning to the vacation-home market, the NAR says.

The typical vacation homebuyer has a median age of 46 and a median household income of $87,200. Half of all vacation home buyers in 2009 purchased their second home in the South; the typical property was a median distance of 348 miles from their primary residence, according to the NAR.

If you are among those considering buying a vacation home, think about the following before starting to expand your real estate portfolio.

Preliminary Analysis/Affordability

If you dream of owning a home away from home, start your search by determining how much home you can afford. If you haven't saved enough for a cash transaction, you'll need a mortgage, and the bank can help you determine what you can pay. Loan officers determine the amount of mortgage and type of mortgage for which you qualify based on several factors, including the amount of cash you have for a down payment, your debt-to-income ratio and your credit score. (Also see our guide: "How Much Home Can I Afford?")

Regarding the down payment, banks have gotten tight on requirements, often asking for between 20 percent and 40 percent for a down payment on a second home. Make sure you have money set aside for the down payment and closing costs.

To calculate your debt-to-income ratio, add your current monthly home payment, the projected payment of your second home and any other debt (car payments, student loans, credit cards, etc.) and compare it with your monthly gross income. Know that lenders will not give loans to those who have a debt-to-income ratio of more than 36 percent, so consider this in addressing your price range.

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Also, make sure your credit score is in its best form. (Still wondering how much home you can afford? Check out AOL Real Estate's Mortgage Affordability Calculator.)

Then ask yourself the following question: Do you plan to rent out your vacation property? NAR says only one in four vacation homebuyers plan to rent out their properties to others. But one in five investment homebuyers plan to use their purchases for personal vacation use and/or as a family retreat. (Also see our guide: "Rent Out Your Home as a Vacation Property and Make Money.")

The difference between a vacation home and an investment property, according to the Internal Revenue Service, is 14 days: If you rent a house out up to 14 days a year (which you can do tax-free and still qualify for mortgage deductions on your taxes), it's a vacation home; if you rent it out and spend less than 14 days per year in it for personal use, it's an investment property. Make sure you calculate the tax ramifications when considering what you want out of a property.

Still worried about affordability? Consider shopping to buy a vacation home and asking the owners whether they are interested in owner-financing, Kelly says. "Ask what's possible. If an owner sees a terrific family that's willing to put 10 to 15 percent down and will cash them out in five years, they may be amenable."

The Fun Stuff

Beach, mountains, island getaway, rural retreat? When looking at homes, make sure it has something special - a view, proximity to main attractions, a three- or four-season resort with vacation appeal to all or waterfront. Finding a place that has one quality with universal appeal boosts one's enjoyment of a space and is good for resale. "Chances are if you like something about a place, others will too," Kelly says.

A rule of thumb for buying a vacation home is to find one within a three-hour drive of your primary residence so it's accessible on weekends. Kelly says people tend to stick with this rule, mainly because they enjoy a close corps of friends and family at their primary residence and want to stay close. Still, the NAR reports that 50 percent of vacation homebuyers in 2009 purchased a home 500 or more miles from their primary house, so don't restrict your search if you, say, live in Ohio and really want a home on North Carolina's Outer Banks.

Taxes and Oversight

A quarter of buyers who purchased a vacation home in 2009 intend to use it as a principal residence in the future, the NAR says. Many vacation homebuyers look for potential retirement homes. Owners avoid paying capital gains taxes when they sell their principal residences, so if they move into their second residences for at least two years, they can sell that house without paying capital gains.

Joy and Cliff Williams of Williamsburg, Va. took the opposite tack. They left their primary residence, an 18th-century historic home in the country that Cliff restored in the 1970s, to move into town. But they didn't want to give up their rural retreat, so they decided to rent it out as a vacation destination. Using VRBO.com by HomeAway and other websites, Cliff Williams now manages the house, Lightwood, as a side business and the Williamses have been able to keep a precious asset. "It was a leap of faith as to whether it would work, but it did, " Joy says. "We get people from as far away as Australia and Britain renting out our property."

Kelly says that Internet sites like VRBO.com and craigslist.com have eased the challenges of renting out vacation homes, so he encourages buyers sitting on the fence to keep an open mind regarding renting out their dream homes.

"I think people underestimate the number of people who are interested in renting vacation homes rather than staying in hotels," Kelly says.

They also overestimate the amount of time they'll spend at their own vacation home, he adds. But don't let that scare you. Vacation homes, he says, are a lure for family and friends. As a vacation homeowner himself, he's hosted many family gatherings in the mountains near Seattle. "You can't put a dollar sign on that stuff. Those are family memories we got," Kelly says.

Looking to buy a second home, or your first? Here are more AOL Real Estate guides to help:

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D.C. Real Estate's Most Powerful Person: Public Schools Chief?

Patricia Kime — 2010-08-25T16:55:00 00:00

Does the blunt, no-nonsense administrator of Washington, D.C., public schools actually influence home values in the city?

Washington City Paper blogger Lydia DePillis argues that Michelle Rhee does, although area Realtors and residents aren't as sure.

In her three years as schools chancellor, Rhee has shuttered under-performing schools, fired administrators and teachers, and invested millions in professional development. Parents are becoming more involved citywide, and test scores, overall, are on the rise.

Citing the experience of D.C. Councilmember Tommy Wells, who says Realtors gush to him about school improvements and increased housing values, DePillis dubbed Rhee "the most powerful person in D.C. real estate."
Certainly, something is keeping residents in the city, once their children turn 4 and 5.

"For a long time, people moved away when their kids reached school age. They are not doing that anymore," says Meg Shapiro, an agent with RE/MAX Allegiance who covers Capitol Hill neighborhoods. Shapiro's oldest child attends Washington Latin, a charter school for grades five through high school. "Are people staying just because of the schools?" Shapiro asks. "I don't know. It's really cyclical."

Real estate agents are the first to say good schools mean higher property values. Yet agents are bound by the Fair Housing Act to restrict opinions on what they consider "good schools." Additionally, empirical data showing a correlation between a high performing school system and property values is also hard to come by.

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A 2004 study of the desegration of the Mecklenburg County, N.C. schools found test scores to be less influential on property values than, say, the differences in established housing prices within school boundaries, changes in assignments and changes in peers at a school. ("The impact of schools on housing values appears to be largely indirect, through the residential sorting that goes hand-in-hand with school boundaries and reassignment," wrote the authors of "Do Good Schools or Good Neighbors Affect Property Values?")

So Rhee's successes in improving schools may be less influential than, say, the fact that parents become more involved in their neighborhoods and communities offer amenities that make them more attractive to families.

Not surprisingly, the District's high-performing schools usually are found in upscale neighborhoods. Schools like Tyler Elementary on Capitol Hill and Key and Hyde elementary schools serving Palisades and Georgetown have long-standing reputations for quality education.

But increasingly, high performers can be found across the district. Students at Draper, a small school scheduled for consolidation in Barnaby Terrace, boasted 100 percent passing grades on reading and math assessment tests. And at Takoma Education Center, a kindergarten-through-eighth-grade school near Georgia Ave., students have raised scores -- thanks in part to an incentive program that rewards them for good behavior and grades.

Still, many schools continue to struggle in the District, and whether Rhee's policies will eventually turn them around -- and help pull home values up along with them -- depends on whether she stays in office. Rhee was hired by current Mayor Adrian Fenty, who faces challenger Vincent Gray in a primary on Sept. 14. Gray has not committed to keeping Rhee, if he wins.

Shapiro says that as a parent of a D.C. public school student, and as real-estate agent who works with buyers, she hears less about Rhee and more about whether D.C. high schools will improve, as the foundation elementary schools get better.

"There are some really quality programs at the schools, the math and science charter school, Duke Ellington School for the Arts. But parents are also looking for a rock-solid public high school option and are really watching what happens at Eastern High School," she says, referring to a school now under renovation.

"The renovation at Eastern, how it all shakes out -- that's going to change the dynamics of real estate in D.C.," she adds.

Still trying to decide which is right for you? Here are some AOL Real Estate guides to help you no matter whether you choose to buy or rent:

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6 Steps to Sell Your House Without a Realtor

Patricia Kime — 2010-08-10T20:00:00 00:00

When Lake Grove, N.Y. residents Jim and Rose Maguire decided to sell their vacation home in Vero Beach, Fla. they decided to try the home sale themselves.

With limited knowledge of home sales (they'd purchased three homes but never sold any), Jim went online, searched "for sale by owner" and came across www.ForSaleByOwner.com.

Following the site's instructions, the couple took pictures of their home, listed it and waited for buyers to come.

They spent their winter holiday hosting open houses and corresponding with potential buyers to no avail. So when it came time to return home to Long Island, they handed the listing to a Realtor with a caveat -- that it exclude a couple they'd met through ForSaleByOwner.com who needed to sell their own home first.

Weeks after the Maguires returned to Long Island, the couple called.

"I knew the market was tough, but "I figured 'what do I have to lose?,' " Jim Maguire said. "I knew what I had to gain - saving $15,000 on a real estate commission."

The Maguires successfully maneuvered the For Sale By Owner process, or FSBO (pronounced "fizz-bo") in real estate lingo - not an easy task in a down market. In 2009, 11 percent of home sales were FSBOs, according to the National Association of Realtors. And just over half of these, 6 percent, actually sold on the open market. (The remaining 5 percent were private transactions among family, friends or neighbors, according to the NAR).

The NAR estimates that nearly 70 percent of all for-sale-by-owner sellers eventually hire a professional agent for help. While these numbers might look discouraging, this percentage includes home sales using a real estate agent, says Joanne Cleaver, a senior editor at ForSaleByOwner.com.

So while a for-sale-by-owner home sale is hard work, it can be done. With the right attitude, knowledge, motivation and some Internet savvy, nearly any homeowner can turn their property into a successful home sale.

Experts and homeowners alike agree on these six steps to a successful for sale by owner experience:

1. Do your research

The first order of business in preparing for a home sale is to become familiar with the ins-and-outs of real estate transactions. Since you've been through the experience at least once, pull out the paperwork and contracts on your home and read them. Learn the language of real estate and read a book or two about how to sell your house.

Gather all the paperwork and forms you'll need for the home sale closing, including copies of property records for appraisers, the title company and others, as well as insurance documents, disclosures and legal documents. At this time, also line up people who will help you in the process, including a real estate attorney, an appraiser if you plan to use one, and a title company. Finally, consider how you want to structure the deal. Will you want to offer such incentives as owner-financing or lease-to-own to attract first-time homebuyers? Learn how these arrangements work.

2. Prepare your house

Now turn a critical eye to your home. Cleaver says house issues fall into three categories: cosmetic problems; functional issues; and things you can't fix. The first two should be corrected before you try and sell your home and the third, if any, should be addressed with the home's pricing.

Turn a critical eye to your house. Paint scuffed or brightly colored walls in soothing neutrals. Replace carpeting or refinish floors. Make sure that your home is cosmetically clean and perfect. Then turn to the working items in your house - the functional things - and see if they need to be repaired or replaced. Ruthlessly inspect appliances, the heating and air conditioning, the roof and other items. Cleaver says. If these are nearing the end of their lifespan, they could turn off buyers. Finally, take a look at things that you can't change about your house: Is it on a busy road, adjacent to an odiferous chicken farm or on an awkward lot directly facing the neighbor's back windows? You may need to adjust or lower the price to entice buyers.

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The next step is to clean it, clear away clutter and personal items and stage it. Aim for crisp, clean interiors, closets and spaces. "Trim the trees, wash the windows, get rid of big heavy draperies. Stuff like that doesn't cost you anything and it brings the light in, making a home seem bright and spacious," Cleaver says.

3. Price your house

The number one mistake owners make is pricing their home too high, says Piper Nichole, author of "The For Sale By Owner Handbook." Price it too high and you might scare off potential buyers. Allow it to sit on the market and it gets stale. "Buyers start to wonder what's wrong. Pricing effectively helps a home sell faster," Nichole says.

To determine what you consider the home's fair market value, check out neighborhood sales from the past six months. Attend open houses and check out the competition. Use AOL Real Estate's Home Values page to get a starting idea. You can interview real estate agents, but be up front with them regarding your intention to try to sell the house yourself. Some may decline an offer to speak with you, but many know that you still might need an agent and will welcome the chance.

Finally, if you are stumped, hire an appraiser. A professional assessment could cost between $300 to $500, but having that appraisal in hand is also helpful if there is a wide discrepancy with the potential buyer's offer or the lending appraisal.

4. Market your house

The internet has taken away what used to be a real estate agent's ace-in-the-hole: the multiple listing service. For a small fee, owners can list their for-sale-by-owner listings on an MLS, giving them similar exposure to the market. Other outlets, including Craigslist and websites geared exclusively to home-sales-by-owner draw home shoppers. "If you use these online avenues to market your home, make sure the site gets a lot of unique visitors. You don't want to waste money on a site that doesn't get a lot of traffic," Nichole says.

Also, spread the word on social networking sites, forums you frequent and traditional media outlets like local newspapers. To entice agents with buyers, offer a commission, one comparable to one they'd receive in a normal sale. "We love buyers' agents," ForSaleByOwner.com editor Cleaver says. "Many first-time buyers use an agent and we encourage our customers to offer that 'co-broke' fee to help reach that market."

5. Negotiating

Be prepared for the offer and the counteroffer on your home sale. If you have a firm bottom-line in mind, make sure it's justified with strong research and weigh the cost of continuing to market the home. Again, if you are squeamish about haggling, consider bringing in someone - a real estate attorney - to assist.

6. Closing the deal

Make sure you are familiar with the required closing paperwork for a home sale in your state. Hopefully, your buyer will have already shown you their written preapproval and you will sail through the closing process. But be prepared for snags or delays along the way. Add some cushion to the closing date: Schedule your move and the turnover so that it's somewhat flexible, should the mortgage approval process be delayed. Be prepared for the results of any home inspections and appraisals, and come to the closing table with everything mandated by state and federal law.

In the Maguires case, they hired a title company that managed all the last-minute details, Jim Maguire said. "It was no trouble at all."

More on AOL Real Estate:
Find out how to calculate mortgage payments.
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Get property tax help from our experts.

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How to Choose a Realtor

Patricia Kime — 2010-08-09T15:49:00 00:00

Virginia Realtor Lon Crow has firm ideas on how homebuyers should choose a Realtor. And they don't involve calling the agent named at the bottom of a listing.

"You have to find someone who will act on your behalf. A listing agent's not going to do that. A listing agent is going to try to get the price that, in theory, they've helped the seller determine," Crow says.

Home sellers often go to great lengths to choose a Realtor to help in selling their homes; an effective Realtor can assist in determining an appropriate asking price, stage a house to sell and market the property.

But buyers, 90 percent of whom now use the Internet for their home search (according to the National Association of Realtors), often just pick up the phone and call the Realtor or agent who is selling the house.

It's an approach to choosing a Realtor that can cost the buyers, Crow says.

"In my area, I've looked at the stats," he says. "Buyers who use the listing agent for a home usually save about five percent off the asking price. But if they have a buyer's representative, it's closer to 10 to 15 percent, and sometimes as much as 20 percent off."

Realtors can facilitate a deal, when it comes to selling or buying a home. But to help with one of the largest transactions in their lives, both sellers and buyers should do their homework before engaging in a business relationship with a realtor. The National Association of Realtors reports that 85 percent of home sellers retain an agent while 79 percent of buyers bought a home with assistance from one.

Should you decide you'd like the advice of one of these professionals, consider the following before you choose a Realtor:

Selling or buying?

Real estate transactions potentially needing a Realtor involve two sides - the seller and the buyer. Sellers hire listing agents to aid with the deal on their end. Buyers use a selling agent, sometimes called a buyer's agent, to locate homes and assist with the paperwork associated with the sale.

The selling side

It's recommended that sellers interested in enlisting the help of a real estate agent or a Realtor (the proper name of an agent who is a member of the National Association of Realtors) should interview at least three agents before choosing one.

To find these potential Realtors, first ask neighbors for references, or attend open houses in your neighborhood. Strike up conversations with colleagues who have recently sold homes nearby. Once you have a list of Realtors, set up interviews with individual agents.

When interviewing a Realtor, ask a series of questions, including:

How well do you know the neighborhood?
What are your plans for marketing my house?
How much do you think I should ask for this house and how do you justify that price? Can I see the data?
Will you be going to the closing with me or will you send an associate?
With whom will I communicate in the office? (Some busy agents often use assistants for the bulk of their communication with clients.)
What have you sold lately? How much experience do you have? What percentage of sales have closed? What is the average time the homes were on the market? How close to the asking price was the final sales price?
How do you plan to market this house among your colleagues?

Once you, the seller, have determined who you'd like to hire, you must sign a listing contract with the Realtor or agent. Seriously consider asking for a maximum 90-day listing contract - that's enough time for a home to have showings if it is priced right, and it's short enough that if the seller is not happy with the agent's effort, he or she can move on.

While many Realtors will say they need a 180-day listing, especially in a slow market, a 90-day listing can always be extended by agreement by both parties.

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The Buying Side

Buyers' agents help buyers find homes. Often, they first work with a buyer without any formal contract, but after looking at a number of houses, they'll likely ask buyers to sign a buyer-broker agreement, binding the buyer to them for all real estate transactions during a set time period.

But before buyers begin even looking at Internet listings, they should consider choosing a Realtor. All Realtors can show properties listed on the MLS or multiple listing service, but not all real estate agents are created equally. In the Realtor search, friends, colleagues, strangers and the Internet can help.

Start by asking for Realtor referrals from people who bought homes in the community you are interested in. Drive around the neighborhood and look for signs - see who is doing business in the community. You want an agent who knows the area in detail. Look online, usually in county real estate assessment records, for the names of people who have recently purchased homes in the neighborhood. Find out whether they'd recommend their Realtor.

Look at agents' websites and the Internet for reviews on specific agents. Lon Crow suggests looking for Realtors who not only give information about their listings but also provide information about their region -- both the good and the bad. "You really want an agent who knows the place," Crow says.

After looking on the Web, call Realtors who seem like a good fit. Evaluate the conversation. Do you hit it off? Do you feel like they're trustworthy? Can you communicate well? Remember, you might be spending long hours with this person. Having confidence in your agent, as well as feeling comfortable with him or her, can help you feel like you're getting your money's worth.

While the internet has helped both buyers and sellers become more market-savvy, a dependable real estate agent can be a timesaver. Crow says that he sees the future of the profession changing, largely in part to the availabliity of information on the Web, but for now, real estate agents still hold the keys to the lockboxes. So it pays to give careful consideration to choosing a Realtor.

"It helps to hire someone you trust," Crow says.

More on AOL Real Estate:
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Should You Use a Buyer's Agent?

Patricia Kime — 2010-08-09T15:08:00 00:00

Filed under: MyNextMove

To put it bluntly, Carrie and Ryan Fitzgerald of Washington, D.C. were "clueless" about home buying when they decided to purchase a condominium.

"We weren't sure where to start. A friend in Boston suggested getting a buyer's agent instead of a real estate agent, so we thought we'd give it a try," says Carrie.

She went online, and using the search words "buyer's agent" for the Washington area, came up with Steve Israel, a broker for Buyer's Edge of Bethesda, Md. Two months later, the Fitzgeralds signed a contract for a two-story loft condo.

"Steve totally exceeded our expectations," Carrie says.

An exclusive buyer's agent differs from other real estate agents or brokers in that they don't represent sellers. Some, like Israel, never list properties for sale and only work with buyers.

Nowadays, with many homebuyers starting their search on the Internet, it's common for buyers to pick up the phone and call the agent who is listing the home that they want to see. But is this a good idea? Buyers' agents argue that it's not and say this method could end up costing buyers money.

Is a buyer's agent right for you? Understanding how real estate transactions work can help you decide -- before you shop for a home.
Understanding Relationships: Where Is Your Broker's Loyalty?

The real estate agent listed as a point of contact for a house on the multiple listing service (or MLS) is called the listing agent. This person has entered into a contract with the seller to market the house and serve as the seller's consultant throughout the sales process.

A listing agent has an established relationship with the seller, which is why buyers' agents encourage buyers to find someone to represent them in a home purchase. A listing agent is interested in getting the best offer for his or her client -- an offer on which a listing agent's commission is based. Obviously, it's in the listing agent's best interest to sell the house and in their financial interest to sell it at the best price.

Oddly, real estate contracts are written so the buyers' agent fee is usually also dependent on the final sales price. But more on that later.

Dual Agency: Playing for Both Sides

When a buyer contacts the listing agent asking to see the house and having the agent help draw up a contract offer on it, the buyer is, in effect, asking that agent to represent both parties of the contract. This sets up what's called "dual-agency," in which the agent's broker handles both sides of the negotiations.

Some states ban dual agency. And all states have made non-disclosed dual agency illegal (when a broker doesn't explain to both parties that he is representing both the buyer and seller).

But laws on disclosed dual agency vary in those states where it is allowed. In these states, there is a document in the contract called an "agency disclosure" form that spells out the relationship between buyers, sellers and agents.

In a dual-agent agreement, an ethical agent is supposed to become more of a transaction facilitator. In effect, they would not be an actual advocate of either party but mostly an information provider and communication conduit. The agent would be able to convey offers and counteroffers but can't provide opinions or advice to one party or the other. They can answer questions and explain the transaction but aren't supposed to advocate for the buyer or the seller.

This setup is usually not in either party's best interest. (It does, however, give the entire commission to the listing agent, which is a win for that broker).

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Going Solo: Working Without an Agent

Sometimes, experienced buyers will act without an agent, coming up with their own offer and hiring a lawyer to draft a contract. This is best for buyers who understand the market like a professional and know the ins-and-outs of negotiating a sales price and contract details.

But new buyers like the Fitzgeralds, or those who don't have the time to study market trends, should consider finding their own expert, someone who will act in their best interest, says Steve Israel, the Fitzgeralds' broker.

"They really should ask for references and interview agents, looking for someone who they find trustworthy and they want to work with," Israel says.

The Deal: Signing a Contract

Once a homebuyer has found an agent, they'll sign an agreement with them, called a buyer-broker contract. The details of a buyer-broker agreement stipulate the agent's fee and when he or she should be paid in a transaction.

Real estate agents make their money when a sales transaction is complete (when the home goes to "closing"). In most real estate transactions the seller includes, in their listing contract, a line stating the percentage of the final sale price that will be paid to the listing broker. The contract also mentions what portion of that percentage will go to the agent who brought in the buyer.

That's right. A listing contract states how much the buyers' agent receives, usually a percentage based on the final sales price. In a nutshell, in a traditional real estate transaction, even though the buyer's agent works for the buyer, his or her commission is based on final price.

So how do buyers ensure that their agents are really acting in their best interest? They should carefully read any agreements that their representatives want them to sign and be prepared to negotiate the terms of their buyer-broker agreement. Some buyer's agent companies, like Israel's, offer different payment options, including fixed-price, hourly fees or the traditional percentage based on the final sales price.

"There is an obvious conflict of interest with the structure in how any real estate agent gets paid," Israel says. "But in the end, most customers opt for the percentage route and are reassured by the amount of work we put in."

Buyer-Broker Agreements

The three different types of buyer-broker agreements offer varying degrees of representation for the buyer. The most restrictive is the exclusive buyer-broker contract, which commits the buyer to using one agent exclusively, guaranteeing that the agent will get paid for any real estate transaction conducted within the covered time period.

The three types are:

Non-Exclusive/Not for Compensation: This contract defines the terms for the relationship between buyer and broker but does not bind the buyer to work only with the agent. (If, say, a buyer finds a home on his own and decides not to use an agent for help drafting a contract, he or she is not obligated to pay a commission to the broker.) The buyer also can use another broker if he or she wants.
Non-Exclusive/Right to Represent. With this type of contract, a buyer can use other brokers if he or she desires. But this contract obligates the buyer to ensure that the broker receives his or her commission if he or she introduces the specific property to the buyer or acts at all on the buyer's behalf.
Exclusive Right to Represent. This type of contract obligates the buyer to pay a commission even if the buyer finds the property him or herself or uses another broker. Sometimes these contracts stipulate that the buyer will ensure that the broker receives a certain percentage of the commission. The obligation for a buyer to pay his or her agent's fee is usually waived if the seller's contract says that the seller will pay the fee of the buyer's agent.

Another of Israel's clients, Julia Spicer, signed an exclusive contract with Buyer's Edge after finding a house that she wanted to buy. She needed assistance in drafting an offer and contract, and Buyer's Edge gave her a discount for doing her own legwork, she said.

Spicer recommends buyer's agents for those who prefer to do their own searching.

"When I saw the house, I called a traditional agent in the neighborhood asking them to help me with a contract. They told me I didn't want the house and tried to steer me to one of their own listings," Spicer said.

Referred to Buyer's Edge, Spicer and Israel drafted a proposal and she bought the house.

"He has enormous experience working on real estate deals. If I were in the market, I'd definitely use a buyer's broker," Spicer says.

More on AOL Real Estate:
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Guide to New Home Warranties

Patricia Kime — 2010-07-08T11:51:00 00:00

Filed under: MyNextMove

Bob Bostock's home warranty saved him tens of thousands of dollars.

Three years after moving in to his Wildwood, N.J. condominium, Bostock noticed problems with the condo's deck, including mold and mushrooms growing from the boards. Before calling the home warranty company, he called the builder, who came over to inspect. "He said he pulled everything and there was nothing wrong with it," Bostock remembers.

Two years later, problems snowballed with Bostock's deck, as well as three others in the neighborhood. The condominium's association board banded together to insist that they be fixed. Under Bostock's original new-home warranty, workmanship on the condo was covered completely for the first two years and structural or engineering problems were covered for up to 10 years. The builder argued that the deck issues no longer were covered, but the original architect examined the problem and determined the problem was structural.

Bostock and his neighbors pursued a claim with their warranty company; the decks eventually were repaired at a cost of $25,000 each.

A new-home warranty can offer peace of mind for homeowners, guaranteeing that if something goes wrong in the early stages of a home's life, it will be covered. Most builders include a home warranty as a benefit for buying their product, and in many states, builders and developers are required by law to provide home warranties.

But requirements and stipulations for new-home warranties vary from state to state, and home warranties themselves vary widely in terms of coverage. If you are the owner of a new home, even if you're not directly shelling out cash for your new home's warranty, it pays to pay close attention to the fine print. With a new home warranty, the devil is in the details.

Buyers of new homes should always insist that they receive a copy of their home warranty well before taking possession of their property. Then they should read it. Carefully. They should first learn which company holds the warranty: While warranties often are called "builder's" warranties, the builder usually contracts with a third-party provider to solve claims.

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A good home warranty will spell out exactly what's covered. New-home warranties cover, to different degrees, workmanship and materials related to a home's systems and components, including the heating and air conditioning system, the electrical system, plumbing, windows and structural concerns. Usually they don't cover items like appliances or anything that comes with a manufacturer's warranty, or cosmetic issues such as cracks in drywall, cement or brick -- unless the cracks are determined to be of a sign of a structural problem.

A home warranty also will delineate how the company plans to handle claims, either repairing or replacing the items covered. Often, this is where homeowners and home warranty companies don't see eye to eye. For example, a homeowner believes that certain items should be totally replaced or rebuilt if there are problems with them, while the company insists on repairs instead. Under the home warranty, the company usually has the right to decide how to fix the problem.

Many home warranties say that the warranty company can choose the subcontractor who will make repairs on any filed claims. Some homeowners appreciate this because they are new to the area and don't know any local repairmen. Critics often charge that this allows home warranty companies to use the cheapest, sometimes less effective or less diligent workers.

If you have a new-home warranty, consider calling the company that holds it and find out who would be doing the repairs should a problem come up.

Owners of new homes shouldn't expect repairs to be completely free. Most home warranties insist that the homeowner pay a deductible, usually a service charge, for a repairman to visit the home. Also, few home warranties cover expenses incurred while having the work done, such as alternative accommodations if the repairs make it necessary to vacate.

Homebuyers also should be careful to read the fine print. Many home warranties include a clause that requires homeowners to deal with any significant problems through arbitration. This is to keep costs down, but often the clause requires homeowners to waive their legal rights if a problem grows. Again, these regulations vary from state to state, but read carefully and ask questions before you sign and accept the warranty.

A new-home warranty can last for as long as 10 years but include shorter coverage terms for certain systems and materials. For example, the drywall, doors and trim may be covered for only the first few years of the warranty term, while major structural defects are covered for longer. Again, be sure to read the fine print.

A new-home warranty is more akin to a service agreement than to an insurance policy. In many cases, filing a claim will involve diligence and follow-up on the part of the homeowner. In Bostock's case, he first called the builder's warranty agent, who determined the deck problem was not covered. As the issue grew worse, the association called in the original architect, who noticed that the deck's header beams (which support its front end) were the wrong size, and the method for supporting critical beams didn't match the architect's original drawings. Because the problem was structural it was covered under the warranty.

Filing a Claim

If something goes wrong in a new home, experts recommend that its owners pursue the issue with both the original builder and the home warranty company. The builder likely will defer to the warranty company, but at least they've been alerted.

Homeowners should make a list of the problems that they want resolved, and they should make sure that they're covered under the home warranty. Pay attention to the "performance standard" section of the document, which lists common problems and describes to what extent the builder is responsible for fixing them.

When filing a claim, homeowners should put repair requests in writing and ask for a return receipt for their records. Copies of all correspondence should be kept and additional copies should be sent to the builder.

In a best-case scenario, the builder or the home warranty company will fix the problem. If issues persist, however, the problem could go to arbitration (remember, many new-home warranties require this less-expensive option as a way to avoid the court system).

One way to guard against future problems is to hire a home inspector to examine the house before taking possession. Many new homeowners believe that that they don't need a home inspection since municipal building inspectors have signed off on the work done in the home; the house is brand-new; and it is covered by a home warranty.

The U.S. Department for Housing and Urban Development recommends that all homebuyers get a home inspection, though.

"A qualified inspector takes an in-depth and impartial look at the property you plan to buy," writes HUD's Office of Single Family Housing.

New homeowners also should remember to keep a maintenance file containing documentation of everything done on the home, including routine and special maintenance. The paperwork will come in handy if a claim is needed.

In filing a claim, homeowners should remember to be persistent. It may take a while. In Bostock's case, it took four years and $1,600 out of pocket for additional inspections, as well as a temporary shoring wall that he built to ensure that the deck didn't collapse and hurt someone.

In the end, he said, diligence paid off.

"We were fortunate in that we didn't have to hire a lawyer. In New Jersey, if you buy a new home, a home warranty is a requirement. I know if I bought a house elsewhere, I'd make sure the builder bought a private homeowner's warranty," Bostock says.

Want to learn more about buying a home? Here are some AOL Real Estate guides that might help:

Or find an home for sale at AOL Real Estate.

******************

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Making an Offer

Patricia Kime — 2010-06-25T14:22:00 00:00

Chris and Stephanie Wendell spent three months looking for a home in Rockville, Md. before they made a house offer. When they saw a three-bedroom, two-and-a-half bath townhome in Regent Square, they thought they'd found "the one."

"We pulled into the parking lot and saw a really massive oak tree near the house. I said to Chris, 'Unless this place is really disgusting inside, this is it,'" Stephanie Wendell recalls.

Working with real estate agent Lisa Abrams of Re/Max All-Pro, they crafted a house offer. Having researched the process, they knew that submitting an offer-to-purchase contract would entail more than simply coming up with a price.

"It was hectic. We submitted our offer and then found out there was another one for the same house," Wendell says.

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"We were cautious. There were just things, like the home inspection, that we wouldn't waive," Wendell says.

After days of negotiations, the Wendells increased the house offer price, but decided to keep most of the other requests in their offer-to-purchase contract. With their agent's advice, they knew that much of what's contained in a real estate sales contract exists for both the buyers' and sellers' protection.

Making an offer to buy a home is one of life's biggest decisions. While the house offer contains the most important figure - the price - the contract also contains details that must be reviewed carefully to protect a potential investment and limit risk during the transaction. A real estate sales contract is more than just the offer of a price, it's a legal document that determines who pays what, when they will pay, how they will pay and what day the property will change hands.

A standard house offer, or sales contract, according to the National Association of Realtors, includes:

A home's address
The sale price
Financial terms
A seller's promise to provide clear title
The amount of earnest money deposit accompanying the offer
The method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted between buyer and seller
Provisions about who will pay for title insurance, survey, termite inspections, closing costs, etc.
Type of deed to be given
State-required disclosures or contingencies
A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
A target date for closing
A time limit after which the offer will expire
Contract contingencies

While all sections are important, some require close oversight. It behooves buyers and sellers to pay special attention to the information contained in the sections below.

Price and Financing

Usually the most important part of the house offer to buyers and sellers is in this section. Buyers should begin by determining what they want to offer as a purchase price. This decision usually is made based on information such as comparable sales, available tax assessment information and the market rate. Coming up with this figure is often the most stressful task of drafting an offer: propose too little and you risk receiving an outright rejection; offer too much and you could be stuck with a bad investment. If you have a real estate agent, weigh his or her suggestions on this part carefully. Ultimately, you're the one who must live with the decision.

A buyer's first offer kicks off the negotiations. While the first house offer could be the final price, it's usually more of an opening salvo. Savvy, well-positioned buyers can expect a counteroffer, or an opposing offer, from the seller.

Along with the house offer price, buyers include their plans for financing the deal. A sales contract contains the details: how much you have for a down payment; the amount of your first trust mortgage; whether you will seek a second trust. This information is important to the seller because it shows whether you're a serious buyer.

Earnest Money

Besides the price included in the sales contract, a seller sometimes determines a buyer's ability to seal the deal based on the earnest money deposit -- the deposit handed to the real estate agent at the time of the offer. The deposit is held by a real estate broker or attorney during the transaction and is used toward the down payment.

Again, buyers carefully should consider the amount of their earnest money deposit. The deposit should be large enough to illustrate your intent to purchase, yet it shouldn't be so large that, should something go wrong in the deal, funds are at risk.

A general rule of thumb is for the earnest money deposit to be equal or less than 2 percent of the offer price. In a seller's market, with multiple contracts offered, potential buyers may want to exceed this rule to draw attention to their house offer.

But in a buyer's market, 1 to 2 percent usually shows intention without tying up valuable funds.

Personal Property

Generally, house offers include a place for buyers to list anything in the house they'd like to keep. Most contracts include boxes next to a list of items like appliances, fixtures, window treatments, alarm systems and more. Buyers should check the boxes for those items to ensure that they stay put when the seller vacates. Likewise, if a seller wants to remove a specific item that is part of the home - like, say, an heirloom chandelier -- the seller must list it in the contract.

Timetable

A sales contract includes a timetable for the deal, including a time frame for the seller to respond to the house offer. It also lists a date for going to settlement, or completing the transaction, as well as a date for taking possession of the property. It's essential that you include a settlement date as part of your offer, but understand that there may be need for flexibility on both the selling and buying side.

A transaction is closed once the deed is recorded at the local courthouse. Make sure the contract includes the date that you plan to occupy the property.

Contingencies

A contingency is a specification that you will only buy the house if something occurs in the buying process as required. If a contingency doesn't occur as planned, the house offer can be withdrawn without penalty. At the height of the market, buyers often waived standard contingencies like home inspections, so their contract would seem "easy" and appeal to the sellers. This isn't advisable. Buying a house is the biggest purchase of a lifetime. Would you buy a car without taking it for a spin? We hope not.

Other common contingencies are the buyer's ability to obtain specific financing from a lending institution for the transaction; radon testing; and contingencies on the buyer selling their current home.

When crafting a contract, remember that anything discussed verbally between the buyers and sellers during the initial review of the property should go into the contract. Agreements regarding payment for closing costs and points, to make repairs or paint, or other agreements, should be put in writing if they are to be legally binding.

Learn more about closing costs in our "Guide to Settlement and Escrow."

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

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Refinancing Do's and Don'ts

Patricia Kime — 2010-06-25T13:43:00 00:00

For Ernie and Laura Anastos of Arlington, Va., 2010's historically low interest rates couldn't have come at a better time. After careful analysis, the couple ditched their 7-year-old balloon mortgage with its 5.375 percent interest rate in favor of a 4.75 percent, 20-year fixed rate.

Their monthly payments have risen slightly, but thanks to mortgage refinancing, they shaved three years off their mortgage and could save more than $80,000 over the course of the loan.

"It made a lot of sense. Because it was a balloon loan, we knew we'd have to refinance at the 10-year-mark, and interest rates are low now," Laura Anastos says.

The Mortgage Banker's Association, an organization that monitors and represents real estate financial institutions, predicted in late 2009 that loan applications for mortgage refinancing would tumble by more than 52 percent in the following year. This was based on an assumption that financial institutions would raise rates to ward off inflation.

But rates have remained low, largely because of global financial instability, and current homeowners are wondering whether they can take advantage of the situation.

Average rates on a 30-year-fixed loan in mid-year 2010 were 5.0 percent, according to mortgage giant Freddie Mac. This is down from the 2009 average of 5.04 percent for a 30-year fixed loan.

To get rock-bottom rates, however, homeowners must be eligible. And that means they must do the math, make sure their financial portfolio is primed for review and shop around for the best rates.

If you're considering a mortgage refinancing, here are some tips to help you decide whether now is the right time to refinance your home:

Check the Costs

First, examine your loan and see whether it makes sense to refinance. Speak with a mortgage broker or officer to determine by how much you would reduce your monthly payments and how long it will take to recoup closing costs on the new loan.

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Or use a mortgage calculator yourself to determine whether you'll lower your bills. Remember that you'll pay loan origination fees and discount points. Also, keep in mind that you've already paid into a loan. Will the new mortgage have you refinancing another 30-year mortgage, adding onto the years you'll be paying for your house? Or will it shorten the term of your loan?

You, like the Anastoses, might want to consider refinancing for a mortgage with a shorter term. If you plan to stay in your home for years, you might be able to shorten your loan while keeping the costs similar to what you are currently paying. The Anastoses, if they stay put, will pay off their mortgage in 27 years or less (Laura also likes to make additional payments on the principal). If they decide to sell, they'll have built up more equity in their home by opting for the shorter-term loan.

Clean Up Your Credit and Finances

You've seen the advertisements about poor credit scores and their effects on your finances. Get your financial portfolio in shape for the best rates. Start by getting a copy of your credit score and record. You're sitting pretty if your score is roughly 740 or higher.

If it's below 740, spend a few months boosting your score before applying for a loan: Pay off credit cards; pay down or eliminate car loans; and lobby to remove any errors on your record.

While reviewing your credit score, also assess your finances. Companies have returned to old-fashioned math to determine who is eligible for loans. Specifically, they believe a consumer's housing debt should not exceed a quarter of their monthly income. For example, if you have a mortgage payment of $2,000, lenders believe you should gross at least $8,000 a month.
In considering whether you are a good loan candidate, banks also may look at other debt, such as credit cards, and car or student loan payments.

If other loans put you at a total debt-to-loan ratio approaching 50 percent, you'll likely face difficulties obtaining a refinancing loan.

Shop Around

If you determine you are a good candidate, start looking for the best rates and costs. Start with your current lender. If you are a customer in good standing, the company may give you breaks on fees and requirements, saving you up-front costs and lowering your payments.

If the company won't budge, actively compare interest rates and lenders. Ask for recommendations from friends and colleagues and find companies which offer the lowest interest rates, fees and closing costs.

Steer clear of "no cost" refinancing, especially if you plan to hold onto the property. Basically, "no cost" means the costs will be rolled into the mortgage, which means you'll pay interest on them over the life of the loan. It's usually better to pay the points up front for a lower rate and pay any fees with a check at closing.

Be Prepared for What You'll Find Out

Mortgage refinancing is like buying your house again. You will have it appraised, and depending on when you bought the home, be prepared for surprises. According to Consumers Union, many lenders require you to have at least 10 percent equity in your home. Check comparable sales in your neighborhood to help determine what your home might be worth under current market conditions.

Expect to Wait

Mortgage companies are keeping their loan officers on tight reins: Remember that in this conservative loan climate, mortgage refinancing can take more than a couple of months. Consumers Union recommends asking lenders to lock-in rates for at least 60 days or more. Make sure the lock-in is free - ask your loan officer specifically if there are any fees or whether you'll be charged a higher mortgage rate for the lock-in protection.

Buyer's Remorse?

If the closing goes poorly, and you're refinancing your primary residence and have not refinanced with your current lender, you have three business days to cancel the deal. It's called the right of rescission.

Say you found unexpected fees or felt pressured by the loan officer to sign something you didn't want to; you can notify the lender in writing within the three-day grace period.

The lender has 20 days to return your fees.

See our guide to learn about "Four Ways to Benefit from a Cash-In Refinance."

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Washington, D.C.'s Market to Return to Peak By 2015

Patricia Kime — 2010-06-22T17:23:00 00:00

Filed under: Lifestyle

Market trends in the Washington, D.C., region indicate that housing values will return to 2005's phenomenal highs within five years, says an economist who studies regional growth at George Mason University in Fairfax, Va.

Dr. Stephen Fuller, speaking to members of the Northern Virginia Association of Realtors on June 17, said the Washington housing market has recovered 10 percent to 12 percent of its value in the past year after being down 25 percent to 30 percent at its lowest in 2008.

Despite a forecast of higher interest rates by year's end, and an increase in taxes for many as tax cuts implemented in 2003 expire, Washington houses should fetch prices similar to those at their 2005 peak by 2015, according to Fuller.

And the northern Virginia market, he added, is likely to return to peak values sooner -- by 2014.

"When are houses going back to the values they were here?" Fuller asked, pointing to a chart containing 2005 values. "That wasn't defensible; it was too soon. But if you play this out, in Virginia, it's going to be 2014 when we are back at those astronomical values."

Fuller said an examination of the charts shows that, between 1999 and 2009, the Washington area housing market saw 6 percent overall annual growth, despite its swinging highs and lows.

He reminded Realtors that the long-term average return on investment for real estate is 6 percent to 7 percent. "So we're only a point below where we would have been if we'd been on a straight-line trajectory the whole time," Fuller said.

Agents attending the seminar were buoyed by his projections but raised concerns over what some analysts say is a looming "shadow inventory" of pending foreclosures and homes that could flood the market now that homeowners, who were awaiting a market bounce, list their properties.

Fuller said trends indicate reluctant homeowners are slowly putting their homes on the market, having accepted the current values, and banks have spent the past two years learning to deal with foreclosures and expedite sales.

"In the next year, we'll still see signs that are troubling...but we've now gone through a year of watching indicators that are pointing to growth," Fuller said.

He added that the one economic sector that continues to concern him is the construction and home building industry:

"New home construction started subtracting from the economy in 2005, was still really negative in '09 and is projected to go positive in '10. Not a whole lot -- about 500,000 units. We should be doing 1.4 million, and we will, but it's not going to be until '11, '12, and we don't equalize until '14. That's a key element to the recovery. The building industry puts people to work, not just the ones in construction. It has the broadest impact on the economy, a big impact, but it won't show up until this time next year," Fuller said.

Fuller's reluctant pessimism about the building industry's recovery puts him on par with the industry itself, which has expressed less confidence in its recovery.

This week, the National Association of Home Builders said they believe the expiration of the first time home buyer tax credit will contribute to slower housing starts, according to an Associated Press story.

The home builders' hopes might by slightly lifted by a reprieve granted June 16 by the U.S. Senate yesterday that extends the credit to buyers who signed a contract on a home before April 30.

Fuller said housing starts likely will increase in Washington, D.C., as consumer confidence grows, as the city maintains its low unemployment rate and as the market for existing homes expands.

"I'm holding out for the October figures. By then, we'll have worked through the distortions of the tax credit and the economy should be on its own. Take a close look at that month, as it will be the month that sets up the next year," Fuller said.

See homes for sale in Washington, D.C. and elsewhere at AOL Real Estate.

************************************************

Want to learn more about home buying and home finance? If so, you won't want to miss
our online discussion with industry experts,
"What Works Now: Smart Moves When Buying a Home,"
created by AOL Real Estate in participation with Bank of America Home Loans.
Watch it now on AOL Real Estate.

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Northern Virginia's Crystal City Gets New Life

Patricia Kime — 2010-06-09T11:00:00 00:00

Filed under: Lifestyle

In a county known for attracting young professionals to neighborhoods with its vibrant development on Washington D.C.'s Metro corridors, Arlington, Va. planners are hoping a facelift will help a 40-year-old, mixed-use development known as Crystal City compete with the upstarts.

The county is floating a plan to redevelop the 260-acre area, which lies along two major Metro lines and abuts Reagan National Airport. Under consideration is a $200 million, 20-year overhaul to convert Crystal City's functional configuration of office towers, hotels and underground shops into a lively blend of street-level retail, office space, and residential and open spaces, including a central park.
The plan would allocate $90 million in the next five years, according to county documents. Funds would go toward parks, street and sidewalk improvements, and a streetcar that runs the district's length and all the way to the Potomac Yard retail area.

Crystal City is home to a million square feet of office space and nearly 60,000 workers. But under the Defense Department's 2005 Base Realignment and Closure Recommendations, the area is slated to lose nearly a third of those workers as their jobs move to locations deemed more secure.

In 2005, the area lost nearly 7,000 workers when the U.S. Patent and Trademark Office moved to a new facility in Alexandria, Va.

The mass exodus presents an unprecedented opportunity for a development do-over. While the area houses nearly 6,000 residents, the portion under consideration for redevelopment historically has been void of life on evenings and weekends. The underground malls that were the hallmark of Crystal City's avant garde planning allowed residents to walk to work and shop without going above ground, but the oddly empty streets didn't attract outsiders.

Angela Fox, president of the Crystal City business improvement district, told the Washington Examiner that the area needs the county to lead the planning and build the infrastructure necessary for redevelopment.

County planners are drafting a revised revitalization plan, which will be announced for public review shortly. Meanwhile, county board members are struggling to figure out how to pay for the redevelopment. While some funding will come from private enterprise, the county plans to use local, state and federal money as well, according to the Examiner.

Money continues to be tight: In the Arlington County budget for fiscal 2011, board members approved a 6 percent cut in funding to the Crystal City Improvement District, agreeing to provide $2.08 million this year for landscaping and beautification, marketing and other expenses.

But developers and business owners aren't waiting for government action. In the past three years, new condominiums with first-floor retail, including a Harris Teeter supermarket, and Potomac River views have been built at the Eclipse on Center Park. And Camden Realty Trust has built a 386-unit, luxury-apartment complex nearby at Camden Potomac Yard.

Street level eateries like Kora and Jaleo also are attracting customers as is the Tony Award-winning Arena Stage, temporarily housed in Crystal City while construction wraps up at its new home in D.C.

A farmer's market, arts festival and summertime film festivals also lead Crystal City toward a renaissance as a vibrant, mixed-use neighborhood.

See homes for sale in Arlington, Va. at AOL Real Estate.

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Washington, D.C. Housing Inventory Down

Patricia Kime — 2010-06-02T14:30:00 00:00

Filed under: Lifestyle

Is it a sign of a healthy housing market when homeowners choose to rent out their houses rather than sell because they can't get what they paid for them just five years ago?

According to a recent Washington Post article, it is. The Post's Dina ElBoghdady tells us that inventory is down, and prices are up in the D.C. area, and this is a sign of a recovering market.

The number of available houses for sale in D.C. is down from a year ago in nearly all the region's communities, and houses are spending less time on the market. In many cases, the period that listings are on the market before they sell is near 1999 rates.

And that's considered a good sign, since 1999 is the year generally thought to be the last "normal" year before the market exploded and then imploded in Washington.

Prices are up as well, but aren't quite high enough for two homeowners interviewed in the story. Both bought in two of the area's most desirable communities, Arlington, Va., and Bethesda, Md. (pictured), near the top of the soaring D.C. housing market in 2004 and 2005. And both have decided to rent out their homes rather than put them up for sale.

The owner of the Arlington condominium who bought in 2005 was told he'd owe up to $30,000 if he sold now. And the Bethesda homeowner decided to rent out his home when he realized he wouldn't get the $899,000 asking price.

Public records show the homeowner paid $784,000 for the house in 2004. It sold in 2003 for $723,000. And back in 1999 -- that magic year before housing values began their double-digit climbs and middle-class Joes could still afford to buy in Bethesda or Arlington -- it sold for $475,000.

According to the article, researchers believe that a smaller inventory, no matter what the cause, will help revive the housing market. In Prince William County, Va., inventory is down by 55 percent from the previous year.

This is a remarkable turnaround for the county hardest-hit by foreclosures in the D.C. area. Prince William is one of the few areas near D.C. where first-time homebuyers can find a single-family home for less than $300,000, so it's likely that the first-time homebuyers' tax credit and current interest rates are drawing new owner-occupants and foreclosure deals are luring investors.

With the inventory stabilizing, price stabilization shouldn't be far behind, say analysts. Yet prices remain high, albeit not by 2005 standards. According to NeighborhoodInfo DC, the median sales price in the area rose 6.6 percent to $315,000 in the year ending December 2009. This is 29 percent below the peak in 2007, but is still 41 percent higher than in late 2000.

So is price stabilization at this point a good thing in Washington? The area experienced an outlandish seller's market for six years, from 2000 to 2006. Starting in late 2007, the bubble softened but did not completely burst in this government town that stayed fairly insulated from a collapsing economy. Now it's a buyer's market, but still an expensive one (remember, $400K for a starter home).

It seems like shoppers should still have a couple of years of a "buyer's market" before sellers expect to recoup their 2004 and 2005 purchases.

See homes for sale in Washington, D.C., Maryland and northern Virginia at AOL Real Estate.

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Arlington, Va. Condo Complex Taking Years to Finish

Patricia Kime — 2010-05-27T14:00:00 00:00

Filed under: Lifestyle

Six years after the building permit was issued for the Bromptons at Cherrydale, a 22-unit, mixed-used development at 3800 Lee Highway in Arlington, Va., the unoccupied complex has reached a milestone. But neighbors aren't rolling out the welcome mat to newcomers quite yet.

In April, Arlington County announced that the "first phase" of corrective action on the complex is complete. This means the property which has been sitting half-built since 2006 -- when the county issued a stop-work order over concerns about its structural integrity -- now has a complete brick facade, new exterior windows, pavers and sidewalks.

Gone is the ripped Tyvek that flapped in the wind for years and the weathered-gray balcony platforms that appealed to few but the pigeons. That's a relief to the locals who have been worried about their property values.

But the complex still isn't ready for inhabitants.
Developer R15 LLC and its contractors are performing a second phase of corrective action, which includes finishing interior spaces and installing balconies, trees and street lights outside. They must finish the work by mid-October under an agreement with Arlington County.

For the neighbors who have lived for years with this eyesore, the changes are welcome.

"This has been a huge bummer," neighborhood activist Maureen Ross told HousingWatch. "First, let's talk sidewalk. We barely had one for the past four years.... Then I do wonder what it did for property values. It didn't help retail and it slowed down the undergrounding process [for utilities] on Lee Highway. This has been a blight."

The trouble with the Bromptons coincided with bust of the housing bubble, but its problems weren't financial, at least at first.

In March 2006, county building inspectors ordered work to cease on the building when inspectors noticed signs of structural deficiencies. The original brick veneer was improperly anchored and leaned away from the building, the concrete foundation needed additional support and the upper floors weren't level.

Arlington developer Ed Peete, who has built several condominium complexes in the county, applied for a demolition permit in 2007, deciding that fixing the problems would be too expensive. He also filed suit against engineering firms responsible for the design and later inspections. Progress ground to a halt as Ed Peete and Co. became mired in lawsuits and financial problems.

In 2009, Arlington County and Ed Peete finally reached an agreement that the building be finished or demolished. The Ed Peete Company is now called R15 LLC.

The Bromptons were marketed as a complete community of single-family homes, townhouses, condominiums and retail space. The single-family homes and townhouses were built and sold. The condos quickly sold out in 2004, but all contracts were canceled after the stop-work order was issued.

The units are not yet being marketed and there's no word on their asking prices. Condominiums are rare in this neighborhood, which is a 20-minute walk to the Virginia Square Metro Station and is serviced by Metro Bus.

But the Bromptons won't be the only game in Cherrydale for long: the Christopher Company is planning a 69-unit condominium complex just a block away, at 3365 Lee Highway.

See homes for sale in Arlington, Va. at AOL Real Estate.

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D.C. Neighborhood's Chemical Weapons Problem

Patricia Kime — 2010-05-18T12:30:00 00:00

Filed under: Lifestyle

There are a few drawbacks to online home evaluations like Zillow's Zestimate. Like, for instance, they can't tell you whether a bomb is buried in a backyard.

Sure, it's unlikely an unexploded munition is a shovelful beneath your begonias, but in Washington D.C.'s Spring Valley neighborhood, the chances are significantly higher. That's because Spring Valley once was the site of the U.S. Army's chemical warfare research center and testing grounds, and since 1993 workers have uncovered all sorts of leftovers from this ominous chapter of history, including old bombs, chemical weapons, 50-gallon drums and more.

Just last month, the U.S. Army Corps of Engineers found a glass container, that, when unearthed, began smoking. It contained arsenic trichloride, which at the very least causes skin irritation, and at its worst can cause damage to the central nervous system and death. Since January, hazardous materials experts working on the front lawn of an unoccupied home on Glenbrook Road have uncovered liquid mustard and munitions as well, according to reports in The Washington Post and the Los Angeles Times.

Yet Spring Valley continues to attract new homeowners, and it's easy to see why: This is one of D.C.'s prettiest upscale neighborhoods, with manicured lawns, verdant woods, established landscaping and elegant homes. It's a community of powerbrokers and diplomats, including the president of American University, a former U.S. ambassador to Bangladesh and the current South Korean ambassador to the United States.

"It's a very popular neighborhood, says Carroll Thornton-Chapin of Washington Fine Properties, who has a listing at 5012 Tilden Street NW.

In 2004 and 2005, the Corps of Engineers tested soil and groundwater in the neighborhood and found that 139 of its 1,600 homes contained elevated levels of arsenic. The Corps removed soil from those sites and brought in fresh.

The groundwater tests showed no evidence of chemical weapons but revealed low levels of perchlorate and arsenic contamination. A federally funded study reassured residents that no "apparent health hazard exists" and a May 2007 Johns Hopkins public health report showed that cancer and mortality rates are similar to those in nearby Chevy Chase, Md.

Still, some neighbors believe the presence of those chemicals is unhealthy. Kent Slowinski, a landscaper who grew up in Spring Valley and now gives environmental and historical tours of the area, says a toxic legacy has been left by the U.S. Army and the neighbors have suffered for it.

"Two instances of fatal aplastic anemia, decades apart, in the same house on Sedgwick Street. Multiple myeloma, pernicious anemia. These are health issues," he said.

Slowinski and neighborhood activitists say they'd like further studies on the longterm health effects of arsenic and perchlorate exposure. He believes that anyone buying a home should read all the available information on the area before making a commitment.

"The Army Corps does the job of reassuring people that if anything is found, they'll take care of it. What they don't say is that it might take five to 10 years to deal with it," Slowinski said.

Thornton-Chapin agrees that prospective buyers should research potential homes, but said the information is readily available.

"If you go to an open house in Spring Valley, you can get a report. All the homes have been tested," Thornton-Chapin said.

For more information on Spring Valley, check out the U.S. Army Corps of Engineers site, American University's site and "Bombs in Our Backyard", a website about a film created by Spring Valley resident and award-winning documentarian Ginny Durrin.

See homes for sale in Washington, D.C. at AOL Real Estate.

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D.C.'s Newest Waterfront Neighborhood -- In the Right Ballpark?

Patricia Kime — 2010-04-28T10:00:00 00:00

Filed under: Lifestyle

If they build it, you will come.

At least that's what developers banked on when they scooped up waterfront and waterview properties along the Anacostia River in Washington, D.C. in the early 2000s, ahead of construction of the city's major league baseball park.

Now, tighter lending practices have dampened commercial development in the neighborhood. But the promise of a new condo or townhouse within walking distance of the U.S. Capitol and the stadium is bringing in residents, according to a recent Washington Post story.

The dream of developing Washington's waterfront into an energetic corridor of shops, homes and businesses -- from Anacostia around Hains Point and on to Georgetown -- is not new. For years, Washingtonians have seen development dreams and plans come, go, and run astray.

Prime example: the 1950s urban renewal project on the Southwest waterfront that brought in architects such as I.M. Pei and Harry Weese to design a mid-century modern mix of housing, businesses and entertainment venues.

The neighborhood still exists: a quiet area seemingly cut off from the rest of the city -- with condos, a lovely marina, a row of seafood houses popular with bus tours, but little else.

Will the Anacostia Waterfront Initiative, as the renewed Navy Yard/Nationals Park effort is known, be different?

Perhaps, says John McIlwain, senior housing fellow at the Urban Land Institute, but not because of its river views or proximity to Nationals Park.

The area, bounded by Interstate 395, the river, the Navy Yard and South Capitol Street, is just five long blocks to the U.S. Capitol. That proximity just might be the key to its success, he says.

"You've got Capitol Hill as a business destination and the newly revitalized 8th and I area. Those are the attractors in that area," McIlwain says.

And according to the Post story, that's happening: proximity of the Nationals Park neighborhood to workplaces -- including the Navy Yard and its supporting contractors; the Department of Transportation; and the Hill -- is drawing first-time homebuyers, empty-nesters and investors.

But the chance to walk to work on the Hill or to the restaurants of Barracks Road (along gritty sidewalks under the Interstate) doesn't come cheap: a one-bedroom, one-bath condo in the Velocity, a hi-rise development with Capitol, stadium or river views is listed for $365,900. The first phase of the new townhouse development known as Capitol Quarter sold out, with market-rate homes selling from $635,000 to the mid-$700,000s.

Full development of the area, including new riverfront trails, and a commercial center with bars, restaurants and shops, is likely a decade away, McIlwain says.

"One of the problems with Washington, D.C.'s waterfront is that it's cut off from the city. Washington hasn't been geared toward the water since it moved away from Georgetown 200 years ago," McIlwain said.

See homes for sale in Washington, D.C. at AOL Real Estate.

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