"Financial Savings" Example
What better way to explain how you can benefit from purchasing a home in today's market than a real life example?
Subject property:5 beds/4 baths and 3300 sq. ft.
Location: Henrico County, 23229
Days on market: 136 days
The following scenario assumes good credit and minimum 20% down payment.
Scenario #1 - October 2008
Original list price: $665,000
Sold Price: $665,000
30 yr. fixed rate: 7.875%
Monthly P&I payment: $3857.37
Scenario #2 - September 2010
List price: $569,000
Sold Price: $525,500
30 yr. fixed rate: 4.3%
Monthly P&I payment: $2080.44
Real Money Savings =
$139,500 on purchase price
$27,900 on down payment
$21,323.16 $1,776.93 savings per month x 12
$188,723.16 REAL MONEY SAVINGS
WOW, huh? Remember, it may make economic sense to buy now rather than wait. Many local experts are predicting that we are at the bottom and as soon as we see home prices and interest rates begin to tick upward, you may have lost the financial advantages of homeownership available today.
ACT NOW!
Monday, September 13, 2010
Wednesday, August 11, 2010
All Real Estate is Local
These days, it is difficult to read a newspaper or browse a web site without encountering a headline about the current real estate market. And depending on the source and their "spin", you may find conflicting information which only leads to further confusion.
Below you will find a quick snapshot of National vs. Local Statistics. The good news : Central Virginia and the Richmond area have fared better than the nation in terms of unemployment, house value declines and foreclosures. However, we are not out of the woods yet! While sales transactions are up in our region, there is continued downward pressure on price and the threat of "shadow inventory" may further dampen demand for houses.
Unemployment Rate
9.5% in U.S. vs. 7.9% in Metro Richmond
Home Value 2Q 2010 vs. 2Q 2009
3.2% in U.S. vs. -2.5% in Metro Richmond
Homeowners with Negative Equity
21.5% in U.S. 17.4% in U.S.
Foreclosures
16.9% in U.S. vs. 11.5% in Metro Richmond
Source: Zillow.com, Richmond Assoc. of Realtors, Bureau of Labor and Statistics
Of course, all real estate is local and certain neighborhoods in the Richmond area have seen an increase in prices in 2010 over 2009 --but we are a long way from the peak housing values of 2006. If you need help determining the value of your home in today's market, let us know. We will be happy to give you a professional and honest assessment.
Below you will find a quick snapshot of National vs. Local Statistics. The good news : Central Virginia and the Richmond area have fared better than the nation in terms of unemployment, house value declines and foreclosures. However, we are not out of the woods yet! While sales transactions are up in our region, there is continued downward pressure on price and the threat of "shadow inventory" may further dampen demand for houses.
Unemployment Rate
9.5% in U.S. vs. 7.9% in Metro Richmond
Home Value 2Q 2010 vs. 2Q 2009
3.2% in U.S. vs. -2.5% in Metro Richmond
Homeowners with Negative Equity
21.5% in U.S. 17.4% in U.S.
Foreclosures
16.9% in U.S. vs. 11.5% in Metro Richmond
Source: Zillow.com, Richmond Assoc. of Realtors, Bureau of Labor and Statistics
Of course, all real estate is local and certain neighborhoods in the Richmond area have seen an increase in prices in 2010 over 2009 --but we are a long way from the peak housing values of 2006. If you need help determining the value of your home in today's market, let us know. We will be happy to give you a professional and honest assessment.
Tuesday, June 1, 2010
Lowball Home Appraisals Can Spoil Deal
Realtors are reporting that appraisals are coming in lower than the price agreed on by buyer and seller. And contracts are being renegotiated because of lower appraisals.
Factors that we see contributing to the lower appraisals are below:
1.) The loan process is being more scrutinzed than ever before. Lenders want more recent sales - not older than 6 months and more active comparables.
2.) A set of new regulations were put in place last year which apply to Fannie Mae and Freddie Mac. The Home Valuation Code of Conduct is a regulation that severs the relationship between appraisers and lenders. Appraisals are now ordered through a third party appraisal management company which takes some of the money that used to be paid to the appraiser.
Homeowners are suffering from these new guidelines and regulations because these management companies are steering work to appraisers who cost the least, not those who know the neighborhoods the best! Many times, the appraisers who are the most affordable are not the most qualified.
Realtors can try to supply the appraiser with recent sold comparables but the appraiser is not required to use them. Be prepared, price your house right and hopefully you won't be subject to these appraisal pitfalls.
Factors that we see contributing to the lower appraisals are below:
1.) The loan process is being more scrutinzed than ever before. Lenders want more recent sales - not older than 6 months and more active comparables.
2.) A set of new regulations were put in place last year which apply to Fannie Mae and Freddie Mac. The Home Valuation Code of Conduct is a regulation that severs the relationship between appraisers and lenders. Appraisals are now ordered through a third party appraisal management company which takes some of the money that used to be paid to the appraiser.
Homeowners are suffering from these new guidelines and regulations because these management companies are steering work to appraisers who cost the least, not those who know the neighborhoods the best! Many times, the appraisers who are the most affordable are not the most qualified.
Realtors can try to supply the appraiser with recent sold comparables but the appraiser is not required to use them. Be prepared, price your house right and hopefully you won't be subject to these appraisal pitfalls.
Tuesday, May 25, 2010
The Challenges of Pricing Homes Today
In today's market, we probably hear the question "Why hasn't that house on XYZ street sold yet?" or the comment "Nothing is selling" several times a week from friends, neighbors, prospective purchasers, etc. More often than not, our answer is: "If it is priced right, it WILL sell! ". And while that statement is true in boom times, it holds even more truth today.
Pricing in today's market is complicated and the following graph should help shed light on why determining the correct list price can be challenging.
As you can see, the exponential growth in appreciation between 2000-2006 far surpasses the growth of previous decades.
The challenge for realtors is to bring homeowners back into reality. While we are seeing a market correction, we may still have a ways to go. And while current sales data is typically the largest factor in determining a list price -- other factors such as inventory supply, location, and property improvements are factored into the price as well. Remember each home is unique and holds many memories for most, so only an established full-time realtor can give you the education you need to make an informed decision in this ever-changing housing market.
We pride ourselves on our honesty and candor -and it is difficult to deliver bad news - and difficult to stomach, if you are the homeowner....however, we also realize that a homeowner cannot make a fully informed financial decsion about selling their home without a "real price".
Pricing in today's market is complicated and the following graph should help shed light on why determining the correct list price can be challenging.
As you can see, the exponential growth in appreciation between 2000-2006 far surpasses the growth of previous decades.
The challenge for realtors is to bring homeowners back into reality. While we are seeing a market correction, we may still have a ways to go. And while current sales data is typically the largest factor in determining a list price -- other factors such as inventory supply, location, and property improvements are factored into the price as well. Remember each home is unique and holds many memories for most, so only an established full-time realtor can give you the education you need to make an informed decision in this ever-changing housing market.
We pride ourselves on our honesty and candor -and it is difficult to deliver bad news - and difficult to stomach, if you are the homeowner....however, we also realize that a homeowner cannot make a fully informed financial decsion about selling their home without a "real price".
Tuesday, May 4, 2010
Positive Signs in Housing Market
The data is in and we wanted to be the first to share the good news with you! The positive first quarter results indicate that our region's housing climate is on the road to recovery. Sales for Metropolitan Richmond (City of Richmond, Chesterfield, Hanover and Henrico) were up 9% over first quarter 2009. Moreover, pending sales demonstrated even greater improvement with a 22% increase - a strong indicator of next quarter's sales.
We are pleased as punch to share this good news about the current housing market in Richmond. And while the sales data is improving daily, we must realize that the recession was deeper than most thought and that recovery will not be a "V", but rather it will be more gradual growth.
What does that mean for Buyers and Sellers?
"If Sellers will take note of the overall economy and the housing market we're in and PRICE their homes accordingly, and if Buyers will recognize that now is the time to buy before interest rates climb, then we should continue to see solid market growth" stated Karen Smith, 2010 President of Richmond Association of REALTORS. Central Virginia including Metro Richmond are still in a state of flux and will most likely remain so for the next six months or longer. While we are seeing signs that sales are improving, it remains unclear how much is due to federal government efforts and the homebuyer tax credit. We attribute the increase in sales to still-low interest rates and pent up demand. We know we have been preaching to you over and over to act now if you are a Buyer- Prices have now reached levels that have not been seen since before the housing bubble! And if you are a Seller, your house may be worth more today than in the next year. Why? Because as the sales data improves, homeowners gain confidence and will likely put their homes on the market. Supply of homes will increase dramatically and create a surplus of inventory thus creating further downward pressure on price.
We are pleased as punch to share this good news about the current housing market in Richmond. And while the sales data is improving daily, we must realize that the recession was deeper than most thought and that recovery will not be a "V", but rather it will be more gradual growth.
What does that mean for Buyers and Sellers?
"If Sellers will take note of the overall economy and the housing market we're in and PRICE their homes accordingly, and if Buyers will recognize that now is the time to buy before interest rates climb, then we should continue to see solid market growth" stated Karen Smith, 2010 President of Richmond Association of REALTORS. Central Virginia including Metro Richmond are still in a state of flux and will most likely remain so for the next six months or longer. While we are seeing signs that sales are improving, it remains unclear how much is due to federal government efforts and the homebuyer tax credit. We attribute the increase in sales to still-low interest rates and pent up demand. We know we have been preaching to you over and over to act now if you are a Buyer- Prices have now reached levels that have not been seen since before the housing bubble! And if you are a Seller, your house may be worth more today than in the next year. Why? Because as the sales data improves, homeowners gain confidence and will likely put their homes on the market. Supply of homes will increase dramatically and create a surplus of inventory thus creating further downward pressure on price.
Tuesday, February 9, 2010
Today's Real Estate Buzzwords
With the current economy, the real estate industry is always in the news. While we live and breathe it everyday, we also know that new terminology can be confusing or intimidating. We thought it might be helpful to give you a vocabulary primer so you aren't caught off guard at the office water cooler or next cocktail party.
Underwater: When the current mortgage exceeds the actual home value. Also referred to as having "negative equity" in your house or being "upside down" on your mortgage.
Usage example: They are so underwater on that house, they won't be able to sell it for what they originally paid.
Strategic or Rational Default: When a homeowner who is current on their mortgage payments makes a conscious decision to stop making their payments because the value of their home is so far below the amount owed on their home loan.
Usage example: They decided to strategically default on their home and just turned the keys into the bank.
Please note: We are not recommending this - a foreclosure will be listed on your credit report for up to 7 years and a financial institution may not lend you money for up to 5 years after a foreclosure.
Contagion Discount: The discount attributed to surrounding properties per nearby foreclosed property. The discount is typically 1% per foreclosure.
Usage example: The value of their home has decreased due to the contagion discount of the neighboring foreclosed property.
Short Sale: When a homeowner contracts a sales price below the amount owed on their mortgage and the bank agrees to accept the shortfall.
Usage example: They are going to negotiate a short sale on their house because they are underwater on their mortgage.
REO Properties:REO is an acronym for Real Estate Owned. Property that is in the possession of a lender as a result of foreclosure or forfeiture.
Usage example: With a higher inventory of REO properties, there are some good buys in today's market.
Underwater: When the current mortgage exceeds the actual home value. Also referred to as having "negative equity" in your house or being "upside down" on your mortgage.
Usage example: They are so underwater on that house, they won't be able to sell it for what they originally paid.
Strategic or Rational Default: When a homeowner who is current on their mortgage payments makes a conscious decision to stop making their payments because the value of their home is so far below the amount owed on their home loan.
Usage example: They decided to strategically default on their home and just turned the keys into the bank.
Please note: We are not recommending this - a foreclosure will be listed on your credit report for up to 7 years and a financial institution may not lend you money for up to 5 years after a foreclosure.
Contagion Discount: The discount attributed to surrounding properties per nearby foreclosed property. The discount is typically 1% per foreclosure.
Usage example: The value of their home has decreased due to the contagion discount of the neighboring foreclosed property.
Short Sale: When a homeowner contracts a sales price below the amount owed on their mortgage and the bank agrees to accept the shortfall.
Usage example: They are going to negotiate a short sale on their house because they are underwater on their mortgage.
REO Properties:REO is an acronym for Real Estate Owned. Property that is in the possession of a lender as a result of foreclosure or forfeiture.
Usage example: With a higher inventory of REO properties, there are some good buys in today's market.
Saturday, January 30, 2010
The Boathouse at Rocketts Landing
Intrigued by recent reviews of The Boathouse at Rocketts Landing, we decided to try it ourselves this past weekend. Based on what we had heard, we expected to be awed by the interior and the view, but perhaps slightly underwhelmed by the menu offerings.
Interior/Atmosphere: While the walls of windows highlighting the view of the James and the downtown skyline are impressive, the choice of woods, vividly-upholstered booths and blue/green color scheme just misses the mark. Given that the restaurant occupies the old Power Plant building, a minimalistic or industrial look with an understated palette would have placed more emphasis on both the building's heritage and the fantastic view.
Additionally, the acoustics in the restaurant are horrific. The cacophony of patrons yelling over one another in order to be heard was a little too reminiscent of a high school cafeteria.
Food: At our server’s suggestion, we started off with the Seafood Tower - the Boathouse’s take on a pupu platter– which offered something for everyone – sushi, oysters, mussels, smoked salmon, jumbo shrimp, etc. All in all, it was good.
Among the entrees ordered by our table: grilled mahi with pineapple mango salsa, tuna tartare, scallops over risotto and sesame tuna. Both the entrees and “table shares” of creamed spinach, Tillamook cheddar mashed potatoes and wild mushroom and asparagus risotto were all well-received.
Overall, The Boathouse impressed us with its unique riverfront location and stunning views; but, we found the food, while enjoyable, to be slightly less memorable. For us, it may be better suited as a destination restaurant - the place you take your out-of-town friends during their inaugural visit to Richmond and the place you meet up for drinks on a warm summer evening.
Interior/Atmosphere: While the walls of windows highlighting the view of the James and the downtown skyline are impressive, the choice of woods, vividly-upholstered booths and blue/green color scheme just misses the mark. Given that the restaurant occupies the old Power Plant building, a minimalistic or industrial look with an understated palette would have placed more emphasis on both the building's heritage and the fantastic view.
Additionally, the acoustics in the restaurant are horrific. The cacophony of patrons yelling over one another in order to be heard was a little too reminiscent of a high school cafeteria.
Food: At our server’s suggestion, we started off with the Seafood Tower - the Boathouse’s take on a pupu platter– which offered something for everyone – sushi, oysters, mussels, smoked salmon, jumbo shrimp, etc. All in all, it was good.
Among the entrees ordered by our table: grilled mahi with pineapple mango salsa, tuna tartare, scallops over risotto and sesame tuna. Both the entrees and “table shares” of creamed spinach, Tillamook cheddar mashed potatoes and wild mushroom and asparagus risotto were all well-received.
Overall, The Boathouse impressed us with its unique riverfront location and stunning views; but, we found the food, while enjoyable, to be slightly less memorable. For us, it may be better suited as a destination restaurant - the place you take your out-of-town friends during their inaugural visit to Richmond and the place you meet up for drinks on a warm summer evening.
Wednesday, January 27, 2010
Richmond, VA - 2009 4th Quarter Housing Update
The numbers are in and home sales nationally have improved in the second half of the 2009!
Sales Activity in the Richmond Metro Area for the 4th quarter, was up 38% over 2008! More than half the homes sold in this quarter were priced below $200,000. By contrast, in 2008, only 40% of homes sold were under the $200,000 price range. The uptick in sales activity was driven by the 1st Time Home Buyers Tax Credit.
Home Prices in Central Virginia including Metro Richmond were down 14% in 2009 compared with 2008. Prices were down in every quarter of 2009 and there is still little evidence that they have reached a turnaround point.
The Outlook for 2010....calls for an increase in sales activity for the first half of 2010. As the number of potential buyers increases in early 2010, so will the confidence of potential sellers. As a result, it is expected that the number of listings will multiply, giving buyers more options.
While sales activity will likely continue to improve, it is not certain that prices will rise. Foreclosures remain a potential problem as the economic recovery continues to unfold. These homes will generally be lower-priced and will continue to dampen prices in the overall market. Second, sellers have been holding off listing their homes, therefore, it is possible that the new supply of homes may be greater than demand, keeping prices from rising appreciably.
Sales Activity in the Richmond Metro Area for the 4th quarter, was up 38% over 2008! More than half the homes sold in this quarter were priced below $200,000. By contrast, in 2008, only 40% of homes sold were under the $200,000 price range. The uptick in sales activity was driven by the 1st Time Home Buyers Tax Credit.
Home Prices in Central Virginia including Metro Richmond were down 14% in 2009 compared with 2008. Prices were down in every quarter of 2009 and there is still little evidence that they have reached a turnaround point.
The Outlook for 2010....calls for an increase in sales activity for the first half of 2010. As the number of potential buyers increases in early 2010, so will the confidence of potential sellers. As a result, it is expected that the number of listings will multiply, giving buyers more options.
While sales activity will likely continue to improve, it is not certain that prices will rise. Foreclosures remain a potential problem as the economic recovery continues to unfold. These homes will generally be lower-priced and will continue to dampen prices in the overall market. Second, sellers have been holding off listing their homes, therefore, it is possible that the new supply of homes may be greater than demand, keeping prices from rising appreciably.
Friday, January 15, 2010
The 5 Most Common Home Inspection Issues
Whether you are thinking about selling your house in the next few months or whether you plan to stay put for the foreseeable future, it is important to stay on top of home maintenance issues so a minor problem doesn't lead to a more expensive issue or damage down the road. A recent article in REALTOR magazine highlighted the following as the 5 most common issues that arise during home inspections and what you can do to ensure these issues are not a problem.
1. Improper Electrical Wiring - Open wires, faulty wiring, inadequate overload protection - all of these are very common occurrences that could be cited on a home inspection report.
Preparation Tip: Call a qualified and licensed electrician to evaluate the wiring prior to the inspection so that you may alleviate costly repairs cited in the report.
2. Roof Deterioration - Old or damaged shingles can lead to leaks but easy and inexpensive repairs to damaged tiles or shingles can stave off more costly and extensive damage; i.e., water stains, damaged sheetrock or plaster, etc.
Preparation Tip: Use binoculars to check for any damaged, loose or missing shingles. Cut overhanging tree branches back from the roof.
3. Improper surface grading or drainage - Water can enter a home and cause major damage if proper drainage isn't in place. Basements and crawl spaces are most vulnerable.
Preparation Tip:When it rains, grab an umbrella and observe how your home sheds water. Does it disappear into a window? You might need to install, realign or repair a damaged gutter and downspout system to ensure proper drainage.
4. Plumbing problems- Dripping faucets, corroding or mismatched piping, faulty fixtures, rocking toilets and improperly installed hot water heaters are all sources of common plumbing problems.
Preparation Tip:Make sure toilets are securely bolted. Check all faucets, valves and hose bibs for potential leaks and fix them right away so they do not lead to more damage such as mold, mildew or structural damage.
5. Poor overall upkeep- Cracked, peeling or dirty painted surfaces, inside and out can signal overall neglect. Decayed caulking around windows and doors may be more than an eyesore -it may be compromising the efficiency of your heating and air systems leading to higher utility costs.
Preparation Tip: Walk around the interior and exterior of your house at least once a year with a scrutinizing eye. Consider hiring a home inspector for a maintenance inspection to identify any conditions that may lead to more serious defects later.
1. Improper Electrical Wiring - Open wires, faulty wiring, inadequate overload protection - all of these are very common occurrences that could be cited on a home inspection report.
Preparation Tip: Call a qualified and licensed electrician to evaluate the wiring prior to the inspection so that you may alleviate costly repairs cited in the report.
2. Roof Deterioration - Old or damaged shingles can lead to leaks but easy and inexpensive repairs to damaged tiles or shingles can stave off more costly and extensive damage; i.e., water stains, damaged sheetrock or plaster, etc.
Preparation Tip: Use binoculars to check for any damaged, loose or missing shingles. Cut overhanging tree branches back from the roof.
3. Improper surface grading or drainage - Water can enter a home and cause major damage if proper drainage isn't in place. Basements and crawl spaces are most vulnerable.
Preparation Tip:When it rains, grab an umbrella and observe how your home sheds water. Does it disappear into a window? You might need to install, realign or repair a damaged gutter and downspout system to ensure proper drainage.
4. Plumbing problems- Dripping faucets, corroding or mismatched piping, faulty fixtures, rocking toilets and improperly installed hot water heaters are all sources of common plumbing problems.
Preparation Tip:Make sure toilets are securely bolted. Check all faucets, valves and hose bibs for potential leaks and fix them right away so they do not lead to more damage such as mold, mildew or structural damage.
5. Poor overall upkeep- Cracked, peeling or dirty painted surfaces, inside and out can signal overall neglect. Decayed caulking around windows and doors may be more than an eyesore -it may be compromising the efficiency of your heating and air systems leading to higher utility costs.
Preparation Tip: Walk around the interior and exterior of your house at least once a year with a scrutinizing eye. Consider hiring a home inspector for a maintenance inspection to identify any conditions that may lead to more serious defects later.
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