Wednesday, July 25, 2007

Increased Grantors Tax Fees to Fund the Transportation Bill

I wanted to let all of you know about the changes to the tax fees for grantors. On July 12, 2007 the Northern Virginia Transportation Authority voted to increase the residential Grantor's Tax. Implementation is expected to begin January 2008. The Grantor's Tax rate will increase by $0.40 per $100.00, taking the total tax rate to $5.00 per $1000.00. The increased Grantor's Tax is one of seven fees that will fund transportation improvements in Northern Virginia. To look at the whole list of increases, look at NVAR’s site here.

HGTV’s Top Ten Ways to Make Buyers Bite

I was looking at HGTV’s website and found this article. Here is my quick summary:

1. Nice Entryway. Make sure your house is a pleasure to walk into. Fresh paint on a door, or setting up a sitting area can create an entryway which will catch any buyer’s eye.

2. Hardwood Floors. They never go out of style and everyone wants them. Consider using Pergo floors as a cheaper alternative.

3. Fabulous Fixtures. Fixtures are the little touches which can make a house immeasurably more attractive. Update your sink or the knobs on your cabinets for a more modern, put-together look.

4. Beautiful Baths. Even if you don’t have the newest features, such as a steam shower, updating the mirror and lighting can make your bathroom soar above the rest.

5. Counter Intelligence. Avoid grout lines and try to go for granite or Corian countertops. People want updated countertops, so try to steer away from tile or laminate.

6. Steel This Idea. Stainless steel appeals to the mass because it reflects a commercial kitchen, which makes people believe they are great cooks. Most importantly, your kitchen should follow a cohesive pattern, instead of just focusing on putting in stainless steel appliances.

7. Pre-Organized Closets. Just as with the kitchen, pre-organized closets and cabinets can make a buyer feel that they themselves are a better homemaker. Organization calms people, so try to make sure your closets, cabinets, and pantries are highly organized.

8. Light Up. Make sure your house has plenty of light so the buyer doesn’t have to try to figure out how to brighten the place up. Consider installing recessed lighting.

9. Built-In Bonus. Built-ins can be seen as free furniture. Some people may not find them appealing, however, so consider trying furniture or shelves which look built-in, but are not.

10. Grass is Greener. Don’t put in a concrete patio or a rock garden. Families with children will want the flat open yard.

Bonus Tip: Make your house feel homey when there is an open house. Don’t be afraid to stage the house by renting furniture if yours does not cut it.

Tuesday, July 17, 2007

The State of the Market

Unlike what we have seen during the bulk of the last five years, the Northern Virginia real estate market is great right now for buyers, but tough for sellers. The market has been sliding down since last year, primarily due to an oversupply of inventory (unsold homes) and increased foreclosure rates.

Looking at market statistics for the sales volume of June 2007, compared to the market in June 2006: there was an 11% decrease in sales in Fairfax Co, Arlington Co, Alexandria and Falls Church; a 41% decrease in sales in Prince William County; and a 14% decrease in Loudoun County. The average sales price to the 2007 tax value was about 94% in the Greater Northern Virginia area (this is a major difference from the ‘boom’ years when sales prices were often exceeding tax values by 15%).

Increased foreclosure rates are having the largest impact on our market. Not only do they increase the supply of unsold homes in an already flooded market, thereby forcing prices down, but also bank owned properties are often in disrepair and have to be sold ‘as is,’ so they sell for less than traditional resale homes which puts even more downward pressure on neighborhood values. The rate of foreclosed homes is much higher in the suburb areas than inside the beltway, and foreclosures are expected to increase through 2007 and possibly beyond.

While these trends and statistics indicate a not-so-healthy market for the most part, homes that are considered ‘good value’ to qualified buyers are still selling within 60-90 days. Price and showing condition are what determine whether or not a property is good value. Buyers understand that they have choices, and they will not even look at an overpriced home if there is a high supply of homes for sale in that particular area, which is typical of almost every local market in the greater Northern Virginia area. A home’s condition and its upgrades are also very important factors to consider in determining a home’s value; buyers prefer homes that have been cosmetically upgraded and well maintained. Thus, a property that is in disrepair, or one which needs thousands of dollars of upgrades, should be priced lower than the competition to be considered ‘good value.’ Buyers will not even consider a house that is outdated yet priced similar to updated homes when there are so many other homes to choose from.

It is, therefore, more important than ever to price a property competitively, while taking into account the current competition and the most recent sales data, and to make sure your home is as close to ‘model home condition’ as possible. This is the best overall strategy to command the maximum price the market will bear for any particular property.

If you would like to talk further about current market conditions, selling strategies, or any other matters concerning real estate, please don’t hesitate to contact me.

Thursday, July 12, 2007

30-Year Interest Rates Decreasing

The Washington Post reports that the rates on 30-year mortgages are continuing the trend of slowly sinking down an averaged 6.63 percent last Thursday, down from 6.67 percent the previous week. As the rate continues to creep down, it will cost purchasers less money to borrow the money they need for real estate. With this trend, hopefully buyers will be spurred into the market, creating more activity in theses summer months.

Read the article here.

If you have an adjustable rate mortgage, now is the time to consider refinancing to a 30-year fixed rate. Rates are anticipated to begin to increase again in the late summer or early fall. Do not miss this chance.

Sunday, July 08, 2007

How Foreclosures Affect the Market

It has been a while since I have updated this and I wanted to share with you how the number of foreclosures is affecting the NoVa real estate market. As many of you know a foreclosure happens when a bank repossesses a home because the borrow is delinquent on mortgage payments. While there are many reasons a borrower can become delinquent on their mortgage the most common reason in this market is due to borrowers obtaining a ‘teaser loan’ that starts adjusting upward after a certain period and the borrower is unable to keep up with the higher mortgage payments.

The increased rate of foreclosures in the market is leading to a higher supply of homes on the market and putting downward pressure on prices. When the supply of homes for sale in a particular neighborhood or area is high then buyers have many homes to choose from and sellers have to make sure their house stands out as the ‘best value’ for that area based on price and condition. When you add foreclosures, or bank-owned properties, into the mix you have even more supply for for buyers to choose from and often the prices on bank-owned properties are lower than traditional resales. There are two reasons for this: 1) bank-owned properties are usually in bad condition, need work, and are being sold ‘as is’ and 2) the bank has held the property longer than they wanted and they slash the price to get it off of their books. This increase in the number of homes for sellers to compete with, and the lower prices attached to bank owned properties, forces prices down.

If you are a seller trying to sell in a market where you are competing with bank owned properties you need to make sure your house shows better than the bank-owned properties and is priced competitively compared to all of the competition.

If you are a current home owner facing foreclosure contact your lender immediately and try to renegotiate your loan terms. This is becoming more common as the rate of foreclosures increase. Remember that banks don’t want to foreclose on your house because it costs them a lot of time and money to do so.

Read the Washington Post article about suburbs seeing a rise in foreclosures here.

If you would like to discuss this topic further please contact me via email or phone.