Wow! I never thought I would be posting an article about this but I guess this is a product of the world we live in. While browsing CNN.com I learned of a couple that recently purchased a home and quickly learned the home used to be a meth lab. This was discovered by way of serious health issues the couple experienced shortly after moving in. The most frustrating part of this story is that it was well known that this home was a former meth lab and state law did not require that this be disclosed prior to the house being sold. The couple is now stuck with a home that is uninhabitable and if they desire to live there again they will need to shell out $61,000 to rid the home of contaminants. I am so angry that our system would allow this to happen to somebody! Buying a home is supposed to be a joyful experience and for these people it has been everything but.
The reason I am sharing this story and posting a link to their blog is because this is a serious issue that can impact thousands of home buyers. While performing your search be sure to look for key things that may indicate whether or not the home was a former meth lab. Rather then telling you what to look out for, I encourage you to visit OUR METH HOUSE which is a blog created by the devastated couple. They share pointers on how to spot a former meth house. I think this is something valuable to store in the back of you head as you go out and see homes.
By now you had to hear the news that they broke ground on the new Marriott Marquis next to the convention center. This is a great project and one can only hope that now it will help fill all of the vacant spaces in and around the DC Convention Center. What could this mean for the real estate market though? I doubt it will do too much because prices west of 8th have already inflated but for the areas east of 8th who knows. This has been a very troubled area for some time so I am optimistic that a big project like this might bring some needed energy to the area. Lets talk again in 2014 when this project is scheduled to be completed.
So unless you live under a rock you probably heard about the recent foreclosure nightmare. Long story short we are facing another situation where a couple of idiots and banks screwed up a system of kicking people out of their homes. If you want read more about the situation email Sarah Palin, I hear she can recommend some great media resources.
Anyway what does this mess mean for our immediate area? Basically a painful process just got more painful! When dealing with foreclosures the first thing you need to realize is that the buyer has no control. The seller (bank) drives this transaction and if you are not willing to play by their rules then start looking at traditional home sales.
The sale of foreclosures has not been completely halted but several banks have begun to review properties they foreclosed on to make sure they are in compliance. This is great because the banks are finally doing their job but its bad for the buyer. In a lot of instances it means the buyer might not find out until a day or two before closing that there is a problem. There is a light at the end of the tunnel though. In most of these instances the property is not closing on its scheduled settlement day but typically these properties are closing a week or two later. It is in everyone’s best interest to make sure the closing ultimately happens.
There are a lot of entities that are impacted by this mess. To name a few:
Agents – There are a small number of agents that strictly handle the sale of foreclosures. Just like buyers agents they do not get paid until the property settles.
Title Companies – There are a lot of title companies where their main source of income is derived from foreclosures. In a lost if instances certain title companies might have a relationship with a particular lender IE Bank of America. If BOA puts a complete halt on foreclosures business at certain title companies might dip by 50-100%.
The Foreclosing Lender – Yes thats right! They hurt too. The longer the property sits vacant, the longer they are out funds whether it be from utilities or taxes.
Foreclosures are not a losing proposition. They just need to be treated like a marathon and not a sprint. If you have some extra time on your hands then these are still the ideal property for you.
Well summer is halfway over….somewhat. Ever since the first time home buyer credit expired in April the market has been VERY slow. It has definitely picked up a bit and I am anxious to see numbers for this summer compared to last summer but I still think we are down and things are still fragile.
My biggest concern at this point is lack of inventory which definitely seems to be driving price up due to the principles of supply and demand. Inventory has been stale for a while now but it seems to have really hit bottom recently. Yes new properties come up all the time but in my opinion not enough to meet the current demand. This ends up causing a very difficult situation where if a property is priced right it could cause a bidding war and thus go above its original list price. We are seeing this a lot! So lesson to be learned: If you love a house and its only been on the market for a few days, don’t hesitate. Write an offer quickly and submit it quickly! Also offer list price or risk losing the property in a bidding war. Don’t get pissed at your agent if you miss out on the property. There are a ton of disappointed buyers out there because of the current market conditions. If you put your best foot forward on an off then it is what it is!
Then again…..if you have 9 million to spare and don’t mind moving outside of DC, the biggest house in Montgomery County just came on the market. It is being marketed as a palace and wow is it incredible. Over 200 windows alone in this house! Its insane. Check it out by clicking here.
An article posted in the Washington Post today discussed the potential collapse of the real estate market, yet again. It went on to further describe the expired $8,000 rebate program as a mere band aide that has since been ripped off of an unhealed wound. This is probably the most accurate description yet. The market is stale and things are turning south quickly. I don’t mean to paint a dark picture but we need to be realistic. The government as much as it thinks it helped us, disrupted a cyclical pattern and prolonged the inevitable. Prices rise and sink and that is the nature of a free market system that is based in supply and demand. I am not an economist but this is just simple logic.
With all of the above being said I think it’s important that we delve deeper into the problem and look for a long term solution that could really place the real estate market back in full swing. Most realtors aren’t going to like this suggestion but the truth often hurts.
For too long real estate agents and their brokers have been enjoying ridiculously high commissions. These commissions range from 5% to 6%, at least in the DC area. That means every time a seller goes to list their property they are faced with a 6% hit right from the beginning. Imagine that you go to sell a home in DC where the average home is $500,000. That means as a seller you are faced with an upfront cost of approximately $30,000 assuming you paid a 6% commission! That is just ridiculous. Yes real estate agents work hard but not $30,000 worth…..especially if the home sells in a matter of weeks.
In good markets where homes are selling well above list and sellers are seeing a higher return on investment this 5 or 6 percent payout doesn’t seem bad but what about when markets hit bottom, like they have across this country? Yes the market in DC is rebounding but people that purchased 5 years ago still are not seeing an adequate return on investment and therefore those homes are not coming on the market. In this city in particular we had a lot of 1 and 2 bedroom condos swallowed up during the boom but these were never long term homes for most. Most got in with the notion they would sell in a few years and at the very least break even. That is not the case. Instead some owners are being forced to sell at a price much less than what they paid a few years back and when you add an additional 5 or 6 percent deduction on that number, the seller is in pain and is often forced to rent. This idea of renting versus selling is, in my opinion, what has really destroyed the market and inventory in DC.
So I have gone and given and argument but I have not proposed any sort of solution. Well buckle-up because here it is. This is by no means the ultimate fix-all but I think it’s a crucial step in the right direction. Agents need to cut their commissions and offer rebates! Wow I have probably just turned every agent against me. How dare I disrupt a business practice that has worked for decades? Agents, swallow your egos and listen. If we reduce our commissions and offer rebates this simple step may allow more people to list on the market. At the same time it might allow more buyers to enter was well and not be as pushy with the seller because they are getting a rebate back from their agent. Phew!
A few companies are offering rebates today and I think they have seen a significant boost in sales because of this. Unfortunately I have mentioned these companies before because they also have AWESOME websites….drumroll……..Zip Realty and Redfin. Zip boasts that it offers up to 20% of their commission back and can save sellers as much as 25%. Redfin has a far superior deal because assuming the company makes their minimum of $5500 buyers can expect a rebate of 50% of the commission. On the sales side Redfin only charges 1.5% commission and goes the extra mile by hiring a professional photograph for all listings.
If any readers are aware of there agents or brokers that offer rebates please feel free to share in the comments section.
Okay so you missed the $8,000 tax credit back in April and you are bitter because you were really counting on that. SO WHAT. As of this week interest rates have hit an all time low of 4.69%. This is incredible but for some reason we aren’t seeing a flurry of buyers!?!?!?!? Last week the rate was at 4.75% and thought a .06% difference doesn’t seem to be much it really is. This can save you thousands over the lifetime of the loan. In addition DC still has a first time home buyer tax credit of $5,000! This is honestly the BEST TIME ever to buy. If you are on the fence you shouldn’t be.
Language taken directly from the Office of Tax and Revenue
This federal tax credit is available to first-time homebuyers in the District of Columbia. The credit is the smaller of:
- $5,000, if single, married filing jointly, head-of-household, or qualifying widow(er) ($2,500, if married filing separately) or
- The purchase price of the home.
In general, you may claim the credit if:
- You purchased a main house during the tax year in the District of Columbia, and
- You (and your spouse, if married) did not own any other main home in the District of Columbia during the 1-year period ending on the date of purchase.
Income restrictions and other qualifications may apply. You must file the federal form 1040 to claim this credit. For more information, contact the Internal Revenue Service at (800) 829-1040 or visit the local IRS Taxpayer Assistance Center at 500 North Capitol Street, NW, Washington, DC.
Almost one year ago the Lion of the Senate passed and now his former DC home is for sale. For only $8,000,000 you can live in the house that once provided shelter for one of this countries biggest political families!
http://www.redfin.com/DC/Washington/Undisclosed-address-20008/home/9997210 – after going to the link click on the link for virtual tour to see photos.