Real Estate Live

Welcome to Real Estate Live, an online discussion of the Washington area housing market with Post Real Estate editor Maryann Haggerty.

Maryann has been with The Post for 18 years and has served as real estate editor for the last five years. She's been a business and real estate editor and reporter for about 25 years. In all that time, she still hasn't figured out where you can find a lovely but inexpensive house in a charming neighborhood.

She's online twice a month to answer your questions about the local housing market -- from condos and investment properties to contracts and mortgages.

For more on local real estate, visit washingtonpost.com's Real Estate section .

The transcript follows.

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Maryann Haggerty: Greetings, ladies and gentlemen... Thanks for joining me today. I'll do my best to answer your questions, but everyone, please, feel free to chime in with your advice for others!

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Arlington, Va.: Okay, I am admittedly a potential first time buyer so I am clearly not without my bias, but is the NAR completely insane? With every bad number that's come out the past few weeks, they send some economist out to insist that XYZ has bottomed and that there is an up tick imminent. I've almost reached the point where I don't want to seriously home shop until they say something downtrodden (which I know they never will, but ...). Which leads me to my question:

Putting aside all of the numbers that get batted back and forth, what is your opinion on the psychology of the marketplace these days? In the frenzied days of last summer, people rushed to bid and buy. Today, it seem there is a reverse panic and icing in effect. In your experience, have you ever seen a down market with a mentality this extreme?

Maryann Haggerty: In my memory, the psychology of the 1989-early '90s downturn was more extreme, because it was linked to an undeniable downturn in the overall national economy.

It has been a moving target all year, but we are working on a story that tries to take a dispassionate look at the numbers from then and the numbers from now and see what they tell us.

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Landover, Md.: I've been watching the condo market for the past few weeks, I have seen condos with the same floor plan in the same building in bowie with about a $30,000 difference. The higher priced ones had stainless steel appliance. is the upgrade of a dish washer and stove really worth spending the extra $30,000 or is it best to get in lower an upgrade those items my self?

Maryann Haggerty: That would be a very very very nice dishwasher and stove for $30K. If that truly is the only difference, you would of course be better off buying and installing your own.

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Disappointed in Arlington, Va.: Against my planning to seek friends' recommendations for a realtor, I worked with a realtor I met when I found a place via a Web site. I won't mention the company. I put my condo on the market in early August and have had no offers. The realtor promised to put pictures and virtual tour on the web. In reality he put up bad amateur shots he took which left out half of the rooms specifically the best looking rooms, and did not get better pictures up until I raised questions. But the bad pix and no tour where in place until mid-September. He didn't do an open house until that same time frame, after I raised the question. We got no visitors! He promised to use Craigslist and other adds and agent outreach. None of this happened until late Sept./early October.

Additionally, he only show me places I found on the Internet and never suggested places to view for purchase. Some of this I take partial blame for because I didn't stick to my plan of getting realtor recommendations.

I write for suggestions for how to raise these complaints with him as I close out the relationship, and as a warning to others.

Get a great and energetic realtor. I makes all the difference. I have a really nice, well price 3BR, 2BA in Arlington. His laziness and my naivety cost me prime selling time in the summer. Now I am getting out for a few months. Luckily I didn't NEED to sell and have a great 30 year fixed rate (5.125 percent). But seller/buyer beware.

Maryann Haggerty: Thanks for sharing your experience. It's a great reminder: Pick your agent carefully. Rely on personal recommendations and on your interviews with several agents. Check their references. And if you don;t get the service you are promised, it is a good idea to go over the agent's head and have a business-like discussion with her broker/officer manager.

And now, as you close out the relationship: It sounds as if it is too late for you to do anything. However, you do want to have that calm, businesslike discussion--with the agent and with the broker-- about how you feel the transaction has been handled.

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Washington, D.C.: Hi, Maryann. It has been a while so I am glad you are back. My question may be more of a legal question than a real estate question. But when one is renting a home to three people, should one person be the main leasee (i.e., responsible for the rent) and the other two people listed as co-leasees? The reason being what if one person moves out? How would the lessor (landlord) be able to track that person down and collect the rent?

Thank you!

Maryann Haggerty: Everyone should be on the lease, and the should all be "jointly and severally liable" for everything. That means each one of the three is liable for the entire rent--it's their problem if a roommate vanishes, not yours. If one would like to move out, ideally, the next roommate should be put onto the lease. This is standard lease language.

Obviously, if you are renting a group house with a lot of turnover, you may instead want to make one person the main lessee and give her the right to sublet. But everything then becomes her responsibility. It's not your responsibility to figure out who writes which check each month. You just want one check.

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Alexandria, Va.: Maryann, love your column. Having recently sold my home within three weeks (we received multiple offers in early October) I have some advice for sellers: Get rid of the clutter. We rented a $99 a month storage unit and rid our home of all the clutter. Make sure your home is clean and fresh looking. We put fresh flowers out. Make sure the house shows well. Spend that extra money on paint and carpet if necessary. We updated light fixtures and added crown molding ourselves. You have to price your house accordingly. We had our realtor pull comps every week and we reduced our price one time (we had two offers several days later).

This is not 2000 to 2005 where people are buying houses with no inspections and were willing to overlook all the little things.

Maryann Haggerty: Yes, a house that sells now is one that sparkles. And it's truly amazing how we become blind to the small faults and the clutter in houses we live in every day.

Think about it. Do you even notice, say, the grubby kid fingerprints on your own front door? But wouldn't those be the FIRST thing you noticed at an open house?

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Sterling, Va.: Maryann, thanks for taking my question. How does a lease to own deal work? Does my rent (or a part of it) go toward the cost of the house in case I decide to buy it after, say a year. Is the price of property decided while leasing, what if the property prices come down drastically in a year?

Maryann Haggerty: Everything is negotiated up front. You negotiate the up front option payment, how much of the rent each month goes toward the down payment, and what the actual sales price will be. There are obviously time-span risks to both parties (i.e., how prices change over time, etc.)That's just how it works--but you know what you will owe when.

My columnist Bob Bruss is a big fan of rent-to-own sales. Here is what he had to say about them in one column, in answer to a questioner who was having a problem selling a house: "DEAR LAITH: A method that has never failed me is to advertise the houses as "rent to own" or "lease with option to buy." Advertise under "houses for rent" and "houses for sale."

"Headline your ad "$5,000 moves you in," or whatever number is appropriate for your local market. The move-in cost should include the first month's rent plus non-refundable option consideration.

"Advertise a Sunday open house. If you do it right, you will be swamped with prospective renters and buyers. There are always more lease-option buyers than sellers. Be sure to give a decent rent credit toward the purchase price. For example, suppose the house would rent for $1,000 per month. Offer a 33 percent or 50 percent rent credit toward the down payment."

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Washington, D.C.: I'm a student at GW and I want to find a reasonably-priced apartment to rent or buy, since I'd like to stay in D.C. after college. Where are the best places to look in the Foggy Bottom area that are close to a Metro?

Maryann Haggerty: Everything in the Foggy Bottom area is close to Metro! And all those buildings are full of GW students. You know better than I do which ones you want to live in now. That's because all the buildings I lived in as a GW student back in the dark ages are either office buildings or dorms now.

However, think about the underlying question here. You are trying to make plans for what you will do AFTER college. And you really, really don't know what is going to happen then. It is one of the most exciting and uncertain times in your life. The dream first job out of college may be in Washington state, not Washington DC. Why do you want to be tied down to a condo in Foggy Bottom? Find an apartment now that you and a roommate or two or three can afford. If you have extra money, save it. (Tip: Drink cheap beer!) Then open your mind up to the possibilities the future will bring.

Hey, even if you DO stay here, you may land up working in an office on the Red Line...

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Lorton, Va.: The timing couldn't be worse. I just got an offer for a new job out of the area. I'd been wanting it for awhile, but they took six months to do it. I'm a fed, so no relocation help. What can I do (beyond the general declutter and sprucing-up advice) to try to get a house sold during the holiday season?

Maryann Haggerty: Find yourself a real estate agent who has experience and will market your place aggressively. Price it realistically. And keep your fingers crossed. Sales do slow to a trickle around the holidays, but there are still some people out there. Like you, they are probably folks who have had sudden and inconvenient job changes.

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Arlington, Va.: How to sell your home faster? Here's a hint, price it below that of the other 12 for sale on your street! I mean really, do you think there's more to it than that? You can clean, decorate, paint, offer closing help, etc., but at the end of the day in a buyers' market you'd better be cheaper than your neighbor. We all knew this was coming -- just deal with it and eat into some of the absurd profit margin you'll probably still make.

Maryann Haggerty: Yes, cheaper sells--but not if the place is a dump. Really. Buyers can and do simply ignore the cheapest if they fear they are buying a problem.

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Bethesda, Md.: Hi,

I'm interested in buying a townhouse/condo and am a first time buyer. I can afford up to $350,000. Would you suggest it is better to: 1. Buy a condo close to or in D.C. and a metro stop, or buy a bigger place (townhouse).

2. Buy a townhouse further from the city and access to Metro? Which option is likely to appreciate more over time and easier to sell. Thanks.

Maryann Haggerty: Which option is likely to make you happy now? Which will fit into your life? Do you hate commuting, or treasure the time alone? Does the thought of living in a townhouse community full of families with little kids make you smile, or does it make you wonder how you will be able to continue to have a social life?

As far as appreciation: Historically, the condo market is not as stable as the the single-family or townhouse market. Flip side: In this region, we have seen time and again that those farther-out places that allow lots and lots of development in boom times also see sharper drops, i.e., Prince William County.

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Washington, D.C.: I currently own a condo in D.C., but am thinking about moving in with my partner for a year to test the relationship waters. Both of our places are too small to accommodate two -- if we decided to rent together for a year, and I also rented out the condo I own, what are the financial repercussions? I know that tax deductions on interest are for principal residences, but if I move to a rental unit, rather than buying a second home, can I still take the deduction? Any other issues I should be considering?

Maryann Haggerty: It's basically still deductible, but on a different form. When you're a landlord, you take both your income and your expenses into account for tax purposes, and what you pay on your mortgage is an interest expense. You can find all the basics on the IRS web site (www.irs.gov), though some folks may find that tough reading. In that case, get to a bookstore or library. There are lots of books out there that explain what it takes to be a landlord. I find nolo.com's books quite comprehensible and thorough.

As far as other issues: The tax break on capital gains for the sale of a principal residence (i.e., you don't pay taxes on profit up to $250K for a single taxpayer) requires that you have owned and lived in that principal residence for 24 of the last 60 months prior to the sale. So if your relationship appears to be working well (as we all hope!) you have to keep an eye on when you sell. You have just three years between the day you move out and the day you sell. The IRS takes these time frames seriously.

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Prince William County, Va.: Why does my neighbor insist on selling his house for what it's worth instead of what I think he ought to sell it for?

I'm just kidding, although that question still cracks me up.

We're thinking about selling and buying in the spring. In the recent past, selling was easy and buying was the hard part. How should we structure/time the deals now that it's the other way around?

Maryann Haggerty: The platonic ideal is a simultaneous closing. But you also should plan for other possibilities, by thinking about how you will deal with things if you have to find temporary housing at some point. Or how you would handle two mortgage payments for a while.

Sale times can be quite long in Prince William these days, so I think I would put the house on the market first (while testing the waters to see where you plan to buy).

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D.C.: Thanks for taking my question, Maryann.

I've been reading articles lately about frivolous and/or padded closing costs, but no good advice about how to spot such costs. Any advice? If you suspect you've been duped at the closing table, is there a way to get the money back?

Maryann Haggerty: Do your darnedest to get an up front list of the fees you will pay, in detail. Unfortunately, the "good faith estimate" that you are supposed to be given often is not reliable.

A growing number of lenders/title companies are becoming better about offering guaranteed-cost packages. Try shopping around for them. (Our columnist Ken Harney has frequently written about that subject, and I expect he will keep us all up to date as things shift.)

"Junk fees" are those that aren't on the good faith estimate and instead show up by surprise at the closing table. Generally they are the ones that go to people who don't DO anything for them. You can dig your feet in and refuse to pay, but that may or may not succeed. You can insist that you put your objections in writing and then head to small claims court, I guess.

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Arlington, Va.: I know that many condo and townhouse owners bought their places specifically to rent out. How does a potential tenant go about finding one of these places to rent? For the tenant, what are the pros and cons of renting from an individual landlord versus an organized apartment complex?

Maryann Haggerty: Read the ads, folks!

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Alexandria, Va.: Aside from cleaning up the clutter, and staging the home, our realtor aggressively marketed the home via the web. He posted about 15 pictures vs. the normal four to five and did a virtual tour. Over the course of three weeks we had over thirteen buyers (with realtors) look at the home and many of them commented that the pictures really drove them to want to see it. By the way, there were eight other very similar priced townhomes for sale in the neighborhood and we were the most expensive (it sold in three weeks). It helped to be an end-unit, and all the upgrades we did helped as well, but I really believe the pictures helped a ton.

Maryann Haggerty: Human beings do tend to want to buy things that are presented well.

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Washington, D.C.: Hi there. I put a deposit down on new construction condo two years ago. It is due to deliver next month. I am changing my mind. How can I back out of the contract and get my deposit back? Thank you.

Maryann Haggerty: Good luck! You signed a contract. You can try talking to a couple real estate lawyers to see if they can find a loophole or grounds to get you out of that contract, but I wouldn't hold my breath.

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Bailey's Crossroads/Seven Corners: I have a 730 sq. ft., one bedroom condo with tons of closet space on the third floor of a six story building in an eight building complex. I've already upgraded my kitchen appliances and also hope to upgrade the countertop after the holidays. where else is a good place to invest/improve? I have no plans to move soon. Cabinets are pricey, I will need new carpet due to the dog. The bathroom is clean but outdated. The closets are so big they waste a lot of space...

Maryann Haggerty: I have never, ever heard anyone complain before that their closets are too big!

If they really really are too big (wow!), then maybe you can use that space in a creative way. Make the bathroom bigger? (Though that can be an expensive project.) Convert one closet into an office nook?

In a small apartment such as yours, there really aren't a lot of places to "improve." Paint and nice window treatments make your life nicer, but they aren't long-term. As you know, new counters will be a big upgrade. Cleaning up the cabinets at the same time, maybe adding cool new hardware to them, will keep them from looking hopelessly ancient next to the new counter.

Otherwise: Maybe relax and enjoy?

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Lorton again: I forgot to ask. Are seasonal (aka Christmas) decorations a bad thing when selling over the holidays? Assuming they are placed out in a non-clutter-like way. Even with it on the market (looking to list in about two weeks after touch-up painting and decluttering), I don't know if I can go without a small tree.

Maryann Haggerty: The general consensus: Decorations are nice, but they have to be INCREDIBLY tasteful. I mean, Martha Stewart but toned down even more. A little greenery. A real tree with white lights and gold decorations. Maybe one red bow somewhere or a new wreath on the door. No inflatable reindeer in the front yard.

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Laytonsville, Md.: Hello -- I have my home for sale right now, but no one is even going through the house. The market appears to be dead. In your opinion, would it be better to take the home off the market for now and then wait until spring or whenever things improve?

Maryann Haggerty: If you don't need to sell now, why put yourself through all that grief?

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Arlington, Va.: Why do you think that some houses have stayed on the market for so long without any significant price drops? Do you think it's because realtors are reluctant to advise sellers to drop their prices, or that realtors do advise sellers to drop their price but sellers refuse to listen?

Maryann Haggerty: We have a very very interesting story in tomorrow's Real Estate section on this point. Essentially, people get very emotionally invested in pricing a home, and simply will not budge on price, even though that would seem rational.

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Silver Spring, Md.: I know everyone is anticipating difficulties for folks with interest only type mortgages and people who just bought homes in the last few months because property values are going down and interest rates are not coming down with it. But there could be potential economic benefits for people looking to invest in real estate in this area. Do you care to comment please.

Thanks.

Maryann Haggerty: If troubled properties do indeed start to flood the market, then yes, there will be opportunities for investors. That's how it works--"buy low."

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Columbia, Md.: I bought a townhouse (2br, 2ba) earlier this year for $289,000. The couple who sold the house bought it approx. five years earlier for around $140,000. They got lucky because I was desperate and wanted a house very badly, so I bought with no bargaining. What I am getting at is there are other houses in the neighborhood for sale at the same prices and higher. They are having trouble selling at their price. OK. These people have been in their house for years. What I am getting at is that they can drop their prices by $10K, $20K, or $50K, and still make a huge profit on the sale and they get their house sold. But they are greedy and instead of dropping their prices they take the house of the market and are angry they can't sell. In reality, they can sell and make a profit if they really wanted too.

Maryann Haggerty: That's one way of looking at it.

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D.C.: Here's a typically wonkish DC question:

What effect, if any, might the upcoming mid-term elections have on D.C. housing market?

Maryann Haggerty: Geez, it took this long for this question to show up?

My opinion: Zilch. A couple hundred--at most--underpaid Hill rats will have no macro effect in a region of several million people.

But what about the armies of lobbyists, you ask? They never left, and they won't leave now. They just shift their arguments...

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Maryann Haggerty: I have to leave now, but a couple things:

--Are you an active home shopper now (or a recent buyer)? Would you be willing to talk with a reporter on the record about your experiences in the current climate? Then drop me a personal e-mail at haggertym@washpost.com.

--Tomorrow's Real Estate section has an interesting story on the psychology of home pricing, as seen through neuroeconomic research. There's also a piece on the pros and cons of various types of generators (bad weather is coming soon), as well as tons of good consumer advice. Pick it up tomorrow to read over your second cup of coffee.

Have a lovely weekend; see you in a couple weeks!

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