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: Hello, everybody. We're glad you took the time to join us. We're going to jump in and start answering questions, but want your responses too. Let's go!

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Washington, D.C.: I really hope you can answer this for me. I can't get a straight answer anywhere about PMI. I bought a condo in Dec. 06 for $195,000. My lender and D.C. tax assessor say it's worth $315,000. I didn't put any money down so I am currently paying 95/month in PMI. My original lender said that the PMI would be dropped after "a few months" but in the last two months they sold my loan to countrywide and they refuse to drop the PMI no matter whta the appraisal for a minimum of two years! They base this on the original loan amout and not the appraised value. Are there any laws regulating PMI or is it soley at the lenders discretion. I didn't select Countrywide to service my loan and I never would have knowing this poicy first. Do I have any recourse?

Maryann Haggerty: It was sleazy of the "original lender" to say that youcould drop the PMI in a couple months, because that's not how it works. It is absolutely standard that a lender require PMI for a minimum of two years. I'll bet it said that in your loan papers (no matter what you recall the original lender saying). And at the time, you also agreed to let your loan be sold, because just about all of them are.

And guess what? I understand why they require that PMI. I don't really believe that a condo you bought six months ago for $195K is now worth $315K. And you put no money down! Do you kinda maybe understand why the lender wants some protection?

However, if it really is worth $315K, you should have absolutely no problem refinancing into a new loan without PMI. But do read those loan papers, OK? You want to find out if there's a prepayment penalty nobody mentioned to you.

Elizabeth Razzi: The flip side of that is that you might want to appeal that tax assessment. Ask a couple of real estate agents what units like yours are selling for NOW. If it's less than your tax assessment, file an appeal and get your property taxes reduced. Check with the District government to find out the dates when you can appeal an assessment.

Maryann Haggerty: DC assessment appeal deadline has already passed. You'll get another shot next year.

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Gaithersburg, Md.: Maryann: My ARM is going to be adjusting soon to its fully-indexed rate, which by my estimate is about 7.5 percent. Seeing as fixed rates are distinctly less than that, refi-ing seems obvious.

But it's so obvious I have to wonder whether ARM lenders are willing make deals to keep hold of a performing loan. I know I'll have to call them, but is there any advice you can give about kind of offers I should have in mind that they might accept to keep my loan?

As a follow-up, are ARMs ever intended to be worthwhile to keep after fully indexing?

Elizabeth Razzi: Your loan may already have been carved up into parts and sold off to bond investors. If you plan to live there a couple of years, it makes a lot of sense to refinance into a relatively low fixed-rate loan. And the longer you intend to live there, the more sense the switch makes.

Maryann Haggerty: But yes, there are circumstances when holding onto the ARM makes sense. Sometimes, that fully indexed rate remains below what fixed-rate loans would be.

In addition, ARMs can also surprise you in a falling-rate environment. Both Elizabeth and I have had ARMs in the past --back in the mists of history--where the rates actually fell, and steeply. That's what happens, of course, when the starting rate is 16 percent. That's less likely to happen in a relatively stable interest-rate environment, which is where the economy has been for a while.

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Silver Spring, Md.: The FDIC Web site has an article that lists Va. as having the third highest percentage of non-traditional loans and D.C. as having the fifth highest. Is there any way of finding out whether these are ARMs, Alt-A, piggy back, etc.? I'm thinking that if we knew where (perhaps by zipcode) the largest concentration of ARMs are (as opposed to other non-traditional mortgages) we could pinpoint the areas where sellers might be more motivated.

Maryann Haggerty: A lot (not all) of that info is out there, but sifting through it is a lot of work. A lot.

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Silver Spring, Md.: A friend of mine suggested that if I'm interested in a property, to go talk to the listing agent and make an offer ... the theory is that if you cut out the buyers agent the listing agent makes more or the same at a lower price (the agent would more strongly encourage the seller to lower their price). What are your thoughts about this?If I wanted to try this, would I ask for a contract to review with a real estate lawyer before I signed?

Maryann Haggerty: Well, that's sort of the way it used to work, before the widespread acceptance of buyers agents. (I must say, I'm not sure what the psychology of the agent urging the seller to lower the price is, though. Some might do that when they are taking both sides of the commission. Some might not.) Just remember that the seller's agent has NO obligation to be on your side AT ALL. Please, hire that lawyer.

Elizabeth Razzi: At a minimum, you should have a lawyer help you prepare a purchase offer BEFORE you present it. There's no room for negotiation after a seller accepts your offer. If you're even thinking about working directly with the listing agent, you need to feel very comfortable negotiating AGAINST that agent over price and all the other important terms of the deal. Unless you've been through a home sale or two already, I'd really advise against it.

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Anonymous: If given a choice, is now a good time to buy a house? I've just sold my home, but keep hearing the background noise that home values are expected to drop within the next year.

Elizabeth Razzi: Well, do you want to buy a house now? Real estate agents always think it's a good time to buy a house, of course. But your own needs, living preference and budget should be the real drivers. If you plan to live there five years or more, it's reasonable to think you could ride out any dip in values--should one occur. Real estate is very much a long-term investment. If your plans are uncertain, or you simply want more flexibility, then you should rent.

Maryann Haggerty: What she said.

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Leesburg, Va.: I was advised to hold off on building a deck and patio this year because the slowing economy and bad real estate market (less new home building) will drive prices down further among contractors next year. What are your thoughts? Should I wait?

Elizabeth Razzi: I've heard that there are a lot of contractors looking for work at the moment, but I don't know if they're cutting their prices much. If you can afford the patio and deck now, it sure would be nice to get it done so you can enjoy the spaces.

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Maryann Haggerty: I always hear how contractors are going to desperately start cutting their prices. Somehow, my bigger problem is still getting them to return phone calls at all.

But gain, what do you want when? I re-did my patio and deck last fall and have now been able to sit outside and read for the last two weekends. I love it!

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Washington, D.C.: I'm selling my condo in D.C. I have renters in there. What rights do they have when I want to sell my place? I want to have open houses, agent's showings, but I wantto respect their privacy.

Maryann Haggerty: In the District, they have A LOT of rights. You need to familiarize yourself with the Tenant Opportunity to Purchase Act (TOPA). It is a complicated law designed to allow your tenant the opportunity to purcxhase your condo and to match offers from third-party purchasers. It applies to you even if you own just that one unit.

Additionally, the lease that you and your tenant signed usually will have some provisions that cover things such as open houses and showings. Normally, you need to give something like at least 24 hours notice. But guess what? Things will be much nicer if your tenant and you are on good terms. (Among other things, the condo may even be clean for showings.)Schedule things well in advance. Communicate well.

Some DC landlords have found that the best thing to do is negotiate a payment to the tenant to move out.

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Chicago, Ill.: I bought a condo a year ago (first time buyer). I first went mortgage shopping with eLoan, which tells you they will find you four quotes, but they only managed to find me one quote, which struck me as strange because I have an extremely high credit rating. For that reason and because I started to feel like I needed somebody who knew more about my local market, I went with a local Illinois mortgage broker. Do mortgage brokers search nationwide for the best rate? Are condo buyers always going to get quoted a higher rate than detached home buyers because condos are riskier? My rate is 6.65 percent; should I be shopping around to refinance? Thanks.

Elizabeth Razzi: Whew, lots of questions wrapped up in that one. But the answer boils down to one thing: Would you remain in the condo long enough to recover the expenses associated with a refinance? Even if the fees are rolled over into a new loan amount, you end up paying more in the long term. As for your question about mortgage brokers, they typically work with a number of loan originators, including some of the big-name national outfits. A good, reputable mortgage broker can help you find a loan that suits you well -- but there is nothing requiring brokers to put a borrower's interest ahead of their own. Some have been known to sign borrowers up for the loan that generates the best fee for the broker. Reputation is everything when you're choosing one.

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Hyattsville, Md.: Any thoughts on how the new urban rowhomes in Arts Hyattsville might impact surrounding residential property values?

Maryann Haggerty: If EYA (the builder) does as nice a job on those houses as they have on some of their other infill projects, it likely will pull up some values--because what they have done in other places is add high-end homes to more modest neighborhoods.

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Falls Church, Va.: What should rent in Falls Church be for a one-bedroom? What if it will include all utilities? Thanks!

Elizabeth Razzi: Off the top of my head, I don't know. But it's easy to find out. Just do a little shopping for a one-bedroom with utilities. You can quickly determine the going rate by making a few phone calls to apartment leasing offices and checking the classified ads.

Maryann Haggerty: It really does vary depending on the type of apartment, etc. But yes, this is a very knowable number, with a quick read of the classifieds!

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RE: Realtors: Have you read the Freakonomics chapter about realtors? The point is, in a nutshell, that the realtor only makes about a hundred bucks for every $10,000 in increased sale price, so they have a lot more of an interest in getting a deal done than in negotiating relatively small price changes.

Elizabeth Razzi: Yep, I've read it. And it's true. Just think about it a little bit. A done deal means a commission check. But if a seller holds out for more money, turns down an offer, haggles over endless rounds of offer and counteroffer, that poses all kinds of opportunities for the deal to fall apart completely. Result for the agent: The risk of an expired listing agreement and zero commission.

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McLean, Va.: We contracted with a custom builder for a $2.4M house and moved in last Aug. The house was built lower in the ground by two feet and the house next to us was built higher by two feet according to the plans and towers over our house (originally there was a six feet difference in heights) and there is a steep incline between the houses. I believe this has affected the value of our house and that the home was not built according to specifications. On this side of the house, we had water and mold in the basement which the builder installed a french drain to remedy the problem. I have no idea if there is mold behind the drywall. I just do not know what to do. The Fairfax County engineer told me that it's a legal issue that they do not enforce the actual house siting plan and presume the builder does it according to plan. He suggestedt that I contact the inspector to get a copy of the RUP and "as built" survey. I cannot reach the inspector. I asked for these items from the builder and he has not provided. I suppose I will need to hire a lawyer to pursue this but how does one go about assessing the damages or decreased value? I am sick over this purchase, it's been a total nightmare and is not over.

Elizabeth Razzi: Since you already own the house and live there, why not try a little exploratory surgery on those walls? Cut out a piece of drywall where you suspect there may have been dampness, and take a look. If you find mold, then think about talking to a lawyer. If you don't find mold, all you have to do is patch your drywall. At least it's a reasonable first step.

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Condo Tenant: The owner might try offering an incentive to the tenant as well--maybe a couple thousand bucks if the condo sells in the first month, decreasing over time. Assuming D.C. allows that, the tenant could be a real asset in keeping the place nice, and so on.

Maryann Haggerty: Money can indeed help immensely. But again, in DC, you have to know that law and follow it or you could find yourself with messy legal problems. There are indeed rights that a tenant can sign away--usually in return for a payment--but everything has to be in writing, using the right forms, etc.

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Falls Church, Va.: RE: Washington D.C. (condo owner with tenants who wants to sell) -- unless it looks great, I'd wait to see until after they move out. As a current house hunter, the worst ones I've seen were ones with tenants. Sometimes tenants wouldn't even let us in, even though we had called and or the listing agent had called ahead.

Maryann Haggerty: Oh, yes, you can often tell a house with tenants very very quickly!

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Anonymous: We have a ARM that starts fluctuating in 2008. Our current interest rate is around 4.5 percent, and I know we won't get as good a rate on a 30-year loan now. My question is this: does it make sense for us to refinance, when we are about 50 percent sure we'll be moving out of the state in 2009, but there's a 50 percent chance we'll be in our current house till 2011. I just don't want to be at the mercy of a fluctuating rate for a year, but I also don't want to spend on a refinance and then sell the house a year later. Also, when you do a refinance, how much pressure do lenders put on you to take money out of the house? We've built up about $100,000 equity in the house (on a $300,000 house) and we'd like to use the refinance as a way to stabilize or lower our payments, not have more cash on hand.

Elizabeth Razzi: As Nancy Reagan used to say, "Just say no." All you have to do is say "no, thanks" if a lender encourages you to take cash out on a refinance. And here's some homework that will help you decide what to do about that ARM. Dig out the contract, and look for the adjustment period (yearly? six months? more frequently?, the index (such as the one-year Treasury index, for example, the margin (the number that's added to your index to arrive at your new rate) and your interest-rate caps. Plot out what's might happen to your rate if interest rates were to remain stable for the next couple of years, and then plot out the worst-case scenario. Having those numbers will help you decide if you can live with the risk over a couple of years.

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Rockville, Md.: Is the median price or average sold price the leading indicator of price direction of a given zip code?

Maryann Haggerty: Median is much more commonly followed. Why? Because an average can be pulled far askew by one or two very high-end sales, especially with a small sample such as a Zip code. (Math review: The median is the point where half the sales are for more and half are for less. The average is what you get when you add up all the sales prices and divide by the number of sales.)

Medians, of course, have their own problems. The big thing is that they can not reflect the quality of the housiong stock that changes hands. If, for instance, a development of mini-mansions springs up in the midst of a bungalow Zip code and a lot of them are sold, that will skew the median. But it won't mean that the value of the individual bungalow has increased by that same XX percent.

Elizabeth Razzi: Probably the best way to track changes in values is through the numbers reported by the Office of Federal Housing Enterprise Oversight (www.OFHEO.gov). That takes into account the values of homes that were sold AND those that were refinanced, giving a better picture of what's really happening to homes.

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Clifton, Va.: Contractors: Costs of lumber, other raw materials and fuel ie gas and diesel isnt going to drop. If anything they are going up big time.

Contractors insurance costs arent going to drop if anything they are going up. You did make sure the contractor is fully insured

and bonded. Especially make sure they ahve workmen's comp insurance. Check with their suppliers. And I don't see their labor costs declining significantly for the best contractors!

Maryann Haggerty: Valid points.

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Centreville, Va.: Would you recommend the contractor doing your patio?

Thank you very much.

Maryann Haggerty: Nope, we can not give recommendations. I hope you understand why.

But ask around among your friends and neighbors. That is always where the most successful searches for contractors begins. No Internet referral system can ever be as reliable as the nice lady who hosted your book club's last meeting out on her lovely deck.

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Arlington, Va.: I closed on my first home in February. Since then, my mailbox has been deluged with insurance offers to pay off my mortgage in case i die (no dependents, so no interest in that) or make payments if I become disabled -- which I don't expect, but of course life has all kinds of surprises...

Is there any "prevailing wisdom" on these sorts of offers?

Elizabeth Razzi: I'd suggest investing in a good shredder. You don't need that stuff. And if you do feel a need to cover the what-ifs, then term life insurance is the cost-effective ticket. Without dependents, though, you probably don't need that much anyway. Long-term disability insurance is worth checking out. First see what your employer might provide, review your annual Social Security estimate of benefits (it comes in the mail once a year), and consider getting some quotes if you think you need more.

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Rockville, Md.: I plan on buying my first home in late November (lease ends Dec. 31, and I want some leeway in moving time). I've read a few books on the home buying process to be prepared, but one thing the books never mentioned was how long to look for a new home. If I ideally want to move in late November, when should I begin contacting an agent and looking for a place?

Maryann Haggerty: Are you the kind of person who knows exactly what you want and makes decisions quickly? You could start as late as Labor Day.

That of course assumes your credit is in tip-top shape. That's what you have to look at first.

However, not everyone is like that. Some of us really enjoy the process of shopping around. As I have said on these chats any number of times, I looked at about 100 houses before I actually bought mine. And no, I didn't burden an agent with that whole search! Most of it was on my own, at open houses and such. It was a process of getting to know neighborhoods, houses and my own likes and dislikes. And agents, too. I eventually chose to work with one that I had met at a number of open houses. By the time I began working with her, I had a very good idea of what I wanted, so it only took a few more weeks to submit a contract.

(Negotiating it was another story...)

Elizabeth Razzi: Start backwards from that late November date. Allow 4 to 6 weeks for the deal to get wrapped up after you've found the home you like. That puts you in mid-to late October. There's usually a flurry of homes that come on the market right after Labor Day, so you should plan on some intense home-shopping in September and October. But it wouldn't hurt to investigate markets through the summer. If you find a home earlier than you planned, the seller might be amenable to a deal that doesn't close until November. You can always ask.

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Upper Marlboro, Md.: If we decide to take our house off the market because it's not selling, do we owe anything to the real estate agent?

Maryann Haggerty: Read your listing contract. You probably don't owe the agent anything, unless the contract says you need to reimburse marketing costs. With most houses, that won't be the situation.

Also, you can't sell it to someone else during a given period without owing the agent. Again, read the contract.

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"The theory is that if you cut out the buyer's agent ...": Quantitative studies have shown that agents make most money by having quicker sales. They rather take a lower price and move on to the next property. Waiting for a higher price does not give them enough extra money to justify the extra weeks they spend working on that when they could be selling another house. Time is money to them and the quickest sale is the best.

Maryann Haggerty: I think we already said that, but if that wasn't clear, you said it well.

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Laurel, Md.: Arlington, Va.: Is there any "prevailing wisdom" on these sorts of offers?

Yes -- throw away unopened any envelope that doesn't bear at least 30 cents postage. (If they don't think you're worth that much, phooey on them.)

Maryann Haggerty: Shredder, shredder, shredder...

(Just got one recently, and it's fun to shred things while you're watching TV...)

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Alexandria, Va.: I'm hoping to close on a new townhouse in Maryland on September 1 (first-time buyer). Trying to decide when to lock rates on my loan. What do you see as the mortgage rate trend for the next four months in the Washington area?

Elizabeth Razzi: I'm not much of a gambler, and predicting interest rates is like predicting where the ball is going to drop on a roulette wheel. While there's no indication right now that rates are going to zoom up in the next couple of months, world events could change that within hours. You just never know. The way to decide when to lock rates is to figure out how much risk you can stand. If a little blip up in rates would make it tough to qualify for the loan, then lock in ASAP. If you're a gambler at heart and would be agitated if you missed out on a small decline in rates, then play on. If it's new construction, however, you need to make sure your rate lock will last long enough to cover you in case the builder delivers your townhouse late.

Maryann Haggerty: That point about the timing for new construction is a good one. Construction can take longer than predicted, for unpredictable reasons. One big late-August storm--something that happens around here most years, come to think of it--can throw a construction schedule off by weeks, no matter how diligent the builder.

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Foggy Bottom: Hello, Ladies. I have two mortgages -- the first at 6.5 percent, the second at 8.4 percent. I plan on staying in my place for the foreseeable future. Should I be looking at refinancing?

Maryann Haggerty: Yes. If you have good credit and equity, odds are you can find a much better deal.

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Arlington, Va.: Looks like it's time for us to start thinking about buying. How do we start shopping around for mortgages without hurting our credit score? Does getting a pre-approval hurt credit too?

You said that lenders require PMI without a downpayment but Primerica tells me they don't. Would a high income ($180k +) and excellent credit scores (800 and 825, respectively) convince other lenders to forego the PMI?

Thanks.

Maryann Haggerty: Mortgage shopping won't hurt your credit score. Take a look at the Web site www.myfico.com for more explanation of the ins and outs.

The usual way to avoid PMI while also avoiding a downpayment is a piggyback or 80-20 mortgage, ie, first mortgage for 80% of value and second mortgage for 20%. The second is of course at a higher rate. The way to see whether a piggyback or PMI is the best bet is to crunch the numbers. The answer depends on interest rates, but it becomes obvious pretty quickly. (And if either of those mortgages is an ARM, take possible increases into account.)

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"I was advised to hold off on building a deck ...": It will drive prices down among the worst contractors, and even worse, the bubbas who call themselves contractors when they can't get any other job.

Good contractors are always in demand and will not have to lower their price to get work, they have waiting lists.

Maryann Haggerty: Thanks.

Folks: Are there any of you have have done any remodeling lately and would be willing to talk to a reporter for a story about the status of the market? Did contractors return your calls? If so, drop me an e-mail directly at haggertym@washpost.com.

Elizabeth Razzi: Hey, some Bubbas do good work! But, you're right, you can't hire just anybody. Every year or two there's a tragic story about a deck falling off a house. You need to work with someone who actually knows how to do the job, even if it's something seemingly simple, like a deck or patio.

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Maryann Haggerty: We're running low on time here.

However, we have plenty more real estate news, etc., for you this weekend. In the Saturday Real Estate section, one story looks at the growing demand for elaborate, spa-like baths. Another -- for a different perspective--looks at a "green" remodeling project that relied largely on scavenged materials. Plus, of course, zillions of great consumer tips, etc.,

And on Sunday, look inside the Sunday Business section for our expanded real estate coverage, featuring Elizabeth's "Local Addrees" column. And, again, more advice and info.

And have a lovely Mother's day weekend! (If you haven't sent flowers, Do It Now!)

Elizabeth Razzi: Have a great weekend!

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