With a current real estate market that's unpredictable, what's in store for would-be buyers or those thinking about selling? The Post's special feature, Property Values: The Market & You, helps forecast what to expect in the coming months.

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.

Haggerty is joined by Washington Post columnist Elizabeth Razzi. Razzi is the Local Address columnist for The Post's Sunday Real Estate section in Business. She's written about real estate and other personal finance topics for magazines and newspapers since the days of double-digit interest rates. She is also the author of two consumer-advice books, The Fearless Home Buyer (2006) and The Fearless Home Seller (2007).

Today, they'll discuss 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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Elizabeth Razzi: Hello, everyone! How unusual to be chatting with you on a Monday. I'm afraid it's going to feel like the weekend when we're finished.

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Maryann Haggerty: Thanks for joining us today. We'll try to tackle as many of your questions as possible.

I hope you saw our sections this Saturday and Sunday, in print or on the Web. (There's enough of you here so that I'm pretty sure you did see them...)

A couple things before we chat:

--First, thanks to all of you who volunteered to share your stories of home buying and selling for the Sunday section. (The folks who were featured as "Valuable Experience.") Most of you are regulars in these chats. I'm sorry I didn't get a chance to speak with you personally!

--Next, a sad thing to share. Last week, Bob Bruss, the nationally syndicated Real Estate Mailbag columnist whose work has appeared in The Post for more than 30 years, died of complications from cancer. He was 67. He was a source of real estate information for so many of us for so long--and a nice guy, too. I'll miss him, and my weekly Real Estate sections will be so different without him.

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Washington, D.C.: I have a question about the tax credit for new D.C. residents --

specifically, does it still exist? The last I had seen, the credit was set to expire at the end of 2006. Has Congress renewed the provision, and is it likely to do so as part of any relief package related to the sub-prime market?

Maryann Haggerty: To the best of my knowledge, it still exists. There have been times over the years when it has gotten caught up in Hill politics and lapsed for a while, but has then been reinstated retroactively.

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Silver Spring, Md.: It was heart-wrenching to read The Washington Post story about innocent people getting killed when criminals set up business in empty houses left after foreclosures swept through Cleveland, Ohio. Have there been any new developments and have you heard of anything similar anywhere in our region?

Elizabeth Razzi: Thankfully, no, I haven't. The real estate market in Ohio and Michigan is drastically different from ours. Their economy has been suffering--and that's the only word to describe it--because of job losses. Predatory lending has been a huge problem in those areas as well. By contrast, the Washington region has one of the strongest employment rates in the nation.

Maryann Haggerty: Yes, it was heart-wrenching. When scam artists or predators target in on a neighborhood--or an entire city, in the case of Cleveland--it can disrupt that area badly.

What could have been done to prevent what happened in Cleveland?

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Arlington, Va.: I like Arlington a lot, but it doesn't seem like there are a lot of affordable properties in metro accessible areas. Is it worth it to buy in Columbia Heights instead?

Maryann Haggerty: They're very different places. Do you like Columbia Heights, too?

Elizabeth Razzi: I agree. I like apples...and oranges. Can't tell you which is worth more.

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Arlington, Va.: Our agent told us, after our open house recently, that the comments were positive, including on the price, but she's concerned that there just aren't a lot of buyers out looking for a "starter home." Are first-time buyers really waiting out the market in droves?

Elizabeth Razzi: I'm a little skeptical about that. First-time buyers are definitely looking for an affordable starter home. Trouble is, they can be hard to find in close-in suburbs like Arlington. In such places you often find starter homes at move-up prices.

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Harrisonburg Va.: In our Shenandoah Valley area (especially my area in Harrisonburg), we have noticed in the last couple of years that many folks are selling their condos for high prices and then buying new single family homes in our area with cash. Thus our real estate prices have gone through the roof but our wages have not kept up with this "house inflation". Any comments?

Elizabeth Razzi: It looks like newcomers are buying homes in your area, and bringing money that they had earned elsewhere.

Maryann Haggerty: The world is a changing and dynamic place. Is it better to have "new folks" moving in, with all the good and bad that implies? Or is it better to have a declining population, with empty houses, etc.?

I'm not sure there's any way to just freeze time and make sure neither one of those happens.

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Washington, D.C.: I am confused by the argument that I should buy now if I plan to stay for a while. I grew up in Northern Virginia, am currently working in a stable, professional job, have a six-digit down payment saved up, and plan to live in the D.C. area for the rest of my working life (I'm only in my mid-twenties).

According to columns in Mega Real Estate I should buy now. But how could that make sense if prices drop 5 or even 0 percent? And some people are implying even higher price drops. Why shouldn't I just wait a year or two?

Elizabeth Razzi: The key word in your question is "if." If prices go down...and if they go down by that magnitude...and if they don't increase sooner than you expect. Wait a year or two if you like, and if you find a rental that you find comfortable. But it's a very good bet that you won't be able to time the market that accurately. Other uncertainties are what will happen with mortgage interest rates. If you want selection, buy now. If you want maximum flexibility, rent.

Maryann Haggerty: I just can't get my head into thinking of a home purchase as solely a financial thing. I can't. If prices in a year drop 5 percent--and I'm not selling--what's the big deal? Did I buy the lifestyle I wanted for that year?

And if prices go up 20 percent during that year--and they did more than that in some recent years--I can grumble about my higher tax bill.

But on a more long-term basis, I also have to say that increases in prices have been more the rule over the last 30 years than decreases. If only I had bought when I lived on South Beach in 1980, I might be a zillionaire now. Of course, at that time, I could barely afford the $160 a month that my un-airconditioned apartment cost me.

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Washington, D.C.: What do you know about buying a house off of ebay? In some ways it seems very similar to a traditional for-sale-by-owner sale. But what are the risks?

Elizabeth Razzi: Well, how much is the seller charging for shipping? haha... Seriously, the biggest risk would be buying it sight-unseen. If you do pursue an eBay home purchase, make sure you have your own lawyer prepare a contract.

Maryann Haggerty: I would think you need to treat it, as you say, like a traditional FSBO. Go, see it, look at legally required disclosures, hire your own lawyer and make sure that your contract includes a home inspection contingency.

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Falls Church, Va.: I'm looking for a home in near Tysons Corner or Great Falls, and as I search for a place to live, I can't help but ask myself: how can all these homes be so expensive when they are not even made presentable for potential buyers? It seems as though many of these homes have not even been cleaned from the inside at all. Yet when we go to look at houses, sellers expect that we fork over unbelievable amounts of money for their property. I understand that there are other factors in home value, but shouldn't someone feel the need to at least make the home look nice prior to putting it on the market? And if the house is really filthy, shouldn't that depreciate its value?

Elizabeth Razzi: I have often wondered that, myself. A pail and a scrub brush are two valuable sales tools. If the structure of the house is good, though, and the neighborhood is good, you should see dollars in that dirt. Bid low.

Maryann Haggerty: Additionally, if someone can't even get a house cleaned up to sell, I would keep an eye peeled for other signs of neglect.

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Fairfax, Va.: What do you think about comparing the tax records for a home versus the asking price? I'm seeing a lot of homes on the market with tax assessed values at around $850,000, but an asking price of $1.1 million or more. I know that there's a difference between tax value and market value, but in this market, you would think these two values would be closer, meaning the list price should be much lower.

Elizabeth Razzi: Or the taxes should be much higher. There could be reasons why the tax value is lower than market value. Maybe the owners did a lot of upgrades that don't require a building permit, for example. Upgraded paint, appliances, furnace, etc., won't show up on the tax assessor's radar screen. Also, tax assessments tend to lag values because when an assessment is too high, owners appeal to have it lowered. If the assessment is too low, owners don't tend to complain.

Maryann Haggerty: Tax assessments are simply not relevant to sales prices, even in those jurisdictions where the assessors do a good job. People simply do not appeal a too-low assessment.

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Vienna, Va.: How long do you think you should wait to buy a home before the market picks up again?

Maryann Haggerty: At the risk of sounding like a broken record: It all depends on your life circumstances. Market timing is tough, both on the way up and on the way down.

Two or three years ago in these chats, all the questions were about whether buyers HAD to jump into the market immediately or otherwise risk seeing any chance of homeownership vanish. My answer was the same then--it all depends on your own life.

Elizabeth Razzi: If you wait long enough, you'll find yourself surrounded by other buyers, each of whom decided the market has picked up. The herd may make you feel secure in your decision to buy--but it won't get you any bargains. Maryann is right; the only way to time it is according to your own housing needs.

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washingtonpost.com: Robert Bruss; 'Real Estate Mailbag' Columnist, (Post, Sept. 28)

Maryann Haggerty: This was Bob Bruss's obituary.

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Vienna, Va. I recently got married and we have two houses between us. At one point we were sure we would sell both houses and buy another, but after looking around -- even with the market slowdown -- it doesn't seem as though we can get the houses we want even with the equity in our homes (which is also subject to market pressures). Well, we could get the house the want, but our ultimate goal is to buy a house we can raise a family in with a monthly mortgage payment that can be paid with one salary. And that is what we can't really do right now. So now the plan is to just make do with one of the houses we have. To that end, we are currently paying two mortgages and living in one house. I don't think selling right now is a good idea, but not sure what do in the short-term with the empty property. I consulted with a management company and they said they didn't handle rentals for less than a year. I'm afraid to go the Craigslist route. Any suggestions?

Maryann Haggerty: You can try renting it out on your own, but a rental for less than a year is indeed tough. After all, people usually do want a lease. So consider being a landlord for a year, even if that robs you off some sales market flexibility.

That said, maybe you can find a short-term rental through less formal channels. Any visiting professors at a nearby university who need a nine-month rental?

If that fails, then you'll have to leave the house vacant. If you decide to do that, shut it down the way you would a seasonal rental--water turned off, etc. But do keep an eye on it anyway. Your old neighbors will not appreciate it if you let the landscaping deteriorate or neighborhood kids start breaking in and hanging out.

Elizabeth Razzi: A year really isn't all that long. Why not just hunker down in your current home for a year, lease the other out (keeping in mind there's a lot on the rental market these days) and use the time to scout new neighborhoods thoroughly. One idea: Maybe you can get that house sold by offering a rent-with-option-to-buy deal.

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Arlington, Va.: I bought a house last year and signed up for mortgage with a fixed interest only rate that switches to an adjustable rate mortgage after five years. I currently pay down principal on the note even though it's not required and would have no problems paying a fixed mortgage. Is now a good time to refinance into a 30-year fixed given the drop in interest rates?

Thanks

Elizabeth Razzi: It depends. If you're planning to move within the next couple of years, don't refinance at all. Why incur the costs? If your mortgage is less than $417,000, interest rates are rather low at the moment. Not so much for bigger mortgages, so if your mortgage is greater than $417,000 (a "jumbo" mortgage), it could pay to wait for those rates to come down a bit. Also, before you refinance, check your loan documents to see how high the rate might go when it adjusts. If there are decent interest-rate caps there, you might not have to refinance.

Maryann Haggerty: Flip side: If you're settling in, with no plans to move, you may want to price out refis, if that makes you feel more secure. Look at costs to refi as well as how much the loan adds to your monthly payment.

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Vienna, Va.: About a month ago, I signed a contract to build a new house and gave the builder's sales representative a check with 5 percent earnest money. Less then 48 hours later, I changed my mind and asked in writing to have the contract canceled. I also called the sales representative to return the check and was told that it would be returned to me after a sales meeting the next day.

That was two weeks ago. I've left a few messages and no one has returned my call. No money was ever drawn from my checking account, but I closed it nevertheless. I'm concerned that the builder wants to cause some trouble. The contract clearly stated that I had some time (I don't remember exactly how much, but clearly over 48 hours) to go back on a contract once it was signed.

What are my options? I want my check back.

Thanks.

Elizabeth Razzi: First thing, dig out that contract and find out exactly what your right to cancel was. I think I would have put a stop-payment on that check instead of closing the account, because now you don't know if they have been trying to cash it. I would send the builder a signed, dated, letter by registered mail stating that you do not intend to buy the house and asking them to return your check. Send it to the formal address written somewhere on your contract.

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Chevy Chase, Md.: Hi, enjoyed the mega-real estate section this weekend. I live in one of those "still hot" close-in neighborhoods. Do you sense any price decreases in those types of neighborhoods yet, or is it just a flattening?

Elizabeth Razzi: Thanks very much! Looking at MRIS stats for August, the median price in Chevy Chase was 17 percent higher than a year ago. But the stat that I find troubling is that about twice as many new listings came on the market in August as the number of deals that closed or went under contract.

Maryann Haggerty: We just aren't seeing all that many decreases in those neighborhoods. (Which tend to be the expensive ones with great schools in Nortwest/Montco/maybe Fairfax.) But even a slowing of the appreciation has meant breathing room for buyers.

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Arlington, Va.: My husband and I are thinking of buying a home for the first time. Is there a general income-to-home price ratio we should keep in mind so that we can comfortably buy a home yet not go bankrupt in the process? For instance, if we make $100,000, can we look at $500,000 homes or should we stay in the $200,000 range? Thanks!!

Maryann Haggerty: Take a look at the story we ran yesterday about determining how much house you can afford. (Link to come.)

Essentially, with all the mortgage payment calculators out there, it's very easy to figure out what you can afford. There's no need for rules such as X times your income. (Those rules really only made sense mathematically when interest rates never changed.)

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washingtonpost.com: How to Figure Out How Much You Can Afford, (Post, Sept. 30)

Maryann Haggerty: Here's that link

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Bowie, Md.: If a non-contingent buyer has his eyes on a house with an asking price of $420,000, and there is no buyer's agent, just one for the listing (meaning less commission being paid by both), and the buyer pre-qualifies for a full mortgage with no down payment but needs closing costs paid, is there a rule of thumb for how much to offer?

Elizabeth Razzi: Don't assume there is less real estate commission being paid in this deal. I assume you're the buyer. Because you're working without a buyer's agent, that simply means the seller's agent gets to keep the whole commission. Honestly, you probably would benefit from the help of a buyer's agent, given your search for "rules of thumb." There is only one way to figure out how much to offer, and that is to compare the prices paid RECENTLY for similar properties in that neighborhood along with the prices for other homes that are on the market now, competing for your bid. Good luck.

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Atlanta, Ga.: I am moving to Sweden but can't sell my house. Any other ideas what I can do? It would be very hard to manage it as a rental property from 4,600 miles away!

Elizabeth Razzi: Sell or rent are pretty much your choices. An Atlanta-based real estate company should be able to manage the property for you, for a fee, of course. Check references, preferably among landlords who have moved far away.

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Washington, D.C.: Do you think the recent housing turmoil will affect prices on condos and row homes on Capitol Hill? Thanks.

Maryann Haggerty: Well, as in most of the rest of the region, it has already changed the market. There's a lot of inventory and not a lot of bidding wars.

Will "the recent housing turmoil" bring prices down to where they were 5 years ago? I doubt it, barring a catastrophe.

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Harrisburg Pa.: I just bought a condo on 12th and Massachusetts in NW, D.C. for my son, which ends up costing about what room and board did last year with the tax savings. And I'm planning on using it as a pied-a-terre when he graduates and moves on. I guess I look at it as a long term investment (15 years until I'd probably sell). Any need for me to worry about falling prices with that long an outlook?

Elizabeth Razzi: Given that long an outlook, you may have more to worry about due to global climate change than due to the changing real estate market. Seriously, when you're looking back 15 years from now, you will probably marvel at the way-back-when price of your pied-a-terre.

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Washington, D.C.: In renovating a kitchen or bathroom in a condo, does the extra expense associated with eco-friendly materials and appliances bear out in the resale price of the unit?

Maryann Haggerty: At this point, it appears buyers are not willing to automatically pay extra for ecofriendly.

Elizabeth Razzi: Even in a strong market, I don't think you could expect much of a premium because of eco-friendly choices. But you could still find satisfaction from doing your bit for the planet.

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Rockville, Md.: How do you thing the proposed ICC in Montgomery county will affect prices in North Potomac/Gaithersburg area. Thanks for you opinions.

Maryann Haggerty: I think it depends on how close an individual property is to the road. (And, of course, whether that road ever exists.) If it's going through your land, you're already working through eminent domain issues. If you'll be right at an exit, expect the commercial developers to look for ways to buy you out. If you're within sight/sound of it, and don't have noise barriers, that's a minus. But if everything works out for the best, and the road is far enough way so you can't smell it but close enough so it eases the commute, well, that could be a plus.

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Washington, D.C. : I'm interested in this a new home in Falls Church, but the seller (a builder) is insistent on staying firm in his asking price, which is about $200,000 above what a similar model sold for in 2005. What do you think?

Elizabeth Razzi: Maybe the builder likes owning that house more than you would. Has anything comparable sold recently for that price?

Maryann Haggerty: If the house is that overpriced, I would politely make sure he has my contact info in case he changes his mind, then I would shift my search elsewhere.

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Washington D.C.: I've got a question about the article over the weekend with the theory that first-time buyers would be better off renting than buying right now. I don't understand why. Right now I'm renting but looking to buy probably early next year. Even if prices drop five percent or so over the next few years, aren't I better off putting my money into a home rather than into my landlord's pocket?

Elizabeth Razzi: I know I didn't say that this weekend. There are many different opinions out there, and you could drive yourself crazy listening to all of us opinionators. My best guidance is to make your decision according to your own needs and plans. If you intend to stay in a home for at least three years (five is better) and can afford the payment now, buying is a reasonable thing to do. If you don't know where you want to live in two or three years, or you simply want the freedom to move whenever the lease is up, then rent.

Maryann Haggerty: The article you're referring to (let's see if we can find the link) essentially said that you shouldn't jump into buying unless you plan to make a long-term commitment.

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Arlington, Va.: The Condo Market in Arlington seems to be seriously flooded. Does that mean the prices will soon become more reasonable?

Elizabeth Razzi: Many of those condos have been pulled off the for-sale market, and even more are likely to be switched to rentals, according to analysts at Delta Associates. That would limit the price declines.

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Washington, D.C.: I'm interested in a transaction where I sell my existing condo and buy another one, all using the same realtor. What would you say is the going commission rate for such a deal? Thanks!

Elizabeth Razzi: It's as little as you're able to negotiate.

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Arlington, Va.: I have a small condo worth about $350,000 and about $45,000 remaining on the mortgage. I don't want to live here the rest of my life but am thinking I could keep it as a rental as it's in a good neighborhood. Does it make sense to take out the equity and buy another house in the area for about $460,000 and keep this as a rental? Rent would cover the mortgage and taxes with $200 clearance.

Thank you.

Maryann Haggerty: This is mostly a do-the-numbers thing.

If you "take out the equity," you do so with a mortgage. (Unfortunately, they won't just give us that equity interest-free.) What is the cost on that mortgage vs. the cost of a mortgage directly on a new house?

It sounds like the condo would make an economically viable rental for you, as long as you're willing to be a landlord.

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Springfield, Va.: How important is staging a home with furniture for selling? I'd rather just move all of my stuff to my new house and leave the house empty (which will also make it easier to replace the carpets, paint, etc.). What do you think?

Elizabeth Razzi: I prefer to look at for-sale houses when they're empty, but people have convinced me that I'm unusual in that respect (and a few others...) The trouble is, many buyers seem to lack imagination. They can't envision themselves curled up in a cozy chair by the fireplace, reading, unless the chair and ottoman are there--and a good paperback left just-so on the table, too. Also, sometimes a vacant house implies that there was a divorce or some other unhappy occasion for the vacancy--and that the owners might be a tad desperate to sell.

Maryann Haggerty: I must say that "staging" always strikes me as a little fake-y. (And the whole empty house look is a plus for me, as it is for Elizabeth.) I wouldn't pay extra for it. However, many people swear by it. I suspect it might also have something to do with the house itself--how will it show best? I would add that question to my list of questions for possible agents.

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Elizabeth Razzi: Thanks very much for all the fine questions. Have a great week, and good luck with all those big buying, selling and borrowing decisions.

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washingtonpost.com: In Cool-Down, Would-Be Owners Reconsider, (Post, Sept. 30)

Maryann Haggerty: Here's that link I referred to...

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Maryann Haggerty: Thanks for joining us, folks. If you haven't taken the time to poke through the Mega Real Estate sections this past weekend, I invite you to do so. If they're not in your recycling bin, they're here on line (www.washingtonpost.com/realestate). There are some great chats scheduled for the rest of the week, too. Take a look at those!

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