Real Estate Live

Maryann Haggerty and Elizabeth Razzi
Washington Post Real Estate editor and columnist
Friday, September 5, 2008; 1:00 PM

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

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.

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's Real Estate section.

Submit a question now or during the discussion.

The discussion follows.


Elizabeth Razzi: Hello, everyone! Lots of letters to start with, which is great. We often get some really good ones late in the chat, when there's not enough time to get to them. So... speak up early... and often!


Maryann Haggerty: Thanks for joining us. Let's talk real estate!


Falls Church, Va.: Hello, do you or any chatters have any experience with putting homes up for auction? We're looking for a new home, but with no urgency. Since we'll almost certainly find a new home before putting our townhouse on the market, my husband has raised the possibility of auctioning of our house. His thoughts are that the auction attracts multiple interested buyers in one place and gets the house sold quickly. Any words of wisdom on this non-traditional approach? What should we consider and/or watch out for?

Elizabeth Razzi: The big thing to watch out for, especially these days, is that "auction" means "foreclosure" to most buyers. They're going to expect a low-low price.

Maryann Haggerty: I've long been skeptical about home auctions -- auctioneers promise both that the buyer will get a bargain and that the seller will realize greater-than-otherwise profit. It's kinda tough to have both.

That said, there are places where auction is the dominant home sale mode -- Australia is one of them. On Sunday afternoons in Sydney, people go to watch the house auctions. It's like wandering thorugh open houses when you don't plan to buy. Each week, the papers print statistics about what percentage of auctioned houses clear the asking price.


Falls Church, Va.: I posted last week in regards to buying an investment property which was supposed to be our dream vacation home but found out it did not perk. Your responses were true to the point that it's a learned experience of buying property without the guarantee that it perked and now we only have a piece of property that is a campground instead. Well, we'll still have to continue paying taxes on this property -- not much (approx. $75/year) but we see that no one will want to buy and the value will decease. My question is: Can this be something we can list as a tax write-off? I know that you're not tax experts but hope that you have encountered these types of situations. Thanks.

Elizabeth Razzi: Definitely not a lawyer talking here, but I believe investment-property loss could be written off against other investment income. You cannot deduct losses on your principal residence, that's for sure. Perhaps you could give the land to a neighbor, to get out from under the tax burden?

Maryann Haggerty: Definitely talk with an accountant. You need to realize the loss to write it off.


Confused: How is it that we are able to have "active adult" communities -- age restricted?

As far as I know, you can't have restricted communities on any other basis (race, religion, gender, etc.). Thanks.

Elizabeth Razzi: We're able to have them because Congress said so, back in 1988. When the law allowing them was first passed, age-restricted communities were only to be allowed if they had special services for seniors, but developers opposed that and the requirements were dropped. Communities welcome these developments because they don't bring the expense of more school-aged kids. I know a lot of residents love 'em, but they're not for me. I think it's healthier for the community -- and for the "active adult" -- to have age-mixed neighborhoods.


Pittsburgh, Pa.: I recently visited the area looking at housing to relocate to MD/DC area. The prices have not declined much. Would it be better to rent first and then consider a house purchase later, when house prices are lower?

Elizabeth Razzi: Moving from Pittsburgh to the DC area is always a tough one. You get so much less for the dollar in this area. I wouldn't count on prices going low enough to make up for that difference between the two markets. But I'd choose renting for a year, anyway, just so I could learn the market better and figure out where I really wanted to live.

Maryann Haggerty: Oh, ouch. What look like lower prices from our perspective still look ridiculously inflated from yours.

I vote for renting, too -- but again, not because of anything that prices might or might not do, but because you should try the area out first.


Waldorf, Md.: Regarding "What is a bedroom?" Beyond the definitions, buyers and sellers should be aware that homes on septic systems may have more "bedrooms" than the septic system is approved for. In Maryland, anyway, a septic system is approved for a certain number of bedrooms (not bathrooms). It is not necessarily illegal to have more bedrooms than that approved number, but that fact should be a matter of for disclosure and due diligence.

Maryann Haggerty: This refers to some discussion a couple weeks ago about how to define a bedroom.


Fairfax Station, Va.: Hi, I have some equity on my properties, and I am thinking of using most of it to purchase a few foreclosed properties in Northern Virginia. I have found a few properties and they all went above what the banks were asking for. Would it be wise for me to jump in or wait? Thanks.

Elizabeth Razzi: Well, since you're thinking of using your home equity as the foundation of your expanding empire, (a traditional technique for investing in real estate, btw) I don't see the logic of waiting for values to fall. If values fall further on your purchases, it's also likely to shrink your equity.

Maryann Haggerty: The fact that those properties went for more than the banks were asking proves that there's some competition for those investment properties -- and that at least some other investors think the market in those neighborhoods is at a bottom.

But a bigger thing to check: Can you even get at that equity now, at a reasonable cost? You may want to ask some lenders. Home equity loans are tough right now.


Follow Your Heart or Your Pocketbook: Basically, my husband and I WANT to buy another home. Our current two-year-old home that we bought new is shockingly average to below average in quality. My husband is making his typical wonderful improvements but we are only doing it to break even. We live in a small town with a huge military base nearby so the real estate situation is crazy since those people are so transient. We also dislike our neighbors. This is usually a problem when you underbuy like we tend to do. I hate to have lots of house debt so we end up with trashy neighbors.

We dont need to buy. How do you know when to take the plunge? I don't want to regret going with my heart on this.

Maryann Haggerty: We have a story in tomorrow's Real Estate section about how to know if you're ready to buy. (The link will be up this evening.)

But you really sound like you know what you want to do. So I'll validate your decision: Move. Life is too short to hate where you live.

Elizabeth Razzi: But, seriously, less expensive does not necessarily equal trashy neighbors. You could easily end up disliking neighbors in a more expensive neighborhood.


Rockville: Is the current RE environment a particularly bad one to try to move just for the sake of upgrading? I mean, is there a such large difference between what you can really expect to sell for, and what the sellers expect to get, that you'd lose a lot of "spread" simply based on expectations?

Elizabeth Razzi: Well, no, it's not particularly bad. (And there's nothing wrong with wanting to upgrade...some folks would have you think you're just a self-indulgent consumer who's heedless of the value of a buck.)If you sell your home for less, you're likely to also pay less on your upgraded home. The trick is getting that first home sold promptly so you can move on.

Maryann Haggerty: If you price your home realistically, there's no "spread" to worry about.


Dulles, Va.: I recently purchased a small investment rowhouse in Georgetown. It is renting well with a good tenant. My question relates to expanding this (very) small home in Georgetown. What are the hurdles to getting approval in this highly architecturally controlled neighborhood? What committees or boards do I need to satisfy? What advisors should I get to accomplish such an expansion?

Elizabeth Razzi: You have a multitude of hoops to jump through. The Citizens Association of Georgetown publishes a brochure on the topic, which you can find here

Maryann Haggerty: Start being nice to your neighbors NOW. They have a voice in what you do -- and most of them are not afraid to speak up.

When you talk to architects/contractors, you want someone who is intimately familiar with the process -- preferably has gone through it in Georgetown. Among other things, they can tell you if your project is one where you will need a lawyer, too.


Washington, D.C.: A lot has been said about D.C. and its recession-proof real estate. How valid is this statment and further, affordable housing seems to be a big topic in D.C. and used repeatedly by politicians running for office especially this year at the city council elections. Looking at SE and NE D.C., there seems to be an abundance of affordable housing, both condos and apartments. Can you please give us an overview of D.C. housing now, what products are moving, and how you see the environment a year from now in our D.C. region (especially in demand vs. supply)? Thank you in advance.

Elizabeth Razzi: Recession-proof? Have you been to Prince George's, Loudoun or Prince William counties lately? It's true that government employment--and all the related businesses--help stabilize the Washington area. But no place is truly recession-proof. As for the parts of the District where prices are the very lowest, there are unfortunate reasons for that. They tend to be the areas where crime rates are highest and schools are struggling. If someone can manage to fix crime and schools, home prices in those neighborhoods would soar.

Maryann Haggerty: Yeah, I think it has been a LOOONG time since anyone actually believed this area was recession proof.

Affordable housing is inded a major subject here -- because prices remain some of the highest in the nation. In the District in particular, there is a concern that the middle class has increasingly been priced out. The close-in suburbs also have that same issue.

As far as the overview you ask for: That's a pretty broad question. What's moving are the places that are well-priced for their neighborhoods. But that varies immensely from place to place. For instance, in July, average days on the market for a place in DC was 74, for Fairfax County it was 94, in Prince George's, it was 127.

And as I say all the time, I don;t have a crystal ball, so I can't make predictions.


Clarendon, Va.: "less expensive does not necessarily equal trashy neighbors."

Yes it does. That's why I've opposed any project that promises to devote units to "workforce" housing. The last thing I need is people like that contaminating my neighborhood and hurting my home's value.

Elizabeth Razzi: I'll counter your "does too!" with a "does not!"

Maryann Haggerty: Are you serious?

You might try saying that to a nurse the next time you're in the hospital, or to a teacher when you drop your kids off at school. Unless you have the servants do that.


Georgetown, D.C.: For Dulles: You won't be adding on to your rowhouse. Just understand that now.

Elizabeth Razzi: Not sure if this one sounds like guidance or a threat, but here you go...

Maryann Haggerty: I suspect it might actually be experience speaking.

(But indeed it is possible. My old boss in fact put an addition on her house in Georgetown. But the approval process took maybe two years, maybe more. And I'm pretty sure she baked cookies for her neighbors a couple of times.)


Severna Park, Md.: I've just found out that I'm being transferred to a new location. I bought my house in 2006 and my company does not have any kind of house-buying program. I read that Anne Arundel home prices have been relatively stable, but I'm still worried that I'll lose a lot of money if I sell now. Are there any bright spots, or any advice that you might have? Can I take a tax deduction if I take a loss on my house, or get credit toward an FHA loan or something? Should I try to keep the house and rent it out as an absentee? What would you do?

Elizabeth Razzi: Well, first thing I'd do is take a very deep breath and start collecting hard information. Talk to a couple of local real estate agents, and check out other properties available for rent and get a good estimate of how much rent you could take in. Discount that by 10-15 percent to allow for vacancies and other expenses. Can you keep up with mortgage payments (and rent on your new location)with that kind of cash flow? And while you're at it, go through the same process to estimate what you might net from a sale. cannot take a tax deduction for loss on a sale; no FHA credit or anything like that. Sorry.


If property won't perk: Research other disposal options besides drainage field. There is pump and haul; and further out there, anaerobic systems like clivis multrum.

Elizabeth Razzi: Good point. But before you invest a whole lot of time and money into that search, see what the local zoning folks have to say about it. If they don't approve... it doesn't matter what you find.

Maryann Haggerty: Yes, some interesting ideas, but you really do have to decide whether they're worth the extra expense and hassle, or whether you just want to cut your losses up front.


Rockville, Md.: Any advice on how to go about finding movers for a local move?

Maryann Haggerty: Ask your friends and neighbors for recommendations. That remains the very best source for these kinds of things.

If you insist on using some of the (many) Internet-service-rating options, fine. But at least ask the movers you talk with to give you real-world references, and follow up on them.

Then at least check out the Better Business Bureau to see if the folks that you're considering have a bad rep. But most local movers are too small to show up on the radar, I suspect.

Elizabeth Razzi: I will very strenuously discourage you from using internet-based referrals. I've written about them in the past, and they've been the starting point for some very serious frauds. Not all...certainly. But enough. Even if the mover is only driving your stuff around the block, keep in mind that you are allowing someone to oad ALL your stuff on a truck and to drive off. In the worst situations, movers have demanded a lot of cash (and I mean dollar bills) at the doorstep to the new home before they'll relinquish the goods. That's the nightmare scenario; doesn't always happen of course. But reputation is EVERYTHING in this business. Talk to multiple satisfied consumers. Get recommendations from real people.


20036: I agree with the experts. Wow... reduced lunches = trashiness? You chatters are so out of touch...

Elizabeth Razzi: Another voice heard..


Fairfax, Va.: Hello. With the new lending law in place soon, developers/banks/other for-profit organizations will no longer be allowed to pay the 3 percent minimum for FHA loans, correct? Do you think this will limit the buyer pool more and cause prices to go down further? Or do you think it won't make much of a difference?

Maryann Haggerty: Right, after Oct. 1, seller-financed downpayment assistance programs are gone. (Tho some of the organizations that arrange such loans are lobbying hard to have them reinstated.)Folks on one side are saying this is the end of the world; folks on the other are saying it won't make much difference and in fact will help the housing market. We're working on a story that I hope will answer your question with some actual facts. Look for it sometime next week. Until I see some of those facts, I'd just be guessing.


Herndon, Va.: Experts: My wife and I will be selling our 25-year-old home (on the Reston/Herndon border) in the next couple of years. We're going ahead now with refurbishing the "master" bathroom and the "second" bathroom. I know there's no real rule of thumb as to how many $$ you get back at sales time for improvements, but where do bathrooms rank on the importance list?

Maryann Haggerty: Pretty high, right after kitchens.

Elizabeth Razzi: Remodeling Magazine, a trade publication, publishes an annual survey on cost/value relationship to lots of home improvements. In this area, bathroom remodels recover about 78 percent of the investment upon resale, Remodeling said. You can find more info here


Ashburn, Va.: How is the townhouse market like in this area? I'm willing to buy a new unit.

Elizabeth Razzi: It's plentiful. Get out there and look around!

Maryann Haggerty: Some townhouse neighborhoods have been particularly hard hit by the mortgage crisis, so you do want to have a good feel for how many foreclosures, etc., there are in a neighborhood before you buy.


For movers: I used Ron's movers twice, I believe they are $180/hour with a minimum of 4 hours.

Also go on to get recommendations.

Elizabeth Razzi: I've never heard of these guys, but here's one recommendation, possibly from Ron himself....


Washington, D.C.: So we're finally looking for our first house, with a pretty small budget -- enough to buy a house, but not a big or grand one by any means. It's tough to find anything in our price range in a safe neighborhood. My question is how long we should give ourselves to look before giving up and going back to renting for another year? (We are already pre-approved for our mortgage.) We've been on the market about a month, and so far we've seen two places we like, but haven't been able to put in an offer in both cases because of a variety of circumstances (owner died, listing agent not returning calls and list agent's office # is disconnected). How long does it take on average? Even in the down market, the pickings are kind of slim if you want to be in the metro area.

Elizabeth Razzi: A willing buyer not getting phone calls returned? You need to get an on-the-ball buyer's agent working on your side. A good one will help you cut through the clutter--or wave you away from listings that aren't seriously for sale. Keep in mind August is one of the worst months for finding homes in this area. It's so hot--and so many people are on vacation. You ought to find more listings coming on the market in September and October. And if you're not finding enough, broaden your search to more neighborhoods.

Maryann Haggerty: I don't think August counts at all.

Give yourself plenty of time before you give up -- at least several months. Yes, the emotional ups and downs can be tough, but you don't want to make things even tougher by putting unneeded time pressure on yourselves.


Arlington, Va.: I live in a condo that currently has community laundry. The condo association is now having a study done to install in-unit laundry. Question is, in general how much value can one estimate this would add to my unit if it can be done?

Elizabeth Razzi: I don't know, but a real estate agent who sells condos in your neighborhood might. I can say that I'd be way more likely to buy or rent a condo that had its own laundry unit than a shared facility. Community laundry rooms are just nightmares from a personal safety standpoint. In fact, one creepy, threatening experience comes to mind now. shudder.

Maryann Haggerty: In-unit laundry has pretty much become the standard. I can't put a dollar value on what it will add to your unit, but I can tell you that many buyers will automatically skip a unit with a laundry room unless it's really, really, really cheap.

If it's physically/legally possible, I'd put the washer/dryer in myself, no matter what the association decides.


Atlanta, Ga.: Hi there. I recently bought a house in Atlanta, and my boyfriend lives with me. He is in graduate school and helps me out with the mortgage by paying "rent." We don't have a formal lease, but he pays be $550 each month + 1/2 utilities. When I file my taxes next year, do I have to declare this as rental income? Thanks for taking my question!

Maryann Haggerty: Technically, I think you do, although I can't find a specific reference to that on a quick read of the IRS web site.

Elizabeth Razzi: You might get away with not reporting the income...not that I'm advocating it, mind you... BUT, if you were so unlucky to get a thorough audit by the IRS, they might have a few questions about that $550 deposit to your checking account on the first of every month. Maybe this is the year to go to H&R Block or someone like that to help with the tax return.


Washington, D.C.: Dear Maryann and Elizabeth,

My wife and I are beginning to seriously look at buying a home again now that prices have dipped. However, we're finding it difficult to determine if certain homes that require renovations (some minor stuff, some more significant) fit into our budget. Can you recommend a resource (such as a forum) that gives an indication of prices for various renovations and repairs, specific to the D.C. metro area, where we can get information from D.C. area homebuyers as to what they actually paid?

Maryann Haggerty: I don't know of such a forum, but would actually love to find one. Chatters?


At last!: My husband and I finally sold our 1950s ranch home in Chicago. It only took eleven months, multiple price drops, and many bottles of Tums. I think our Realtor is as relieved as we are.

Elizabeth Razzi: Congratulations!!!


Movers: Agree with Also try Angie's List. And see if Washingtonian has covered them recently.

Elizabeth Razzi: More advice, thanks...


Ashburn, Va.: The carpet in my townhome is 15 years old, and it's in decent condition, but it certainly isn't new. Would new carpeting be a requirement in order to sell in this market?

Elizabeth Razzi: You'd be surprised at how much new carpet would freshen the look. It will really boost your chances of selling for the best price. And how's the paint looking, by the way?

Maryann Haggerty: Townhouse, Ashburn? Yup, you need new carpet.

And to tell you the truth: After 15 years, that carpet is looking ratty, even if you always take your shoes off in the house.

Our eyes get used to what we live with. Crooked molding, dirty stove burners, that splotch on the wall. We don't see them anymore, but buyers focus right in on them.


Richmond, Va.: Explore suing the seller if there was even a hint that the lot was buildable. Was this in a development/subdivision? Lots are approved (meaning the county verified they perk) at the time of subdivision, notprior to buidling permit application. Are other lot owners also having trouble perking? Consider a class-action lawsuit for the misrepresentation.

Then, if you're still stuck with the lot, work with the county to allow pump and haul. If they say they don't allow it, ask for a conditional use (via the planning commission) to allow you a special exception, explaining you can't enjoy your land without pump and haul. There are ways. Developers know this, work the system, get special exceptions all the time. Laymen just walk away. Don't. Find a consultant (civil engineer) who knows the zoning process and get your investment back.

Maryann Haggerty: If I recall the original question, the lot cost around $4,000.

I'd walk. But I'm not as stubborn as you, obviously.

Elizabeth Razzi: Right -- you'd soon be throwing good money after bad. The real secret is not to get yourself stuck in a lousy situation like this. If you can't prove it perks and that the authorities will allow building, don't buy the land!


Recover about 78 percent of the investment upon resale: True. I hate how all the TV shows imply you'll make money off improvements. You'll get your dream house, and in your case MAKE A SALE. So that makes it worth it. Otherwise people might be bypassing your house for the renovated one and you never sell it.

Elizabeth Razzi: And keep in mind that return assumes you sell shortly after the remodeling. After 10 years... you have a 10-year-old bathroom, after all.


Alexandria, Va.: Halcyon House reminded me of those Renaissance dukes who would buy an entire block in a city to house their extended family and business. I'm glad we've got something like it in D.C.

Elizabeth Razzi: Link coming right up.

_______________________ Here's the link to last week's House Gossip article: Centuries of Drama at Halcyon House

Elizabeth Razzi: And here it is.


Safeneighborhood, D.C.: for the would-be buyers: make sure you know what you are talking about and not just going on impressions and rumors. I live on the Hill in a great neighborhood. Many of my friends would like to move here, but they can't afford it now. Back when I bought (in 2001), the neighborhood was no more "dangerous" than now, but people were wary and held out. (And, weirdly, the was a whole spate of violent crime right around my Woodley Parl apartment right before I moved, proving that "safe" is an elusive thing.)

Maryann Haggerty: Yup. The DC police department has a great web site that will let you map out crimes in any neighborhood. ( So do many other police departments. Facts can be very useful.

There are plenty of people who are irrationally prejudiced against certain neighborhoods, for whatever reason.


Washington, D.C. - repair advice: We've been struggling with the same question: how much will this cost to repair/upgrade if we bought house x? I've been relying on some internet searching, which has yielded ballpark estimates, but you have to keep in mind the source where you're finding the info (who put it up, and what are they selling?), as well as the fact that each situation will be unique, so what one person's reno costs will be quite different from another.

Maryann Haggerty: As a homeowner, it is my experience that the price quotes for any given job will vary wildly -- that's why you get multiple bids.


Alexandria, Va.: Clivus Multrum looks interesting. Has anyone ever installed one of their toilets?

Maryann Haggerty: I've seen them in some Park Service facilities, but never in a residence.


Arlington, Va.: Is there a Web site or a source where I can find ratings for local real estate agents? Thank you.

Maryann Haggerty: I've seen a couple that purport to do so, but when I've poked into how they rate, I've found wildly bad information.


Washington, D.C. - first house: I have to disagree with your assessment of our agent. I've been pleased so far, but what on earth can he do about it if the listing agent's phone goes straight to voicemail, his calls aren't returned, and the real estate office in which that listing agent works appears to now be closed (b/c the main line is disconnected)? The fact that the listing agent doesn't return our agents calls seems very fishy to me. We might, in fact, be dodging a bullet there.

Elizabeth Razzi: I didn't catch a mention that you were working with an agent already. Well, it sounds like you're trying to buy a non-listing offered by a non-existant agent. Don't waste time, even if it's a super-cheap foreclosure. There are lots of sellers out there dying to receive your offer. But if your agent continues to guide you to duds, I'd re-evaluate the relationship.


Alexandria, Va.: I like mixed-age communities because someday those kids are going to be your doctors ... to say nothing of possible organ donors!

Elizabeth Razzi: Ah,I guess that would be an argument to be careful about what chemicals you use on your lawn.


Rockville, Md.: We've heard a lot about the evil mortgage lenders lately and caveat emptor. How about a peice on how everyone shouldn't stick their head in the ground and hope their mortgage woes will just go away? People are scared to pick up the phone and seek help in fear of being taken advantage of. Many who face late payments, higher adjustable payments, and even foreclosure can still refinance into more appropriate loan products. What about a story on assistance rather than doom?

Elizabeth Razzi: They can refinance? Really? I'm not so sure about that. Actually that's what lenders often told them when they took out the in "don't worry, you'll refinance long before that loan resets." Many of them cannot refinance because their home's value is less than the outstanding debt, they didn't really have enough income to justify such a large loan in the first place, and lenders demand more down payment and higher credit ratings. But you're right, they still should pick up the phone and try to get a loan modification before all is lost.


Elizabeth Razzi: Time flies! This Sunday's column looks at the incentives -- and their sell-by dates -- available to buyers this fall. See you next time.


Maryann Haggerty: Oops. It's past 2 p.m.! We have to go. Sorry if we missed you.

Tomorrow's Real Estate section looks at some ways to decide if you're ready to buy. And on Sunday, Elizabeth looks at some of the things that first-time buyers need to take into account this fall.

And if you know a good way to find out renovation costs, let me know... It's


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