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Maryann Haggerty and Elizabeth Razzi
Washington Post Real Estate editor and columnist
Friday, June 12, 2009; 1:00 PM

Post Real Estate editor Maryann Haggerty and author Elizabeth Razzi discussed the local housing market -- from condos and investment properties to contracts and mortgages.

The transcript follows.

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Elizabeth Razzi: Hello, everyone! Maryann Haggerty is still on her amazing 29-day trip around the world. Today she is in Jordan, then heading westward. Post real estate reporter Dina ElBoghdady is scheduled to join us today, but she's tied up on a reporting trip to the wilds of Arlington. I hope she can join the conversation later. She's our expert on all things HUD and FHA. Let's get going.

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Arlington, Va.: My condo was a conversion from apartment to condo. Our board just learnt that for the last 3.5 years since the conversion went into effect, one bedroom owners were paying more in condo fees than the formula in the declaration allowed, while other unit holders were paying less. The board decided to correct the fees at the start of 2009, but take no other action. Are you aware of anything that can be done to help the one bedroom owners reclaim the extra money they paid? Thanks.

Elizabeth Razzi: You might want to ask your board to re-open that question. (Running for a seat on that board wouldn't be a bad idea, either.) Perhaps some form of compensation, even if it's short of the excess paid over 3.5 years, could be approved. Failing that, the overcharged condo owners might choose to file small-claims suits against the condo association. I'm not a lawyer, and I have no idea how effective that would be. But even the hassle would be costly for the board, and something you might want to avoid. Reparations of some sort could defuse the issue a bit.

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Anonymous: Good intel for a robber: And on Saturday, Hudson & Marshall of Texas, Inc. is offering 102 foreclosed homes in the Washington area at auction. Bidding starts at the Sheraton Premiere hotel in Tyson's Corner at 1 p.m. (though bidding is already under way online). Doors open at 11 a.m. It's a reserve auction, meaning homes won't sell unless bidding passes their minimums. Buyers need to have cash or a certified check for a $2,500 deposit on any property they buy, and a 5 percent buyer's premium will be added to the winning bid.

Elizabeth Razzi: Argues well for the certified check option, don't you think? That kind of cash/check requirement is pretty standard for auctions, so I didn't have any qualms about printing the amounts. And btw folks, that auction was LAST Saturday.

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Pasadena, Calif.: I bought a home in Potomac, Maryland a few years ago. I stayed in the home for a few weeks to take care of renovations. During my stay, I experienced powerful spiritual and supernatural occurrences inside the home and on the property. Later, I found out through a title search and newspaper articles that a prominent rabbi had lived and died in my home. In California, this death inside a home offered for sale would have to be disclosed. This death was not disclosed to me in connection with the Maryland home, and so I assume this disclosure was not required by Maryland law.

I am currently thinking about putting the home up for sale to ease my financial burden. What obligations do I have to disclose the death of the rabbi inside the home and the powerful spiritual/supernatural occurrences I experienced? The experiences were overwhelmingly positive and not the least bit scary. Nevertheless, do I have a legal or moral obligation to reveal these experiences to a potential buyer?

Elizabeth Razzi: How absolutely fascinating. Please send me an email at razzie@washpost.com. I'd love to know more. Now, to the question you raise, California has disclosure rules that are generally more strict than elsewhere. Around the Washington area, I don't think you need to disclose that--especially if it was not a crime scene. But if a buyer asks you whether you know of any deaths, etc., then you're obliged to answer. The moral obligation? That's a tougher call. My gut says no. Many folk would just dismiss you as a kook (not my opinion, btw. And it may be a non-issue for others. Gang, help us out here. What do you think?

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Eastern Maryland: How effective is refurbishing one's house(ie. full paint job, remodeling of bathroom or kitchen) in raising the sale value of one's home?

Elizabeth Razzi: It's almost a necessity if you want the house to sell at anything close to a fair price. It all depends on condition, of course. But dated or shabby paint is a must-fix. Kitchens and baths cost tens and tens of thousands of dollars to re-do completely. But a spruce-up is money well spent. And you will probably be better off replacing dumpy appliances that could turn people off.

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Washington, D.C.: This is not exactly a real estate question per se, but maybe you can lead me in the right direction. I am reviewing my renter's insurance coverage. I live in a studio apartment. How much coverage do I need if I have all the normal things (1 TV, 1 computer, etc.)?

Elizabeth Razzi: It sure is a real estate question. And good for you for thinking about this. Way too many renters don't realize they need coverage. Imagine Day One after a fire. What would it cost to replace your electronics, clothes (often overlooked!)books, furniture, etc. Then cover yourself for that much. Take a video camera around the apartment to document what you own, and store the file or tape outside of your apartment. An insurance agent can really help you figure out how much coverage to buy.

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Dupont Circle: I'm a first time buyer and I'm interested in purchasing a condo from a new development in D.C. Should I still use a real estate agent or is it unnecessary since its a new development from a large firm?

Elizabeth Razzi: Get somebody to help you with this transaction, especially because it's your first time. A real estate agent can help you arrange for a home inspection (even useful on new buildings) and guide you through the mortgage and closing processes. Btw, make sure you receive your condo documents in a timely manner and take the time to review them! Get someone to guide you through the condo's financial statement if that's not your area of expertise.

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Washington, D.C.: Hi, I own a Capitol Hill townhome that is currently rental property and in good shape. I'm planning to put it up for sale this summer and thought of doing some painting and other cosmetic improvements for potential buyers. However, I've gotten some advice that I'd be better off just listing the house "as is" and saving myself the labor. My question: Do the words "as is" in real estate ads scare off buyers? Would they assume it might be a dump? Thanks!

Elizabeth Razzi: "As-is" translates to "bid low" in buyers' minds. Yes, they will assume it's a dump. Especially in this market, buyers expect something close to perfection. They might not even look at your townhome if you don't spiff up.

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Washington, D.C.: We're looking right now for a house but the interest rates have gone crazy! What do you think the medium term prognosis (next 3-6 months) is for mortgage interest rates?

Elizabeth Razzi: I really don't know, but my gut doesn't think they're going to go back down. Neil Irwin has a good story on the topic in today's Post. We're trying to get you a link. The federal government was deliberately driving interest rates low, and it's not at all clear that it will continue doing so. Will they zoom up quickly? Don't know.

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Potomac, Md.: I know you don't have a crystal ball, but if you could go back to early 2006 and tell yourself one thing about the real estate market since then - what would you say?

Elizabeth Razzi: I would remind myself of something I know is true, but which sometimes takes discipline to remember: Never assume that current circumstances will be permanent.

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Leesburg, Va.: So, back in March of this year I submitted my application to have my loan modified (we're on time with all mortgage payments, but sadly at the expense of other bills). Our mortgage currently takes up 48% of our gross monthly salary. I've called Wells Fargo every week since mid April to get an update; have even updated my financials to show that we are making strides to budget more. I've been told that they are working on a solution. In a week or so it will be 3 months since we submitted our application. Do you have any sense how successful Wells Fargo is at completing modifications within their 30-90 day timeframe?

Elizabeth Razzi: I don't have any stats on how they're performing. But I have heard lots of anecdotes such as yours. Lenders have been swamped by loan mod requests--and then with a refinancing surge. It might help if you get a HUD-approved counselor to help get their attention. You can find one from the www.HUD.gov web site.

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www.washingtonpost.com: Spike in Interest Rates Could Choke Recovery (Post, Friday, June 12, 2009.)

Elizabeth Razzi: Here's Neil's story.

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Arlington, Va.: I'm seeing a major uptick in condo sales in Arlington along the orange line. I've recently lost several bidding wars for one bedrooms and one bedroom/dens. Properties seem to be only staying on the market 30 days or less. I'm not sure if this is how things are working further out in the suburbs but it is my very limited scope view.

Elizabeth Razzi: Thanks for the report from the field. I've been hearing about a lot of homes getting contracts in two weeks.

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Maryland: If a you ask, does a seller have to tell you if they know if anyone died (violent or not) in a house?

Elizabeth Razzi: To do otherwise is to lie about the house, correct?

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Ashburn, Va.: Can I refinance the second loan on my mortgage? I have a good rate on my first one but the second one for $50000 has a rate of 7.875 and I would either like to pay it off or refi..

Elizabeth Razzi: People do it all the time with home equity lines of credit. Ask your lender, and shop around with other lenders, too. However--you could find that you don't have enough equity now to qualify for the same amount of second lien.

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Feeling Pessimistic: I'm feeling pessimistic about the housing market and housing prices. I'd love to sell my condo and upgrade to 2 bdrm something but close in housing prices are still too high for my budget.

Elizabeth Razzi: Sorry 'bout that, Pessimistic. Close-in prices are high. That's just the way it is here in the nation's capital. We wouldn't have so many folk making giant commutes if close-in housing were affordable.

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Elizabeth Razzi: Hey, to the guy who forwarded the Arlington video -- I can't wait to see it, but hesitate to post here without viewing it myself first. Anyone else want to comment about it?

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Anonymous: I live in Australia. Am I able to refinance with a U.S. bank/finance Co? And does the U.S. have reverse mortgages for those over 50 yrs but under 60 years of age?

Elizabeth Razzi: Oh, my. G'day! American banks want to lend on American properties. Foreclosing on a place down under would be just so much more difficult. Seriously -- lenders tend to stick within their own borders, where they know the laws and the procedures.

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Re: As is and renter's insurance: I was convinced to buy renter's insurance after the two most low-key, laid-back slacker friends of mine said they thought I was crazy not to have it. If they got their act together enough, then surely I could! And the insurance agent helped me figure out the coverage.

After all that, I went house-hunting last year. "As Is" is a big turn-off. Not just when you see things like paint at the initial showing, which isn't that big of a deal, but the buyer will assume that includes things like the light switch that doesn't work and anything found in a home inspection that would otherwise be fixed by the owner. Not enticing.

Elizabeth Razzi: Ah, thanks for that!

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Arlington, Va.: The video (if it's the Clarendon rap) is AWESOME!!!!!

Elizabeth Razzi: I know what I'm doing at 2 pm.

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On the east coast: I'd assume someone DID die in every house I've ever looked at. Obviously I like old houses, but really, death is a part of life and people die in their homes most of all. There's no reason that is a negative about a house that should be revealed. It's a given: This house has been lived in.

Elizabeth Razzi: Yep. I suspect someone may have departed from my house, too.

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Report from the Field: Baltimore: Just signed on our refi this morning (4.6%!). I was worried about the appraisal because we bought less than 2 years ago and haven't done too much to upgrade beyond new paint and appliances. But, our value was up $15,000 (from $255,000 to $270,000). Do you think it was the cosmetic stuff that helped us, or are we just in a lucky neighborhood with holding/increasing home values?

Elizabeth Razzi: Could be all of the above. Also, two different appraisers can give two different numbers. Congrats!

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Arlington Video: If it's the "Arlington rap"

Safe for work, very entertaining, highlights include: hybrid cars, abundance of Starbucks, Whole Foods, lack of parking, etc...

Elizabeth Razzi: Another endorsement.

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Are you aware of anything that can be done to help the one bedroom owners reclaim the extra money they paid?: Believe me, the association is already thinking about that. Approach gently and ask about the overpayment. Maybe they can come up with a plan to reimburse you over time. Lump sum reimbursement is probably what they fear, so they aren't saying anything (than may be used against them in a court of law), you have to approach first.

Elizabeth Razzi: Good points! Thanks.

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Rockville MD - Haunted house: Maryland has the don't ask don't tell rule regarding deaths inside a home. However, do realize, this is another avenue for you to pursue. Some would LOVE to buy a home that is potentially haunted.

If you need a psychic for cleansing the house, may I suggest the following psychic:

http://www.thejoyofspirit.com/

She is amazing.

Elizabeth Razzi: She's anticipating your call.....

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How effective is refurbishing one's house(ie. full paint job, remodeling of bathroom or kitchen) in raising the sale value of one's home?: There are 2 very different factors: price and time on market. Some improvements may not increase your actual value, but put your house ahead of another in the buyer's mind and they'll buy yours. Being #2 is a killer in job interviews and home sales. If there's always a house that looks 1% better, the buyer will buy it, not yours. So the improvement may not increase your sales price by one cent--but if it makes the difference between closing a sale and stagnating on the market, it is worth it!

Elizabeth Razzi: Agreed. And the market climate right now seems to punish the frumpy house more severely than usual.

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RE: Capitol Hill rowhouse: Also keep in mind that many buyers rely on FHA to get a loan and FHA will reject financing places that are in too rough of shape (aside from the special FHA 203 rehab loans which aren't realistic option for many buyers). So if you want to bring in the greatest number of potential buyers, make sure it's in good condition when you put it on the market!

Elizabeth Razzi: I think, though, that FHA focuses on the big things, like bad roofs and safety problems. But you're right, you definitely want to be FHA-worthy.

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Alexandria: "...Getting contracts in two weeks..." Ha! Try two hours! We looked and just bought in the Del Ray/Rosemont/Old Town area of Alexandria. Anything decent for between $400 and $500K gets scooped up before you barely realize it's on the market! Two weeks would have been great! (This is mostly for townhouses, duplexes, and bungalows... not sure about condos.) What buyer's market?

Elizabeth Razzi: OMG. Sounds like a few years ago, doesn't it?

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Gang, help us out here. What do you think? : You have no obligation, either legal or moral, to notify potential buyers of your personal superstitions. Now if aliens landed in the back yard, that's a different story.

Elizabeth Razzi: haha

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Baltimore, Md.: Re-- disclosing a death at a home for sale: This sounds pretty, uh, strange to me unless you are talking about a crime scene. I know that I sold the home I grew up in last year--a home in which my father, mother and sister all died of natural causes quite a few years apart. And I have not heard from the buyers in the past year re any spiritual emanations.

Elizabeth Razzi: Thanks for that perspective.

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'As Is': Most folks would use the "As-is" listing for a property that has some kind of structural issue - not cosmetic. To me it's a red flag there are some expensive issues to be dealt with, that it wouldn't pass an inspection. Probably not a good term to use for simple cosmetic fixes. In this market, what's the big deal about spending a weekend patching a few holes and painting a couple of rooms white?

Elizabeth Razzi: I agree completely -- except for the "big deal" part. My hubby's been grumbling about the FINE JOB he did painting the past few weekends.

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Richmond: How old is your house? I can guarantee someone died in it if it's more than 50 years old.

Elizabeth Razzi: 'bout 50. But the owners didn't die 50 years ago.

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Alexandria, Va.: Elizabeth, over at the blog, you wondered why some commentors/bloggers were so interested in "jawbowning" down prices further. At least, in my experience, the interest is there because housing in D.C. is still out of line with incomes (at least, if you don't want to be on the margins and vulnerable to foreclosure.)

For example: my (very unfashionable) corner of Fairfax County had semi-detached homes selling at $100,000 in 2000. Ten years later, they're listing for $325,000. Does that even vaguely sound like real increase in value, or a run up in prices caused by extremely low interest rates and loose lending? Sure, the 'value' of a home is what people are willing to pay for it--thus my neighborhood has had almost no sales for 6 months other than foreclosures/short sales.

It may be 'jawboning', but at the core, it's about reasonable affordability, not punishing homeowners or vindicating those who cried housing bubble.

Elizabeth Razzi: Thanks for the comments. It doesn't seem you're rooting for prices to go back to $100,000 though.

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The Sticks, Va.: What's considered a low-ball offer? House is priced at about $225k. Our agent is warning us "not to go too low" but isn't providing any basis on what too low is? We've tried looking at comparables, but we're in a rural area and don't see many that have sold recently. Suggestions?

Elizabeth Razzi: Well, gee. You have to figure out what you think is a fair offer before you can estimate what a lowball would be. It's really tough to estimate values in a rural area without many sales. But maybe you can look at going rates for similar homes in other areas that are similar to yours. That's how appraisers do it.

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Virginia: Hi! We are working on refinancing our home. Wells Fargo-holder of our HELOC- wants to charge us $150 to subrogate the loan. Is this a normal charge? (We don't actually owe anything, and due to falling property values, they have frozen the account, so we couldn't use it if we wanted to. We get hit with a $500 charge if we close it before the 3 year minimum, however. If there is not typically a charge for subrigating, then I plan to argue this one!)

Elizabeth Razzi: Doesn't sound unusual to me. And it doesn't sound like you have much choice, either.

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Forestville, Md.: After looking for a home for the last 20 months that's taken me from St. Mary's County to PG County. I'm finally closing on a new construction townhome in Waldorf, MD. The existing homes in PG County are still over priced and even if they were short sales or foreclosures the bank didn't want to pay closing. I'm getting a new 2200 sq ft townhome with all closing cost paid. When I started the only thing I could afford was a condo in PG County and the agent I was using tried to convince me to get an interest only loan. Since then the same condo has gone down $45k in the asking price. Being patient really worked for me.

Elizabeth Razzi: Thanks for the report. And congrats on avoiding the interest-only loan.

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Columbia Heights, D.C.: I am looking at buying a house with existing tenants as my only home. My real estate agent tells me that once I purchase, obtaining occupancy "won't be very hard". They have a month to month lease. Their rent would not cover my mortgage payments. I haven't fooled myself into thinking this will be a walk in the park, but what are my rights on purchase? Where can I research what taking on a tenant occupied home will entail? And what should I be prepared for as my "worse-case scenario"?

Elizabeth Razzi: Alas, Maryann is our resident expert on DC's landlord-tenant law, which is pretty strict about renters' rights. But you need to go to the source on this--the District government. Here's some info I plucked from the renter's guide on our web site.

The District of Columbia Housing Code (DCHC) is enforced by the D.C. Department of Consumer and Regulatory Affairs' Housing Regulation Administration (HRA). The HRA publishes the "Tenant's Guide to Safe and Decent Housing," a 30-page booklet summarizing the D.C. housing code and its partner, the Rental Housing Act of 1985, which is the city law covering rent-controlled apartments. To obtain a copy, visit the Housing Regulation Services Center in Room 700 at 614 H Street, N.W., Washington, D.C., 20001, telephone (202) 727-7395, or send the office a self-addressed, stamped envelope to receive the guide by mail.

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Silver Spring, Md.: To Leesburg - I was able to do a "streamline refinance" with Wells Fargo last month in less than two weeks! I have less than stellar payment histories on my debt too. Something weird is going on with your application. Maybe try a different loan officer! Good luck!

Elizabeth Razzi: Thanks!

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Washington, D.C.: I live in a condo in D,C,; I work at Fort Belvoir. The commute is getting old, the market seems promising, and so I've considered moving closer to work. Maybe this is a question for Hax, but here goes. I'm the queen of indecision. I'm not sure if I want a single family detached or a townhouse or a condo. I've seen plenty of properties in plenty of areas, but I'm not much closer to figuring out where I want to be. Any ideas how I get myself unstuck?

Elizabeth Razzi: There's a funny amount of overlap between Haxian questions and real estate questions. I'd make myself a couple of pro/con lists. The maintenance questions might be the deal makers/breakers. How do you feel about the prospect of cleaning rain gutters, raking leaves, etc? That oughta narrow down your choices quite a bit. I suspect you're being influenced by what you think you ought to want vs. what you really want. Is that a Haxian enough answer? (Apologies to Carolyn!)

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Crownsville, Md.: My husband and I have been searching for a home in central Anne Arundel county for the last couple of months and we've been perplexed as to why home prices in this area haven't dropped as much as those in PG and Montgomery counties. Do you know why home prices haven't dropped as much here? Do you have any sense of whether prices will drop further in this area? We are hoping that the recent rise in interest rates will cause home prices to drop further.

Elizabeth Razzi: Anne Arundel is situated pretty conveniently between Baltimore and DC, which makes opens it up to both job markets. And I never got the impression there was a ton of speculative building there, as there was in parts of Prince George's.

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Tips for selling: A few years ago I sold my condo (that was previously rented out for many years). I cleaned it top to bottom, had the carpeting professionally cleaned, and had it professionally repainted and recaulked where needed. You don't have to spend a lot of money to spruce up.

Elizabeth Razzi: Very good advice.

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Death in home: It never occurred to me to disclose a death in the home. My uncle died in his sleep, so did my aunt and a bunch of other relatives, it happens. Not a crime scene, I wouldn't even think to ask. Some people are scared of that sort of thing, so I could understand if someone did ask.

Elizabeth Razzi: Thanks for sharing that.

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D.C.: Hello, my condo is getting close to the 50% renter mark. I understand that that has an impact on lending decisions. Can you explain what the impact is and why?

Thank you!

Elizabeth Razzi: Well, would you like to invest in a condo where half the other owners don't live there themselves? It can be very difficult for buyers to get mortgages in such buildings. And condo boards dominated by landlords often aren't willing to invest money in quality-of-life improvements.

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Laurel, MD: For Dupont Circle: When we built a home from a well-known, reputable builder, we still made our own arrangements. I hired a building contractor that I know to come do a "pre-wall" and "final walk-through" inspection. It only cost $65 per visit. The pre-wall was an inspection after the framing was up, but before the drywall went up. Make sure to talk to the builder BEFORE you sign anything or put any money down and have the inspection by an inspector of your choosing written into your agreement at time of down-payment. If not, they may not allow you to do this.

We also hired a real estate lawyer to review our HUD-1 and closing papers and to come to us at the closing to review all the paperwork. It was fortunate, because Ryan Homes and NVR mortgage (big enough names?) changed two very important numbers between the HUD-1 that was sent on Friday and the one that was presented at Monday's closing. Since the new numbers did not represent what our contract said it was, we didn't sign. We had to reschedule for the next day and thanks to our lawyer, we got them to comp us one day's salary for both of us to compensate for their mistake (and our salaries are -NOT- cheap) as they had to redo all the paperwork with the correct numbers. The lawyer only charged us a little extra for the extra day and not close to what the first day BTW, he saved us about 5x what we were paying him for his session cost us. All told, we paid $600 for his services and he saved us over $5K.

Unlike the ladies, I think that a good inspector and a lawyer are a better combination than a real state broker or agent when you are buying direct from a builder.

Elizabeth Razzi: This lady has nothing against that combo -- IF you get a lawyer who has experience with real estate and is willing to do the necessary hand-holding. And an inspector is mandatory in my mind. Thanks for contributing!

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Poor credit help, please: If you have poor credit (and have been working on boosting it--it has improved, but it's still not good) but a great, well-paying job, is it possible to buy a home? Would a large down payment help in this situation? If so, how large, percentage wise?

Thank you so much for any guidance.

Elizabeth Razzi: You will find the process much easier and the interest rates much cheaper if you can improve your credit before you try to buy a home. You can make really significant changes to your credit scores in just a year.

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Elizabeth Razzi: Time flew! Maryann will be back with us for the next chat in two weeks. In tomorrow's Post I have a story about real estate industry attempts to cheerlead the market up, and there's a very fun story about the cool accessory buildings some people build around their homes. I figure if I can't afford to do it, I can at least read about it. And I'll be blogging daily; stop by and chip in with your opinions anytime. Thanks and have a sunny weekend!

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Editor's Note: washingtonpost.com moderators retain editorial control over Discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.


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