July 10, 2009, 1 PM

Real Estate Live

Elizabeth Razzi
Washington Post Real Estate blogger and columnist
Friday, July 10, 2009; 1:00 PM

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

The transcript follows.


Elizabeth Razzi: Hello, everyone! Glad to see you here on an incredibly beautiful July day. Just think how expensive it would be to live here if we always had this kind of weather in July.


Rockville, Md.: We are thinking about selling our cape cod style home in the next few years, but want to get a sense of what kinds of repairs/work would need to be done on the house to prepare it to go on the market. Would a real estate agent be able to help us, or is there some other kind of home consultant we should speak with?

Elizabeth Razzi: You do think ahead, don't you! With a couple of years' lead time, you could probably go ahead and tackle the obvious stuff without advice. Have the paint in good shape inside and out. Improve the landscaping, especially in the front. But put more backbone than money into it. Without investing too much cash, you can get the grass growing well, flower beds cut out, overgrown shrubs taken out, etc. Do general fix-ups. If the furnace is near death; replace it. Then, a year or so out from your sell-by date, talk with a real estate agent about refinements. Anyone else with ideas on this?


Falls Church, Va.: What are the current options for homeowners who what to buy a bigger house, but have not sold their current home. Are bridge loans available anymore? It seems like homeowners have no choice, but to sell their current home, move out, close, and then start looking for that bigger home. Please help we want to upgrade into a bigger house, but do not want to move twice.

Elizabeth Razzi: Bridge loans are available--but you'd need a whole lot of cash to qualify for one. Buying before selling is always a risky strategy--easily leading to many months owing payments on two homes. But it's especially so now because there's a chance your old home could linger on the market a while. You still can do what most move-up buyers have always done: Put your home on the market, and when it looks like there's serious interest from buyers, start looking for a purchase in earnest. A good real estate agent can help you coordinate the sale and purchase so you don't have to move twice.


Arlington, Va.: I thought you might find this interesting - I found the bill of sale to my parents first house bought in 1951 for $12,000 in Kensington, Maryland. I have the pictures of it--2 bedrooms/1 bathroom unfinished basement. I wonder what the equivalent that would be in today's dollars? Remember the guy complaining about not being able to buy a house like his parents could? I wonder if he'd be willing to buy this one.

Elizabeth Razzi: Cool find! Actually, adjusted for inflation, $12,000 would be worth $98,702.77, according to a handy calculator published by the Bureau of Labor Statistics. http://data.bls.gov/cgi-bin/cpicalc.pl

That, of course, accounts for pure economic inflation over the years. Homes have appreciated (or not) at a different pace. And you bring up the most intriguing point -- it was a simple 2 bedroom/1 bath Cape Cod. Very, very basic housing. But I'll bet it had a big yard.


Atlanta: So, D.C.'s back on the table in terms of jobs. re the in town near metro/good schools neighborhoods at all looking like there is a downturn? Is there a way to get a good deal? Or are they still selling like hotcakes? Thanks...

Elizabeth Razzi: Hi, Atlanta. Well, they're not quite selling like hotcakes, but those close-in/near metro/good schools neighborhoods are still selling pretty well. And your definition of "a good deal" is likely to be cheaper than what you'll find around here. DC is a significantly more expensive market than Atlanta. For the same dollar amount, I bet you'll think, "All this money for THAT?" Welcome to the area...


VA Financing: Hi, I put my condo up for sale and got an offer with VA (Veteran's Affairs) financing. We accepted the offer, but my condo declined to do the paperwork to be approved for VA financing. The board gave no reason why it declined to fill out the paperwork so that buyers could use VA financing. What do you think would be the downsides the board considered in turning down this military officer's VA financing option?

Elizabeth Razzi: Hi, VA. That's unfortunate. The downside to those condo owners is that it limits their pool of potential buyers. We'd love to learn more about your experience using VA financing. Would you mind dropping an email to me at Razzie@washpost.com?


Washington, D.C.: Hi Elizabeth, although the timing may not be ideal, my family is likely going to be trying to sell our condo sometime next year and buy a bigger house. How far in advance should we discuss strategy with our realtor? Our condo is relatively new, so we won't be making any major improvements, but we will likely need to paint and de-clutter some before putting our place on the market. Thanks!

Elizabeth Razzi: It wouldn't hurt to chat soon with a few real estate agents who are active sellers in your condo building. Let them know your timetable; they may have good advice about which month would be optimal for you to list. (If they push for NOW as the optimal time, take that with a huge grain of salt. It might be best for the agent to get the listing NOW.) Otherwise, it's probably wise to talk with an agent about three months before you want to list. She may have a list of fix-up chores for you to do!


Sweet spot, D.C.: a report from the trenches near the Friendship Heights metro: I don't know all the transaction $ details, clearly, but I notice that $1 million+ vintage homes continue to sell in this part of Chevy Chase, D.C. Some do linger, which tells me that the initial price is set too high (because they are great houses and they do eventually sell in a couple of months). I'm amazed, and frankly, thrilled, that this sub-neighborhood continues to do so well. The WaPo's last batch of real estate data-by-zipcode bear out my observations. Woo hoo!

Elizabeth Razzi: Lucky you! That area has always been very, very popular. And very expensive.


Raven, Va.: My husband and I purchased several acres with a trailer in the mountains for weekend get aways. However, our plans have changed quite a bit, so now we have decided to sell. The trailer is listed with the DMV - as opposed to being real property. So we pay taxes on the property (land); and we pay taxes on the trailer as if it were a vehicle (DMV). In talking about selling, someone mentioned that it might help if we transfer the trailer (which is very large and incl two fireplaces) from DMV and list as real property attached to the land. So, the land and trailer would be valued and taxed by the county.

Could this be done? Would there be any advantages from a seller/buyer standpoint?

Elizabeth Razzi: As I understand it, if it has wheels, it's a vehicle/personal property. If you've put the trailer on a real foundation, then it can be considered real property. BUT what really matters is what the authorities in your mountain community set as the rules.


Rockville, Md.: Just bought our first house and its time to paint... any thoughts on a red kitchen?

Elizabeth Razzi: Ketchup. That's my first thought. Second thought is that if you plan to live there long enough to enjoy the red kitchen, then why not? Third thought: It's going to take a lot of primer when you eventually tired of ketchup-colored walls.


A D.C. Apartment: Hi Elizabeth, I know that this isn't technically your field, but it's in the subject area - will the Post ever return to chats about renting apartments? It was so helpful when they did, and would seem useful considering the large number of renters in this city. Especially considering the number of younger renters on their own for the first time! Thanks for letting me vent!

Elizabeth Razzi: I don't know the answer to that. But let's post it to get the conversation going. Anyone else think an apartment chat is needed?


Edgewood, Md.: Hello! I read with interest the article on buying beach property in the current market. I've long wanted a place at the beach, and think that I can now afford one. However, I can't afford a single family house, but would be looking more at a studio or efficiency, perhaps in Ocean City's quieter northern end. I would not rent it out, but use it for frequent get-aways with a pile of books and flip flops for walking on the beach.

The problem, of course, is that you can get great buys, many o the condo associations are about to go under because so many owners are not paying their monthly fee and the units are facing foreclosure. At least I think that's so, but in many cases it can be hard to get the relevant data. I'm working with an excellent, experienced agent, but she's not terribly optimistic. Any comments and suggestions would be greatly appreciated! Thanks.

Elizabeth Razzi: Hi, Edgewood. You're smart to be worrying about the condo association's health. You have a right to see the current financial documents, though. Anyone else seeing issues with this?


Idea for a story: I'm trying to refinance. Couldn't initially because the appraisal came in low ($350k). Got a new appraisal months later. This one came in at $435k. Slightly smaller house sold across the street for $437k.

Now the deadline for closing has past, and I'm still tied up with the refi, because it's been flagged as a overvalued appraisal.

Interesting, no?

Elizabeth Razzi: Sure is interesting. Send me an email, razzie@washpost.com, and we can talk!


3rd Party Approval: Hello and thank you for these chats. I am a first time home buyer and really need some help. A house I am interested in just came on the market a couple days ago. It is in the Alexandria area in a neighborhood that usually sells homes in the 400-450k range. This house is priced at 350k. Being that it is a short sale, is there room for the price to be dropped? Also, what is the process to put an offer on a house requiring 3rd party approval? And lastly, do these home stay on the market long?

Thanks again!

Elizabeth Razzi: Well, the bank may very likely NOT have signed off on the $350k price. You should work with a real estate agent who has successfully made it through at least one short sale process. You make an offer to the seller's agent, and then, from what I hear, the offer goes into a black hole at the lender's office. Prodding and following up can help get an answer. But you'll need patience.


Anonymous: I am in the market for a house but am wondering if I should be looking at location and zip codes in the kind of market today. In other words does it still pay to go for location versus house size in a less prestigious zip code?

Elizabeth Razzi: Well, I don't know; how important is prestige to you? How important is house size? These are very personal questions that only you can answer. If you're looking for a sheer price-appreciation angle, then you should be looking for easy-to-fix but homely homes in popular neighborhoods.


Silver Spring, Md.: What kind of documentation is needed to appeal for a reduction of fiscal house value assessment for tax reduction? That is when you consider your house assessment is much higher than the current market price of your property? Who do you address you complaint to? Where? What documents or proofs do you need? Is it cumbersome or too expensive? Do you need a lawyer? Please instruct. Thanks!

Elizabeth Razzi: You deal with the property tax assessor's office. And you can find appeal details included with your last notice of tax assessment. The problem is, there is a strictly enforced time period for assessment appeals. The clock starts ticking as soon as they send it to you. And Maryland re-assesses its homes on a three-year cycle. If you're in the middle of that cycle, you have to wait until the next assessment happens.


Annapolis, Md.: My wife and I bought an old house, lived in it for 3 years and spent $50,000 repairing and updating it during the time we lived there. However, we recently moved several states away for my wife's job and bought a new house. We've been trying to sell the old house, but there's not much activity given the market, so we're pondering other options. One idea is renting, although neither of us have been landlords before and approach this with some trepidation. If we do start to rent the old house this year, can we deduct the $50,000 spent in repairs and upgrades?

Elizabeth Razzi: No, I don't think so. I'm not an accountant or lawyer, btw. But you would not have placed the rental property in service when you spent the $50k. And you would have been taking homeowners' tax deductions on it all that time as well.


Bethesda, Md.: How easy/difficult is it to get a construction loan these days? We want to put an addition on to our house, ranging from $180-$250,000. House is currently appraised around $600,000 -- there is some equity in it but not nearly enough to cover the loan.

Elizabeth Razzi: Talk to a lender. If you have other investments, bank accounts, etc., that you could put up as collateral, the bank might be happy to talk with you. Also, you can explore loans that use your fixed-up value as the basis for the loan decision. In those cases, the bank gets involved in doling out payments to contractors as work proceeds. Never hurts to talk to a couple of lenders.


Rockville, Md.: We are about to put our house on the market in a few weeks. We have 3 cats who are quite friendly and outgoing, and I'm concerned they might escape through an open door when prospective buyers are touring the house. The house will be spotless with a clean, hidden litter box and we have NO issues with pet odor or hair/dander.

In your experience, are agents fairly good with respecting owner's wishes about keeping pets confined in the home? Would a note on the door asking people to be mindful of open doors be effective? The animals will be in a kennel during the open house weekends, but we can't afford to board them the entire time the house is on the market.

Elizabeth Razzi: Tough one. I've had cats as part of our family, and they were the type to hide when the doorbell rang. You just cannot tell what will happen when an agent you don't know enters the house with a lockbox key. How dire would the consequences of an escaped kitty be? And a note on the door might be off-putting to some buyers. (Half the world seems to be allergic to cats.) Do you have a friend who might host the cats temporarily?


Annandale, Va.: My husband and I just sold our house in another city and we are now ready to get out of our rental and start looking for a place in Virginia. What's the best way to find a good mortgage broker? We don't have a realtor yet, but do most people get a referral through a realtor? Or do we just walk into a bank and ask? I'm not sure where to start! Thanks!

Elizabeth Razzi: You shop, just like you shop for anything else. I wouldn't limit myself to mortgage brokers; you can also get good deals dealing directly with lenders. Start with your bank or credit union. What loans/interest rates are they offering? Real estate agents also can recommend lenders who they have found to be attentive and competitive. Some real estate brokerages have their own affiliated lenders, btw. You don't have to work with them, but you might as well check them out. Ask co-workers and neighbors. And, if you do go with a mortgage broker, make sure to talk with a couple of recent clients, to make sure they had a good experience.


Glover Park, D.C.: I am president of a 5 unit condo bldg in the Glover Park area of D.C. We are working to turn common area into 5 common area parking spaces. What value, in your opinion, would the availability of parking add to each unit when sold. Each unit owner would be special assessed approx. $5-$8K to cover the scope of work. Additionally, the proposed parking area would continue to part of the General Common Elements with each unit owner having an undivided interest. That being said, if our Rules and Regs stipulated that each unit is entitled to the use of one parking space, could a unit owner who does not wish to use his or her space have the option of renting his or her space out to generate income for themselves, not for the association? I am in need of some quick advice and am hoping you might be able to help!

Elizabeth Razzi: You need to get a lawyer to advise you on what can and cannot be done according to your bylaws--or to craft new proposed bylaws correctly sp they can be voted on by the rest of the association. Parking almost always adds value--but there's always the question of what you're giving up. Paving over the pool? Ripping out trees?


Re. Tax assessment appeals: Property assessment appeals, at least in Virginia, go to the Board of Equalization in your jurisdiction. That means they analyze your assessment based on comparable properties. They will lower your assessment if the comps are lower. However, if your house is assessed lower than comparable properties, then the Board can RAISE your assessment. So do your homework before you decide that this is the same as a traffic ticket and that it "can't hurt" to appeal your assessment.

Elizabeth Razzi: Appeals go through the local assessor's office before they go to the Board of Equalization. And yes, they can raise your assessment. But how likely do you think that is now, considering the market?


Re: Selling In A Few Years: For the person planning to sell in a few years, what about putting in crown molding before painting? It doesn't seem expensive and it's one part of my house that gets raves. Also, how about replacing the kitchen counter with siltstone or granite? Do these things get dividends for sellers ?

Elizabeth Razzi: Yes on both counts. However, some old kitchen cabinets would need to be reinforced before getting granite tops. And if the rest of the kitchen is frumpy, it would be a waste. I saw a report (cannot remember where--might have been the Freakonomics guys) that said the mentioning of granite in a real estate ad made it more likely to sell.


Rockville, Md.: To the Ravin, Va. person -- be very careful because a lot of regular lenders will not put a mortgage on a trailer home, no matter how nice it is, and even if on a foundation. If it's a manufactured home, it's probably out of the question. You might want to consider selling separately, or just raising the price to include the home. How did you do the purchase? Do the same when you sell.

Elizabeth Razzi: Good point. But there are manufactured homes (factory-built non-trailers) that aren't judged so harshly by lenders.


Re: Red Kitchen: I used BenjMoore's "Chili Pepper Red" with a tinted primer and it looks great (5 years later). I think the primer is key but with deeper/darker colors, the brand is important too. Good luck!

Elizabeth Razzi: More on colors!


Report from Reston, Va.: Have been house hunting with a friend who's going through a divorce and boy, oh boy, location is key in this market. She wants her kids in a particular Reston school, and every listing in that area has gone under contract in less than 2 weeks. At about last year's prices or even a bit higher. I feel terrible for her--and a bit relieved for myself, since we already live there. We are looking at other schools/neighborhoods this weekend.

Elizabeth Razzi: Thanks for the report! Good luck hunting.


Sterling, Va.: To 3rd Party Approval: We were under contract for a short sale house in Herndon starting on March 6, 2009. We finally let it go last month as interest rates keep edging up and we want to actually get into a house. Patience isn't even the word. The house is STILL waiting for approval for the short sale.

Elizabeth Razzi: thanks


Bowie: I've heard about extreme bubble-busts in places like inland SW Florida. Are many people finding good prices, "pre-need", on retirement condos there in the current market?

Elizabeth Razzi: How "pre" is your need? You could have a tough time renting out a place in the current Florida market.


Olney, Md.: Hello, we are first-time buyers--We liked one home in Olney area-- However, the seller is not coming below $315K. We looked into the tax records for other house around the place and they are valued at around $300K-$305K. House is in good conditions and well maintained (new appliances & equipments). Our agent put an offer for $315K with the condition of doing an appraisal in 10 days. He is sure that the bank appraisal will be max $310K looking at the surrounding area. There were couple of foreclosures in the area and they went for $290K

Do you think It will be good idea to do the closing with this house (spend around $5000 from my pocket as the seller is ready to sell all the furniture, window treatments and other equipments), or it would be better to look for some other property ?

Elizabeth Razzi: Contingent on doing an appraisal in 10 days? I don't see how the buyer or seller can control that. The lender has to order the appraisal, and then you're subject to the appraiser's schedule. It seems to me you're pretty close on price. If the place you're interested in has new appliances, etc., it could really be worth $10-$15k more than others. Small differences in location could justify a higher price, too.


Short sale assistance: Found a house being sold as a short sale. Price listed is very good, maybe too good... I wonder if the bank will accept such a low price. What suggestions do you have to improve the chances that your offer will be accepted by the bank?

Elizabeth Razzi: Bid closer to what you think the real value of the home is in this market, considering the condition of the home. Banks aren't always involved in setting the asking price on a short sale.


First-time home buyer: We have a ratified contract on a short sale and we are now waiting for the bank's approval (thankfully only one is involved). We know they have assigned a negotiator, and we know they've appraised the house, but now we're waiting. The waiting is MADDENING! It's been a month since the seller ratified the contract, and for short sale, we know we've gotten off easy so far but BAH! It's amazing how much of the home buying process is hands-off considering it's probably the biggest purchase we'll ever make!

Elizabeth Razzi: I understand your frustration! This will be your home -- but to the bank it's just a line item on a long list of problems. Good luck.


I thought you might find this interesting - I found the bill of sale to my parents first house bought in 1951 for $12,000 in Kensington, Maryland. : I have my Dad's bill from 1961 of my mother's stay in the hospital having me: 3 days after insurance $35 paid in full.

Elizabeth Razzi: Oh, how cute. You should frame it.


Fairfax, Va.: Do you ever monitor property tax appeals at "Board of Equalization" meetings and the like? I would imagine those could be really interesting. You'd see the types of appeals that pass muster, and also the, er, "expectations" that some people seem to have when they appeal their assessment.

Elizabeth Razzi: That would probably be a pretty good drama. Good idea.


Alexandria, Va.: I am a renter who, thanks to an inheritance, has the ability to buy a home now, and reap the tax advantages. However, I do not plan to stay in this area more than 3 1/2 years, so I am torn on whether it makes that much financial sense for me to buy. I do like my rented town-home, although it is on the pricey side. Any thoughts?

Elizabeth Razzi: That's cutting it a little close. Why not talk with an investment advisor who can help you figure out what other opportunities you have with that inheritance? At least you'll have an apples-to-apples basis for a decision.


Chevy Chase, Md.: Hello Elizabeth--Sent you a questions before the start of the show regarding the list of D.C. tax sale properties. Did the District Government drop the ball or was the list of tax sale properties only in the D.C. edition? I couldn't find the list in the Md. edition.

I'd like to buy in the District but do not want to have to work until I drop dead.


Elizabeth Razzi: Hey there Chevy Chase. Not trying to ignore you; I just don't know the answer off the top of my head.


Fairfax, Va.: How do taxes on a rental differ from when the house is your principal residence? Based on your answer above, it sounds like one can't take the homeowner's interest and RE deductions on a rental unit. Is that the case?

Elizabeth Razzi: The same house cannot be your primary residence and a rental (investment) property at the same time. Well, you could carve out a portion, like a basement apartment, as a rental, but then you carve up all your expenses that are eligible for deductions in proportion to their residence/investment share. The biggest difference: You dont' get tax-free capital gain on investment property when you sell. And rental property qualifies for depreciation... There are lots of differences.


In Re Upgrades: Put the crown molding up AFTER painting. My 1970's house has new crown molding that we finished the basement with before painting (it's a pain to paint) and it also makes the clamshell molding everywhere else look not-so-good in comparison.

Elizabeth Razzi: Oh, it's not THAT hard to paint...(at least not when I watch my husband do it, haha). Clamshell molding....Oh that is an oldy, isn't it?


HGTV shows in D.C.: Do you ever watch HGTV shows that spotlight our area? There was one on yesterday called Real Estate Intervention about a woman in Gtown. I often wonder if those national shows get our market "right."

Elizabeth Razzi: I watch those shows as rarely as possible. There's a snarky element that usually irritates me. And there's a cheap element -- I don't like slapped-together renovations done on the cheap.


Manchester, New Hampshire: My husband is in the middle of a layoff, he has been looking for work in our current area but coming up short, the job offers are coming from other states which will cause a move. Our real estate agent has valued our house much less than our mortgage... is there any help out there for job hunters needing to move? If not, can we attach negative equity to a new house? Thanks.

Elizabeth Razzi: Talk to your lender about the possibility of them approving a short sale. They take time, unfortunately. You also could benefit from free mortgage counseling. http://www.995hope.org/ Call them at 888-995-HOPE. Also, the Department of Housing and Urban Development's web site, www.HUD.gov, has links to sources of reputable help. You cannot, however, attach negative equity to a new house. Good luck.


I have my Dad's bill from 1961 of my mother's stay in the hospital having me: 3 days after insurance $35 paid in full.: Sound like a bargain!

Elizabeth Razzi: ha!


Appeals go through the local assessor's office before they go to the Board of Equalization. : Right (I used to do that). The local assessors office will reconsider. If you don't like their response, you may take it to the Board. Used to be, they always knock a courtesy $20,000 off if you had good comparables.

Elizabeth Razzi: Thanks for that.


re: MoCo assessment: I'm not sure that you have to be in that strict of a time line. We just had ours re-assessed (saving us the taxes on $90K!!!) and I don't think it was right then. However, you might have to wait a year for it be adjusted. But I'm pretty sure it's not three. And as far as paperwork, I met with the assessor and told her that given the market and neighboring house values, no way was our house worth the 390K. I brought print-outs of recently-sold homes and on-the-market homes that I got from a realtor friend. That's it! Oh yeah, then I put it all in a fancy spreadsheet and calculated averages. It worked for us! Do it!

Elizabeth Razzi: Thanks for the advice on the method. But I am sure Maryland is on a three-year assessment schedule.


Elizabeth Razzi: Well, that's about it for today. If I didn't get to your comments, it was most likely a time issue, so go ahead and resubmit for next time. In this weekend's Real Estate section, Renae Merle has a lot of good details on what's happening with short sales now. And apartment-dwellers can find tips on portable washer-dryers made just for small spaces. See you in two weeks, or daily on the Local Address blog! Bye.


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