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Elizabeth Razzi
Washington Post Real Estate blogger and columnist
Friday, August 7, 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.

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Elizabeth Razzi: Hello, everyone. Here we are in the nation's capital on a temperate Friday in August. Both houses of Congress will be on vacation when the Senate leaves today, which means all the lobbyists and their assistants, their nannies and all the other folk whose lives are however indirectly tied to the schedule of the legislature are getting outta town ASAP. It makes for a delightful August of easy traffic and plentiful restaurant seats for those of us left behind, don't you think?

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Waldorf, Md.: Where can I find the listing of recent home sales in my neighborhood?

Elizabeth Razzi: Right here on the Post's Real Estate page. You can look up recent sales by ZIP code. Here's a link: http://www.washingtonpost.com/ac2/wp-dyn/admin/homepricereports?includePage=/jsp/hsales/html/advancedSearch.jsp

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Arlington, Va. 22201: Where do you see the market for selling condos in 2 years and future in Arlington Courthouse area...

Elizabeth Razzi: Oh, just over the Potomac river from DC, and along the Orange line, just like now. Seriously, I cannot even begin to guess at that.

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Denver, Colo.: We have $120,00 in liquid assets, and real estate that we own 3 houses and 3 condos clear worth about one million. I am 81 and my wife is 70 years old. We plan to take a $100,000 mortgage on our home to pay cash for a retirement apartment priced at $160,000. We want to maximize our tax benefits by deducting interest payments on our mortgage. What do you think? Is this an unnecessary risk? We just can't pass up what we believe is a good investment. Any advice, comments? Thank you.

Elizabeth Razzi: I think you would really benefit from a consultation with a good financial planner. Find someone who holds the CFP designation (Certified Financial Planner) and not an insurance salesman or stock broker who misleadingly calls himself a planner. Taking on any debt at ages 70 and 81 is a risky move--and could be impossible if you can't demonstrate enough cash flow to carry that debt. $120,000 in liquid assets may be a lot of cash if you also have reliable pensions or annuities--or it could be frighteningly little if you don't. That's why you need to consult with a planner who can look at your entire financial picture. You may be over-invested in real estate already. My father's warning about imprudent purchases rings in my ears: You can go broke saving money.

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Washington, D.C.: Do you think landmark lofts near Union Station is over priced with 2 bedrooms ranging from 699,900 to 779,000. 1230-1350 square feet. If so, what would you pay?

Elizabeth Razzi: I really, really, really don't know. And the only way you can find out is to shop the competition. What else can you get for $700k to $780k? What have two-bedroom condos gone for in that neighborhood--and with similar amenities--recently? How's the condo fee? How healthy, financially, is the condo association given the recession? Do they have a lot of residents who aren't paying their fees? Do they have a lot of renters? And, finally, the appraisal will--one hopes and fingers crossed--give you and your bank a good read on whether the condo is overpriced.

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Painted Post, N.Y.: Good Morning, I need your advice on the buying a home in Horseheads NY/ painted post NY/ Corning NY. I am a first time home buyer, my savings are less than 100K and have an annual income of 100K. I have an 18 m old daughter and dependant wife to take care off. If I rent a 2 bed 2 bath I pay 900 towards my rent. This could be my mortgage payment if I bought a 2 bed 2 bath home.

With the given scenario and in the current market, would it be a wise thing to rent a house and save up for my daughter's future or Invest in a home, divert the rent amount to mortgage payment and jump into a 30 yr commitment?

The years of stay at the home could be a year/ 2 years or 10 years based on my work visa status.

Elizabeth Razzi: Good morning Painted Post! I have no idea what's happening with the real estate market in upstate New York, but I can try to take a look at the decision making process you face. And if your work visa could expire in just a year or two, that would make buying a home at any price a pretty risky move. It can take five years, more or less, for a home's value to increase enough just to cover the 5 or 6 percent brokerage fee you'll have to pay to sell it. And if you must leave the country--or leave town for a different job that protects your visa--then you'll be in a very bad negotiating position when you try to sell the house. Good luck with your decision-making.

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Rockville: When we settled our house we didn't realize that city is spelt wrong in the property address line. The mailing address is correct. Called mortgage company and they told me they can't change. I have to go to the court house to change since the loan paper is the legal document. Do you know how to handle it? Thanks!

Elizabeth Razzi: Is it that important? Even if the official records misspell your city name incorrectly--Rockyville? Rokville? Rockvil?--you can always use the correct spelling in all your business dealings?

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NoVa: We're thinking of putting an offer in on a bank-owned home in Virginia. Under Virginia law, what if anything does the bank have to disclose? Do you have any links to information about Virginia foreclosure law? What advice do you have for someone who's thinking about buying a foreclosure (the home looks to be in great shape, and it's in a very nice neighborhood.) Thanks!

Elizabeth Razzi: I'm not a lawyer and can't begin to recite Virginia law. But their foreclosure law will really govern the bank's taking back of the property--not the bank's re-selling of it. I would expect the bank to have to comply with the usual disclosure laws that say a seller has to reveal defects that would affect the price -- IF THEY KNOW ABOUT THEM. Banks don't live there; often they don't know. And often they sell the houses as-is. You can inspect it, but don't expect them to fix it. Protect yourself with a thorough inspection and title insurance.

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Why retain an exclusive buyer's agent?: It seems that a buyer would benefit more from an agent with experience representing both buyers and sellers so that the agent could advise from a broader perspective. Of course, you don't want the same agent representing both seller and buyer on the same transaction, but wouldn't an agent who has only ever participated in strategic negotiations etc. from one side of the transaction be lacking some knowledge base, or am I missing something?

Elizabeth Razzi: Eh, maybe the agent would have some insight from her experience representing sellers, maybe not. The knock against exclusive buyers' agents, to my mind, is that there are relatively few of them from which to choose. Many of the most aggressive agents focus on listings, which yield more profit. (They profit even when someone else sells the listing. Buyer-only agents only profit when they pull off a deal themselves.) Some listing/buying agents really don't like the time-consuming aspects of working with buyers. You avoid that by going with a specialist.

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Rockville, Md.: I'd like to dispel a Maryland D.C.-Metro myth. There are no such mythical lands as "North Bethesda" or "North Potomac." They are Rockville and Gaithersburg respectively. As far as the postal service and zip codes are concerned, you live in Rockville or Gaithersburg. Those other names are just goofy made up addresses to woo otherwise ignorant buyers or boastful braggers into what they see as more upscale addresses. That being said, I have to laugh at the Condos of Midtown project on Rockville Pike that claims to be in North Bethesda. Not only are they not even close to Bethesda (or the mythical North Bethesda for that matter), they are no where close to midtown Bethesda.

Elizabeth Razzi: Any replies from North Bethesda?

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Culpepper, Va.: My husband and I purchased a foreclosed home. After moving in, a very very loud pickup truck started a routine of speeding past our home at 2 or 3 in the morning... followed by a Harley. This has been every morning.

We think it could be the person who was foreclosed on. But have no way of knowing.

Does this kind of thing happen often? And is there a best-practice in dealing with it? If someone is foreclosed on, are they required to sign something saying they will not harass the new owners?

Elizabeth Razzi: Hi, Culpepper. I wouldn't jump to conclusions about the roaring engine and foreclosure link. After all, you just moved into the neighborhood, right? Anyway, local ordinances about noise and disturbing the peace are the ones you want to focus on. Have a friendly talk with your local police department, and ask what they can do to help restore peace to your neighborhood. Good luck. And, really....you had nothing to do with the foreclosure. Why would the old owners want to harass you?

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For Painted Post: Given that you don't have a huge amount of savings (less than $100K) and that there is a risk you will need to leave in 2 years, I say rent for the $900/month. So very little of your mortgage payments will be going to build equity in that time, and even if the market rebounds tremendously (which it is not likely to do in upstate NY), you are better off being cautious until you get your visa situation sorted out. You may even find a great house to rent that your landlord will offer to sell to you if you find out your visa is solid.

Elizabeth Razzi: Thanks for the advice...

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Buying a Bank-Owned Home: Another strategy is to ask the neighbors if they know anything about the house. Here in Florida, we deal with this all over the neighborhood, and while it's not a substitute for a thorough (that's THOROUGH) inspection, you may learn more than the bank knows.

Then, make your offer, and relax for six months while you wait to hear back from the bank.

Elizabeth Razzi: This one's for the foreclosure buyers....

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The loan paper is the legal document: The loan paper is between the buyer and the bank. The LEGAL definition of the property and who owns it-- is the DEED.

Elizabeth Razzi: yep. But I don't see the harm in a misspelling on either document.

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Washington, D.C.: I'm cautiously optimistic about some of the latest D.C. Metro area indicators, especially the 5 mo. available supply. The tighter lending regulations concern me a little, since the cost of ownership in D.C. is so high to begin with, and so many lenders want more cash at closing. Even for a house that costs the regional mean of ~$350K, that's $70K + closing costs. Is this impacting sellers, especially in mid to upper brackets? My modest house appraised for $750K recently, but I can't picture buyers ponying $150K in cash (+ closing costs) to buy it. Fortunately for me it's not for sale :-)

Elizabeth Razzi: Thanks for your thoughts on the market. Usually the buyer of a $750,000 house isn't a first-timer. And the $150k or more in cash comes from the sale of someone's old residence.

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McLean, Va.: Based on your many years of professional experience with, and knowledge of, the local / regional real estate market, here's my question -- yes or no: Is now the best time that you have seen in years to buy residential real estate? Do you think the housing market has seen 'bottom'? Or you think the market will get worse before better?

Elizabeth Razzi: Yes or no? Geez, it's a chat, not a deposition. And I really don't know. It's a better time to buy than it was in 2005 and 2006, when it seemed like everybody was trying to buy real estate--at whatever cost. Are we at bottom? It feels bottom-ish. It could be a long, bumpy bottom for all I know. But, most important, over the past two years, right around this time of year we saw the economy do things I never thought I would see in my lifetime. So you're not going to get a yes or no from me.

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Washington, D.C.: I have gone through three refinances. What documents of the older refinances can I discard? Thanks, much.

Elizabeth Razzi: Really, are you that strapped for space? I like to keep anything that has my signature on it. If you need to cull the documents, go for the disclosure forms on the older transactions--the termite inspections, etc. KEEP all notices of lien release. And keep everything from the latest transaction. Any lawyers out there with an opinion?

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Albany, N.Y.: To Painted Post: Here in Albany, 200 miles to the east of you, it's still a buyer's market but agents tell me they don't see it recovering before next year or, more likely, 2011. Elizabeth is right that the other factors matter more, in your case. If you aren't positive that you'll be in the house at least 5-6 years, don't buy. Also, since your daughter is getting to be college age, financial aid offices right now are going to ask you to draw on your savings and you will be better off not listing a home as an asset. Besides, if your daughter goes away to college, your house needs will change too. You should be able to find a nice rental for that price, and possibly a still nicer home for a couple hundred more dollars.

Elizabeth Razzi: Thanks, Albany.

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Orlando, Fla.: I had a 45 day contract on a short sale that went no where. After 45 days, I cancelled the contract within the 5 day window put forth in the contract. The seller is now refusing to release my escrow money. It is only $2,000 so my only option is to wait until the case goes before the state real estate committee. I will not pay a lawyer to sue because that will probably cost at least $2,000. Is it common for people to refuse to release escrow money?

Elizabeth Razzi: I don't know how common it is--or the details of your transaction. But keep in mind that small claims court is there for disputes about $2,000.

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Manassas Park, Va.: I read through some of the comments and one caught my eye. In your reply you seemed shocked that a home could be $250K under water. I live in Northern Va. and my home has lost nearly 50% of its value from my purchase price which is nearly $210K. This is not unusual in my community and in nearby localities.

Unless the government finds someway to intervene, you are going to see a third wave of foreclosure tided not only to the rate of unemployment and under employment but to homeowners like myself who have lost every cent they put in as a down payment and all the equity they have accrued in paying down my mortgage simply have no other recourse but to walk. And when that happens, that third wave of foreclosures will snuff out any hope for an economic recovery.

I never used my home as an ATM. Never refinanced or took any equity out of my home. However, I never intended to stay in my home for more than ten years. I am half way there at this point. My home will never be worth what I paid for it and I have lost a large chunk of what was going to help support my retirement. I think I have about a year to figure what I am going to do but in all likelihood, I will walk and suffer the consequences. I simply do not see any other reasonable action.

My question is, if I am going to walk, is it better to do sooner rather than try and hold on another year?

Elizabeth Razzi: Can you afford to pay the mortgage? And is moving out after 10 years non-negotiable? Why the rush to decide within the next year?

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Geez folks, don't get out much do you?: What is with it with the questions today. Most of the questions seem to be from people who don't read the chat much and don't know that neither you nor our recently departed Real Estate editor, Maryann, predict or make financial or real estate legal recommendations. This is an generic real estate discussion, not a financial or legal aid. For those, pony up the money and hire a professional who can give you a real answer based on your real numbers and situation.

I can't imagine trying to make a huge investment in the hundreds of thousands of dollars and relying on free, anonymous generic advice instead of paying a few hundred dollars to get real professional advice based on my actual financial situation (with details).

Elizabeth Razzi: Now, now. We get a lot of those questions here at the Post. And, now, on to the generic....

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McLean, Va.: Obama should appoint you as an ambassador -- that was an eloquent and diplomatic non-answer answer. And I totally understand. You're a moderator, not a pundit. But you did mention a long, bumpy bottom: I agree. The days of 20% appreciation in just one year are not to return for a long time. But hey, that just means that we're going to be, well, dare I say: NORMAL. I can't wait.

Elizabeth Razzi: ooh, boy. Eloquent! I'm gonna hang on to that one. Thanks for the comments.

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Arlington, Va.: Man, having grown up where 699,900 to 779,000 could buy you two or more nice homes with large lots, I still can't help but shake my head that people are willing to shell out that much for 1,000 sq. ft. in a glorified apartment building.

Elizabeth Razzi: Please, I grew up where that kind of money would buy all the houses on the block and up the street a little. Have you been in some of those glorified apartment buildings? Some of them are gorgeous, and you have one of the world's great cities right out the door. That's why they cost so much.

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Arlington, Va.: Your point to the previous post about 750K home buyers is valid, but also speaks to why I think the market around here will at best flatline over a long period.

There is just no way for most people to buy "move up" houses when they don't see massive appreciation in their own starter home. I can't see how that will happen in an environment where loans are more difficult to get and downpayments are no longer viewed as optional. Simply put, the food chain is broken and will be for a long time. Just my 2 cents.

Elizabeth Razzi: Thanks for the 2 cents. But modest appreciation, compounded over a decade or more, adds up faster than you might think.

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North South East and West: Responding to Rockville, I am always very leery of anything with a direction and town name (South Laurel, North Bethesda, West Fairfax, etc). In general, most of those are made up. If I am really interested in what I see on-line, I pop up a map and check the zip code. I ignore any listings where they don't have address or map information available. To me, that's one of many warning flags (e.g. I'm going to have to call a realtor just to find out where the bloody property is? No way).

I wouldn't trust any location name until I checked it out from the post office.

Elizabeth Razzi: Thanks...

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Baltimore, Md.: Re the buyer of the foreclosed home in Culpepper: From reading various accounts in the national media over the past couple years, people who lose a home in foreclosure can get pretty squirrely. The pickup/bike behavior may be no more than annoying, but I know if it were me, I would check it out.

Elizabeth Razzi: Yes, but then what would you do? That's where it gets dangerous, with angry sleep-deprived people in the middle of the night.

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North Potomac: Foofy here. We don't live within the city limits of Gaithersburg. Only our Post Office is there. So I'm not a resident of Gaithersburg. When we bought our house, the address of the real estate agent's brochure was North Potomac.

Why does this bother people like the original writer so much? Somebody protests too much.

Elizabeth Razzi: two more cents....

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N. Bethesda: I live in a Rockville zipcode, 20852, near Grosvenor station. The city of Rockville doesn't think I'm a resident. From http://www.rockvillemd.gov/residents/am_i_a_resident: "However, areas near the borders of the City also are referred to as Rockville and may have Rockville mailing addresses. Residents in those areas are residents of the County, but ARE NOT residents of the City of Rockville."

I found this out when I tried to get a garden plot.

Elizabeth Razzi: Bummer. It's always good to check for yourself about school districts and municipal borders before you buy the house.

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Keep all documents until you sell a house: Last home: bought 1995, refi'ed in 1999, refi'ed in 2002, major accident destroyed 75% of home in Jan 2008, rebuilt 75% of home Jan-June in 2008. Sold July 2008.

At the time I sold, the buyers had lots of questions about when the house was inspected, appraised, when fixes were done, if/when radon testing done, etc. I needed the paperwork from the sale, and both refi's to answer assorted questions. I don't know if not having those answers would have stopped the sale, but having those answers definitely comforted the buyers and made the sale smoother. I say, keep all paperwork for a house until you sell the house.

Elizabeth Razzi: hard-won advice...thanks.

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Wheaton from last chat: Hi again -- I'm the first-time home buyer who lamented to you during the last chat that my agent has gotten verbally abusive by e-mail with me but I can't dump him because I'm too far along in the buying process.

I'm entitled to a final walkthrough on my home right before closing. Typically, who else would be there? I don't really want to do it with just my agent. Does the seller's agent usually accompany a final walkthrough? Anyone else? Would it be out of turn for me to ask my real estate lawyer to come along?

Thanks. You've been a big helP!

Elizabeth Razzi: Usually the seller's agent goes along. Does your real estate lawyer happen to be a big, intimidating guy? I wouldn't want to pay a lawyer's fee for hand-holding. But a friend who plays rugby on weekends, him I'd take. ....And you're welcome!

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Cars at 3 a.m.: Betcha it is the newspaper delivery person. They may "roar" past because this person isn't a subscriber and they are just en route from the last toss to the next one. It didn't start "after they moved in" - it's just that's when they were there to notice.

Elizabeth Razzi: Certainly not a Post delivery person.....

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Old owners harassing: Seriously? Of course they had nothing to do with it, but that does not mean the former owners wouldn't still try to retaliate in some way.

Former owners tear down walls and pull out fixtures, not entirely rational behavior either, but it's not outside the realm of possibility.

Elizabeth Razzi: just posting...

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Nags Head, N.C.: We built a beach home here about five years ago, as a second home. Took out a 5/1 ARM at 5.25%. Just got notice of adjustment - it will be 3.25% for the next year. Whee! Sometimes falling rates are really a nice present, aren't they? Just wanted to share some happy news amongst all the gloom of the real estate market these days.

Elizabeth Razzi: Glad to pass along happy news...Thanks.

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Austin, Texas: We found the house, it's under contract, but now we're dealing with the mortgage. It's crazy and frustrating and we have excellent credit scores, $0 credit card debt, a 20% down payment and are buying less house than we can afford (mortgage payments will be less than 28% of our gross income). I can't imagine what it's like for someone without even one of those things.

My in-laws are assisting us with the down payment. The bank informed us that our contribution to the down payment must either be $0 or a minimum of 5%, nothing in between. I've contacted several banks and they all have this requirement.

For example, we couldn't contribute 3% of the down payment with my in-laws paying 17%. We're personally okay on this, but I don't understand the logic. If we couldn't contribute a minimum of %5, we'd have to put down less than 20%. It can't be about proving that we are capable of saving/contributing, because we could contribute $0. The only answer I can get from the bank is some vague muttering about "underwriting guidelines."

We expected that we'd have to provide a gift letter from the in-laws. But the bank is also demanding that they receive copies of my in-laws' investment statements. No, it's not just to prove that they didn't borrow the money they're giving us. This will somehow prove that they're not laundering money or dealing drugs. The loan officer actually used the words "laundering money" and "dealing drugs." He did admit that my in-laws "might find this a little insulting." Might!

Another surprise: We have to demonstrate that we have assets of at least 20% of the purchase price (this is in addition to the down payment). They didn't say "have it or pay a higher interest rate." We have to have it.

Once again, we're okay, but what about the people that scrimp and save to put together a down payment of 5%-10% but don't have the 20% in investments/retirement accounts. Is it really impossible to get a mortgage without it?

Elizabeth Razzi: Interesting. I can understand the bank not wanting the in-laws to supply, say 17 percent of the down payment, and you just 3 percent. They want to see you with more at risk than just 3 percent (which below even what FHA requires now). And lenders have been burned badly by people bearing bogus gift letters. They want to see the dollars. It's an incredible hassle, from what I've been hearing. Good luck.

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Elizabeth Razzi: Thank you, everyone, for contributing to a great chat! In tomorrow's Real Estate section we have a fun story by the Post's Ylan Q. Mui about good luck charms in real estate. Yes, St. Joseph makes an appearance, but there are a few surprises, too. And we'll have a few interviews with people who have decided to hold off on selling in this market. Next chat is scheduled for August 21. Meanwhile, I'll catch you around the Local Address blog. Have a safe 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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