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Elizabeth Razzi
Washington Post Real Estate blogger and columnist
Friday, August 21, 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: Hi, everyone! I thought President Obama said nobody's left in Washington in late August...and that those of us who are are a little loopy. So, sounds like a recipe for a freewheeling chat! Let's go.

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Annapolis: I recently put a contract on a house that was accepted. After the contract was submitted my real estate agent gave me a document to sign that said I would be responsible for a $350 flat fee to my agent. Is this normal? I wouldn't have cared so much if I was notified of this prior to working with the agent. What will happen to the home contract if I refuse to sign it?

Elizabeth Razzi: I'm with you. If the agent didn't talk about this $350 fee when you were making a decision to work with that agent, then it should be too late now. I'd refuse to sign it and refuse to pay.

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NoVa: Elizabeth- what are the odds the federal tax credit for first-time homebuyers will be extended into 2010? I know it's not a reason to buy a home, but it's nothing to blink at from a purchasing perspective.

Elizabeth Razzi: I really don't know what the odds are. I know the Realtor and home builder lobbies are pushing hard for it to be renewed--and expanded to cover all purchases. But even if Congress were to expand the credit, it would be foolish to announce it now. It's the ultimate limited-time offer! Why lower the flame under the buyers' feet before you have to? And the jump in existing home sales reported by the Realtors today doesn't necessarily argue for extension of the credit. They could say the housing market has been jump-started and it's time to move on to other areas of the economy. And then there's that pesky federal deficit....

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Dupont Circle: I live in a condo building that has now has 56% renters (investor owners renting their condos.) I'm told this is affecting my ability to sell since lenders no longer want to lend to buyers in my building. I'm told a buyer would not qualify for certain types of loans and must come to the table with a very high % of the money as a down payment. Since most people do not have huge down payments available to them, what are my options for sale?

Elizabeth Razzi: Sorry, Dupont, but that's true. In fact lenders have always had reservations about lending for purchases when a large share of owners are investors. They don't tend to keep the place up as well as owner-occupants and often aren't willing to vote for condo fees that are high enough to cover long-term maintenance and improvements. Your alternatives may be to market it to investors (who will, of course want a low price) or to become a landlord yourself.

Anyone else with ideas?

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Washington, D.C.: http://otr.cfo.dc.gov/otr/frames.asp?doc=/otr/lib/otr/preamble_2009_and_tax_sale_list.pdf

To my shock and horror, I discovered my house is on this list of tax auctions that the District will be holding Sept. 9th. I never received any kind of notice until I discovered this, this morning. I am currently in Iraq and frantically trying to get my dad to find out what the hell is going on. Can this really be happening? There must be 5,000 houses that the city of D.C. is planning on auctioning in the next couple of weeks.

Elizabeth Razzi: Okay, deep breath. The District (like most jurisdictions) has auctions for unpaid taxes annually. Many, if not most, of the properties listed on the auction sheet do not actually get auctioned off. But, of course, you do need to take this seriously. If you are behind on property taxes (or if your mortgage lender's escrow department fouled up), you need to get that resolved ASAP. The District's Office of Tax and Revenue phone number is 202-727-4829. And here's a link: http://otr.cfo.dc.gov/otr/frames.asp?doc=/otr/lib/otr/tax_sale_brochure.pdf

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Alexandria, Va.: Remodeling/real estate value question here: Do master bathrooms always have to have double sinks? We need to remodel; I'm thinking of ripping out current double vanity and replacing it with nice single vanity plus linen-cabinet type storage. Would that be a turn-off to an eventual buyer? There is a second hall bath, if that makes a difference.

Elizabeth Razzi: I'd try very hard to put in double sinks. Part of is personal preference; I believe it's the key to a happy marriage! Of course, linen cabinets are nice too, but couldn't you find a way to hang one over the commode or something? I just think it rings more bells with buyers than closets.

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Washington, D.C.: Please explain how a house in Washington, D.C.'s Brookland neighborhood, specifically on 13th Place just "sold" for 200,000.00. Elderly former owner passed away recently, a "real estate agent" sign was placed in front of the house, but not a for sale sign, could not find the listing anywhere, yet suddenly on 8/17/09 it "sold" for a ridiculously low price, yes it needed TLC, and prices are down but not that down, are heirs being taken by real estate agent, lawyer, routine story, sales are down, etc, etc. This smells of fraud, I am sure they got around the "legal" aspect but these types of transactions benefit few and hurt many.

Elizabeth Razzi: There's no law saying a home has to be presented to the public--with big "for sale" sign--for a minimum period. All sorts of things could have happened. A relative may have bought out the other heirs' interest. A developer may have bought it. And, as for the value, it could have needed way more work inside than the exterior reflected. Was it termite-ridden? Why assume the heirs are a bunch of dummies?

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Cleveland Park: How much can upgrades really improve the selling price for a condo 5 years from now? For example, if you bought a condo for $390,000, put in $10,000 of upgrades into the bathroom and kitchen, what kind of selling price could that lead to down the road?

Elizabeth Razzi: You'll probably get less than $10,000 worth of bump in price. You'll be selling five-year old sinks and appliances, after all. They won't be cutting-edge style. Then again, you get to enjoy it for five years.

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Advice for Dupont Circle: Don't give up, check with local realtors especially those that have listings/have listed in that building, to find out their opinion or past efforts to sell similar units for their clients. Location helps.

Elizabeth Razzi: Thanks for the advice.

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Land of Humidity: My partner and I are thinking of renting a SFH (either MD or DC). If the home is owned by an individual, what can we do as renters to verify that the mortgage is being paid promptly? I've heard too many eviction horror stories to not be wary about this.

Elizabeth Razzi: You're smart to be thinking about that. You can't really force a landlord to disclose anything, but you can explain your concerns and ask for documentation that the mortgage is being paid. Perhaps they will agree to show you their latest mortgage statement. All you need is to see it; they wouldn't have to turn anything over to you.

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Bethesda, Md.: MRIS statistics show that for the first time in over 3 years, median home prices in Northern Virginia are up on a year over year basis.

Any guess as to when the Maryland side will start to see some price increases?

Elizabeth Razzi: Analysts I quoted in the blog last week said Prince George's might actually lead the way with price increases in Maryland, with supply and demand coming into balance next spring. You probably won't see much by way of price increases until that inventory balance is reached.

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Fairfax, Va.: A few days ago, our short sale offer was rejected by the bank. They want about 25% more than our offer, a price totally not in line with the market or comps in the area. (The price they want is essentially what the house sold for in 2005.)

Our realtor said to accept the higher price contingent on appraisal and negotiate from there, saying we can reject it after the appraisal. Is this a good idea? We are trying to get in under the $8K credit but I'm worried.

Elizabeth Razzi: I would only do that if I could afford to pay the mortgage at that 25 percent higher price. An appraisal contingency doesn't usually say that you can reject the deal if it DOES appraise at your agreed-upon price. But it sure works out better for that agent, doesn't it?

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Somewhere, New England: Just a word of advice: if you care about your property values, NEVER give up when people tell you that a development is inevitable. We had a "Smart Growth" project here that was going to generate about 50 units of affordable housing just a block away from our house. As you can imagine, this was a breach of contract as we would have NEVER bought near people from the projects.

We went through rounds of lawsuits, and it appeared after many delays that we lost. But there was one last detail. A preschool hosted at the site had to be relocated for the two years the project would take. The school system had a vacant school that would fit the bill with code, zoning, etc. However, our hole card was that we are very dear friends with two of the School Committee members, and they were aghast at what was going to happen to our neighborhood with people like this moving in.

Our friends knew they couldn't just "oppose" this, as the developer would have time to find a substitute facility. So our friends strung along the developer, until at the end they had a "crisis of conscience" about using a public school for a "private" childcare facility. Pulling out the rug like this caused a 6-month delay, as the developer hadn't lined anything else up (because they thought they had a deal). Thus the tax credits funding the project expired, and the project couldn't be built without them. Goodbye poor people, hello luxury housing and cheers to their $1-million SFH neighbors (that would be us). So don't give up. Don't ever give up.

Elizabeth Razzi: Okay, I'm only posting this snarky bit to open up the conversation....

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Washington, D.C.: Hello! I'm not sure this is the right forum for this question, but I was wondering what the process is for becoming a landlord in D.C.. We have a basement apartment (with separate entrances in both front & back) that we are going to rent out, and it looks like we're supposed to have a business license (as well as other documentation of legality?). Our real estate agent (from when we bought the house in June) suggested we didn't need to bother with the business license. Are there other types of registration, etc, that are necessary for legally renting in the district?

Thanks so much!

Elizabeth Razzi: Shame on that agent! Indeed you do need a license in the District of Columbia. And DC has stringent tenant-rights laws that you had better understand going in. Contact the District's Department of Consumer & Regulatory Affairs. Here's a link: http://dcra.dc.gov/dcra/cwp/view,a,1411,q,641504.asp

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Beltsville: I just saw my dream home. Do you know how to encourage people to move without them knowing you're doing it?

Elizabeth Razzi: Haha...sounds like a sitcom premise. Well, the most effective way would be to move in next door and be obnoxious.

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Potomac, Md.: I'm sorry, but it doesn't MATTER that the soldier is in Iraq when his house gets auctioned. It was his responsibility to keep up with his house. It's no surprise Iraq seems to have fumbled the maintenance of his house, given how our troops were supposed to have secured the Iraqi oil for us, oh, SIX years ago! Have you seen the Dow has DROPPED 3,000 points while the troops have been "fighting" there. Soldiers, before you go crying for special treatment, why don't you actually EARN said treatment for once. When my portfolio earns back its 30%, give us a call.

Elizabeth Razzi: Whoa! Who said the writer in Iraq is a soldier, a he, or at fault? The writer is just trying to handle a tax problem from 8 or 9 time zones away. Find yourself an air-conditioned space and a cool beverage, Potomac.

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We need to remodel; I'm thinking of ripping out current double vanity and replacing it with nice single vanity plus linen-cabinet type storage.: Oh no! That's as bad as remodeling and turning a 4 bedroom into a 3 bedroom. I cannot stress this enough - double sinks! My husband and I share a sink and it's a big, big pain when we're rushing to get out the door.

Elizabeth Razzi: Have to say I agree....

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Dupont Circle, D.C.: Why doesn't Dupont approach a nonprofit affordable housing provider and offer to sell the unit to them? They'll have the capital to finance the unit and, while Dupont won't make much money, at least the unit will get sold and someone will actually get to live there who needs the unit.

Elizabeth Razzi: Anyone think this would work?

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Then again, you get to enjoy it for five years. : Plus you sell your house. My house is exactly like my neighbor's, but he has a dishwasher. Any buyer who looks at both houses will buy his. So it doesn't' matter how much I recoup on the cost of adding a dishwasher, if it's the antidealbreaker that facilitates me selling my house. Selling is better than not selling.

Elizabeth Razzi: True.

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Nervous sellers: Hi Elizabeth - love the chats and your book! My husband and I have been flirting with the idea of putting our Arlington townhouse on the market and buying a SFH in Arlington/Alexandria. The problem is this will be our first time buying AND selling, and we will need to sell before we can buy (side note: we have 4 pets and don't want to move twice, so selling our place, moving out temporarily and then buying a new place doesn't seem like an option). We both get totally overwhelmed by this undertaking, and sometimes I think we're going to stay where we are forever because we don't want to deal. Our realtor wants us to sell first and use a home of choice clause, but I'd rather put out a contingent offer on a place we like and then try and sell ours. Any words of encouragement or advice on which way to go? Thanks!

Elizabeth Razzi: Thank you, Nervous.. I've done the buy first then sell routine, and if you think you're nervous now, just wait till you try that! I wouldn't do it in this market. It's very risky. And I'm skeptical about the "home of choice" clause. It's hard enough to sell a home now without asking buyers to swallow that uncertainty. Now...about the 4 pets. I'm assuming they're not goldfish. And I absolutely love animals! But four pets are going to make it hard to sell your townhouse. Do you have any animal-loving friends who could host your loved ones (with ample visitation rights) while you mount an aggressive effort to sell that townhouse?

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In Re. Somewhere New England : Wow, just wow. I have some affordable dwelling units in my townhouse area and let me tell you, these are not people from the projects or however you want to think about them. Why don't you open your mind and realize how great it is that working families can afford the American Dream? What's wrong with that? This not section 8 housing by any means and even so, in the words of Celebritology, carm down. In any case, that poster totally woke me up. But now I am very angry.

Elizabeth Razzi: Yeah...I suspect we're being goaded. Then again, maybe not.

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Okay, I'm only posting this snarky bit to open up the conversation: I think it's fake anyway.

Elizabeth Razzi: Yeah, could be. But I figure there could be grains of truth in there.

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To Somewhere in New England: Really? You need to get out more. "Poor" people are not bad people. And sometimes "affordable" (really, who can afford even affordable) housing is geared so that certain members of the community can live where they work. Teachers, police officers. .etc.

And, most 'poor' people work hard, keep their yards clean, don't throw wild parties and are fine upstanding citizens. Everyone deserves a decent and safe home, get over yourself already.

Elizabeth Razzi: posting..

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Re: Somewhere New England: You're wrong, that wasn't snarky. That was evil.

Elizabeth Razzi: and posting..

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Washington, D.C.: To somewhere, new England. I think the real winners in this story are "those people" who don't have to live near you. Congrats.

Elizabeth Razzi: and again, posting...

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Washington, D.C.: The poster from Iraq, if he or she is a service member, should contact his/her servicing legal (JAG) office ASAP. The military lawyers can help. There are laws that protect service members stationed overseas from certain debt collection actions. Sometimes just having a lawyer who can help figure out the process and assist with communications can solve the problem.

Elizabeth Razzi: Thanks for that. I believe the USO might be able to offer a hand as well.

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Renting from Deadbeats: A close friend is now on his third rental house hunt in three years, after both of his residences have gone into foreclosure. The only thing you can do is ask for a credit check on the landlord, along with the info you would need to check his mortgage account from time to time... no picnic.

Elizabeth Razzi: Thanks for the advice!

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Short Sale 25%: I'm sorry, I meant that we would consider their counteroffer of 25% higher contingent on appraisal. Not sure if that makes a difference in your answer. We cannot afford (or rather, refuse to afford is more accurate) the extra 25%. i.e. if the appraisal comes in higher than our offer (which isn't a deal/steal, it's fair, I think), then we can reject. Does that make sense?

Elizabeth Razzi: Your risk is that the appraisal supports their 25 percent higher price. Then what? You've got yourself a contract.

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To Iraq soldier: Call your Senator's constituent services office, tell them you're currently serving in Iraq and ask for their help. Thank you for serving your country.

Elizabeth Razzi: More for Iraq. Thanks.

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Somewhere, New England- WoW: Holy cow. Where to start with this? Besides being a bigot, where is it written that people who want to be able to afford housing are going to bring down property values? I mean, folks like me aren't going to keep up my yard? My house? Nothing like keeping stereotypes afloat so you can feel better about yourself. How about being a human being?

Elizabeth Razzi: Another for New England....

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For New England: I'd rather live next to the "projects" than near someone with an attitude like yours. Who knows what you'd think of my 30-year-old townhouse community with original owners, poor families sharing homes, and young professionals like myself. Personally, I love the variety. You'd probably see it as a slum.

Elizabeth Razzi: posting...

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Northern Va.: Please provide some options for couples separating who are not married and are under water on their home. Any recourse?

Elizabeth Razzi: I'm assuming you bought the home together and are both on the mortgage and the deed. Your options are pretty basic. One buys the other out; both walk away (and into credit rating hell); you talk the lender into a short sale, or you sell at a loss and divy up the pain. I can't think of others, sorry.

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Tysons Corner, Va.: RE: Affordable Housing. WOW! Housing costs in the Metro D.C. are are super high, especially in close-in areas, metro accessible areas, areas with good school districts, etc. Affordable Housing does NOT equal Poor, and Poor certainly does NOT equal sloppy, dirty or disheveled. Many of our school teachers, fire fighters, police officers, as well as single parent households fall into this category. Everyone deserves to live in an area that is safe and doesn't require several hours worth of commuting a day. For what it's worth, I'd much rather be considered "poor" rather than proven ignorant.

Elizabeth Razzi: note the writer claimed to be from New England....

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Whoa Potomac (nice zip code, btw): I'm a liberal, but I don't blame one soldier for the Iraq mess! I've had my tax notice sent to the wrong address, so I'm sure it can happen to a soldier serving overseas! Why assume it's his fault?

Elizabeth Razzi: I'm thinking Obama was right about folks getting loopy in late August....

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Re: Somewhere, New England: OH MY GOD. Really? "Those" people?!

Affordable housing is something that is desperately needed. Sounds like you could use some time with folks who aren't exactly like you, or from your socio-economic class.

Elizabeth Razzi: posting..

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Bowie: Hi Liz, do you know if Maryann is trying to sell her Washington-area home and move to Florida, and how that's working? Current market conditions in the two areas would seem favorable.

Elizabeth Razzi: Maryann seems to be quite content right here in the District of Columbia. No talk of moving to Florida (where she once lived). And it's "Elizabeth." ;)Thanks for the comment....

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Arlington VA: I'm looking to buy a house in Arlington early next year, but I don't know where I'll be getting my mortgage. I'm reluctant to rely solely on my real estate agent. How do I compile a list of reputable and competitive mortgage lenders and brokers to contact?

Also, when I get closer to buying, what's the best way to shop for a mortgage? When I've called lenders to check their rates, they often press me to apply for a loan before giving me any useful information.

Elizabeth Razzi: Don't call. Check their web sites. They usually have the day's rates posted somewhere. I like to keep a little chart of their rates and fees combos before I narrow down my selection of lenders. It gives me an idea of who's generally most competitive. And don't forget to focus on fees--they're just as important as the rate. Include the lenders you already do business with in your search. The credit union, your regular bank. Try some of the web sites for big-name lenders. If you're going with a mortgage broker, get references from people you trust. Not all mortgage brokers are created equal. Some look out for borrowers; some look out for themselves. AND. include your agent's recommendations in your search. If an agent has a longstanding relationship with a loan officer, that can help get your application off the bottom of the pile.

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Falls Church, Va.: I've had a terrible time with mortgage lenders -- they have all the information and rarely have the buyer's best interest as a top priority.

Anyways, we've locked in a 30-year conventional loan with an interest at 5.125% with 10% down. After some evaluation, my wife and I decided to sell off our mutual fund to make a 20% down payment and avoid PMI. Our Wells Fargo lender claims that a 20% down payment will INCREASE our interest rate by 0.125%. The reason is that without PMI, the investors (Fannie Mae) take on additional risk of us defaulting on the loan. With PMI, they know that the insurance company will pay even if we go bankrupt.

As long as we keep our down payment below 20%, we will still have PMI and still qualify for the 5.125% rate. Have you ever heard of being charged a higher interest rate for putting in a larger down payment? We're already "fired" one lender. We'd hate to fire a second one so close to closing.

Elizabeth Razzi: Sounds like a bogus explanation to me. My guess is what's really happening is that the lender would be putting you into a completely different loan, at prevailing interest rates, which might be higher than when you locked. Look around some more--rates just dipped a bit. But you'd still be re-starting the clock and would have to pay new application fees, so it might not be worth it.

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Re: Northern Va.: They could jointly keep it and rent it out, and split the difference on what's owed for the mortgage every month until the housing market gets better.

Elizabeth Razzi: Good idea. Requires ongoing collaboration, though.

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Iraq: Actually, if it is a soldier in Iraq, I don't believe the property can be auctioned in their absence. Someone needs to let D.C. know if this is a soldier because there are special rights and obligations involved on both sides. How would you like to be off fighting for your fellow countrymen, only to come home and find out it's been sold out from under you without so much as a by-your leave?

Elizabeth Razzi: More for Iraq. Thanks.

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To Potomac: The person in Iraq wasn't asking for special treatment, he/she was freaking out and wanted to know how to solve the problem. I can imagine freaking out in general, but as Elizabeth said, from 8 or 9 time zones away... let's all take a chill pill today!

Elizabeth Razzi: Chilling is good.

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Alexandria, Va.: Double-sink vs.. single here again: OK, you guys have convinced me! My husband and I never ever share the bath; he uses the hall bath, I use the master, and I always wondered if couples really do use those double sinks at the same time. We are just not share-the-bathroom type people; guess most folks, or enough folks, anyway, really do share.

Elizabeth Razzi: And that is a good ending point for today! Thanks.

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Elizabeth Razzi: Thanks for a loopy chat today, folks. In tomorrow's Real Estate section, Dina ElBoghdady has a story about two very different investors who bought and rehabbed foreclosures. And be sure to stop by the Local Address blog anytime. Stay cool (literally) and we'll chat again in two weeks. Bye.

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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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