This week in Northern Virginia Real Estate - February Edition
The real estate market in Northern Virginia has been picking up. I have been so busy with buyer's that I have been unable to keep my Blog updated. With rates on the rise this week, the stimulus being ironed out, and conforming loan limits back up over $700k buyers are finally getting off the fence. Right now is the best time to buy.
Financing: With rates down there was a mini-refi boom which kept lenders very busy. Lenders and Appraisers are also tightening up on appraisals. I had an appraisal challenged because it came back too high above the sales price. Sometimes I feel like the cog in the market is HUD/FHA going from one extreme to another and making it so difficult for qualified buyers to get through the approval process. Some examples:
I had one closing that was delayed a week because the lender was apparently "too busy" processing refi's. I was the listing agent and my client wound up having to make another mortgage payment, condo fees, etc. The underwriter also challenged the appraisal. The purchasers had high credit an were putting 30% down. They made the process longer and more stressful than it needed to be. Two different lender's on two different condo transacations this month required copies of the full condo documentation which is a first. They are now also requiring a condo questionaire with full financials for the association. This is a new requirement which can cost the purchaser an extra $120. The lender's are also really cracking down on condo's with high investor ownership. If there are too many investor owner's then the lenders won't fund the loan. In another buyer transaction the appraiser came up with a list of lender required repairs. Some were so ridiculous, for example switch plate covers, drywall repair for a hole in the wall that was only 4 inches, and staining a banister.
Another property a client had an interest in the lender wouldn't fund because there is currently an outstanding $2.4M lawsuit against the Condo Association. The previous owner is suing because they claim they had pest infestation and the association did nothing about it. Luckily I asked the listing agent why the previous contract fell through and they said the financing fell through. The agent sent me the page from the condo docs that showed the outstanding litigation. When I checked with my Lender they told me that most lender's will not fund loans for properties that have outstanding litigation against them.
The lesson learned here is that we need to not rush through the financing and make sure that we leave enough time from contract to close. We also need to do our homework on properties up front so that there are no last minute surprises.
Short Sales: I wrote an offer for a client on a short sale the day after New Years. This week the bank approved the short sale at a price above the list price. Since making the offer on the property the furnace has broken and the pipes froze. There is also damage in the house from the frozen pipes. So basically, the house is in worse condition than it was at contract date and they want my clients to pay more for it. If my clients didn't accept the offer I was told that the house would be going into foreclosure on Friday. My clients obviously are not going to move forward with the contract. We are going to wait a couple of weeks and see what price it comes back on as a foreclosure. I had a situation like this occur on another property a client of mine was interested in. When the property came back on the market as a foreclosure they priced it so low that we were in a multiple contract situation. Luckily my client won out and hopefully will be closing on the property in a few weeks.
With two clients I tried to go the so-called "Approved" Short Sale route. This is where a bank had approved the short sale because they had another offer on the property and the contract fell through right before closing. Most regular short sales take 60-90 days to approve but agents claim that approved short sales only take one to two weeks. Thus far this has not been the case. One short sale after a month of hearing nothing my client finally found another property. A second one even though the seller had chosen to work with our contract another one apparently came in during the week they were approving it and they bumped our contract out. When short sales first started the owner's would ratify the contract like a regular sale and the bank would then approve it. Recently the banks have stopped letting the owners select the contract. Instead they want to see all of them and then they choose the one they want to work with.
Many real estate experts and economists are saying that the market won't get better if we ignore short sale properties and don't try to sell them. The process is long, the fact that my clients contracts can get bumped after waiting for weeks just make them frustrating to deal with.
Foreclosures: Still a lot of multiple offers happening on foreclosure listings that are in good shape. I was able to secure two foreclosure sales for clients at well below list. I decided that the trick is to look for properties in good condition that have been on the market for a while and are higher priced. I go in at a low price with the "My Clients Can't Afford Anymore" line and lately it has been working. Sometimes I think it is easier because everyone is so busy going for the lower priced properties. It looks like in some cases you can get the higher ones for the same price.
Frustration of the week: I was showing a listing of mine and the persons car was towed while I was showing a property. We were in the property for literally 5 minutes before the car was towed. Note to condo associations: If there is no visitor parking where you can park for 10 minutes without a parking pass and Realtors cars get towed they will now longer show the properties. Thus it will de-value the homes in the neighborhood. The sad thing is that the girl loved the property but after her car was towed she changed her mind.
To search the MLS please visit http://www.kimdarwaza.com.