When Does the “Spring Housing Market” Start?
February 3, 2010 by Danilo Bogdanovic
Filed under Buyer Resources, Seller Resources
Many sellers and buyers are waiting until Spring for the “Spring housing market” to sell their home or buy one. But when does the “Spring housing market” really start?
The most common answer is, “Spring!” Is that correct?
Nope.
The “Spring housing market” has already started. In fact, it starts in January. In the 6 years of being a Realtor, January has been the busiest month of the year for me (and in general) when it comes to buyers house hunting and writing a contract on a new home. The third busiest month? February. (The second busiest month is October)
“Really?”
Yup. And here are some guesses as to why based on what buyers have personally told me…
More time + more money = more buyers in the market to buy a home.
People are busy with end of year work, holidays and their children’s winter break in December. This puts selling their home or buying one on the back burner. Once January rolls around, all of that is behind them and they have more time on their hands so they start house hunting.
December and January also equal Christmas/year-end bonuses. And let’s not forget that many people know they have tax money coming back to them from Uncle Sam soon so the thought of a hefty down payment is a bit more bearable.
What it means to you if you’re a seller
If you’re thinking about selling your home, for these and other reasons, you may want to strongly consider listing your home in January/February (more on this in another post coming soon).
What it means to you if you’re a buyer
If you’re a home buyer house hunting in January/February, know that other buyers are doing the same thing so be prepared for increased competition (aka multiple offers) on properties that are great deals.
If you have specific questions or concerns regarding buying or selling a home or the local housing market in general, click here to email me or call me - 703.582.6900.
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- The upfront Mortgage Insurance Premium (MIP) is going up from 1.75 points to 2.25 points (1 point = 1 percent of the loan amount). On a $200,000 FHA home loan, that’s an added cost of $1,000
- FHA home loans to borrowers with a FICO score (aka credit score) of 579 or less will go up from 3.5 percent to 10 percent. On a $200,000 FHA home loan, that’s an added cost of $13,000
- Many home buyers going with an FHA home loan ask for closing cost assistance from the seller in order to minimize the amount of cash they need to come up with out of their pocket. Currently, FHA guidelines allow seller closing cost assistance of up to 6 percent of the purchase price. The new FHA home loan guidelines will decrease the amount from 6 percent to 3 percent. I typically see closing costs (including pre-paid items) on FHA loans of between 4 to 5 percent. Under the new guidelines, the home buyer would have to come up with the last 1 to 2 percent out of their own pocket rather than asking for all of it to be paid for by the seller.
- CNTG/NO KO means that the property is contingent upon one or more things, but the seller can not “kick out” the offer to take another offer. The type of “no kick out” contingency you usually see is an appraisal, financing and/or home inspection. Unless the buyer is paying all cash and has absolutely NO contingencies, the status is CNTG/NO KO
- CNTG/KO means that the contract is contingent upon one or more things, but the seller can “kick out” the offer to take another offer. The “kick out” usually involves some sort of notice and short time frame for the buyer to remove the “kick out” contingency or the seller can accept another offer. One example of a “kick out” contingency “Sale of Home Contingency” by the buyer
- CONTRACT means that all contingencies have been removed and the buyer and seller are locked into the contract. Typically, there is no way out of the contract that doesn’t involve default on the part of one or both parties.
- CNTG/NO KO - you could put an offer on it if the seller is accepting back-up offers. Your offer would be considered only if the original buyer/contract falls through
- CNTG/KO - you can place an offer on it at any time. If the seller likes your offer better, they can give the original buyer notice requiring them to remove the “kick out” contingency. If the buyer does not comply with the terms of the notice and doesn’t remove the “kick out” contingency in time, the original contract could become void and the seller could accept your offer
- CONTRACT - at this stage of the game, the chance of the deal falling apart is extremely small. If you’re really interested in the property, have your Buyer’s Agent contact the Listing Agent and ask them to keep you in the loop should the contract fall apart. Your Buyer’s Agent and you can also place the property on your “watch list” which will alert you of any change to the status (aka from CONTRACT to ACTIVE/back on the market)
- Houston, TX (77048) compared to Ashburn, VA (20148) - Moving.com (click “Compare to another city” to change cities)
- Raleigh, NC compared to Reston, VA - BestPlaces.com (click on “Cost of Living” tab near top to change cities)
- Phoenix, AZ compared to Arlington, VA - PayScale.com (click on drop down menu in top box to change cities)
- Jacksonville, FL compared to Washington, DC (click on “Cost of Living Wizard” near bottom left of page to change cities)
- CNN.com’s “How Far Will Your Salary Go” tool (use Washington-Arlington-Alexandria as the city/area here)
- BankRate.com’s “Cost of Living Comparison Calculator (use Washington-Arlington-Alexandria-DC-VA-MD-WV metro as the city/area here)
- This is probably the most competitive price range to be in. The majority of properties in this price range can be found in Prince William County
- Most of the properties you’ll find in this price point are foreclosure/bank-owned and short-sale properties. But this price range is also very popular with investors so you’ll see investor flips/rehab properties on the market
- A buyer I’m currently working with had to go through countless properties and compete against over 50 offers before finally getting their offer accepted on one. One reason is because a significant amount of the offers being placed on properties at this price point are all-cash offers with no contingencies whatsoever. Trying to compete against cash offers with FHA, VA and even conventional financing offers is extremely tough - though it definitely can be done
- Properties in this price point that are priced at or below market value typically receive multiple offers within a matter of days so buyers have to jump on them as soon as they hit the market
- I have seen properties in this price range in some areas sell for 10 to 20+ percent more than they did at the beginning of 2009
- If you’re a buyer, expect to see 5, 10, 15+ offers on well-priced properties. But don’t be scared or intimidated by that - just make sure you have some extra patience and are ready to jump on a property you like as soon as it hits the market. And if you don’t get it, don’t be too down - it happens a lot at this price point. You have to just keep plugging along
- If you’re a seller in this price point, you’re sitting pretty and can expect an offer quickly if you’re priced correctly
- This is also a very competitive price range to be in. Properties in this price range are a mixture of foreclosure/bank-owned properties, short-sales and traditional resales
- The type of properties in this price range depends on how close or far you get away from Washington, DC. The closer you are to DC, the smaller and/or older of a property you typically get
- Cash offers are also becoming more common in this price range though not as much as in the sub$150K price point
- I have seen properties in this price range in some areas sell for 10+ percent more than they did at the beginning of 2009
- As a buyer, expect to compete against many other offers especially on properties priced at or below market value
- As a seller, you’re still sitting pretty as long as you price your property correctly
- This price range is also competitive especially within the Beltway. Properties in this price range are also a mixture of foreclosure/bank-owned properties, short-sales and traditional resales
- Though there are fewer instances of cash offers in this price range, they’re still out there. Though you may not be competing against 10+ offers as is common in the lower price points, I’m still seeing a handful of offers on well priced properties
- I have noticed values in this price range remain steady with some areas showing a slight increase in values
- As a buyer, expect to compete against other buyers on well-priced properties. You should be aggressive and jump on a property that interests you as soon as it hits the market
- As a seller, you’re still in a price range that has a decent amount of buyers in it. But don’t get greedy because of that fact - you still have to market and price your property correctly
- This price point puts the majority of buyers into the ‘”jumbo” loan/financing category (financing over $417K), which makes for a smaller number of buyers. The reason why is because it’s harder and more expensive to secure “jumbo” financing these days. Fewer buyers means less competition though there are still so few properties on the market that it’s still competitive
- Nevertheless, buyers are out there. A recent listing of mine in Broadlands has many buyers come through as soon as it hit the market and it the sellers received and accepted an offer within 10 days of being on the market
- Most of the properties in this price range are short-sales and traditional resales though you may see a foreclosure/bank-owned property here and there
- Though cash offers are rare at this price point, they’re still out there. I had a buyer who put 20 percent down, use conventional financing and offer the highest amount of all the offers lose to a lower priced, all cash, non-contingent offer
- I have seen values in this price range remain relatively steady since 1/1/09
- If you’re a buyer, you still have to be aggressive on finding and buying a property in this price range. But it’s definitely not as crazy as the sub-$350K range
- If you’re a seller, make sure you’re aware of your competition/other homes on the market so that you price your property correctly and adjust to comps and new properties as they come on the market. The higher the price range, the more important it is to have an experienced and knowledgeable Listing Agent working for you
- This is where the pendulum starts to swing the other way a bit (generally speaking). Properties in this price range tend to stay on the market longer and have fewer buyers competing for them. Nevertheless, if the property is priced at or below market value, buyers will come out from everywhere
- For example, there was a foreclosure/bank-owned “McMansion” in Fairfax listed just last month that was priced at $722K. This was an incredibly attractive price because the property was worth well over $800K. A buyer I’m working with offered $800K using conventional financing with a down payment of 30 percent. Their offer was not chosen because the winning offer was…take a guess…all cash, non-contingent. (Yes, someone paid $800K+ cash for a house)
- The example I just gave is not isolated to Fairfax - it’s happening in Loudoun and across Northern Virginia
- I have seen values in this price point remain steady or go down since 1/1/09 depending on location and how hard the particular community has been hit with foreclosures and short-sales
- As a buyer, this price point can be good and bad. It’s good because the market is not as crazy as the lower price points. But it’s bad because there is so little inventory on the market to choose from. You may have to wait weeks or even a few months before a property that fits your criteria. Some of my buyers have made adjustments to their criteria so they can have more properties to choose from
- As a seller, price and marketing are key in this price range. Make sure your Listing Agent is knowledgeable and is on top of your local market
- This is the least competitive price range especially in Loudoun County. Properties in this price range in Loudoun have been known to be on the market for months and months. As you get closer to DC, the average days on market is less, but still much higher than lower price points
- Some of the properties in this price range are foreclosure/bank-owned properties, but most are short-sales and traditional resales
- This price range is still showing signs of weakness and depreciation especially the farther you get from DC
- If you’re a buyer, you’re in a good position in this price range. There are few buyers that are in the market for a $900K property and a fairly decent amount of inventory for you to choose from, including new construction
- If you’re a seller, you’ve got an uphill battle especially in Loudoun County. Be patient and realistic when selling your home. Even more so than in any other price range, make sure you have a knowledgeable and aggressive Listing Agent who will market your property correctly and will price it where it should be to get an offer
- At a 5.0 percent mortgage rate with .7 points, your principal and interest would be $2,147.29 and your points would equal $2,800
- At 8.25 percent with 1.8 points, your principal and interest would be $3,005.07 and your points would equal $7,200
- At 17.48 percent with 2.2 points, your principal and interest would be $5,858.79 and your points would equal $8,800
Is Selling Your Home in the Spring a Good or Bad Thing?
A Seller’s Guide to the Short-Sale Process
Claim the Home Buyer Federal Tax Credit with IRS Form 5405
January 30, 2010 by Danilo Bogdanovic
Filed under Buyer Resources, Taxes
Earlier this month, the IRS released form 5405, which allows homebuyers to claim up to an $8000 tax credit for the purchase of a home. You can get a copy of IRS form 5405 by clicking here or check out the copy embedded below. You can find full details on claiming the tax credit on IRS.gov.
IRS form 5405 home buyer tax credit -
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First Time Home Buyer Federal Tax Credit Extended and Expanded
Upcoming Changes to FHA Home Loan Guidelines = Higher Costs to Home Buyers
January 26, 2010 by Danilo Bogdanovic
Filed under Buyer Resources, Mortgage/Lending
Upcoming changes to FHA home loan guidelines will increase the cost of buying a home for buyers - especially first-time home buyers. It may sound crazy considering the state of the national housing market, but it’s true.
Here’s the official HUD press release (click here if you don’t see the embedded HUD press release regarding FHA home loan guidelines)…
In a nutshell, here are the FHA home loan guideline changes and what they mean to you…
To put the changes into perspective, let’s see what the difference in cost will be to John and Jane Smith, first-time home buyers in Northern Virginia using an FHA home loan under today’s guidelines versus the new guidelines…
Today’s FHA home loan guidelines
John and Jane Smith are buying a town home in Northern Virginia for $300,000. They will need to come up with 3.5 percent of the sales price ($10,500) for the down payment. They’re happy that they don’t have to come out of pocket for their closing costs because the sellers agreed to credit them back 4.5 percent of the sales price ($13,500) to cover them. John and Jane need a total of $10,500 cash out of pocket to buy the town home.
Upcoming FHA home loan guidelines
John and Jane Smith will need to come up with $10,500 for the down payment if their credit score is 580 or above. If their credit score is less than 580, they will need to come up with $30,000 for the down payment. The seller will only be able to pay up to 3 percent of their closing costs so they will need to come up with the remaining 1.5 percent ($4,500) out of their own pocket. In addition, they will pay an extra .5 percent ($1,500) in upfront Mortgage Insurance Premium (MIP). The total increase in cost to buy the same town home will be either $16,500 or $36,000 depending on their credit score with the majority of it coming out of their pocket in cash.
Under the new FHA home loan guidelines, Jane and John will need at least 62 percent, if not 343 percent more cash out of pocket to buy the same town home.
When do the new guidelines go into effect? No official date has been set. But they are coming and the word on the street is sometime late spring/summer 2010.
If you’re sitting on the fence when it comes to buying a home right now, you may want to jump off and take advantage of the current FHA home loan guidelines (and federal tax credit) before they change. If you don’t, you could be in John and Jane’s shoes and need an additional 62 percent (if not 343 percent) to buy the same home in the future.
If you have specific questions about the FHA home loan guidelines, the housing market or real estate in general, email or call me - 703.582.6900 - danilo.bogdanovic (at) gmail (dot) com.
What the Heck is the Difference Between “Contingent” and “Contract”?!
December 22, 2009 by Danilo Bogdanovic
Filed under Buyer Resources
Here’s a two-part question one of my clients recently asked me… “Can you explain to me the difference between ‘CNTG/NO KO’, ‘CONT/KO’ and ‘CONTRACT’? Can you still put offers on houses like that?”
The abbreviations stand for the following:
As far as still being able to put an offer on a property in each of these three situations…
A few important things and disclaimers…
1) If you have questions about the status of a specific property or whether you are able to submit an offer on it, contact your Buyer’s Agent. If you don not have a Buyer’s Agent, contact me directly - danilo.bogdanovic (at) gmail (dot) com - 703.582.6900.
2) These abbreviations are used by the local MLS here in the DC metro area. Different real estate search sites and different MLS’ use different abbreviations/terms so none of this may apply to you/your area.
3) I am not a lawyer - this is not intended as legal advice nor guidance - every contract and its’ terms is different - every MLS and area is different - check with your Buyer’s Agent/Realtor and others for guidance.
Buying New Construction, Financing and Future Interest Rates
December 18, 2009 by Danilo Bogdanovic
Filed under Buyer Resources, New Construction/Builders
Here’s a three-part question recently asked by a new construction home buyer I’m working with… “If my new home won’t be ready until June, how will that affect my financing contingency, when can I lock in my rate and what happens if rates spike up between now and June?”
That’s a very good and important question.
To answer the first part of that question, your financing contingency depends on the what the builders’ contract says. In my clients’ particular case, the builders lender has 45 days from the date of ratification to find him a loan. If they can’t do so within those 45 days, they can extend that time period for another 30 days.
Notice that I highlighted “date of ratification.” Whether you settle in 30 days, 6 months or 9 months, the financing contingency usually starts when you sign the contract and it’s then signed by the builder’s rep.
But - and a very important “but” - if you were to do anything to adversely affect their credit, you could lose the financing contingency time period and could be in default (aka lose your $20K deposit).
To answer the second part of that question, the typical interest rate lock is done 30, sometimes 60 days before settlement. If you would like to lock it in for longer, you should check if it’s possible with your particular lender. Even if it’s possible, you will most likely have to pay a point(s) upfront to do so. (One point is equal to one percent of the loan amount)
If you’re 6 months out from settlement, you may have to wait 4 or 5 months before locking in your rate. Yes, that can be a gamble, but it’s the price you pay for buying new construction.
Which leads me to the third question…
Even if rates go up between now and when your new home is delivered, you may still be responsible for buying the property. And if you don’t move forward with the purchase, you may be in default and could lose your deposit.
Now before you take any of what I just wrote as gospel, let me give you the mandatory disclaimer:
I am not a lawyer nor a loan officer/lender - this is not intended as legal advice nor guidance - every new home builder’s contract is different - every lender’s guidelines and offerings are different - check with your Buyer’s Agent/Realtor, your loan officer/lender and others for guidance.
***If you are interested in new construction in the Northern Virginia area, contact me before you head out to new home sales centers - danilo.bogdanovic@gmail.com - 703.582.6900. You need to have your own Buyer’s Agent representing and guiding you through the process. Remember - the builder’s sale rep works for the builder - NOT you. And your Buyer’s Agents/Brokers fees are already built into the sales price so it’s of no additional cost to you.
Dulles Airport Impact Overlay District Disclosure Requirements
December 15, 2009 by Danilo Bogdanovic
Filed under Buyer Resources, Seller Resources
Several of you have asked me about the Dulles Airport Impact Overlay District and any required disclosures. To best answer your question, my broker and I spoke with the Dulles Area Association of Realtors (DAAR) about the subject. Here is what DAAR had to say…
As a follow-up to our discussion this afternoon, the attached section of the Loudoun County Zoning Ordinance states that Homeowners Associations are required to make disclosure if the property is in the Airport Impact Overlay District. This would require a home being resold within a particular subdivision that has an HOA to provide the disclosure as part of the HOA “Packet” that is transferred to new owners. As you know, the rules covering subsequent disclosure are in the Virginia Property Owners Association law. The county ordinance also clearly states that all deeds of conveyance are required to have the disclosure. Since the county ordinance states that all deeds of conveyance must contain the disclosure that covers all transactions for properties that do not have an HOA.
A great tool created by the Washington Airports Task Force for buyers and the real estate community is “The Homebuyer’s/Broker’s Guide to Compatible Land Use Around Washington Dulles International Airport” found under http://www.washingtonairports.com/noiseandlanduse/homeownersguide.htm. The intent of the guide is to assist potential homebuyers and the real estate community in assessing the effect of aircraft noise and flight operations on homes in areas close to Washington Dulles. You may also find useful a presentation conducted before DAAR members last month by the Washington Airports Task Force on this issue.
If you or your clients would like to determine whether a particular property lies within the AID, visit Loudoun County’s mapping system at http://gisinter1.loudoun.gov/weblogis/default.htm An address can be typed in and determination made as to whether the property lies in any type of overlay district (ie Historic, Mountside, etc.)
If there are further questions about flight activities in or around Dulles, contact:
Anita Kayser, Director, Washington Airports Task Force anita@washingtonairports.com, Phone: 703-572-8714, Address: 44701 Propeller Court, Suite 100, Dulles, Virginia 20166
If there are further questions about the AID designation within the Loudoun County Zoning Ordinance, contact:
Loudoun County’s Zoning Hotline at 703/777-0118. They are really great about getting back to you within 24 hours.
In addition, check out the Loudoun County Zoning Ordinance that covers this subject (click here if you do not see the embedded document below)…
Loudoun County Dulles Airport Impact Overlay District Disclosure Requirement -
Compare Cost of Living in Northern Virginia/Loudoun County to Other Areas of US
December 12, 2009 by Danilo Bogdanovic
Filed under Buyer Resources, Seller Resources
Many of you who are thinking about moving here from other parts of the U.S. ask me the question, “What’s the cost of living difference between (enter your town here) and Loudoun County/Northern Virginia?”
To help answer your question, I’ve compiled a list of web sites you can check out. Each of these sites will give you anywhere from a little to a lot of detailed comparisons of cost of living of your town to any city/zip code in Loudoun County or in the Northern Virginia/DC metro area.
Here are some sample searches from each site:
If you would like to see how far your salary goes when moving from a major metropolitan area to the DC metro area in general, check out,
If you have specific questions regarding cost of living differences, what stores and price points this area has to offer in general or in detail per city/zip code, drop me a line any time. I can be reached at danilo.bogdanovic (at) gmail (dot) com or on my cell - 703.582.6900.
Loudoun/Northern Virginia Housing Market Conditions per Price Range
November 12, 2009 by Danilo Bogdanovic
Filed under Buyer Resources, Seller Resources, Statistics
The question I get asked most often is, “How’s the Loudoun/Northern Virginia housing market?” Today’s housing market conditions do not allow for one, general correct answer. For the purpose of giving you a good, general idea of the Northern Virginia* housing market conditions, I’m going to break it down by price range - you choose the price range you fit into.
*I am referring to all of Northern Virginia, which includes Loudoun, Prince William and Fairfax counties (including Arlington, Falls Church, Alexandria, etc)
Note: If you would like to know what the specific housing market conditions are within your community or the area you are interested in buying within, click here to contact me so I can provide you with the specific details and statistics.
Less than $150K
$150K to $350K
$350K to $500K
$500K to $700K
$700K to $900K
$900K+
Please remember that these are general market conditions. To find out what the housing market conditions are within your community or the area you are interested in buying within, click here to contact me so I can provide you with the specific details and statistics.
First Time Home Buyer Federal Tax Credit Extended…and Expanded
November 6, 2009 by Danilo Bogdanovic
Filed under Buyer Resources, Homeowners
The government has extended the first-time home buyer federal tax credit as well as expanded to include many existing home owners. First-time home buyers now have until April 30, 2010 to sign a contract and qualify for a tax credit up to $8,000. And starting November 7, many existing home owners may qualify for a tax credit of up to $6,500.
For more information, check out this flyer provided by the Virginia Association of REALTORS(R):
Information on extended and expanded first time home buyer federal tax credit -
You can also get more information on the extended first-time home buyer tax credit by clicking here.
Putting Mortgage Rates Into Perspective
October 16, 2009 by Danilo Bogdanovic
Filed under Buyer Resources, Interest Rates, Mortgage/Lending
I’ve heard some folks saying, “Uh oh…mortgage rates are up!” and “Mortgage rates went up a lot (1/4 point) since last week and I’m going to wait for them to go back down.” Yes, mortgage rates may have gone up since last week. Yes, they may (or may not) go back down (though, in my humble opinion, the only way from here is up).
But seriously…do you realize how good we have it right now when it comes to mortgage rates and points?!
Let’s put things into perspective…
Several of my home buyers with good credit recently got sub-5 percent mortgage rates with no points (a point is equal to 1 percent of the loan amount). Not too long ago, people could only dream about single digit rates, let alone sub-5 percent. Here’s the pudding…
- In July 2006, the average 30-year fixed-rate mortgage was at 6.76 percent with .5 points
- In July 2001, the rate was 7.13 with .9 points
- In July 1996, the rate was 8.25 with 1.8 points
- In July 1991, the rate was 9.58 with 2 points
- In January 1982, rates were 17.48 with 2.2 points
When is the last time mortgage rates were below 5 percent with less than 1 point? They haven’t been this low since Freddie Mac started tracking mortgage rates in 1971.
Let’s crunch the numbers on a $400K loan…
Aren’t you glad you’re buying a property at today’s mortgage rates rather than those of the last two decades (especially with prices at pre-2000 levels in some areas)?!
And don’t forget the icing on the cake…the $8000 first-time home buyer federal tax credit.
So next time you say, “Rates just went up” remember that it could be worse…MUCH worse.
For a complete list of the average mortgage rate and points per month since 1971, click here.
