New Construction Homes vs Existing Homes

Many home buyers have questions about new construction homes versus existing homes. One such question was posted by David on Trulia’s Q&A section…

New and used prices on comparable homes, in my area, are the same (Northern VA). Are there advantages of buying an older home, besides immediate possession?

Here is my $0.02 on the subject (which is also the answer I posted on Trulia)…

The prices may be the same, but what you get for your money is not the same. You will pay a premium for having a new construction home over an existing home. Why? Because it’s new.

It’s similar to buying a car – you can pay about $45K for a brand new fully loaded Mercedes C350 or you can pay the same for an excellent condition, 4 year old, decent mileage S550. Some people will go for C350 while others will go the S550 – it’s personal preference.

Regardless of which you may think you would rather go for, you should check out all your options. Have your Buyer’s Agent get you all of the info on all new construction builders/communities in your price point in the areas you’re interested in. Have them take you to see the model homes (some builders have models located in communities other than the ones you’re interested in). Have your Buyer’s Agent give you a list of all the current builder incentives, lot releases, etc. And have your Buyer’s Agent give you the inside scoop on their and their clients’ experiences with each builder in the area whether it be a local or nation builder with local presence.

As far as advantages of one versus the other…new homes are just that, new. The new smell, the lack of wear and tear, you getting to choose where everything goes (i.e. outlets, ceiling fans, HDMI points), you getting somewhat of a choice of the look and color of cabinets, etc. You also get the builder’s warranty.

The disadvantages are that you have to deal with all of the construction around you until they finish the community, the switch of the HOA from the builder to the future HOA management, the settling of the house (i.e. nail pops, dry wall tape, etc) and what some say to be lesser construction and attention to detail than “how they used to build them”.

As for existing homes, the house has already settled and the previous owner(s) have more than likely addressed those issues. You may also find than an existing older home has been renovated with higher quality materials and looks better than a new home for the same price.

For example…your new home has builders’ “level 1″ granite, decent cherry cabinets, their standard hardwood floors and the typical builder secondary bathrooms choice of materials. But the resale home has really expensive and awesome looking granite, top of the line cherry cabinets and high-end, wide plank hardwood floors and the secondary bathrooms have been renovated with top of the line contemporary vanities including granite and cabinets, awesome and expensive tile work (floor and walls), top of the line fixtures/faucet, etc.

There’s more to it than just this, but this gives you an idea of some of the differences and just how much there really is to consider. If you would like to chat in more detail about the rest of the differences and what to consider, give me a call or email me anytime. I have worked with many new construction homes in Loudoun County and stay in constant contact with sales reps at all of the new (and future) new home communities and developments in the area.

P.S. This is David’s reply to my answer: “I really appreciate your comprehensive reply to the question I posted on trulia. I would like to talk with you more. I have been prequalified for a VA loan and am looking for a home in Western Loudoun County. Can we talk? 571-XXX-XXXX”

If those of you reading this would also like to speak in more detail about this, don’t hesitate to contact me.

-Danilo

Curb Appeal – Setting the Tone, Attracting Home Buyers

Two important pieces of the marketing puzzle are web appeal and curb appeal. Getting both right is key to selling your home for top dollar in today’s market. I discussed web appeal in an earlier post entitled, “Web Appeal – Your Home’s First Impression to Buyers” (click on title to read). Today, we’re going to look at curb appeal.

Curb appeal sets the tone and attracts (or deters) home buyers. It makes your home stand out from the competition – hopefully in a good way. If done properly, it informs and attracts those just driving by as well as buyers/agents pulling up in their car to see the property in person. If done incorrectly, it will deter potential buyers and make your competition (aka similar homes for sale in the area) appear better and more appealing than yours which usually leads to the buyer placing an offer on your neighbor’s home rather than yours.

How do you go about getting an A+ grade on your home’s curb appeal? The same way you would go about getting your ready to sell. Give it a full detail. You won’t get top dollar of your car is dirty and doesn’t look well maintained. The same goes for your home.

Here’s a partial list of what should be done…

• power wash the exterior
• replace any damaged siding, bricks, wood, etc.
• give your home a landscaping facelift (mulch, shrubs, flowers, trees, grass, etc)
• fresh coat of paint if applicable
• bay and other window frames, shutter touch-up
• power wash (and possibly re-seal/stain) the deck

There’s more, but this gives you an idea of what I’m talking about.

One part of curb appeal which few agents/brokers talk about is the yard sign in the front yard. Why don’t they talk about it? Because the typical agent/broker yard sign does absolutely nothing to increase the curb appeal. In some cases, it detracts from the home’s curb appeal.

The typical agent/broker yard sign gives buyers only the following information…

• brokerage name and phone number
• agent name and phone number

The irony of it is that we, as agents and brokers are hired by you to market your home in the most effective manner possible in order to attract a ready, willing and able buyer with an offer acceptable to your terms. The bad news is that the typical yard sign gives no information about the property whatsoever which does nothing to attract a buyer which, in turn, does nothing to help sell your home.

The good news is that you don’t have to settle for the norm nor anything less than top of the line. Here’s why…

 

 

This is one example of a custom yard sign I made for a recent listing of mine. Here’s what this sign includes that others do not…

• price
• photos of the interior
• number of bedrooms and bathrooms
• description of other key interior features
• custom property web site URL

Why is this stuff on the sign? Because this is the type of information that buyers want and they want it right then and there. And as the saying goes, “If you got it, flaunt it” – inform potential buyers driving/walking by about your home, what it’s best features are and make them say, “I want to see this house!” This is key, because getting a buyer to want to see your home in person is the first step in getting an offer in your hands.

In the case of this particular listing, while the sitting at the settlement table, the buyer said, “We pulled up to the house and said, ‘Wow, that’s an awesome sign!’” That’s the kind of stuff that will make a buyer remember your home over others (i.e. “the home with the awesome sign”) which plays a part in getting your home sold for top dollar.

The bottom line is this… If you want to sell your home for top dollar in today’s market, you must have excellent and “stand out from the rest” web appeal and curb appeal. If you don’t your home will sit on the market while those around you sell or you lower the price. If your home’s web appeal and curb appeal is better than the rest, your yard sign will look like this,

 

 

Local New Home Sales Trump Rest of Nation

There’s the national new homes sales market. Then there’s the local new homes sales market. And they’re quite different from each other. The Washington, DC metro/Northern Virginia new homes sales market is ahead of the curve and doing much better than the rest of the nation.

There have been many articles and media coverage of how new home sales have slowed down. In some areas, new home sales have “plummeted” and “almost completely dried up”. Builder Magazine just ran an article, “New Home Sales Decline, Prompting Predictions of Worst Year on Record”, which paints a very gloomy picture of the new home market.

But that’s the national market. What about the local market here in the Washington, DC metro/Northern Virginia area?

Builders with developments/communities in this area saw the worst of the local new home sales market 3 to 5 years ago. Things started slowly turning around about 3 years ago. Then, as of about 18 months ago, someone lit a match under the new home sales market and the market took off.

For example, in speaking with several folks who are in the construction business, both builder employees and subcontractors, work finally began flowing about anywhere from 12 to 18 months ago. Rather than looking for side jobs to make ends meet, they’re working full time building homes across the DC metro/Northern VA area.

Another example is builder sales centers. Instead of a lot of green dots signalling open lots and sales reps throwing incentives at buyers as if they were confetti, there are red dots all over the site maps and incentives are few and far between.

And the attitude of builder sales reps is quite different… A look of despair was hard to hide a few years ago while smiles and positive attitudes are the norm nowadays.

The most impressive example is the actual number of new homes being sold and the success of communities and developments throughout the area. At the top of the list is Brambleton (Ashburn, Loudoun County, VA)…

In 2010, Brambleton set a record for the most new homes sold in its’ 10 year history. On top of that…Brambleton has sold more homes January through July 2011 than it did January through July 2010.

The thing that makes that statistic even more impressive is that Brambleton is made up of not just one builder, but 7 builders. And they all build different products and appeal to different home buyer personalities, incomes and demographics.

Why is this information important to consumers? Here are a just a few of the reasons…

1. If you are only reading national headlines, you may get a rude awakening when you walk into a new home sales center and try to negotiate 10% off the base price, get another $50K in incentives and put down a deposit on that awesome lot that was available last week.
2. You may not have believed your Buyer’s Agent when they told you something similar last week or even 18 months ago, but here’s the thing…they were telling you the truth.
3. If you’re a seller, you need to realize that you don’t have just your neighbors’ homes to compete with. You also have nearby home builders to compete with. Buyers are not just looking at existing homes – they’re also looking very closely at what home builders have to offer. And what they have to offer is often very enticing.
4. Builders know that they have the market on their side so you have to be even more careful when working and negotiating with a builder. You should have a Buyer’s Agent well versed in new construction on your side. Remember, a real estate agent’s/broker’s commission is a already written into the sales price. And no, you don’t get that commission refunded to you if you don’t have an agent/broker. So why would you not hire an agent/broker, pay the commission anyway and pad the builder’s pockets with even more profits?

If you have specific questions about the local new homes sales market, new home communities, builders or the new home purchase process in general, email or call me any time.

 

Can You Handle The Truth?

Most, if not all people say they want truth and honesty from others whether it be personally or in business. But not all people can actually handle the truth. This is especially true when it comes to their home because it’s often a perceived reflection of themselves.

Let me share a story with you illustrating my point…

Chapter One – Wanting Truth And Honesty

Several weeks ago, I was contacted by someone who had their home on the market. They were not very happy with their listing agent/broker and were thinking about switching. They contacted me after I was recommended to them by a past client of mine.

Over the course of two weeks, we exchanged numerous emails and phone calls and we had two lengthy face-to-face meetings at their home. I gave them an honest assessment of their situation which included, per their request, an assessment of how their current agent was doing from a selling/marketing standpoint.

I told them that their current listing agent was doing all the right things and their home had excellent exposure. When asked if I would do anything differently from a marketing standpoint, I said that I would do all of the things that their current agent was doing as well as a few things they were not which is what sets me apart from most other agents in the area (I give credit and take credit equally). I did not bash or disparage the other agent nor did I answer any questions that would cross any lines of legality or ethics. In fact, I gave the agent all of the credit they deserved, which was a lot.

Then they told me that they “just don’t feel right about the agent” and that there is something that “bothers” them. I told them that how they click with one agent versus another is the same way people click (or don’t click) with other people in general – you either do or you don’t. And that was not for me to discuss nor steer them one way or another. That’s something they had to decide amongst themselves on their own.

During and after they talked things over, they sent emails saying things like,

• “It was so great meeting you the other day and I thank you for my education lesson. You taught me a great deal!”
• “I will be in touch very soon- and thanks for being a guy full of integrity. I completely appreciate that.”
• “If this current offer goes no where – we will be KNOCKING on your door!!!!! You rock!”

After the offer they received did not work out, they told me they wanted to switch to me and sent me this,

• “We like the way you think. We can get the necessary doc you need to proceed with us and get to it when you get back [from vacation].”

At this point, things looked great!  But then…

Chapter Two – Not Really Wanting Nor Being Able To Handle The Truth

Their property is very unique and there was only one other property on the market that truly competed with theirs – same town, very similar price, similar size, etc. Well, that property went under contract while theirs was still active.

During our discussions about the situation, I said, “I wonder if the buyers that came through the other day are the ones that bought the property on XXXXXXXX. I say that because it would make sense for them to look at and consider that property along with yours.”

I then followed that up with facts – the property had a larger lot, more privacy due to not having a neighbor directly behind them nor having to share a driveway with another property, slightly more square footage, closer to a shopping center/amenities, etc.

Then they sent me this,

• “Actually, it would not, in our opinions! We have decided that it would be in our best interests to remain with [our current listing agent[ as [they] know the value of extremely well built homes in this area! You should be wary about criticizing the properties of potential clients in the future. Just a suggestion!”

The last sentence is what I mean when I ask you, “Can you handle the truth?” The irony is that truth and honesty is what they admired the most about me in the beginning yet, they used that against me when it didn’t agree with their personal opinion even though it was true and was exactly what they needed to hear.

In order to get the listing and make well over $10K in commission, I could have just agreed with them and told them that their home was the greatest thing since sliced bread because that’s what they obviously wanted to hear. But lying or blowing smoke to get a client is something that I will never do. Doing that is detrimental to you and will hurt your chances of selling your home.

But more importantly, it’s not what I’m about.

What I am about is honesty and the truth. I would rather be honest and truthful and waste my valuable time and money (as is the case in this situation) than lie to make thousands of dollars. Despite incidents like this, I will not ever change that philosophy.

Chapter Three – Can You Handle The Truth?

If these folks were you, would Chapter Two be written differently? Would you have taken my constructive criticism and the facts and applied them in a positive way? Or would you have also not wanted to hear the truth?

If you can handle the truth, then we will get along just fine and I would love to hear from you. If you can’t, I may not be the right agent for you.

Loudoun County Housing Inventory and Days On Market

Let’s take a look at Loudoun County’s housing inventory and average days on market (DOM). This is important to know because it gives you a sense of how to negotiate as a buyer and how to position your property as a seller.

Loudoun County inventory – new and active listings

There are just under 1500 active listings in Loudoun County, which is on the low side. To give you some comparison points…active listings hit a decade-low 1087 in December 2009 (seller’s market and values went up). And active listings hit an all time high of 4659 in the summer of 2006 (that’s when everything really hit the fan, prices started tanking and it was a buyer’s market).

Note: Yes, inventory has risen in the recent weeks. But that’s a yearly/seasonal thing called the “Spring market” when sellers believe they can get the most for their homes and put their home on the market.

Loudoun County average Days On Market (DOM)

The general rule of thumb in this area has been that when DOM goes above 4 months (120+ days), it signals a buyer’s market. If DOM is below 3 months (<90 days), it signals a a seller’s market. Right in between 90 and 120 days typically signals a balanced market. As you can see, DOM is below 80 and was even as low as 40 for a while there.

What does all of this mean?

For home owners that are able to sell their home at its’ present value, the market is on your side. DOM and inventory are low, two things that bode well for sellers.

For buyers, it means that your choice of homes is limited. In addition, you’ll see a lot of competition on the current homes on the market and even stiffer competition (aka multiple offers) on the homes that are priced very well and a great value.

Even though the signs point to a sellers’ market (and recovery), don’t get overly excited. Among other things, there is a lot of shadow foreclosure inventory to still get through and lending guidelines are making it harder and more expensive for consumers to get financing.

If you would like statistics about a specific town or community within Loudoun County, don’t hesitate to contact me.

Washington, DC Metro Area Rental Rates Rising

Rental rates in the Washington, DC metro area (including Northern VA and MD) are rising. They’ve risen so much that the Washington, DC metro area came in 9th in the list of metro areas in the U.S. with the greatest increase in rental rates.

Here’s the list in order…

1. Greenville, SC (+11.2%; $669 average monthly rent)
2. Chattanooga, TN (+10.4%; $726 average monthly rent)
3. Savannah, GA (+8.4%; $866 average monthly rent)
4. Portland, OR (+8.1%; $875 average monthly rent)
5. San Jose, CA (+8.0%; $1,716 average monthly rent)
6. Nashville, TN (+8.0%; $786 average monthly rent)
7. Tacoma, WA (+8.0%; $900 average monthly rent)
8. Denver, CO (+7.5%; $873 average monthly rent)
9. Washington, DC (+7.4%; $1,473 average monthly rent)
10. Raleigh, NC (+7.4%; $785 average monthly rent)

Good for landlords and investors

This is good news if you’re a landlord/investor because it’s more money in your pocket and a higher return on your rental property investment. For those that are renting their property out because they are upside down, but don’t want to or can’t do a short-sale, the rental rate may soon able to cover your mortgage rather than you losing money every month.

Not good for renters

This is not good news for renters. It means more money and less negotiating power when getting a rental. For several years now, rental rates have been very low compared to mortgage amounts for the same property making renting a very attractive prospect. But that’s starting to change. For those on the fence about renting or buying, you want to start explore your options when it comes to buying. Rental rates are on the way up yet, prices are at realistic levels and mortgage rates are still very low (for the moment).

Note: This figure is for the general DC metro area – each specific area and subdivision is different. Contact me to find out what the rental market is like in your specific area or the area you’re looking to rent in.

H/T Bill Lublin

Congratulations to the Virginia Leadership Academy, Class of 2009

IMHO, to be a great Real Estate Consultant/Realtor, you have to do more than just “sell real estate”. That is why, over the past 9 months, I’ve been attending sessions throughout Virginia as part of the Virginia Association of REALTORS® (VAR), Virginia Leadership Academy (VLA) program.

From VAR’s website:

VAR challenges REALTORS® to invest in themselves and their associations by participating in the Virginia REALTORS® Leadership Academy . Through this program, VAR identifies and trains emerging REALTOR® leaders from all around the Commonwealth. Approximately 20 applicants are accepted each year, and each class of participants builds their leadership skills through a series of retreats and a major class project. Graduates are groomed to take on leadership positions in their local associations, at VAR, or in other organizations.

Not only do the participants develop strong leadership skills to put to use in their communities and professional lives, they also nurture strong relationships with their class members that turn into rewarding business and personal connections.

The VLA program consisted of several multi-day retreats throughout Virginia. We studied and discussed leadership and listened to and spoke with many incredibly knowledgeable and experienced folks with credentials the length of a real estate sales contract. We also spoke with local and state association officials and worked on a very mentally challenging class project.

This year’s class was instrumental in the design redesign and continued new direction of the Virginia Homeowners Alliance. This was a tough project, but the outcome was better than I thought it would be and everyone in our class learned a lot about leadership and speaking up for the sake of others in the process.

The VLA program was by no means a “piece of cake” – it meant taking time out of my professional career and working with 21 other professionals, many of whom are “Type A”. Was it worth it? It was more than worth it.

Will I end up being in a leadership role in the local or state REALTORS® association? I don’t know. But I do know that I’ve learned a lot, made some great friendships in the process and have become a more well rounded person personally and professionally.

Thank you to VAR for the opportunity to be a part of the Virginia Leadership Academy, Class of 2009 and congratulations to all my fellow alumni! (click here if you can’t see the video below)

Loudoun Community Spotlight: Pulte Homes, Hamlets at Red Cedar

This Loudoun County Community Spotlight falls on the Hamlets at Red Cedar community by Pulte Homes. The community is located off of Evergreen Mills Rd in Leesburg, VA (click here for map). Once the community is complete, there will be a total of 350 homes situated on 1300 rolling acres.

Personally, I think that the Hamlets at Red Cedar community is ideal for those looking for that “private and quaint” community feel yet, be close to amenities and things to do.

The majority of single family homes in the Hamlets at Red Cedar community are located on 1/2 acre lots and the entire community is surrounded by conservancy lots ranging from 10 to 100 acres. This gives you privacy from surrounding development for up to 100 years (based on current zoning laws regarding conservancy lots).

Even though being inside of the community give you a feel of being away from the hustle and bustle of daily life, you are only 5 to 10 minutes from Brambleton Town Center, 10 to 15 minutes away from downtown Leesburg and about 10 to 15 minutes from the Dulles Greenway and the future Moorefield Station, which will include commercial, residential, retail and a Silver Line metro rail stop (coming 2016).

The Hamlets at Red Cedar is made up of town homes and single family homes. The town homes along with the Ambassador and Manor single family home collections have all been sold, but there are still some Stoneridge collection single family homes and home sites available.

The Stoneridge Collection offers 8 different models ranging from 2510 square feet on the upper two levels to 4589 square feet on the upper two levels. Base prices range from $539K to $739K. Delivery times are about 6 to 9 months though there are some quick delivery “spec” homes with move-in dates as early as November.

Lot sizes on the Stoneridge Collection are 1/2 an acre giving you more land than 90+ percent of the rest of Ashburn and Leesburg. One nice thing about these lots is that the majority of them still have trees in the back of them rather than just a flat piece of land where you can still see the house behind you.

Amenities include a club house with pool tables, a community living room, gym and pool. There are several parks, tot lots and trails throughout the community as well.

If you are interested in knowing more about the community, home models, available lots/home sites, spec homes, incentives, etc., email or call me – danilo.bogdanovic (at) gmail (dot) com – 703.582.6900.

Related Articles

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Slideshow of Hamlets at Red Cedar community

Leesburg Single Family Home Median Price up $35K

The median price of single family homes in Leesburg (20175 and 20176 zip codes) has gone up $35K since April. With inventory down 33 percent since 9/08 and buyer demand up, median prices have gone up. You can feel the effect of this in the housing market conditions in the area – Buyers have less inventory to choose from and more competition from other buyers while sellers are seeing more buyers coming through and competing for their property (if priced correctly) than since 2005.

Leesburg Single Family Home Median Price – up $35K

Leesburg Single Family Home Inventory – down 33 percent

Ashburn Single Family Home Median Price Up $20K

The median price of single family homes in Ashburn (20147 and 20148 zip codes) has gone up almost $20K since April. This is mainly due to less inventory on the market and more buyers purchasing properties – supply vs demand. We’re currently seeing a plateau in median prices, but that’s probably due to a typical slowdown in buyer demand over the summer months.

Ashburn Single Family Home Median Price – up $20K since April

Ashburn Single Family Home Inventory – down 30 percent since 9/08

P.S. Check back on Tuesday for Leesburg’s median price and inventory levels.

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