This mris report was gathered from sales and contract data from Januar to March 31st of 2010. This covers all of Washington, DC. There market is…HOT!  I’m attributing this to the tax credit, which was supposed to end at the end of November but now has been extended to April 30th (settlements no later than June 30th).  Activity is up across the board but, as usual, most activity was in the price range of $300k-$600k with not much going on in the luxury bracket.  Even though average sales price is lower by 13% compared to last year, activity has jumped to nearly 8% more than October’s sales volume.  Interestingly, most properties are getting close to what their asking price is when compared to last year.  Compared to last month, more people were willing to pay more for properties.   Interest rates were still in the high 4’s or low 5’s at the most and inventory was plentiful.  Most properties didn’t stay on the market for more than 30 days which indicates that demand was up.  This is a clear sign that buyers are taking advantage of the favorable market conditions.

Clearly, Washington, DC is experiencing a robust real estate market.  On top of the great rates and well-priced properties, buyers were inspired to move forward with their plans to purchase because of the $8,000 first-time homebuyer tax credit.  It has now been extended to the end of April 2010 which will help the market keep its momentum.

Check out the report and let us know if you have any questions about your neighborhood.  We’re happy to provide you with custom neighborhood reports. In the meantime, we hope that you find this information useful.

If you’re planning to purchase a home in 2010, here’s the annual list of New Year’s resolutions you should consider making.

– Get your credit and finances in shape. If you want to take advantage of today’s low interest rates, you need to have a credit score above 760. The higher, the better. If your credit score is below 620, you’ll have trouble getting even an FHA loan.

– Know how much you can afford to spend before you shop. Getting pre-approved has never been more important. You’ll need documentation (W-2, tax returns, account statements, etc.), so get it together before you contact a lender. And shop around. Each lender sets its own fee schedule. Get the best deal by contacting four or five types of lenders.

– Know the neighborhood, and be comfortable with it before you buy a home there. Houses are great, but neighborhoods that are littered with foreclosures may be unstable for years. Spend time in the neighborhood before falling in love with a particular house.

– Interview at least three brokers before hiring one. This is the single biggest purchase of your life. You deserve to have the best representation. Interview at least three agents or brokers before hiring one. Ask questions about how many transaction sides they’ve closed, what price range they work in, who their typical customer is and what kind of technology they use. Hiring an agent is like being in a marriage. You want it to be good, supportive and productive.

– Read and understand all documents before signing them. I know loan documents are long and boring. So what? You’re committing to the next 15 to 30 years of your life (less if you refinance). Take the time and read your loan and purchase documents. Make sure you understand what they’re saying. Make sure the numbers match what you were promised. And if they don’t, speak up before you close — not after.

Remember, you have until the end of April to take advantage of the $8,000 credit.  So get to work!  Call us today to get a complimentary home-buying consultation.  Our agents are experienced in all facets of home buying and can help you make a sound decision.  Contact us today!

$8,000 Homebuyers Tax Credit

Legislators and industry experts expect that the credit will encourage buyers to move up their purchase plans.  Taxpayers can claim credit through April 30, 2010.
On November 6, 2009, President Obama signed the Emergency Unemployment Compensation Extension Act into law. This legislation extended the first-time homebuyer tax credit until April 30, 2010. It also increased the salary caps. Single buyers can now claim the full tax credit if they make under $125,000 per year. Married buyers can earn up to $225,000 per year and still receive the full credit. The tax credit starts to gradually phases out at higher income levels. The new legislation also extends to current homeowners. Any buyer who has owned and occupied their existing home for 5 out of the past 8 years can claim a $6,500 tax credit until the end of April.

Once in a while, you encounter a situation where a buyer has to move in to the property they intend on purchasing before settlement has occurred.  Usually, this happens because their lease is over before the settlement date and settlement itself has been delayed for one reason or other.  Whatever the case may be, having a pre-settlement occupancy agreement becomes the only option for the purchaser so as to avoid becoming homeless (literally).

The thing to be aware of with these agreements is that it not only accommodates the early move-in, but it also gives the seller a lot of leverage in that should settlement not occur on the specified date, then all monies are forfeited and the purchaser is literally kicked out of the property within a matter of days.  So it’s a case of Buyer Beware.  There are explicit clauses within this agreement which are in contrast to most statutory laws regarding tenant rights.  Also, a buyer accepts the property in the condition it was in at time of signing the agreement.  This means that if AFTER you’ve signed the agreement the HVAC stops working, the seller is no longer responsible for repairs or replacement.  Additionally, the buyer does not have the right to alter the property without seller’s prior consent.

There are also indemnification clauses that protect the seller in the event the property is destroyed or damaged for any reason whatsoever.  That is why it is crucial to purchase insurance that has an effective policy as of the date of the pre-settlement occupancy agreement.

As a buyer, you have to go in it with the understanding that, unless modified, pre-settlement occupancy agreements are written to protect, first and foremost, the seller’s interest.  This is not a buyer-friendly agreement and there are caveats that need to be taken into consideration prior to signing.

I just settled on a house for my clients and it was a short sale.  I’m not sure how we pulled through, given that it took three months to get to the table!  Their patience certainly paid off, but they were in good shape because they didn’t have to vacate a rental at a certain date.  In any case, short sales suck because they put everybody on edge.  How?  Start by having to negotiate with a bank that’s not at all considerate to the timelines outlined in the contract.  Please, if you’re purchasing a short sale, go in it with the expectation that you’ll be given the run around for a quarter to nearly half a year (i’ve heard horror stories).  Even then, you’re not guaranteed that you’ll get to settlement.  So all of that waiting around could  end up costing you  al ot of time, a lot of upfront costs out of your pocket (home inspection and appraisal) and a ton of aggrivation. Another reason why this process sucks is that when a lender locks in a purchaser, there are expirations to the interest rate lock-in periods.  This means that while the short-sale bank is out there, no where to be found, with no updates being given, and with the expiration of lock-in rate fast approaching, you could be at risk of having to shell out even more money to the lender to keep that sweet interest rate for god knows how long.  Be sure to ask your lender to lock you in for as long as humanly possible because you’re going to be waiting a while for closing to take place.  It’s never a good feeling to have to pay more money for something that’s not in your control.  So beware!

The bright side of it all is that short sales benefit everyone when they go through:  They benefit the neighborhood because it’ll be one less empty, dark, boarded up house on the block, the purchasers usually get awesome deals when the sale goes through because often times you can purchase these at below market values, and you’ve helped a desperate seller to come out from under a nasty loan, moods are elevated, lives are saved, neighborhoods are preserved and everyone’s happy.

My point is no matter how it turns out, short sales are a lot of hard work, they require a ton of patience and are risky in that they may fall through at the last minute.  Go in it with as much expectation for disappointment and hopefully you’ll be pleasantly surprised in the end.  I know my clients were : )

Posted by Andrew Kohn, www.andrewkohn.com

http://www.washingtoncitypaper.com/blogs/housingcomplex/2009/04/16/rents-are-rising-in-washington-dc-unlike-anywhere-else/

Written by Ruth Samuelson on Apr. 16, 2009, Washington CITYPAPER at 2:45 pm

Potential home buyers should take note of the change in interest rates. The average rate on 30-year fixed-rate home mortgages hit a record low this week, after the Federal Reserve announced it would purchase Treasury securities over the next six months.

The 30-year mortgage averaged 4.85% in the week ended March 26, the lowest point since Freddie Mac’s weekly survey began in 1971. Last week, the mortgage averaged 4.98%; the mortgage averaged 5.85% a year ago.

Fifteen-year fixed-rate mortgages and five-year adjustable-rate mortgages also hit record lows. The 15-year fixed-rate mortgage averaged 4.58% and hasn’t been lower since 1991, when the survey began tracking the mortgage. The 15-year mortgage averaged 4.61% last week and 5.34% a year ago

This change amounts to a savings of about $450 in monthly mortgage payments for a $400,000 loan.

To obtain the rates, the fixed-rate mortgages as well as the five-year ARM required payment of an average 0.7 point. The one-year ARM required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

For a free loan consultation, contact us for a lender referral. Now is truly the time to be a buyer in this market.

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

• What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

• I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

• How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

• I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

• Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a “Good Faith Estimate” that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

• What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

• Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

• How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

• When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

• What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

• • information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month, and
  • payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

• What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

• Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

• How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

• I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

• I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

• I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

• I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

• I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

• How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

• Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

• I’m already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

• How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

• What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes

• • information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month, and
  • payments on other loans such as student loans and car loans.
• My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower’s eligibility.

Washington, D.C., traditionally takes a back seat to world cities like London, New York and Tokyo when it comes to real estate investment.

That’s likely to change.

Thanks to a proposed $1 trillion wave government spending, investors are flocking to D.C. for opportunities in the commercial and residential real estate markets. All these new programs will need offices, after all, and their employees will need places to live.

This year, Washington leapfrogged London for the first-place ranking in the world’s best cities for real estate investment. But don’t count out the world’s financial capitals just yet–even with massive financial troubles in London and New York, those cities finished second and third, respectively. Why? It’s the appeal of long-term stability, and fears that emerging countries are going to take a harder hit

Behind the Numbers
Forbes’ rankings come from the Association of Foreign Investors in Real Estate, a research association that tracks where member investors are finding the best opportunities around the world. AFIRE surveys its 200 members, who collectively hold $700 billion in cross-border real estate.

Here’s a list of top ten best places to invest in real estate:

courtesy: Forbes.com

In today’s market, becoming a seller means you’re initiated in a group that’s labeled as being at the bottom of the real estate food-chain. There are way too many sellers and, as a result, the inventory has become saturated. Funny thing is there are sellers who are savvy enough to know what the buyers are looking for: Everything from a great location, great price, and a great house . That’s right. Buyers want it all and sellers have to deliver on this expectation.

So here’s my advice to sellers thinking of listing their property for sale:

1) Do your homework. Go to as many open houses in your neighborhood as possible and get a sense of how people are “packaging” their house.

2) Talk to at least two real estate agents who know your neighborhood and its inventory. It doesn’t hurt to ask whether or not the agents are currently working with buyers looking for a similar property as yours.

3) Don’t be greedy! In this market, it will not pay off to make this first impression in the buyer’s mind. Believe me, they’ve done their research and will know right off the bat whether or not you’ve priced your home right. So be VERY careful not to over-price. In fact, research has shown that homes priced competitively or just a bit below the average sell at a faster pace than those priced right at market or above it by a few percentage points.

Welcome to the Pricing Game!

4) Be a perfectionist with your decor. De-clutter as much as possible, de-personalize as much as possible and remember that less is always more when it comes to staging your house. Don’t get too creative and don’t customize anything so as to turn off the masses. Think of a hotel room and make sure people can feel at home the minute they walk into your home.

5) It is scientifically proven that you literally have less than 10 seconds to capture a buyer’s heart. Take the time to really pay close attention to the exterior as well as things like the door, main entry and the main room being the focal point of the home. Scent is another big deal. Stay away from over-scenting your place. In fact, keep it as neutral and “clean” smelling as possible.

6) It might be helpful to get a home inspection before you list your home. That way, you can avoid any hurdles should a buyer choose to have a home inspection. Getting these items fixed will play a big part in helping the buyer feel at ease with their decision in that they’re not about to invest in a money pit. You may also consider giving the buyer a home warranty, which is insurance for the systems and appliances of the home. Typically, they average at $400 and it’s paid at closing. Whatever you can do to communicate to the buyer that they’re buying the best and most put-together home will help.

6) When you get an offer from a buyer, make sure they’re serious. There are far too many wishy-washy buyers out there who, even after submitting an offer, tend to change their minds. Make sure that the buyer is qualified for the loan by speaking directly with the lender, make sure that their earnest deposit is sizable and be careful with too many contingencies. That could be a sign that they want a way out and they want it easy. The more full-proof a contract is, the less likely it is that you’re dealing with a fickle buyer.

7) Clean, clean, clean. You’ve moved your things out to your new place and it’s time to turn in the keys for one final round of inspections, called the pre-settlement walk-through. This is when the buyer and his/her agent do an inspection of the place, make sure the place is clean and ready for move-in. Far too often, and especially after a long and arduous day of moving, sellers forget to clean the house. This could cost you at settlement so hire someone if you can’t do it yourself.

By following this simple to-do list, you can make the transaction and easy and smooth-sailing one. Keep in mind that things do happen and sometimes, no matter how much you’ve done, it still takes longer than you had expected. All of this is in line with the uncertain market, but so much of that depends on your location and local economy. Sellers are at the bottom of this food chain at the moment, but you can climb your way up if all of the components - location, price, and house - are right on.