Real Estate is Local - Always

As always, real estate is local. Freshman lawmakers are not having an easy time locating affordable housing on Capitol Hill. CNN's Samantha Hayes gives an inside look at what it's been like for some of them.

While the housing market has deteriorated tremendously for the nation as a whole, there are specific areas where unique local market conditions continue to provide upward pressure on housing prices. The situation in D.C. is a good example of this. The continued demand for housing close to federal government offices has caused housing prices to remain high there.

If you are relocating to a new city, don't forget to take local conditions into account as you set expectations for what you are able to get for your money.

What Can You Buy for $200,500?

The median home price, as of 3rd qtr 2008, is now $200,500. This is a 9% drop from the same period last year. Foreclosures are mostly to blame, but of course, the bad state of the economy, stricter lending standards, and the high number of unsold homes have also contributed to the price decline. So, what can you buy for $200,500? Sushil Cheema at the Wall Street Journal took a look to find out. I thought you'd be interested to see how far the money goes and what people are saying about it. Check it out here. See how the homes compare to what's in your city or town.

A Call From John

Just recently, I received a call from John, a prospective homebuyer, who found a few homes on my website that interested him. Wanting to learn more about these homes, he gave me a call to discuss them and his plans to buy. This call was unlike most I receive. Instead of focusing all attention on the homes themselves, his first questions centered on how I give representation and how I would work with him. Since questions like these don't come along often, I took extra pleasure in answering them all.

Whenever I receive a call or an email inquiry from serious prospects about a home for sale, I raise the subject of buyer agency as part of my "orientation" process with them. Hoping not to overwhelm or confuse, I always take care to invite questions and I take advantage of subsequent opportunities to revisit and further clarify specific points we've discussed. There are many times, unfortunately, where prospective buyers would unwittingly share sensitive information with me in an initial email inquiry regarding a home that interests them. It is the kind of information they certainly wouldn't want the seller to be privy to if they ever wished to enter into purchase negotiations. Luckily I don't represent the sellers, but what if I did?

Thinking about my conversation with John, I thought I would highlight it as a good example for homebuyers to follow. So, whenever you are ready to contact a real estate agent and before you engage him/her in a discussion about your real estate needs, do what John did. Ask about representation and what it means for you first. Ask follow-up questions if you have any and don't hesitate to ask for clarification if there is something you don't quite understand. Finally, if that agent does not welcome your questions, find one that will!

The Beautiful Thing About Built-Ins

Perhaps the most popular item on the wish-list of any homebuyer today is "character". This wish-list item is often difficult to describe except to say "I'll know it when I see it"! There really is no one specific thing that a home must have in order to have character, but among the homebuyers I've worked with, all agree that the home should have that je nais se quoi - that thing that pulls them in and says "this is home".

My favorite item that can give any home a little bit of personality is the built-in. I've found them to consistently grab the attention of my homebuyers whenever we've come across them. A few have even had built-ins added after their home purchase. Built-ins are quite versatile in nature. Here is an extremely small sampling of what they have to offer.

Built-ins surrounding the fireplace are by far the most common option I come across regardless of the age or price range of the home.

Another popular trend, especially among homes less than 20 years old, is the tv nook above the fireplace. This particular one was made for the wide flat-screen, but I still see way too many (even in new construction) that only fit the 25-27" tube sets. Consider this built-in carefully if you EVER plan on upgrading your tv.

For larger homes, a butler's pantry gives both style and function to the transition area between the kitchen and formal dining room.

This is a great example of one of my favorite built-in options. Bonus rooms can sometimes be a bit awkard to furnish because of the sloping ceilings. But with built-ins you can adapt to the shape of the room with no problem.

Here is another wonderful example of how versatile built-ins can be. You can create a special place for your library just about anywhere - even underneath the stairs!

Benches - whether in a sunroom, a breakfast nook, or made as a window seat - can add a bit of charm to any home. The addition of drawers underneath for extra storage just can't be beat.

One thing I think everyone would enjoy is the built-in work area. I see versions of this option both in high-end homes with spacious, exquisite offices as well as in smaller homes with little nooks that can be found just about everywhere - hallways, bedrooms, closets, underneath the stairs - you name it!

I absolutely love built-ins. They are functional, space-saving, and eye-catching. Best of all, the options in design are endless. They can be fancy and expansive or they can be simple and abbreviated. It really doesn't matter if you are in the market for an 800 sq.ft. condo or an 8,000 sq.ft. mansion. Built-ins are wonderful in any home.

President-Elect Obama's Interview on 60 Minutes

President-Elect Obama sat down with Steve Kroft for his first interview since November 4th. The interview covered a wide range of topics - from politics to family, and of course the transition to life in the White House. Michelle Obama joined her husband for the latter part of the conversation and the playful banter between the two made for quite a charming interview.

When asked about where his focus rests as he prepares to take office, Obama raised the issue of the foreclosure crisis and how it was being managed. He stated that "if we don't have a clear focused program for homeowners by the time I take office, we will after I take office". While housing (and the economy) has always been at the top of his executive to-do list, I was reassured that this issue remains at the forefront.

The way I see it, addressing the foreclosure crisis in a prompt and meaningful way is necessary for both homeowners and homebuyer's alike. We must stabilize neighborhoods as quickly as possible. Homebuyers need to have confidence in knowledge that their investment will not be adversely affected by an over-abundance of foreclosure and for rent signs sprouting up on lawns across the neighborhood. In case you missed it, go to CBS News-60 Minutes to see video and transcripts from the interview.

- Amenities -

Amenities - The qualities or state of being attractive and comfortable.

When applied to real estate, this term refers to the benefits that are attached to a property. For example, a home may have state-of-the-art appliances in the kitchen or a well-appointed home office with its own private entrance. Others may have a neighborhood pool & tennis club or have proximity to city parks and entertainment venues. Amenities are simply things that add value and make a house a pleasant place to live and call home.

Cash Found in Ohio's House Wall (AP)

Associated Press writer, Joe Milicia, submitted a rather interesting story over the weekend. A contractor discovered $182k cash in the bathroom wall of his friend's home. That's a nice chunk of money to come into - talk about hidden value!

Too bad the story doesn't have a happy ending, though. Greed, as always, has a way of complicating things. Read the full story.

A (HOME) Score

If you knew that you could not - in fact - afford the home loan you were pre-approved for, would you convince yourself otherwise? Would you go for it anyway? Of course not!

No well-meaning person would accept a mortgage that would guarantee a path to foreclosure. Unfortunately, there are many homeowners out there who have found themselves completely blindsided by the true costs of their home loan. This problem is just one of many at the center of the current housing crisis. Many homeowners just did not have the means to properly interpret their mortgage options and compare them to one another.

Recognizing its importance, the National Association of Realtors has provided homebuyers with buyer agency. But here's the problem; there is no clear mechanism within the mortgage industry to extend the same agency relationship to borrowers. Unless a lot of time is invested in "reading up" on mortgage options, how is a borrower able to make a good decision? And is that really enough? Where's the expert advice needed to arrive at a truly informed decision?

Now that the election is over, prospective homebuyers are wondering what they can expect from the new Obama Administration. Barack Obama has followed the subprime mortgage industry for years and has already taken steps to create protections for homebuyers. One of his plans will create a mandate for clear, complete, and honest information about home loans. It will take the form of a (HOME) score.

This mandate will give you the means to not only understand all of the costs entailed in your home loan, but it will make it easier for you to compare them too. One thing is certain. This mandate must be written effectively so as to accomplish what it intends to. Borrowers can't be helped by a mandated accurate loan disclosure that is not accurate.

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Mandate Accurate Loan Disclosure: Today's subprime mortgage problem stems in large part from the lack of easy-to-understand information that borrowers receive from mortgage brokers. As president, Barack Obama will enact laws to ensure that all prospective homebuyers have access to accurate and complete information about their mortgage options. Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan. The HOME score would also help borrowers understand their long-term obligations and would be required to include mandatory taxes and insurance.
www.BarackObama.com

We Believed!

America has undergone a remarkable sea change and will soon embark on a different journey, one that faces a brighter future, with President-elect Barack Obama at her helm.
Phenomenal! Phenomenal.

It's Almost Time

Before too long, voting lines will draw down and polling will come to a close. Soon, I will take my favorite spot on the sofa, turn on my television, and begin some serious deep breathing exercises.

What an incredible experience it has been to both witness and participate in this election season. It was historic on many fronts. One being the enormous role technology and, more specifically, the Internet played in it. YouTube, Twitter, Facebook, and the blogosphere in general really made it possible for Barack to maximize the potential of his grassroots ideals. Who could forget Obama Girl or Will.i.am's tribute to those three famous words? The Internet gave his base a different kind of voice and a phenomenal way to move the campaign forward. It was one of his not-so-secret ingredients for success.

Speaking of technology, BarackObama.com has got to be the next great case-study in campaign-strategy innovation. From as early on in the campaign as I can remember, my husband signed us up to receive email updates on all the latest campaign happenings. From those updates and from checking into the website, we've enjoyed easy access to pertinent campaign information, attended rallies, volunteered our time, donated money, and even bought ourselves some Obama gear...I mean, really! Although I'm an active voter, I've never participated this much in one election campaign before! It was a great adventure and we met some really cool people along the way.

It was good that Barack understood the important issues and communicated his vision with eloquence and conviction. And it was great that he promoted a culture of teamwork among his base. But I believe his strongest asset and the key to his success was his ability to surround himself with really smart people. He had a winning combination of advisers, strategists, IT people, and staff. My favorite among them is Michelle. Barack's greatest ambassador and the brightest spot in his campaign. I have tremendous admiration for her. With this kind of support in his corner, I have no reservations about Barack's ability to fill the role of Commander-in-Chief.

My first introduction to Barack Obama was while watching the 2004 Democratic National Convention. He was described as the party's rising star and it was easy to see why. His keynote address opened my mind to new possibilities which, at the time, was a tremendous feat. Back in 2002, I was growing fearful of the post-9/11 feeding frenzy on civil liberties and the blood lust for anyone remotely resembling Osama bin Laden. I was very angry about the rush into Iraq and disturbed at the thought of what it would mean for us in the long run. When I learned of the timing of Sen. Obama's stand against the war in Iraq, wow, I just knew...I don't know, if you are a Matrix fan, perhaps you'd understand.


Barack Obama fought hard to transcend the divisive issues that continually holds this country back. He proved himself a man for all American people. He eloquently and passionately reminded us that we share a common dream for a more perfect union.


I truly hope that enough Americans choose to believe in Barack's message of change. He is not a messiah, he's not perfect, but he is the best man to lead us through the tough times times ahead. I hope to see him emerge as President-elect. This is what I want to see recorded in the pages of history. It's time.

Today is Election Day!

by Bruce Beattie via SLATE

Remembering Madelyn "Toot" Dunham

Just hours shy of the election season's biggest day, Barack Obama's grandmother lost her battle with cancer. She was 86 years old. Through his profound words and dignified character, Barack Obama has helped us become just a little better acquainted with who Madelyn Dunham was. We appreciate the invaluable role she has played in his life. Barack Obama is a great inspiration and source of hope to so many. At this time of great loss, our thoughts are with his family. Madelyn Dunham will not be forgotten.

How Big Will Your Downpayment Be?

Last Tuesday (Oct 28th), President Bush's first Treasury Secretary Paul O'Neill put forth the proposal that Congress forget about the new economic stimulus package idea and instead concentrate their efforts to push through a law that will mandate a minimum downpayment threshold for prospective homebuyers. In other words, if a homebuyer does not have downpayment funds at least equal to 20% of the anticipated purchase price, they should not even think about applying for a home loan.

So, are you in the market to buy a home? How big will your downpayment be?

O'Neill believes that we wouldn't be in this credit/economic mess if home lenders stuck with the old tried-and-true 20% downpayment rule. He said that in 2006, 30% of all mortgages were zero-down and among those buyers, an even larger amount defaulted on their very first mortgage payment. It should have been obvious long before now that too many buyers could not afford the loans they were approved for. As such, homes loans should be reserved for only those buyers that can afford to put down 20% towards a home purchase. O'Neill is certain that while this may not be good for some businesses in the short term, it will be good for the overall economy in the long run.

The number 20 has long been the "magic" number in the banking industry because the research showed this to be the threshold where the lending risks most favored the bank. If, for whatever reason, the home did wind up in foreclosure, the bank could price the home at a deep enough discount to attract a quick sale. (This is why foreclosures continue to be perceived as great deals - even this market.) It was, therefore, in the bank's best interest to have as much of a buffer as possible in the event of a foreclosure.

For a some time, if you wanted to buy a home, you were going to have to save up and/or borrow the money to make it happen. This was impossible for some and difficult for most. However, as home values started to increase, so too did the home loan options available to homebuyers. Buying a home with 20% down was no longer the rule. Instead, a buyer could use private mortgage insurance or piggy-back loans to make the deal happen. With these options, buyers were even able to finance 100% (or as high as 125%) of the purchase price. Banks were now able to make much more money from home loans than before. Loan requirements that were once strict and available to just a few buyers became too lenient and available to too many of the wrong ones.

O'Neill contends that enacting this 20% downpayment law will be the quickest way to shore up the nation's economy. He is critical of the presidential campaigns of both Sen. Obama and Sen. McCain, neither of whom has endorsed this idea. O'Neill is not surprised by this. And I say, he shouldn't be. It is a terrible idea.

Homeownership is a highly-regarded financial planning tool and has long been recognized as the best way for the vast majority of people to build personal wealth. By leveraging a loan, a person is able to earn all of the appreciation and enjoy all of the financial benefits homeownership provides. More importantly, because homeownership is best as a long-term investment, if a person can afford to own a home now, it would behoove him/her to buy as early on in their lives as personal circumstance would allow.

The type of legislation that O'Neill is proposing may look good on paper, but one can not legislate a one-size-fits-all mortgage product and expect good things to happen. I'm willing to bet that it will hurt homebuyers - the middle class and working poor in particular - far more than it will hurt any business. O'Neill should give more consideration to the many buyers who are, in fact, a good credit risk even without having saved 20% to put towards a downpayment.

This is a complicated problem that will require careful consideration of many factors in order to find a workable solution. If homeownership is really part of the American Dream, Congress should work to give everyone a fair opportunity to achieve it. How big will your downpayment be? No law should ever affect the answer to that question.

Buying "As Is"?

Here is a great piece from HGTV's My First Place. It is a wonderful illustration of how everything really is negotiable in real estate transactions. It is very common for corporate or bank-owned homes to be sold "as is - where is". These corporations and banks do not live in these home of course, and do not make any representations as to the condition of the home. The buyer is expected to rely on their own due diligence. Since the buyer will be putting their own resources into repairing the home, the seller sets the list price accordingly.

Here, the seller was motivated to work with the buyer they had in-hand. If they killed the deal over the inspection issue, they will still have to confront the very same problem with the next buyer. And who knows when that buyer will come along! In the meantime, they will still have to fix the leak to avoid further damage to the house. Going back to the negotiation table in this transaction was a win-win for everyone.


Tip: Before you enter into a purchase agreement to buy a home in "as is" condition, be sure to include a cost-of-repair contingency. Don't ever lock yourself into buying a money pit!

A+ for Ron Clark Academy

Have you seen this video? If not, you must! These are the students of Ron Clark Academy in Atlanta, GA. Their teachers are obviously doing a fantastic job in nurturing a strong love of learning. Ron Clark's mission to prepare his students to hold the highest office in the land is sure to be realized one day. In the meantime, what a way to participate this historic election year. Wow!

Check out this amazing school on PBS and be sure to click on the "watch the video link" at the bottom of the profile. Guaranteed to bring an enormous smile to your face!

Ask about Buyer Agency

When a homeowner wishes to sell their home, they may opt to hire a real estate agent to market their home to attract a qualified buyer as quickly as possible. When a person is in the market to buy a home, they too may opt to hire a real estate agent to help them to find a good house and help them with the negotiations and the final purchase. In the first scenario, the real estate agent serves as the listing agent. In the second scenario, the real estate agent serves as the selling agent or in layman's terms the buyer's agent.

For any business relationship to be successful, there must be clearly defined roles and expectations. When working with real estate agents, the same holds true. When you hire a real estate agent to act on your behalf and represent your interests in a real estate transaction, agency is created. Most real estate agents represent both buyers and sellers. They may represent only the seller on one transaction and on another transaction they may represent only the buyer. Sometimes they may represent both the seller AND the buyer in the same transaction. When an agent represents both sides of a transaction (the seller side and the buyer side) this is called dual agency. There are also real estate agents who choose to represent only buyers. They are called Exclusive Buyer's Agents and they do not list homes at all. Since they cater only to homebuyers, the possibility for dual agency never arises.

Different states may have different rules about agency and how a real estate agent may work with the public. Some states may prohibit dual agency while others allow for it. Others may provide for designated agency (a type of dual agency) where the agent of a firm represents the seller and another agent in the same firm represents the buyer, and both agents maintain strict confidentiality of both buyer and seller from one another just as if they were working in competing real estate firms.

In the role of buyer's agent, a real estate agent will work hard to locate homes for sale - any home - that matches your tastes and requirements. They will arrange personal tours and incorporate your feedback into the selection process for future showing appointments. You will be encouraged to ask lots of questions and share your thoughts about your needs, wants, likes, and dislikes. Your buyer's agent will also ask questions of you so as to ensure that house hunting efforts are as productive as possible. A home's positive features as well as its drawbacks will be pointed out so that you can weigh your options in an informed manner. You should be able to rely on your agent to help you process and sift through all of your choices so that you are considering the homes that have the most appeal. Once you've found THE house, your buyer's agent will continue to exploit all available resources to help you compose a good offer and negotiate a good deal. Since price is just one of several things a buyer can negotiate, your buyer's agent will help you determine the negotiating options that could work best for you. Throughout the process, a good buyer's agent will help you avoid frustration or disappointment by helping you establish realistic goals and expectations.

If you are like most buyers, you will begin your home search online. This is a great way to get a feel of the market and it also allows you to assess the responsiveness and attentiveness of different agents as you make requests for additional information about a home that interests you. I recommend signing a buyer agency agreement as soon as you have found an agent that works well for you and most importantly, as soon as you are ready to get out there and buy a home. The buyer agency agreement spells out the nature of your agency relationship in plain black and white. The duration of the agency agreement, confidentiality, duties, agent compensation, bonuses & incentives, permission or refusal to engage in dual agency, and expectations regarding other real estate service providers are all negotiated and outlined in the agreement. You should have confidence in your home purchase and a satisfying buying experience overall. As with any successful business relationship, a satisfied client is the primary goal.

Whenever you are ready to begin working with a real estate agent, be sure to first inquire about how that agent works with homebuyers. Describe the type of home and general price range you are in the market for. Does this agent have any listings that you may be interested in? Learn about what happens in the event you are interested in a home listed by that agent and that agent's real estate firm in general. Remember - the personal information you share now just might compromise your negotiating position later. So before you go spilling your guts to the agent on the phone or to the agent on the receiving end of your email inquiry, take a moment to talk about buyer agency. You'll be happy you did.

The Foreclosure Angel

Every now and then, someone engages in an act of kindness that surprises and amazes the rest of us. CNN reported on the story of a foreclosure angel who opened up her heart and provided a woman with a second chance. I am looking forward to CNN's follow-up story. I want to learn a little bit more about these two women and the paths that led them to meet at this crossroad. I especially want to know how things worked out. After all, everyone loves a happy ending. And who knows. Maybe we'll see them Oprah sometime soon!

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UPDATE: Additional story details at ABC News.

Today's Homebuyer

Yesterday afternoon, I headed out to the Board of Elections to cast my vote early. Considering the fact that we are in the midst of an historic election, I did not want to be faced with long lines and overworked computer systems on Election Day. I brought a magazine with me to keep my mind occupied and help me pass the time while waiting for my turn to vote.

As I found the back of the line, I took a moment to look around and take in my surroundings. The line wasn't too long - maybe a 1/2 hr wait. Voters were soothing their little ones, conducting business on cell phones, filling out change-of-address forms, reading through candidate literature shoved in their hands on the way in. All felt calm and as I opened up my magazine, I started to wonder about the personal stories of the people surrounding me. Was anyone drowning in medical bills? Losing sleep worrying about the well-being of an enlisted loved one? Wondering how they would be able to afford to send their kid to college or begin retirement on schedule? Struggling to make ends meet? Was anyone in fear of losing their home to foreclosure?

Like this election, this last real estate boom is one for the history books. The rise in home appreciation far surpassed all other booms thanks in part to low interest rates, high confidence in the market, and a host of creative financing terms. It didn't take long for greed, corruption, and irrational exuberance to find its way into the mix. Many buyers relied on the "advice" of questionable industry experts and now have found themselves in terrible circumstances. Interestingly enough, a few big-named players in the real estate industry have found themselves in terrible circumstances as well!

Approximately 40 mins after I first arrived at the Board of Elections office, I was finally standing in front of my ballot box reviewing the selections I had made. Finding no mistakes, I held my breath and pressed the green button. I smiled to myself as I wondered about where this country will be in two weeks...in two years. Will my candidate win? Will campaign promises be kept? Will we be better off then than we are today? Will the housing market and economy be in recovery? I believe today's homebuyer should be inspired, empowered, and knowledgeable regarding their homebuying experience, not overwhelmed, stressed or intimidated by it. This would go a long way to avoiding the kind of economic disaster we currently find ourselves in! As I made my way to the exit, I took one last look around at the others in line waiting for their turn to cast a vote in this historic election. And then, I smiled again.