Archive for the 'FAQ’s' Category
Slight of Hand-How long has that home been on the market?
February 28th, 2008 Categories: Buyers Corner, FAQ's
How long has that Northern Virginia house really been on the market? That is a question every buyer should be asking before they formulate an offer on a property. In Minnesota one agent has gone on national TV to clearly state that he is manipulating the data in the local MLS to make a home feel fresh. In fact his listings have been on the market for much longer and he isn’t the only one trying this sleight of hand. In Northern Virginia a number of agents employ this tactic and a few others to try and hide the reality that the house has been on the market for awhile by deleting the tax id from the listing.
For buyers who are working with an experienced Realtor® this slight of hand is a waste of the listing agent’s time. However for buyers who have decided to go it on their own this manipulation of MLS data could cost them big time when they overpay for a home. While the average days on the market in Northern Virginia varies slightly between counties and type of property the average in our area has climbed from a nanosecond in 2003 to between 60 to 120 days in 2007 and 2008. So unless a property has been languishing on the market for 6 months or more the fact that it has been on the market for a couple of months shouldn’t shock anyone and isn’t a reason to withdraw it from the MLS and then reentered it five minutes later.
The MLS in our area has two fields that a buyers agent knows to check when looking at how long a property has been on the market. The first is DOM (Days on Market) and the second is DOMP (Days on Market Property). The second field is the cumulative days the property has been on the market continuously even if the seller has lowered the price, changed agents or withdrawn and re-listed the property within 90 days. As a buyer when you are looking at data across various websites you may only see the DOM field and not the DOMP field.
Many times buyers think they will get a better deal if they go right to the listing agent and bypass having their own representation. Not only can an experienced buyers agent help you navigate the correct information in the MLS but guide you every step of the way from finding the right financing, the right home, navigating the complex contract process and make sure that when you get to the settlement table that you have had an advocate protecting your interests.
So if you are starting the process of looking for your new home, make sure you find your own agent. You may save thousands of dollars and a lot of heartache making one of the largest single financial purchases in your life.
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There Is No Home Buyer Lemon Law in Northern Virginia
November 19th, 2007 Categories: Buyers Corner, FAQ's
In Virginia there is a Lemon Law on the books to protect consumers who purchase a car which is later found to have serious defects. However, there is no such law when it comes to protecting buyers when they are purchasing a home. When the market was hot in Northern Virginia many buyers had to pass up the opportunity to have a thorough home inspection in order to “win” their first choice home.
For some of those buyers the movie the Money Pit went from being an amusing comedy to a real life nightmare.
Recently I wrote a contract on a “bargain” home and at first blush the house looked to be outdated but in decent shape. Fortunately the buyers had taken my professional advice and included a home inspection contingency in their contract. They hired a licensed experienced home inspector to give the house a complete inspection from top to bottom. Everything started out fine. However as the inspector made his way through the house he found serious structural issues and significant termite damage. Since we had the home inspection contingency in the contract the buyers were able to walk away from the contract and though they were disappointed they were also very thankful that they wouldn’t be stuck with this lemon of a house.
This is just one example of why buyers need to make sure they have their own representation when they are ready to purchase a home. A buyer’s agent is going to make sure all of the options available to protect you in your home purchase are in place. So remember there is no Home Buyer Lemon Law. If you don’t have your own representation you could find yourself trying to figure out how to make lemonade from a very sour lemon
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While working with some first time home buyers this week they asked if a title insurance policy was different than the home owners insurance policy their loan officer had told them they would need to get before they went to closing.
It was easy to understand their confusion as the terms do sound very familiar. The simple answer to the question is YES and you need both but for different reasons.
Home owners insurance is designed to protect you should your home is hit by lightening or a tree fall through the roof. You renew and pay for the policy every year. Depending on the type of coverage you decide to buy it will cover not only damages to the structure of your home but also can cover personal property within your home as well. There is usually a deductible that is not covered when you file a claim and the rest of the damage is covered by your policy.
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After writing Foreclosures are an Elusive Prey last month I had a call from a prospective investor who wanted to learn more about the foreclosure process. Each state has different rules for the process and in talking to three different lenders it was obvious that their processes for getting homes to the courthouse steps are slightly different as well. Since I am not a lawyer or an expert on foreclosures I went looking for information and found the United States Foreclosure Law site. This information is specific to Virginia. If you are outside Virginia you will want to go to the site and look up your state for specific information.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, the property will be auctioned off to the highest bidder.
The borrower has two hundred forty (240) days from the date of the sale to redeem the property by paying the amount for which the property was sold, plus six (6) percent interest.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined on the next page in the “Power of Sale Foreclosure Guidelines”.
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I had a question recently from new buyers who were asking about the difference between two terms they had seen in the MLS which had them a bit puzzled and it seemed like a good time to post a short explanation for everyone. These terms are found in the MRIS for the DC metro region.
The two fields are DOMM (Days on Market) and DOMP (Days on Market Property). Most of the times the numbers in the fields are the same, however in today’s market when homes are staying on the market longer we are beginning to see some significant differences in those numbers.
DOMM is the number of days that the property has been listed as ACTIVE in the MLS. When an agent changes the status of a home to temporarily off the market (TEMP), contract (CONT) or expired (EXP) the DOMM clock stops ticking. If the property comes back on the market from one of those statuses the DOMM clock starts ticking again. Each of these status changes also has a date attached to it and an agent can look through the history of a property and see the listing history of a property.
DOMP is designed to be a running total for the number of days the property has been on the market with the same MLS number or same Tax ID. This is where things can get tricky. If listing a listing expires and then is reentered into the MLS within 180 days from the last active listing date the previous days on the market appear in the DOMP field. So in this case the two numbers (DOMM and DOMP) do not match. In our current market you see this happening more often as listing expire and a new agent takes over the listing or an agent withdraws the listing from the market changes the price and then re-enters the listing with a new MLS number.
Now this is where things can get tricky. There are agents who will withdraw a listing and then put it back in the system with the wrong Tax ID to try and mask the days on the market. A big NO/NO in the eyes of the MRIS and a habitual “cheater” can face significant fines and loss of MRIS privileges if caught. For a buyer who is out looking on the internet on their own this little slight of hand is invisible. For another agent searching the MLS it is easy to spot. If I don’t see a Tax ID associated with a property I am immediately suspicious. There are times when a Tax ID might be legitimately missing e.g. new construction but for the most part it is a 
to dig a little further.
I won’t go in to the details of how as agents we have to report our fellow agents to try and fix MLS data but suffice it to say it is a practice that does happen more often than it should. As a buyer it is important that you know the true history of a property you are considering purchasing. DOMM and DOMP are two pieces of data for you to consider when putting together an offer on a property in today’s market.
For more information on important data for you to consider when making an offer on a home you might want to read What is Missing from Your Monthly Marketing Report or give me a call and I will be glad to help you look for your new home!
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Why are Settlements Scheduled at the end of the Month?
July 30th, 2007 Categories: FAQ's, Real Estate Ramblings
It never seems to fail. The end of the month is packed with closings. The loan officers are scrambling, the settlement companies are swamped and the Realtors® are shuffling contracts to make sure everything is done.
But is closing at the end of the month all that important?
The answer may depend more on your cash in hand than any other reason. For many first time homebuyers an end of the month closing means less money needed at the settlement table. First, you probably made your last rent payment at the beginning of the month and if you settle and move at the end of the month you don’t have to worry about another rent payment. Secondly, interest on your mortgage begins on the day the transaction closes. So if you settle on March 30th then you only have to pre-pay interest for that month or in this case one day. Your first payment will be due on May 1st, when you will be paying April’s interest. Interest is always paid in arrears so in some ways April becomes a “free” month.
There is no harm in closing in the middle of the month and some settlement companies in Northern Virginia offer specials to encourage buyers to choose a settlement date other than the last few days of the month. If you decide to close in the middle of the month you just need to have extra funds at closing to cover the pre-paid interest that will be due on your loan. The good news is if you are buying a home at the end of the year and close in the middle of November you won’t have a payment due until the 1st of January.
I generally encourage my first time homebuyers to look at the end of the month to close so they have a little extra money on hand for the incidentals. For my move up buyers with cash from a previous sale I suggest they take advantage of the less frenetic middle of the month closing. It is interesting to point out to buyers that no matter when you close you don’t actually save any money in the long run. Your final mortgage payment is still a long way out and it will due 15, 30 or 40 years to the day of your original close.
So it is the end of the month and I’m off to the settlement office!
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I work with a number of first time homebuyers who wonder whether they should pay for a professional home inspection. With the cost of real estate and the expenses involved in purchasing a home the question is a good one.
In Virginia when a home is listed a seller has the option to either provide a Property Disclaimer or a Property Disclosure. Unless a seller knows that there is a major problem with the property such as a basement that floods every time it rains then they will most often choose a Property Disclaimer statement. Most sellers don’t know everything about the condition of their home. We all have a tendency to overlook a light switch that doesn’t quite work the way it should. It isn’t dangerous we just don’t think about it.
So getting a home inspection saves the potential for surprise when you move in to your new home. I’ve compiled a simple list of questions and answers that might help you decide whether a home inspection is right for you.
What is a home inspection?
A home inspection is an objective visual examination of the physical structure and systems of a house, from the roof to the foundation.
Buying a home could be the largest single investment you will ever make. A professional home inspection has two parts. The first part is to ensure that the home you are thinking of buying is in sound condition for its age. The second part is to help educate you on the maintenance of your home for the future.
When do I call a home inspector?
Typically, a home inspector is contacted immediately after the contract or purchase agreement has been signed. Before you sign, be sure there is an inspection clause in the sales contract, making your final purchase obligation contingent on the findings of a professional home inspection. This clause should specify the terms and conditions to which both the buyer and seller are obligated.
What does a home inspection include?
The standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system (temperature permitting); interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.
What will it cost?
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