Ask Adam

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. We just bought our first house and are feeling a little house poor, but we are eager to make some worthwhile improvements. Can you recommend some relatively inexpensive improvements that will provide return on investment at some point? 

I love your enthusiasm and foresight. You don’t always have to spend a lot of money to improve the appearance and value of your home. Below are my top five suggestions:

Paint — You just bought the home so I am hoping you plan to live there for many years to come. Updating the interior paint is probably not a strong return on investment project at this point as you are likely to paint again before selling one day. At that time it will be a good idea to speak with your agent about the trending interior colors. This year I am seeing a lot of the light grays.

I suggest concentrating on the exterior. The wood trim and shutters often get neglected. You can give them a fresh look and provide them with much needed protection from sun, rain and snow. I can’t tell you how many home inspections I have been to where we discovered rotting wood trim.

Deck Cleaning and Staining — Similar to the suggestion above, this is a project you can do by yourself to freshen and protect your investment.

Start with a thorough cleaning. I usually rent a power washer from Bill’s True Value Hardware (2213 N. Buchanan Street), but first check around to see if you have a friend that will lend you theirs. It’s a simple process of cleaning, sanding and staining. Compare stains to find one that lasts for a longer period of time.

Landscaping — I just got back from a trip to Cape May, N.J., and was extremely impressed with the beautiful landscaping that is prevalent in that little beach town. It’s amazing how much more inviting the landscaping can make a home feel regardless of the home’s age.

I suggest creating a plan for your landscaping that takes into account the placement of plants, flowers and shrubs in relations to their height and the seasons they are in bloom. You should also consider the amount of water and sun they will require. It’s nice to create a garden you don’t have to water.

Because we are talking about improvements that will add value to your home, I suggest using perennial flowers that will continue to come back season after season.

Arlington County provides free mulch. For a small fee you can even have it delivered. Mulch provides a nice accent to your yard and helps control weeds.

Hardware — No offense to those of you who have gold colored hardware throughout your homes, but it is not really the finish of choice for most home buyers right now. I’m talking about doorknobs, light fixtures, fireplace hardware, cabinet knobs, towel racks… you get the picture. You can really update the feel of your home by replacing these items with a popular finish like brushed nickel or oil rubbed bronze.

ReStore — Habitat for Humanity ReStores are nonprofit home improvement stores and donation centers that sell new and gently used furniture, home accessories, building materials, and appliances to the public. Because they depend on donations, the inventory is hit or miss, but I have seen some gems in there. Everything from hardwood flooring to stainless steel appliances. There is a ReStore located in Alexandria.

I highly recommend YouTube for any projects you would like a quick education about. In my personal experience, it has been a life saver.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. My husband and I are soon going to be in the market for a single family home in Arlington, and we were wondering if you can advise on the pros and cons of buying a flip versus buying a smaller, cheaper home and commissioning the renovations ourselves. I imagine there are differences between the risk you take on, the financing options, as well as the equity you end up with when all is said and done. Can you walk through those and any other considerations?

A. In most cases you are going to get more for your money by purchasing a smaller, cheaper home and commissioning the renovations. If someone is going renovate a home to be move in ready, they are usually going to build in a premium on the sale. This is especially true with homes that are being “flipped.”

If you make tasteful choices and manage your costs carefully, you could create some nice equity for yourself by the time you are done renovating. Another benefit of commissioning the renovations yourself is that you get to choose the options and build the home around your needs. This can be fun and rewarding. The most prideful homeowners I can think of are the ones that renovated their own homes.

I’m only aware of one mainstream loan program that allows you to finance the home and the renovations. It’s a form of FHA called the 203k. It allows you to purchase with a low down-payment and finance your renovations. You’ll want to speak to a lender for more details, but I’ve heard it can be used for just about any home renovations besides a hot tub or firepit.

If the 203k loan does not meet your needs, then you will most likely need to save the money required for your renovations or tap into an alternative line of credit. This will be in addition to the down-payment and closing costs you will need to budget for with your purchase.

The other major consideration is the time and stress involved in renovating your home. It can be fun, but it can also put a lot of stress on your life and relationships. Even a simple bathroom or kitchen renovation should be entered into with caution. Invest ample time up front asking friends for referrals and interviewing contractors. In my experience, working with the right contractors can make a world of difference in how your project turns out and how enjoyable or painful the experience is.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. Our house in 22207 would be considered a teardown. We may move in a year or so when my husband retires. Our question is: would it be better to do some remodeling and then rent it out for a few years to benefit from possible future appreciation, or better to take advantage of the current developer demand and sell? Of course it will depend on specific details of the house, the neighborhood, and other family considerations, but do you have a general suggestion?

A. Cash in or let it ride… This is the classic question of gamblers and investment owners. In this case I’m inclined to advise you to cash in. Here are three reasons why:

1. Alhough I have confidence in the direction of our real estate market, there is no guarantee that the current level of demand for tear down properties will continue. In the current market, you may be able to orchestrate a bidding war that will outperform what your property will return during more conservative times. Many builders are buying with their own cash and they have been burned by past markets. I imagine that the slightest hint of slowdown in the luxury market will directly affect the demand for teardown properties.
2. You have mentioned remodeling the home before renting it out. This is going to require investment in the home that is not going to provide any value to the person or developer looking for a tear down. Your investment will become a sunk cost that eats into the additional profit you hope to gain by holding onto the property longer.
3. You’ll want to carefully explore the tax implications of holding the property. For example, renting the property out for too long can create substantial costs in the form of your capital gains tax.

If you were my client, I would provide you with an estimated sales price and strategy for the current market. I would also do my best to project the appreciation or depreciation you may experience by holding onto the property. This exercise would help you make a decision based on the unique value and estimated performance of your home. You can compare these numbers to the estimated costs of holding on to the property as a rental.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. I have to admit that my question is more based on curiosity than desire to sell or purchase anytime soon. Can you tell me if the luxury housing market is on the incline or decline in North Arlington?

A. To help me answer your question, I’m going to use statistics for the 22207 and 22201 zip codes. That is where the bulk of luxury, single family home sales take place in North Arlington, and it will reduce the variables in my analysis.

I’ll compare January through June in 2013 to the same time span in 2014. The price range I am looking at is $1 million and greater. I realize an argument could be made for whether $1 million will buy you a “luxury” house these days, but I think it is a fair cutoff.

In 2013 the market experienced the following sales activity:

• Average sales price: $1,402,099
• Sales price compared to original list price: 95.5 percent
• Average days on market: 64
• Number of homes sold: 85

In 2014 the market experienced the following sales activity:

• Average sales price: $1,396,940
• Sales price compared to original list price: 97.2 percent
• Average days on market: 63
• Number of homes sold: 106

You can see some improvement in the sales price compared to original list price, which is a good sign that sellers are getting closer to their asking price in 2014. There is also a 21-unit increase in the number of homes sold in 2014. I think this can be partially attributed to an increase in the number of new homes available, which is helping inventory catch up with demand.

There has been a 33 percent increase in the number of new homes sold so far in 2014. The increase in new home inventory is good news for homebuyers, but the cost of teardowns is rising sharply, which is causing the price of new homes to increase accordingly. With more new homes pushing the $1.8 million and greater price range, we have to be getting close to a tipping point where the pool of buyers able afford these homes dwindles. When that happens, the amount of days homes spend on the market should start trending higher.

Average sales price doesn’t really tell the story, but from what I am seeing, the average price you would pay for a luxury home in 2014 is higher than what you would have paid for the same home in 2013. I would personally categorize the luxury market as an inclining, though it is a gradual incline.

You can follow this link to view the current luxury market listings in Arlington.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. We’re preparing to buy a house and are doing some preliminary research. One thing I came across is the idea of radon testing. This is something I have not heard of before and am wondering if you can help me understand how it relates to buying a home? 

A. According to the EPA, “exposure to radon is the second leading cause of lung cancer after smoking. Radon is an odorless, tasteless and invisible gas produced by the decay of naturally occurring uranium in soil and water. For most Americans, their greatest exposure to radon is in their homes; especially in rooms that are below grade (e.g., basements), rooms that are in contact with the ground and those rooms immediately above them.”

According to the EPA map, Arlington falls within an orange zone, which is defined as having a predicted average indoor radon screening level between 2 and 4 pCi/L. The EPA recommends remediation for any home that has a concentration of 4 pCi/L or higher.

Keep in mind that these levels will vary from one home to the next within Arlington depending on the location and composition of the home. For example, as homes are being built tighter to make them more energy efficient, they can also trap greater concentrations of radon inside the home.

If you would like to include radon testing as part of your real estate transaction, you will use the same addendum as the home inspection contingency. In fact, the structure of the two contingencies are very similar. You will designate a certain number of days for the contingency, which will allow the testing and lab work to take place. You will also designate how many days each party will have to respond to a negotiation in a case where the buyer would like the seller to remediate unsafe levels of radon. You also reserve the right to void the contract based on the results.

In my experience, sellers are less apprehensive about radon testing than they are about a standard home inspection. If radon is something that concerns you, then I highly recommend testing for it. The cost of a professional radon test, usually ranges from $150 to $200. You can also buy your own test kit on Amazon.com for $11.99, but this will not meet the standards required for a radon contingency in a real estate transaction. The radon contingency requires a radon professional certified by the National Radon Safety Board, or the National Radon Proficiency Program using EPA approved testing methods.

When I bought my house I decided not to include radon testing as part of the transaction. I purchased a kit at Home Depot shortly after closing to test it on my own. I knew that radon remediation is not terribly expensive in most cases so I was willing to take on that risk.  We were well within the safe range and I was able to save the money I would have spent on a professional test. I also had one less item getting in the way of me negotiating the price I wanted. That said, I’m a little less averse to risk than I encourage my clients to be.

I didn’t even scratch the surface of information available about radon that is available on the EPA website. If you have additional questions about what it is and the risks it poses, I highly recommend spending some time on their website.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. Despite positive reports about the local real estate market, I would like to find out how my neighborhood and zip code are selling. I’ve heard that finding out the rate of sales compared to the amount of inventory is a valuable analysis. Can you tell me where this information is located on the internet?

A. What you are referring to is often called the absorption rate. Absorption rate calculates how approximately how many months it will take to sell the current inventory of active real estate listings, based on the most recent sales volume.

• More than six months of inventory on the market is generally considered a buyer’s market.
• Less than six months of inventory on the market is generally considered a seller’s market.
• Six months of inventory on the market is generally considered a balanced market.

It will be easier to understand if I take you through an example. Let’s analyze the absorption rate for the 22207 zip code:

• Within the last 90 days, 159 properties have gone under contract.
• That’s an average of 53 properties per month.
• Currently there are 113 properties actively on the market.
• At the current rate of 53 properties being sold per month, we have a little over two months of inventory on the market.

If you agree with the assumption that under six months of inventory is a seller’s market, then this analysis would indicate that 22207 is currently experiencing a strong seller’s market.

I think it is smart that you want to analyze your neighborhood as well as your zip code. We often find that neighborhoods and condo buildings within a given zip code can perform quite differently.

I don’t know of a website that provides this type of analysis, but your Realtor should be able to create a custom absorption rate chart with data from the multiple listing service (MLS). If you don’t have a Realtor yet then let me know and we can help you out with this information.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

(Updated at 4:05 p.m.) Q. We are moving to the Arlington area this summer and would like to find a condo or townhouse with a view of D.C. Can you tell me where to look and how much we should expect to pay?

A. That’s one of the nice things about Arlington… we have the best views of D.C. Below is a list of the condos and townhomes I would put at the top of my list when it comes to view. I highly recommend experiencing the view in person to make sure it meets your standards as they vary significantly. You may also want to visit in the evening as some evening views can be quite spectacular. After all, you need to make sure it is worth the premium you are going to be paying.

Waterview — I’ve been in a lot of homes in the D.C. area and I have not experienced anyplace with a view of D.C. that is this stunning. Some of these homes include panoramic views of the Potomac, Georgetown and the D.C. monuments. Because of the waterfront location, you truly get a front row view of DC. Recent home sales with a D.C. view range from about $775,000 to over $3,500,000.

Memorial Overlook — This building is located just south of Arlington Boulevard near Iwo Jima. These luxuriously appointed homes boast views of the Lincoln Memorial, Washington Monument and the Capitol. Recent homes sales with a D.C. view range from about $1,400,000 to over $2,000,000.

Odyssey — Even though the Odyssey is located in Courthouse, it sits high enough that many of the eastern facing units have unobstructed views of D.C. The floor to ceiling windows lend themselves well to you experiencing the view. If you don’t want to pay the premium for a home with a view, you can still enjoy the best views in the building from the rooftop terrace, which is available to all residents. I’m not aware of any one-bedroom units with a D.C. view at Odyssey. The two-bedrooms with a D.C. view have been ranging from $675,000 to over $1,300,000.

Residences at Liberty Center — You may also be surprised by the views that Liberty Center has from Ballston. The rooftop terrace and the upper level, eastern facing units actually have very impressive views of DC. You are just a little farther away than some of the other options on this list. Expect to pay between $500,000 to $800,000+ for a home with a D.C. view.

Monument Place – These impressive five-level townhomes have gorgeous D.C. views from the private rooftop terraces, which you can access with your own elevator. The most recent sale was for $1,775,000 and there is a home currently available for $1,950,000.

Here are some additional condo building where you can occasionally find units with a view: Turnberry Towers, Atrium, Alta Vista, Belvedere, Clarendon 1021, Station Square, Prospect House, Eclipse and Woodbury Heights. I’m sure the commenters will help me out if I forgot any others.

Please keep me in mind for your Fourth of July party…

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. I own a condo unit (Falls Station in Arlington), not far from the East Falls Church Metro.  Condo values in Arlington have risen from their low point, but they certainly haven’t rebounded.  With the completion of the Tysons-Reston phase of the new Silver Line metro, and work continuing on to Washington Dulles Airport, could we see a corresponding increase in condo values in the EFC area?

For those who are not familiar, the East Falls Church (EFC) Metro station is located in Arlington on the border of Falls Church. It currently serves the Orange Line, but it is scheduled to begin servicing the Silver Line as well. Phase One of the Silver Line will run through McLean, Tysons Corner, Greensboro, Spring Hill and Wiehle-Reston East. Phase two of the project will extend the Silver Line through Herndon, Washington Dulles International Airport and points in Loudoun County.

In addition to the new Silver Line, there are also several mixed use development projects nearby in Falls Church City that will make the area more fun and convenient to live in. Many bicyclists and runners have already found how nice it is living directly on the W&OD trail.

Home buyers that don’t need to be within the Rosslyn to Ballston corridor will find that they can get a little bit more home for their money in the EFC area.

Below are some of the more popular nearby condos:

* Westlee (built in 2006 — recent prices ranging from $370k to $565k)

* Falls Station (built in 1994 — recent prices ranging from $368k to $468k)

* Washington Courts (built in 1979 — no recent sales)

The benefit of the Silver Line to the area is that it opens up Arlington to an additional pool of possible homeowners. There are a lot of jobs in Tysons, Reston and Herndon. There are also a good number of people who have to fly out of Dulles on a frequent basis. Some people are willing to drive back and forth every day, but traffic stinks even if you’re traveling against the grain. Being able to walk to the Metro station and jump on the Silver Line will make living in Arlington a lot more attractive for these commuters.

Will this potential increase in demand result in appreciation around the EFC Metro station?  It’s hard to say for sure, but I think it is certainly possible. We should check back in the fall to see how things are going.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. I own a two-bedroom, two-bathroom condo in Clarendon that I rent out. The unit only has a single parking space. Does it make sense to purchase a second parking space if I find one for sale?

A. If you were living in the condo and personally needed a second parking space then the decision making would be a little different. You would need to factor in how much it costs you each month not to own a parking space for your second car. You would also likely consider how much the convenience would be worth to you.

Because you are renting the property out, you need to look at it as an investment. In Clarendon, condo parking spaces typically sell for $15,000 to $25,000.  Your agent should be able to help you figure out what the market rate is in your building. If you don’t have an agent relationship, then check the Arlington County tax records. Although I would not count on seeing much appreciation from a parking space, you may be able to find a situation where you can purchase it for below market value and later sell it at or above market value.

The next step is to determine how much extra the parking space will be able to help you earn each month with your rental. Compare this to how much your money could be making you if you invested it elsewhere. For example, if it is returning an average of $100 per month in a current investment, but you could be earning an extra $200 per month in rental income with two parking spaces, then it would make good sense to purchase the second parking space.

Some two-bedroom condo owners fear that they will have trouble selling their homes without a second parking space. That is not the case along the Ballston to Rosslyn corridor. Seventy-one percent of the two-bedroom condos sold along the R-B corridor in the last 12 months did not have a second garage space and their average days on market were only 25. The days on market actually increased for two-bedroom condos with a second parking space. That’s probably because of the higher price point for those units. 

Note: Before making a final decision on your purchase, check with the condominium association to be sure you are aware of any rules and fees that may affect your ownership of a second parking space.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. We own a 1,000 sq. ft., 2 bedroom, 1 bath townhouse in 22204. We’re planning to remodel the small bathroom later this year and as part of the remodel we’ll need to remove or replace the bathtub because of rust and a poorly done refinish (by the previous owner). We are not bathers — at all — and I would like to have a nice walk-in shower rather than a bathtub. Please correct me if I’m mistaken but I suspect that the tub/shower debate is purely subjective and either choice will attract and/or deter certain buyers. My primary concern is how will removing the tub impact property value?

A. I remember first considering this question when the Wooster & Mercer Lofts were selling million dollar condos without tubs. To be accurate, some of them have tubs, but most do not. Having brought dozens of home buyers to see these homes, I witnessed a decent sample size of reactions.

As you mentioned, it is purely subjective. The demographic that Wooster & Mercer primarily appealed to, loved the idea of a large walk-in shower over the “wasted space” of a tub. I’ve heard many stories of the fancy whirlpool tubs that clients had in previous homes, which were never used. These people tend to have a particular distaste for tubs, especially large ones that take up valuable space.

On the other hand, when I’m working with families who have children, a tub in at least one of the bathrooms is often on their must-have list. And then of course there are people who just prefer to take baths.

My advice is to consider who is likely to make up the target market for your home when it comes time to sell. If you expect they are going to be people much like yourselves, then go for it. Get rid of the tub. From what you have told me, I think it will end up adding value to your home.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. I own a townhouse on Columbia Pike in Arlington Village. Let’s say it’s worth $290K right now, and the streetcar is completed in 2022. Considering general market increase, and a boost from having a streetcar, what can I expect it to be worth in 2022?

I expect it to be worth $400,627 in 2022.

If I had the ability to make predictions like this I would be living in Las Vegas rather than Arlington, and making a lot more money. As long as you don’t take my response too seriously, I’m happy to play along with the question.

Though many economists argue that year-over-year appreciation averages out to between 3 and 5 percent, there is no way to predict what the next eight years will bring us. The economy could boom, bust or both.

To come up with the number I provided above, I guessed the rate of appreciation for each of the years leading up to 2022. Below are the guesstimates I made:

• 2014 – 5 percent
• 2015 – 4 percent
• 2016 – 3 percent
• 2017 – 3 percent
• 2018 – 4 percent
• 2019 – 4 percent
• 2020 – 5 percent
• 2021 – 5 percent

My expectation is that you will see the greatest level of appreciation after the Columbia Pike streetcar is complete (after 2022). In my experience, the mere promise of improved infrastructure is not as strong of a catalyst as the completed project. The completed streetcar will attract the new business and the level of interest you are hoping for as a homeowner along the Columbia Pike corridor.

Let’s touch base in eight years to see how close I am on my prediction.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.