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’ve been looking at homes for sale in the area and have noticed a pretty big range from the homes that show well to the ones that do not. It’s obvious that the nicer looking homes have been staged. We’re going to be selling our house soon and are wondering if staging is worth the investment? 

A. If your house already looks like a model home then you may not need to stage. If your home is more suited for function than fashion, I recommend staging in one of the following formats.

Consultation — A professional design consultant will provide you with a custom plan for arranging the furniture you currently have and improving your home as needed. They can provide paint, lighting and upgrade recommendations. They pay close attention to how the home will look in marketing photos and how it will showcase the space when potential buyers visit in person. At Arbour Realty, we pay for this consultation as part of our list of services.

Vacant Property Staging — The other popular option is to have the staging company furnish your home with their furniture and decorations. This is usually the optimal strategy, but it requires the highest investment. I’ve seen this method completely transform the way a home looks. It shows buyers the full potential of each room and demonstrates how the home can be lived in.

Hybrid — Some homeowners go with a hybrid of the two described above.  Maybe you just need to furnish a room or two. Maybe you just need decor to compliment your current furniture.

Is it worth the investment? Absolutely. More so than selling a house, you are selling a lifestyle. Showing buyers how the home matches the lifestyle they are imagining is vital to maximizing the return on your home sale.

It is certainly going to be much more attractive than the vacant house down the street. When buyers walk through the vacant house they look out the windows at the power lines and traffic. They look for what they can find wrong with the home and are quickly ready to see the next home on their list.

When they walk into a staged home they are more instantly comfortable. They spend more time in each room. They notice and talk about things they like. They begin to make an emotional connection to the property. The difference is amazing. It’s one of the secrets to why our listings outperform our competition.

According to StagedHomes.com:

• The average sales price of a staged property is 6.9 percent higher than a non-staged property
• Staged homes typically sell 50 percent faster than non-staged homes.

I’ve never had a seller regret staging. Actually, they often comment that they should have done it earlier while they could have enjoyed it.

Additional Tip: Staging is especially important in odd shaped or smaller spaces where potential buyers may not be able to easily visualize a good use for the room.

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 townhouse in Arlington and will be in the market for a house soon. The townhouse is located in Clarendon. We are looking to purchase in Arlington or Falls Church. Maybe McLean. How should we coordinate our sale and purchase so we don’t get stuck with two homes or end up homeless?

A. This can be a tricky situation. The best strategy for you is going to vary depending on the market and the options you have available.

I recommend that you start by looking at some homes for sale. Not necessarily to buy right away, but more as an exercise to confirm that you are going to be able to find what you are looking for. In others words, make sure that your budget aligns with your expectations about what is available on the market before moving forward with the sale of your current home.

In the markets you mentioned, it is going to be very difficult to be competitive as a buyer if you plan to make an offer with a Home Sale Contingency. You will have better luck selling first and negotiating a rent-back while you find and purchase your new home.

Below are some suggestions when it comes to pricing your current home and negotiating offers:

• Determine a price that will keep you from leaving money on the table, but also puts you in a position to attract multiple offers. This is where it really helps to have an agent who is extremely familiar with your local real estate market.
• Have your agent make it known to potential buyers that you will require a rent-back period. I suggest trying for up to 60 days. This is the maximum amount of time allowed by some lenders and it will provide you with about three months to find and settle on a home (assuming a 30-day closing).
• Try to negotiate an offer without contingencies or at least very short contingency periods. You’ll feel a lot more confident moving forward on your purchase once the contingencies are out of the way on your sale.
• Try to obtain a backup offer. Just as it sounds, this will provide you with a backup contract if the primary contract falls through.

Once you have a contract in place on your current residence, it is time to become very active in your search for a new home. Based on how clean the contract is for your Clarendon townhouse, you’ll have a much better idea how you should structure your offer on the purchase. You and your agent should determine if it makes sense to include a Settlement of Purchaser’s Property Contingency. This contingency is not as frowned upon by sellers as a Home Sale Contingency and it will provide you with protections from the contract if your current home does not close for some reason.

Figure out ahead of time what your plan B and C are if you aren’t able to find a new home.  Do you have someone you can stay with temporarily? If not, you may want to look into temporary housing solutions like aka.

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 don’t want to get ahead of myself too much, but we are putting our house on the market next weekend. It’s in great shape and we think it is priced well. If we are lucky enough to find ourselves with multiple offers, what is the best way to handle that situation?  

A. There are a number of ways I have seen multiple offer situations handled. I think the best strategy is to set a deadline by which all offers must be in. I prefer to go live on the market Wednesday or Thursday with a Monday evening deadline for offers. This gives buyers plenty of time to see the home and gives agents plenty of time to thoughtfully construct their offers. I’ve found that waiting any longer than can lead to drop off in interest.

You’ll need to make it clear to agents that they should present their client’s best offer. Otherwise you will have some buyers that are expecting back and forth negotiation.

I highly recommend allowing escalation clauses. In my experience, buyers are much more willing to reach on price if they feel it is justified by what other buyers are also willing to pay. I’ve come across listings recently that didn’t allow escalation clauses and for the life of me, I can’t figure out the justification for such a rule. It almost guarantees that buyers will take a more conservative position when it comes to deciding what terms to offer.

I have a spreadsheet template I created to keep track of the offers. It makes it easier to compare the merits of each offer, like: price, escalated value, contingencies, EMD, closing date, seller concessions, rent-back offered, etc.

Once you have chosen the contract you would like to work with, you still have the ability to counter certain items that you would like the buyer to improve. For example: you may like everything about one of the offers, but want to request a rent-back period.

If you are already getting above asking price, then I don’t recommend countering price unless it is somehow justified. For example:  You really like everything about offer “A” but it is a few thousand dollars less than one or two of the other offers. You might decide to reach out to offer “A” and let them know you are willing to go with their offer if they can adjust their price to match offer “D.” Some buyers may tell you to take a hike, while other buyers will be relieved that you gave them the opportunity.

I also recommend asking for backup offers. It tends to keep your primary buyer much more motivated and provides you as the seller with a clear backup plan. This is especially important if you are in the process of buying a new home for yourself.

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 are looking at homes that will require us to obtain a jumbo loan. We’ve been pleasantly surprised by how low interest rates still are. Do you expect that to continue through the summer and possibly the rest of this year?

A. The short answer to your question, and good news,  is “yes” — rates are expected to remain low through the summer and perhaps even into parts of 2015. This is true for FHA, V.A., Conventional, as well as Jumbo loans.

To get to the “why” that these rates are expected to remain low, let me digress to a bit of recent history and then come back to expectations for the future. Months ago, rates were extremely low because the Federal Reserve was directly subsidizing interest rates (i.e. keeping them lower than rates would have been without the subsidy). Over the past months, the Fed has begun to eliminate this subsidy program, and rates were expected to rise to 5 percent or higher once this occurred. However, over the past few months, when the subsidy phase out actually did begin to occur, rates remained relatively constant, and even decreased a small bit. Experts scratched their heads.

While the Fed did phase out it’s direct subsidy of interest rates, the Fed also decided to keep what is called “short term borrowing” rates very low. Keeping short term rates low is a traditional manner that the Fed has used throughout history to keep overall borrowing rates low, and the Fed does this when they feel an overall lower cost of borrowing is the best way to assist a fragile economy to continue to recover.

Interestingly enough, the elimination of the rate subsidy by the Fed was not an indication that the Fed thought the economy was strong and that rates should increase. The Fed still believes that low rates are needed to help economic recovery, but they felt that the rate subsidy program was no longer necessary to achieve this goal. Most thought the subsidy would be eliminated because the Fed was OK with higher interest rates, but in reality, the Fed still believes and wants to maintain lower interest rates, but is doing this in a manner now where the rate subsidy is no longer necessary.

It is expected that the economy will not significantly recover at least until early 2015, and since the Fed has stated that they prefer lower interest rates until there are signs of economic recovery, the most likely expectation is that rates will remain low through that period, which is very good news for homebuyers this summer.  (more…)

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 wife and I are in the North Arlington market for a single family home and have dealt with the frustrations of losing out on competitive situations. We have lost a few homes recently while bidding 3-4 percent above ask, waiving all contingencies, writing a heartfelt letter, putting down a large EMD along with 20 percent down payment, yet we were still not even the top three contenders with our offer.

Have you noticed an uptick in demand this spring market compared to the last spring market? I know it really depends on what the seller is looking for, but it is not often realistic (nor possible) for us to offer 10 percent above ask on every offer to get our home. Do you have any suggestions for a winning strategy while still exercising at least one contingency to protect us? Additionally, could you rank the contingencies from best to worst in terms of making a competitive offer? Thank you.

A. It sounds like you are competing in a market segment that is in very high demand, which can be highly frustrating. There are certain segments of the Arlington market where demand seems to continuously outpace supply, creating the type of bidding wars you are experiencing.  That said, I have not noticed an uptick in demand this spring over last.

I wrote an article last year that provides a points-based list of strategies that you can use to strengthen your offer. It’s still highly relevant, but I like your idea of putting these strategies in order. In my professional opinion, these are the top seven ways you can become more competitive.

1. Price. Assuming that you feel the current market value of this home is higher than the asking price and you expect competition — I recommend offering the full list price.
2. Escalation. 
   1. Decide what the highest price is that you feel comfortable paying for this home. Said differently, if someone is willing to pay $1 more than this price, are you OK with them getting the home?
   2. Most buyers are going to escalate in increments of $1,000. I recommend picking a more aggressive number — perhaps $5,000 or $10,000. This will help make up for any deficiencies in your offer.
3. Appraisal. If you can afford to do so, waive the appraisal contingency. Putting yourself in the seller’s shoes — it’s great to have a high contract price, but if they are running the risk of it not appraising, they could find themselves re-negotiating the price after the appraisal. Many sellers will put a lot of value in being able to avoid this situation.
4. Home Inspection. Home inspectors are paid to find problems in a home. Even for the most well maintained homes, they are going to find something. Sellers would prefer to avoid the possibility of the home inspection turning into additional expenses for themselves. If you are not comfortable waiving the right to a home inspection, you may want to consider waiving your ability to request repairs. Done properly, you can maintain the ability to cancel the contract if something is found that you are not comfortable with.
5. Closing Date. Find out when the seller would like to close and match this closing date in your contract. If they are in the process of buying another home, they may also prefer a rent back. You can win some major points by offering a free rent-back for the sellers.
6. Financial Contingency. This is the hardest contingency to exercise so sellers are not typically as worried about the financial contingency. The listing agent can usually determine by the strength of your pre-approval letter and a conversation with the lender, how big of a risk you pose of being turned down for financing at a later point. We work with some lenders that can fully approve you prior to writing a contract, which make the financial contingency unnecessary.
7. Earnest Money Deposit (EMD). Assuming you don’t default on your obligations, this a free way to strengthen your contract. The minimum EMD amount we usually see is 1 percent of the purchase price. I recommend an EMD of 3 to 5 percent in a competitive situation.

Please consult with your Realtor about how each of these strategies can affect your level of risk before moving forward. Best of luck out there!

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 just purchased my first home in Arlington, one that had only one owner over the life of the home. The home was also owned outright. When going over closing costs, I was told that the owner’s title insurance is optional. Given that this expense is upwards of $800, what is your take on buyers opting out of this?

A. The house may have had just one owner, but what about the land itself?  It has had several owners over the last 200 years. There could be any number of title defects that affect the land.

If there are any title defects, a buyer can certainly pursue a claim against the seller under the covenants in the deed; however, will the seller have the assets to satisfy the buyer’s claim? Will the buyer even be able to find the seller years after closing?

That is the benefit of owner’s title insurance. A buyer is safe in purchasing realty because if there are any title claims, the title insurance carrier will be there to compensate any loss.

Not getting title insurance is like not getting auto insurance. Sure if you get into an accident and it’s someone else’s fault, you can sue them. But if they are without insurance and judgment proof, unless you have insurance, you have to absorb the loss yourself.

The response to this question was provided by Helen Krause and Nicholas Vlissides of NewWorld Title.  I recommend contacting Helen at NewWorld Title for any of your settlement and title needs: [email protected].

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 have been working with a Realtor for almost two years and we have been unable to find a house in North Arlington that is suitable for us. At this point we are wondering if it is time to find a new agent, but at the same time, we wonder if a new agent would do any better for us because there is such low inventory in North Arlington and the market is so competitive.

We are having second thoughts about our agent because he is not proactive. We receive a daily automated email from him with the MRIS listings, however, after reviewing the daily list, we must tell the agent which houses we would like to see. He has never once said to us “this house is coming on the market” or “this house came on the market today, let’s go and see it.” We feel like we are doing all the work and the agent is just “opening doors.” Yes, we know once the time comes to put in a contract the agent will be working hard for us, but at this point it is frustrating.

We have not signed any kind of agreement with our agent, but after almost two years we feel a little guilty about finding someone new, especially since he is expecting to sell our condo. What is the best way to handle a situation like this? Could we have him sell our condo and work with another agent to find our home, or should we just separate ways?

A. There are plenty of people critical of my profession and I totally get it. Many of those critics have had an experience like the one you are describing. You are hoping this agent adds value once you find the right home, but he has not demonstrated the ability to do so thus far. If he is just going through the motions now, I would expect the same when it comes to advising you on the value of the home, negotiating your offer and marketing your condo. You deserve a lot more than this!

There isn’t any excuse for not being able to find a home after two years. I know that housing inventory is lower than buyers would like, but after two years it is not low anymore. It is just normal. In February alone, 183 other people were able to find homes in Arlington.

There needs to be continuous dialogue between you and your agent so that he is advising you on what needs to be done to help you meet your goals. Maybe your expectations are a little unrealistic, but that is not your fault. It’s his job to be a market expert and to help you understand what it will cost to get what you want in today’s market. Rarely should a week go by without at least one proactive suggestion from your agent. If he is unable to do this, then he is either not trying hard enough, too busy for you or not well enough ingrained in the North Arlington market.

The buyer agents on my team and I try to establish realistic expectations at the initial consultation. Sometimes, we even review active listings in this first meeting. It does not make sense for someone to think they are going to find something that doesn’t exist.  Especially in a market where prices are increasing.   (more…)

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. Have you done any analysis on the average sale price per square foot by Metro area in Arlington? I’m looking to buy in the Clarendon/Courthouse area and that along with HOA fees are two of the key components I am examining.

A. I have created a report for you that follows the Metro stations along the Orange Line from East Falls Church to Rosslyn. You mentioned in a subsequent email that you are looking at newer condos, so I am going to limit my analysis to condos built more recently than 1999. I’m using data from the MLS so it will not includes some of the new construction sales at Gaslight Square and the growing number of sales that take place outside of the MLS.

East Falls Church

The only newer condo currently located near East Falls Church metro is Westlee. The average cost per square foot (CPSF) is $454 with a range of $442-$476.

Condo listings near East Falls Church metro

Ballston

Ballston includes a larger number of condo options, such as Liberty Center, Continental and Berkeley. You will also start to pay a premium for being within the Ballston to Rosslyn corridor. I did not include condo conversions like Eastview & Westview because they were not actually built after 1999 (despite how they are listed in the MLS). The average CPSF is $555 with a range of $450-$624.

Condo listings near Ballston metro

Virginia Square

Virginia Square often gets lumped in with Ballston, but I decided to break them up. I included Hawthorn, Lexington Square, Monroe and Ballston 880. The average CPSF is $544 with a range of $463-$600.

Condo listings near Virginia Square metro

Clarendon

Clarendon is consistently in the most demand when it comes to condo buyers like yourself.  I included Hartford, Lyon Pointe, Clarendon 1021, Phoenix, Station Square and Clarendon 3131. The average CPSF jumped to $589 with a range of $518-$724.

Condo listings near Clarendon metro

Courthouse

Condos in Courthouse include Vista, Odyssey, Park, 1800 Wilson, Dakota, Gaslight Square and Wooster & Mercer Lofts. Courthouse is typically a little less expensive than Clarendon but the average cost per square foot is going to be skewed slightly higher because of the luxury Abdo buildings. The average CPSF is $569 with a range of $443-$744.

Condo listings near Courthouse metro

Rosslyn

The numbers in Rosslyn are off the chart because Rosslyn includes the ultra-luxury condo buildings: Turnberry Towers, Waterview and Memorial Overlook. Even though the average CPSF I’m reporting is higher in Rosslyn, I think it is safe to assume that if you built the exact same condo building in Rosslyn and Clarendon, the one in Clarendon would be able to demand a higher cost per square foot. The average CPSF is $815 with a range of $532-$1102.

Condo listings near Rosslyn metro

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 considering building a new house on our existing lot in Arlington. We are trying to decide whether or not to include a garage in our plans. We live about half a mile from a Metro stop, and our current home lacks a garage (though we do have off-street parking). We have never really worried about the lack of a garage for ourselves, but we don’t want to hurt the resale value of the home. Because our lot is small, building a garage will come at the cost of some of the interior space of the home. We are trying to determine whether or not the garage is worth sacrificing living space, or whether a larger living area without a garage will have better resale value.

A. When it comes to buying newer homes, a garage is often on the “must-have” list for Arlington home buyers. There are people like yourselves who could live without one, but the pool of potential buyers is going to be much smaller if you forgo a garage with your home.

I don’t think it matters terribly if the garage is attached or detached. Some people prefer one or the other, but most don’t care. You’ll find that homes with a detached garage gain an incentive “bonus” when calculating maximum lot coverage in Arlington County.

If you do go with a detached garage, I recommend looking into creating usable space above the garage. I’ve seen people use this space as a home office, workshop, clubhouse, hobby room or even just for storage. It creates a lot of possibilities that are certain to add value to your home.

I looked at the statistics for Arlington fee simple homes that were built in 2013:

• 7 homes did not have a garage
• 13 homes had a 1-car garage
• 62 homes had a 2-car garage

This means that 91 percent of homes built in Arlington last year had a garage.

You may also want to assess what segment of the market you want to attract with your home when it is time to sell. It’s my casual observation that homebuyers looking to spend around $1.3 million and up, tend to expect a 2-car garage.

Your home is located near the Metro and includes off-street parking so you may benefit from some market leniency, but I think the safe bet is to include a garage in your plans.

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. How can I soundproof our home near the road/in the city for a peaceful night’s rest and increased attractiveness to buyers and renters?

A. Exterior sound is something that a lot of us deal with in Arlington. Without rebuilding your home to completely soundproof it, but there are some things you can do to make it more difficult for sound waves to penetrate your home and disturb your rest.

Here are some ideas you can try:

• Seal any cracks or holes with caulk or plaster.
• Use weather stripping around windows and doors.
• Windows are often a path of least resistance for noise, so if you have older single pane windows, you may want to consider upgrading to double pane windows with a higher level of insulation. Windows have a Sound Transmission Class (STC) rating. The higher the rating, the greater the noise insulation. I’ve read that you should look for windows that will provide at least a 5 to 6 decibel improvement.
• Ensure that the walls and roof of your home are properly insulated. If you add or improve insulation, be meticulous about eliminating gaps.
• Consider heavy curtains and thick carpet or rugs to dampen sound vibration.
• Install a solid core door.
• Replace open turbine roof vents with low profile baffled vents.
• Add a solid exterior fence or dense vegetation.
• This one sounds extreme, but some contractors advise adding another layer of drywall.

You may also want to think about adding an indoor water feature to drown outdoor noise with something more soothing. You can do the same outdoors if road noise is disturbing you while you are trying to enjoy time outside.

Depending on how dire your situation is, it may be worth hiring an acoustic expert to provide specific solutions for your noise concerns.

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. Can I save money on the purchase price in lieu of paying a commission to a buyer’s agent when purchasing a home? 

A. I’m glad you asked, because there are a lot of misconceptions about how this works. Potential homebuyers often think that they can show up to any property without agent representation and they will be automatically granted a discount equal to whatever commission is being advertised to buyers’ agents. That is not the case.

The listing agreement negotiated between the listing broker and seller will allocate a certain commission rate for the listing. A portion of the commission is designated for the buyer’s agent. If a buyer’s agent does not exist, then the total commission defaults to the listing agent. Of course there are exceptions where the seller and listing broker add language to the listing agreement to specify a different protocol if a buyer is unrepresented, but in this case the discount may default to the seller rather than the buyer.

Even if you submit a written offer that includes a provision to lower the commission to the listing broker, your offer does not have the power to modify the listing agreement or commission structure that is already in place. In a situation where a property is having trouble selling, you may find that the listing broker and seller are willing to consider a reasonable proposal, especially if you are able to demonstrate the ability competently represent yourself. If it is a well priced property that is likely to sell quickly, you will probably have a hard time convincing them to make a special exception for you.

When buying new construction, the price is often non-negotiable whether you have a buyer’s agent or not, so it makes sense to have an expert representing your interests.  In cases where the price is negotiable, I’ve always found that I’m able negotiate a better deal for my clients than unrepresented buyers.

You can target for-sale-by-owners. They are tough to find and your pool of options is going to be limited in Arlington, but they do exist. The major question is going to be whether they are willing to provide you a discount or not. They are often trying to save money themselves so you will have to evaluate the situation to decide whether you are actually getting a deal or not.

Though I am happy to answer your question as best I can, I am in no way an advocate of attempting to purchase a home without expert guidance.  I feel that the risk far outweighs the potential reward. You may want to check out a past article I wrote about Avoiding Homebuyer Pitfalls.

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