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. Please submit follow-up questions in the comments section or via email.

Question: I’ve been in the market for a 1 bedroom condo along the Orange Line and am getting really frustrated with how expensive it is. I can’t believe people are asking $450k for a standard 750 square foot condo! Do you think it would be a better investment to buy a townhouse in Ashburn for the same price? 

People are often told that condos are an inferior investment to townhomes and single family homes. It’s probably true in many parts of the country, but you really can’t make that argument without taking location into consideration.

There is currently only one new construction condo building for sale along the Orange Line, which is a luxury building called Gaslight Square. In Ashburn, I am able to find 12 new townhouse developments currently for sale. That’s a lot of new inventory and I expect that number to continue climbing over the next few years. It’s going to be challenging to compete with all these new and resale townhouses when it is time to sell your property.

I also wonder how the growing cost of commuting is going to affect demand for homes along the Greenway, with tolls threatening to increase to $4.90 / one way. This adds insult to injury when commuters are already getting clobbered by high fuel costs.

When it comes to real estate investment, I think you can learn a lot from how an area has performed historically. Below are the average sales prices of 750 square foot units in the Clarendon 1021 condo building. As you can see, Clarendon 1021 held its ground pretty well during the economic downturn and rebounded quickly as the economic climate began to improve.

• 2006 average sales price = $389,666
• 2007 average sales price = $396,380 (+1.7%)
• 2008 average sales price = $382,900 (- 3.4%)
• 2009 average sales price = $370,500 (-3.2%)
• 2010 average sales price = $380,950 (+2.8%)
• 2011 average sales price = $394,467 (+3.5%)
• 2012 average sales price = $409,667 (+3.9%)
• 2013 average sales price = $446,240 (+8.9%)

Let’s look at 3BR townhomes in an Ashburn neighborhood called Belmont Land Bay, built around the same time as Clarendon 1021. As you can see, prices took a huge dip after 2006 and have still not fully recovered.

• 2006 average sales price = $631,510
• 2007 average sales price = $417,900 (-33.8%)
• 2008 average sales price = $368,833 (-11.7%)
• 2009 average sales price = $354,202 (-4.0%)
• 2010 average sales price = $420,667 (+18.8%)
• 2011 average sales price = $449,557 (+6.9%)
• 2012 average sales price = $391,250 (-13.0%)
• 2013 average sales price = $428,143 (+9.4)

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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. Please submit follow-up questions in the comments section or via email.

Question: I’ve never been one to appreciate the “character” that others find so delightful in older homes and I don’t think I can afford brand new.  What does a recently-built home cost near the Orange Line in Arlington? 

I work with a lot of home buyers like yourself that would prefer something built within the last 10 years or so. These homes tend to have less wear & tear. They also closer to today’s standards of finishes, materials and energy efficiency.

Because you haven’t specified the type of home you are looking for, I’ll provide a breakdown across condos, townhomes and single family houses. Please understand that the home’s age is only one of many variable. Factors such as location and size also play a big part in determining the price.

Condos

• There are currently 43 condos on the market.
• Price range: $299,000 – $1,995,000.
• Popular buildings: Clarendon 1021, Phoenix, Station Square, Liberty Center, 1800 Wilson, Berkeley, Continental, Clarendon 3131, Hawthorn, Rhodes Hill Square, Odyssey (above) and Hartford.
• Luxury buildings: Turnberrry Towers, Gaslight Square, Waterview and Wooster & Mercer Lofts.

If you wanted to buy a one-bedroom in a popular building like the ones I’ve listed above, you should prepare to spend between $400,000 – $450,000 on average. If you are looking for a two-bedroom in a similar building you should prepare to spend between $600,000 – $700,000 on average. There are plenty of options above these price ranges, but this is what I would consider the sweet spot.

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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. Please submit follow-up questions in the comments section or via email.

Question: I own a townhouse in a community in Falls Church where demand outpaces supply. Houses consistently go on the market and receive multiple offers above asking price within a few days. If and when I decide to sell, what are my options for negotiating compensation with my agent? I want to ensure the agent is fairly compensated while taking into account the fact that little time and effort is required on the agent’s part. Any info on negotiating commission, proposing an hourly rate, or using a real estate attorney (FSBO) is greatly appreciated.

There really isn’t a one size fits all answer to your question, but I’ll provide you with some things to think about so that you can decide which option is the best for you.

For Sale By Owner

The easiest option to address is selling the home on your own as a for sale by owner (FSBO). You live in a desirable neighborhood so it sounds like you are confident your home will sell quickly. You can go bare bones and just put up some signs and a Craigslist ad. Hire an attorney to help you with the contract and save most of the money you would have paid a real estate professional. In fact, the broker / owner of Frankly Realty wrote an article that discusses this very strategy: Go FSBO! Save $20,000! Realtor Tells All!!

Five Reasons To Hire A Listing Agent

Even if you are confident in your home’s ability to sell and have plenty of free time, you may still want to consider hiring a real estate professional. Below are five points I recommend that you consider.

1) Maximum Exposure: My goal is to generate as much interest as possible so that my clients hold the upper hand in our negotiations with potential buyers. It’s the key to maximizing the sales price and negotiating terms that are preferable to my clients.

I think of the listing as a unique brand that requires a professional image and a custom marketing plan. High quality professional photographs of the home and community are the cornerstone to our marketing. Depending on the home we may also include evening photos, aerial photos and video. These are used in the MLS listing and throughout our print and online marketing. I am happy to show you any of my past listings so you can see how they stand out from the crowd.

Though the MLS is an important tool for reaching thousands of homebuyers and their agents, I feel that it is only one of many other marketing channels that should be leveraged. I utilize every website and social media channel available to reach our target market and create interest in my listings. I would be happy to speak with you about this more specifically, but I can’t give away all my secrets in this forum. Some of our marketing plans also include a strategic dose of direct mail and print advertising. I also place an emphasis on pre-marketing the listings so that there is buzz before the listing goes live and begins collecting days-on-market.

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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. Please submit follow-up questions in the comments section or via email.

Question: What advice do you have for a first time buyer? I’d like to purchase a condo in Arlington but literally have no idea where to even start. It also doesn’t help that my credit is a little shaky. Are there things I can do to mitigate that and how do FHA loans work?

Here is a condensed list of the steps usually taken during the home buying process when working with myself or my team:

1. Initial Consultation
2. Mortgage Pre-Approval
3. MLS Updates
4. Showings
5. Market Analysis
6. Drafting of Offer
7. The Negotiation
8. Managing The Details and Removing Contingencies
9. Settlement
10. Move-in

I like to start by meeting with a new home buyer in person for an initial consultation. This gives us a chance to discuss your timeline, goals and expectations. We also talk about the steps to buying a home and the unique ways in which I help my clients along the way.

I offer all of my clients a list of lenders who consistently provide a high level of customer service and competitive loan programs. Based on our conversation, I will recommend one or two that I think will be a good fit for your needs.

Because you are a first time home buyer, I may recommend someone who is going to take extra time to explain your options. It sounds like it would also be helpful to introduce you to a lender with experience repairing damaged credit. You mentioned FHA, which is a wonderful program for some people, but everyone’s situation is different. It is usually best to complete a mortgage application so that a mortgage lending expert can gain a deep understanding of your situation and provide you with all your options. From there, you can decide if FHA is the best program for you or not.

Based on the information we gather during your initial consultation, I will create a custom home search in the multiple listing service (MLS) database. Most of my clients prefer to be updated on a daily basis. Depending on your needs, I can set this up to let you know the instant a new listings hits the market or as infrequently as once a month. Simultaneously, I will be working in the background to try and find you homes that are not listed in the MLS.

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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. Please submit follow-up questions in the comments section or via email.

Question: We would like to purchase a new condo or townhouse and have seen lots of construction around Arlington. Can you tell us which ones are for sale?

Unfortunately, most of the large construction sites in Arlington are for rental apartment buildings. However, here are a few that are being offered for sale.

Ballston Green — This development will bring 28 new townhomes to the western edge of Ballston. These homes are located off of Wilson Blvd., behind the Virginia Tech Research Center. Prices are in the $900’s. Sales have recently resumed and a brand new model is now available. http://ballstongreen.com

Pike 3400 Towns — This is the development replacing the former Chrysler/Jeep dealership on Glebe and Columbia Pike. Once complete, this development will include 44 new urban-style townhomes in an area that is quickly growing in popularity. Following the current trend, these homes will forgo basements for a 4th level loft and terrace. Construction seems to be moving forward, but sales are currently on pause. Prices start in the $700’s. http://www.nvhomes.com/community/pike-3400-towns/

Gaslight Square — These luxury condos are offering a modern flair and unique amenities such as direct elevator access (in other words, the elevator opens into your home). The floor plans are generously sized at 1,000 – 1,900 square feet. They did not skimp on outdoor space either. Units in the second building are now available for move in. Prices range from the $700’s to over $1.3 million. http://abdo.com/gaslight-square

Ballston Row — Though the name would lead you to believe they are located in Ballston, that is a bit of a stretch. They are actually located at the corner of George Mason and Henderson, just outside of what I would consider to be Ballston. The homes are four stories and include 2-car garages. Prices range from the $700’s to over $1 million. http://www.ballstonrow.com

The Avery — Located on the south side of Arlington Blvd, just outside of Rosslyn. This brand new condo building is complete and ready for move-in. Unfortunately, the prices are up there with what you would expect to find within a block or two of the Metro stations along the Orange Line. Prices range from the $400’s to the $800’s. Unless they make some drastic adjustments, my guess is that the Avery will be converted into another rental building. http://theaveryarlington.com/

Dominion Heights — As I’m writing this they have one remaining unit to sell. It is a beautiful two-bedroom on the top floor. At $660,900 this unit seems to be priced a little high being this far off the Orange Line, but you will have a hard time finding another condo in Arlington with a larger private terrace. http://dominionheightsarlington.com/

Please feel free to contact me for additional information about any of these communities including my candid opinions about them.

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. Please submit follow-up questions in the comments section or via email.

Question: According to our property survey it seems that part of our neighbor’s gravel driveway is on our plot of land. How have your clients dealt with this scenario? What would you recommend?

I have had similar issues come up when a neighbor’s fence encroaches on someone else’s property. In some cases they have asked that the fence be moved. In other cases they have resolved the situation through a method similar to what is described below. The nice thing about a gravel driveway is that it can be a little easier to move than a fence.

Though easy to resolve, it’s an unfortunate circumstance because most people moving into a neighborhood would prefer to avoid confrontation with their new neighbors. It’s possible that the neighbor is not even aware that they are encroaching on your property.

I recommend finding a friendly yet effective way to address the situation to avoid the possibility of adverse possession. According to A Broker’s Guide to Virginia Real Estate Law, adverse possession is the acquisition of title to real estate by means of adversely occupying the property. To establish title to real property by adverse possession, a claimant must prove actual, hostile, exclusive, visible and continuous possession under a claim of right, for the statutory period of fifteen years. Based on my interpretation of this statement, if the neighbor continues to encroach your property for fifteen or more years, they could have a legal claim to the the portion of property they are encroaching.

Sara Rodriguez, the settlement attorney at Ekko Title in Arlington, recommends one of two paths.

The first is to quite simply rectify the situation by moving the gravel driveway back onto the neighbor’s property and off of yours. The other option is to send the neighbor a certified letter acknowledging this encroachment and consenting to it on a temporary basis. By giving permission to use the land you take away their ability to stake a claim to the property by adverse possession.

For further assistance, I recommend contacting an attorney.

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. Please submit follow-up questions in the comments section or via email.

Question: I own a 1 bedroom condo near the Courthouse Metro in a full service building. In the near future I will be moving into my fiance’s townhome, and originally I thought I would rent my condo for a couple of years. I refinanced last year and can rent it at a rate that will cover my mortgage and condo fees. We plan to sell both our properties within 3 years (so I can avoid capital gains tax) and use the equity to purchase a single family house, most likely in Arlington.

However, with the market dynamics currently in play, I am wondering if it is really worth the time, risk and possible expenses to become a landlord for such a short time. I have about $70k in equity in the condo and am thinking it might be better to sell it now, and invest that money to have it on hand for our next house. Do you have any advice in helping to make this decision?

If you were considering whether to rent out the condo indefinitely, I would strongly urge you to hold onto it because I think that a condo near Courthouse Metro could be a great addition to your investment portfolio.

If you are only keeping the property for a short period of time, it is important to take a look at all the costs to evaluate whether they outweigh the benefits of holding on to the condo.  There is an iPad/iPhone app I really like called Property Evaluator that can help with this analysis. You can also create a spreadsheet, but be sure to add up the following:

• Interest payments
• Projected maintenance and improvements to the condo
• Estimated number of days the property will be vacant and the cost of carrying the property during that time
• Insurance
• Condo fees and estimated increases
• County, state and federal taxes
• Opportunity cost that the $70k you have in equity and the future principal payments could be making if invested elsewhere
• Property management fees (if applicable)
• Advertising costs (if applicable)

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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. Please submit follow-up questions in the comments section or via email.

Question: Though the lots in Arlington are relatively modest, it seems that the size of new houses continue to grow. Has size now trumped the importance of location when it comes to real estate?

I remember when it seemed absurd to think that someone would try to sell a house with virtually no yard. Now it is becoming the standard rather than the exception with new homes.

Appraisers, Realtors and homebuyers have adopted cost-per-square-foot as a method of determining value. This trend is forcing builders to maximize the square footage of the homes they build in order to increase value and make a profit. Evidence of this trend is the proliferation of homes that are outgrowing their yards and the addition of a fourth level. My point is that size definitely plays an important role in determining market value.

The *cost* in the cost-per-square-foot equation is highly affected by location. Quite simply, the more desirable the location, the greater the demand and the higher the cost-per-square-foot. It is the reason why appraisers and Realtors like to use comparable sales from the same neighborhood or a very close proximity to determine a home’s value.

Location also plays a major role in determining the investment potential. My friends in Ashburn like to point out how they can buy a brand new house for what people pay for a 2-bedroom condo in Arlington. This may be true, but how did those homes’ values hold up just a few years ago when the real estate market softened? From what I recall, the 2-bedroom condos in Arlington held their values quite well, while the houses they build in droves out in Ashburn were decreasing in value by double-digit percentages.

In the current market, almost everything looks like a decent investment, but I expect location to play the key role in how much you will profit when it is time to sell. Here are just a few of the indicators to keep an eye out for:

• How has the micro-market you are considering performed during “cold” and “hot” markets?
• Are there any major improvements being made to the area? The Merrifield area surrounding Mosaic District is a good example of an area that is becoming exponentially more appealing.
• Are convenient commuting options available?
• Does the area have a favorable WalkScore?
• How much housing supply is on the horizon? Areas with a seemingly unlimited supply of new homes always worry me from an investment perspective.

When it comes to real estate… size matters, but location is still king.

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