Ask Eli

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I recently read an article by the Sun Gazette that median price per square foot was down since last year in Arlington and the rest of Northern Virginia. Is that what you’re seeing in the market, despite reports of prices going up?

Answer: I read that article as well and was equally confused by the statistic that $/sq. ft. was down 6.8% in Arlington in the first nine months of 2019 compared to the first nine months of 2018. While this data point may be technically correct, it doesn’t accurately represent what’s happening in the Arlington/Northern Virginia marketplace. Even without having access to the data behind it, does anybody believe that with all the news about the Amazon-effect on Arlington’s real estate market, that people are paying less per square foot in 2019?

Price-Per-Square-Foot Is Actually Up (Obviously)

The truth is that while the median $/sq. ft. did drop year-over-year in the first nine months of 2019, it was actually due to a shift in the type of inventory that sold, not because buyers are getting more for their money. As I pointed out earlier this year in an article about a national news story on Arlington’s real estate market, it’s easy to find market data that sounds interesting (aka generates reader clicks) but doesn’t tell an accurate story.

When I drilled into the 2018 vs. 2019 data on median and average $/sq. ft., I found that within comparable sub-markets (e.g. 2 BR condos, 4 BR single-family, etc) median and average $/sq. ft. increased year-over-year. In fact, if you use average $/sq. ft. instead of median, like the article references, there was a 9.5% increase across Arlington.

In this case average is a better statistical measure than median, but of course the median $/sq. ft. made for a better story.

Accurate Headlines From The First Nine Months

While I have the data together comparing the first nine months of 2019 to the first nine months of 2018, I’ll go ahead and offer up five headlines that accurately represent the Arlington real estate market through September 2019:

• The market is up, but not by as much as you might think based on some news stories. The average purchase price in Arlington jumped 5.8% to just over $722,000.
• A lack of inventory drove total sales down by 8%, with the biggest drop-off showing up in the condo market which suffered from a 12.3% drop in sales, led by a 13.6% drop in two-bedroom condo sales.
• The price range of the middle 50% of homes jumped from $380,000-$864,300 in 2018 to $415,000-$916,000 in 2019, a 9.2% increase in the lower limit and a 6% increase in the upper limit. This indicates that the Amazon-effect is impacting lower price points faster than upper price points which makes sense because investors and other speculators are more likely to purchase at lower prices.
• Good properties sold much faster in 2019 with 62.7% of homes selling in the first 10 days, compared to 46.4% in 2018. The craziest stat? 85.5% of 2 BR townhomes/duplexes sold within the first 10 days.
• Price growth in the 22202 zip code, the area surrounding Pentagon City and Crystal City aka National Landing aka Bezosville, led all Arlington zip codes with a 13.7% jump in average sold price.

If you ever run across market data you’re not sure about or would like a customized data analysis, please reach out to me at [email protected].

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local real estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

This past week, Bright MLS announced major changes to prevent agents and brokerages from marketing properties for sale that are not entered into the MLS.

Previously, there were no restrictions on where and how long a property could be marketed to the public and/or other agents if it was not in the MLS. Effective immediately, a property must be entered into the MLS within one business day of any marketing (some exceptions apply). Violators will be fined up to $5,000 per violation.

Initially it might seem like this rule is unnecessarily restrictive and hurts consumers, but I strongly believe it is a net benefit for the marketplace.

What is MLS?

MLSs (Multiple Listing Services) are the organizations that allow agents and consumers to see all properties for sale in one place; the database of record that powers your favorite property search apps/websites. They are private entities born from the cooperation of regional brokerages, funded through brokerage and agent fees. There are around 600 regional MLSs across the country.

What is Bright MLS?

Bright is the name of our local MLS and is the largest in the country. It is responsible for property listings in all of D.C., MD,and DE, most of VA and PA and some of NJ and WV.

How it Benefits You

This type of regional cooperation between brokerages means that buyers have access to every home for sale in one centralized location, thus increasing the odds of finding the right home, and sellers can ensure their home is visible to every buyer, thus increasing the odds of their home selling for full market value.

A market without an MLS is fragmented, inefficient and not in the best interest of consumers.

New Pre/Off-Market Policy Change is Necessary

Over the last few years, in an effort to distinguish themselves from competition, brokerages and agents were engaged in a fierce competition to establish an inventory of pre/off-market properties marketed through independent websites, portals and social media channels. The idea was that if an agent or brokerage has a large inventory of off-MLS properties, in addition to access to all on-MLS properties, they’d be able to attract more clients.

These efforts led to fragmented “shadow markets” across the region, making it impossible for buyers to access all properties for sale and potentially limiting a seller’s market exposure. The Bright MLS Board, made up of brokers from across the region, recognized this problem and unanimously determined that changes were needed to secure the enormous benefits of cooperation.

The new rules still allow intra-brokerage marketing of off-market properties and agents to have one-off conversations with other agents and/or buyers about off-market properties, but agents/brokers cannot engage in public or inter-brokerage marketing.

What to Expect

Going forward, you should no longer find a property being marketed for sale or coming up for sale that is not entered in the MLS and widely available across all/most consumer-facing property search websites/apps. This includes social media, even Instagram and Facebook Stories.

One caveat is that not every consumer-facing property search website/app picks up properties entered into the MLS with a Coming Soon status. Bright MLS allows properties to be entered as Coming Soon for up to 21 days.

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This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Are there any loan programs available to people buying a home in Arlington?

Answer: October is Housing Month in Arlington which means some nice County programs including the annual Live In Arlington Info Fair which provides a ton of great information and education on fair and affordable housing in the County.

To support affordable housing, Arlington offers four programs for moderate-income homebuyers that I’ll highlight below.

Most Popular: Virginia Housing Development Authority (VHDA) Community Homeownership Revitalization Program (CHRP)

• Reduces your interest rate on a VHDA loan by 1%
• Household income must be 120% or less of the Area Median Income (AMI)
• Purchase must be in one of three Arlington County zip codes: 22203, 22204, 22206
• Must be a first-time homebuyer
• Can be combined with other programs
• Programs ends when funds run out each year. $5M was allocated in 2019 and ran out in September. Program will begin again in 2020 with new funding.

Most Unique: Moderate Income Purchase Assistance Program (MIPAP)

• Interest-free loan up to 25% of the purchase price to cover down payments, closing costs, rate buy-downs, etc.
• Owner pays back loan, interest-free, plus 25% of equity at time of a sale or refinance. If no equity or negative equity, only the original loan is due. This incentivizes owners to refinance once they can afford the home on their own and recycle the funds back to the County to expand the program.
• MIPAP has only been used about ten times in the last two years, representing 50% of the program’s applicants
• Household income must be 80% or less of the Area Median Income (AMI) and other loan/credit limits exist
• Must be a first-time homebuyer or no interest in property within the last three year

Live Where You Work: Arlington County Employee Program (LINK)

• Forgivable loan for Arlington County employees up to $6,600 (FY2020), becomes a grant after three years and does not have to be paid back
• Can be used for down payment and/or closing costs and combined with other programs
• No income limits or other restrictions
• Also meant for teachers, but currently no budget allocated to it in FY20

Reduced Rate Homeownership: Affordable Dwelling Units (ADUs)

• Housing units required to maintain specific reduced-price levels based on affordability standards for moderate income buyers
• Buyers must register to qualify for ADUs and, once registered, will be notified when ADUs come up for sale. If multiple buyers are interested in purchasing an available ADU, there is a priority drawing.
• Developers can include ADUs in new construction as a community benefit. Recent examples include Key & Nash (four two-bedrooms) in Rosslyn and Carver Place (six three-bedrooms) off Columbia Pike (Pike East)
• Resale properties are periodically for sale, but there are none currently
• Arlington currently has 55 ADUs in its portfolio
• Arlington lender requirements mean buyers have access to a limited set of lenders and should inquire with their lender if they meet the portfolio requirements

If you have questions about any of these programs or would like to explore how they fit into your purchase strategy, feel free to email me at [email protected].

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local real estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Is it possible to buy a home with less than 20% down?

Answer: I’m always surprised by the number of people who assume they have to put 20% down to buy a home and delay their goal of becoming a homeowner for years because of it. Studies show that the most common reason people give for not buying a home is that they don’t have enough for a down payment.

In reality, about 1/3 of Arlington buyers purchase a home with less than 20% down and for many buyers, especially first-time home buyers, they’re putting as little as 3-5% down.

Programs For Everybody

For those with good credit, there are popular Conventional Loan programs allowing for as little as 3% down and for those with lower credit scores, FHA Loan programs range from 3.5%-10% down. There are also some exceptional programs available to those with great credit and strong incomes allowing for 10%-15% down at great rates.

Specialty Programs For Military and Doctors

If you are an active-duty or former service member you likely know about VA Loans that allow purchases with zero down. Doctors also have access to special loan programs offering great rates with low down payments for large loan amounts.

Mortgage Insurance

Most loans with less than 20% down will include mortgage insurance, which I wrote about here. It will increase your monthly payment and generally represents a higher percentage of your loan amount the less you put down. However, there are options to get rid of the mortgage insurance fees by buying it out or applying for early removal after a couple of years. There are also some programs that do not include mortgage insurance at all.

Impact on Negotiations

Clients often ask me how much a lower down payment will impact their ability to negotiate, so last year I ran the numbers on the impact of different down payments on the percentage buyers were negotiating off the sale price.

The results showed that only cash buyers (100% down) and buyers not putting any money down were materially impacted by their down payment, the negotiation leverage was pretty similar for everybody in between.

However, it would be misleading to suggest that down payment percentage doesn’t have any impact. Most sellers will respond more enthusiastically to higher down payments and this comes into play in competitive scenarios (multiple offers), which has become common in Arlington and the surrounding D.C. Metro neighborhoods. When sellers are choosing between multiple, similar offers, buyers with higher down payments have an advantage.

Buyers can combat the potential negative impact of a lower down payment in multiple offer scenarios by getting a strong pre-approval letter from a reputable local lender, offering to get pre-approved by a lender of the seller’s choosing, increasing the Earnest Money Deposit, or a number of other tweaks to the contract that will be looked at favorably by the seller, without increasing risk to the buyer or increasing the offer price.

Favorite Mortgage Programs

Here’s a link to an article I wrote with some of my favorite mortgage programs and contact information for great lenders who offer them.

If you’d like any additional information or recommendations on lenders or loan programs, don’t hesitate to reach out to me at [email protected]. If you’re thinking about buying a home in Arlington or the surrounding Northern VA/D.C. Metro neighborhoods, I’d be happy to meet with you to discuss your options.

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local real estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: How fast are homes selling in Arlington this year and how does that compare to previous years?

Answer: Days on Market measures the number of days between a home being listed for sale and when it goes under contract. Low days on market is one of the leading indicators of a hot market and signals future price appreciation.

The most common way to measure this is average or median Days on Market, currently 33 days and 9 days over the last six months in Arlington, but I also like to track the percentage of homes that go under contract within the first ten days. I generally find that this metric gives buyers and sellers a better feel of the market.

Fast & Furious 2019

The percentage of homes that go under contract within ten days has skyrocketed in 2019, doubling the rate seen in 2015 and 2016. Below, you can see how demand for South Arlington homes has been increasing relative to North Arlington over the last three years, not just since the Amazon HQ2 announcement in November 2018.

The table below breaks the market down a bit further by number of bedrooms within each market. Note the incredible demand of one and two bedroom homes (mostly condos) in South Arlington, with well over 80% going under contract within ten days. Even more impressive is that only about 25% of one bedroom South Arlington properties were selling within ten days as recently as 2015 and 2016. If you bought one before the madness, congratulations!

Prepare To Pay

Sellers control the negotiations during the first ten days of a sale and the price paid on homes going under contract within the first ten days reflect that, with an average purchase price well above the asking price.

The table below breaks the market down a bit further by number of bedrooms within each market. It is based on net sold price (sold price less any seller credits). In South Arlington, homes that go under contract within the first ten days on market are averaging a net sold price nearly 2% higher than the seller’s asking price.

One important takeaway from this data is that in 2019 buyers making an offer on a property that has recently hit the market have become accustomed to including escalations, which is why you see average prices well above the asking price.

What Does It Mean?

Unsurprisingly, some national studies have determined that Arlington and Alexandria are the country’s hottest real estate markets. That’s great news for home owners, especially those looking to make a move into a less expensive market, renting, or downsizing. The frustration for buyers comes from all sides as well. There’s very little inventory to choose from and, as detailed above, good inventory moves quickly and for a premium.

If you’re considering selling, it’s important to understand just how high you can price your home without overpricing and missing the market, which can lead poor results.

If you’re hoping to buy a home, planning and preparation are critical. Despite the market conditions, I have worked with a lot of buyers this year who have found success in Arlington, but it requires the right approach.

I am available every day of the week to meet or schedule a call if you’d like to discuss your options to buy, sell, or rent in Arlington or the surrounding Northern Virginia, D.C., and Maryland Suburb communities. Just send me an email at [email protected] to schedule some time to talk.

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local real estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: How do I know that I have the right homeowners insurance coverage?

Answer: Most people will spend more time figuring out what movie to watch on Netflix than setting up homeowner’s insurance on their most valuable asset(s). Despite how fast and easy insurance companies make the process, you should be spending more time with a real person designing an insurance policy that fits your home and your risk tolerance.

Two weeks ago, ARLnow columnist Peter Rousselot wrote an article about a home flooded with sewage because of a back-up in the public sewer line that didn’t have proper Water & Sewer coverage and was denied coverage by the County, thus costing them almost $20,000 and a ton of headaches.

According to my insurance partners at Day, Deadrick, and Marshall (DDM Insurance), Water & Sewer Back-up Coverage is one of many things commonly missing from most homeowner’s insurance policies written by popular “fast and simple” insurance providers.

In addition to having the right coverage, a good insurance provider will also make sure you understand what is NOT covered that people often think is covered. Basement flooding from heavy rains is a good example of something that is often not covered, a lesson many locals have learned the hard way over the last few years. If you understand what isn’t covered, you may make different decisions on where and how you store valuables or where you invest in expensive renovations.

I asked the team at DDM Insurance what some of the most common mistakes are that they see in other homeowner’s insurance policies they review and outlined some of them below:

Sewer Water Drain Backup (what was missing in the policy for the homeowner in Peter’s article): Applies to sump pumps, wells, toilets and piping within the structure. Separate coverage applies to the breaking or freezing of pipes, but any other back-up or over run of these sewage systems within a home require this coverage and should be no less than $25,000.

Additional Living Expenses: It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Typically, most policies will cover 20% of the value of your home, but for those with lower valued homes, it may be appropriate to increase this limit. In the event of a total loss, it is very reasonable for these expenses to be over and above that amount.

Guaranteed Replacement Coverage on the Dwelling: This provides additional coverage on the dwelling if there is a total loss, so the client gets a percentage over the dwelling coverage listed on the policy declarations. Those percentage options are usually 25%, 50%, or 100%, so if you have $100K on the dwelling coverage, with this endorsement, you get up to $125K, $150K or even $200K.

This is a must because you never actually know what it will cost to rebuild until it has to be done. The replacement cost estimators that insurance companies require to be done are only estimates so this endorsement gives people a cushion so they are not out of pocket in the event the house is totaled.

Supply Line Coverage: This helps to defray the cost to replace the incoming/outgoing water and sewer lines from the street to the house. This covers the cost to dig up the front yard, replace the busted pipe and then backfill/repair your yard. It often costs $5,000-$10,000+ for this type of work, depending how far your house is from the street and the amount of landscaping/hardscaping to dig-up/replace.

You should also consider who the actual insurer is because when a claim is filed, the quality of service and responsiveness of your insurer is critical. Like anything else you buy, the cheapest providers often render the cheapest service when called upon.

If your homeowner’s insurance was set-up online or without involvement by a real person with expertise in local insurance practices, I highly recommend getting another opinion from an insurance agency/provider who offers a more personalized review of your policies.

I also don’t suggest taking those recommendations and sourcing the cheapest version of it elsewhere because oftentimes, the personalized service you get (or don’t get) building a policy is reflective of the quality of service you’ll get when a claim arises.

For a review of your current policies or help setting up a new policy, I highly recommend contacting Matt Deadrick ([email protected] or 301-937-1500 x13) at DDM Insurance, who I use personally and recommend to my clients.

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local real estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: How often should a condo building conduct a Reserve Study?

Answer: In my opinion, the Reserve Study is the most important planning tool for Condo Associations because it provides a roadmap for how much money needs to be saved and what projects the Board should prioritize.

What is a Reserve Study?

A Reserve Study should be done by an engineer who specializes in condo or apartment buildings. The engineer inspects all of the common elements like the roof, garage, hallway carpeting, pool, etc to determine the remaining useful life and major repair schedules for all common systems/elements. For buildings around here, the cost usually starts around a couple thousand dollars and goes up from there.

After the inspection is complete, the engineer provides a report that generally includes:

• Summary of the common systems
• Maintenance or repair recommendations
• Replacement schedule over the next 30 years
• Estimated annual cost of repairs and replacement needs over the next 30 years
• Analysis of the Association’s current reserve balance, annual reserve contribution amounts, and projected annual costs to determine if the current balance and contributions are enough to support costs over the next 30 years

How Often Should a Study Be Done?

Virginia Code states that a new Reserve Study should be done at least once every five years. This will still be the case when the new code becomes effective on October 1, 2019.

Who Cares?

The Reserve Study is important for many people including owners, Board members, management and buyers.

• The financial analysis is critical for the Treasurer to determine monthly fees and reserve contribution levels.
• The repair schedule allows the Board to set priorities for themselves and management to solicit bids for major repair or replacement projects.
• Homeowners must provide a copy of the Reserve Study and current reserve account balance to buyers once they go under contract. Buyers have the right to cancel a contract within three days of receiving this information so having an updated Study and sufficient reserve funds is important.
• Buyers should carefully review the Reserve Study and compare the recommended reserve balance and contribution levels with the current balance and current-year contributions in the budget.

Funding Depleted Reserves

After completing a new Reserve Study, you may find out there are insufficient reserve funds and contribution levels. Boards generally have two options — increase condo fees or issue a special assessment.

If the reserve deficiency is 5+ years out or relatively small, there’s likely enough time to slowly increase fees until you’re caught up. However, increasing fees by too much can have a negative impact on sale prices, so sometimes a one-time special assessment is in the best interest of the owners. A special assessment may also be your best option if the money is needed quickly to cover reserve costs in the next few years.

Not only does Virginia Code request Associations to complete a Reserve Study at least once every five years, it’s good practice for all stakeholders to have an update Study available for better financial planning and facility management.

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local real estate, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.