Ask Eli

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

Question: What are some of the most common mistakes people make when buying a home?

Answer: Hope you had a Merry Christmas! I’m assuming very few people will read my column this week so I figured it was a good time to sneak in some click-bait so I can pick-up some future readers :)

Please don’t throw tomatoes or broken Christmas tree ornaments, I’ll get back to my normal columns on January 8 with a deep dive into how the market performed in 2018. Without further ado, here are the three biggest mistakes I see people make when buying a home:

Mistake #1: Meet Me At [Insert Address] in 60 Minutes

Buying a house should not be like ordering an Uber across town. Just because you can “order” a real estate agent online to meet you at a house in 60 minutes doesn’t mean you should… and you really shouldn’t.

If you want to set yourself up for the best results, you should expect the process to start like any professional relationship; with an introductory meeting to discuss your needs, review the process, establish a strategy and vet the professional you’re working with.

Mistake #2: A Good Deal Isn’t Just About Negotiations

People are programed to think that by negotiating a seller down from their asking price, they’ve secured a good deal. Good deals come in all shapes and sizes and shouldn’t be defined by the seller’s asking price, but by whether or not you are getting value relative to the market and your needs.

I come across plenty of properties that are underpriced or fairly priced and buyers who are solely focused on negotiating a discount often lose out on what would be a great deal without negotiating. Similarly, I’ve seen plenty of sellers overprice homes by so much that buyers negotiate 5% off and still over pay, but they walk away feeling like a winner.

Don’t let a seller’s price dictate what is or is not a good value. Put yourself in a position to recognize value and move with confidence when you find it.

Mistake #3: Duped by Lenders

It’s easy to shop for interest rates online, but what you see online is often very far from what you get. Here are a few tips when shopping lender rates:

• Go through their pre-qualification process first
• Compare rates for a specific property (rates may change based on loan amount, property type, and location)
• Compare rates on the same day
• Compare the Annual Percentage Rate (APR) not the interest rate. A lender may artificially reduce an interest rate by tacking on up-front costs and these costs will be captured by a higher APR even though the interest rate is lower.

Merry Christmas and Happy New Year to everybody. I’ll see ya in 2019!

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Admittedly, I thought I would be more successful learning about the home-buying process online, but realizing it’s difficult to get clear answers that apply locally. I’m getting confused about the meaning and impact of a contingency and hoping you can explain what contingent means and what I should know about contingent contracts in this area.

Answer: There are plenty of educational resources online about buying a home, but local customs and contracts differ so much by state or region that a great explanation of a topic by an agent in New York may prove to be misleading for a home-buyer in Northern Virginia.

I always recommend that our clients spend some time up-front with us discussing key milestones and contract protocol. You’d be surprised how much even the most seasoned buyers can learn during a 30-60 minute review of the buying process.

Simple Definition

Contingencies, in a real estate transaction, are clauses or addendums added to the Purchase Agreement that give one party the right to cancel or renegotiate the contract if certain things do or do not happen within a pre-determined period of time.

Nearly every contingency you will need is a pre-written form offered by the local Realtors Association (e.g Northern Virginia Association of Realtors) so you don’t have to worry about hiring an attorney to draft the language unless you find yourself in an unusual situation.

If a Buyer cancels the sale within the legal limits of a contingency, they receive a 100% return of their deposit/escrow (Earnest Money Deposit).

The Big Three

There are three standard contingencies used in almost every sale — Home Inspection Contingency, Financing Contingency and Appraisal Contingency.

Like most contingencies, they protect the Buyer. However, they are not required so Buyers may decide to remove some or all of their contingencies in order to improve the strength of their offer. Fewer contingencies equals fewer barriers to sale which is more attractive to a seller.

Home Inspection Contingency — This provides buyers the right to hire a 3rd party home inspector (your Agent should be able to recommend somebody), followed by the buyer’s right to negotiate for repairs and/or credits from the seller and/or the ability to void the contract if an agreement on repairs/credits can’t be reached.

Buyers may elect for a Pass/Fail Contingency which eliminates their right to negotiate repairs/credits, but leaves intact the right to void. Nobody other than the buyer can decide whether a home passes or fails inspection.

The Inspection Contingency Addendum also includes a section for Radon testing, which is applicable when a home has a livable underground basement.

Financing Contingency — A Financing Contingency protects the buyer in the event that they are unable to secure a loan to purchase the home. If a buyer is rejected from their loan application for any reason other than personally sabotaging the loan (e.g. not delivering required documents), they have the right to void the contract.

This is why it is important for sellers to vet their buyer’s pre-approval letter before accepting an offer to make sure they have been fully qualified by a reputable lender. Your Agent should know how to vet the approval and whether there are any red flags.

Appraisal Contingency — If you are taking out a loan to purchase your home, the lender will most likely require a 3rd party appraisal. The Appraisal Contingency protects buyers in the event the appraised value is less than the purchase price.

It allows the buyer to renegotiate the purchase price, add more equity to the loan to maintain their down payment percentage, leave the equity unchanged and reduce the down payment percentage or void the contract.

Other Contingencies

Other less common contingencies include the Association Document Review, which offers Buyers a non-negotiable three-day review period any time they purchase a home in an Association (Condo, Coop, HOA, POA) to review the Resale Package which includes documents like by-laws, rules, budget and reserve study. Upon delivery, Buyers are able to cancel the contract for any reason within three days of receipt.

Another less common contingency relates to the purchase or sale of another home. Sellers may include a contingency that states they must find a home to purchase before they will sell their current home and buyers may include a contingency that requires them to sell their home before they purchase their next home.

Proper Use

After purchase price, contingencies are the next most important terms in a negotiation. You should spend time early in your buying process talking with your Agent about the most efficient use of contingencies to maximize your protection while not unnecessarily compromising the strength of your offer.

This is especially important if you are making an offer on a home that has been on the market for less than two weeks and there is a chance for multiple offers. The winning offer is not always the highest price, but the one who presents the best overall contract. Even in non-competing offers, you may save yourself money on the final purchase price by using contingencies and other terms more efficiently.

As always, if you would like to set-up time to discuss this topic in more detail, don’t hesitate to email me at [email protected] to schedule a meeting. Now go finish up your holiday shopping!

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Is it realistic to expect a seller to pay all of my closing costs?

Answer: Over the last 18 months, Arlington sellers have paid for a buyer’s full closing costs in less than 4% of transactions. In May, I wrote a column explaining that in a standard transaction with a mortgage, buyers are responsible for paying about 2.5-3% of the purchase price in closing costs (reference the article for a breakdown of what is included).

Closing Cost Assistance vs Repair Credits

Seller contributions towards closing costs are often referred to as Seller Credits or Seller Concessions and serve to reduce the amount of cash a buyer needs to put up at settlement. If a seller offers a credit for a broken washing machine, painting or something that comes up during the home inspection, that credit falls into the same bucket of money.

In other words, regardless of whether the money was negotiated under the pretense of closing cost assistance, repairs, updates or a combination of the three, it is all considered a Seller Credit/Concession and deducted as one lump sum against closing costs at settlement.

Lender Limits

In some cases, lenders limit the amount of closing costs a seller can pay for (e.g. investor loans), but most of the time buyers can try to negotiate for the seller to pay up to 100% of those costs and sometimes more than 100%.

You should always ask your lender to confirm how much seller credit you can negotiate because if you negotiate for a 4% seller credit, but are capped at 2%, you may end up losing out on the extra 2% you negotiated for.

The Data

Let’s take a look at how much Seller Credit Arlington buyers have been able to negotiate over the last 18 months. Note that there is no way of knowing whether the credits were offered up-front by the seller as incentive, negotiated during the initial offer negotiations and/or as a result of defects found during the home inspection.

• On average, buyers negotiate Seller Credits worth .4% of the purchase price or just over $2,000 per transactions
• 5% of transactions did not include any Seller Credits
• Buyers negotiated a Seller Credit worth 2.5% or more of the purchase price in just 3.8% of transactions

The higher the purchase price, the less likely buyers are to negotiate a Seller Credit. There is a huge drop-off in average negotiated Seller Credit on homes worth over $500,000.

If you have a limited savings and require the seller to pay some or all of your closing costs in order to comfortably purchase the home you want, it’s important to discuss that early on with your real estate agent and build it into your purchase strategy.

If you don’t create an appropriate strategy around closing cost assistance, you may find yourself wasting a lot of time during the search process and losing out on multiple offers. If you ever want to discuss a purchase strategy, send me an email at [email protected] to schedule some time to talk.

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I am interested in remodeling my home to better suit my family’s current lifestyle. How much should I consider resale value over our personal preferences?

Answer: I often say that the best way to ensure your home is a good investment is to find one that will suit you for a long time. Market appreciation and local development are never guaranteed, but eliminating one or two real estate transactions from your lifetime is a guaranteed way to generate value.

This is why many homeowners take on major remodeling projects instead of moving to a new home. Major remodeling projects often cost well into the six-figures so homeowners rightly question resale value.

To provide an insider’s opinion, I reached out to Caroline Goree, a Project Leader with BOWA, a local design build firm that specializes in luxury renovations from kitchens to whole-home remodels.

In Caroline’s role, she works almost daily with her clients from the design consultation through construction so she is intimately familiar with the challenges homeowners face when choosing between resale value and personal preference. The following is courtesy of Caroline:

Renovation Expert Advice

As a Project Leader, I am part of the remodeling process from beginning to end and there almost always comes a point during the design phase when clients ask “Will I ever get a return on my investment?”

How often do you buy a new pair of shoes or new tech and consider its return on investment? Taking on a major renovation allows you to stay in your neighborhood, extend the time you live in your home and customize to your lifestyle.

Some of these bonuses won’t show up in a financial model, so it’s important to remember that return on investment can be about more than money (like the one year old iPhone you just replaced with a newer iPhone).

Does Quality Pay?

“Buy well, cry once.” Getting value out of your renovation isn’t just about purchase price and resale potential. Appliances and other systems (HVAC, windows, roofing, etc.) vary greatly in maintenance costs, life expectancy, energy usage and more. Spending more up-front on design consultation and materials often pays off in the long run.

If maximizing resale value is more important than personal preference, talk with your Realtor about the appropriate level of finish for your home that will maximize your return on investment. I typically use appliance packages as an example.

You can purchase a GE Electric Range from Home Depot for under $1,000 or a custom built La Cornue for $25,000. Clients who choose the La Cornue are making a personal choice and should not expect to recoup much of the cost on resale, save the ultra-luxury market. Similarly, choosing a sub-$1,000 range in a $1M+ home is likely to hurt resale value by more than $1,000.

Be Design Specific

In Matthew Frederick’s book “101 Things I Learned in Architecture School” he highlights what I believe is the backbone to a great renovation project, saying “Being nonspecific in an effort to appeal to everyone usually results in reaching no one. Designing in idea-specific ways will not limit the ways in which people use and understand your buildings; it will give them license to bring their own interpretations and idiosyncrasies to them.” Most homeowners and builders are scared of doing something different but, I believe that “the more specific a design idea is, the greater its appeal is likely to be.”

Click here to see an example of a recently completely BOWA kitchen that does not follow the “all white everything” trend that has taken over (dare I blame Chip and Joanna Gains?!), but is absolutely stunning and certain to attract the most discerning buyer… at a premium.

If you and your renovation partner spend the time creating a thoughtful design that is functional and tasteful, there will be other buyers down the road who are equally as passionate about it.

Eli’s Perspective

Caroline, thank you very much for your insight! I’ll add that your decisions don’t have to be 100% for personal enjoyment or 100% for resale, it can be a blended decision.

To help you prioritize, think about how long you’ll live in the home after the renovation. If it’s less than five years, resale should be a higher priority. If you’ll be there for another 12-15+ years, personalize away!

Remodeling.com conducts annual studies on the resale value of popular renovation projects. Their studies found that most projects return 50-80% of their value upon resale. HGTV would have you think otherwise…

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: My neighbor is mowing a portion of the lawn I thought was mine, but my neighbor claims it is his. Is this something I can prove through my title work?

Answer: Clients often ask me whether or not they should purchase a property survey, which is optional, when they buy their home. I think that in almost every case it is worth the relatively small investment (usually about $300-$400 for a standard survey).

I was recently chatting with Liz Wasserman of Universal Title, one of a small group of excellent title companies in Northern Virginia (they also serve D.C. and Maryland) and one of the few I recommend to clients, and she shared a story with me about a client who did not order a survey and ended up incorrectly assuming that a section of land was theirs.

Given how frequently I am asked about ordering surveys, I thought it was a good opportunity for Liz to share the story and provide some reasons why it’s a good idea to order a survey when you buy a home.

Take it away Liz…

A new homeowner noticed a neighbor mowing part of her front lawn. When she asked the neighbor why he was mowing her lawn, the neighbor replied the property he was mowing belonged to him, even though the line of trees separating the two houses looked as if the property belonged to the new homeowner. She called her title agent and found out the neighbor was correct. “How can that be? Didn’t you search my property?”

Unfortunately, the new homeowner did not understand the difference between a title search and a survey and failed to purchase a survey. A title search confirms ownership of property, but it does not show the details of the property location.

A survey is a map of real property that shows where the property is located on the earth, the boundary lines of the property, the improvements on the land and access to the property.

FIVE GREAT REASONS TO PURCHASE A SURVEY

• Undisclosed Rights and Easements: You may own your new home and its surrounding land, but someone else might have a right to use a portion of your property. A survey will show physical evidence of the rights of others to use your property for access, parking, utilities, and other situations.
• Undiscovered Encroachments: A survey may be the only way to tell if a third party holds a claim to part of your property because their improvements such as a garage, fence, or swimming pool, are on your land.
• House Built on Incorrect Lot: It may seem impossible, but sometimes a house is built on the wrong lot. A survey provides peace of mind by showing the exact location of the house you are buying.
• Size of the Property: A survey shows the exact dimensions of the property’s boundary lines and how much land is included within those lines.
• Adding on in the Future: Many residential platted lots have building restrictions known as setbacks which prohibit building anything within a certain distance from the boundary lines. If you are thinking of adding on in the future, a survey will help you determine if the property is right for both your current and future plans.

Liz, thank you very much for sharing this story and providing some good reasons for ordering a survey. I’d also like to add that you can order a survey at any time if you did not do so when you purchased.

If you are in need of a survey, planning to sell or purchase a home and would like to work with a great title company, or have title questions in general I highly recommend reaching out to Liz and her team of attorneys at Universal Title.

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: What impact has Amazon’s announcement had on Arlington’s real estate market?

Answer: Wouldn’t it be funny if I wrote about something other than Amazon this week? I’ll come back to this topic every 4-8 weeks to provide an analysis on how Amazon’s decision (and probably Apple too) is changing our local real estate market by combining my normal data analysis with experiences of my clients and my colleagues around the D.C. metro area.

Key Data Following the Announcement

On Saturday, November 3 the Washington Post broke news that Amazon HQ2 was in final discussions with Crystal City and by Monday, November 5, the impact on property values was all over the national news.

Late on Monday, November 12, the Walls Street Journal reported the decision was final, and the next day, it was confirmed by Amazon. Let’s take a look at market activity in Arlington over the last two weeks since the news broke:

• The November 3 WaPo announcement created the biggest surge with investors pouncing and owner-occupants accelerating their timelines. From November 4-12, 100 properties went under contract. Historically, about 200 properties have gone under contract the entire month of November.
• Since the news became official the night of November 12, 46 more properties went under contract, for a total of nearly 150 properties under contract in a two-week period, surpassing the activity during the same period in previous years by over 50%.
• I figured a lot of the increased activity would be in the condo market, but the percentage of contracts on condos is in-line with historical trends (about half of all contract activity)
• While we won’t know how much the market is appreciating until these properties close (when purchase price is released) investors and owner-occupants seem willing to spend more.
  Historically, properties that have gone under contract in November averaged an asking price in the low $600’s and median asking price in low/mid $500’s. Properties under contract in the last two weeks averaged an asking price of $698,000 and median asking price of $625,000.
• The surge in purchase activity has not been off-set with a surge in new inventory. We’ve had 89 properties listed for sale since the November 3 WaPo announcement, which is barely higher than the same period in prior years.
• After removing age-restricted housing and the River Place Cooperative, there are less than 350 properties currently for sale and the average asking price of those properties skews abnormally high. The current average asking price is over $995,000 and median asking price is $812,500, compared with an average asking price in the mid $800’s and median price in the mid/upper $600’s historically during this time of year.

My Experience So Far

I knew we were in for a wild ride when buyers I was working with started running into multiple offers and escalations on properties that had been sitting for weeks/months.

Generally, the odds of running into multiple offers after a property has been on the market for a full week are slim, yet every one of the buyers I worked with on an offer in Northern VA over the last two weeks found themselves competing against at least one other very strong offer.

Another investor I’ve been working with ran into 11 competing offers on an old condo in northern Alexandria that normally would have sat on the market for a couple of months.

On the listing side, we’ve had people reaching out about properties that were already under contract and off the market (rarely happened previously). Remember the new 12-unit condo building near Rosslyn I wrote about on October 30? All six of the two-bedroom units are under contract at full price and with the six three-bedroom units almost finished, we expect those to move just as quickly.

From what I’ve gleaned from offers I’ve been part of and activity my colleagues have seen, there’s been an almost overnight increase of 2-5% on most properties in Arlington and northern Alexandria. It doesn’t seem like D.C. or outside the beltway in Northern Virginia is experiencing as notable of a bump, at least not yet.

What I’m Watching For

I am really interested in how the Amazon news fits in with the winter market we usually experience, highlighted by fewer homes listed for sale and slower buying activity.

December historically produces the fewest new properties for sale, by a wide margin, and also tends to offer buyers the best opportunity to negotiate bigger discounts, but I highly doubt this December will offer buyers much in the way of negotiating.

The big question is whether the Amazon news will push a higher number of home owners to sell and buck the low-inventory trend. If new inventory remains low as sellers prepare their homes for the spring market, I wouldn’t be surprised if home owners who make it to market in December/January walk away with significant returns. The pace of new inventory will be key.

I also doubt the purchase momentum will continue at this pace, but will be watching closely with interest. A lot of the activity over the last two weeks was driven by investors, but I suspect many who didn’t get under contract in the first two weeks will hesitate for fear of not getting in early enough (I’ve heard this from a few of my investor clients already).

While many investors will take a step back, I think owner-occupants will continue to be active in the market and willing to pay the new premium, knowing that there is still a much higher ceiling for appreciation over the length of their ownership.

If you are interested in testing the market as a buyer, seller, or investor and want to talk in more detail about your options, feel free to give me a call at 703-539-2529 or email me at [email protected]

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Are funding fees on VA loans eligible for seller credits?

Answer: Loans guaranteed by the Department of Veterans Affairs are known as VA Loans and provide current and former service members with an opportunity to purchase a home with as little as 0% down.

In addition to the normal closing costs (title fees, transfer taxes, etc.), a funding fee is charged at settlement, which is equal to anywhere from 1.25-3.3% of the loan amount, depending on size of down payment, type of service and whether or not it’s the borrower’s first time using the VA loan program.

It’s a fee paid to the VA on every loan to offset the cost of loans that default (similar to mortgage insurance on non-VA loans). Disabled veterans are eligible to have the entire fee waived.

In a previous column, I explained how buyers can negotiate for seller credits to reduce or eliminate the out-of-pocket expense of closing costs at settlement. Fortunately, the funding fee falls into this category, along with the rest of the standard closing costs associated with a VA loan, and buyers are eligible to have all of these costs covered by the seller.

In theory, if a buyer is able to negotiate 100% of closing costs paid by the seller and chooses a 0% down payment loan, a home can be purchased cash-free.

If you’re unable to negotiate seller credits to cover the funding fee and are concerned about having the cash to pay for closing costs, you’re also allowed to roll the funding fee into your mortgage so that it becomes part of your monthly payment.

Some Other Facts about VA Loans You May Not Know

• Financing is available up to $1,500,000, just not at 0% down
• You can use your VA entitlement more than once
• VA loans are assumable (can transfer from seller to buyer at seller’s rates) which is a big deal in today’s market because rates have been increasing steadily
• Adjustable Rate Mortgages (ARM’s) are also available, not just fixed-rate

Arlington Veterans Affairs (VA) Loans by the Numbers

• In 2017, 261 of 3,130 buyers (8.3%) used a VA loan. By comparison, 2,173 used a Conventional loan (69.4%)
• The average purchase price for homes purchased using a VA loan was just over $615,751
• 38% of VA loans were used to purchase a condo, 29% to purchase a townhouse and 33% to purchase a single-family home
• On average, buyers using a VA loan negotiated 2.3% off the original asking price. By comparison, buyers using a conventional loan negotiated 2.2% off the original asking price and cash buyers negotiated 4% off the original asking price

I hope the veterans and active duty military readers had a great Veterans Day Weekend. Thank you for your service!

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Am I allowed to use a gift for the down payment on a home purchase? If so, are there any restrictions I should be aware of?

Answer: How else do you think many first-time homebuyers (second and third timers too) are able to afford the steep cost of real estate in Northern Virginia and D.C.?

Sometimes the gifts are just that, gifts from generous family members who want to help a loved one or child purchase a home, but many “donors” consider these contributions to be a way to invest in the local market.

The good news is that it’s easy for family members to help each other out with down payments and closing costs. I reached out to one of the area’s top lenders, Jake Ryon of First Home Mortgage (can be reached via email at [email protected]), to provide some general guidelines on gifts:

1. There is no limit to the total gifts funds you can receive or how many gifts you can receive from multiple eligible sources.
2. The gift must come from an eligible source. For most loan products, that means a relative or spouse. The donor cannot be an interested party (seller/developer/realtor/lender/title attorney) to the transaction.
3. For Conventional or VA loans, we just need to show the borrower has received the gift funds. FHA requires “donor-ability”, meaning we need to look at the donor’s bank statements.
4. For best practices, we typically recommend the donor wire the gift funds directly to the title company so there aren’t delays waiting for a check to clear.

Oftentimes a lender will require a signed letter from the gift donor stating the purpose of the funds and there may be a need to establish the source of the gift, but those details are circumstantial and it’s best to notify your lender up-front of any gifts you will receive so that they can advise you on the proper steps.

I have noticed a sharp increase in the number of buyers I’m meeting whose parents are gifting down payments in order to help their children purchase a home before Amazon (likely) announces its move into Crystal City/D.C. Metro.

For those of you who don’t have the luxury of financial assistance helping you get to 20-25% down, there are plenty of great loan programs available that allow you to put 3-10% down and make home ownership much more accessible.

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: You recently offered off-market condos near Rosslyn in your Off-Market Source post. Do you have any additional information about the building and other units that are available?

Answer:

Full Disclosure

Before I jump into the details, I want to disclose that my team and I have a direct role in the sales of Pierce Court (1245 N. Pierce Street), unlike previous condo buildings (Key & Nash, Trafalgar Flats) that I have written about. Now back to your regularly scheduled program…

The Basics

I’ve noted in the past that Arlington is starved for new condos, averaging less than one new condo building per year since 2010, but beyond that, Pierce Court will be one of only a few buildings with less than 20 units (12 total units). It has six 2 BR/2 BA units on the first two floors and six 3 BR/2 BA units on the top three floors.

All units have high-end finishes (gas cooking!), upgraded sound-proofing, parking and a lot of private outdoor space, including some units with multiple balconies and/or large terraces (the model unit alone has 596 square feet of combined outdoor space). The penthouse units each have private rooftop terraces with ~500 sq. ft. and wide open views.

These smaller boutique 2 BR-3 BR buildings are wildly popular in D.C. (zoning plays a big role in their prevalence) and I think it will play well in Arlington for buyers who don’t want to live in a high-rise or pay high monthly fees for amenities they don’t value.

What I’m Most Interested In

I have no doubt buyers will love the floor plans, finishes and outdoor space delivered by the builder, The Asset Companies, but what interests me the most about this project is how it will do in an underdeveloped, yet highly desirable, neighborhood.

Most locals will know it as being “around the corner from Quarterdeck,” it’s more easily described as being across Route 50 from Rosslyn/Courthouse and the County calls it Radnor/Fort Myer Heights. It’s a half mile walk to the Rosslyn or Courthouse Metro and the Iwo Jima Memorial, one mile to Whole Foods/Clarendon and truly a quiet, residential neighborhood (was a favorite of mine for dog walks when I lived in Rosslyn).

One would think that every neighborhood this close to Rosslyn-Clarendon would be developed and expensive (Lyon Village/Park), but Pierce Court sits in the middle of a 2-3 block radius of underdeveloped properties and will garner a lot of industry attention to gauge future condo and townhouse development.

There is precedent for $1M-$2M+ sales here, but for properties a few blocks east, with unobstructed views of D.C., like Monument Place townhouses (in my opinion, the most undervalued properties in the D.C. area) and condo buildings like Prospect House, Memorial Overlook and The Westlie.

I think the builder did a great job setting prices that will attract buyers to an area they aren’t used to seeing modern condos, which I will detail next…

On-Paper vs In-Person

The 2 BR/2 BA units range from $485k-$575k with monthly fees under $350 and the 3 BR/2 BA units range from $815k-$995k with monthly fees under $530. All units include parking and the fees cover all utilities except for TV and internet. For details on floor plans, pricing, availability and more you can visit the Pierce Court website.

When I initially reviewed the project on-paper, the square footage jumped out at me. With the 2 BR’s at 702 sq. ft.-870 sq. ft. and 3 BR’s at 1127 sq.ft.-1261 sq. ft., I was concerned about how buyers would receive that amount of space — would it be enough?

Once I had a chance to see the units in-person I was sincerely impressed with the layouts and how the space was used. The way it’s designed for functional space feels like there’s an extra 20-25% more square feet in each unit.

When you add in the large, usable outdoor space and low condo fee, I think the builder is delivering incredible value to the market and this building will stimulate more development in the neighborhood.

Say Hello at the Launch Party or Private Tour

We are hosting a public launch party at Pierce Court (1245 N. Pierce Street) on Thursday, November 8 from 3-7 p.m. I’ll be there the entire time and would love a chance to meet readers! We’ll have light snacks, beer and wine for you to either celebrate or drown away the results of the mid-terms! Please RSVP online if you think you’ll make it.

If you can’t make it to the launch party, the model unit (unit #1, a 2 BR with huge private terrace) and on-site sales office opened on Sunday and will keep regular hours Tuesday through Sunday.

You can also schedule a private tour online or directly with me by emailing me at [email protected]. I’m happy to share my personal thoughts on which units I think will sell the fastest and offer the best value, just shoot me an email and we can meet or find time for a call.

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I’m the Treasurer for my condo association and we’re working on the 2019 budget. What’s a good way for us to save money in the budget without compromising the health and maintenance of the building?

Answer: As a former Condo Board Treasurer, I feel the pain that this time of year brings, so I’m happy to offer some advice that helped me finding savings while I oversaw the budget and has helped other associations do the same… review your master insurance policy.

I know, it’s not the most exciting answer, but your insurance policy is likely a top three expense on your balance sheet every year and if you haven’t reviewed it lately, there’s a good chance you can cut the cost by 5% or more and probably improve your coverage at the same time.

I’m not an expert in insurance so, I asked Andrew Schlaffer, Vice President at USI Insurance Service’s Community Association Practice to provide some details on what Board’s should look for when they do a review of their Master Policy. If you’d like to discuss a review with Andrew directly, you can reach him at 703-205-8764 or [email protected].

Take it away Andrew…

Pillars Of Insurance Reviews

Condo insurance reviews require a holistic approach, so it’s important to break the cost into a few distinct categories: insurance premium, deductible expense and out-of-pocket costs. To effectively accomplish long-term savings, all three of these categories need to be considered and addressed with a qualified insurance professional.

Adjust Coverage Responsibly To Save On Premium

Premium is certainly a factor to consider during the insurance selection process; however, available insurance products differ significantly.

Coverages and services should be very carefully analyzed and compared. While omitting various coverages will save premium dollars, it might also result in substantially increased costs to the association for out-of-pocket expenses related to uncovered claims.

It is critical to work with a professional who understands local insurance needs and can adjust your insurance program in a way that maximizes premium savings while maintaining adequate insurance coverage. Some coverages may be required by statute and/or association documents, so cutting required coverage exposes the Board to unwanted risk.

Deductibles Based On Loss History

Associations with strong financials often choose to increase their property deductibles which can provide immediate savings of 2-5%. Deductibles range from $2,500 to $25,000+.

When considering deductibles, it is important for the association to review their loss history and the loss history of comparable buildings in an effort to obtain an accurate estimate for deductible expenses.

Rate Shopping

The most common strategy employed by associations seeking lower insurance costs is to shop their carrier.

An association can accomplish this in several ways but generally their appointed broker can offer alternative carriers in an effort to obtain the most competitive rates possible. Make sure your broker has access to all of the competitive markets in order to maximize the likelihood of finding savings.

Secondly, and more importantly, if savings is found, your broker should verify that all required coverages are included to secure the association’s long-term financial security and lender approval. Additional savings can be realized by a thorough coverage analysis to verify the association is not being over-insured by paying for coverage it won’t use.

We are in a relatively soft insurance market, so an association can expect savings of 2-5% from a simple review, depending on the number of claims that have occurred during the previous policy period.

To insure cost savings and long-term health of your property, make sure your insurance broker specializes in condominium or homeowners associations. To maximize your savings, the association, insurance broker and insurance carrier need to work in harmony in an effort to identify and reduce threats to the financial health of the community.

Help Reducing Claims

One of the best ways to keep insurance costs down is to avoid claims altogether.

Some examples of how insurance brokers can help reduce claims and the impact claims have on your future premium costs include coverage reviews/benchmarking, claims management services, site inspections, building upgrade recommendations, life safety planning, vendor contract reviews, discrimination/harassment training and hiring/firing best practices.

Thank You

Andrew, thank you very much for providing your insight. I know from experience how much of an impact an insurance review can have on a condo budget, but also how important the right coverage can be when there’s an unexpected claim.

One thing board’s often overlook when they’re solely focused on price is the quality and speed of service when a claim in filed. For example, if a pipe bursts and floods the gym and lobby, a board should be confident that the work orders will be executed quickly so the building can be back on its feet without delay or headache.

Unfortunately, most boards don’t think about this until they’re dealing with it, and it’s too late. I encourage any board/treasurer to reach out to Andrew to review their policy. He does fantastic work and USI is a leader in condo/HOA insurance policies in Northern Virginia. His contact info is:

Andrew Schlaffer, Vice President
USI Community Association Practice
www.usi.com
Direct: 703-205-8764
Email: [email protected]

If you’d like a question answered in my weekly column, 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 DC, 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 Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: How much interest has there been in Trafalgar Flats and do you think it’s a good investment?

Answer: Twelve months ago I introduced a new condo building off of Columbia Pike, Trafalgar Flats, by Pillars Development Group. Now that they’re near completion, I stopped by to take a look at the progress and talk to Rick Snider, Pillars’ VP of Planning & Design.

Impressive Design, Upgraded Finishes

Trafalgar Flats owners will be pleasantly surprised with the quality of the finishes; everything is upgraded well beyond what one expects at this price point.

It’s a modern design without being over-the-top and includes nice touches, like heavier interior doors, most builders skip. Instead of using standard bucket-style recessed lighting, they chose LED lights that lay flat against the ceiling (pictured below) for a minimalist look I expect will become a trend.

Strong Pre-Sales

Selling condos without a model isn’t easy so having 40% sold (33 of 78 units) already reinforces how starved Arlington is for new condos at a reasonable price (about half the cost of comparable units at Key & Nash).

To Pillars’ credit, their sales have been evenly distributed across each of the three types of units – Jr 1BR ($265k+), 1BR ($340k+), and 2BR/2BA ($475k+). I was particularly interested in how the Jr 1BR would sell because it’s a product that we don’t see much of around here; it turns out they made the right decision.

Trafalgar Flats will be complete, with a model unit, by the end of the year. Although that comes at the slowest time of the year for local real estate I expect the pace of sales to move quickly. I wouldn’t be surprised if they are sold out by March 2019, sooner if Amazon HQ2 announces their move to Arlington.

Investing Along Columbia Pike

Western Columbia Pike has a higher appreciation ceiling over the next 5-10 years than most Northern VA neighborhoods. It is primed for a shift in residential and commercial activity as the County’s Multimodal Street Improvement project reaches completion over the next few years, including improvements to underground utilities.

Just this year, major projects along western Columbia Pike have been announced or under construction including Trafalgar Flats, a new Pillars townhouse community, Centro Arlington (anchored by Harris Teeter), and Gilliam Place Apartments.

Thoughts From Pillars Development Executive

I spoke with Rick Snider, long-time Northern Virginia real estate Executive and VP of Planning & Design for Pillars, about Trafalgar Flats and his thoughts on development along Columbia Pike:

How did you choose this area over others to build TF? We were immediately attracted to this site when it came onto the market due to the ‘hole’ in the market relative to “For Sale” product versus “Rental”; we rightly anticipated that some nearby apartment renters would want to become new home owners, rather than purchase an older condo.

Are there other pockets of Northern Virginia or Arlington that you believe has similar appreciation potential? We like Columbia Pike and the market along it; we already have townhouse lots in planning nearby Trafalgar Flats to emphasize our interest in and commitment to this area, and are hopeful that our searches for additional land development opportunities in the area will be rewarded.

Where do you see Columbia Pike Development in three years and in seven years? When do you expect the biggest transition to take place along the Pike? The foundational change of course is found in the Multimodal Project which underscores Arlington County’s commitment to upgrade the infrastructure along this important corridor and to thereby not only improve existing residents’ quality of life, but also to attract additional developments like Trafalgar Flats, Centro Arlington and Gilliam Place.

Do you think Columbia Pike or Lee Highway will re-develop faster?  If you had asked me this a couple of years ago, I would have weighed in on Lee Highway without hesitation, but I think that with the new developments underway and with the infrastructure improvements going in now and in the future that it becomes much more of a horse race; and I think that the price of housing, both for sale and rental, may well be the deciding factor that pushes the Pike ahead.

If you’d like a question answered in my weekly column, 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 DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.