I probably should have said the residential streets of Vienna or the sidewalks of Vienna feel like NASCAR.  If you do see someone speeding through the streets of town or running down the sidewalk, it is probably a Realtor trying to get their clients to a listing before the competition. ( Who will cross the line first, the #8 red  RE/MAX  car, the #32 yellow Weichert  car or the #54 blue Coldwell Banker car?)

It has truly changed into a sellers market this spring.  Inventory remains lower than a year ago.  We have had 15 months in a row where the current  month inventory level is lower than the same month one year earlier.   With interest rates still at  unbelievably low levels, buyers are out in force but have little to look at.  Well priced homes, particularly in the lower price ranges, are moving quickly.  Multiple offers are once again the norm.  All of my deals this year except 2 have involved a multiples.

Let’s look at the numbers.

In Vienna and Oakton, since April 1, 2012, there were 172 resale homes that went under contract.   The average time on the market was just 27 days.

If we eliminate properties listed for  $650,000 or more (72), eliminate the short sales (17) and eliminate the foreclosures (2), we are left with 81 regular sales.  For those, the average time on market was 21 days.  And 37 of the 81 sold in less than 1 week.

Now, days on market is defined as the time from the listing date to the date the contract was accepted.  Often it takes several days to negotiate and ratify a contract.  The days between time on market and arrival of the first contract is even less than 21 days.

While I did not do the numbers for other areas of Northern Virginia, we would be seeing the same type of market in areas like Reston, Centreville, Fairfax and Chantilly.

Thinking of selling?  Give me a call.  There are many strategies we can put into place to take advantage of this market and make your home stand out among the competition.

Photo credit: M-Pic

THE STREETS OF VIENNA FEEL LIKE NASCAR is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

Many of my buyers are either not finding the type of home they want or they are getting involved in multiple contracts.  I had one buyer recently get out of the resale market and explore new homes even though that would mean living in his current situation a bit longer.  We contracted on the new home but while we were writing the contract another buyer stopped by the model with the intent to buy his lot.  So it is happening in new homes as well as resales.

Here are the numbers for the first quarter.  They cover the counties of Arlington and Fairfax and the Cities of Alexandria, Falls Church and Fairfax and represent sales recorded in the Realtor MLS system and do not include private sales.

PRICES

Prices in all 3 categories were up in the first quarter.  As mentioned in my year end recap, my unscientific study of the market over the last 20 years indicates that when  detached home and townhome price increases are greater than condos, it means the market feels prices are attractive and affordable.  Buyers are able to comfortably step up to the next level of housing.  Conversely, when the condo activity is more robust, it often means prices are too high and buyers need to step back to something more affordable.

INVENTORY

As stated above, this is the real story.   Discretionary sellers have not reentered the market in force.  By discretionary I mean folks who do not need to move but would like to move up or move down and can wait until the market is, in their eyes, “favorable.”  A large majority of sellers are in the market because they need to move – job relocation, marriage, divorce,  new baby, financial distress, investors flipping property, etc.  Until “regular” sellers start to come back, demand will exceed supply.

SALES ACTIVITY AND MARKETING TIME

Marketing time is now measured in days and weeks, not weeks and months.   A properly priced and presented home should generate a contract relatively quickly.  I have never understood the average marketing time stats.  They never seem to match up to what I feel is happening in the market.  For instance in March 2012 it states that the average time on market was 72 days vs 71 in March 2011.  That just doesn’t ring true.  I am jumping on listings just days old only to find they have contracts being negotiated.  I guess there are enough improperly priced homes that are sitting on the market for long periods that adversely impact the average.   For instance, I looked recently at a condo community where the most recent sales were in the $260s.  The one my client was interested in was on the market just 3 days and our contract was one of 3.  There was a similar model to the one we were bidding on.  That comp had been on the market for 177 days.   Why?  It was being offered at $305,000.

CONCLUSION

Now is a wonderful time for sellers to enter the market.  If you would like to discuss your options in more detail, please give me a call.

Photo credit: digitalart

Recap Of The 1st Qtr 2012 Northern Virginia Real Estate Market is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

Right field of Crabtree Field at Yeonas Park, home of Vienna Little League

On this bright Saturday morning, hundreds of young kids will be gathering at Yeonas Field in Vienna to kick off the start of another Little League season.  Some are being introduced to the national pasttime for the first time and others are 12 year old “veterans” playing their last year and hoping to represent Vienna at Williamsport in the  Little League World Series.

I have been a supporter of Vienna Little League since 1995 when my oldest son started playing Tball.  The following year I  managed his team, took him up through AAA and then stepped back to A ball to manage my younger son.  With the younger one, I managed until he left the Majors.   Somewhere around 2002 I started to support the league by advertising with a banner on Crabtree field.

I look back on my family’s interaction with the league over all of those years with tremendous warmth.  My boys formed many friendships that last until this day.  And as parents we have, too.   I love walking around town and running into my former players who are now young men.  Some still warm my heart when they call me coach.   And my wife and I still socialize with families we first met at the ballpark.

This is a great time in the lives of these kids.  There are plenty of stories of overly competitive sport coaches and parents who destroy innocent childhoods.  However, my experiences indicated that was a very, very rare situation.  Yes, some dreams will be dashed.  This year many will realize their future may not be on the diamond but that their greatest talent lies behind an easel, a trombone, a microscope or on the stage.   However, they can still come away with an appreciation for this beautiful,  intricate game and experience what it means to be part of a team striving toward a goal.

Reality is that only a few dozen of these boys will play high school ball.  Most will find other interests both in and out of sports.  Of those that do play HS ball, only a third or so will play college ball.  And professional?  Right now in majors there are less than a handful of players who came from this area. (see below)

But the dreams!  Let them dream and believe they will be the next Zimmerman, Desmond or Espinosa as they effortlessly field a groundball and zip a throw to 1st.   And when those dreams change,  I hope they still remember the joy of sunshine on their backs, the smell of the leather glove and friends they made in this glorious period of their lives that will pass way too fast for both them and their parents.

—————————————————————

*According to Baseball Almanac  there are 7 active  MLB players born in Northern Virginia but only 3 are currently on a major league roster.

Joe Saunders – Born in Falls Church – West Springfield HS – Virginia Tech – P/Arizona Diamondbacks

Mat Latos – Born in Alexandria Va – Graduated HS in Florida – Broward CC – P/ Cincinnati Reds (Was the starting pitcher for the Reds at the Nats home opener this year)

Shawn Camp – Born in Fairfax Va – Robinson HS – George Mason – P/Chicago Cubs

(What about Brandon Snyder out of Westfield HS?   He  was born in Las Vegas.)

Vienna Little League Opening Day is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

I get excited presenting out of the box ideas to my clients

I recently had a  investor client call saying they would need my services to help rent out their property in Vienna VA.   This is a property they bought for $225,000 and is now worth $325,000.   They are blessed to have been able to pay off the home and own it free and clear.

This client has called a few times over the past two years and  asked about buying another property but even though they were able to pay off the existing rental,  there is not much cash available now to purchase a new investment and for various reasons (mainly being that they recently purchased a principal residence with me) the numbers never seemed to work for that next investment.  So when I heard that their long term tenant had left and they wanted to rent it again, I proposed they sell it instead and here is why.

I saw this as the perfect opportunity to get that 2nd property.  By using a 1031 exchange, they could defer any capital gains on the sale and use the proceeds to buy 2 new rentals.   They would sacrifice some cash flow in short term but generate more wealth in the long term.  Let’s look at the numbers.

Currently they are getting $1850 a month in rent.  After taxes, insurance and HOA fees, they clear $1500 per month.

Let’s say they they sell the current home and replace it with two homes of equal value.  They put down 50% on each new home and take out a mortgage for the remainder.

Now they have two homes generating $1850 in rent.  Assuming the same costs for taxes, insurance and HOA, each home will net $1500 before the mortgage payments.  Those payments will be about $1000 on each home.  So with 2 homes, they will clear $1000 per month vs clearing $1500 per month with 1 home.

BUT the missing factor is appreciation.

The current property is being replaced with 2 similar properties so all will appreciate at the same rate.  One can not forecast future appreciation but using 3%  as the yearly average  appears rather conservative based on the average sale price history in our market over since 1975.   ( Click here for the stats)

Using 3% means that by keeping the current property,  in 10 years, they will have a free and clear property worth $425,000. By  trading the current property for 2, they will have properties worth $850,000 and mortgages totaling $280,000 (each will have been paid down to about $140,000)  This would mean the net worth of their real estate investment is $570,000 (850,000-280,000)

Okay but over those 10 years, they lost $500 per month in income which totals $60,000.  Subtract that from the $570,000 and the return from two properties is $510,000 vs the $425,000 they would have by keeping one property.

I know this is a very simple analysis.  There are tax implications and other factors that come into play.  One might say that the extra $500 per month invested properly could close that gap.  Nonetheless, I see owning 2 properties being about $85,000 better than owning 1 and even if you massage my calculations this way or that, the difference will still be significant.

Many deals and situations are rather straightforward but when I can offer buyers and sellers options and suggest ideas that work to their benefit,  I get excited and it makes this business even more rewarding.

P.S.  Their long term tenant above was a section 8 tenant.  Learn more about the pros and cons of renting to  Section 8 folks here.  In this case, it was a positive experience for my clients and they are open to doing it again.

Photo credit:  jscreationzs

Problem Solving 1031 Style is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

How to promote a product has changed in the last few years and real estate is no exception

Sounds like a Freakanomics headline.  If you have read Steven Levitt’s book, you know his chapter headings often combine seemingly unrelated items to make his points.  For instance the first chapter is  “What Do Schoolteachers and Sumo Wrestlers Have in Common?”   I won’t tell you what he pairs real estate agents with but I will say that many of his conclusions in that chapter are wrong or at least wrong for this Realtor and most of the ones I know.

So, back to the headline.  Yes, marketing a home in today’s world is like the selling or marketing of drugs – legal prescription drugs that is.  The concept I am referring to is the difference between push and pull marketing.

PUSH MARKETING

When I first started selling real estate, there was no internet.  Walk in traffic was common and I recall that one of the advantages of our Vienna VA office was that it was the first real estate office one would see when they came up Rt 123 from the beltway.  Buyers would depend on us to let them know what homes were available.  Sure they could drive neighborhoods and look for signs and they did.  Or they could pore through newspaper ads or real estate magazines but for the most part, they depended upon the Realtor to decide which homes were best for them.    Listing agents would spend a tremendous amount of time marketing to other Realtors to let them know about their listings as  the Realtors were the gatekeepers.  (Levitt does talk about this in his real estate chapter and he is correct on that.)

Now, think back several years and how prescription drugs were sold.  There was general information available to doctors in journals and other sources just like information on homes was available to Realtors on the MLS.  To  get the doctor to prescribe a particular product, pharmaceutical sales people would visit the doctor to highlight the effectiveness of their product vs the competition which is very similar to how Realtors would try to get other Realtors to see their listings so they could point out the pluses of a particular home in light of what else was on the market.

In both instances, the sales person was trying to “push” their product through a gatekeeper to the public.  But times have changed.

PULL MARKETING

How long can you watch television before you see a commercial for a  prescription drug and at the end they say,  “Ask your doctor about __________?”    Sure, drug salespeople still visit doctors and continue to try to push their product through the marketing channel but now the companies are also “pulling” their product through the marketing channel by getting the consumer to go directly to the doctor and say, “I think this prescription is the right one for my condition.”

In real estate the same direct to consumer marketing shift has developed.  With so many sites (and my home search feature is one) consumers can see all of the homes on the market that seem to be “the right one for their condition.”   More and more,  my buyer clients are calling me to tell me properties they want to see when we look at homes.   Of course, I will show them most of the homes they select and often they are the same ones I would have selected.  But many times, based on my experience and knowledge of the neighborhoods and what certain words mean in a house description, I will suggest we pass on a property and will offer up other selections that for whatever reasons didn’t catch the buyer’s eye online.

I am sure doctors are doing the same thing and there are conversations in  doctor’s offices throughout the country where the doctor says, “Yes that drug can do this or that but for you we need to go to a different brand because that one also offers x and y benefits.”

VERY NICE MARKETING LESSON BUT SO WHAT?

The main point is that in today’s world, in order to drive traffic through a home, a strong internet presence is mandatory.  Multiple, professional pictures and a strong virtual tour are a must.  Furthermore, prior to the pictures being taken, the house needs to be staged and set so that the photos show the home in the best light.

I can not emphasize enough that the photos need to be professional.  I can take photos but I can never get the light right on interior shots so I use professionals.  When you look at a professional shot next to a non-professional Realtor shot, it is obvious which home will capture the consumer’s interest.  (Believe it or not, more than once I have seen shots of a family room with the family sitting on the couch.  I can not believe it. Does anyone focus on the room when people are in the middle of the shot?  My second favorite is of the Realtor taking a photo of the bathroom and they appear in the mirror.  Please, these pictures have no place online.)

Staging, great photos and a sharp virtual tour are so critical yet I am surprised how many agents still don’t do this.  Now I know there are some properties that may not photograph well.  Perhaps  a home is going on the market as a tenant is packing to leave or the home is a potential tear down.  I understand not all homes shoot well but that is rare.

On Realtor.com the maximum number of pictures allowed is 25.  A Realtor needs to pay a nice annual fee to have the privilege of posting that many.  But isn’t it critical to be able to strongly present a home on one of the most popular websites in the country?   I think so and pay the fee so I can.  Without paying that fee, I believe one is limited to 6 or 8 pictures, I am not sure.

Well, I just did a search on Realtor.com of homes in Vienna VA listed between $400,000 and $700,000.  There were 92 results.  Only 28 of the postings had the maximum 25 pictures.  Another 18 had between 20 and 24 pictures which is pretty strong.   Surprisingly, though,  24 had less than 5 pictures and shockingly, 3 had not 1 picture of the home.  I  don’t care how rundown or decrepit the inside is, there is at least 1 outside shot or something that can be posted.

Even as a Realtor, when I am selecting properties to show, if I have more properties than I can show in one outing and need to cull down the offerings, I look at the pictures.  Those Realtors who post no pictures or just one or two usually find their homes in “pass” pile.   Pictures are important.  In another post I will discuss virtual tours and which are the most effective but for now, if you are planning to sell your home,  know that you must insist on a strong internet presence or better yet, just call me and rest assured it will happen.

How Marketing a Home is Like Selling Drugs is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

This is all wonderful but despite all of our advances, nothing beats old fashioned “boots on the ground”  (just saw Acts of Valor with my son).  Let me explain what I mean.

A few months back, I had a young couple looking to purchase their first home in Vienna VA.  In typical fashion we started the home search with a set of wants and needs.  I showed them homes that closely fit the criteria but also stretched some of the edges.   We looked in slightly different geographic areas.  We looked at styles of homes that they had not mentioned but were ones that could possibly work.  We looked at homes where  one aspect of the search criteria was spectacular (a top of the line kitchen)  but the home lacked another key feature ( a 2 car garage.)

I have found that a home search is an evolutionary process.  Almost all buyers I have worked with start with an idea but once they hit the street and start to see homes, the picture of what constitutes a great home changes.  I feel it is my job to help folks realize their options  and help them work through the choices and trade offs involved.

Early in a search, my goal is to challenge buyers with an array of possibilities and hope they tell me a few seem right and also that a few absolutely will not work.  A home search is simultaneously selection and rejection.  I try hard to see the world through the eyes of the buyer to understand the must haves and deal killers.

The first few times out, we are looking at a wide variety of homes and over time the focus narrows.  As I get to understand the buyers, I start to preview homes in advance of showing them.   Many homes look good on paper but once seen live do not meet the client’s needs.  By previewing in advance and seeing the home through their eyes, I can eliminate those that would waste our time.

And occasionally, I see a home that I just know is the right home for a particular set of buyers which is exactly what happened with the young first time buyers, Adrienne and Jason, that I mentioned above.

We had been looking for a few weeks and I really had a sense of what they wanted.  One Friday, a home came on the market that seemed perfect.  I went out to take a look and I felt it was just what they wanted.  I sent the listing to them via email and said we need to see this as soon as possible.  We were already set up to go out on Sunday but I was hoping they could see it on Saturday.  They could not so we decided to meet Sunday afternoon as planned.

Next I called the listing agent to ensure the home was still available.  Unbelievably, a contract had come in on the home BUT the sellers were out of town and the agent was presenting that offer at 2 on Sunday.  Well, if  Adrienne and Jason went to see it on Sunday afternoon, they would not have time to get a contract in.  I called them and we shifted our meeting time to Sunday morning.

I so believed this was the right home that in advance of our meeting I filled out most of the contract for the home  except for the key terms such as price, settlement etc which we would decide on later.  I kept the contract in my folder.  If they liked the home,  we would be prepared to move forward quickly.  They did like the home.  We worked out the details of our offer and I got it to the agent in time for her presentation.  We beat the other contract  and were the winner.

Not every agent believes in previewing.  I do.  It makes the time I spend with clients more productive and sometimes, as in the case of Adrienne and Jason, results in a new home.   What would have happened if I didn’t preview?  Well, we would have seen that home on Sunday and seen several others as well.  (The “several others” we would have seen,  I saw on Friday.  I clearly saw that they were better on paper than in person and were not contenders.)

Then Adrienne and Jason would have gone home and thought about the day’s showings.  Perhaps on Sunday night they would have called to tell me to write up an offer on the the one they liked.  I then would have called the listing agent only to find out it was already sold.

Previewing pays. Timely reaction to the market pays.  Boots on the ground pays.  Technology is great and can get us to the end result more effectively but a Realtor can’t forget good old fashioned hustle.

Tales From The Front Lines: The Power of Previewing is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

One decision factor that does not come into play is the condition of the current market.  Really,  it doesn’t matter.  When your personal situation lines up in favor of buying, it is time to make the move.   Homes are not stocks – short term investments that may be traded weeks or months after a purchase.  The hold time for a home needs to be years.  During that time the market may go up and the market may go down.   It is confidence in the long term market one needs to consider, not  a guess as to what will happen in the next year or two.  So the first question one needs to answer is…..

1: HOW LONG DO I THINK I WILL OWN THIS HOME?

If the answer is less than 5 years, it would be best to delay until that answer is 5 years or more.

In a rapidly appreciating market, buyers get excited and think they can buy today and sell next year for 10s of thousands more.  Well, if the timing is right, that may work.  But if the timing is wrong (and at some point the music always stops), it isn’t pretty.  I strongly advise against trying to time the market.

On the other side, I have seen people say, “Prices are way too high.  I will wait until they come down before I buy.”  Occasionally those folks are right but in our market, very often, they are wrong.  There are people I know who have been saying this since 1995 and are still renting.   I sure would be happy, from a financial return standpoint, with any home I bought in 1995 or 1999 or 2003, etc.

To get a sense of why I say 5 years, read this post on average sale prices in Northern Virginia since 1975

Note, I said that you need to own the home for at least 5 years, not live in the home.  It is a perfectly fine scenario to plan to buy the home, live in it a few years and then rent it out.

2:  DO I SENSE A CHANGE IN EMPLOYMENT OR INCOME IN THE NEAR FUTURE?

If you think that you will soon get a promotion with a significant salary increase and that would change the price point of the home you want to buy,  it may be best to wait.  However, the change in salary needs to be significant.   A normal performance increase will not dramatically change your buying power.  A $3000 change in salary will  change your buying power by $15,000 to $17,000.

Do you anticipate being relocated to an office in a different part of the region? You certainly wouldn’t want to buy in Vienna and then find your position relocated to some place in Maryland.

If you anticipate a change in employers and will be staying in the same general line of work at the same general salary, there is no need to wait.  A lender will not have an issue if you change companies for a better opportunity BUT you do not want to make that change while you are under contract for a home.  While the lender has no problem with a recent job switch,  you will need to produce (depending on the program) one or two paychecks from the new employer.  So making that switch in the middle of a contract will likely cause a delay in settlement as the lender will not be able to close the loan without those paystubs.

Now, if you plan to change from a salaried position to a commission based position or if you plan to become self employed, you need to buy now.  Most loan programs require two years of tax returns before they will count commission income and/or self employment income.

I have a client who bought both a residence and investment property with me a few years back and then a year or so later left a corporate job to start a consulting business.  Even though he had clients lined up  from day 1 and  his income  exceeded his corporate income, he could not qualify for another investment property (which he really wanted to do) until he had filed his the tax return from his 2nd full year in business.

3. DO I ANTICIPATE A SIGNIFICANT AMOUNT OF CASH COMING MY WAY SOON?

This can take two forms. Perhaps there is an inheritance or trust coming due thus allowing for a larger downpayment which may change your price point or allow for  more favorable loan terms.  Or perhaps you are due for a big bonus that will have a similar impact.

Usually that is a good reason to wait although there are situations where one could buy now and structure the financing so that when the money is received, the financing is reworked to optimize the situation.  That is too complicated to explain here but the point is that if the money is coming soon, it may be okay to proceed now.  If it is some time off, it may be best to wait.

(FYI, bonuses are like self employment income for qualifying purposes.  Lenders will only count them if you have a 2 year history and then they will average the number.)

So, the bottom line is that once you feel comfortable you can own the home for at least 5 years,  feel relatively stable in your job and don’t see any dramatic short term changes in your financial situation, you should take the next step toward home ownership.

In the next part of this series, we will discuss how much home you can buy.

First Time Buyer Series #1: Should I Buy or Continue to Rent? is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

Well, homes didn't cost a penny in 1975 but they sure were much cheaper. If we had those prices today, you wouldn't need a mortgage, just a nice down payment and a credit card

As previously mentioned, I am a collector of real estate stats.  A few years back I saw a chart in a Sun Gazette newspaper showing average sale prices since 1975 in Northern Virginia.  Since then I have added to that chart and have computed a annual appreciation or depreciation and rolling 5 year and 10 year averages.

Now, as they say in the investment business, past performance is not an indicator of future results.  And as Warren Buffet has said, “In the business world, the rear view mirror is always clearer than the windshield.”  Still, I think there are important takeaways from the chart below.

It is interesting to note that since 1975 there have only been 4 years when the average price dropped and only one year (2008) when it was a double digit drop.  And except for the last 3 years, there has not been a rolling 5 year period where prices have declined.

I try to encourage folks to take a long term perspective on housing prices and not be concerned about whether a year or two after a home purchase the prices are likely to rise or fall.  Neither matters.  One needs to buy a home with the idea of holding the home for a 5 to 7 year period as a minimum.  If the anticipated hold period is shorter , the purchase should be deferred.  (Note I said own the home, not live in the home.  It is a perfectly fine plan to buy with a plan to live in the home for a few years and then rent it out.)

The costs of buying and selling are so high that the home not only needs to appreciate to keep one from being upside down but also enough to cover the transaction costs.  While only the last few years show a negative 5 year rolling average, there are a few 5 year periods where the appreciation could have left a homeowner at a roughly breakeven point after transaction costs are factored in.

So again, while the past is no guarantee of the future, as long as the Federal government stays in Washington DC, I have confidence that over the long term,  from a financial perspective, this area more often than not will be a great place to own a home.

You can see the chart here with this link to the Sun Gazzette.  Well, you can sort of see the chart – it is rather blurry.  If I find a better link, I will switch it out.   For the years pre-1995 the chart above and the chart in the newspaper should match.  For some of the more recent years, there may be a small discrepancy between my numbers and the chart.  I would attribute that  to additional data or a recalculation of data  that may have come available after the the article was published.

Average Sale Prices Since 1975 In Northern Virginia is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

I am often asked if the assessment is reflective of market value and the answer is  – not really.

On the Fairfax County website it does state, “The Constitution of Virginia requires real estate assessments to represent fair market value.”  So why did I say the assessment does not reflect the fair market value of your home?  Well, let me ask a key question.  Did the tax assessor come into your home?  Unless you know the individual and they came to your holiday party, the answer is probably no.  Thus two different  4 bedroom, 2 1/2 bath homes in the same neighborhood that are the same size and sit on a lot of similar size will have the same assessment even though one has a new kitchen, granite counters, fresh paint, gleaming hardwood floors and the other has original appliances, worn and tired carpet, peeling paint and a CAC unit that went out last summer.  Obviously the market value of these two homes is dramatically different but the assessment will be the same.

Additionally, it would be nice if the assessors had all the info they needed to make a fair assessment but they don’t.  I can not tell you how many finished basements I see that are not reflected in the tax records.  Additions and decks are almost always in the tax records but that extra bath in the basement, the finished attic, the new furnace and many other items are often not which is another reason it is hard to use assessments to determine value.

Furthermore, assessments are static and the market is dynamic.  I can not say with certainty what the value of a home will be in November but I can, with 100% accuracy tell you what the assessment will be.   The further we get into the year, the less relevant the assessment becomes.

HOW I USE THE ASSESSMENT IN EVALUATING HOMES

If  I am evaluating a condo, townhome or detached home subdivision with similar models, I really have no need for the assessment as there are usually enough settled sales to give guidance on a fair market price.  However, if the property is rather unique like some of the contemporaries one might find in Reston or in  places like Arlington or Alexandria where several neighborhoods boast older charming homes that over the years have been uniquely remodeled,  I sometimes use the assessment as my last evaluation tool.  The assessment is not an absolute value but can, in some circumstances, be used to help determine value.

On unique properties, I will use the best available comparables and make adjustments for various features such as number of bedrooms,  living space, lot size, basement type, garages, and many more.  I will get to a price and then adjust that number up or down based on current market conditions and a bit of gut feel.  Once I get that final number, I will often go back and sort of “check my work” via the assessment.

At different parts of the market cycle, homes are selling above or below the assessment by some percentage.   In complicated cases,  after getting my number, I will take the settled price of the comparables and determine the percentage they sold above or below the assessment.  I will then average out those differences and  apply that number to the the assessment of the property I am evaluating.  If the resulting number is close to the number I came up with, it reinforces my original calculations.   If it is not, I will review my initial analysis.  The initial analysis carries the biggest weight by far but I may massage the number based on the assessment analysis.  Bottom line, pricing a property involves both analytics and a bit of intuition combined with market experience  No one method holds all of the answers but when several lead to the same result it builds confidence.

YOUR ASSESSMENT AND TAXES

The other comment I hear about assessments concerns tax bills.  In the past few years when assessments went down, folks thought their tax bill would go down at the same percentage.  And when prices were rising, folks were happy they were building equity but worried their taxes would become unmanageable.

Reality is that when prices decline, it is likely that the tax bill will go down but not as much as one thinks. The local government depends heavily on real estate tax revenue so when assessments go down, tax rates inch up to cover the budget.   The individual homeowner does not save as much as anticipated.

Conversely, when prices rise, we sometimes see headlines that the tax rate is being cut.  Hey, it makes the politicians look good.  Even though the total tax collected is up they can proclaim they cut the tax rate.

Actual numbers:   In Fairfax County in 2002, before the real estate boom, the rate was $1.21 per $100 of assessed value.  At the peak, in 2008, the rate had dropped to $0.89 per $100 of assessed value. When prices declined, the rate rose and in 2011 stood at $1.07 per $100 of assessed value.

Bottom line, whatever my tax may be and regardless of whether the assessment reflects market value or not, I would rather open that envelope and see rising values than falling values.

Photo credit:renjith krishnan

My Real Estate Tax Assessment Changed. What Does It Mean? is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog

The flow of inventory goes up and down each month but like a roller coaster, follows the same path each year.

I must admit, I am a bit of a stat nut. I have detailed sales and inventory data for the Northern Virginia market for the last 15 years and additional sales data going back to 1975.   (Using baseball parlance, I might border on being called a seamhead) Don’t worry, it is safe to read on.  My  blogs  will never get too deep into a statistical interpretation of the market.   I will leave that to others.  Under the Market Stats tab above are several good resources for those interested in viewing a stunning array of charts and graphs.  Here we will just review very simple data that can help a buyer or seller in deciding what time of year may be best to act.

First, when people ask is now a great time to buy or sell, they are really asking if the market is hot or cold and are thinking short term.  Well, I think that is a fine question to ask but it should not be a major factor in deciding whether to buy or sell.  No one can accurately predict the short term fluctuations of the market. (But I can’t resist and do have some thoughts on that below).  A buying decision should be made when one feels the market in 5 to 7 years will be stronger than it is today.  Unless one is a flipper, the short term movement is just noise.  And selling is so personal that when a situation dictates a change in residence, one just needs to hire a great agent (preferably me) to help generate enough interest in the home to maximize the sales price and minimize the time on market and the transactional stress of moving.

However, the time of year one  chooses to sell or buy may be a factor to consider.  Depending on one’s goals, it may be best to buy or sell at a point in the year when inventory is plentiful or, conversely, there are sometimes advantages to buying or selling when inventory is low and many buyers and sellers are taking a few months off.

Unlike predicting price movement, the flow of inventory is fairly consistent year to year.  The number of homes available and number sold may differ dramatically each year but the low points and high points are fairly consistent.

Look at the two charts below to see what I mean.

I have touched on some of the ways to play the annual flow of the sales and inventory in the blog “Moving Up is Hard to Do.”  In general, for buyers if one is looking for a very specific type of home, the odds are increased during the peak inventory periods.  For sellers, I often point out that the early part of the year when inventory is low, can be a far better time to sell than folks think.  Many buyers start the year with a resolution to buy a house and those actually looking in the 1st quarter have slim pickings.  A well priced and presented home really stands out in that environment.

One other note on the charts above.  Notice that in 2011, except for January, inventory was substantially below the 10 year average.  This trend is continuing this year and is one reason I believe that upward pressure on prices is likely.  Until inventory expands back to more historical levels, the market should favor sellers.

If you would like to talk about your situation in detail and determine the best time of year for you, give me a call or shoot me an email.  I am always happy to talk real estate.

Sales and Inventory In Northern Virginia By Month is a post from: Vienna, Oakton, Fairfax, Reston, Centreville VA Real Estate Blog