NRVLiving - Real Estate. Simplified.

Never Been So Happy to Say "We're #3!"

I'm going to brag a little.  A wee bit.  Actually, a lot.

I'm an independent contractor, which means I work for myself.  But I "work" at Coldwell Banker Townside, a real estate brokerage with offices in Roanoke, Blacksburg and Radford.  I love the company, for a number of reasons, but today I learned some things that made me really excited about being a part of such a great group of people.  (While Roanoke has some awesome agents as well, the statistics below apply ONLY to the Blacksburg office of Coldwell Banker Townside.)

Did you know ...

*  the #2 Coldwell Banker agent in Virginia works in my office? 
*  Ten of the top 103 Coldwell Banker agents in Virginia work in Blacksburg (including yours truly - shameless shill)?  As a point of reference, there are ~ 3300 Coldwell Banker agents in the state.
*  the Blacksburg office of Coldwell Banker Townside is ranked THIRD in the entire state? 
*  In July, we closed approximately $29 million, or nearly 30% of all real estate transactions (the MLS reports $102 million in residential real estate was closed in July 2007).

Impressive to say the least, particularly when you consider that Southwest Virginia is not considered a hotbed of real estate.  Oh, and have you heard?  We're in the equivalent of Real Estate Armageddon according to some.  I'm proud to be associated with such an impressive group of professionals, and excited to see what we'll accomplish as we continue to grow.  Nice job, guys!

Approved. Preapproved. What's the Difference?

Ever wondered what the difference is between being Preapproved vs. Approved when it comes to your mortgage? Ever cared?

It's easy - the Preapproval comes before the Approval. Makes sense. But what's the difference?

When working with buyers, we'll almost always submit a Preapproval letter with our offer to show the Seller our intention to buy. The Preapproval letter is a letter from a local lender stating that according to the information the Lender has from the Buyer at that time, the Lender should be able to lend a particular amount of money to that Buyer for the purchase. It shows the Seller that the Buyer has taken the time to meet with a lender, either in person or by phone, and have their 3 C's evaluated - credit, capacity and collateral. The Lender will ask very specific questions, enter that information into an automated underwriting system, and receive a "firm" underwriting result almost instantaneously. I say "firm" because it relies on the information the Buyer has given to be accurate, and certain contingencies to be met, but my experience has been that 95% or more of the Preapproval letters my buyers have received have been honored with no major delays.

An Approval takes the process a step further ... the paperwork's been verified and processed, the property's been appraised to assure the bank's not loaning more money than the property's worth, and an underwriter - an actual worker bee somewhere in Cube Farm USA - puts their John or Jane Hancock on the loan result, endorsing it and allowing it to be sent off to closing. It's the final step in the weeks preceding closing, and once approved the loan documents can be prepared for closing by your closing attorney.

Some lenders use the Preapproval as just a way to get a Buyer excited about buying a home, without actually ever having looked at that person's financial snapshot to get a clear picture of whether or not they can afford that dream home or cash cow. That's wrong. And unprofessional (as an aside, did you know that a Lender does NOT have to be licensed? I didn't.) And you won't find any of our recommended lenders, like Salem Financial or Prosperity Mortgage, doing anything like that. But it does happen. So go with a reputable lender, someone recommended to you who has a good reputation, and ask questions. Lots of 'em. They like that.

Oh - and when we submit that great bid on the house of your dreams, we'll ask the Lender to rewrite the Preapproval letter for the exact price we're offering and not a penny more - we don't want that Seller to know just how strong a buyer you actually are!

How To Turn $100k into $10mil, Guaranteed!

If I could show you a way to turn $100,000 into $10,000,000, would you be interested?

Thought so ...

If you've ever wanted to make money buying and selling properties, here's an easy, no-risk way to get started. Enjoy.

Weird ...

Eating Away at the McMansion

So it's not two all beef patties, special sauce, lettuce and cheese, but it's still a freakin' big burger!  Wonder what the number of recommended servings would be?  Nevertheless, I'd venture to say that it's excessive in a number of ways.

Ever wondered why we do the same thing with our homes?  The popular term is McMansion, but you might have also heard it called a parachute home, a Starter Castle, or my personal favorite, the Garage Mahal.  Love that one.  Whatever you call it, housing consumers seem to be split on whether they love 'em or hate 'em.  Typically considered anything over 3000 square feet, McMansions across the country have one thing in common across the board ... they're big.  Very big.  And a Congressman now says he's going to draft a bill to try and curb their deflation of America's collective wallets (sorry, was trying to go with some kind of clever word play there, but just couldn't find the right combination).

Rep. John Dingell, D-Michigan and chairman of the House Energy and Commerce Committee, says he's going to draft a "carbon tax" bill, proposing a cutoff of mortgage-interest tax deductions for any house with more than 3000 square feet.

McMansion, have you met the Low Fat Menu?

Rep. Dingell says that the bill will seek to "remove the mortgage interest deduction on McMansions - homes over 3000 square feet.", and believes that such a change will help to achieve the environmental goal of reducing carbon emissions by 60-80% by the year 2050.  The idea is to make consumption more expensive, thereby homeowners are more likely to find other ways to reduce greenhouse gas emissions through changes in heating and cooling cycles, electrical usage and building materials. 

Surprise surprise - homebuilders don't think it'll work.  Bill Killmer, policy advocate for the National Association of Home Builders, says that consumer behavior needs to be addressed.  Rubbish. Consumers aren't likely to lessen their usage, as our "must-haves" now come with more and more cords, larger and larger usage numbers, and bigger and bigger fuel tanks.  I think what he's trying to say is that the systems in the house need to be more efficient, but I'd bet manufacturers of those systems are going to pass the increased production costs on to consumers.  Where's the balance?   

I don't know where the middle ground here is ... it's no surprise that the benefits of the mortgage interest deduction is in favor of those taxpayers with larger-than-average mortgages, which are often owned by higher-income taxpayers, and a larger-than-average mortgage in many cases could be traced back to a nice big McMansion.  I'd bet those same taxpayers wouldn't be real happy with the elimination of what amounts to more than $100 billion in mortgage deductions a year between 2006-2010.  I'm happy to see it being discussed, but the cynic in me says that those taxpayers who make the law aren't going to vote for something that's going to hit them in their own wallets.  But that might just be me. 

Thanks to Reader Jane for forwarding the link.  You can read Kenneth Harney's whole article here.

Concert for Virginia Tech tickets now available to the public

From VTNews ...

Coming up this Saturday on the NRVLiving Real Estate Show, Mark Weddle and Angela Anderson from Salem Financial will take me to task on what's going on in the mortgage industry.  On last week's show, I took issue with some of the comments the National Association of REALTORS(R)' lead economist has made regarding the market and their projections.  So Mark and Angela are going to fill me in on our local market from their perspective, and what they've been doing to help borrowers out.  We'll also talk briefly about carbon monoxide poisoning and some of the warning signs you can look for. 

It should be a good show, so check it out, and if you have topics you'd like to hear covered make sure to email us and let us know!

Show Schedule ...

Friday Mornings, 8:30am on FOX News Radio 810AM's NRVLive
Saturday Mornings, 10:00-10:30am on FOX News Radio 810AM

"Go to hell, relo company"

That's the title I found on Jim Duncan's Real Central VA site this morning.  I thought the post was eloquent and well-stated.  Well, the title at least.

Relocation companies are in some cases a necessary evil, and I thought Jim did an excellent job of explaining his frustration.  Specifically, he's wondering why the requirement that a buyer use the same closing attorney as the seller (the relocation company) is using is not a violation of the Real Estate Settlement Procedures Act.  And he's right.  He should be asking.  It's a question we've been asking for a while, and no one can explain why it's not.  Which says to me that it is.

Yet relocation companies continue to set the requirement, and often the language appears right in front of Paragraph 19 of the RVAR Purchase Agreement, which reads:

"You have the right to select a settlement agent to handle the closing of the transaction.  ... No settlement agent can provide legal advice to any party to the transaction except a settlement agent who is engaged in the private practice of law in Virginia and who has been retained or engaged by a party to the transaction for the purpose of providing legal services to that party."

So how can a settlement agent provide legal services in an environment in which their services have been "retained or engaged" by both parties?  They can't.  Jim's stance is that a buyer's agent ought to be wary of placing their clients in that situation.  Also, check out his post at the bottom of the page on transparency in real estate commissions.  It's a very forthright look at how a real estate fee is taken apart in a relocation transaction ... and his readers comments are very insightful as well.   Real estate is a great business to be in, for a number of reasons, but not everyone can pull off the cheesy REALTOR ... Nice job, Chester.  You win.

Cheesy Ads ... Do They Really Work?

I don't know, maybe I'm missing the whole point.  Maybe the point IS to attract attention, attention of any kind, and that eventually you'll be catchy enough to actually stick.  What about you?  Would you actually vote for Christopher Knight because he used a Star Wars theme, or would you visit Pawn U.S.A.?  Personally, I appreciate an ad that informs me rather than makes me laugh. 

Be looking for some new, creative NRVLiving Real Estate Team ads around the area real soon!

Your Home As An IPO ...

Now here's an interesting idea ... Dallas Maverick's owner Mark Cuban has a blog, and yes, I read it.  I don't know why - he's an interesting guy, a little impulsive, always speaks his mind, and I can relate to that.  So yesterday he posts an article about why homeowners can't sell a percentage of their homes on the market, just like you can sell stocks. 

It's inventive ... it's different ... and I thought it was pretty cool.  There are a lot of banks throughout the country that would need to be involved, as their liens are directly involved here.

Why can't home owners sell some percentage of equity in their homes on a listed exchange ? Why can't I "Take My House Public ?"

Why not create a market or exchange where homeowners can sell equity in their homes ?

The rules could be very simple
1. The house is appraised by a company approved by the exchange that lists the houses.
2. "Shares" are set with a Par Value of 10pct of the appraised value. For a 100k dollar house, there are 10 shares potentially available. However at no point in time can more than 40pct of the "shares" in a home be sold. We dont want the opportunity for "hostile takeovers"
3. The price of the shares will of course be set by the market. In a hot market it will be set above par, in a tough market like today, it will sell below Par.
4. All Proceeds from the sale of shares MUST be used to pay down any debt on the home.

This is the key element of this approach. By selling equity in a home, the buyer gets an asset based security that will move up and down with the market. If this market is big enough, there should be enough liquidity to move in and out of positions.

The seller receives cash that can be used to pay down the debt and thereby reduce his/her monthly payments. The seller loses a part of the upside if the market for the home improves and prices go up, but thats a small price to pay for not going into foreclosure.

Beyond creating liquidity options for individuals in the housing market, which i think is a good thing, I think this will also reduce the volatility in the market. Despite the best efforts of the residential Real Estate industry, no one ever really knows what their house is worth until you try to sell it. This exchange listing approach will certainly make for better information available for the market, which in turn will also reduce the volatility.

It will also increase the options of homeowners who have paid off their homes to acquire capital for personal uses. If a homeowner has completely paid off his/her home and wants to raise money for whatever purpose, a vacation, a car, education, whatever, rather than taking on debt , they could get their home appraised, have the option of selling equity in my home that I would not be obligated to pay back. An option that would create a significant flow of capital back into the hands of consumers.

You can read the full text of the article here, which I think is an important part of the whole puzzle ... what do you think?  Could something like this stabilize an industry?  Is stabilization of the real estate roller coaster actually good or bad for our economy?  I tend to think that market fluctuations are actually good ... it seems to me - and I know little about economics - that a predictability in the market would actually WEAKEN it.  We tend to have a more balanced, conservative and steady real estate market here in the New River Valley - would you consider this kind of a setup intriguing?  Thoughts?

High Quality of Life, Good Job Opportunities & Low-cost of living ... sound familiar?

Blacksburg/Christiansburg/Radford - A low-cost place to be.  From MSN comes this article showing the "tri-city" area of Blacksburg/Christiansburg/Radford to be one of the Top 10 Low-Cost Locales in the country, with a high quality of life and good job prospects.  We're called a Flyover city, which is just fine by me.

"Blacksburg is the largest of the three communities and combines a small-town feel and college amenities with a beautiful setting in the Appalachian and Blue Ridge mountains. A pleasant climate and proximity to nearby Roanoke, with its excellent arts, commerce and health care, are perks. The wooded area lacks some big-city hustle and amenities, and is isolated from air service. But it has a low cost of living, with a median home price of only $197,800 and great outdoor recreation opportunities to boot."

Billionaires Have No Idea, & Jim Cramer Is Upset About It

I'm a fan of Stephen Colbert's ... I found my wife giggling at the TV one night, and we catch his show "The Colbert Report" fairly regularly.  Last night, he brought in Jim Cramer from "Mad Money".  The two were hilarious, watch the whole thing.

Jim Duncan at Real Central VA caught this line, which I had originally missed:  "Apparently a bunch of billionaires thought it would be a good idea to give millions of poor people mortgages that they couldn’t afford and somehow that turned sour."  Shocking ... How did that fail?

Upcoming Radio Shows

The first ever NRVLiving Real Estate Show took off without a hitch last Saturday (streaming audio / podcast / to follow at some point in the near future - technical difficulties!) and we thank those who listened and gave us a shout to let us know they checked it out.  Yes, one of those listeners was our mother, but a listener's a listener, right?

If you weren't able to check it out, make sure to stay tuned as we WILL have recaps of every show available very soon.  This week's topic?  Under-insured homes.  We'll start the topic on Friday morning at 8:30am on NRVLive, and we'll follow it up on Saturday morning's show with  Eric Johnsen, a State Farm agent out of Christiansburg.  Check it out, and if you have topics you'd like to hear covered make sure to email us and let us know!

Show Schedule ...

Friday Mornings, 8:30am on FOX News Radio 810AM
Saturday Mornings, 10:00-10:30am on FOX News Radio 810AM

Lenders Broaden Clampdown on Risky Mortgages

I guess I'm feeling a little gloomy today ... two negative posts in a row.  I'll work on that. 

In the meantime ...

The Best Way To Buy A House For Nothing! Seriously!

Something for nothing.  It doesn't exist.  This is a plea to all of you who are looking at mortgages with as little money down as possible.  Please - come up with the cash.  I don't mean come up with all of the cash to buy the property outright, but do all you can to come up with 20% of the cash.  In the market we're in, with extended inventory and longer selling times, lenders are getting tighter on their restrictions on loans.  Gone are the days when they'd lend to anyone, under virtually any circumstances, because they know they'd just sell it to someone else in the secondary market.  Which makes this story, from the Washington Post, even scarier.  Thanks to Kim for bringing it to my attention.

The title of the article, by Elizabeth Razzi, is "Something For Nothing Home Deals".  In the article, Elizabeth tells of a growing "company" in the Northern Virginia area called Metro Dream Homes.  Members of MDH (we'll call 'em that from now on, they don't need any publicity) are invited to join (sounds like the pyramid scheme Quixtar, to me), so it's an invitation-only kind of thing.  They buy a house, sometimes for far more than the asking price, and often without a down payment.  The catch is that the seller agrees to give back 10-15% of the sales price to the buyer, who returns it to the pockets - er, account - of MDH. 

MDH says it will take that cash, invest it in other businesses, and the profits made from those businesses will go to fund the monthly mortgage payments of the MDH members, and on an accelerated schedule that will get the house paid off in FIVE to SEVEN YEARS!  After five to seven years of PAYMENT-FREE living, the homeowner sells or refinances the house, and the homeowner and MDH split the profits.

Oh, MDH says they'll donate some money to charity, as well.

Awesome!  Incredible!  What a sham ... I mean, what a deal!  Buy a house with no money down, find a mortgage worth more than the value of the home, and then never make a payment on the home!  And after a few years, you'll get out of the house and split the profits with MHD.  Something for nothing.

Please be careful ... take a look at the facts:

• An estimate 10% of the mortgage market has been shutdown with subprime loans
• Alt-A (Loans below prime, but above subprime) mortgages have taken a huge hit, shutting out another indeterminate amount of buyers (~2-5%).
• Adjustable Rate Mortgage calls have hit many buyers VERY, very hard.
• The Fed chose to keep interest rates steady, pushing mortgage rates higher than expected.
• Time on the market has increased significantly for most markets and overall
• Mortgage defaults have climbed ... and that's not likely to slow anytime soon.  (It should be noted that defaults bring down selling prices in a particular locality, so your neighbor's inability to pay their mortgage DOES affect you)
• Major homebuilders are reporting significant drops in revenue and net income
• Mortgage REITs and Mortgage companies are going out of business

All of this swirling around your head, and you STILL want to pay more for a property and put nothing into it? 

Thankfully, and to the best of my knowledge, we have not seen anything like this in our area.  I have been involved in one deal several years ago where the sellers took a higher-than-list price on their home, then deposited the difference (about $6000) into an account that would be used to apply to the buyer's closing costs.  The account principals kept a percentage (less than 15%, I think) of the total amount contributed, and it made me nervous.  We had an attorney look at everything and pronounce it as legit, but it was still a little awkward.

MHD?  Where's there's smoke there's fire, and trust me - this is part of one BIG fire.  If you're in the market for a mortgage, contact reputable lending professionals like Angela Anderson at Salem Financial.  Or Dave Shelor at Prosperity Mortgage.  Or Brad Denardo at National Bank of Blacksburg.  Need more?  We only use lenders we know are going to service our clients with the utmost integrity, each and every time.  And if you have a question about something you find and want to get a second opinion, please don't hesitate to contact me. 

To Break Ground, Or To Not Break Ground ...

Heard the news?  The Blacksburg Board of Zoning Appeals voted unanimously to reverse Council's approval of Ordinance 1450, and overturned Zoning Administrator Steve Hundley's ruling that the South Main Street development would be subject to the rules of the newly adopted Ordinance 1450.  It's about time ... Ordinance 1450 has the opportunity to allow the Town better control over what's built within Town limits, but it was inappropriately enacted and I hope the Board's ruling will stand.  As usual, we need to go through the appeal of the appeal now. 

This doesn't mean a big box store is going in on the site ... but it certainly makes it more likely than ever before.  And I like that the Ordinance will still be in place for future projects ... As I wrote at the time, I don't care where you stand on the issue - Council's vote was grandstanding and ill-served.    I hope that this ruling will stand and we can move forward.  It's not about one store over another for me, it's about the project as a whole.  Ordinance 1450 was created to try and stop what some believed to be an inappropriate store (despite the fact that no announcement has ever been made) and was a knee-jerk reaction.  Council's decision ended up being what was inappropriate.  I don't want this Council going unchallenged when they clearly acted with a vendetta. 

Enjoy the ride.       

The State of the Market - July 2007

NOW we're talking!  This is the kind of market we've been expecting to see, and it's come at just the right time.  The summer buying season is in full swing, and sellers are seeing increased activity on listings as buyers look at everything on the market.  Last month, we saw a market in Radford, Giles and Pulaski, with those areas remaining at 6-12 months worth of inventory.  Not good numbers if you're a seller, but a little more balanced as to how we typically see them.  Blacksburg and Christiansburg are blowing the rest of the market away - overall, supply and demand for the month of July is 7.30 months, while Blacksburg and Christiansburg are at 3.87 and 5.09, respectively.  Again, we're looking at how long it would take to sell the existing residential inventory in a particular area, if nothing else came on the market until supply was exhausted.  Anything over 5 months is typically a buyers' market, and anything less than 5 months is typically a seller's market.

Area	Active	Sold	Absorption Rate	Buyer/Seller Market
Blacksburg	213	55	3.87 Months	Seller
Christiansburg	290	47	5.09 Months	Buyer & Seller
Montgomery County	77	8	9.63 Months	Buyer
Floyd County	98	10	9.80 Months	Buyer
Giles County	85	15	5.67 Months	Buyer & Seller
Pulaski	133	11	12.09 Months	Buyer
Dublin	124	19	6.53 Months	Buyer
Radford	82	15	5.47 Months	Buyer & Seller

We're still expecting stability in rates through the end of the year, so conventional, traditional products are still a good idea.  If you don't know what kind of loan you have, feel free to call me and my team at (540) 552-6500 or email me and we can help you find out!  If you'd like more specific data about this report, or anything else pertaining to real estate in the New River Valley, don't hesitate to contact us by email or Instant Messenger!