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Wednesday, March 24, 2010
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86 comments:
Walk-away prevention program?
BofA principal forgiveness
Did you manage to tough it out this far, but are now thinking your home's reduced value makes paying the loan a fool's errand? Well, Bank of America is getting serious about principal reductions just for you!
UPDATE 1-BofA to start reducing mortgage principal-sources
* For homeowners owing more than 120 pct of home value
* BofA to offer forgiveness of up to 30 pct in two stages
* Statement due Weds, also covers negative amortization loans (Adds detail, background)
So apparently we are starting to get spam bots, because the url tag for the links definitely do not look like sites we want to go to...
Cara-
Wow good luck to BofA in dealing with the million free riders. That is always the trouble with these programs. It is nearly impossible to determine who will default vs. who would keep paying. Although it is interesting that they appear to be doing this on their own with no government intervention.
housebuyer,
They may have targeted it reasonably well, I believe the studies have shown that the tipping point of 120% LTV is significant. Although I can't recall whether that's just a place at which the percent of walk-aways/defaults rises, or where is rises to being over X% (where X is mor than 50).
With only 30% forgiven, they're also specifically targeting areas that haven't fallen that much, i.e. which have some level of under lying strength, and fewer neighbors defaulting.
So it's concievable that they'll get a necessary to freeloader ratio of better than 1 to 2.
Who knows. Maybe this is all about "optics" again.
Cara-
Agreed I think they set up the program reasonably well, but the free rider problem is always a big one. I hope for the best, because if programs like this work it is truly a market based solution. I only skimmed the article but didn't see any government involvement. So this is a good way for both the owners and banks to admit they made mistakes and try and find a reasonable middle ground.
Okay, this is a completely bizarre question...
But my mom was in town this past weekend. She's allergic to our cat, and despite the bigger house and cleaning thoroughly was still having a hard time allergy-wise in the mornings, despite spending as much time as physically possible outdoors walking or on our porch.
So, anyway, she thinks staying with us when she visits is not tenable and she also thinks other family members would be too crowded under our roof. (She's the only one who thinks this, but she does also stay at hotels when visiting my sisters so...)
But anyway, she was talking about buying a condo here so that she and other people would have a place to stay. She was thinking this could be a good investment, which I told her was nuts since she's not thinking about renting it out. My logic is that hotel stays couldn't possibly add up to the costs either of a mortgage plus HOA/condo fees or the loss on investment plus HOA/condo fees.
On the other hand... I would love to have her down here for a few months out of the year. Or even to move down here permanently. So I feel stupid for poo-pooing it. (I mean she was just talking about buying the world's most expensive guest house and trying to justify that it wouldn't be just for her...).
So ideas, all? Suggestions for condo developments my mom might like? I'm thinking she could be as far from us as Reston or Manassas and that would be okay so long as she was here for long stays. She was thinking Fairfax City because it's close and a university town which is her thing. But I'm assuming that would be prohibitively expensive.
Basically I was trying to get across to her that she could do it if that's what she wanted to do, but that looking at it as an investment I didn't see how the numbers could work. She was looking at it and thinking, well if you're telling me we're at the bottom of the cycle in DC then I'd be buying at the bottom and it'd be a good investment...
Cara-
I agree I can't see how the numbers would work. My guess is that Reston would not be much cheaper if any than Fairfax City. So if you want to keep it cheap I would look at manassas/ pwc.
My guess is it would be much cheaper to stay at a hotel for the couple of day trips and stay at a furnished apartment / executive suite for the couple of month visits. This way she has her own space and can do her own things a couple of days a week on the longer visits. At least during my consulting days it was slightly cheaper and you got a lot more space renting an executive suite for 1-2 months rather than a hotel.
Or maybe I'm wrong...
PITI on 100k could run as low as 650/month + 250 condo dues would be 900/month, which would "pay for itself" so long as she was in town on average 6 nights a month, or 72 days a year. Which if she stayed for a couple weeks at a time wouldn't be hard to do.
But I don't think you could get more than a 1bdr/1bath condo for that which while it would serve her purposes fine, wouldn't be all that helpful for "other guests", in her mind anyway. A lot better than nothing though, and I see nothing wrong with it being exclusively for her since she's the most likely to use it, and twice the bedrooms is twice the price as far as I can tell.
The question is could we find something that's not sketchy at that price? And can she really afford it?
She would be infinitely likelier to stay for longer chunks if she wasn't under our roof. I think multi-generationaly housing is a great thing, my mom not so much. With baby on the way, having her here more would be a really good thing...
(btw I picked $100k because there's a $125k 1bdr/1ba condo short-sale across the lake from me)
I think we're heading bullish on the housing market here as a collective, but if there's any segment of the market where any of us are still extremely bearish and with good reason it's the condo market.
Long-term hotels are definitely more expensive than renting or owning. But she might want to look into medium-term rents instead, if she really dislikes the hotel idea. Most landlords want a 1yr+ lease, but you can find some that will go with less particularly if you'll pay full rent and they're currently sitting empty.
Buying a condo might make sense as well, but I don't think so. The fees will eat any 'savings', and it's a terrible investment, as already noted. Real Estate in general isn't a great investment unless you're a landlord yourself. At least it shouldn't be. Bubble-thinking.
Cara,
Don't to forget to incorporate future condo fee increases into your analysis. You should (IMO) figure that they'll keep pace with inflation at a minimum.
xpovos,
Yeah that was my basic first reaction. Condos? Are you kidding? Condos out in my part of FFX aren't going to "appreciate" again for 10-15 years. And when they do it will at best be keeping pace with inflation. (until they briefly shoot up in the next bubble, which is pretty useless unless you're willing to sell at the peak, which she wouldn't be...)
Condo fees will indeed go up, at least with inflation if not more, but hotel/rental costs will go up too. If the condo fee starts off as 20% of the monthly cost, eventually it will be 50% or more, but since it's still a fraction it would need to rise more quickly in order to offset the rise in daily stay costs.
The whole concept was difficult for me, since she could stay with us. So there is no fair cost to compare it to, in my mind, so it seems like post-facto justification...
I'd say we could finish her off an apartment in our basement but her allergies were the reason I didn't look for such an arrangement in the first place. If she can't handle the cat, there's no way she could live in our basement no matter how dry we managed to get it.
It's all wierd. There's no way she's going to shuck out the money for a long term rental, because that's money down the drain. But if she owned a condo she would make good use of it. I know it's pure bubble-thinking. But good luck ridding my mother of this.
It's all crazy to me. We have a 3 bedroom house. Hence we have the space for her... It's not like my sister's houses which don't have guest space and also are filled to the brim with a menagerie of pets.
It's difficult being cheaper than your own mother. And having no clear sense of whether she's living beyond her means already or not. I think she's fine right now, but an extra $900/month...
Cara-
Maybe it could work. If she is just looking for a place for herself you could get a small studio. I assume this place is probably only ~5 miles from your place and only costs 55K it looks like it will have many offers so maybe it goes for 65K....
springfield condo
Very interesting new census stats:
http://tinyurl.com/yhbyguf
If you dig into the underlying excel charts at the Census site, you'll see that Arlington grew more from 2008-2009 than any time in the past decade.
fd-
That probably shouldn't be that surprising a lot of large condo complexes were being finished during that time period. So I assume that most of the growth was directly related to these large condo/apartment units.
Cara, I agree with your financial assessment. I have a friend in a similar situation, except that her mother planned to live in the condo most of the year if she decided to buy it. Even in that situation, they decided it did not make financial sense, since she wanted to keep the current condo in a warmer location as well. This friend also was stuck with renting her own condo for the entire 1990s to avoid losing money after she got married and moved to a bigger place, so she is acutely aware of how one should NOT expect capital gains to offset the considerable out-of-pocket expense.
So in your mother's case, I think it all depends on how much time she wants to spend there and whether she can give up the expense and hassle of the current house. Given her current plans, she could probably stay at the Four Seasons every time she visits you and spend less money.
Cara,,did you say.."baby on the way?"...crimey you kids..there are tons of reasons for buying that doesn't include making money and is not even a serious consideration. Cara tell your Mom you would love to have her close by if that is how you feel. Period.
fd, Robert will be happy to see those #s. I have to admit I am surprised that the whole region has grown as much as it has during that particular time.
Thanks, Arkey, how did I miss that very important news? Cara, congratulations!!!!
OK, I just can't shut up. As someone who's dealt with allergies (including multiple years of injections) all my life, I would encourage you not to question her saying it's not a matter of space (in staying at your home) but truly a health and comfort issue. Some people are only mildly allergic to cats and the symptoms don't annoy them much. But others are made miserable by symptoms, which can worsen into something more serious, like asthma or other auto-immune disorders. So I believe her if that is an issue.
I hope there isn't a question of your keeping the cat(s) in order to allow your mom to live with you, as I consider them to be members of the family. But if you do go that route, I know some people at rescue organizations who can help.
"xpovos - I think we're heading bullish on the housing market here as a collective."
Contrarian indicator perhaps!!
I saw that, Cara. Wonderful news! Pro to having your mom be near you: babysitting and a favorite visitor for your little one. Especially since it sounds like you're a transplant, like many of us, without other family near you.
Looks like everything is falling into place nicely for you.
Hope everything is going smoothly for you.
I don't think there were a lot of complexes finished between June 08 and June 09? Many more earlier in the decade.
Spider,
I said as much over the weekend. Normally I'd hope so. This time, I hope not. It's odd for me to be sitting on the other side of the fence.
Thanks REdealseeker,
So far so good. I count myself incredibly lucky that I got pregant this quickly at my age. Hope the rest is this easy. Has been so far.
What I want is for her to move down here year round and give up the home on the Cape. But I don't think she's ready to do that.
And my mom? Favorite visitor yes, babysitter? Before crawling, maybe, but then not until after age 8. She's not a little kid person. Sadly neither am I, we're hoping hubby fills in this gap.... or suddenly I like small children much better once their mine. People keep telling me that will happen. I have my doubts.
Thanks Ace and Arkey.
She already has asthma. From refinishing too much furniture as far as we can tell.
I'm just thinking also that if she turns up her nose at the brand new Residence Inn at the mixing bowl, how could we possibly find her a condo she'd like for a non-prohibitive cost?
two recent solds:
$651,301
$652,500
how much would you say the "I-66 discount" was for the first house? $60K? $710,000 gets you this house.
or more?
Cara,
Congratulation! I would just reiterate, make sure your mother isn't experiencing allergies in general because she might be just as miserable in a high end, exceptionally clean condo.
In other words, has she been comfortable in the area for a week or so, during spring/summer, at a hotel?
Figure that out first.
In this area, I've seen people only moderately impacted by allergies (or not at all) in other areas suffer miserably.
As always,
My $0.02
$0.02,
My mom suffers pretty miserably from pollen allergies no matter where she is... but it's not the same as the cat. It's bad, but not the same level.
But similarly I think the best plan is to stick to the Residence Inn or the like for this year and see how it goes before leaping into a decision.
Cara, its different with your own. You just can't imagine the depth of love that rushes over you when they put that baby in your arms. You'll be fine. I think most people have these doubts left over from babysitting or being around children..an ol' good lord..kinda feeling. Congrats! I'm tickled for you. Let life begin..
MM, from photos alone (I realize that's not very much info) I think that middle one was a good deal - with a different floor and backsplash in the kitchen, it might have been more attractive, but that shouldn't have made much of a difference in price. Do you think emotion accounted for any of the price differences?
Does anyone have experience buying a house and using the listing agent as your agent?
A few months ago, we put in an offer on a home that wasn't chosen. The house closed for the exact price that we offered. I've no way of knowing their contingencies, but ours were pretty standard. Given everything was equal, I'm wondering if we our offer would have been selected had we gone with the listing agent as our buyer's agent -- if she could have "swayed" the sellers any.
Poppy,
Possibly, but you're getting into tricky ethics area there. For me, the reason why our contract got chosen over another at the same price and a second at an even higher price was our flexibility on schedule (we moved to the seller's closing date of choice), willingness to put down a contract at 20% down, putting a good chunk into earnest money (ended up being ~3%--our agent indicated that 1% is more standard), and getting in line first, all with no absurd contingencies.
If they'd chosen the higher price contract, that'd be one thing, but we did everything we could to make sure they weren't going to choose another at the same price or lower.
If your buyer's agent can't procure you the seller's desired closing date, you need a new buyer's agent, IMO.
Xpovos,
Agreed, there is no such thing as equal bids. And a good buyer's agent will find out which things for that seller will make your bid better. In our case the 20% down was enough.
3% earnest money? Holy moley!
Poppy-
Using the listing agent would help although as Xpovos said there are some tricky ethics issues there. Its also possible the other person had no contingencies e.g. they were a cash buyer and were fine with any closing date. Its also possible their offer was originally higher, but came down during the inspection. In which case they may have found things that would have made your offer lower in the end. It is also possible they knew the person who bought the house. Bummer you lost out on the house, but I wouldn't try and think about why it happened, because you will likely never know.
Cara,
We wanted the house, we weren't going to back away for anything less than a rejected contract or something that would trigger the contingencies we did have.
Xpovos,
You're talking about the house in Woodbridge? Congrats on that, btw.
It didn't even occur to me that the seller's closing date of choice is that big of a deal. Silly me, but lesson learned as a first time home buyer! We settled on a date our agent recommended, roughly 4-5 weeks after submitting an offer, figuring that's probably pretty standard and should give us enough time to secure a loan. Other details on our offer were the usual home inspection, had 25% down, 2.5% earnest money, but we were not the first in line (I was told that was what doomed us in the end).
Sounds like maybe I need a new buyer's agent.
housebuyer,
What kind of tricky ethics issues do you mean? Are there listing agents that would not take on as the buyer's agent for the same house? I agree that I should stop dwelling on this as I'll never know the real reason. But just thinking if I were to find a new agent, would I be better off going with the listing agent.
Poppy-
The ethics problem is that your agent is supposed to represent your best interest and their agent is supposed to look after their best interest. If it is the same person they can not do both of these jobs. In reality I don't think its that much of a problem because agents care more about closing the deal than looking after your best interest.
Ace,
I think the 2nd house is unique in its own ways so in that aspect it'd be a good deal (5% over listing is the proof). It has the wow factor (albet the so-so kitchen) the others don't.
I'm hoping to find clues on what 'fair market discount' of I-66 is. I know many here had said they wouldn't even consider houses near I-66, but I'm being 'open-minded' because there's just not many too choose from otherwise.
Poppy-
I'm house shopping without buyer's agent. I find working with listing agents is just as easy. I may not get the best deal without 'professional help' but I have issues with RE agents in general so I'll live with that risk.
Poppy, you lost because you are not approved for a loan. Until you get loan approval you will lose out everytime. Dual agency is what you are talking about and used to be fairly common to normal until aroung 1970/80 when they came up with a buyers agent. Dual agency...hmmm..as a recent seller form Manassas I can tell you that I authorized my agent for dual agency and any buyer buying through him the commission would have been reduced meaning the buyer could get a better deal. Any agent that has long term solid track record will not screw the pooch for a sell. Most buyers know going in what the want or need as far as inspections go. My agent also could get loan approvals for buyers that other so called buyer agents couldn't. I know this for a fact. So, in summary..research and hire your real estate agent like you would any employee..trust me..some are worthless, some are priceless.
MM,
How do you tour houses by yourself? Every house we've been to, there has been a keypad lock on the door.
Arkey,
We were actually pre-approved for a loan and had submitted that with our offer. Unless you're talking about actually having a loan secured already?
Good to know about the reduced commission.
Thanks for everyone's advice :)
I figure you guys are the right people to ask for some advice.
One of my staff members is buying a condo. Short sale. Today is closing. About an hour ago they dropped the bombshell on him: Bring an extra $3K to closing because there's a second mortgage on the condo, and you're going to eat it.
My understanding is that the second lien holder can try this, but that if the primary lien holder and the buyer agree to terms the second lien holder has to eat it. That's their risk, and why they get paid a higher rate.
I've instructed him to consult a lawyer, but as he goes on his way, I'm concerned for him. I know this tactic has been used in the past, and I think it's just a scare tactic to try to get him to make someone else whole. But how much authority to sink the deal does the second have?
Xpovos,
If the 2nd doesn't extinguish the lien the title isn't clear and the deal can't proceed. The 1st lien holder has the right to know about this though, and it should appear on the HUD statement to be legal.
(because the 2nd is second in line to all proceeds from the sale, so the 1st would have to approve this payment).
If the 1st has no objection to the buyer paying $3k to the 2nd, then it's up to the buyer whether or not to eat it or lose the deal.
It's a game of chicken. Potentially an under the table illegal game of chicken at that. If he pays off the 2nd, the wronged party is the 1st lien holder which didn't get that extra $3k they were entitled to, not him though.
Paying a few hundred dollars to get a lawyer may be the right course.
Xpovos-
The second holder definitely has the legal right to stop the deal. It is only in foreclosure that he gets no rights on the price. Also as Cara said it is illegal for the second lien holder to ask for money unless the 1st lien holder agrees. I think they should consult a lawyer, and then decide how much they want the house. If it is worth the 3K they could just pay it and say they didn't know any better. If they are ok with losing it they could tell the second lien holder that asking for money under the table is illegal and see how they respond.
This principal reduction thing BoA is pushing is terrible. It punishes anybody that put a down payment on their house and rewards every jackass that bought without having any skin in the game. This is morally offensive and economically unsound.
kevin,
Have you seen the update at Calculated Risk?
It's evidently only for those who not only had no skin in the game, but who picked risky, speculation only loans.
A whole, whopping 45,000 borrowers are potentially eligible based on originations alone.
At least it's limited, albeit to the benefit of those that really don't deserve it. I think there will be a huge negative PR disaster by them doing this. Imagine all those customers that are watching their neighbors get these freebies for being idiots. I could see people like this just going postal:
http://www.nytimes.com/2010/03/23/business/23lend.html
BoA's model is based on the assumption that all of these people they're rewarding would bail if this weren't done. I hope they lose a lot of money from this stupid plan.
kevin,
Well they already had a program in place to try to help these borrowers until 2012, and no one went postal yet (that I know of). This just adds principal forgiveness to the mix.
I think more people are likely to be mad that they're not eligible for free cheese.
Housebuyer, I think that there is an inherent conflict of interest with agents in the process in general, buyers or sellers. A $300k house will generate about $18,000 in total commissions. The agents will work in collusion to make the process as fast as possible, not necessarily benefiting either of their clients. I question how such an expensive service could possibly be worth that astronomical amount being paid.
Getting a sweet deal rate sounds less insulting to those that don't get it than, say, an equivalent of $100,000 cold cash. I think it won't go over well for BoA.
You're willing to spend tens of thousands a year so you can keep the cat? That's one hell of a cat.
hb,
My recommendation was more towards the second, but I sent him to a lawyer, knew that much. I just hope he's able to find one on such short notice.
Thanks, all, for the information.
If anyone's interested, the "whacko" house is up for sale at the bargain basement price of $879k.
http://www.redfin.com/VA/Arlington/2271-N-Upton-St-22207/home/11232597
It's listed as having 4 bdrm's - but as others have pointed out, it may only have 2 legal bedrooms.
shamrock,
My cat, my mom's money... which is probably under 10k a year in hotel stays. (much less than that to date). I lived without a cat until 4 years ago, just so mom could visit more easily, but I couldn't stand it anymore.
She is quite a cat, but if mom actually needed to come live with us, we'd find another home for the cat. As such, she'll probably be my only cat for a very long while, just in case.
Congrats Cara! Your mom saw this coming, didn't she? I seem to recall you mentioning that she was seeing babies once she heard you were buying a house. And I'll second the statements that your own child is different - I can't say that I've ever wanted to hold anyone else's baby. But my own? Can't get enough.
Did anyone else see treasuries today? They went up almost 0.2% 10 year treasuries This was the biggest move since the markets were crazy almost a year ago. It also left interest rates just below its post meltdown peak. We can say goodbye to sub 5% mortgage rates unless the market comes back down
XP
Tell your colleague to tell the Second holder to go "F^$K themselves"
It's a short sale, they are second,
the other option is a fast foreclosure.
Tell the seller, to give your friend the keys, do a Deed in lieu to the first, let them do a non judicial foreclosure, and have your friend as the ready buyer, right there.
doing what they propose makes your friend a party to fraud, which seems to be the principal business of bankers nowadays.
CARA
$1K/month on average?
figure your mom can rent a room somewhere for half that, or, she can
rent a 1BR for that price, it's not like there is going to be a huge appreciation.
Now if she wants to buy a place to feel "Landed", and wants a shot at appreciation, I think the YALE LOFTS on NY Ave, had the HOA go bankrupt, so you have to pay cash but it's half price compared to sales and it's an improving part of DC.
look around, see where a busted condo plex is, and see if she can buy in there, if she has cash.
Whenever they get fixed, and you know they will, those will appreciate the most.
Ace said
Of course, they are not complying with the state law in doing this as all properties are supposed to be assessed at FMV and FMV very definitely is affected by whether you are on an awful street in Arl. It would be more work to take busy streets (and property condition) into account, and obviously they can't micromanage this to account for every little thing, but it is really unfair to do this with such big, important factors.
In fairness to Arlington, I do think between 2003-06 or so there was less of a major road deduction as there was pre-bubble and now (as things have gone back to normal.)
Nothing is stopping landowners on major roads from appealing Arlington's assessments.
xpovos, this may be redundant with what others have said but the issue you're describing has been addressed on the web--here's one example:
http://www.cashoffer.com/news/cnbc_short_sale_fraud.asp
quote from the story: But here’s what’s not legal and what’s apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say “on the side,” I mean in cash, off the HUD settlement statements, so the first lien holder doesn’t see it.
“They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale,” says Brandt. “So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal.”
I said:
The pedestrian bridge goes over one of the driveways and is an eyesore to all three front lawns.
Pat replied:
TBW, the smashed pedestrians on 50 are a terrible eyesore.
I did not say we should not have those pedestrian bridges over Route 50. There are a lot of things that society needs but are annoying to have next to your house: pedestrian bridges, bus stops, interstates, state roads, cemeteries, fire stations, airports, prisons, trash dumps, transmission stations, etc. The term of art I once heard for these is LULU (locally undesirable land use).
We once had a discussion on here whether some home in Arlington on Route 29 facing a KFC-Taco Bell-Pizza Hut would have its value docked.
TBW, It's nice to say that appealing the assessment is available, but in practice it does not work.
I have appealed an assessment through Arlington soon after buying the house. I had a spreadsheet with all of the data I had gathered clearly presented. Any 4th grader who did not have a vested interest in the outcome was able to see that my house was worth at least 20% less than the houses Arlington said were equal to it in value. The major reason: it was in terrible condition, and Arlington refuses to consider condition (as well as busy road location, etc.).
The first required step is to appeal to the assessor. She came to my house, was clearly totally uninterested in ANY data I had.
The assessor said Arl. does not consider improvements; if I put $$$ into the property that greatly increased the market value, Arl. wouldn't increase the valuation; therefore "it all evens out." But that's not assessing the house at the current FMV. And that (lazy) rationale assumes an owner is going to stay in the house long enough, put in a new kitchen and baths, etc., and that the market value would move with all those changes (beyond the increases that Arl. would impose simply for average market increases). That rarely happens.
The charming visit from the assessor occurred approximately 1.5 years after the ending date of the assessment in question. As she walked around she noted several changes I had made, but would not listen when I pointed out that these changes (which at most might have produced half their value in the market) occurred AFTER the assessment period for the value I was appealing. She also pointed out an "updated bath"--the prior owner updated it in *1986*. Didn't she just tell me that updates (or horrid condition) did NOT affect the Arlington assessment?
So I appealed to the next level--the volunteer citizen board that presumably has no vested interest in the outcome. There, only one member of the panel (the chair) had any understanding of the idea that my house should be fairly valued relative to my neighbors'. He tried to explain both to the assessor (who was present at the hearing) and to the doofus other panel members, whom you would (mistakenly) think would have worked with this principle previously, that the data supported what I was arguing. They finally decided to simply split the difference just to get rid of me.
Then, the following year, Arlington started with the UNCHANGED valuation and applied the same percentage increase used for all my neighbors' houses. So all I received was a partial correction -- for ONE year.
At the time of the kangaroo appeal and hearing process, I discussed with my real estate attorney in my former home town what to do. He said unfortunately this was quite common and that "volunteers" had mixed qualifications and motives for serving. Although I could have taken it to the next highest level of appeal, we agreed the time and cost (and risk) of doing this was simply prohibitive relative to the chance of a just outcome and tax savings, particularly since I planned to continue to try to improve the house over the years.
So I don't believe Arlington has a genuine appeals process. It is not self-correcting and there is nothing you can do (other than move). As a result, their flawed "broad brush" approach overvalues some properties (greatly) and undervalues others.
I agree with HB who said that (at least from what I've seen) Fairfax appears to at least try to reflect two big factors that Arlington chooses to ignore. And I hope their appeal process is more fair and effective.
cara,
I think your mother should go with a hotel for all the reasons you note.
That being said -- if she really wants to spend a lot of money -- what about an "in-law suite" at your house? Is there any tasteful way to construct an addition to your house (i.e. not upset your curb appeal or neighbors)? She could have a room at your house but not technically connected to the house so the cats never go in there.
Issues that would arise would be who owns the in-law suite -- you or your mother. If it essentially became a gift to you then your sibling(s) might be upset. It also can be unpleasant to have your house be a construction zone.
Cara,
My utmost congratulations to you! Yes, your own child will be completely different. But it's true that you'll need mental breaks. :-)
I wanted to mention that since the big recession hit, my husband's company has been making use of furnished, managed 2-3 bedroom apartments for his stays overseas. The company used to put them up in hotels, but the apartments are more economical, and they often stay in them with co-workers.
So if your Mom wanted to rent hers out to government or corporate employees, it might really help cover the cost. I would want hardwood floors, cleanable furniture and a good cleaning company, but it probably wouldn't be any more distasteful than a hotel room to come back to. Just a thought, if you two are business-minded. And if the condo development had a baby pool it would be really nice.
Ace,
I think not looking at the interior of the house is pretty standard even in Fairfax County. I've noticed in the neighborhood I used to live in that most homes now sell with vastly upgraded interiors than what was there when it was built in the late 1970s. Thus, the county's assessment has been influenced by those sales. People who still have unfinished basements or old kitchens or old baths (and so on) have over-assessed homes. I agree with you that this is nonsense but I think the counties would argue it's too much work to keep track of who finished their basements and who installed a new kitchen and so on.
I'm not sure what to suggest because we have trouble enough getting people to agree to fill out a Census form. So I'm not sure we could get people to agree to annual or semi-annual tours of the insides of homes to determine what's been changed.
I'm aware of the arduous process to appeal an assessment. They have all those hurdles since otherwise the various state courts would be overwhelmed with assessment appeals. I would think that if the volunteer citizen board pretended not to understand that being on Route 50 lowers the value of your home that the state judge would get it. Maybe I'm too optimistic.
TBW, I agree no county has the resources to allocate to viewing every house. However, Fairfax does note things like, "atypical upgrades", and "handyman special" in the assessment pages for some homes that I have seen. It probably makes some inferences based on exterior condition -- which would have also helped in my case, since the outside was as bad as inside. At least it's making an attempt to factor condition in, which, in my opinion, is better than what Arlington does.
The second thing all counties can do that is not as expensive as interior inspections to have a legitimate appeal process that takes seriously appeals that are data-based, that show the broad brush approach has produced an unfair outcome in an individual case. Even though it's imperfect --it requires time from taxpayers, and may mean that small inequities aren't corrected and maybe even some big ones--at least it does allow for some justification for what you and HB have said: that if someone felt a value was far off, it would be corrected, therefore officials shouldn't be too troubled by the system as a whole.
Actually, TBW, according to statistics I have seen, only a tiny fraction of homeowners appeal assessments even to the lowest level, i.e., the county's assessor, each year. So it is hard for me to be persuaded that a fair process requires that lower level intractability or incompetence be seen as an appropriate hurdle, or that other inappropriate hurdles be placed even at the lowest (pre-court) levels.
One last thing, and then I promise to let it go - remember that the year I appealed, I was able to present completely objective data about what the house was worth, because it was sold that year, in a hot market. If the house were worth more than what we paid, then someone else would have paid it. I have some sympathy for counties that might argue that subjectivity is involved for the thousands of houses that aren't sold each year. But certainly in the year of sale (and presumably for at least some time after that) there is little or no question as to what the FMV is.
The point is that the law says each house should be valued on the basis of FMV. If this is an onerous burden (even simply to be reactive to facts presented by the taxpayer) then the law should change.
MM, I can't figure out why this one has not sold. It's not in an ideal location, but it has a low price, with some updates.
http://franklymls.com/AR7139961
Any thoughts?
Cara: I am so happy to hear about your pregnancy. When I found out I was pregnant with twins, I was stunned because I felt like you do about young children. Once they were born, I went to instant mother mode and have loved every age. One week after we finished the work to our new, old house in Arlington I confirmed that I was pregnant. The first trimester with a single has been much easier than with the twins. I am going to become a SAHM after this one, so I am happy that we locked in our housing costs by buying earlier. Our neighborhood prices seem to be going up each weekend with bidding wars.
"Ace said:
MM, I can't figure out why this one has not sold. It's not in an ideal location, but it has a low price, with some updates.
http://franklymls.com/AR7139961
Any thoughts?"
It's in South Arlington. That explains most of it.
Ace
It's not in South Arlington, it's in South, South, South Arlington, so it's wildly overpriced.
By the way, i suspect the water table is poisoned down there.
pat, Tom,
So is this house, which sold last year for $1.6 million. Check out others in the zip code. The median sales price in that zip is comparable to that in most North Arlington neighborhoods. So that does not explain it.
http://franklymls.com/AR6754468
AR7139961 is extremely cheap--wayyyy below the median--for that neighborhood. And it is too near Glebe for my taste. But there must be something else that explains it. It has no basement, which is a big deal, esp. in a little house. Pat, maybe you're right about the water at that particular house. And maybe there's mold?
Here are the assessed values for the neighbors--this house's asking price is ~$30K below the lowest of these:
http://www.arlingtonva.us/Departments/RealEstate/reassessments/scripts/saleslist.asp?Action=View&nbhd=511093&lrsn=56835&backRPC=37021019
I should have said the "recently sold neighboring houses."
There are exceptions, but generally South Arlington is a MUCH less desirable place to live, compared to North Arlington. Many parts of South Arlington are more comparable to PG or PW counties.
Tom, that may be true for certain neighborhoods, but not for 22202 except for a few houses right on Glebe or nearby, in part because it's close to two metros and extremely convenient. Waiting Too bought there recently. The selling prices for SFHs in that zip are as high or higher than in Willet Heights. Check out the 2009 sales values and you will see many more higher end properties than in Willet. It's a matter of record.
URLs to make it easier:
Willet SFHs sold in 2009
http://franklymls.com/default.aspx?m=R&l=0&h=ALL&s=arlington+detached+willet&x=sold2009
Aurora Hills SFHs sold in 2009
http://franklymls.com/default.aspx?m=R&l=0&h=ALL&s=aurora+hills+detached&x=sold2009
Houses in the area closer to that particular house that sold in 2009:
http://franklymls.com/default.aspx?m=R&l=0&h=ALL&s=oakcrest+detached+22202&x=sold2009
Cara: Glad to hear you are having a baby. That always brings a blessing to a new house.
MM: I believe that house on 31st St. is within smelling distance of the sewage treatment plant on Eads St. . Maybe they should close it down and move it to Tom's neighborhood in North Arlington (heh, heh, heh).
reecon, good point!
tbw,
There's an obvious place to build an addition off the back (take the L and make it into a T), but the most logical addition there would be two stories, and wouldn't have a stairway inside it, so wouldn't function well as a in-law suite. And two stories would probably make it more expensive than a condo. It's something we might consider doing eventually ourselves, but not in the near term. One could do a single story addition with a huge 3 season room above it, which might be slightly less expensive than the second upstairs master that I was thinking of. Still, it's money we don't have, and that I wouldn't accept from Mom.
Harriet,
That's a good idea. We should keep that in mind, that renting it out wouldn't have to be for full year leases. Mom's taste in furniture and finishes would definitely make a good executive apartment.
Tom: That's funny, because I find North Arlington an extremely undesirable place to live.
Cara,
How about giving your cat for adoption. I know it sounds cruel, but if you want your mom to stay with you for a longer period of time you may reconsider.
Cara,
Congragtulations. I missed the fact earlier that you are havin a baby. That is great.
dc2,
If my mom couldn't afford the hotel or short-term rentals, then we would have to resort to that, and we would. Likewise if the baby is allergic, we'll have to find the cat a new home.
I think she was actually being hit by the beginning of the spring allergy season and misattributing it to the cat. Because the last few days I've been hurtin. So going outside to avoid the cat was actually just making it worse in the long run. Doesn't change the fact that at our house she has no where to escape allergens.
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