Continuing to examine and hold a lively discussion of the Northern Virginia Real Estate market.
Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Frank goes to the dark side to benefit his clients: When to overprice a real estate listing?Creating high comps to make lower ones (that are still not bargains) look better. Which then sets better comps for the one that started high. Thus it begins. Me hates easily manipulated buyers who don't thoroughly research the sold comps and their alternative options. Creating higher prices out of thin air. The listing agents can try this to their heart's content, it's the buyers' fault for falling for it...
I assume this will not be a huge surprise, but the CS numbers showed DC down another ~0.5%. So as I have said in the past I expect we will continue to see weakness losing between ~0.5%-1% / month for most of this year. The 10-city index was down 0.6% so DC is doing basically average.Probably the most interesting part of the numbers this month is the difference between the low, mid, and high tiers. The low tier is down 1.6%, the mid was down 0.6% and the high was only down 0.2%. I thought we would see these sort of differences when the 8k went away, but I am a little surprised to see them this early (seeing today's numbers are from December through February). I guess the high tier is just on a slower more steady decline. The low tier is only down for the 3rd consecutive month, the middle tier is down for the 4th and the high tier is now down for its 5th consecutive month. All three tiers are down ~2.1-2.2% from their recent peak.
Well said Cara. It is also lender's fault for approving the loan. Unless you have higher DP, buyer's don't have skin in the game. Appraisal & lending process need to be tightened as well to catch such practices.
hb,Thanks for the heads up and good analysis. If the three tiers are now all down very similar amounts since the most recent peak, then it's not clear whether the lowest tier is really worthy of more concern or not yet. Although, obviously the end of the tax credit is a good enough reason in and of itself, plus the fact that foreclosures are still concentrated in that tier.
spider,Indeed. The lender and appraiser as well. Although after viewing the video itself Frank's two examples were both extremely modest such that one can see how they'd escape a lender's heavy scrutiny.
Cara- I am not sure I agree with real estate agents that originally listing it too high brings in a lower amount normally. Perhaps historically this has been true, but in the recent market where people are tripping over each other to get the "deal" higher listing prices were probably better. I also agree with you and Frank that the buyer/buyers agent should look at sold comps... Although I don't believe his knock on rebate agents for not checking comps. Lets be honest most full price agents also are not going to try and get you the best deal. They are all better off by making the transaction go through and if that means screwing you slightly ohh well... In this day and age it is easy enough to check the comps yourself.
Lets be honest most full price agents also are not going to try and get you the best deal. That is the heart of the issue. Honesty.You can't shield stupid people from the own mistakes...because...they are stupid. Ethics in business exists in part to try and protect those stupid folks who cannot protect themselves.Which is why I think the RE market is changing for RE agents. With the volume of freely available data becoming more and more accessible to the *average* person, the role that the RE agent used to provide is being eliminated in favor of alternate sources of information.The market is changing to favor the educated savvy buyer and seller.It's a favorite topic of mine with my Southern niece who sits on a local NAR ethics board. She is on one side of the argument(river), entrenched, spouting the company line, and I am across this vast river with the rest of the tech savvy world saying "All that just for you to open a door and sell me something that is overpriced?".FWIW.They are all better off by making the transaction go through and if that means screwing you slightly ohh well... In this day and age it is easy enough to check the comps yourself.Precisely. And with ease comes a market change.One wonders what will happen if Craigslist or eBay ever capture a significant portion of the RE market.
hb,I think it's all a matter of current inventory levels. In Frank's two examples he implied that these were the only two available properties in a given development on the market at the time. Then his strategy can work. It's less clear whether whole neighborhoods towing the line on high pricing above recent comps works or not. Seems to me that getting homes off the market and into sold status faster is better for creating the scarcity needed to keep selling. Having 5-10 homes all $25k over the price that would make them move seems both unstable and a potentially a bad thing. This is the case right now in my neighborhood. Two recent price drops have created two reasonably well priced homes. Everything cheaper than them is in lesser condition but under contract (and not closing as quickly as one might hope). And there's 5 above them priced $10-$30k too high for an easy sale. Very unstable. As well it should be given they're all arguably above comps.
continuing my thought.I guess the "bad" thing part is having the sitting inventory make your neighborhood look less desirable than others nearby. For the simple reason of why is everyone there trying to get out now? No neighborhood is an island and looking less desireable, or like there's no appetite for houses in that neighborhood being those prices is not a good thing. Psychologically buyers think this portends future weakness and a lack of appreciation potential. Far better to be the low priced neighborhood where everything gets snapped up.
I heard on the news this morning that Northrup Grumman is re-locating it's headquarters from CA to Northern Virginia and bringing 300 executives to the area.We beat out DC and MD. Reportedly, the locations being considered are the Dulles Corridor and Crystal City.
VA_Investor, I also heard that news. The NPR report said since most of Grumman's clients are with the military or other parts of the Fed. Govt., it made sense to be in Crystal City near the Pentagon and DC (also there is some office space that the military vacated last year). But it's easy to imagine good reasons to consider Dulles as well.
VA, Ace,Thanks for the report, I just caught the promo not the story. Here's the WaPo version for those that want to read it WaPoAlso on the local page was the fabulous news that Fred Smoot formerly of the Redskins is planning on opening a Waffle House at 14th and U. About time!
cara,Thanks for the link (I should at least go out in the morning and get the paper).Fairview Park is at the beltway and Rt 50 (I believe - anyway it's the Falls Church area of FX). I'd rather see them in the Dulles Corridor, of course!Hard to tell from the article how many subcontractor's will come along. I imagine (and heard on TV) that the 300 jobs being relocated are higher level. They aren't going to pay to move admin's.
I thought this was good news for our friends in Southern Fairfax such as cara. Fairview Park should be an easier commute than Tysons (and obviously Reston) from Burke or Springfield.
tbw,This is as concrete as I could find about the final location guess: Fairview Park? so far just a leading contender. My guess is the 300 executives moving in will help McLean more than anything else, but that's just where I would live if I made that kind of money in that kind of job.
cara,I'm sure some will pick McLean. I just meant Fairview Park makes it much easier to commute from Springfield, Burke, Fairfax Station than Tysons. On a side note commutes between those areas and Tysons should improve when they open the 495 HOT lanes (which also will be free for HOV-3).
cara,I agree. They will want easy access to the Beltway plus prestige nabe w/good schools. I don't see them in south county.The highest exec's will decide on final locale.
What are your thoughts on appraisals ordered by a lender that come in at exactly the sales price? I thought an appraisal was supposed to represent the fair market value of a property. Instead, it seems like an appraisal ordered by a lender represents that the house is worth no less than the sales price. It just seems like an appraiser with knowledge of the sales price is prone to manipulate the fair market value to be just high enough to make the deal go through but no higher. I'm not sure why they are hesitant to appraise it any higher.
http://franklymls.com/FX7211150the POS wouldn't sell for 275K, andthey decide that maybe it's really worth 349K. i suspect they will be back to 275, soon enough.It's a nice place but a place on the same block sold for 180K. I really like the houses there, but it's got the Beltway in the back yard, and my GF is chemical sensitive.
Pat - The place was listed last July at $275000 but purchased in October for $147000 by a flipper. I checked out the virtual tour. It's a big unit for that area with a big yard. The flipper put in the usual granite countertops but what I find odd is that the wooden flooring shows some massive stains. Or maybe it's just large quantities of mud since much of it is near the front door. If so, it's odd that they would leave it in the photos showcasing the property.Like you, I checked out that neighborhood. It wasn't bad. The proximity to the Beltway doesn't bother me - that's across the river. What ruled out that neighborhood for me was/is the periodic flooding.
Va_investor,It's not just that. South County doesn't even really have the houses for them. There's some very nice stuff in Fairfax Station and Fairfax City, but not that level of high end executives all around you nice. Way above my pay-grade nice, but people who actually make this kind of money are discerning. tbw,But yes as more jobs move into Fairview Park that is a slightly more convenient place to get to than Tyson's, although you're still going the wrong direction, i.e. with all the Tyson's traffic. I pity the people who live along some of the N/S backroads in that area if it really explodes.
MJC,My appraisal came in above the contract price. Not by much, $11k. Appraisals always have some fudge. The 4 different comps gave prices from $409k to $424k for an average of $420k. Appraisers know that if that highest comp had dropped out of the allowed time frame or if that lowest comp hadn't just appeared (it wasn't a low price it was a Capital Investments LLC job being offered below market), the exact number would be different. So I think what happens is that if the contract price lies well within the range of the comp prices based on each good comp, they just call it done and agree to the contract price. Why stop the deal so long as it's reasonable? It's only if the contract price is below the comp range or above the comp range that they object and simply state their best opinion.Now I personally don't think we underpaid, because I don't think the appraiser was able to account for the age of the HVAC and other major appliances which are towards the end of their life in our house, but in all probability had some newer and only some old in the comp houses.
Pat and C,Yeah some friends of mine live nearby. It's not a bad neighborhood. Not great, but not bad. The real problem is the river, both friends of mine who bought in that area live uphill from there, and thus also closer to the metro stop.Like c, to me that just screams flood-plain and I'd never buy it for that reason alone.
Post a Comment
Subscribe in a reader