Fairfax Living Real Estate Blog

I guess that is just stating the obvious. Without a job, the fear of losing the one you have, or reduced hours and wages, it becomes difficult for people to buy a home, and in some cases pay for the one the have already. Another article from Marketwatch.com on the ongoing catch 22 for real estate. I thought I would share.

http://www.marketwatch.com/story/without-jobs-housing-rebound-may-take-years-2010-06-14

Agents have occasionally asked me why I don't do alot of home "previews." I do them but only when I am looking at an area I am not that familiar with and usually that coincides with a buyers interest in that area.

Why do I not bother? Just a very short time ago relatively, I used to drive from Bethesda, MD to Annandale, VA in about 40 minutes on an average to good day in evening rush hour after 5:00pm. Due to the BRAC expansion/relocation, construction on the Capital Beltway, and the usual wrecks and breakdowns, not to mention just volume, that drive is now about an hour and a half or longer and exceeds the original 45 minutes now even in midday traffic. Hello, Los Angeles, we are right behind you with the nations second worst traffic. Atlanta and Orlando, You're not far behind us. Today, previewing three houses took me over three hours. I have better ways to use my time and will likely propose that a group of agents in my office get together and compare notes and share so that we are not all previewing the same houses and driving (walking can actually be faster) through the D.C. metro area cluster you know what. Also, would help on the carbon footprint.

There are alot of good things about the D.C. area. Some of the best school systems in the entire nation, excellent colleges and universities, and better than average hospitals. There is alot to do and much of it is free, courtesy of the National Park Service. There is a lot of history here. A lot of parks, and overall the quality of life is great. It is expensive to live here  and people still want to move here, mostly because of the job market. The job market and housing market for that matterin the Washington, D.C. area, does not experience the ups and downs experienced in other areas such as So. Cal. and the Mid- West. The housing market has been pretty stable and the prices are within, at least in my neighborhood, 10% of the peak in 2006. There are multiple offers on almost any reasonably priced house and if you haven't bought yet you might want to do it while the rates are where they are (very low). We have bottomed out and are moving up in my humble opinion.

If we could only solve the transportation infrastructure problems; the #1 complaint in the region. Recently, a poll stated that 10% of the population was thinking to move because of the traffic. If 10% moved the traffic would be alot better and for awhile at least, the listing agents would be busy. The issue might be a glut of houses and a short term downward spiral in prices. I am thinking of moving when my kids get out of college (relatively soon) and they get settled. I might just move far enough out to miss the traffic if my kids stay in the area. If they leave, depending on where the go, I might be right behind them. If it were not for the awful, almost daily grind of traffic, I would almost have no reason to leave. If the traffic problems could be resolved, The Washington, D.C. metro would be a great place to live, and about as good as it gets.

Todays Washington Post, Front Page, an article on the Federal Government busting Taylor, Bean and Whitaker's Lee Bentley Farkas.

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/16/AR2010061603438.html?sub=AR

Call me Jimmy Buffett. I grew up in Florida on the beach when Florida had less than half the population it has now. Although I am formal when I need to be, I am in Flip Flops, T Shirt, and Shorts at most other times, and a northern variation of that in the Winter up here. I am comfortable in my semi-Northern habitat. To folks from Minnesota, this is the Deep South (DC area). To me, its a nice compromise, four seasons, generally mild climate except Jan and Feb. The snow this past Winter, although more than Syracuse usually gets, was beautiful.

To my point, When I am not with a client, at a networking function like I will be tonight, or at a formal gathering of some sort, I will almost always be wearing Flip Flops, T Shirt and shorts. Occasionally, you may see me in a fine restaurant dressed that way like Old Ebbit or Smith and Wollenskys in D.C. It depends what I am doing when I get invited to lunch.  I have actually had clients call me to view a house and I was actually near them in the District. I said I had to go home and change and they said, forget it, just come as you are in your T Shirt, Flip Flops and Shorts. When I have non-pretentious clients like that, in this case a Doctor, its wonderful but I really do not feel comfortable doing business that way. I am more concerned about running into other agents or brokers and looking unprofessional to them then I am with clients who know that I am Mr. T Shirt, Flip Flops and Shorts.

I rarely go into my office unless I need to use their high speed, high tech equipment. I can do in ten minutes what I can do at home in an hour as far as printing scanning and sending contracts. i do change and you will rarely ever see me in the office, unless it is late at night, wearing anything but professional attire. I usually wear a polo type shirt and slacks if not a buttom up shirt and sportcoat (rarely a tie though)

So here I am enjoying a breezy early Summer day outside with my laptop, taking and making calls in my T shirt, flip flops and shorts

I dont think that this was a secret to anyone. The Home tax credit has slowed down the market a bit. I certainly am noting less competition with offers. The big thing I have noticed is that I was bumping into other agants and their clients showing houses, in one case four agents at one showing, right before the tax credit expired on April 30th. Last weekend I only bumped into one agent.

http://www.marketwatch.com/story/home-building-craters-after-tax-break-expires-2010-06-16-83200

Lately, due to some very wierd phone messages I have received, I have been investigating different types of phone scams on the internet. There are some where the caller will call usually not even saying who they are or where they are calling from saying there is a complaint about you and to call them back at an 888 number or a decision will be made with or without your consent.

In the process of checking on one scam, I was reminded of the overseas call scam and to be leery of calls to these area codes primarily in the carribbean. These area codes are legitimate but the numbers are not and you could be charged thousands of dollars for a phone call.

Here are a some links to be aware. One is to the FTC web site...

http://www.ftc.gov/bcp/edu/microsites/phonefraud/identity.shtml

http://www.snopes.com/fraud/telephone/809.asp

http://www.scambusters.org/809Scam.html

 There is plenty more info where this came from.

In yesterdays and todays (and looks like tomorrows) Washington Post, Sen. Harry Reid ((D), Nevada has proposed extending the closing date for the tax credit to sometime in September. This is for contracts ratified before April 30th. The problem is the backlog at Title Companies according to the article.

You may have to cut and paste and put in your browser.

The Link from yesterday's paper:

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/10/AR2010061003686.html?sub=AR

The link from today's paper:

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/10/AR2010061005434.html

And...another recent article on the market struggling without the tax credit. Note that this is dated as being in Saturday's (tomorrow) paper:

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/10/AR2010061006142.html

This just in from WTOP News.....not exactly but the article is published on WTOP's website. I have provided a link below. Two local criminals (thats what they are so lets not sugarcoat it) have been arrested with at least one getting a five year jail term and likely deportation to Bolivia after he serves his five year term. Too bad he just can't serve it in Bolivia but that's not how it works.

Ruben Rojas, a poster child, for why the general public has such a low opinion of real estate agents. We are ranked right up there with insurance and used car salespersons. No offense to those professions but they are perceived they way they are perceived. Please read the article link below from WTOP, Washington, D.C. A local news operation and considered one of the best radio news organizations in the country.

 http://www.wtopnews.com/?nid=25&sid=1952300

From time to time on the internet or from people on the street, I hear "real estate agents make too much money." I think alot of that is the misconception that the percentage charged for listing a property all goes to the agent. In fact, I have seen that on the web from person who really don't understand where all that money goes.

As those in the industry know, the agent may get 25% of the total take depending on the agreement with their broker, etc. They may get substantially less if they have to split it with another agent on their side of the deal (either Buyers or Sellers). However, there are other expenses to consider. First if all, if the agent is a listing agent, they have to buy the signs, signposts,lock boxes, pay for marketing the property, pay to use the MLS system (not cheap), pay for membership in the National Association of Realtors, their state association and their regional association. Then there is gas, wear and tear on one's automobile, insurance for their business, health insurance, and of course taxes. When its all said and done, the average real estate agent in the country makes less than $50,000 a year before taxes. Many make alot more but they work long hours, nights and weekends to attain that level of income. Considering the fact that the real estate agent is considered to be self employed and is responsible for their own expenses, then one could say that many real estate agents might be better off working at a regular old 9 to 5 job with a demanding boss.

There are positives. To some degree, you can choose when you want to work. Most savvy agents work when they can and take the slower season to take time off (usually the dead of Winter). That time of year is probably the best time to head South for a sun-filled vacation.

I mentioned the agent on either the buyers or sellers side might get 25% (more or less) on a deal before the expenses mentioned above if no other agents on their side get a cut. Keep in mind the agent works for a broker and that broker gets their share as does the agent and their broker on the other side of the transaction. The broker is responsible for supervising the agents. There is the cost of a real estate office and the usual business expenses that go with that.

In reality, only a small percentage of agents make the big bucks. My experience is those that work the hardest build their business and offer their clients top notch service are the ones making all the money, and if they worked that hard, then they deserve to be compensated like anyone else.

Lately, I have been getting a "gut" feeling that the days of buying houses for cheap and fliping them at a profit (wholesaling) are coming to a close in this cycle in many markets and certainly my own (DC & No. VA). I suspect there will always be value, especially after every Tom, Dick, and Harry gets out of the wholesaling and flipping business, in buying properties that are in horrible shape in good stable neighborhoods. The value comes in when an investor buys a neglected property and improves the value by good old "sweat equity." This may be the only way soon to make money with buy and hold strategy as well. When interest rates rise it will be the creative investor who makes a profit in residential real estate.

Then there is commercial real estate. Probably at or near the bottom in some instances, commercial real estate is not as competitive as most investors either do not understand it, do not have the higher capital requirements, or just don't want to deal with it. There are certain types of commercial real estate that are considered somewhat recession proof; apartments, self storage, Senior Living, and possibly one or two others, I don't think I would buy an office building, for example, right now unless it was filled with Doctors and near a hospital or filled with title companies, bail bondsmen, and a lawyer or two and near a courthouse. I certainly wouldn't buy a retail property unless I could handle the carrying costs or it was in a high demand area. If you want to know why I would stay away from these properties (for the time being at least) all you have to do is look at the "For Lease" signs dotting the landscape. Eventually they will come back but I think it will be awhile.

Overall, if you have the time and the financial ability to buy and hold residential, or even commercial property (some exceptions as noted), then you could find yourself cashing in over the long term.