Cathy Baumbusch

Saturday's Washington Post published an interesting article about Fannie and Freddie's Home Valuation Code of Conduct.

Apparently the House Financial Services committee approved an amendment on October 22 that would eliminate the code with the creation of a new Consumer Financial Protection Agency.

The code, as it exists today, was a compromise between NY Attorney General Andrew Cuomo and Fannie and Freddie and their regulatory agency the Federal Housing Finance Agency. Cuomo was investigaing the two pseudo-governmental agencies appraisal practices. Lenders putting pressure on appraisers to quote the right numbers and inflating home values to make deals happen was being reported as the norm. Fannie and Freddie agreed to adopt the code if Cuomo backed off.

The code however, while creating appraiser independence, created a whole set of other problems. First, it created "clearing houses" or "appraisal management companies" who paid the appraisers much less for the same work while pocketing the difference. The appraisers who work for these companies often accept work far from their area of expertise. Personal experience: I once had an appraiser who drove from her home in Pennsylvania to do an appraisal on a home on one of my listings in Springfield, VA. She used inappropriate comps and as a result, the value came in lower than the agreed upon price, and we had to go back to the bank to renegotiate the price. As a result, the bank removed all of the closing costs it was going to give to the buyer originally. It could have killed the deal. Luckily it did not.

The code also has caused buyers to pay for the appraisal up front, and sometimes pay for multiple appraisals, if the first one is simply too low

The new bill that creates the Consumer Financial Protection Agency has an uncertain future, especially in the Senate, where big banks and mortgage companies are lobbying against it. There is an independent bill, however, cosponsered by 118 congressmen that will slap an 18-month moratorium on the current code.

Lets hope for the sake of consumers and agents that reason prevails.

One of the great things about being a REALTOR is the continuing education. Today we had our annual convention. There were great courses on SEO, social networking, business planning, and marketing.

The firm also raised over $16,000 for the Children's Miracle Network.

I'm looking forward to working on my business plan for 2010 and a great year in real estate next year.

So, you've looked around at a few new developments and you really want to buy, but you've fallen in love with the model. What, with all the decorator touches, the furniture, and all the upgrades, how can you lose?

Well, here are some possible pitfalls to consider when buying the builder's model:

1. From a Lending standpoint oftentimes it is hard to get the value if the price includes the furniture and/or built-ins etc.
2. The builders warranties may not convey to a future buyer.
3. They are sometimes built a little faster than the rest, and perhaps a bit more carelessly than others. For example, the non-models have a chance for pre-drywall inspections etc. But because the builder is hurrying to open a model to help sell the rest, they might skip this step. The lots are often not the best so be sure they are comfortable with that. Negotiate hard on the price, Model homes may be considerably harder to resell because of all the "decorator" touches and upgrades. If there are too many, you may end up paying too much for them, affecting your future bottom line.
4. Prior to settlement, the house should look like essentially a new home, just like all the other houses delivered by the builder. If the carpet is worn, it should be replaced, paint fixed, etc. Of course, if the buyer makes a killing on this purchase, the terms could be different than if they bought a newly built home, such as lender incentives, etc. At a minimum, you need to know about the warranties on appliances, etc. and at least get seller to pay for home warranty.
5. If you buy the home before the development is finished and the builder "rents it back" to you, the builder will pay you rent equal to the PITI. But the IRS may consider the rent as income and you may have to pay taxes on it. If you are buying the model after the builder is through with it, then this would not be an issue.
6. If you buy the model and the builder rents back to you, some of the "normal" time-sensitive new home construction warranties may not apply because of the age of the house. Lets say you bought a model home that's 2 years old at settlement and the builder rents it back for a year, therefore, its 2 years old at the time of settlement and 3 years old when you move in. Lets say 6 months after you move in, some large windows lose thieir seal. They may have been improperly installed, but the builder will not honor the normal procedure of replacing it because of the age of the house. So, between the as-is clause typically employed in a model home purchase and the time limits on new home construction warranties, you may end up paying for some repairs on your own.
7. But all in all, you may get a great purchase and really enjoy all the bonuses and upgrades that came with the house because it was the model.

Many thanks to Stephanie Reimann, Dan Stone, Claybrooke Dean, Zinta Rodgers-Rickert, Gayle Yates, Wendy Cervantes, Patsy Humphrey for contributing to this article.

Wow! Its been really crazy out here lately!

I've been running around all over the place- seems like I'm filling the gas tank every other day these days.

I've been getting tons of BPO orders- both residential and commercial. And lots of them in DC.

My newest short sale listing went under contract in 3 days and now all I have to do is finalize my seller's hardship letter and make sure the bank has received the packet. Then its just a waiting game.

In the meantime, I've got to finish these BPOs.

I'm looking forward to Happy Hour tomorrow!

Getting Ready. Brian Block, Nancy Alert, Linda Tyres, Cathy Baumbusch. 3AM 8/28/09

Nancy and Linda chuck some debris

Cathy and Brian haul some trash

Icky dirty trash! (I'm wearing a SKORT!)

Nancy and Brian serving breakfast to the laborers

Ryan Sanford, Nancy Alert, Cathy Baumbusch, Brian Block 9AM 8/28/09

Shift Change. Front, Cathy, Nancy, Linda and Brian. Day shift is behind. Includes Charlie Bengal, Robin Burdette and others.

Before

During

After

Thanks to Linda Tyres and Brian Block for most of these photos!