Coral Gundlach

Arlington, Virginia is a very affluent area, especially North Arlington. And I must admit, as a whole, we have not felt the impact of the recession or the real estate bust as severely as some other areas. Our home prices have come down a bit, but houses all still sell, we have less than 6 months inventory in any segment of the market, and you just don't hear constant sob stories about people losing their jobs. There are very few short sales and foreclosures as well (in North Arlington). We have the highest percentage of residents with a graduate degree and have the distinguished ranking by CNN Money as one of the "Best Places to be Rich and Single", and our median income is $108,815. Business Week crowned Arlington in 2008, when the financial meltdown had the whole country depressed, as "The Safest City to Weather a Recession."

That said, values are still tight or behind for many sellers who bought in the last 3-5 years. They've either lost value or not gained enough to break even after paying real estate commission. I recently met with two prospective sellers in this situation. Neither were suffering financially, or the short sale type of people. Stellar credit score, highly educated, upwardly mobile, sucessful people who simply have had major life changes that necessitate a move (in this case both had to do with getting married, and wanting to start a new home with the new spouse).

In both cases, it would be either "rip the bandaid off quickly" and possibly bring a bit of money to the table or say bye bye to that down payment you put in, or stick it out and rent for awhile and cover most of the mortgage with the rental payment (within $200).

That decision has to be the seller's alone. I can't make it for them. Personally, I think that renting for a few years and having someone else pay down your mortgage, or at least most of it, is better than bringing money to the settlement table or losing a ton of equity when you sell. But that all depends on how much money you are willing to part with in order to move on. Money can buy you peace of mind, and if parting with $10,000 or so is worth not having the headache of being a landlord, sell low.

I convinced a client last year to rent rather than take a loss (mind you not bringing money to the table just parting with at least half of that money he'd invested as a down payment, around $70,000). He really did not want to do it, but I convinced him to and he gave me a small amount of grief for it. I found him wonderful tenants, and the rent nearly covers his mortgage. I felt it was the best financial decision for him, but he's the one who has to call the plumber when the phone rings. As an agent, my goal is to give my clients the best advice, keeping an eye on their bottom line. However, sometimes a loss is worth it to an individual. My job is to give you all the data you need, from then, the decision has to be yours.

If you are thinking about selling or renting out your house in Arlington, give me a call for a consultation. I will give you the numbers, discuss pros and cons give you what you need to make the best decision regarding selling or renting.

Coral Gundlach, CRS. McEnearney Associates. Mobile: 703-200-3631. www.coralgundlach.com

I have heard a lot of bad Realtor stories lately and want home buyers and home sellers out there to know - you don't have to stay with your Realtor if they are not doing a good job for YOU. Your Realtor might be the biggest name in town, have their face on every ad and every sign in your neighborhood, but if they don't listen to what YOU want and what YOU need, you should let them know it's not working and ask to be released. And if they say no, contact their broker and ask to be reassigned, voicing your grievances. And if they are the broker, demand to be released from the agreement. It is that simple and most will let you out. There are other agents out there, not all are the same and you can choose whom you want to work with.

What brought on this blog topic you might wonder? 3 stories in particular, but truly this topic comes up all the time in this profession - why do people hire these agents?

Story one: "The Name"

A few weeks ago I was talking with a colleague who used to work for one of the gigantic agents in this area. She told me that once the listing agreement was signed, the client never spoke to "the name" again. Not once. She has no repeat business and 100% of her clients come from marketing. How can that be? Are they intimidated into staying with this agent? Do they assume because they see her name everywhere that she has to be good, even if they don't think so? Apparently so, because year after year "the name" does zillions of dollars worth of business.

Story two: "Why?"

When meeting with a prospective seller yesterday, after I showed examples of my marketing and photography, and explained how I have a professional grade wide angel digital SLR camera, my own stock of staging supplies and an extremely thorough marketing approach, she asked me: Why do people hire agents who don't do all this stuff? I was a bit stumped. And the only answer I could come up with was - they don't know any better. They don't know that some Realtors do a better job than others.

Story three: "I am miserable"

A Realtor colleague of mine told me about how a prospective client got involved with another Realtor due to heavy pressure from a family member. This agent was not listening to her, was blowing her off, canceling appointments and showing her houses in areas she did not prefer. She vented to my friend and my friend, a true professional, held her hand and told her it shouldn't be that way, without slamming the other agent, she just explained that home buying should be fun and you should get to look at houses and areas that you are excited about, not that the agent is.

People out there in the home buying and selling world, I want you to know that some Realtors do relish hard work, some do want to do a good job for you, some do listen. And sometimes an agent is good and the client just can't see it. Call it bad chemistry or a bad fit. Either way, if you are not happy with your relationship with your Realtor, please end it and move on. It will be better for everyone if you do.

Northern Virginia is experiencing an inventory shortage like nothing we've seen in years, at least in the past 6 years since I've been selling houses here. The fully available inventory in all of Northern Virginia is 40.1% less than it was a year ago (end of February 10 to end of February 09). For Arlington county alone: Sixty two detached homes sold from January 1 to February 28, 2005 in the $500,000-$750,000 range. Compare that to 2010 - only 39 homes sold in that same time period. You may think these numbers make our market sluggish, but quite the contrary, buyers are out in droves drowning open houses and houses in this range are getting multiple contracts and the contracts are getting cleaner with fewer contingencies.

I wrote a previous blog in January on why this market is so much better than 2004/2005, because buyers are not stripping contingencies as often as they were then, and lenders are no longer giving money to anyone with a pulse. Only qualified buyers are buying and they truly have to get approved with documentation to get a loan approval. Well, it does appear the contingency waiving is happening again, just thankfully not as often as before. But lenders are being sensible and still making sure they truly qualify buyers before handing over the money.

Most people here think that this won't last, and that once the Fed stops buying the mortgage backed securities the rates will jump and then the tax credits will expire and buyers will back up and go home.

Every day, I search the MLS hoping some more houses will be listed, and a few are, but not enough to meet the buyer needs out there. There are a lot of well qualified buyers who have been saving up, waiting for this day to buy when 30 year fixed interest rates are this low, who can't find anything to buy.

I just looked up the "just listed" numbers for March 1-12, 2005 vs. same period 2010. 2005 had 36 houses listed during this first week or so in March, 2010 only had 23. That's a 37% decline in listings.

I am beginning to think this "seller's market" will last past the tax credit. It is not the magnitude of buyers out there looking for their 8,000 bucks that is causing this. It's would be sellers not listing their houses.

Arlington has always been a tight "move up" market. We have plenty of small houses priced in the $600-$700K range, but when those people have 2 or 3 kids and want a bigger house, there are few $800-1,000,000 houses from which to choose. Always has been that way. These people usually add onto their house. That's what we did and why there are many thriving design build businesses around here.

Does this current lack of inventory mean even fewer "move ups" are selling than usual? Is it because these sellers who bought in 2004 and 2005 are flat on value and after closing costs might lose a bit to move? I think that's part of it. I also think money is tight, stocks and 401Ks are not overflowing with value, and people are deciding moving up is not necessary right now, especially when it means they've "lost" money, meaning not getting back all they put down when they purchased.

This is good news for property values, bad news for buyers who aren't willing to take a few risks with contingencies and those with FHA financing.

Check out the latest Northern Virginia numbers in McEnearney's latest Stat Pak.

Search for homes in Arlington, Alexandria, Falls Church and McLean on my website.

The recent Realtor's confidence survey was released by NAR. It struck me as terribly negative, and in my market, Northern Virginia, I don't see it as all that bad. Perhaps it is about perspective. It made me think back to the market in which I began my real estate career - the boom of 2004. I bet most Realtors would think we were better off then, yet I strongly disagree. Selling houses was "easier" then, if you had a listing, it would sell. Now, listings still sell, but the seller has to take a big dose of reality regarding pricing and staging, and Realtor's negotiation skills are more important than ever. Buyers then had to often write multiple offers and see dozens of houses before actually buying a house. Same thing is happening now, only now the prices are lower and not skyrocketing, and if they do, an appraiser comes in and stops it all from happening (but that's really for another blog).

The big difference between then and now, and why I think we should see this as a positive market is this: Back then, and for many years around then, there was a rat race to get the biggest loan the fastest, so you could get the house before 10 other people did, and offer 10% more than anyone else, and the lenders encouraged people to buy more and more, for example "get an interest only ARM and you can afford a $750,000 house instead of only a $600,000 house." I also recall asking a loan officer why the no doc loans existed, saying "Well what if a borrower gets a loan for an amount that exceeds their monthly income?" His answer: "Oh we are confident they won't ruin their good credit like that." There was a sense of entitlement among our entire industry, as well as among buyers and sellers.

It was awful to write 10 offers for buyers, to see their disappointment time and time again, and then by the time they actually got a house, it's not their favorite and they are burned out, finally waive the inspection contingency and put in the escalation clause, and have a mixed feelings about it all. Happy to be homeowners, but just feeling taken advantage of by everyone involved. As a new Realtor, I felt uncomfortable representing buyers and explaining to them if they wanted a house, they'd have to compete for it. That's scary as a first time buyer, as my very first clients were. Fortunately, I never had any buyers pay more than they could afford, and I was never a big advocate of pushing the limits of affordability (even though the environment was at the time) either personally or professionally.

Now in 2010, well qualified buyers with cash, great credit and good jobs, have to go through the ringer to get a loan. Day before settlement, lender asks a bunch of new questions they should have asked at application, but just didn't because the left hand didn't talk to the right. And then transactions are being delayed because of this nonsense, and everyone is freaking out, lives are in the balance, moving trucks are on hold. But wait a minute, isn't this what should be happening? I will admit, I am as frustrated as the next person about all of this and wish lenders were a bit more organized, but it's better than not asking the questions and having yet another short sale or foreclosure or failed loan modification to swim through.

We really are better off now. Realtors have to know what they are doing. Basics of pricing, negotiation, marketing and staging are imperative to selling - but that's healthy. Good Realtors are still working, bad ones are dropping out. Yes, the process is a 100 times harder but at least we are transparent. Everyone knows exactly what they are getting into. As on recent AR blogger put it "You couldn't get a bad loan if you wanted to." Especially now with the now Good Faith Estimate that must match the HUD. Banks are figuring out how to sell homes (finally) and many more short sales are actually closing. No one is trying to convince anyone to buy more house than they can afford, which is the best part of this market to me.

Here in Northern Virginia, I think Realtors are optimistic about 2010. There's low inventory, but buyers get it and are being patient. Most sellers realize it is not 2005 or 2006 and their house has lost value. REOs have fresh carpet and paint and are in good shape, Short Sales are selling much more than before. Well staged homes that are priced and marketed right are selling, and buyers who have their act together are getting loans - what more could we really ask for?

Link to the NAR survey:

http://www.realtor.org/research/economists_outlook/commentaries/rci0110