Melissa Loughridge Savenko

The December 21, 2008 Sunday Real Estate Section front page had an article about a "mini condo" development in Jackson Ward. The developer is a gentleman named Ron Stallings of Walker Row Partnership. Just for the record, I have never met Mr. Stallings. However, I did see him speak at the Venture Richmond Forum on Downtown Development, about which I have previously blogged.

I have to say, of the residential developments that were described at that Forum, I was most impressed with Mr. Stallings and his descriptions of his condominium projects. Not only did he describe what he was developing, he explained WHY. He had a specific target market for each of his projects. For example, the "mini condos" are for young, urban dwellers with steady but moderate income. They sell for $87,550, or $530/month. [NOTE: I don't know if that $530/month includes the $100 per month condominium fee]. He made the units small and affordable, but still hip and cool, by using IKEA cabinetry in a shiny white or red lacquer, full size stainless steel appliances, and movable wardrobes and wall configurations. He also emphasized the environmentally friendly elements of this development, since this buyer demographic - young, 20-something, urban dweller - tends to be environmentally and socially conscious.

On the other hand, he described another of his condominium projects designed for downsizing Baby Boomers, who want the traditional "hallway style" of living. According to Mr. Stallings, the Mrs. wants to go down the hall and get in bed and read while the Mr. stays up watching the game. These buyers are NOT interested in the urban loft-style condominiums where the private sleeping space is open to the living areas (see The Summit Lofts, The Mews at Carytown, the Reserve, etc.). For these units, the square footage is larger, the cabinetry and finishes are more traditional, and the price point is higher (up to $269,000).

What I really liked about Mr. Stallings presentations: He was THOUGHTFUL, and his designs and floor plans were specifically tailored for a particular project's buyer demographic. Too many other developers seem to churn out the exact same product over and over and over again, ad nauseum. ANYONE can do dark cabinets, brushed nickel fixtures, stainless steel appliances. In fact everyone seems to use the same exact granite, the same exact cabinets, the same exact tan floor tile. B-O-R-I-N-G. I think developers stick with a formula because it has sold in the past, so the assumption is it will sell in the future. If that works, great. But then you are competing against ten other developments with the exact same product. So you better have something those other projects don't, like a better location, lower price point, better amenities.

Kudos to Mr. Stallings for thinking about market needs that aren't being met, and trying to figure out if he can make a specific product to address that under-served segment of the market. Other developers seem to shy away from these niche developments. It's like they'll only do exactly what everyone else is doing, maybe that makes them and their lenders feel safer.

As a result, we end up with these cycles of project types and the developers who are late to the game end up with not enough demand for their type of supply. That seemed to be the case with the downtown high-rise new construction condominium projects. Riverside on the James did great for the first round of buyers, and people even flipped reservations for big money. But by the time Vistas on the James was completed, the market was saturated. Even now, lots of those units in both buildings are rentals, not owner-occupied.

Now it seems everyone and their brother has jumped on the band wagon of uber-urban open plan loft condominiums in Church Hill, the Bottom, Downtown, the Fan. These puppies have exposed ductwork, contemporary fixtures and finishes, and lots of open spaces. For example, bedrooms often aren't framed completely in, but have partial walls, or are in open lofts overlooking the living spaces. Personally, I don't think there are enough buyers who WANT that ultra-industrial, open space style of living in little ole traditional Richmond to absorb all the units currently in inventory or in development. I sure as heck don't want people downstairs playing "Rock Band" while I'm trying to sleep in my open loft. But maybe that's just me, and maybe I'm wrong about the amount of demand for this style of living. It sure as heck wouldn't be the first time. [;)]

Good projects will meet their markets. By that I mean they will have a specific target buyer demographic, be designed to appeal to that demographic, and will have the other required basics: decent location, good execution on the construction side, and appropriate pricing. But too often it seems the projects aren't designed with a clear picture of the likely buyer demographic's needs or wants. For example, I don't think you can develop a "luxury" condominium project ($375,000+) in the Fan without off-street parking. If you develop a high-price point project in an urban neighborhood without that amenity, you have just created a HUGE obstacle for yourself in selling those units.

But I digress. To return to my original point: I was and am impressed by Mr. Stallings for "thinking outside of the box." We'd have better projects, better urban infill, a better City, if more developers did the same thing. If you were a developer, wouldn't you rather be on the cutting edge, than one of the lemmings late to the game? Kudos to you, Mr. Stallings, and good luck with all your projects.

I'm constantly amazed at how opaque the real estate industry is to the average consumer. I don't at all mean that as a knock on the consumer, or any indication that consumers aren't smart. And trust me, I think we as real estate professionals are responsible for the general public's lack of understanding of what we do. WE agents are responsible for the stereotypical image of us - mere pushy "salespeople" (said as a dirty word), not experts and partners in a very complicated and complex financial transaction. Realtors, and other parties to a sale of home, don't do a good job explaining exactly what it is we do, and why we are value-added to a transaction, especially in difficult financial times, such as these.

So, I think I'm going to try to do my part in my own tiny little part of the cyber-universe, and try to edu-mu-cate folks, by deconstructing some of the confusing terminology that seems to trip people up. I'm going to start at the beginning of the alphabet, with the confusing "Three As," the appraisal, the assessment, and the abatement.

Appraisal: An appraisal is an evaluation of a home's market value. It is prepared by an appraiser, who in Virginia is required to be licensed, and must follow specific standards in determining market value. An appraisal is usually ordered by the lender, to make sure the property that the lender is financing with a home mortgage is actually worth as much as the buyer is proposing to pay. The appraiser collects comparables, which are similar homes (by location, square footage, number of bedrooms and baths, etc.) sold within the recent past, typically within the previous six months. Adjustments are made for quality and condition, but are typically based on objective, quantifiable standards, such as more or less square footage, garage or no garage, basement or no basement, etc. Appraisals are always RETROSPECTIVE, looking backward at what the market conditions were in the past for similar sales. As a buyer, you want your appraisal to be HIGH. That means per the appraiser, the property you are purchasing is worth more than you are paying.

Assessments: I've blogged in the past about assessments, and how to challenge one. An assessment is the local taxing authority's valuation of your property for real estate tax purposes. In other words, you pay real estate taxes to the City or County based on the assessed value of your home. For example, in the City of Richmond, the tax rate is $1.23 in real estate taxes for each $100 of your home's assessed value. So, if your home is assessed at $100,000, you will owe $1,230 in real estate taxes for that tax year.

Assessments are generally fixed at the market price of a sale, and then adjusted over time by some statistical methodology. For example, when you purchase your home, the assessed value of the home may increase in that next tax year, Year 1, to the purchase price you paid. This is because assessors assume the purchase price of a property reflects the " fair market value" ("FMV") of that property, what a willing buyer would pay a willing seller in an arm's length transaction. After that time, in tax Years 2, 3, etc., the assessed value of your home stays the same or increases, typically based on some statistical amount, using recent sales trends in the immediate area of your property. The taxing authority will have an Office of Assessor, and that office is responsible for creating and administering the methodology to qssess that locality's property values. There is an appeals process if you believe your home has been incorrectly assessed, and the increase in assessed value is too high. As an owner, you want the tax assessed value of your home to be LOW, to minimize your real estate tax bill.

Abatements: Abatements are programs that your locality may or may not have, which "abate" or limit the real estate taxes you pay on your property in return for certain behavior the local government is trying to encourage. For example, the City of Richmond has a tax abatement program that suspends real estate tax liability on the increase in value an owner adds to a property, so long as the property value is increased at least 20% over the "base value assessment." In order to encourage individuals to invest in properties and ultimately add to the City tax base, the City will "abate" the real estate taxes for that added value for 7 years, and then will add back that abated amount 1/3, 1/3, 1/3 in Years 8-10.

I know that may sound like Greek, so let's use an example to try to clear up any confusion. Let's say I buy an existing property in Church Hill that has not been well cared for and could benefit from renovation. I file a piece of paper with the Office of the Assessor, and that office sends an assessor out to evaluate the property. That assessor fixes the value of the property in it's current condition at $100,000. Let's say I renovate the home and add a new roof, update the kitchen and bathrooms, refinish the original hardwood floors, add landscaping and paint the exterior. When my renovation is complete, I file another form with the Office of the Assessor, which once again sends an assessor to the property to decide what the post-renovation value of the home is. Let's say that now the house is worth $200,000, per the assessor. Well, for Years 1-7 following the process, you do not pay real estate taxes on that $100,000 of added value, which saves you the home owner $1,230 per year. In Year 8, 1/3 of the $100,000 in abated value, or $33,333, is added to the current taxable value of the property. In Year 9, another $33,333 is added, and in Year 10, the final $33,334 is added back to the taxable value, and the abatement ends.

So you see that an abatement program can save a property owner significant money over time. Another major positive of the program: The abatement runs with the PROPERTY, not the individual(s) who did the renovation. So, if you have a home with an abatement, and you decide to sell it in Year 5, the remaining 5 years of tax savings will transfer to the new owner. When marketing your property, that should give you as a seller an advantage over other similarly priced homes, all other things being equal.

Whew! I hope the above was at least somewhat helpful, and not cryptic and boring. If you have any questions, send them my way. I am also always open to suggestions on potential topics that you, the reader, might find interesting and/or helpful. Of course, I remain shocked that anyone actually READS anything I have to say. Oh, not you, Mom. [;)]

I've blogged before on the pluses and minuses of new technology. On the positive side, it's GREAT when it's working. It allows me to be efficient, to work remotely, to better juggle the craziness that is my single mom/working mom/person-trying-to-have-a-life life. On the down side, when it's not working, it makes me positively froth at the mouth from frustration.

Last month my laptop was on the fritz. $400+ later, that issue is solved. NOW my home wireless network is acting tempermental, to put it mildly. So it makes it impossible to work from home at night, except by texting and e-mailing on my Blackberry using two thumbs at a time. I might as well be chiseling messages into stone tablets. Arrgghh....

On the plus side of my own personal technology experience, RE/MAX Commonwealth just became the only local brokerage to use this super-cool new service called Voicepad. Basically, it allows any buyer looking for property to call a local number (804-377-0777), punch in the street number of a listed property, and get a voice recording of property information, INCLUDING PRICE, instantly over the phone. What's the trade off? Your call on a property is captured, and you might get a phone call from an agent asking if you need additional information. But I think the upside value for buyers - being able to drive around on weekends and "browse" properties without the need of an agent - makes that a small price to pay. I've used the service myself, when I'm out and about and I see a new listing that I haven't seen before, and I want to know some basics without finding a computer or dealing with the listing agent. Another bonus: You ALWAYS get an answer. No leaving messages for listing agents and waiting for them to call you back.

So if you're looking for a house in the Greater Metro area, give 377-0777 a call and try it out, tell me what you think. I think Voicepad is pretty cool myself, but I would be interested in the consumer's perspective.

Back on December 5, 2008 I posted an entry about a Venture Richmond Forum highlighting downtown development projects recently completed, under construction, or proposed. The gist - I was impressed by the breadth and depth of stuff going on in Richmond, as well as the program put on by Venture Richmond. The post went out into the Internet ether with nary a ripple, but for one snarky comment accusing me of "drinking the Kool-Aid." Well, maybe I did, but I L-O-V-E my hometown, and when it comes to progress in the River City, I'd rather be an optimist and root for the glass to be half full.

Yesterday's Richmond Times-Dispatch did a cover article that followed Mayor Wilder around as he basically covered the exact same ground as the Venture Richmond Forum. Maybe 7:30 a.m. was too early for him, too. If you missed the Forum, here's the article. Worth clicking on if only for the picture of Doug in a hard hat. Priceless.

This was posted on my personal blog back in mid-November. Thankfully, the computer problems have been resolved, not without turning over the laptop for several weeks and outlaying mucho dinero. But it did make me think twice about how totally dependent I am on my technology tools. When they work, boy, do they make my life lots easier. When they DON'T work, man, is it stressful. Makes me wish for simpler times...

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How did this happen? I have a virus on my laptop - it's my own d*mn fault for letting my virus software license lapse - and until I get it fixed, I can't work from home at night or early in the morning. It's TOTALLY stressing me out.

I'm trying to be a bit Zen about it, and enjoy my evenings at home, but I have to admit it's really, really hard not to give myself hives. I mean, right now it is 5:47 P.M. on Monday night, I have to leave the office like, 5 minutes ago, because I promised my babysitter I'd be home by 6:00 P.M. I still have to make dinner for myself and my baby girl, and I have 4,000 things I need to do, 3,997 of which require a computer. Arrgghh....

I'm hyperventilating at the thought of all the e-mails I need to read and respond to, the blog posts and responses I want to write, the market research that I need to do, the listings to update, the brochures to draft....

Ommm...ommm...ommmm...There is something wrong with this world, that has gotten so fast-paced and so high-pressured, that I am feeling GUILTY about the fact that I will be away from my computer and (God forbid!) not working from 6:00 P.M. until 9:00 A.M. tomorrow. That's only 15 hours, and for a good 8-9 of it I'll be unconscious.

Sigh. Did life used to be like this? Is it just like this because I am more than a little ADD and a single mom with a commission-based job? When did I become a slave to the laptop?

To heck with it. I'm going to go home, drink some red wine, make chicken and stuffing and green beans with gravy, snuggle my daughter, read the paper or a book after she goes to bed, and try, TRY, NOT to feel guilty about not working. We'll see how that goes...[;)]