Vicky Chrisner

Do you know the movie Polar Express? Remember how the kids who believed in Santa could hear the jingle bells and the grown ups, who no longer believed, couldn't hear the jingle bells any more?

It's sad, but when your kids reach that age, it can seem like a little magic disappears from your holidays. I wonder how other families adapt to this changing dynamic... but in our household, we managed to keep some surprises even after the jingle bells stopped ringing.

A tradition in our household is practical jokes. Every year, we pull some prank on our boys. This year, as we were sharing stories with friends, it was interesting to me that my boys (now 19 and 21) can tell you what joke happened what year - even if they can't remember anything else. Here were a few favorites:

- It started small...the first year, I picked up gag gifts of candy that tasted like fish and put them in their stockings. Watching them - then about 7 and 9 - sneak the candy before breakfast and then spit it out... well, it was such fun for my husband and I, that it simply caught on.

- In 1999, we bought our first home computer for Christmas. But, before letting the boys unwrap the computer, we let them unwrap everything else, including a few computer games. When they opened them, we played dumb and told them we thought they were PlayStation games and promised to exchange them. After breakfast, we "found" the one last present - the computer - and let the boys open it. They were thrilled.

- One year, my husband found an old stereo in terrible shape with paint splatters on it everywhere, and only half working. We wrapped it up, and gave it to one of our sons who was asking for a stereo for Christmas... we told him it was all we could afford. Of course, later, while he was taking a shower, we tip-toed into his room and set up his new stereo - the real one!

- Each Christmas Eve, the kids get a new pair of PJs. But, one year, we pre-treated them with itching powder. That was hysterical!

- A couple years ago, I bought each of the boys a pack of sodas called "Thanksgiving Dinner". One of the boys just thought it was gross and threw it in the trash... the other one actually drank every drop. He didn't like it, but said the curiousity was killing him. Have YOU ever had turkey flavored soda?

- This year, the 19 year old asked for a new cell phone, but I simply wasn't able to get his phone before Christmas morning. So, I printed a picture of one that I picked out for him, and wrote an IOU on the back of it. Then, I wrapped the IOU in a box from an old (really basic, boring) phone my husband had. It was quite fun to see him open it, looking at the box and thinking I got him a lame out dated phone for Christmas....and, then opening it to see there was no phone inside! It got even better because all day he kept pretending to use it, showing it off at Christmas dinner with my sister and her in laws (who don't know us very well). His real one should be arriving in another day or so.

-Perhaps my favorite was the accident. It wasn't a joke at all... but it was hysterical. Along with the PJs, each kid gets a Christmas Ornament to hang on the tree on Christmas Eve just before we go to bed. One year, Joe, then about 16, opened an empty box. I guess I bought the box empty - it was a Hallmark box and I didn't check before leaving the store. However, so used to practical jokes, Joe was sure I was pulling another fast one on him. He kept waiting for the punch line. About 11:45 he came into my room and asked where it was... he said he just couldn't sleep until he'd put the last ornament on the tree, and he knew there was still one for him somewhere. Up until then, the kids would tease me every year about my silly Christmas Eve gifts - the PJs and ornament... but finally, there was a little appreciation for the tradition! Luckily, I remembered we'd gotten a free ornament from CVS that year with a purchase, and it was still in my car. I threw on a coat and went and got it for him. THAT was when he realized I was serious... but he was still grateful for having an ornament for the tree.

I am curious... what unique family traditions do you have at your house? Please, share...

This post is intended to assist you with familiarizing yourself as a buyer with the types of sales we are seeing in the marketplace today. Read separate posts on Short Sales * REOs * Auctions for more detail.

Traditional Sales

If the prices are right, these are the best transactions! The contract is more "normal" in nature, allowing reasonable negotiations between the parties. Each party genuinely hopes for the sale to be completed and therefore works together to meet deadlines and ensure everything is resolved to the mutual satisfaction of all parties. These contracts are generally more predictable.

Considerations

• Generally, private homeowners can not compete with the aggressive pricing strategies of a bank.
• Properties are often in better condition, requiring less fix up. Owners may also complete some repairs.
• Private owners generally do not consider a cash offer more valuable than common financing terms.

Short Sales

In these sales, the Seller must negotiate with their lender(s) for approval. They may be asking for full or partial debt forgiveness or a note payable for any deficit. Banks agreement to these sales are dependent on the ability of the family to repay the debt, and the circumstances that have changed since the loan was originally approved. This process can take several months, and sometimes does not result in a closing.

Considerations:

• How many lenders are involved?
• What is the hardship/ability of the owners to repay?
• Will they be asking for debt forgiveness or a note payable?
• Who is negotiating with the bank and what is their experience level?
• Which bank is it; what is their process and has it been started?

Contract considerations:

• Longer contract periods with floating deadlines, all based on the approval timeline of the bank.
• Banks generally will not agree to a below market sale - this is determined based on an independent appraisal they conduct.
• While owners may consider doing some repairs, generally contracts are "AS IS".
• Inspections are usually OK, but buyer can not ask for any repairs; their only choice is to terminate the contract.
• Cash offers are considered favorably, but not to the extent they are with bank owned properties.

Bank Owned (Post Foreclosure) Properties:

These tend to be some of the best deals available in today's market.

Contract considerations:

• Banks are pricing aggressively, and when they do, often there are multiple competing offers for properties. You may consider submitting an escalation addendum in these cases, although some banks will not consider escalation addendums during negotiations and simply come back and ask for "best and final", or accept an alternative offer.
• Cash is king! Banks realize the struggles and risks involved in some buyers obtaining financing. In addition, they are aware of property condition guidelines from FHA or other types of loans, which might REQUIRE repairs prior to closing... and they want to avoid this.
• By targeting homes which might not qualify for government financing, and making cash offers, you may be able to buy at a more reduced rate.
• Often properties are in "fixer upper" condition, and properties are sold strictly AS IS.
• Inspections are usually OK, but buyer's only recourse is contract termination.
• Banks require that you agree to the terms in their addenda, with NO CHANGES.
• Some banks require certified funds as deposit and/or specify who will hold the deposit.

Banks are like the military - it's "hurry up and wait". The timeline looks something like this:

Offer Submission

3-10 days later, Offer "Acceptance" (verbal or email)

1-2 days later, Counter Offer sent w/bank addendum

Within 1 day - resubmit offer w/ acceptance of bank terms

3-10 days later, Ratified Contract

Closing is as specified in the counter offer, which is generally a fixed date. Challenges here become getting utilities turned on to complete the home inspection; completing title searches; & obtaining HOA docs within the time frame permitted by the contract.

Banks will close AFTER you, and you will not get possession until they've signed off on everything. This can cause delays, I have seen more than 1 take over 2 weeks. I suggest attempting to negotiate a penalty to the banks should this occur.

Auctions:

Public Auctions/Courthouse Steps: These are the foreclosure auctions. The vast majority of these are purchased by the bank who owns the mortgage/lien, which is generally more than the current market value. There are some opportunities here, but they are more limited than many expect. There are also more challenges in these transactions.

Private Auctions/Ballrooms or at property: These are often done by banks (or other parties) and most commonly are done with a RESERVE. Again, there are sporadic opportunities here. Terms are very similar to those by any Bank Owned Homes

The Virginia Association of REALTORS released it's third quarter sales report. Most consumers will be shocked to hear that, overall, sales prices are UP 1% compared to last year, and sales activity (closed sales) is down only 9.2% for the state. But, as the National Association of REALTORS is constantly trying to explain, real estate is regional. And, in reviewing this report, it is clear. Some areas have found the "bottom" of the market and have stabilized, and even started recovering. I expect other areas are still in need of deflation in pricing before they will stabilize. Clearly, price is king in today's economy. Look at these tidbits: For the third quarter of 2008, when compared to the same quarter in 2007....

• Prince William County's median price is down 42%, but sales activity is up 145%.
• Lexington/Buena Vista's median price is down 38%, sales activity is up 70%.
• Greater Piemont's median price is down 28%, sales activity is up by 19%.
• The Dulles Area's median price is down 23%, and sales activity is up by 27%.
• Northern Virginia's median price is down 19% and sales activity is up by 15%.

On the other end of the spectrum:

• Chesapeake Bay & Rivers median price is UP 19%, but sales activity is down 52%.
• Roanoke Valley's median price is down only 4%, but sales activity is still down 26%.

Prince William County leads the state with most improvement in sales activity, reflected as closed sales for the quarter (3128 transactions), and pending sales (3894). Northern Virginia (defined as Fairfax & Arlington Counties), and the Dulles Area (Loudoun County) closely follow. These stats show us that once the submarket finds its correct pricing, buyers are out in force again.

The lesson to sellers here is - if you are in an area with declining sales activity, then your prices will be declining, soon. Price AHEAD of the curve, below the last sale... you must attract a buyer, and quick, before you lose even more value. Sellers in these markets thinking that instead they will "wait out the market" need to be prepared for a long wait -several years.

The lessons to buyers is - if sales activity is up, the prices will soon follow. Buy now. Get off the fence. Buy quick. It seems you may have missed the bottom of the market, and if you wait to try to buy at the "bottom" of the market again, you may be waiting many years... and you could miss it again. With interest rates favorable, the combination of affordable home prices and availablity of good loans means that this is an incredible time to be a buyer.

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To read the entire report - click HERE.

For information about sales activity in your neighborhood, sign up for a free (automated) market snapshot here. If you put in your email address and physical address, this report with detailed sales activity will be emailed to you monthly (you can unsubscribe at any time). I am also available to complete a complimentary Comparative Market Analysis for you if you are considering selling in the next 3 to 6 months.

To search for available homes and land in the Northern Virginia area, click HERE, this search links directly to a live feed from the local MLS.

There is a difference between "appraisals" and "assessments" although the words are commonly used interchangeably. A educated consumer knows the differences:

Assessments

• Completed using an automated valuation program.
• Generally done once per year.
• Used to determine real estate taxes.
• Should be within a margin of error of +/- 10%.

Appraisals

• Done by licensed appraiser who looks at the home, and comps.
• Values property "real time" (as of the date of the report).
• Used to support sales prices or loan amounts.
• Should be as close to Fair Market Value as possible.

Fair Market Value is what a willing buyer will pay for a property of a willing seller in an arms length transaction. Fair Market Value is determined SOLELY by the buyer and seller, and will be reflective of the market conditions. If a seller is stuck on obtaining an unrealistic price for their property, it will not sell. If a buyer is stuck on purchasing below reasonable values for the market conditions, then he will not buy. When these two parties meet in the middle they will find Fair Market Value, and each will accomplish his goals.

Appraisals are often part of the sales process, but usually after a price has been agreed to between buyer and seller... appraisals attempt to support the price of the purchase so that financing can be obtained. Assessments are not part of the equation, except when the purchaser attempts to estimate his costs to own the home, and he is determining the taxes due for the property.

Attention: Buyers and Borrowers There IS A DIFFERENCE!

A lender is a specific lending institution, often times a bank, that lends their OWN money. When they pre-qualify you they are using the actual, real time standards that institution has in place. A pre-qualification means something. An approval means something. It means the person that has the money has agreed to give it to you.

A mortgage BROKER does not have any money to lend. A pre-qualification means that they THINK they can get a loan for you SOMEWHERE. The approval from the actual lender will generally come at the very last moment, and when it does the loan program may look very different than what you originally discussed.

When getting loans was easy, using a mortgage broker offered an advantage because they could look at all the products available on the market, and (theoretically) find you the best loan available - no matter who was offering it.

But, today, with loans being harder and harder to obtain, and guidelines and programs changing by the minute, you need to be talking to someone as close to the source of money as possible. When lenders change guidelines or discontinue a loan program, it is their own people who learn of the changes first; and their own people who have opportunities to close loans in progress under those programs. Any broker planning to use the same exact loan program runs a higher risk of not being told as changes are taking place, and of the programs vanishing before the loan can be securely placed and approved. Plus, many banks are considering brokered loans higher risk, since they do not know if that broker operates under the same standards that their employees do.

In my opinion, with our current climate, I do not recommend attempting to get a loan through any mortgage broker for any transaction that is critical or time sensitive (like a home purchase). For refinancing, it is less risky to consider a mortgage broker.

You also want to use only reputable lenders. I recommend you speak to your real estate agent to get a referral... even if you're not buying, but just refinancing - ask your favorite real estate agent for a referral to their most trusted lenders. Remember, without a good lender, a real estate agent may never close a deal. They need to keep lenders who are trustworthy and knowledgeable very, very close to them. Conversely, those loan originators work hard for those agents that are sending them business....they know that messing up ONE loan could cost them the potential of a lot of future business from that agent. As the consumer, you can benefit from that relationship.