Homeownership: Make the Most of Time and Don't Let It Get the Best of You

It may seem like your payments are all going to interest at first, but greater equity comes with time.

A recent post on The Atlantic proclaimed, "It Will Never Be a Good Time to Buy a House." And, while there are some hard truths outlined in the article (such as the lack of inventory and today’s higher interest rates), homeownership is about the long game and sitting on the sidelines doesn't equate to winning for most, especially if you haven't made your first investment. Renting is helping someone else gain equity or profit (if the home is owned outright), so investing in you as soon as possible is key. It can be a hard journey but we can do hard things, right?

Since numbers don't lie, let's look at an example of a first-time homebuyer who bought a two-bedroom condo in a on-the-rise neighborhood in DC ten years ago. Despite a good job, with the relatively high cost or real estate, he put down only 5% of the $429,000 sales price, understanding that this would mean an additional cost for private mortgage insurance (PMI) for a while. Closing costs, including the down payment, equated to just under $33,000 and the total monthly payment of PITI (principal, interest, taxes & insurance), PMI, and the condo fee equated to $2,750/month. At the time, the median rent for a similar unit was $2,200. Who would want to pay $550/month more? (Answer: Almost anyone planning to stay or hold onto the unit for five or more years)

After an early termination of his PMI due to him proactively requesting an appraisal due to rising property values in his neighborhood, let's fast forward to 2023. Today he is paying less than in 2013 ($2,550/month) without PMI and even with higher taxes, insurance and condo fees. That same unit would rent for $2,900/month on today's market (a 30+% increase, while he is paying 7% less than in 2013). As an owner-occupant, he'd be making out great. As an investor-landlord, he is clearly in the black -- now having someone else help him continue to gain equity and cover his mortgage (and then some). My how the tides have turned.

And this is just looking at his cost of living; however, here's the real magic: over those 10 years his property value appreciated more than 45% (or almost $200,000), while he also gained another $100,000 of equity by paying down his mortgage. During this time, he may have paid approximately $20,000 more in the early years to own vs. rent but, even with is $33,000 down payment, an investment of $53,000 that grows to $300,000 in 10 years isn't too shabby (that's just under a 19% annual return). Other benefits include stability, the peace of mind of being able to make his home own, the savings not having to move, etc. A home is one of the few investments you can enjoy while it appreciates. Even if he had sold five years in, the equity would have made a solid down payment on a new $1M+ home.

Yes, this is only one example. And, yes, interest rates back then were closer to 4% and the location of the home was on the rise...but the principals still apply. With a lack of housing supply, the S&P CoreLogic Case-Shiller Home Price Indices are near their highest inflation-adjusted levels. The price of entry may be higher but the trajectory in a vibrant market like the DC metro area is clear.

Even if your budget may be tighter due to higher interest rates and that first home may be a condo or townhouse instead of a detached home, time is your greatest asset in real estate. Whether you're in your 20s, 30s or beyond, you can crunch your numbers, make moves and invest in you. The average age of today's first-time homebuyer is at an all-time high, but that doesn't mean you can't beat the average (and I love helping first-time homebuyers make the leap with confidence). Curious in running your personal scenario? Reach out today and let's look at your financial situation, the variables you can change, and the market to see what your path may look like.

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia.

Buyer's & Agent's Eyes: What to Look for in Your Next Home

A Licensed Inspector Is a Great Resourced in Your Home Purchase — Whether Before an Offer or After (Even for Informational Purposes Only)

When it comes to identifying your next home, you may find yourself making the decision to submit an offer after only 15-30 minutes in the property (or, sometimes, without even stepping foot inside).

As an agent-buyer team, our shared goal is to find a home that fits your needs and wants — near and longer term. While a general home inspection and/or other inspections may be a part of your process (before an offer or after its accepted), we have to use our combined experience and knowledge to look out for any dealbreakers.

Often what a buyer’s eyes focus on upon the first visit is different than what an experienced agent who has seen thousands of homes may be looking for. With buyers, some of the top areas of attention include:

• Kitchen: The adage is true. Kitchens sell homes, as they can be among the more costly renovations and updating a kitchen while living in a home is not ideal (ask anyone who has done it).

• Primary Bedroom & Bath: If you’re paying the mortgage, you want your personal retreat to feel like just that. En suite bathrooms are preferred by most buyers who are purchasing a home with more than one bathroom, too.

• Bathrooms: Like kitchens, bathroom renovations are a little more involved and, if you only have one, you want it to be perfect.

• Curb Appeal: You want to walk or drive up to a lovely looking home, even if the inside is much nicer than what’s on the outside (it’s what’s on the inside that counts, right?)

• Flooring, Paint Colors, etc.: If the tone ans/or width of the floors are “on trend” or the wall color is neutral, it’s easier to picture making it your own. I have yet to hear a buyer say, “Oooh, I LOVE that orange wall!”

While these features of a home are all important, most have the common theme of being more cosmetic than not (all of which can be changed when you’re ready and at a range of budgets, usually). For example, sometimes simply painting walls, trim or a vanity can be transformative and cost effective. However, as a buyer’s agent, I strive to make sure we also focus on the “less sexy” features that can turn into projects that don’t give you the same level of satisfaction as a new bathroom or quartz countertops but can drain your wallet as much or more:

• Gutters, Grading and Drainage: Water is the enemy of any home. We’ll look at where it may travel when there’s a storm or otherwise (and hopefully it’s away from your home). With increasingly heavy downpours in the DC area, features like larger gutters with guards, sump pumps with battery backups, etc. are always nice to see.

• Foundation Issues: While I am not a structural engineer (and you likely aren’t, as well), we can look for visible cracks or feel for sloping in floors (just pull out that handy marble). If something seems off to us, you’ll want to bring in an expert to do an assessment.

• Basement Condition: This ties in with the first two, as basements can help reveal underlying/larger problems. Does it feel moist or smell musty or moldy? Do you see evidence of work — from re-poured sections of concrete to new paint and flooring? As much as we all love a finished basement, sometimes it’s great to have one with exposed ceilings and cinder block walls.

• Major Systems: While a garbage disposal can be replaced for under $100, a water heater or HVAC will cost much more. Older systems shouldn’t be a non-starter if your budget and homeownership plan allows for updating them or, at the least, a comprehensive home warranty.

• “The Bones": As much as possible, we want to look past the stylish finishes and pay attention to what you can’t change easily/cheaply or at all — think location, layout and underlying construction quality. If you want that brick house (right, Carolyn?), it may be better built and require less maintenance than another material.

So, does this mean we can’t look for, admire and place value in items on the first list? Of course not. But by prioritizing the second list you may find yourself considering a wider range of properties…and avoiding headache down the road!

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia.

What to Do When You're Ready to Buy...and Everyone Else Is, Too

Make Sure You’re Not Iced Out of Your Next Home

With everyone focused keenly on what they need and want in a home (thanks, COVID-19) and historically low interest rates, what normally would be the start of the “busy season” in DC area has been intensified to the nth degree.

With supply (number of homes for sale) and demand (number of buyers looking) so mismatched, if you’re looking for a detached home or townhome practically anywhere, you’ll likely be facing a multiple offer situation. And, while escalation clauses and pre-inspections are not uncommon in our market normally, we are seeing the number of competing offers on homes rise (we’re talking 10, 20 and more) at the same time as reasonable contingencies mean you won’t even make the short list of offers considered.

Both listing and buying agents long for a more balanced market but, until then, if you’re looking to buy you want to make sure you’re prepared and persistent. Here are a few tips to get you in the right mindset (and please reach out if you’d like a one-on-one consultation to learn more to inform you next move…now or later).

• Assemble the Right Team: You can’t do this alone, so you want to ensure you have an agent who is on top of the market, strategic and responsive. The same goes for your lender (let me know if you are interested in introductions to several of the best local ones) Remember that your offer is evaluated not just on the terms but also on the parties representing you. Are they good to work with? Do they deliver on time? You want to be able to give a resounding “Yes!” to those questions about your team.
  

• Know the Market: With the help of your Realtor, start learning about the specific market (geography, price point, house type) well before you are ready to make moves if possible. This will help you mentally prepare for the challenges and sometimes tough decisions you will face (like waiving a major contingency) in your journey.
  

• Know Your Numbers & Thresholds: Unless your name is Bezos (or another household name), you likely have limits — in terms of your finances and your risk tolerance. Work with your lender to model out scenarios and know what you have to bring to the closing table. You very likely will be faced with a situation where you may have to make up a difference between the appraised value and contracted sales price of your future home or assume risk by waiving an inspection (or, at the least, assuming responsibility for any issues you may find). Exploring what’s right for you in advance of writing an offer will allow you to be as aggressive as you can (and need to) be in this market while not setting yourself up to be house poor.
  

• Act Swiftly: The DMV real estate market generally moves quicker than most of the country, and I’m not just talking about closing in less than 30 days. It’s not uncommon in this market for showing appointments to be gone before a house even hits the market. By getting ahead of listings while in Coming Soon status or through your agent’s network and relationships, you can ensure you have a chance to take a swing when you find a home that hits the mark. Your speed comes in handy well beyond the initial showing — from squeezing in a pre-inspection and meeting offer deadlines to closing quickly and on time.
  

• Understand Types of Value: If your #1 criteria in a new home is getting a steal, now is not the time to buy. That being said, if you place value in quality of life and are financially ready, there’s no reason to wait. As always, think ahead to your five- and ten-year plans and consider your exit strategy. Since you will be paying a premium most likely, it may take longer for valuations to catch up and, as with all markets, real estate goes through cycles.
  

It’s a lot to unpack, which is why the first bullet is always the place to start. With a solid team and preparation, your next home is in sight!

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia.

Five Reasons Why Buying (or Selling) Now May Be a Good Move for You

As I write this, DC is entering phase II of its coronavirus re-opening plan and life pre-COVID-19 seems simultaneously like it was yesterday and ages ago. While I definitely find myself on the cautious side of the “getting back to normal” spectrum, I have been able to help many clients navigate buying and selling homes during this pandemic.

This is what an open house on your home may look like…agent with a phone, gimbal and Zoom welcoming prospective buyers and their agents.

Additionally, while we don’t have a vaccine or cure (yet), agents, lenders, title companies, inspectors, etc. have become adept at new ways of doing business, while still looking out for our clients. In fact, if you have been considering making real estate moves — from buying a first home to moving up, there are several reasons why now may be the right time to map out your plan and get started:

1. You’ll never be more aware of your real home needs. Pre-pandemic we all had crazy long lists of what we wanted in our next house; however, spending more time at home has helped us prioritize what really matters — whether that’s simply more square footage (indoors or outdoors) or spaces to meet specific needs, like work and working out.

2. Interest rates are low. Like really low. I’ve had clients lock in well below 3% recently, and this means you can afford even more house than before or save even more. If you are renting, for example, it’s not uncommon for a mortgage payment for a comparable home to be less than the rent in our area normally, and It may be even more affordable now. (Also, you don’t need 20% or even 10% down to buy.) Meanwhile, if you are selling and moving up, applying your equity to a new property at a lower interest rate is a no brainer.

3. There’s less “froth” in the market. While, yes, limited inventory means we are seeing multiple offers and homes going above list price often, COVID-19 has put things in perspective for everyone. I have found that means parties are more rational and cooperative than ever (no buyers asking for a new HVAC when the current one is working fine), and contract to close is the smoothest I’ve seen it.

4. Tech tools mean you can make the most of your time. While virtual tours aren’t new, they are being used on listings at all price points now (and buyers are becoming comfortable with making decisions sometimes based solely on them). As a seller (especially if you are living in your home while it’s listed), this means you can do a lot to market your home without having to constantly open your doors for showings and open houses, which is inconvenient and also can pose health concerns. As a buyer, you can make the most of your time but exploring properties from your computer or phone using pre-produced tours or with your agent taking you along virtually first.

5. Your happiness is one thing you shouldn’t put on hold. As we spend more time at home, the value of it to your mental well-being is greater than ever. While real estate is a financial investment, I often encourage my clients looking for their primary residence with a happiness filter first and we’ll still ensure they aren’t paying more than they should based on the market…that intangible value of the perfect fit is more than just icing on the cake.

3D tours allow you to walk through a home, zoom in and out and even measure distances!

If you have questions about specifics of how we can partner to navigate buying and selling safely or want to put together options for your next move, drop me a line by clicking on the button below. Here’s to happiness at home and healthy times ahead for all!

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

Fall Is the Perfect Time to Start Getting Ready for the Spring Market

As the leaves are just starting to turn, spring may seem ages away...but not when you are considering selling and/or buying a home.

Source: Schluesseldienst from Pixabay

Whether you are a first-time buyer or a veteran property owner, now is the time to start making your to-do list so you can be prepared when April and May arrive and so you have a head start on the competition.

Below are a some key tasks and tips for both buyers and sellers to get you going, but please reach out if you'd like to discuss your needs in more depth. I am already holding appointments with spring clients, and I'd love to meet with you!

Selling Your Home

1. Forget spring cleaning, fall is the time! We've all been there when moving day is around the corner and your plans to organize and purge are thrown out the window in favor of dumping a drawer at a time into a box labeled "stuff." Take advantage of the cooler days to sort through everything from books and clothes to those dusty bins under beds and in closets. If you have't used it in the past year, if you have multiples or if it doesn't fit, it's likely time to find it a new home. By paring down your belongings (including furniture), you'll be a step ahead when staging your home (where less is always more) and when it's time to ultimately pack and move.
   

2. Make those fixes you've been putting off. When you live in a home, you tend to overlook little imperfections -- from a cracked tile or two to a window that sticks. However, it's the little things that often catch the eye of potential buyers and leads them to assume they could be an indicator of bigger problems. Walk through your home with a critical eye and identify the fixes, big and small, that need attention and then tackle one a week.
   

3. Interview and select your REALTOR®. Most agents, including me, are already looking toward spring and filling their books with clients. Partnering with an agent now allows you to develop a rapport and prepare a detailed marketing plan to maximize the potential return on your sale.
   

4. Identify smart upgrades that can help your house stand out with buyers. If you've done #3, this is something your agent will happily do with you, walking your home and identifying updates that will likely yield a faster sale and higher sales price. Upgrades may be painting woodwork white, upgrading a kitchen counter or even replacing light switches that are yellowed and showing their age. Together you can prioritize based on level of effort/expense and potential return.
   

5. Follow the market! While spring undoubtedly starts the busiest time of year in real estate, there are lots of dynamics at play that can affect a market, such as rising interest rates and changes to consumer confidence. Your real estate agent will be your guide, but you should be engaged as well...especially if you are planning to buy!

Buying Your Home

1. Check your credit. If you don't do so regularly and have not done so recently, get your free credit report from all three bureaus and make sure all the information is accurate (if not, you have time to try to remove incorrect information). You also can look for ways you can improve your credit score, such as lowering or eliminating credit card balances.
   

2. Interview and select your REALTOR®. While there is usually less lead time in getting ready if you are just buying, having an agent take you through the current market dynamics and home buying process (especially if you are a first-time buyer or someone who hasn't bought in many years) is essential.
   

3. Understand your buying power and define your budget. You may already have a lender but, if you don't, your real estate agent can recommend trusted lenders...and you always should shop around. While you may have used an online calculator or app to approximate what you would be approved for, an experienced lender can give you the best idea of your buying power and what to expect in the coming months. This means you'll go into the spring market with clear expectations of what's attainable and ready for pre-approval.
   

4. Start to research and explore neighborhoods. While you might have a good idea of where you want to live, now is the time to expand your consideration set (for example, if your budget means your ideal location may not be in reach). Read hyperlocal blogs, like Petworth News or Brookland Bridge, grab drinks or dinner at new-to-you restaurants and talk to friends about their communities. In the end, your new home may be where you least expected!
   

5. Mind your finances. Even if your credit is stellar and you have a healthy amount in the bank, pay close attention to your spending habits to avoid penny pinching and stress closer to when you buy (and after). Most everyone is aware that there are closing costs associated with purchasing a home, but also remember you may need to hire movers, buy new furniture and more.

To set up a time for your free listing or buyer consultation, contact me today! 

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

Avoiding First-Time Home Buyer Flubs

There's nothing more exciting than making the decision to go from tenant to homeowner, but buying your first home can be daunting (the number of legal documents and signatures required before you even go under contract can be maddening enough).

Source: Max Pixel

At times we all fancy ourselves chefs, handy(wo)men and more thanks to technology, social media and a generous dose of can-do spirit, buying a home is a big decision and commitment. While a wealth of information and tools — from seemingly up-to-the minute listings arriving in your inbox to mortgage calculator apps — are a great start for the novice, this is one area where a dollar spent (specifically on a real estate agent), will net more than that in one or more ways.

It's true there are about as many tales about challenging first-time home buyers as there are about annoying agents, but I find working with first timers enjoyable and rewarding. For that reason, I thought I'd share a few myths I have had to debunk with clients if you are considering starting your search:

• Pre-qualification or pre-approval...it doesn't matter which I choose. If you are looking to buy in the Washington, DC area, you will likely face stiff competition. One of my key roles as a Realtor is to help you make the most competitive offer, and financing is a big component of that (we include a copy of your pre-approval letter in your offer). Before you walk in the door, you should know that you have the ability to buy that property if it's "the one." Pre-approval is one step beyond pre-qualification and means your lender has done due diligence and is even more confident that it can handle your mortgage needs (giving the seller confidence that if they accept your offer the deal will close).
  

• As long as I have the money in time for close, I'm set. With the high price of real estate in the area, often clients are relying on family loans or gifts to help them with closing costs. As a part of the pre-approval process, you will need to document the sources of your funds, and extra scrutiny is usually placed on funds that haven't already been in your bank accounts for at least a few months prior. This means it's wise to have the funds in place as soon as possible and to be prepared to provide a loan agreement, letter or other documentation (sometimes from the person lending or gifting the money) in order to have your loan underwritten.
  

• Every renovation is created equal. In the local market, many buyers want properties that are new construction or that have been recently updated. While those white kitchens with quartz countertops look amazing in the photos, not all updates are created equal. Look at the quality of the finishes when you visit the property and for signs of cutting corners (which sometimes can also been indicative of shortcuts taken behind the fixtures and walls).
  

• New is always better. While I caution first-time home buyers against biting off more than they can chew (financially, maintenance-wise, etc.), some buyers are open to renovations — from a fresh coat of paint to kitchen and bath updates. If you can look past outdated fixtures, you may get your hands on a great property that others have passed over. Whether you have the cash in hand or are considering a 203k loan, make sure to add a healthy buffer in terms of budget and time to your plans.
  

• It's only a starter home... When you buy a new home, you invest more than just the down payment at closing. For this reason, it usually is beneficial to own property for several years before selling. If you think you are going to stay in the area, you may want to expand your search to find a property that meets your anticipated future needs (or that could). For example, if you are thinking of starting a family, you may want to find a home that allows you to not just comfortably raise a baby but also a young child (and that takes into account their educational needs). If your budget does not allow you to buy as much house as you know you will want (with the features you want), look for properties that may need cosmetic updates you can do over time or that have a lot that would allow you to expand the house to add livable space.

As I mentioned at the top of this post, technology, social media, a can-do spirit and even a blog post are not substitutes for a professional. If you are (or know someone) thinking about buying your/their first home, please reach out!

Amber Harris is the owner of At Home DC and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

5 Tips to Land Your Dream Home This Spring

Spring. The time of year when tulips, daffodils and cherry blossoms bloom (even if they are delayed)...and when homebuyers are ready to move! While market activity picks up across the country with the warming weather, it also means more competition - which can be a problem when there are inventory shortages.

U Street

According to Bright MLS, the Washington market has seen declines in year-over-year inventory for nine months (as of January 2017). This is great news for sellers, but it can lead to greater frustrations for buyers - especially first-time homebuyers who have not yet experienced the process. Of course, this doesn't mean you should throw your hands up in the air and stay put in a less-than-ideal home. Here are five tips to help put you in a better position to land your dream home in the DC area:

1. Enlist the help of a Realtor® now. Finding the perfect home is a stressful process for any buyer, so add a licensed real estate agent to your team. They'll shepherd you through the process, put your interests first and allow you to focus more on all the joys of homebuying and, eventually, homeownership. Even if you're not sure if now is the right time to buy, having an agent on your side can help you make that determination and be ready when your dream home hits the market.

2. Spring clean...your credit! If you haven't already, take a close look at your credit and take steps to bolster your credit score and increase your ability to get approved for a mortgage at the most favorable rates. This may mean reducing existing credit card debt and paying extra close attention to avoid late payments on any bills (more tips from MyFICO.com). 

3. Have your list of must-haves and nice-to-haves, but be open. Most of us have pictured our ideal home for years but they almost always are out of reach. The homebuying process is rooted in trade-offs but talk to your real estate agent about options you may not have considered, such as a fixer upper (and a 203k loan), alternate neighborhoods and properties with income potential (such as a basement unit you can rent out).

4. Be the early bird and catch the worm. In a market with low inventory, preparation and timing is key. In addition to being pre-qualified or pre-approved for a mortgage, take advantage of your Realtor®'s access to information not yet available through the many online real estate search portals. Agents - through relationships and their tools - often know about inventory three weeks or more before it hits the market (allowing you to see properties first and, if it's a fit, make an offer).

5. Choose an agent who knows your target neighborhood(s). DC and its neighborhoods are unique and diverse (part of what makes our region so great), so find an agent who knows (or, better yet, lives in) the neighborhoods you are honing in on. Google and public records can only tell you so much, so tap into the knowledge and expertise of your agent.

Here's wishing you luck on your homebuying journey this spring. If you are looking in DC area - and especially if you are interested in Petworth, Columbia Heights and Brightwood - I'd love to meet you and discuss your needs. 

Amber Harris is the owner of At Home DC, an interior decorator and a licensed real estate agent with Keller Williams Capital Properties working with clients in DC, Maryland and Virginia. 

To Rent or To Buy?

"The rent is too damn high." 

Photo Credit: Home Water Softener Reviews

While that phrase was popularized several years ago thanks to mayoral election activities in New York and a certain Jimmy McMIllan, if you're a renter in DC, you are not imagining things when you think you may be paying much more than in other U.S. markets.

Nested released their 2017 Rental Affordability Index earlier this week, and Washington, DC is the fourth most expensive city for U.S. renters (San Francisco, New York and Boston take the three top spots). The Washington Post breaks things down further, but it begs the question: Is it better to buy or rent?

View fullsize

Chart via Nested.com

While financially it may make sense with our still low interest rates and the tax benefits of home ownership, any potential buyer must consider a range of factors - from how much you can put down to how long you plan to stay in the home or area. Realtor.com has a calculator that is a great starting point if you are a renter (in any market) who is considering buying. 

If you think homeownership might be right for you, reach out to a licensed real estate agent (yours truly included) who can consult with you as you evaluate if you're ready and can help make the process of homeownership as enjoyable and effortless as possible!