How to Decide If It's Time to Buy

When you ask a real estate agent, “Is now a good time to buy?” you’d probably expect to hear (or have heard), “Yes, it’s always a good time to buy!” Of course, their business is selling houses, so why would they say otherwise? If you ask me, I’d add two words to that initial question — “Is now a good time to buy…for me?” My answer: “Let’s talk and see.”

The truth is each of us is different, from our financial situations to our priorities and risk profiles, and that’s why I always walk potential buyers through a few key questions to help them determine what’s best for them.

The first question is always about timing, as the real estate market goes through cycles with peaks and valleys. Time is your friend on many levels when it comes to real estate (just check out the equity gains homeowners have seen in our area) and it’s always better to have flexibility as to when you’ll want to or need to sell (if ever). You’ll gain equity through your mortgage payments (although early on a larger portion goes to pay interest) and, depending on the micromarket (neighborhood, type of housing, etc.), you can earn quite a bit in a year. But that’s not always the case, so we want to make sure you’re okay with all scenarios — yes, even the worst case ones.

In the Washington, DC area, we are fortunate to have a less volatile market than many areas of the country. Competition may mean you have to pay more than you’d like to as a buyer at a particular moment, but time can cure that. Higher interest rates (and, yes, they may go up more after the Fed meets again soon) may not seem great when you look at the sub 3% rates of a year ago; however, 6% doesn’t look so bad when buyers paid more than 16% on average in the early 80s! It’s cliché but true: you marry the house but you date the rate. With property values on an upward trend, waiting for a lower interest rate means losing time building equity and quite likely paying a good deal more for that house in the future.

I could go on and on, but the question we started with is a personal one, so let’s move from generalizations and talk about you and your needs. Click or tap the button below to reach out for a no obligation consultation.

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.

How Do You Know It's 'The One'?

Picturesque Georgetown
Photo Credit: Picssr

Some people fall in love with every home they see, while others can pick each one apart — identifying flaws that may be consequential or not. Having spent countless hours working with buyers with a range of budgets and needs, when they find “the one” it’s usually pretty clear to me (then we move onto the harder part of structuring the best offer so it becomes theirs).

While it’s true that you’ll often see a property for 15-30 minutes and then find yourself signing a contract of sale for hundreds of thousands of dollars to buy it, that doesn’t mean you can’t prepare yourself to make that swift decision more easily and recognize if you’re ready to take the next step in the homebuying process.

As you prepare to buy your first (or next home), here are a few ways I guide my clients and help them discern what’s best for them and that you can use to help you (or your clients):

• Check(list) Yourself: Buying a home is an emotional process and you often have to go with your gut; however, that doesn’t mean throwing reason out the window. I always make sure to place a concise list of needs and wants at the top of showing sheets I prepare for my clients. This way, you can remind yourself that private outdoor space wasn’t a must but storage space was, for example. It’s easy to get distracted by shiny object (that gorgeous soaking tub!), so check yourself.
  

• Compare and Contrast: While you definitely should compare each potential new home to your list of needs, you naturally may find yourself comparing it to other properties you have seen. For this reason, if time allows, it is sometimes helpful to see a few more properties after you think you’ve found the one you want to offer on — most likely confirming how your feel and strengthening your resolve to make it yours.
  

• Picturing Your Future: One of the telltale signs someone is falling for a home is when they start placing their furniture (verbally) in a home and talking about how they would spend their time in the space. If you can envision not just special occasions but daily life in that home and neighborhood, it may be the perfect fit.
  

• What If…: I often ask clients how they would feel if we just found out that the home in question just went under contract with another buyer. If you’d be kicking yourself for not acting faster, the game of “what if,” is a great final check before making your offer.

In the Washington, DC area, the market moves fast and it’s natural to be nervous about making such a big decision so quickly…but by stepping back briefly, holding yourself to a few simple “tests” and, most importantly, leaning on your real estate agent as a trusted advisor will make sure you can act confidently and give yourself the best chance of nabbing “the one” (or the next one)!

The Amazon Effect: Real Estate Reality or Hype?

Amazon. It has impacted our daily lives — from how we shop to what we watch — for years…but now it may have a greater impact for residents of two east coast communities: Arlington, Virginia and Long Island City, New York.

The selection process for Amazon’s HQ2 has been in the works for a while, so speculation about how it may impact the communities who were bidding for its business has been going on just as long. With the official announcement this morning that Amazon has selected two sites (and also will be bringing jobs to Nashville), the volume has been cranked up to 11.

Photo Credit: Wikipedia

From a residential real estate perspective, it is something that homeowners, potential buyers and sellers, investors and renters all should pay attention to (as if you could avoid it). What it is not is something that in and of itself is the reason to make an investment or decision to buy/sell. We will learn more details in the coming hours, weeks and months about the composition of jobs, timeline for hiring, etc. but here are some initial thoughts::

• Not All Hires Will Be Moving Here: Part of what Amazon was looking for was communities with the right type of talent for their needs, so this doesn’t mean 25,000 new residents for the Washington, DC region necessarily. You will likely see talent pulled from other organizations (for example, Discovery Inc., which has made recent changes to how many employees it has in the area). The net impact remains to be seen, but the DC area is dynamic so, while significant, it’s not as big a percentage change as it could be for a smaller market.

• Greater Buying Power: With attractive salaries, Amazon will likely bring on new talent who will see a salary bump, which means they may be more likely to make a real estate purchase — whether a first home, a larger home and/or an investment property. Higher salaries and attractive benefits also likely will put pressure on competing employers to match them to retain or recruit talent.

• More Regional Moves: Current homeowners and renters who are hired by Amazon very well may decide to move to improve their commutes (as is common in an area known for commuter headaches). Expect to see greater interest in properties closest to Metro stations, especially on the Yellow and Blue lines. The region’s traffic woes are not going away anytime soon, so this will contribute to the trend of people seeking walkable communities with easy access to public transportation.

• Rise in Renters: It is no secret that there has been a shortage of housing inventory for sale in the DC area for quite some time; meanwhile, the rental market has been less competitive. For those relocating to DC, they may choose to rent first and will be looking for nearby, updated options or those that provide a swift commute.

• Catalyst for Change: The arrival of Amazon isn’t reason alone to buy, sell or invest but it is an important factor to consider — along with increasing interest rates, low inventory, etc. — when deciding what you best next move is.

So, what does this mean for YOU? The short answer is, it depends. If you have been dipping your toe in as a buyer, now may be the time to make that move before competition is likely to increase for the most desirable properties (as it normally does in spring but likely to a greater extent). If you are a homeowner looking to move up, you might want consider finding that new home sooner rather than later and evaluating whether listing or renting out your current home (for both the near- and long-term) is the best financial decision for you. And, if you are an investor or have been thinking about investing, there may be some good opportunities that come of this…but you’ll want to act swiftly (as many have already made their bets/investments).

There is no one answer for everyone and, no matter your feelings about the arrival of Amazon and its potential positive and negative impacts on housing affordability, traffic and more, it is a prime example of the complex dynamics you need to consider when making a real estate decision.

Is there a lot of hype? Absolutely.

Are all the accounts of potential impact exaggerated? No.

But, does hype have an impact on supply, demand and how people will act? Yes. Even if it’s more than it should have, it can work for and against you if you don’t think clearly.

Feel free to share your thoughts below and reach out if you’d like to talk about the potential impact on your 2019 (and remainder of 2018) real estate plans!

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. 

The 411 on Renovation Loans with Movement Mortgage's Duke Walker

While most buyers want a turnkey new home, many have dreams of finding and updating that fixer upper (thanks, HGTV) or, more commonly, can’t find that “perfect” property in their market due to limited inventory and/or budget.

Fortunately, if you don’t have the extra cash to put into updates (which is not uncommon with real estate prices in the DC area), there are financing options that let you tackle everything from a basic kitchen or bathroom update to more extensive renovations. To shed some light on these, I caught up with Duke Walker of Movement Mortgage, a native Washingtonian and current Capitol Hill resident who has helped hundreds of families in the region with their mortgage needs.

Walker

With limited inventory in the DC area, are you seeing more buyers considering and purchasing homes that they want to make renovations to right away? What mortgage options are there for those that may not be in a position to self-fund those?

Yes, there has been an increase in buyers looking at homes that are in-between “shell/unfinanceable” and “turnkey/brand new.” At Movement Mortgage, we offer and specialize in many renovation loans, which allow people to finance the purchase of the property in additional to the construction work needed to update the house to their specifications.

Can you briefly explain the different types of renovation loans and who they work best for?

There are renovation loans offered by FHA (203k), Fannie Mae/Conventional (HomeStyle) and the VA (Veterans Affairs).

There are two types of FHA loan, 203k Standard and 203k Limited. Both loans require only 3.5% down payment. Standard covers many “major” repairs, such as structural repairs, moving or altering a load-bearing wall, or even knocking the house down to rebuild it as long as you leave part of the existing foundation intact. 203k Limited covers a max of $35,000 toward repairs. This loan type is intended for less intensive changes or updates such as roof repair, replacement of HVAC systems, flooring or minor remodeling work.

The conventional reno loan is called HomeStyle. It has a minimum of 5% down but no minimum renovation cost required. HomeStyle also has an option for investors. It can be used on a single unit property with all renovation work allowed, including luxury additions, and a minimum down payment of 15%.

Download a chart comparing the various renovation products, courtesy of Movement Mortgage.

What are the major differences in the process between a “standard” mortgage and a renovation product?

The primary difference is that a renovation loan requires a bid from a licensed contractor detailing the work to be done on the home. That bid has to be completed prior to an appraisal on the property. An appraiser will inspect and review the house in its current condition, as well as review the bid from the contractor in order to come up with what’s referred to as the “after improved value.” Often times, waiting on the bid can push the timeline out 7-10 days further than the “standard” mortgage approval process.

Click the image to download.

Can anyone do the reno? Could the borrower or a family member complete the renovation?

The work has to be done by a licensed contractor and that person cannot be the buyer or a family member of the buyer.

Are there any frequent misconceptions buyers (or agents) have about renovation loans?

The typical misconception has to do with the length of the process. It does not have to take forever. Most of our renovation loans go to close in 30-45 days, sometimes sooner. If the contractor is on board and motivated to do their part, there’s no reason it should take more than a month to close.

How can current homeowners take advantage of these options, whether they are planning to sell or not?

These renovation products can not only be used in a purchase transaction but also in a refinance. For example, if you wanted to put $30,000 into a kitchen remodel but don’t have the equity position for a HELOC (home equity line of credit) or extra cash lying around, you could roll that cost into a mortgage and build equity!

Is there any final advice you have for buyers, in general, looking to purchase in the coming year?

Don’t be afraid to get your hands dirty with a property. Some of the best deals out there are livable homes that just need a little bit of love. And don’t be afraid to talk with a mortgage lender such as myself. We don’t judge people. Our job is to guide and consult you from beginning to end of the home buying process. It never hurts to see where you stand financially and what possible loan products might be available to you.

Thank you to Duke for sharing his experience and knowledge, and feel free to connect with him on Facebook, Instagram and Twitter, or reach out to him for your specific questions and needs.

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. 

Am I Ready to Be a Landlord?

After you transition from being a tenant to being a homeowner, many people come upon a new decision point: becoming a landlord or not. That juncture could come about for a few reasons, including:

1. You have to leave your beloved city/neighborhood for work, family or other pursuits.

2. You need to up or downsize in the same market.

3. You are contemplating investing in real estate and building a secondary (and maybe, eventually, primary) income source.

Whatever the reason, there are several important factors to consider before becoming Mr. (or Ms.) Roper (pretty sure at least 50% of my audience might need to Google this reference). In no particular order:

• What is your motivation? Perhaps the property holds sentimental value for you or you see an opportunity for even more equity by holding onto it. Either way, make sure you can articulate your motivation and use that to evaluate whether you become (and remain) and landlord.
  

• What is the rental market like currently? Do you live in a neighborhood near a hospital where you are likely to get residents or in a community that has a large expat population? And, just as when you are buying or selling, you must consider inventory levels - total volume but also the availability of and demand for homes like yours.
  

• Does it make financial sense? It is hard to perfectly predict what will happen to any given market or economy, but you should start by running the numbers. Look at what similar properties are renting for in your neighborhood, itemize other anticipated expenses such as maintenance and costs for acquiring tenants (whether or not using a real estate agent) and determine if you want to manage the property yourself (harder to do if you are moving out of town) or higher a professional company (and pay a percentage of each month's rent). This is where a spreadsheet with formulas will help you run various scenarios. And don't forget that you may not have a tenant 12 months of the year, so you have to be prepared to carry your mortgage (if you have one) during periods of vacancy.
  

• What are the business and legal implications? In order to be a landlord, you should make sure your property is legal and licensed (UrbanTurf has a great writeup). You also need to make sure you are in compliance with any condo/HOA bylaws (if applicable) and are insured appropriately. Every market is different but some (like Washington, DC) are more tenant friendly - meaning a problem tenant can be an even bigger problem. If you're in D.C., you likely have heard of (or are familiar with) the Tenant Opportunity to Purchase Act (TOPA). If not and you intend to rent a property in DC, familiarize yourself with it.
  

• Will this impact other real estate transactions? If you intend on buying a second (or third) home, keep in mind that your existing mortgage on a rental property still counts toward your debt-to-income ratio (most lenders don't want to see this higher than 36% of your monthly pre-tax income) and can affect being approved for (and your interest rates and down payment required for) any additional mortgages. Talk to your mortgage broker to understand your options.
  

• Do you want to be a landlord? Your time is money. Whether or not you higher a property management company, think about the demands (and potential stress) being a landlord places on you and proceed with what feels right!

Finally, remember that real estate is not an incredibly liquid asset, meaning that it cannot be quickly sold (in comparison to stocks, etc.). If you anticipate a scenario where you may need the capital invested more readily, you might want to consider investing your dollars in other ways.

I have several clients that are thinking through becoming a landlord or selling right now, and there isn't one right answer for everyone. Consult with your Realtor and financial advisor to land on what's best for you - personally and financially.

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?

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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!