Each month for over 4 years, we have gathered top real estate agents to discuss the market, trends and future of our business.  Here is what we discussed this week:

Unprofessional agents are controlling a lot of the business out their today.  Lack of returned phone calls, delays in presentations, incorrect information listed in MLS, and general lack of respect for fellow Realtors.

The short sale process is taking even longer as banks appear to be more disorganized than the previous several months.  Paperwork isn’t being logged, lost or is being asked to be resent for verification.  In some instances, short sales have been lost to foreclosure as there is no communication within the bank.  In one scenario, the seller’s suffix wasn’t at the end of their name on some paperwork so the lender closed the file without notifying any of the parties in the transaction – just reported no updates at this time for 3 weeks before realizing they had actually closed the case.  There is no end in sight as more short sales continue to come on the market.  A uniform process should be implemented by banks to streamline the process and allow more short sales to go through.

Appraisals are still a leading concern.  The HVCC process is extremely disorganized and has many flaws.  Here are some examples:  An appraiser was assigned to do an appraisal in Alexandria VA and the appraiser was from Aberdeen MD – nearly 100 miles away.  An appraiser was assigned an appraisal in Oakton VA and they were from Waldorf MD – over 75 miles away.  Two appraisals were done on a property in Piedmont – one was $550,000 the other $635,000 on a sales price of $600,000 – the underwriter said both were flawed and said the house was only worth $590,000 – they were in OKLAHOMA!  How can they say what a property is worth when they aren’t familiar with our market and more importantly – never saw the house and based their opinion on 2 flawed appraisals?  Many of the appraisers aren’t following through on their commitments and add to delays in approvals by taking 10 to 14 days to get their appraisals in to the lender.  Values are being surpressed by unprofessional, uneducated, and inexperienced appraisers who are the low bidders for appraisals through Appraisal Management Companies.

Average sales prices are down for everyone in the group – more first time buyers, fewer move up buyers, and investor purchasing low priced homes for investment opportunities.

We continue to have pent up demand for housing.  The market is on fire below $450,000 with multiple contracts on virtually every home that is in good condition, shows well and is priced right.  With many properties experiencing multiple contract situations, agents are starting to look at new homes as an option.  There are tons of calls coming in from buyers – many have a huge back log of buyers but no inventory to sell them.

We still are not seeing foreclosures flood the market as has been discussed for nearly 9 months.  Our inventory levels are down to May 2005 levels and if they were to come on the market, we could absorb the inventory with the pent up demand we have in our marketplace.

The agents were encouraged to remain optimistic, to be proactive in reaching out to move up buyers, educate the public on the opportunities available and to go sell something!

Click here to see what our agents are saying about the market!

Our Monthly Real Estate Information Exchange at the Market Street Grill was once again filled with lively conversation, outstanding & relevant real estate information and great networking opportunities.  We covered topics such as short sales and recent bank changes.  We are hearing more about banks asking for mortgagees to hold a reduced note, interest free for up to 7 years to offset the mortgagors losses and the impact it is having on getting short sales through.   The conversation also went on to discuss reporting MRIS violations on listing agents who do not properly change the status on listings with contracts in our multiple listing service.  We also discussed which areas are “emerging” as hot markets and where we are seeing more multiple contract situations occur.  More frustration was discussed about how we are having increasing difficulty with cooperating agents and getting responses from them in a timely fashion and how to handle them through Professional Standards to “police” our own.   We also covered our recent involvement in Top 5 in Real Estate and how it will help us differentiate us from others in the industry as well as help us promote ourselves more professionally to the public.  On the mortgage side we reviewed how ARMs are a great alternative to fixed rates as fixed rates continue to rise.  FHA 5/1 ARMS are currently at 3.5% with caps of 1 and 5 – a very viable option for many buyers in our market today!  Conventional 5/1 ARMs are at just 3.625% – very attractive as well!  We also heard that NVR had acquired WCI’s land holdings in Northern Virginia out of bankruptcy court on Tuesday by outbidding several other National Builders.

Here's a petition that puts it all in a nutshell!

https://www.thinkbigworksmall.com/public/showArchiveVideo/1/4909

I recently attended an Economic Summit at our local Realtor association. It was an informative session where we heard about the National economy and how it compares with our local economy. Dr. Fuller with George Mason University informed us that we would need to have nationally 100,000 new jobs per month for one year for the level of unemployment to stay where it is now. If not, the level is going to continue to rise until 2011 when job  loss should stabilize because by then our economy will have been able to absorb all of its losses.

One point I found interesting is that in the end, once the economy has stabilized, it will be more streamlined. When there is a downturn, it makes us change our ways to find better, more economical ways to do things, thus legislation is formed that in the long run, helps our economy. 

 The Washington DC Metro Area is quite unique.  The national outlook seems pretty bleak, but in our area, the GDP (Washington GDP) is higher than the National GDP, our unemployment level is substantially lower at 5.6 than the National unemployment rate which is 8.6. This is due in large part by the opportunities within the Federal Government and contractors/consults that move to the area and/or move their businesses to the area. We are very fortunate to live in the DC Metro area as opposed to other parts of the country that are suffering devastating blows to  their local economies, high levels of unemployment which in turn produces high levels of foreclosures and short sale situations.

All we can do is wait and see how it all pans out in the long run.

 It’s a crazy mixed up real estate world today and we are faced with an uphill battle for the next several months, if not for the next several years. We are looking at quick turnarounds on properties if they are priced right and staged properly.  We are inundated with buyers and rates continue to be at historically low levels, but we are fighting the untouchable appraiser and underwriters in terms of attaining values. It has always been my opinion in an arm’s length transaction that market value is what a buyers is willing to pay for a property and what a seller is willing to sell for.

In today’s environment, we are faced with a challenge of not being able to communicate to our lender with the appraiser an as a result properties are not appraising for the sale price.  As of May 1^st appraisal management companies have been inserted into the real estate transaction.  This has resulted in the consumer not being able to get values on properties on their purchase. Appraisal Management Companies are taking a piece of the pie for doing nothing more than assigning an appraiser to appraise a property.

What’s the problem you ask?  The problem is top quality appraisers are not getting paid what they are worth and the appraisal opportunities are going for lower fees and to lower quality appraisers. Until this practice gets overturned, we will be faced with making the role of the realtor more critical in today’s real estate transaction.  We are here to help.

Yes, we continue to be the anomaly in the world of real estate. At the National Association of Realtors meetings in Washington, DC last week we heard the wows of the rest of the country and how houses aren’t selling – prices are reducing daily – foreclosures paint their real estate landscape and they don’t see any end in sight. Nationally, there is a 9 month supply of houses for sale – as you see below, we have a 1.6 month supply of houses. Foreclosures are a part of our business but vacancies rates only represent 25% of our market, down from 33% last year showing we are selling our foreclosures. Our area does have a huge supply of short sale properties on the market which may turn into foreclosures, but as the government and banks work together to systematize and shorten the process to approve short sales – this may not occur. In many areas, our prices are stabilizing as a result of high demand and low supply, but we are encountering a significant issue with appraisals. There are new rules and regulations that are changing our appraisal landscape that places appraisers on a pedestal with no contact until after the appraisal has been completed. This lack of contact with appraisers has resulted in low appraisals causing significant issues in our market. It has always been my assertion that the
market price is what the buyer is willing to pay and the seller is willing to sell any product for in any market.

As we analyze our business, we see that first time buyers are representing 60% of our market; investors representing 30% which leaves just 10% for move up buyers and relocation buyers. Couple this with higher rates on jumbo loans results in making our upper price ranges more susceptible to longer marketing times and perhaps, further reductions in prices as there is a smaller pool of buyers. We continue to believe that, although there will be challenges, we are in the best real estate market in the country and will continue to be for many more years.