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Platinum Group: Hot Topics in the Northern Virginia Real Estate Market

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In a recent Platinum Group meeting we discussed many hot topics in the real estate market today.  They included the appraisal issues we are encountering that I discussed in my last blog, new home sales, the rental market and of course, low supply and high demand.

New home prices are rocketing up, incentives are going away, one builder sold 13 houses last weekend in Prince William County and took closing costs down to just $5,000 when they were offering more at the beginning of the weekend.  Nationally, new home sales dropped but not in Northern Virginia.

Platinum Group Hot Topics FEB 2013 scottymacsblog

Lack of resale inventory is leading buyers to new homes.  When buyers go to new homes, their prices increase.  Be careful as a lot of builders don’t have appraisal contingencies in their contracts.  Ask what happens if house doesn’t appraise.

The rental market continues to be on fire.  We have a 1.7 month supply of rentals available in Northern Virginia.  Prices have stabilized and move quickly when they are in good shape.  Additionally, in a recent article, it was estimated there will be another 6.6 million renters in the market.  It makes now a good time to work with investors, understand the rental process or even start a property management company.

One other topic we discussed was the lack of inventory of resale properties on the market.  It has been mentioned that we are at an 11 year low in terms of available properties.  When something is desirable, we have seen as many as 14 contracts on one home.  It is time to structure offers for our buyers so they can win in multiple contract situations.

 

To learn more about the market or our networking group, feel free to reach out to me.  scottmacdonald@remax.net

Now, go sell something!

What’s up with our market?

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There are home buyers out in Northern Virginia but they are savvy, price sensitive and condition critical.  As we have seen in the papers, read online, and heard on the news, the rest of the country is experiencing a double dip in home prices, and waves of foreclosures are going to hit the market spiraling prices even further.  All of this has made buyers in our area become very cautious and has lowered consumer confidence nationwide. 

Why do you ask are they this way?  Well, most of them are from someplace else and they have seen streets riddled with real estate signs, are from areas that have a 41 month supply of houses versus our 3.1 month supply of houses or have friends and relatives who have been unable to sell their house in other parts of the country.  This has an impact on their buying decision here and yes, they hear our area is different and understand the underlying reasons why our market is strong but they are still looking for “a deal”.  They scrutinize each property looking for excuses not to buy them versus finding reasons to buy them.  When there is a home that offers the right price (often below market)  that has been staged (painted in neutral or trendy colors, new carpeting and de-cluttered), in perfect condition (no broken window seals, leaky faucets, etc.) and in a great location (backing to trees, end of cul-de-sac, etc.) they swarm on this property like vultures.  Many times we will encounter multiple offers on these types of properties and see them escalate above list price.

If you are a seller and your home hasn’t sold, what should you do?  Lower the price – it is the least common denominator and makes up for many areas where the home may be lacking such as in condition or location.  Get the home staged, by a professional.  You could also offer a higher commission to the buyer’s agent as an inducement to sell your house.  Many sellers or listing agents are offering a lower commission as many buyer agents have accepted lower commission rates in the past few years  as a result of short sales and foreclosures (banks) only paying a lower fee so paying more can set you apart from the competition.  Be ready to negotiate to get your house sold.

If you are a buyer, what do you do?  You should be ready to be in competition if you are looking for the perfect house at the perfect price and be prepared to include an escalation clause with your contract.  As was mentioned early, these properties are typically seeing multiple offers that go above list price.  Buy a new home – pick your own colors, location, and avoid the competition.  Many builders have adjusted to the market and are priced to sell.  Make an offer on an almost perfect house and see what happens.  Often times, as homes stay on the market and sellers have many visitors with no contracts, they tend to be more reasonable with what the market is telling them in regards to pricing.  The idea for buyers is to just buy.  The housing affordability index hasn’t been this high since 1979!  Interest rates are at their lowest level this year and prices are reasonable plus, we have jobs and stability in our market place.

If you need to sell, this is a great time to do so.  If you are a buyer, you shouldn’t delay – prices and rates are not going to get lower in our area making this an opportunity of a lifetime.  Contact your RE/MAX Gateway professional today and get packing!

Growing your business with foreign investors

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This week we learned yet another way to help agents today grow their business with developing new relationships through foreign investors.  Our featured speaker was NVAR’s Chairman of the Board, Vinh Nguyen.  He provided us with valuable information on how and where to establish these relationships as well as why we are a viable place for foreign investors to invest their resources.  Here are a few highlights from our training:

 

Working with Foreign Investors

 

It provides you with an additional source of income by working with foreign investors – it is another spoke in your wheel of building relationships.

 

It helps to diversify your business and grow your database.

 

Work with immigrant population, it is a hedge against the main stream market.

 

Work with embassies, schools where a high number of foreign nationals attend and participate in local and national conventions.

 

Attend NAR conventions and attend global forums, learn their market and offer to speak at their conventions, build relationships through your knowledge and expertise of our market.

 

Many foreign developers are interested in our real estate market.  They are looking to purchase bulk REOs, commercial, as well as buy houses for children studying here or abroad as they say in their country.

 

Many of these entrepreneurs have upwards of $50,000,000.00 to spend here in the US.

 

Develop referral channels for yourself to obtain business from different parts of the world.

 

Reasons they want to invest in the United States of America

    Stability of our government

    Price appreciation

    The value of the dollar is low coupled w/depreciation

 

The benefit to you is they do not know who to use, build trust through developing contacts.

 

80 countries have agreements with NAR to accept referrals and pay referrals to US agents.

 

There are great resources available to you through NAR.  Go to Realtor.org, resource, international buyers to learn more.

 

48 % of international buyers pay cash for their properties.

 

New loan program through HSBC

    30 % down, 5.25 % no points

    Foreign investors, paper trail on 30%  down payment is the only qualification that requires verification.

 

Finding channels to bring in money quickly and legally is a challenge to learn to overcome.  Get to know the process through your banker.

 

Your goal is to sell Washington area.  Make them aware of the Nevada, California and Florida foreclosure issues and why we are different.  We have:

    Stability of market

    # 1 in the world now for foreign institutional investors

    Low risk vs. overseas risk

    Diversify their investments

 

Other places to obtain more information on how to work with foreign investors:  Association of Foreign Investors in Real Estate – AFIRE.org –  has a lot of research information.

 

Also, it is important to learn immigration, visa, and green card processes to be able to speak with clients about these issues.

 

Were you aware that you can obtain a green card if you invest $1,000,000.00 in a business?  If you buy a business or establish a new one and maintain it or if you hire 10 Americans, you will have green card within 3 months and you can apply for permanent status in 2 years.

 

Another option is to invest $500,000.00 in a designated, depressed area and you can get green cards – regional EBS’s program.

 

A few final thoughts:  One thing to keep in mind is to not worry about communicating with your new contacts.  Most wealthy investors have translators or speak English.  Look into attending conventions and other associations, such as: AERAA.org and NAHREP.org and lastly obtain a designation – CIPS – develop relations with those agents and work referrals with them.

 

You have heard it before and will hear it again, the more you learn the more you earn – go get educated and learn how to build your database through alternative means.  Get it?  Got it?  Good!

 

Now, go sell something!