The Real Estate Triangle

I have a tool, adapted from my Project Management toolkit, that I use to help explain real estate choices and decisions to clients. I decided to share it in a blog post after receiving a lot of terrific feedback about it from colleagues at my brokerage, McEnearney Associates.  This is the Real Estate Triangle of Triple Constraints. Of course it is just a model, but I believe it is an important one that reflects realistic constraints and relationships between different home purchase (or sale) factors.

For any given price range, or maximum purchase price, there are three main factors at play: Location, Condition, and Size & Features.  There are physical and market forces that limit the houses available in any given location, and this triangle of factors must be in balance for a given price.  It just is not possible to want a bigger house in better condition and located in a more desirable (or popular) neighborhood for a given price, if perhaps you've seen everything in your price range in a given area.

Another way to think about this triangle is: sometimes you need to sacrifice the condition (maybe everything was not upgraded last week) of a house to get the size and features you want (number of bedrooms, size of yard, finishes in the kitchen); or vice versa (condition is key, so the house may be smaller).  Also, a buyer should share with their agent what is their driving, priority factor in their search.  Sometimes a buyer might want to stay in their current school cluster, or they want to walk to the Metro or to shopping and recreation, so Location is their priority "leg" on the triangle. To get that priority feature, they may need to sacrifice on size depending on their price range.

I also use this tool to demonstrate to sellers how potential buyers will perceive their home based on comparables in their area, price, condition or size. If their house is a larger home compared to others in the same area and in similar condition, they may sell at a higher price. But if their home's condition and features (finishes and upgrades for example) are lagging behind others on the market, the price will be affected.

I am always happy to meet with buyers and sellers for an initial consultation about their situation and this is just one example of the tools and topics I share.

The Not Spring

I was going to write about spring springing forth this week.  Here are my daffodils, seen peeking through the soil on Saturday, March 15, 2014.

  

And here was my backyard this morning.  Happy St. Patrick's Day.  I guess our spring market will need to wait, or be put on haitus, for a few days. The silver lining: if you were thinking about selling your house this spring, you have a couple more weeks to talk to an excellent Realtor, like me, about getting your house ready to put on the market.  You'll still get a jump start on others if you get started today!

QOTD: Flooring

Today's Quote of the Day comes from my almost 14 year old daughter, Lucy. We were touring houses this past weekend to see comps for an upcoming listing I have in the works and she made a very interesting observation.

The floors really say a lot about a house.

She went on to explain that one house, which had beautifully refinished hardwood floors really shined and she thought better about the house overall because the sellers had taken such good care to present the floors well.  Another house had hardwood floors which were not only very dirty but uneven in places, paint-stained, and overall very scuffed.  She thought that house did not show well.

I've written before about some guidance for open house preparations which did highlight cleanliness.  I'm working now on a new seller checklist for Open House Prep (I have my own Open House Preparations Checklist, but this new one will be to give to my seller clients).  I'm happy to share with my seller clients in the future.

I just thought it was an interesting observation that Lucy had.  What stands out for you about houses and how do those things reflect on your overall impression of the home?
 

QOTD: From A Charlie Brown Christmas

A Charlie Brown Christmas is a classic holiday movie. From the toe-tapping soundtrack to the iconic imagery, there are many memorable moments.  My favorite quote this year:

Lucy Van Pelt: I know how you feel about all this Christmas business, getting depressed and all that. It happens to me every year. I never get what I really want. I always get a lot of stupid toys or a bicycle or clothes or something like that.
Charlie Brown: What is it you want?
Lucy Van Pelt: Real estate.

Mortgage Limits for 2014 Remain Steady in MD & DC

For those in the market for a new house now, that search may stretch into the new year.  There was some talk, and concern even, among Realtors and those in the mortgage industry that there may be a reduction in the maximum loan limits for loans underwritten following standards of Fannie Mae and Freddie Mac.  Great news!  The loan limits for conventional financing are remaining fixed into 2014 in our area (and most of the country).  In Maryland and DC, here are some relevant caps for high balance conforming loans.

Montgomery County = $625,500
Prince George's County = $625,500
Frederick County = $625,500
Anne Arundel County = $494,500
Talbot County = $417,000
Washington, DC = $625,500

And for my friends and family in Wisconsin, all counties in that state have the $417,000 limit. If you would like to know your loan limits if you live elsewhere in the US, I can let you know based on your state and county.

By the way, I have a terrific listing for a house for sale in College Park, MD, listed at $274,000, which is in Prince George's County, through my brokerage, McEnearney Associates, Inc; main office: 202-552-5600; or email or call me directly.

House Sale Prep Checklists

For each seller client, I create a customized House Sale Preparation Checklist.  While of course some of the items on the list may be universally helpful to sellers, I take into consideration that particular client's situation, their means and time available, and the most likely buyer of their house in making suggestions to them about getting the property into optimal showing condition.

Recently I worked with some seller clients whose house was already in terrific condition and who are quite handy and comfortable with home improvement projects.  I started with an initial one page list with these categories:
   * POD - rent one and start filling it with...
   * Sorting/Clearing Out
   * Projects [minor household repairs]
   * Early Staging

Once they finished that list (in 5 days!!), I went back to their home with my notepad in hand and made a second, final list (typed and emailed by that evening).  This one was more detailed and led up to the time when the professional photographer I had hired was scheduled to arrive.  This "Stage 2" checklist included items such as:

   * Add to the POD (and get the POD picked up)
   * Sorting/Clearing Out [the finer points]
   * Yard Word/Exterior
   * Projects
   * Final Staging
   * Pre-Photo Little Things

For another seller client, I created a room-by-room list rather than by categories, because that was an easier way for her to work through her house preparation tasks.

My best practice for sellers is helping organize and plan with you to make your house shine for its potential buyers.
 

DC Buyer Programs

For first time homebuyers in Washington, DC, there are some great options you should investigate if you are considering a purchase.

First is the DC Tax Abatement program.  This program has two components and is based on household income to qualify.  Qualification guidelines are available elsewhere and each buyer should consult their licensed real estate agent and a settlement agent or attorney about their specific situation.

The first component of this program is the elimination of the DC Recordation Tax (for properties under $400,000 purchase price, this is 1.1% of the sales price for each side of the transaction) and a possible seller credit of the other 1.1% of the DC Transfer Tax.

The second portion is potentially more impactive. Starting in the first tax year following purchase, with the DC property tax cycle running October 1 to September 30, the buyer is exempt from DC property taxes for 5 years, assuming you live in the property as your primary residence for that full period.

In addition to these tax programs, there are currently a number of mortgage programs aimed at DC first time buyers, too.  For example, the DC Open Doors program is one option available through specific mortgage lenders.  There are low down payment requirements and potential down payment assistance (in some cases through a low or no-interest loan) for qualified buyers.

I have one buyer client now (and potentially a second client) working with a mortgage lender on a Community Reinvestment Act (CRA) loan for first time homebuyers.  This has a low interest rate, low down payment requirements, and no private mortgage insurance.

A skilled and experienced Realtor can guide you to programs that could help make your dream of home ownership a reality, within your means, and with the right loan, and home, for you.