Starting Your 2022 Home Search

Question: We are looking forward to buying a home in 2022. Do you have any recommendations on how we should start the home buying process?

Answer: Google “home buyer tips” or “what to know before buying a home” and you’ll find plenty of advice on the topic, so I’ll include some suggestions I don’t see on most of those lists and also put my own spin on others that you have heard before.

Weighted Criteria

It’s easy to come up with 3-5 things that are most important to you, but challenge yourself early to come up with a list of 12-15 things. Then give yourself 100 points and allocate points to each based on how important each item is to you and you’ll end up with a weighted criteria list to help you focus your search and objectively compare properties.

If you want to take it to the next level, bring your weighted criteria list with you on showings and score each house out of the total points allocated to it so each home you see is scored on a 100-point scale.

Length of Ownership

How long you expect to be in your home is one of the most important considerations in defining what you prioritize and how you use your budget. You should focus on the following:

  1. Likely length of ownership
  2. Difference in criteria for a 3-5 year house vs a 10-12+ year house
  3. Difference in budget requirements for a 3-5 year house vs a 10-12+ year house

Appreciation is not guaranteed and difficult to predict, but the value of longer ownership periods is undisputed. One way longer ownership adds value is the potential for eliminating one or more real estate transactions, and the associated costs (fees, taxes, moving expenses, new furniture, etc) and stress that comes with moving, over the course of your lifetime.

If you have an opportunity to significantly increase your length of ownership by stretching your budget, it’s often justifiable. On the other hand, if your budget or future plans restrict you to housing that’s likely to be suitable for just 3-4 years (and buying now still makes sense), it’s generally better to stay under budget.

Influencers (not the Instagram ones)

Family, friends, colleagues…they’re all happy to offer opinions and contribute to your home buying process, but the input can be overwhelming and unproductive if you don’t set boundaries. Try to determine up-front who you want involved in the process and how you’d like them to be involved.

Think about how you’ve made other major decisions in life – what college to attend, what car to buy, where to get married, whether to change jobs – and if you’re the type of person who likes input from your friends and family, you’ll likely do the same when buying a house. Plan ahead with those influencers so their input is productive.

Does Your House Exist?

Before jumping too far into the search process, spend a little bit of time searching For Sale and Sold homes on your favorite real estate search website/app to see if the homes selling in the area you want and within 10% of your upper budget are at least close to what you’re looking for. If not, spend some time adjusting price, location, and non-critical criteria to figure out what high-level compromises you’ll need to make and then compare those compromises to your current living situation and/or continuing to rent.

Know Your Market

We’re in a strong seller’s market for single-family and townhouses right now with low supply, high demand, and increasing prices, but the condo market is more balanced.

Each sub-market behaves a bit differently and comes with its own unique set of challenges and opportunities, so take time early on to understand the sub-market(s) you’ll be involved in and what you’re likely to experience. This is something your agent should be able to assist with.

Pre-Approval & Budget

There is a lot of value in working with a lender early on in the search process. For starters, you’ll have somebody who can provide real rates and advice based on your specific financial situation/needs. A lender can only do this if they’ve reviewed your financial documents and credit. The more you put in, the more you get out.

You’ll need to have a lender pre-approval to submit an offer (seller has to know you qualify for the purchase you’re offering to make) so if you have to do it anyway, why not doing it early on so you get the most value out of your lender? It also means that you’ll be prepared to make an offer if you find the right home before you expect to be ready.

Given how competitive the Arlington/Northern VA/DMV real estate market is, the quality of your pre-approval can make a big difference when you make an offer. You should strongly consider partnering with a local lender with a great reputation to give yourself an advantage (or not put you at a disadvantage) when making an offer. Pre-approval letters from big banks and online lenders don’t go over as well in our market. If you’re looking for a recommendation, consider Jake Ryon of First Home Mortgage (JRyon@firsthome.com).

Find an Agent

The least surprising suggestion on this list! Agents come in many different forms and finding somebody who suits your personality and goals is important. Ask friends, colleagues, and family for referrals and meet with multiple people until you find the right fit.

The worst thing you can do is choose your agent based on whoever responds to an online showing request faster. A good agent can provide a ton of value being involved in your buying process 3-6+ months before you’re ready to buy. Be wary of anybody who wants you to “wait until you’re ready” before working with you.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Avoid Gaps In Your Condo Insurance Policy

Question: My condo association carries an expensive Master Insurance policy, but my lender is requiring that I purchase my own individual policy. What coverage do I gain from the individual policy that the master policy doesn’t include?

Answer: Every condo association has its own (expensive) Master Insurance policy to cover the common elements, but there are substantial gaps between the association’s policy and what you’re personally liable for without an individual HO-6 policy. Most people shop for the cheapest, fastest individual insurance policy and apply just enough coverage to meet the lender’s requirements, but that may put you at risk.

To explain common gaps between master policies and HO-6 (individual condo) policies, I’d like to re-introduce Andrew Schlaffer, Owner and President of ACO Insurance Group. Andrew is an expert in Master Insurance policies and has helped multiple local condo association’s reduce their cost and improve their coverage since writing a column on the topic last year. If you’d like to contact Andrew directly to review your association’s master policy, you can reach him at (703) 719-8008 or andrew@acoinsgrp.com.

Take it away Andrew…

Increasing Claims, Increasing Coverage Gaps

The condominium insurance marketplace is facing challenges that will impact homeowners in 2021. Water damage is leading this list of challenges—according to the Insurance Information Institute, about one-third of homeowner insurance losses are caused by water damage and freezing. The DMV is home to many aging condo buildings that struggle with mitigating water damage losses and their impact on insurance.

As water damage claims continue to rise and property damage costs increase, many insurance carriers are beginning to make changes to their coverage offerings that may increase your risk exposure.

Master Insurance vs Individual Insurance Policy

Nearly all master insurance policies in this area are written on a Single Entity basis which means coverage extends to general and limited common elements but also extends within individual units to fixtures, appliances, walls, floor coverings, and cabinetry, but only for like, kind, and quality to that conveyed by the developer to the original owner.

Items not covered by the master insurance policy and are generally not the association’s responsibility include:

  • Personal Property (clothes, electronics, furniture, money, artwork, jewelry)
  • Betterments and Improvements (demonstrable upgrades completed after the initial conveyance)
  • Additional Living Expenses (the cost to live at a temporary location, storage fees, loss of rents)
  • Personal Liability (provides protection for bodily injury or property damage claims arising from your unit)
  • Loss Assessment (triggered only if there is a covered cause of loss and the master insurance policy limits are exhausted; this assessment would apply collectively to all unit owners)
  • Medical Payments (no fault coverage available for injured guests within your unit)

Condo owners should purchase an individual condo insurance policy (HO-6), which is also required by lenders. This policy can provide coverage for the items listed above.

Review Your Dwelling Coverage

Dwelling Coverage should be included in every HO-6 policy to avoid significant out-of-pocket expenses. Many condo associations can hold you responsible for expenses that fall under the master policy deductible that are caused by the owner’s act, neglect, misuse, or carelessness. Due to the rise in water damage losses, many insurance carriers are increasing their deductibles, which in turn spurs the need for homeowners to adjust their dwelling insurance limit.

In a recent instance, a condo suffering from significant water damage losses was required by its insurance carrier to increase the master insurance policy deductible from $10,000 to $25,000. In this community, each homeowner should have at least $25,000 of dwelling coverage to indemnify them for the deductible expense in the event a claim arises from their unit. If coverage is not available, the homeowner would either pay this expense personally or the association can put a lien on their unit.

Dwelling coverage should also include a homeowner’s betterments and improvements (improvements made above what the builder originally delivered), including those completed by prior owners. Most lenders will require at least 20% of the unit’s market value insured under this coverage as well. 

What Information to Share with Your Insurance Provider

You should always review the condo association’s governing documents and understand the applicable statutory requirements (i.e. Virginia Condominium Act) and lender requirements to verify their individual responsibilities, including maintenance/repair and insurance. Along with sharing the association documents, homeowners should also provide their personal insurance agent with the following:

  • What is the master policy deductible? ($5,000, $10,000, $25,000)
  • What approach is used for the condominium insurance coverage? (Single Entity)

My Recommendation for HO-6/Other Individual Policies

Thank you, Andrew, hopefully this helps at least a handful of readers better protect themselves.

I find that most buyers go straight for the path of least resistance and cheapest premiums for their insurance coverage. Adding coverage to your existing auto policy in 5-10 minutes probably means that nobody actually reviewed your association’s Master Insurance policy and thus you’re at risk of coverage gaps. Personally, I’d rather pay a bit more to know that my policies have been designed with some personal attention and reviewed annually for gaps. Andrew and his team can handle this for you as well.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.

Who Is Responsible for Main Supply Lines?

Question: We bought an older home with original water and sewer lines. Who is responsible for the maintenance and replacement of these lines and how do I know if there’s a problem?

Answer: You are responsible for the main plumbing lines for water and sewage running between your home and the public lines. In most cases, the gas company is responsible for everything to and including the meter (attached to your home) and you’re responsible for the lines after the meter.

The main lines are usually buried under your front yard and replacement costs (water and sewage) often start at a couple thousand dollars and can easily exceed $10,000. Costs vary based on some key factors including:

  • Distance from the public line to your home
  • Pipe material
  • Type of excavation/installation (difficulty in digging up old plumbing, # of turns in new pipe)
  • Cost to return landscaping to original state (this is on you, not the County)

In most cases, Washington Gas will return your property/landscaping to its original condition, including hardscape and your lawn (even your driveway), after excavating for repair or replacement. It’s not a bad idea to find out where your gas supply line is and plan landscaping with that in mind.

Identifying Problems

The life expectancy on many of the most common materials used for main plumbing lines range from 50-100 years, but tree root growth, unnatural disturbances like new landscaping, corrosion, and pressure build-ups can cause leaks, blockages, and other damage that you should monitor.

The most effective and most expensive way to look for problems is to hire a plumber to scope the lines with a camera to see if there are any issues. The cost of doing this often exceeds $500 per line, but can give you piece of mind or early warnings of a problem.

If you don’t want to pay a plumber to scope your lines, you can monitor for signs of a problem:

  • Water Line: higher water bills, lower water pressure, flooding in yard when there isn’t rain
  • Sewer Line: slow drainage/clogs in multiple areas of the house, foul smell inside or outside, odd behavior from plumbing like bubbling sounds
  • Gas Line: if you smell a gas/rotten egg odor, hissing sound from a gas line/meter, hazy/cloudy near gas line, plants dying, issues with gas-powered appliances

Good To Know

Here are some other helpful tips regarding the main lines for water, sewage, and gas:

  • HomeServce USA, through Dominion Energy, offers insurance protection for the water supply line, sewer line, and in-home gas lines
  • In most cases, you can expect the gas company to have a utility easement on your property which allows them the right to access your property for repairs or replacement as needed. Check your survey/plat to verify this right of access.
  • Polybutylene pipes (grey plastic) were used from the 70s-90s and prone to breakage. If your sewer lines is Polybutylene, consider replacing them now.
  • Lead pipes (dull grey) were used in the early 1900s for water supply lines and risk leaching lead into your drinking water and should be tested or replaced
  • CSST (Corrugated Stainless Steel Tubing) became popular for gas lines in the early 90s and is often not property bonded which means a lightning strike can blow a hole in your gas line. Bonding your gas line is simple enough that most home owners do it themselves, although I must recommend you use a qualified Electrician.
  • These days, PVC/CPVC are the most common piping for the main water and sewer lines instead of the heavier cast iron/galvanized steel options that used to be the standard. Copper is still a popular choice for water lines, but more expensive and more difficult to install.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Renting Back Your Home After it Sells

Question: We’re preparing to sell our home and would like to stay in the house for a few weeks after it sells. Can you explain the rent-back concept?

Answer: A Seller’s Post-Settlement Occupancy, more commonly referred to as a rent-back, allows a homeowner to sell their home, collect the proceeds, and continue living in the home for a pre-determined period after closing.

Some common scenarios for a rent-back are:

  • You need the sale proceeds for the purchase of your next home
  • You want to ensure the sale closes before you move out
  • You want to wait-out the end of the school year or last day at a job

How Rent-Backs Are Structured

The Northern Virginia Association of Realtors contract (as well as other regional contracts) provides a standard form for a Seller’s Post-Settlement Occupancy Agreement so you don’t need to worry about hiring an attorney. It functions as a short-term lease including:

  • How much the seller will pay the buyer for the rent-back
  • How long the rent-back lasts
  • A security deposit
  • A penalty for staying past the rent-back period

Buyers will conduct a pre-closing walk-through before they purchase the home where they have all the rights provided to them in a normal sale. At the end of the rent-back, the new owners will conduct another walk-through once the previous owners move out, which is like that of a walk-through at the end of a normal rental period. If the previous owners caused damage during the move-out, leave junk behind, or fail other property delivery requirements, the new owners can make a claim against the security deposit, which is generally held by the Title Company who handled the sale.

Time Limitations

If the home is being purchased as a primary residence and the Buyers are taking out a mortgage, most loans (and all Fannie/Freddie loans) require that the Buyer intend to move into the property within 60 days of the closing and thus any rent-back is limited to 60 days (I usually recommend 59, just to avoid an issue with underwriting).

If a home is being purchased with cash or as a secondary home/investment property with a loan, the 60-day limit doesn’t apply. However, the contract form you’ll use explicitly states that it’s meant to give the seller the temporary right to use the property after closing and not subject to the Virginia Residential Landlord Tenant Act, so avoid using this form in place of a legitimate lease if the Buyer/Seller intend on a longer-term rent-back.

Not Without Risk

For the new owners, a rent-back carries with it some of the same risks as being a landlord. Disputes over security deposit, damage in excess of the security deposit, or trouble with the previous owners moving out on time are all realities that Buyers need to consider.

As with many decisions in a real estate transaction, a Buyer’s willingness to agree to a rent-back is a matter of risk and benefit. The risk being issues arising like those mentioned before and the benefit being that offering the seller a rent-back can be the difference between them accepting your offer or taking somebody else’s.

Free Rent-Backs?

In “normal” markets, the fee for a rent-back is usually calculated using the new owner’s carrying costs (mortgage + taxes + insurance), but in our hyper-competitive market, many Buyers offer Seller’s a free rent-back as a way to increase the competitiveness of their offer. A free rent-back isn’t worth much if the seller is asking for an extra week, but it certainly adds up if they’re asking to stay for 6-8 weeks past closing.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Financing a Major Remodel or New Construction

Question: We are deciding between buying a lot to build a new house on or expanding and remodeling our current home. Do you have a recommendation for a lender who can finance these projects?

Answer: Over the years, I’ve found that one of the best banks for construction or major remodeling loans, and a favorite amongst local builders, is Sandy Spring Bank. They are large enough to offer some excellent, customized products with great rates and local enough that relationships with builders and homeowners matter to the success of their business. That’s usually a good combination for a business, especially lenders.

I have worked with Skip Clasper (sclasper@sandyspringbank.com), a loan officer at Sandy Spring Bank, for years so I reached out to him to gather up some details on their popular construction and remodel loan products.

Remodel Loans

Sandy Spring Bank will give you a loan to finance the cost of your remodeling project based on the expected post-construction value of your home. Given how high market values are now, that means you can get a significant amount of financing to expand and remodel your home.

There are a few things that stand-out about the way Sandy Spring Bank handles these loans:

  • They offer 90% loan-to-value (LTV), meaning you can get financing for 90% of the future value of your completed home. Most banks limit their loans to an 80% LTV.
  • They accommodate a flexible draw schedule. Banks give borrowers/builders draws to pay for construction incrementally as the project progresses. Many banks offer their draws on a fixed schedule, but given the unexpected twists and turns construction can take, a flexible draw schedule makes for a better process for everybody.
  • You only pay interest on the money you have drawn from the loan so you only pay interest on the money you’ve used, not the money you will use
  • Interest rates are competitive with rates you will find on standard, non-construction loans. This is noteworthy because oftentimes specialized loan products require paying higher interest rates.

Construction Loans

A construction loan allows buyers more control over building a new home because it allows you to finance the purchase of the lot and construction yourself. That means you can purchase the lot you want (easier said than done) and choose the builder you work with, as opposed to hoping that the builder who acquires a lot you like is also a builder you want to work with.

Here are some highlights and key pieces of information about the Sandy Spring Bank construction loans:

  • You can purchase a tear-down/lot and finance the construction of your home with a single closing. After closing on the tear-down/lot, they will finance the construction, and then the loan will automatically convert into a permanent 30-year loan after the construction is completed.
  • The loan is interest-only until construction is completed, making your payments during the construction phase much lower
  • Sandy Spring allows cross-collateralization on construction loans, meaning they will include equity in your current home towards your future down payment when considering your loan application/qualifications for your construction loan
  • It will take 6-8+ weeks to finalize the loan on your tear-down/lot purchase, which may put you at a disadvantage in some cases if you are competing against buyers or builders who are paying cash or using a standard loan product that can close faster
  • All construction loans are Adjustable Rate Mortgages (ARMs), but can be refinanced into a fixed rate mortgage with a second closing
  • Interest rates are competitive with rates you will find on standard, non-construction loans. This is noteworthy because oftentimes specialized loan products require paying higher interest rates.

If you’d like to talk with Skip Clasper about Sandy Spring’s remodel, construction, or other loan products the best way to reach him is by email at sclasper@sandyspringbank.com or phone at 301-928-7523.

Answering Common Real Estate Timeline Questions

Question: I’m getting ready to buy my first home and wondering how long things will take during the process. Can you explain some basic timelines I should be aware of?

Answer: Timelines vary by regional markets quite a bit due to different customs, contract structure, or local/state governance. Below, I’ll offer a quick answer to common timeline questions I get as it relates to real estate in the greater DC Metro area.

1. How long does it take to close/settle on a home after an offer is accepted?

The median contract-to-close period in Arlington has been ~30 days since 2018, down from ~36-38 days a decade ago. Most sellers want to close as quickly as possible, so buyers who can close faster have an advantage. Be sure to talk to your lender about how long they need to close before signing off on your offer. Some bigger, national banks and credit unions often need 35-40+ days to close. Many of our local lenders can comfortably close in as little as three works (sometimes even faster).

2. How long does a seller (or buyer) have to respond to an offer/counteroffer?

Our contracts do not stipulate a response deadline so any deadline for a response must be written into the contract or otherwise communicated by the party who wishes to set a deadline. Technically, an offer/counteroffer can go on forever if it is never responded to or withdrawn.

3. When is the Earnest Money Deposit (EMD) due?

It is common for the EMD (usually 1-3% or more of the sale price) to be due to the EMD holder (usually the Title Co) within 3-5 days of going under contract. With such a quick turn-around for a substantial amount of cash, make sure those funds are in an account that you can quickly and easily transfer (wire or check) money out of. For a reminder on what the EMD is, here’s an article I wrote earlier this year.

4. How long do you have to complete a home inspection and decide whether or not to move forward with the purchase?

The game has changed lately for home inspections, which I wrote about earlier this year, but for buyers who can secure a post-contract inspection contingency, they usually have as little as two days to as many as ten days from going under contract to complete the home inspection and decide whether or not to move forward or submit their requests for repair or credit. The timing and type of inspection contingency are all negotiable terms and factor heavily into the strength of offer.

5. How long does the mortgage financing process take?

As noted earlier, this varies by the type of lender you choose to work with and can range from as little as 10-14 days to 45+ days. Here’s an article I wrote earlier this year highlighting the importance of choosing the right lender.

6. How long does it take to have an appraisal done?

In most cases, when you finance the purchase of your home through a lender, they require a third-party appraisal before approving the loan. In short, they need to make sure that the market value of a home, per the appraisal, is equal to or greater than the purchase price of the home (here’s the most relevant article I have, but I’ll do a deeper dive into appraisals soon). Most lenders will order the appraisal within a week of you going under contract and it usually takes a week or two for the appraiser to visit the home and submit the report, so the total time to get appraisal results back is usually 1-3 weeks depending on when it’s ordered and if it’s a rush order.

7. How long does the Attorney Review take?

An Attorney Review period is common in other jurisdictions (New York/New Jersey), but not here so there is no legal review period built into our contracts. It is rare that an attorney outside of the Title Company is involved in the transaction.

8. How long does it take to sign paperwork at closing/settlement?

For sellers, it often takes just 10-15 minutes and for buyers it usually takes 45-60+ minutes, depending on the size of the loan package and questions you have for the title attorney while signing.

9. When can you start moving into the house after closing?

You can walk through the front door and start moving in immediately following the closing, unless otherwise stipulated in the contract.

10. How long can a seller rent a home back from a buyer?

If a home is being purchased using a mortgage for a primary residence, the law states that a buyer must intend on moving into the home as their primary residence within 60 days, so the longest time a seller can rent-back (link to an article I wrote in 2019 on rent-backs) in that scenario is 60 days. If the buyer is paying cash or buying the home as an investment property, there are no restrictions on how long a seller can remain in the home after closing.

11. How long does the home search process last?

This is the question everybody wants to know but there’s no good answer for. I have worked with buyers who plan on buying a home 6-12+ months from starting their search and end up finding a home they love in the first week and have worked with buyers who want to buy right away and end up spending two years searching for the right home. If I had to estimate, I would say that most buyers find a home within 6-12 weeks of starting their search.

Remember that these timelines are not fixed and vary widely by jurisdiction/market across the country and a heavily dependent on the negotiations/circumstances of the buyer and seller on a specific transaction. Use these timelines as general guidance on the customs and common practices in the greater DC Metro area.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Expect Short-Term Increase in Listing, Contract Activity

Question: Will I see more homes being listed for sale in the fall or is there a stead drop in sales activity until next year?

Answer: It is completely normal for the market to slow down (pace of listing activity and contract activity)  during the summer, but it was discussed much more this year because the preceding months were so crazy, locally and nationally, and everybody is on high alert to a potential bubble.

Nothing I have seen so far has suggested that the change in market conditions over the last couple months is anything more than normal seasonal behavior, so I expect the next couple months to lead to similar seasonal patterns as in years past (except for 2020).

This means a quick bump in post-Labor Day listing activity and contract activity, followed by a steady drop in both measures through the end of the year.

The chart below shows monthly listing and contract activity as a percentage of total annual activity for Arlington from 2015-2019, broken out by single-family homes (SFH)/townhouses (TH) and apartment-style condos/coops. The following bullets are some highlights I pulled from the data:

  • The September bump in listing activity only lasts for a couple of weeks before starting a steady decline through the end of the year
  • The SFH/TH and condo markets behave similarly, but the changes in condo activity aren’t as extreme as the SFH/TH market. The spring peaks and summer lull are closer to average for condos, meaning seasonality plays less of a role in the condo market than the SFH/TH market.
  • The bump in post-Labor Day SFH/TH contract activity outlasts the short, but more extreme, burst in listing activity
  • From October-December, contract activity actually exceeds new listing volume, but this generally does not lead to better sales results during this time of year
  • The four months from March-June account for nearly 46% and 43% of annual SFH/TH and condo listing volume, respectively, and almost 44% and 40% of annual SFH/TH and condo contract activity, respectively.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Should You Stage Your Home?

Question: Do you recommend staging for vacant homes?

Answer: When you stage a home, you are placing temporary furniture and accessories in a home while it is being marketed for sale. In most cases, I strongly encourage staging a home instead of leaving it empty.

The value of staging shows up in two critical parts of the selling/marketing process. It improves the quality of the photos by helping people understand the scale and purpose of a room. Better photos lead to more showings. Good staging also improves the way Buyers experience the home in-person during a showing. Better showings lead to better/more offers.

Figure 1: Great staging helped Buyers make sense of an otherwise large, open space at 3196 N Pollard St Arlington

In my opinion, the three main benefits to staging a home are:

  1. Add Life to Empty Homes: Walking into an empty house can be eerie and makes a home feel lifeless. Those are not feelings you want potential Buyers to have while walking through your home. Good staging can add energy and life to a vacant home.
  2. Help Rooms Feel Larger: This is counterintuitive, but most people perceive empty rooms as being smaller than they really are. I’ve experienced this on numerous occasions walking through empty rooms with Buyers who have trouble understanding how a bed or couch can fit into an empty room that is more than big enough for their furniture.
  3. Engage the Eye: Well staged properties keep Buyers engaged with room layout and functionality, but unstaged empty rooms allow Buyers to focus on flaws like paint scuffs, separating trim, poor lighting, and other things you’d prefer Buyers to overlook during their visit

You do not need to stage every room. In a larger townhouse or single-family home, that can get unnecessarily expensive. Prioritize the most important rooms like the living room, dining room, and primary bedrooms for the best return on investment. Accessorizing walls, countertops, and shelves also adds a lot of value.

Figure 2: Don’t forget about staging for outdoor spaces like this patio at 4645 4th Rd N Arlington

Good staging isn’t cheap, often ranging from ~$2,000-$10,00+ depending on the size of a home and type of staging furniture, but it should be looked at as an investment like anything else you do to prepare your home for sale like painting, cleaning, and landscaping. As a rule of thumb, I think that investing .25-.5% of the market value of a home generates a clear, strong return.

Cheap, thoughtless staging provides little or no value at all. Sticking a chair or two in the living room or simply laying a blow-up bed on the floor of a bedroom are not the same and provide little, if any, benefit.

If you intend on living in your home or leaving your existing furniture for the sale (photos and showings), consider “occupied” staging, whereby you hire a stager to help you maximize the use of your existing furniture and accessories. Just promise not to get offended if they recommend removing your favorite lime green shag carpet 

ies from the owner, with some add-ons from the Stager, in a great example of a successful Occupied Staging approach at 1276 N Wayne St #1230 Arlington

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Smoking Bans Made Easy For Condos/POAs with New Law

Question: Do you have an update on the smoking ban bill you wrote about earlier this year?

Answer: Virginia House Bill 1842 (link) was signed into law by Governor Northam on March 18 2021 and became effective July 1 2021. The bill has major implications for owners of Condominium and Property Owners Associations (condo and POA) by giving the Association’s elected Board the ability to ban smoking inside homes and on private balconies by way of a new resolution to the rules and regulations, which generally requires a simple majority vote of the Board.

Prior to this, Boards could ban smoking in common areas this way, but smoking bans within units/homes required a lengthy (multiple years), costly, and resource intensive effort to get a 2/3+ vote from owners to change the by-laws.

I spoke with attorney Michael C. Gartner, a Partner at Whiteford, Taylor, & Preston LLP and current President of the Community Associations Institute (CAI) Washington Metro Chapter, about the new law to make sure I was clear on the implications this has for Virginia condos and POA communities.

Mr. Gartner confirmed that the new law, effective July 1 2021, does in fact allow condo and POA Boards to ban smoking inside private residences with a simple majority vote of the Board. He also offered some helpful advice and caveats for any Boards/communities who plan to move forward with in-unit smoking bans:

  • In rare cases, some by-laws may specifically restrict a Board’s ability to make certain rule changes or require something other than a simple majority, so Boards should have an attorney review their by-laws prior to proceeding with a smoking ban
  • Smoking bans should be written as a compliant resolution through legal counsel, not as a simple motion
  • Enforcement is always a challenge for Boards (noise, trash, and other common rules always present enforcement challenges) and Boards may want to work with their legal counsel to establish compliant enforcement protocol
  • The new law includes a provision that allows owners to call a special meeting to vote and repeal a change in the smoking policy
  • Smoking ban policies might flip back-and-forth as new Boards are elected and the majority votes for a new/different smoking policy than the previous Board

I’m not aware of any other state that has passed legislation like this (please comment if you know of other similar laws) in the rest of the Country, which is amazing, considering Virginia’s political and economic history, that we may be the first state with this type of law.

It will also be interesting to see how the law holds up if/when it is challenged in court. Until then, however, Boards now have the ability to ban smoking within homes, on private balcony/outdoor spaces, and in all common areas by simply majority (except in the rare case by-laws restrict it).

If you would like assistance with reviewing your by-laws, drafting a smoking ban resolution, and/or create compliant enforcement policies (or any other legal needs for your Association) you can contact Mr. Gartner directly at 703.280.9267 or mgartner@wtplaw.com. His firm, Whiteford, Taylor, & Preston, LLP, has one of the largest and best-regarded community association practices in the mid-Atlantic region, representing more than 800 condominiums, planned communities and housing cooperatives, of all sizes and types, in Maryland, Virginia, the District of Columbia and Delaware. Their Community Association Section is made up of approximately 30 attorneys and an experienced professional support staff.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Demand Drops Regionally, Remains Competitive

Question: Is the housing market slowing down?

Answer: Over the last 2-3 months I’ve experienced a noticeable slowdown in the single-family and townhouse market relative to what we’ve experienced most of the last 12+ months. While slower than it has been, the market is still very competitive, and prices are holding.

Properties that would have gotten 8-10+ offers a few months ago might get 2-3 now. Escalations over asking are still common, but less extreme. And in some cases, Buyers can secure modest contingencies (inspection, appraisal, financing). I believe the main factors in this change are:

  • Buyers have distractions they didn’t have for much of the lockdown (vacations, events, commute, etc)
  • Asking prices are more reflective of market values now that 6+ months of closed sales in 2021 are available for market pricing analysis
  • Some Buyers have given up after months of struggling to find/win a home
  • Normal seasonal behavior. Demand usually subsides in the summer, relative to the previous spring.

Home Demand Index Readings

To put the receding demand into perspective, I pulled out some charts from the most recent Bright MLS Home Demand Index, which tracks regional and local demand by analyzing data ranging from buyer showing activity to closed sales to feedback from local real estate agents.

Demand in the overall Washington DC Metro housing market dropped 17% from June to July and 13% year-over-year. The July 2021 Demand Index reading of 123 is lower than the Demand Index reading in 10 of the last 14 months, with the four months from November 2020-February 2021 being the only months with lower readings since May 2020. July 2021 is also the first month with a year-over-year decline in demand over the last 12+ months.

Home Demand Index

The Index uses the same price ranges to track demand across all Bright MLS market centers (DC, Baltimore, Philadelphia) so the price ranges aren’t the best for the DC Metro/Arlington, but still provide a good indication of regional and local demand trends.

The Demand Index for single-family homes $395k-$950k dropped 19% from June to July and 9% year-over-year. For single-family homes over $950k, the Demand Index dropped 29% from June to July and just 2% year-over-year.

While these reports show significant drops in demand recently, the actual demand is still very high and is enough to support recent price appreciation.

Single Family Home $395K-$950K
Single Family Home Above $950K

Listing Volume Still High

The number of condos listed for sale over the last 12 months is significantly higher than any other 12-month period we’ve seen in Arlington, but July listing volume settled down to finish closer to historical averages than we’ve been seeing. This is a sign that the surge in condo supply may be tapering off while we’re also seeing condo demand increase relative to the 2nd half of 2020 and early 2021.

High market values and changing housing needs have also led to an increase in the number of single-family homes listed for sale in Arlington lately, but that volume is much closer to the historical average than what we’ve witnessed in the condo market. It also does not seem like it to most Buyers because demand has quickly absorbed the extra supply.

New Listings In Arlington County

Looking Ahead

There’s usually an increase in demand and homes listed for sale after Labor Day and I expect to see similar seasonal behavior this year until we reach the winter/holiday market starting around early November when demand and listing supply both tend to retract.

Historically, it has taken until late February/mid March for demand and listing volume to ramp up towards their spring peaks, but the last few years we’ve seen the ramp-up period, especially for demand, start in January. I expect a similar pattern next year, but will be surprised to see anything like the double-digit price appreciation that we experienced in 2021 repeat in 2022.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.