Archive for October, 2011

Many clients ask us ” should I buy a condo or a home”. That’s a great question and not easy for us, your realtors,  to respond to. The reason is because it all depends on your life style and you know better than anyone what that looks like.  When deciding on what’s best for you, it is also important for you to consider the differences between the two.  I have lived in a condo and in a house, each for 5 years so I do have some experience.

So let’s explore a few differences between a condo and a home.

When buying a condo you will need to pay for the condo fee. Many clients ask me ” what does that involve and how much is it?” A condo fee can range from $150 monthly to over $1000 a month. Why is that so  different? Some are old buildings and require a lot of maintenance, others are newer and don’t need any updates and maintenance. Some include utilities like water, electric, gas, heating and cooling, but the combination varies greatly. Some include assessments. Some condos have many amenities like a gym, pool, and concierge, so every condominium is different and the older they are and the more amenities they have, usually the higher their condo fee is.  We can help you determine if buying in a specific building is a smart buy or not. Condo fees also include what is called Master Policy Insurance that covers all the common areas and the walls of your condo. You still need to obtain your hazard insurance to protect your belongings and the inside of the condo but the cost is really low compared to a home, about $250  a year.

A home doesn’t have condo fees yet you will need to pay for your utilities and your hazard insurance will be much higher. Around $1200 a year or so. Hazard insurance will cover the amount of rebuilding your home in case there is a fire. Homes have a higher cost of maintenance. For example, if the roof goes you will need to pay for it vs in a condo the condo reserves would pay for it.

Another factor that will help you determine what’s best for you is your budget and the location where you would like to live. For example do you want a $500,000 condo in Dupont or do you want a $500,000 home in Petworth? Becoming familiar with neighborhoods, space, and price will be very helpful and we will be happy to help you with this.

You also need to ask yourself what your life style is going to look like in the next 5 to 10 years. Will you be ok in a condo or will you need more space and need a home to accommodate your future space requirements?

These are some factors you can think about when trying to decide what to buy. We can certainly help you figure out what’s best for you and at the end you will need to decide what’s best for you and your life.

We’re all hearing how now is a great time to buy.  Interest rates are at historic lows, there are some great opportunities in the market and it’s cheaper to buy than rent right now in the DMV (DC, MD and VA for you newbies!)

Condos are a great entry point for new home buyers.   They typically don’t require as much maintenance  as a home and they’re a natural progression from renting an apartment.  And with a loan through the Federal Housing Administration (FHA) you can get in one for a low down payment of 3.5%.

But before you invest a lot of time, energy and money in pursuing a condo you should know that FHA has implemented some new financial rules that make it more difficult to get financing in one of these buildings.

FHA requires that a building be certified and in their system in order for you to get a loan on your purchase.  Many buildings are already certified however many are also due for recertification.  Have your realtor confirm their standing prior to you submitting an offer if you’re going FHA. 

If they’re not on the list many lenders can submit a certification package or if it is up for recertification the condo association is probably already working on that step.  It is at this point that you may run into problems.  FHA rules require that condo project budgets, insurance and financials be in order.  One aspect of this is causing problems.

If more than 15% of owners are 30-days behind on their condo fees, then lenders cannot fund on the project without waivers from FHA.  In a 4-unit building if only one person is behind then that 25%. 

Other issues that will be important to know: 

1.       What is the investor ratio?  Can’t be over 50%

2.       How are the condo reserves? Funds must be set aside each year to fund long term maintenance

3.       With new condo projects at least 30% have to be sold

These are problems that can be found out prior to you investing money on an appraisal, inspection or most importantly your time.  Do your research or better yet, ask your realtor to do it for you.

So you think you might like to buy a house.  Congratulations, now where do you start?  If you don’t know the answer to this, you’re not alone, trust me, and all the questions of location, size, style, price and quality only scratch the surface of it all.  That said, step one is, always has been, and always will be discovering the motivation behind what put the thought of moving into your head.  It seems silly to state what otherwise would sound obvious, but if you take a second to pause and ask yourself what matters to you and why you wanted to move from renting to owning, or trading up an existing house, you might just find the process smoothes out a bit and clarity quickly follows.

$$$… Know, Don’t Guess!

After finding your motivation, the next step is to find out what you’re capable of.  To some it may be a tough conversation about finances and savings, but either way it’s good to remember that it’s simply a way to gauge your buying power, and this knowledge comes without a price.  Lenders work everyday with people free of charge to get them pre-approved, a process that takes less than 24 hours and lets a buyer know what they will be paying monthly for their future purchase and how much the bottom line price of the house can be.  This means you won’t have to guess if your range is 2-3, 3-4, 5-6 or 1 million, and then you can shop with confidence!

Live There Before You Live There…

Let’s imagine for a second that you are considering moving to my beloved H St NE, a place of immense culinary variety, rich history, and the future site of luxury apartments, retail, and the much anticipated trolley!  I live there, work there, and play there, and the next part of the conversation between you and me would revolve around a 20 questions format in which I proceeded to list and elaborate on all my favorite spots to eat, catch out of the box burlesque shows, and even play mini golf without ever putting down my favorite cocktail.  Do you see where I’m going with this?  Get out there and enjoy yourself, get lost, ride the metro, and sample the variety of life the area you are thinking about living has to offer.  Find an open house, and when you walk out the door, practice turning left and right and seeing where you end up!  The point is that you can learn a lot simply by being on foot for a while and exploring, so give it a shot and you might just see me walking around too!

I’ll save the next step for when you’re done with these, slightly over stuffed from local cuisine, and ready to relax from all the exploring!  So have fun with it and I’ll see you around!

1.      Roofs.  I think roofs get a bad rap.  Many buyers are scared to death of a bad roof, but don’t think anything about replacing the HVAC system.  Roofs don’t cost as much as you think, and many times patching is part of maintenance and doesn’t mean you actually need a new roof.  Consult with a roofer you trust to determine if you really need a new roof, or a tube of calk.

2.      Discoloration (sometimes referred to improperly as mold).  Mold is a term to describe microbes that meet certain criteria – however, not all discoloration is mold.  True mold infestation is a serious problem, though 95% of what I see is discoloration that is solved with proper ventilation and drywall repair – and does not require men in space suits.

3.      Electrical issues.  No one want their house to burn down, though that is the quick jump-to fear when presented with an “electrical hazard” in the home.  The truth is, most electrical issues are “issues” as the code has improved and an electrician can take care of most things in an hour or two.  Not a big deal most of the time.

This morning I visited a possible listing in DC for a valuation assessment.  The homeowner told me on the phone about all the money and time he had spent on the property renovating it to top notch condition.

I knew I was in trouble when I approached the home and the front door was the wrong size.  Sure enough, upon entry, it seemed like “Harry Homeowner” (no offense to homeowners named Harry) renovated the home, from top to bottom, over the course of 5 years and created a disaster of poor workmanship.  The improper corner cuts, crooked tile, sagging floors, and bad design choices added up to a complete waste of money and time.

Please, do not test your workmanship on what is likely your most valuable asset – your home!  It is like playing mechanic on the weekends to the Bentley in the driveway.  I have no issue with home renovation projects, though please make sure you consult with experts and have someone look over your work from time to time so you don’t renovate your entire home only to be told by your neighborhood Realtor that the entire home basically needs to be redone.

Ouch.