As we have gotten deeper into this changing economy and real estate market, I’ve noticed that the need for educating the consumer on the basics of real estate transactions is alive and well.   So, I’ve decided to stick with real estate basics for a few posts.  We’ve already addressed CMAs, BPOs, and Appraisals.  Now let’s address the confusing kick out and no kick out scenarios in a contract.   

A Kick Out is a clause in a sales contract that allows the seller to terminate the contract with a buyer if a better offer comes along.  This termination is done without penalty to the seller and the buyer gets to keep their earnest money deposit.  The buyer is usually given a agreed upon amount of time to release their contingencies before the seller can void the contract.  It is common to see the time period be 48-72 hours.  In essence, a second, and presumably better contract, kicks the first contract out of primary position.  Most REALTORS(R) will continue to market a home that has a Kick Out Contract as an Active listing in hopes of obtaining a better offer.  The most common type of Kick Out Contingency is a home sale.  If a buyer needs to sell their current home in order to purchase a new home, they usually require a home sale contingency.  Most homeowners can not afford the expense of two homes and many buyers need the proceeds from the sale to help obtain financing for the new home.  Most REALTORS(R) will show buyer clients homes that are listed as having a Kick Out; especially if the buyer client would not have a Kick Out Contingency in their offer.

A No Kick Out Contract is a contract that the seller has accepted that has one or more contingencies that must be satisfied by one or both party before they will go to settlement.  These contingencies usually put the buyer in the driver’s seat for voiding a contract.  The most common types of No Kick Out Contingencies are  home inspection, radon inspection, financing, appraisal, and third party approval.  The only time a back-up contract can take primary position is if the buyer and seller can not agree to the outcome of the contingencies.  For example:  The buyer has a home inspection and finds that the house needs a new roof that will cost around $6000.  The buyer asks the seller to pay for the roof repair.  The seller says that they will not.  It is the buyer’s decision whether to proceed with the sale and pay for the roof themselves, or void the contract based on the home inspection contingency.  Short Sale Contracts fall into the No Kick Out category.  The buyer and seller agree that a third party, the short sale bank, needs to approve the sale of the home.  The seller can not void the contract while the 1st contract is being negotiated with the bank.  (This rule may be different in states other than Virginia).  The contract will become void based on Third Party Approval if the home goes to foreclosure, the bank rejects the contract offer, or the buyer walks away after a specified period of time defined in the contract.  Many agents will show buyer clients short sale listings that are under contract with No Kick Out because many short sale contracts fall through.  However, if the listing is a foreclosure or a traditional sale, many REALTORS(R) prefer not to show the home because the likelihood that the home will go to closing with the current contract is strong.

It’s that time again!  Let’s see what furry friends the Fredericksburg SPCA has up for adoption this week! 

Meet Felipe!

Felipe is a orange and white striped male kitten.  He is full of energy and loves to play with toys.  He is 4 months old.  He loves to explore and is great with kids.  He is also good around other cats.  His brother Gustave is at the SPCA, as well.  Make arrangements to meet Felipe today!  He’s too cute to say no to! 

Meet Gary! 

Gary is a 7 year old Beagle who has a sweet and affectionate personality.  He is trained to alert you when he needs to go potty.  Once he’s finished, he is ready to rejoin his family in the home.  Gary enjoys being a lap dog.  He values hugs, being brushed, and walks.  Gary is good with kids, other dogs, and cats!  He’s up-to-date on his shots and is neutered.  If you think Gary would fit into your family, visit him today at the Fredericksburg SPCA! 

All Furry Friday featured animals can be reached by calling the Fredericksburg SPCA at (540) 898-1500.  Call Today.  You know you want to!  Make an animal part of your family!

Many REALTORS(R), and real estate industry professionals, will throw arouifnd industry jargon and just assume the consumer knows what we are talking about.  I’m going to address three words that all have to do with determining a property’s value that can be confusing to a consumer. 

First, a Comparative Market Analysis, also called a Competitive Market Analysis or a CMA, is an informational estimate of your home’s value.  Usually CMAs are prepared by a REALTOR(R).  (You know you’ve received countless newsletters that say that if you call ABC Real Estate Company today, you will get a FREE market analysis.  Here’s a news flash, 99.9% of REALTORS(R) will provide you with a free CMA.  It’s part of the service we provide in hopes of getting a listing).  CMAs are one of the lowest forms of price evaluation.  The suggested market value is determined by examining Active Listings, Under Contract Listings, Sold Listings (within the last 3-6 months), Withdrawn Listings, and Expired Listings in your area that are comparable to your property.  Many REALTORS(R) also look at specific market conditions like Average Days on Market, Sales Price vs List Price, and Months Inventory.  All of this information, taken together, will allow the REALTOR(R) to come up with a price range of the most likely sales price.  Or, more accurately, the price that will most likely garnish a contract in the least amount of time.  Because the market is constantly changing, homes that are on the market should be re-evaluated by the listing agent at least once a month.  It is important to remember that a CMA is only an estimate of what the home could get on the open market under normal circumstances.  It in no way sets value for the property. 

There are a few terms that have existed in the real estate industry for quite some time, but it has been the recent market to bring them to the forefront of consumer minds.  One such term is Broker Price Opinion, or BPO.  A BPO is a tool used by lenders, mortgage companies, and relocation companies to obtain an estimated value of a property to determine viability or strength of a sale.  They usually contact a REALTOR(R) and pay the REALTOR(R) a set fee for researching comparable properties to determine value.  A BPO will have information regarding comparable Active Listings, Under Contract Listings, and recent Sold Listings.  They will also contain information on sales trends in the area, employment opportunities, quality of life in the area, and an estimated cost of repairs for the property.  The REALTOR(R) will provide two estimated values, one for selling the house with all repairs made and one for selling the home “as-is.”   In this market, lenders are calling for a BPO to determine if a contract on a short sale property has a contract price that is in line with today’s market value.  Remember, BPOs are a little more detailed than a CMA, but they do not determine true market value for a property.  BPOs are an estimate of value. 

More people are familiar with the term Appraisal.  An appraisal is generally performed by a licensed or certified appraiser and is the value of real property as of a specific date.  An appraisal is still just one person’s opinion based on 3 approaches to determine market value.  These 3 approaches are the cost approach, the sales comparison approach, and the income approach.  When determining value for a residential property, the sales comparison approach is usually given the most weight.  Market value is the estimated amount a property should sell for on a specific date between a willing buyer and a willing seller in an arms-length transaction in an open market.  The buyer’s lender will order the appraisal.  The appraisal will be paid for by the buyer.  The appraisal is used by the lender to determine if the subject property is a good investment for the lender at the contract price.  A lender will not lend more money than what an appraisal determines the home is worth. 

In a perfect world a CMA, a BPO, and an appraisal on the same property should garner similar values, within a few thousand dollars of each other.  However, all three value estimation tools are subjective.  Their subjectivity is the source of many real estate debates in recent months.

The topic of removing fixtures in real property has become a part of my daily business.  Just a few years ago, no one would imagine removing pantry shelves, closet racks, the shelving from the refrigerator, or the towel bars from a home before closing.  Now, the market has changed and people’s mentality has changed.  Buyers expect to get the what Target promises, “Buy More, Pay Less.”  They’ve been told time and time again, “This is a buyer’s market; we are giving homes away.”  Sellers are sick of being beat-up over every little detail when selling their home.  Sellers are stressed with the threat of foreclosure.  They are angry at banks, they are angry at REALTORS(R), they are angry at buyers.   This all leads up to the epidemic of sellers removing items that should convey, pass to the new owner.  Removing these items only causes headaches for all parties in the transaction.  

The Northern Virginia Regional Sales Contract, this is the most common sales contract in the Fredericksburg area, addresses personal property and fixtures in paragraph 9; in case there is any doubt as to what should be left behind for the new owners.

9.  Personal Property and Fixtures   The Property includes the following existing personal property and fixtures:  built-in heating and central air conditioning equipment, plumbing and lighting fixtures, sump pump, attic and exhaust fans, storm windows, storm doors, screens, installed wall-to-wall carpet, window shades, blinds, window treatment hardware, smoke and heat detectors, TV antennas, exterior trees and shrubs.  Unless otherwise agreed to in writing, all surface or wall mounted electronic components/ devices DO NOT convey. 

The items marked YES below are currently installed and offered.

Alarm System              Built-in Microwave      Ceiling Fan    

Central Vacuum          Clothes Dryer              Clothes Washer  

Cooktop                       Dishwasher                 Disposer                     

Electronic Air Filter    Fireplace Screen/ Door                         

Freezer                       Furnace Humidifier          Garage Opener  w/ remote                         

Gas Logs                   Hot Tub, Equip, Cover      Intercom         

Playground Equip       Pool, Equip, Cover     Refrigerator  w/ icemaker    

Satellite Dish               Storage Shed               Stove or Range           

Trash Compactor        Wall Oven                   H2O Treatment System     

Window A/C Unit       Window Fan               Window Treatments    

Wood Stove

Flowers, grasses, trees, shrubs, and bushes are all considered real property.  This means that they may not be removed from the property unless their is an agreement, in writing, regarding their removal.  Yes, there have been battles over lilac bushes.  I’m not kidding.  Lilac bushes.  If you have a plant that you plan on removing from the yard when the home sells, you need to address it in the contract to purchase.  As a buyer, if there is a specific plant that you want to stay on the property, go ahead and address it in the contract to purchase.  

Short sales and foreclosures are still the predominate transaction in today’s real estate market.  Sellers removing fixtures in a short sale situation are really hurting themselves by removing these items.  The buyer has a right to receive the items a seller promised them.  In a foreclosure situation, the bank has a right to go after the defaulted borrower to reclaim the missing fixtures.  As a seller, it is important for you to understand what is expected of you in the purchase contract.  If you have agreed to leave certain items behind, leave them behind.  If you want to take something with you, tag it and address it in the purchase contract.  As a buyer, it is important for you to document the fixtures in the house you are buying.  I always recommend taking pictures of fixtures and writing down serial numbers of appliances, if they are conveying.  The last thing either party needs is to be squabbling over a $25 bathroom cabinet several days before going to closing.

This economic crisis and house market turmoil hasn’t just affected the homeowner’s of America.  It has also affected their pets.  Furry Friday helps highlight these unsung victims of predatory lending.  Opening your home to a new furry family member is just one of the ways we can start the healing process.  Let’s see who’s up for adoption this week! 

Meet Roady! 

Roady is a male black and white domestic short hair.  He is about 4 years old and is up-to-date on shots and is neutered.  He has a big heart and loves to be held!  If you have room on your lap just big enough for Roady, call the Fredericksburg SPCA today and set up an appointment to meet this cute guy! 

Meet Ladybug and Cricket

Ladybug – This beautiful girl is a poodle/ miniature pincher mix.  She is 6 years old and is good with children over 12 years old.  She is a little shy at first, but warms up quickly.  Ladybug loves to run and loves to be with her best friend Cricket!  She loves to be brushed and is good with other dogs. 

Cricket – Cricket is Ladybugs sidekick.  They both love people and have great house manners.  Cricket is a 3-4 year old Australian Sheppard.  He enjoys walks, playing with toys, and is very playful.  Cricket likes to talk to his people, but not in an annoying way.  He is up-to-date on his shots and is neutered.  Ladybug and Cricket are a pair and must be adopted together.  So if you have room in your home for 2 new canine pals, open it up to these two.

All Furry Friday featured animals can be reached by calling the Fredericksburg SPCA at (540) 898-1500.  Call Today.  You know you want to!  Make an animal part of your family!

Fredericksburg City:

• 64 days on market – this is 107 days less than in July 2008
• Sellers received, on average, 89.65% of their list price when the home sold
• There is 7.48 months of inventory on the market
• 23 homes sold in July 2009 – this is 1 more than in July 2008
• The most popular price range was under $100,000 and $300,000-$349,999.   
• The median sold price was $218,000, compared to $317,950 in July 2008
• Financing Terms:  Conventional – 9, FHA – 5, VA – 2, Assumption – 1, Cash – 6

Orange County

• 155 days on market – this is 10 days less than in July 2008
• Sellers received, on average, 87.73% of their list price when the home sold
• There is 11.97 months of inventory on the market
• 36 homes sold in July 2009 – this is 10 more than in July 2008
• The most popular price ranges were $200,000-$249,999
• The median sold price was $209,000, compared to $202,950 in July 2008 
• Financing Terms:  Conventional – 13, FHA – 11, VA – 1, Assumption – 2, Cash – 6, Seller Financing – 1, Other – 2

Spotsylvania County

• 99 days on market – this is 44 less than July 2008 
• Sellers received, on average, 89.72% of their list price when the home sold
• There is 5.80 months inventory on the market
• 162 homes sold in July 2009 – this is 28 more than in July 2008 
• The most popular price range was $250,000-$299,999
• The median sold price was $218,450, compared to $252,500 in July 2008 
• Financing Terms:  Conventional – 47, FHA – 54, VA – 29, Assumption – 8, Cash – 21, Other – 3

Stafford County

• 74 days on market – this is 61 less than July 2008 
• Sellers received, on average, 94.32% of their list price when the home sold
• There is 5.06 months inventory on the market
• 156 homes sold in July 2009 - this is 13 more than in July 2008 
• The most popular price range was $300,000-$399,999
• The median sold price was $238,250, compared to $290,000 in July 2008 
• Financing Terms:  Conventional – 48, FHA – 42, VA – 37, Assumption – 11, Cash – 18

Prince William County

• 61 days on market – this is 51 less than July 2008 
• Sellers received, on average, 94.83% of their list price when the home sold
• There is 3.93 months inventory on the market
• 787 homes sold in July 2009 - this is 225 less than in July 2008
• The most popular price range was $300,000-$399,999
• The median sold price was $200,000, compared to $214,000 in July 2008
• Financing Terms:  Conventional – 181, FHA – 299, VA – 129, Assumption – 37, Cash – 133, Other – 7, Seller - 1 

Statistics provided and calculated using data supplied by MRIS.

Today starts the 2009 Virgina Sales Tax Holiday.  (Just in time.  Hubby needs a new laptop!) 

The following schools supplies are exempt during the holiday as long as they are priced $20 or less per item:

Binder pockets, Binders, Blackboard chalk, Book bags, Calculators, Cellophane tape, Clay and glazes, Compasses, Composition books, Crayons, Dictionaries and thesauruses, Dividers, Erasers (including dry erase marker erasers and dry erase marker cleaning solution), Folders: expandable, pocket, plastic, and manila, Glue, paste and paste sticks, Highlighters, Index card boxes, Index cards, Legal pads, Lunch boxes, Markers (including dry erase markers and dry erase marker kits), items for musical instruments, Musical instruments, musical instrument accessories, replacement Notebooks, Paintbrushes for artwork Paints (acrylic, tempera, and oil), paper, manila paper, colored paper, poster board and construction paper, Paper: loose leaf ruled notebook paper, copy paper, graph paper, tracing, Pencil boxes and other school supply boxes, Pencil sharpeners, Pencils, Pens, Protractors, Reference books, Reference maps and globes, Rulers, Scissors, Sheet music, Sketch and drawing pads, Textbooks, Watercolors, Workbooks, and Writing tablets. 

Clothing items that are $100 or less can qualify for the holiday.  The following clothing items are included:

Aprons -household and shop, Athletic supporters, Baby bibs and clothes, Baby receiving blankets, Bandanas, Bathing suits, swim trunks, cover-ups and bathing caps, Beach capes and coats, Belts and suspenders, Bibs, Boots, Choir and altar clothing, Clerical vestments, Coats, jackets, and windbreakers, Corsets and corset laces, Costumes (sold not rented), Coveralls, Diapers – children and adult -including disposable diapers, Dresses, Ear muffs, Footlets, Formal wear for men and women (sold, not rented), Fur coats and stoles, shawls and wraps, Garters and garter belts, Girdles, Gloves and mittens for general use, Golf clothing, caps, dresses, shirts, skirts, pants, Gym suits and uniforms, Hats and caps, Hosiery, Insoles – inserts for shoes, Jeans, Jerseys (both athletic and non-athletic), Lab coats, Legwarmers, Leotards and tights, Lingerie, Neckwear – including bow ties, neckties, and scarves, Nightgowns, Overshoes and rubber shoes, Pajamas, Pantyhose, Raincoats, rain hats, and ponchos, Robes, Rubber pants, Rubber thong/flip-flops, Sandals, Scarves, Shirts and blouses, Shoes and shoe laces, Shorts, Skirts, Slacks, Slippers, Slips, Sneakers, Socks and stockings – including athletic socks, Steel toed shoes, Suits, Suspenders, Underwear, Uniforms – athletic and non-athletic, Vests, Wedding apparel – including veils (sold not rented). 

For a more comprehensive list of tax exempt items click here. 

The tax holiday is August 7-August 9.  Happy Shopping!