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Real Estate Live

Maryann Haggerty

Byline: Maryann Haggerty

Welcome to Real Estate Live, an online discussion of the Washington area housing market with Post Real Estate editor Maryann Haggerty.

Maryann has been with The Post for 18 years and has served as real estate editor for the last five years. She's been a business and real estate editor and reporter for about 25 years. In all that time, she still hasn't figured out where you can find a lovely but inexpensive house in a charming neighborhood.

She's online twice a month to answer your questions about the local housing market -- from condos and investment properties to contracts and mortgages.

For more on local real estate, visit washingtonpost.com's Real Estate section .

The transcript follows.

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Maryann Haggerty: Good afternoon, folks. Glad you could join me to discuss real estate in this new year.

I'll answer the questions that I can, and hope the rest of you will jump in when I can't.

In the meantime, a request to all: Our real estate reporters, all charged up and raring to go in 2007, would love to hear from you if you are willing to be interviewed about your experiences for publication in various Post articles. We'd particularly love to talk with you if you have been cleaning up your credit in preparation for a home search, if you are currently in the market to buy/sell a house, or recently completed buying or selling. Drop me a note at haggertym@washpost.com.

Now, onto today's questions:

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Moving in: Thanks for the chats, Maryann. I'm moving into the area and not yet sure if I'll be buying a house in D.C., Northern Virginia, or suburban Maryland. Do real estate agents in the area move seamlessly between the three areas? Any recommendations on how to find an agent who can handle this?

Maryann Haggerty: There are a lot of agents who are licensed to work in all three jurisdictions, but I have a very difficult time believing that any single human being could specialize in the entire region--heck, you can barely drive across it in a day anymore! In my experience, the most knowledgeable and successful agents specialize in a smaller area.

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Rockville, Md.: Just got my assessment notice. It specifically says that there is a 10% assessment cap established by the county. But then it gives my previous property value ($350,000) and my current property value ($550,000) that will be phased in over the next three years. Not only is it a 55 percent increase (which, frankly, is accurate considering what's been going on real estate-wise over the last few years even though I couldn't sell it for that much in this market) but the three-year phased in increase is 18 percent followed by 15 percent followed by 13 percent. How are they allowed to do that if there is a cap of 10 percent?

I don't necessarily want to fight the assessment because I think the new number is accurate (and it's very close to my neighbors with similar houses as per the Md. Real Property Data Search page here http://sdatcert3.resiusa.org/rp_rewrite/) but I don't get the 10 percent cap versus the actual yearly increases that they're hitting me with. Can you explain? Thanks!

Maryann Haggerty: The cap is not on the assessment, ie, what the state/county say the house is worth--but rather on the amount of tax you actually pay. The following comes from the Md. Dept of Assesment and Taxation:

"Q:What is the Homestead Property Tax Credit?

"A: The Homestead Property Tax Credit, commonly referred to as the Assessment Cap, is a program for homeowners who qualify that limits the taxation of large annual assessment increases on a property owner's principal residence. For State tax purposes any annual assessment increase for a home or homesite that is greater than 10% is not taxed. Counties and municipalities may limit assessment increases for local tax purposes to less than 10% annually."

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Gainesville, Va.: Maryann,

I'm thinking about investing in the NoVa condo market, specifically in Arlington. I've noted quite a number of condos in the River Place Cooperative that are priced significantly below market. According to the information on many of these listings, River Place is a cooperative with a land lease with approximately 50 years remaining. If I purchase a condo, what happens when the land lease expires?

Maryann Haggerty: When the land lease expires, the land and all the improvements--ie, the building--go back to the land owner. This is why buildings on leased land decline in value over time.

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Annandale, Va.: I heard that someone has purchased 142 acres in Ashburn and plans to build a retirement community. Does anyone know who is planning this development?

Maryann Haggerty: I don;t know the answer to this one--but if you;re talking about 55-pkus communities, they are hot among buildes hoping to cash in on the aging of the baby boomers

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Arlington, Va.: Thanks for taking my question. I just bought a condo, and unfortunetly it is costing more than I expected. I need to increase my credit availability on my card, and I was wondering: is this bad for my credit score/rating? I know this is slightly off topic, but real estate can put you in a pinch sometimes! Thanks Maryann! Love the discussions.

Maryann Haggerty: Before I answer your question, I need to throw up a red flag: If you need to increase the credit limit on your credit card,it is highly possible that you are overspending. Sit down with your budget THIS WEEKEND and give it a hard look before you get into trouble.

(Lecture over): If your existing credit card lender will up your limit with no hassle, that should not hurt your credit rating. What the credit scorers look at is what percentage of your available credit you are using (ie, it is better to have a higher limit and not use it all.) HOWEVER: What counts even more is that you pay those bills, and pay them promptly.

For a lot more detail on credit scoring, see www.myfico.com

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Fairlington: Do you know of a way to check out a realtor? I've been given the name of one that a friend knows but has never used. I'm wondering if there's some sort of way beyond my friend's recommendation to get more information. It seems that if I ask the realtor for references, she's only going to refer me to people who loved her, which may not be an honest evaluation. Thanks.

Maryann Haggerty: You check out a real estate agent the way you do any other business/professional. Touch base with the state licensing board to see if there are outstanding complaints. Check with the better business bureau, also for complaints. Ask around among your friends. And yes, ask for references. (You can also specify that you want a list of her most recent transactions and that you would like to call the three most recent, or something like that.) As with any business, the references will tend to be nice ones--but check them anyway. You'll be able to glean a lot about work style, etc. And contact and interview multiple agents to see who you want to work with.

It's not like it's tough to find people in that business.

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Poorhouse, Va.: It's getting to the point where we need (and want) to buy a house, but we have no money! Ironically, we probably make too much for first-time-homebuyers assistance, even though we can't seem to save up enough. I'm at my wit's end and don't know what to do; any suggestions?

Maryann Haggerty: Well, you could play the lottery more often, but that doesn't work for everyone. Here's the reality: Homeownership costs money.

Sure, you can buy a house for no money down. But then each month it will cost you more than it would otherwise, and you could be facing some very unpleasant surprises in the future when that cheap no-down-payment, interest-only loan comes home to roost.

So instead, you have to start saving money, as unpleasant as that may sound. Get yourself out of debt. Start putting money in the bank every pay check--for starters, teh difference between your current rent and what your house payment might be. For inspiration, read my colleague Michelle Singletary's columns/chats

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Herndon, Va.: Hi Maryann,

Do you have a rule of thumb when it comes to how much one can afford (i.e., two times your annual income)?

Maryann Haggerty: If those rules ever worked--and they sure required a stable interest rate environment to do so--why bother with them these days? With the internet, you don't even need mortgage tables and formulas and the like, as you used to. It's so so easy to figure out what you can afford--just use any one of the excellent mortgage calculators out there on any one of a zillion web sites.

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Falls Church, Va.: RE: River Place and prices. It's also significant that the building is not condos, but a cooperative. Co-op units are harder to sell than condo units, because of the additional restrictions and approvals necessary. Don't get me wrong; that may be an ideal lifestyle for the right people, but I do think it depresses the selling prices.

Maryann Haggerty: I don't want to open the condo vs. co-op discussion--especially because in this case, that's not the big factor. The land lease is. Also, in this case, the percentage of rentals in the building is already so high that conventional financing is pretty much out of the question.

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Alexandria, Va.: What do you think of Zillow adding the option of individuals to sell their homes directly from their Web site?

Maryann Haggerty: I read some stories that speculated that this could be the single biggest change in real estate marketing in the history of the universe. I don't get it. If I were selling, I would want to make sure that I marketed my property in every known way, and one more Web site would be one more Web site.

I've said it before: I think Zillow's maps are way cool. I think its price estimates are unreliable.

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Washington, D.C.: So, my brother sold his house in two weeks! Is it luck of the draw, of just that he lives in the Kentlands in Gaithersburg and priced it right?

Maryann Haggerty: Who knows? The right price in the right place--for the right buyer at the right time. How much of that is luck, how much is smarts?

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Alexandria, Va.: How do I find out when a haunted house is up for sale? Realtors are remarkable uncooperative, you'd think they'd like to move one.

Maryann Haggerty: Do you have a particular haunted house in mind?

If you're just looking generically, I woudl suggest following the do-ings in your favorite probate court...

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Realt, Oregon: We're thinking of selling our current home and buying one in a different area, which means finding two agents. Why, why, why do real estate agents insist on putting their picture on everything that will hold still? Do they feel like it gives them some competitive edge? You can tell anything about their skills from the photo, and some of them are downright scary looking.

Maryann Haggerty: It's my suspicion that someone in some intro self-marketing class suggested those photos years ago, and they're now de rigeur...

Does anyoen have a better explanation?

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Goodyear, Ariz.: Maryann, I'm moving to the area and a friend recommended your chat for real estate help. How do you find a good real estate agent to buy a house with? What questions should I ask? I've gotten burned before with recommendations from friends, so I'm hesitant to go with that method.

Maryann Haggerty: Recommendations from friends remain the single best way to find any service professional, I believe. You sure don;t want to just randomly call folsk whose pictures you see on bus benches--though in the long run, those can turn out to be good aggressive salespeople.

There are a couple other possiblities: If the company you work for has a relocation office, talk with them. They may have agents they work with regularly, or may be able to tell you about people with whom they have had good experience. Also, attend weekend open houses in the neighborhoods that interest you. Don't just look at the house. Talk to the agent who is minding it, too. You may quickly find someone who seems smart and clicks with you. I have met some great real estate agents this way.

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Lorton, Va.: Very generally speaking, How much money would you need to include down payment closing costs and any other costs that accrue that I may have forgetten for a $250,00 home?

Maryann Haggerty: You'll need your down payment--anywhere from 3 to 20% of the home price, plus another 4-6% for closing costs (that is, another $10,000 to $15,000.) Also allow some room in your budget for unexpected maintenance costs in the initial months.

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Vienna, Va.: All of the news articles and TV say that '07 will be flat and the market may not get better until '08. Does that mean that my wife and I should wait until '08 or buy in '07? Have we hit the bottom yet?

Maryann Haggerty: If you're into market timing, you want to catch the absolute bottom--which of course is always before some people say and after others say.

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Petworth, D.C. : Maryann -- My wife and I recently purchased our first home, a renovated rowhouse in Petworth. We positively love it. It was worth the wait and sacrifice.

We love it, though, because we plan to be there for years and years. I've even stopped compulsively checking the real estate pages to review offering prices.

I think that embracing the long-term nature of a real estate investment contributes a good deal with feeling good about owning one's home.

Maryann Haggerty: Now, I hope you keep reading about real estate in order to glean more ways to make your house better for you and your family!

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RE: Online mortgage calculators: ... but a lot of those want estimates on property taxes or insurance and I don't have any idea where to get those (esp taxes).

Maryann Haggerty: Tax rates vary from county to county, but as a ballpark, I'll pick Washington DC, where the rate is 88 cents per $100 in value. Thus, the annual tax payment on a $400,000 house in DC is $3,520, or $293 per month. (you can find the tax rate for almost every county on its web site. Just err on the high side if you're unsure about anything.)

I don't have a homeowners insurance bill handy... but there are calculators out there that will plug this stuff in for you. (I think it was fannie mae that used to have that calculator.)Or just guess at, say, another $200 or $300 per month.

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Herndon, Va.: My wife and I are both, FINALLY, finishing school. Our combined gross income will be circa $90-95,000 per annum. Realistically, the rates what they are today, what can we afford? We've sniffed around some townhome-style condos in Herndon, which are on the market for circa $300-350,000. Will that kill us? We have a modest ($35,000 combined) student debt burden and no other debt (e.g., car payments or running credit card balances).

Thanks so much!

Maryann Haggerty: Again, try a mortgage calculator--or talk to a mortgage broker--to get a firm number.

However, with a down payment, my rough calculations--very rough--show that $300-350K won't in fact kill you. But you will need and want a down payment, closing costs, etc., so start saving...

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Vienna, Va.: "Which of course is always before some people say and after others say."

Not really sure about what you meand by this. In your opinoion have we seen the bottom yet or what signs should we look for?

Maryann Haggerty: I'll answer this (and a number of others like it I have here) with a statement that will seem like a broken record to regular readers: I don't know. I don't have a crystal ball. I'm not in the business of having opinions/forecasts about what the market will do. I'm in the business of retailing the opinions of others--some of whom think we've already hit bottom, and some of whom think there's a lot of dropping yet to come.

And even more important: I have a really lousy track record with my market forecasts. You're all better off not knowing what I think!

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Arlington, Va.: We bought our house with no down payment, but our loans (80/20) are both fixed rate, 30-year mortgages. So although we are paying approx $500 more per month than we would if we'd put 20 percent down, it would have taken us 14 years of saving that $500 before we'd have the down payment saved. We have stability in knowing that our payment will remain constant as long as we live in the house, and we can work on paying the second mortgage down more quickly if we'd like.

My point is that although we took on extra risk by having no equity in our house at the start, we didn't have to get a no-interest loan to do so.

Maryann Haggerty: Yeah, a 20% down payment in today's market can be an almost insurmountable barrier. There ARE loans out there that work in a lot of circumstances. You seem to have found one that works for you, especially if both halves of the 80-20 are fixed. The moral: Shop around

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RE: Retirement Community in Ashburn: Here is the one I keep seeing:

Potomac Green by Del Webb http://www.centexhomes.com/Washington-DC/N46078.asp

Maryann Haggerty: Someone has a guess for the earlier questioner.

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First home bid: I am getting ready to bid on my first house in the next week or so here in Maryland. When bidding on a house what percentage below asking bid is reasonable and what percentage below ask is not worth even asking for?

Maryann Haggerty: Don't rely on formulas. Rely on info about the market. Make sure you know what recent comparable sales prices have been, and use them as a guide.

That said, also use sensible bargaining guidelines--this isn't a flea market; you really don't start at 50% of asking price...

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Alexandria, Va.: Love your chats and advice! Question for you ... how much does landscaping add to the value of a home? Current home has very little curb appeal, is barren and retaining wall is dilapitated. Received quotes to spruce up the front for between $8,000 to $10,000 which includes new retaining wall, walkway, steps and landscaping. We anticipate being in the home another two years and wonder if the cost is worth it and, in effect, if it will ultimately help sell or bring prospective buyers to the home when the time comes. I would appreciate any advice/comments you could provide. Many thanks!

Maryann Haggerty: Many years ago I wrote a story saying landscapers generally estimated that a full yard re-make would come to about 10% of the home's value. In that same story, agents pointed out that a nice--not elaborate--curb appeal update would more than pay for itself, and that skipping it would actually cost you money at the sale. (The numbers are out of date, so I can't quote them to you.)

Personally, I hope landscaping adds loads, because I just spent a small fortune renovating my back yard...

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Maryann Haggerty: Sorry. It looks as if I am out of time. If I missed your question, apologies.

Again, if you're willing to talk with a Post reporter for publication to share you experiences shaping up your ceredit or buying or selling a house, please drop me a line at haggertym@washpsot.com. Your experiences can be of great help to others. (Also, one other late-ish request: How do you think/have you dealt with allocating some space in your home that is just for the male or males of the family?)

Have a lovely weekend--it sounds as if we're going to have one more chance to get outdoors in the sun!

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Editor's Note: washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.

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