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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, everyone. Thank you for joining me to talk about real estate. Let's jump right in!

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Alexandria, Va.: I am a first-time homebuyer looking to purchase this spring. I currently have a lease, so I am looking to close early to mid-April. When should I contact a realtor to start seriously looking at potential homes?

Maryann Haggerty: Start working seriously on the entire process right now. But your first step should not be to call a real estate agent. It should be to take a close look at your credit files and credit scores. That, more than anything, will dictate what you will be able to find mortgage-wise.

And "early to mid-April" is really, really soon. Figure in most cases it will take about 45 days to go from contract to closing. That backs the whole thing up to, say, late February. And that is practically around the corner.

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Rockville, Md.: Hi,

We are in the preliminary stages of looking for another house. I would prefer to avoid dealing with banks and real estate agents at this point and I was wondering if you are aware of sources for the following:

1. Estimating the amount of loan we could qualify for. For example, years ago when I was a banker, I was told that the max mortgage payment could be 28 percent of gross monthly income. From that, it is easy come up with the loan amount.

2. A way to input the price, location, characteristics of the home we're looking for and the computer spits out homes or neighborhoods that meet the qualifications.

Thanks

Maryann Haggerty: 1. You remember the 28 percent ratio correctly (i.e., no more than 28 percent of your gross income can go to principal, interest, taxes and insurance) for a conventional loan. However, many lenders have abandoned those ratios for more creative financing. That's what shopping around is all about. In the meantime, there are a kajillion mortgage calculators on the Web that will do the math for you.

2. There are also a kajillion Web sites that let you specify various combinations of that info. That most widely used is Realtor.com . Lots of other entrepreneurs are competing to see who has the most killer features, so you just need to see who is offering what you want. (On any of the sites, just click on the equivalent of "more search options.")

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Washington, D.C.: I finally gave in and paid over $2000 for an apartment, but I really don't like it. Any chance prices will come down or is it like gasoline, prices go up but really don't come down?

Maryann Haggerty: I'm sure there are recorded instances of rent coming down, at least temporarily. But over time, barring another Great Depression -- nope, rents go up.

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Logan Circle, D.C.: Hi Maryann,

I feel slightly sheepish asking this, but here goes. After I bought my condo in D.C. in 2004, I took the D.C. first-time homebuyer's credit on my taxes, but didn't apply for the homestead deduction. In all the excitement of moving into the district, I think I got the two benefits confused and thought I'd already signed up for the homestead deduction somehow. So now, three years later, I realize my mistake (I double-checked my assessment on the OTR Web site ). I've been paying about $500 too much tax per year! Do you know if the homestead deduction can be applied retroactively to recoup what I failed to claim? (I assume I can still take it for the present and future at least...) Thanks!

Maryann Haggerty: I don't know for sure, but it appears from the D.C. government Web site that one of the requirements for receiving the D.C. homestead deduction is that you have an application on file for it. But hey, it doesn't cost anything to call the Office of Tax and Revenue and ask. There may be some fine print there that I'm missing

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Bethesda, Md.: I have a question that may sound simple, but for me it is really not an easy thing. How do you fire a realtor? I asked a realtor from a major realty company to help find a place to purchase, but he is rude, pushy and...to be quite honest, not very nice to my kids. I found a place that I like and want to see it again, but not with him. I found another woman whom I like so much more and who exudes the professionalism I expect. Am I legally bound to this first guy because I saw the property with him first? (I found the property online and asked him to show it to me.) How do I fire him? He keeps calling and sending e-mails even though I don't want to work with him any more. This is all pretty new to me....What do I do?

Maryann Haggerty: First, a warning. If he showed you that house, no other agent will show it to you. He already, essentially, has dibs on you and is entitled to a piece of the commission if you buy the place. If you neglect to mention this relationship to a new agent, you could get everyone tangled up in some messy legal things.

Next, did you sign a contract or buyer broker agreement with him? Then read it. It will tell you how long you agreed to stick with him, etc. But really, what you need to do is get some backbone here. Tell him you would like to terminate this relationship from this point on. Or if that is just too much, call his broker -- the guy who runs the office he works for. Tell him...

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Arlington, Va.: Ms. Haggerty,

I've been hearing about the "New Urbanism" movement in developments. I recently saw a piece on TV but just caught the end of it. Can you explain the concept? It mentioned a place in Arizona and a town called Daniel Island in South Carolina. Are you familiar with the idea, it sounds rather idyllic?

Thanks.

Maryann Haggerty: The new urbanism (also known as neotraditional development) isn't so new anymore. The Congress for the New Urbanism was founded in 1993 to codify/debate principles that architects and planners had already been bouncing around for several years. Essentially, it holds that communities can be designed in ways that foster neighborliness, walkability and sustainability -- following the model of older, successful communities pre-suburban-sprawl. There are more than 200 communities nationally following these principles to some degree. One of the earliest was Kentlands in Montgomery County. You can read much, much much about this, because its adherents LOVE to write and talk about it.

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Bethesda, Md.: Just to emphasize your advice that the best time to start a home-buying process is right now: Buying a home is open-ended, it can take six weeks, or it can take a year.

Maryann Haggerty: It really all depends on your personality, I think. Some people can make these decisions the first weekend. Some can't.

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Washington, D.C.: First-time buyer

I am going to go look at condos to buy for the first time with my realtor this weekend in Arlington. I am getting excited! Any good advice?

Maryann Haggerty: A couple things:

--Take notes. Lots of them. (Photos don't hurt, either.) You simply won't remember which condo had the bay window and which had the oak floors otherwise. I know for a fact that without notes, I tend to miscount the number of baths a place has.

--Be realistic. Know roughly what is in your price range, so you don't fall in love with something that is far far beyond you.

--Be prepared to compromise. You may think you know your priorities now, but eventually something will have to give.

Anyone else????????

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"Firing your realtor": Just FYI, I don't think there are any real legal entanglements to fire your realtor UNLESS you've signed something. We were looking for a house for my sister and saw a house online, talked to the realtor the house was advertised with and he talked to the seller's realtor. My sister loved the house and since she lives in another state she just worked with the seller's realtor to buy it. I never heard from the realtor we contacted first. So, apparently you can get out of it.

Maryann Haggerty: Not sure what "the realtor it was advertised with" means, but it's essentially the seller's real estate agent who controls the commission. At that level of work, the seller's agent may have had some prearrangement for a referral fee or something, rather than a straight commission split. But trust me, if a third agent had suddenly become involved in the deal, it would have gotten more complicated.

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Richmond, Va.: I have a mortgage prepayment question-

The house I bought last year is secured by two mortgages.

Mortgage No. 1 (a.k.a. The Big One) is a 30 year conventional mortgage at 5.5 percent that has $267,000 left,

Mortgage No. 2 (a.k.a. the Balloon) has $48,000 left but is for 10 yrs at 6.75 percent with a balloon payment of $41,000 in year 10. (My mortgage broker said she did it this way to avoid paying an insurance and I could always refinance the baloon payment.)

I can pay a little additional principal each month-- does it make sense to pay the additional principal payment to Mortgage No. 1, Mortgage No. 2, neither or both?

Thank you for answering my question.

Maryann Haggerty: This makes my head spin a bit, but let me give it a try. I think I would do the principal paydown on The Big One, because that will make the biggest dent in your long-term indebtedness. Those dollars you pay off up front are dollars you won't have to pay for over the next 30 years, rather than the next 10...

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Harrisonburg, Va.: We are preparing to put our home on the market. It is a three year old duplex; would you recommend that we purchase a one year home warranty? The market for this type of home has not cooled as much as other type homes in this area.

Thanks.

Maryann Haggerty: This is a matter of seeing what your competition is doing. If everyone else competing for the same buyer has a warranty, you have to offer one, too. If no one else does, why bother?

Do home warranties ever actually pay up, or is it mostly psychological? I don't know...

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Silver Spring, Md.: For the person starting to look at condos:

Once they have looked at a few places and are paring their choices down they should visit the building during different times of day if possible. A place that is quiet as a churchmouse may be very different on a weekend or in the evening.

Maryann Haggerty: Very good idea. I would always want to know what a place/neighborhood is like on a Friday night!

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L'Enfant Plaza: Is there an example of a new urbanism community in Northern Virginia?

Maryann Haggerty: First, the classic Old Urbanism (as it were)community is in Northern Virginia: Old Town Alexandria. This is what new urbanists aspire to.

Among newer communities, I think most people would point to, say, Cameron Station. But for a long list, see this Web site .

It lists purported new urbanist communities by state, along with more Web links than anyone could want...

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Alexandria, Va.: For the first-time buyer, my husband and I just bought our first home together and it was my first time too. We started out saying we had to have a garage and a fireplace. As it ended up, we were much more interested in a neighborhood we really loved and in the end we got our great neighborhood but not the garage or the fireplace. I also thought I wouldn't be able to live without a totally redone kitchen but, as it turns out, I can and I'm totally in love with my new home!

Maryann Haggerty: This is what I meant about compromises and priorities. The whole process makes you think about what is important to you.

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Re; Richmond:

NO NO NO. Pay the higher interest debt first. ALWAYS. And with the terms of this second, the principal reduction will be greater than on the first (longer amortizing) mortgage with the same amount of prepayment.

Maryann Haggerty: Like I said, this one made my head spin. You're probably right. Unless someone can explain it the other way.

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First-time buyer - Arlington, Va.: For condos, ask the following questions:

1. How much is the condo fee and what is included in this fee?

2. Rules about pets? Allowed/not allowed?

3. Percentage of renters vs. owners living there

4. Have your agent give you the latest sales price (comps) on similar units.

Maryann Haggerty: More helpful suggestions.

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Arlington, Va.: When I have an open house, what percentage of the visitors should be considered "interested purchasers" instead of just nosy neighbors, fans of open houses, etc.? I get excited when my realtor says 25 people came to see the house. However, should I expect that only half are even thinking of purchasing in the near future?

Maryann Haggerty: I'd be really surprised if it was even as high as half.

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Home warranties!: They do pay out!! We got a new dishwasher -- for $100 we upgraded to the one we wanted, not the one comparable to the one that died. We've had a pool pump replaced and the heater fixed more then once. I'm hoping the fridge will die before the warranty expires (and we've renewed it once!).

Maryann Haggerty: That's good to hear. I admit, I mostly hear from people with problems. I guess people don't call newspapers demanding that we write stories about how everything is going just the way the expect. (Unless, of course, they're the people selling the product in question...)

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Re: first time condo buyer: I recommend you try your commute to work from a condo you are seriously considering before making an offer -- especially if you will be driving. A short drive for a Sunday open-house can be much longer on a Wednesday morning or evening.

Maryann Haggerty: Oh, yeah! This almost goes without saying -- or would, if I didn't hear from so many people who seem to be surprised by how bad their commute is...

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Warranties: The house that we bought (built in 1948) had a home warranty, but to be honest, it was not a deciding factor at all, nor did anyone talk it up or suggest that it was peace of mind for the older furnace and AC. And when it was time to renew, we didn't, because I'd done some research and found that most people are not satisfied with the service from warranties -- you have to go with their repair people whenever they're available, and are limited in what they will do for you. We figured that when the AC dies, we will want to choose the best option for us at the time, and not be stuck with the warranty company's limits.

Maryann Haggerty: The other perspective.

I must say, I consider all appliances innately perverse and most likely to expire on day 366 of a 365-day warranty.

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D.C.: What kind of impact, if any, does the NFL Super Bowl have on the real estate market? Do people generally wait until after this event to put their home on the market?

Maryann Haggerty: Many real estate agents say that the spring real estate market doesn't begin until after Super Bowl Sunday. Others say you have to wait for the azaleas to bloom.

But the Super Bowl itself? Can't see that it makes much difference.

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Washington, D.C.: Hi Maryann. We're lifelong city folks contemplating a move to the suburbs. If you were to make a list of neighborhoods (i) in Montgomery County; (ii) within walking distance of a Metro stop; (iii) within walking distance of at least some shopping and restaurants; and (iv) where one might be able to buy a nice 3+ bedroom house for something like $600,000, what would be on the list?

As an aside, I wish there were some way to search for properties on the Web site that were "close to Metro" or something. It's a requirement for us, but it's hard to wade through all the listings that don't satisfy it. (Zip codes are too big!)

Maryann Haggerty: That's a pretty tall order, actually.

While we wait and wait for someone to come up with a high-tech GIS-enabled home search (which someone has probably googlemashed somewhere or something), I have a lower-tech suggestion: Pick up the Real Estate classified ads in The Post on Saturday and Sunday. The ads ALWAYS mention close to metro, if they are. And of course they mention price. Read in conjunction with a good map, you'll see patterns.

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Warranties: My wife and I recently bought our first home and the home warranty certainly was a factor in our decision. Neither of us has much fix-it knowledge.

We've been in the house for three months and the warranty has already paid for itself: A new copper pipe in the basement and a half hour's worth of electrical work in the living room. We're both lawyers and we couldn't believe how much plumbers and electricians charge per hour!

We are definitely renewing our home warranty when it expires.

Maryann Haggerty: Thanks.

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Fairfax, Va.: There's a house for sale on my way to work and on top of the sign is a smaller sign that says "Buy this house and I'll buy yours with cash!" I keep forgetting to note the guy's name or even the agency he's with (which I guess doesn't speak well for the effectiveness of the sign) but I'm dying to know what that really means. Have you heard of promotions like this before? We are looking into buying something a little bigger but we're hesitant because of concerns about selling our place. So this idea intrigues me if it's legit.

Maryann Haggerty: What this means is usually that the guy (or more likely, the company he works with) will buy the house. What they won't do is offer you a fantabulous amount of money.

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Ward 4, D.C.: Maryann -- Do you care to comment on the front page article in that other East Coast newspaper describing the awful state of the Washington, D.C. condo market?

The article was stronger than anything The Post has dared publish regarding what appears to be an undeniable fact about the D.C. condo market.

Maryann Haggerty: Actually, I think we've been writing variations of that same story for a year now.

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Philly, soon to be D.C.: My husband and I are moving back to D.C. soon and looking to buy our first home. How do we even begin to figure out what we can afford? Is there some resource you can recommend to help us sort out points, down payment, insurance, property taxes, condo fees, and all the other things we DON'T know about?

Maryann Haggerty: There's A LOT of info out there. On the Web, look over the homeowner education portions of Fannie Mae's and Freddie Mac's Web sites. They have lots of info, calculators, etc. And go to a bookstore or library and find a book aimed at first-timers, such as "Home Buying for Dummies."

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Washington, D.C.: What is going on with the H street corridor? I've heard a lot about it, but it still seems somewhat rundown, with many boarded up buildings, etc.

Maryann Haggerty: Gentrification doesn't happen overnight.

Even more so on a commercial strip. Investors want to see what happens to the pioneers.

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RE: Super Bowl: I wouldn't put a house on the market on Super Bowl weekend and have an open house -- I don't think anyone would come and it would give an extra week to your house being on the market with no one looking.

Maryann Haggerty: Unless you advertised it, "Get away from the madness! Come see this quiet gem on your way to the Kennedy Center!"

Or something like that...

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Arlington: Are landlords required to paint units in between tenants in Virginia? I have heard mixed answers on both sides of this issue.

Maryann Haggerty: States generally do not require such cosmetic work.

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Re firing the agent: You've said (twice, essentially): "But trust me, if a third agent had suddenly become involved in the deal, it would have gotten more complicated." Maybe so, but why does this buyer care? Let the real estate goons figure it out for themselves. Absent a contract binding her, she should not feel compelled to spend any more time with the present agent. She should find a substitute agent, disclose the situation, and let others fight over her commission.

Maryann Haggerty: Of course. But I'm telling her she should make sure everyone knows what the situation is, and that in the real world it might be difficult to get another agent involved.

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For Washington D.C. - re: neighborhoods: The D.C. person looking for a Montgomery County neighborhood should look in the southern end of Gaithersburg, near-ish to Shady Grove Metro, east of 270. I'm talking about the older, established neighborhoods north of Shady Grove and along 355. Several meet all of the person's stated requirements and he or she may be surprised at how much house can be had for the money. You can walk to Metro (and MARC in some cases), or take the Ride-on bus.

Maryann Haggerty: Thanks for the suggestion.

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Second home: I have a second home in a beach community I want to sell, but in 2006, as we all know, the real estate market went south (figuratively, unfortunately not literally). We have seen no traffic. Any prospect for change?

Maryann Haggerty: Change will come eventually. That is not the question. The question is WHEN.

And to that, I don't know the answer.

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Maryann Haggerty: Folks, I'm out of time. Thanks for joining me. I hope you can pick up the Real Estate section tomorrow, where we'll tell you lots of interesting stuff about your credit score.

Have a lovely weekend; see you in two weeks!

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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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