The winner of the Prudential Halloween Coloring Contest is Lexy of Thousand Oaks.  Her choice of mixed media include but not limited to crayon, cotton, color marker, foam buttons and tissue paper on white parchment.  Congratulations on your win.  We encourage your to continue exploring your creative talents. Michael and Lora

By Deborah K. Dietsch, Published: October 26

After staying put during the economic recession, you might be tempted by stabilizing real estate prices and low mortgage interest rates to sell your house and buy your next place. What you may not realize is how long and complicated the process of buying and selling a home has become. New lending regulations, appraisal procedures and consumer expectations can throw up roadblocks for even the most seasoned flipper. Many homeowners who haven’t sold or bought a home in the past few years will find that many of the old “rules” have changed. Residential real estate experts suggest homeowners become aware of the new rules before listing their current property and searching for a new home

1. A buyer’s market? Not entirely.

Home prices and mortgage rates are down, but buyers may not be in the catbird seat in some sought-after neighborhoods, where properties are worth almost what they were between 2005 and 2007. In August, median sales prices of houses in the District reached almost 88 percent of their peak value, prices in Northern Virginia rose to nearly 80 percent of their high and those in suburban Maryland climbed to nearly 67 percent, according to the George Mason Center for Regional Analysis. But within each county and, indeed, each neighborhood, there can be a lot of variation. Inside the Beltway, it is somewhat balanced between a buyer’s and a seller’s market because there are fewer buyers out there and less inventory,” said agent Jamie Koppersmith of Century 21 Redwood Realty. When priced right, he said, homes can still attract multiple offers. Confirming this reality is agent Anslie Stokes Milligan of McEnearney Associates, who said she fielded seven offers earlier this month on a rowhouse near Dupont Circle.

2. Pick a real estate agent willing to do the homework, because buying and selling take more effort these days.

Buyers and sellers should insist their agents do more than show listings and run open houses. Today, savvy buyers are well-versed in online tools such as Redfin and Zillow, and they look up a lot of listings data themselves. Buyers should make sure their broker is well versed in the latest lending and appraisal practices and able to navigate around potential land mines that could detonate the deal. “There are so many things that can go wrong with a transaction, even when the buyer and seller are organized and well-qualified,” said realtor Morgan Knull of ReMax Gateway. “These days, there seem to be more problems than in the past with buying and selling, and everything takes longer to do.”

Knull said agents should be expected to supply appraisers with detailed information about relevant comparables and market trends and to resolve title issues, especially with foreclosures involving complicated chains of ownership.

Realtors should also be expected to understand short sale transactions and be willing to keep tabs on the buyer even after the contract is signed.

“When an offer comes in, you can’t just assume the buyer will get the loan,” said Koppersmith. “We need to look at the financials they provide as well as talk to their lender to make sure they are qualified and will be able to close the transaction. The last thing you want for your seller is to have the property under contract for a month or more, only to have it come back on the market because the loan wasn’t approved.”

3. Sellers, don’t put off those remodeling projects.

Call it the “HGTV effect.” The proliferation of home improvement shows on cable television has increased buyers’ expectations of finding homes in move-in-ready conditions. Except for do-it-yourselfers intentionally looking for a fixer-upper — with a lower price to match — buyers want older homes to look like new.

They now expect sellers to have renovated older kitchens and bathrooms, replaced windows and refinished floors. “There is intolerance among today’s buyers for properties that haven’t been updated appropriately,” said Knull. “Granite on countertops is no longer an upgrade — it’s an entitlement.”

4. Home staging may be worth the extra cash.

“Besides new paint, staging is the best return on investment you can make,” said agent Rachel Valentino of Keller Williams. Particularly for vacant homes, she said, “It’s difficult for most buyers to walk into an empty house and see how their furniture would be placed. You have to do the legwork for them.”

With so many buyers searching online for properties, well-decorated rooms with visual impact are critical to standing out from the crowd. “If the photos look depressing, buyers may never walk inside the front door,” said Knull. Staging, he adds, is most valuable in properties with small or unusual spaces.

Professional stagers both rearrange owners’ furniture and redecorate from scratch, but their services don’t come cheap. A two-hour consultation with staging advice typically costs $200 to $300, and outfitting the main rooms with rented furnishings can cost $5,000 or more. “The national average to stage a vacant house is about 1 percent of the asking price,” said Monica Murphy, owner of Preferred Staging in Potomac Falls, Va.

5. Appraisals may not match price expectations.

The days of cherry-picking a friendly appraiser to assess a property within 24 hours are over. In 2009, a practice known as the Home Valuation Code of Conduct went into effect to ensure that homes are appraised fairly, without the influence of lenders and third parties. The policies are still in place for conforming mortgages sold to Fannie Mae and Freddie Mac, and they have created unintended consequences for appraisals.

Now lenders often outsource the process to third-party appraisal management companies to avoid any conflict of interest. Since the appraisal fee is now shared between the management firm and the appraiser, the appraisal can cost more, with the higher price passed on to buyers and sellers. “Not only is the consumer paying more but getting lower quality,” said Ken Chitester, spokesman of the Chicago-based Appraisal Institute. “Top appraisers won’t do the job for less than they used to be paid and often the selected appraisers are the least experienced professionals available.”

In some cases, appraisers may undervalue the property because they are unfamiliar with the community in which the house is located. Realtor Kimberly Cestari of W.C. & A.N. Miller found one of her listings in Chevy Chase was appraised at $100,000 less than the sales price because it was a rambler in a neighborhood full of colonials. “I found a rambler of similar value in [the nearby neighborhood of] Forest Hills and the appraisal went up. It was a nail-biter,” Cestari said. “The onus is now on the listing agent to provide the appraiser with relevant comparables to show them how we arrived at the price.”

The seller can also help prove the value of the home. “Provide the appraiser with a list of repairs and upgrades to the home over the past four to five years,” said Frank John of Washington Appraisal.

More layers of administration and quality control between lenders and appraisers mean the appraisal process takes longer. “Generally, it takes seven to 10 days,” said McEnearney Associates’ Milligan. “Some lenders require two appraisals for some FHA and jumbo loans.”

6. Start saving your financial records to show the bank.

Lenders now require more documentation than ever to be convinced of financial qualifications. “We have to validate everything,” said Catherine Smith of First Home Mortgage in McLean. Her advice to a potential buyer? “Become a paper hound. Come prepared with two years of tax returns and two years of bank statements for all assets. Be ready to defend your credit.”

Buyers need a credit score of at least 620, the minimum accepted by Fannie Mae, and many lenders require higher scores. “In general, the lower your credit score, the higher the interest rate will be on the loan,” said Debbie Polcyn of First Savings Mortgage in Bethesda.

7. Prepare to spend more time securing a loan.

What used to take two weeks can now take 30 to 60 days, according to several lenders. “The absolute number one reason that the loan process has lengthened is because of compliance with federal regulations,” said Polcyn. She also cites increased loan documentation requirements, more intensive underwriting and quality control processes such as fraud checks as contributors to the wait.

Meeting with a loan officer before you start looking for a house can help pave the way to more financing options and a smoother deal. “Get an accurate snapshot of interest rates and monthly payments before you start shopping,” said Valentino.

8. A bigger down payment might be necessary.

Buyers seeking homes in upscale neighborhoods may have to come up with a higher down payment, since jumbo loans aren’t available in the amounts that they used to be. “You used to be able to borrow up to $729,750 in high-cost areas inside the Beltway, but now the maximum is $625,500. If you exceed the limit for the area, your loan becomes nonconforming,” said Smith of First Home Mortgage. “There are fewer sources for that money, and interest rates are higher.”

Documentation of income and reserve funds is required of all loans, but the process is more stringent for securing a jumbo loan. “Lenders want to make sure the borrower can handle unexpected expenses, loss of income or other financial bumps in the road after closing,” said Polcyn.

9. The home inspection is back with a vengeance.

Waiving the inspection was one way to beat the competition during the go-go market of 2005-07. Now buyers view the top-to-bottom assessment of a home as essential to making sure their investments are sound. Some even see the inspection as an opportunity to get renovations done at the seller’s expense. “People are asking for more and more on the home inspections,” said Cestari. “Buyers are becoming pickier. I’ve had them request the sellers paint the trim, replace the gutters, line chimneys.”

To avoid a second price negotiation over fixes, some agents recommend that sellers pay for their own inspection before putting the house on the market and making the report part of the disclosure package. “I encourage the owner to service the heating and cooling system, and get chimney and termite inspections,” said Milligan. “Those are three big-ticket items that buyers bring up frequently.”

10. Sell or rent before buying or be willing to pay two mortgages.

Selling one house and buying another used to happen in quick succession, without the need to rent temporary quarters and move a household twice. Buyers who wanted to purchase a home before selling their existing residence often made the contract contingent on the future sale. Or they opted for a bridge loan as a stopgap measure to finance their next purchase before selling.

But as the real estate market has slowed and lending regulations have tightened, both these options have been kicked to the curb. As a result, sellers can be left scrambling to find a place to live after closing.

Renting a furnished apartment for the transitional period in between selling and buying is an option but an expensive one. Oakwood, a temporary housing company with more than 60 properties in the D.C. area, charges $193 to $209 per day for a two-bedroom apartment in the metro area. Another company specializing in transitional apartments, Turnkey Housing Solutions, charges about $145 per night for a similar unit. ExecuStay Marriott, a division of the hotel chain, works with more than 54 apartment communities in the metro area to offer two-bedroom units averaging $199 per night in the District and $135 per night in suburban Maryland and Virginia. Added to those prices are a 14.5 percent sales tax in the District for a stay of less than 90 days and a 10.5 percent tax in Maryland and Virginia for stays of less than 30 days.

To avoid these high costs, Koppersmith suggests that sellers rent their property back from the buyers for a month or two. “This allows the seller to close on the home they are selling, get the proceeds and then quickly put a contract on another home and settle that property as fast as possible,” he said. “Assuming the seller feels confident they can find a home they would like to purchase, this is a pretty good strategy for bridging the gap.”

California housing starts rose 10 percent in September compared with the prior month, and were primarily driven by an increase in the multifamily sector, the California Building Industry Association announced this week.

According to statistics compiled by the Construction Industry Research Board (CIRB), permits were pulled for 3,291 total housing units in September, up 10 percent from the same month a year ago but down 35 percent from August. Permits for single-family homes totaled 1,463, down 16 percent from September 2010 and down 25 percent from the previous month, while multifamily permits totaled 1,828, up 45 percent from a year ago but down 41 percent from August.

Late last week, the Senate passed an amendment to an appropriation bill that would reinstate the conforming loan limits to $729,750 through December 2013. The Senate and House now are working out the differences between the Senate and the House bill, which the House passed earlier this year. C.A.R. also is working with the California Congressional Delegation to ensure this provision is included in the final bill.

NAR worked tirelessly to keep this issue alive and collaborated with senators to explain the negative impact the lower loan limits are having on the market. California Sen. Dianne Feinstein played an instrumental role in ensuring the loan limit amendment was included in the bill.

The Federal Housing Finance Agency, along with Fannie Mae and Freddie Mac, on Monday announced changes to the Home Affordable Refinance Program (HARP) to help more borrowers.

The program will continue to be available to borrowers with loans sold to Fannie Mae and Freddie Mac on or before May 31, 2009, with current loan-to-value (LTV) ratios above 80 percent.

The new program enhancements address several other key aspects of HARP including:

• Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;

• Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;

• Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;

• Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and

• Extending the end date for HARP until Dec. 31, 2013, for loans originally sold to the Enterprises on or before May 31, 2009.

Fannie and Freddie plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by Nov. 15. Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes.

Builder confidence in the market for newly built, single-family homes rose four points to 18 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for October. This is the largest one-month gain the index has seen since the home buyer tax credit program helped spur the market in April 2010.

“Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “That said, confidence remains quite low as builders continue to confront overly restrictive lending policies that are discouraging prospective buyers, problems with new-home appraisals and widespread uncertainty regarding federal support for homeownership.”

Each of the HMI’s three component indexes recorded substantial gains in October. The component gauging current sales conditions rose four points to 18, the component gauging sales expectations in the next six months rose seven points to 24, and the component gauging traffic of prospective buyers rose three points to 14.

Regionally, the West led all other areas of the country with its nine-point gain to 21 – the highest HMI score for that region since August of 2007.

When my husband and I considered moving to the Conejo Valley we know no one in the area. I googled local real estate agents and the Lora Martin / Michael Radonic team fell in the middle of my handwritten list. For some reason they were the call I made; it turns out that even my closest friend could not have made a better recommendation.  I still can’t believe we fell into such trustworthy and capable hands. Not only did Lora and Michael sell us our home, they exposed us to the beauty of the area. It wasn’t long before our wonderings had turned into a real commitment to sell our Pasadena home and move west.

We spent hours together every week, month after month. I saw every viable house on the market (they saw many more; before we walked into their office each week, they had already spent hours previewing properties and ruling things out. The one that looked so great on the internet? “It’s by a car wash,” or “It’s on too busy of a street.  If you move out here, you don’t want to hear traffic.”) After seeing house after house that wasn’t quite IT, they assured me, “The perfect house will come when the time is right. It will all fall into place. And we won’t let you buy a house you don’t absolutely love!”  Their calm, level-headed approach took all the anxiety out of the process, and in the course of the five months of house hunting I learned the neighborhoods (and their accompanying schools) from Agoura to Newbury Park. How could two people be so patient?

It turned out they were right about everything – when the time was right we did find a house we absolutely loved! The entire process, from making the initial offer, negotiating, having our offer accepted, moving into escrow, the inspection, the move in date… it was all handled impeccably. There was never a moment of doubt about their ability to handle all the necessary steps; we knew that Lora and Michael were pros – they had been helping buyers in this process for years and years, and nothing fazed them. We were in constant communication through email, cell phone, and face to face interactions. Lora called at 10:00 at night to tell us our offer had been accepted.  She was thrilled for and with us. And they didn’t disappear once the transaction had been made. They continued to check in on us and make sure that all facets of the move happened smoothly.

I can’t believe it was a totally random act that lead us to Lora and Michael; you have a little more to go on having read this letter. If you are looking for a fun, stress-free home buying experience, you need look no further. Lora Martin and Michael Radonic are an incredibly competent realtor team, but more importantly, they are the kind of people whose integrity and kindness will affirm that there is goodness in the world.  Travis and Sara

A comparison of nationwide FICO scores from 2005-2011 illustrates that score distribution has remained relatively stable at a national level. However, a close look at the numbers suggests that U.S. lenders have experienced two distinct phases of consumer credit risk in the recession thus far.
Early in the recession, lenders saw a sizeable increase in the number of consumers who scored in the lowest (300-499) and the highest (800-850) segments of the FICO score range, and a corresponding drop in the volume of consumers at the middle range of 600-749.
The movement toward the tails of the FICO score distribution curve is typical during economic downturns. The downward shift likely is a result of quick credit problems experienced by consumers who are highly leveraged, leading to serious delinquencies and bankruptcies that push their risk scores toward the low end of the score range.
At the same time, mainstream consumers may instinctively move to protect their finances by paying down revolving debt, postponing new purchases that would require financing, and similar actions.  Such behavior tends to improve consumers’ credit risk and push their FICO scores higher.
The trend reversed course after 2008, when consumer scores moved away from the tails of the distribution curve, and 2.8 million more consumers scored in the 550-649 range. This shift may reflect the enduring impact to credit risk caused by the appearance of serious delinquencies on consumer credit reports. As FICO reported in March, score recovery from negative events such as mortgage foreclosure typically takes three to seven years for consumers who meet their credit obligations following such events.

Home sales and median price are predicted to improve only slightly in 2012, as the continuation of the tepid economic recovery, uncertainty about the future, and funding challenges for residential mortgages are expected to keep the market moving sideways, with little foreseeable momentum in either direction, according to C.A.R.’s “2012 California Housing Market Forecast” released Tuesday.
The forecast, which was presented today by C.A.R. Chief Economist Leslie Appleton-Young during her luncheon at CALIFORNIA REALTOR® EXPO 2011, says that California home sales next year is for a slight 1 percent increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.
The California median home price will increase 1.7 percent in 2012 to $296,000 in 2012, according to the forecast.  Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4 percent in 2011 to $291,000.
“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants,” said Appleton-Young.  “An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.”