If you follow real estate at all, you probably saw the announcement that Zillow is closing its iBuyer program. This is big news, but what does it really mean for Zillow and the real estate industry?

First, let’s clarify what is an iBuyer program. It’s where deep-pocketed online companies give sellers an instant cash offer on their house (the “i” in iBuyer is for “instant”). Usually the sales price is computer-generated (like a Zestimate), and the homes are bought unseen. The buyers are not typically looking to do major renovations and want to resell quickly.

Online buyers have existed for quite a while now, and many have been very successful. Zillow’s iBuyer program was not national but in a few carefully selected markets with plans to eventually roll out more extensively. Zillow was aggressive in its purchases, relying on the automated price generated. Some buyers were thrilled with their offers, receiving more than they may have expected. In fact, it appears Zillow overpaid for many of the homes and now has a huge inventory that it must sell off, potentially at a loss.

This doesn’t speak well for the Zestimate data or technology-based pricing methods. Why not? In large part, because technology can’t determine a property’s condition, a major factor in pricing homes.

This is no surprise to real estate agents. Recently, I was trying to price a home and was looking at the neighborhood comps. A home a few doors down that looked wonderful in the pictures had just sold for a fairly low price. I called the listing agent to understand why. According to her, the house had a very unpleasant pet-related odor, and the neighboring house was very cluttered, “like a junkyard”. These are extenuating circumstances that automated technology can’t determine or factor in.

Technology wasn’t the only downfall for Zillow’s iBuyer program. Zillow has not been immune to the global supply chain issues and labor shortages. When time is of the essence, these delays can be very costly for the home improvements sometimes needed. Finally, Zillow determined that the iBuyer business scale needed to be very large in order to be as profitable as was hoped and, in the end, they decided that this was something they did not want to pursue.

Does that mean Zillow is in trouble? In short, no.

Before 2018, when Zillow decided to get into the  iBuyer business as well as the mortgage business, it offered consumers a marketplace to sell, buy, or rent properties. It also marketed properties listed by real estate agents where buyers can search properties and reach out to an agent for more information or to schedule a showing. The person they contacted was not always the listing agent, but a Premier Agent who pays fees to Zillow to obtain leads.

This marketing program has mostly produced buyer leads. By getting into the iBuyer program, Zillow was hoping to be able to generate more seller leads for their Premier Agents, therefore hoping to increase the number of Premier Agents and their revenue stream.

While there are many in the real estate industry who fear Zillow is trying to replace the real estate agent, I do not believe this is their model at all. Contrary to popular belief, Zillow does not sell properties directly to the public. For their iBuyer program, they rely on a small group of staff to purchase properties. Once a home purchased through the iBuyer program was ready to sell, they would offer it to a vetted Premier Agent.

Real estate agents, of course, have the advantage for detailed information and acute market knowledge, but we can’t offer national searches. We are restricted by our local MLS. Here in the Washington area, we are fortunate to have an expansive area with feeds that include parts of New Jersey and Pennsylvania. But Zillow saw a gap, and thus an opportunity: give the consumer an opportunity to not be restricted by a single MLS.

Zillow is a fine place to start looking for a home, but it should be the first step, not the full process. Most buyers don’t want to wait too long before reaching out to a professional, as we often know about homes not yet listed that are for sale (see my last article “Full Market Exposure” for more details) or know the nuances of a particular home or market.

For those still interested in searching for an online cash buyer, there are still many online iBuyer programs out there. McEnearney Associates just launched McEnearney Advantage. The McEnearney Advantage offers our sellers the option of seeking iBuyers as a way to market their homes.

I recently had a client who wished to do this. We entered the information and received two viable online offers. The first came from a local flipper. We met at the property and he made an offer. The other was strictly an online offer. The seller wasn’t happy with the price offered and decided to move forward by putting his home on the market. The house sold for $38,000 more than the highest iBuyer offer. This isn’t surprising to many – it has been proven time and time again that sellers receive a significantly higher price when they list their home on the market versus selling off-market.

The bottom line is that Zillow is here to stay, as are real estate agents and iBuyers. We will all continue to compete for our share of the market, and we will all continue to offer different services to meet the evolving needs and demands of the consumer.

Rebecca McCullough is a licensed real estate agent in Virginia with McEnearney Associates, Inc. in Old Town Alexandria, VA. If you would like more information on selling or buying in today’s complex market, contact Rebecca at 571-384-0941 or visit her website RebeccaMcCullough.com.

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Many buyers I am working with lately are looking at the future potential of homes and considering properties that they will add additions to — either before they move in or in their long-term plans.

Some lots have the space for an entire extra room or would benefit from a large deck off the back, and others have the potential to be bumped up a level. Even smaller adjustments, like a new fence, garage, or shed can be important to know about before purchasing a home.

The first step in finding out about a potential add-on is to have your Realtor call the listing agent. They will be able to tell you if the seller has ever considered something like this before — sometimes, if you’re lucky, they will have plans from a builder to give you an idea of what could be done. Even if the seller has considered this option before and found that it isn’t possible, that is valuable information.

More commonly, they will have a survey from when they purchased the home. This is a document that shows where the boundaries of the property are, as well as measurements of structures, such as sheds or patios. If there is an existing fence, it will tell you which property it is on and which home it belongs to.

Survey example courtesy of jadsurveyor.com

If the seller does not have a survey, a buyer has the option to have the settlement company order a survey to be completed before they purchase the property. In Washington, D.C., a location survey is required in order to issue title insurance. In Maryland and Virginia, the survey is optional but highly recommended. A buyer can only order a survey once the home is under contract, therefore, this information is not available before making an offer unless the seller already has it.

If the home is in a community with a Home Owners Association (HOA), there will be guidelines in place that clearly state what can and cannot be added to the property. If other homes in the neighborhood have additions or updates similar to what you would like to do, it is very likely that you will also be able to add them to your home, but there are no guarantees. It is still very important to look over all the HOA documents, and if the update that you want is very important to you, a call to the management company or HOA president is recommended, before making an offer.

For a home in an HOA, once a home is under contract, the buyer will have a period (typically 3 days) in which they are given the opportunity to review the HOA documents and then void the contract if they see something they don’t like. Unfortunately, HOA documents are usually not available until you are under contract, so if a buyer has a specific question before making an offer, their Realtor can sometimes get answers from the listing agent.

Even if the home is not in an HOA, there will likely be city or county guidelines for what can be built on a property. For example, I added a new, larger deck to my home a few years after I bought it. I had to submit my property survey to the city, along with architectural plans, before I could begin construction. The city even provides a manual with specifications on what materials to use, and how things must be built to adhere to code.

Whether you are making updates to the exterior or interior of your home, you should always check if you need to get permits from the city or county. Many contractors will do this for you, however, a buyer should still familiarize themselves with what is even possible in the code ordinance for where they live. For example, although I was permitted to build a larger deck, due to set-back requirements, I would not have been allowed to have it wrap entirely around my duplex in Del Ray!

If you live in a historic district, like Old Town, there can also sometimes be more strict regulations in order to maintain the historic integrity of the community. You should check the Board of Architectural Review website, as your plans will need to be submitted for approval. And if your decision on whether to buy the home depends on it, call the city and ask how likely it is that your modification would be approved, then pick a contractor that is experienced with the jurisdiction and requirements for approval. I recommend that you always choose a contractor that is familiar with the jurisdiction.

Finally, it can be a good idea to get a general idea of what the cost will be. Your Realtor likely has a great contractor who they can refer to you for a general estimate. Even if you don’t want to make major renovations — maybe just fresh paint, or new carpet — an estimate can be good help in deciding how much you are able to do if you purchase a specific house.

Whether you are thinking about making changes to your home in the long term, or the near future, your Realtor can help you evaluate what is feasible for your situation! I have worked with countless buyers who go through this process and would be happy to help you create your vision for the perfect home!

Hope Peele is a licensed real estate agent with McEnearney Associates, Inc. in Alexandria, Virginia. She grew up in Old Town and currently lives in Del Ray. As a partner with The Peele Group, Hope is dedicated to guiding her clients successfully through the many faceted process of buying or selling a home. Contact Hope at 703-244-6115.

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First off, congratulations on the early stages of home buying!

Attending open houses at the beginning stages of your search can really help you narrow (or expand) what and where you are looking to purchase. They allow you to tour new neighborhoods you’re considering, define your likes, dislikes and things that are non-negotiable, gauge market activity, and define a clear picture of home value.

Once you attend a couple of opens, you’ll be a pro. Here are a few tips to get you started on the right foot:

Do a little research first

Decide what neighborhoods you’re most interested in and find homes that match your ideal price point. Although it can be fun to see all types of homes ranging in all types of prices, it doesn’t assist you in the long term. You want to use this time to set your expectations for what’s in your budget and what you like and don’t like before you truly enter the market. By attending open houses in your preferred areas, you can gauge other buyer interest and overall value for that type of home/area. It’ll help down the line knowing if you’re in a competitive area and price point.

No scheduling necessary, but keep an eye on the time!

Open houses are usually Saturdays and Sundays from 12-4 p.m. with common time slots being 12-2 p.m., 1-3 p.m. and 2-4 p.m. If you have too many on your list in varying neighborhoods, you may miss some. In the early days of in-person open houses during the pandemic, there were lines out the door and people had to wait to enter homes. Now, it’s up to the seller and listing agent on how they manage open house traffic, so be prepared to potentially wait. The average time to tour through an open house is about 15 minutes.

Wear shoes that you can easily take on and off

Sellers typically ask those attending an open house or a private showing to remove their shoes or wear the provided shoe covers (also known as booties). It’s a common courtesy to the seller!

Follow the Golden Rule

Treat the home as you’d want your home to be treated. Limit touch and keep your hands to yourself with personal items. You can always ask the agent present to assist you with opening closed closet doors or kitchen drawers.

Sign in!

As a courtesy to the seller and the agent present, please remember to sign in as you enter the home. With the resurgence of QR codes, most agents will have a touch-free way for you to quickly sign in with your smartphone.

Ask questions!

The listing agent or their associate present will greet you at the door and provide you with fast facts about the open. Don’t be afraid to ask specific questions or inquire about the basic facts again. It’s why they are there!

If you are looking to start your home search, please give me a call!

As a fifth generation Realtor and the granddaughter of an architect and builder, Sallie has deep roots in real estate. She is passionate for the charm, history, and architecture of Alexandria and its surrounding communities. If you would like more information on selling or buying in today’s complex market, contact Sallie today at 703-798-4666 or visit her website SallieSeiy.com.

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As we roll into fall 2021, the US mortgage industry will see some changes, some more attractive to consumers and some not as much.

Recent positive changes include a reduction in the spread between rates for owner occupied properties and those for second homes and investment properties. Several months ago, regulatory changes caused significant increases in the rates for non-owner occupied properties.

For a period, the rate spread between primary residence properties and non-owner occupied could be as high as 1.75% in rate. That spread is now back down to roughly .500% to .750% making investment purchases and second home purchases more tenable.

At the start of the pandemic, Fannie Mae, Freddie Mac and most of the secondary market imposed various additional restrictive underwriting guidelines. The purpose of the tighter underwriting guidelines was to protect lenders from potential increased risk associated with pandemic related economic downturns. At this point most of the more restrictive guidelines have been lifted and underwriting guidelines generally reflect pre-pandemic standards.

Mortgage program options have continued to rebound as well. Some programs were suspended early in the pandemic, again to allay risk. Many lenders suspended their non-conforming or jumbo programs. At Atlantic Coast Mortgage we suspended our construction loan and bridge loan programs at the beginning of the pandemic.

The good news is we have brought those two programs back. Additionally, we added programs such as special loans for doctors and lawyers. Most lenders in the secondary mortgage market have brought back their jumbo loan programs. The loan program offerings for consumers today generally mirror those offered prior to the pandemic.

The last bit of good news is conforming loan limits are going to increase significantly at the start of the new year. There are no official numbers currently, but we expect the standard conforming loan limit to increase from $548,250 to at least $625,000. At Atlantic Coast we have already begun making conforming loans up to that loan amount.

In the Washington Metro area, we enjoy the benefit of the 2nd tier conforming loan limit which is currently $822,375. That number will also likely increase to somewhere close to $900,000. Conforming loans have less restrictive underwriting standards including lower down payment requirements which make it easier to purchase property in the ever increasingly expensive Washington area.

Now for the less than pleasant news. Interest rates are increasing. We knew it would happen and it is generally a sign of an improving economy. Interest rates have been in the two percentiles for most of the past year. The Federal Reserve’s response to the pandemic economy were the reason for the historically low rates and now the Fed is faced with the need to address the reality of significant inflation. Generally, the Fed’s response to inflation is to increase the Fed funds rate which also has the impact of driving up all other interest rates as well.

Mortgage interest rates have inched into the low three percentiles for most transactions, and we expect they will continue to rise in the coming months. An increase in rates has an impact on a consumer’s ability to qualify for loans. At some point that will translate to pressure against the rising cost of housing. The lack of housing supply has been the primary driver of the cost and it will continue to be so, but a rise in rates will have some tempering affect.

Brian Bonnet, Senior Loan Officer (NMLS ID# 224811) of Atlantic Coast Mortgage, LLC (NMLS ID# 643114).

If you would like more information to help plan your next move, please contact Brian Bonnet at bbonnet@acmllc.com or call 703.766.6702.

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With today’s amazing technology, it’s increasingly likely a home may have a security system or other recording device in use. Homeowners regularly use cameras and sound recording devices for many reasons. Sometimes it’s a security concern, while other times it’s just to see who’s at the front door. Some use cameras and listening devices to check on their children while the babysitter is there or to make sure their puppy is not misbehaving. Whatever the reason, when you’re buying or selling a home, home recording devices should be considered.

One of the first things we tell our buyers when starting to look at homes is to wait until you’re outside to tell us that you love the home. And we certainly don’t want discussions about value and pricing inside the home.

We don’t want to give the seller any inside information on your thought process, especially if you decide to make an offer. We certainly don’t want our buyers to lose any of the negotiation leverage we hope to bring to the table, especially in this competitive market. Have you heard the expression poker face? Don’t show your cards to the other party, either with your face or verbally, when touring a home, whether it’s a private tour with your agent or when you are attending an open house.

So, what are your rights and responsibilities as it pertains to real estate? As a seller in Virginia, the listing agreement asks a question that you must answer honestly, disclosing whether you have a recording system in your home. If you do have a recording system for audio, your agent is required to disclose this to all buyers and their agents.

We know of a situation where the sellers checked the box for “no” audio, forgot about this and decided to check in on their puppy cam, which had been set up and not looked at in a couple of years. Their home had gone under contract with multiple offers, and there were no contingencies or further negotiations that would be affected. However, on a buyer visit to measure for window treatments, they heard the realtor and buyers criticizing their decor. They were offended and told their realtor about this and said that if they were not already committed, they would never have chosen this buyer. They were reminded by the realtor that they were in the wrong for listening, and they were instructed to turn off the camera for any future visits. In Virginia, it’s illegal to record a conversation without consent.

We also know of an instance where a seller signed into their recording system to hear the comments of buyers during their open house. They overheard comments about their home being overpriced, and they were furious. Their realtor had to remind them that they should not have had a recording device in the home without disclosure and that it needed to be disabled immediately — or post warning signs so realtors and buyers were aware.

According to a recent LendingTree survey, 30% of home sellers admitted to using hidden recording devices during open house visits. The study also showed that 44% of buyers would back out of a contract if they learned that the sellers had been recording them.

As a buyer, your rights are clear. A seller must disclose the presence of sound recording devices. If it’s simply a camera, with no sound recording, they do not need to disclose, but under no circumstances can a camera be in a private section of the house, such as a bathroom.

The reality is that cameras are present more and more and sometimes sellers don’t need to disclose, even though it is courteous to do so. There are also homes where audio is being recorded, even though it should not be, without disclosure. Sometimes sellers forget to disclose. It’s better to be safe than sorry. As a buyer, you should only discuss the home once you’ve departed the property. As a seller, know your responsibilities, disclose the presence of cameras and turn off all sound recording unless you post signs.

The Peele Group works with their seller clients to make sure that they are aware of the laws and that they are in compliance. We work with our buyers to protect their privacy and put them in the best position for strong negotiations.

If you’d like to discuss your plans for buying or selling a home, we are here to help! Reach out today to Kim and Hope Peele at 703-244-5852.

Kim Peele is a licensed real estate agent with McEnearney Associates, Inc., lives in Old Town and works in VA, DC & MD. She and her daughter Hope Peele are The Peele Group. Kim is a second generation Realtor and fourth generation Washingtonian and is dedicated to helping owners through the challenges of selling their home.

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It started in March 2020 — my first “drive-by” settlement in a parking lot with sellers getting a clipboard, papers and a clean pen through their car window. I was in another car watching with my phone on speaker. The buyers copied the process 15 minutes later — same parking lot, same paperwork plus loan documents. It worked. One-time event, right?

Au contraire — as in so many areas, the real estate world has permanently changed due to the pandemic and safety worries. Here are some distinct differences in today’s world.

In the olden days of pre-2020, the highest tech was a “mail-away” scenario where papers were sent to sellers to print and go to a bank to find a notary wherever they were.

Now, the notary will come to you (called a mobile closing or remote notarization). The title company will designate a company and have a trained human come in person to your dining room table to tackle the papers and authenticate the actual signing before scanning and shipping everything to the closing company. For my clients, with the keen cooperation between the lenders and the title company, my far-flung sellers have opened their doors to these live notaries and completed their work in places from Vancouver to Colorado Springs to Naples, Italy.

A remote company can also handle long-distance virtual seller signings, and this is called eNotary. Just this year, I have had legal electronic signings occur with a seller recuperating in a Paris hospital and others unpacking at their new home in Austin, Texas. No face-to-face human interaction — just phone connections and internet presentation of the documents.

Buyers can now occasionally join in on the long-distance, remote-signing fun. International settlements were recently tricky due to time zones and FHA/FreddieMac/VA loan requirements that everything be signed on exactly the same date, which meant staring at the door waiting for FedEx or DHL to appear before 5 p.m. Now, buyers can standby for that very long-distance call, ask their questions and make an appointment with the approved eNotary.

“Hybrid settlements” have increased exponentially. According to one title company, every month more and more diverse closing styles are taking the place of sitting around the table at the lawyer’s office or settlement company conference room. I miss the camaraderie and ceremony of the group meeting of the sellers and buyers, but times have changed… Some in-person, some electronic, some in-office, the variable scenarios do add up to the official transfer of property, just without the warmth, good cheer, key transfer and stories about the neighborhood cat everyone feeds or the wonderful UPS fellow who goes the extra mile.

So why not just have local someone else show up to sign, you ask? There are strict rules these days on granting a Power of Attorney (POA) to sign on your behalf. No one with a financial interest in the transaction can be given this responsibility, so you need to find a relative, trusted friend or hire another attorney not involved in this specific closing. And, that person needs to actually show up ready to perform the tasks. “Wet signatures” with real ink are still required on Deeds of Trust, though one-by-one some jurisdictions are allowing carefully controlled electronic signatures. Even so, worry remains about the potential for foul play or hacking.

The burden falls heavily upon the buyers, no matter where they are, to watch for emails several days prior to the official closing date and to actually READ the documents, check the math and ask the questions that might have normally come up around the table. Corrections can be made, but time is always a factor. I suggest doing the walk-through five to seven days before settlement so that any adjustments can be made without stress. They may still have to find a bank officer, military base legal office or embassy to notarize last-minute changes, but progress is being made at every turn.

Happily, complicated and simple home sales continue every day. However, with more settlement styles and options, the world has turned upside down for the better. Welcome aboard!

These thoughts and years of experience are brought to you by Ann Duff, Realtor, with McEnearney Associates. Based in Alexandria, Ann is busy day-in and day-out in D.C., Maryland and Virginia, listing, selling, and leasing distinctive properties with and for wonderful people — and all with a splash of fun! Let’s Get Busy… contact Ann at 703-965-8700 or visit her website AnnDuff.com.

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