One of the most important players in a real estate transaction often flies under the radar: The Appraiser.

How do you know that your home was worth what you paid for it?

How did the bank determine if the loan was secured properly?

How did the seller and their agent come up with the list price in the first place?

The work of one person – an appraiser – answers the above and represents the grease that keeps the wheels of real estate turning. An appraiser is an independent, impartial, and objective professional in the mortgage transaction who develops a report which is a credible, reliable, and supported opinion of value. The work that they do has a direct impact on how much buyers might pay for a home and whether a loan may be approved at all for the property.   

John Chapman, co-owner of Omni Appraisal Services based in Fairfax, VA who has over 30 years of appraisal experience, recently spoke to a packed audience of McEnearney Associates | Middleburg Real Estate | Atoka Properties agents who turned out to hear how appraisals may be affected by National Association of Realtors® (NAR) changes in how buyer agents are paid for their services, among other topics.

“Our job is to reflect what’s going on in the market,” Chapman explained. “We’re not creating the value, we’re just reporting what we see in the market.”

Data used in an appraisal report is culled from various sources, the most important being information shared by agents. Chapman explained that appraisers are looking at previous comparable sales transactions, called “comps,” for as much detail as possible in the listing notes. Appraisers want to see hard data like plats, surveys, list of improvements/renovations, an array of pictures of the property, and whether there were multiple offers. But appraisers are also looking for insight agents may have gathered in their own research on the comps used to set a price. This could include details such as whether the home is being sold in a divorce (which could decrease sales prices), if there was an odor (such as from smoke or pets), what traffic noise could be heard from the property, and what concessions may have been offered to the buyer. 

“Each situation is case-by-case,” Chapman said when asked about the deciding factors in creating a report. “There are all these little clues that I’m trying to piece together that come up with my value report.” 

Beginning August 14, concessions from a seller could also include money to pay a buyer’s agent’s fee. Historically, those agent fees were paid through “cooperative compensation” whereby the seller’s brokerage shared a portion of the sales commission earned with the buyer’s brokerage, and this commission amount was advertised in a local multiple listing service (MLS). But recent NAR changes mean that all concessions – including home inspection repairs, closing costs, and other buyer fees – are negotiable between the seller and buyer within the terms of an offer and not determined at the time of listing. 

Chapman is concerned that not all agents will report concession information the same way, potentially leaving out important comparable cost data that could help in more accurately determining the value of a subject property.

Some complicating factors in determining a home’s value are specific to our region, Chapman noted. For example, because of low inventory there may not be comps for a subject property and the appraiser will have to look further than the standard 3-6 months of sales to find a comparable property. This is especially true for unique properties and homes in the luxury market. There’s also the way that different jurisdictions count square footage, where some include basements and some do not, depending on how much of the basement is above-grade (it gets complicated!)

Chapman also shared that kitchens offer the most value to a property, followed by bathrooms. Green and renewable energy features are starting to become a factor in appraisals because of new lending guidelines to factor their value into a report. 

Also of note: building cost increases due to post-pandemic inflation and supply issues. “It costs more on a per square foot-basis – labor, materials – to build a house now prior to (COVID-19),” Chapman shared. “What appraisers are adjusting for … has increased over the past few years to match the market.”

If you are considering selling or buying a home, here’s what your future appraiser would like you to know.

For Sellers:

• Review your tax record to check for errors or missing information.
• Provide your listing agent with a list of all home improvements and their dates.
• Document features that may not be readily observable, like hardwood floors under carpeting or an easement.
• Understand that what you have paid for home improvements may not equal the value these improvements are given in the appraisal report. A $100,000 kitchen renovation doesn’t necessarily equal $100,000 in market value.
• If you conduct a pre-listing appraisal, expect that it may be out-of-date by the time a buyer’s appraisal is ordered. While you can share that information with the appraiser, it may not have much influence on the final value.
• Be careful about “testing the market” and pricing higher than recent comps. Even if a buyer is willing to pay an inflated price, the home may not appraise at that price and the deal could be in underwriting jeopardy.

For Buyers

• Exercise your right to have an appraisal conducted, even if you are paying cash. This is likely your most valuable asset so you’ll want to know what you have!
• If you have an Appraisal Contingency, stay on top of the deadlines and communicate with your lender about any information you learn through the appraisal process.
• Be prepared that a home may not appraise for the contracted sales price and discuss a strategy with your lender and agent for next steps.

Pricing a home is often likened to “an art, not a science” given all the factors that are used to determine value. The appraisal process helps to put hard data into the mix to give buyers and their lenders the confidence that they are getting their money’s worth. Consult with one of our Associates to come up with a plan to value, price, and close on your home!

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It’s been the hottest year on record. How are you and your home holding up?

There’s no other way to describe it: this summer’s heat has been brutal. The DC-Metro area has been crushed by oppressive heat – The Washington Post’s Capital Weather Gang reported “every metric used to assess heat ranks among the most extreme in records that date to the late 1800s” – while temperature records across the country and the world have similarly been broken. And we still have several more weeks of summer to get through.

Heat, humidity, strong thunderstorms, flooding, hurricanes, and air pollution caused by wildfires and smog are all dangers not just to residents but to properties as well, and some neighborhoods and their residents are more prone to the effects of climate change than others. Urban communities like Washington and its suburbs are particularly vulnerable and it’s important for homeowners and dwellers to do what they can to mitigate how climate change affects not just their health but their homes.

Who Is At Risk?

According to studies by the Environmental Protection Agency (EPA), certain groups are more vulnerable than others to the health impacts of climate change due to social and economic factors like income, age, education, health care access, and housing which can affect people’s ability to prepare and cope with climate hazards. Socially vulnerable groups in the United States include communities of color, low-income groups, certain immigrant groups, and those with limited English proficiency. These groups may be more at risk because:

• They may live in locations that are prone to climate-related health hazards, such as flooding, extreme heat, and air pollution.
• They can have greater rates of existing medical conditions, such as physical disabilities, poor mental health, kidney disease, diabetes, asthma, or heart disease, which can be worsened by climate change impacts.
• They may live in urban and rural areas with poorly maintained or aging infrastructure that may not be able to handle climate-related events. Such infrastructure can include buildings, utilities, and transportation and health care systems. Individuals in these communities may also struggle to access resources and care during and after extreme weather events.
• They may have limited financial resources or cultural, language, or citizenship barriers that restrict their access to health care, social services, and safe, nutritious food.

How To Determine Risk

One comprehensive resource is the Climate Mapping for Resilience & Adaptation site (CMRA), which was developed in 2022 as part of an interagency partnership working under the auspices of the U.S. Global Change Research Program (USGCRP) and with guidance from the U.S. Federal Geographic Data Committee (FGDC). It is funded by federal grants and compiles information from various sources, including the Department of the Interior, Department of Energy, the National Oceanic and Atmospheric Administration (NOAA), and NASA among many others.

At the heart of the CMRA portal is the Assessment Tool, an interactive application that provides statistics, maps, and reports on climate conditions for every county in the United States, while the Climate Resilience Toolkit helps residents determine their specific risk not just to themselves but to their assets, like a home or a business.

Another option from Realtor.com offers homeowners risk assessments on a specific property for flood, heat, wind, air quality, and wildfires through FirstStreet.org, a research and technology nonprofit with expertise in assessing physical climate risk at the property level in the United States.

How to Combat Risks

Local, state, and civic authorities are the frontline for promoting Environmental Justice, a movement that calls for the “just treatment and meaningful involvement of all people, regardless of income, race, color, national origin, Tribal affiliation, or disability, in agency decision-making and other Federal activities that affect human health and the environment.” The EPA cites several ways for citizens to get involved via grants and resources, strategic and community planning, and collaborative resources.

Here are ways individuals can also identify, assess, and combat climate change risks:

• MyMoney.gov offers a roster of governmental resources in an easy-to-navigate format, and includes not only education about environmental hazards but also how to develop a disaster plan, what resources are available after a natural disaster, how to avoid fraud and scams, and how to modify a home to mitigate climate risk.
• The United Nations offers 10 Actions that individuals can take to limit their contributions to climate change and how to get involved on a global level. 
• The World Economic Forum offers tips on climate-proofing homes.
• The Consumer Financial Protection Bureau offers guidance specifically on housing, breaking it down for buyers, renters and current homeowners.

Check out these local organizations who are working on education, prevention and policy in our region:

• DC’s Commission on Climate Change and Resiliency
• Maryland’s Commission on Climate Change
• Northern Virginia Regional Commission (a division of Virginia’s Department of Environmental Quality)
• Fairfax County’s Office of Environmental and Energy Coordination
• West Virginia University’s WV Climate Link
• Climate Change Resources (choose your location)

It can feel overwhelming as an individual to mitigate the effects of climate change, especially if you are part of a community that is bearing an unequal burden caused by climate disasters. Learning about the resources available is the first step in protecting your health and your home for what will come next.

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Changes are coming to common real estate practices. Find out what they are before you buy or list a home for sale.

 If it’s been some time since you bought or sold a home, there are recent changes to the selling process you need to be aware of. These are part of nationwide changes from the National Association of Realtors® (NAR) and how homes are promoted in Multiple Listing Services (MLS) – regional databases across the country that compile information about homes for sale and sold, as well as rental properties that use an agent during the leasing process. Updates are designed to give consumers a better understanding of how they can negotiate fees associated with buying or selling a home and will take effect August 14. 

It’s important to know that in our region Realtors® have been following these practices for decades, allowing for a clear and fair sales process that encourages both buyers and sellers to have their own representation in a sales transaction and negotiate their agent’s fee for service. What has changed is that a broker’s fee is not only more clear to the buyer but can now be a potential negotiating item of the buyer-seller contract, rather than being listed in an MLS as a co-operating fee between brokerages.

Here are some things to be aware of:

Buyers

•  Your first step will be to sign a Buyer Agency agreement that will outline the ways your Realtor® will represent you in your search for a new home and how they will be paid for their professional services.
• Buyers can negotiate many terms in their offer to purchase, including cash concessions from the seller to help cover different costs associated with buying a home. This now includes negotiating for the seller to pay a buyer broker’s fee.
• The Department of Veteran Affairs (VA) announced a temporary policy allowing VA buyers to compensate their real estate agents directly. 
• Not all sellers will consider financial concessions so it’s important to set your home purchase budget to cover all costs associated with the sale, including your agent’s fee.
• Read more at NAR’s resource page for homebuyers.

Sellers

• Your first step will be to sign a Listing Agreement that will outline the ways your Realtor® will represent you in the sale of your home, including how they will be paid for their professional services.
• Your Realtor® will advise you on current market conditions and what will make your home attractive to the greatest number of potential buyers. 
• Sellers can indicate if they will consider concessions to a buyer but they are not obligated to do so. Sellers should evaluate offers to purchase their home based on all specific terms and conditions, which may include a request for cash concessions to cover a buyer’s costs, including their broker’s fee.
• Read more at NAR’s resource page for sellers.

A professional Realtor® is your best advocate and will work with you to develop the strategy that works best for your goals. Reach out to one of our agents to get started on your next move!

Take a look at our website for all of our listings available throughout Washington, D.C., Maryland, and Virginia.

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One agent’s firsthand report at how NAR’s focus on sustainability is preserving housing inventory and the land it sits on.

The National Association of Realtors® 2024 Sustainability Summit was held in early June in Minneapolis with a focus on initiatives to upgrade our nation’s housing stock, add client value, increase business, and lead on an urgent global issue. As an agent who is committed to helping my clients find new and innovative ways to increase value in their homes and build more resilient communities, I was excited to hear what’s coming to the sustainability market from those working in the sustainability industry.

Realtors® work to help our buyers and sellers navigate myriad changes in an accelerated landscape, something the Sustainability Summit reinforced with each panel discussion. As the organizers laid out in the mission of the conference, “(Agents) understand that sustainability isn’t a box to check, but a fundamental part of our job. Our inventory requires stewardship. The properties we help people call home must be maintained, protected, and updated to grow in value.”

The summit had an emphasis on high-performance homes, which are properties with features that increase energy efficiency, prioritize climate resiliency, and reduce emissions while reinforcing comfort, durability, and a healthy indoor environment. Mentioned throughout the meeting were organizations and resources that provide standards to measure these features, like the non-profit Passive House Institute US, Inc. (PHIUS) and the Department of Energy’s Pearl Certification. These provide savvy agents and their buyer-clients quantifiable ways to compare properties and interpret results. These standards will also help seller-clients leverage these features when marketing their homes.

Forward-thinking speakers dominated the panels, including Rohit Bhargava, the summit’s keynote speaker and best-selling author of How to be a Non-Obvious Thinker (And See What Others Miss), the newest addition to his Non-Obvious Thinking book series. In his presentation he shared, ““Obvious Thinking is the inability to imagine something different, think bigger, be open minded, or shift your perspective” and challenged participants to invest in unconventional thinking to inspire change within the industry and serve the public.

Bhargava’s presentation resonated because while real estate has always been a dynamic field, factors like fluctuating interest rates, reduced inventory, and rising prices are affecting housing sales nationwide. Other influencers such as technical innovations and climate change, and developments in related industries like public utilities and insurance companies, are all moving parts that affect housing and sustainability advances.

Sustainability, stewardship, and home ownership go hand-in-hand, and as housing professionals we work to educate our clients, help them navigate industry changes, avoid expensive or unnecessary pitfalls, and maximize not only a property’s environmental benefits but its investment value as well.

If you are interested in working with a Realtor® who has advanced knowledge about these initiatives, look for agents with NAR’s GREEN or a LEED Green Associate designation as they have completed additional training in issues of energy efficiency and sustainability in real estate. There are many within our McEnearney | Middleburg Real Estate | Atoka Properties family and we’re excited to share our passion for building great communities!

Since permanently moving back to Northern Virginia, JaneEllen McLaughlin Saums developed an intimate knowledge of its diverse communities, and thanks to her  teaching background,  JaneEllen has always educates her clients on the area’s market and housing options, to make sure that they find the best place suited to them to call home. 

Take a look at our website for all of our listings available throughout Washington, D.C., Maryland, and Virginia.

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Owning a home doesn’t have to be a dream. Check out these initiatives and resources to get buyers in a position to make homeownership a reality.

June is a month for graduations, weddings, and summer dreams. It’s also the month when Realtors® and housing advocates promote various pathways to homeownership, a goal for those who want to build generational wealth and create a place to call their own.

But the truth is that buying a home in 2024 is challenging, and it is harder for some groups to take that first step to homeownership. According to Realtor.com research, low-income earners are 22% more likely to be denied a loan, LGBTQ+ are 25% less likely to own a home compared to all Americans, one in four Hispanic individuals complete the home-buying process entirely in Spanish, seven in 10 veterans are unaware they qualify for a zero-down home loan, and the gap between Black versus white homeownership is worse today than in 1968 when the Fair Housing Act was passed. 

The Census Bureau’s quarterly report for Q1 2024 showed the latest homeownership rate is at 65.6%, down 0.1 percentage points from Q4 2023 and the lowest rate in two years. On May 31 the Biden administration issued a Proclamation on National Homeownership Month 2024, calling upon “the people of this Nation to safeguard the American Dream by ensuring that everyone has access to an affordable home in a community of their choice.”

Put simply, the proclamation states, “Whether they rent or buy, Americans deserve a safe place to call home.” 

Some of the proposed initiatives to make homeownership more accessible include:

• A tax credit of $5,000 per year for the next 2 years for any family earning under $200,000 — money they can put toward a mortgage when they buy their first home or trade up for more space.  
• My plan would also provide first-generation homebuyers with $25,000 for a down payment.  
• A pilot program run by the Federal Housing Administration (FHA) to make it more affordable to refinance a home by eliminating title insurance fees on certain federally backed mortgages, which would save buyers $1,500 at closing. 
• The FHA is now considering positive rental history when making decisions about creditworthiness — ensuring that the people who could qualify for mortgage financing receive it.  
• Advancement in fair housing practices, including by rooting out bias in the home appraisal process, which keeps too many Black and Brown families from enjoying the full financial returns of homeownership.

Homeownership In Our Region

Let’s start with a look at what local buyers are up against. Overall, Realtor.com statistics shows the Washington, DC/Northern Virginia/Maryland/West Virginia region with a median listing price of $640,000 (unchanged from May 2023). The District, which is not a state, ranks the lowest in both our region and the nation at 43.9% for homeownership. There are many factors that contribute to this lower rate of homeownership, including a higher transition rate of people moving in-and-out of the region (9.8% for DC compared to 2.5% nationally). This is partly explained by the number of universities, embassies, research facilities and government contract work that brings short-term residents to the area, but high housing costs are another factor. According to Realtor.com the median listing home price in Washington, DC was $614,900 in May 2024 (trending down -5.4% year-over-year) while the median home sold price was $697,500.

On the other end of the scale is West Virginia, which ranked highest in the nation at 74.7%, thanks in part to home values that are less than half that for the entire country. Again from Realtor.com, the median listing home price in Charleston, WV was $182.500 in May 2024 (trending down -13.1% year-over-year) while median home sold price was $181.900. Comparing the two areas, it’s clear that a buyer’s dollar is going to go much further in West Virginia than DC.

Rounding out the homeownership review is Virginia at 69.9% and Maryland at 70.9%. The average sales price in Northern Virginia in May 2024 was $882,180, up 10.2% the previous year’s average of $800.427, while the median sales price was $760,000 in May 2024, up from $715,000 in May 2023. Meanwhile, the average Maryland home value was $421,804, up 4.0% over the past year.

Where To Start?

Buyers in the DC-Metro area need a strong and strategic game plan to succeed in our competitive and expensive local market. The first step a buyer should take is to hire a Realtor® to assist in their search for a home. Agents have the resources, connections, insight to help buyers navigate the buying process and save their clients from the pitfalls of going into a major financial negotiation unprepared and unrepresented. An agent will connect buyers with savvy lenders who know the best financing and grant programs available and can guide buyers through complicated scenarios with many moving pieces. 

First-time home buyers have it the hardest in this current market, with interest rates higher than they’ve been in decades (although still relatively moderate in the 6-7% rate range), high home prices, and limited equity. But a little bit of research and preparation goes a long way! Both Realtor.com and the U.S. Department of Housing and Urban Development (HUD) have extensive resources to tap, in addition to the advice their agent will offer. 

Putting It All Together

Deciding to buy a home is a personal, economic, and logistical process. It’s not always the right choice for everyone, but for those who have a goal to become a homeowner, put down roots in a community, and begin building financial security through home equity, there is a way forward. Start with a conversation with an experienced McEnearney | Middleburg Real Estate | Atoka Properties agent and see which path is right for you,

Additional Resources for National Homeownership Month:

• PropertyAction.Realtor 
• Northern Virginia Association of Realtors®
• American Property Owners Alliance
• Greater Capital Area Association of Realtors®
• West Virginia Housing Development Fund

Take a look at our website for all of our listings available throughout Washington, D.C., Maryland, and Virginia.

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