Preparing for Settlement: Buyer Tips

Once your offer has been accepted and your contract is ratified, it seems like there are a million things left to do before settlement. Here are a few tips to help keep you organized and informed throughout the process.

First Steps

When you first come under contract, these are the items that you’ll need to start working on right away.

EMD. Your earnest money deposit must be deposited right away. Be sure to coordinate with your agent on who will be holding it and how you’ll be getting it to them.

Home inspection. If your contract is subject to a home inspection, you’ll need to be sure it’s scheduled quickly. It will give you a much deeper look into the condition of the home and you’ll be able to see if there are repairs that need to be done, if you’ll need to negotiate any repairs or credits with the seller, or determine if you’re even still interested in buying the property.

Financing. Apply for your loan right away so that your lender can begin the loan process. Your lender will require quite a bit of documentation from you throughout the process, so it helps to stay organized and get them what they need quickly.

Contingencies. If you negotiated contingencies in your contract, each contingency will have its own deadline. Work closely with your agent to keep track of each date. Some typical contract contingencies are the home inspection contingency, appraisal contingency, and financing contingency, but there are many others that can be added, and some contracts don’t have contingencies at all.

The home inspection contingency deadline usually comes very quickly and in some cases may result in additional negotiations over repairs or credits. Your agent will help you navigate through this process.

Appraisal contingencies can sometimes trigger negotiations as well, if the appraised value is lower than your sales price. The appraisal report is critical to the financing process, and will be ordered by your lender.

Financing is a really big part of the home buying process and can be very time consuming. Try to be prompt and responsive to requests from your lender. The lender will often call on you to provide various documentation in order to get your loan approved. The financing contingency in a standard contract is not a hard deadline and will continue until it is formally removed by the lender providing a letter of commitment. However, you’ll want to do everything you can to get approved on time, as financing delays are a very common cause of postponed settlements. If you’re not ready to close by the settlement date that’s listed in the contract, it can cause tension between you and the seller, and can also potentially result in your being found in default of the contract.

Preparing for Settlement

Once your settlement draws nearer, there are several things you’ll need to do to prepare. Below is a sample list of some of those items.

1. Prepare any required funds for closing.

2. Initiate utilities and service accounts for your new home.

3. If you’re buying a condo or co-op, contact the property manager to coordinate your

move-in, if necessary.

4. Reserve street parking for your moving truck, if necessary.

5. Conduct a pre-settlement walkthrough inspection of the property.

6. Review your HUD-1 Settlement Statement, which details all costs associated with the purchase.

7. Bring your photo ID to settlement.

8. Have your check book with you at settlement, just in case there’s a difference between

your cashier’s check or wire and the total amount due from you.

General Tips

Check your email! Almost everyone works through email these days, so when you have something as important as a home purchase going on in your life, be sure to check your email often. If you’re not great with keeping in touch via email, be sure to let everyone you’re working with know. Your agent, your lender, the title company, and all of the people on their respective teams will need to know how to reach you quickly.

Ask questions. As they say, it’s better to be safe than sorry. If you’re unsure of something, be sure to ask for help. Communication is key between all parties in a real estate transaction.

Stay organized. Some documentation will be requested of you, so you’ll need to make sure everything you need is accessible. Plus, with all of the deadlines, you’ll need to do your part in keeping it all on track.

Reishman Report: DC Median Sold Prices Up, Inventory Stable

The Washington region’s housing market performed well in October, according to the latest data.

In the District, the median sold price in October hit $500,000 – that’s a jump of 9.9 percent over last October and the highest median home price in an October in the District ever, and it’s just $30,000 less than the high in July 2014.

DC real estate October 2014 inventory Average days on market, at 35 days, is still lengthy but is a 2.8 percent drop from last October and the fewest days on market for sold properties in an October in the past several years. This means homes are moving relatively quickly and for a good price.

One of the main factors we look at is housing inventory. That’s something we’ve been tracking very closely over the past several months. Housing inventory tells us a lot about how consumers are feeling about the market. While some people move because they have to (a job change, for example), a lot of people move when they believe the time is right – and it looks like more people think the time may be right.

Although new listings were down in October in the District of Columbia, inventory in October was virtually unchanged from September (from 1,469 active listings in September to 1,459 active listings in October).

Housing inventory had been declining from June through August before bouncing back up in September. Still, October’s housing inventory was 7.6 percent higher than the October before, and the highest it has been since October 2010.

For buyers, some advice: Make sure your financing is in order before you go home shopping, and be prepared to make a solid offer on the property you want when you see it.

The Reishman Report: A Look at August Real Estate Inventory

August is traditionally a slower real estate month than July in the District – and that held true this year, according to the latest data from RBI.

August real estate inventory was down from July by about 9 percent but that’s nothing out of the ordinary for the months of July and August in recent years.

We’ve seen similar decreases in real estate inventory from July to August in each of the past five years – it’s a seasonal occurrence that hits particularly hard in the nation’s capital.

What’s more important when looking at August numbers is a slightly longer view: How did this August compare to last year?

Compared to the month of August in years past, this August had a higher median sold price and more inventory than the same month in past years. Inventory this August was 6.9 percent higher than August 2013. The median sold price for residential properties in the District in August this year was $475,000. That has increased every August for the past several years and is an increase of more than $75,000 since 2011.

That data may be showing some softening in the market. As prices have increased, more people are deciding to sell, which is pushing more inventory to the market. Simultaneously, transactions may start to wane as buyers start to see properties as relatively expensive from those price increases.

This August, residential properties stayed on the market an average of 15 days. This is an increase of 4 days from July and an increase of 3 days over August of last year. Attached townhomes are moving fastest at an average of 12 days on the market, according to the most recent data available.

Despite a slowdown overall from July to August of this year (and every year), taking a longer-view reveals sellers are seeing an opportunity to profit. We’ll have to watch closely to see how buyers react to the continued increase in prices and continuing long-term increase in inventory.

For buyers, little has changed at this point: They need to be well-prepared to move quickly with an attractive offer to get the property they want.

Anecdotally, we saw an increase in listings from our office right after Labor Day – whether that forecasts an overall increase in activity here in the District remains to be seen.

Virginia Reishman Report: NoVa Real Estate Market Softens

The real estate market in Virginia is softening, and that may change the game for buyers and sellers this fall and winter.

The number of active listings in Northern Virginia is up more than 45 percent over last September. There is more inventory now in Northern Virginia than there has been at any point in the past five years, according to RBI.

Specifically, Arlington County has seen a 45.6 percent increase in inventory over last September. Alexandria City has seen an increase of 24.9 percent in inventory over this time last year, Fairfax County is up 46.8 percent, the City of Falls Church is up 43.7 percent and Loudoun County is up 53 percent.

Days on market in the Northern Virginia region have also increased significantly compared to the summer (when homes do typically move a bit faster) and also compared to previous Septembers. Residential properties stayed on the market an average of 30 days in September – almost double the time on market a year ago and the longest time on market data in a September since 2011.

The average median list price in Northern Virginia was $415,000 in September, an increase of just 1.1 percent over September 2013 and the lowest it has been since March of this year. However, localities vary: Loudoun County has seen a 5.3 percent drop in median list price since September 2013, Alexandria City is down 9.4 percent and Arlington County is down 11.4 percent. Fairfax County has remained stable – no change in median list price since last September and median list prices are actually up in the City of Falls Church.

The median sold price is down to $410,000 and pricing ratios (the ratio of list price to sold price) is showing a declining trend.

It seems that buyers might consider being a little bit more aggressive with their offers on homes – particularly those that have been on the market for 30 days. For sellers, pricing their property competitively and focusing more on other moves that can help (professional photography, staging and improvements).

Reishman Report: D.C. Real Estate Inventory Increases

September saw a jump in real estate inventory after a typically slow August, the latest data from RBI shows. August is normally a slow month in Washington, D.C. for a variety of reasons, as is the increase in activity every September.

The September active listings were 1,469 across the District. Compared to September in years past, this September had more inventory on the market than in 2013 (8.9 percent more), bringing the market very close to September 2012 levels. But there is significantly less inventory than there was in September of 2011 or 2010, when inventory was well north of 2,200 homes.

The median list price for homes in Washington was $499,000 in September. That’s down from this summer, when median list prices for homes in the District were above $530,000, and down 3.9 percent from 2013. The median sold price in the District in September was $465,000 – that’s a 1.1 percent increase from this time last year, and sellers are getting (a median of) 99.9 percent of their property’s list price right now.

Homes are selling just a bit faster than they were at this time last year, with the average time-on-market at 14 days – that’s two days faster than this time last year, and much faster than in past Septembers.

What does it all mean? Prices have increased when you look over the past several years in the District – in fact, a study of data from the Bureau of Labor Statistics this month revealed the Washington, D.C. metro area is more expensive to live in than New York and San Francisco (when you factor in housing and related expenses such as utilities).

However, we are seeing some softening in the market locally at this time. The median list and sold prices are down compared to this summer, and days on market are up compared to this summer. We’ll have to see how buyers react this winter and, importantly, in the spring.

For now, the advice remains the same: Buyers still need to be well-prepared to move quickly on a property they like. That means getting pre-qualified for a mortgage if one is necessary and coming to the table with an attractive offer. (See this blog post from agent Timothy W. Detweiler for more on that.) Despite the listing-to-sold price ratios remaining strong for now, sellers need to price their homes competitively if they want them to sell quickly.

Maryland Reishman Report: Montgomery, Prince Georges Real Estate Inventory Up

What a difference just a few miles’ can make in real estate markets. When we look at year-over-year trends in real estate inventory, prices and days on market, Montgomery and Prince George’s counties tell very different stories from each other.

It appears that the market is starting to soften in Montgomery County. There, inventory in September was up 36 percent over September 2013, almost matching levels in September 2010.

The median list price in Montgomery County is up 2.9 percent over September 2013, and the median sold price is up 5.1 percent from a year ago. The median sale to original list price ratio is 97.6 percent.

Tellingly, the days on market in Montgomery County are at 34 days on average, an increase of 61.9 percent over a year ago.

Call it a tale of two counties: In Prince Georges County, inventory is up a comparatively low 12.1 percent.

Both the median list and sold prices are up over last September much more than in Montgomery County. The median list price in Prince Georges County is $265,000 – an increase of 3.9 percent over September 2013. The median sold price is $225,000, which is up 11.9 percent over last September. The median sale to original list price ratio is 99.1 percent.

And, in Prince Georges County, days on market average just 23, an increase of 21.1 percent from a year ago.

What does it all mean? While the two markets are very different in housing stock, the market in Montgomery County is decidedly softening, while the market in Prince Georges County is only showing hints of softening. Buyers can be a bit more aggressive with their offers in Montgomery County than they can be in Prince Georges County, and they should consider that among other factors when moving.