Be Aggressive! B-E-Aggressive!

A little something I published on the Huffington Post today.

This one is a total 180 from the tone of what I have written in the past. Having lived through a runup of prices, a horrible downturn and the subsequent runup we are currently experiencing, I lean to the conservative side of real estate. They were very dark days I experienced, working for a builder when the phones just stopped ringing. I’m always scared that we’ll end up there again.

In my last article, I said it was a bloodbath out there. It truly is. The market has reached a level of such insanity that buyers have to get creative to get their house. Don’t get me wrong, even I’m perturbed by what is happening now with prices going through the roof and the escalations necessary to secure a home. But I’m not the one looking for a house. You are. And my job is to help you buy your house. So, it’s time for some tough love.

People, we need to get focused!

Bask in the gorgeousness of Logan Circle.

Bask in the gorgeousness of Logan Circle.

Here’s the advice I have for buyers in making sense of their Spring, 2017 search:

1) Pick One: Location or Condition

Unless you want to totally blow your budget, you probably have to choose between location and property condition. Real Estate is still about location. It is less about finding the perfect house as it is in finding the perfect location, because locations don’t change. While many sellers and their listing agents have cranked up their game and list a home for sale only when it’s immaculate, other sellers don’t have to try as hard. Some locations are so prime that those sellers can list a house that results in a collective sigh upon crossing the threshold. It needs help, work, TLC, handyman’s special - whatever you want to call it.

Look beyond the inside of the house and focus on the things that won’t change like location. Not considering a house because it doesn’t have the countertop you want is silly. Picking apart the interior features is a waste of time. If you want this location, I can guarantee someone else does. There are a lot of people who will live with linoleum counters to get into the right neighborhood, right school district, etc. You need to stop with the First World Problems.

2) Don’t Fixate on Price

Just ignore the price. There will be the rare occasion that a home is priced slightly low. Don’t fall into the trap of thinking that you can get the house for that price. Other buyers are just as sharp and the house will end up in an escalation situation. Wipe the list price from your mind and offer what you think the house is worth – to you – based on what you have seen already and how much this house checks the boxes for you. I constantly witness buyers trying to talk themselves into higher priced houses that aren’t a fit. Then they find the perfect house that’s priced $50,000 lower and knowing they have to escalate to get the house, they won’t go up more than a tiny bit. But they would have paid more for something they like less? I don’t get that at all.

3) Do You Want a House or a Hobby?

For some I believe it is fun to look at houses. If the market is too tough for you to contend with and you aren’t ready to play ball with the big kids, then it’s fine. Sit this out. There is no reason to keep making yourself (and me) crazy looking at houses every weekend when you have been outbid 5 times and you’re getting frustrated. It’s time to think critically. Is this the time for you to be in the market? You’re fighting against lots of all-cash buyers and fully approved buyers. You have to be aggressive. And for the love of all that is holy to you, please don’t look at 50 houses, write offers on 10 and then claim you aren’t in a hurry. That’s a waste of everyone’s time.

4) Please Don’t Talk About Tennessee.

Or any other place where you are from. And please don’t fly your parents in from another place to do it either. Other markets do not work at all like DC. Don’t apply logic from where you live to this market. This market defies logic. Are we Silicon Valley? No, thank goodness. But the government provides a stable employment base so we’re not like other cities at all.

5) Think of the Money!

Please don’t ignore your lender until you need them. Just go get yourself approved so you have nothing to worry about when the loan process begins.

This DC Real Estate Market isn’t for everyone. Many buyers don’t have the stomach for it. But the ones who do are under contract and locked in at an interest rate that is probably as low as it will be for the next few years.

Your real estate agent’s job is to get you a house, not hold your hand while you pick apart the half-assed renovation of some HGTV junkie wannabe who overpriced the piece of real estate in which you are standing.

 

April Showers Bring May Insanity to DC Real Estate

Me + Huff Post = a spankin good time. Enjoy.

Here we are, party people. Smack in the middle of the DC Real Estate Soiree, known to locals as the infamous “Spring Market.” It is anything but fun for most of the partygoers.

Last Fall, there was a noted lull in activity. Properties were sitting on the market a bit longer than usual, and there were price reductions. Gasp. DC Real Estate hadn’t seen price reductions on listings for years! Was it a sign of things to come? Election, new administration, changes in government afoot, it seemed like it might slowly be winding down.

But someone burst open the door and the life of the party came back and it’s back with a vengeance.

In some typical water cooler chat, other agents have been sharing the familiar stories of buyers escalating $100,000 over asking price and still not getting their offer accepted.

Folks, it’s a bloodbath out there.

 

Screen Shot 2017-12-05 at 1.10.43 PM.png

A couple weeks ago, my clients bid on a 1 bedroom condo in Logan Circle. They put an escalation in but were not the winning bidders. There were close to a dozen offers but 2 frontrunners duked it out in the $50,000 over-asking price range and the rest were barely out of the gate. My clients were in 3rd place. How did they feel about this? I didn’t let them even have a moment to ponder that because I learned that the two frontrunners aside, many of the other offers came in at about the same price and terms as theirs.

When I was reviewing the situation with them and explaining that they hadn’t won the bid, I told them they should feel great about what they offered. They said “But we didn’t get it.” But, I told them that when their bid is similar to everyone else’s, they probably nailed the value because everyone else came to the same conclusions. Just because two outliers bid the property way up doesn’t mean it was a good move. It may feel like it to those buyers right now but time will tell. My super-smarty-pants land developer husband always says, “There’s no winner in a bidding war. If I’m the winner in a bidding war then I paid too much.”

The price of a property matters most at two points in time – when you buy and when you sell. Like most others, I don’t see a crash of any type here in the District, but I believe we could go for several years with flat appreciation in some neighborhoods.

It’s easy for me to say these things though. I’m not emotional about property. For me, it’s business. If I didn’t get a house I would move on to the next one. But as a novice homebuyer many years ago, I recall having to take a long nap (Ok I went to bed early that night) after a crazy bid process where I didn’t win the place I wanted. It all turned out for the best though, because I ended up with a home I still own and still adore to this day. But it’s hard to paint a picture of the future for buyers when the present seems so discouraging.

In the last week since that bidding war I just described, I have had 2 more clients get outbid.

Parts of this process feel uncomfortable to me. I am pretty financially conservative and the freewheeling spending style isn’t my style at all. I always shop the clearance racks. I always get my Easter Candy after Easter when it’s half price. Just because it’s wrapped in pastel foil doesn’t mean that chocolate is any less delicious today than it was yesterday.

I told several buyers this week alone that bidding wars are never fun and they are never fair. You will pay more for the property than the seller would have accepted. But, this is the market and there’s not much anyone can do to “fix” it. It will fix itself. Or not. But now is not the time to show up on the scene expecting a deal or to offer less than list price because the price is “inflated.” It’s only “inflated” if no one wants to pay the list price, otherwise if someone offers it, then that’s the new market value. Sorry. It sucks. But it’s the “Come to Jesus” I’ve had to have more times in the last few months than I would like.

People who have been waiting it out for a couple years have watched prices rise out of their reach. It’s frustrating, discouraging and nerve-wracking. People who have been waiting it out from Fall, 2016 when there were price reductions and stagnant inventory and a potential election that may have killed the economy with the outcome now see properties escalating to crazy highs. They feel like the bus left in December and they missed it. But last December, those same people felt that they could wait and prices would come down even further. If this is proof of anything, it’s that no one can predict what will happen next in DC Real Estate.

One thing that won’t change in DC anytime soon is inventory. There just are not enough houses to go around for people who live here. That should tell us all something.

Bid wisely, my friends.

 

 

Churches & Log Cabins Are Houses Too!

Despite some annoying, face-hurting allergies, I managed to get out to take clients into houses over the weekend. Houses, many many interesting houses.

The Sanctuary, a gorgeous church conversion in Northeast, a couple blocks south of the H Street Corridor is first. These are pictures from their Piece de la Resistance, the Penthouse Unit. Gorgeous stained glass can be your living room windows.

Screen Shot 2017-12-05 at 10.49.12 AM.png
Screen Shot 2017-12-05 at 10.50.14 AM.png

And the 40 stair climb to the Bell Tower has amazing 360 degree views of DC.

Screen Shot 2017-12-05 at 10.51.19 AM.png

Church conversions are all the rage these days in DC. Not sure what that says about our culture but seems as though there is no shortage of churches being converted to condos in Washington, DC.

And then in a complete 180 degree turn from converted churches and city-living, I showed a log cabin in the suburbs. Totally unique, and totally quirky.

Screen Shot 2017-12-05 at 10.52.05 AM.png
Screen Shot 2017-12-05 at 10.52.15 AM.png
Screen Shot 2017-12-05 at 10.52.24 AM.png

It reminded me of some houses I have been in down in the south. It only had one bedroom, but there was an additional attached house - not a log cabin style, and the rest of the sleeping areas were there. Unfortunately that side of the home wasn't as unique as the log cabin side.

Truly never a dull moment. And, despite the allergies, I was very happy to be running in and out of houses again. Because sometimes being home all weekend with the Terror Twins can be a teensy bit much. Even though they're cute. Apparently I missed dress up with their Halloween Costumes. Seems Stanley wanted to eat that little piggie.

Screen Shot 2017-12-05 at 12.59.37 PM.png

Real Estate's Spring Thaw

My spring update on Huffington Post.

~~~~~

In Washington DC, there really is no such thing as a spring thaw. The entire winter was pretty mild which I am happy about, but then we got a cold blast the last couple weeks. Weather can wreak some havoc on a real estate market, because everyone’s question is always “When does the spring market get into full swing?”

This should be a pretty straight forward question to answer, but in DC, the real estate market is anything but straight forward. I always feel like there are 3 answers to the question.

1) January 2nd: Some people will want to buy or sell as soon as the holidays are over because they’ve been chomping at the bit to do so since November. And whoever they have been talking to about it has discouraged them from doing so. Never fails that someone will snag a house on December 27 that’s been listed for a month with no activity, then on Jan 2, there are half a dozen buyers who say “Oh, we saw that house but we got busy with the holidays and thought there would be more on the market...” and whatever else the reason.

2) After the Superbowl: Yes, Sundays are for football until they aren’t anymore. Then they are for open houses!

3) When the weather breaks.

Well here we are. It’s a blustery 40 degrees as we are now at Day 1 of Spring. My birthday was last week and mom always likes to say I was born on a sunny spring day. Hmmph. I’ve never seen any of those, but, March can be like that. It can be 65 and sunny or it can be 25 and snowing.

My clients who needed to get the party bus on the road have been pounding the pavement since New Year’s. I’m currently in about a week three day stretch of quiet time, which is nice in a way to have a little breather before it picks up again. But, for the buyers, I always think it’s better to be out when the weather is unpredictable, cold, rainy, snowy. Why? Because relocations, family changes, life – these things continue to happen in property owner’s lives regardless of what’s happening outside their window. It’s sometimes easier for buyers when the weather is bad to get a house.

But here comes the sun. Bring DC a perfect day with low humidity and hardly a cloud in the sky and everyone is out there again performing the Sunday dance. Gym, brunch, then pounding the open house circuit to see what the DC real estate market has to offer. The truth is that 50% of those people at open houses aren’t even “in the market,” but the sheer volume of bodies that turnout creates a perception as reality situation and things heat up really fast.

The Fed pushed rates up ¼ point last week though our local DC based lenders reported little change in mortgage rates thus far. The Fed concluded the meeting with a note that subsequent rate increases at future meetings will be very measured, dependent on many economic indicators but will likely stay low in the near term.

"It's Good, It's Good"

I spent the weekend house hunting with a couple clients. We saw lots of houses. Some good. Some not good.

On Friday, I scheduled the appointments for Sunday. Call me crazy, but when I follow the listing's instructions requiring an appointment 2 hours in advance, and I show up with my client to find that the person or people in the home had no clue I was coming when I gave 48 hours notice, I curse our entire industry.

The first two houses we visited were occupied. Meaning - not only was someone living there, but they were actually inside when we arrived. And both were like the house version of that old clown car. People kept coming out from all over the place.  The first house had two people in the one of the many many cars in the driveway, two people in the backyard (no clue why) and people in every bedroom. I get it - we don't all make enough to live one family per house, but we really walked in on some madness that made us both cringe. One lady was laying in bed with no clothes on saying "come in, come in, you can look around." I saw nipple. I felt horrible but there was nothing I could do. My job is to show my client the house. The sellers hired a craptastic agent to whom appointments may mean nothing. Except that on my way out the door, one of the men of the house said, "He may have left us a message, we never check the voicemail." Yep. I know a few real estate agents like that, with their permanently full voicemail.

The next house wasn't as friendly. Big Bertha was sitting at the kitchen table playing minesweeper on her phone, giving us the grand tour by pointing at rooms with her cane. Then she sent us upstairs to meet her husband who would show us around up there. There were 6 doors in the hallway and each one was closed. Each doorknob had locks on it - the kind you need keys to unlock. Of the 6 doors up there, Bertha's husband would let us inside of exactly one - which had 3 beds in it. The rest he pointed at the door and described the room inside and just kept expanding his arms and saying "It's good, it's big, it's good."

He told us the kitchen was renovated but my idea of renovated doesn't include cabinet doors that are falling off the hinges. The backyard was like an avalanche, with the house sitting at the bottom of it. The owner followed us outside and asked if we liked the house, because it's "good, good" and I said my client would need to actually see inside the rooms before she buys it. He told us to come back and make an appointment. I just shook my head. Good luck with that one buddy.

Another house was super cute inside but the backyard was about 8 feet lower than the yard next door. And there was clearly a retaining wall there at one point in time that no longer existed, so there was a shelf of dirt and tree trunks just waiting for the next rain so they could mudslide onto the yard of the house for sale. I don't often leave feedback because I never have anything decent to say to the listing agents besides, "my client just wasn't feeling it - no specific reason" but this weekend? I was leaving feedback all over the place. The retaining wall house had a form inside they wanted the agents or buyers to fill out and FAX back to their office. I filled out some details about the hot mess of a yard and left it on the kitchen counter for her to find when she showed up to host her open house that was starting in 3 minutes.

Mama don't fax anything to no one unless they are sitting in the 1980's and don't have a cell phone.

Crazy Weather, Crazy DC Real Estate Market

From moi, Huffington Post Style!

~~~~~

In the Fall (of 2016, remember then?) the DC real estate market was having a breakdown of sorts. Buyers were changing their minds quite a bit. Historically, with the low inventory levels in Washington, D.C., buyers rarely walked away from a house they successfully placed under contract. It wasn’t unheard of for a buyer to change their mind. It happens. A night of sleep, a bad home inspection report, or condo documents that are too restrictive are all reasons buyers may cancel. They either get over those little hurdles and buy the house or they rescind the offer.

But in the the fall, there was a lot of indecisiveness in the market – much more than usual. I had several buyer clients change their mind – not just once, but up to a dozen times about buying the same home. They were debating the inevitable rise of interest rates with the lackluster selection of homes and it was a tough call.

With some of my clients, I thought it was situational. The homes in question had downsides and it was smart of my clients to recognize that and really consider the pros and cons. With one client, I pulled the old trick out of my hat, and asked, “Don’t think about the individual pros and cons. What is this house, to you, on a scale of 1-10?”

When she said it was a 7, I said, “Let’s go.” It wasn’t the house for her. No one should make that many compromises in my opinion to only get something that’s a 7 out of 10. She ultimately moved on and found a house she was excited to purchase, and negotiated so fiercely that she knows she got a great deal. It’s almost like those mediocre relationships you talk yourself into believing are right, but then when you finally break up, the next person you meet is fantastic and there’s never a doubt you made the right move.

This same process then played out with several more buyers, all in the same month, as well as several buyers for one of my listings. They want it. They don’t. They want it. They don’t. They wake their Real Estate Agent at 3 a.m. (not me) canceling their contract. Then bypass their Real Estate agent and email the listing agent (me) at midnight a few nights later, apologizing for walking away but saying they want it now and will pay over the asking price. Then they change their mind again and walk away.

My explanation for this sudden spastic mind-changing by so many buyers is rooted in one place and it was not the election. Sure, 95% of DC was stunned by the outcome. But a lot of people have jobs that are not tied to an Administration. The indecisiveness was fear.

Buyers were scared. A few months before the election, the email subjects were screaming “Price Reduced,” “Price Improved” or some variation that indicated a seller did not get the bidding war to which they had become accustomed. The tide started to turn, ever so slight, but it was indeed turning.

Everyone has been so conditioned to this long-time seller’s market that they are actually suspicious now of a price drop or a house that didn’t sell in the first weekend. And I’ve said it quite a bit, but buyers aren’t stupid. There are “Developers” all over the DC, Maryland and Virginia real estate markets, selling houses they’ve flipped. I put developer in quotes by the way because: see next paragraph.

I have a client who liked a home that went under contract in 2 days just this week. She wasn’t upset so much as just curious. After speaking with the listing agent to find out how he was finding the temperature of the market in this particular Northern Virginia neighborhood, it seems that the contract purchaser was watching this construction take place for the last few months and was very interested in purchasing as soon as it was available. But they were quickly disenchanted to see that the roof was as the end of it’s life and in need of replacement, and that the Water Heater and HVAC weren’t new either.

The worst thing a flipper/developer can do in this transitioning market? Cut corners. Buyers will know. They will always know. And if they don’t, but they have an agent like me? I’ll absolutely point it out to them. Because is using old rusted hardware on brand new doors a problem? No. But it signals that there are other, more expensive corners that were cut as well. And if the agent misses it? Well, the home inspector won’t.

So my friends, this is where we are. If you’re a seller, get on your game. Don’t try to sell problems to someone else. Fix the issues and you will make it back on the sale both in price and expediency. If you’re a buyer, we are in a slight transition. Feel free to take a day to think about it if that’s what you want. Rates haven’t gone crazy, it’s better to take a deep breath and think it through than to take a massive leap of faith and land in mud.

Water Cooler Conversation

It was a jam packed weekend of house showings. I typically miss some fun stuff with the girls when I'm out for marathon tours like I've been for the weekends since New Year's.

My Saturday morning clients finished earlier than I expected, so I had about half an hour to fly home and crank out a Home Inspection Release. I really was 99% absorbed in the inspection report when my stepson came upstairs from his cave and sat at the table with the girls.

He picked something up from the table - the table where WE EAT, and my 2 year old said, "I  wiped my vagina on that."

I shut my computer and walked right back out the door to meet my afternoon clients. I'll never go home in the middle of the day again. Lesson learned.

How to Find and Make Good Investments

Also published on the Huffington Post.

 
Screen Shot 2017-12-04 at 10.07.16 AM.png
 

Courtesy of Ashref El Shazli: BroCAR Properties, 2016: Doing another of their signature “down to the studs” total renovations in Washington, DC

There’s been a lot of buzz in the last few months about changes coming to our beloved real estate market. I’ve heard everything from, “we’re seeing the start of a correction” to “this sucker is about to blow.” So what’s the formula for figuring out if the apocalypse is coming? Real estate is local. While I’m not an expert on what’s going on in California real estate, I can weigh in on the Washington, D.C. real estate market. And I believe it generally does apply to other markets.

Come with me, back to 2007 if you would. I was plugging away at a job at a national builder in Rockville, Maryland, when the hammer came down and they filed for bankruptcy. We weren’t alone on the chopping block.

What happened in the years to come was fascinating. Not while I was living it of course - that part was miserable. There were no real estate jobs to be had and anything remotely interesting in my career path now paid half of what I had made before - and it wasn’t like I was rolling in money. It was sad watching an entire industry, one I loved, collapse.

The years came – 2007, 2008, 2009 – and so did the “correction.” There were lots of distress sales. Property after property had abandoned furniture, kids toys piled up in the corner, evidence of a hasty exit– it was jarring.

By today’s standards, those properties were steals. But not many people were buying. Money was tough to borrow and life wasn’t as easy as it was in the years prior. Homeowners would be foreclosed on and they were so angry they would take their granite countertops with them. It was a hard loss for many. And hard to rebound. That landscape pales in comparison to today’s seller’s market.

The national builders stayed out of the game for a while. When there is a Board of Directors and ultimately, shareholders to answer to, it’s not that easy to start buying land and building houses again. Any entrepreneurial spirit previously afforded by the big boss at the building company is crushed by fear.

When the market started to rebound in 2011 and 2012, it felt like that first sunny day after a month of rain. A couple new homes popped on the market and they were sparkling clean! Buzzing with buyers! Staged! We were just in a total panic a couple years prior, so, how did we get here, and how does anyone know when the right time is to jump back into the game and make money? Someone was clearly out there buying houses and fixing them up again. If it wasn’t the big builders, and it wasn’t the individual homeowner – who was it?

The last housing recession taught me several very important lessons:

  1. No one knows where the top is until 6 months have passed. But, there are clues when you get there: The luxury market stalls. People who probably shouldn’t be buying houses are suddenly buying houses, as in the case of this article about my beloved hometown. I’m curious how a part time literary specialist and a salesperson in their 30’s can afford a $2M house.

  2. No one knows where the bottom is until 6 months have passed and there are almost no clues when you get there.

  3. Solo investors usually lack the resources to take advantage of the right window of time in which to invest. Often risk averse, they will never be the first ones out of the gate when the market rebounds again.

  4. Large publicly traded homebuilders will never make a killing either because they can’t get back into the market until they are 100% sure it has turned around and can answer as much to their shareholders. And by the time they are 100% sure, they are already at least 6 months past the bottom, so they’ve missed the best deals.

  5. There is only one group I’ve seen in the DC Real Estate Market who can typically time this right and make the most of the highs and lows - The smaller, local developers. They have anywhere from a few to a dozen employees. They have loyal investors and deep pockets so they don’t pay a lot for their funding. They don’t have shareholders to answer to. They respond to the market immediately and they talk to their many customers regularly. They have an eye for what people want and they make that happen. Most importantly – they are investors in the community. They want to see it improved, they want to be a part of that change, and they plan to stick around for the long haul. There are no fly by night developers and builders who sneak into town and make a killing. The ones in the Washington DC real estate market are the ones who have been here for a long time, not the ones reading about it in the news from several states away.

Find out who these people are in your market and follow them. If they are selling off a property you thought would be a gem, pay attention. They are either cashing in or they know something is turning. These are the people who have their ear to the ground – more so than anyone else in the game.

Real Estate Investing on HuffPo.

State of the D.C. Real Estate Market

This article also appeared on Huffington Post.

~~~~~

To all my clients who I’ve told that the market really slows down in late July and August, you now have permission to slap me. 

Thanks to the Brexit, interest rates came crashing down to new lows and the market turned over like a roller coaster. There are now so many people looking to buy a home and so few homes available that things are shifting. Both the demographic and price point have changed drastically – but not necessarily how you would think. Every news source likes to remind us there are two constants in the real estate market – Millennials aren’t buying and prices aren’t affordable. Well, forget all that.

The whole mantra of “Millennials don’t want to buy because they are saddled with student loan debt and they don’t want to be tied down” is sooo last season. Take the already-hopping Washington D.C. real estate market, add low interest rates and a housing shortage and you’ve got a party. This party has suddenly dropped quite a few first time buying Millennials at our door, looking for the location of the secret club. That is, where is the place to buy a house?

DC finally has some real exciting activity happening in neighborhoods that have long been slated for redevelopment and change. The locals mostly refer to this part of DC as “East of the River.” (Anacostia River, not the Potomac.) Just last fall, there was lots of talk about the changes coming to neighborhoods like Anacostia, Congress Heights, Hillcrest and Deanwood. But last spring we were all hearing that, and last year, and the year before that and many years before that. You get it. Those “promised” changes seemed to be moving at a snail’s pace – for those already living there as well as for those looking to buy but priced out of other neighborhoods.

 

 
Screen Shot 2017-12-04 at 9.43.14 AM.png
 

Photo by Chris Piller: Anacostia Rowhome Renovation by BQN Home Improvement & TLC Homes

Many of the new developments will have apartments for rent as well as residential homes for purchase – mostly condo but some townhomes appeared in the mix. Some of these projects are approved and some not, meaning this could play out slightly differently. But for those in the market, the point to focus on is the retail and office space coming to these neighborhoods. The neighborhoods East of the River have long been lacking acceptable retail options. All that is about to change as these developments take hold and become the new neighborhood anchors, bringing a redefined sense of community with it.

 

Right now, it’s the renovations of existing rowhomes that are appealing to first-time buyers. Since a glance at the map indicates much of the development will be in the Anacostia area, it makes sense that ownership of existing homes in the surrounding neighborhoods is in high demand. This feels quite sudden to me since I spent a lot of time hunting in these same neighborhoods all through the Fall of 2015 to year-end and those clients found their options to be bleak. But now? Oh, how can I describe what is happening now?

How about a cute little rowhouse, not more than 1000 square feet but renovated impeccably, getting almost two dozen offers in the first weekend on the market. Or how about a handful of canceled open houses when offers were accepted after just a day on the market. Usually sellers want to hold the open house to garner as much interest as possible and create a client database for their next house flip. But this market is slightly different and sellers know that. They realize they aren’t dealing with a buyer who will bid up a price $100,000 like they might in AU Park, so they aren’t delaying ratifying an offer over the possibility of getting a few thousand more dollars if they stayed on the market long enough for an open house.

 

Photo by Chris Piller: Even at this price point, buyers don’t have to sacrifice any of the bells and whistles. Home by BQN Home Improvement and TLC Homes.

Photo by Chris Piller: Even at this price point, buyers don’t have to sacrifice any of the bells and whistles. Home by BQN Home Improvement and TLC Homes.

Photo by Chris Piller: Same kitchen as above, opposite wall space made into additional cabinet and storage space.

Photo by Chris Piller: Same kitchen as above, opposite wall space made into additional cabinet and storage space.

The house style and type, the small yards and square footages around 1000 feet are appealing to first-timers, most of whom are Millennials. They always wanted to buy into an area where they can walk to things, hop on the metro and not feel far from downtown – that hasn’t changed. But what has changed is they can now afford it. The price point in Anacostia and its surrounds is very steady – the renovated rowhouses around 1000 square feet are consistently selling in the low to mid $300,000’s and the promises for the future are now coming to fruition.

It’s time to go east, people. It’s all starting to happen there now.

This article also appeared on Huffington Post.

Stop Watching HGTV

Also published on Huffington Post.

Or at least stop thinking it's based in any remote shred of reality.

I believe in 1970’s parenting. This means if my kids aren’t at the playground then they’re in front of the TV.  (Don’t judge.) We’re big Peppa Pig fans in this house but man, do not put on that whiny Caillou in my presence or I will stab myself in the eye. Unfortunately, the fact that I’m well-versed in all things kid-show means I rarely get to watch the TV myself. And I mean, rarely.

A few weeks back though, the stars aligned with nap time, not having to show houses, and not feeling compelled or particularly motivated to clean the house. I actually got to watch HGTV while it was running a “Flip or Flop” marathon. After a few hours of watching with my jaw dropped, I said to the man, “Ohhhh. I get it now.”

It now makes perfect sense why so many people think that flipping houses is a quick way to make some cash. They saw it on TV so it must be true.

Let it first be said that unless you have a real “in” on something, a unique idea or a huge advantage, there is no express lane to wealth for the vast majority of us. Did you create that Pokemon game everyone is going nuts over? Yeah, me either. Back to work for us.

So, where does this show and others like it steer people wrong? Let’s drill it down.

  1. They completely ignore legitimate acquisition costs. In one episode, a house was being auctioned for $350,000. The flippers called the listing agent the day it was listed and offered $275,000 cash, sight unseen and the offer was accepted. An offer 21% below asking price wouldn’t even be responded to in the DC market, much less most other markets right now in the U.S. - unless there were extenuating circumstances of which they didn’t make the viewer aware. And the first day on the market? Laughable. It takes months to get a 21% price reduction from the list price – even if the list price was grossly over what it should have been.

  2. Their renovation costs seem quite low. Contractor quotes for totally gutting houses on the show come in around the $50,000 to $60,000 range. In real life, I estimate the true price is more like $100,000 to $125,000. In DC, if renovation costs for an entire house flip are less than six figures, they are either cutting serious corners or they could be cutting the contractor in on the profits.

  3. When they have construction overruns, it’s portrayed to be this huge bank-breaking deal but then it’s only a few thousand dollars. In the grand scheme of things it hardly cuts into their profits. Ask anyone who has ever tackled a home renovation project – no matter how big or small, it always takes twice as long, costs twice as much and sucks 8 times as much as you thought it would. If these people are really squeaking out a profit and a couple thousand dollars causes such drama, then something is amiss with their numbers. The drama is really just for show. No one renovates a house without expecting a swing in their budget and allowing for an overrun.

  4. The homes they acquire for around $300,000 end up selling in the mid to high $400,000’s.  They show profits anywhere from $60,000 to $100,000 for a few weeks work. This is insane. No one is making money like this unless they really know what they’re doing. It takes time to add value like this to a home. The reality is, if there was the underlying value in a house so much so that it could be acquired for $300,000 and sold for $450,000 then everyone would be doing it, right?

 

This is a fixer upper, in process. Imagine living in this disaster. I did. I was just outside this shot, holding our 3 week old, trying to find somewhere clean to change and feed her.

Interest rates are low and prices are as high as they have ever been. When the market is as good as it is right now for buying real estate, it is impossible to find something at a low enough price to be able to renovate, add value, sell and have a nice profit. It isn’t impossible, but the people who do this are actually on the hunt for these houses full time. They build relationships with property owners – sometimes over years, trying to work a deal to buy their home. They endure Property Tax Sales, probably one of the best scams going for the would-be 51st state. They understand the acquisition is key – both price and ease of financing, which means they have cash or investors who can back the buyer and make them basically as good as cash.

If you are looking for a “good deal” or a “fixer upper to flip” or a “place to buy and rent out to make money every month while someone else pays the mortgage,” step away from the TV.  In this market, those expectations are out of line with reality. What’s portrayed on TV is wildly inaccurate, and is really crafted for entertainment value first and foremost. There isn’t any legitimate merit in their acquisition, negotiation and construction processes. It’s all just for fun. Or for making fun. Because does anyone really scout vacant houses and go to auctions in stilettos and a camisole? Oh HGTV, never ever change.


Also published on Huffington Post.