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SPRING 2008 Volume IX, Number 1

PRICING YOUR HOME DILEMMA OF A Call


IN TODAY’S MARKET SHORT SALE
For many, many years the traditional way to We recently placed a home on the market
703-239-1234
set a list price for property was to review both that the owner was attempting to deed back to Selling
neighborhood sales in the last six months and his first trust lender while offering a cash settle-
current homes listed for sale. In a neighborhood ment to his second trust lender. The home was
Northern Virginia
where there are different builders and multiple priced at exactly what the bank said it would Area Homes
floor plans, we normally looked at the tax accept. We received multiple offers on the prop- for the Past 30 Years
record for the recorded square footage of the erty and submitted each one to the two lenders.
house and then locate properties with similar Although we were promised a 48 hour decision REFINANCING:
square footage. As homes aged, we then on any contract sent to them, we found that this TODAY’S OPPORTUNITIES
compared amenities such as finished basements, was simply not the case.
updated kitchens and baths, and the age of We had contact persons at each institution, Many adjustable rate loans are due for an
major home components such as furnace, roof, but when the contracts came in, no one would adjustment in 2008 and 2009. Now is the time to
and AC compressor. return our many calls, e-mails and/or letters. look at your old loan papers and determine what
In today’s market, we have a new The owner also called, wrote letters, and had his your current rate is, the adjustment date for your
phenomenon: short sales or foreclosures being attorney contact them. Still no answer. loan, and the index and margins in your loan
documents. You were given this information at
offered for sale by the owner or their lender. After 30 days, the purchasers withdrew their
your loan closing. Here is an overview of the
The pricing on these properties can range from contract as they wanted a solid purchase and
terminology you’ll encounter on your loan papers
very low – under market – to very high – could not wait any longer. The listing was fi-
Current Rate: The interest rate you are paying
enough net return to cover the current mortgage. nally withdrawn from the market as we received
today. Is the loan interest only or is the loan
The pricing on these properties is based on what no responses from either of the two lenders. fully amortized?
the owner or lender will accept, not on what the Almost six months later the second trust lender Prime Rate: The Prime Rate is controlled by
real value of the property is. In addition, these called and wanted to know if the buyer was still large banks and governs most equity lines, many
properties are sold “as is.” That means no interested. The lender had no record of receiv- credit cards, and consumer loans. The Prime Rate
repairs will be done and you take the house as ing anything from us other than the contract. is 6% as of February 1, 2008.
you see it, which could be stripped of all In the mean time, the property has been va- Adjustment Date: The month and year your
interior fixtures. cant since June. No maintenance or upkeep has interest rate will be evaluated for adjustment
Often the home has sat vacant for six to ten been done for over six months. Prices continue Index: The index on your loan determines the
months with no maintenance or upkeep during to drop and our “as is” price is now the current interest rate when your loan adjusts. Some
that time. A recent analysis showed that several list price for adjacent properties that are in good common indices are the 1 year T-Bill, 11th
of our local neighborhoods have as many as condition and fully warranted. When will this District Cost of Funds, Libor, etc. These indices
25% of adjoining homes for sale in the short house sell? It is hard to guess. Perhaps it will change as often as weekly.
sale category. go to auction and the new owner will fix it up Margin: The amount that is added to the
Today, home sellers are competing with and resell it or it will be another six months be- index to determine your rate, i.e. Index – 1 year T
these drastically reduced properties. Buyers are fore the banks get serious about establishing Bill, current value 3.53 percent plus 2.50%
often afraid to buy a home “as is” because that policies and procedures that can quickly handle margin = 6.03% new rate.
means that any repairs that need to be done are offers that come in on properties. Until then, Caps: Each loan will typically have an
paid for by the purchaser. Cash out of pocket is we will all have declining properties in our adjustment cap as well as a life cap. A typical
often a problem for current home buyers. neighborhoods, which will erode home prices. adjustment cap is 2%. Interest rates cannot rise or
Some banks are recognizing this problem fall by more that 2% per adjustment. A typical
and are offering mortgages that would cover life cap is 6% above your start rate. Therefore if
remodeling costs. However, banks and your start rate was 5%, your lifetime cap will be
appraisers are under close scrutiny from the 11%.
federal government to refrain from over If you have questions about your loan, call the
inflating appraisals. To give the buyer money Customer Service Department of your current
lender. Start keeping track of your funds Index so
for repairs, the bank has to insure the work is
that you can decide if you should refinance or
actually done and not pocketed by the buyer.
stay with your current lender and pay the adjusted
An experienced Realtor can help home
monthly payment.
sellers arrive at the correct list price and then
suggest marketing techniques to highlight the
special features that make that property stand THE PAT RICHTER GROUP Referrals are our major source
out. Homes are selling when the price and Back: Nancy Ade, Amy Van Norman, Teta of new customers. Thank you
condition meet the expectations of current Johnson, Jill James, Olga Drew. Front: Steve for referring the Pat Richter
buyers. Richter, Pat Richter, and Don Richter. Group when asked, “Who is
the best Realtor in the area?”

The Pat Richter Group ~ (703) 239-1234 ~ 1 (800) 455-7368 ~ www.richter1.com ~ pat.richter@richter1.com
SPRING 2008 VOLUME IX, NUMBER 1

9005 Southpointe Dr. 10629 Canterberry Rd. Captain John Smith Ct. 10819 Maple Street
Lorton Fairfax Station Fairfax City Fairfax

LD LD LD LD
SO SO SO SO

10451 Courthouse Dr. 12602 Lake Normandy Ln. 12712 Kentstone Way 3931 Lyndhurst Dr.
Fairfax City Fairfax Fairfax Fairfax

OLD LD OLD OLD


S SO S S

INCREASED CLOSING COSTS BASED ON CREDIT SCORES


Some new changes have been instituted by Fannie Mae and Freddie Mac that will affect all new mortgages in our local area. Several
counties and cities in the state of Virginia as well as elsewhere have been listed as declining market areas. These are Alexandria, Arlington,
Fairfax, Fairfax City, Falls Church, Loudon, Manassas, Manassas Park, Prince William, Stafford, and Fauquier. Conventional loans that
required a 5% down payment will now require 10%.

Borrowers with lower credit scores and high loan to value ratios will experience an add-on to the points as follows:

Below 620 credit score an additional 2% of the mortgage amount as closing costs
A credit score between 620-639 an additional 1.75% of the mortgage amount as closing costs
A credit score between 640-659 an additional 1.25% of the mortgage amount as closing costs
A credit score between 660-679 an additional .75% of the mortgage amount as closing costs

Buyers, it is important to determine your credit score before you buy a home so you know what your closing costs will be. Sellers, be
prepared to continue helping buyers with closing costs to offset these additional charges.

SELLER PAID GRANTORS TAX


For many years sellers have paid a one percent “Grantors Tax” when they sold their home. On January 1, 2008, this tax was increased to
5% of the sales price or assessed value of the home, whichever is higher. The additional four percent is being retained by the county/city
where the property is located as a Transportation Tax. There are some minor variations in the amount charged, so be sure to check with
your Realtor for the exact amount your jurisdiction charges.

The Pat Richter Group (703) 239-1234 1 (800) 455-7368 www.richter1.com pat.richter@richter1.com
SPRING 2008 VOLUME IX, NUMBER 1

13504 Ellendale Dr. 46414 Esterbrook Cir. 8235 Carrleigh Parkway 8115 Winter Blue Ct.
Chantilly Sterling Springfield Springfield

LD LD LD LD
SO SO SO SO

5703 Waters Edge Landing Ct. 10919 Carters Oak Way 5916 Cove Landing Rd. 4537 11th Street N.
Burke Burke Burke Arlington

LD D LD LD
SO
S OL SO S O

IMPORTANT INFORMATION ON BURIED OIL TANKS


Oil furnaces were installed in many of the original homes in the Burke and Fairfax Station areas. Later many homes converted
to gas or electric heat pumps and left the oil tank in the ground or in the basement. Most of these homes were built before
1970. A recent study has found that over 70% of small heating oil tanks are leaking or have leaked. The tanks were not
constructed to last over 30 years. The leaking petroleum may impact wells (for those properties with well water), storm drains,
and basements.

The owners of a property with a leaking tank are typically responsible for necessary environmental cleanup. Buyers of
properties with buried oil tanks should have the tanks properly inspected prior to purchase to insure they are not “buying” into a
problem. In addition, while the tank may not be leaking, oil may have spilled when the tank was filled over the years and the
soil around the tank could be contaminated.

The Virginia Department of Environmental Quality recognizes that leaking fuel tanks can cause significant damage to property
and the environment. They have established the Virginia Petroleum Storage Tank Fund to provide financial assistance for
environmental cleanup. This fund will reduce owners’ out of pocket expenses for correcting the problem.

Be aware that if the tank has leaked, owners must report the leak to the VDEQ. The second regulation is the State Building/Fire
Code, which states that an underground oil tank that has been out of use for more than one year shall be removed or abandoned
according to certain specifications. Typically a County permit and inspection by the local fire marshal is required.

For more information go to www.oiltanks.net or call (800) 761-3299.

The Pat Richter Group (703) 239-1234 1 (800) 455-7368 www.richter1.com pat.richter@richter1.com
5361 Burke Center Pkwy, Suite 1
Our Sweet Deal Program Burke, VA 22015
(703) 239-1234
We offer a specially designed commission program for home sellers in (800) 455-7368
the Northern Virginia area. The program was designed to meet the
needs of home sellers and acknowledges the current market conditions
in the area.

Sound interesting? Here is how it works. Call us about selling your


home and / or purchasing a new property. At the first meeting we will
show you our “Sweet Deal Program for 2008.” Everyone wants to
reduce the cost of selling his or her home. Our commission schedule
will save you dollars at the settlement table.

The Pat Richter Group is on the Move!

Buy or sell with The Pat Richter Group and


receive use of our courtesy moving truck.

Any time of the day or night, see inside all of our listings by Disclaimer
going to the Pat Richter website at www.richter1.com and This newsletter is not intended as advice on legal or tax matters.
clicking on Virtual Tours. Not only will you see exterior Distribution is not meant as a listing solicitation for the properties
VIRTUAL Tour

photos, but you will also receive a complete guided tour of currently listed with another broker. This is a paid advertisement
the property. and is not the expressed view or opinion of Residential Preferred
Properties or The Connection Newspapers.
If you are buying or selling your home, think about the
advantage your home will have if buyers all over the world Is it Time to Change Property
can see your home both inside and out. A Virtual Tour is a Management Companies?
benefit offered to all of our selling clients.
Are your fellow homeowners complaining about your property
Our tours average over 707 views a week. Think of the management company? Is the trash not picked up on time? Are
the HOA rules not enforced? Is there little or no oversight in
added exposure your listing will receive. Want to know
your community? Call Richter Management at (703) 503-1234
what other benefits the Pat Richter Group offers? Call us and see how an experienced property manager can make a
today at 703-239-1234. difference in your community.

HOME STAGING
Super Service Resource Center Home Stage and Design
Teta Johnson (703) 743-5611
ATTORNEY
Law Offices of John F Richter, PLC REAL ESTATE SALES
John Richter (703) 239-0650 The Pat Richter Group (Residential Preferred Properties)
(703) 239-1234 ~ Fax (703) 239-0958
MORTGAGE LENDERS e-mail: pat.richter@richter1.com
SunTrust Mortgage, Inc.
Frank Donnelly (202) 624-1245 REAL ESTATE EXCHANGES
PTE Exchange LLC
PROPERTY MANAGEMENT John Richter (703) 239-0650 ~ e-mail: jrichter@jrichterlaw.com
Residential Management Services TITLE COMPANIES
Steve Richter (703) 503-1234 ~ e-mail: rmspm@aol.com Provident Title & Escrow LLC / T/A RGS Title
Burke Office: (703) 239-9600
ASSOCIATION MANAGEMENT Lorton Office: (703) 495-9600
Richter Management Springfield Office: (703) 451-6600
Amy Van Norman (703) 503-1234 ~ e-mail: RichterHOAmgmt@aol.com Chantilly Office: (703) 961-1750

The Pat Richter Group (703) 239-1234 1 (800) 455-7368 www.richter1.com pat.richter@richter1.com

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