The Pointing You Home Real Estate Blog

Our Maryland, Northern Virginia & Washington DC Photo Gallery. Please click on a thumbnail located below to for a larger version.

[View with PicLens]

• Read More »

Real estate owners in Rockville, Bethesda, Potomac, and other Washington DC suburbs need to be aware of the recent upheavals in the appraisal industry.  Decisions that are being made can dramatically affect property values, appraisal costs, and loan requirements for mortgages of Washington DC and Maryland real estate.   So much so that professional real estate appraisers are up in arms.

Appraisals are important. They ratify the value of properties and affect selling prices and loan requirements.  They also affect refinancing and down-payment terms.  The problems are stemming from the “home valuation code of conduct” issued in December 2008 by the federal regulator of Fannie Mae and Freddie Mac.

This issue has become a political tug of war and may be the subject of a federal lawsuit.  The National Association of Mortgage Brokers is planning to appeal to Congress to reverse the code that is scheduled to take effect on May 1.  According to an article by Kenneth R. Harney on January 10, the code “is the product of a settlement involving New York Attorney General Andrew M. Cuomo, the Federal Housing Finance Agency, and two congressionally chartered mortgage companies that the agency oversees.

Cuomo had threatened to investigate Fannie Mae and Freddie Mac to ferret out alleged yellow flags in the appraisal industry—yellow flags such as overvaluations or evidence of pressure put on appraisers to reach numbers that were needed to close loans.  The parties, therefore, agreed to create a set of standards to ensure that appraisals are accurate and insulated from the pressure of mortgage brokers, lenders, real estate agents, and third-party appraisal management companies.

However, the new code goes above and beyond.  Experienced appraisers are being undermined by its slipshod approach.  They are refusing to sacrifice the integrity and quality of their work to perform valuations for a fraction of the regular fees.  The code also eliminates the traditional practice of brokers selecting the appraisers for real estate.  However, appraisal management companies require appraisers to perform valuations for under $200, a fraction of the going rates between $300 and $600.  They also require quick response, which generally means cutting corners.  Also, these big companies take the difference as profit.

In response, several large appraisal organizations, including the Appraisal Institute and the American Society of Appraisers, allege that the code “will force lenders to shirt their valuation assignments to third-party appraisal management companies, abandoning the traditional system of using local appraisers selected by mortgage loan officers.”

Buyers also need to be aware that it could be that a middle man is charging you a few hundred dollars for a quick, mediocre appraisal.  Also, it could be that your property will lose value because of it.  A good quality appraisal offers more than meets the eye.  It also provides an accurate evaluation of comparable properties, pending sales contracts, and local market trends.

Feel free to contact Eric Stewart of Llewellyn Realtors at (301) 424-0900 for more information about real estate in the metropolitan areas.

• Read More »

Some professionals, especially singles, may be tempted to lease properties in Potomac, Bethesda homes, or Arlington, instead of buying real estate in northeast Washington D.C.  However, the ability to deduct mortgage interest should be a huge incentive for people to invest in qualified homes in Maryland, Northern Virginia, and the District of Columbia.

Interest paid on mortgages for real estate can be deducted on the first $1 million in mortgage loans for the first and second homes combined.  For those with a million dollars involved, that would mean a much-needed $50,000 deduction.

For some homeowners, the deductible amount can be significant.  First of all, interest payments can be deducted on the first $1 million in mortgage loans for a “qualified home.”  A qualified home actually includes the combination of a first and second home, which must have a kitchen, sleeping quarters, and a toilet.  Houseboats, trailers, and even stock in many of the cooperative housing corporations around Washington D.C. all count as a “qualified home.”  There are lots of stipulations about the cooperatives, and they are worth investigating.

Benny L. Kass explains the IRS “acquisition indebtedness” in a recent series of articles entitled, “Mortgage Interest: What Can You Deduct at Tax Time?”  According to this limitation, the mortgage must have been taken out after October 13, 1987 in order to buy, build, or substantially improve a qualified home.

Kass’ example states that if, “In 2000, you bought a condominium for $300,000 and obtained a $240,000 loan.  Based on the rapid appreciation in the years after you bought, your unit is now worth $500,000, even if it has lost value recently.  You still owe $230,000.  You refinance and get a new loan in the amount of $400,000.  Your acquisition indebtedness is the amount you owed on your old loan, $230,000.”  Homeowners can deduct the interest on the $230,000 plus any money borrowed to upgrade the home.

Even if homeowners incur acquisition indebtedness, they may also deduct interest on any home equity loans.  Homeowners can deduct interest on up to $100,000 of home equity debt.  When the home in the above example was refinanced for $400,000, the interest on the additional $100,000 would also be tax deductible.
Other deductions may be taken for points and private mortgage insurance.  It all adds up in favor of the real estate owner.

Feel free to contact Eric Stewart of Llewellyn Realtors at (301) 424-0900 for more information about real estate in the metropolitan areas.

• Read More »

All of the regions around the Washington DC real estate area, from Virginia to Maryland, cities in Montgomery County, such as Potomac, Bethesda, and Rockville MD real estate, tend to prosper in times of national crisis.  The demand for Washington DC homes and residential real estate in popular Maryland suburbs such as Gaithersburg increases as government lobbying increases.  Local business leaders also hope for a boost in the commercial real estate market as well.

Recently, the area has seen a most-welcome relief from the struggles of the past couple of years.  Washington DC does not have immunity from the nation’s economic problems.  For example, there have been low retail sales, low tourism, layoffs, foreclosures, and declining home values.  However, during 2008 and entering into 2009, several residents of homes in the Maryland and Northern Virginia suburbs have benefited during this time.

Professionals that have been referred to as “influence-peddlers” in a January 2009 Associated Press article are coming to town.  They include government employees, lawyers, lobbyists, public relations experts, businesses, and companies.  These folks have a vested interest in legislation being drawn up to stimulate the economy.  They attempt to influence regulations and direct the flow of the government monies.

The AP writer Brian Westley quoted David Rubenstein of The Carlyle Group a private-equity firm who said, “Far from struggling, the Washington region could be on the verge of ‘boom times’.”  The federal government has added over 7,500 jobs in the area in the past ten years, partially for defense, military, and homeland security oversight since September 11, 2001.  Now we have companies who want bailout funds who are based outside the area operating larger Washington offices.

The region’s unemployment rate (4.4) is the lowest among metropolitan areas of over a million residents.  We have gained 31,000 jobs from November 2007 to November 2008, making up for the large numbers of jobs lost in the construction and real estate industries during the housing crisis.  Some believe that another 20,000 new jobs will be opening up in the region, with a third of them expected to be government and contractor positions.

Along with the influx, we are expecting the real estate markets in the area to remain slow but steady.

Feel free to contact Eric Stewart of Llewellyn Realtors at (301) 424-0900 for more information about real estate in the metropolitan areas.

• Read More »