Real Estate and Reston, VA: Coming Around Again in Fashion and Real Estate

If  you are a woman of a 'certain age,' you have probably heard the fashion adage 'if you remember wearing it before you probably shouldn't wear it again.'  In case you are not familiar with this concept, examples of  it include: hip-huggers, micro-mini skirts, thigh-high boots and leggings as pants.

Like Fashion, the Real Estate industry is experiencing a resurgence/recycling of products and processes from the past. Unlike Fashion, however, the recycled Real Estate practices are worth a second look--both for Realtors and for Buyers and Sellers.

There was a time, in the not-so-long-ago-past, when buyers would almost never consider buying a home with an FHA or VA loan.  They were complicated, took a long time and were not appealing to sellers because of appraisal processes and contribution requirements. Before you object, I know there were always people who used these products, but the majority of folks bypassed them and took out more forgiving, and easier to acquire, loan combinations. Instead of a 5% down payment and an FHA loan for the balance, a buyer would likely go for an  80-15-5.  This combination would allow them to bypass Private Mortgage Insurance (or PMI) since the 2nd loan would be used to make sure that they could get their first loan to 80%. I am seeing a resurgence of these FHA and VA loans--AND the use of PMI.  The government is working to make the process easier and suddenly buyers with these loans are more appealing to sellers because of their government backing and the likelihood  that they will get to closing.  A 'better loan' that evaporates before closing is not a better loan!

Another thing that I am seeing now is Home Sale Contingencies on purchase contracts.  We are in recovery from a period where plenty of people got burned by buying a new house before selling their old house. For a while, if you sold your house without buying a new home you were likely to end up with no house at all.  Unfortunately, as the market began to unravel, many folks who bought the house before selling their old one got caught in the bursting of the real estate bubble and ended up with two houses. There were plenty of cases where people lost both homes because of this series of events.  Buyers are more conservative now.  No one wants to be left with two mortgage payments and the days of easy-to-access money for bridge loans is in the past. The Home Sale Contingency is fashionable again because it gives the buyer some assurance that they won't be left with two mortgages. Sellers need to be re-trained to accept this reality, but when the alternative is to continue holding a house you can't sell, I suspect sellers will come around.

Longer listing periods seem to have come back in to style, too. During the boom years, a 45-60 day listing period seemed more than enough time.  If you couldn't get the house under contract in a week or two and settle within 30 days, as a Realtor, you were not doing your job!  Now days, it is not uncommon to see a really nice, well priced and well maintained home on the market for 6-9 months.  In the higher brackets, a year long listing is not unheard of. Again, just a change in mind-set, but it is is changing our approach to business. We have to adjust the expectations of our sellers and do a better job of making sure they understand how critical the pricing and preparation phase of Listing their home is to the subsequent sale.

These are just a few examples of ways that the Real Estate industry is recycling practices from the past.  There are plenty of things that will never come around again (driving around to pick up keys, anyone), but some of the old-but-good practices are helping us to redefine our industry in response to that Real-estate-gone-wild period from which we are recovering.

You might not catch me in a baby-doll dress ever again, but putting together an offer using a VA loan? Absolutely!