Everyone's Favorite, HOA's!

Michael and Melissa discuss Homeowner’s Associations, also known as HOA’s. An HOA is a planned community where the property owners own their home in “fee simple” - meaning, they own the ground underneath them. What’s the difference between a home in an HOA and a condo association? In HOA’s, the owner owns the whole structure from ground to roof. They are responsible for fixing the roof, maintaining the yard, dealing with any basement leaks or foundation issues.

This is different from a condo association (to be discussed on the next podcast) where you are only responsible for the walls and everything inside of them, known as “walls-in.” The roof, foundation and grounds are considered common elements maintained by the condo association.

What should you look for in HOA Documents when you are under contract to purchase in a community governed by an HOA? It’s important to review that there is nothing in conflict with how you plan to use your home. Do you have several pets and the community has a limit? Do you plan to run a business out of your home which the documents may not allow? Do you want Harold and his purple crayon to color your house and purple isn’t allowed.

In Virginia, the buyer has 3 calendar days to review HOA Documents. In DC it is 3 business days, and Maryland has is five calendar days. In DC if it is brand new construction, the buyer has 15 days to review.

The package has to be complete and up to date when it is delivered, and the time frames do not start counting down until the buyer has a complete package. In most HOA’s, the management company also has an extra step called “inspection.” They walk through the outside of the property prior to sale to ensure there are no violations - broken windows, missing shingles, a toilet planter in the yard. These have to be corrected by the seller prior to sale.

Melissa shares stories about her Delaware community’s lack of understand of the Yahoo message board. The reply button is no one’s friend on some message boards because it goes back to the entire community. And we learn that an entire community can misunderstand a turn of phrase, “fat dumb and happy.”

Michael then becomes Old Man Withers as he goes on his rant about his experience with HOA’s and admits he practically incited a riot at his current HOA meeting about a very controversial topic: Sod.

Melissa takes us back to Yahoo Groups in Delaware where disaster awaits. It was a reply-heard-round-the-world. The sender believed she was replying only to her friend but her comment went back to the whole community and everyone learned one woman’s husband was hitting on the other wives in the community.

One may wonder why HOA’s exist at all? This is what the Jurisdictions (county/town/city) require of land developers who submit plans to develop property. This is a way for the governmental powers that be to make sure that the HOA will maintain the roads and they won’t become the responsibility of the town or county to handle.

We also learn how Michael’s Irish Roman Catholic Family violated a scarecrow, setting a whole #metoo movement into play and Melissa’s family’s inability to keep hermit crabs alive.

When Bad Appraisals Happen to Good Contracts

What is an appraisal and when does it happen? What’s the assessed value and are either of those the same as the market value?

Nope. Appraised value, assessed value, and market value are three different numbers for the same house.

Assessed value is what the town or county jurisdiction feels your home is worth and they use it to form the calculation of property taxes. This typically trails the market value and that’s what you want. You don’t want to pay taxes off an inflated value, so having this trail the market value is best.

Market value is what someone will pay for the house - basically what would it sell for on the open market. As a buyer, this is going to be in line with your contract price. It’s the price you as the buyer agree to pay for the home.

Appraised value is what an appraiser (who is hired by the bank that is providing the mortgage loan) deems the house is worth. This may be more than market value or less depending on what the sales of comparable homes in the neighborhood are. They use a variety of factors to calculate this value.

Appraisals are problematic for many reasons but they are a required hurdle to clear for anyone getting a mortgage to buy a home. The result of most appraisal reports will state that the value is at the contract price and they won’t attempt to show more value even if it’s there. It’s rare that they miss the number and here’s where the whole system is flawed. Appraisers know the number they are trying to hit. They have a copy of the contract when they are doing the property appraisal. It’s sort of like cheating but for some reason, it is allowed.

Appraisers have zero incentive to miss the contract price - if they consistently miss their numbers the bank won’t hire them anymore. The entire system seems to be a bit of a sham.

Michael and Melissa stress the importance for a listing agent to meet an appraiser at the property. The listing agent should be prepared to show the comparable sales to ensure the appraiser isn’t going to pull bad comps and miss the number. Definitely do not leave this to chance.

Melissa hits the road with dilated pupils, scaring drivers all over the DC area, amasses an entire collection of hermit crabs who commit suicide and Michael calls her a shit magnet. Michael finally closes some long term clients who wrote many offers and they give him a bottle of wine from Spain!

Where's the Fucking Lockbox!?!

Michael and Melissa share the real reasons Michael’s hair fell out and Melissa’s is gray - it’s because they spend too much time managing nonsense with agents on the other side of the transaction.

Starting with access issues - sometimes houses have lockboxes that require a combination that the agent didn’t provide, or the lockbox can’t be located in the case of many condo buildings.

Rentals are a whole other animal. Melissa tried to make appointments for 6 different rental condos and 5 of the listing agents didn’t respond at all. The following day, showing day, Melissa circled back to follow up again with the agents to find out why they didn’t respond and if the property can be shown. One agent had no idea what was going on in her life and another agent said his listing was rented already. When Melissa told him to change the status from “active” to “pending,” he said, “Well they haven’t moved in yet.” This isn’t how it works. When a potential tenant sees that property as “active” they believe it is fully available. As it should be. Forehead slaps all around.

Rentals are often used as training ground for new agents. Unfortunately, the clients suffer from the incompetence of being mishandled with the hands of incompetence.

Michael, who is highly allergic to mold, showed a house with floor to ceiling mold. He called the listing agent to ask why they wouldn’t have warned people of the mold in the house or offered a mask at the front door. Some people have no home-training!

Verbal negotiations sometimes make sense when time is of the essence and it’s important to get a contract ratified quickly. But it will backfire if an agent on the other side is not playing fair or misunderstands what was decided in the conversation. Then there are two frustrated clients to deal with.

Along the lines of fair play, Michael explains how sometimes agents set deadlines for offers and accept something before the deadline. You can hear his frustration of a showing being canceled at the last minute. Melissa attempted to console him by telling about the times she has gone to show houses that have contracts and the listing agent doesn’t bother to extend the courtesy of a call.

Melissa has a Coconut Roll addiction, broke her wedding band (while loading the coconut rolls in her car) and humanely saved a mouse. Michael is already “renovating” and upgrading his brand new house and discusses the things that need to be done. As summer winds up, Melissa is squeezing in a vacation, Michael is going for a hike and planning an event for clients at a winery.

When Bad Houses Happen to Good People

Michael and Melissa share stories today about the crazy things they see in Washington DC, Northern Virginia and Maryland houses on their tours with buyer clients.

Melissa opens by recalling a showing in Capitol Hill where the stairs to the basement were not attached to the wall of the house. While she and her clients felt like they were in a scene from Silence of the Lambs, the owners of the home were upstairs cooking a tray of sausages.

Michael tells a story about what a house filled with floor to ceiling mold entails. They had to wear face masks, and they were greeted by a refrigerator on its side on the counter - but good news! There was an indoor pool…kind of. The basement was filled with a foot of black water. Michael then discusses how to winterize a house and how important it is to hire a plumber.

Back to Melissa with a story of a house where someone living there had shut off the water and was using the water delivery jugs as their toilet. Michael tops it with his story of stumbling into a possible sex dungeon in the attic space of a home he was showing to a client.

Then there’s the saga of listing a condo upstairs from where a very high profile DC crime occurred and was covered by many news sources. While Melissa was trying to sell it for her clients, pictures of the building kept appearing on the front page of the Washington Post with updates on case.

They discuss how houses have many secrets. They can be haunted, harbor squatters who run out the back door when you enter and how it can be downright dangerous to enter people’s homes - especially if they pull a gun on you.

Michael learns there is a Wawa just a few blocks from the office and that you can’t buy x-rated magazines at a Sheetz, and Melissa learns that the bottles filled with yellow liquid on the sides of the roads are NOT filled with lemonade. People pee in them and then toss them from their car. She also reconsiders her carefree approach to opening doors in houses after Michael tells enough stories of what he has found behind closed doors.

It's Always About the Money

They survived one podcast and are back for week 2!

Michael and Melissa banter back and forth about writing contracts, placing corgis from the rescue Melissa founded, East Coast Corgi Rescue, into their forever homes, zen gardens, bonsai trees and why a gay man would ask three straight women for home decor advice.

The lender often makes or breaks a deal and there are many reasons why. Some lenders may not be responsive at night or on weekends. Since real estate is practically 24/7, and since houses are seen and offers are written most often at night or on weekends when the buyer isn’t working, it’s important that a loan officer has the work ethic to be responsive at all times.

The timeframe for closing is also important. Lenders who aren’t familiar with the pace of the Washington DC market may think 60 days is a good closing date but sellers and listing agents in DC, Maryland and Northern Virginia expect a lender to be able to close in 30 days.

Relationships with underwriters is also important. If underwriters are in the same office as the loan officer, they often have a relationship based on respect, and they help each other to get the loan finished. Michael and Melissa explain that when underwriters are in another location and the loan officer has to submit a file and has no idea which underwriter they will end up with, it’s the same as taking your car to 10 mechanics. You can end up with 10 different answers. Every time the underwriter picks up the file, they will ask for more things which can delay the process and irritate the buyer.

Appraisal turnaround time is another hot issue. Some lenders know their pool of appraisers well and know that they won’t miss a deadline. Others hire from a regional pool and an appraiser may come from far away, not understand the market well or be brand new. And these are the appraisers who can stand between a buyer getting their dream home or not.

Then there’s an exciting lightening round of questions for Michael to answer on the fly, nods to both the Golden Girls and Family Guy, when contractors pretend to fix home inspection items and a 24 year old air conditioning unit.

Why Is It Called 7 Dollar Listing?

Michael Sheridan and Melissa Terzis both work as Real Estate Agents in the Washington DC market. They talk about their background and what makes them think they are qualified to have a podcast about real estate.

Melissa worked for a land developer almost 20 years ago in suburban Maryland and then went on to work for a couple different national New Home Builders before getting her real estate license. Michael bought a fixer-upper at 19 years old and the renovation experience planted the seed in his brain about helping people to buy their own homes.

Why is this podcast named 7 Dollar Listing? It’s a partial nod to the Million Dollar Real Estate Shows of TV. While showcasing that kind of Real Estate Agent life makes for good television, it is definitely not the norm. The stories of things that happen to everyday agents working in the trenches can be just as entertaining.

The Summer 2019 State of the Washington, DC Real Estate Market continues to be strong. The announcement of Amazon coming to Arlington, Virginia has resulted in an entirely different sub-market of DC Real Estate. Investors from all over the country flooded their attentions on the newest real estate darling, Crystal City in Arlington.

To be clear, Crystal City was never a real estate darling. It has been known as a place of high rises with dated condos that didn’t sell very quickly. Now these condos are flying off the market in anticipation of the mothership’s arrival. If anything comes up in Alexandria and Arlington on a client’s search, it’s necessary to go out right away or the property will be gone within a day or two.

Michael and Melissa believe that the entire area will see the boost in real estate values as those working for Amazon will not necessarily want to live right next to where they spend their work week. Places like Fairfax, Burke, and McLean will also be great places for Amazon employees to live.

Michael closes by telling a story about an agent who held the lockbox key hostage and pretended to be the listing agent.