How To Find Undervalued Real Estate

Most investors know that in real estate money is made when you purchase a property, not when you sell it. Just as in the stock market, you want to buy low and sell high. When you are out to purchase real estate, you seek to locate properties that are selling below their market value. A savvy buyer looks for several circumstances which may cause a property to sell under its real value, some of these circumstances are listed below:

- A family problem; for example a divorce or the passing of a spouse.
- The house is in terrible shape and in need of repair, something the current owners do not wish to do themselves.
- Problems with the title of the property which can be remedied, but the owners do not want to deal with them or don’t know how to overcome.
- Homeowners heading for a foreclosure and willing to short sale their house.
- Homes that are damaged by some form of disaster; examples are, flooding or fire damage.
- The owners believe their property is a financial burden and are looking to get rid of it.
- Property that is inherited by the heirs of the owner; many times disputes arise and the heirs are willing to cash out quickly.

The ability to discover and find one of the circumstances mentioned above, ensures that a buyer or investor is purchasing a property at a significant bargain to what a similar property is selling for on the market.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Benefits Of Buying A Home

The first reason to buy a home of your own is pride of ownership, which is a psychological benefit to owning rather than renting. The pride of ownership is reflected in a well-maintained property. However, a price cannot be attached to this subjective value, and its importance will vary from person to person. Most folks seek the freedom to do whatever they want in the place they live; from attaching permanent fixtures to decorating and painting wherever they wish. But more importantly, home ownership gives you and your family a sense of stability and security.

Although the real estate market is cyclical, with periods of boom and bust, investing in real estate has historically been one of the best ways to increase your wealth. Home appreciation is the number one reason for buying a place of your own. The chart below shows how a $100,000 investment in Northern Virginia real estate in 1975, could have become $953,000 by 2006 and $713,000 today. Data is obtained from the Federal Housing Finance Agency (FHFA), Housing Price Index for the Washington DC metropolitan area.

Everyone knows that owning a home is the American dream, but did you know that borrowing to pay for one is a taxpayer’s dream? The interest on your home mortgage, your home equity line of credit, and any construction loan you may have, are all tax deductible expenses. However, the amount you can deduct is limited. Furthermore, you can only deduct interest paid on your main home and a second home. At the end of each year, your lender should send you a “Form 1098”. This form tells you how much you paid in interest and points during the year; this is your deductible interest. Taxpayers need to file the “Form 1040” to itemize these deductions.

Although at the beginning borrowers pay mostly interest on their loan, the amount paid towards principal increases every year. Through this process of amortization, borrowers build equity as they pay down their mortgage. Therefore building equity is another good reason to buying your own home.

IRS Publication 530 contains tax information for first-time home buyers. Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. Most homeowners pay property taxes to a state, local or foreign government. In order to deduct these property taxes, they must be charged uniformly against all property in the jurisdiction and must be based on the assessed value. Many states and counties also impose property taxes for local improvements to property, such as assessments for streets, sidewalks, and sewer lines. These taxes cannot be deducted. Local property taxes are deductible only if they are for maintenance or repair, or interest charges related to those benefits.

After you sell your home, as long as you have lived there for two of the past five years, you can benefit from Capital Gain Exclusion of up to $250,000 for an individual or $500,000 for a married couple. You do not have to buy a replacement home or move up. There is no age restriction, but you can only exclude the above thresholds from taxes every 24 months. Furthermore, if you received more profit than the allowable exclusion upon the sale of your home, that profit will be considered a capital asset, which would receive preferential tax treatment as well.

Finally, remember that the outrageous interest you are paying to your credit card company is not tax deductible. However, when you purchase a home that appreciates in value, you qualify for a home equity loan. By using this loan, you can completely eliminate your credit card debts, get a much lower interest rate, and deduct the interest you are paying from your taxes at the end of the year.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Avoiding Stress When Purchasing A Home

While buying a new home is exciting, there are many hurdles along the way that can create stressful situations. Knowing what to expect and understanding the steps involved in buying your new home, can greatly reduce the stress you will go through. Our aim is to create a pleasant experience and in order to accomplish that, homebuyers must control their emotions and not get attached to the property until settlement is over and the house is finally theirs…which is not an easy thing to do.

The best way to control stress is to understand that at any point in time something can go wrong with your real estate transaction. Stress can start as soon as you have placed your offer and are awaiting an answer. Afterwards, during negotiations, you will soon realize that sellers can be difficult to deal with, and argumentative at times. Obviously they are planning on getting the most out of the deal for themselves and that usually goes against what is best for you. For example, you may have to change the settlement and moving date if they conflict with the seller’s plans. Other problems may include your loan application being denied, the appraisal coming in lower than expected, or the home inspection showing a major defect. Furthermore, the title company could find a problem with the title of the home; you certainly don’t want to purchase a house that has a lien against it. Last but not least, moving is a stressful experience and people should prepare themselves for things to go wrong and damages do happen.

Throughout all this, it is most important to have a good real estate agent working for you, one who communicates with you everyday and explains every step along the way. You have to make a conscious effort not to constantly think about your transaction. Distract yourself by taking the children out, occupy your time with work or games on the computer, read a good book, or spend time with friends. In a real estate transaction you cannot control the outcome of many things, accepting this fact is your first step to reducing your home buying stress.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Successful Remodeling Projects

A few years ago when the real estate market was bubbling, you could count on getting your money back on most remodeling projects. But those times are over and today one must go over every project in detail to make sure you are parting with your cash for good reason. One important fact to consider is, the average return on the value of an improvement is just 60%. Below are some pointers to maximize your improvements.

The most important things to concentrate on are repairs and not additions. While it is great to have an added Jacuzzi or a nice deck, no one would tolerate a leaky roof, inadequate air-conditioning or plumbing.  Don’t fool yourself into believing you can keep problems a secret either, because when the home inspector discovers them, your contract will be in jeopardy.

In today’s market “bigger” has been replaced with “quality.” Instead of adding an extra bedroom or a formal family room, concentrate on improving the kitchen, expanding it, and upgrading the appliances. Today’s homeowners like newer house plans; for example, eat in kitchens are very popular. So try knocking down the wall between your kitchen and dinning room to create an open feel. Choose neutral colors when repainting, and use traditional fixtures; they’ll appeal to the greatest number of people. It is also a good idea to install new cabling and Ethernet ports wherever possible; this is a low cost way to upgrading your home to meet the technology demands of most new homebuyers.

Eco-friendly upgrades are also very popular. Energy efficient features, such as appliances, new insulation or updated windows translate into lower energy bills for the new homeowner, and are also rewarded by the Federal Government in the form of tax benefits. With most of the buyers in the market being first time homebuyers, it makes sense to improve the quality of your home and make it energy efficient, because those folks are planning to stay in their new homes for a longtime.

Home improvements are a bargain right now, with contractors bidding anywhere from 10% to 40% lower for the same work a few years ago. Make sure you let them know you are getting multiple bids on your projects to make them undercut one another’s prices. Homeowners today have to accept the fact that tastes, needs and desires of homebuyers are always changing. Remodeling projects that worked well a few years ago are no longer in demand. A homeowner can expect good bids on their residence, by keeping in touch with what the market is looking for at the moment.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

New Homebuyer Mistakes To Avoid

One of the first things a homebuyer should do is check their credit report and know what their FICO score is. FICO score is a credit score derived from the credit model developed by Fair Isaac Corporation. The FICO score is the best-known credit score in the United States, and is used by all three of the major credit bureaus: Equifax 1-800-685-1111, TransUnion 1-800-888-4213 and Experian 1-888-397-3742.  The credit score range for an individual is between 300 (Poor) to 850 (Excellent). The lower your score, the higher your costs of borrowing which means a higher interest rate for your loan. A 100-point difference in your FICO score could mean over $40,000 extra in interest payments over the life of a 30-year mortgage on a $300,000 home loan.

There are some things a homebuyer can do to improve their credit score. Get a copy of your credit history and go over it in detail; if you see any errors contact the appropriate credit bureau in writing and correct the mistakes. Your next step is to pay down your revolving debt balances (such as your credit cards) and keep those balances to no more than 30% of the maximum allowed.

Don’t open any new credit accounts; such as a new credit card or a new car loan while buying a house and your mortgage application is in process. These new accounts affect your credit score dramatically. A car purchase, for example, could use up a considerable portion of a borrower’s total credit limit, which results in a drop in their credit score.

With all the costs involved in purchasing a new home, often times a homebuyer who is strapped for cash does not spend adequately on a proper home inspection. Many foreclosed and short sale homes in Loudoun and Fairfax Counties today are distressed and in poor condition. That is because their owners did not have sufficient income to spend on repairing these properties. A detailed inspection of your future home is essential, because the cost of a major repair far exceeds the cost of the home inspection.

Everyone in a real estate transaction, from the seller to real estate agents, to loan officers and settlement attorneys, have a vested interest to see the deal go through. A new homebuyer sometimes is well served to have an unbiased opinion regarding the transaction they are about to make, and they can obtain one by hiring a real estate attorney. These attorneys will look at your purchase objectively and tell you whether you truly have a good deal. The costs are also reasonable; most simply charge a flat fee.

Make sure you have all the “contingencies” written into the contract. A new homebuyer should be able to get out of a contract if they fail to obtain financing, or the house does not appraise to the selling price. Additionally, there should be a way out for them if the home inspection uncovers major problems. Sellers try to limit the grounds for canceling, and inexperienced buyers find themselves in trouble. Naturally a good real estate agent will make sure these problems are avoided.

Homebuyers should protect their residence with sufficient home insurance and understand what is exactly included in their coverage. Typical insurance policies pay for theft, wind, fire, lightning, hail and explosion damage. But many other events are not covered, such as flooding, earthquake damage or problems caused by neglect of routine maintenance. You can determine whether your property falls in a flood zone by contacting FEMA and entering your address in the search feature. If your future home falls in a flood zone, call and find out what the insurance costs are and whether you can afford them. It is necessary for a homebuyer to determine the total cost of insurance for their new home, because they will be responsible for those payments as long as they own the property.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Homebuyer Tax Credit, IRS Audits, Mortgage Rates, And Real Estate Market Forecast

There is no question the government homebuyer tax credit program, to help jump-start the housing market, has been effective and popular among homebuyers. For this reason tax credits were extended in November of 2009, and will still be in effect for those who sign a purchase agreement by April 30 and go to settlement by June 30.

Most people are now wondering whether the tax code was the best way to pay for these credits. After all, the homebuyer wants the credit at settlement of his or her new home; no one wants to wait until tax time to receive it. To make matters worse, these claims have caused confusion at IRS, which now feels the need to verify each claim to make sure they are correct. Therefore, those applying for the credit are being audited. About one fifth of all IRS examinations done by mail in the past six months were for people claiming the credit. These audits could mean big delays in getting the refund, as much as five months.

Under the new IRS rules to help prevent fraud, homebuyers are required to include a settlement statement, better known as the HUD statement, with their tax returns. Longtime homeowners have to submit proof that they have owned their current home for five years by including their old tax bills. This added documentation also means that these folks were unable to file their tax returns electronically. It is important to note, the audits are taking place because most people are unaware of the additional required documentation.

About two million people are estimated to have taken advantage of the homebuyer tax credit in 2009, according to the National Association of Realtors (NAR). Approximately 900,000 first time homebuyers and 1.5 million repeat buyers are expected to take advantage of the tax credit program in 2010.

Will the program be extended again? No one really knows, but the consensus in the real estate market seems to be that we will experience a drought in the market after May 1st. In November of last year, when we had the original deadline, many first time homebuyers were in a panic; they were rushing to find a property. This year, the market was somewhat slow from December to the end of February, mainly because of the winter storms our area experienced. However, the market has picked up significantly and this time we are not seeing as much activity from the first time homebuyers, as much as the move-up buyers, who are taking advantage of the drop in home prices in our region and hope to keep an extra $6500 credit in their pockets.

At the same time, the Federal Reserve just ended their program to buy mortgage bonds. The Fed launched its support program after Lehmen Brothers’ collapsed in the fall of 2008 and sent mortgage rates soaring while credit markets froze. The recent exit of the Fed is seen by many to result in a rise in interest rates down the line.

These recent events do not make a rosy forecast for the real estate market. But personally, I feel when everyone is predicting doom and gloom, that is not what will actually take place. Sure there is going to be some slowdown experienced when the homebuyer tax credit program ends, but by no means that will signal the end of all activity in the market. In fact, our regional market has been fairly strong; unfortunately this is not being reported often by our news media. Loudoun was just named the wealthiest county in the US, where the median household income is $110,643. Ashburn has become the international center for technology, biotechnology, communications and transportation. The real estate market here is resilient and I am certain in ten years people will look at these home prices and think, 2010 was the best year to have purchased something. Furthermore, without the support of the Fed, interest rates may rise but I don’t think it would be very significant considering we are at all time lows. If rates rise too much, you can be sure that the Fed will be back buying in the bond market, to avoid a double dip recession.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Ashburn News

The board of Supervisors declined the request of a land developer in Ashburn who wanted to move the route 606 Metrorail station several hundred feet to the west. The developer wanted to put the station closer to his property, where he hoped to build a convention center, a 6,000-seat theater,plus hotels, shops, and much more parking. But the Metropolitan Washington Airports Authority believed changing the design plans would cost Loudoun County at least another $20 million.

George Washington University is thinking of expanding its Virginia location in Ashburn and move more of their administrative offices to the location. The University currently owns four buildings on the campus. Last year, they purchased a 70,000 square-foot, $16.6 million facility, increasing the size of their campus by 25 percent.

Merritt Properties launched a free iPhone application, simplifying the way brokers and customers can search through its inventory of 16 million square feet of commercial real estate. The Baltimore-based firm’s local portfolio includes about two dozen offices, flex and industrial properties in Ashburn and Sterling. With the new application, properties can be sorted by type, square footage, city, and radius. Included are various pictures of each site. The application automatically updates availability and Google Maps provide driving directions. Merritt owns and manages the largest privately held commercial real estate portfolio in the Baltimore/Washington region.

The Obama administration announced mortgage relief for unemployed homeowners. Banks and lenders are going to be required to:
-Temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed.
-Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be their unemployment insurance, for up to six months.
-In some cases, a lender could allow a borrower to make no payments at all.
Lenders will be given incentives for providing relief to unemployed homeowners. The plan will not expand the $50 billion allocated by the Treasury Department’s Troubled Asset Relief Program to rescue housing, and will also allow underwater borrowers to erase mortgage debt down to a maximum of 115 percent of their home’s value by refinancing through the Federal Housing Administration.

Mike Shanahan will not move the Washington Redskin’s training camp; the team will remain in Loudoun for this summer to get ready for the 2010 season. “Staying in Loudoun County was the best thing for the Redskins,” Shanahan said in a statement. “We have brand new practice fields at Redskins Park, ample meeting room space, a terrific relationship with Loudoun County and everything we need to have an outstanding training camp.”

The Claude Moore Park Recreation Center in Sterling was recently filled by Loudoun residents, property owners, developers, business owners, representatives of trade associations, community leaders, appointed and elected Loudoun officials, members of Loudoun County Department of Planning and maps. Individuals gathered to participate, listen and offer comments and suggestions regarding future zoning policies along the Route 28 corridor. Two more Route 28 Stakeholder “workshops” have been scheduled for Monday, April 26 and Monday May 24 at the Claude Moore Recreation Center in Sterling.

After the devastating winter, Ashburn roadways are full of potholes. While disguised as simple puddles, this year’s potholes have ripped tires, destroyed rims and sent many cars to the repair shop. Unfortunately the usual repair techniques, which included a dump truck, shovels and a few workers, can no longer keep up with the demand. It seems more funding by the county is necessary to handle this problem. So until they think of something to fix the roads, be careful out there!

The Board of Supervisors recently voted to support a Capital Improvement Program for the school system that includes the potential conversion of Belmont Ridge Middle School into a high school.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Banks May Be Forced To Modify Loans Prior To Foreclosure

Anyone who has tried arranging a loan modification for their home knows how difficult banks are to negotiate with. Just getting to talk to the right person could mean calling a dozen times. Most banks in my opinion are not motivated to negotiate a loan modification, and could care less about your financial problems. For them, a vacant home holds more profit potential than one with a family paying at a reduced monthly rate.

However, the government is coming to the aid of the troubled homeowner. President Obama wants to make foreclosures much harder for banks, funneling them through the administration’s Home Affordable Modification Program (HAMP), which is overseen by the government’s new “Making Home Affordable” program. The proposed new rules will force banks to try and modify the borrower’s loans before any foreclosure proceedings can take place. According to the Mortgage Bankers Association, a record 15 percent of American mortgage holders are either in foreclosure or at least one payment behind. In the past year, only 1 out of 10 families seeking a loan modification have been successful.

This may be a good time for those seeking a loan modification to prepare and gather their documents. Below is an initial list of what you may need to put together to start the process.

1. Find your existing mortgage documents and note.
2. Make a copy of your most recent mortgage statement(s).
3. Show proof of employment and income; include your federal income tax returns, W-2′s and your most recent pay stubs.
4. Figure out your monthly budget; explain your income and expenses. Try to be as detailed as you can. You want to show that your current monthly expenses are higher than the income your household brings in. A loan modification, where the interest rate is reduced, or the term of the loan is increased, or the principal is reduced, could help you get back on your feet without having the lender foreclose on your property.
5. A home evaluation must be performed, or a Comparative Market Analysis (CMA) by your real estate agent can be done, showing your property’s current market value.
6. You must write a hardship letter. A hardship letter is a written explanation as to what “events” have caused you to fall behind on your mortgage. This letter acts much like an outline or biography of your current “life” issues that are affecting your ability to meet your financial obligations.
7. Finally, go on your lender’s website and read about their loan modification program. Fill out all the required applications and submit your documents. Follow up with frequent calls to make sure someone is paying attention to your case.

The most important advice I can give homeowners is not to give up. Through perseverance anything is possible!

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Controlling Your Household Finances

In these tough economic times, it may be wise to set up a household budget for your family. Your task is to determine where all the money in your monthly paycheck is going. You seek to eliminate all bad spending habits, while creating and instilling new fiscally sound practices that will strengthen your family finances.

Most financial planners suggest you go through a full year’s worth of bills to figure out then total amount of money you have spent. Try to assign a category to each expense, such as utilities, mortgages, groceries, entertainment, auto and so forth. Make a note of the periods when you notice a sharp increase in your spending, particularly when you take your annual vacations or around the holidays. Figure out where exactly each dollar of your income is going. Determine which are fixed, such as mortgages and car payments, and which are variable, for example your groceries, entertainment or personal matters.

Calculate a monthly average of expenses. Hopefully your general spending per month is less than your income, if it isn’t, you would need to control and decrease your variable expenses, or seek to find ways to bring in additional monthly income. However, if you have money left over each month, it should either be placed into a savings account or go towards paying down your credit card balances. Setting up an emergency fund for your family is a wise decision, try to put away enough money so you have living expenses for at least six months. These simple actions will ensure your survival and help you weather the storm when economic down cycles are hitting us in full force.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.

Real Estate Statistics For Northern Virginia

According to real estate statistics released by the Metropolitan Regional Information System for the Washington DC Metropolitan Area:

• Prices are showing signs of a moderate recovery:  4^th quarter prices in the metro are up from the same quarter in 2008, with the Outer jurisdictions outperforming the Core and Inner jurisdictions.  Prices will likely gain traction in 2010, as buyer and seller expectations continue to move closer to a balance, facilitating an increase in transaction volume.  This is the first time prices have risen on a trailing 12-month basis since the 4^th quarter of 2007.
• Days on market continue to decline compared to both last quarter and a year ago.  Properties in the Outer jurisdictions (Loudoun, Prince William and Frederick Counties) have experienced the sharpest decline, but across the region, time on market is at or below the region’s long-term average.
• The ratio of inventory to sales continues to decline in most jurisdictions from one year ago.  The metro-wide ratio of 5.3 months’ worth of listings is below the normal, healthy standard of 6 months, signaling that demand is beginning to outpace supply.
• The gap between buyer and seller demands is closing with the average sales price in the 4^th quarter of 2009 at 93.7% of list price, the highest share in more than two years.

For Northern Virginia Counties of Loudoun and Fairfax:

Loudoun County, VA

• In Loudoun County, VA, the average sales price in November 2009 was $379,191.  This represents a slight increase over the November 2008 average sold price of $355,235.
• Listings remained on market for an average of 47 days in this time period, compared to 91 days in November 2008.
• The total number of new listings taken for the month of November 2009 was 519.

Fairfax County, VA

• In November 2009, the total sales dollar volume was $458,672,700.  This is up from $356,719,653 in November 2008.
• Listings remained on market for an average of 48 days in this time period, compared to 95 days in November 2008.
• In Fairfax County, the average sales price in November 2009 was $412,105; an increase over the $409,082 average sales price in November 2008.

Cameron Akhavan MBA, is a Realtor and Licensed Mortgage Consultant living in Ashburn, Virginia. “Please contact me if I can be of assistance to you or your friends with your real estate needs.” Contact Cameron or visit His Website. See also: Ashburn Lifestyle, Cameron’s Ashburn community guide.