Blog Archives | PAM DENT

Real Estate Property Taxes in Central VA

In Virginia, property taxes are based on the assessed real estate value, and the rate is expressed as ‘cents per hundred of assessment’. The Real Estate Property Tax is separate from any Personal Property Tax such as boats, cars, etc.

COUNTY	RATE/ per $100
.
ALBEMARLE	O.854
AMHERST	0.61
AUGUSTA	0.63
BEDFORD	0.50
BUCKINGHAM	0.55
CHARLOTTESVILLE	0.95
FLUVANNA	0.884
GOOCHLAND	0.53 (+.32 EXTRA IF TUCKAHOE WATER/SEWER LINES
GREENE	0.82
LOUISA	0.68
MADISON	0.71
NELSON	0.72
ORANGE	0.804
RAPPAHANNOCK	0.73
ROCKBRIDGE	O.74

Gaited Meadows Horse Farm

Gaited Meadows is a 21-acre horse farm gently tucked into the Fluvanna countryside. The farm’s layout is thoughtful and practical, with privacy and functionality in mind. The tree-lined driveway leads you on a gravel driveway along the pasture to the house. As the home comes into view, you can glimpse the barn and back pasture through the trees.

NOW UNDER CONTRACT, BUT WE HAVE OTHERS

The farm consists of a four-stall barn with a wash stall, hay storage, three large and one small Centaur and RAMM fenced paddocks, automatic waterers, run-in shed, and equipment shed. The owners created a riding trail that goes along the length of the property leading to the woods. At the rear of the property, where the open land meets the woods, approximately five acres are not fenced.

The current owners built the home with an open and easy-to-maintain floor plan. As you walk through the front door, you will notice the large stone gas fireplace and vaulted ceiling in the living room. The home is perfect for entertaining with an easy flow out to the spacious screened porch overlooking the barn and open land. The main level includes a primary BR, second BR, full bath, laundry room. The walk-out terrace level has a 3rd BR, den/office, large workshop.

Below is an interactive Google map that you can click/drag to explore Gaited Meadows farm more closely.

Co-listed with Bridget Archer 434-981-4149

Cedar Glen

Historic Cedar Glen Farm
NOW SOLD, BUT WE HAVE OTHERS

Legend has it that George Washington once stayed at Cedar Glen while surveying Bedford County in Virginia. It is easy to imagine horse and rider galloping through the 124 acres of rolling farmland in need of an overnight stay. Think back to a time when children grew up with swings tied to trees, eggs were collected each morning, and the cows signaled their content in the fields. As you approach the house, you will notice the beautiful setting surrounded by mature trees. So the past can meet the present, the house now needs restoration to bring it back to life.

The land is 60% cleared farmland used for cattle and hay production. As with many historic properties, there is a cemetery where the original owners are buried. The rock wall surrounding the cemetery is extensive. The rolling topography is tucked into the base of Sharp Top Mountain. Adding to the picturesque setting are a pond and outbuildings. Cedar Glen offers an opportunity to restore a piece of history and enjoy life in this peaceful setting. Although the house would be an extensive restoration, the location and panoramic views will inspire you to consider life in the Bedford, Virginia, countryside.

Below is an interactive Google map. You can click to drag/move and explore the area.

Co-listed with Bridget Archer 434-981-4149

Adjustable Rate Comparison

An Adjustable Rate Mortgage (ARM) is not as common as a Fixed Rate (i.e, 15 or 30 Year Mortgage), but an ARM may be a better choice for a homeowner who knows they are going to stay in the home for less time than the break even point.

An ARM might easily be 1/2% less than a fixed-rate during the first period of the loan, which can reduce the monthly cost of housing compared to a fixed rate.

The actual rate of an ARM can go up or down during the life of the loan, depending on an independent financial index. If the index rate is higher on the anniversary of your mortgage, the rate of your ARM could go up. But if you believe that rates are going to trend down during the time you own the home, then an adjustable rate could be to your advantage.

A mortgage financial advisor can provide you with a comparison of an Adjustable Rate vs a Fixed Rate to estimate when a Fixed Rate would have been a lower way to finance. There is a breakeven point in terms of months and years.

The ARM may be a better choice for the homeowner who knows they are going to stay in the home less time than the breakeven point. But if you plan for this to be your Forever Home, a Fixed Rate will likely be the better choice. If you’d like a recommendation, please let me know.

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No Need To Make Common Mistakes

A successful home sale, considered by many owners, is to maximize their proceeds in the shortest time with the least inconveniences. Just because it is a seller’s market doesn’t mean that homeowners can shortcut some of the steps that make it happen and they certainly need to avoid commonly made mistakes.

Pricing too high

Low inventory and high demand have contributed to the rising prices of homes. NAR reports that the median sales price is up 17.8% in the past year and CoreLogic recently released data that July set new record growth of 18% year over year. This might give sellers a false sense of security about overpricing their home

Pricing a home too high initially can limit activity, attract the wrong buyers and ultimately, cause the home to realize a lower price than optimum. There is an interesting dynamic that takes place when there is a shortage of homes to show, and a new home hits the market. Buyers, who have been in the market but not purchased yet, will rush out to see the home. They are familiar with what homes are selling for and possibly, have even lost bids on one or more.

These savvy buyers expect certain amenities based on the price of the home. They can tell if a home is priced right or not.

Failure to do Market Preparation

There are people who will buy a home that is not pristine and does not have everything in good working order, but they usually will not pay top dollar for the home. They recognize the money that needs to be spent and will adjust the price accordingly.

To command the highest price, the home needs to be spotlessly clean with everything working as it should be. The home needs to be depersonalized to appeal to the broadest group of people. The clutter needs to be removed so it isn’t distracting or give the impression that the rooms, counters, or closets are small.

It is important to evaluate if painting is necessary along with replacing floor covering, appliances and/or light fixtures.

Thinking the agent doesn’t matter

Market time is down to 17 days and 89% of homes are sold within a month. These statistics might be used to rationalize that an agent is not currently playing an important role in the home but that would be a mistake.

Nine out of ten homeowners use an agent, and the four most important reasons were to help sell the home within a specific timeframe, help price the home competitively, help seller market the home to potential buyers and help the seller find ways to fix up home to sell it for more money.

Being present during showings

It may not be convenient, but sellers should try to leave the home when it is being shown. Buyers like to look at the home freely and ask questions or point out things to their agent. Sellers may have the best of intentions, but they have not established rapport with the buyer and don’t really know what is causing the questions.

Not letting your agent negotiate for you

The role the agent plays as third-party negotiator is one of the most important things an agent does for a seller. It begins long before buyers even make an offer. The protocol is for the buyer’s agent to go to the listing agent with the question and if necessary, they can ask you and get back to the buyer’s agent.

Buyers and sellers have inherently different objectives. Sellers want the highest price and buyers want to pay the least. Sellers want the terms of the contract in their favor and the buyers want them to favor them. Buyers want lots of contingencies to let them out of the contract and sellers want the fewest possible contingencies. Sellers want the most earnest money and buyers want to put up the least possible.

Agents are skilled at negotiation not only because of training but also experience. Sellers’ experience is usually limited to personal transactions separated by years in frequency. Agents see multiple transactions in their daily business and can guide people through difficult areas.

Not responding to offers in a timely manner

Normally, an offer can be withdrawn, at any time, up until the point that it is accepted. The expression a bird in the hand is worth two in the bush reminds us that the offer you have is real and the ones in the bush, may never come to fruition.

A common situation occurs when there is large amount of activity on the home and an offer comes in quickly. Instead of negotiating on that offer, the sellers wait to see if any better ones are received. By waiting, the seller runs the risk of the buyer changing their mind.

Alternatively, in the same situation described, the seller may decide to put the home on the market on Saturday morning and let prospective buyers know that they will be deciding on all offers received over the weekend on Sunday evening.

Your agent is a valuable part of selling a home who can offer advice, bring perspective to the transaction, and suggest different ways to help you achieve your goals. Once you have the right agent, everything else will start to fall into place.

Boutique Hotels

Some of my clients who are combining their real estate search with a vacation have been choosing to stay at one of the Charlottesville area boutique hotels and inns. Below are some of my favorite local places to dine or visit. If you want ideas for places to stay, things to do, and where to eat, I am happy to provide suggestions to accommodate a variety of tastes.

The Clifton Inn

History combines with luxury at the Clifton Inn, a charming upscale European-style boutique hotel, restaurant, and wedding venue. The Inn is set among lovely old trees and beautiful gardens, scenery which lends a serene grandeur to a dinner on the patio or a sunset stroll. It is located near Thomas Jefferson’s Monticello, and in fact it was first built by Jefferson’s son-in-law Thomas Mann. The Clifton Inn is a perfect spot where visitors and locals gather to meet friends on the terrace for drinks or for an elegant meal in the dining room. Seasonal menus at their 1799 restaurant feature organic vegetables and herbs from the Clifton’s own gardens.

Guests who choose to enjoy overnight accommodations have a delightful selection of cottages and suites, all charming and elegantly historic. As one of Charlottesville’s most popular wedding venues, Clifton Inn even has a honeymoon cottage on the grounds. The Inn’s location offers guests proximity to Virginia’s wine and horse country, and is convenient to Charlottesville’s entertainment and amenities.

The Inn At Court Square

In the center of Charlottesville are the streets where Thomas Jefferson used to walk to the courthouse. The Inn at Court square is across from the historic Court Square Park. This boutique hotel is comprised of two beautifully restored houses. The Federal style house, c.1785, is the oldest existing house in downtown Charlottesville. The second with its rare Mansard roof dates from 1918. Both are charmingly decorated with period antiques, which often are available for purchase.

The Inn has 10 beautifully appointed guest rooms and suites with private bathrooms. Many of the rooms offer fireplaces and whirlpool tubs. Guests enjoy elegant Southern style breakfasts; the dining room is also available to host private functions.

The Inn at Court Square presents a wonderful opportunity to experience a bit of historic Charlottesville, yet it is only a block away from the downtown pedestrian mall and Charlottesville’s vibrant restaurant scene.

Willow Grove

Even from a distance, the Inn at Willow Grove provides a tempting hillside view of southern grandeur. The manor house at Willow Grove Plantation dates from 1778 and additional structures on the property originally included a schoolhouse, a smokehouse, a weaving house, and a spring house. The huge Jeffersonian columns were added to the manor home as part of a balcony addition in the mid 1800’s. All of the property was tastefully renovated by 2010 to provide luxurious boutique hotel resort accommodations that include a Forbes 4-star rated restaurant …. sure to please even the most discerning guests. There are several dining locations in addition to the main dining room, and among those is my favorite, the cozy Pub where locals and visitors relax in its congenial comfortable atmosphere.

Accommodations inside the main hotel include elegantly appointed rooms with fireplaces, soaking tubs and private balconies. The Tenant House Cottage offers a more casual option with its two bedrooms and Creekside Cottage provides 5 unique bedrooms and luxury suites. The adorable Butlers Cottage is a cozy 1-bedroom retreat located in a quiet corner of the gardens. If you have the time, don’t miss The Mill House Spa, a fitness facility with a saltwater pool. It’s easy to see why The Inn at Willow Grove is a popular wedding venue as well.

When a Home Appraisal is Low

Lisa Sturtevant, Chief Economist for the Virginia Association of Realtors, has recently given us an overview of various market conditions affected by low home appraisals.  Can a low appraisal derail home buyers?

A home appraisal is an evaluation of a home’s market value based on comparable recent sales and sometimes recent listings in the neighborhood. Appraisals are required by a lender to protect both the lender and the buyer and to help to ensure that the buyer is not borrowing more than the home is worth.  

In hot housing markets, like the one we have been in for nearly a year, it can be challenging to accurately appraise the value of a home. Different appraisal values and below-offer appraisals can be confusing for home buyers and sellers and can sometimes prevent a successful transaction. 

Different Methods, Different Values
An appraisal is typically conducted by a licensed real estate appraiser at the request of a lender or borrower. Appraisers generally use data on the prices of comparable homes sold in the last three or six months, or sometimes over a longer period. However, in fast-paced markets, where prices are rising rapidly, looking back at past home prices might not be a good indication of current values. It is important in this busy housing market that appraisers are not only using data on closed sales, but are also using data on pending sales and listings.  

Automated valuation models, or AVMs, have been a popular way for consumers to get an immediate assessment of their home’s value. These AVM values can also sometimes be used in refinance applications. AVMs collect data from multiple listings services, along with data from public records, to compare recent sales and list prices and generate a value for a particular home.  

There are differences in the methodologies in these AVMs, including the types of data used, how frequently the data are updated, and the number of comparables used in the estimate. These differences in data and methods can result in different home value estimates. (I plugged my home address into five different AVMs, and the difference in estimates was more than $100,000.) Because the housing market is so fast-moving, it is important that the data they use are updated very frequently. 

These public-facing AVMs are popular with consumers, but they can also provide misleading information and result in disappointed (or pleasantly surprised) homeowners when a licensed appraisal is produced. 

Appraisals Below Offer 
In this frenzied housing market, bidding wars and offers over list are common. When the home appraises at the contract price, the deal can go off without a hitch. However, appraisals below offer can throw up a roadblock to the purchase.  

While there are stories about buyers losing out due to a low appraisal, the data suggests that it is very uncommon for low appraisals to completely derail a transaction. According to Fannie Mae, an estimated 8% of appraisals came in below offer price in 2017. Zillow estimated that 10% of deals that fell through in 2018 did so because of a low appraisal. More recently, the National Association of REALTORS® reported in August 2020 that appraisal issues accounted for less than 1% of real estate transaction issues. 

Despite the fact that appraisal issues seem to be relatively uncommon, homebuyers that are worried about a home not appraising have increasingly been waiving appraisal contingencies in their offers. Nationally, Redfin estimated that about 20% of winning home offers last summer had waived the appraisal contingency. According to a survey of Virginia REALTORS®, in March 2021, 37% of REALTORS® said that it was very common for buyers to waive the appraisal contingency to make their offers more competitive. For some buyers, waiving the appraisal could be problematic down the road. For others, including those using an FHA or VA loan, an appraisal contingency is not an option.  

Helping Buyers and Sellers When Appraisals Come in Low 
There are several steps REALTORS® can recommend to buyers and sellers if an appraisal comes in lower than expected: 

REALTORS® should remind clients that AVMs are not meant to serve as a formal appraisal and that for most transactions, a lender will require an appraisal from a licensed real estate appraiser. 

Appraisals should include data not only on recent sales, but should also take into account homes that have recently gone under contract and homes currently listed for sale. The fast-paced market means that home prices six or even three months ago are not necessarily a good indicator of current home values. 
Buyers, sellers, and lenders can request a review of the appraisal to see if there were any inaccuracies in the analysis. 

If the appraisal comes in below an offer, buyers could have the option to increase the down payment to make up the difference or take some of the money set aside for a down payment to close the appraisal gap. 
It is also possible that a low appraisal is a sign that the offer price really is above the home’s true value and that the smartest thing for the buyer to do is to step away from the deal and move on to the next home. Having a REALTOR® who can provide sound advice on market conditions will be a tremendous value to buyers in this situation.



*Information as of 07/21/21

2nd Quarter Update – Virginia Housing Market

Where is the Housing Market Cooling in Virginia?

Virginia Association of Realtors’ Chief Economist, Lisa Sturtevant, has released the following details about the overall market activity of real estate in the state.

Over the past 12 months, the housing market in Virginia—and really around the country—could only be described as hot. Or maybe frenzied. Perhaps on fire.

And while conditions are still very positive, there are signs that the housing market is cooling a bit in some places across the commonwealth. As conditions change, it is more important than ever to pay attention to local markets and factors that impact local demand and supply.

Why Might the Housing Market Be Cooling?

After a year of the housing market running on all cylinders, it is not surprising to see a downshift in market conditions. There are several reasons why the hyper competitive housing market will ease:

Extremely low inventory and rising home prices have frustrated some would-be homebuyers who have decided to take a pause on their home search.
More homeowners may be listing their homes to try to capitalize on the record home prices in most markets.
With the opening up of the economy, individuals and families may be looking to spend their money on other things—including travel and celebrations—instead of a home purchase.

As housing market conditions ease, we would expect slightly slower sales activity, a bit more inventory, and a lengthening of average days on market. Home prices will continue to rise, though the pace of price growth should moderate slightly.

Where are Markets Cooling?

Markets with lower pending sales activity

Statewide, the number of pending sales dropped 5.5% between May and June. Pending sales are listings that have gone under contract in the month and is a leading indicator of where the closed sales numbers will be a month or two out. In a typical year, there tends to be a slowdown in pending sales between May and June; however, in some local markets, the drop off in new contract activity has been much more pronounced than it has been in the past.

Pending sales have slowed in markets across the state, including in most of Northern Virginia and Central Virginia. For example, in Rappahannock County, there were just eight pending sales in June 2021, down from 20 in May. In Caroline County, the number of pending sales in June 2021 was down by nearly 60% compared to a month earlier.

When the number of new contracts on homes slows, that is an indication of a slowdown in buyer activity, and it means that the number of closed sales will post lower in the months to come.

Markets with rising inventory

At the end of June, there was a total of 19,346 active listings statewide. Inventory is about 18% lower compared to the same time a year ago. However, the pace of inventory being drawn down has slowed and inventory levels have expanded month-to-month for four consecutive months. At the end of June, the number of active listings was up 7.5% compared to the end of May.

Inventory expanded in June in nearly all markets across the commonwealth. The main exceptions are the Northern Neck and Upper Peninsula, where inventory continues to decline month-to-month.

But inventory is up in most places in Virginia. In the City of Lexington, for example, there were 100 active listings on the market at the end of June, which is up 56% compared to May. In Warren County, the number of active listings increased by 52% between May and June.

Outlook

Housing market conditions across Virginia are still strong, though there are signs of an easing of the housing market for many local markets. A cooling housing market is good for buyers, who will have more options and more time to make decisions. Even with a shifting market, inventory will remain relatively low and prices will continue to grow, albeit a bit more slowly. Over the next few months, pay close attention to local market conditions and trends, rather than national figures. All housing markets are local, and this is particularly true during a period of market transition.

Sad Real Estate Story That Keeps Repeating

Ask any real estate agent and they will tell you a similar sad story. The seller, whose home just hit the market, received an offer which was less than the list price, but felt secure that their home would sell quickly … so the seller countered for more. For whatever reason, the buyer did not continue to negotiate and moved on. After a week or two and no other offers, the seller instructed the listing agent to contact the buyer’s agent and say that the seller had reconsidered and would now accept their original offer.

However, the initial enthusiasm the buyer had was gone and they were looking elsewhere. This is a story that frequently happens across America, in all price ranges. The lesson to be learned is that sometimes the first offer is the best.

Consider the rationale, a home is fresh on the market,, and buyers (especially the ones who have lost bids on other homes) act quickly to hopefully avoid some of the competition. When an offer is not accepted, it voids the original offer and, in this case, the seller might make the buyer a counteroffer. The buyer can accept it, make a counteroffer, or walk away. Even if afterwards, the seller reconsiders and says that he will accept the terms of the original offer, the buyer is under no obligation to accept it. Alternatively, if the seller accepts the buyer’s original offer, a contract has been agreed upon based on the terms within. The house is sold and closed once any contingencies such as financing and/or inspections have been satisfied.

Think of an example where a seller countered for an additional $5,000. If he had accepted the original offer, the home would have been sold. In essence, he bought the home back from himself in hopes of making an extra $5,000. To put it in perspective, on a $350,000 home, the additional $5,000 would have been 1.4% of the value. As an investor, the risk involved in having to continue to own the property may not be justified by such a low rate of return. Having the property sold may actually provide peace of mind and convenience that far exceeds the $5,000.

When a seller receives an offer, they are faced with three options.

(1)They can accept the offer and the house is sold considering the contingencies can be met.

(2)The seller can reject the buyer’s offer outright and wait for an acceptable offer.

(3)The seller can counteroffer the buyer with terms that are agreeable to the seller.

Many agents feel that if the offer is not acceptable, the counteroffer alternative presents a greater likelihood of negotiating to an acceptable agreement between the parties. Every situation is unique, but compromise has brought buyers and sellers to agreement in many situations. One of the valuable advantages sellers have is their agent’s experience and lack of emotional connection to the property. Your agent can provide objectivity and alternatives for you to consider in making your decisions.

Recent trends in home prices suggest that this past year has, indeed, been extraordinary. While price growth will remain strong throughout 2021 and into 2022, it is likely that the pace of home price appreciation will slow as demand softens, mortgage rates tick up, and inventory expands.

Lumber Prices and New Construction

People have commented on the current high prices of lumber and how that impacts new construction. Below are observations regarding lumber prices nationally as well as prices in Virginia at this time.

NATIONALLY

Nationally, new home construction has hit a 15-year high, fueled by strong housing demand. In May, home builders started construction on new homes at a pace of 1.57 million annually, a 3.6% increase over April and 50.3% above the level in May 2020.

The National Association of Realtors has recently shared information about the high prices of lumber. The price of framing lumber has plunged about 50% over the last seven weeks, offering up a hopeful sign that skyrocketing building costs would ease. However, builders say that the prices they pay have only declined by a fraction of that percentage. The disconnect in pricing has always existed in the lumber supply chain. It can still be a “long lag time” before the full price reductions come to builders, the National Association of Home Builders reports.

“As the price declines began grabbing headlines, the price of lumber packages quoted to builders held at record highs,” NAHB economist David Logan writes on the association’s blog, Eye on Housing. “This dynamic is primarily due to dealers’ inventory carrying costs and potentially large differences between the price at which inventory is bought and sold.”

The lumber supply chain consists of the following stages: from forest to sawmill to wholesaler to retailer to end user. The association offers up an explanatory reason prices are staying elevated at its Eye on Housing blog. Wholesalers and retailers have incentive to run through their existing inventory and recover what they paid for it—one of many factors that is currently keeping prices elevated for builders.

So, when will lower prices reach the builders and ultimately new-home buyers? The answer is unclear, but builders say more price drops in lumber may be needed. “Prices must fall for long enough to materially lower a supplier’s average costs after a run-up,” the association blog notes. “Depending on the rate and consistency of price decreases and whether prices have stabilized at the lower level, it may take a few weeks to a couple of months for builders to see price relief on the order initially reported in the futures or cash markets.”

Meanwhile, new-home building prices for home buyers continue to rise. In May, the median price of a newly built home was 18% higher than a year ago, at $374,400.

Source: “Why Builder Lumber Prices Remain Higher Than Headlines Suggest,” National Association of Home Builders’ Eye on Housing blog (July 6, 2021)

IN VIRGINIA

According to Dr. Lisa Sturtevant, Chief Economist for the Virginia Association of Realtors, new housing construction is up, and lumber prices are down. In Virginia, there were 3,125 permits issued for the construction of new residential units in May. Nearly 80% of permits were issued for the construction of single-family homes, while 20% were for units in multifamily buildings, including apartments and condominiums.

Like in many other places around the country, new home construction been on the rise in Virginia. In the first five months of 2021, there was a total of 17,685 permits issued for new housing construction in the state. By comparison, there were just 13,744 permits issued between January and May 2020. Year-to-date, the number of permits for new housing construction was up 28.7% compared to last year, with a 25.0% increase in single-family permits and a 36.3% increase in permits for multifamily housing units.

The cost of construction materials has been a major impediment to new construction. Lumber prices, in particular, surged to historically high levels during the COVID-19 pandemic. Back in March 2020, the futures price of lumber was $303 per thousand board feet. The cost more than quintupled over the past 14 months, reaching a high of $1,608 per thousand board feet in May 2021.

Lumber prices skyrocketed as a result of strong demand for new homes and a major interest in home renovations and DIY projects by people stuck at home. At the same time, supply chains have been disrupted by the pandemic and recession.

However, there is good news on the lumber costs issue. In June 2021, prices fell below $900 per thousand board foot of lumber, reflecting a drop of 44.2% from the recent peak. The drop in lumber prices is good news for builders. Some new residential projects that have been put on hold could start back up again as costs fall.

Lumber prices are falling now as more sawmills have been able to open up more fully and ramp up production. In addition, the opening up of the economy means that more people are back at the office and are spending less time on DIY projects around the house which has led to slower demand from homeowners.

Falling materials costs (e.g., lumber, concrete, steel, brick/masonry) are a good sign for the home building industry and for consumers looking for more choices. However, there are still challenges to home building. The shortage of construction workers, limited building-ready lots, and zoning regulations that limit homebuilding will continue to be challenges to building enough housing to meet demand.

Real Estate Property Taxes in Central VA

Gaited Meadows Horse Farm

Cedar Glen

Adjustable Rate Comparison