Understanding As-Is Clauses

New Year, New Taxes, New Forms for Virginia Real Estate in 2013

While the real estate market in the commonwealth is roaring ahead with the State sales up 18%, and prices up 12%¹, the Realtors are active in making sure that the voice of home-owners is heard and that the good news will continue in the Commonwealth.

One of the most important factors of a location is reaching it through the transportation system.  The Virginia Realtors are supporting Gov. Bob McDonnell’s transportation bill in order to facilitate adequate funding for our roads and transportation systems.  Revenues from the 17.5c/gallon gasoline tax, which was put in place in 1986, have been falling due to the improved efficiency of cars, and the increase in the use of alternative fuel vehicles.  Meanwhile, the transportation costs are increasing as the number of miles has risen, and due to increased asphalt prices.  This has created stress within the transportation budget;  funds are being diverted from public transportation and new roads to maintenance.  The Governor is proposing to get rid of the gasoline tax, and instead raise the sales tax by .8c.  This will result in a sales tax of 5.8% for most goods, which is lower than the surrounding states.  Sales tax revenues do grow with inflation, which means that the funds will be available to cover increasing costs.  This alleviates the transportation fund being dependent upon the stagnant tax revenues from the sales of the number of gallons of gasoline.   Also, registration fees will rise $15, and there will be an additional $100 fee to register an Alternative Fuels Vehicle.   All this results in the additional funds needed to keep Virginia’s roads & rails running efficiently, and keep commuting times reasonable in the bustling Commonwealth.

The Northern Virginia Association of Realtors (NVAR) has been busy again updating their standard forms.  Among other miscellaneous changes, the standard listing agreements and buyer agency forms which are used by the sellers and buyers to hire their Realtors have been updated.  Now these agreements will expire at midnight on the agreed date.  I thought that my work hours were long enough, as the contracts have always included weekends and time-frames which ended at 9pm each day.  The real estate contracts still use the 9pm time-frame for the expiration of contingencies etc.  Welcome to the 24 hour world of electronic communication!!

1.              Full report available at http://www.varealtor.com/sites/default/files/Virginia%20Monthly%20Report[1].pdf
2.         http://www.governor.virginia.gov/utility/docs/Transportation%20funding%20fact%20sheet.pdf

Great Time to Rehab a property in the Northern Virginia Real Estate Market

 In the bleak mid-winter this is a great time to get a head-start on the local real estate market.  Northern Virginia real estate market is leading the country out of the recession.  With the lowest unemployment rate of major markets and leading job growth, the demand is strong.   There are fewer homes on the market than usual as the number of distressed properties is declining, and other sellers wait for prices to rise.   The aging housing stock is also contributing to the number of rehab possibilities.  Some home-owners have been very comfortable in their older homes, and have not upgraded them to modern buyer’s standards.  These homes are often in good locations.  At the same time, today’s busy young professionals often want to buy homes which are “ready-to-go” with modern amenities, and will pay top dollar for a comfortable,  modernized home.

At this time, I have a great rehab listing available in Old Town Alexandria.  This 1970's home is currently occupied, but it could do with a new kitchen & replaced baths, and fixtures etc.  The nearby renovated homes are selling for more than $150,000 more. It is in a great location on a quiet street, walking distance to King St Metro, shops & the waterfront, with off-street parking and 3BR 1.5BA.  The property is available for $425,000.

Call or email me today if you would like to see this property. I expect it to sell quickly.

The new Northern Virgina Real Estate contract will result in huge changes.

The new real estate contract, coming out in January 1, 2012 will make the housing sell in AS IS condition.  I believe that this will result in prices falling.  It will also change the way we do business. 

They are planning to change the way we sell real estate here in Northern Virginia.  The homes are to sell in AS IS condition, not in normal working order.  This will change a lot of the ways that we do business.  I do believe that this will result in prices falling more than they would of without this change. 

The expectations of what the buyer is getting will be lowered.  We have already seen the market be particularly brutal to the older, single family homes.   And indeed the older homes all seem to have aged disproportionally in the past year. 

Just one year ago, the homes that were built in the 1980s or newer seemed to have features which the market wanted.  They had master bedroom baths, good closets.  Indeed the townhouses have been pulling ahead in the marketplace.  Now the homes seem dated when they were built before 1995.  The extra rain storms have taxed roofs and basements.  The droughts have been hard on trees. 

Earlier today, at the NVAR convention, we saw a preview of the new real estate sales contract to be used in Northern Virginia.  For 30 years we have been transferring in real estate in "normal working order".  That is, that the buyer could expect all the items in the house to basically function as expected.  And so all parties could argue about what is "Normal", and what the buyer should expect to get.  Now all the buyer is told is "WYSIWYG" what you see is what you get; the house sells AS IS.  However the appliance, equipment or structure is operating at the defined time is what you are buying.  We have already seen the market be particularly brutal to the older, single family homes.   And indeed the older homes all seem to have aged disproportionally in the past year. 
Just one year ago, the homes that were built in the 1980s or newer seemed to have features which the market wanted.  They had master bedroom baths, good closets.  Indeed the townhouses have been pulling ahead in the marketplace.  Now the homes seem dated when they were built before 1995.  The extra rain storms have taxed roofs and basements.  The droughts have been hard on foundations. Buyers' are very cautious when looking a these properties because they do not want to just take on someone else's problems.
Sellers should do their bet to put the properties in top condition and consider replacing older systems. It is better to get permits when doing remodelling so that they can assure a buyer that the work was done properly. When putting a house on the market, be prepared to do a home inspection prior to marketing so that you can let a buyer know that you are ready to sell. Also, home warranties are important as they truly do mitigate costs when moving into a new home (Old Republic paid out 8 times so far this year to my clients).
In this ever changing real estate world, this new challenge of selling the properties as they are presented will lead to new norms in how we do business.