Melissa Savenko's Richmond Real Estate Review

Buyers Beware - Upcoming Changes in Regulations Means Getting a Loan Will Be MORE Complicated!

People outside of the real estate business may or may not know of the significant changes to regulations regarding lending that are coming, effective August 1, 2015.  But we agents have a duty to get the word out to ALL parties to the transaction, but especially the buyers.

I had a closing scheduled for today delayed, and when we asked for guidance on how we could avoid that same situation in the future, and what to expect, we received a very thoughtful and helpful response from the lender.  Here is a portion of that response:

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First of all, forthcoming federal regulations require that a loan application be in process within 10 business days of the application date.  To be in process, it means that the buyers have to have submitted all SIGNED documents applicable to the application and provided as much as possible that has been requested by the lender (like income and asset documents).  If the buyers drag their feet, after 10 business days, the loan has to be withdrawn or denied.  We are then bound to certain dates from that point to keep things moving along.    

It is incumbent on the buyers to get the documentation to lenders as fast as possible.  This means that things like verification of cash to close has to be documented and in the file as soon up front as possible and cannot be lagging behind in the process.  For buyers who don’t have the funds yet or have to “save” it up, they aren’t going to be able to make it  or start application until the cash to close is in place (either in bank accounts or with gift documentation)(emphasis mine).

Lenders are going to have to get more up front at prequalification so that, once the buyers are in application, they already have the majority of what is necessary. 

For [THESE BUYERS], they did EVERYTHING quickly and on time and responded immediately to our requests for items.  Unfortunately, the market is buzzing (which is a good thing!) and underwriting and closing are both terribly backed up.  It has been a while since we have seen this kind of volume and most lenders don’t have the staff to meet it because they don’t want to hire new staff until they see that this is an ongoing issue.  Otherwise, lenders are using their current staff and trying to get as much as they can out of them. 

I would definitely recommend that agents start writing contract closing dates out for 45-60 days.  If a buyer is using a grant program, 60 days is going to be the minimum amount of time to allow because you have to add the grant application and approval process to everything else going on in the deal to get to closing.  If there is a holiday involved, then a few more days need to be added to the closing date.  We are all changing and adapting our process flows from start to finish to tighten up so we can meet the impending regulations. 

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 This response does not even address the new regulations that require the buyer to have the "Document Formerly Known as the HUD-1" in hand at least three (3) days before closing, and requires that three (3) day period to START OVER if there are any changes to the interest rate or the cash being brought to closing.  That means no last minute credits to take care of miscellaneous items that come up late in the process, or during walk through.

Personally, I think this is going to make closings after August 1, 2015 a total nightmare.  Don't even get me started on the ridiculous new names for the documents and processes.  [NOTE: As an aside, whoever thought that "Consummation" was a better name than "Closing" is either an idiot or brilliant, with a sick sense of humor.  I'm hoping #2, but fear it's #1.]

So, buyers, be prepared to be even more frustrated and annoyed by the "consummation" process than you currently are, with even more requests for ever more esoteric documentation.  Absolutely do NOT have a moving truck packed up and ready to unload on the scheduled day of "consummation." And sellers, do not count on an on-time closing, or on having the money in hand on the scheduled "consummation day."  Expect delays.  

More on this topic to come, but I thought the lender's response was helpful and worth circulating. As always, your comments, suggestions, and topic ideas are always welcome.

FSBOs - They're B-A-C-K! Why Real Estate Agents Hate Working with FSBOs

It’s happening again.  The market is super-hot in almost all areas of the City of Richmond, where I do most of my work.  Bellevue, Church Hill, the Fan, the Museum District – all en fuego.  Houses are flying off the market in just a day, sometimes hours.  Bidding wars.  Escalation provisions.  And what happens when the market is super-hot, when people hear how quickly these properties in these desirable neighborhoods are selling?  Yup.  The hated, dreaded Fizz Bo.  The For Sale By Owner (“FSBO”).  I’ve seen several in my neighborhood lately.  I’m going to explain to you why real estate agents can’t stand dealing with FSBOs.

There are a few reasons people decide to sell their house themselves.

• Category One:  They don’t believe that real estate agents add value to the transaction.  Frankly, they often believe real estate agents are unprofessional idiots;
• Category Two:  If they do concede that real estate agents have some value, they believe they are grossly overpaid; or
• Category Three:  They are in some kind of financial straits, and are selling by owner because they can’t afford to pay an agent’s commission.

So either you think I am an idiot, or a shyster, or you are completely stressed out over money and the transaction is going to be emotionally difficult for everyone involved.  Lovely.

Now don’t get me wrong.  If you want to sell your own house, that’s your business.  FSBO your little heart out.  Just so long as I don’t have to represent the buyer who wants to buy your house, I’m fine with you doing whatever you want with your time and money.  But I don’t want to be on the other side of the FSBO transaction, representing the buyer.  If a buyer I have been working with wants to see a FSBO, I shudder.

Why, you ask?  Well, first of all, see the above-outlined reasons why people sell their own homes.  Why would I want to work with someone who thinks I am an idiot at worst, or not worth their fee, at best?

Second, I am going to end up doing twice the work.  To be completely blunt, the FSBO seller doesn’t know what they are doing.  They don’t know about required disclosures.  They don’t know what terms are standard in the market.  They have no experience negotiating a contract, then negotiating an inspection provision, and possibly negotiating over an inadequate appraisal.  They don’t know how and when they need to be communicating with the lender.  They have no experience managing a complicated transaction from contract to closing.  So I am going to end up doing my work representing the buyer, and I am also going to end up doing the seller’s work, so he or she doesn’t screw up the deal.

And please, FSBO advocates, don’t say you are going to work through a lawyer, like that’s going to make it okay.  Take it from someone who IS a lawyer, and practiced corporate law at a large downtown law firm:  Lawyers, even real estate lawyers, aren’t experienced at the process of buying and selling homes.  Maybe it is different in other markets.  But here in Richmond, Virginia, in the standard residential real estate transaction, lawyers are not involved in negotiating the initial contract terms, or the inspection addendum terms, or any other provisions which come up frequently.  Lawyers in the deal just make it more complicated, because they typically overlawyer to death everything.  So you, FSBO seller, are going to spend a lot of money on a lawyer who costs more and has less experience negotiating deals to sell a home than any halfway competent real estate agent.  But the FSBO seller who uses a lawyer typically falls into Categories 1 and 2, and thinks agents are idiots and/or overpaid.  Guess paying $300/hour to someone with a law degree just sits better for those folks.

Third, working with a FSBO seller is just plain uncomfortable.  One of the often overlooked roles of the agent is to put a buffer between a buyer and a seller.  The agents communicate with their respective clients, and then with each other.  This is a way to take (some of) the emotion out of the transaction.  Selling a personal residence is not like selling widgets.  As much as we tell them not to, people get emotionally involved.  The space represents them.  It’s home, it’s a safe space they have created, it’s designed and decorated to the seller’s personal taste.  It’s hard to hear someone criticize something in which you feel so personally invested.  And for the prospective buyer and their agent, having to tippy-toe around a seller’s feelings makes a challenging situation even more difficult.  My client should be able to say “what the hell was he THINKING when he painted the kitchen lime green with that pee pee yellow accent wall?”  In a normal transaction, I could tell the listing agent what my client said, and he or she would pass it on to the seller in a more palatable manner.  For example, “Well, the buyer thought the paint choices in the kitchen were a bit bold for her taste.”  But if you are lurking about during the showing, and the inspection, and the appraisal, and any other time we have to get into the house, my client likely isn’t going to feel comfortable speaking freely to me in front of you.  And it makes it harder for me to tell you what you may need to hear, because you will take it personally.

Lastly, FSBOs often pay LESS than the standard 3% buyer agent commission.  Just looked up a neighborhood FSBO, who has paid a flat fee to be in the MLS, and sure enough, he's offering 2.5% in buyer's agent compensation.  Why in the world would I want to sell a house when I am going to do at least double the work, for less money?  The short answer:  I don’t want to.

So, that’s the quick and dirty on why real estate agents don’t like working with FSBOs.  There are some agents who just won’t show FSBOs, period.  I do, but I hate doing it.  It’s just all around uncomfortable and unpleasant.  I hope this insight into why is helpful.  And here’s my favorite FSBO story, saw it in a recent blog, even though it was years ago, I still think it’s hysterical.  Short version:  Founder and CEO of ForSaleBy Owner tried and failed to sell his own home, and then hired an agent who sold it right away for more money.  Classic.

Richmond Is One of the Top Markets in the USA for Residential Rental Properties

According to an article published by RISMedia, Richmond, Virginia  is one of the top markets in the entire country for purchasing residential rental property. That doesn't surprise me.  HUGE and growing public university with inadequate housing supply.  Growing Millenial population.   In-migration of professionals from other parts of the country to take jobs at some of the big Richmond employers, like Capital One, Martin Agency, VCU, etc.

The problem right now is there is so little supply of investment properties and we have an ever-increasing pool of investors chasing the same limited supply.  My long-time investors are crabby about it, since people new to the game are driving the price of real estate up, up, UP.  And it makes it more difficult to find and land investment properties, when you are in competition.

My suggestion:  Figure out your ideal renter profile.  Do you want undergraduates?  Young professionals?  Families with school age children?  Then look to areas that right now might be considered "fringe" for your ideal renter but still have main amenities they would want, whether it's walkability, yard and access to the river, good schools.  Recognize that you may likely have to offer discounted rent to overcome the perceived locational disadvantage to get great tenants.  In other words, follow the Nos. 1, 2 and 3 of real estate - location, location, location! - but try to be predictive of the next "hot" areas by being logical about the known wants and needs of the rental population.

As always, just my $.02.  Always interested in the opinions of others, so hit me up and share your thoughts in the "Comments" section.

 

 

 

My Return to Blogging and Some VERY General Thoughts on Richmond Real Estate

WHOA.  I knew I hadn't blogged in ages, but I didn't know it was almost a year and a half.  That's crazy. Time flies when you're having fun.  Or when you are busy.

And that's the biggest news in the last 18 months.  The market, at least in the old and historic neighborhoods of the City where I do most of my work, has picked up significantly. In some submarkets, such as the Fan and the Museum District, we're currently in a STRONG seller's market.  This rapid shift has been hard for some buyers to understand.  Many still seem to have the mentality that this is a buyer's market, and they can offer substantial discounts off list price, or ask for concessions like closing costs, and the sellers should be glad to have their offer.  Nope.  Not the case for some submarkets.

And I think that's the most interesting thing about this current Richmond real estate market.  Is this a bubble?  Why are prices rising so rapidly?  Should we be concerned about Real Estate Crash 2.0?

My take:  No.  A crash is not coming.  This is the result of a significant structural and demographic shift in the market.  You are not seeing this white hot market across all of the Greater Richmond Metropolitan area.  You are seeing it in the City.  Almost exclusively.  And some Henrico County submarkets, like Lakeside, that are immediately adjacent to the City.

What's going on?  What is the big change?  Downsizing Baby Boomers are a BIG driver.  I am seeing more and more 50-60-somethings, coming from Short Pump or Midlothian or other points north, south, east and west, who are looking for a lifestyle change.  They don't want the huge suburban house.  They definitely don't want the huge suburban yard.  The kids are grown and in college, so schools are no longer an issue.  And they want to be able to walk to restaurants, museums, shops, art galleries.  This is a group that I don't feel like you saw much of back in 2006 when I started in real estate.  But what was a trickle has become a flood.

I do most of my work in the City, and much of that in the Fan District and the Museum District.  The typical buyers in those areas in the past have been (i) folks affiliated with VCU, as professors, administrators, etc., who wanted to be close to work; (ii) young professionals, who wanted an urban walkable lifestyle; and (iii) young families, who moved to the Fan for William Fox Elementary. 

[NOTE:  Until fairly recently the Museum District was districted for John B. Cary Elementary, which was not perceived to be as good a school as Fox.  That difference used to account, in my opinion, for the price differential between the Fan and the Museum District.  The Museum District is now districted to Fox, so much of that price differential is disappearing.]

You're now adding these downsizers, many of whom are selling a large and expensive house somewhere in one of the counties, and can afford to buy in the upper end of the City property price range.  Often with cash.  And then there are the folks who are relocating to Richmond from somewhere urban - Washington D.C., New York, Boston, just to name a few localities recent clients of mine have come from - and want the same urban lifestyle that they are coming from.

So why the rapid escalation in values and the extraordinarily fast switch from a buyer's, or at least a balanced, market to a clear seller's market?  Limited supply, ever increasing demand.  There is only so much urban core real estate, and more and more people want it.

Certainly, there are other factors coming into play.  Housing values are coming back to the point that people who have been underwater since 2007 are able to consider a move.  Interest rates may rise, and that concern is getting people off the fence.  First time buyers, who have not been as large a part of the market as they have been traditionally, something like 25% vs. the "typical" 33%, are getting off the fence and are finally ready to buy, after living through the 2007-2012 recession.  It's 2015, and they are tired of paying rent.

I think 2015 is going to be a really interesting year.  So far, all signs are pointing to it being a barn burner. [NOTE:  I am knocking on wood as I say that, because I don't want to jinx myself].  I consider myself very lucky that I grew up in Bellevue and Ginter Park, lived at Libbie and Grove during law school, and currently live and work in the Fan, all super-white-hot neighborhoods.  My prediction:  All of those neighborhoods, as well as Battery Park, Byrd Park, Church Hill, and Lakeside, will continue to blow up.

We'll see. Hopefully it won't take me 18 months to follow up on this post.

Turning Over a New Leaf, a/k/a Removing My Head from My Rear

Well, it's been over six months since I published a post, although there are two half-written posts from November 2012 and December 2012, respectively. 

[ASIDE:  Interestingly, the November 2012 post I never finished is about the School Board punting on the recommended elementary school closure of John B. Cary Elementary, and what a failure of leadership that was.  The topic is big in the news today, as the Richmond School Board voted 5-4 to close several schools, although Clark Springs Elementary got the axe, not John B. Cary.  That's a topic I may revisit myself.]

I've been navel-gazing for a lot of different reasons that I won't bore you with, but I've finally shaken off the funk and decided I want to write, I miss writing, and gosh darnit, I'm going to do it.  I have decided to be kinder to myself and lower my expectations.  So expect to see shorter posts, on more timely topics, and more focused on real estate.  I'll still talk about things going on in the realestate development community, such as the Redskins Training Facility, but I'm going to try to focus generally on local real estate issues and trends that affect the average buyer or seller.

So, next up:  My overview of the insane market that is the Historic Fan District right now.  Or perhaps something on the prevalence of pocket listings and the ethical issues they raise.  Or what to do in a rapidly appreciating market, for both buyers and sellers.  I don't really know.  I'm going to write about whatever tickles my fancy.  Although I am always open to suggestions.

Best,

Melissa

 

Notorious R.O.B. on Magical Thinking OR How Realtors Get Marketing Wrong

I wrote this post back on July 24, 2012 and never posted it.  It's still relevant, but the good news - knock on wood! - is the market appears to be picking up, at least in the urban Richmond neighborhoods where I work.  AND on a purely personal note, I have hired an assistant, which has been AWESOME.  Should have done it ages ago.

But, it is still the case that deals are stupid hard to get closed, leaving anyone with several active transactions going on at one time, way less time to market.  The main culprits, in my opinion?  The large banks.  The underwriting criteria are ridiculous.  The appraisal requirements are ridiculous. They suck.  No ifs, ands, or buts about it.   Something has to change.

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I just read Rob Hahne's newest blog posting, "Magical Thinking vs. Boring Reality."  His point:  real estate agents quite often get it wrong when it comes to marketing, focusing on the hot, the new, the cutting edge, rather than just doing the boring old stuff that has proven results, like...oh...staying in touch with your past clients?  Returning phone calls within a reasonable amount of time?

You know what?  He is exactly right.  And I resemble those remarks.  But in defense of myself, and of real estate agents everywhere, let me provide a little insight into that behavior.  And let me link some of my, at least, personal failings in this area to the vagaries and realties of the current market.

And might I say, this current market has been dragging on, and on, and on, since 2007.  I got into real estate sales full time in February 2006, so almost my entire real estate career has been during the worst overall economic conditions since the Great Depression.  So all of us that do this as our sole source of financial support have been hampsters in a wheel for a very long time now,  And I personally am just overwhelmed and exhausted by it.  Can it PLEASE end?

So, here are my defenses.  Most of them come down to the simple combination of needing time and/or money.  Here goes:

1.  Every Deal Is Harder.  Every deal requires twice as much effort to keep it all together.  Getting the client under contract is not, in my opinion, the difficult piece.  The difficult piece is getting a transaction from contract to closing.  There are inspection issues.  OR appraisal issues.  OR financing issues.  None of these things are our fault.  These are just the realities of the market.  But if you are spending twice as much time on a single deal to keep the wheels on the bus, then the available time that might be spent on marketing is substantially less.

2.  You Have to Work Harder to Get Buyers and Sellers, Who Are Fewer and Father Between.  Every working agent, except for those lucky enough to have established brands and stable books of business that are more than adequate to support them and their loved ones, is having to work harder to generate enough business.  

3.  There Is Less Time and Money to Invest in the Business.  Client appreciation programs take time.  And money.  If all my time is spent keeping the active transactions I have moving forward, and if I have to count on a substantially higher percentage of deals falling apart for stupid, unreasonable reasons, I don't have that extra time.  So my solution would be to get some help.  Having additional help has been, for me, the chicken and the egg scenario.  You need an assistant to make more money, BUT you need more money to hire an assistant. 

 So, not a comprehensive explication of all the reasons agents may not be marketing the time tested and proven ways - keeping in touch with past clients, actively seeking referrals from those past clients, maintaining and actively working a client appreciation program.  But hopefully a glimmer of insight into the rationale of at least one full-time working agent. 

 

Downtown Development - Does the Emperor Have No Clothes?

I knew someone would write this perky, upbeat article for me.  It comes from Work It, Richmond, and I can't remember if that is some Richmond Times-Dispatch  offshoot or another initiative from the Greater Richmond Chamber of Commerce, through HYPE, the "Helping Young Professionals Engage" group. 

[I personally call HYPE "Helping Young Professionals GET Engaged"," but that's just me.]

Anyway, of course everyone there said everything was "Great!," everything was 100% occupied or renting up well above expectations, rents were high, blah, blah, blah, blah.....

God bless Brian Ohlinger of the VCU Real Estate Foundation, who basically looked at the developers following his presentation and said "Stop. Building. VCU. Student. Housing."  Although in a much more diplomatic and politic manner.  No one else seems willing to call anyone on all this insane apartment development downtown.

I'm going to write more on this later, but I just had to post this article.  For now, you can see my personal opinion on the apartment building craze here.  And keep in mind my March 7, 2012 post includes a much broader geographic scope of development than Venture Richmond's definition of "Downtown" and does NOT include a heck of a lot of apartment units that were discussed yesterday.  Scarier and scarier, I believe.

The Victory Rug Factory Proposal and the Special Use Permit Process - Ironies Abound

Well, this story appeared in Richmond BizSense yesterday, only a few days after the story of the Georges versus the Snows, which I am also calling "the Tempsford Road Kerfuffle."   I was struck when I read this story and the comments, in comparison to the story covering the feud over the Snow's special use permit application to subdivide their lot. Ironies will be addressed later, most likely in another post.

The Victory Rug story outlines the dispute between the Oregon Hill Neighborhood Association ("OHNA") and a developer, Guy Blundon of CMB Development, over the conversion of a commercial building into apartments.

Let me be clear on the front end. I don't know Mr. Blundon. This is not personal.  I am sure he is a lovely human being. He may do nothing but "high-quality developments wherever he's been in the Richmond area," and he may indeed have a "social conscience," as one ** cough ** commercial real estate broker commenter noted. However, what is indisputable is he does not live in Oregon Hill.

Blundon wishes to turn the old Victory Rug building into 18 apartments, with an adjacent 18 space parking lot. The proposed unit mix is one studio apartment, 6 one bedrooms, and 11 two bedrooms.

The neighborhood proposes 6 apartments and 2 single family homes, which would be supported by the current R-7 zoning.

The issues: The neighbors say the project is too dense for the urban neighborhood, doesn't provide enough parking, and they don't want more VCU students. The developer says the 18 units proposed are the bare minimum necessary to make the project work financially, and he plans to rent to young professionals.

Let's unpack this.

First, some basic facts and principles to underpin the analysis:

Oregon Hill is a dense, urban residential neighborhood of early Victorian (1890s+) rowhouses tucked between VCU's Monroe Park campus and the river.  The neighborhood was a blue-collar, working class neighborhood for families who worked in the tobacco warehouses, manufacturing facilities, and docks in Shockoe Slip and Shockoe Bottom. Because of the nature of the neighborhood and the demographic of the residents for whom it was developed, there is not nearly as much masonry construction as there was in more affluent Victorian neighborhoods of the same period, such as the Fan and Jackson Ward. Much of the neighborhood housing stock is frame.  Consequently, the property values have traditionally been lower than in other neighborhoods immediately proximate to VCU, most notably the Fan.

Oregon Hill has already suffered some serious urban planning damage from the creation of the Downtown Expressway, which cut a swath right through the middle of the neighborhood.  The historically African American neighborhood of Jackson Ward suffered as well.  I don't think it's at all unreasonable to say these neighborhoods bore the brunt of these massive development projects because they were poorer and minority, and did not have the clout of their more affluent neighbors, such as the Fan.

In the last _____ [10? 15?] years, Oregon Hill has transitioned from a predominantly owner-occupant residential neighborhood to become a residential neighborhood with an unusually heavy influx of VCU students and other renters.   As in any college community, in the areas surrounding the university, there are tensions between the home owners and the student renters.  Think noise, parties, drunkenness, petty vandalism, and trash, plus tons of extra cars.  And VCU's rapid expansion (over 20,000+ students) and transformation from a commuter college to a true residential urban university means there are very real growing pains exacerbating the typical "Town vs. Gown" challenges.

I think one could fairly argue that Oregon Hill, and the property owners of Oregon Hill, have born a disproportionate share of the burden from the creation of the Downtown Expressway and the expansion of VCU.

[NOTE: I'll have to validate this later with some citations. This post is getting too long as it is. But especially in the Trani era, VCU did pretty much as it pleased in its insatiable march to expand its footprint. VCU expanded into the neighborhood, despite the OHNA objections, and despite previous representations from President Trani himself. Remember the controversy over tearing down historic stables? Or the construction of the VCU gym at old city Stadium? The Carver neighborhood is now suffering the same fate].

So, with that background and underpinning, let's unpack this Victory Rug proposal.

1. The likely tenants will not be "young professionals," as Mr. Blundon claims. Let's be realistic. There is a strong likelihood they will be VCU students.
2. 18 parking spaces is not enough space to accommodate all the project's residents. That's one space for each UNIT. However, you should be calculating car needs based on BEDROOMS.  So, that would be a need for 28 parking spaces.
3. Are there REALLY 18 legitimate parking spaces? If these parking spaces look anything like spaces I've seen in some other urban deals, and aren't even appropriate for a compact car, as indicated by one commenter, that is a legitimate concern raised by OHNA.
4. Commenters claim that Mr. Blundon was told BEFORE he purchased the property that the neighborhood association would oppose a project they considered too dense. I presume there were discussions about what "too dense" meant. If that is indeed the case, then I agree with the commenter that says Mr. Blundon now can't fall back on some position that 18 units is the bare minimum that is financially feasible. He knew the risks.

People may not believe me, but I am actually pro-development, and especially urban infill development. I think recycling old buildings is the greenest thing we can do. Creating appropriate living spaces in urban areas means - theoretically, at least - eating up less greenfields with sprawling suburban development.

BUT, I also believe residents and particularly home owners have the right to oppose any development in THEIR neighborhood that requires a special use permit. If the OHNA says this development is too dense, and has legitimate, reasonable, and rational reasons why, the City Council should give the neighborhood association's official position great deference. I mean, really? How dare these commenters essentially suggest, if not outright say, that the people who live in this area and own their own homes should be grateful that this developer is going to come in and put up some shiny new apartments? 

 Here some examples:

"It seems like this property could potentially bring better residents to the neighborhood than those who currently reside in the unkept rowhomes."

"...[f]rom my perspective, a new small apartment would be better than what is there now…a run-down vacant commercial property. Richmond on a whole seems to run into this a lot. The people who live in the neighborhoods have a vision for what they want but not the financial ability to do it. Is it worth it as a community member to allow the improvement of your neighborhood even if it doesn’t necessarily match your vision?"

Condescension, much? I guarantee these commenters don't live in Oregon Hill. They are also probably the first people who would be jumping up and down if any such project were coming to THEIR neighborhood. Shades of Tempsford Lane.  But my disdain for the attitude expressed by those commenters will need to be worked out another day.  For now, what to do about the Victory Rug project?

Maybe there is a middle way. How about compromise? I understand that it has to work financially for the developer.  And I know I haven't seen a pro forma.  But the property owners in the neighborhood have to live with the results long after the developer is gone, and have deeper and detailed insights into what the true day-to-day issues are going to be.  In the interest of trying to be creative, here are some ideas:

• If it's really supposed to be for single professionals, how about 18 one bedroom units? That makes it more likely that there is only one car per unit. Not a perfect solution, but worth a discussion.
• If the developer intended for it to be for young professionals, make it an age-restricted community. No one may occupy a unit unless they are 25 or older.
• I believe the area is zone for parking.  So you can't legally park on the street for longer than an hour without a parking sticker.  So, how about as a condition of special use, make the apartment tenants ineligible for a parking sticker?
• Can you give your apartment dwellers a discount or a credit if they certify that they are car-free? Maybe that's the wackiest idea yet, but if you are trying to reach a compromise, maybe we have to throw out some nutty ideas.

 What do y'all think?

A Rant About Agents with "Expertise" in Expensive Neighborhoods - A Pitfall of Real Estate + Internet

I am going to be venting a bit in this blog, so just bear with me. But consumers, particularly first time buyers, please think about these points. This was triggered by a few recent incidents that have really, really irked me.

A bit of background: I live and work in Richmond's Historic Fan District. It is a very specifically designated area, the entire neighborhood is listed on the National Register of Historic Places. It also happens to be adjacent to VCU's Monroe Park Campus. The Fan is one of the City's most expensive neighborhoods, for a number of reasons, including :

1. Beautiful Victorian architecture;

2. One of the best, if not THE best, public elementary schools in the City of Richmond in William Fox Elementary;

3. An established walkable urban neighborhood filled with shops, restaurants, art galleries and more;

4. The VCU connection, which creates high demand from both the students and faculty associated with the University.

Certainly since the 1990s, the Fan has traditionally attracted old home lovers, VCU students and faculty, young families with elementary school children, and the urban hipster and young professional population. Increasingly, it is attracting another demographic, the down-sizing Baby Boomers relocating from the suburbs. Some of these folks previously lived in the City, and moved out to one of the Counties for the public schools when their children were old enough. But more and more we are seeing people relocating into the City who have never lived in an old house. This creates issues in and of itself. These issues are further complicated when either of the agents involved in the transaction, buyer's agent or listing agent, is unfamiliar with the issues that can come up with old houses. To name some "biggies": asbestos, lead-based paint, oil tanks.

So, what is my problem? Working in the Fan - and for that matter the Museum District, Carytown, Bellevue, Ginter Park, Westover Hills, I could go on and on naming historic City neighborhoods - requires a certain level of expertise. I would think a buyer or a seller would want an agent who has listed and sold properties in the area. However, over and over again I see people using agents that have no or next to no experience with historic properties.

I really don't understand it. People will do more research to buy a TV or a computer than they will to find the agent that is going to help them buy or sell a home. And that home is for most people the biggest single investment they will make in their life.

Now, part of the problem is some agents represent themselves as expert in a particular area when they are no such thing. This is mainly on the Internet, through websites and Facebook pages. From what I've seen, the representation of "expertise" is typically passive, meaning the agent has sections on their website that discuss the Fan and buying and selling in the Fan. They are using search engine optimization ("SEO") to show up high in search results. But here's what I don't understand: Why don't you, Mr. or Ms. Buyer or Seller, ask the agent how many houses they have listed or sold in the [relevant historic neighborhood]? Or if they have some other nexxus for knowledge of the neighborhood?

I will certainly agree that part of this rant is self-serving, because I do almost all my work in historic City neighborhoods, I live in the Fan, my office is in the Fan, I grew up in Bellevue and Ginter Park, and almost all my business has been in City neighborhoods. It is frustrating when you have spent a lot of time to develop specific expertise, and other agents are using the Internet and SEO to capture leads without putting in the time and developing the expertise. It is especially frustrating when you have to do a deal with one of these agents and end up doing their work, because they don't even know what issues to spot. Or, worse yet, you have a deal fall apart because the inexperienced agent missed an issue that is typical with an old house, didn't advise their client, and their client flipped out over an inspection item that we see all. the. time.

Look, it is no surprise that agents and brokerages would like to get a toe-hold in these City neighborhoods, which are often some of the most expensive real estate in the Greater Richmond Metropolitan area. There have been a number of brokerages that have established offices in the Fan and Museum District over the last several years, in an attempt to capture market share. Many, if not most, of those offices eventually closed.

What is my "solution?" Well, besides having all those buyers and sellers calling me up to represent them? [:)]? I think agents have to earn their stripes the old fashioned way, by putting in the time. I tagged along behind my broker for two years, learning as much as I could about a real estate market that I already knew intimately, because I lived in it and had for 15+ years. But I needed to learn the ins and outs of representing buyers and sellers, how to manage a transaction, what the pitfalls are that can come up in inspection, how to solve those issues, and much, much more. I am a licensed attorney that had done major corporate transactions, so I knew my way around contracts and negotiation better than the typical new real estate agent. But I still had to learn how to buy and sell real estate. My real estate training was like law school, where the teach you how to "think like a lawyer," but nothing about how to actually practice law.

The situation of the buyer or seller calling on the inexperienced agent based on that agent's SEO skills is yet another example of the pitfalls of internet access to data in the real estate world. Information is not knowledge. Consumers, do your homework. Interview multiple agents. Find someone with expertise. Find someone that you feel comfortable with too. After all, this is a professional service relationship, so you need to like the person you are working with. Agents and consumers who want to flame me for this position, I'd love to get some comments back. Meanwhile, I'm off to host an Open House. In the Fan. [;)].

New Apartments in the Richmond Market - Are We Looking at the Next Real Estate Bubble?

OK, I keep referring to how many new apartment units there are in Richmond, Virginia, particularly Downtown/Shockoe Bottom, and wondering if there are enough bodies to fill them. I've decided to tally up the various projects to see how many new units there are online and/or in development. Here's what I have:

SHOCKOE BOTTOM/SHOCKOE SLIP:

1. Bobber Flats, 2001 E. Franklin Street, 41 Units

2. Old Stone Row, 21st and Main Street, 96 Units

3. Engine Company Lofts, 2000 Block of East Main Street, 28 Units

4. Trolley Commons, 2001 East Main Street, 80 Units

5. Cedar Broad Apartments, what I call "The McDonald's Project," 1900 Block of East Broad Street, 204 Units

6. 2001 East, 2001 East Broad Street, 75 Units

10. Monument Construction Building, 1425 Cary Street, 38 Units

11. Harvester Project, Cold Storage Building #6, 36 Units

12. Canal Lofts IV, 18th and East Main next to Have a Nice Day Cafe, 124 Units

12. Genesis Townhouse Project, Union Hill, 150 Units

11. Marcellus Cox Building, 19th and East Marshall, 120-130 Units

TOTAL BOTTOM/SLIP/UNION HILL UNITS: 992-1,002

 

DOWNTOWN:

1. Berry Burke Building, 525 East Grace Street, _____ Units

2. Montaldo's Building, a/k/a Pasture, East Grace Street, 4 Units

4. Hotel John Marshall, Corner of N. 5th and East Franklin, 238 Units

5. First National Bank Building, 825 East Main Street, 154 Units

6. 8 1/2 Canal, 8 1/2 Canal Street, 160 Units

TOTAL DOWNTOWN UNITS: 556 + Berry Burke

 

JACKSON WARD/CARVER

1. To Be Named Gilbane Project, 1200 Block of West Marshall, 136 Units

2. Eggleston Property Project, 2nd Street, 31 Units

3. To Be Named, 1325 West Broad, 19 Units

4. Hippodrome, 2nd Street, 29 Units

TOTAL JACKSON WARD/CARVER UNITS: 215

 

MANCHESTER:

1. Former Mercer Property, 901 McDonough Street, 188 Units

2. Miller Manufacturing Project, 5th and Stockton, 210 Units

TOTAL MANCHESTER UNITS: 398

 

NORTHSIDE:

1. The Collegiate, Chamberlayne Avenue Just North of Interstate 95, 270 Units

2. To Be Named Virginia Union Project, 2300 Lombardy Avenue, 33 Units

TOTAL NORTHSIDE UNITS: 303

TOTAL UNITS: 2,464-2,474+

If I adjust for number of people in these units, since many are 2-4 bedrooms, it can be anywhere from 3,696 new residents required, using a multiplier of 1.5, to 7,392, using a multiplier of 3. Are there going to be enough new bodies to fill all these apartments? I sure hope so. No one wants to see any of these projects fail, that would be bad for the City of Richmond and the surrounding neighborhoods. But I do have some worries:

• I am sure I've forgotten or missed some new projects.
• This analysis does not take into account condominium projects that came on-line 2008-2009 and have significant rental components. Vistas on the James and Miller & Rhoads come to mind.
• What about the existing apartment inventory? Do new projects just cannibalize the older, not-as-fancy projects?
• This doesn't include two new projects in Scotts Addition, 3600 West Broad and 3200 West Clay (135 units). And I will be shocked if the Interbake Foods Building does not have a significant apartment component. These three projects alone should add over 500 new units in a very desirable location.
• Why are people paying $1,600/month and up for an apartment? That's a mortgage payment on a $300,000 house in the Fan/Museum District/Carytown/Munford/Bellevue/take your pick "hot" neighborhood.

I'd love to hear people's thoughts and comments on the apartment building craze. Do you think there is going to be an oversupply of apartments in the City? Why do people want to rent vs. buy?