- The Washington Times - Monday, November 20, 2000

The tight housing market deprives Sandy Andrews of a lot of sleep these days.

The Alexandria Realtor spends her nights scouring the Internet for housing listings for clients. She discovered one such listing on a Thursday in mid-October, in front of her computer a little after 2 a.m.

Ms. Andrews didn't waste any time with houses getting snapped up faster than free tacos at happy hour, she couldn't afford to.

She called her client, Michelle Venable, the next morning at 7. They had dinner together around 6 p.m., wrote out a contract on the Fair Lakes town house, and faxed it to the seller that evening.

Like many real estate agents, Ms. Andrews is confronted with the challenge of too many potential buyers and not enough houses for sale. Like other agents and home builders, she must get creative and work hard to connect the buyers with the right home.

"In this market, it's easy to be one of 15 buyers opting for a property," said Pat Jablonski, senior vice president of Better Homes Realty in McLean.

Buyers are engaging in bidding wars and making concessions on contracts, such as giving up appraisal options, to win existing homes. Sellers are jacking up prices, since buyers especially technology executives in Northern Virginia are flush with money from the strong economy, and willing to pay.

Real estate agents are asking their clients to be more flexible and fast-acting. Some are soliciting in neighborhoods where no homes are on the market, asking owners to consider selling. They and their assistants slip flyers in mail slots and make dozens of phone calls.

All must get to know clients well and make lists of their priorities. Buyers often have to compromise on some factors, like commute time or fireplaces to retain others, like good schools.

Meanwhile, home builders are compiling their own lists of waiting buyers, many of whom are willing to sign contracts on homes that won't be completed for months. Some builders have suspended sales in developments because home and road construction can't keep up with demand.

Potential buyers don't seem to be scared off yet by long waits, compromises or even ever-rising prices. Area contracts on existing single-family homes rose 9 percent from October 1999 to October 2000, according to the Greater Capital Area Association of Realtors.

Median home prices for the Washington metropolitan area were projected to reach $188,800 by the third quarter, according to the National Association of Realtors. That's up 9 percent from $174,000 the previous quarter and a 5 percent rise from $179,900, the median price in the third quarter of 1999.

Prices remain high because supply continues to fall. From October 1999 to this October, the number of existing homes on the market dropped more than 30 percent.

The number of new homes being built has fallen as well, according to the National Association of Home Builders. New housing starts for the Washington metropolitan area were 30,903 in 1999 and are projected to dip 5 percent in 2000 as the economy slows, said Gopal Ahluwalia, the group's director of research.

The lack of cheap housing has not been an issue thus far because people keep on buying, said Stephen Fuller, an authority on the local real estate industry and professor of public policy at George Mason University.

But he expects that to change.

"The likelihood is that [the industry] cannot expand the supply to meet the demand, so prices will go up and the problem will worsen," he said.

If at first you don't succeed

Real estate agents stand atop the unbalanced scale as liaison between clamoring buyers and powerful sellers.

The agents warn purchasers that they may not succeed on their first contract and may have to outbid other buyers.

"We're seeing buyers that will lose out on two or three contracts before they're successful," said Peter Clute, a senior agent in the Georgetown office of Pardoe Real Estate.

The contract that Ms. Venable signed on her town house, scheduled to settle Nov. 30, was not her first attempt.

Ms. Venable, 24, a software test engineer for kinkos.com, put in a bid a few months ago on a house in Kingstown, a development in Alexandria.

But one of the competing buyers was from the same country as the owner's wife, and that buyer won the contract.

Ms. Venable, who lives with her parents in Springfield, almost gave up and waited to buy.

"It was definitely a rigorous process … You're lucky if you can even find one, and if you do, it's so overpriced," she said.

But she persevered, and received that early morning call from Ms. Andrews, an agent with Re/ Max Horizons in Alexandria.

Three or four contracts came in on the Fair Lakes house, and Ms. Venable succeeded eventually with a bid of $247,000, $200 under the home's listing price, which real estate agents say is unusual.

"The Realtors are expecting people to pay more than the asking price," Mr. Fuller of George Mason said.

Michael Patterson, a Realtor with McEnearney Associates in Arlington, said the tightest competition is in the $300,000 to $500,000 range, though price and supply pressures have affected every segment of the market.

He counsels clients to put escalation clauses in their contract, outlining what their offer is and by how much they are willing to outbid others.

"It's the young tech people coming in with huge stock options who are scarfing up the homes," said Mr. Jablonski of Better Homes Realty.

Try a clean contract

Money isn't always what puts successful bidders over the top. Real estate agents are telling their clients to waive certain contract provisions that would be standard in a buyer's market.

"[The buyer is] not necessarily going to take the highest prices he's going to take the cleanest contract," said Jack Paganelli, a Realtor with Coldwell Banker in Vienna.

Contracts can include provisions for home inspection, appraisal, document review, radon and lead testing.

Mr. Clute of Pardoe said it sometimes helps to strip away those provisions then the seller knows the buyer can't back out if there is a problem with a home inspection, for example.

Mr. Patterson said he does not recommend that clients give up too much to the seller.

"It's one thing to jump through hoops for a seller, it's another thing to make poor investment decisions," he said.

He does tell buyers, however, to be flexible on other elements such as settlement date.

Ms. Andrews also said flexibility is key.

"[Buyers] are willing to go a little further out. They've gotten very flexible, which is what we need," she said.

For example, Ms. Venable wanted a yard but settled for a less-expensive town house with green space.

Mr. Jablonski said buyers must also be flexible when it comes to availability.

"When we find a house, it will go fast," he said, so clients should have their cell phones on and handy at all times house-hunting becomes a second on-call vocation.

He asks prospective buyers to come in for a 90-minute initial consultation. If they refuse, he won't work for them.

Since clients will probably have to bend on some of their priorities, he said he has to know them fairly well to understand their needs.

Cozying up to clients may help in placing them in the right house, but it won't help find the houses that are out there.

The agents check listings frequently Ms. Andrews' all-nighters are an example.

Mr. Clute said he touches base often with friends at other agencies to see if they have heard about an available house but don't have a client to match.

Want to sell your house?

Ms. Andrews and several other agents employ a more unorthodox and aggressive method for finding houses for their clients.

Want a house in a particular neighborhood, but none are on the market? Some agents try to convince residents to sell.

Ms. Andrews does it through mailings. "Help! I have a family who wants to buy a home in Newington Forest," reads one flier. Mr. Paganelli favors phone or house calls.

"I don't wait for it to happen, and that's why my clients win," Ms. Andrews said.

She uses solicitations so often that she gets domino effects. One homeowner will agree to sell if she can find him a house in another particular neighborhood, so she sends out mailings there. She ends up with a chain of buyers and sellers, each closing contingent upon the next going through.

"You're forced into it because of the lack of inventory," Mr. Paganelli said.

Mr. Fuller said the last time making unsolicited bids on houses was popular was in 1987.

"That's characteristic of the tightness of this market that we haven't experienced for 10 years," he said.

Other agents, such as Mr. Clute and Mr. Patterson, feel the technique is unproductive.

Buying under construction

House hunters don't have to rely on the short supply in the existing home market. They can also turn to the short supply in the new home market.

At Saybrooke, a Ryland Homes development in Bristow, Va., in Prince William County, the company halted sales for two and a half months because demand was so high.

"I don't think in the history of Ryland they have ever shut a sales site down for selling too many homes," said Marilyn Parker, the sales representative at Saybrooke.

Since the development opened in July 1999, she has sold 64 town homes. More than 50 occupied single-family homes are up on the site, and she has a waiting list of 30 persons who want to buy but haven't been able to since Ryland suspended sales.

The singles start at $235,990 $35,000 more than their sales price when Saybrooke opened. The base price for town houses is $174,750, almost $50,000 higher than in 1999.

But Ms. Parker estimated that the homes cost $40,000 less than identical units in the closer-in Fairfax.

"The caveat in the market is they have to go farther out for buying power," she said.

Sales were scheduled to open again last weekend, and those buying would not be able to move in until July or August, she said.

That hasn't scared buyers, though, she added. "People are willing to wait for what they want."

Where's the land?

New-home construction has been stunted by the paucity of land on which to build and a labor shortage.

Thomas Pellerito, president of home building and chief operating officer for Washington Homes in Landover, said the challenges have encouraged builders, like real estate agents, to be more inventive.

They now look at smaller, infill lots in more urban areas, such as a town house development near Old Town Alexandria, he said.

Large home builders are also considering land in far-out counties such as Fauquier and western Loudoun where they wouldn't have built before.

Mr. Pellerito said builders have had to put sales on hold because they don't feel comfortable selling houses whose "delivery," or completion dates, are much more than six months away. His company holds back certain lots and sells them in increments.

The pace of advance selling "is really outstripping our ability to deliver the homes and also the developer's ability to develop the lots," he said.

A six-month delivery time is common, he added.

Blair Diseati, director of sales and marketing for Ryland Homes' Washington division, said the company pre-sells 95 percent of the homes they build in the area.

"We have more homes under construction now than we've had for years," he said.



LOAD COMMENTS ()

 

Click to Read More

Click to Hide