Rick Jarvis

We Love Photography

September 13, 2016 By Rick Jarvis

I think that deep down inside, each Realtor is part frustrated architect and part frustrated photographer (ok, this Realtor is) and thus my obsession with extremely well done photography. Nothing quite lends itself to powerful photography quite like people, nature and architecture.

Being lucky enough to work in a city with architecture dating back centuries, unique shots are everywhere. And being lucky enough to work with some really talented artists (yes they are artists) only makes our job easier.

Here are some of our favorites.

I am a Housing Critic

September 13, 2016 By Rick Jarvis

I am a housing critic.

I go into houses each and every day and I am asked to pass my opinion. I am asked about colors and layouts and light and quality and location and fences and appliances and utilities and fireplaces and flooring and ceiling heights and roofing and basements and — well you get the picture.

We all have opinions about housing — each of us. Buyers, sellers, agents, appraisers, Zillow, the assessors office, decorators, inspectors and the stereotypical nosy neighbors. And you know what else? They all have value, if you understand what each opinion means.

Here are some lessons to help you navigate this critic-based industry.

Listen to the Topic, Not the Tone

Phil Sims, former Super Bowl winning QB (and MVP of the Super Bowl) used to talk about how his coach, Bill Parcells used to deliver his critiques in a manner that ranged between humbling (on a good day) and downright humiliating the rest of the time. Sims said that once he learned to listen to the message that his coach was delivering not the way in which is was delivered, he became a much better player.

We tend to take things personally and hear an insult when we should be hearing a suggestion

I think everyone in the process — agents, buyers, sellers — we tend to take things personally and hear an insult when we should be learning a lesson. When a buyer does not like a house because of a particular feature or characteristic and delivers what was intended to be constructive criticism, more often than not, the seller feels rejected, hurt or otherwise offended and loses the ability to draw any lesson from the message.

Learning to listen to these criticisms at their most basic level allows you to glean important information about market preferences and not become bogged down in the tone of the message.

Qualify the Criticism

Some criticism can be incredibly useful while some can be ignored completely — knowing how to tell the difference is key. And it is the agent’s job to figure out how much importance to attach to the message.

Unqualified criticism carries little value.

Imagine yourself as a seller of a small townhome on a crowded city block and you receive criticism from a buyer who is from out of town, on their first day out and is looking at townhomes, land in the country, a new homes on a cul-de-sac in suburbia — how much credence should you give the criticism? On the other hand, how seriously should you take the criticism from a buyer who looked at 5 townhomes in your neighborhood and bought the one down the street?

Unqualified criticism carries little value. Qualifying the criticism allows us to either gain insightful knowledge about the market we are competing in or brush off a message that may have otherwise caused us anxiety.

‘One is Data Point, Two is a Trend’

You hear this statement uttered quite often at One South, especially when it comes to seller feedback. At its core, it means ‘be patient and don’t overreact.’

You can’t please everyone and you would be wasting your time and money to try — not everyone who comes through your home is going to love it. That being said, if you begin to notice trends in complaints (3 people think the yard it too small and the kitchen is too far from the great room), you would be remiss to continue to ignore them.

Pay attention to what people are saying — if you hear a critique once, it’s likely just a personal preference that may not reflect the market expectations as a whole. But if you start to hear the same critique come up showing after showing, it’s probably in your best interest to go ahead and fix the problem or adjust the price accordingly.

Price is the Ultimate Criticism

Non-specific negative feedback, for me, is the worst type of feedback to receive. When you receive criticism that is obviously negative but doesn’t point to an issue (or issues), it makes it hard to develop a strategy. That said, even nebulous or vague feedback can have value, too.

Listen to when feedback begins to change in tone from openly negative to balanced

Price drives buyer expectations, and buyer expectations have the biggest influence on the types of criticism you may receive regarding your home. If your home is grossly overpriced, criticism will be largely negative because individuals have come in with an expectation that reflects a price higher than what you have delivered. On the other hand, if your home delivers above and beyond what buyers expect at its listing price, you may hear nothing but rave reviews and high levels of interest and intrigue. The key is finding the spot in the middle – where your price matches what the market demands in terms of features, size, location, etc. Paying close attention to the tone of the criticism you receive will give you great insight into the quality of your home matches (or does not match) with price at which you are offering it.

The lesson (and this is especially important when you drop price) — listen to when the feedback begins to change in tone from openly negative to balanced. Remember, you want some criticism (otherwise you probably have under-priced the home!), but a fair balance of of positive and negative comments — the kind of balanced feedback that suggests your home is priced well and can be competitive in the market.

Summary

Despite the fact that housing, like stocks, bonds, mutual funds, rare automobiles or foreign currency, is just an asset, it is a personal one and the criticism we receive on housing somehow seems to carry more bite to our egos when it is rejected — it shouldn’t.

We try to tell our clients that their homes are worth what the market says they are worth, not what the owners say, nor the agents say, nor Zillow, nor the appraiser. The market is never kind, but it is always correct, and will tell you everything you need to know if you are willing to listen. That said, it is amazing the number of people who choose to hear feedback, but draw the incorrect conclusion from the message.

Remember, be objective, don’t take it personally, and pay attention to trends. If you can do those things, the criticism you receive will be constructive and you will maximize the value of your home.

The Making of an American Farmhouse — Walnut Hill, Rockville VA

September 5, 2016 By Rick Jarvis

Periodically, you get smitten with a neighborhood, and Walnut Hill in the Rockville area of Western Hanover County tends to have that effect on people.

Walnut Hill is pretty close to what most are envisioning when they imagine a classic neighborhood in a rural setting. With extremely large lot sizes (most are between 8 and 25 acres) and the kind of gently rolling topography that brings to mind the picturesque farmland in the foothills of Western VA, the Walnut Hill neighborhood perfectly captures the imagery of what rural Americana should be.

Walnut Hill

If you have not been to Walnut Hill, you should go.

The neighborhood is a testament to the developer – they resisted the urge to take the path of least resistance and try to wedge as many lots as possible onto the site. By NOT trying to create maximum density, they ended up creating incredible spacing throughout the community that allows differing architectural styles to coexist peacefully with one another.

Walnut Hill does not ‘demand’ a specific style or size. Rather, it lets the land dictate the home. Within the neighborhood as it stands today, you see mostly traditional residential architectural forms (variations on colonial styles along with some ‘craftsman’ influences) and generally a quality material palette ensuring enduring physical structures. I think that any good design is cognizant of its surroundings and should compliment the existing homes.

Creating the Home on Paper

Deep within every Realtor is both a frustrated architect and would-be builder.

So when we were presented with the chance to work with a builder with decades of Richmond home building expertise, WB Garrett, on conceiving a home in Walnut Hill, we jumped at the opportunity. Being involved from such an early stage is every agent’s dream, and one we wanted to make sure we took seriously.

Effectively, we were engaged with the ultimate question of ‘what should we build?’ Not just from a price and size standpoint, but in all facets — from architectural style and aesthetic to features to materials.

Several ideas were tossed about, mostly relating to style, but the concept of the ‘New American Farmhouse,’ seemed to speak to each of us. Rather quickly, we all agreed that should be the direction. We recognized that even within traditional forms were variations and departures that could work, especially in such a bucolic rural setting, and thus we chose to craft a modern version of the American Farmhouse to pay respect to the setting as well as the surrounding homes, while still introducing what the market demands.

Walnut_Hill_Leasing_Plan_pdf__page_1_of_2_

[ Download the Walnut Hill ‘Amercian Farmhouse’ Plan ]

So the team of home builder Bill Garrett of WB Garrett, Peter Fraser of 37 Ideas and Rick Jarvis, with One South Realty sat down and discussed the features and materials for such a home and with a little hope from our friend and film colleague, Kent Eanes, we were able to document the creation of the plan in such a way that will give the marketplace a peek behind the curtain of how homes go from ideas and concepts to paper and plans.

Using Realtor Recommendations

August 1, 2016 By Rick Jarvis

[ A quick note — the 2017 spring has been even more insane than last spring. In order to give yourself the best chance to purchase a home AND close on time, a team approach is required. Below we talk about the reasons why agents make recommendations for team members and why it matters. ]

Imagine this …

You are buying a home and it’s the day before closing. Everything is ready to go. Your stuff is totally packed, your movers are scheduled to be at your home first thing in the morning and the cleaning crew is coming soon afterwards. Your in-laws are (thankfully) lined up to take the kids (and the dog) so that you can direct traffic. The utilities are set to switch over and the cable company will be at the new home between noon and 3 (ok, noon and the following Tuesday) … everything is lined up.

And then the phone rings.

‘WHAT DO YOU MEAN the loan is still in underwriting and we may not close on Friday?!?!’
‘WHAT DO YOU MEAN there is a unreleased deed of trust from 2006 that was missed?!?’
‘WHAT DO YOU MEAN the closing statement is off by $29,000?!?’

In a panic, you call your agent who informs you that the internet lender you chose for your loan and your closing attorney (an old college roommate who specializes in divorce) cannot be reached — and there is nothing that can be done.

Are Agents in Cahoots with the People They Recommend?

So why would a client not use lenders and attorneys that the agent recommends?

Sometimes, the reasons are perfectly understandable. Corporate relocation packages might mandate the use of a specific lender or attorney. Other times, office politics or family relationships play a role.

Chris Owens at Southern Trust — Might want to give these guys a call. They are extremely good a delivering on time.

But in most cases, the main reason that clients do not take the Realtor recommendation is simply a lack of trust — ‘What is the agent getting for making this referral?’ is the prevailing thought. The public quite often feels that the relationship between agent and lender (or attorney or inspector) is designed to benefit the agent at the expense of the client.

The perception that agents somehow make recommendations based on a kickback is as unfortunate as it is untrue.

Kickbacks are highly illegal in our industry.

RESPA is Your Friend

The public is largely unaware that the practice of Realtors being directly compensated for referring a customer to a lender (or other service provider) is a big no-no. The practice is known as a ‘kickback.’

Legally, Realtors, lenders, attorneys, title companies and home inspectors are all strictly prohibited from being directly compensated for referring business to another service provider. Stated differently, if every time I referred a loan to a lender, they sent me $100, we could both be fined, lose our license or even go to jail.

The Real Estate Settlement Protection Act (RESPA) spells this out in great detail and no agent, lender or attorney wants to be caught in the net of a RESPA violation.

So despite the public’s opinion to the contrary, the practice of ‘quid pro quo’ referrals is largely non-existent.

So What is Allowed?

Real estate service providers are allowed to enter into formal business relationships with other real estate service providers as long as they are legitimate business arrangements.

A common arrangement is for a lender (or title company) to lease space from a brokerage or an attorney in order to facilitate workflow. Putting the multiple necessary services to complete a transaction physically under the same roof both enhances communication and makes it easier for clients to obtain services in one location. Additionally, service providers can share expenses relating to marketing or technology in order to drive business opportunity or create efficiencies.

As long as the business reason is legitimate AND the referring of service is not compensated on a deal-by-deal basis AND the client is not being injured by the relationship, then it generally is deemed to be within REPSA compliance.

So Why Use Our Team?

The client spends money before the transaction closes that cannot be recaptured. No closing = lost money

When we say ‘you should call this lender’ or ‘ we recommend this attorney,’ we are saying it with the confidence that the recommendation will positively impact the transaction.

Here are the primary reasons why:

As a commissioned salesperson, my compensation is tied to the SUCCESSFUL transaction. Any and all of the work I do comes BEFORE I get paid. No closing = no payday. Why on earth would any agent risk a $10,000 commission check for $100 and the threat of legal action? I just don’t think anyone is that stupid.
Similarly, the client is spending money on the transaction before it closes, too. Deposits, inspections and appraisals (and sometimes rate locks and title searches) are all expenses that occur prior to closing. If closing does not occur, then the some (or all) of the money spent by the client is lost.

So when we make our recommendations we are protecting our own work and money in the same way we are protecting yours — our interest are aligned.

(A quick sidebar — I once had a client tell me that the only reason that I was recommending a specific lender was that ‘You just want the deal to close.’ I was actually too stunned to respond.)

Money is a Commodity, but a Financial Product is Not

‘There are horses for courses’ goes the old saying.

Banks not only offer different loan products, but they also differ in what they do well — and a Realtor’s recommendation should change based on the asset type, credit profile or income level. Each mortgage company typically offers the same Fannie Mae, Freddie Mac and/or FHA products (and rates), but the other niche products (non-warrantable condo, construction/perms, HELOCs, Grant Programs, Doctor Loans) can vary widely from lender to lender. Furthermore, lenders often times underwrite to different standards (‘straight agency’ or ‘credit overlay’ are the terms used to describe this practice) and thus, some banks may be more aggressive for different types of buyer profiles.

It is also important to note that the way banks handle underwriting, closing and funding is also of great importance and having a lender headquartered in your time zone matters more than you know.

It is the agent’s job to know and make the correct introduction.

Missing is Expensive

I cannot stress this enough — a missed closing date is hugely expensive.

Do you know what happens when a closing date is missed — especially with little to no notice?

Rate locks expire
Contracts sometimes can be voided
Deposits sacrificed
Movers cancel or worse, begin to go into full extortion mode (and if you don’t believe me, read your agreement with your movers about ‘storing’ your stuff)
Hotel rooms might be required
And other financial penalties can be levied

And do you know who pays the penalty? Well, it isn’t the lender and it isn’t the agent, that’s for sure.

The party with the most to lose in the case of a missed closing date is the buyer. Look, if the house is vacant and the deal is cash, then a missed closing date is not a huge deal. But when the buyer and seller are all set to close in a sequence, and the first closing allows several more to happen down the line, the ability for a lender (and attorney, and title company) to deliver on time is of critical importance — because the one with the most to lose is almost always the buyer.

So How Do You Know Who to Recommend?

So how did we find the best service providers in the marketplace? Trial, error, experience, vetting, familiarity … all gained over 20+ years.

Since becoming licensed in the early 1990’s, we have largely used the same lender(s) and followed them through the numerous mergers and acquisitions that they endured in the volatile world of mortgage banking. Why? They are good at what they do. They don’t miss dates. They don’t tell a client that they can deliver a product or rate when they can’t. And they don’t employ bait and switch tactics. Having done this for as long as we have, we know who shoots straight (and who doesn’t) and we know who consistently delivers.

And furthermore, when we recommend a service provider, we are not only recommending the individual, but the organization. Our knowledge of the companies we recommend extends well above and below our primary contacts. We know the owners, the managers, the administrators and the processors so that when the inevitable hiccup occurs, we can often times go direct to the individual who can solve the problem.

Volume = Preference

All of the above notwithstanding — imagine the scenario at the beginning of the post.

A day before closing and a problem comes up, whose files are going to be worked on first? Is the lender or attorney going to work on the file of the agent who sent them one deal this year or the one who sent them 50? The answer is obvious. When last minute issues arise (and they ALWAYS do) service providers fully understand where their bread is buttered.

The volume we generate for our preferred partners creates an implied concierge service for our clients.

But Remember, You Are Free to Choose

Please understand that you are free to use whoever you choose to use. This post is in no way a mandate that you have to use who we recommend.

If your brother is an attorney and your father is a lender and they do hundreds of transactions in any given year, then yes, by all means, use them. But if you are unsure of their volume or if their real estate specialty is in the specific type of transaction you are conducting, beware.

When we make a recommendation, the only kickback we receive is great service for you. When our clients have a pleasant and efficient experience, everyone wins. So when a client takes our recommendation, it means they have the highest chance for their transaction that closes on time and on the money.

Without a doubt, the most troublesome deals are the ones where the buyer selected an online lender (or other inexperienced or incompetent service provider) and the deal went sideways at both a critical and expensive point. I wish I had a nickel for every time I’ve heard a client in a self-made pickle say, ‘I guess I should have used your guy.’

Seriously consider taking our recommendations — we are looking out for you more than you realize.

Using ‘Currency’ to Your Advantage

May 10, 2016 By Rick Jarvis

What do you think of when you hear the word ‘currency’?

Cash? Bitcoin? Dineros? Dollars? Sawbucks? Moolah? Dead Presidents? Pesos? C Notes? Shekels? Or my personal favorite, wampum?

Currency is nothing more than a form of value that can be exchanged between parties. And while we generally associate currency with cash, currency can take on many forms. Time, risk, certainty, labor or other more conceptual versions of value can also be used as currency by a shrewd buyer or seller.

… often times, each side misses the opportunity to strengthen the deal for themselves by introducing other forms of ‘currency’ into the negotiations

So when I hear people talk about negotiating for a home, piece of land or other property, I almost exclusively hear them talking about price. It is unfortunate, as often times, each side misses the opportunity to strengthen the deal for themselves by introducing other forms of ‘currency’ into the negotiations.

So what do I mean by ‘other forms of currency’ in a real estate transaction? Lets discuss.

Time

The first and most obvious most universally accepted form of currency is time. Our beloved bespectacled founding fatherly figure Ben Franklin once said (or so my 3rd grade teacher said he did) that ‘Time is money.’ Time IS money — provided it is leveraged correctly.

It amazes me when I see or hear one side of a transaction digging in on a time issue when they don’t have to. Typically, when a seller is trying to simultaneously sell their home and move to a new one, they have a time issue. And when an apartment dweller or someone else with time flexibility is trying to purchase and is inflexible on the possession date, they are costing themselves money and/or possibly even the chance to secure the home for themselves.

Figure out what currency you can offer cheaply that the other side values dearly, and you will come out ahead.

Offering a time-constrained seller the luxury an early settlement with some form of possession post-closing can mean the difference between winning a competitive bid and losing it. Similarly, accelerating inspection schedules (other contingency deadlines) to create a fully ratified contract or offering a floating closing date — this things help aid the seller in finding the home of their wishes — and everyone wins.

A buyer can can either help or hinder the seller’s next purchase and the lesson is that while cash means the same to each of us, often times 30 days may mean a great deal more to one side than the other. Figure out what currency you can offer cheaply that the other side values dearly, and you will come out ahead.

Risk

Hand in hand with time, as a form of currency, is risk.

Real estate is typically a two-sided transaction. While it is easy to focus on only one side of the transaction, they are almost always related as selling one means buying another or moving out of one home means moving into another.

The younger crowd may not remember the epic board game, Risk ... — The younger crowd may not remember the epic board game, Risk …

So anytime there is a two-sided transaction (which is most transactions), each side carries varying degrees of potentially negative outcome if the transaction fails to consummate. A buyer spends money on inspections, loan fees, title searches, deposits and other items that are paid for well before the transaction closes. No closing = sunk costs. Similarly, a seller also experiences many of the same costs, especially if they are also buying and again (if the transaction does not close) they are left with not only the loss of any fees, but potentially subject to legal action for failure to perform under the terms of their contract to purchase the next home.

Needless to say, both sides carry risk, but often in different forms and quantity. So when one party who can potentially absorb risk (think of a tenant who can stay month to month) refuses to mitigate the risk for other side of the transaction, I see an opportunity lost to really strengthen a deal.

Paying attention to the Days on Market of a specific segment can lend guidance on how to best structure offers.

Comparing Offers

Imagine yourself as a owner who has a home under contract with a builder that will be ready in ‘about 90 days.’ Your current home is older, but in good (although not great) shape and probably needs some work. You put the sign in the yard and within a week, you have three offers, all from buyers who are currently renting an apartment:

Offer One — Full price with the seller putting 5% down, pre-approved by a local lender, who wants you to respond by tomorrow at 5 p.m. and wants to close in 60 days.
Offer Two — Full price with the seller putting 20% down. They have been pre-qualified by Quicken Loans, and want to close in 90 days, but needs 3 weeks for inspections due to travel. They have given you two days to respond.
Offer Three — Is for $10,000 less than full price, but will close in 30 days and offer you a rent back for up to 120 days if you need to. They are pre-approved by a local lender and putting 10% down. They have given you two days to respond. Additionally, they will inspect the home within 7 days AND absorb the first $5,000 any inspection items found.

Which one would you choose? I know which one I would recommend to my seller to accept. While offering a marginally lower price, the third offer contains the most time-friendly and flexible terms to the seller (that they TOTALLY needed) while still mitigating risk for both sides. Whatever agent recommended that final contract structure is a true pro and odds are wins a lot of bids for their clients (ok, that was how we structured a winning offer for our client in a competitive bid situation earlier this year, sorry to brag …)

‘Win-Win’ is Not Just a Cliche

‘Win-Win’ may sound cliche, but really provides the most durable framework for contracts.

In a prior post, we talk about how a typical real estate contract is made up of 20 pages with only one paragraph dedicated to price. The remainder of the contract discusses terms ranging from timing to contingencies to inspections to personal property to title — each one of these clauses can and should be used to strike a deal that benefits both parties. ‘Win-Win’ may sound cliche, but really provides the most durable framework for contracts.

Think each deal through, strive to understand what currency each side can offer the other one — and don’t solely focus on price. While price is obvious important, don’t ignore the other terms. Your deal will be stronger, your risk lower and the likelihood of your transaction closing on time and as written and will skyrocket.

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