Loyal readers will know that I have an affinity toward neighborhoods that do more than put folks in houses in close proximity to one another. I like neighborhoods that create communities. Neighborhoods that stand for more than just roofs over heads. I like places like RiverBluff. And I am proud to say that, thanks to one of Nest’s newest associates, Laura Winn Smith, she and I now represent such a place.

RiverBluff is a quiet little circle at the end of a cul-de-sac. (Yes, I have written about cul-de-sacs in the past.) It fronts the Rivanna River and the Rivanna Trail. It was a wonderful piece of land of just 19 acres. And thanks to thoughtful planning and a directed vision from the start, RiverBluff now has 9 homes, 1 home under construction, and 12 lots available for building. And of that 19 acres, more than 15 of those acres are still available for use by the community. 201002101732.jpg

Those 15 acres are trails, and playgrounds, and community space. The land has been conserved rather than consumed. Pedestrians and visitors to the Rivanna Greenbelt portion of the city park system are still able to enjoy this land. And the residents of RiverBluff are richer for that community.

201002101746.jpgRiverBluff is more than just clustered houses. As I said, it was built around a vision. That vision is that land and homes do not need to overwhelm the environment. So, the houses are built to the highest of standards of sustainability. From green roofs to greywater waste systems. From super high efficient insulation to geothermal heat pumps. These homes are designed to impact the environment as little as possible. And the end result are buyers that don’t just “buy into” the vision, but live it out.

Rainwater gardens, community composting, active biofilters… all of these are intentional and desirable. And the beauty of the vision is that it does not require a specific style of home, just a consistent intent. Some of the homes are traditional, others are modern, but all are responsible.

RiverBluff and communities like it are the types of places that Nest Realty wants to work with more. We are proud that we have been selected to market RiverBluff, and I am proud to put my name on the sign out front. And many thanks to Laura Winn Smith who is working with me on RiverBluff. What a wonderful partner and what a wealth of information and energy.

I hope that as Spring arrives and this arctic tundra in which we live retreats, that many of you will make the drive down Market Street and Riverside Avenue to RiverBluff.

A Bigger Nest

–Nest Realty Group Acquires Summit Realty–
CHARLOTTESVILLE, VA (Feb. 8, 2010) – Charlottesville-based Nest Realty Group (www.NestRealtyGroup.com) today announced its acquisition of Summit Realty Company. The move combines two of Charlottesville’s most successful real estate firms and expands the 1-year-old Nest Realty team to 14 full-time real estate professionals. It also paves the way for Nest to expand its services from a primary focus on residential real estate into commercial real estate and leasing.
“While other firms are cutting back, Nest is continuing to expand,” said Jonathan Kauffmann, Principal Broker, Nest Realty. “I believe this is a testament to our top-notch agents, the emphasis we place on technology and our dedication to client service. Our combined resources and expanded services will allow us to better serve our clients, something that is paramount to all of us.”
Founded in 1982, Summit Realty grew to be one of the most well-known and respected real estate companies and brands in Central Virginia. Owners Bob Hughes and Bob Headrick took over Summit in 2007 and are enthusiastic about joining forces with Nest Realty as Associate Brokers.BobHughesTeam.JPG
Bob Hughes has been a full-time Realtor since 1989. He is a consistent top producer, a past winner of the Charlottesville Area Association of Realtors’ Salesperson of the Year award and was named C-Ville Weekly’s Best Real Estate Agent in 2009.
Specializing in commercial and residential property for sale, purchase or lease, Bob Headrick brings an array of experience to Nest Realty. He also offers strong expertise in investment sales, corporate services, and both tenant and landlord representation.
“We are excited to be part of the Nest team. They are an aggressive, young company with a vision of how real estate will be marketed and sold in the future,” states Bob Hughes, Associate Broker, Nest Realty.
In 2009, the company’s first full year of operations, Nest Realty was awarded the prestigious Most Innovative Brokerage honor by Inman News at the Inman Connect Conference in San Francisco. Hewlett Packard also honored Nest Realty at the National Association of Realtors conference in San Diego with its 2009 Real Estate Technology Award, given to only five Brokers nationwide.
Nest Realty is known for its use of technology to better serve clients, both locally and nationally. The firm has received national accolades for its cutting-edge web site, www.NestRealtyGroup.com, which features interactive home search capabilities and detailed information for more than 175 Charlottesville neighborhoods. Jim Duncan, one of Nest Realty’s partners, was recently named to Inman News’ Real Estate’s 50 Most Influential Online.
In addition to a strong focus on technology and innovation, Nest Realty agents are held to a higher standard. All agents must have a minimum of three years experience, practice real estate full-time and earn their Broker’s license shortly after joining the firm. With almost $4.7 million in sales per agent and 13.75 transactions per agent, Nest Realty agents more than doubled the production for the average Charlottesville Realtor in 2009.DavidFerrall.jpg

“We pride ourselves in having a team comprised of exceptional professionals, said Kauffmann. “We want consumers to know that if you work with a Nest agent, you are working with a true, full-time professional with high ethical standards. To date, we have had an extraordinary team; the addition of the Summit agents only enhances our strength. The combined experience and track record of Bob Hughes, Bob Headrick, and their entire team is a wonderful addition to the Nest family. We couldn’t be happier.”

Title Companies v. Attorneys

Once a home is under contract, and sometimes even before, buyers will be asked if they have a settlement agent in mind to handle their closing. Some buyers opt for attorneys, others request a title company to handle the closing, primarily to avoid the attorney fees. After all, the insurance is the same after the closing, so why pay any more for the same service?title ins.jpg

Fair question.

I have in front of me a 56 page document that was just released by CRA International, a national research organization that studied the HUD-1 costs across the country and tried to determine how much extra buyers spend on attorneys instead of going straight to the title company and closing it with them.

The argument that settlement companies have made is that attorneys are expensive and unnecessary for these transactions. Without competition, attorneys would force the price of home loan settlement sky high and the consumer would be punished. The attorneys argue that in fact it is the title companies that keep prices high. They claim that title companies may charge less in the form of a “closing fee” but they more than make up for that discount in the price of the insurance policy that they offer consumers. Attorneys are able to price title policies from different companies and that brings price down.

The study looked at 839 financings that occurred in a single 12 month period, and included 366 new home purchases and 473 re-fi’s. In the case of re-fi’s, there are occasions when the lender actually performs the closing. So, in Virginia for instance, 50% of the cases studied were closed by settlement companies, ~30% by attorneys and ~20% by the lenders directly. Across the entire study 60% were closed by settlement companies, 17.4% by attorneys and 22.7% by lenders.

The empirical evidence is that the attorneys are correct that title companies charge more for their policies, but they are wrong that it always costs more overall. The study showed that in states where Attorneys handle all the closings by law and the states where settlement agents are dominant the charges are roughly equal. There does not appear to be any influence that regulations have on the costs of closing a loan. In states, such as Virginia, where consumers have a choice, the numbers that make up the total for closing costs may be different, in the end, the costs are roughly equal.

The CRA study found that “High or low closing costs appear to be at least equally – and frequently more strongly – associate with a wide range of other factors (such as details of the loan, the characteristics of the state or loan area, and the characteristics of the borrowers);” Translation: While different loans cost different amounts to close, it is based on size of loan, credit score, local taxes (GRANTOR TAX!!!) and other factors, not who the settlement agent was.

So, what does an ambiguous study tell us about how buyers should choose their settlement agent? Very little. Instead, it says that the price conscious buyer isn’t going to save money. So the question that a buyer needs to ask is, “How will I best be served?” Given that settlement companies are not allowed to act as attorneys or provide legal advice in the case of legal issues arising, my advice is to stay with a local attorney who can represent you if you need it. The cost of bringing a lawyer on board down the road is much higher than having them with you from the start.

Product Mix

Talk to a marketer and you will hear this term frequently: “Product Mix”. It refers to the breakdown of a market and precisely what is selling. This then allows companies to focus on what to manufacture. Imagine a computer company determining whether to build desktop or laptop computers. A quick look at the product mix of what is selling allows them to divert resources to the appropriate market.

Builders operate in much the same way. The problem is that a project must go to the city or county months or years before construction begins, and that can be 6 months or more before the first buyer can occupy the residence. Therefore, there is always the risk of over building a certain type of home. Below you will see a graph by quarter from 2003 to Present for the combined Charlottesville and Albemarle markets. Each line represents a product type: Detached, Attached, and Condo.

(Click on the graph for a larger image.)
YearEndWrapUp.jpg The quickest thing most folks will notice is the enormous bump that occurred in the 1st quarter of 2005 when the first condo conversions became available to the general public. The condo market was steady until it got another bump mid year 2006 and then slowed until the end of 2008 when it hit the skids.

This is a fascinating tale of what the right project was to work on then… and not now…

Builders watched as the early developers sold their stock quickly, but trends shift, and the developers who brought condos on the market at the end of 2008 were greeted with credit issues as well as an over built market.

Contrast this with attached homes which saw a bump in prevalence just as condos were slowing. While I cannot state for sure that I know what was happening, I do have a theory here. Detached homes tend to be the priciest of the three product types. Therefore, those who may not be able to afford the 3BR/2BA home on a 1/2 acre in the county look to more affordable options. Those options tend to be condos and townhouses. When credit became impossible to get on condo projects, the attached home was the only solution.

But, take a look at the last 3 quarters where detached homes have grown in popularity even while attached homes fall off sharply. This coincides with the convergence of prices across the different product types. For the first 9 months of the year in the city, the median home price of a townhouse was $242,000. But the detached home price median in the city was only $261,000. A difference of only $19,000. That’s just over $86 month in mortgage payments on an 80% loan.

So what does product mix tell us about the future market? It says that as long as the price between detached homes and their counterparts are small, the detached homes should continue to rise as a percentage of the sales. It also reiterates that we need financing to be eased in reference to condo projects.

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