Your Credit Score Could Improve under FICO 9 

By Kevin Reid Shirley

For anyone who has ever been stymied by seemingly arbitrary (or, put another way, nutty) lowering of his or her all-important credit score, next month’s beginning rollout of Fair Isaac’s new credit score model should be welcome news. It will be known as “FICO 9” — and promises to correct a few of the previous model’s inadequacies.

Why now? It’s been six years since San Jose’s Fair Isaac Co. last tinkered with their credit score methodology. Hmmmm … it’s been six years, too since the financial crisis of 2007–08, which Wikipedia correctly describes as “a major global recession characterized by various systemic imbalances … including high levels of household debt…”

You might expect that the accuracy of many a credit score could have been thrown off-kilter during the crisis — if not throughout the painfully slow recovery that’s followed. If, for example, someone is laid off, then suffers a sudden medical emergency, a formerly spotless credit history would be seriously distorted. Add in regulatory pressure on the banks, and many truly responsible individuals could suffer unfairly. As The Wall Street Journal summarized in a recent article: “Since the recession, many lenders have approved only the best borrowers, usually those with few or no blemishes on their credit report.”

Keep in mind that the whole purpose of a FICO credit score is to help lenders predict the likelihood that an individual will repay a debt. Lenders pay for accuracy in credit scores — and last year they bought 10 billion of them!

BUT … because of two specific problem areas, the scores gradually were becoming less reliable as predictors. First, there was the fact that once a bill was sent to collection, it showed as a black mark — one that could lower a credit score by as much as 100 points — even after it was paid. For as long as seven years after it was paid! So FICO 9 will not penalize borrowers with a collection on their report once no balance remains.

Then there was a problem with medical debt scoring. According to WSJ, as of last month, more than 64 million consumers had a medical collection on their credit report. That would account for many a credit score being adversely affected — sometimes even when it had been an insurance company which rejected the charge … and sometimes when the consumer wasn’t even notified of the situation! Worse yet, when a Consumer Financial Protection Bureau report came out in May, it found that many borrowers’ credit scores weren’t being raised even after they repaid such a debt. FICO 9 will count medical debt sent to collections as less important than other kinds of debt.

The new scoring changes are expected to ease access to loans — mortgage loans included — without materially raising the risk exposure to lenders. But if history is any indicator, wholesale rejoicing may have to hold off for a while, because mortgage lenders can be slow to adopt changes in credit scoring. Nevertheless, if you are soon to start looking for a new home, I’d recommend checking your current credit report to be sure all is accurate. Then call me!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C.; Maryland; and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Address Tomorrow’s Needs by Choosing the Right Home Today

By Kevin Reid Shirley

At the end of the day…” “The bottom line…” “When all is said and done…”

The final verdict on whether any activity is ultimately deemed a triumph comes down to how successfully it addresses future circumstances. It’s especially relevant when you find yourself at the outset of searching for a new home.

That’s not always as easy as you might think. The pressures of the moment (especially when the change of residence is mandated by outside factors — like a job transfer or quickly approaching school registration deadline) — can loom so large that when you find a house that’s perfect for the family now, second thoughts about the distant future don’t even surface.

Better idea: before you even start, take a breath! The search for your new home in will ultimately be much more successful when you start out with an unhurried appraisal of your family’s requirements, not only as they are in the immediate future, but further downstream as well.

To accomplish that, the first order of business is to make as good an approximation as you can of the likely longevity of your family’s stay in your new home. If it’s quite likely that you’ll be moving in five years or less, your planning horizon can more comfortably center on today’s requirements. If a longer stay is possible, longer-term considerations really need to be addressed seriously. Not doing so can wind up creating a lot of extra effort and expense you might have been able to avoid.

Of course it’s the unique makeup of the household that will determine the size, type and features you target for your new home. Especially when children are part of the picture, their ages will be a leading factor in your house hunt. Families with toddlers usually find themselves automatically gravitating towards properties with smaller, more contained yard spaces that are easily child-proofed. But when they hit the 5-to-10 year-old age group, the target is more likely to include properties with ample space for children to play — and a neighborhood with a lot of other kids. It’s an important time for them to be discovering their talents, interests and abilities.

It might seem to be an abstraction right now if you are under the gun, but later on, how valuable might it be to have a house with a guest suite on the main level for visiting in-laws? And if the kids are nearing adolescence, most parents and their offspring will value a new home that enables the teen to have a room of her or his own — welcome respite for everyone!

If there truly is no way to realistically appraise how long your stay will be, rather than just shrugging off the possibility of taking the long term into account, you might be on the lookout for a new home that features a layout with a lot of flexibility, such as one with a semi-detached bedroom that could be converted into an office (or even rental space).

Buying a new home is always a substantial commitment — one that warrants going the extra mile to project how it will fit your unique household now and into the future. If you will be looking for a new home in the near future, I hope you’ll contact me to discuss today’s choices and those that will be coming on the market!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C.; Maryland; and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

"With interest rates still at historic lows, and prices projected to increase by almost 20% over the next four and a half years, this may be time to buy a new home."

When Investing in Real Estate, Stick to Your Strategy

By Kevin Reid Shirley

If you have been doing groundwork with an eye toward investing real estate, chances are you’ve also been watching some new national movement in housing sales. Last month’s Real Trends Housing Market Report showed U.S. sales of 5,880,000 units (a 5.1% increase over June 2013 numbers): “a substantial improvement over the five prior months.” Prices also continued to rise across most of the nation, though at a slightly slower rate. It’s the consistency of the appreciation that has continued to attract investors.

Those investors are drawn for differing reasons — since investing in real estate can advance a variety of financial strategies. For investors who purchase residences in order to rehab and flip, any continuation of price appreciation and rising sales volume is encouraging news. For others who plan to hold long term to maximize rental income potential, still low mortgage rates continue to undergird a historically attractive environment.

Whether investing real estate becomes the high point of a portfolio or a footnote depends on such a wide variety of factors that entire books continue to be written about them. Here are a few — with a couple of the ways they can be viewed:

Not only does location play a critical part in how the underlying property is valued, it also can be the deciding factor influencing rental income where rental income is the main goal. Some of the best performing rental property investments can be those located close to transportation and other amenities like restaurants, shopping and parks: key attractions to tenants (and buyer-investors) alike. On the other hand, a good deal in an iffy location can pay off — but only if it passes a critical analysis.

A storied strategy for winning a higher ROI on a real estate investment is to target properties situated in less-developed areas — areas promising a better-than-average pace of development in subsequent months or years. Such properties hold the likelihood of outstanding appreciation for the long term investor with ample time and patience.

Investments can be acquired only when sufficient capital is available–but successful investing is about more than just finding the least expensive property. Success means creating a budget in line with the expected return, leaving padding for unexpected expenses, and then scouring the available properties that can realistically fit that template. It’s a simple truth that hard-headed budgeting is a skill worth developing: often the best deals materialize from the best plans.

Whether you’re looking to buy and flip or buy and hold, investing in real estate can be both profitable and exciting. The assistance of an experienced and well-connected agent will prove invaluable when it comes to uncovering potential real estate investment opportunities.  If you’re looking for such an agent, I hope you will contact me today.

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C.; Maryland; and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Which Renovations Are Musts for Selling a Home

By Kevin Reid Shirley

When you are selling a home, two underlying unknowns are always present. How long it will take? is one. The second is what will the final selling price be?

The answer to that second one at least partially depends on actions the person selling the home controls, since performing renovations and add-ons boosts a property’s salability. But which renovations add the most value? Even though considerable study has been given to the issue, for any given home it’s difficult to pin down which are most likely to have the greatest impact.

Even so, some general observations are widely accepted:

ITEM: Some kinds of renovations show a much higher return than others. Replacing a traditional entry door with a steel door, for instance, often generates about a 100% return on the investment. A sunroom addition, on the other hand, is likely to result in closer to a 50% return when the home is sold. The web site remodeling.com presents national averages tabulated each year.

ITEM: The old focus on “location, location, location” applies to improvements, too. Selling a home in different areas of the country can influence how much you can rely on the previous item. For instance, some reports say that a backup generator is one of the worst investments a seller can make if they hope to recoup the add-on cost. Yet in areas where dangerous storms have a history of knocking down the power grid for days on end, a well-integrated generator can prove to be a highly marketable add-on.

ITEM: Some repairs that are not undertaken constitute such red flags that, though minor, they can seriously slow down a sale. A broken screen door is a good example of an easy-to-remedy detail that can have a disproportionate effect, drawing prospective buyers’ attention from an otherwise well-maintained property.

ITEM: Some other kinds of repairs are essential for a different reason. A homeowner selling a home might be tempted to decide that replacing the garage roof, for example, simply isn’t worth the expense. Although it could be true that the garage roofing might not be important to buyers, it could prove vital if it prevents the bank from lending on the property.
So, how can a seller know what to do? Luckily, the answer is simple.

Your veteran REALTOR® will be able to offer expert advice based on current market experience — to advise you on which repairs or improvements are a good or necessary expense (and which can be tabled for now). If you are thinking of selling your home this fall, do call me to discuss a home improvement strategy that will help maximize your return!
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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C.; Maryland; and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Action Plan for Pinpointing the Ideal Neighborhood

By Kevin Reid Shirley

There’s a lot you can change about a house. You can repaint it, renovate the interior, landscape the yard. The one thing you can’t change is its location — and there’s abundant truth in the familiar list with the three most important words in real estate: location, location, location

That’s why getting to know as much as possible about the neighborhoods is so important when you are searching for the right home. The characteristics of your choice of neighborhood will affect the quality of life your family enjoys — as well as the capital appreciation and resale value of your property (a good example is the strong positive correlation between house prices and school quality).

Begin with a Plan

A good place to start is by making your personal list of what you think will make a great neighborhood for you and your family. Ideally, one of the neighborhoods will check off all the requirements. In any case, you do want to make sure that your highest priority needs are met. For some, that might mean access to quality schools. For others, it might be the availability of public transportation — the kind that makes the commute to work a breeze. For still others, it’s ready access to indoor or outdoor social and recreational activities. Know before you start looking what you’re willing to compromise on — and what’s a deal-breaker.

Make the Most of Your Budget

There are desirable neighborhoods that almost everyone wants to live in. But for some buyers, budget constraints put these neighborhoods out of reach — for now. But that doesn’t mean you still can’t find a great buy! Try looking for neighborhoods that are on the periphery of more popular areas — neighborhoods that are showing signs that the homeowners are upgrading their properties. Targeting adjacent neighborhoods on the way up is more than just a way to get a better deal on a home today. Ideally, it means investing in a property that stands to increase in value as its neighborhood improves through the years.

Use Online Tools

Thanks to the Internet, finding information about neighborhoods is only a mouse click away. Sites like Trulia, Zillow, and WalkScore allow you to research the profiles of individual neighborhoods. You can find overviews of schools in the area with ratings from parents, graphs which list all sorts of characteristics — even violent crime in the area. Another useful online tool is Google Maps, which shows proximity to shops, schools, transportation and other facilities.

After you have researched the area neighborhoods that look most promising, plan to devote enough time to exploring them in person — weekdays and weekends, daytime and nighttime. Make sure the actual places measure up to their reputations, and find out which ones feellike places you’d like to live.

If you’re looking for in-depth neighborhood advice, give me a call or stop in to go over your wish list.  Whether you are relocating from afar or across town, I’m here to help my clients make smart long-term real estate moves. Call me today!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C.; Maryland; and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Should You EVER Overprice Your Home?

By Kevin Reid Shirley

A crucial part of selling your home comes right at the outset — when you set your asking price. It boils down to a decision to go high (the I-love-this-place-and-gotta-have-it-no-matter-what price); or low, with a number that is just under neighborhood comparables (the I’d-better-snap-this-up-before-someone-else-does price).

Success in selling your home quickly is commonly understood to correspond with the lower price strategy, it’s true. But are there ever reasons why you would want to set a price that’s significantly higher than your neighborhood usually commands? Is there EVER a right time?

Although the common wisdom for selling your home is a pretty firm ‘NEVER!’ — but there might be some possible exceptions. When might it be reasonable to ‘test the market’? Here are a few circumstances:

No true comparables. If you have a home that’s verifiably one of a kind in the area, comparisons based on size, number of bedrooms and baths might be misleading. In such a case, it’s important that the differences be blatant — obvious to everyone — because banks and other lenders are likely to need considerable persuading. “Comps” are easy to justify, which is why they are the usual reference points that make loan officers comfortable. But keep in mind that it’s an absolute ‘must’ for selling your home with a higher-than-comparable listing price: it’s got to be a gem!

Uniqueness. Selling your home at an elevated may be justified when it offers features that aren’t duplicated anywhere else in the area. This can be the case when the location is unique, as when the views from the living room are breathtaking, or a long driveway or dense plantings offer seclusion in an otherwise crowded neighborhood. To warrant the elevated price tag, those unique features should be easily describable in marketing materials. 

No need to sell. If demand for properties in your area is intense — but you have no urgent need for selling your home right now, you might decide to list at a price that would warrant a move for financial reasons. This is the weakest reason to price high: it usually ends in wasted effort without much to show for it.

The list of reasons why overpricing is usually a terrible idea would include showings lost, appraisals that come in at lower than sale price, offers from prospective buyers discouraged, etc. The fact is, when it comes to selling your home, you’re probably looking for a speedy sale at a fair price.

If you are going to be selling your own property this season, give me a call. We can go over how your property is likely to fare in today’s market — and draw up a selling plan that will meet your goals!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C., Maryland, and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

3 Things to Keep in Mind When Negotiating a Home Purchase

By Kevin Reid Shirley

Negotiating tactics. It’s a topic that business authors adore. This is perennial best-seller territory…so much so, you could probably fill a moderate-sized home library with titles like The Art of the Deal and Getting to Yes.

When it comes to negotiating a home purchase in {Your Region}, fine-tuning your offer — finding the balance between writing a winning offer and writing the most advantageous offer — can present a real challenge. Add to that the national headlines that tell us that there are more bidders out there vying for the same properties, and it makes sense to listen to what the experts have to say about the most successful tactics. When you’re negotiating a home purchase in {Your Region}, some of the most repeated generalities are applicable:

  • Keep your cards close to your chest. Kenny Rogers sings about it, and every poker player agrees: when you’re negotiating, it’s almost always prudent to volunteer as little information as possible about yourself and your home search. If you aren’t considering any other properties, don’t let the sellers’ agent in on the fact. Never lie, of course; but find a polite way to be vague. The less you say about personal connections to the property, the better. Stick to the numbers and terms.
  • Keep Your Paperwork Smart. Likewise, if you are approved for, say, a $350,000 loan, but are writing an offer for $325,000, instruct your mortgage broker prepare a pre-approval letter with the amount of your offer — not your full buying power (that’s just asking for a higher counter offer!).
  • Negotiate for the win, not just to win. If you get caught up in negotiation, it can cause you to lose sight of the big picture, which is winding up owning the property you want. If a seller won’t budge on price, ask yourself if the property is actually worth the price they are asking. Canny buyers keep in mind that this isn’t about “winning” by getting sellers to come down to your bid, it’s about winning by getting the home purchase that makes sense for you. If the comps support the price (and you know you’ll be delighted with the house) do be open to weighing the merits of the deal…even if it’s not as rock-bottom as you had hoped.

A home purchase is a complex, sometimes emotional process — but going in with the right mindset can make all the difference. Good luck hunting! If you’re looking for an agent to help you every step of the way, I’m standing by all summer waiting to lend an experienced hand!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C., Maryland, and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Buying a Home Takes a Team of the Right Professionals

By Kevin Reid Shirley

I’ve written about the professionals who are on call to help anyone who sets about selling their house — but there is another team of pros who can be called on when it comes to buying a home. Buying a home is not quite like any other purchase — even those with high dollar amounts. Buying a new Audi or Dodge Viper, for instance, can run you well over $100,000, but you don’t need much more than a fat savings account and willing car salesman to complete the deal.

Buying a home is just different; you need to be able to count on the help of a number of professionals from a number of different fields of expertise. Before you are handed the front door key, you’ll need to secure the necessary funds, acquire the property in a legally-bulletproof manner, and diligently investigate various aspects of the home’s plant and history — all the while protecting you against any kind of fraudulent representation. Here are four of the professionals whose assistance will greatly facilitate the process.

The most basic requirement for buying a home is the substantial amount of money involved. Most often, the actual cash is pledged by a third party — bank or other financial institution — which supplies it in exchange for your promise to repay it over time. There are several financing options, with mortgages being the most popular: that makes the Loan Officer the person to consult. The loan officer will advise you on the types of mortgages available, the amount you qualify for, lay out the chosen payment plan — and take you through a substantial amount of paperwork.

A great REALTOR® contributes a lot more to buying your home than just selecting which of the current listings will be the most suitable. That REALTOR will arrange showing schedules that make the best use of your time and energy, will be a trustworthy key player when you are evaluating and negotiating the price of a potential home, and sometimes will unearth possibilities that are only available to one who is plugged into the ongoing real estate market 24/7. Your Realtorcan also help you identify other members of your team.

Your Inspector is the professional who will give you the go-ahead on the condition of the property. That inspector will use a lifetime of experience to go over the physical plant and prepare a comprehensive report on its every critical aspect. It’s often the prime determinant that guides your decision about whether it truly fits the price you are agreeing to pay.

When you’ve reached the final stages in buying a home, it’s the Title Attorney who facilitates the actual transfer of the property. He or she will prepare the legal documents that legally record the transfer of ownership from the seller to you, as well as oversee the proper and timely deposit and disbursement of funds.

This summer will be prime time for buying a home. It all starts with a phone call — if you’re looking for a top-notch professional, I hope you’ll be making that call to my number!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C., Maryland, and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

When Selling a Home, Which Upgrades Matter Most?

By Kevin Reid Shirley

For owners who are contemplating some major upgrades with an eye to eventually selling a home, there’s always the question of where to do the upgrading. Last year, the National Association of Home Builders weighed in with a study of what today’s home buyer “really want” — which supplies some guidance that may be helpful.

Although the findings aren’t directly applicable for every home, the concepts that were cited as most popular can be informative, particularly to creative-minded homeowners ready to take a fresh look at how they might add allure and value to their property.

While the kitchen remains the top location for upgrades, there are several other valuable options for adding appeal in other areas of your home.

“Drop Zone”

A Drop Zone is designer-speak for any area that conveniently serves as a catch-all utility area. As such, it can be just about the most cost-effective upgrade for owners selling a home because many prospective buyers recognize their value. Such spaces can be customized for use as laundry rooms, mudrooms, or areas where children can store backpacks and coats.

Open Plan Family Area & Kitchen

While many upgrade preferences are regional, one that continues to hold appeal across the board is the creation of an open area where family and friends can congregate. Whether it’s part of an eventual campaign for selling a home, or simply to accommodate your family’s appreciation of the property, it’s worth considering an upgrade that would result in creating more of an open, airy multi-use area.

Master Bedroom as Retreat

When it does come to selling a home, one of the most alluring investments an owner can make is to transform the master bedroom from a ho-hum bed-and-dresser into a welcoming sanctuary. Some design specifics to help achieve that effect:

  • Lighting improvements, like recessed fixtures and wall sconces
  • Upgraded ceilings and moldings
  • Hardwood flooring
  • Walk-in master closet
  • Custom-designed storage multipliers (like tilt-out bins and pull-down racks)

Master Bathroom as Spa

Transforming a master bath to include spa attributes is increasingly popular (when you think about it, it’s really a continuation of the master bedroom/retreat idea). Selling a home today means anticipating the value many buyers place on bathroom upgrades—like separating bath and shower, and upgrading tile floors.

If you are weighing remodeling choices — especially if you suspect you’ll be selling your home in the future — give me a call. I’ll be happy to consult about the alternatives, and which are most likely to maximize your property’s resale appeal!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C., Maryland, and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Thinking of selling? 5 reasons to do it now
Thinking about buying a home in the next year? Now’s the time! Don’t wait …

Thinking about buying a home in the next year? Now’s the time! Don’t wait …

Selling a Home — Little Things Can Be a Big Deal!

By Kevin Reid Shirley

This summer, success in selling a home in will depend upon the same factors as always: location; quality; buyer appeal.

A home’s location — short of calling in the house movers — is pretty much what it is. The structural quality of workmanship and the level of maintenance that it’s received though the years can be gussied up where it shows (and should be), but that, too, is largely a done deal.

Which leaves that other factor in selling a home — the little things that reach out to appeal to buyers. The difference between receiving a swift offer and not can hinge on what makes your home more desirable than others in its price range.

A good example is with closet space. Any property with a closet organization system will carry great appeal to a large number of prospective buyers. Likewise, advanced technological touches can stick in buyers’ memories at the end of a long day of house tours. They don’t even have to be expensive or whole-house systems: a simple programmable thermostat that can be accessed on a smart phone can be an interesting selling point that sticks in the memory. It’s the kind of touch that isn’t a great deal of trouble to install — but it can provide the edge that makes selling your home that much easier.

More extensive tech-savvy features, like tricked-out media rooms or home offices wired to the hilt, are also very hot right now (especially for today’s younger homebuyers) and can provide the edge you’re looking for — if.

What’s the “if”?

If when you are readying your home for showings and open houses, you —

  • prep to emphasize each of these special features (like leaving that system-organized closet door open with the light on);
  • you make sure your agent is in the loop, ready to showcase key elements; and
  • stage to bring out less visible features — whether it’s printing up a list of newly-refurbished utilities or setting out a wine bottle and glasses with a note to “be sure to check out the killer wine cellar downstairs”

It’s also possible that some appealing features are ones that you take for granted; you’ve simply gotten used to them, yet they ought to be emphasized. Often those are details that your agent will be helpful in pointing out. Whatever is unique and desirable will make selling your home that much easier.

If you will be selling your own home in this summer, I hope you will give me a call. There’s never an obligation, but if you wish, we can go over your property to uncover the marketing options that will make it a stand-out: the one with the edge!

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Kevin Reid Shirley is an associate real estate broker licensed in Washington, D.C., Maryland, and Virginia. You may reach him at 202-320-6634 or kevin@RealAstute.com.

Moving Up: Was it Worth Waiting?
If your family plans on moving up in the next twelve months, it may make sense to move now rather than later. Prices are definitely still appreciating and, unlike the last year, interest rates are also projected to increase. 

Moving Up: Was it Worth Waiting?

If your family plans on moving up in the next twelve months, it may make sense to move now rather than later. Prices are definitely still appreciating and, unlike the last year, interest rates are also projected to increase.