Ask Eli

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: Are buyers now required to pay the buyer’s agent commission?

Answer: Most people have heard at least a little about the sweeping, nationwide changes to how compensation is offered/paid to buyer agents in residential real estate transactions that took effect in mid-August. If you’d like a catch-up, you can read my article on it from July.

Are Buyers Required to Pay Agent Commission?

I have heard a lot of confusion over the last few months on what these changes actually mean for buyers and sellers. Many came away from reading/hearing whatever news they follow, understanding that buyers are now required to pay buyer agent compensation, but that is not accurate.

Here’s what you need to understand: Buyers are responsible for their agent’s compensation, but they are not required to pay it out of pocket.

What Does it Mean for Buyers to Be Responsible?

Prior to the new rules/laws, buyers didn’t hold much responsibility when it came to their agent’s compensation because in most cases (like 99% +) buyer agent commission was set when the seller signed a listing agreement with their agent and became enforceable when the home was entered into the MLS for mass marketing. So most buyers thought little about their agent’s compensation and rarely had to come out of pocket for it (the DOJ hated this).

The new rules require that the Representation Agreement between a buyer and their agent include a clear and specific amount of compensation the agent will earn. In other words, it must be a specific percentage or dollar amount, it cannot be vague (e.g. “as negotiated with the seller”) or broad (X%-Y%). This means that, through the Representation Agreement, buyers are responsible for ensuring their agent is paid the agreed-upon amount.

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: How much should I wait for rates to drop until I refinance my loan?

Answer: Mortgage rates have fallen (and risen) over the past six months. A few weeks ago rates were down by over 1% from earlier this year and at 18-month lows, which meant anybody who took on a mortgage recently should be thinking about refinancing. Rates have come back up over the past couple of weeks, but I wouldn’t be surprised to see them sink again in the coming months.

I reached out to the loan officer, Jake Ryon at First Home Mortgage to ask about the process he uses to help clients decide whether it’s the right time to refinance.

What Are Your Goals?

The first step is understanding what you want to achieve. Ask yourself:

• Do you want to lower your monthly payments?
• Do you want to shorten or extend your loan term (e.g. 30-year to 15-year)?
• Do you want to take cash out for home improvements or other financial goals?

Since most people refinance to lower their monthly payments, I will focus mostly on that decision.

How Much Does a Refi Cost?

The transactional cost of refinancing varies, but Jake advises estimating 0.5%-0.75% of the loan amount to refi in Northern Virginia (usually on the higher end of the range), but these costs can vary based on several factors and vary by state/city. The transactional costs include things like:

• Lender fees
• Title fees
• State taxes/fees (e.g. recording fee, transfer tax)
• Third-party fees (e.g. HOA questionnaire, appraisal)

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: I have heard that inventory is building and the market is starting to favor buyers. Is that accurate?

Answer: I have preached for years the importance of caution and care when applying real estate data to your own decision-making. National real estate data is rarely useful, regional real estate data is sometimes useful, and even local data can be full of misleading conclusions.

It’s quite likely you’ve started to hear news and see data showing significant inventory build-up and markets shifting to favor buyers. We have seen modest market shifts in Northern Virginia, but nothing like what other regions of the country are experiencing, which is the source of most of the newsworthy reports you may see.

I recently came across this fantastic chart illustrating how housing market conditions are in different regions of the country. The bigger the green bar, the more favorable the market is for sellers, the smaller it is, the more favorable the market is for buyers.

Inventory Levels and Demand Drive Price Momentum

The green bars above illustrate demand levels against inventory and provides a good indication of how prices might react in the coming months/year, the charts below show how inventory levels have changed by state over the past 12 months and five years (pre-pandemic levels) and are also a good indicator of future price movement.

• Sun Belt and Mountain West markets are seeing a faster return to pre-pandemic inventory levels
• Many of the markets seeing the biggest buyer-favorable swings (more inventory) saw greater home price growth during the pandemic housing boom
• Northeast and Midwest markets have lower levels of homebuilding (new supply)

It’s Good to be in the DMV

Attom Data released a report on Sept. 6th analyzing 589 counties to determine the risk of a housing downturn based on:

• % of homes facing possible foreclosure
• underwater mortgages
• % of income to buy
• median sales price
• local unemployment rates

The metropolitan areas around New York City, NY, Chicago, IL, as well as broad stretches of California, the Southwest, and Florida are considered most vulnerable to a housing downturn.

Virginia had eight of the least-at-risk jurisdictions, including Arlington County, City of Alexandria, Fairfax County and Loudoun County. This is the story of real estate ownership in the greater D.C. Metro area — we may lagged other regions in appreciation during the pandemic boom, but we can sleep comfortably now as many markets are facing a risky future.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460. 

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: What do you think about the ruling against Missing Middle? 

Answer: It’s a joke amongst realtors that if you want to do some business, go on vacation, and your phone will start ringing. I guess the same goes for me getting the Breaking News that Missing Middle/EHO has been overturned by Judge Shell as I head out of town. 

So instead of my planned article comparing our local/regional housing market to the rest of the country, I’m going to share my first thoughts on Missing Middle getting thrown out while I wait for my flight. 

Good Riddance Missing Middle (v1.0) 

I support the idea of bringing actual Missing Middle housing to Arlington by creating broader, more flexible zoning policy so the market can supply the type of housing we lack and the type of housing that’s in demand (3-4BR homes with ~1,500-3,000 sq. ft. and some yard space), but I did not support the version of Missing Middle/EHO in the recently overturned policy. 

Speaking purely from a housing market perspective (leaving aside my personal concerns as an Arlingtonian), I had two main issues with it: 

1. It didn’t allow for the construction of the type/size of homes that I think are most in demand and missing from Arlington. It also didn’t properly incentivize construction of the type/size of homes allowed in the v1.0 policy that was closest to what was most in demand and missing from the Arlington market (duplex and three townhouse developments). 
2. The policy did not properly incentivize the type/size of housing that most aligned to demand and missing supply so naturally, builders were incentivized for more density (4-6 unit multi-family units) and the result was the majority of units applied for/approved under Missing Middle were of the size and type that we currently have the most supply of… 1-2BR condos and apartments, which I wrote in Nov. 2023 meant that Missing Middle was not achieving its goals (and a failed policy) 

We got v1.0 wrong. I say v1.0 (my label, not the County’s) because I have no doubt our community and County Board will continue to work on v2.0 of Missing Middle/EHO to develop a more thoughtful policy. 

How We Can Get v2.0 Right 

There are tons of people more qualified to offer opinions on how to do Missing Middle right, but I’ll offer some here: 

• Start with Honesty: Be honest about what we’re trying to achieve. Is it making Arlington housing more affordable? Then let’s talk about housing affordability and Affordable Housing, not Missing Middle. Is it about making North Arlington schools and neighborhoods more socioeconomically diverse? Then let’s have that conversation, not Missing Middle. But if the goal is allowing the market to build housing, that’s lacking in supply and high in demand, then let’s discuss a better implementation of Missing Middle housing. 
• Build Actual Missing Middle: The v1.0 policy brought us too much of what we already had in high supply and not enough of what was actually missing from our market. Set a clear intention to bring certain types/sizes of housing to the market where there are currently gaps and work backwards to build a policy for the intended outcome. 
• Engage the Builder Community: I can’t recall where I read it, but one of the most shocking things I learned was that the County was intentional about not giving the builder community (and those in similar fields, like local architects/engineers) a seat at the table in planning because they didn’t want to give the impression they were doing this to line builders’ pockets (though plenty accused the County of it anyway). The County must understand how their policy will be implemented by builders and work together with them to create a policy that properly incentivizes the market to build the desired product. 
• Vary Zoning Policy by Location: Allow for higher density and smaller units (multi-family) primarily along high-traffic corridors like Glebe, George Mason, Carlin Springs, etc where redevelopment of old, obsolete housing is slower under the current single-family zoning. Strongly consider allowing/encouraging assemblages of adjacent lots along these corridors to promote a broader range of development (townhouses/duplex). Taper/adjust the zoning code to keep multi-family development where it makes sense (in Metro/walkable/commuter corridors) and do not allow multi-family style development inside neighborhoods. 
• Increase Parking Requirements: The v1.0 policy required just .5 or 1 parking space per unit and was going to result in a problematic number of cars being parked on neighborhood streets; many of those streets were already near or at capacity for parked cars. Create policy that is realistic about the numbers of cars that people will have in new Missing Middle housing and make sure there’s space for most/all on site. 

This is far from an exhaustive list of priorities to consider in the next iteration of Missing Middle/EHO and doesn’t include significant ones, like infrastructure and environmental concerns. 

My Big Question Is… 

…What happens to the Missing Middle that has been approved or is under construction? There is no longer a zoning policy in place to for the County to issue a Certificate of Occupancy under and even if the County says they will honor approved permits, I imagine the neighbors will file suit and either prevent altogether or endlessly tie up the completion of a project in court. Get your popcorn ready… 

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Eli Residential channel.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460. 

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: How much did mortgage rates drop after the fed cut rates last week?

Answer:

The Fed Cut Rates and Mortgage Rates… Went Up?

Last week, the Federal Reserve cut the fed funds rate by 0.5%, more than the 0.25% some expected. Great news for mortgage rates, right? Wrong.

Despite the large rate cut by the Fed, mortgage rates actually increased each of the next two days. Why?

To understand this, you need to understand that mortgage rates are not directly tied to the fed funds rate but are influenced by something else: the 10-year Treasury yield.

The Fed Funds Rate vs. Mortgage Rates

The fed funds rate is the interest rate banks charge each other for overnight loans. The Federal Reserve adjusts this rate to control inflation and guide economic growth. When they cut the rate, it makes borrowing cheaper in the short term, encouraging spending and investment.

However, long-term interest rates, like mortgage rates, don’t directly follow the fed funds rate. Instead, they are more closely linked to the yield on the 10-year Treasury note. The 10-year Treasury is market driven, as opposed to the fed fund rate controlled by the Federal Reserve, and its yield reflects investor expectations about future inflation, economic growth, and overall risk in the economy.

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: We are finalizing our 2025 condo budget. Do you have any advice for ways to save money?

Answer: As a former Condo Board Treasurer, I feel the pain that this time of year brings, so I’m happy to offer some advice that helped me find savings while I oversaw the budget and has helped other Associations do the same… review your Master Insurance Policy.

I know, it’s not the most exciting answer, but your insurance policy is likely a top three expense every year and if you haven’t reviewed it lately, there’s a good chance you can cut the cost by 10% or more and probably improve your coverage at the same time.

I’m not an expert in insurance so, I asked Andrew Schlaffer, President of ACO Insurance to provide some details on what Boards should look for when they do a review of their Master Policy. If you’d like to discuss a review with Andrew directly, you can reach him at 703-595-9760 or [email protected]. Take it away Andrew…

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