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Welcome to Real Estate Live, a biweekly discussion of the Washington area housing market, featuring Post real estate reporter Daniela Deane.

In her live online discussions with the audience, Deane discusses the specifics of the market, from condos and investment properties to contracts and mortgages.

Deane has covered real estate for The Washington Post since April, 1999. She has worked as a reporter for more than 20 years -- mostly overseas.

The transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

Daniela Deane: Hi everybody! Nice to be back with you all this beautiful afternoon in Washington. I've got lots of questions, so I'll get started without further ado!

Upper Marlboro, Md.: I want to move to a bigger house but I have a high rate, 8.6 percent right now. I want to know: would it be better to just sell ... or refinance and then sell?

Daniela Deane: Well, it’s hard for me to answer that…Do you like your house although it’s small? And your neighborhood? … Because you can certainly refinance for much lower than that….30-year fixed rates hit another low this week, an average of 6.15 percent with 0.6 point…. Isn't that amazing? We haven't seen rates this low in decades. So you could refinance and then get a home equity line/loan to add on to your house. Many people are opting for that strategy since there’s so little to pick from out there. But then I don’t know if you want to move anyway, or have seen some things you may want to buy….I wouldn’t waste my time refinancing and then selling..what’s the point of that?…there’s always paperwork involved in refinancing and if you’re just going to sell soon, anyway, why bother?…

Clifton, Va.: My girlfirend is Latina. On Saturday she and her real estate agent went out looking at houses in the Herndon and Centerville areas. The agent was upset at my girlfriend because she dragged the agent away from the Woodbridge/Lake Ridge area, her home turf. The agent showed my girlfriend about eight townhomes in neighborhoods, predominantly Hispanic in really bad areas.

None of townhouse were even close to what my girlfriend told the agent she was looking for. My girlfriend was livid. She had never told the agent she wanted to live in an Hispanic neighborhood. As my girlfriend was leaving the agent's office, the agent said I quess we will look in Woodbridge again next time! There isn't a next time since my girlfriend dropped this agent. Great agent. Guess she didn't want a sale.

Daniela Deane: That’s outrageous Clifton…I’m sorry your girlfriend had to go through that…And she was right to dump that agent quick! Better luck next time! There is possible redress for discrimination under our Fair Housing laws, but in this case, it probably isn't worth it...At least spread the name of this agent around to your friends as a bad apple to be avoided.

Berea, Ohio: Dear Daniela,
We are in the process of purchasing a condo as an investment. It is located less than 50 miles from our current location. The project we are building in offers 1.50% under the current morgage rates because it is a state subsidized complex.
We are not going to sell our current home, we are going to use this as either a second home or rental. Our bank said if it is not our primary residence, we are not intitled to the lower interest rate. Could you please advise us on the best way to take advantage of the lower rate, if possible? Thank you.

Daniela Deane: Well, hello there all the way from Ohio….Yes, that’s true. If it’s not your primary residence, if it’s a rental, you have to pay a higher rate…This is something all investors bemoan…and a lot of them make the case that it’s unfair since investors don’t default at any higher of rate than primary owners, they say….There’s always lying and calling it your second home…I did not just say that. And I didn’t mean it.

Washington, D.C.: I was thinking of buying a trailer in Rehoboth and renting it out for the entire summer. Since I don't have a car and was thinking of turning to a real estate agency to handle the affairs of renting it ... and perhaps a propert management company for the upkeep. My question is this; how profitable is this and what, if any, are the dangers/risks?
Thank you in advance.

Daniela Deane: Wow, now there’s an idea! … Beach properties are really in demand these days….The second home market has exploded. Now, I’m not sure about trailers though, or their rental potential. Try calling some of the big agents in Rehoboth. Most of them do rentals too since rentals are such a big part of the business there. There’s Jack Lingo Real Estate in Rehoboth and then O’Conor Piper & Flynn are big too (now Coldwell Banker O, P, & F, I think they call themselves down there.),. Do some research into a trailer’s rental potential before you take the plunge is my advice.

Alexandria, Va.: Do you recommend self-payment of taxes and insurance vs. payment into an escrow account for the same purpose? A financial planner has suggested that I establish an interest bearing account and pay property taxes and insurance on my own.
C. Taylor

Daniela Deane: Well, there’s certainly something to be said for paying your property taxes and insurance yourself. I just went through a horror story of my mortgage company not paying my taxes on my investment condo in the District…The D.C. government even threatened to put it up for tax sale for the non-payment. The only problem is a lot of mortgage companies don’t let you pay it yourself. They’re set up to pay them (or not pay them) themselves. Ask your mortgage company if they’ll let you do it.

Silver Spring, Md.: Can you suggest a couple books on investing in rental property (residential)? Something that could cover the basics and be comprehensive at the same time. You've mentioned Real Estate Investment for Dummies in the past, any others?

Daniela Deane: Well, the real estate section in your local bookstore is FULL of books on real estate investing. If I were you, I would cruise the stacks (or amazon.com) and see which books appeal to you. I reviewed one that just came out last year called All About Real Estate INvesting by Benke and Fowler that was very comprehensive, but a bit dense. There's Secrets of a Millionaire Real Estate Investor, bu Shemin...There's so many. Find out that suits your tastes...

Alexandria, Va.: Any tips on preparing my house for our open house on Sunday? There's not much clutter, so I don't really have much to clear away, but any other advice would be greatly appreciated.

Daniela Deane: The main advice I have on such short notice is clear all the clutter away...and I mean all the clutter. Just bag it all and take it to a friend's house or something....Or better yet, use this opportunity to have a good old clean out and throw away! Put some fresh flowers in the house, turn on the lights, be sure your windows are clean...Just make your house as CLEAN and CLEAR of junk as you can....If you have time, paint any rooms that look dingy...(Sunday is close! I doubt you'll have time for that now...).

Refi Before Selling: Don't forget that you have to pay closing costs on refinancing -- usually around $3000-$4000. So that will be money lost if you sell -- seeing as you won't live in the house long enough at a lower payment to recoup the costs.

Daniela Deane: Yes, there's no real point in re-fiing if you're selling...at all.

McLean, Va.: Hey Daniela,

Just a "note from the field"--in my area there are many, many more houses up for sale than there were even a few weeks ago, and even rental signs have popped up everywhere. I think some of this may be influenced by a sort of "panic sale" domino effect: Out in Loudoun County, the layoffs have created several panic home sales, and now some of that is washing into the inner 'burbs. People are mortgaged up to the values of their houses (abuse of home equity lines of credit), and now it is coming home to roost. What do you think??

Daniela Deane: Thanks for your notes "from the field." The market has slowed, agents tell me, although in lower price ranges (under $400,000) there's still lots of competition. Agents told me this week that sellers are negotiating a little bit (not coming down 20,000 but maybe paying closing costs?). Houses are sitting longer as buyers take their time to decide. They're not as frenzied as they were. But rates are still really really low and inventory is on the whole pretty tight, so my feeling is that it's not going to slow significantly. If unemployment goes way up, then it will. Rates and employment are two key factors affecting the housing market. Although unemployment has inched up to around 6 percent, that's still historically low. Any other voices from the field?

NW Washington: Hi Daniela,

My fiance and I are moving into his condo. I'm trying to decide whether to sell my efficiency in Cleveland Park or rent it out. Where would I go to find out how much property is selling and renting for in my neighborhood? Thanks!

Daniela Deane: If I were you I would keep the efficiency in Cleveland Park and rent it...But heck, I'm not you. You may not want to go through the hassle of being a landlord...Check out some books on real estate investing...They'll tell you to keep it too. Check the paper (yes, ours) on the weekend to see what efficiencies in your area are renting for. Or contact an agent in that area....

D.C.: I am not familiar with condo fees, but I am considering buying a 950 sq. ft., 2-bedroom condo in the National Cathedral area -- the fees are about $390/month (I know that the fee includes water and gas, but I'm not sure about electric). Does this seem like a reasonable fee to you? Thanks!

Daniela Deane: Find out exactly what the condo fee includes (electric is a big point) and what other bills there are. If electric is included, it may not be that bad...Does it have a doorman?...A pool? Employees that work for the condo association make the fees go up a lot....

Washington: Real estate fascinates me. It's almost a hobby, watching all the properties change hands and monitoring the selling prices. It makes me think I should go into it, become a real estate agent instead of an office wonk. I know it's hard work - how do I go about finding more information, especially the risks involved?

Daniela Deane: There are books out there about becoming an agent...and then there's the local associations of realtors in the district, virginia and maryland that would have information. Also talk to agents and find out how they got started, etc. AS with everything, the more information you have, the more informed you are and the better decision you make!

Alexandria Va.: For the Rehoboth rental person, the real estate agents generally charge 15% commission on rentals. If you list exclusively with one agency, that agency will charge a little less-usually around 12%. It is hard to make money on rentals at the beach, the season for weekly rentals is not as long as you think--it goes from mid-June through the 3rd week in August. Sometimes, you'll get the last week in August. With the school calendars stretching into June and starting before Labor Day, families are not as interested in as many weeks in the summer. Also realize that you will have to pay utilities for your renters (cable, electric, phone), and cleaning every week (approx. $50 for a 700sf condo). Just some things to think about when doing a cost analysis.

Daniela Deane: Thanks for your insight and yes, you make some valid points. But, I hate to tell you this, I know people who have made SIGNIFICANT money renting at the beach (although I don't know anything about trailers). Shoot, there are houses that rent for $5000/week at Rehoboth....

Georgetown: Can cosmetic improvements on an older home make it appraise for more? We've painted, stripped some built-ins and replaced countertops in a rowhouse we bought last spring. We feel the house already looks drastically improved, but we're not sure if we are adding significant value. We also fixed a leak that was problematic for the sellers. Thanks.

Daniela Deane: I don't think small, cosmetic improvements make that much difference. Appraisers usually look at big things like is there a finished basement, is the kitchen remodeled, are the bathrooms new or original, is there a garage, does it have a brick front instead of siding, like that.

Appraisals: How does an appraiser come to his or her number? We are having our home appraised for a refinance, and she took photos of all the rooms and the yard, asked if we had central air, and left. Is it mostly based on other sales in the neighborhood, or on the condition of your house?

Daniela Deane: It's almost exclusively based on comparable sales...An appraiser just said to me yesterday his job was based on "comps and comps and comps." So what properties like yours (square footage, type) sold for recently in your area...They will also consider sometimes properties under contract. Then after the comps, they compare the properties for big differences, like does one have a finished basement and the other one doesn't, does one have a two-car garage and the other no garage, like that. They take pictures because lenders like pictures of your property and the comps in the material the appraiser gives them. Remember the appraiser is not there to make the sale go through; he's there to protect the lender's investment.

Alexandria, Va.: regarding condo fees: If the condo is your primary residence, that $390 is not tax-deductible. It can make a big difference--if that $390 were part of a mortgage payment (the interest on which you can deduct), you would get back 28% (or whatever bracket you're in)--or $109, so your real effective payment would only be $281. If you own a condo but rent it out, the condo fee is a rental expense, and is tax deductible.

Daniela Deane: Thanks, Alexandria....

To the person with the condo near the Cathedral: Just for comparison purposes, I have a two bedroom condo in Rockville, and the fees run at $270 a month. We have a pool and nice grounds, and garbage removal, water and electricity are included. But we are garden style condos, so we don't have a doorman. Sometimes, it is nice to compare.

Daniela Deane: Thanks for the comparison! Yes, it is nice to compare....My condo fee on my east Dupont condo is $240...It has very nice grounds, no doorman, no pool, but garage parking, elevator. That includes cable and water, but not electricity....

Report from the field: I'm buying a townhouse in Fairfax county (north of Lorton, between Springfield and Burke), and I got $13k of the original list and closing costs. It was on the market for 2 weeks without an offer, so they took my lowball. Nice safe neighborhood (I'm a single female), near the prison site which will soon be updated with schools and such. I'm happy with all but the commute (estimating 30-45 mins AM).

Daniela Deane: Thank you for that...Could you e-mail me please after this chat at deaned@washpost.com. I'd like to talk to you for a story I'm writing for this Saturday on pricing and whether prices are negotiable now or not...Thanks!

Alexandria: Rehoboth rentals--you can make money if you didn't pay a lot for the house. The $5,000/week houses cost almost $1 million to buy. The mortgage payment is probably about $5,000 a month, meaning that you need to rent for 12 weeks to cover mortgage. Those high rental rates are only for July & August. Plus, you'll have another couple of thousand dollars in cleaning and utilities expenses. Seasonal rentals can be better money-makers than weeklies. Tenants are in Memorial day-Labor day, they pay for utilities & cleaning, and they pay the whole rent up front. It really depends on the house. Also, the beach is becoming more of a year-round place, opening up weekly rental possibilites outside the season.

Daniela Deane: Thanks, Alexandria..And yes, the particular house I was thinking of does go for about a million....or even more...But the lucky dog owners bought it about 8 years ago, so no, didn't pay anywhere near that much...The owner, who's an agent, told me recently that that Rehoboth house has turned out to be one of the best investments she's ever made (and she's made alot..). Another agent told me recently he was looking at a condo in Sea Colony in Bethany as an investment...

Hunting for 1bdrms in NW D.C.: Hi - thanks for all of the ideas and advice.

I'm condo hunting this weekend and probably going to view a bunch of properties. Any tips on what to look for when I'm in a place? Any questions people commonly forget to ask? Is this the time to flush toilets, check the stove, etc.?

Daniela Deane: Nah, I wouldn't flush the toilet on the first viewing...Just know that there's competition out there for lower-priced properties and condos in the city. So get pre-approved if you're serious and be ready to move quickly if you see something you like....

Arlington, Va.: I bought my cute 2 BR, 1 BA Westover colonial five years ago for $170K; now they are selling for $310K -- with no improvements -- and if renovated & improved, they are selling for $375K+ (if
you can find one). This used to be the most affordable neighborhood in North Arlington for couples & families with 0-1 children. If the market continues it's steady escalation, will it drive changes to these demographics?

Daniela Deane: Arlington has seen a huge boom in prices because it's close-in..The closer-in suburbs and the city have seen the highest appreciations in values...I like Westover!..Be happy you bought...And yes, people are getting priced out of what were once affordable neighborhoods...

Arlington, Va.: Daniela, the prices might be softening, but we're still have a hard time finding a good house in the $300-400K range. There are some not so great ones that just sit and sit, and get reduced in price, but there is still a big inventory problem. Nothing really nice comes up, and when it does there are multiple bids. However, the houses are selling at list, or for a small amount over, not the tens of thousands over like last year (or this past spring). We're looking in Ellicott City.

Daniela Deane: Yes, at that price range, it's still hell out there as they say....And yes, inventory is still low...It's still a hard market for buyers looking for something affordable (400,000 is affordable??). It's just not quite as bad as it has been...Any more stories from out there from the trenches?

Washington, D.C.: My brother and wife are planning to move up here from Florida (yeah!). How is the market in Columbia and its outlying area? Also, is it difficult for people out of town to find places? Thanks!

Daniela Deane: Welcome to Washington! (You sure you want to leave lovely Florida???) The market is tight here in terms of the amount of properties for sale and tight for lower price ranges...But it is loosening up a little. It's better than last spring, for example....No, I don't think it's that hard for people from out of town to find places....You can cruise the Internet and see what's for sale...(longandfoster.com, realtor.com, homesdatabase.com, etc...) It's just making the decision to buy something without seeing it that's hard, isn't it? Come up for the weekend!

Washington, D.C.: Regarding the issue of escrow ... my mortgage company pays interest on the escrow account. It isn't much but it is a nice gesture.

Daniela Deane: Yes, it is a nice gesture.....

Ashburn, Va.: Wanted to see if you or any readers' had insight on Loudoun county. The stat's show that sales chance is still around 43 percent (a sellers' market is less than 20 percent, I believe). But there's plenty of new building going on, making resale tougher, and of course all the layoffs must be taking a toll. Any first hand buyer/ seller experiences?

Daniela Deane: A call to all you clickers out there who are in the trenches in Loudoun? Yoo hoo????

Fairfax, Va.: Good afternoon, Daniela.

I have a comment more than a question. I recruit nationally for the residential construction industry and almost all of the homebuilders I work with in the D.C. area are expecting to exceed last year's production and profit numbers. They're still growing and expect to for the foreseeable future.

Finding affordable land, if any is available, closer in, seems to be the largest hinderance to future growth. Many builders are acquiring land much further out beyond the traditional metro area and seem to have found robust markets in places like Frederick County, Md., Winchester, Va. area, West Va., etc.

Other than mortgage rates, do you see anything from your perspective that would hinder local growth in the housing market?

Daniela Deane: Don't worry: I like comments too....Like I said previously, employment is the other big factor affecting the housing market. If unemployement rises a lot here -- or rates go up over 8 percent (not likely in the near future), the housing market will slow....Things slowed down in the summer. Agents are all holding their breaths to see if things pick up again now in September or not....

New homeowner, Va.: Hi Daniela,

I asked you 2 weeks about about appreciation in condos vs. townhouses, as I was looking at condos but concerned if/when there is a bubble burst that condos will take the first hit. Plus, I really wanted a townhouse for various reasons but thought I was priced out. So, I wanted to relay my good news. I have a contract on a townhouse - albeit not quite as close in as I had hoped, but still in Fairfax county and w/in 30 mins of work. And, to offer hope to others out there, I'm getting it for $13k under list price (and I am low range, looking under $150k)! Granted, it was priced way over the comps, but I would like to offer encouragement to those frustrated by looking. It's possible! Maybe the market is slowing, or maybe I got lucky with a seller who was impatient after only 2 weeks on the market. But the point it, you can be surprised! Thanks!

P.S. Daniela, You rock!!

Daniela Deane: Thank you for a good story with a happy ending....We like those, right, clickers???

Oxon Hill, Md.: We purchased our townhouse just about two years ago and have a fixed 30-year mortgage at 7.25 percent. With mortgage rates falling to the lowest levels in 30 years, is it worth it to refinance or do you think the potential closing costs would not make it worthwhile?

Daniela Deane: Well, you have to do the numbers as they say. Find out how much it'll cost you to re-finance, how long you plan on staying in the house and how much you'll save on your payments....I don't know what your credit history is like, but you could certainly bring that rate down into the 6s...Amazing, how 7.25% might now be considered high, huh?

Bethesda: Condo Fees: Condo fees will depend on-- the neighborhood, the size of the building, the age of the building, the size of the regular contribution to the reserve account, amenities, number of employees, the policy of the condo board (pay for things with reserves or with special assessments), insurance premiums (going up in D.C.).. etc. There's no free lunch.

Daniela Deane: Thanks for more information on condo fees....They've becme our topic du jour! And no, no free lunches out there...Hey, wanna take me to lunch?

Arlington, Va.: I have a chance to sell my Westover home without having to list it with an agent -- I have a buyer who has been beaten out of several offers and is delighted to get into a non-competetive sale. Can anyone recommend a good sources for a residential sales contract form? Who gets the down payment/earnest money until settlement?

Daniela Deane: Get a real estate lawyer to help you with this transaction. Don't do it without one...

Reston, Va.: Re: realtors in Rehoboth - We've used Crowley Associates for 25 years and they really take care of us. Their number 1-800-sea-side.

Daniela Deane: Thank you Reston...Are our beach clickers still on? (Beach properties have become our other topic today....) I like it! It shows you guys are reading!

Bethesda, Md.: Will there be new developments at the Geico location and the Saks Fifth Avenue location in Bethesda? I remember reading sometime ago about townhouses and offices being considered.

Daniela Deane: Isn't that Friendship Heights? .. And yes, there are big plans for redevelopment there....

Fairfax County, Va.: My husband and I bought a townhouse for $185,000 one year ago with 7.00 percent interest on a 30-year conventional loan. We put 3 percent down so are now paying PMI. Since then, similar properties have consistently sold for between $225,000 and $239,000. We are not sure about refinancing because we may not be in the house long enough to recoup the estimated $4,000 in total refinancing costs. Instead we are wondering if we shouldn't just try to get our house reappraised, in hopes of increasing our equity and cancelling the PMI ... or at least shortening the time we will be paying it. How much should it cost to have the property reappraised, and how do we work this out with our mortgage company? Thanks.

Daniela Deane: Yes, try dropping your PMI is my advice...Contact your lender and ask what you have to do...Remember, they're not in any hurry to get you to drop it....They'll give you a list of appraisers they approve of, probably, and then you pay to have it appraised...they run between $300-$400. Good luck! And isn't equity wonderful??

No Cost Refinancing: Don't forget to mention that there is such a thing as no cost refinancing! These type of programs make it possible to refinance with no up front costs by paying a slightly higher interest rate (about 1/4 point). I'm in the process of refinancing my 7 year balloon note into a 30 year fixed with the same rate and paying nothing to do it. So, you don't have to be getting a much lower rate for it to make sense.

Daniela Deane: Hey, are you in the mortgage business?

Chevy Chase, Md.: I bought my house in 1981 for $250K. It recently appraised at $550k, and I think it could go to $750K, despite being old and having a leaky roof. I think being close in (right over the D.C. line), and close to Metro, are a potential boon. My daughter will soon graduate college, and my 16-year-old son is two years away from it. Question: Do you think in two years, I'll be able to sell my house, buy a condo for my wife and me, and use the difference to fund my son's education? P.S. I MUST be on a Metro line, as I hate cars.

Daniela Deane: Hey, now here's a question!!! First of all, I have no idea if your son is going to go to Harvard or to the University of Maryland...(There's a difference in price there, I believe....) And then how big of a condo do you want to buy?...And where? Too many variables to consult my crystal ball out...But it is doable, I would think, if you're willing to make some compromises (on schools, on condos)...Congratulations on all that appreciation! Isn't it wonderful??? (Crappy if you're a buyer, I know...)

Ellicott City: My husband and I have been generally looking in EC and Columbia. A few houses have been on the market for months and they seem to be over-priced, but the sellers must not be in any hurry. -I sold my place in Alexandria for a huge profit in a few days last month, so I know that the market is crazy.] Honestly, some of these places are just dumpy and the sellers are asking nearly $400K! Fortunately, we can sit tight where we are until we find something that we like. It'd be easier if we wanted a new, huge house on a tiny lot, but we'd like a smaller house on a larger lot (we want a garden!), but those just are not being built any more in the DC area.

For FL, Columbia is really nice, but I'd move up here first, take a look around and then buy something, rather than buy quickly, be unhappy & have to sell.

Daniela Deane: Thanks for sharing, Ellicott City...Florida, are you still listening? Or have you gone off to the beach?

Re: PMI w/ 3% down-: If it's an FHA loan, PMI will NOT be waived after an appraisal. Don't spend the $400 w/o checking.

Daniela Deane: Thanks for that comment....

Clifton, Va.: Trailer at the beach. Not sure about rental income. Trailers don't appreciate, they depreciate. Resale difficult. Hurricanes love trailer and trailer parks. Your insurance will be incredible.

Daniela Deane: Good points you make, Clifton...I'm not sure about the trailer idea either, but I don't like to rain on people's parades without enough information. I like enthusiasm...It just needs to be tempered with information too....

Falls Church: Just wanted to pass along to all those who are putting multiple contracts on houses and losing... that there is hope! We just put our fifth(!) contract on a house and finally won! Yippee. All our contracts were in Falls Church and Arlington. While we still paid over the asking, it wasn't near the $30-50K over asking... that people were paying last spring.

Daniela Deane: Thanks for the words of encouragement for all our frustrated buyers out there...The moral of this story is PERSEVERE...What I've been hearing is that your time will come!

Hope you can get to this!: We're in the market for a condo. My realtor said that getting a home inspection for a condo is not imperative, since the condo association maintains the structure and grounds. What do you think?

Daniela Deane: People have definitely been buying condos without home inspections...I'm sorry to admit I bought my condo that way a year and a half ago...(It was truly the only way to get it with five other contracts...). Remember, you can still pay a home inspector to do an inspection if you're worried...Just don't make your contract contingent on it...

Daniela Deane: Folks, it's 3 p.m...and I have to go talk to my editor about my Saturday story on pricing....She's got problems with it...Gimme a break! It's brilliant!...Thanks so much for tuning in...Please join me again in two weeks -- same time, same place. Get out there and enjoy what's left of this brilliant day...Yes, get away from your computers!

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