Welcome to Real Estate Live. Today's guest is Steve Israel, president of Bethesda-based Buyer's Edge, an exclusive buyer-brokerage.

All you frustrated buyers out there-ask Steve how to navigate this still crazy spring market. Do you still have to include an escalation clause in your offer in order to have a chance at the home you want? Is there any hope that the D.C. market will cool off?

Ask Steve and Daniela your real estate question now!

Daniela Deane: Hello everyone on another glorious Friday in Washington. I've got Steve on computer next to me and we've already got quite a few questions. Remember, this is just our opinion even though it's one based on a lot of research and reporting. And don't get mad if we don't get to your question! We'll do our best. Let's get started.

NW D.C.: I purchased a one-bedroom apartment last May on upper Connecticut for around 115,000. An acquaintance searching for apartments in the same area this month has told me that 2 bedrooms are going for 250,000! True? And are two bedrooms that much more valuable that one bedrooms?

Daniela Deane: I think it is true, actually...An agent told me the other day that a two bedroom two bath condo in a nice neighborhood in D.C. has not reached $300,000. Outrageous? Or on target Steve? One bedrooms are also becoming much better buys, I've heard, as larger place go out of reach for many first time buyers. Steve?

Steve Israel: In general the one bedrooms are above $125k and the two bedrooms above $175k but there are always deals to be had, even in this crazy market. I settled a deal this week on a two bedroom (fixer-upper) in the 5100 block of Conn Ave that was $126500. It was 800 SF, the size of a decent one bedroom. Most of the two bedrooms in older buildings they are much more expensive $300K plus.

TysonsVA: with all these company layoffs, where can I go to find the sell off or foreclosures on those McMansions?

Steve Israel: Start with a good exclusive buyer's broker (a bit self-serving). There are more of these big home coming available now, however I haven't seen any panic selling as of yet... Stay tuned.

Daniela Deane: A word of caution here from your impartial host!: Agents always say you need a good agent. They could be right. If you're a buyer, I agree completely.

Maryland: Do you think that these layoffs in the area will catch up to real estate market values in the next 12 months? Should I wait or buy now before prices continue? I still see a lot of land left undeveloped, is it possible that I can still buy a new home 5-6 years from now for a lot less then what the surrounding neighbors paid if I wait until the recession to buy?

Daniela Deane: Local economists are saying that even though we're losing some jobs, the area is still projected to have a net increase in jobs this year. Nobody is predicting a crash in real estate values in this area. What they are predicting is a flattening off of appreciation. So no, I wouldn't wait if I were you. Steve?

Steve Israel: No, I would not advise waiting. It certainly pays to be very careful though. The local market may not go way down, but it is quite possible that it will level off sometime in the near future and those who pay too much will have some ground to make up.

Foggy Bottom: First time buyer here: husband and I are looking to by in FX County-prob Burke, but more likely Centerville. We are looking at Townhomes (only thing w'in our price range-180k is our max). Is the market just as competitive out there for us lower-end buyers? Heard some rumor speculation that the market is expected to slow w/in 6mo-but I say it is all a rool of the dice. Any advice for considering resale value of TH? (end unit, facing wood I would suspect would be top priorities?)

Steve Israel: Your priorities are right on target. Townhouses with special qualities are a much safer bet that the run of the mill.

Logan Circle, DC: Steve: I own a 2 bedroom, 2bath condo in Logan Circle and am considering selling in the next 6 months or so.

Is the market for condo in the DC is still as hot as they were a year or so ago, when I heard of insane bidding wars? Thanks-I certainly hope so!

Daniella Deane: Lucky you! From what I've heard, the market for condos is still incredibly hot in the District. And in my opinion the District will stay a good market for a long time to come. They're just not making anymore of it... and a lot of people seem to want to live downtown these days. Steve, what do you think the outlook for the city is? And condos in general?

Steve Israel: We need only look at what the builders are doing. High End! The market for existing condos should stay hot for some time as more people move into downtown and the prices of single-family homes stay so high in relation to incomes.

Washington, DC: Hey Steve/Daniela-
This may be off-point, but it is sort of real estate related. Once you have purchase a home, and decide you must have some renovation work, ho do you go about finding a contractor that you can trust? Do you depend primarily on referrals from friends, work colleagues? Is there an industry group that can weigh in? How does one research the background of a contractor? Thanks

Daniela Deane: I really think the best way is to get referrals from friends and work colleagues. And I thing the best way to research the contractor to talk to people who have used him. Any other way that you could trust here, Steve?

Steve Israel: I think that the Washington Checkbook is a good resource as well as real estate people. We hear an earful from all of our clients who have renovated.

Sterling VA: Hi Daniela, hi steve. Thank your for having this discussion. Prices are crazy these days. I just bought a new townhouse last year. I am getting worried that by the time I can comfortably afford a single family house (3-5) years. I will be out-priced by this area. I'd like to stay in the area. Is this a real concern or am I just too worried?

Daniela Deane: It's good you got into the market. So you'll have something to sell when you want to trade up. I think you'll find you will be able to trade up at that time, depending on the area, of course.

Steve Israel: Moving up is always tough unless your income goes up dramatically. Your investment in your townhouse will hopefully provide you with a decent down payment the next time around. Single Family home prices do generally go up ahead of the rest of the market but as things progress the townhouses and condos catch up. I think there is an especially vigorous market now for townhouses and that they may continue up after the detached market slows up to more equilibrium of sorts.

Fairfax, VA: Thanks for taking my question. It's one you've probably heard before but is a major concern: How can you save for a down payment (just 5%) and keep up with housing appreciation? We're saving $3000 a month, and will have enough down payment by October for $315k house. Thing is, but October a $315k house won't be as nice as a $315k house now. Any suggestions or words of encouragement? Also, are you familiar with rolling the closing cost into the lean (could get us in a house sooner)? Thanks

Daniela Deane: Here's some words of encouragement: AMAZING that you can save $3000/month! That is really good. I'm sure many other families in this are could not swing that kind of savings. You're doing well! Does that make you feel better?

Steve Israel: There are lots of no or low money down programs and other programs that allow you have the seller pay for costs available through most of the lending institutions in the area. Some of these programs have income cap restrictions, but it is definitely worth it to check with a number of lenders.

Daniela Deane: Or talk to a mortgage broker about these things.

Arlington VA: There is a house in the neighborhood I like that is being auctioned on the Internet. It's for sale by owner, a good price for the opening bid, and perfect for my family. I hear good things about the owner from friend of mine who live next door to the house for sale. But I've never heard of home being sold this way so I'm hesitant to touch this one. Is this a new trend? Any advice? Should I retain my own real estate agent? (I'd have to pay the commission, which would be 3 percent right?)

Daniela Deane: Well, it's the seller that pays the buyer's agent, but many FSBO's (for sale by owners) are paying the 3 percent commission to the buyer's agent. You need to find that out, though. Some sellers who are selling by themselves don't want to pay any commissions. Others are paying the 3 percent for the buyer's agent. Usually, in food real estate markets, more people sell houses by themselves basically to save the commission. This is a subject that drives agents mad!

Steve Israel: The biggest issue you face on the purchase of any property is to analyze and evaluate the property correctly. Auctions can be great for the seller because they create quite a stir, but only good research and wise council will help you enter into a contract that helps you pay no more that a fair price an protects you from the many pitfalls in the buying process. Having an agent is great, but ultimately it is your money that pay the. If the seller has included the agent's fee, it just means that they raised the price to accommodate it. You do not get always what you pay for. Choose your agent carefully, it is your money!!!

Silver Spring: Hi Daniela/Steve: My fiancé and I are looking to buy a condo in Wheaton that's currently being built. It's a great deal for the locations ($160k for two level 2BD, 2BA, 1 car garage) and we're not quite ready for all the responsibilities that come with a house, but in the back of my mind I have reservations about buying a condo. I guess I've just always heard that there're hard to unload. We're renting right now so we definitely want to buy property. Bet we looked around for houses in our price range ($160-190K) and all the houses were either too small (some smaller that our current huge bedroom) or need tons of work. We're very much leaning on going for it, but what do you guys think?

Daniela Deane: I think you should buy it. Buying is always better than renting. And it sounds like you like it, which is a big consideration. Condos were a dad deal during the last slowdown, but they've been incredible in this market. Do you think condos in Wheaton will hold up, Steve? I think with the way prices are for single family houses, a new condo like what you describe sound like a good deal and something that will hold its values...But I could be wrong.

Steve Israel: I would look carefully at the construction of the unit and the location in relation to other comparable units. It is almost always better than renting, provided you do your homework.

Arlington: You mentioned the price of single-family homes being high in relation to incomes. What do you consider to be a good ratio? Isn't the conventional wisdom that people should try to stretch as for as they can when buying, on the assumption their income with go up?

Steve Israel: The ratios that the banks use to qualify people for loans are not really what I was referring to. I just believe that a two income family in their early thirties with one child gets to a point where nothing they can afford makes any sense at all to live in. At that point, the market will be too high. This obviously holds for pole in all price ranges. Tolerance varies quite abet between different buyers but there is a point of sever distaste for all. I think we may be getting close...

Arlington: First time buyer, just married. Our credit scores haven't merged yet... and his is terrible. I'd like to buy something before fall, and am willing to be limited by my salary in terms of mortgage size. But will lenders be willing to approve a mortgage just in the wife's name? Otherwise, it would take several years to get his credit score up to the level mine is at. Any problems foreseeable with this (other than we won't be able to get as big of a place that we could if we used his salary as well)?

Daniela Deane: Yes, they will give a mortgage just in the wife's name, BUT your income has to prove that you can handle it by yourself. When I fist came back to this area from overseas four years ago, my British husband had no credit history at all. So we got the first mortgage just in my name and then a year later, re-financed and put him on the deed when he had established some credit here. Anything I'm forgetting here?

Steve Israel: No, better to go it alone.

WDC: Howdie Daniela and Steve-Need your glorious opinion. Here's the deal: found a condo that I want to own and will likely be signed a contract in the next one to two weeks. I don't have an agent since I found it when I was casually looking alone. Do I need a lawyer or agent to guide thorough the contract? Are there terms/conditions/etc. that I won't get as a regular Joe? Everyone has been telling me to get someone, but do I need one? And where can I find an affordable one?

Daniela Deane: As a buyer, you don't pay the agent. That's why all buyers seem to have agents these days. The seller pays all of the agent's fees. But, have you told your seller you don't have an agent already? Usually agents help buyers negotiate escalation clauses and the like in the market...Are they're any other offers? You can get a lawyer to look at it for you, but now, you'll have to pay the lawyer... and you wouldn't have had to pay the agent as the buyer. This is something people get confused about. I think. Buyers pay nothing. Sellers pay all!!!

Steve Israel: Actually, in this case you may want to hire an agent on your own guide to you. It is true that one can normally have the agents fee included in a sales price so that the seller pays it at settlement, but all buyer brokerage agreements require the buyer to accept responsibility for their agents' fee. The way the system works is that the buyer's agent collects the cooperative commission that is offered thought the listing agent and credits it against the buyer's obligation. Please check our website at www.buyersagent.com for a frank discussion about how fee structures work.

Alexandria VA: At what point is it realistic to offer below asking price on a house? After 1 week on the market, or longer? We have been watching a house that has been on the market for 10 days. It is priced at $350k, which is too high compared to others in the neighborhood and the amount of work. The fair price should be around $310-320. At what pint would you surface and put a bid in at the price to start to feel out the listing agent on the owner's flexibility?

Daniela Deane" Good question! A week has become along time in this market. Your assessment that the property is overpriced sounds right on. When should they go below asking, Steve? Its hard to gauge if a seller is motivated, isn't it?

Steve Israel: It is always smart in my book to move as fast as possible. In this market many of the sellers are just testing the waters. This week I settled a deal in Palisades at $510k that was listed for $525. We negotiated that contract the first day the property was on the market. We offered $500k; they came back at $510k. It appraised at $590k- Sometimes listings agents make mistakes.

Arlington: Seems like a basic questions, but how does one determine an asking price. I live in a building in Arlington where no units my size has been sold at "Market rate" for a number of years (low turnover, one purchased in foreclosure sale, one purchases in rent-to own deal). Other units (2bedrooms) are going about 20% over their assessed value; is that a reasonable guide for my unit?

Daniela Deane: In general, the way to determine an asking price is to look at recent, comparable sales. If there's nothing to compare to in your building (the best comparison, obviously), then what about on your street? Basically, you need to look at what appraiser and agents call "comps".

Steve Israel: True. The comps agents' use will take into account other buildings in the area with similar sized units that are generally the same condition.

Woodley Park: I am renting a home that I would love buy. The assessed value is around 338K and recent homes have sold for 400K. My home, though, is in considerably poorer shape. Any suggestions on how to persuade a landlord who is making 24k/yr on the place to sell it.

Steve Israel: If your rent is $2000p/mth. The seller could bank the sales price and at 6% interest in a bond could make up the interest with about $330K. I would keep it if I were they and raise your rent! Seriously your only great argument may be jest to relive that from the hassles of being a landlord. The money part works for them.

Arlington: If prices are getting so out of whack, why are lenders continuing to extend credit? It suffers THEY think the market will bear these insane prices. Aren't the prices just reflective of a broader problem in the DC area, with many neighborhoods simply being priced out of most metro area residents' budgets?

Steve Israel: Lenders make money placing loans and hopefully don't loose too much of it when the shift comes. Land is scare and building restrictions close to the city are tough. The close market will always be hard to compete in as a buyer, but when it comes too high things will slow down.

Washington DC: I currently own a condo in a very desirable area. I stand to make over 100,000 on it when I sell. My fiancé also has some money and together we are willing to put down $160000. Our combined income is over $150000. Why can't we find anything in the area that we can afford? Neither of us has much debt either. It seems that in order to get a decent house in a decent neighborhood in the District or close in you need to spend over 500,000.

Daniela Deane: You said it!! It's incredible, really.

Steve Israel: We can help, I'm very, very sure of it!!!
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