I’ve been doing a lot of REO (Real Estate Owned) properties for about two years and I encounter many misconceptions by consumers – at least from my personal experiences in dealing with bank-owned (foreclosure) properties.
First, the bank will take anything to dump a home. This is absolutely not true in most cases. (Of course, the borderline tear down is the exception.) If you’re offer is at 80% or less of the list price it will likely be rejected outright. If you’re asking for seller contributions towards closing costs, you’d better bump that price up a bit, too.
While banks don’t want to hang onto these properties, they’re just like you and I – they want the best price that the market will bear, based on condition, amenities and the like. Banks price homes in different ways, but they usually get at least two Realtor® evaluations (called Broker Price Opinions, or BPOs), and sometimes a full appraisal, too. When they list a property at a certain price, they’re fairly confident in that value.
Second, if you’re putting in an offer on a house that hasn’t been on the market before, you’d better go in close to full price for the first few weeks. Some Asset Managers will not take less than close to that amount for the first 2-4 weeks. Prices typically get reduced monthly, based on the listing agent’s Monthly Status Report. Asset Managers pay careful attention to local market trends (housing values, unemployment rates, etc.) when deciding upon a pricing strategy and the amount of the reductions.
Third, most banks have already priced the home for its condition. Sure, all of the appliances are gone, and maybe some light fixtures, too. It could have a few holes in the wallboard or carpet that is badly stained. That’s been rolled into the original pricing. If you’re on the edge with what you can afford, don’t expect the bank to bend over backwards for you to get that extra few thousand dollars to meet your pre-approval price point.
Remember, that may have been what happened to the prior owners who just lost the house – they became over-extended. As one Asset manager told me in an email that recently accompanied an offer rejection, “I can't help if they do love the house, they absolutely need to purchase something they can afford and this one they cannot, sorry.” Ouch!
More discussion in later posts, but remember that you buy these homes ‘as-is’, so be sure to get inspections done and carefully consider what you are trying to buy. Expect to pay a licensed plumber to de-winterize the home to check out the plumbing (around $100) and then to re-winterize it (another $200). This is over and above the cost of the inspection itself.
If you have questions about both the benefits and pitfalls of buying a foreclosure property, feel free to contact me.
Thursday, November 27, 2008
Wednesday, June 04, 2008
Brighton Optimist Club - Free Fishing Derby For Kids - June 7th
This Saturday, June 7th, the Brighton Optimist Club will be holding its 22nd annual Free Fishing Derby For Kids at the Brighton Millpond.
Free to kids under 16, there will be awards in various categories across three age groups, free bait, a Lil' Anglers event for children 4 and younger, and a casting contest. A large display tank will show some of the better catches that day.
Bring your rod and reel and a bucket for the fish. There will be three weighing/counting stations available, and all fish are to be released after being recorded. There are some loaner rigs available and free bait, while supplies lasts. The first 400 kids registered will also get a tee shirt.
Registration starts at 7:30 am and the Derby runs 8-11 am. Souvenier picture fishing licenses are also available, but pictures must be taken prior to 10:30 am. Pizza will be served to the kids at 11. While results are being tallied, a local Jump Rope Team, the Jumpin' Allstars, will entertain the crowd. This event is totally FREE!
The Brighton Optimist Club is celebrating its 30th anniversary of "Bringing Out The Best In Kids" this year. This is the longest continually running fishing derby in the State of Michigan. Feel free to contact me with any questions about either the Fishing Derby or the Brighton Optimist Club.
Activity Report - First Time Buyers Driving The Market
Single Family Home sales in Livingston County for the period of January 1st through May 31st have increased by 6% over the same period last year. The average sales price is down 12.9%, but at the end of April that figure was at 13.7%, so it appears that we're moving in the right direction.
Almost half of the sales (46%) are being attributed to first-time buyers. First-time buyers are defined by the U.S. Department of Housing and Urban Development (HUD) as:
- an individual (or spouse) with no ownership in a principal residence for the 3 years prior to the purchase of this home
- a single parent who has only owned a home with a former spouse while married
- a displaced homemaker who has only owned a home with a spouse
- an individual who has only owned a prinicipal residence not permanently affixed to a permanent foundation
- an individual who has only owned a property that was not in compliance with State, local or model building codes, and if that home cannot be brought into compliance with building codes for less than the cost of constructing a permanent structure
Condominiums continue to be a very good buy, too, although many first time buyers decline this type of home ownership because many lack basements for storage, they're intimidated by community regulations, and they don't want to pay the maintenance fees.
A future article will discuss the benefits and shortcomings of condominium ownership. If you have questions in the meantime, you're welcome to contact me directly. My blogging time has suffered due to a high increase in listing and selling activity, my community service commitments, and trying to keep a semblance of family time. You are always welcome to contact me via phone or email (available at my primary web site, http://www.RealEstateMich.com).
Tuesday, April 29, 2008
Buyer Activity On The Rise?
It's not just me. Talking with agents from other firms and to agents within my company, there seems to be a real spike in buyer activity.
I am getting regular calls on my listings and frequent email inquiries from my various web sites and blogs. Most of the activity is coming from two groups - first time buyers who are generally in the $175,000 and below range, and move-up buyers looking higher. There are a lot of great values in the $225,000 to $300,000 range. Larger, newer homes with a lot of space and upgraded amenities seem to be the ticket.
This is great for the move-up buyers that have been able to save some money, retire debt, or both. They are in a wonderful position to get bargains right now.
A recent short sale in which I worked as a buyer agent gained the buyers $40,000 in equity. This is no joke. The sale price was $240,0000 and the appraisal came in at $280,000. A recent foreclosed home that I had listed sold for $210,000 and appraised at $240,000. Believe me, appraisers and banks are looking critically at comparable properties and have tightened up on the appraised values significantly, but these types of gains are still fairly common in my market areas.
Sellers, I still recommend that you don't put your home on the market unless you absolutely, positively have to sell. If you do market your home, accept that its value will be less than it was just two years ago. Unless it's priced properly you won't even get people to look at it to see how great it is.
Buyers, get pre-approved, Not just a pre-approval letter, but have your lender run the credit, put you through desktop underwriting and really see what (or if) you can afford to buy. If you're looking at foreclosures as a possibility, you may even have to get pre-approved by a representative of that particular bank, although they won't require you to use them for the actual transaction. They're simply trying to reduce the number of transactions that fail to close.
I regularly work with buyers and sellers, have a good listing inventory mix of traditional (homeowner or retail) and bank-owned properties. I'm experienced at short sales and have undergone loss mitigation training, too. If you're feeling the pinch and think you might be on the road to losing your home, call me for a short consultation. There may be other avenues you can take with your lender to keep you in your home.
I am getting regular calls on my listings and frequent email inquiries from my various web sites and blogs. Most of the activity is coming from two groups - first time buyers who are generally in the $175,000 and below range, and move-up buyers looking higher. There are a lot of great values in the $225,000 to $300,000 range. Larger, newer homes with a lot of space and upgraded amenities seem to be the ticket.
This is great for the move-up buyers that have been able to save some money, retire debt, or both. They are in a wonderful position to get bargains right now.
A recent short sale in which I worked as a buyer agent gained the buyers $40,000 in equity. This is no joke. The sale price was $240,0000 and the appraisal came in at $280,000. A recent foreclosed home that I had listed sold for $210,000 and appraised at $240,000. Believe me, appraisers and banks are looking critically at comparable properties and have tightened up on the appraised values significantly, but these types of gains are still fairly common in my market areas.
Sellers, I still recommend that you don't put your home on the market unless you absolutely, positively have to sell. If you do market your home, accept that its value will be less than it was just two years ago. Unless it's priced properly you won't even get people to look at it to see how great it is.
Buyers, get pre-approved, Not just a pre-approval letter, but have your lender run the credit, put you through desktop underwriting and really see what (or if) you can afford to buy. If you're looking at foreclosures as a possibility, you may even have to get pre-approved by a representative of that particular bank, although they won't require you to use them for the actual transaction. They're simply trying to reduce the number of transactions that fail to close.
I regularly work with buyers and sellers, have a good listing inventory mix of traditional (homeowner or retail) and bank-owned properties. I'm experienced at short sales and have undergone loss mitigation training, too. If you're feeling the pinch and think you might be on the road to losing your home, call me for a short consultation. There may be other avenues you can take with your lender to keep you in your home.
Thursday, April 17, 2008
Preview Properties to Host Blood Drive - May 10, 2008
On Saturday, May 10th, Preview Properties will be hosting a blood drive for the Livingston County Chapter of the American Red Cross. This is the company's charity activity for May 2008, and we invite you to participate.
Hours will be 10 am - 3pm. You can call the Red Cross office at 517-546-0326 to set an appointment, or just show up during the blood drive hours.
Preview Properties is located at 130 W. Grand River Ave., Brighton, MI 48116, at the corner of St. Paul Street.
The Livingston County Chapter of the American Red Cross web site is http://www.liv-redcross.org/index.html
Hours will be 10 am - 3pm. You can call the Red Cross office at 517-546-0326 to set an appointment, or just show up during the blood drive hours.
Preview Properties is located at 130 W. Grand River Ave., Brighton, MI 48116, at the corner of St. Paul Street.
The Livingston County Chapter of the American Red Cross web site is http://www.liv-redcross.org/index.html
Wednesday, April 09, 2008
Brighton Optimist Club Golf Outing - 5/17/08, Whispering Pines Golf Club, Pinckney
The Brighton Optimist Club is a community service organization whose motto is 'Bringing Out The Best In Kids'. Perhaps best known for the Free Fishing Derby for Kids at the Brighton Millpond every June, they do many other notable things.
In their 30 year history, they've given out tens of thousands of dollars in scholarships, conduct an Oratorical Contest to encourage public speaking in youth, recognize area youth through their Youth Appreciation events and Public Safety professionals through Respect For Law days. The Brighton Optimist Club was also the group that started the effort towards what is now the SELCRA Meijer's Skate Park. The group is supporting the only remaining Junior Achievement Program in Livingston County.
As part of their annual fundraising efforts, they are organizing a Golf Outing for May 17, 2008. It will start at 1pm at Whispering Pines Golf Club in Pinckney. They're looking for golfers and sponsors. Please visit their online registration page at http://www.regonline.com/Checkin.asp?EventId=610749 to register to golf, or click on the 'event details' link on that page for more information. Help the Optimists help our area's youth - and have a great time while doing so.
Register as a golfer or sponsor today! The Brighton Optimist Club Foundation is an IRS-recognized 501 (c)(3) organization.
In their 30 year history, they've given out tens of thousands of dollars in scholarships, conduct an Oratorical Contest to encourage public speaking in youth, recognize area youth through their Youth Appreciation events and Public Safety professionals through Respect For Law days. The Brighton Optimist Club was also the group that started the effort towards what is now the SELCRA Meijer's Skate Park. The group is supporting the only remaining Junior Achievement Program in Livingston County.
As part of their annual fundraising efforts, they are organizing a Golf Outing for May 17, 2008. It will start at 1pm at Whispering Pines Golf Club in Pinckney. They're looking for golfers and sponsors. Please visit their online registration page at http://www.regonline.com/Checkin.asp?EventId=610749 to register to golf, or click on the 'event details' link on that page for more information. Help the Optimists help our area's youth - and have a great time while doing so.
Register as a golfer or sponsor today! The Brighton Optimist Club Foundation is an IRS-recognized 501 (c)(3) organization.
Monday, April 07, 2008
Aprils' Community Service - Cell Phones For Soldiers
Here at Preview Properties, we select a new community service project each month. For April 2008, our project is 'Cell Phones For Soldiers'.
Stop in at the office located at 130 W. Grand River, Brighton (corner of E. St. Paul St.) and drop off your old cell phone. For each one collected, a serviceman or woman on assignment overseas will receive a free 60 minute phone card. If you can't make it into the office yourself, give me a call at 810-220-1478 and I'll be happy to make arrangements to pick up your old cell phone equipment.
Stop in at the office located at 130 W. Grand River, Brighton (corner of E. St. Paul St.) and drop off your old cell phone. For each one collected, a serviceman or woman on assignment overseas will receive a free 60 minute phone card. If you can't make it into the office yourself, give me a call at 810-220-1478 and I'll be happy to make arrangements to pick up your old cell phone equipment.
Gleaner's Food Bank - Fill The Gazebo, May 3, 2008
The Livingston County Association of Realtors has been supporting Gleaner's Food Bank for a number of years by way of its 'Fill The Gazebo' Food Drive. As the name implies, we want to fill the Brighton Millpond gazebo with food donations.
On May 3, 2008, you can drop off items on Main Street in Downtown Brighton. Realtor volunteers will be standing in the center lane to accept your food and monetary donations. We'll also be stationed aroudn the County at various grocery stores to accept donations.
In addition to food, the Gleaner's Food Pantry needs household items like laundry detergent, toothpaste and the like. All food collected stays within Livingston County for families in need. In fact, we can't support our own County's needs and Gleaner's has to bring additional food into Livingston to help support the demand for its services.
If you see a great sale at your local grocery store, consider buying extra to donate on May 3rd. If you have trouble making it into town that day, most Realtor offices will have drop offs available. Or feel free to call me at 810-220-1478 and I'll be happy to get your food or monetary donation collected.
On May 3, 2008, you can drop off items on Main Street in Downtown Brighton. Realtor volunteers will be standing in the center lane to accept your food and monetary donations. We'll also be stationed aroudn the County at various grocery stores to accept donations.
In addition to food, the Gleaner's Food Pantry needs household items like laundry detergent, toothpaste and the like. All food collected stays within Livingston County for families in need. In fact, we can't support our own County's needs and Gleaner's has to bring additional food into Livingston to help support the demand for its services.
If you see a great sale at your local grocery store, consider buying extra to donate on May 3rd. If you have trouble making it into town that day, most Realtor offices will have drop offs available. Or feel free to call me at 810-220-1478 and I'll be happy to get your food or monetary donation collected.
Tuesday, February 05, 2008
New Home Construction Summary-Jan 2008
In a previous post, I reported on an industry survey of new home construction that is conducted monthly by Bank of America. With their kind permission, here is a summary from the January 2008 report.
New home prices and incentives to buyers continue to increase while time to sell is taking longer. Nationally, part of this is still an over-abundance of inventory, but as many builders are now reducing standing stock and beginning new construction only upon receipt of a signed puprchase agreement, this inventory continues to drop.
New home affordability, attractive mortgage interest rates and the dropping inventory will help this sector over the next 12 months.
The Detroit-area market was the nation's 36th largest for all of 2006. This latest report indicates that traffic at new models is still pretty slow and prices continue to drop, while time on the market increases - pretty much in step with national trends. In this market, the builders with the most exposure are Pulte, Toll Brothers and Centex, but there are a lot of great smaller, local builders, too. Many are also doing remodeling work in addition to new construction.
It's a great time to get a bargain on a new home, but shop carefully! There are many, many great deals available on exisiting homes, too, and you can often get more for your money with a re-sale home. Work with an experienced, full-time real estate professional and mortgage representative to get the most from this strong buyer's market.
New home prices and incentives to buyers continue to increase while time to sell is taking longer. Nationally, part of this is still an over-abundance of inventory, but as many builders are now reducing standing stock and beginning new construction only upon receipt of a signed puprchase agreement, this inventory continues to drop.
New home affordability, attractive mortgage interest rates and the dropping inventory will help this sector over the next 12 months.
The Detroit-area market was the nation's 36th largest for all of 2006. This latest report indicates that traffic at new models is still pretty slow and prices continue to drop, while time on the market increases - pretty much in step with national trends. In this market, the builders with the most exposure are Pulte, Toll Brothers and Centex, but there are a lot of great smaller, local builders, too. Many are also doing remodeling work in addition to new construction.
It's a great time to get a bargain on a new home, but shop carefully! There are many, many great deals available on exisiting homes, too, and you can often get more for your money with a re-sale home. Work with an experienced, full-time real estate professional and mortgage representative to get the most from this strong buyer's market.
Sunday, February 03, 2008
Michigan Voter Identification
If you voted in the November 6, 2007 local elections or the January 15, 2008 primary elections, you noticed that you were asked for identification for the first time.
The preferred ID is a valid Michigan Driver's License or State-issued ID card (also available at the Secretary of State office). Federal or state government-issued photo ID's, U.S. passports, military photo ID cards, photo ID cards from a high school or higher education institution and tribal ID cards with photo are also accepted.
So what happens if you don't possess any of these documents? You were asked to complete an 'Affidavit of Voter Not in Possession of Picture Identification' before being allowed to vote.
This State Law was originally enacted in 1996 and then renewed in 2005, but then State Attorney General Frank Kelley ruled it a violation of the equal protection clause of the 14th amendment on the basis that it was essentially a 'poll tax'. The law had been in 'limbo' since then.
This divisive issue has been split along political party lines, with Democrats in opposition and Republicans in favor of the law. Finally, the Michigan Supreme Court ruled that because voters can choose intead to sign an affidavit swearing to their identity, there was no poll tax. The ruling went along political party lines, with five Republican judges in favor and the two Democrat judges in opposition.
As the second voter in line at my precinct on January 15th, I can attest to the confusion of the election workers first thing in the morning, but they seemed to have it ironed out later in the day, according to my wife, who voted in the late afternoon.
The preferred ID is a valid Michigan Driver's License or State-issued ID card (also available at the Secretary of State office). Federal or state government-issued photo ID's, U.S. passports, military photo ID cards, photo ID cards from a high school or higher education institution and tribal ID cards with photo are also accepted.
So what happens if you don't possess any of these documents? You were asked to complete an 'Affidavit of Voter Not in Possession of Picture Identification' before being allowed to vote.
This State Law was originally enacted in 1996 and then renewed in 2005, but then State Attorney General Frank Kelley ruled it a violation of the equal protection clause of the 14th amendment on the basis that it was essentially a 'poll tax'. The law had been in 'limbo' since then.
This divisive issue has been split along political party lines, with Democrats in opposition and Republicans in favor of the law. Finally, the Michigan Supreme Court ruled that because voters can choose intead to sign an affidavit swearing to their identity, there was no poll tax. The ruling went along political party lines, with five Republican judges in favor and the two Democrat judges in opposition.
As the second voter in line at my precinct on January 15th, I can attest to the confusion of the election workers first thing in the morning, but they seemed to have it ironed out later in the day, according to my wife, who voted in the late afternoon.
Wednesday, January 30, 2008
MDOT Closing Park 'n Ride Lot at M-59 and Michigan in Howell
Due to the expansion of M-59 to a 4 lane boulevarded roadway, this Park 'n Ride lot will close for good on February 4, 2008. The next nearest lots are at Michigan Ave and I-96, south of the Howell City Limits, and to the east on Old US-23 just north of M-59.
The project will also undertake ramp improvements at I-96 and M-59, resurface the road and make drainage improvements. Three bridges over M-59 will be totally replaced.
See this link for details. http://www.michigan.gov/mdot/0,1607,7-151-9621_11008_45330---,00.html
The project will also undertake ramp improvements at I-96 and M-59, resurface the road and make drainage improvements. Three bridges over M-59 will be totally replaced.
See this link for details. http://www.michigan.gov/mdot/0,1607,7-151-9621_11008_45330---,00.html
Monday, January 28, 2008
Groundhog Day Is On The Way
This Saturday, February 2nd is Groundhog Day. Groundhogs are also known as woodchucks, marmots, and even as land beavers and ground squirrels. They are widely distributed in North America, especially in the central and northeastern United States, and can weigh in between 4 and 9 pounds. There's no real relationship between woodchucks and wood. The name is believed to have originated from the Algonquin or Narraganset name for the animal, 'wuchak'.
Groundhog Day started in Pennsylvania and New York State as a prediction of how the last half of winter would proceed. If the groundhog comes out of his burrow to see his shadow, he goes back in to sleep for 6 more weeks, indicating a hard end to winter. If he sees no shadow, he remains out, forecasting a mild second half of winter.
Punxsutawney Phil of Punxsutawney, PA is the most famous groundhog weather forecaster in the United States, but Howell, Michigan has its own Woody the Woodchuck. Taking up residence at the Howell Nature Center, Woody will be making her 10th appearance this year, which could make her record 8 for 10 if she successfully predicts this year's last half of winter conditions.
Woody will appear promptly at 8:15 am, and the there is a new breakfast option available, too. $8 for adults, $6 for children under 12, and children under 2 years of age are free. if you're planning on breakfast, please call to make reservations by dialing 517-546-0249. The proceeds will support the Wildlife Programs at the Nature Center. Photos with Woody are also available for a small fee.
UPDATE: Woody's prediction was that Spring will be early this year!
Groundhog Day started in Pennsylvania and New York State as a prediction of how the last half of winter would proceed. If the groundhog comes out of his burrow to see his shadow, he goes back in to sleep for 6 more weeks, indicating a hard end to winter. If he sees no shadow, he remains out, forecasting a mild second half of winter.
Punxsutawney Phil of Punxsutawney, PA is the most famous groundhog weather forecaster in the United States, but Howell, Michigan has its own Woody the Woodchuck. Taking up residence at the Howell Nature Center, Woody will be making her 10th appearance this year, which could make her record 8 for 10 if she successfully predicts this year's last half of winter conditions.
Woody will appear promptly at 8:15 am, and the there is a new breakfast option available, too. $8 for adults, $6 for children under 12, and children under 2 years of age are free. if you're planning on breakfast, please call to make reservations by dialing 517-546-0249. The proceeds will support the Wildlife Programs at the Nature Center. Photos with Woody are also available for a small fee.
UPDATE: Woody's prediction was that Spring will be early this year!
Saturday, January 26, 2008
Huron River Watershed Council
In a few minutes, I'll be heading outside. It's Saturday morning, January 26th, and I'm off to wade in local tributaries. Yup. Why would I do that?
I'm a volunteer 'collector' for the Huron River Watershed Council, and one of their biggest events (in the Adopt-A-Stream) program is the Winter Stonefly Search. Stoneflies are aquatic invertebrates and live only in fairly clean water, so their presence is a rough indicator that a creek or river is generally 'healthy'.
Team are assembled, a leader and collector assigned (they've gone through specific training), and volunteers are added as 'pickers', to sift through the trays scooped out of the water.
Even though it's 21 degrees and snowing, we'll have a huge turnout of people looking for something to do. School-aged children with parents, environmentalists, fishermen, residents that live in the watershed all band together to make this great event possible.
For more information, see the link at http://www.hrwc.org/adopt/index.html
And don't worry about me getting cold in the water. I'll use my 5mm neoprene waders that will keep me very warm and dry
I'm a volunteer 'collector' for the Huron River Watershed Council, and one of their biggest events (in the Adopt-A-Stream) program is the Winter Stonefly Search. Stoneflies are aquatic invertebrates and live only in fairly clean water, so their presence is a rough indicator that a creek or river is generally 'healthy'.
Team are assembled, a leader and collector assigned (they've gone through specific training), and volunteers are added as 'pickers', to sift through the trays scooped out of the water.
Even though it's 21 degrees and snowing, we'll have a huge turnout of people looking for something to do. School-aged children with parents, environmentalists, fishermen, residents that live in the watershed all band together to make this great event possible.
For more information, see the link at http://www.hrwc.org/adopt/index.html
And don't worry about me getting cold in the water. I'll use my 5mm neoprene waders that will keep me very warm and dry
Random Thoughts About Buying Foreclosures
(c)2008 Robert Smith
There's no doubt that there's a lot more foreclosure properties on the market and a lot more of them are selling. This post isn't as structured as most of mine are, but here are some general observations I've made on buying foreclosures over the last few weeks.
First, look at how long a property has been in the MLS. I've seen some lenders refuse all but full price offers in the first two weeks of a listing. Why would they do this? To make sure it's priced right, or perhaps to try to spur multiple offers to get two buyers competing against either other. The number of showing a property receives in the first two weeks will tell if it's priced right. And they don't care if it's a cash offer or a mortgage-backed offer, either.
Second, when looking at the lower-end priced homes in a given area, you aren't going to be successful bidding ridiculously low. In my market area, for example, homes at $115,000 or less will probably sell within $5,000 to $7,000 of list price. It really is a waste of time to write that offer for $75,000, folks. Unless, of course, the home needs total rehabilitation, but then you have to re-add those costs into your 'project' scope.
Third, banks aren't trying to give away these properties. They are willing to wait. And if they don't sell they'll often put them up for auction. At most house auctions that I've monitored, the successful bid price is at least the price the bank would have sold the property at, anyway. Often, they sell for a higher price at auction!
If you're a first-time buyer, please think carefully about buying a foreclosure property. Let's say you're approved for $150,000 but you're monthly payment comfort level is really around an amount of $130,000. At 6.5% interest and a 30 year fixed mortgage, the difference between financing those two amounts is around $147/mo, or $821 vs. $948 on the mortgage payment.
That doesn't include property taxes, PMI, insurance, maintenance or any of the other stuff that goes along with owning a home. And often, property taxes on foreclosures have gone 'non-homestead', which adds another 19 mils to the property tax rate. Once a home is vacant, and often shortly after the Sheriff's Sale, the local assessor changes the status, so for at least part of the next year after pruchase, your property taxes will be higher.
It makes no sense for you to be looking at $160,000 or $180,000 houses thinking that you'll get a fantastic deal at your $130,000 comfort level, yet many consumers are doing this. It's a waste of time and makes the home buying process a lot more frustrating.
Get educated as to what kind of, or how much home you can buy for your price range. Look at houses, but also keep an eye on the ones that have sold. That's where the real value indication is seen. Honest, forthright discussions with a lender and a Realtor(R) that you can trust will help you get the most value in the home buying process, especially as a first-time home buyer.
There's no doubt that there's a lot more foreclosure properties on the market and a lot more of them are selling. This post isn't as structured as most of mine are, but here are some general observations I've made on buying foreclosures over the last few weeks.
First, look at how long a property has been in the MLS. I've seen some lenders refuse all but full price offers in the first two weeks of a listing. Why would they do this? To make sure it's priced right, or perhaps to try to spur multiple offers to get two buyers competing against either other. The number of showing a property receives in the first two weeks will tell if it's priced right. And they don't care if it's a cash offer or a mortgage-backed offer, either.
Second, when looking at the lower-end priced homes in a given area, you aren't going to be successful bidding ridiculously low. In my market area, for example, homes at $115,000 or less will probably sell within $5,000 to $7,000 of list price. It really is a waste of time to write that offer for $75,000, folks. Unless, of course, the home needs total rehabilitation, but then you have to re-add those costs into your 'project' scope.
Third, banks aren't trying to give away these properties. They are willing to wait. And if they don't sell they'll often put them up for auction. At most house auctions that I've monitored, the successful bid price is at least the price the bank would have sold the property at, anyway. Often, they sell for a higher price at auction!
If you're a first-time buyer, please think carefully about buying a foreclosure property. Let's say you're approved for $150,000 but you're monthly payment comfort level is really around an amount of $130,000. At 6.5% interest and a 30 year fixed mortgage, the difference between financing those two amounts is around $147/mo, or $821 vs. $948 on the mortgage payment.
That doesn't include property taxes, PMI, insurance, maintenance or any of the other stuff that goes along with owning a home. And often, property taxes on foreclosures have gone 'non-homestead', which adds another 19 mils to the property tax rate. Once a home is vacant, and often shortly after the Sheriff's Sale, the local assessor changes the status, so for at least part of the next year after pruchase, your property taxes will be higher.
It makes no sense for you to be looking at $160,000 or $180,000 houses thinking that you'll get a fantastic deal at your $130,000 comfort level, yet many consumers are doing this. It's a waste of time and makes the home buying process a lot more frustrating.
Get educated as to what kind of, or how much home you can buy for your price range. Look at houses, but also keep an eye on the ones that have sold. That's where the real value indication is seen. Honest, forthright discussions with a lender and a Realtor(R) that you can trust will help you get the most value in the home buying process, especially as a first-time home buyer.
Tuesday, January 22, 2008
Mid-January 2008 Market Update
We've been hearing a lot about the horrible housing market for sometime now. In fact, it's hard to get away from it. Television, radio, magazines, newspapers, candidate speeches - it's all over the place.
Livingston County finished 2007 with November and December reporting more sales than the same two months in 2006. As of today, (January 21, 2008), it looks like January could do the same. At this time in 2007, there were 59 sales, today we had 74. That's a pretty good increase.
It's also interesting to note that the Days on Market (DOM) went down from 169 in 2007 to 130 for the same period this year (1/1 - 1/21). Another great indicator is that about 25% of these sales were at list price or above as opposed to 17% in 2007.
We also had more homes sell within 90 days for this time period, 43 sales or 58% vs. 18 sales or 30% in 2007.
It looks like buyers have finally figured out that they can't just lowball their way to a great home. That works some of the time with some properties, but it's important to determine any property's TRUE VALUE. There are some deals in the market, but there are precious few steals.
TRUE VALUE takes into account the declining prices. It's not unusual to have buyers getting homes cheaper than the price the seller paid for it two, three or four years ago. When you find that house that you really want, have your Realtor(R) assist you in determining its market value, then go for it!
Livingston County finished 2007 with November and December reporting more sales than the same two months in 2006. As of today, (January 21, 2008), it looks like January could do the same. At this time in 2007, there were 59 sales, today we had 74. That's a pretty good increase.
It's also interesting to note that the Days on Market (DOM) went down from 169 in 2007 to 130 for the same period this year (1/1 - 1/21). Another great indicator is that about 25% of these sales were at list price or above as opposed to 17% in 2007.
We also had more homes sell within 90 days for this time period, 43 sales or 58% vs. 18 sales or 30% in 2007.
It looks like buyers have finally figured out that they can't just lowball their way to a great home. That works some of the time with some properties, but it's important to determine any property's TRUE VALUE. There are some deals in the market, but there are precious few steals.
TRUE VALUE takes into account the declining prices. It's not unusual to have buyers getting homes cheaper than the price the seller paid for it two, three or four years ago. When you find that house that you really want, have your Realtor(R) assist you in determining its market value, then go for it!
Sunday, January 20, 2008
2007 Washtenaw County Housing Market Report
Year-end information for Washtenaw County home sales is now available.
Home sales dropped in number for 2007 when compared to 2006, dropping from 3,345 to 3,062 (or 8%) and condominium sales dropped from 761 in 2006 to 660 (13%) in 2007.
Sales volume (total dollar value of all sales) on houses went from $866,132,966 in 2006 to $766,375,165 - an 11.5% drop. In the condominium category, volume dropped from $135,160,039 to $119,784,350 - an 11.3% drop.
There was a 4% increase in 'fall throughs', homes under contract that never reached closing for one reason or another, and withdrawals from the MLS increased over 9% compared to 2006 (6,083 in 2006 vs. 6,652 in 2007).
Based on information from the Ann Arbor Area Board of REALTORS® Multiple Listing Service for 2007.
Home sales dropped in number for 2007 when compared to 2006, dropping from 3,345 to 3,062 (or 8%) and condominium sales dropped from 761 in 2006 to 660 (13%) in 2007.
Sales volume (total dollar value of all sales) on houses went from $866,132,966 in 2006 to $766,375,165 - an 11.5% drop. In the condominium category, volume dropped from $135,160,039 to $119,784,350 - an 11.3% drop.
There was a 4% increase in 'fall throughs', homes under contract that never reached closing for one reason or another, and withdrawals from the MLS increased over 9% compared to 2006 (6,083 in 2006 vs. 6,652 in 2007).
Based on information from the Ann Arbor Area Board of REALTORS® Multiple Listing Service for 2007.
Sunday, January 13, 2008
December 2007 and Year-End Market Report
(c) 2008, Robert Smith
Analyzing data released by the RealComp multi-list system to its members, it appears that Livingston County finished 2007 with an small upswing.
While homes (single-family houses and condominiums) on the market were down by almost 7% from the same period in 2006 (419 homes vs. 450), total listings on the market, which includes vacant land, multi-family and commercial listings, were dead even (4698 for 2007 vs. 4695 in 2006).
In December, there was a slight rebound in both the average and median sale prices. While these are only good as a larger view, it's encouraging to see increases at the end of the year in these indicators. Comparing 2007 to 2006, the median price showed an overall drop of 8.6% from $215,667 in 2006 to $197,195 in 2007.
Houses fell from $218,900 median sale price in 2006 to $190,000 in 2007, and condominiums took a much larger hit, going from $155,000 in 2006 to $104,000 in 2007. Vacant land prices also fell dramatically, but on a significantly smaller sales (dollar) volume. This is probably due to the massive decrease in new home construction.
Another postiive indicator was in the monthly residential sales totals. Both November and December 2007 showed increases vs. the same two months in 2006, 145 in Nov 2007 vs. 130 in 2006 and 135 sales in Dec 2007 vs. 125 in 2006. The year finished with a 10.4% drop in total residential sales. The sales volume (total dollar value of all sales) fell 19.1% in this last calendar year.
We saw a lot of value drop in this last year. My personal opinion is that we'll see another 6% loss in value in calendar year 2008 in the County. In addition to more foreclosures coming into the market, tightening credit, increased scrutiny by lenders and more rigid borrower requirements may make home loans difficult to obtain for many potential buyers, even though the overall interest rates remain very good.
If you absolutely, positively have to sell your home now or at any point in 2008 be prepared to take a lot less than your last refinance or mortgage appraisal value. I'm sorry, but there it is. A full-time local Realtor that keeps their eye on market conditions in the various Livingston County home market areas (Cities, Villages, Townships and School Districts) and price ranges will be your best bet to maximize your selling price.
Buyers are poised to find some value in this market providing that they can meet the tougher new lender requirements to obtain financing. It's still possible to get 100% financing through FHA loans, but almost all other loan types are going to require some money out of your pocket. As home values continue to fall, this buyer's market will persist through 2008.
Analyzing data released by the RealComp multi-list system to its members, it appears that Livingston County finished 2007 with an small upswing.
While homes (single-family houses and condominiums) on the market were down by almost 7% from the same period in 2006 (419 homes vs. 450), total listings on the market, which includes vacant land, multi-family and commercial listings, were dead even (4698 for 2007 vs. 4695 in 2006).
In December, there was a slight rebound in both the average and median sale prices. While these are only good as a larger view, it's encouraging to see increases at the end of the year in these indicators. Comparing 2007 to 2006, the median price showed an overall drop of 8.6% from $215,667 in 2006 to $197,195 in 2007.
Houses fell from $218,900 median sale price in 2006 to $190,000 in 2007, and condominiums took a much larger hit, going from $155,000 in 2006 to $104,000 in 2007. Vacant land prices also fell dramatically, but on a significantly smaller sales (dollar) volume. This is probably due to the massive decrease in new home construction.
Another postiive indicator was in the monthly residential sales totals. Both November and December 2007 showed increases vs. the same two months in 2006, 145 in Nov 2007 vs. 130 in 2006 and 135 sales in Dec 2007 vs. 125 in 2006. The year finished with a 10.4% drop in total residential sales. The sales volume (total dollar value of all sales) fell 19.1% in this last calendar year.
We saw a lot of value drop in this last year. My personal opinion is that we'll see another 6% loss in value in calendar year 2008 in the County. In addition to more foreclosures coming into the market, tightening credit, increased scrutiny by lenders and more rigid borrower requirements may make home loans difficult to obtain for many potential buyers, even though the overall interest rates remain very good.
If you absolutely, positively have to sell your home now or at any point in 2008 be prepared to take a lot less than your last refinance or mortgage appraisal value. I'm sorry, but there it is. A full-time local Realtor that keeps their eye on market conditions in the various Livingston County home market areas (Cities, Villages, Townships and School Districts) and price ranges will be your best bet to maximize your selling price.
Buyers are poised to find some value in this market providing that they can meet the tougher new lender requirements to obtain financing. It's still possible to get 100% financing through FHA loans, but almost all other loan types are going to require some money out of your pocket. As home values continue to fall, this buyer's market will persist through 2008.
Friday, January 04, 2008
Michigan's Growth Industry - Wine!
(c) 2007, Robert Smith
Over the last few years, I've become more interested in wines in general, and Michigan wines in particular. I gravitate towards fuller bodied reds with a low relative sugar content. Of course, in Michigan you have no problem finding sweeter wines either, a fact that delights my wife.
Most people know about the Leelanau and Old Mission Peninsula areas, but there are some very good wineries in southeast and south central Michigan, too. Some, like Sandhill Cranes Vineyards in Jackson and Cherry Creek Cellars in Cement City, have their own vineyards.
Others like Pentamere Winery (Michigan's first urban winery) in Tecumseh buy grapes and do the wine-making at their site. Pentamere buys grapes only from watershed areas that drain into the Great Lakes. Stop in and talk to these guys, their passion is contagious! And take a taste of Garnet 2005 while you're there. Most red and white wine lovers will like this wine. Ask them for a tour of the basement for a fascinating look at a compact wine making operation.
There are more wineries and 'micro-wineries' opening that buy various grape juices and start the wine making process from that point, like Spotted Dog Winery in Saline. Don't let that stop you from trying some very good wines! (Their Saline River Red is a very enjoyable and affordable table wine.)
Some good general internet wine resources are CatchWine.com , WinesAndVines.com, and MichiganWines.com - website of the Michigan Grape and Wine Industry Council. The Benson Marketing Group (www.BensonMarketing.com/enews_monitor.html) serves the wine industry and has three different eNewsletters that you can receive in the General, Direct Shipping, and Wine Afficionado categories.
Over the last few years, I've become more interested in wines in general, and Michigan wines in particular. I gravitate towards fuller bodied reds with a low relative sugar content. Of course, in Michigan you have no problem finding sweeter wines either, a fact that delights my wife.
Most people know about the Leelanau and Old Mission Peninsula areas, but there are some very good wineries in southeast and south central Michigan, too. Some, like Sandhill Cranes Vineyards in Jackson and Cherry Creek Cellars in Cement City, have their own vineyards.
Others like Pentamere Winery (Michigan's first urban winery) in Tecumseh buy grapes and do the wine-making at their site. Pentamere buys grapes only from watershed areas that drain into the Great Lakes. Stop in and talk to these guys, their passion is contagious! And take a taste of Garnet 2005 while you're there. Most red and white wine lovers will like this wine. Ask them for a tour of the basement for a fascinating look at a compact wine making operation.
There are more wineries and 'micro-wineries' opening that buy various grape juices and start the wine making process from that point, like Spotted Dog Winery in Saline. Don't let that stop you from trying some very good wines! (Their Saline River Red is a very enjoyable and affordable table wine.)
Some good general internet wine resources are CatchWine.com , WinesAndVines.com, and MichiganWines.com - website of the Michigan Grape and Wine Industry Council. The Benson Marketing Group (www.BensonMarketing.com/enews_monitor.html) serves the wine industry and has three different eNewsletters that you can receive in the General, Direct Shipping, and Wine Afficionado categories.
Free Radon Test Kits
The Livingston County Health Department is giving away free radon test kits through the end of January 2008. They can be picked up at the County's East Annex at 2300 E. Grand River, at Chilson.
Radon is a colorless, odorless gas that can cause lung cancer. It is estimated to be present in one of every five homes in Livingston County. Radon gas accumulates in the lower level of the home (basement) and enters via cracks in the foundation or the sump. It can also be found in homes built on a slab, and is easily remediated by qualified firms.
All homes should be tested for radon, especially if you spend significant time in the basement. January is National Radon Action Month.
For more information please check this link to the Indoor Air Quality section of the Environmental Protection Agency's (EPA) web site, this page at the Michigan Department of Environmental Quality (DEQ), and to the Livingston County Health Department web site.
Radon is a colorless, odorless gas that can cause lung cancer. It is estimated to be present in one of every five homes in Livingston County. Radon gas accumulates in the lower level of the home (basement) and enters via cracks in the foundation or the sump. It can also be found in homes built on a slab, and is easily remediated by qualified firms.
All homes should be tested for radon, especially if you spend significant time in the basement. January is National Radon Action Month.
For more information please check this link to the Indoor Air Quality section of the Environmental Protection Agency's (EPA) web site, this page at the Michigan Department of Environmental Quality (DEQ), and to the Livingston County Health Department web site.
Wednesday, January 02, 2008
Investors - Be Careful Out There!
This afternoon, I dropped off an executed purchase agreement to an area lender who was working with a buyer. While there, I took a few minutes to compare notes with the loan officer. We talked about the housing market in general, the tightening of requirements by underwriters, and our prospects of what 2008 will hold for the industry.
The talk came around to investors who are having the same problem that many homeowners are experiencing - time to refinance but there's not enough equity in the property with dropping values. Making it somewhat worse is that there are fewer recent solds to use as a basis for determining value.
A good rule of thumb for any investor is to critically examine a property's cash flow. Don't just think about the old PITI guidelines - Principal, Interest, Taxes and Insurance. Build in a vacancy rate in case you have turnover. If you have a single unit house, one month's vacancy is 8.3 percent for the year. Are you able to comfortably carry the payments without rental income for a month? How about two months?
Before you buy, do a rent survey to see what rent prices are working and how long it's taking to fill vacancies. Add a certain amount for routine maintenance, even if you require tenants to do things like lawn care and snow removal. And don't forget about start-up repairs or remodeling that you may have to do rent a home.
It's a wonderful time to buy investment properties, but keep cash flow as your number one goal. Number two should be likelihood of and rate of appreciation. Number three is a 'no-brainer' - the tax benefits you'll get from owning investment property.
By the way, we think that 2008 will see property values continue to drop (at least through mid-year) unless there is a strong stimulus to jog the economy. And another quarter point interest rate cut by the Fed won't qualify! Again, if you're looking to move up to a larger more expensive home, buy a vacation home or investment property, the first six months of 2008 should be that time.
The talk came around to investors who are having the same problem that many homeowners are experiencing - time to refinance but there's not enough equity in the property with dropping values. Making it somewhat worse is that there are fewer recent solds to use as a basis for determining value.
A good rule of thumb for any investor is to critically examine a property's cash flow. Don't just think about the old PITI guidelines - Principal, Interest, Taxes and Insurance. Build in a vacancy rate in case you have turnover. If you have a single unit house, one month's vacancy is 8.3 percent for the year. Are you able to comfortably carry the payments without rental income for a month? How about two months?
Before you buy, do a rent survey to see what rent prices are working and how long it's taking to fill vacancies. Add a certain amount for routine maintenance, even if you require tenants to do things like lawn care and snow removal. And don't forget about start-up repairs or remodeling that you may have to do rent a home.
It's a wonderful time to buy investment properties, but keep cash flow as your number one goal. Number two should be likelihood of and rate of appreciation. Number three is a 'no-brainer' - the tax benefits you'll get from owning investment property.
By the way, we think that 2008 will see property values continue to drop (at least through mid-year) unless there is a strong stimulus to jog the economy. And another quarter point interest rate cut by the Fed won't qualify! Again, if you're looking to move up to a larger more expensive home, buy a vacation home or investment property, the first six months of 2008 should be that time.
Subscribe to:
Posts (Atom)