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Saturday, November 30, 2013

Weekend update from Milford, Michigan - Christmas Season Kickoff


Today is the Christmas Parade in Downtown Milford. The parade is organized by the Huron Valley Chamber of Commerce (HVCC) and is one of the “Big 3” parades in Milford during the year. The other two are the Memorial Day Parade and the 4th Of July Parade.

I’ll be in the parade today as an honoree, having been named the HVCC Ambassador of the Year. That means riding in the back of a convertible, which will be a very chilly, albeit, at a parade-time temperature of about 30 degrees, still a heartwarming experience. The parade steps off at 10 am and winds through the downtown. Afterwards stick around in Milford and shop the local shops on Small Business Saturday. They have some great sales going on today.

Santa will arrive in Milford at the Christmas Parade to officially kick off the Christmas season (notwithstanding the fact that many stores had Christmas stuff on display before Halloween). Santa
will be a busy guy with many personal appearances in the Milford area.

On Dec 5th the downtown merchants will host an open house with visits to Santa for the kids, strolling music and refreshments.  Santa will also be holding forth on Dec 7 and 15 at the Pettibone Creek Powerhouse on West Canal Street (north end of Central Park) for Pet Pictures with Santa. A donation of pet food to Community Sharing is all that’s required to get your pet’s picture taken with Santa either day. You’ll get the picture on the spot. Click here to view the poster for this event. Santa will also host Snacks with Santa out at Kensington Metropark at the Farm Center at 10 AM, noon and 2 PM on Dec 7 & 8. Tickets for that event are $10. Preregistration Required Call 810-227-8910 to order your tickets.

Speaking of pet pictures, the 2014 Pet Calendar, also sponsored by the Community Sharing Pet Pantry makes a great Christmas gift that will bring a smile to the face throughout the year. The calendar is only $10 and you can buy the calendar at several locations in Milford. Click here for the flyer with locations.

The gallery opening of the fourth annual Festival of Trees Holiday Artist Market, presented by HVCA’s The Art Shop, opens with a reception Friday, Dec. 7; it will start at 7 p.m. with the Kettle and
Friends holiday concert running simultaneously at Huron Valley Council for the Arts, 205 W. Livingston Road in Highland. Tickets are $15; purchase them online at huronvalleyarts.org or in person at HVCA. Guests will have the chance to enjoy wine and appetizers as well as the concert's holiday selections and get first crack at the holiday market's wares. Click here for more information about the event and the market. The market will be open until 9 p.m. and during regular gallery hours through Saturday, Dec. 21. Doors open at 6:30 p.m. for the concert. Gallery hours for Festival of Trees Holiday Artist Market take place from 10 a.m. to 5 p.m. Wednesdays through Fridays and from 11 a.m. to 4 p.m. Saturdays. For more information, call HVCA at 248-889-8660.

On December 13th the Michigan Philharmonic Orchestra comes to the area for a Holiday Pops concert at the Walled Lake Northern Center for Performing Arts. Click here for more on this event. General Admission tickets are $15 for this concert with starts at 7:30 PM.

As always, to stay up to date on all of the events in the area, check in often at www.movetomilford.com where the calendar of events is updated daily.

Friday, November 29, 2013

Small Business Saturday in Milford

Nestled between Black Friday and Cyber Monday is a relatively new named shopping day – Small Business Saturday. This Shop Small day was originally an American Express promotional idea that has taken on an identity of its own. The basic idea and thrust behind this can be summed up in another oft heard phrase – Shop local or there won’t be any local.

The danger to small local businesses has never been greater. The small retail shops that make up the Main Street stores of America are under tremendous pressure from both the big box stores and from the Internet. There is just no way for your local toy store or clothing store or shoe store to compete on price with the big box stores. Instead many emphasize that they have products that you just won’t find in the big box stores or they may have more selections of specific brands. They also provide much more personalized service and in most cases are closer and easier to get to than the big mall stores.
Milford has one of the few remaining small town downtown areas that is still full of useful stores – stores that sell things other than knick-knacks or antiques. One can still shop in Milford for clothing and shoes, in addition to toys and jewelry and candy and furniture and more. Sure, we have some nice knick-knack stores, too; but the point is that the downtown still provides a good, diverse shopping experience. The same cannot be said of many of the small towns on this side of Michigan.

The big box stores most often came in and positioned themselves just outside of the towns and villages, most of the time between two or three. Once they took hold, local downtown areas withered and many gave way to the trend to turn the quaint old downtown buildings into antique stores or knick-knack boutiques. Milford was far enough away from the I-96 highway that the big box stores chose to congregate around to avoid some of that impact, but they still had and have an impact.

I think that the attractiveness of many of our restaurants also helps. When you have 2-3 destination restaurants (restaurants that people will drive for more than 5 miles to get to, because they are so good) it helps draw people to the downtown. They walk up and down the street, sometimes visiting the shops and sometimes just making note of shops that they want to come back and visit. It helps.

So this Saturday, Nov 30, after the Christmas parade at 10 AM, plan on staying in Milford for some
shopping. Many of the merchants will have special sales going for Small Business Saturday. Plan on coming back on December 5th when the local merchants will host a Christmas Open House, with strolling entertainment and refreshments provides by the stores. Bring the kids, because Santa will be here too. Get in the spirit of Christmas in small town America – It’s a wonderful life!

Thursday, November 28, 2013

November Market Report Video

For those who prefer getting their information via videos, here is the November Market Report from the Real Estate One President of Brokerage Operations - Dan Elsea. Enjoy and happy Thanksgiving!


Tuesday, November 26, 2013

Short sales fall out of favor withthe lenders...


A report from RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, shows that short sales have fallen out of favor with lenders as the values of the homes that are in distress or foreclosure continues to rise.  From the RealtyTrac® report -

Inventory shortages are part of the picture — last week Lender Processing Services reported that after 18 straight months of declines, U.S. foreclosure inventory is now at its lowest point since the end of 2008, falling nearly 30 percent from a year ago to 1.28 million in October.

The RealtyTrac® report shows that short sales represented 5.3 percent of all sales in October, down from 6.3 percent in September and 11.2 percent at the same time a year ago.

Foreclosure auction sales to third parties (a new category, separated out in the report for the first time) represented 2.5 percent of all sales, down from 2.8 percent in September but nearly twice the 1.3 percent seen at the same time a year ago.

Sales of “real estate owned” (REO) homes repossessed by banks accounted for 9.6 percent of October sales, up from 8.9 percent in September and 9.4 percent a year ago.

While it is still possible to do a short sale, more and more lenders would prefer to just take the house back and auction it off themselves to cash buyers. It is also quitter possible that homeowners who think that they are still under water on their mortgages are wrong about that. Values have come back so strong and so fast that the majority of homeowners can at least break even on a sale now. If you haven’t had an updated Market Analysis done by a real estate professional in the last 3-6 months you are out of date on your home’s value.

Locally, we were at about 50% of all sales being distressed sales for much of the last three years. Now, distressed sales in most markets locally are in the low teens or even below 10% in some. That’s good news. The biggest issue that we face today is the lack of inventory – not enough houses for sale. A part of that problem is the misunderstanding by homeowners about their home’s current value.  So call your local Realtor® and get yourself up to date on your house. You may be pleasantly surprised.

To read the entire RealtyTrac® story about the falling short sales and the shift in the market towards foreclosures again click here.

Monday, November 25, 2013

Should you have a home inspection done before you list your home?


I suspect that this might be a topic of some controversy amongst Realtors®. Advising a homeowner who is listing his home to spend the $300-400 to get a home inspection up front is a tough sell and may slow things down, at least at the front-end. Some homeowners might also retort that what you don’t know, you don’t have to disclose about the house. While that may be true, it is also a bad practice that will usually come back to bite that homeowner. The more you know (and can honestly disclose up front) the better off you are likely to be in the long run. You can also make the repairs that are needed or remediate the issues that will be found later by the Buyer’s inspector at a panic-free pace.

Most homeowners make honest disclosures about what they do know about the house. Many just don’t know that there may be mold in the attic or that some component of the infrastructure has failed. If they did, they would probably have done something about it. In many areas Radon is a common issue, but few homeowners have ever had a Radon check done on their house. Homes that are on wells and septic systems also may be harboring problems that the homeowner is just not aware of or has gotten used to living with, such as failed bladder tanks on the well or a marginal or failed septic field.

What the home inspector will find are all of the things that go beyond the obvious things that the homeowner can see. The roof with missing shingles or that needs replacing may be obvious to the homeowner from the ground, but perhaps they don’t see the deterioration in the valleys or the flashing around the chimney that needs to be redone. They may not be able to spot all of the wood rot that has occurred, because they don’t get up and walk around on the roof like the inspector does.

Many other things that a home inspector might find are relatively easy and inexpensive to fix and getting them done ahead of listing will mean that they don’t become distractions for would-be buyers. Buyers make lists (mental or otherwise) of the things that they notice and each item on that list is something that they may take a little off the offer price because they’ll have to fix it. Certainly when they get their own inspection report all of the major items become negotiation points for repair or concessions.

You can get some good advice from your Realtor, if they’ve done a good job of walking through your home with you to point out the things that they see that need work; however, they are not home inspectors and won’t be climbing on the roof or looking into the attic space. The Realtor is more concerned with clutter and cleanliness and obvious minor condition issues, like missing plug or switch plates or paint that needs a touch-up.

A good home inspection will uncover the major things that the homeowner may not be aware of and equip the homeowner with a good to-do list to get the house in shape for the market or at least a good idea of the points of possible concessions that he/she will have to negotiate with the buyer. It may also help the seller in setting a more realistic sale price for the house.

So, is investing $300-400 at the front end a good idea? It does allow a homeowner to react to a major issue without being under the gun of having to make a big decision on a repair or concession while under the gun of a deal on the table. It give the homeowner time to call and get quotes from several companies that might do the work, rather than just taking the first bid so that the deal can move forward. Yes, it might require disclosure on the Seller’s Disclosure form; however, that same form has space to explain what was done to fix the issue, so that is out on the table, too. If the issue is one that might require some negotiation with the buyer over splitting the cost of the repair, it is also good to have 2-3 quotes for the work in-hand, so that the seller knows what he/she is negotiating. That investment at the front end may be one of wisest things you do to get ready for listing your home.

Sunday, November 24, 2013

It's back because somebody cared...

I recently reinstated a feature on my real estate web sites that I had dropped about a month ago. That feature was the tracking of the home sales in the markets that I cover - the townships (and included Villages or Cities) of Milford, Highland, Commerce, White Lake, Lyon and West Bloomfield in Oakland County;  along with Green Oak, Brighton and Hartland in Livingston County. I had been reporting the weekly sales in most of those locations for 6-7 years. The reported data format changed a bot over that time, but the basic sales data was always there.

Now I will admit that this is a somewhat arbitrary report of sales data. I did not report sales under $20,000. Those sale are mainly tear-down or made for he land value alone. I also only reported single family homes; so, condos were not included in the data. During the recent "Great Recession" I added a field to indicate whether the sale was a distressed sale, which was defined as a foreclosure or short sale. I also reported the SEV (State Equalized Value) of the home at the time of the sale and calculated the ratio of SEV to Sales Price.

The SEV is a contrived number in Michigan which is supposed to equate to 1/2 of the assessed market value. The idea was that if you doubled the SEV you would have the market value, at least as the assessor saw it. The fact was that it was never possible to calculate a market value by taking a straight 2.0 times the SEV. At the depth of the recession sale prices were running about 1.4 times the SEV and now that the recovery has sky-rocketed prices the sales prices are running about 2.4 times SEV or better.

Both the distressed sale indicator and the SEV and the calculated SEV as a factor of sales price number became largely irrelevant as we exited the recession, so I have stopped reporting them in the current report. I have added instead, fields that show the number of bedrooms and baths of the sold houses. I hope that these fields will make the data more meaningful for many.

So, if you are interested in what's happening in my little patch in the real estate world, go to any of my three real estate web site - www.movetomilford.com, www.huronvalleyrealtor.com or www.themilfordteam.com and look for the link that will take you to what has sold recently in the area. The reason that I reinstated this feature is that several of my followers emailed mine to tell me that they missed it. It's always helpful to get that kind of feedback, so that I can see what is important to visitors to the sites.

Friday, November 22, 2013

Michigan grants tax relief to disabled veterans


The Dannie Lee Barnes disabled veteran property tax relief act.
 

There are many laws that get passed by state governments that few people hear abnout or know about. The Dannie Lee Barnes disabled veteran property tax relief act may be one of those new laws. Just enacted by the Michigan legislature during early November, 2013, it was made effective immediately but little has been done to get the word out about the law.
 

For those who served their country and suffered life changing disabilities because of that service, this is welcome relief. The law applies to only those who have been declared to be 100% disabled by their injuries or who have special needs due to their injuries and to those who lives have been so disrupted that they are now essentially unemployable.
 

This is also one of those laws that most local County and Township officials may not have heard of yet or know how to implement.  I have posted the law, as it was published by the legislature below. Since it was given immediate effect, it applies to this winter’s taxes, if the disabled veteran can find someone locally who knows how to implement the law.
 

One aspect of this new law that local officials are sure not to like is that it provides no relief to the local governments for the tax revenues lost due to this change. It is relatively easy for legislators sitting in Lansing to pass laws with the provision – “each local taxing unit shall bear the loss of its portion of the taxes upon which the exemption has been granted.”
 

Read through the law below and then Veterans who wish to take advantage of this new law should contact their local Township or County officials and ask about submitting their affidavit (see below) of eligibility. You should have your VA paperwork ready as proof of your level of disability.

  

THE GENERAL PROPERTY TAX ACT (EXCERPT)

Act 206 of 1893
 

211.7b Exemption of real property used and owned as homestead by disabled veteran or individual described in subsection (2); filing and inspection of affidavit; cancellation of taxes; local taxing unit to bear loss; death of disabled veteran; continuation of exemption in favor of unremarried surviving spouse; "disabled veteran" defined.


Sec. 7b. (1) Real property used and owned as a homestead by a disabled veteran who was discharged from the armed forces of the United States under honorable conditions or by an individual described in subsection


(2) is exempt from the collection of taxes under this act. To obtain the exemption, an affidavit showing the facts required by this section and a description of the real property shall be filed by the property owner or his or her legal designee with the supervisor or other assessing officer during the period beginning with the tax day for each year and ending at the time of the final adjournment of the local board of review. The affidavit when filed shall be open to inspection.


The county treasurer shall cancel taxes subject to collection under this act for any year in which a disabled veteran eligible for the exemption under this section has acquired title to real property exempt under this section. Upon granting the exemption under this section, each local taxing unit shall bear the loss of its portion of the taxes upon which the exemption has been granted.
 

(2) If a disabled veteran who is otherwise eligible for the exemption under this section dies, either before or after the exemption under this section is granted, the exemption shall remain available to or shall continue for his or her unremarried surviving spouse. The surviving spouse shall comply with the requirements of subsection (1) and shall indicate on the affidavit that he or she is the surviving spouse of a disabled veteran entitled to the exemption under this section. The exemption shall continue as long as the surviving spouse remains unremarried.
 

(3) As used in this section, "disabled veteran" means a person who is a resident of this state and who meets 1 of the following criteria:


(a) Has been determined by the United States department of veterans affairs to be permanently and totallydisabled as a result of military service and entitled to veterans' benefits at the 100% rate.
 

(b) Has a certificate from the United States veterans' administration, or its successors, certifying that he or she is receiving or has received pecuniary assistance due to disability for specially adapted housing.
 

(c) Has been rated by the United States department of veterans affairs as individually unemployable.
 

History: Add. 1954, Act 179, Imd. Eff. May 5, 1954;¾Am. 1978, Act 261, Imd. Eff. June 28, 1978;¾Am. 2013, Act 161, Imd. Eff.

Nov. 12, 2013.

Popular name: Act 206
 

Compiler's note: Enacting section 1 of Act 161 of 2013 provides:

"Enacting section 1. This amendatory act shall be known and may be cited as the "Dannie Lee Barnes disabled veteran property tax

relief act"."

Rendered Wednesday, November 20, 2013 Page 1 Michigan Compiled Laws Complete Through PA 172 of 2013

Legislative Council, State of Michigan Courtesy of www.legislature.mi.gov

Wednesday, November 20, 2013

Doing the real estate cha-cha...


 “An optimist figures that taking a step backward after taking a step forward is not a disaster; it’s more like the cha-cha.” – Robert Brault, from my favorite daily blog, Jack’s Winning Words.

My wife oft accuses me of being a pessimist and I admit that I must constantly fight against that unfortunate natural predisposition. Life is full of little set-backs; many of them following close on the heels of the little victories that we also get to celebrate. One can choose to see only the negatives in life or one can choose to see both the good and the bad and get used to doing life’s version of the cha-cha.

In real estate, many deals end up feeling emotionally like an episode of the TV show Dancing with the Stars. You’re up, you’re down, you’re twirled all around. Cha-Cha-Cha.

On the surface the process appears to be fairly straightforward – the seller offers his property for sale, a buyer makes an offer that the seller finds to be acceptable and they move to the closing. But, along the path from listing to closing there are often ups and downs, twists and turns and even starts and stops. Cha-Cha-Cha.

Just the process of getting the property listed can have its own twists. Often the Realtor will make suggestions for repairs or improvements that the seller may object to or argue about. Sometimes the seller will reveal things during the process of filling out the listing paperwork that he failed to mention before and which might impact the ability to sell the place for the suggested price. The Realtor has already had a high (getting the listing) and a low (discovering a major fault) before the house is even on the market. The seller might have experienced a little letdown from the pleasant high of having made the decision to list. Sometimes seeing the sign go up in the front yard is the first time that it has really hit them that they are selling their house. Dip your partner!  Cha-Cha-Cha.

There may be lots of little ups and downs before the first offer – good reviews from visits that get hopes up; but, which then don’t result in anything further and the bad reviews that must be discussed and decisions taken about what to do. There may be one or more discussions about pricing, which are often emotion filled. Eventually you get to that first big lift – you get an offer. What a thrill as your emotions go higher and higher. CHA-CHA!

Then it’s down again as the inspection reveals what looks like a deal-killer problem – maybe it’s mold, maybe it’s hidden water damage, maybe it’s even something that the owner “forgot” again – “Oh, yeah, that was caused by the fire.” Fire! What fire? You didn’t mention a fire on the Seller’s Disclosure. Down you go your heart racing and gut in your mouth. Then a twist and a turn and a couple of good remediation quotes and you’re back in the deal – the buyer will accept the suggested fixes. Up go your spirits again. Cha-Cha-Cha

Next up is the dreaded appraisal. The agent does what he/she can. They take comps for the appraiser that support the sale price and then you wait. And wait. And wait. Funny what tricks your mind can play on you while you wait- lots of imagined twists and turns are analyzed. You can cha-cha all over the place mentally. Then good news! The place appraised! Yea! You’re happy again. Cha-Cha.

Just then you get an email from the Title Company that reveals that the examination department has determined that there is an old water and sewer assessment that has never been discharged. Oh, by the way, they did not see a private road agreement on file at the County either; so please supply that. Cha-Cha-Cha!

Once you have all of the issues resolved it’s time to move to closing. In fact time is running out. The contract expires in a week or less and panic replaces fear.  Are we clear to close yet? No! Why not? Did the buyer get his insurance lined up yet? No, why not. Whose job was it to tell him? What do you mean that underwriting hasn’t finished yet? They’ve had it for 40 days. Why haven’t they contacted the PMI company yet? Are we going to make the close four days from now? What do you mean you don’t have a closer available? We can go anywhere. My seller has movers coming. Yes I know that he was supposed to wait for the clear to close, but he didn’t. The buyer has to be out of his apartment next week. What do you mean we’re not ready to close yet? Cha-Cha-Cha.

Just when it seems all is lost, miracles happen. It’s part of the process. Underwriters magically get done, the PMI company rushes the decision and clears the deal, a cancelation means that there’s a closing slot and closer available and all parties show up at the right place at the right time (maybe just a little late to draw out the drama)  with the right amounts of money and their drivers licenses. Yet another real estate transaction gets competed. You can breathe again. The dance is over – for now.  Cha-Cha-Cha.

Tuesday, November 19, 2013

Things your Realtor doesn't want to hear...


There are lots of old jokes about things you don’t want to hear; like, “Oops!” when you’re lying there awake on the brain surgery operating table or, if you’re on an ocean crossing flight: “This is your Captain speaking, I just wanted to take this time to remind you that your seat cushions can be used as floatation devices…”

The real estate process, no matter whether it’s on the buyer or seller side of the sale, is a cooperative process between the client and the Realtor. There are things that both sides need to do, in order for the process to work well. There are also things that I’m sure neither side wishes to hear from the other.

As a buyer or a seller, I’m relatively sure that you don’t really want to hear, “I just got my license last week and I’m so excited to have you as my first client.” It’s not that there’s anything wrong with the Realtor or with being their first client; in fact they work harder for you as a result and most Realtors belong to organizations that provide them with support and counsel as they get started. It’s just that you had probably hoped for a more experienced Realtor to handle your search or sale. There are other things that an experienced Realtor might say that you also may not want to hear, like, “Your expectations for what you can get for this place are way out of line with the market.”  Sometimes that’s true and the agent will just feel like you need a cold dose of truth about value, in order not to waste a lot of time on the market with an overpriced house.

On the flip side, there are things that clients can say that make a Realtor cringe (inside if not so you could notice). One of the most often heard comments from would-be buyers that can give a Realtor a chill is the phrase, “I’ll know it when I see it.” That just tells the Realtor that the buyer doesn’t really have any firm ideas about what they want. Buyers would be well
advised to take the time before meeting with a Realtor to make a list of must-haves and want-to-have items for their search. They should also have already met with a mortgage rep and have a mortgage pre-approval in hand to guide them (and the Realtor) on the price range that they can afford. The Realtor will normally want to discuss the buyer’s needs and desires before starting any search effort. As the search goes on, the Realtor will be constantly adjusting the list, as he/she gets experience with what works or doesn’t work for the buyer on each visit.

“I’m not in any hurry”, is another scary statement to make to a Realtor. It’s not that the Realtor wants you to hurry; however, the Realtor’s time has value and he/she can’t afford to waste a lot with a client that really doesn’t have any firm motivation to make offers or to buy. Realtors would much prefer a client(s) who has a lease deadline approaching or who have finally tired of living in the same bedroom that they were in when they left for college or young couples living in the basement of one of the parents. You don’t have to be in a hurry and I won’t try to hurry you; but, the Realtor does need to have a sense that you are ready and motivated to buy.

On the sell-side, there are a few statements that indicate that the Realtor is going to have to work hard to make the sale happen. “I’m not going to give it away,” is a favorite; as is, “It was good enough for me for 30 years, and it ought to be good enough for a buyer.” The Realtor is not asking you to give your home away; just to be reasonable about its worth on the current market. That is why the Realtor did the market analysis and gave you pricing advice in the first place. And that 30-year old roof or furnace or whatever, that is on its last legs is certainly not going to slip by the inspection and be good enough for a buyer. The buyer will either discount the offer price or ask for a concession to have those items replaced. That’s why the Realtor’s suggested price may have been lower than you expected in the first place. He/she was already factoring that in to the market value.

Another seller statement that portends problems for the Realtor is, “Let’s test the market at this price.” That usually means that the price is too high and that the house will set on the market until it gets stale. Many times it will end up selling for less than what the Realtor originally had in mind, because it sets there too long and people start to think that something in wrong with it. Another oft heard statement from sellers is, “My sister (brother, cousin, friend) is a Realtor in another state and she told me that my house should be worth $XXXXXX.” No one, including another Realtor, should ever try to advise someone about real estate pricing in another state. It’s not really possible for them to know the local market. Good Realtors, even if they are in other parts of the same state, will usually avoid giving pricing advice about properties out of their area of expertise. 

Buyers can also drive Realtors crazy with this statement, “Let’s toss this low-ball offer in to see how serious (or desperate) the seller really is.” Buyers are often surprised when they get a rejection and not a counter-offer. Low-ball offers just offend sellers and often they will not entertain future, more serious offers from the same buyers. If you like the house, make a reasonable offer, based upon advice from your Realtor. Lobing in low-ball offers is a waste of everyone’s time.

Buyers and sellers often use this line, “I’ve bought and sold lots of house, so I know real estate.” Really, how nice for you. It’s great that you’ve had some experience with the real estate process. Hopefully, that means that the Realtor won’t have to teach you everything about the process; however, each transaction stands alone in terms of the property’s location and condition and the condition of the market at the time of the sale. Your real estate experience should tell you to do your part to make the house marketable and then step aside and let the Realtor do his/her job to market it.

The Realtor will be happy when he/she hears, “You’re the expert; I’m going to take your advice.” I think you both will be happy with the results.

Monday, November 18, 2013

Go Vampire Hunting in Your Home...

Vampires and vampire shows on TV and in the movies are still very popular; however, you should be aware that there are vampires in your home that you need to locate and kill. In the movies and on TV the vampires suck the blood of their victims by biting into the veins in their necks. In your home the vampires suck the power out of the circuits in your home. The power vampires in your home are the result of devices that never fully turn off. They are in stand-by mode, ready to come back completely on at the click of the remote. In fact it was the advent of the remote control that necessitated that the device always be partially on and ready to respond to the remote.
 

Both kinds of vampires are most often seen at night. The easiest way to go vampire hunting in your home, wait until dark and then turn out the lights and walk around. I think you’ll be surprised at the eerie little glows that you see in the night – those are your vampires. Those are the little standby lights on your TV or your printers or your computers or any number of other items in your house. As you walk from room to room in the dark, count the number of little glowing lights that you see. I’ll bet you’ll be surprised at all of the vampire activity that is going on. You can also just go around picking up all of those little power bricks that come with almost every new device and which you leave plugged in. If they are warm that is heat from the power that they are drawing, even if the device isn’t turned on.


Now some of you may be saying that the use of the term vampire is too dramatic for such a small amount of power waste by each device. So, maybe you’d prefer the term “ticks”. Each little tick draws just a little blood. But imagine instead of one little tick there are tens of them, all sucking at once. According to one study - The average US household has a total of 50 watts of standby power going all the time. That’s 440kWh per annum per house hold or about 5% of the total consumption for that household. Across the 100+ Million homes in the US that represents 5 GW of wasted power.


If you’ve never thought about all of the things in your home that might be sucking down power when you thought they were turned off, read this government report -  http://standby.lbl.gov/summary-table.html.  I’ll bet there are some surprises on this rather extensive list of home items that draw standby power.


It turns out that it is probably impossible to get rid of all of the standby vampires, since some of that energy is going to maintain internal clocks that need to be kept current or they would have to be reset every time that you wanted to use the appliance or gadget. Many of the little energy suckers can be completely turned off only by unplugging them or putting them on a power strip that can be turned off. Ironically, many of those same power strips have a glowing (energy consuming) little light in the on-off switch, so that you can see them in the dark. There are many things that you can do to rid your home of most of your vampires. Here is a good video by Kansas City Power and Light on some suggestions to reduce your power losses - http://www.youtube.com/watch?v=fJCSjsrE8ZM

 
So, unless you are comfortable sharing your home with vampires (or ticks) wander through tonight and see how many of the little power-suckers you have in your house. Happy vampire hunting!

Sunday, November 17, 2013

Monthly Michigan Marekt Report


Every month, Dan Elsea, our broker at Real Estate One does an analysis of the Michigan Real Estate Market. He looks back at the previous months and ahead to the future in order to try to help agents and clients understand what is happening and how that might impact them.  Below is a Shortened version of the November report. To view the entire report, including the monthly market charts that Dan always includes, click here.

Similar to August and September, October showed continued resilience, but at a slower pace of growth than the first half of the year. We are still burning off nearly six years of pent-up housing demand from 2006 to 2011. This has caused a rather quick jump in values and some recent signs of an uptick in listing inventory.

Both the release of that pent-up demand as well as the increase in inventories is a result of the following:

·         There was a panic element to the decline because prices fell further than they should have based on the pure economic conditions. There has been a quick jump back to compensate for that.

·         Housing affordability has been at an all time high bringing additional buyers into the housing market (thanks to a combination of lower prices and interest rates). The affordability is higher than normal for a recession, offsetting many of those who could not buy or sell because of their economic situation.

·         With rising values, more and more people who could not move since 2006 but needed to (because of births, deaths, divorces, employment, etc.) are now able. Values are beginning to exceed mortgage balances causing the slow release of inventory to the market.

·         Many of those who had short sales or foreclosures can buy again.

·         Investors are now beginning to release their inventory with prices rising.

As the demand rolls off over the next year to 18 months, the market will settle back to a balance between buyer demand and seller supply. Helping with that will be an increase in new construction, which we think is more than a year away, since banks are still not comfortable lending for new subdivisions or model homes.

Looking ahead to 2014, we see buyer demand slowing to a more manageable pace, additional listings entering the market and appreciation in the 6-8% range. There will still be a listing shortage. In fact, absent of an economic downturn, the listing shortage will continue until lenders are willing to finance more new construction. Without additional new home inventory, the market is just churning existing inventory against an increasing level of net household formations. At some point banks will notice this imbalance of more buyers than houses and begin to lend to builders again.

There has been and will continue to be quite a bit of chatter within the real estate and lending community on the effect of the implementation of the provisions of the Dodd-Frank legislation in January 2014. The legislation was designed to prevent the predatory lending that helped exaggerate the real estate crash and it does contain some reasonable provisions to do so. As you can imagine with any new law, there are also some unintended consequences that could hurt some homebuyers’ ability to get a mortgage. You will hear things like Qualified Mortgage (QM), Ability To Repay (ATR) and the 3% Points and Fees Test.  The Consumer Financial Protection Bureau (CFPB), which now oversees all mortgages as part of the Dodd Frank Bill, requires mortgage companies to implement QM, ATR and the 3% Points and Fees Test. The goal is to move towards “safer” loans, but in reality, mortgage companies have been moving towards this already.

There are predictions that with these new rules as many as 20% who could get a loan in the past, will not in the future, but we don’t feel it will actually be that high. In fact, with refinance mortgages drying up, more lenders will be focused on new purchase mortgages, which could cause them to be more aggressive, offsetting some of the Dodd-Frank impact. However, it will be important for buyers and sellers to anticipate that some transactions may take longer with a few more hoops to jump through. All lenders will operate under these new rules and most have added underwriting staff as well as adjusted approval processes to anticipate the changes. These rules go into effect with mortgage applications starting January 2014.

Real Estate One is the largest real estate company in Michigan and in the top 10 of independent brokerages in the country. Real Estate One was named one of the best places to work in Michigan among larger company, moving up to the number three spot from last year’s number 5 slot. Real Estate One had been a family owned business since 1929. Today the Real Estate One family of companies is made up of the Real Estate One, Max Broock, Johnstone & Johnstone, John Adams Mortgage, Capital Title, Insurance One, Relocation America, Rental Management One brands and other ancillary services. Real Estate One has over 65 locations in Michigan with over 1,800 agents to serve you.

Saturday, November 16, 2013

Buyers, don't leave home without one of these apps...

Realtors® would always prefer that you let them do the searching for you and then have them show you each house that you like. That really doesn't happen in real life. Buyers today are more independent and many seem to enjoy driving around to see what they can find in areas that they may like. They are also much more into technology, especially mobile apps on their smartphones.

I understand that and so I always advise buyers that I work with to download one of the great smartphone
apps that exist for buyers. You can find these at the Apple App Store or at your Android App Store. The two that I recommend are from Real Estate One and from Realtor.com (search on Real Estate One or Realtor at either store). If you live in Michigan, especially in the Detroit Metro area you really can’t beat the Real Estate One mobile app. If you live anywhere in the United States (including Michigan) the Realtor.com app will work for you and is just as good. The Real Estate One app only works for Michigan-based properties.

The great thing about both of these apps is that they are location sensitive. They are GPS enabled, so they know where you are when you turn them on. They both have very good, very up-to-date data bases of the homes that are for sale anywhere in the country. Unlike some apps from national real estate oriented sites, both of these apps are kept up-to-date. The databases for both are updated multiple times during the day. That means that you won’t waste your time calling on a house that was sold last week or last month, like you can with those big national sites.

As you drive around both apps will interactively show you on a map display what homes are for sale all around you. You can set the range of the display, so that you only see homes within a mile or within 5 miles (or more). Both give you a very cursory display initially – you know the format from other location-based apps- a little pin with a street address and the price. Touch on the pin and the information expands to show you more, including a picture of the property. Touch again and you can see the entire listing. It’s sweet. All the stuff you need to know to decide whether or not to head over to that address to take a look at the house from the street.

Both apps will also let you do searches that are criteria based rather than location based – things like price, number of bedrooms and more.  The Realtor app has a nice, unique feature that lets you search within a school district, if you have your heart set on a particular district. You’ll have to play around with both apps to see all of the search options, but both are extensive and both put you in charge of the data.

Once you have enough information available from either app and maybe have done a drive-by, you can call and set up an appointment to go see the  listing. And, if you’re in the Southeast Michigan area, you can set the Real Estate One app up with me as your preferred agent and then it will make it easy for you to call me when you want to see a house. I like that part. These are apps that any serious house hunter should have on their phone. Don’t leave home without one.

Here is a link to a video about the Real Estate One app.

Friday, November 15, 2013

Visit your home like a buyer does....


An educational technique that I often use with would be listing clients is to take them on a visit to their own home, through the eyes of a would-be buyer. I haven’t yet gone all the way to loading them up in the car and driving around the block to get to the visit; but, I do normally start outside in the driveway, where a Realtor and his client(s) might park. Sometimes we have to start discussing things right there, if the driveway has been neglected, is cracked and has grass growing through the cracks.

One of the most often neglected places in a home is the front walk and front door. As side-entry garages became prevalent, more and more homeowners got into the habit of popping the garage door open and driving in. They then make their way into the house through the garage door, which often opens into a mud room. Many can’t even remember when the last time was that they used the front door; and it shows. Realtors don’t bring visitors in through the garage; they use the front door.

Overgrown front walks and neglected front stoops or porches and front doors are very common. People put in all sorts of cute little bushes or plantings along the walk or beside the porch and then forget about them. Often one has to step off the walk to get around the overgrowth from the those cute little bushes that have now grown into monsters. Porches or stoops are also often left with little attention, even when they start to deteriorate. Often that bright brass coach light that looked so cute when it was installed is now dull and rusted and is cocked off at a slight angle, just to call extra attention to itself.

Just getting to the house up the walk may be a challenge, especially in the coming winter months. If it’s not uneven concrete flags to trip over; it might be icy spots on the walk or porch. Since the homeowner doesn’t use that entrance sometimes they forget to shovel it off when it snows or to spread ice melter when it is cold.  Don’t make a visit to your house a survival course.

The next challenge is often the Realtor struggling with the lockbox. As we get into shorter and shorter days, showings will more often fall in period of darkness. I can’t tell you the number of times that I’ve struggled on a dark front porch trying to work the combination on a lockbox because the seller forgot to leave the front light on (yes, that same pathetic, rusty brass light). I carry a flashlight in the winter just for this case.

Once inside, especially if it’s snowy or rainy, you’ll probably be ask (or want to) take off your shoes. Many homeowners forget to provide a chair for shoe removal and putting them back on; so that can mean leaning against a wall while trying to accomplish this feat. Hopefully, they have provided a mat of some sort to put your snowy shoes or boots upon; so the snow doesn’t melt all over their foyer.

The entrance foyer can set the tone for the rest of the visit. Visitors will make note of what they see just inside the door; even if it only views of the stairs and a couple of rooms off to the side. The worst that I’ve seen is a foyer with a view up a straight set of stairs right into the bathroom at the top, with the toilet prominently on display. No sale on that one!

If you’re doing this “visit” with a Realtor watch were their eyes go. They will be looking at or looking for things that you just may not notice any more. They will scan the ceilings in every room, looking for any evidence of water stains that are clues of leaks somewhere. They will scan the walls looking for plug and switch covers and for extra amenities, like wainscoting or ceiling molding. They will be looking at the lighting fixtures – types, how many and do they work. They will note the paint job in each room, looking for evidence that it was a badly done DIY job. They will note the condition of the kitchen – appliances, cabinets, countertops and layout. In baths they will note the condition of the grout around tubs and in tile work and look for signs of rust staining that indicates iron in the water.

Of course the Realtor will be seeing and noting any issues with clutter and cleanliness, so that they can discuss that with you, too. He/she is not trying to make you feel bad about your house or your housekeeping. They know that people fall into patterns of comfort about how they live in a house. The Realtor just needs to get you out of that comfort zone enough so that you see the house as strangers will see it when they visit. They may suggest hiring a cleaning service for a one-time deep clean.

After the visit, you should sit and discuss the results. Let me give you a hint at a line not to use with the Realtor – “Well, it’s good enough for me, so it should be good enough for them.” Maybe you should turn that thought process around and think, “If I make it good enough for them, it will be great for me.” You may rediscover something that you surely had at one time; but, which might have gotten sort of pushed aside for a while – pride of ownership. Once you have that again, it will shine through to visitors and help your house sell itself.

Even if you aren’t about to sell your house, make a visit to it every year, so that you can see the stuff that you need to get to in order to keep it up. I guarantee you that once you’ve gone through this experience with a good Realtor, you’ll never walk into any house again without noticing more than you’ve ever seen before.

Thursday, November 14, 2013

Watch the donut and not the hole...


 “As you go through life, make this your goal. Watch the donut, not the hole.” (Burl Ives)

That would be good advice for real estate as well as for life. Too often both the sellers and the agent involved in marketing the house put too much time in on watching the hole – things that aren’t there; instead of things that are. There are almost always shortcomings in most houses, whether it is the design and layout, a smallish kitchen, small bathrooms, no garage or whatever.  Those are the holes. What needs to be the focus is the donut. That might be the great location, the cozy warmth of a smaller place, the features of character that may not be found in newer homes.

You and your Realtor, working together, can figure out how to best show the donut and minimize the attention paid to the holes. Some Realtors give staging advice themselves and some may bring in a stager. It’s amazing what someone with an eye for furniture placement and accessories can do to make the donut look so great that you don’t even see the hole. Sometimes it may require a little paint to change the character of a room or just removing some of the stuff in the room to make it feel bigger. Little things, like adding knobs to kitchen cabinets can change the look of the whole kitchen and is a relatively cheap update. Just doing a deep clean on your bathrooms to make the tile and grout sparkle can change your view about that room. There are many other small and inexpensive tricks that your Realtor will be able to suggest.

One way to make the holes disappear is to take care of all of those little maintenance things that you’ve been putting off. That broken switch plate or missing plug cover is a hole in your donut. The piece of door molding that your cat has used as a scratching post for the last few years is a hole in your donut. That water stain on your ceiling from a leak that happened before you got the roof replaced is a hole in your donut. That wobbly bottom step on the front porch or the loose hand railing are holes in your donut. You may have grown comfortable living with those things, but a buyer will just see them as holes in your donut. Fixing them lets the buyers keep their eyes on the donut.

 So, while it is good advice to stay positive and keep your view on the donut; when the time comes to sell you’ve got to fix those holes that you’ve been living with.  Ask your Realtor to help you by walking through and helping you make a list of the holes that need attention. You may be surprised at the number of things that he/she sees that need attention and that you’ve just gotten so used to that you don’t even notice them anymore. You want your home to come across as a crème puff and not a stale old donut.

Tuesday, November 12, 2013

Let them see the house...

Here’s a quote by a famous actor from the past that I’d like to apply to real estate:

“My father used to say, ‘Let them see you and not the suit.’”  (Cary Grant)

What the heck can I do with that? How does that apply to selling your house? Well, let’s just pervert it a little bit –

“My Realtor says, ‘Let them see the house and not your stuff.’” (Norm Werner)

One of the tougher things for me to get across to sellers is the concept of their house as a product and no longer their home. Sure, they may still be living there; but, as soon as it goes on the market, it is a product competing with all the other products out there for the attention of the buyers. Buyers aren't interested in seeing your wall of family photos or all of the sports trophies that you kids won in high school. Buyers could care less about the miniature teacup collection that you have from all of the places that you've visited or the Hummel collection of cute (if somewhat dusty) figurines that you have in the corner cupboard. They aren't very understanding when they open a closet and half of the sports equipment that you are still storing for your kids tumbles out at them. These are not selling points for your house.

Most people are pack rats, whether they admit it or not; they just keep too much stuff. If you have closets that are stuffed to the brim, you are a pat rat. If you have stacks of papers or magazines or things you have clipped out to get to later; you are a pack rat. If you have boxes of tools and shelves full of half full bottles and cans of stuff you can no longer remember buying; you are a pack rat. If you have boxes full of items that you used to collect and display but no longer do; you are a pack rat. If you have boxes up in the attic or out in the garage that are still unpacked from your last move; you are a pack rat. So, admit it – you are a pack rat- and then let’s get on with life.  

When it comes time to sell your house it is time to deal with your problem. Get rid of stuff! Hold a garage sale. Load up the car and head to the nearest Salvation Army drop-off location.  Rent a storage unit, if you just can’t bring yourself to part with your treasures; but, get it out of the house. People need to be able to see the house and not just your stuff. You may well find this exercise in getting rid of stuff to be very liberating. All of that excess stuff is like baggage that you may have been dragging around for a long time.

And what about the precious memories that have become a part of the house? Who didn't have the kitchen doorway or wall with the little ruler marks and dates on the wall or doorjamb that marked the passage of time and the growth of various family members? Paint it over! Buyers might think it is cute initially, but then it just becomes another update project on their list and something that they will take off money for to cover the paint. And what of the stars on the ceiling mural in the Princess room, lovingly placed to warm the heart of your little princess? Get rid of them and paint the ceiling. Take down the bead curtain on the closet, too, and put the door back. It might be little Tommy’s room next. Finally, there’s the Hunter Red family room that seemed so cool when you had it all decorated with your daughter’s Dressage pictures from the equestrian team.  Paint it neutral and deep six the horse pictures.

The real point of all of this is not to call into question your tastes while you were living here, but to drive home the point that you have made the decision not to live here anymore and now you need to present the house in as neutral and unobtrusive way as you can. If the new owners want a Hunter Red room, they’ll paint one that color. If they want to put up soccer pictures of their kids, they can. If they have a little Princess, too, let them create their own fairy land bedroom. If they don’t want any of that stuff they certainly won’t want your old hand-me-downs.  People looking at houses need to be able to see the house well enough to imagine their stuff in it and not be distracted by all of your stuff.


I know that this is a tough point to get over for some home sellers, but it is an essential point. Once you can get past the issue of your home becoming a product – a house competing against other houses of similar size and cost – then you can join you Realtor as a more effective partner in making that sale happen. What was your home will always be there in your memories. You will remember lining the kids up for the annual marks on the doorjamb, even if the marks are no longer visible. No one can take away your memories of the house as your home, but now it’s time to let someone else take your house and make it their home. 

Monday, November 11, 2013

In real estate, mind your Ps and Cs…


 
There is an old phrase “Mind your Ps and Qs” the origins and meaning of which there is not a consensus. Various learned sources trace it back to various uses in England in the 1500 – 1600’s. Google it to read all of the various sources that are referenced.

In real estate, I tell my clients that in order to sell their house they must mind their Ps and Cs, and I do have a explanation for them about that.   

What I tell them is that, when it comes to selling a house, there are three Ps and Three Cs in real estate, which are primarily things that they control. There are certainly lots of other factors that they can’t control, such as location, the local economy and the style of the house (once a tri-level, always a tri-level).

Here are factors that they do have personal control over:

The three Ps – Price, persistence and perseverance.

Price -  Sellers always have input and the final say on the price at which the property will be offered to the market. Hopefully, they have retained a good, local Realtor® to help them properly price the home within the market context and have listened to that advice. Sometimes it’s hard to hear that the market doesn’t care what you need to get for the house or what you think it is worth. That has been especially hard for those who have been underwater on their mortgages. Setting the right initial price can mean the difference of a quick sale at asking price vs. lingering on the market for months and slowly, begrudgingly lowering the price to where it should have been. Normally homes that linger on the market for months end up selling for less than they would have, had they been properly priced at introduction to the market.

Persistence – Selling your house means consistently and persistently having it ready to show. It means getting into a routine with your family of straightening everything up before you leave for work or school in the mornings and being ready to leave on relatively short notice to accommodate showings. Sometimes it means having to accommodate the inconvenience of leaving your home for a showing when you’d much rather just stay warm and comfortable inside on a blustery winter day. Sellers with small children may benefit from creating a game-like environment with the children to see who can get their rooms picked up and ready fastest before school or for a showing. Having a crate for Fido or Tabby, or taking them with you is also highly recommended.  Showing Realtors hate being challenged by the showing instructions - “Don’t let the cat out”- when they call to show your house. 

Perseverance - This means giving the real estate process time to work. In today’s tight inventory market you may not have to preserver quite as long as in the past; however, you can’t be like the children in the back seat saying “Are we there yet?” to your real estate agent every day. Even though you hear about and read about fast sales in today’s Sellers’ Market; it may take months, rather than days or weeks to find the right buyer for your home. You also need to understand that there is a process involved with getting from an accepted offer to the closing table that can take 30-45 days. Hang in there!

In addition to the three-Ps, there are three Cs that are definitely the responsibility of the seller. Without a commitment to the three-Cs the sale process may stall or be drawn out and the sale price will likely be lower.

The three-Cs – Condition, Clutter and Cleanliness.

Condition – this has to do primarily with the things that some people get too used to living with – a gutter that needs cleaning, the marks on the door where the dog chewed, that window with the broken seal that fogs up in the cold weather, that missing knob on the cabinet drawer. This is mainly about maintenance or the deferral of maintenance. It could be something big, like the leaking roof or the air conditioning that no longer works, but more often than not it’s a whole bunch of little things that the owner has just gotten used to looking past and living with. Those things need attention before you put the house on the market or they will kill a sale or lead to much lower offers.  This is an area where a good Realtor can also help by doing a critical walk-through of you house to provide you with a list fo things that he/she sees need to have attention. In some cases, it may even be worth it to hire a home inspector to do and inspection and give you a list of things that will be found later anyway. For $300-400 up front, you can avoid (or at least know about) the bigger issues that may kill a sale later. Keeping the place in good condition during the listing is also the sellers’ responsibility.

Clutter – Having too much stuff in a house is the most common issue that Realtors face with sellers, especially those who have lived in the home for many years. De-clutter is usually the first piece of advice that a seller will hear. Buyers don’t really want to spend time looking at all of the family pictures that you’ve collected over the years. They could care less about your bowling trophies and fish mounts. Would be buyers need to be able to walk through the house without having to navigate around a labyrinth of furniture and knick-knacks and souvenirs from all of your family vacations. When they open the door to a closet they do not expect to have to catch the stuff falling out on them.  De-clutter, de-clutter, de-clutter and then de-clutter some more.  If you can’t bear to part with some things, consider renting a storage unit to put them in until you move. Moving will likely force you to re-think things, since many people are downsizing and won’t have room for all of that stuff. If you need help with this, have your Realtor give you de-cluttering and staging advice or hire a professional stager (whose first piece of advice will likely involve de-cluttering).

Cleanliness – Potential buyers aren’t going to inspecting the cleanliness of your home with white gloves, but they will notice the dust bunnies or cobwebs under the tables or in the corners of the rooms. They will see whether or not you have kept the grout clean on floors and walls. They will see the dark streaks that can build up on cathedral ceilings and wonder what is causing that. They might notice a dirty washer or dryer and wonder what other appliances you have neglected. The point is that lack of cleanliness just brings unwanted attention to things and ignites the imagination of the buyer in ways that aren’t usually good. I often recommend that a seller hire a local cleaning company for a thorough deep cleaning, especially if the sellers both work and don’t have time to do the cleaning themselves. It will still be up to them to keep it clean during the listing.

So, now you know about the Ps and Cs that you will need to mind, if you are selling your home. You really need to think about these and make the commitments that are necessary to do your part in the sales effort. Your Realtor will be focused upon the marketing of the property and getting buyers through to take a look. Most of what they see is up to you. Call me if you'd like my take on your current Cs and to discuss the Ps of selling your house.

Sunday, November 10, 2013

Don't try to understand; just go with the flow...

 “Women and cats will do as they please, and men and dogs should relax and get used to the idea.”  (Robert Heinlein)

The idea behind today’s saying is similar in concept to the title of the popular book Men are from Mars and Women from Venus. The underlying truth is a difference so profound in how men and women view the world and the things that are happening around them that it cannot be understood by either party. Many men never relax and get used to it, so they go through life being continually astounded and confused by the actions and reactions of women. Women, on the other hand, seem to be able to at least accept the idea that their mates live in a completely different world and they try to show sympathy or empathy for the actions and reactions of these befuddled beings.

Perhaps the tendency of men to try to make logical sense of things is at the root of the differences. Embracing logic as the basis for life’s decisions and actions is very restrictive and confining in terms of creativity and even emotions. Men’s tendency to think about things too much and too logically can also lead to hesitancy, which kills the spontaneity that so many women exhibit. I won’t pretend to be able to discuss what drives the actions of women. Some say intuition more than anything else, which tends to reinforce the notion of women living through a “feel” for the situation, rather than the pure logic of it all.


So, I think it best to take the advice that Robert Heinlein gave and just get used to it; rather than trying to figure it out. Men might actually have more fun in life if they just go along with the women in their lives who are doing as they please. 

Friday, November 8, 2013

Appraisal issues a never ending battle…


As much as the market has been straining to break out of the recent recession and regain lost property values, one component of the market has been acting as an anchor, holding back or at least significantly slowing the positive progress. That component is the dreaded appraisal. I say dreaded, because it has become the biggest obstacle to sales these days. The house can be in move-in ready condition with a clean bill of health from the home inspection and still have the sale
queered by a low appraisal. That’s happening a lot these days. Why is that?

One of the constant battles that go on in the real estate market is that between the Realtors involved in listing the houses and the appraisers over what the market value of the house should be. Appraisals can be the cold splash of reality in the face for many sellers. Appraisals take all of the emotion out of the process of putting a market value on your property.  The battle over market value is one that is likely to continue forever, just due to the different natures of the two sides in this argument.

Realtors, especially listing agents, tend to be optimistic and they also tend to bake the direction of the market into their listing pricing. In a rising market, like we have now, it is quite easy to miss the market on pricing, either low or high. If the listing agent prices the property too low, it might sell quickly; but, the seller will not have gotten the most out or the sale. If, on the other hand, the listing agent is too aggressive with pricing the property for a rising market, he may price it too high and it will just sit there, waiting for the market to catch up.

Appraisers go at value pricing from a different perspective. They are required to use sold comparable properties as a barometer of the market; thus their data is always trailing the market, sometimes by as much as 6 months. In a rapidly rising market that almost always means that they miss the value on the low side. For a long while appraisers were also forced to include the sales of foreclosed and short sale properties in their comparable properties. Fortunately much of that business is behind us now, but there are still a few of those types of sales that were done in the last few months that can affect appraisals.

Another major factor in many appraisals is something that the seller can’t do anything about – the style of the house. House styles come and go, with each decade usually having some dominant style. There are a few “classic styles” – ranches and colonial, for instance, that never really go out of style, but which might be less desirable than a more modern architectural style. For the past couple of decades the 1 ½ -story or Cape Cod seems to be the preferred style. Split levels, which were all the rage in the late sixties and seventies, have really fallen out of favor as a style. Those style preferences show up in the appraisals. Bi-levels, tri-levels and quads definitely appraise lower than ranches, colonials and Cape Cods of the same size. Homes that were sometimes classified as modern or contemporary when built can also fall out of favor, since many of them have very unusual floor plans.

What can you do about all of this as a homeowner who wishes to sell? Not much about the style issue; but you can make sure that your house is the best one of whatever style that it is on the market. A house in great, move-in ready condition will still attract buyers. Another thing that sellers can do is to compose a list of the updates and upgrades that they have put into the house, hopefully not too long ago. It is not obvious to the appraiser exactly when the roof was replace or a new furnace put in, but those things make a difference. Some updates, like granite counter tops will be obvious, but many others may benefit from being pointed out for the appraiser. Taking care of the many little “deferred maintenance” items that you may have been putting off can also help by removing those value detractors.  
Another thing to do is seek professional advice. Get a good Realtor to do a Market Analysis for your home and then follow his/her advice. You don’t need to fight with both the Realtor and the appraiser. Call me and I’ll help you understand more about the market value of your home and what you can do to improve it.