Translate

Follow by Email

Tuesday, December 22, 2015

Market report for December

The market report for December may be viewed as sort of a market report for the year, or at least as the report that shows the trends going into 2016. Dan Elsea reports on the Southeastern Michigan  market in this video report.

View the report and then give me a call to discuss what it means for your home, if you are planning to sell or how it will impact your new hone search if you are a buyer.

Saturday, December 19, 2015

Market Report for November

Every month Dan Elsea, our broker, looks back over the month's activities to see if there are trends or significant changes or surprises. This is his report for November, 2015.

There was a surprising jump in new purchase contracts written across all price categories over last November, providing some additional optimism going into the winter months. The jump may have been a combination of continued good economic news, the release of remaining pent- up demand, and mild weather. Overall, we are still in a Seller's market, but we do expect For Sale inventories to rise next year, causing most markets to achieve more balance between supply and demand.

What is driving buyer demand?

A) Mortgage credit continues to ease, particularly for first time home buyers.
B) Interest rates remain extremely low.
C) Household incomes are rising slowly, but still rising.
D) Employment is rising as well.
E) For Sale inventories are rising, drawing out buyers with more choices.

For sellers, prices are still rising, although at a slower pace, creating equity to help release those move-up sellers who have been held hostage to their past declines in equity.

We have been seeing the upper-end markets, generally over $400,000, slowing as the growth in For Sale inventories outpaces the growth in sales. However, how slow depends on how long each home has been on the market. For homes on the market under 30 days, there appears to be strong buyer interest, similar to that in the more active, lower price ranges, but as the time on the market grows, the buyer interest narrows considerably.

The following chart illustrates that trend by showing the average number of active listings for every buyer (sale) in November.



For homes that sold in 10 days or less (about 30% of all sales), the number of listings per buyer is about equal, regardless of price range. As the time on market increases, there is a dramatic jump in the number of listings for each sale, specifically in the over $500,000 market, showing why some upper-end buyers are seeing an active market, equal to other price points, and others are feeling like activity is shutting down. In all price ranges, the optimal buyer interest will occur in the first 30 days, when 50% of all sales take place. After 30 days, buyer interest drops considerably unless there is a change in either price or property condition.


The majority of transactions occur in the $250,000-and-under market, where buyer activity is the strongest as move-up activity is created, which means that while we are seeing some signs of a normalizing market, it is still very active, pushing demand up in the higher-priced markets, particularly going into the winter months.

Friday, December 11, 2015

A real “estate” opportunity…

There are all sorts of properties that use the word “estate” in their descriptions, including many mobile home parks in the area. There are subdivisions that advertise “estate-size lots”, which usually means a plot of 2-5 acres in the middle of a barren field that used to be a farm. The newly rich build big houses on those lots for all to see, because they have a need to show off their wealth and to be seen.

Then there exists what I would truly call estates. Most of the time, you may not even be able to see the house or perhaps just catch a glimpse of it. They may have high stone or brick walls around them and impressive entrances with big iron gates. They usually have long winding drives, many times in wooded areas that afford the privacy that moneyed people who are secure with their wealth and position in life crave. Of course they are still spectacular homes, but they are not so much on public display as they are built for the enjoyment of the owners and a few invited guests.

Such will be the case for the estate that will be built on the 12.6 acres at the end of Indian Hills Drive in Milford, Michigan. The area was named Indian Hills by early settlers and likely was frequented by the Chippewa Indians that lived in the Milford area.  The Chippewa Nation (also called Ojibwe) were part of an Algonquian body, including the Ottawa and Potawatomi Indians. During the late 1700s and early 1800s, all three nations resided in Michigan. Back then, the band of Saginaw Chippewa tribe ruled most of Michigan’s Lower Peninsula including the Milford area.

To begin with, this is a spectacular property. It is perhaps the most pristine and dramatic build site left in Oakland County and perhaps all of Michigan. Hilly and with ravines that drop off 50’ or more this property was formed by the recession of the great glaciers that once covered this area. From the entrance on Indian Hills Drive, off W. Commerce Rd., the property rises perhaps 100-200 feet along the ¼ mile path that will be the driveway.  It ends at the highest point of the property on a hilltop that overlooks Indian Lake, which is about 50-60 feet down the slope of the hill. The property has 332’ of frontage on the Indian Lake. Indian Lake is a small all-sports lake that is most suitable for swimming or fishing and provides a great view from the hill top.

All around the build location, and for the full length of the drive, the property is heavily wooded with trees that have been there for centuries. The right buyer and builder will leave as many of those trees as possible. It would be a shame to clear this land down to a barren plot as many would-be estate builders seem to prefer. The trees and the wildlife that lives in them are a major part of what will make this a true estate. It awaits the right buyer and the right builder with a grand vision of what it could become.

I’m working currently with Hemphill Builders and have listed  their proposal to build a 5,000 Sq. Ft. 4-bedroom, four and a half bath French Country Home on this spectacular site.  There were two obvious ways that one could go with a site like this – either go modern with a Frank Lloyd Wright inspired house that would blend in with nature or go classic with a French or English style country home. I think the natural stone facade of the proposed French Country style home will fit very nicely in the wooded setting. The listed price of
$1,700,000 for the build job is just a starting point and does include the lot, which is listed separately for $300,000. The right person will probably end up in the mid-$2 Million range, perhaps much more if they decide to do a privacy wall around the estate or to pave the ¼ mile driveway and put in a grand entrance gate. This has the potential to become one of those properties that is given a name, because of the unique and spectacular nature of the setting.

It’s interesting to speculate about who might build here and what they might end up doing. People coming to this area from places like California can’t believe how inexpensive real estate is here. Out there, one might pay $1.7 Million for a three-bedroom ranch house of 2,500 Sq Ft. in a subdivision. So an executive moving from there might think this is a bargain. The same is true of many international buyers. We do not have quite the draw of the coasts for international buyers; however, we do have a quaint little Village nearby with great restaurants and shops and the promise of great anonymity, should they choose to live quietly by themselves.  

For those who are past the need to show off their wealth and just wish to have a wonderful and private estate, this is a rare opportunity. Hemphill Builders has built many homes in the area from 3,000 to over 10,000 Sq. Ft. They use the finest materials and employ the best craftsmen to insure the finest finishes inside and out. They can put all of the amenities that you can imagine into the home, but it would still not be a true estate if it were placed out in the middle of a barren field in a subdivision full of “estates”.  IF you’re ready to build a true estate, then check out this property and Hemphill builders. It doesn’t get any better than this. 

Monday, December 7, 2015

Is it a clog or a systemic change?

One of the news feeds that I get every day comes from Realtor.com, the web site for the National Association of Realtors®.  One of the featured stories to day was about the assertion that Baby Boomers have clogged up the real estate pipeline by not acting as expected and selling their homes when they retire. The Realtor.com story was based upon a story that originally appeared on Dec 2 in the Washington Post.

The fact is that the whole real estate market has not been acting as expected after the recent Great recession. Apparently, whoever wrote the original Washington Post article decided that it is the fault of the Baby Boomers for not selling their homes and downsizing when they retired as expected ( or at least not in the numbers that were expected). A change in behavior anywhere in the real estate pipeline impacts things, but the Baby Boomers make up such a large portion of the total real estate market that a change in their behavior has an amplified impact.

What was predicted was the mass migration of the Baby Boomers from their McMansions into smaller retirement homes. That has not happened in the numbers that were forecast and that has led to few homes in their current homes’ price range being available and that has exacerbated and already
tight used housing supply. The result has been a rapid run up in home prices in the mid to upper price ranges. That has stalled out the move-up buyers who were projected to buy those Baby Boomer McMansions. The lack of movement from the middle tier has meant that many first time buyers or those moving up from starter homes had fewer homes to choose from, so they stayed put, too. You can see how this all feeds on itself.

While I agree that the whole Boomers not moving thing has had a clogging effect; I also believe that the economy has not yet recovered sufficiently from the recent recession and that the basic economic reset that the recession caused is also playing a key role.  The middle class has been largely gutted of its working middle class component – the factory worker making good money and getting lots of overtime pay to spend on housing.  The unions have been neutralized to a great extent and the remaining factory workers as a class earn less now than they did before the recent recession. That home buying power is gone and that is having an impact. The younger generations have been forced into multi-tier wage scenarios that limit their buying power and many have accepted that they will be living a different, less affluent lifestyle and that includes housing. We live in an era when it is quite probable that the next generation will not have it better than the last. The Baby Boomers may have been the last great affluent generation.

In addition to all of this, the retiring Baby Boomer generation didn’t necessarily plan well or save well for retirement. Many of them are the last group that will get defined retirement benefits; but, more of them that have been reported were in the groups that saw their retirements converted into 401K plans and other contribution-based plans. Many did not contribute enough. Now many are struggling with retirement and in no mood to sell off their biggest asset. Many still have hefty mortgages and some are still in negative equity positions, due to the great recession and their penchant for using their homes like piggy banks.  

The other issue for many Boomers who might be able to sell is the fact that the tight housing market has left them with nowhere to go. Not every retiree wants to go to Florida or Arizona to live. Most would rather be close to family. The issue them becomes finding a place to downsize into if they sell the McMansion. That is where their expectations and desires run afoul of the available housing stock of smaller sized homes. Almost all builders have been chasing the Boomers desire for bigger and bigger McMansions, with more and more amenities aimed at the owners. That means that when they go look at smaller houses, many of them are older and older homes weren’t built with the amenities of the big McMansions.

The problem is especially bad for the Boomers who are chasing the dream of moving to “small town
America”. I know because I live and sell homes in one of those idyllic small towns – Milford, Michigan. I get requests all the time from retirees who want to move to Milford, but who have unrealistic expectations about what they can buy in our little Village. They all say that they want a single floor home with a gourmet kitchen and a big master suite with big on-suite bath. Guess what? They didn’t build houses like that in the late- 1800’s and early Twentieth Century when most of our housing stock was built. Sure we have a few modern homes and some modern condos, but for the most part, if you want what you had in your McMansion you have to get out of the Village and into a newer sub, most of which put you out too far to walk downtown, which was the driving force to get here in the first place. So, compromise is the order of the day; or giving up the dream of living in Mayberry. The lack of housing to meet those expectations has been a major clog for us locally.


Are Boomers then the major clog in the system? They certainly contribute to the problem, but perhaps the current slowdown is more systemic and reflective of the change that America is undergoing economically and socially. There also seem to be movements afoot to re-urbanize, as cities like Detroit recover and start building new urban housing. There is a strong pull away from the
bigger is better mentality and a rebirth of values that have less to do with ostentatious displays of wealth and are more focused on family and relationships. Collecting stuff is out and collecting relationships is in. Shortly having a better life will have less to do with the size of your house and more to do with the size of your heart and those that you share it with. Real estate is about things, but life has become more about people and that will impact everything. Progress has too often been measured by constantly  moving up or moving on, the future will be more defined by being content with where you are and what you have and those with who you share both.  So there’s no real clog, just the beginning of a new reality.

Thursday, December 3, 2015

Can “U” help you?

In Michigan and many other states the sale of a property provides an opportunity for the tax man to
get in on the action with what is called a Transfer Tax. The tax is levied on most sales and is split between the state and the counties. It is made up of two deceptively named components – the State Revenue Stamp and the State Tax Stamp.  It’s sort of like a sales tax on the transaction and in Michigan amounts to a total of $8.60 per $1,000 of value of the sale. In Michigan it is customary that the Transfer Taxes are paid by the seller of the property; however, if the property is bank owned the banks lately have been requiring the buyer to pay those taxes.

There are also exceptions in the law that established these taxes (when are there ever not exceptions?), one of which was recently “clarified” by Michigan lawmakers. Exemption “U” provides that the seller is exempt from the Transfer Taxes if the SEV value of the property at the time of the sale is lower than the SEV value when the seller bought the property, i.e. it is still underwater, with negative equity, from the recent Great Recession.

While many areas in Michigan have recovered nicely the value that was lost in the Great Recession, not all area have shared equally in the comeback.  Many properties (mostly residential homes) that were purchased at the peak of the “real estate bubble” that led to the Great Recession are still way below those values. In most cases the SEV values of those homes rose along with the bubble prices (although not as fast due to restrictions on how fast SEV’s could be raised by local assessors) and reached heights that are well above where we are today. Many severely depressed areas, like Detroit and some surrounding, older suburbs saw value drops exceeding 50% during the Great Recession, after having seen run-ups in value that just didn’t make sense in retrospect.

So, now people who bought during the peak years are trying to sell and are usually taking a loss. In addition, the SEV values were brought down relatively rapidly to reflect the market values losses of
the recession. Most of those people now qualify for the Exception “U” relief from paying Transfer Taxes on the sale of their homes. Many who sold within the last 4 years and actually paid those taxes may also be due a refund of the taxes that they paid. The recent Legislative action clarified when and how properties qualified for the exemption from those taxes under Exception “U”.  There is a good article explaining how you can determine if you are eligible for a refund of those taxes at the Alger Law Office web site –


If you seem to be eligible, you can download the form to request the refund here –



So, the bottom line is that you may still take a loss on a property that was just way overpriced during the heat of the real estate bubble; but, you don’t have to add insult to injury by being taxed by the state on that transaction. And if you did sell within the last four years, you may be able to get a refund. So “U” can help you. 

I hope this post helped you, too.

Sunday, November 22, 2015

Southeast Michigan November 2015 Monthly Market Update


Each month our Company President of Brokerage Operations, Dan Elsea, posts a market update for this Area of Michigan, This is his November post.

There are a number of reliable indicators that show there is still some pent up real estate activity yet to be released going into 2016, including steady economic and employment growth, along with continued low interest rates. The chart below shows that about 23% of homeowners are considering putting their homes on the market. Historically, the percentage of homeowners who sell each year is in the 7-12% range. As values rise, more homeowners will be able to financially afford to sell (and buy another home), giving the housing market an extra 10-12% activity boost as those homes are put on the market and sold over the next 12 to 24 months.



On the other hand, as more homes are put on the market, it will create more competition for buyers and value-increases will level off, particularly compared to the fast-paced appreciation rates of 2013/2014. The chart below shows that sellers’ expectations of value continue to rise above their actual appraised value, which will most likely lead to For- Sale inventories being overpriced going into 2016, particularly in the over $400,000 price ranges.



Specifically by price range, here are the latest activity trends for Southeast Michigan compared to
the same time period in 2014:



Sales have picked up in the last 90 days with inventories still falling, as well as new listings, so sellers are smiling and buyers are frustrated.







Sales have been strong all year, with inventories also rising, until a slowing trend occurred for inventory within the last 90 days, firming up this market-segment to the seller’s side.



Sales are holding up well but slowing, along with the growth in inventory. This is the prime “move-up” market, where many sellers are buyers, meaning a rise in inventory and sales goes hand-in-hand, as the “move-up” homeowners both sell and buy.



Sales have been surprisingly strong with inventories still rising, but at a slower pace. The over $500,000 markets inventories have been building up for some time now so this is where sellers will feel a significant slowing, even with sales remaining strong year over year.



After a strong start in 2015, luxury sales have slowed down considerably, in addition to a continued rise in inventory, causing values to flatten out, and in some market areas, decline.

So what does this tell us? The market is making a directional shift from a strong Sellers Market to a more balanced market. When a market changes direction there are often mixed signals, such as strong buyer/seller interest, while at the same time, increasing inventories slow the market pace. It is still a great time to buy, with values not quite back up to peak levels, rates low and a more plentiful inventory to choose from in most markets. For sellers, buyer demand still remains strong, values will continue to rise, and for many sellers, there will finally be something for them to buy, breaking up the log jam we have had for the past two years, during which sellers were holding back because they could not find something to buy.

There is no bad news here, just different news, which will require buyers and sellers to set different expectations. If we are off on our projections of the market direction, it is more likely that hindsight will show we were too conservative, and the market will show more kick to it going into 2016, than less.

Dan

Saturday, November 14, 2015

It’s a Site Condo. What have I gotten myself into?

As would be home buyers wander around in their cars or spend hours on-line looking through listings, they are usually not aware of the fact that they are oft times wandering into and out of
condominium complexes. After all the homes are all separate and have their own yards. It’s a subdivision, right? In Michigan most of the tie the answer would  be no, if the “subdivision” is newer. Since the mid-1980’s Michigan developers have found it quicker and easier to apply for all of the necessary permissions to build under Michigan’s Condominium Law, rather than under the older Land Division Law that governs true subdivisions.  What they end up building has been given the name “Site Condos”.

There is no legal description of the term Site Condo m in the Michigan Condominium Law; however, it is the common usage term for a development where everyone owns their own plot of land and their individual house, but they are also co-owners of a variety of “common elements” – things like the streets in the complex, the entrance island and any amenities such as park spaces or playgrounds that might be shared by all residents in the complex.  Not only do they share ownership of those common elements, they also share responsibilities for them and are required to join the Home Owners Association (often called a Condominium Association) for the complex and to pay the dues for that membership.

The need for such an association is clear when you stop to think about the consequences of the shared ownership of the common elements. While each individual homeowner is responsible for things such as insurance, upkeep and maintenance for their own plot of land and the house on it; it is the Home Owners Association (HOA) that is responsible for those things for the common elements. Probably the most important and the item of biggest potential cost is the maintenance of the roads in the complex. You may think that the City or Village or Township or County has that responsibility. Wrong! Remember that you live in a condo complex. The maintenance of the roads and things like snow removal  in the winter are the responsibility of the Home Owners Association. That’s why they collect a monthly HOA fee. The HOA also pays for the maintenance of any entrance improvement to the complex (usually a sign and perhaps a small island at the entrance). They also pay for liability insurance on the common elements. This protects the owners is someone is injured while using the common elements.

When considering buying into a Site Condo complex there are things that you need to check and rights for information that you have in order to evaluate the state of the HOA and potential future liabilities. You should download and read through a copy of the Condominium Buyers Handbook , which is published by the State of Michigan. You should make sure that any offer to purchase a Site Condo is made contingent upon  your right to review the the Master Deed and the By-Laws of the Homeowners Association within a reasonable period of the offer being accepted (usually 3 days). You really should do that before you even make the offer. Then you should thoroughly read through both documents to see if there are terms and conditions (usually deed restrictions or HOA rules) that you cannot live with. You have the right to back out of the deal is that is the case (assuming that you put that review contingency in the offer).

Before you get all upset at the monthly HOA fee that you might see in the listing, remember that
those fees are being collected (and hopefully well managed) to provide the money needed for valuable services, such as snow removal, sidewalk (if there are any) maintenance and liability insurance on the common elements of which you are a co-owner.  In fact you should ask to see the HOA financial reports to make sure that Association is collecting those fees and investing them for future use. That’s a good thing. Don’t feel good about finding a Site Condo development where the HOA fees are really low. That means that they are not saving for future needs. Why is that important? Because some day the roads in the complex will need repair or replacement; and, when that day comes, the alternative is that each owner in the complex is hit with a special assessment for the costs. That can be big bucks. I know of one case where every homeowner was hit with a $20,000 assessment because they had not been collecting for the eventual road replacement that finally came due.

So, buyer be aware (not beware) that it is your due-diligence responsibility to read and understand the responsibilities and obligations that are associated with buying that house. In cases where you used to be happy saying “they will take care of that”; you are now the “they” in that sentence. They’re your roads and your entrance and your playground or park and it’s your responsibility, through the HOA, to take care of them.  There could even be liens on the property due to disputes between the previous owner and the Association. HOA’s have even been known to initiate foreclose proceedings. .

Also be aware that the HOA By-Laws give the association great power over other things that you may think are rights of the individual homeowner. The HOA can have rules governing the type, size and number of dogs or other pets that you can have. The HOA will likely have rules that prevent you from putting up fences or out-buildings. There may even be rules about how often you have to paint your house and even restrictions on the colors that you wish to use. HOA’s are given great power and it is up to each HOA how they exercise those powers. The only way that you can know what’s going on is to go to the meetings;  however,  HOA’s are also not subject to the Open Meetings laws, since they are not public entities, so check with other residents about how the HOA conducts its business.


Your home being a part of a site condo development isn’t necessarily a good or bad thing. It’s just something that you need to be aware of and find acceptable. Once you’ve purchased your “unit” within the site condo complex you’ll have to live with the rules of the HOA until you sell. 

Wednesday, October 21, 2015

The myth of “Comps”…

One of the most overused, misused and abused terms in real estate is the term “Comps.” The term is generally defined as homes that have sold recently that are comparable (thus the term Comps) to the house being evaluated by the real estate practitioner. Comps are used on both sides of the deal. On the Sellers’ side they are used to help establish the rationale for a market price recommendation. On the Buyer side they are used to help establish or evaluate an offer price.

So, what is the myth part? The myth is found in the word itself and its definition.  Few Realtors® have the time, or take the time, to do the kind of exhaustive analysis of the homes that are chosen for comparisons sake. The Realtor may choose a few recent sales within a reasonable distance from the home being priced, based upon a quick look at some easily evaluated criteria – style, square footage, number of bedrooms and baths and maybe a few more. Most good Realtors do take some time to vet the list to make sure that homes with special value changing criteria, such as waterfront location, are removed.  Then the Realtor may run the remaining comparison homes through a CMA program of some sort to generate averages and statistics. Notice also that the Realtor did not usually visit each house on the list, so he/she really doesn’t know that they are comparable.

Appraisers, on the other hand, may spend hours agonizing over the details and accounting for differences with adjustments to the final value that they use for comparison in rendering their value opinions. Most appraisers also do drive-byes on the Comps, so that they get a feel for the neighborhoods involved and they usually take pictures of the comparable houses.. They may also take the time to look at all of the listing pictures of the Comps, so that they get a better feel for the interior amenities of the homes being used as Comps. Appraisers have to be able to defend each house that they choose to use as a comparable house and the relative values that they assign to it and to the subject house.

I stopped using the term Comps several years ago. I prefer to state to clients that what I am using for my analysis are “similar” homes – similar in size and style and amenities – at least as far as I can tell. I spend some time educating the seller or buyer on the fact that I have usually not been in the other homes, so I really can’t state that they are really comparable. What I can say with some high degree of comfort is that buyers looking for a home within the area of the subject house will likely also visit these houses or did visit them if we are looking at sold homes. I do stay within a reasonable search radius, where the term “reasonable” is relative to the density and sales activity of the area. In some cases a mile radius may suffice, but in some I may have to go out 5 miles. The same is true for the time span for sold homes. In high-density, high-activity areas, 90 days or even less may be all that I need to look at; however, out in the boonies I may have to look out over 6 months, even though the market may be changing in that time frame.

So, instead of Comps, I use a list of 5-8 “similar” homes, within a reasonable area and timeframe. I try to make sure that major factors like the style, square footage, number of bedroom and baths and a few other things are the same or close. Sometimes is it impossible to even get enough similar homes within the same style (ranches can be hard to find), so I try to make sure that the other criteria are very close.  I mainly use this list of similar sold homes for the averages that it allows me to generate. I then spend my time trying to evaluate whether the house that I’m evaluating is above or below that average and by how much. I do that based upon my own visit to the subject house. If it is a house that I might be listing, I do a Franklin Chart of the Pluses and Minuses of the house upon which I’m trying to establish a market value.  I am also usually able to create a to-do list for the homeowner of the things that he can do to improve the market value of the home. Some homeowner care about that and will take action, but many just say “it is what it is” and then I say “and because of that, here is the market value that I recommend and it is what it is, too.”

I usually take the time to educate a would-be seller on the four values that every home has – The assessed value (usually the lowest), the appraised value (higher but still conservative), the Realtor’s Market Value (sometimes called the CMA value and usually higher than the first two) and the insurance value (always the highest “value” for any house).  I try to get them to accept a Market Value for listing purposes that is not too far above what I believe might be the current appraised value. Being a little high is OK, if the market is moving up. On downward trending markets we have a heart-to-heart talk about letting go of “value” that is no longer there. Currently we still talk about when the market will recover all of the value that was lost in the Great Recession.

Many times homeowners have old appraisals, maybe from their last re-fi, and we have to discuss why those are no longer valid. We also have long discussions about why what was good enough for them for all of these years may not be good enough for the market and the potential  impact on market value of not having done any updates or upgrades for the entire time that they owned the home. I point out why Buyers will be discounting their offers on a home with a 25 year old roof, even though it doesn’t leak, yet or for a heating system put in when the house was built in the 1960’s, even if it still works fine for them.  On the buy-side we discuss why they can’t take all of the cost for every project that they see off the asking price. Some things just have to be accepted under the heading of normal maintenance needed.  

So, when getting Comparative Market Analyses on your home as you prepare to sell, take the term “Comps” with a grain of salt. The homes on any list that you are given are probably similar, but there can be major value-changing differences, even if all of the houses are in the same sub. There are choices that people make, while building or as homeowners, such as granite counters or Formica, hardwood floors or carpet, finished basement of unfinished,  crown molding or none, updated or original, new roof or original, new mechanicals or updated, all of which can have dramatic impact on the market price. Two houses with the exact same floor plan can have differences in all of those areas and have values that are tens of thousands of dollars apart. Are they Comps? You decide.


There is value in the work that your Realtor does to arrive at his/her market value recommendations, but don’t cling to the term Comps or get too upset if you happen to be in one of the homes that they used and it is nowhere near as nice as your home. They are just similar. But, do take note of the things that there that perhaps you could do in your home to improve its value. Take heart also that nothing will ever be comparable to the home that you made in your house. It’s just time to love it AND list it. 

Sunday, October 18, 2015

Evaluating the strength of your offer…

Many times Realtors® may use the terms “strong offer” or “weak offer” when you suggest what you want them to offer to the other side in a real estate deal. What do those terms means and how is an offer’s strength determined?

The strength of the offer really refers to the attractiveness of the offer from the Sellers’ perspective. Your offer is usually evaluated by the Sellers’ agent as well and they will likely render their opinion and advice to the Sellers (even if not asked to do so).
So, looking at typical offers from the Sellers’/Realtor’s perspective, let’s explore offers from the strongest to the weakest, so that you’ll better understand where the offer that you are about to make might fit and how it might be viewed by the Sellers and their Realtor. Use the Infographic below for a quick reference guide.



CASH
There’s a saying in real estate that “cash is king.” The strongest possible offer is an all-cash offer at or over the asking price, along with clear proof of the funds necessary to get to the closing table and no contingencies or concessions. These offers also usually hold out the promise of a quick close, since no time is required for arranging financing. Who wouldn’t accept and all-cash offer for what you were asking (or perhaps even a bit more) from someone who produces financial statements representing the money in the bank and ready to go. Some of these offers go further (and get even stronger) by putting no contingencies (not even an appraisal or a property inspection) into the offer. I would never recommend that approach to a Buyer, but it is attractive to Sellers.  Most of the time there is a contingency that the property must appraise for the sale value and most buyers will request a property inspection. These offers usually do not carry requests for concessions to cover closing costs. Sometimes these are called “no-brainer” offers by the Sellers and their agents. While they are relatively rare, they do happen; especially at the lower end of the market, where cash buyers are often investors (or investor groups) looking to pick up rental properties.

MORTAGE OFFERS - The next strongest offer is usually one involving a mortgage of some sort. Within this category of offers there is a hierarchy of strength that depends upon several factors.

CONVENTIONAL
In general the strongest of these offers involves a Conventional mortgage with a good down payment (20% or more) and a pre-approval letter by the lending institution. Note that the letter is stating that the buyer has been pre-approved and not just pre-qualified. That means that the Buyer has been run through the Underwriting process and not just had some financial data collected and a quick credit check. It is a very strong offer if only the normal contingencies are specified – a good home inspection and an appraisal that supports the sale price. Conventional offers may have other contingencies or request Seller concessions; however, those both weaken the offer.
The next three offer types also have mortgages associated with them, but of differing types.

FHA
An offer with an FHA Mortgage is the most common type in this area. An FHA offer is considered to be slightly weaker than a Conventional offer because the Buyer only has to put down as little as 3%. For many Sellers that is a red flag that th3e Buyer may not have the wherewithal to get to the closing table. FHA deals often also carry Seller Concession requests for assistance with closing costs. Another reason that some Sellers (and their listing agents) don’t particularly like FHA deals is the FHA Appraisal process. Many people call it the FHA Inspection, but it is really not an inspection; there are just a bunch of things that the FHA appraiser looks for in the house while doing his appraisal walkthrough. Most of those things currently involved safety hazards in the home, such as not having handrails on stairs that are more than 3 stairs long or not having GFCI circuit breakers on outlets  that are within 5 feet of water (kitchens and baths) or are in the garage or are exterior plugs. IF the inspector finds those things FHA required that they be fixed and made safe before the loan can proceed. It required a second visit by the appraiser (which someone has to pay for) and adds time to the process. Still, an FHA deal is the strongest non-cash offer, assuming that the contingencies and concessions requested aren’t onerous. More on that below.

VA-
Mortgage loans backed by the U.S. Veterans Administration (VA) are next on the mortgage deal spectrum. Basically all of the FHA requirements are encompassed within the VA loan process, plus a few other things. VA still requires a pest inspection as part of the home inspection process and someone has to pay for that (usually the Seller). Not all condominium developments went through the VA certification process while they were being built, so the Seller may also have to do the paperwork to get his own condo development VA certified. That involves getting the Condo Owners Association or Management Company to submit the proper paperwork and may involve a cost that the Seller might have to bear. That can be a particular problem in Michigan, because we are the only state that allows subdivisions of free-standing homes to be built under the State’s Condominium Law. These are called Site-Condos, where the owners own their own site and the house on the site, but are also required to belong to a Home Owners’ Association which owns common elements in the sub – parks, play areas, sub entrances, etc.  The same cautions about contingencies and concessions apply to these loans. The more there are the weaker the offer is considered to be.

RURAL DEVELOPMENT
The last mortgage type that we see a lot of locally is USDA Mortgages under the Rural Development (RD) program. The USDA RD program was originally aimed at getting people to move into rural areas that needed people and development. These days, much of what we might call “the suburbs” actually qualifies for RD loans. These loans are also aimed at the lower-end of the market and at first-time buyers or people who haven’t owned a home for at least 3 years.  There are strict household earnings limits.  Much of the process and most of the rules are the same as for an FHA loan, but these loans can go all the way down to a zero down payment and the don’t have the onus of the FHA Appraisal associated with them.  Zero down loans really spooks some sellers and just looks a lot weaker than loans where the Buyer has at least some skin in the game. The contingencies and concessions issues are heightened in the Sellers’ minds if they see a zero down USDA RD loan in the offer.

CONTINGENCIES -
So, what are the contingencies that weaken your offer? Things like the appraisal value supporting the offer and a satisfactory home inspection are expected and pretty much accepted by most Sellers. Including such inspections as a well and septic inspection, a radon inspection or a pest inspection aren’t necessarily show-stoppers, unless you try to make the Seller pay for all of them. Just those four items could run well over $1,000 in costs to the Seller. Adding requirements for things like a staked survey of the property or an environmental study could runs over $1,000 by themselves and would probably get your offer deep-sixed if you asked the Seller to pay for them.

The most onerous contingency of all is the dreaded “Offer contingent upon the sale of the Buyers current home.” That is the kiss of death for most Sellers. Almost as bad, but perhaps acceptable is an offer “contingent upon the closing of the sale of the Buyers current home.” That says that the current home is escrow and awaiting a closing. Usually the Buyers will supply proof of the sale and usually they are ask to supply proof that the buyer of their home is capable of getting to the closing table on that sale. It can get fairly complicated to evaluate.

CONCESSIONS –
As for Seller Concessions; these are normally requested to help the Buyer cover his closing costs and usually are 3% or less of the sale price, but could be more. Sellers really don’t like concessions because it feels to then like they are paying the Buyer to buy their house (at least that’s what I hear a lot). Sometimes, when the appraisal doesn’t come back high enough to cover the sale price, Buyers will request a Sellers’ Concession to make up the difference. Many times a compromise will be worked out where the Buyer and the Seller both kick in something to make up that difference.

Why worry about the strength of your offer?
The main reason to be aware of the relative strength of your offer is so that the Seller doesn’t just turn it down because it is too onerous or because you look like a buyer that might not be able to get to the closing table with this offer. Remember that you are asking the Seller to take the house off the market based upon your offer. The other reason is that your offer may be compared side by side with other offers. Many times a Seller will take an offer that has a lower offer price but with less contingencies and no concession. You may see later that the house sold for $5-10,000 less than you offered; but what you don’t see is that the offer that was accepted was judged to be much stronger than yours and much more likely to close. Most times the accepted offer also resulted in a higher net to the Seller than your contingency and concessions laden offer.

A final factor impacting the strength of an offer as reflected on the Infographic is a more of a contingency on the buyer. It is the ability of the buyer to obtain a grant through the MSHDA (Michigan State Housing Development Authority) or to get a gift from family or others approved by the mortgage company.  The grant or gift will be used by the Buyer to make the down payment and perhaps to cover the closing costs that he/she incurs. The MSHDA grant program is unique to Michigan and is used my many first-time buyers.  A MSHDA grant is not considered to be a loan, since it does not have to be paid back if the Buyer lives in the house for at least 5 years. Gifts from relatives are not loans either; however, gifts must be qualified by the mortgage company and cannot contain any payback strings. The gift giver also has to show where the money is coming from. It can get a bit complicated and usually adds a bit of time, which is why the Sellers don’t like to see them in the deal.


Your Realtor should be able to advise you on the potential impact of the things that you want to put into the offer. They are working for you and trying to make the deal happen. They may have to tell you that you honestly aren’t ready to buy the house that you want to make an offer on, because the things that you need from the Seller are too expensive or onerous. They will point out that you are wasting everybody’s time with those kinds of offers. Listen to their advice. Lobbing in weak offer after weak offer is no more productive than lobbing in a constant stream of low-ball offers. A good Realtor won’t allow you to do that repeatedly. 

Friday, October 16, 2015

Dan Elsea's October Southeast Michigan Market Report

We are now through the third quarter of 2015 and the overall housing market continues to move at a steady and positive pace with buyer interest as strong as the fall of 2014. The overall economic news remains good as well, with Michigan leading the Midwest in terms of economic growth. The combination of steady job growth, low interest rates,  increasing household income, and home values give consumers increasing confidence in housing.

The housing recovery has been surprisingly strong considering so many homeowners have been sitting on the sidelines waiting for their home equities to rise, and with For Sale inventories so low, waiting for a home to purchase. With home values up, it appears that those homeowners are finally beginning to act, increasing the number of homes for sale, which in turn, should bring more buyers into the market, providing fuel for the 2016 housing market. Add to that the credit easing up for first time home buyers, (and their desire to move out of their parent’s basement) and it looks like a steady flow of buyers entering the market for the balance of this year and into 2016.

We do anticipate that For Sale inventories will be rising faster than sales, which will give buyers more choices and sellers more competition.  At the same time, sellers will see increased time on the market, as well as a leveling out of home values. The charts below confirm these trends across all price categories.

Going into the fall and winter markets, sellers should be wary of over-pricing.  Values are rising but not as fast, and in fact, most of the current inventory, particularly over $400,000, is over-priced compared to homes on the market this past spring.  With more listings coming on the market, values may settle a little and homes that might be just a little over the market now, will be quite a bit over this winter.

The under $100,000 market has shown a steady decline in sales and inventory over the past three years as a result of fewer bank-owned homes. Removing the bank-owned properties, the number of sales are down only slightly and the number of listings are actually rising over the past 2 quarters. Values based on the average price per square foot have had a steady rise, the most of any price point, as a result of both fewer lower priced bank-owned properties and more buyers competing for fewer listings.



The next price point, $100k to $250k, shows a more pronounced rise in inventory, along with a strong jump in sales, with the rise in inventory since mid-2014 out pacing the rise in sales which has resulted in a corresponding flattening of the increase in value per square foot during 2015. We expect these trends to continue through the fall and winter, keeping values relatively
flat.

The $250k to $500k price points follow the same trends as the prior charts with a more pronounced increased in listing inventory this year which results in an even flatter pricing chart for 2015.

For the luxury market, the gap between the rise in inventory and sales has been the most pronounced, so it has not been surprising to see values remain flat, and even start to decline, during this past quarter.  We don't expect this value decline to be a long-term trend, but until inventories are absorbed later in 2016, values will remain flat, or in some cases, continue to decline.


All investment markets, whether stocks or real estate, don't recover in a steady line, they jump around as demand jumps, then supply follows, then demand jumps again. So for the next year or so, across all price points, we should see a temporary jump in For Sale inventory, and over the balance of 2016, the market should settle back down to a better balance as those new listings are sold.

Saturday, September 26, 2015

The Milford Historical Society Endowment Fund

The Milford Historical Society is a 501(c)3 non-profit organization founded in 1973 with the mission
of collecting, preserving and sharing the history of the Milford, Michigan area. We are an educational organization with the Milford Historical Museum in Milford, Michigan serving as the primary vehicle for our efforts to educate the local community about the history of the area. An important part of or mission involves engaging local high school students to share the area history. Students volunteer at the Museum as docents (guides) over their final two years in high school. Those who complete 100 hours of service as docents by the time that they graduate are awarded $1,000 scholarships. We usually award 2 or 3 scholarships each year.

The Milford Historical Society has created a dedicated Endowment Fund which will be invested to provide income for these student scholarships, as well as supporting the operation of the Milford Historical Museum with any earnings beyond that needed for the scholarships. At the current rate of return on conservative investments, we estimate that a fund of $60,000 should be sufficient to provide for the annual scholarships. We have also provided for the naming of each scholarship on behalf of the donors, should any single donation be made at a level of $30,000 or more. Scholarships may be named for individuals or for corporations. Scholarships are awarded at the end of each school year to the graduating seniors who have completed their service requirements at the Museum.

The Milford Historical Museum is located at 124 E. Commerce Street in Milford, Michigan 48381, and is open from 1 – 4 PM on Wednesdays, Saturdays and Sundays. The museum displays historic  memorabilia that has  been donated by area residents as well as featuring a second floor that is furnished and decorated just as a turn of the century hoe might have been in Milford in the late 1800’s. In addition, the museum staff provides history research for those doing genealogical work or who want to know the background of the Milford home. The Milford Historical Society maintains at the Museum an archive of every issue of the Milford Times news weekly since its beginning in 1871 and also has an extensive photo collection of historic photos and sells reproduction prints of selected photos.

We have established a crowd funding site for this endowment fund on the Crowdrise.com web site - https://www.crowdrise.com/themilfordhistorical


Please consider supporting our mission.

Monday, September 7, 2015

Regaining Equity from Home After Divorce

Ed. - This post is by Cathryn Wayne-Spindler, a local family law attorney with whom I work occasionally on divorce cases that require that the family home be sold as part of the settlement. 

The current strong real estate market and higher home values are good news for many people, especially those whose mortgages were underwater because they owed more on their home than the house was worth. The July 2015 Existing-Home Sales statistics showing a two percent increase were released recently.

“Sales in July remained at the highest pace since February 2007 (5.79 million), have now increased year-over-year for ten consecutive months and are 10.3 percent above a year ago (5.07 million),” according to a National Association of Realtors article, “Existing-Home Sales Maintain Solid Growth in July.”
Many people are now finding relief as they are once again able to either sell their home or refinance and access some of the home’s equity. This has particular significance for couples who divorced during the economic downturn and found themselves either unable to sell or unable to recoup any home equity. In many situations, one partner agreed to keep making the mortgage payments on the family home to avoid foreclosure.

With the stronger real estate market, realtors and divorce attorneys are working with clients who divorced years ago and are now looking to either get out from under their former mortgage or regain some of the equity that did not exist when they split.

When people ask Southeastern Michigan Divorce Attorney Kathryn Wayne-Spindler what they can do to get out of the prior mortgage or recoup some equity, she first recommends revisiting the divorce settlement papers’ division of marital property.

“It’s all about the Judgment of Divorce. A judge can only enforce what was in the contract you signed at the time of the entry of judgment.”

Wayne-Spindler says some experienced divorce attorneys were long-sighted. “We realized during the tough times that the financial situation would mostly likely rebound. So we negotiated terms into our clients’ divorce settlements that would require the spouse retaining the house to sell or refinance within a certain period of time,” said Wayne-Spindler.

If that’s your situation, the courts can enforce those requirements and you will be entitled to your share of the home equity (if in the judgment) and/or be released from your connection to that debt.
That’s important, especially for any divorced person who may be looking to move on in life and buy a new home. With your name still attached to the mortgage on the prior house, the debt-to-income ratio may have been too high to be approved for a new mortgage, even if you were not contributing to the home payments. Any divided equity from the sale of the first home can also be applied as a down payment for the next home.

Unfortunately, many divorce attorneys either did not look to the future or were not able to secure those kinds of clauses in their client’s agreement. If that is the case, unless your ex-spouse is willing to sell out of the goodness of his/her heart, it’s unlikely a judge would force him/her to now.
If the divorce settlement does not include a clause about selling or refinancing, consult an experienced family law attorney to determine your options.

Once you’ve determined what clause applies in your situation, it can be helpful to confer with an experienced Realtor like Norm Werner who can advise you about current market conditions and help you sell your old home or find a new home. It can also be advantageous to work with a local home appraiser like Norma Nicholson who can determine an anticipated home value so you know what to expect.
Attorney Wayne–Spindler has experience helping clients with their divorce and real estate questions. Contact her Milford, Michigan office for more information at 248-676-1000.


Saturday, August 8, 2015

Mold revisited. How to remediate black mold.


I wrote here about mold in homes in an earlier post; however I don’t think I spent much time on how to remediate it.

Let’s start by establishing that almost all homes have some mold of some sort and that most of it isn’t the dreaded black mold.  Mildew is the most common type of fungal growth in most homes and is as close cousin to the molds that are actually harmful. Mildew is a surface fungus, while true mold will penetrate into the surface of the things that it is growing upon. Mildew is easily handled with common household cleaners, but mold takes a bit more effort and if left untreated for any length of time may require replacement of the wood or drywall that is growing upon. All molds require a source of moisture and something to eat. While we don’t consider our drywall walls to be all that taste, mold loves the stuff and will happily grown on any drywall surface, as well as wood , wallpaper and anything else that it can digest.

So what should you do if you see a patch of mold in your house? You can try to tackle it yourself or you can call in a professional. Since you aren’t an expert on mold types, if it’s anything besides the common mildew it’s probably a good idea to get a professional opinion, rather than panic and move out to a hotel because you think your house is overrun by black mold. There are many types of mold, in a variety of colors and with a variety of different hazard levels in terms of human health. I think it’s safe to say that almost any mold may cause some human reaction, depending upon one allergies and general health.

Recently I received an email from Trica Hall, a representative of the Web Site BlackMoldRemoval.com – a site run by a mold remediation company, that contained the following  Infographic about black mold and how to remediate it - http://www.blackmoldremoval.com/removal/. Take the time to browse through that site.

Having dealt with mold issues in many homes that I’ve either sold or for which I represented the buyers,  I can tell you that it is an issue that should not cause panic, just like the3 presence of Radon should not cause panic. Both of those issue are easily remediated and usually at a reasonable cost. There are much bigger and more costly problems that one can find in a house than either of those – foundation issues come to mind.


One thing that I think does deserve some thought is whether to try a DIY remediation if mold is found. A tiny patch in the basement by the laundry is one thing; however extensive mold groth due to flooding is quite another. If you read through the Infographic you’ll notice that the pros come in equipped in Hazmat suits; they bring big HEPA filter with them and large air drying equipment. They also have professional grade sanitizing chemicals to kill off the mold. What are you standing there with – a roll of paper towels and a spray can of Scrubbing Bubbles? That may work for mildew, but not for real mold. And what about your breathing safety equipment? Pulling your T-shirt up over your nose isn’t going to cut it when dealing with mold. If you truly have mold, especially black mold, leave it to the professional to remediate.  For more on black mold and how to find a professionals to deal with it, go to  http://www.blackmoldremoval.com/.  If it’s extensive black mold this is probably not a DIY job.

Monday, July 27, 2015

Don’t DIY if you don’t KWYD…

The popularity of many of the HGTV home fix-up shows has spawned a host of amateur DIY (Do It Yourself) projects and led to a host of DIY disasters. As a Realtor I end up showing a fair number of these failed projects, many of them in foreclosure. The problem is that the would-be fixer –uppers were people who didn’t KWYD (know what you’re doing). 

It all looks so easy on TV, especially the demo parts where the TV personalities seem to be having fun knocking down walls to “open up rooms”. On a few of these “reality TV” shows they at least
show the unexpected that can be discovered during the demo phase – the pipes that were running behind the walls or the shoddy wiring that is really a fire hazard or maybe they “discover” that the wall was load bearing after all and needs a major engineered beam to hold the second floor up. Many DIYers often hit those problems and more, plus they discover that demolition work is not fun – it’s sweaty, dirty, hard work and disposing of the resulting waste materials can be expensive, especially  in older (or historic)  homes that may still contain hazardous materials that were in common use years ago. In Michigan, for instance, there is only one dump left open that will accept asbestos waste and it is expensive if you have asbestos waste.  If you’re planning to “open up the floor plan” as part of your renovation; in order to avoid having your house cave in upon itself, get the advice of a good structural engineer before you start knocking walls down.

Once they get to the actual renovation work, many DIYers discover that they don’t have the proper tools. In some cases those tools might be rented, but in many cases they have to be bought, which is just another unplanned expense. Learning how to properly use those special tools can be frustrating, time consuming and perhaps even dangerous. Big wood or tile saws are serious tools that can bite the user. Before you even start a DIY project you should inventory the tools that you have and compare that to those that will be needed. You can get an idea about the needed tools by reading remodeling books. You might be able to get a good handle on the cost and skill needed to properly use those tools by attending one of the demonstration programs at your local Home Depot or Lowes store. Some even have some hands on training time.

Along with tools there is technique. Many aspects of a renovation job involved mastering specific
techniques of working with the materials involved, especially if plaster repairs are involved. It’s not that you can’t slap a bunch of plaster up on the ceiling or wall and smooth it out; it’s that it will look like you slapped a bunch of plaster up on the ceiling or wall and tried to smooth it out.  It takes years of experience for professionals to master some of the techniques involved in their trades. Even painting is an area in which the differences in results between the average DIY person and a pro will be noticeable. You can put up all of the blue painter’s tape you want and still not get a job that looks as good as a painter who cuts his edges in with a brush and no tape at all.

Before you jump into any major remodeling project also make sure that you understand the local building codes and regulations about permits and inspections. Most projects that involve major changes to the plumbing system or the electrical system and any structural changes will require both permits and inspections by the building official for your area. I’ve seen finished projects in which the walls had to be opened up again because the DIYer forgot to pull the necessary permits or didn’t get the work inspected before the drywall went up. That can be a very expensive mistake. I’ve seen building officials make the DIYer tear down the newly installed drywall so they can inspect the plumbing or electrical work. 

And don’t think that because you’re working inside and you don’t think that anybody will notice that you’re making changes that you won’t have to pull a permit or get the job inspected. Many times a neighbor will report the work or just rumors on the street (or in your Facebook posts) may alert the officials.  It could also come back to haunt you when you try to sell the place. There is a question on the Seller’s Disclosure form for Michigan that specifically asks if you’ve made any structural changes to the house without permits.  


The bottom line is that if you don’t know what you’re doing don’t DIY. You probably won’t end up saving the money that you thought you would and you may end up decreasing the value of your home or hurting yourself in the process.  You probably already have everything that you need for even the most demanding projects. It’s called a checkbook and the only skill needed to use it is the ability to fill out the checks. DIY using that tool and get the job done right by professionals.

Saturday, July 25, 2015

What the new TILA-RESPA rules mean for the buyers or sellers


When any major changes occur within industries that impact their current systems there is always a bit of “the sky is falling” reaction to them. The changes to the disclosure and closing documentation requirements for real estate transactions are no different. You have likely already seem newspaper stories about the coming TILA-RESPA changes. You may hear your Realtor® talking about it, but it primarily impacts the mortgage lenders and the title companies. Your Realtor should be able to explain things to you as well, but the primary source for information about how this might impact you should be your mortgage agent.

Here’s the gist of these rule and documentation changes.  The Consumer Financial Protection Bureau (CFPB) was created under the Frank-Dodd legislation that was aimed at cleaning up the financial industry mess after the housing industry collapse that brought on the Great Recession. One of the actions that the CFPB took on was to clear up the confusion caused in real estate transactions by the differences in the Good Faith Estimate that the buyer got from their mortgage rep at the front end of a real estate transaction and the closing documents, including the Buyers’ and Sellers’ Closing Statements and the HUD-1 document, that the buyers and sellers got at the closing table.

Buyers often noticed differences in what they expected their costs to be and the actual costs at closing. In addition, the mortgage industry fell into a practice of not getting the closing information to the buyers in a timely fashion before closing (many times buyers saw the closing docs for the first time at closing). It was sometimes very difficult for the buyer to even determine how much he should bring to closing, since he did not have the final documents.  There was a need identified to standardize the information that was presented to the buyer at the front end and what they eventually see at the closing table, as well as controlling the changes that might be allowed between those two times. There was also a need to get the final closing information to the buyer well in advance of the closing date, so that they could react to any changes and know how much to bring to closing.  

Based upon those needs the CFPB produced the new, consolidated TILA-RESPA documents. TILA stands for Truth in Lending Act, which was the original law that set up the requirement for the Good Faith Estimate at the front end of the deal. RESPA stands for Real Estate Settlement Procedures Act, which defines the rules and documentation requirement for the closing of the sale. The CFPB decided to create new rules and documents for both ends of the sale and initially stated that they would impose those rules in August of 2015. The new document that the lender will give you at the front end is called the Loan Estimate. The new closing document packet is called the Closing Disclosure and clearly presents all of the information that used to be on the Closing Statements and the HUD-1. Best of all the Loan Estimate and the Closing Disclosure use all of the same terms and data fields (although the Closing Disclosure has some data fields concerning the cost of the sale and tax rebates on it that the loan officer would not have known at the front end) and they look very much the same. It is possible to lay them side by side and see what, if anything changed from the front to the back ends of the sale.

 Based upon an outcry of the real estate industry that they didn’t want to try to implement these new things during the height o the busy real estate season, the implementation was delayed until Oct 3, 2015. All mortgage loan officers are being trained, as are all title company people and most Realtors. Your first line of questioning should probably be your mortgage rep; however,  the CFPB has also created a new Home Loan Toolkit for buyers, so that they have a clear reference guide to the new documents and the new process.  In the Toolkit are examples of the new documents as well as helpful forms to help you choose the right mortgage product and to compare mortgages if you choose to shop at more than one mortgage company.

One of the other areas to pay attention to in the Toolkit and with your lender is the changes that are allowed between the initial Loan Estimate and the final Closing Disclosure. Those changes can and do occur because of changes in things like rates or closing dates or other factors; however, they are limited by the new TILA-RESPA rules asn can cause the whole process to be re-set to zero if they are too large. Another new rule concerns the timing requirements on the lenders and title companies to get the Closing Disclosure documents to you. The new rules require that you have them in-hand three days prior to closing. That not only gives you time to get the necessary funds ready, but also to review and challenge any changes that you see that you don’t understand of maybe don’t agree with your lender about. Keep in mind, however, that any changes that may be made during that three day period may reset the clock and push back the closing. There are exceptions which define acceptable last minute changes, but they are few and relatively minor, compared to some of the “closing table surprises” that used to take place under the old system.

So, the sky is not falling. From the perspective of the buyer or seller, these rules and document changes are a good thing and hopefully will make life easier. The mortgage and title company people will adapt, even while grumbling about all of the extra work and time involved (it will likely add about a week to the process). I recommend that you go download the CFPB Toolkit if you will be in the market for a house this fall. Read through it so that you will be an informed consumer who knows what his/her rights are and what to expect in the process.


Friday, July 3, 2015

Summertime in Milford…


It’s officially summer, and that means lots of things to do in the Milford, Michigan area for the next few months.

The annual 4th of July Parade kicks things off, with hundreds expected downtown to watch the parade. The parade steps off at 11 AM in front of the Milford Historical Museum and proceeds down Main Street all the way to Huron Street. Over 45 groups will be participating in the parade with candy and goodies for the kids who are watching. The parade theme this year is “Celebrating the Huron Valley” and signifies that the parade is made up of marchers and watched by spectators from
all over the Huron Valley area.  The parade Grand Marshall this year is Mary Lou Gharrity, a life-long resident of Milford who grew up in Ye Olds Hotel on Main Street  and who, along with her late husband, owned the Milford Times weekly newspaper for many years. Mary Lou is also a founding member of the Milford Historical Society and a “go to” person if you want to know about Milford’s history.

On July 10 & 11 Milford’s Downtown Merchants hold their annual sidewalk sale, with great bargains to be had on a variety of store items, plus entertainment, special prizes and refreshments and other “goings-on” downtown.   On those same two days the Milford Historical Society will be holding its annual Granny’s Attic Sale from 9 AM until 4 PM both days and features an eclectic mix of donated items and items from estate sales in the area. There are things that Granny pulls out of her attic that you won’t find anywhere else, from glass and china to furniture items. Check it out on your way to and from the Sidewalk Sale.

In August Milford’s big event of the year – Milford Memories – will take place over three days from August 7 - 9 - Ranked 41st in the Nation by Sunshine Magazine & Voted 2nd Best Festival by Vote 4 the Best. Over 200,000 guests can't be wrong! This is a huge event, with hundreds of booths featuring art and crafts and other products. It’s not to be missed. Click here to go to the Milford Memories web site.

In September we have the Home Tour weekend, which is comprised of several events over two day – September 19 & 20.  On both Saturday and Sunday, the Home tour runs from 10 Am until 4 PM and features f of the historic homes of Milford, plus 3-4 other venues for visitors to learn more about Milford’s History. On Sunday only there are three more events going on – The 31st annual Milford Car Show will take place all the way down Main Street and into Central Park. The show runs from 8 Am until 4 PM. and features nearly 200 cars of all types in multiple categories that are judged for best in category by the show attendees.  Click here to go to the Milford Car Show web site.
Also on Sunday we have the annual Tractor Show out at the Huron Valley State Bank location at GM and Milford Roads. The show runs from about 10 AM until 4 PM and features both working farm tractors and vintage collectible tractors.

Finally that Sunday the annual Huron Valley Rotary Club Duck Race is held in Central park. There Click here for more on the Duck Race from 2014. Stray tuned for how to buy your 2015 duck. For a little extra this year duck owners will be allowed to paint their ducks a different color so that it makes it easier to see how their duck is doing in the race (each duck is numbered).
will be games and activities for kids, picnic type food available for the family and other activities leading up to the moment when the 1000+ yellow rubber ducks are dumped into the Creek leading to the Huron River and all frantically paddle away trying to be the first across the finish line down-stream. The duck are sold to raise funds for the work in the community that the Rotary does and a part of the funds collected goes to the owner of the first place duck. In the pasts that was well over $1,000.


In addition to those special events, the Concerts in the Park series of summer concerts at the LaFontaine Family Amphitheater continue, as do the Friday Might Live Concerts at the Center Street Gazebo. You can go to my web site www.movetomilford.com to see the schedule of acts at those venues. Then there are lots of activities throughout the summer at the YMCA and put on by the Community Rec and Adult Ed program. You can view schedules for both at the Move to Milford web site, as well as click on the Events Calendar for Kensington MetroPark. 

There’s always something to do in the Valley.