Attorney’s Role in Home Purchase

This is the second guest post from local attorney Katherine Wayne-Spindler. 

A home is one of the largest and most significant purchases a person will make in life. So the purchase agreement, indicating your interest in buying the home, should not be signed impulsively. A purchase agreement is a binding contract and is the single most important document in the real estate purchase. Pre-printed contracts don’t cover the needs of every person. An experienced attorney can plan ahead for potential problems before you sign any real estate contract.

Often people come to an attorney after the purchase agreement has been signed and trouble develops in the transaction. At that point, an attorney can only try to find loopholes and language in the contract to allow the person to void the deal or correct the problems to save the sale. From the time a person starts the process of finding a Realtor and looking for a home, he or she should have an attorney in the wings to help with each step in the process. 

Here are some specific home-buying situations that benefit from legal representation:

1.      Unique Life Situations

An attorney will be familiar with the obstacles you might encounter depending on your life situation. In the case of a recent divorce, an attorney can help you determine how your credit history, or potential lack of one, can impact your closing costs and expenses. Receiving alimony? A family law attorney can help you understand the implications of buying vs. renting. What about a recent inheritance? Your attorney can make suggestions pertaining to real estate that may optimize your estate tax situation.

2.      Short Sales and Foreclosures

Short sales and foreclosures add new elements to the completion of real estate sales that can be aggravating to many purchasers and Realtors. An experienced attorney can help resolve these complications.

3.      Unique Circumstances

“For example, what if your prospective new home has an illegal in-law unit with an existing tenant whom you want to evict in order to rent the place to a friend? Only a lawyer can tell you with any certainty whether your plans are feasible. Or what if you’d like to rent the home for an extended period, such as a year, before you’re obligated to buy it? That will require drawing up an unusual lease.” – NOLO, Law for All http://www.nolo.com/legal-encyclopedia/hire-real-estate-agent-or-lawyer-29527.html For non-traditional purchase arrangements, including land contracts and intra-family exchanges, the advice of a real estate attorney combined with the experience of a Realtor will make the purchase process smoother.

Contact an experienced local attorney before troubles arise in the home buying process. Attorney Kathryn Wayne-Spindler can help home-buyers in Southeast Michigan with their home purchase questions. Contact the Milford, MI law office of Kathryn Wayne-Spindler & Associates www.kssattorney.com at 248-676-1000 or Milford-based Realtor Norm Werner at 248-763-2497. 

For those who like statistics…

Every month the local MLS publishes statistics for the month just past. Below are the April stats that the MLS that I belong to published for April, 2015.

Monthly Highlights:

•    All MLS sales for the month were up slightly by 1.0% from 5,143 to 5,193.

•    The median sale price for All MLS sales was up 21.7% from $118,000 to $143,550.

•    Average Days On-Market (DOM) for All MLS increased by 1 day, from 55 to 56 days.

•    On market inventory increased since last April by approximately 6.3% from 19,862 to 21,119.

•    93.5% of the on market inventory is designated as non-foreclosures and 6.5% is designated as foreclosures. Last year, 90.3% of the on market inventory was designated as non-foreclosures and 9.7% was designated as foreclosures.

April Retrospectives - Based on All MLS Market Activity

•    Over the last 10 years, April sales reached a high in 2009 at 5,956.

•    Over the last 10 years, February sales reached a low 2007 at 4,064.

•    This is the first April for DOM to climb (as compared to the previous April) since 2007.

•    Over the last 10 years, the April DOM reached a high in 2007 at 124.

•    Over the last 10 years, the April DOM reached a low in 2014 at 55.

•    This is the fourth year since 2011 for the April Median Price to increase over the previous year.

•    Over the last 10 years, the April Median Price has reached its highest this month at $143,550.

•    Over the last 10 years, the April Median Price reached a low in 2009 at $44,625.

I also track the sales of homes priced at $20,000 or more on a weekly basis  in the areas that I tend to focus upon – the ten townships/cities surrounding Milford – Milford Village and Township (combined), Commerce Two (including Walled Lake and Wolverine Lake, Wixom, Highland Township, White Lake Township, West Bloomfield Township, Lyon Township (including the City of South Lyon), Green Oak Township, Brighton Township and City (combined) and Hartland Township. Those stats are available at my web site www.movetomilford.com. Click on the “What has sold locally” choice. There is also historical data going back years for many of those locations. Enjoy. 

Dan Elsea's Market Report

Dan Elsea is our broker and one of the company owners. each month he reports on how the market has been doing through the end of the prior month. This is his May report.

In April, the market heated up even more than we had expected. With For Sale inventories rising through the winter and into the beginning of 2015, it looked like the market was becoming more balanced. To some degree it has settled compared to last spring, but the buyers are coming out full force as well. The result is a healthy gain in sales (6% in April, a nearly 10% year to date increase over 2014) and in price per square foot (6.5% in April, about an 8% year to date increase over 2014). New listings entering the market grew faster than sales causing inventories to rise by about 6% in April. The Months Supply of Inventory (MSI) is holding steady at 2.2 months with the vast majority of buyers (88%) buying homes that have been on the market less than 90 days. This makes the feeding frenzy for new listings even more active than the 2.2 months supply indicates.

There are a couple of industry issues that everyone should be aware of regarding any real estate transactions in the upcoming months. The first is a warning regarding a wire fraud scam moving across the country. The second issue reflects changes to the mortgage approval and closing process that could cause extended and delayed closings beginning with new sales this summer.

1) The Wire Fraud scam is based on giving false wire instructions to a buyer, tricking the buyer into wiring their down payment money to the crooks. The criminals, using various methods, gain access to someone's email (Buyer, Seller, Realtor, Title Company, etc.) to monitor the activity during a transaction. When they see a closing coming, they impersonate the Realtor or Title Company, sending bogus money wiring instructions to the Buyer, thereby grabbing the Buyer’s money for the sale.

The solution to prevent the scam is relatively simple for buyers. Always call someone you know in the transaction (the Realtor or Title Representative) to verify any wire instructions you receive (in addition to using email, the crooks will sometimes call and impersonate the Title Company). 

The more we communicate exclusively via email the easier it is to get lulled into a scam. When it comes to wiring money, always add the additional step of personal verification with your Realtor or Title Representative. 

2) The new regulatory changes will affect mortgage applications received after August 1^st, 2015. These changes are part of the final implementation of the Dodd-Frank legislation. We will go into more detail next month, but the core changes will be a new closing statement replacing the HUD 1 and new time frames for lenders to provide information to buyers during the application and approval process. The result will be a lengthening of the mortgage approval process. Most industry experts suggest that we plan on up to 10-15 additional days, as well as the need for a flexible closing date. Transactions during which sellers are closing on their home in the morning to buy their new home in the afternoon ("back to back closings") will be trickier, as will closing where the buyers are scheduled to move in the day of closing. It will be more important than ever to plan some flexibility into the choreography of the closing and moving process, allowing for an extra 10 days or so for the mortgage approval process and an additional 5-7 days for the time between loan approval and the actual closing.The additional disclosures and new forms are benefits to the consumer. The trade-off is a slower mortgage approval and closing process.

April activity for the company followed the strong market activity. Combined we had a truly remarkable record month with over $500 million in new contracts written, a company record and certainly the most ever for a broker in Michigan. Only a handful of real estate companies sell over $500 million in a full year, let alone in one month. 

Take a 2nd Look - get a second opinion and quote...

Recently I posted a blog by Chris Knoche, our local John Adams Mortgage rep, about the clarification of the HUD rules for getting another mortgage is you have been through a foreclosure of some sort. It is good advice for those impacted by the recent recession.

Chris (really John Adams Mortgage,but Chris is their agent in our office) has a also got an important program going right now call 2nd Look. The 2nd Look program is really very simple - you give Chris the opportunity to look at your  mortgage requirements and give you a quote, even if you already have a quote from another mortgage company. You can do it in person or over the phone. You will need your Good Faith Estimate or the closing costs worksheet from that other company, because that allows an apples-to-apples comparison and quote.

So, what's in it for you? Well if they beat your current quote for the mortgage that you need the savings for you will be obvious AND they will give you a $50 gift card for taking that 2nd look. But what if they can't beat your current mortgage deal? Well they will give you a $50 gift card just for giving them a chance. You can't beat that! Click here to read the flyer that they have on the 2nd Look offer.

What's the catch? Well you must be willing to meet with the John Adams rep (in person or over the phone) AND you must give them the necessary information or documents for them to be able to do a valid mortgage pre-approval. Those information/documents may include statement for income, asset and credit. There is no cost to you for this service and you get the $50 gift card.

If taking a 2nd Look before you lock yourself in to the rates on your current mortgage quote sounds like a good idea to you,give Chris a call at 249-535-7073. Tell him that Norm sent you. That won't get you anything extra, but I'll feel better about help Chris out, since he has helped me out so many times.

And, if you're just getting started in your house hunting and don't have a contract with a Realtor®
already, give me a call. I don';t require an exclusive contract - just for the houses that I show you.

How long must you wait…

Chris Knoche is a loan officer for John Adams Mortgage, which is the mortgage company that Real Estate One owns . Chris makes sure to keep all of the agents in the Real Estate one offices that he serves up to date on the latest news and procedural changes from HUD, FHA, VA and lenders in general. Recently he sent this information out to all of the offices.

We’ve received clarification from HUD on the seasoning requirements for previous foreclosures and the treatment of them going forward. This guidance is not new but has been more clearly defined in the new handbook. Even though the new manual will not be effective until September, we are to use the defined timing rule effective immediately.  

For previous foreclosures or deed-in-lieu of foreclosure that are FHA insured, the borrower is not eligible for a new FHA-insured mortgage for three years after HUD pays the claim to the Lender or Servicer. 

For previous foreclosures or deed-in-lieu of foreclosure that were  VA, USDA , Conventional  or any other loan type, a borrower is not eligible for a new FHA insured mortgage until the date that the title ownership of the property changes from the borrower to the lien holder.  If the credit report does not indicate the date of the foreclosure or deed in lieu of foreclosure, the mortgagee must obtain the settlement statement, deed, or other legal documents evidencing the date of property transfer.  This is not the same as the sheriff’s sale date.  The “seasoning” must include the 6 month redemption period as required by law.

In short, the waiting period from a foreclosure is now three and a half years. I am available if you have any questions. Chris Knoche - 248-535-7073.

So those who had the misfortune to go through a foreclosure or who gave up their house in a deed-in-lieu of foreclosure transaction  now know more clearly how long they have to wait in order to get another mortgage that is backed by FHA (and thus by HUD). 

Lots to do in the Huron Valley this weekend

There are lots of events going on on Saturday in the Huron Valley. You can start your day at 8:30 Am with a free, outdoor, instructor-led workout at the Lutheran Church on Huron St (across from Taco Bell), courtesy of Anytime fitness in Milford. In Highland there are events all day long as part of Highland's Founders Day, with a parade, plant sales, vendors and much more and over in White Lake the Summer Showcase will give you a taste for the events being run this summer by the Huron Valley Recreation and Community Ed program at Lakeland High School starting at 9 AM. For the details on these events go to my web site - www.movetomilford.com and click on the posters for the events.

May will be a very busy month , as will June, so go to the web site often to keep up with what is going on in the Valley. MAybe I'll see you at a few of them.

Tell me lies, because I want to believe…

One of the more desperate lines of all times is, “Tell me you love me, before we leave the bar.” For whatever reasons, many people would rather be lied to that to hear the truth in some situations. I happen to work in the real estate business and I run into that a lot. I lose more business than I care to admit, because of that. It usually comes down to some other agent telling the potential client what they want to hear, even if it is not the truth of the situation. That usually involves the pricing of the listing. Many people just do not want to hear what the true market value of their home is; so they believe the agent who tells them the highest number. Often that is a number well above the current market value; but, that doesn’t matter to them, because the higher number makes them feel good for the time being.

Some people play this game for ego reasons. They can go to work and tell everyone that they live in a house that just listed for $300,000, even though the best estimate of its market value may be $250,000. Many people get into this mode because someone else, somewhere else, told them that they thought their house was worth more than the Realtors were telling them. Usually that person is out of the area, many times out of state, and has no idea about the local market. Sometimes the seller points to a house down the street and says that it sold last year or last month for what he is asking me to price his house at; usually with no idea of the updates or upgrades that the other homeowner had put into the house to justify that price (unlike my client, who many times had not have invested in his home in years).

Sometimes, however, it is a less than totally scrupulous fellow Realtor who knows that if he tells the seller this lie, he will get the listing and he can then start pushing for price reductions when it doesn’t sell. That’s not dishonest, just not the way that I chose to work. When someone asks me to do an market analysis for their home to help establish a market value for listing it, that is what I do. I usually come back to them with two things – a list of things that they can do to increase the value and decrease the time it will take to sell; and, a recommended pricing range, with a lower value for a quicker sale and a higher price to achieve maximum value. Both are reasonable numbers that reflect a balance between perceived value and price, but which also show the time trade-off of the pricing options. I try to explain this clearly, so that they understand the factors and logic that I used to arrive at the numbers. I’ve stopped using the word Comps (Comparables) and chose to use what I call Similar Houses that have sold and that are active to establish a reasonable market value expectation.

Some people take my report and advice better than others. Some may initially feel like I’m being negative about their home by pointing out the things that will likely detract from its value, but I usually give them plenty of advice about the things that they could do to correct some of the issues. For things that it is too late to correct or for those that are too costly to correct as you are getting ready to sell, I try to help them understand how potential buyers are likely to react and what impact on their offers those items are likely to have. Unfortunately the process of selling one’s house is fraught with emotions and sometimes they feel better with the agent who comes in and tells them that he/she loves the house and that there is nothing at all wrong with it. They tell them that they love them before they leave the bar; and they feel good about that.

So, I lose some listings because of that; but, I don’t lose any sleep at night over anything that I’ve said. I often get calls months later from those same buyers letting me know (as if it somehow cleanses their conscious) that I was right and the house eventually sold for what I said it would. How nice of them. I’ve only had one case of someone coming back and asking me to list their house after an unsuccessful time on the market with the agent that they left the bar with initially. I’ve heard plenty of horror stories from people about being bullied by Mr. Smooth, sometimes within the first week or so of the listing. The other thing about agents who work like that is that they are not usually very patient. They want to get in, get the listing however they can, get the price dropped as quickly as they can, get the place sold quickly and get out before the client wakes up to what happened. Others have related how they never saw the agent again after he took the listing; because he was on to the next bar, telling more lies to the next desperate patron.

We all use the old saw “Buyer Beware”; but there should also be one for “Seller Beware”. When the time comes to think of selling your home it needs to stop being your home and become a product. The home that you have known and loved for years will live forever in your memories. You should look at the house that you now need to sell with the same cold calculating eye that potential buyers will be using when they visit. So, you don’t need a lover (someone to lie to you) you need someone to give you professional advice.  If you’re ready for that, give me a call. Let’s get out of that bar and go sell your house.