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.

Meet the serial entrepreneur who owns the Milford Anytime Fitness

Many times when I meet small business owners I see that they are people who have a special passion for what they are doing and I always wonder how they got to this point, to this particular business at this time in their lives. Well before I joined Anytime Fitness in Milford, I met Christine Wierenga, the owner, at a Chamber of Commerce event. It was an after business hours mixer at a local bar/restaurant in Milford.  I’m a Huron Valley Chamber of Commerce Ambassador and one of our Ambassador duties is to attend events like that one and to make sure that members, especially new members, get introduced around and get the opportunity to meet their fellow local business people. I met Christine that night and took it upon myself to introduce her around. We’ve been friends ever since and I eventually joined her Anytime Fitness gym in Milford and began my personal fitness journey.

I asked Christine to answer the question that she gets often about how she got into the business of gym ownership and below is her answer -

A question I am frequently asked is “How did you get into the fitness business”? I never mind answering that question because telling the story reminds me of the seemingly random way I came into gym ownership. I won’t go into too many details, but here’s how it happened.

I bought a classic car after I graduated high school and I wanted a custom interior in it. I couldn’t afford to pay someone to do the job, so I taught myself to sew and bought an upholstery sewing machine. It turned out well, so I invested in a bigger sewing machine and starting doing upholstery repairs for gyms in Michigan (while also doing automotive restorations). I grew my upholstery repair business to include gyms across the country, specializing in on-site repairs. As I went from gym to gym, I realized that many gyms were very poorly run and were severely lacking in customer service; so, I decided I could do it better. I did my research on the gym industry and bought an Anytime Fitness franchise on the East Side.

After running the fitness equipment upholstery business for almost 10 years (and having been a member of at least 8 different gyms) the decision to open an Anytime Fitness was an easy one!  That decision was fueled by my experiences with those facilities - ranging from overwhelmingly positive to shockingly horrible!  What set the exceptional clubs apart from the rest?   Customer service!  Or as we call it here at Anytime Fitness – Club Culture.  It’s an atmosphere that welcomes you, encourages you and keeps you coming back!   We know that most people have a difficult time making fitness a habit - It is my team’s goal to make sure that our members feel at home in the club.   We strive to keep our clients motivated and engaged. After all, they trust us to help them with their fitness journey!    

Since opening my first location in 2007, I purchased two other locations (the latest in Milford) and subsequently sold off the two East Side gyms to focus upon the Milford location. I have often looked back to see how I got here. Sometimes in life, you don’t understand why a project isn’t working out or you’re pulled in a different direction. In hindsight, I know that every stumbling block, every closed door, every “coincidence” was there for a reason. When I was asked in school “what do you want to be when you grow up”, I always found it difficult to narrow it down to one profession.  As a small business owner, I don’t have to just “pick one”!  With Anytime Fitness, I'm involved in everything - all of the things I love. I am able to help people get started on their fitness journey. I have an excellent team (of who I am incredibly proud!), that I get to see grow professionally and personally.  As a numbers geek, I even love the back-office work….yes, even spreadsheets!  

Anytime Fitness of Milford is much more than just a business to me.  The people there are my family – staff and members alike.   I’ve been amazed by the transformations I’ve seen our members undergo – Not just the physical changes you’d expect to see, but the even more incredible changes in their confidence, self-esteem, health and energy levels!  It may have taken a strange turn of events to get me here, but I am sure glad I’m here!

Yours in Health,

Christine Wierenga

So, now you know Christine’s story. I encourage you to come into Anytime Fitness in Milford and meet Christine or her
 gym manager Willa Danowski. Right now (Ed.- April 2015) is a good time to do that because they are offering Free Workout Saturdays to introduce people to the gym. You can try out the gym for free! While you’re there pick up one of the free 7-day membership cards and come back to try it out during the week. If you get there in the early mornings, (Ed. - I define that as between 8:00 and 10 AM) you are likely to see me there, too. I go to the gym 5-6 days a week, most weeks. I know of no better way to start my day than with a good workout.

Like some of the ads that you’ll see on TV, the Anytime Fitness gym in Milford isn’t full of “lunks working to feel the burn.” It is full of people like you and me, just trying to get back into a little bit of shape. Joining means that you get a free assessment from one of the personal trainers to help you understand where you are starting from and them they give you a workout schedule to help you get started on your personal  journey to fitness. The gym has lots of exercise machines and, of course, free weights.They also offer lots of free classes for members, from the Saturday Morning Boot Camp, to Spinning, to Zumba to Cross-training to you-name-it. Choose how many or how few you may wish to participate in or just decide to work out on your own whenever you can get in. It took me a while to work up the courage to try the boot camps, but now I’m fairly regular on Saturday mornings.

The great thing about the atmosphere in the Milford Anytime Fitness is the sense of family that you quickly get to be a part of. The same people tend to show up at the same times and you soon meet everyone who is on your workout schedule by their first names. Sometimes I think some of the ladies who come in the early morning spend more time socializing than exercising, but that’s OK; they’re getting out and getting some time on the treadmill or the elliptical or the other machines and they
 are enjoying the time spent at the gym. Life’s too short not to enjoy it, so come on out to Anytime Fitness, at  141 South Milford Road, Milford, MI 48381 (in the old Farmer Jack’s Shopping Center near the corner of Milford Road and GM Road)  Phone: (248) 685-8373 and start your fitness journey. Maybe I’ll see you along the way. And if you think you're up for a real workout right away, join us Saturday mornings at 8 AM for Boot Camp.

Make a Difference on Earth Day…

We celebrate Earth Day April 26th and earlier this year we celebrated Make A Difference Day. I think we should combine the two thoughts and Make a Difference on Earth Day. If on Earth Day everyone on the planet did one little things to help preserve our planet; that would

be billions of little things that help. As they seem to say in Washington – a billion here and a billion there and pretty soon you’ve got something real.

There are lots of events going on around the country to celebrate Earth Day. Most of them have something to do with conservation of natural resources or lessening the impact of man on the planet through recycling or use of less polluting fuels. It is always sobering to read about or see on TV that entire species are about to be wiped out, but that is happening. The impact of global warming is finally being felt and realized by more people and the fact that the oceans are not limitless is now understood. Whether these revelations come soon enough to save what is left is still in doubt.

We are a throwaway society. We have become accustomed to just discarding something when it has been used for a while or when the “next big thing” comes along. Unfortunately we’ll not be able to see the next big thing once we have used up this planet that we live upon. Maybe a million years from now some space-roving explorers will discover a lifeless planet that shows signs that it once supported a primitive civilization that could only figure out how to make energy by burning things, with a people who had a penchant for killing things. They will wonder at the stupidity of a planet of people who committed such a slow and avoidable suicide. Of course, by that time the planet will be rules by the bugs that remained and not by the apes as their movies predicted.

So, maybe this coming Sunday you can begin the re-write of that scenario by making a

difference, by doing something, anything to change your personal behavior towards the planet. It can be a simple as not rolling down your window and tossing your fast food bag out as you drive, or maybe planting a tree instead of burning a pile of leaves, or maybe walking to the store instead of getting in the car for the 3- block trip. Every little bit helps. You don’t have to go out and hug a tree (however, that might make you feel a little better) or find a whale to save; but, you don’t have to do a lot of other things that are causing harm to the planet either. Just think about things before you do them; then don’t do some of the bad things and do go ahead with the good one. This isn’t rocket science, it’s earth science and that’s the only rocket that we have to ride on.

If you’re in the Milford Michigan area, here’s a great way to spend a part of the day - Earth Friendly Family Fun Festival 2015 - noon until 4 PM at Carls Family YMCA, 300 Family Dr, Milford, MI  48381. Help celebrate the Earth with lots of activities for the whole family. Click here to view the event flyer.

Come listen to the stories of our own Main Street Brat

The Milford Historical Society presents Mary Lou and Main Street - Our Thursday  April 16th General Meeting at 6:30 p.m. at the Milford Methodist Church at 1200 Atlantic St and it will be a Potluck. Pot Luck assignments are as follows:  A—F–  Salad or Side Dish   G—Q   Main Dish      R—Z— Desserts.

The Guest Speaker that night will be our own Mary Lou Gharrity (shown on the left

with Marlene Gomez, our recently retired Museum Director). This is a Meeting you will want to attend for sure. Come listen to the stories of the Main Street Brat! Mary Lou grew up in Yea Olde Hotel on Main street and has decades of Milford stories to share.

The Milford Historical Society holds general membership meeting every other month, with guest speakers talking about topics of historical interest from the area and from Michigan. Past speakers have talked about topics like the founding of Detroit and the early settlers who migrated out to found Towns and Villages like Milford, about the impact of the railroads on the small towns that they passed through, about the work of the CCC during the Great Depressing and the CCC camps that were set up in Michigan, about the Vernors soft drink company and about being in the Nazi concentration camps (from a concentration camp survivor).

This months speaker is lifelong Milford resident Mary Lou Gharrity, who spent at least a part of her childhood living in Yea Olde Hotel, Milford's downtown hotel, which her parents ran. Later she and her husband owned and ran the Milford Times. Mary Lou, as much as anyone can represents a living history of Milford, and her stories of the old days are fascinating. we hope that you will join us.

The Milford Historical Society was founded in 1973 by a group of citizens who recognized the importance of the heritage of their community and wished to share it with their contemporaries and preserve it for those who will follow. To these ends, the members have established a museum, a research and archives room, and have sponsored, in conjunction with the Milford Township Library and the State of Michigan Library, the microfilming of the Milford Times newspaper beginning with the first issue in 1871. The Society is currently involved with a project in conjunction with Central Michigan University's Clarke History Library to convert that microfilm library into a searchable, on-line database.

The Milford Historical Society is chartered as a 501c3 Non-Profit organization and as such is eligible to accept tax-deductible contributions. The Society supports the Milford Historical Museum at 124 E. Commerce St (one block east of Main St) and all of its projects from membership donations and fund raising efforts and received no outside support. The Society’s continuing projects include an annual home tour, various research projects and an effort toward local architectural preservation. Through it’s own Sesquicentennial Committee, the Society published a book titled TEN MINUTES AHEAD OF THE REST OF THE WORLD – A History of Milford  as another step towards preserving and disseminating the history of Milford, Michigan.

I know I signed a contract, but what are my “outs”?

There was an interesting article by Benny L. Kass in my daily Realty Times news feed recently that covered the topic of when real estate sale contracts become binding.  You can read Benny’s article at -

http://realtytimes.com/consumeradvice/sellersadvice1/item/34181-20150408-when-does-a-contract-become-a-binding-contract

Benny is apparently from the Washington D.C. metropolitan area and the advice that he gives and contract that he references represent not only the legal side of things, but also the local real estate customs.

I suppose that some lawyers might argue that there is no such thing as a binding contract, just contracts that make it very onerous to cancel or get out of for cause. Locally (in Southeastern Michigan) almost all of the various Purchase Agreements (PAs) that I have seen from the companies

that do business in this area are binding when both parties have signed the contract; however, all of them have several clauses that provide “outs” for the purchasers. Those are contingency clauses that specify certain things that the buyer must be happy with in order to proceed or which must at least have outcomes that are to the buyers’ satisfaction. Usually there are time frames associated with each contingency during which the buyer must perform some inspection or test or complete other actions necessary to proceed to the closing. Perhaps calling then “outs” is a somewhat misleading term. They are not things that the Buyer actively looks for or uses to get out of the contract; but they are the contingencies that allow the Buyer to decide not to proceed with the deal and which allow the Buyer to get their earnest Money Deposit back in full. In most cases there are also provisions for the Seller to try to resolve any issues to the Buyers satisfaction. In every case there are also set time frames within which things must occur. Failing to meet the deadline requirements is considered to be acceptance by both sides of the state of things “as is”.

The first big hurdle that the deal needs to get over is usually the home inspection, which in this area is typically required to be done within 7-10 days (sometimes less) after the Seller and Buyer have both accepted the Purchase Agreement. The wording on most home inspections clauses usually specifies

how the Buyer is to express to the Seller his dissatisfaction with the findings and within what time frame. Most PAs then give the Seller some opportunity at a retort to the Buyers issues. Some contracts, however, let the Buyer move right to declaring the contract null and void, based upon his dissatisfaction with the inspection. If the contract wording allows the Seller time to respond it is usually short and the response requires that the Seller tell the Buyer what he is offering to re-mediate the issues. That could be an offer to have the problems fixed to the Buyers satisfaction or to reduce the agreed upon sale price by an amount that would allow the Buyer to resolve the issues after closing (that would be called a Seller Concession).  Should the Buyer and Seller fail to come to a mutually acceptable agreement on the issues the Buyer will normally have the option to declare the agreement to be void and get their Earnest Money Deposit back in full.

The next big hurdle is normally the appraisal, which is a key part of the Buyer’s ability to get the mortgage that he needs to buy the place. The contract normally specifies a window within which the Buyer must make his formal application for the mortgage, usually within a similar timeline as is set for the inspection deadline. Once the Buyer has applied for the mortgage, the mortgage company will order the appraisal. Getting the appraisal scheduled can take a week or more, so about 2-3 weeks

might pass from the time of acceptance of the contract until this appraisal actually takes place. The appraiser may take 3-5 days to get the report back through his management and into the hands of the mortgage company. If the Buyer gets one of those “Houston we have a problem” calls from his mortgage company another round of negotiations starts with the Seller.

The options for dealing with a low appraisal are that the Seller concede the difference between the strike price and the appraised value or the Buyer throws extra money into the deal to make up the difference or they reach some compromise in the middle.  Failing an acceptable compromise, most Purchase Agreements in this area would allow the Buyer to walk away from the deal and get his Earnest Money Deposit back. Appraisal issues have been the biggest cause of failed deals for the last couple of years, because the mortgage companies and the appraisers have been very conservative and have not kept up with the rising property values in the market.

Another part of the mortgage contingency language in Purchase Agreements also provides an “out” for the Buyer if the mortgage company turns down the mortgage, even if the house did appraise. OK, how can that happen? There are lots of things that can cause the underwriter at the mortgage company to turn down the mortgage, even if the mortgage originator (the mortgage agent that the Buyer was dealing with all along) thought that the Buyer was golden. Buyers can get a “Pre-Approval Letter” based on nothing more than the preliminary information that they give to the mortgage agent and a quick credit check.  Once the mortgage is actually applied for the file goes to the underwriter (that mysterious man behind the curtain) who begins an in-depth review of the deal and the Buyer. The Buyer is asked to provide all sorts of detailed financial information that wasn’t required initially and the devil is usually in those details.

The underwriter may look at up to two years’ worth of financial statements and tax returns (sometimes more), check on employment and review all recent credit purchases looking for any red flags that might indicate that the Buyer doesn’t have the wherewithal to carry this new debit load. Things like getting some money from mom and dad to make the down payment may seem to the Buyer to be his own business, but to the underwriter that is a red flag that must be explained and documented. Was it a gift or a loan? The underwriter also reviews the PA, the title work and any other documentation that may have a bearing on the deal; because his job is to protect the bank from undue risk.  This contingency, like the others in the PA, has a deadline; usually the mortgage must be approved (or denied) within 30-45 days from the date when all parties signed the deal. If the Buyer is turned down for the mortgage, most PA contracts contain provisions for the Buyer to back out of the deal and get his Earnest Money Deposit back.

There is another contingency written into most PAs that could occur between those two steps. When a real estate deal is signed one or both of the Realtors® involved will engage a title company to do the research on the title to the property to make sure that it can be passed to the Buyer at closing. Depending upon the office practices of those Realtors and t3he provisions within the PA, the title search could occur anywhere from a few days to a week or more after the PA is signed. The title search is done at the County Register of Deeds office and any and all recorded encumbrances upon the title are usually found. That may include recording for the sale of mineral rights (usually oil and gas), recordings of any tax liens against the property, recordings of any trades liens (sometimes called mechanics liens) against the property, all recorded easements for utilities, or access rights and any rights-of-way.

The “Title Commit” that comes back from the title company, based upon that search, gives a detailed list of any issues that were found or which need to be resolved in order to insure the title at closing. The PA language usually specifies both a deadline for getting title work done and to the Buyer for review and any objections, as well as provisions about how the Buyers objections must be expressed to the Seller.  Usually the Seller is given some time frame to rectify any issues with the title that the Buyer has; however, if the issues cannot be rectified to the Buyers satisfaction, this is another “out” for the Buyer and he gets all of his Ernest Money Deposit back. Deals have fallen through because of issue with the encumbrances on the title that could not be resolved.

So, let’s assume that the Buyer has gotten through all of these things and was satisfied with each; is it now full steam ahead to closing and the Buyer is now locked in? Well, almost. There is one final “out” that the Buyer could end up using. That last hurdle is the final walk-through. Most contracts

have a provision for the Buyer to walk through the house right before closing to be sure that the house is in substantially the same condition as the day that the offer was written and that the Seller has not damaged the house or removed items that were in the contract or considered to be a part of the house at the time of the offer. I have not had a deal fall apart at that late point, but I have heard of it happening. Sometimes Sellers do something stupid that dramatically changes the house as far as the Buyer is concerned and the Buyer is within his contractual rights to refuse to go through with the closing, if that is the case. Once again the Seller is usually given the opportunity to correct the issues.

If it seems like there are many places where the Buyer could back out and the deal fall apart, there are; however, in most deals both parties really want the deal to go to closing, so most of these “outs” are never used. The Buyer and Seller usually work out some compromise on any and all issues. It may be that the Seller makes repairs, offers price concessions, or corrects issue with the title or that both reach some agreement on how to handle the low appraisal. Most of the time, the sales go to closing.

There is one condition for which the Buyer really has no “out” and that is just getting cold feet and the last minute, sometimes called “buyer’s remorse”. This can occur for many different reasons and at any time, but it is usually after all other contingencies have been met and the closing is scheduled.  If, at that point, the Buyer has signed off on the home inspection and title work and been approved for the mortgage, he cannot just change his mind and back out, without consequences. No one can make the Buyer go through with the closing; however, at that point he will usually lose his Earnest Money Deposit, which will be given to the Seller (usually split between the Seller and his listing broker) as compensation for having taken his house off the market for the time that the deal was in-process.

If you are a Buyer, your Realtor should go over the Purchase Agreement with you in detail and explain all of these contingencies, so that you know what your rights are at every phase of the deal. If you are the Seller, you must understand that the Buyer has the right to back out of the deal and get his Earnest Money Deposit back if you cannot resolve these issues to his satisfaction. Most of the time the issues that come in a deal can be resolved and it makes no sense to blow the sale up and lose the Buyer over an issue that may have a relatively low price tag for resolution. If the home inspection finds Radon in your basement and you refuse to put in or pay for a Radon remediation system for $800, you have just bought your house back for that $800. Is it really worth it on a $200,000 to $300,000 sale? There may be some things that you just can’t fix or that you can’t offer a big enough price concession to overcome and the deal will fall apart. You’ll have to resolve those issues before you get another buyer, one way or another, because they will come up again. As the Seller, you have no ”outs” on those issues.

Hopefully, as either a Buyer or Seller, you now better understand the contingencies that may be within a real estate Purchase Agreement. Whichever side you are on, read that PA carefully before you sign and know your obligations and your outs.

Spring has sprung...get on the market

Spring has officially arrived, even if the weather sometimes doesn't feel like it yet. If you've been waiting until Spring to list your house, now is the time to act. The inventory in the area and especially in the Village is very low, so there will be less competition for buyers right now. And believe me, buyers are out looking! In fact many buyers have recently complained that they are getting frustrated because they want to move to Milford, but can't find many houses to look at. Take advantage of that to get the best price and the quickest sale for your house.

Another positive factor that could change if you wait is the low mortgage interest rates. Mortgages rates are still hovering right around 4% (up and down on a weekly basis) and mortgage lenders are hungry for business again. Programs allowing buyers to get into a home for only 3% down are back and some programs offering zero down loans are available. It won't get any better than that.

So, if you have been holding off making that move into a bigger house (or downsizing) or maybe trying to get closer to relatives, now is the tie to put your home on the market. In order to get ready, I suggest that you invite me in for a market analysis of your home. I'll need to do a quick walk-through visit and you'll end up getting tow valuable things - an estimated current market value for your home AND a to-do list of the things that you can do quickly to get it ready for market and achieve a higher price and quicker sale. The analysis is free but the information may be priceless.

If you've been looking in the Milford area and you're getting frustrated by not finding what you want, let me take some of that frustration off your shoulders and search for you. Many times a local Realtor like me will hear about homes that are going to be going on the market before they are even listed and can give you a heads-up. I might also be able to save yo some time by recommending that you not waste a visit on a listing that I know won't fit or that you won't like.

Give me a call today at 248-763-2497 and let me start helping you fulfill your dream. Whether your desire is to move away from Milford or to move into Milford, I can help.

Splitting home equity in divorce when one party owned the home before marriage

 ED. - This is a guest post by my friend and local attorney Kathryn Wayne-Spindler. Kathryn specializes in family law, which encompasses estate planning and divorce and child protection types of cases. I end up getting involved in the disposal of the family home in many divorce cases and it is not unusual that the property may have been owned by one of the parties in the marriage before they even met. So, I asked Kathryn to comment for a post on what happens and how the court decides who gets what in divorce cases involving that scenario. Below is her reply:

In Michigan, the courts typically prescribe an “equitable” division of assets during divorce proceedings. This includes the equity in the family home. One factor that alters the “even” split, however, is if one of the parties owned the home before the marriage.

In the case of one party owning the home prior the marriage, the courts will usually return the down payment and any equity accumulated before the marriage, to the original owner. The remainder of the appreciated value would be split according to whatever formula the courts deem appropriate for the rest of the couple’s assets.

This holds true for marriages lasting less than 10 years. Long-term marriages are different because the assets have become so co-mingled over the years that determining which equity should be attributed to the down payment or other factors, becomes too difficult. Divorce Attorney Kathryn Wayne-Spindler said, “The definition of long-term marriage depends on the judge. Some say more than 10 years, but certainly 15 or more would count as a long-term marriage.”

In a long-term marriage, the proceeds from the sale of the family home, no matter who purchased it originally, would be split equitably. As Kathryn Wayne-Spindler has said, “equitable does not necessarily mean even. The courts start at a 50-50 split but take infidelity, each party’s income potential, and many other factors into account.”

The courts also consider the amount of divisible assets when deciding who gets the profits from the house. So even if one party owned the home before the marriage, if the house is the couple’s only valuable asset, some of the proceeds will be awarded to each person. “In these cases, the goal of property division is to make sure that neither party will be left destitute,” said Wayne-Spindler.

In cases where the couple has been married less than 10 years and they do have other assets to divide, the original owner would need to provide documentation of the original property purchase including closing papers and cancelled checks showing the amount of the down payment.

Then a historical appraisal would be performed. A certified appraiser, like Norma Nicholson of Nicholson Appraisal Services in Milford, MI, would look at the value of the home at the time of the marriage. She would take into account the comps at the time, features and improvements. In addition to the retroactive appraisal, the certified appraiser would do a current appraisal. The difference in the two amounts gives the court a value of the divisible equity of the home.

In Michigan, in the last decade especially, housing values have been on a roller-coaster path. There are, unfortunately, cases where the house was purchased for a high price and actually lost equity because of market conditions. “In that situation, the equity was likely lost forever.” The good news is that property values in this state are rebounding in 2015 and many homeowners are finding increased equity in their homes once again.

In summary, if the marriage lasted less than 10-15 years and there are other divisible assets, the original down payment and equity accrued before the wedding would generally be returned to the party that originally owned the home. The equity accumulated between the marriage date and divorce would then be split equitably.

Ed. - So, like many areas of the law each case may end up slightly different, depending upon many factors; however, it does appear that at least some of the equity that may have accumulated during a marriage that lasted 10 years or more will be split. This may not be what either party wanted to hear, but there are very few outcomes in a divorce that end happily for either side. Should you become involved in a divorce situation or one that seems to be headed in that direction, seek the advice of  good attorney. If you are in the Milford, Michigan area I can think of no better attorney than Kathryn Wayne-Spindler.

What’s that white stuff on my lawn?

The snow has finally melted in our area and my lawn has this whitish/grey stuff that looks like cotton

candy on it. What’s that?

Well, as you might have guessed, it is not cotton candy; it’s a a disease - mold that is growing in your lawn. It’s called snow mold and it’s very common in the northern tier of states and in Canada. Below is a little about it from Wikipedia –

Snow mold is a type of fungus and a turf disease that damages or kills grass after snow melts, typically in late winter.[1] Its damage is usually concentrated in circles three to twelve inches in diameter, although yards may have many of these circles, sometimes to the point at which it becomes hard to differentiate between different circles. Snow mold comes in two varieties: pink or gray.

Gray snow mold (Typhula spp. or Typhula blight) is the less damaging form of snow mold. While its damage may appear widespread, it typically does little damage to the grass itself, only to the blades.[1] Unlike most plant pathogens, it is able to survive throughout hot summer months as sclerotia under the ground or in plant debris.[3] Typhula blight is commonly found in United States in the Great Lakes region and anywhere with cold winter temperatures and persistent snow fall.[4][5]

References:

1.  "Snow Mold Fact Sheet". University of Rhode Island Landscape Horticulture Program. Retrieved 2012-10-07

2. "RPD No. 404 - Snow Molds of Turfgrasses". Univ. of Illinois Extension. July 1997. Retrieved November 11, 2011.

3. Ash, Cynthia (February 2000). "SNOW MOLDS in LAWNS". University of Minnesota. Retrieved 2012-10-07.

4. Kerns, J.P. (2011). "Turf diseases of the Great Lakes region". Univ. of Wisconsin Extension. Retrieved November 11, 2011.

5. Johnston, William H. (December 2003). "Snow Mold Control in the Intermountain Northwest". U.S. Golf Association. Retrieved November 10, 2011.

I live in Michigan and get grey snow mold in my yard every spring (the picture above was taken in my front yard). Apparently it isn’t really all that harmful to the grass, but perhaps I could do a better job of raking the lawn before the first big snowfall to get it ready for winter. The grey splotches in your lawn now will disappear as the weather warms and certainly be chopped away with the first mowing of the lawn. The mold doesn’t go away, it just goes dormant and remains underground until next winter’s snows.

If you would like to read about alternatives to control snow mold in your lawn, here is a link to an article from the University of Massachusetts that discusses several fungicides that you might use.  Apparently, since the banning of Mercury-based fungicides, there has not been a single fungicide that can effectively control all of the various strains of snow mold, especially the pink type.  

Snow mold is just one of the molds that can infest lawns and you are likely to see most of the other types over the course of a summer, either in your yard or as neighbor’s lawn. Some of the molds are not associated with the grass, but may be growing on the roots of trees, especially trees that were cut down but the roots left to rot. Guess what eats those roots? That’s right – molds.

 So, the bottom line is that you should not necessarily be overly alarmed by the snow mold; but, perhaps take some action this summer and fall to treat your lawn, so that it does not return next year. You won’t see it all summer, but it is still there, underground, just waiting for that first big snow to start growing again. You may still get “fairy rings” and mushroom s popping up from time to time in your lawn and those are forms of molds too, but that’s a different story and usually less harmful to the lawn.

About BPOs, CMAs and Appraisals…

Would be home buyers may occasionally hear that the listed price was based upon a BPO. Sometimes, if the property is to be a short-sale the sellers will hear that term, too; as the bank or mortgage company tries to determine a fair market price.  Normal sellers will always hear the term

CMA or Comparative (sometimes Competitive) Market Analysis; and both buyers and sellers will certainly hear the term Appraisal before the deal is done. All of those terms refer to processes done by professionals in an attempt to determine the value of the property. They are all industry terms and all sound better that SWAG (Scientific Wild-Assed Guess), which it also what they all are.

Of the three terms the one with the most science involved is the appraisal, or at least that is what the appraisal industry works hard at portraying. Buried in the fine print of every appraisal is a little sentence or phrase that points out that the work is an opinion about the price.

Like all of these processes, the appraisal involves real data, mainly from past sales of similar homes, and lots of real work as the appraiser tries to adjust the data that he or she has to work with to level the playing field and make the comparison of the “subject property” reflect as close as possible the current value of the house being appraised. There is no intrinsic value to any house and the most honest assessment of value that I’ve ever heard is that any house is worth what someone else is willing to pay for it. Unfortunately, there is also usually a mortgage company involved and so the value becomes whatever the mortgage company says it is worth – thus the need for the appraisal.

So what do the appraisers use to determine a house’s market value? They start with the assumption that the house is worth what others have paid for exactly the same house. Their job is made immensely easier if the house is in a tract sub with lots and lots of recent sales of houses of exactly the same floorplan and amenities. That does happen, but the reality is that no two houses are ever built exactly alike, so the appraisers challenge is to make “adjustments” for the differences.  That’s still fairly easy in big developments; but, what happens when the house being appraised is custom built and off away from other similar houses. That’s where the appraiser starts applying all of his scientific and experience skills to try to create that level playing field, so the houses can be compared as a market.

Appraisers like to work with as little distance involved as possible, so most like to work with similar homes that are within a mile or two, but they will go out further is necessary.  Staying local takes a lot of the neighborhood factors out of the comparison. They also need the homes to be the same in terms of amenities – number of bedrooms (and locations in the floorplan) and baths, style (i.e. single story, multi story, split level, etc.) and age of the build, garage size, basement finish and much more. The appraisers use the term comps or comparable, because they want you to believe that they are looking at a group of houses that are the same (comparable) as the one that you are considering and that it is logical therefore that your house should sell for the same as those examples. It’s a reasonable and logical conclusion to draw.

The appraisal process does have flaws. The appraiser has seldom done more than drive by the comps, so they may not have a good feel for the materials, finishes or conditions inside. They try to make up

for that by looking at all of the MLS pictures that were on line for the comps. So they try to make adjustments for any differences that they note; adding on value or taking off value for those differences. The other flaw is that they are using data from past sales, so the market may have moved on from those sales, sometimes rather rapidly as is has over the last year or so. So they make adjustments for that, too. You start to see why there is that little statement about it being an opinion; a highly informed one of the appraiser is good and has worked hard at it; but an opinion none the less.

Now, BPOs and CMAs are similar processes but done by real estate professionals and dome without nearly as much rigor as an appraiser uses. Banks and mortgage companies hire local real estate professionals to render opinion about the current market value of properties that they are going to put on the market  as short-sales or as foreclosures. Most of the time a Realtor® hired to do a BPO will be required to at least visit the property to assess it’s condition. After that the process is much the same as with the appraisal, but without all of the adjusting efforts.  The Realtor will look for comps, usually within 3-5 miles of the subject property and using sales that are within the last six months within the market area. The agent will use comps that have the same number of bedrooms and baths and other key amenities; but they make no real effort to agonize over the details and make adjustments. They need to get it within a ballpark range for the bank. Because BPOs are ordered and paid for by the lender, they tend to be conservative on the value. They also tend to involve “distressed homes” that may have been damaged or vandalized, many times by the previous owner.

The Realtor that you call to list your house will do a Market Analysis (usually called a CMA) to try to determine what a fair market price will be for the house. He or she will likely find 3-5 similar

homes that have sold within a 3-5 mile radius of your home and 3-5 homes that are similar and are currently on the market.  Realtors tend to be optimistic about the market and forward looking, so they will almost always come up with the highest “value” for your home. They are trying to answers two questions -  what do I think I can get for this house on today’s market and what do I think it will appraise for if I get that price? As a Realtor, I never use the word comps when I present CMA’s that I have done. I’m careful to use the term “similar homes”, because I understand that I have not applied the rigor that an appraiser would to the selection of the homes, nor do I try to make all of the adjustments that an appraiser would. Certainly I take into consideration things like no garage or no basement and style of the house when looking for similar sold or active homes. If necessary I might make a gross adjustment for a major difference, like no garage when all of the similar homes have one.

The bottom line on all of these is that they are the opinion of the preparer, some done with great rigor and some not. The more “cookie-cutter” your house is that more likely they are to be fairly accurate. Things like location (different school districts, for instance, or located on water) or land content (1/2 and acre vs a place with 5-10 acres), and differences in amenities like finished or unfinished basements can make huge differences in the “values” returned by these processes. They are what we have to work with and it is up to you to question how the market value was determined. Like everything lese in life it should make sense to you and if it doesn’t get a second opinion. You’ll note that nowhere in any of these processes do factors like what you need to get or want to get for your house;  or even what your neighbor down the street got last year for his house (unless it is exactly the same as yours). The market doesn’t care what you need. What all of these processes are trying to determine is what someone might pay for it now. Hopefully you’ll be happy with what you can get. Call me or your Realtor to find out more or visit my web site www.themilfordteam.com.