Metro Detroit Real Estate Homes For Sale

All week updates and blog posts have been appeariing about the pending legislation to extend and expand the Home Buyer Credit until April 30, 2010.  While we knew it had passed the House and the Senate, the final peice was knowing the bill was signed by President Obama.  One would think this is an easy thing to find out.  With NAR sending announcements (along with many other sources), I still wanted verification before I posted the features and comparisons of the new bill (below).  I tweeted a question to @BarackObama as the current tweets were all about the Health Care Bill being passed by the House.  Today, I finally received several e-mails saying it was signed but still without an official date.

According to the White House website, the bill was signed November 6, 2009.  Below are the details and comparisons to the First Time Home Buyer credit (taken from NAR) that was to expire November 30, 2009.  The great thing about the new bill is that it now includes buyers who currently own a home and are looking to buy another.  Why is the date the bill was signed so important?  After reading the fequently asked questions, the bill doesn't begin where the old one left off and start December 1, 2009 - it begins the day the bill was signed.  If a current home owner is closing on November 7, they are eligible for the $6,500 credit (if they meet the criteria).  Also, with the increased income limits, anyone who did not qualify will immediately be eligible if income is now within $125,000 (single) and $225,000 (joint). To view the 'Frequently Asked Questions on the NAR site, there is a PDF of the chart below and the FAQ under the "NAR Tax Credit Resources" on the purple tab, lower right.

One additional provision I found on the White House news release for the extended Home Buyer Credit is:  "The new law extends a similar credit until May, 2011 for members of the uniformed services whose duty takes them overseas."

Looking to take advantage of the extended & expanded Home Buyer Credit and search for homes, click here.

RE/MAX Realtor selling Oakland County Real Estate & Wayne County Real Estate.   TishHouse sells Houses - selling Real Estate in Southeastern Michigan with RE/MAX Showcase Homes in Birmingham, Michigan.  See what my clients have to say about my extraordinary customer service.  Follow me on Twitter.

I often write about first time buyers and why they want to be represented by a “buyer’s agent” (all buyers really) and here is just another example.  My office partner showed one of my listings to a buyer who found it on the Internet.  He is new to the area and a first time buyer.  Investors totally renovated my listing and are now selling.  Everything is updated and with good quality choices.  However it has some challenges with total square feet and no basement.

She was representing my seller and the buyer was calling listing agents to show him homes.  In fact he was late because he had to wait for the agent at his previous viewing.  In the same week, I showed one of my listings to a buyer who doesn’t want a “Buyer’s Agent” because she feels she will save money if she uses the listing agent.

The first buyer decided against my listing but called us to work with him on finding a home.  While our first priority is to sell our listing, after a buyer decides they are not interested, we propose working with them to find the right one.  So my office partner took this buyer out and started showing other listings.  One of his first comments was “I can’t believe how much you are telling me about this home that you did not say about the first one you showed me!”

When I recently showed my listing to a buyer, I was very complimentary about the home – it is lovely and priced well.  However it does need new windows, a new furnace and has some challenges with the location.  As a seller’s agent, I would never point this out to a buyer.  I answer all questions about the home and condition honestly (if those questions are asked).  As a seller’s agent, I am not offering any additional information about a home.

This is particularly important for first time buyers to know - it is in your very best interest to be represented – and it costs you only an agency commission fee.  Our office charges $250 that is paid only at closing.  The seller often covers this as part of closing costs for a buyer.  I haven't figured out why buyer’s think they save money (I have heard this before) – particularly in a “buyer’s market" where seller's price competitively.  The seller pays all commission and most everything else if a buyer’s agent asks for closing costs. 

I have taken care of both buyers and sellers in a transaction and am as fair as possible in representing everyone and have the best interests of all parties.  However, we are a designated agency so my first responsibility when I am the "listing agent"  goes to the seller.  If you are a buyer, it is in your best interest to be represented.  You want a Realtor working only for you to make sure you get the best home in the best condition in the best area at the minimal cost for your price range.  A buyer’s agent will do a market analysis and negotiate aggressively on your behalf.  You want a home inspection and you want to be represented every stop of the way.  Think about it . . . it makes sense.

If you are looking to Purchase a Home, click here for an IDX Home Search

If you are looking to Sell a Home, click here for an outline of our Marketing Strategy

Royal Oak Realtor selling Oakland County Real Estate  and Real Estate in most of Southeastern Michigan.  TishHouse sells Houses - with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service and you can always follow me on Twitter.

Property taxes are always a concern particularly with first time buyers trying to determine an affordable monthly mortgage payment.  Selling in the Metro Detroit area, I often get asked ‘what are the taxes' as they refer to the amount published in the multiple listing service (MLS).  While this is a very important question, the amount listed should not be relied on.  Even in the same city, taxes can vary considerably from property to property. 

The first thing I check is whether the home has a homestead exemption.  This is often confusing and one of the first things I explain to buyers when discussing property tax.  With so many foreclosures on the market, a home has often lost its homestead exemption.  When a buyer purchases a home, it is declared as their primary residence unless someone owns more than one home-like a summer home.  This allows the home to be taxed on roughly half it's appraised value (in most cities).  Each city votes on millage rates they are used to calculate the amount a property may be taxed.

The homestead exemption is often lost when it goes to foreclosure and no longer privately owned.  Investors are buying property and fixing up homes for resale and the exemption can be lost as well.  Taxes are almost double when there is no homestead exemption.  When a home is closed after May 1, a buyer must wait a year before they can declare the "primary" residence exemption.  So, for the first year, taxes are considerably higher.  Since summer taxes are generally higher than winter, this can make a noticeable difference in a mortgage payment.  A buyer can get this back by filing for reimbursement for the first year at a later date.

Another consideration when confirming taxes is the length of time the seller has owned the home.   If they have owned the home for 10 years or more, they are being taxed on an amount lower than the state equalized value (SEV) which is basically the appraised value.  In a decreasing market, this is currently the subject of property tax appeals as the SEV is not necessarily based on current appraised value.  A buyer should always have their Realtor confirm the taxes by checking public record information and then calculate taxes based on the millage rates of that city.   

When I am working with first time buyers or buyers moving to Metro Detroit, I inform them of millage rates of different cities in the beginning.  This often affects which city they may be interested in when taxes are a concern.  Millage rates are often calculated by the reputation of the schools.  So, if schools are a consideration, buyers are willing to pay the higher property taxes.  While this should be taken into account for resale purposes, first time buyers may not be interested and prefer the lower taxes. 

If you are a first time buyer, please contact me with questions and visit my other posts:

I found a Home - What Do I offer?

First Time Home Buyer Credit

Working with First Time Buyers

Do You Need A Buyer's Agent?

Royal Oak Michigan Realtor selling Oakland County Real Estate.   TishHouse sells Houses - selling Real Estate in Southeastern Michigan with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.  Follow me on Twitter.

Whether you are a first time buyer or buying your next home, ‘what do I offer' is always a big question-especially in this challenging market.  I am reminded of the Charles Dickens quote:  "It is the best of times - it is the worst of times".  First time buyers have so many reasons to buy with the first time buyer credit, current mortgage rates and a huge inventory to select from.  However, there is always the concern - will my home decrease in value shortly after I negotiate a deal.  Hence, what to offer?

Whatever you offer, remember that it will have to pass the appraisal.  The bank wants to insure that the home is indeed priced correctly.  They will not loan money for a home that is not priced at current market value.  While these are uncertain and challenging times, the market will eventually go back up-it always does.

 For first time buyers, there are many questions about the whole process of buying a home.  In part one I covered several steps in the home buying experience.  Once you have chosen a Realtor that you feel comfortable working with and found a home you like, the next important question is - what do I offer?

 The first thing your Realtor will do is provide a comparative market analysis (CMA) of all homes that have sold in the area.  Always ask to see prices of homes sold within the last six months.  While six months is a reasonable time, focus on the most recent - preferably within the last month.  There is no hard and fast rule in a market with a lot of inventory as homes stay on the market longer that they used to.  While recent sales are best, there is the danger that most recent sales are often foreclosed homes.  While these affect the market significantly, it isn't always comparing apples to apples - unless the home you are buying is also a foreclosed home.  Here are some guidelines to look for when your Realtor provides a comparative market analysis.

1.  Homes used in a market analysis should be within a half mile radius - or a mile depending on density of the area - unless the home is very unique or in a rural area.
2. The comparative homes should be within 10 years of age - younger or older.  You wouldn't compare a new construction to a home built in 1950 etc.
3. Sold homes should be within 20% square feet of the home you are comparing.  If the home is 1000 sq. ft., comparables should range from 800 sq. ft. to 1200 sq. ft.
4. They should be similar, i.e. if your home has a basement and/or garage, the comparative home should have the same or close to it.  The same applies to number of bathrooms and finished basement opposed to unfinished.
5. All homes that are being compared should be in the same school district since schools can affect the price.  If the radius around the home you selected is near another city, take into account the difference in reputation of the schools to adjust what to offer.
6. Your Realtor will arrive at an "average price per sq. ft." for the final analysis that most comparatively meet the above criteria.  Use this amount to multiply the square feet of the home you selected.  For example:  the average price per sq. ft. may be $75 x 1000 (sq. ft. of the home you have selected).  Basic price to offer would be $75,000. 

Here is where the experience of your Realtor is essential.  He/she knows the market in that area and may be able to provide a recent market analysis of monthly or quarterly price statistics.  Your Realtor will recommend a price based on their knowledge of the area and the adjustments necessary to reflect the features of the home you selected.  For example, if your home has two baths and all homes sold have only one bath, they will guide you accordingly. 

Your offer should include a home inspection.  Once your offer is accepted, you will have 7 - 10 days to complete one.  Your Realtor can provide names of good inspectors.  This is your final opportunity to renegotiate the price if there are significant repairs that you could not foresee when you made the offer.  You may still back out of the deal completely if there is extensive damage and/or repairs that cannot be agreed upon with further negotiation.

 As a final thought, I find that buyers expect to offer considerably less just because they hear "it is a buyer's market".  While I have seen a few "low-ball" offers accepted, I have seen many more refused.  Your Realtor can tell you how long a home has been on the market, if there have been previous offers and give you their advice.   If you are dealing with a bank, it is all about the bottom line and they may be ready to just have it sold.  If it privately owned and you really want the home, understand that sellers are not desperate to give it away.  While some may be over priced, most know they are competing with foreclosed prices and they must fall in line with current market value.

Royal Oak Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service and you can always follow me on Twitter.

One of my favorite responsibilities as a Realtor is working with first time buyers.  While I enjoy all aspects of being a Realtor, I find uniqueness in the vulnerability of someone buying their first home and trusting me to guide them through it.  Right now I am working with several first time buyers in what I consider the "perfect storm" for buying a home.  There is the $8,000 buyer incentive, a huge amount of inventory at bargain prices and low interest rates.  If someone is in a position to buy a home, this is the perfect time.

Why do I like first time buyers?  Beside the obvious that first time buyers have never gone through the process of purchasing a home, I often glimpse the underlying uncertainty and emotions that peek through.  When I am present to how little most first time buyers must know, I am humbled by the fact that they trust me to get them through the process.  For example:

A new buyer was searching on our remax.com website and randomly asked a question about a listing.  RE/MAX captures leads and the first agent to respond gets the lead.  I accepted it, answered the question, introduced myself and offered some further services.  After e-mailing a some lists of homes, I scheduled appointments of the favorites and we met at the first home on the list.  I pointed out things about the interior and condition, talked about home inspections to insure they don't purchase a lemon and we started to get to know each other.  I know I will take good care of them and make it the best experience - but they don't know that - yet.  In the beginning, it has to be a bit overwhelming. 

Why I like working with first time buyers is this:  there is usually this moment when I know they trust me.  I have answered questions and, if I don't have an answer, I get it.  They start to learn what to look for in a home - I always point out the main money items like roof, windows and furnace.  They know that the home inspection gives them a final opportunity to pull out of the deal if miss a major flaw (or renegotiate).  Maybe it is like this in developing all relationships-a moment when you know another person authentically has your interest at heart.  But with a buyer, they are making one of their biggest financial decisions - finding a home-not just a house.  I love being a part of that.

There is always awkwardness at first with the ultimate question of how do we know if she/he is a good agent not yet answered.  There are good questions that buyers can ask to find out how much their agent knows.  I include some here but foremost it is about establishing a connection which isn't all about questions.  It can be a gut feeling or just the efficiency in returning calls and e-mails-whatever an individual uses to establish a comfortable relationship.  I wouldn't necessarily ask all these questions like an interview but pick a couple to start the process and establish trust.  Regardless, these are basic questions that any qualified agent should know. 

1. Does your agent thoroughly answer all questions without rushing or treating them as insignificant?
2. Are they quick to answer calls and respond to e-mails or text messages?
3. Do they point out things about a home to consider like older windows, furnace and possible repairs?
4. Are they knowledgeable about the neighborhood and schools?  Ability to resell a home should be taken into consideration.
5.  Realtors should ask you early on if you have a preapproval as this is required when submitting an offer.  They will have people they can recommend.
6. Are you locked into the person who preapproved you for the loan?  Is there a cost?
7. What is the difference between conventional loans vs. FHA?
8. What is the process of a home inspection and what to do if there are major flaws?
9. What happens after the home inspection?
10. If a home is a short sale, are they knowledgeable in the process and how long it will take to close on a home?
11. Are they familiar with the first time buyer credit currently available?
12. Ask about closing costs as these are often negotiated for buyers on many loans and can cut down on the amount of money you bring to closing.
13. Many other questions will arise out of these - don't hesitate to ask them all.

 I often have buyers who will preface a question with "this may be a dumb question".  There are no dumb questions.  All buyers, and primarily first time buyers, should be well informed about all the steps.  This is a major investment and can be an exciting, confusing, happy and stressful time.  It is your time to buy your first home-expect a lot from your Realtor.  And remember, everyone is a person first - we can all be stressed in these challenging times-all we can expect if for everyone to do their best.

The newest version of the first time homebuyer credit ($8,000) applies to anyone who purchases a home on or after January 1, 2009 through December 1, 2009.  Anyone who purchased a home last year is eligible for the previous credit of $7,500.  However, unlike this earlier version, the current $8,000 does not have to be repaid. 

This credit is equivalent to 10 percent of the purchase price of the home, is capped at $8,000 and applies only to first time buyers and principal residences (as opposed to vacation homes).  First time buyers are defined as someone who hasn't owned a principal residence for three years before buying a house.  If a buyer owned a home three years ago, the date when the title was transferred is the day to use when calculating the three years.   A buyer may have owned a vacation home--but not a principal residence--within the past three years, and still qualify for the credit. 

The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.  The tax credit is refundable so qualified buyers can take advantage of it even if they don't have much tax liability when filing taxes. 

Since it is a tax credit, it will show up a tax refund for most people.  A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference.  For example, if you paid $4000 in taxes this year and after doing your taxes found out that the IRS owed you a refund of $1000, you would now get $9000 back.  If you owed the IRS $1000 after calculating your taxes, you would then get a refund check of $7000 ($8000-$1000).

Taxpayers who qualify for the first-time homebuyer credit and purchase a home this year (before Dec. 1) have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.  This special feature can put money in first time buyers' pockets right now rather than waiting another year to claim the tax credit. The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

In order to save up money for a down payment, prospective home buyers who qualify for the program but do not intend to purchase a home till the end of 2009, may elect to reduce their income tax withholding (up to the amount of the of the tax credit) which will enable the buyer to accumulate cash by increasing take home pay.  However, if the purchase of the home does not occur, the taxes must be repaid to the IRS with possible interest charges and penalties.

Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

If you are looking to Purchase a Home, click here for an IDX Home Search 

If you are looking to Sell a Home, click here for an outline of our Marketing Strategy

Royal Oak Michigan Realtor selling Oakland County Real Estate.   TishHouse sells Houses - selling Real Estate in Southeastern Michigan with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.  Follow me on Twitter.

I am assisting my nephew in buying a home in Ann Arbor.  Since I am primarily in Oakland and Wayne Counties, I wouldn't ordinarily do this and refer him to Missy Caulk.  However, I am sure he knows the area(s) he wants to live in after having been a student at U of M for four years.  He just got married in June and accepted a full time position with the University of Michigan as Systems Administrator Intermediate for the LSA Instructional Support Services Dept.  I don't know what that means - but I am very proud of him!  So, he and his wife have decided it may be a good time to buy a home.  I agree - particularly in Ann Arbor - I love that city. 

I have sharing privleges with the Ann Arbor MLS - he knows the area - and it's not farther to show him homes in Ann Arbor as showing homes in Oxford or Macomb Twp. (where I have closed deals).  So, they have been going to open houses and doing some searching on their own as they get their financing in order.  They found one they LOVED and sent me an e-mail to find out more.

Come to find out, there was less than one week left in the redemption period on that home.  It went to sheriff's sale March 13 and the bank purchased it back for around $151,000 - and the asking is $179,900 and had just been lowered by $20,000.  I looked up the mortgage records and they owe about $167,000 on the home.  Now the MLS listing said nothing about needing "third party approval" and the agent said nothing to them about this either.  So, my nephew was very surprised to find this out.  I called the agent to confirm all this and he said that their has been some interest and he told the other party that he had to have an offer by this Thursday (knowing he was losing the listing).  In my opinion, the asking price is too high, nothing is going to get accepted by a bank in that short of time and the agent will be losing the listing after the redemption period runs out.  My nephew was very greatful for this additional info that the "listing agent" did not supply.  I have been finding many buyers that think they will get a deal when they go directly to the listing agent.  First time buyer's in particular don't know they are not represented - the listing agent always represents the seller.

I am pretty sure that he will get the home for significantly less when it goes back on the market as a foreclosure--and the offer won't get tied up the way it would have in a short sale - particularly so close to the seller losing all rights to the home.  I have worked with buyers offering on short sales and it took us about 4 months and they finally moved on.  I told them to keep lookiing but got in the habit of checking all the public records on each one to see the financial stability of the seller.  If someone can wait, short sales are a good way to get more home for your money.

I work with a lot of first time buyers and love educating them on the process.  As a first time buyer, you pay nothing (except a small administrative fee to the broker) and get someone to represent your interest.  If you are a first time buyer, imagine this:  Why would the listing agent want to do a CMA so that you can offer less than what the seller is asking or coach you in asking for closing costs--which diminishes the money in the pocket for the seller.  Then there is the inspection, where your agent is always present to see if there are any major defaults in the home as a final negotiation for repairs or price reduction for the seller.

While we, as realtors, love to represent both parties and I have done so in the past - and fairly - I can see where it can be a significant conflict as in this scenario. 

Royal Oak Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan.  See what my clients have to say about my extraordinary customer service

On one of my deals recently, I was having a difficult time getting the HUD and my title company said the lender  tells the buyer how much they have to bring and it's not really necessary that I view it.  Well, I say to myself, I must be overdoing it a bit and need to relax. 

Lucky for me, with my most recent closing, another title company sent the HUD over with the closing papers.  This closing was for first time buyers, 100% financing and with 6% closing costs.  They put $1,000 earnest money down and had to come to closing with around $200.  I always tell my clients that I am not a mortgage lender and I have several I would be happy to recommend (I did not recommend theirs). 

So, even though I don't specialize in mortgages, it seemed to me that they should have money coming back.  I took it to my broker (it wasn't with the closing papers he reviewed) and he immediately saw that they were paying about $5,000+ for points.  All I have ever heard is that it doesn't pay to buy points-and their rate for an FHA loan wasn't really any different than a conventional.  My broker said it was really too late but he would say something to their lender.

The lender said that one of the fees was because something was changing with FHA that we had to close by Friday or the rate went up and we were closing on the following Monday-and (he said) my clients insisted on FHA.  The importance of a closing day was never communicated to me and I was furious.  I told him that had I known it would cost them a couple thousand dollars, it would have closed on Friday.  He offered to explain all this to my broker.  My broker was very busy but agreed to speak with him.  A little while later, my broker came by and said the lender said something to the effect that he did not have to explain his job to someone's broker.  I thought he welcomed the idea-hmm?   Anyway, a short time later, the lender called to say he was eating those costs and was giving them their earnest money back and wanted to make sure I told my broker-hmm.   Plus, my clients later said they didn't care if it was conventional or FHA-that was what he recommended.

Early on I had a concern about their choice of lenders but they had paid him $250 or $300 up front and felt locked in.  He was their choice and I didn't have any specific complaints so left it at that.  Needless to say, hindsight is 20/20.  It sure made me realize that not all lenders are trustworthy (my first experience like this) and the more I can go over, the better to protect my clients.  I love working with first time buyers-how exciting, nervous, trusting and fearful it can be purchasing a first home.  They would have been better off losing the $300 to gain more in the end-I am just thankful that they got their earnest money back.  This experience really made it crystal clear as to how important it is to trust the person who refers you to someone and the importance of my choice of who I refer.

Royal Oak Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.