New Rules for Appraisers

The Ann Arbor Area Board of REALTORS®  sent out an interesting article today addressing the New Uniform Appraisal Dataset (UAD) which goes into effect TODAY (Sept 1, 2011). I've copied the article here and there is also a link to the original at the botttom of this post.

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New Uniform Appraisal Dataset (UAD) becomes effective September 1

 

Appraisers must now use a new set of codes and abbreviations to provide much more information with each appraisal.

Read the summary Bill Holmes of Ann Arbor Mortgage has prepared to find out how you can help avoid unnecessary delays.

Big Changes Ahead with the UAD on September 1

 

Effective September 1, the implementation of the Uniform Appraisal Dataset "UAD" will certainly cause some consternation in the real estate community.

Q. What is it?
A. The UAD defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for a key subset of fields.

UAD Specifications:
Three Property Improvement Ratings = Remodeled, Updated, Not Updated
Six Condition Ratings = C-1 to C -6 (Currently - fair, average, good, superior)
Six Quality Ratings = Q-1 to Q- 6

 

There are over 100 standardization abbreviations that must be used in the appropriate appraisal report fields.

Q. What types of loans will it affect?
A. At this point, just Fannie Mae and Freddie Mac conventional mortgages. Effective January 1, 2012, FHA will adopt the system with all new case numbers issued. All single family and condominium Fannie Mae & Freddie Mac Real Estate Appraisals MUST use the ratings. The subject Real Estate Appraiser will be required to ask the subject home owner specific questions about the subject property. The answers must support the appraiser's opinions for the ratings in the appraisal report.

 

Q. Will the current appraisal forms change?
A. No. With the new standards, lenders will be providing more appraisal data than is provided today, but on the existing forms.

 

Q. What additional info must be provided on the appraisal forms?
A. More explicit info that was never requested before will be required. For example, the following are new data points that are being requested:

 

• Days on Market for the subject property and each comp
• Specifically defined Condition and Quality Ratings
• Status of improvements to kitchens and bathrooms for the subject property
• Sale type for the subject property and each comp

Some additional observations after reading through the new guidelines:

 

• The UAD requires that the United States Postal Service (USPS) standardized mailing address be included in the appraisal report.
•  The UAD requires the site size for all properties that are less than one acre to be reported in square feet and the site size of all properties that are one acre or greater to be reported in acres.

 

We spoke to a number of local appraisers and posed the following question:

  

"How can Realtors® help in making a smooth transition?"

 

This is a list of suggestions from the appraisers:

 

•  Take extra time when filling out the Seller's disclosure. The UAD is particularly focused on the 15 year mark--so the year upgrades and renovations were done is going to be important. According to the UAD, anything older than 15 years is not considered updated and redecorating is not renovation--it has to actually involve physical changes.
• The view from the home is receiving a lot of attention and is going to be very specific in the UAD so be prepared for pointing out enhanced views particularly if they are seasonal (i.e. park).
• Please have Realtors provide comparables at or before the appraisal inspection for appraisers to review PRIOR to the writing of the report.
• Include more detailed photos - in particular kitchen, baths, ½ baths, basement finish, (when you think you have taken enough photos, take a few more).
• Note the basement square footage.
• Note the finished basement square footage.
• Attach to the listing a detailed list of updates completed (the dates of these along with the extent of the updates).
• When appraisers call for information, return their calls in a timely manner (the current deal they are working on may not be yours, but the next one may be - you are helping your fellow Realtors and they, in turn, will be helping you).

 Be prepared - this will undoubtedly add extra time to the appraisal turn-around time and may also increase underwriting turn times. Please build extra time into your contingency removal timeframes.

 

 Many thanks to Bill Holmes at Ann Arbor Mortgage for this UAD summary.

  

Ann Arbor Area Board of REALTORS®

 1919 W Stadium Blvd

 (734) 761-7340

  

http://myemail.constantcontact.com/Appraisers-will-need-your-help-with-their-new-guidelines.html?soid=1101068216507&aid=9kLkVPFvptQ    

 

 

 

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HUD Homes Explained.

HUD (US Department of Housing and Urban Development):
The largest number of government foreclosures can be found through HUD. HUD is a federal agency that implements housing policy and was created to increase homeownership across America.

Buying a HUD Home is Different than Buying Other Types of Homes
The procedures for pursuing a HUD home purchase are different than those used in buying other types of residential homes. HUD has made the procedure efficient and convenient.

Who can buy a HUD home?
HUD homes can be purchased by anyone. Homes may be purchased by owner-occupants (who have a priority bid period for 10 days), and by investors, who can then bid along with owner occupants. While many HUD homes are considered to be more affordable.

HUD homes are sold at market value.
HUD homes are initially priced for sale at the appraised market value. The buyer may offer any price, but HUD will only agree to offers that provide an acceptable return. Price reductions may take place later if the home does not sell.

Homes offered by HUD are sold "As Is".
It is important to understand that HUD homes are sold in "as is" condition. This means that the condition of the home when you see it is what you will be buying. HUD makes no warranties, does not guarantee the condition of any home, and does not verify that it complies with any local code or zoning requirements. You must make any necessary repairs after the purchase. HUD may make, or give you an allowance for, major system or safety repairs only if you are purchasing with an FHA-insured loan. It is very important that you get a Home Inspection by a licensed professional prior to closing on the sale.

Time limits are important and deadlines must be met.
Generally when you purchase another type of home, you can usually negotiate items within the contract over a period of time. When purchasing a HUD home, this is not possible. In order to be fair to all purchasers, HUD has imposed timetables that must be met or your bid or contract will be cancelled and the home returned to the market. Once your bid is acknowledged as the highest net to HUD, for example, your agent must send in a correct contract within 48 hours or the bid will be cancelled. Generally, closing must take place within 45-60 days.

How to find a HUD home.
As you search this website under 'available homes', you may find homes that have been identified as HUD homes. However, for a complete list in your area, request more information from a Real Estate One associate.

How to make an Offer on a HUD Home
All offers must be submitted by your broker through an electronic bidding process via the computer through the Internet. The electronic bids are stored in the computer system and, at the appropriate time, calculations are automatically performed to determine the apparent highest net offer to HUD.

After acknowledging the seemingly highest bid, HUD will notify the broker to send in a correct, signed sales contract within 48 hours of acceptance. If the contract is not received within 48 hours or is incorrect, the home will be returned to the market or acknowledged to the next highest bidder.

Initial Listing Period
The initial listing period, which is generally the first public listing for HUD homes, is 45 days. During this time, priority is given to owner-occupants who are buying the home as their primary residence. Priority is given for the first ten calendar days as follows:

All owner occupant offers received during the first five days of this initial period are considered to be received simultaneously. On the first business day after this period, these bids are reviewed to determine the highest acceptable offer to HUD.

If there is no acceptable bid, bids are reviewed on a daily basis for the remaining five days. Bids received at different times during the day will be considered received simultaneously, and the highest acceptable net bid will be acknowledged on the date opened. If the property remains unsold after ten days, it is made available to investors as well, and bids are reviewed on a daily basis. (Investor bids may be placed at any time but are not reviewed until the 11th day, if the property is still listed.)

An owner-occupant purchaser is defined as a purchaser who intends to use the property as his or her principal residence; a State, governmental entity, tribe, or agency thereof; or a private nonprofit organization. Governmental entities include those with general governmental powers (e.g., a city or county), as well as those with limited or special powers (e.g., public housing agencies).

Subsequent Listing Period
After the initial 45-day listing period, the subsequent listing period begins and runs for 90 days. During this time, properties are available to owner-occupants and investors. Bids are reviewed on a daily basis; bids received at different times during the day will be considered received simultaneously, and the highest acceptable bid will be acknowledged on the date opened. Price reductions may be made during this period. If the property remains unsold, it will continue to be listed.

Contract must be submitted within 48 hours
If your bid is acknowledged, your broker must submit a correct HUD Sales Contract, along with other required forms and Addendums signed by you, to HUD office within 48 hours. You may be required to submit proof of financing commitment or cash to close, along with other items. You should be working with your broker to put the required items in place before you bid on a home, so that you are ready when the time comes.

Closing on a HUD Home
Closings are generally within 45-60 days and held at the closing agent office. After your contract has been received correctly, it will be signed by HUD’s representative on behalf of HUD and returned to your agent along with a contract acceptance letter. The letter will give you up to 60 days to close. Once you are ready to close, you and your agent must schedule the date with the closing agent indicated on the letter, who also receives a copy of your contract. HUD’s representative does not set the closing date; it is up to you.

If you use the HUD closing agent, HUD pays their fees. You may use your own closing company, but then you must pay the fees. If you use your own closing company, they must work with the HUD agent on some legal items.

HUD will pay some closing and sales commission costs
Generally, HUD will pay up to a certain percentage of a broker's commission cost. In addition, HUD will pay up to a percentage for standard closing cost items (excluding the closing agent fee which is paid for separately). These items are designated by the buyer and may include discount points, loan fees, title costs, surveys, and other items. HUD will also generally pay any outstanding seller costs such as outstanding tax or utility bills which relate to HUD's ownership. You agent will know commission fees for your area.

Return of Earnest Money
There are specific requirements for earnest money deposits when purchasing a HUD property. When you submit a contract, you must deposit earnest money with your agent, usually in an amount of $500 or $1,000. If you know your transaction will not close, your agent must notify the management company as soon as possible so the home can be returned to the market. You may have to forfeit all or part of the earnest money if the sale does not close. If the sale is to an owner-occupant and does not close due to circumstances beyond their control, the money may be returned. Please review the earnest money policy for your area with your broker before you place a bid on a home.

Time Extensions
There are certain circumstances that may allow an extension of time. Extensions for time to close may be granted, in 15-day increments, under certain circumstances. Extensions may be granted at no cost to owner-occupants under certain circumstances that are beyond their control, such as a delay in financing approval that is not due to the buyer. Extension fees may be charged under other circumstances, and for investors. Extension requests must be submitted to the closing agent (not HUD) in writing prior to the expiration of the original closing date, and accompanied by a non-refundable fee, in certified funds, if a fee is required. Contact your closing agent for more information on this process.

Check out this video of HUD Homes now available in Michigan.  These homes are featured in our Full color, full page Detroit Free Press ad this Sunday too!

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Are YOU Ready to Buy a Home?

Getting Started


Buying a property can require a considerable amount of research and time. One of the keys to making the home-buying process easier and more understandable is planning. In doing so, you’ll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the home-buying process.

As you begin your search, keep in mind these key steps.

Step One: Determine if You Are Ready
One of the first questions to ask is whether you are ready to buy. If you are renting, some will tell you that your rent money is going down the drain, that you can pay close to the same for a house payment and actually make your money go toward something (equity or value in the home). While cost of renting vs. buying is a definite consideration, you should consider all aspects of home ownership to determine if now is the right time to buy.

• Why do you want to buy?
• Do you know what your want?
• Are you planning to move to a new community due a lifestyle change or is buying an option not a requirement?
• What would you like in terms of real estate that you do not now have?
• Do you have a purchasing timeframe?
• Do you have the money? for financing? the downpayment? closing costs?
• Can you afford the costs of home ownership? maintenance?
• Have you weighed all of the pros and cons of home ownership? 

Whether you decide to take the step to home ownership, the more you know about your financial capabilities and the real estate market, the more likely you are to effectively define your goals.

Step Two: Loan Pre-Approval
Before you begin to seriously shop for a home, it makes sense to know your price range or just how much home you can afford. It is beneficial to find the amount of money you can borrow prior to your house search, otherwise you could be spending time and effort looking for a house that does not meet your affordability level. Often the first step a real estate agent will take is prequalify you for a loan. This might be a ballpark figure or estimate based on typical loan setups, or you may formally apply for a loan and become preapproved. You can enhance your buying power by getting pre-approved or pre-qualified.

Step Three: Make a Checklist for Buying
You’ll save yourself many hours of shopping if you narrow your home search and make a list in advance of the features you must have, would like to have, absolutely do not want and would prefer not to have. Start by using basic measures such as general location and affordability, then you can refine your search and focus on homes that offer the most desirable features.

Location is crucial. The choice of area or neighborhood depends on your own particular needs and tastes, some of the following may be important to consider: quality of schools, property values, safety, traffic, future development, and proximity to schools, hospitals, shopping, parks, beaches, theaters and other public amenities. A desirable location can make all the difference if you anticipate reselling the home within a few years.

Style of Home. Once you’ve settled on the “where” it’s time to consider what type of home. There’s a wide selection of homes out there — which is one is right for you? Depending on how much maintenance you want to do, how much privacy you need, or if you want something custom built to suit your particular tastes, each home type has its own features and benefits. Single family home, multi-family home, condominium, ready-to-move-in or fixer-upper, depending on the different stage of your life — whether you have children or are retiring — one type of home can be more attractive than the other.

Wants vs. Needs. Beyond determining number of bedrooms and baths, you search should focus on features which are absolute requirements and those amenities you’d like to have if possible. Homes meeting basic needs may well represent radically different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes. Consider your priorities and if you can’t get a home at your price with all the features you want, then determine which features are the most important. Consider too, your needs in years to come.

Step Four: Search for Homes
With the abundant choice of housing options in the market today, the challenge becomes finding the property which best meets your needs. Consumers have access to more information today than ever before. The Internet has become a great resource for finding out about recent home sales prices, market trends, homes on the market, neighborhood/area statistics and the home-buying process.

We make it easy! Real Estate One offers home buyers the most efficient way to search homes in Michigan through 1st to Know. Register to receive automatic email alerts on properties that meet your specifications as they become available for sale.  We also have a texting program, text "MYINFO" to 59559.  The system will walk you through obtaining instant info on any listed home in the state of Michigan delivered straight to your smartphone.

The search can get complex so you should maintain a file with information on each of the homes you like. Rather than rely on memory, make notes about the homes you visit and review these to help you start narrowing down your choices.

Step Five: Choose a REALTOR(R)
Buyers are looking at a moving target in a marketplace that is never static. Researching recent sales and the price of properties on the market should give a good indication of property values and an understanding of the real estate market in the area which you are looking. It is important to know as much as possible about the choices in preferred markets and the best way to do that is by working closely with an experienced professional. A Real Estate One sales associates can help you through the home buying process from start to close. They can:

• Help you determine how much you can afford when purchasing a home, as well as recommend lenders and work with lenders on your behalf to prequalify you for a loan.
• Provide detailed information on all homes listed for sale in the Multiple Listing Service (MLS). While you can find houses on your own by searching online, looking through the real estate section of the newspaper or attending an open houses, an agent is the best source for complete information on all homes, including how long a home has been on the market, its features, the neighborhood and school system, and more.
• Help you narrow your search and arrange showings for houses of interest. By making note of what you like and dislike they can help you find the ideal match for your specific needs.
• Answer questions about the current market, interest rates and other home buying concerns. As your source for information, an agent can also refer you to other specialists whom you will need, including a home inspector or a lender.
• Negotiate on your behalf when you when you are ready to make an offer on a house. Your agent can assist you in determining exactly what to offer, not only in price but also in other factors affecting the purchase. The agent will write up the offer and present it to the seller’s agent.
• Guide you through the buying process making sure all of the necessary steps are completed, such as securing a loan, getting an inspection, completing a title search, and finalizing items right up to closing on the deal.

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6 Steps to Selling Your Home

Step One: Preparing to Sell Your House
Before you take any action to sell your home, take stock of your situation. Selling a home is an important matter and there should be good reason to sell. Look at the big picture and figure out why you want to sell — your reason can impact the negotiating process. Decide if your desire is worth the time, money and energy of selling, moving and buying again. Consider your options.

Once the decision to sell is made there are a number of matters you must cover before your property is officially made available for sale. The home-selling process typically starts several months prior to the “For Sale” sign going up.

First impressions count so the presentation of your property is critical in creating positive initial interest from potential buyers. It’s helpful to look at your home through the eyes of a prospective buyer and do all that is necessary to put it in its best light. A Real Estate One sales associate is uniquely skilled in helping sellers understand what to do to properly prepare your home for sale.

Step Two – Hiring a Realtor®
When you decide to sell your home you will need to decide whether you are going to sell your home through a real estate agent or on your own. While the end goal is essentially the same — the best possible sales price with the least amount of stress — each home sale transaction is different.

The process of selling a home is more complex than ever. Understanding all that’s involved in today’s real estate world requires experience and training — like the expertise of a Realtor®.

The key to a successful sale is choosing the right agent. Real Estate One’s sales professionals receive ongoing training in current regulations and market conditions and can help you get the best results. They can provide you with up-to-date information regarding prices, financing, marketing, and information about the housing market in general.

In choosing an agent to work with you should consider the reputation of the real estate agency, the sales agent’s track record in real estate, recent sales and knowledge of the area. When selling your home you want someone you can communicate openly with and trust. Be sure to ask a number of questions to ensure you are working with the right person to meet your needs.

Whether it be the first meeting or a follow up, have your information ready as well, including pertinent documents relating to your property: deed, mortgage payment information, tax bills and assessment information, homeowner’s association fees, any restrictive covenants, warranties on appliances, as well as other guarantee or legal documents.

When you hire a real estate agent to sell your property you will sign a contract called the agency agreement. This is a legally binding contract that authorizes the agent to act on your behalf in relation to the sale of your property.

The advantages of working with a real estate agent are numerous. An agent knows how to market, negotiate and sell homes and can coordinate the entire process. Throughout the sale an agent will act on your behalf providing you with advice and guidance to help you achieve the goals you set forth.


Step Three – Setting the Price

One of the most important decisions when selling your property is setting the price. Pricing is one of the variables, along with market conditions and interest rates, which will determine the final net proceeds from the sale of the house. The idea is to get the maximum price and the best terms during the window of time when your home is being marketed.

The actual price of your home will largely be determined by current market conditions. Because the real estate market is continually changing, and market fluctuations have an effect on property values, it is imperative to select your list price based on the most recent comparable sales in your area.

What is your home worth? The value of your house relates to local sales prices and is determined by what buyers have paid for the same type of property, with similar amenities, in your neighborhood, at the time.

Sales prices are also a product of supply and demand. A growing area with a limited housing supply will likely have prices that will rise, while the opposite is true of an area in less demand. Owner’s needs also have an impact on sales values. In a “must-sell” situation, the owner will have less leverage in the marketplace as buyers try to take advantage of the need to sell quickly.

Seller incentives, financing options and other factors can also be included when deciding price. What a seller “needs” should not be factored because that amount could drive the price beyond what the market will bear.

Because all transactions are unique there is flexibility in the marketplace. Knowing those limits is key. Remember that overpricing can hurt your chances for the best net proceeds. An experienced agent can help you set a realistic price, which will net you the highest possible return in the shortest amount of time.

Step Four – Marketing Your Home
In today’s market, your home is competing with a large amount of properties for sale. How do you make your home stand out and capture buyers’ attention?

Marketing plays a very important role in achieving a successful sale. Each home is unique so a carefully planned, well-executed marketing plan will bring the best result.

Selling can demand a variety of marketing strategies and Real Estate One uses a wide array of marketing tools and programs to find the right buyer for each property we list. Each marketing plan is specific to the individual home and is designed to get the best results.

Step Five – Selling It
Selling a home is a major event, one that involves an array of both personal and business concerns so when a buyer makes an offer it’s important to make the right decisions. Your sales associate can assist you in the bargaining process, offering advice and counsel as offers are received and by working closely with legal counsel, tax specialists and inspectors as required.

You will need carefully review any offer received, consider marketplace options and then determine whether that offer is acceptable. Is the offer at or near the asking price? Is it above the asking price? What is the alternative to the buyer’s offer and could there possibly be a better deal? If several offers are received do you choose the high offer from the purchaser with questionable finances who may not be able to close, or a somewhat lesser offer from a buyer with pre-approved financing?

Selling your home is inherently an emotional experience. Learn to detach yourself from the sale and look at offers as business proposals. Just as the buyer had three options in response to the owner’s original price and terms, the seller can now choose one of three reactions to the buyer’s offer.

1. You accept the buyer’s offer as is. The contract then becomes binding on both parties.

2. You reject the buyer’s offer.

3. You change the terms of the contract and counter-offer. It then will go back to the buyer who can either accept your counter-offer or walk away from the deal entirely.

The negotiation process may involve several rounds of counter-offers. Remember that all terms are negotiable. It’s sometimes argued that negotiation must produce one “winner” and one “loser.” Others suggest that a “win/win” situation is possible where each side gets something of value. Real estate bargaining typically involves compromises by both sides.

Step Six – Closing the Deal
Once both parties agree to the terms and sale price stated in the contract the selling process is not over yet. Some of the most complex aspects of a real estate transaction begin now.

Although not required in all states, you may want to require earnest money from the buyer. Earnest money is held in a neutral account called an escrow as a “good faith” or “security” deposit when entering into a contract with the seller. This cash deposit will be paid to the seller in the event the buyer fails to honor the contract. The deposit will be set aside as payment, or returned to the buyer if the seller doesn’t accept the contract terms. If both buyer and seller agree to the contract terms, and then the buyer breaches the contract, the earnest money is paid to the seller as compensation for potential losses the seller may have incurred.

A series of inspections and checks are typically required to satisfy buyers and lenders. Contracts routinely depend on the ability of a buyer to obtain financing, which is why most sellers prefer buyers with pre-approval letters from lenders.

Lenders will establish a number of conditions prior to granting a loan and will want a title exam, title insurance to protect against title errors, inspections, surveys and an appraisal to assure the home has sufficient value to secure the loan.

Closing — or “settlement” or “escrow” — is essentially a meeting where the closing agent (the party who conducts settlement) takes in money from the buyers, pays out money to the owner and makes sure that the purchaser’s title is properly recorded in local records along with any mortgage liens.

The closing agent reviews the sale agreement to determine what payments and credits the owner should receive and what amounts are due from the buyer. The closing agent also assures that certain transaction costs are paid (taxes and title searches).

In preparing to close, it is important to look at the sales agreement and review your obligations. All items agreed upon must be completed before closing.

The closing agent (escrow officer) will handle both the settlement papers and related documents, including title search, record disbursement, paper statements, and the payout of fees and other costs.

If the buyer changes their mind for any reason and breach the terms of the contract, the seller has the right to declare the contract null and void and retain any earnest money. The buyer may also be liable for any other financial damage suffered by the seller and the seller’s agent.

If you fail for any reason to complete the sale of your home according to the terms stated in the contract, the earnest money will be returned to the buyer and you as the seller may be liable for any financial damage.

Once everything is in order, with pen held firmly in hand you sign dozens of documents and as you put your signature on the final dotted line…your house is sold!


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May 2011 Metro Detroit Real Estate Market Update

It has been quite a while since the statement "things are remaining the same" was a good sign, but for Metro Detroit real estate it is. Available home inventories continue to decline and the rate of sales are holding near the same annualized pace as last year, with the average price per square foot on the rise. There certainly is a chance of a double dip market decline, but with the current buyer activity levels and reduced inventories, that does not appear likely.

Saleable listings and discounted bank owned properties are getting multiple offers and selling quickly. With so much activity focused on those segments, the best opportunity for bargains are homes that have been sitting on the market. Many are actually priced within their saleable range, but in outdated or poor condition. Using FHA 203K loans, a buyer can find a diamond in the rough, get a loan to cover the repairs and get a home at a great price.

For buyers, with the most popular homes selling in days, it is important to understand the rules of the road when working with competing offers.

• Be ready to move quickly

• Be pre-approved for your mortgage

• It is now officially OK to offer above asking price for the right home

• Be ready to bridge the gap between your agreed upon price and the appraised value (because the next guy will if you don't)

• Be sure to date and time stamp your various counter offers to ensure a backup offer does not slip in.

This average sale price trend chart shows that prices have for the most part stabilized. So for sellers, it is important to reinforce last month's suggestion that now is the best time to test the market if you are considering selling your home in the next 12-24 months.

I've heard an interesting economic theory recently, that the combined buying power of all of the former and current homeowners who are no longer paying their mortgage is the hidden growth engine driving our economic recovery. That may be exaggerated, but I don't think too far from the truth. Over the next few years, as those former homeowners repair their credit, there will be a large wave of additional buyers re-entering the market.

In company news, Real Estate One remains the most viewed broker website across the state according to the latest Hitwise report, giving sellers the best possible exposure among companies in Michigan. Also, the new features in our 1st to Know customer web portal are catching on as well. Sellers can follow up to five different markets, watching homes for sale, sold prices and market trends within each area. It is a great and quick way for both buyers and sellers to keep a pulse on their target market areas.



Source: MIRS, Realcomp, AABOR, TAAR

Months Supply Inventory is the current rate of sales to sell existing home inventory

*Includes Hamtramck/Highland Park **Incl Eastpointe/Harper Woods ***Incl Grand Traverse, Antrim, Leelanau, Kalkaska, Benzie Counties

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May 2011 Michigan Real Estate Market Report

April 2011 Michigan Real Estate Market Update by Dan Elsea

The April Michigan real estate market continued to show the strong activity level just as we had seen during the first quarter. The actual rate of sales on an annualized basis did slow however. It is too early to tell if that change is significant, it could have been weather related. Compared to last April, real estate sales in Michigan were off about 15%, but last April was a peak tax credit month, so a 15% decline is not as bad as it may seem and is certainly not unexpected. In most every metro Detroit real estate market we continue to see six year lows in the Months Supply of Inventory (MSI). The cause of this may be that some of the growth slow down from March to April was simply there were not enough salable homes available on the market to purchase.

Even though home values appear to be strengthening, Sellers will still need to set their prices based on the most current sales activity. A home that was on the market last year at $75,000 over the then current market will still be overpriced today. Home values are bouncing off the bottom of actual comparable sales, not what the asking prices have been. We don't expect prices to jump dramatically (tough appraisal standards will keep a check on that) but there could be some nice bidding wars for well priced and conditioned homes bringing prices off their bottoms from last year.

Another thing to keep in mind is that buyers are still being very picky. Homes that are not updated or in great condition are still sitting on the market or going for below asking price. If possible, a Seller might consider using a FHA 203K rehab loan as a refinance to help fund their updates for a more salable home.

Lately there has been an issue that has gotten some press called the MERS (Mortgage Electronic Registration System) foreclosure problem. The core issue is the willingness for title insurance companies to write a title policy on bank owned homes that used MERS in their foreclosure process. It is too early to tell if this will be a significant issue but there have been a few banks that have taken their homes off the market until they can determine their title insurance status. It may have the effect of squeezing the available home inventory even further and in some cases causing a postponing or canceling of a sale if title insurance cannot be provided to the buyer. For current Sellers it would be a good idea to have your old title policy handy just in case there was a MERS foreclosure in your title history.

Great advice is to be sure you've done your homework prior to an appraisal. Research your comps, including pending sales and be prepared to walk through them with the appraiser at the property. With so many of our strong listings selling at or even above list price, appraisers will find it tough to keep up with the market without our help. Also, it is a great idea to council Home Buyers on the most active listings that they will need to make up the difference between the agreed price and the appraised value if they want to win the bidding war on the home.


It is tough to tell just how much of the increasing activity could be a temporary spike vs. a permanent market uptick. We are certainly one of the strongest real estate markets in the country. Regardless of which it might be, the strong activity makes this the best time to have your home on the market since 2005! So for anyone who is considering selling their home in the next 12 months, act now and act fast. Demand is rising, inventories are low as are interest rates.




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Understanding Real Estate Representation

By: G. M. Filisko

Published: March 29, 2010



Whether you’re buying or selling, it’s important to choose representation that meets your needs in the transaction.



1. Buyer’s agency

When you’re buying a home, you can hire an agent who represents only you, called an exclusive buyer’s representative or agent. A buyer's agent works in your best interest and owes you a fiduciary duty. You can pay your buyer’s agent yourself, or ask the seller, or the seller’s agent, to pay your agent a share of their sales commission.



If you’re selling your home and hiring an agent to list it exclusively, you’ve hired a selling representative--an agent who owes fiduciary duties to you. Typically, you pay a selling agent a commission at closing. Selling agents usually offer or agree to pay a portion of their sales commission to the buyer’s agent. If your seller’s agent brings in a buyer, your agent keeps the entire commission.



2. Subagency

When you purchase a home, the agent you can opt to work with may not be your agent at all, but instead may be a subagent of the seller. In general, a subagent represents and acts in the best interest of the sellers and sellers' agent.



If your agent is acting as a subagent, you can expect to be treated honestly, but the subagent owes loyalty to the sellers and their agent and can't put your interests above those of the sellers. In a few states, agents aren't permitted to act as subagents.



Never tell a subagent anything you don’t want the sellers to know. Maybe you offered $150,000 for a home but are willing to go up to $160,000. That’s the type of information subagents would be required to pass on to their clients, the sellers.



3. Disclosed dual agency

In many states, agents and companies can represent both parties in a home sale as long as that relationship is fully disclosed. It’s called disclosed dual agency. Because dual agents represent both parties, they can’t be protective of and loyal to only you. Dual agents don’t owe all the traditional fiduciary duties to clients. Instead, they owe limited fiduciary duties to each party.



Why would you agree to dual agency? Suppose you want to buy a house that’s listed for sale by the same real estate brokerage where your buyer’s agent works. In that case, the real estate brokerage would be representing both you and the seller and you’d both have to agree to that.



Because there’s a potential for conflicts of interest with dual agency, all parties must give their informed consent. In many states, that consent must be in writing.



4. Designated agency

A form of disclosed dual agency, “designated agency” allows two different agents within a single firm to represent the buyer and seller in the same transaction. To avoid conflicts that can arise with dual agency, some managing brokers designate or appoint agents in their company to represent only sellers, or only buyers. But that isn't required for designated agency. A designated, or appointed, agent will give you full representation and represent your best interests.



5. Nonagency relationship

In some states, you can choose not to be represented by an agent. That's referred to as nonagency or working with a transaction broker or facilitator. In general, in nonagency representation, the real estate professional you work with owes you fewer duties than a traditional agency relationship. And those duties vary from state to state. Ask the person you’re working with to explain what he or she will and won't do for you.



G.M. Filisko is an attorney and award-winning writer who zealously protected her clients’ interests as a lawyer. A frequent contributor to many national publications, including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.


“Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®."

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