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Archive for January, 2011

If You’re Short on Cash Don’t Ask About Buying a Lake Orion or Oxford Home on Land Contract

I probably get 2 or 3 calls or emails per week asking about buying a home in Lake Orion or Oxford MI on land contract. Often times these callers want land contract terms because they are unable to get a mortgage for the next few years. Many of these prospects had a financial setback of some kind- like many who live in Michigan- and have lost their homes and killed their credit. Again, this is not unusual these past few years and I am not passing judgment on anybody. These people are used to being homeowners; I sell real estate and I LOVE people who want to be homeowners. But because so many people have been losing their homes in North Oakland County MI and Lapeer County MI there is a ton of mis-information and quick fixes all over the Internet, TV, newspapers…

On the surface a land contract seems like the perfect situation for both buyer with bad credit and seller in a market that has experienced declining value. But let’s dig a little deeper.

From the seller perspective:

  • You have bad credit or you would be getting a mortgage
  • They would be giving you title to their house
  • If they currently have a mortgage they are probably depending on you and your bad credit to make your payments on time so they can make their payments

For that risk the seller will usually want a substantial down payment and a higher interest rate than you would pay a bank. You may also pay a bit higher than fair market value for the house. Part of your spanking for having bad credit. And compensation to the seller for taking a risk.

From the buyer view there are also risks you need to consider:

  • If you can’t get a mortgage at the end of the land contract term you may be out your down payment and principle payments
  • If the seller has a mortgage on the house and lets the house go into foreclosure you will be SOL and lose your down payment and principle payments along with any cash you put into the place
  • There is a real lack of choice if you are limited to sellers offering land contract terms

As of today there are 17 homes in the Lake Orion and Oxford school districts offering land contract terms. The range in asking price from $174,900- $4,200,000. The smallest down payment offered is $20,000 and the most common interest rate asked for is 6%.

I am not saying that land contract terms are never in the best interest of both a seller and buyer. I will write another post in the next day or two covering when a land contract is in the best interest of all involved. The point of this post is to address the misconception that many have that a land contract is cheap way to get into a house while you repair your credit.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email: Jackie@JackieHawley.com

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The Difference Between The Deposit and Downpayment

I recently wrote an offer for a buyer client where the earnest money deposit (AKA good faith deposit or just plain deposit) was $10,000 and the downpayment amount I wrote in the offer to purchase was $70,000. Pretty straight forward- they were putting $70K down and the $10K would apply against the closing costs and downpayment.

Not so straight forward and hence the reason for this post. You see, the buyer didn’t see it the way I described above and the buyer happens to be a very intelligent person who actually listens when you talk. The buyer thought he was putting $70,000 down IN ADDITION to the $10,000 deposit.

So to clarify for future buyers– the downpayment is exactly that. The total amount you will be putting down on your mortgage. If you are buying a $200,000 house in Lake Orion MI and you are putting 20% down, then your downpayment is $40,000. Your deposit is totally separate. It shows your seriousness as a buyer and it does apply toward your closing costs/downpayment.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email:
Jackie@JackieHawley.com

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Considering a Condo? Figure the Association Fee in Your Pricing

If you have been pre-approved to buy an Oakland County MI home for X price as long as the property taxes don’t exceed Y doesn’t mean you can qualify for a mortgage for the same price condo. Condominiums in Oakland County MI tend to have a monthly association fee. If you qualify for a $1200/month house payment that $1200 needs to include the association fee. And they can be pretty hefty.

Now to the defense of condos– the price tends to reflect both the association fees and the perks (maintenance, etc the association takes care of) of condo living. But if you’re qualified to buy a $150K house and having trouble finding what you like, don’t think you can just go buy a $150K condo.

Tomorrow I will be showing a condo in Clarkston MI listed for $155,000 with an association fee of $261 per month. Looking at the listing photos and after reading the description it sounds like a very nice home. Probably nicer than a regular house in the same area. After factoring in the association fee your monthly payment would be about the equivalent of a $200,000 home with no association fee.

So if you are looking for a home in the North Oakland County area and are content with either a house or condo, please consider you will have a different price limit for the condo than for the house.

Jackie Hawley
Keller Williams Realty
Cell: (248)736-6407
Email:
Jackie@JackieHawley.com

For Buyers

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The Best Loan Officer Isn’t Necessarily The Cheapest

If you are shopping for a loan officer for your Oakland County MI home purchase, you need to get a good faith estimate and have him/her go over the figures with you. If you get good faith estimates from more than one loan officer and one of them is much cheaper than the others, you need to ask why. In fact at that point you may want to bring all your good faith estimates to your buyer’s agent and get a second opinion, because there shouldn’t be a major difference in prices.

If you have two good faith estimates and they’re fairly close, don’t choose your loan officer solely on the costs. Sometimes going on the cheap can cost you more in the long run. We recently had a buyer choose to go with her credit union loan officer instead of our preferred lender and it cost her $50/day for each day we went past the to close by date. We went 2 weeks past the to close by date in the purchase agreement- or $700.

Another buyer who recently went with the cheapest lender ended up paying for a second appraisal and the time spent in appraisal review caused the buyer to have to pay for a rate lock extension and for me, his agent, to have to beg an extension from the seller. Thankfully the seller was a live human being- not a bank or a short sale.

Both of these buyers saved a few hundred dollarsuntil the problems started. It not only cost these buyers more in money, but the cost in headaches, stomach aches and stress in general was- priceless.

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The Perfect House May Not (Probably Not) Exist

Even with the low inventory in North Oakland and Lapeer County MI, I still consider this a buyer’s market. Prices appear to have stabilized, and in some areas prices look to be increasing a bit and inventory is pitifully low, BUT prices are still low as are interest rates. And there are good houses out there, but if you are looking to buy the “perfect” home there’s a good chance it just doesn’t exist.

A house that sold for $200,000 give or take “back in the day” may go for $110,000 or $115,000 today. And it will probably be in quite decent shape. But it IS a used house. There’s a 50-50 chance it is a distressed sale (foreclosure or short sale), and a homeowner who is looking at losing their home probably isn’t staying on top of maintenance. And quite honestly- there are things wrong with just about every house in every kind of market.

So basically, when you start looking for that great new home, don’t expect perfection. No matter what price range you are in, it probably doesn’t exist. Don’t spend every penny you have to get into the house and don’t max yourself out on what you purchase. You will probably need/want to make improvements/changes/updates to the home you buy. There ARE great deals out there- just not perfect houses.

Jackie Hawley
ReMax Encore, Clarkston MI
cell: (248)736-6407
email:
Jackie@JackieHawley.com

For Buyers

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independence oaks county park clarkston miIndependence Oaks County Park, Clarkston MI Offers Something for Everybody Year ‘Round

The last couple summers I took my continuing education (6 hours/year for license renewal) at Independence Oaks County Park with another real estate office. There is no better way to learn dry legal updates than in the middle of 1100 acres overlooking a lake.

Independence Oaks County Park is located at 9501 Sashabaw Rd, Clarkston MI about 2 /12 miles north of I-75 exit 89.

Independence Oaks consists of 1088 acres with 68 acre Crooked Lake, about 10 miles of marked natureindependence oaks county park clarkston mi and ski trails, overnight camping area, boat launch (non motorized boats) and boat rental. Picnic areas, ball field, sand volleyball courts, playground. horseshoe pits…

For the bird lover Independence Oaks boasts an extensive bluebird trail and from March through August you have a good chance of seeing both bluebirds and tree swallows. More than 150 species of birds have been sighted here.

Independence Oaks also offers restrooms with flush toilets as well as port-a-johns.

independence oaks county park clarkston miThe Lewis E. Wint Nature Center offers exhibits and year-round educational programs conducted by park naturalists. The Cohn Amphitheater accommodates 150-200 guests, and the Rubach Sensory Garden boasts a gazebo and water garden. 

Independence Oaks County Park is just one of the many attractions that makes living in Clarkston MI and the surrounding areas a desirable proposition. You can “vacation” after work or on the weekends and never really leave home.

Independence Oaks State Site

Independence Oaks County Site

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Commonly Asked Questions About North Oakland and Lapeer County Real Estate- What is a Site Condo?

oakland and lapeer county mi real estateThe difference between a site condo and a traditional platted subare mostly technical. Back in the day, when Oakland and Lapeer County MI were growing like weeds, many developers were going the site condo route to develop their subdivisions because it was much quicker.

A single family site condo community looks like a traditional, platted sub. Lot sizes, quality of homes and zoning restrictions are the same as with a platted sub. Buyers receive a warranty deed for their own property and are responsible for the maintenance for their own properties and may landscape as they wish, subject to the Master Deed protections or the more common term “bylaws.” It is not unusual for a typical platted sub to have similar bylaws.

Homeowners within the community own, with the other owners, the common areas. Association fees are typically collected to maintain the common areas. The association it typically turned over to the homeowners a bit earlier in a site condo community than in a traditional platted sub. In a condominium, assessments must provide for a reserve fund under the Michigan condominium Act. In a subdivision such a reserve is not required.

For all intents and purpose there is really no difference buying a home in a site condo community or in a traditional platted sub. If you buy a home in either you should really read the bylaws prior to making an offer or make your offer subject to reading and approving the bylaws.

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