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Archive for the ‘Foreclosures’ Category

Buying an Oakland County or Lapeer County Foreclosure? What to Expect

Or more precisely what not to expect.

Don’t expect to be able to negotiate anything other than price.

Think $150 to re-key a door is high? Too bad. There’s no way around it and you won’t get the key at closing. It may be left in your mail box. Or on the electrical box. Or in the mud under the electrical box.

Furnace doesn’t work? Don’t expect it to be fixed or replaced.

Your attorney doesn’t like the wording in the bank addendum? Too bad. If you change it the seller will back out (or not sign it- same thing).

Want the by-laws which are required to be supplied to a potential buyer in Michigan? In fact if the property is a condo or site condo the buyer can legally walk until they are received and approved. But in the case of a bank owned property you will probably end up at the county building getting them to the tune of $.50/page because neither the seller nor listing agent will have them.

Buying a foreclosure on a private road? You may need to walk door to door getting signatures on a private road agreement or you may not get your mortgage. The seller won’t do it, and heaven forbid the listing agent actually do his or her job.

The seller’s agent may or may not make sure the utilities are on and the house un-winterized prior to your home inspection.

The seller’s agent may or may not make sure the driveways are cleared (in the winter) so bring your boots.

The listing agent may have the utilities on– but if we’re looking in the dark bring a flashlight because there’s no guarantee there will be lights.

The sad facts are, the banks and government (many foreclosures are government owned) don’t care. If the sale falls apart they can just put it back on the market and unlike a normal seller they can afford to keep reducing their price.

It’s a sad fact that most foreclosure listing agents in Oakland County MI and Lapeer County MI don’t even look at their listings let alone service them.

Want to buy a foreclosure listing in Oakland County or Lapeer County MI? You MAY get the house for a good price, but is the discount worth the stress, lack of protections, and probably hidden defects you will need to correct later worth the discounted price?

One other thing to consider– the re-salability of the house. Right now I have 2 listings that were previously bought as foreclosure listings. I have title issues on one and trying to track down the private road agreement for the other before we get an offer. The advangage of using an agent who specializes in NON Distressed sales.

Buying a Distressed Listing

Search the MLS

Jackie Hawley
ReMax Encore, Clarkston MI

Cell: (248)736-6407

Jackie@JackieHawley.com

www.MiRelocation.com

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Can A Seller REALLY Enforce That The Buyer Not Resell For A Specific Period Of Time?

A lot of the bank and government owned listings specify owner occupied only for the first couple weeks or for the first month. They require the buyer to sign a document that the house will be their primary residence and that they can’t sell for the first 60 days up to a year after closing.

What law is the buyer breaking if they lie? I never realized it was against the law for buyers and sellers to lie to each other. They do it all the time- “I can’t go below X on my price.” Or “X it the very top I can afford.”

I spoke to the listing agent today of a HUD listing for a buyer who wants it as a 2nd home- her lake home. The agent told me she would have to claim it as her primary residence for the first year and change her driver’s license.

Is this enforceable? Is it legal? Once the transaction is completed the seller no longer has any interest in the home.

I’m not an attorney and don’t want to become a test case. But I am curious if anybody has heard of a bank or the government going after a buyer after they didn’t move in or if they sell too early.

Jackie Hawley

ReMax Encore, Clarkston

Jackie@JackieHawley.com

www.MiRelocation.com

248-736-6407

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Lake Orion Michigan Foreclosure Listings Are NOT Available For Sale BEFORE Hitting The MLS

I am asked multiple times a week if I can let someone know about Lake Orion MI foreclosure listings before they hit the market. When I say “there is no way” I am then often asked about RealtyTrac. RealtyTrac reports foreclosure notices. Many houses that are served a notice of foreclosure do not go into foreclosure. In fact, it appears that actual foreclosure listings here in Lake Orion MI are on the decline and many distressed Lake Orion home owners are going the short sale route.

We have a couple of foreclosure agents in my office and I’m friendly with other foreclosure agents who work in Lake Orion Michigan and have been assured that the vast majority of foreclosure listings DO get sold through the MLS, and have to be available on the MLS for a minimum of 3 days before they even submit offers.

So, dear Lake Orion Michigan home buyer– Please rest assured that you are not missing out on any of those great foreclosure deals when you get a daily MLS update from me. Also, please be aware- sometimes foreclosure listings aren’t always the best deals. Many of the short sale listings sell for a great price, and the “regular” listings that truely want to sell are priced like a foreclosure or short sale.

Buying a Lake Orion MI Foreclosure

Lake Orion Homes For Sale

Search the MLS

Jackie Hawley
Keller Williams Realty, Clarkston
Cell: (248) 736-6407

Jackie@JackieHawley.com

www.MiRelocation.com 

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Am I Overpaying? Is the listing overpriced? What is the house worth?

All questions, or variations of questions, most buyers ask when buying a house. They are valid questions with not easy or pat answer. The value of the home depends on your point of view.

Webster defines “value” as “a fair return or equivalent in goods, services, or money for something exchanged” or “the monetary worth of something.”

Out of everything that is currently on the market: Is it the best house for you, with an asking price you would be comfortable paying? If you were assured the asking price is fair, would you feel like you were settling with this particular house? If the house is everything you were hoping for in your price range, then you’re not overpaying.

Websters defines “market value” as “a price at which both  buyers and sellers are willing to do business.”

Now that doesn’t mean it will appraise. Appraisals are usually needed to get a mortgage.

My definition of “appraised value” is “a price determined by a licensed appraiser who is following both government and lender guidelines.”

Some of the rules appraisers have to follow for most residential loans, that can and do affect “value” are (among others):

  • they are limited on the amount of value they can give outbuildings
  • they are limited on the amount of value they can give to land when buying a home on acreage
  • they are limited on the amount of value they can give for upgrades such as top of the line windows, 50 year warranted roof, finished basements, crown molding, upgraded cabinets, flooring, light or plumbing fixtures…..

Other factors that can affect the appraised value are the lack of comparable sales. If you are selling a custom lakefront home on a lake that has had mostly cheap foreclosure sales, converted cottages, the appraisal could come in low. Especially if the house is on one of the more desirable lakes- the sold comps for more custom homes may come from a less desirable lake and there’s really no way to adjust value for the lake.

If you are buying a house with a hundred thousand dollar indoor arena and another fifty thousand in oak fencing and 20 acres, the lender expects the seller to give little to no value to the barns, fencing and land.

Do these things have value to the consumer? Are there things about the house you want, that have value to you, that an appraiser may not consider? If so, are you able and prepared to pay the difference if the appraisal comes in below the agreed upon sale price?

If you are unable to pay the difference between appraised value and what the seller is willing to sell for, then we would need to determine an approximate value an appraiser would come in at and not exceed that price in negotiations.

If you are able to pay the difference, you need to decide what the value of a particular house is for you. Basing your purchase solely on appraised value can cost you more in the long run.

Making the Offer

All About Financing

The Home Inspection

Search the MLS

Jackie Hawley
ReMax Encore, Clarkston MI

Cell: (248) 73606407

Email: Jackie@JackieHawley.com  

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Michigan Foreclosures- New Buyer Fee to Consider

It is customary in Michigan real estate transactions for the seller to pay the transfer tax- both state and county- to the tune of .86 of a per cent of the sale price. Bank owned homes backed by Fannie Mae and Freddie Mac have been exempt from this fee until now. Fannie and Freddie are refusing to pay this fee and passing it on to the buyer and this includes sales that are currently pending.

A little background:

Up until now Freddie and Fannie have been exempt from this cost which is not exactly a puny little fee. For every $100,000 of house that is an $860 charge. There has always (probably not literally always) been a clause in the addendum to purchase Fannie and Freddie homes stating “Seller is exempt from payment of state taxes and tax stamps on deeds, mortgages and notes (12 U.S.C 1452(e)) and if payment of such state taxes or stamps is necessary to record the deed or mortgage, the tax will be paid by Purchaser and will not be considered part of closing costs.”

When representing the buyer we have just told them to not worry- Freddie and Fannie are exempt in Michigan, so go ahead and sign if they want the house. Unfortunately on bank or government homes (foreclosures) there is no changing or tossing their addenda. They have standard forms and they don’t deviate.

I personally never felt it was right to exempt Fannie and Freddie from paying the transfer taxes; it’s not like our state is so flush we don’t need the revenue. And if we want to exempt anybody, why not exempt people instead of a quasi-governmental agency which is organized as a privately owned corporation that issues its own common stock? Or stated another way- a private company when it comes to profits and a government agency when they need money.

The change in Michigan Law, or the interpretation of current law, I have no argument with. I have a problem with the cost applying to currently pending sales and with the addendum that states that the transfer tax can’t be considered a closing cost.

The bottom line:

When considering a foreclosure listing, discuss any additional fees with your Realtor regarding that specific home. Fannie and Freddie homes now have close to an additional per cent in fees that other listings don’t have. The last PNC owned listing I sold the buyers had to pay $300 fee plus were required to use the seller’s title company for the lender’s policy (which is probably illegal but if you want the house….). Other banks have their own fees that get passed on to the buyer. Many foreclosure agents have added required buyer fees in order to present an offer.

Often times a regular, non-distressed sale is truly the best “deal” once you consider additional buyer fees, the fact you may need to have utilities in your name in order to have a home inspection, the fact you may have to pay to un-winterize a house in order to inspect, the fact that there are probably obvious issues with the house and probably hidden problems you may not discover in a home inspection.

Are Bank Owned Homes Really the Best Deal?

More About Buying Foreclosed Homes

Jackie Hawley
Keller Williams Realty, Clarkston MI

Cell: (248) 736-6407

E-mail: Jackie@JackieHawley.com 

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Are Southeast MI Foreclosure Sales (Bank Owned Homes) REALLY The Best Deals?

buying a bank owned or foreclosure fixerSometimes they are. Some bank owned homes are in pristine condition. Sometimes. Most of the time they are rough. Often times they are not mortgageable. Often times once you pay cash (money that is not making money elsewhere) and then you put cash into the house to make it livable you end up with a nice house with the same amount of money into it as the regular or non distressed sale you passed up because it “cost more.”

 

Some of what you need to consider before ruling out non-distressed homes:

  • What type of mortgage do you qualify for or do you have all cash?
  • Will you have the cash after the purchase to complete the repairs?
  • Are you going to use a builder or do the work yourself and are you ready to disclose at re-sale that you did all or most of the work yourself?
  • What dollar value do you put on your time?

If you are getting a conventional mortgage remember the house will need to have a working central heating system and running water. Don’t bother looking at a house where the kitchen was removed.

If you are an FHA buyer the house needs to be in decent shape- livable.

If you are an FHA 203K buyer you will be able to finance the repairs, BUT you will need a licensed builder to draw the money for the repairs. If you are paying a builder, are you really any farther ahead than buying a home that has been maintained?

I’m not saying that fixers are necessarily bad, but too many consumers today seem to think there is all this sweat equity to be made on buying distressed properties and for the most part that is simply not true.

Do You Really Want to Buy a Fixer?

The Perfect House- Does it Exist?

How to Figure Your New Property Tax

A Tale of Two Taxes- How Property Taxes Affect Your Buying Power

Jackie Hawley
Keller Williams Realty, Clarkston MI

cell: (248)736-6407

www.MiRelocation.com

Jackie@JackieHawley.com

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What Happens if the Appraisal is Low?

Low appraisals (appraised value coming in lower than the agreed upon sale price) are becoming more common and will probably remain a problem for quite awhile to come. There are many reasons why appraisals can come in low, and it is usually NOT because the buyer was prepared to “over pay” for the house.

I used to define the word “appraisal” as an opinion of value. Back in the day the loan officer got to choose the appraiser; an appraiser on that lender’s approved list of appraisers. Most of the time a local appraiser was used, and appraisals were usually pretty accurate. In fact- contrary to recent pundit opinion– many appraisals tended to come in lower than they should have. Most of the time, the appraiser would justify the sale price, even if the buyer was buying the house at a bargain price.

Today I define the word “appraisal” as an opinion of value derived from data that fits a particular lender’s criteria. Also, because of fairly recent legislation (over the past couple years) the choice of the appraiser is taken away from the lender, and I have been seeing a lot of out of the area appraisers on my listings and when representing the buyer. On a recent purchase my buyers ended up paying for 2 appraisals- both licensed appraisers, both appraisals were within a week of each other- one came in at $300,000 and one came in at $362,000.

Buyers and sellers both want the house to appraise. Buyers are represented now ‘days, and their agent should advise them if they are over paying. Buyers are more savvy and educated than in the past, and by the time they make an offer they know what a house is worth. But the appraisal is usually needed to obtain a mortgage.

So what happens when the appraisal comes in low?

  • The seller can come down in price to match the appraised value
  • The buyer can pony up the difference
  • The buyer and seller can settle somewhere in between
  • The buyer can back out and the house go back on the market

The above scenarios assume the purchase agreement stipulates the house must appraise for at least the sale price. The purchase agreement I use lets the appraised value become part of the negotiations. For example the buyer may offer to pay $200,000 for a house but is contingent on the appraiser coming in no lower than $190,000. This can be very useful in a multiple offer situation.

There is no law that forces a seller to come down in price, just like there’s no law that forces the buyer to go through with the purchase if the appraisal is low. Some sellers can’t come down any farther and sometimes the buyer just isn’t able to pay the difference. This can be a real problem when seller concessions are needed.

Bottom line is: appraisals come in low way too often and there is no right or wrong way to resolve the problem. BUT don’t assume the seller will automatically come down in price because a third party doesn’t agree with the buyer or seller on the value of the home.

If You Work As My Buyers Agent How Much Does That Cost Me?

How Not to Buy a House

All About Short Sales and Why a Short Sale May be Wrong for You

Search the MLS

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

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