Posts Tagged ‘home prices’

How Much Does The Interest Rate Really Affect Your Buying Power?

I am going through old listings that couldn’t sell at the owner’s desired price and through files of home owners who didn’t try to sell after getting a market analysis (CMA) for their home because of the value at that time. The good news for those homeowners is that prices are coming up in the Clarkston area and have been for the past couple years. But for buyers- if you look at your payment instead of price- prices are still very low.

As an example I just pulled up a listing I had in 2007 that was asking $400,000. At that time the interest rate for mortgages was at an average of 6.34%. When I checked the Freddie Mac web site I found the average interest rate last month was 3.92%.

What does this mean from the buyer perspective? If you would have bought that particular house for $305,000 in 2007 your payment (principle and interest) would be the same as if you were to pay $400,000 today. That’s a hundred thousand dollars worth of buying power just in the difference in the interest rate.

But it gets better!!! The property taxes on that house have dropped from just over $6k/year to just over $4600/year. That’s $116/month savings in your house payment.

Interest rates are not going to stay this low forever. Home prices are on the rise– not skyrocketing, but steadily rising. If you have been holding off buying waiting for the market to hit bottom I think we may be there- especially when you factor in the mortgage interest rate and property taxes. AND the cherry on top is the fact that your property taxes will be capped to 5% or the rate of inflation as long as the house is your primary residence. So for the example above it will take quite a while before property taxes are back at 2007 amounts.

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Jackie Hawley
ReMax Encore, Clarkston

Cell: (248) 736-6407


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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.

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Jackie Hawley
ReMax Encore, Clarkston MI

Cell: (248) 73606407

Email: Jackie@JackieHawley.com  

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Could Incomplete MLS Listings Be To Blame For Bad Appraisals?

houseI was reading a letter from our outgoing board president, John Burt, published in our monthly board publication. In the letter he writes about appraisals and mentions that appraisers read the remarks we put in the MLS profile sheet. He goes on to write: “That information can make a difference in value, not just for your listing, but other comparables. If you have a “dog” of a listing, please don’t describe it as a palace, because that could be a future comp for a true palace that gets listed.”

He’s right. And after doing several market updates recently I came to the conclusion that the problem isn’t puffing our listings. It’s incomplete or incorrectly filled out listings. The example I’m going to use is my year end sales data for Lake Orion (the lake located in Lake Orion, MI).

In 2010 there were 27 solds reported in the MLS for lakefront homes on all sports Lake Orion. 12 bank owned homes, 3 short sales, 12 regular sales.

10 listings- or 37% of the total lakefront sales– had absolutely no description of the house. A description lazy listing agentsis NOT “This is a Fannie Mae HomePath property, purchase… blah blah… highest and best offers are due by….”. On THIRTY SEVEN FRIGGIN PER CENT of the sold lakefront listings on Lake Orion the listing agent made ABSOLUTELY NO ATTEMPT to “sell” their listing to other agents. Because that IS what the MLS is for. To sell your listing to other agents so THEY can sell it to their buyers.

But it gets worse. If an appraiser is going to search for solds on Lake Orion you would think he would (should) be able to search X price range, check the lakefront search field, and fill in the water name search field with either Lake Orion or even Orion. If an appraiser did that for sales in 2010 he would have missed out on 7 of the sold listings- or 26% of the sold lakefront homes on Lake Orion. ALL of the listings that had no water name filled in had no description except how to submit the offer. ALL of those listings that had left the water name search field blank and didn’t bother to fill in the description were bank owned homes.

Now I showed many of these homes. Some were in pretty good condition. Some were outright dumps. Some suffered from delayed maintenance. But unless an appraiser had been in those homes, he would have no idea of the condition and no basis for adjustments.

Not only does half assing your job as a listing agent affect appraisals, it is affecting how much work a buyer’s agent has to go through just to be able to include all appropriate, available homes for our buyers. In Lake Orion it’s not so bad to read through 30 or so active listings but try finding a lakefront home in Waterford or Clarkston. Lake Oakland covers both Waterford and Independence Townships. When I update my sales data for Lake Oakland I will probably have to read through over 200 listings since 20-25% of all lakefront listings in our area seem to have the water name search field left blank.

Should appraisers do the same as I am, and read through a couple hundred listings to find the 3-6 comps they use? Yes- they should. A lot is riding on the outcome of their appraisal, and an inaccurate appraisal can mean financial devastation to a seller. DO appraisers go to those lengths for the $300 or so they make on an appraisal? I doubt it.

So listing agents- especially REO agents- Please Please Please start doing your job and fill out your listings completely and accurately. If you can’t at least do that minimal part of the job, please do us all a favor and quit this line of work.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407

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Oakland County MI Lakes

Lake Orion (the lake)

Why Are Appraisers Calling This a Declining Market- Prices Are Up Inventory is Low

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When buying a home in Oakland or Lapeer County Michigan a standard contingency is financing (the buyer obtaining a mortgage for the house). Normally, part of the financing process is an appraisal, and the cost of the appraisal is born by the purchaser.

  • So is this the purchaser’s appraisal?
  • And is the appraisal for the protection of the purchaser?

The answers are no and no.

If it really was the buyer’s appraisal, the buyer would get a say in who the appraiser is. Or at least the buyer’s loan officer would get a say.

Loans mortgage appraisalsThe appraisal is for the protection of the lender. The lender loans money to a purchaser, and that money is secured by the house and, rightfully, the lender wants to make sure the value is there.

Because of some of the asinine changes in the mortgage process over the past couple years, the loan officer is no longer able to hire, or even speak to, the appraiser. The lender (loan officer) contacts an appraisal management company who then assigns an appraiser. And like in anything in life, there are good and bad appraisers.

So you the consumer can interview and choose the best real estate agent to work with. Interview and choose the best loan officer to work with, choose the best home inspector, best insurance agent, best title company … But no say on who appraises the home you are trying to buy.

Appraisers themselves are finding themselves under scrutiny because some want to blame them for the housing mess we are currently in. And the result has been overly cautious appraisers. And many inconsistencies in appraisals.

I had a sale earlier this summer where 2 appraisals were ordered from the same appraisal management company, for the same property within a few weeks of each other. The contract price for the house was $380,000 and it was one of multiple offers. So the free market pretty much set a price of $380,000. One appraisal came in with a value of $300,000. The other appraisal came in at a value of $362,000. Both were local appraisers.

I had another sale where I was on the listing end (a short sale) and it was another property with multiple appraisals. Between the buyer and the lien holders there was a total of 5 appraisals. 5 appraisers came in with 5 different values.

horse racing first and last equalOne of the main problems I’m seeing on the appraisals is the appraisers aren’t giving value for quality. Everything is size and location with very few adjustments, and those adjustments are for things like walk out basement vs standard basement. Maybe a few thousand for a finished basement vs an unfinished basement. If the comparable sales are in the same sub you may see an adjustment for location within the sub.

What I’m not seeing is when the house isn’t in a subdivision is credit for a more desirable neighborhood. In the first example above, that house was on a lake in Independence Township with Clarkston schools. Part of that lake is in Waterford with Waterford schools. Homes in the Clarkston school district have always garnered a higher price than Waterford schools- but not according to the appraiser.

I’m also not seeing credit given for quality. Top of the line Anderson or Pella windows will get zero value. Wood interior doors as opposed to the typical builder’s grade plastic feeling doors will get zero value. Upgraded cabinets, counters, light and plumbing fixtures will get ZERO value.

Now take 2 houses in the same or similar neighborhoods, and house a has builder grade everything and house b had the same floor plan built but upgraded everything mentioned above– should both those houses sell for the same price?

From a buyer perspective you may be thinking “Great! I can get $50K mattress money extra downpayment if house doesn't appraiseworth of upgrades for free.” Maybe not. You may find the perfect house and are willing and able to pay for quality. You spend $300+ on a home inspection. You spend $300+ on an appraisal, and the appraiser comes in $30K lower than the agreed upon price. The seller does not have to come down on price. If  the seller won’t come down, and if you still want the house, you would need to come up with the extra $30,000. If you don’t have it, you won’t get the house. You may have to settle for mediocrity in order to get a mortgage. Or in the case of the lake house above, maybe a lesser school district.

By the criteria many appraisers now feel they need to use, with the value determined solely by size and location, that is the same as saying the first place horse in the Kentucky Derby has the same value as the last place horse in the Kentucky Derby- all the same age, about the same height and all the same class of horse.

When I represent a buyer, I will perform a market analysis on the house you want to offer on. I will give you my opinion of value and back that opinion with comparable sales. I will also give my opinion on what I think the appraised value will be, and if there’s a difference, you will need to prepare yourself to possibly lose the house you want or pony up the difference. And if you are a person who feels that quality has value, be prepared to come up with additional down payment.

Please don’t hesitate to contact me about buyer representation if you are considering purchasing a home in North Oakland or Lapeer County.

Jackie Hawley
cell: (248)736-6407
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Lake Orion Michigan Real Estate Sales- Home Prices Still Up! Inventory Down!

Despite the fact that unit sales have been down the last 4 months in a row, and that the median sale price for October was down slightly from last October (less than 1/2%) Orion sales are still up year to date.

5 of the past 6 months have shown median sale prices above the previous year and October median sale price was down only $500 from the median sale price for last October. Part of the reason for this is the decrease in foreclosure sales. Last year foreclosures made up 48% of the total sales in Lake Orion Michigan but only 38% this year.

lake orion michigan median sales prices monthly

Short sales made up 8% of total sales through October, 2009 but so far this year have made up 20% of total sales in Lake Orion, Michigan.

The amount of distressed sales is about the same this year as last year, but with the shift from foreclosure sales to short sales we are seeing a rise in prices. The median sale price so far this year for foreclosed listings has been $96,250 opposed to a median sale price of $170,000 for Lake Orion short sales.

Since all sales are used to set market value, this is a good trend for home owners- whether they’re selling or not. This might not be the greatest news for home buyers. When you consider the median sales price for Lake Orion is was down 7.7% half way through the year, it’s pretty positive news that prices are up at all only 4 months later.

Part of this is due to the decrease in foreclosures and part of this is due to the decrease in inventory. On Nov. 16, 2010 there were only 147 active listings. On Nov. 19, 2009 there were 214 active listings.

Through October:

Unit Sales 2009: 307
Unit Sales 2010: 323

Median Sales Price 2009: $149,200
Median Sales Price 2010: $150,000

Foreclosure Sales 2009: 148
Foreclosure Sales 2010: 122

Short Sales 2009: 24
Short Sales 2010: 63

Overall, prices are on the rise, inventory is down, and I have no clue about the unit sales. They started strong but have been on the decline. Half way through the year there were 217 closed sales in Lake Orion opposed to 145 through the first half of 2009. At the end of Oct. unit sales are only up by 16 units- 323 in 2010. 307 units in 2009.

lake orion michigan unit sales

Whether you’re a first time home buyer, step up buyer, looking for that lakefront cottage or investment properties, now is a great time to buy in Lake Orion Michigan. Prices are up from last year but way down from 2009 and WAY down from our peak in 2005. Interest rates are extremely low and property taxes have been dropping. Many neighborhoods are selling for mid to late 90’s prices. Below are links to detailed sales data for various neighborhoods as well as detailed sales data for lakefront properties for various lakes in Lake Orion and surrounding areas.

Specific Neighborhood Sales Data

Oakland County Michigan Lakefront Sales Data

Oakland County Michigan Lakefront Homes for Sale

Lake Orion Michigan Homes for Sale

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Lotus and Maceday Lakes Lakefront Real Estate Sales

Madeday Lake Waterford Michigan Lakefront Homes for Sale


Maceday and Lotus are both all sports lakes and are connected for a total acreage of 419 acres. Maceday Lake is located in Waterford, Michigan. The majority of Lotus Lake is located in Waterford Township, but the northern tip falls into Independence Township (more commonly known as Clarkston). There is a public access site at Williams Lake Rd just east of Maceday Lake Rd.

Maceday and Lotus Lakes are all sports lakes– great for the water skier or jet skier in the summer and snowmobiler in the winter.

For the fisherman, Maceday Lake is a designated trout lakeand was stocked last fall with 1,000 lake trout with some of the Madeday Lake Waterford Michigan Lakefront Homes for Salefish being up to 18 inches long and ranging in age from 2-4 years. Maceday Lake was also stocked with 12,000 rainbow trout last year and another 12,760 rainbow trout earlier this year(April, 2010). It was stocked with 15,000 splake (brook trout/lake trout cross) in March of 2009 and 13,300 in April of this year.

In 2005 sale prices on Maceday and Lotus lakes ranged from $245,000 – $1,150,000.

In 2009 sale prices ranged from $76,000 – $590,000. 9 of the 12 sales in 2009 were under $200K and one of those sold for under $100K. Of the 12 sales in 2009 3 were bank owned, 3 were short sales, and there were 3 sold listings where the listing agent didn’t bother filling in the lake name field of the MLS. That is 25% of the sold listings that would not have come up in a search looking specifically looking for Lotus or Maceday Lake.

Madeday Lake Waterford Michigan Lakefront Homes for SaleSo far this year sale prices have ranged from $100,000 – $475,000. Of the 10 sales reported through the MLS only 3 sold for under $200,000 and none of those sold for under $100,000. Only 1 sale was bank owned; 6 were short sales.

If you are thinking of buying that lakefront home you might not have been able to afford a few years ago (prices are down significantly from just a few years ago) now is a good time to start looking. Most of the sales this year on Maceday and Lotus Lakes have been short sales and usually take about 6 months to close. Buying a lakefront short sale now should get you in in time to enjoy your summer on the water.

Oakland County Michigan Lakefront Homes for Sale

Oakland County Michigan Lake Information

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Is This a Trend? Clarkston Michigan Sales are Up AGAIN!

Let’s hope it is. The past couple days I wrote similar posts for Lake Orion and Oxford. And today I’m happy to write that sales are up, AGAIN, in Clarkston Michigan. The median sales price was up for the first half of the year, up through the end of August, and up for the past 4 months in a row. Unit sales are also up and total sales volume for Clarkston Michigan homes is also up from last year.

clarkston michigan home sales

in the graph above the pink line is for 2010 and the blue line is for 2009

In fact- unit sales through August 2010 are up from 2009, 2008 and 2007. Even though unit sales are up, bank owned sales are down from 2009- 95 bank owned sales though August 2010. 101 bank owned sales through August 2009.

Median Sales Price:
2010: $157,450
2009: $142,000

Units Sold:
2010: 268
2009: 209

Total Sales Volume:
2010: $48,227,480
2009: $$37,348,470

Bank Owned Sales:
2010: 95 units or 35.4% of total sales
2009: 101 units or 48.3% of total sales

Short Sales:
2010: 64 units or 23.9% of total sales
2009: 27 units or 12.9% of total sales

As of 9/18/2010 there were 223 total listings for sale in Clarkston Michigan with a median asking price of $217,000. On 9/28/2009 there were 258 homes for sale with a median asking price of $239,450.

For more detailed information about a particular house or neighborhood a market analysis would need to be done for that specific home. Below are links to some pages where I’ve been compiling information (including sales data) for specific subdivisions and lakes (for lakefront homes). The above numbers are averages for Clarkston Michigan/Independence Township with some additional date to help interpret the data. The more specific the geographic area, the more one can glean from the data.

 North Oakland County Michigan Neighborhoods

North Oakland County Michigan Lakefront Homes for Sale

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Clarkston Michigan Homes for Sale

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