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The following was a post we did in February of 2009. Not much

has changed in 1 year.   We are expecting the government to start incentives

to banks and second mortgage lenders to encourage the short sale process

instead of  waiting for foreclosure.

Benefits:

  1. House usually sells for a higher price
  2. Credit of the seller is not affected for as long
  3. Neighborhood is not affected as adversely

The term Short Sale has nothing to do with the time it takes to close

this type of transaction.  It refers to the money the bank or mortgage holder

will receive from the sale of the property.  The closing will be “short” of the

funds that the seller owes on the mortgage. In other words, they are upside

down: they owe more than the home is currently worth.

upside down house

Since we don’t live in a past world where the home “was” worth more or

a future world where it “may” be worth more,  this is the sad financial

situation many reluctant  home sellers find themselves in today, selling at

a loss. It doesn’t make for happy campers.

The Short Sale scenario usually doesn’t have anything to do with

greed or mismanaging money.  Many of the cases we see are typical families

that bought a home, fixed it up a little, and then got a job transfer, had a job

loss, a divorce, a family death or illness occurred which drastically changed

their financial situation.

not happy

What the falling prices on homes does is trap the homeowner.

He can’t sell it for what he paid for it—— he has to take a loss, go bankrupt,

or lose his credit rating.   How many people have equity in their home, or

savings, or a 401K they can borrow from to pay their losses?  We see that

occasionally, but it is not the rule.

The banks and mortgage companies are in a difficult situation.

They are going to take a loss, no matter what happens. The object is to stall,

wait, and negotiate until they get the best outcome they can for their company’s

bottom line.  Okay, companies stay in business by minimizing losses.

But, and this is a big but, stalling, and prolonging these transactions

until the potential buyers walk away is hurting everyone.  Delaying a month,

two months, three months on answering a decent real estate offer hurts the

bank, the seller, the buyer, and the real estate agent.  This kind of time lag is

typical of short sales.  I have heard getting these transactions to close as

compared to  ” trying to land a 747 on a blade of grass. ”

Real Estate agents don’t like to get involved in these transactions

because they are prolonged, messy, tons of paperwork, many, many frustrating

phone calls, and at the end of the transaction, the bank or mortgage company

will typically “short” the commission the agent has worked for. This is another

sticky wicket because the contract is with the seller, not the mortgage lender.

So, this has to be negotiated again, if you are fortunate.  If not, you take what

they will give you.

Short Sales are becoming a much more common transaction as

banks are deluged with foreclosures and calls from homeowners requesting

help.  The recent * Recovery Act may be a relief valve, allowing some people

to reduce their mortgage, save their credit and their home. The first week of

March the US government will tell us what the parameters of their plan are

going to be.

*We have seen little effect from the Recovery Act yet.

Make sure your agent has the experience and knowledge to get you

through the minefield of short sale negotiation, if you are buying

or selling.

_____________________________________________________________________________________________________

The authors of the this blog write about Grand Rapids Real Estate, the Greater Grand Rapids MI area, and what it is like to live in West Michigan. Grand Rapids Michigan is a vibrant, growing metropolitan area with a diverse business community, great medical research & services, numerous universities, plus lively arts and entertainment of all kinds.

We believe: Grand Rapids is a Great Place to Live!

search for Grand Rapids homes Find Grand Rapids Home Value Grand Rapids Relocation Guide

Westbrook Realty Grand Rapids MI Real Estate

Contact Terry   616-292-7263

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Most of us sell only a small number of homes in our lifetimes.

With limited experience in real estate how are we capable of

maximizing the profits from our home sale? Many home sellers

make the critical mistake of thinking all Realtors are the same.

They list with the first agent who comes along. Does it make

good business sense to put the responsibility of selling your

home with someone who has no plan or qualifications?

 

This report will educate you with valuable information that will

help you make the best decision concerning:

With which real estate agent should you list?

Start by doing a few hours of research. Ask around … talk with

someone who has had a positive experience with a Realtor in your

neighborhood. Find out which agents are highly visible in your

market area. Get to know who has the most web presence, ads

and marketing material in your neighborhood. Who’s the most

active agent? Compile a list of agent names and use these

questions to help you determine which agent is right for you.

Now you have the list –Google each one to see how they compare.

Make an appointment and ask the prospective agents the

following questions:

  1. Could you send me some information about yourself! You can

often get a good idea of which agents are the most professional by

looking at their promotional materials. If their own materials aren’t

professional, how well are they going to market your home? Track

how long each agent takes to respond to your request and how

quickly they follow up. If they don’t respond efficiently to your

Listing requests imagine how they’ll handle potential home buyers.

     2. How many homes have you listed and how many homes have

you sold in the last six months? Look for an agent who has experience

with homes similar to yours and is active in your area. If your home

has special features look for an agent with experience in those

areas. Your agent should have a good record of selling homes, not

just listing them. After all, this is your ultimate goal.

Watch for the continuing series: 10 Questions You Should Ask a Realtor

____________________________________________________________________________

If you are looking for a home in the Grand Rapids Area, we service the following areas: Metro Grand Rapids, Ada-Cascade, East Grand Rapids, Caledonia, Kentwood, Lowell, and Rockford. We have assisted Grand Rapids buy & sell homes for the last 35+ years. Call 1-616-292-7263 to talk with Terry or email him at: terry@terrywestbrook.com.

For MLS access to the homes for sale in the West Michigan Area,visit: Westbrook Realty ~ Grand Rapids Real Estate for a free search.  Your search can be saved and modified as you view homes, with no obligation.

Thinking of selling your home?  We offer one of the most extensive marketing campaigns in Grand Rapids with a major online presence for your home.  With over 85% of buyers looking for homes online, this is where we concentrate our efforts.  Click here to view Terry’s Realtor profile.

Subscribe to our Grand Rapids Michigan Real Estate Blog

             Westbrook RealtyGiving You Our Personal Best

In February we received a call on a property that had been foreclosed on

by HUD (Housing & Urban Development).  The buyer was looking to

purchase the house and rehab the property.  When we met the buyer,

his thoughts were to purchase it and put  his daughter in as a tenant.

This sounded like a great idea and after looking as his 401k, he decided

a smart use of what money he still had in his account.

In Michigan the process to buy a HUD-owned home is similar to a

number of states.    The offer is presented on line -  if you are successful

in your bid you have 24 hours to supply the paperwork to the attorney

firm that is handling the process.

All went quite well and HUD accepted our offer on the property.

HUD-owned house

Now we wanted to do inspections. As is typical in vacant HUD properties, we

need to turn the utilities on to do the inspections. The local power company

would not turn the power on  until an electrical upgrade was completed.

We called the attorney firm and they indicated another department in Arizona

took care of that. It would take a few days to get the quotes in to authorize

the upgrade. As it turns out, they need  3 quotes and the guy in Arizona

only had 2 approved contractors. After a few weeks of waiting we did our

own quote and called the attorney and asked if we could do the upgrade

at no cost to HUD and then do our inspections.

electrical wires cut

The answer: No, they would not allow anyone in the house that was not

approved.

I went through the layers of management to get to a supervisor that

indicated he "was all over this" and he would make it happen. Another

month of phone calls and frustration finally got the bids in and received

a call from another department.

This department indicated the bids were in but now they had to check

with HUD to see if they would do the work since all properties were

purchased "as is". I asked why they did not mention that we would not

have the opportunity to do our inspections before we had gone through

nearly 3 months of waiting.

 

HUD foreclosure notice

He did not have an answer but would get back to us.

Finally approved but the approved contractor could not get to the job

for a while.

The buyer, totally frustrated by now, decided he still wanted the property.

With nearly  3 months of phone calls and lack of action by HUD, he

offered to buy the home without inspections, if  they would give a

credit at close for the electrical repairs.

The calls were made and the approval granted. FINALLY!!!

Now we have 3 days to get the home closed before the offer expires.

If not closed in 3 days, we would have to file for an extension of the

agreement which might cost the buyer because he had not closed in

a timely manner.

We did close on the last possible day without too much issue.

Why do we do this?

Because the buyer is so happy!  The Buyer’s daughter actually bought

the  home and has a mortgage from the parents so she can get the

"First Time Buyer Home Credit".

They are happily cleaning and preparing to move in to the home. 

The electric is upgraded and the repairs are being completed.

The moral of the story:

In this housing market, buyers that never would have been able

to buy can own a home ——- if they have patience to go through

the process.

**Having a parent or relative fund the mortgage is another option

to a bank  mortgage.

 

The $ Benefits of the First Time Home Buyers Tax Credit

Buying Foreclosed Homes is NOT FUN

 

If you have the patience to buy a HUD-owned home or a foreclosure

Home, please contact us at 1-888-240-1968 ext 0 or email us at:

terry@terrywestbrook.com

Grand Rapids Ada Real Estate ~ Westbrook Realty

Copyright 2009 All rights reserved

The first attempt to give a credit to buyers last year seemed very limited in

benefits. I looked at it as an interest-free loan that had to be repaid.

The accounting alone would discourage buyers about taking it.

With the new American Recovery and Reinvestment Act of 2009 comes a

new first time home buyer program. The following chart provided by

NAR gives an overview of the changes and benefits.First time home buyer tax credit

Let’s do an analysis on buying 3 different homes:

Starting with a home with an $80,000 loan, then $150,000 loan and finally,

a $300,000 loan.

Remember you must be a First Time Buyer [or not owned a home for 3 years]

and make less than $75,000/yr for a single owner and $150,000/yr for a couple.

The examples are estimates based on an estimated 10% down payment with

PMI(Private Mortgage Insurance).

Other loan terms and down payments are available and will cause these

calculations to vary. Call me & we can see how it will impact you specifically.

Hypothetically, you just bought a home for $88,000, with $8000 down.

Loan               $80,000

Int Rate              5.5%                  Payment    454.23

Taxes                 1200                  Tax / mo   100.00

Insurance             500                   Ins / Mo     41.67

PMI                     420                    PMI/ MO    35.00

Total payment per month                             $630.90

 

Now, what is the best way to use your $8,000.00 credit?

Option 1: Increase your Federal Income tax deductions with your employer

paying in $8000.00 less in taxes and use the extra money to make

the payments for a year and live in your new home for free for the first year.

 

 

Option 2: Increase your deductions so you pay in $8000.00 less in taxes.

Send the extra money into the principal on your mortgage every month.

With the additional payment to principal you will reduce the term of the loan

by 6 years, saving $26,000 in interest over the term of the loan. Potentially

paying the loan down far enough that you can ask for the PMI insurance

to be removed, since you now have an additional 10% payment to principal.

Option 3: Save the money and get less than 1% interest.

The same comparison of Option 2 for a buyer with a $150,000 loan: it reduces

the loan term by 3.5 years and saves $28,800 in interest over the life of

the loan. 

The same comparison of Option 2 for a buyer with a $300,000 loan: you

reduce the loan term by 1.8 years and save $29,700 over the life of the loan.

However you decide to use your $ 8000 tax credit, as long as you stay in the

home for 3 years there is no penalty or payback. At the very least, you are

ahead by $8,000 and you could have an additional $26,000 to $29,700 in

interest savings on the life of your home loan. 

If you were hesitating about buying a home, this should encourage you buy

a home soon.  I would be delighted to discuss the 2009 Tax Benefits to you.

***This analysis is based on estimates I have made based on real estate taxes,

Interest rates, Insurance premiums  will vary based on the home you select.

Grand Rapids Ada Real Estate ~ Westbrook Realty

Copyright 2009 All rights reserved

We have a vacant home listed. It is a nice house, clean, neat, 4 bedroom

 two story home that I showed last Saturday.  It was a changed house

when I showed it again on Monday.  We had record setting low

temperatures here over last weekend and the batteries failed in the

 thermostat. 

                         NO HEAT! 

 

                        Frozen pipes.

 

 

 

Needless to say, I rushed to the store, bought batteries, and got the

furnace going again.  I also turned off the water to try and eliminate

as much damage as possible.  When the house warmed up, sure enough,

a water pipe broke between the kitchen ceiling and the upstairs bathroom,

 according to the plumber. 

 So, the morale of the story is: If you have a vacant home,

change the batteries in that thermostat—don’t take chances!

This home had a 2 year old furnace and thermostat, so I

didn’t have a thought that the batteries in the thermostat

could fail.  Remember this tip is you are planning on an extended

vacation or going south for a month or longer. Replace

those batteries before you go.  It doesn’t take long in below zero

 weather for your home to incur substantial damage.

 

Grand Rapids Ada Real Estate ~ Five Star Real Estate

Copyright 2009 All rights reserved

The Question of the Day: Do we Remodel or Move??

Dreaming of a back yard deck addition? Should you spend the money to

add it on or should you sell and look for a home with a deck already added?

Maybe you could get that extra bath since your teenager is in the bathroom

most of time.

 

Deck  Pergola

The Wall Street Journal advises in this article: Questions you should

ask yourself before you hire a contractor or call a realtor.

So many things enter into the decision.

 

Sometimes it just gets down to:

Do you like the home you are in well enough to invest money into it?

Even knowing you may never get the investment back. You will enjoy the

improvements (a new deck) and you really don’t want to move. Your kids

like the school system, you are close to your elderly parents, so many

reasons to consider before you decide to remodel or move.

 

In this economy many contractors are more than anxious to talk to you

about improvements and the cost to complete your dream project may

never be lower. With the combination of lower interest rates, contractors

that are willing to complete projects for bargain prices, and the current

market in your area, it may be your best option to stay and invest in your

current home.

 

If you are contemplating a remodel, I would be happy to give you my

opinion on the return of investment for your home.  This is just another

option to consider in your decision.  Please contact me directly.

 

Grand Rapids -Ada Real Estate – Five Star Real Estate

Copyright 2008  All rights reserved

When we sit down with potential clients to list their home, there are so many issues

 and hot buttons to discuss.  Inevitably we come to the one where we really have to

agree  to get the home sold quickly and for the most money. 

                 P-R-I-C-E

Most homeowners want to start high and then come down – if they have to – to sell.

Of course, they are hoping their home is an exception, it will sell for more than the

market value of all the other homes in the area.  We see this over and over again.

If you don’t price your home within the price bracket it will eventually sell for, you

 are hurting your chances of selling it for top dollar.  If you price your home correctly,

You are not giving away money!!  

 

 

 I repeat, YOU ARE NOT GIVING AWAY MONEY. 

 

This phantom money that you think you might get if the one person comes along

who will do anything, pay anything to own your “special” home does not exist. 

Let me repeat that  –

The uneducated buyer with money falling out of their pockets, sprinkled in fairy dust,

 so you can make the money you would like to out of your home sale —–

                   DOES NOT EXIST!!!

You are not letting go of money, you are letting go of the dream scenario where you

get the price that is 25-30% over market value.  We have seen literally thousands of

home sales and it just isn’t going to happen.

What will happen, is your home will be posted on the MLS, online, many places where

buyers can look at it.  Buyers then compare your price to others, and say, why would

I buy this house??  There are 10-15 others I can look at that are competitively priced

and look great.

 

 Then….  they are gone. 

 

They don’t come back and revisit your home as an option. Other homes are new on

the market to consider. Your home has been rejected as: too expensive, too

much work, not what they are looking for.

 

Buyer Activity on Listed Homes

Buyer Activity on Listed Homes

 

The charts above illustrate the buyer trends we tell our sellers  about.  These

 charts of buyer activity are on actual listings that are currently listed by us.  

 You can see that the first month is usually the only month that gets

high traffic.  

Some of our sellers will listen, most don’t.

Sadly, two, six, eight months later, we are still trying to get them to agree to

 the price they should be listed at, if they want their home to sell.  Chasing this

downward price spiral is not the best way to get top dollar from your home. 

 When it first hits the market it has the most exposure and best chance of getting

 the best price!

 Have questions about pricing your Grand Rapids home?

Contact me directly at 1-888-240-1968 ext 0

Grand Rapids Ada Real Estate ~ Five Star Real Estate

Copyright 2008 All rights reserved

Mr/Ms 2008 Seller, I would like to have a

heart-to-heart talk about selling your home.

 I know you think real estate sales people are just out for a quick buck.

We want to put a bargain price on your home so it sells quickly which means

 we get our commission check. Cha-ching!

 

This might be the scenario in some cases. Heck, there are bad apples in any

 profession. I have been selling and listing homes for over 35 years and I have

 seen a lot of sold homes and a lot of real estate professionals working in this

 field.  Most of them are nice people who make their living by listing homes

and trying to find homes for people to buy. We offer a service. It might not be

 for everyone – not much is. We have a unique perspective. We work with lots

 of people to sell their home and buyers buying homes.

We know your home is special to you – you live there!

Home Sweet Home

Home Sweet Home

We are here to give you the market conditions for TODAY, whether either

of us likes it or not.  We don’t decide the market conditions – wish we could. 

 We would be happy to have houses selling for close to what they are worth

and in 30-60 days.  We would take that market any day. 

 BUT THAT ISN’T THE CASE TODAY!!

Seriously, I WOULD LIKE YOUR HOUSE TO SELL BUT  I NEED YOUR HELP! 

You need to listen to what I am telling you about the market in your area

and what homes are selling for. The home buyers today are able to get

more information than ever before. They know what the house down the

 block sold for, they know that  a foreclosure home sold in your area for

 much less than the true value, and if you are desperate to sell, they can

take advantage of you.  The average buyer would like nothing better than

 for you to be in a desperate financial situation so they can get your home

at a bargain price. 

 The bottom line is: If you price your home correctly

AND have it in very good condition, it will sell. 

 

Terry Westbrook  – Five Star Real Estate – Copyright 2008  All rights reserved

Photo of Victorian Home Front Door Entrance by Bonnie Westbrook

You know the saying about good guys finishing last, well, I’m not so sure.

This recent scenario is pretty typical of a dilemma the real estate

agent faces every day.

I recently went on a listing appointment. It was a referral from a very happy

past client, the home was about 6 years old, professionally decorated and

had many extras. A very nice house to have listed.

EXCEPT…the seller didn’t want to move right away, they wanted to

list this spring and move in November.

I did my CMA and told them their price would be around $300K as the BEST

possible outcome.  The house next door just sold for $270K and

they included a $10K item of furniture to seal the deal!

I was firm about my price, but I conceded we could start at 310K or 315K,

if they wanted to test the market for a few months.

They interviewed two other agents who had also been recommended.

They went with the agent who told them it would sell for $330K. That is what it

is listed for on our MLS now.

Real estate agents have to make a decision at the presentation.

Do we want to buy the listing at the higher price and deal with a disappointed

seller for 6-15 months?

The other option is to be firm and if the business comes your way it will be

salable and you will get paid for your efforts.

I recently listed a home for the correct price and it sold in three

weeks for full price.

If I had been the Good Guy wearing the White Hat and agreed to

their $330K price, I know I could have gotten the listing. Then during

the 5-6 months when they weregetting really serious about selling, we

could have lowered the price and it would eventually sell, maybe by

spring 2009.

What is the right thing to do?

Telling the seller the truth cost me a listing??           Yes.

My Deduction:

Listening to the client —+— Motivation —+ — Price

All of these go hand in hand to come to an understanding

with the seller. I wasn’t patient enough to offer the option of setting

a higher price and waiting with them to realize their price was unrealistic.

This has been the case with so many listings over the last year and a half.

So I suppose I’m wearing the Black Hat in this Situation.

Or will I be wearing the Black Hat when I list at their price and

it still hasn’t sold in 11 to 12 months?  You betcha.

I will be the one who has failed to sell the house even though

the sellers set the price.

Copyright by Terry Westbrook 2008

Contact me: 1-888-240-1968 x 0 toll free

Grand Rapids Real Estate ~ Westbrook Realty

Email: terry@TerryWestbrook.com

A Few Buying Tips on Foreclosed Properties:

Be Aware ~ Be Prepared ~ Use a Seasoned Buyer’s Real Estate Agent

The recent downturn in the housing market means that there are more and more foreclosed properties going up for sale, especially in areas which are economically depressed. Although these properties may at first glance seem like a bargain, there are many potential problems that you should carefully investigate. Apart from the usual considerations-did the previous owner intentionally damage the property before abandoning it, etc.-there are a number of under-reported potential issues you should be aware of.

Many of these issues stem from the fact that institutional sellers such as banks are simply not as interested in negotiating as an individual owner would be.

Here are several important issues to understand if you are going to pursue a foreclosed property:

 

1. It can sometimes take weeks for a bank or relocation company to respond in writing to your offer. Build time into your scheduling in preparation for longer delays in the negotiation phase.

2. Banks and relocation companies often have cumbersome contract addenda. Have a real estate attorney ready to review their addenda and give you some insight into the risks involved with their contract. Often banks and relocation companies will back down from their position, but it may not be worth your effort as a buyer.

3. Banks and relocation company addenda often put them in the position of being able to break the contract at will, without penalty, at any point right up to closing. Plan ahead for this risk.

4. In many markets, banks often contract to provide a warranty deed on a foreclosed property, and then when the closing documents arrive they will instead provide a special warranty deed (a lower quality form of conveyance). Speak to a real estate attorney ahead of time to evaluate your additional risks and determine if it is worth moving forward.

5. Often, at closing, the seller will claim that they haven’t gotten all their signatures so the actual closing may need to be delayed another 24 hours. This ends up preventing you from moving into your home on the date you had planned. The seller may unilaterally change your closing date and as a result the seller may not deliver ownership exactly as scheduled. Building extra time into your schedule will help in this situation.

Examples from a recent survey of buyer’s agents include:

“On a recent foreclosure my Buyers and the Bank (the seller) verbally agreed to their offer. We waited 3 weeks for them to put it into writing.”

“Lender taking 2+weeks to respond to an offer. Lender not informing us they are already considering another offer. Lender going to closing without having valid deed. Lender refusing to turn on utilities for proper house inspection.”

Forms of conveyance will vary by state.

What You Can Do

 

Most of these challenges can be overcome through due diligence. Always “read the fine print.” Have a real estate attorney ready to review contracts and give you insight into the risks involved. Occasionally, banks will back down when confronted with legal counsel.

Be sure to build extra time into your schedule:

  • Banks and relocation companies are notorious for dragging their feet.
  • Prepare yourself for long waits during negotiation.
  • Don’t plan to move into the home or start renovations the day of or the day after a scheduled closing.
  • The seller may unilaterally change it and delay an extra day.
  • Don’t assume the transaction will close on time and don’t assume that the seller will deliver ownership exactly as scheduled.

You can read more about buying foreclosures and the problems you probably will encounter here.

Foreclosures Selling Faster? Article

Stripped & Violated – This House Could be Next Door Article

Greater Grand Rapids Area Information

Copyright by Terry Westbrook 2008

Contact me: 1-888-240-1968 x 0 toll free

Grand Rapids Photos

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