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Short sales successes

When we started selling homes in 2001, short sales were unheard of in Metro Detroit.  Foreclosures were rare in Oakland County.  But times have changed and this year we have had an enormous uptick in our short sale business.

Short sales are taking place in every price range.  In the last 30 days we’ve helped buyers and sellers to close on homes with list prices between $110,000 and $999,000 in communities like Bloomfield Hills, Royal Oak and Orchard Lake.  We’ve got 5 other short sale homes in the pipeline right now, all with offers on them and in to the bank for evaluation.

Some scenarios can make a short sale even more challenging to handle successfully.  Dmitry recently navigated treachorous waters with a short sale that involved private lien holders in addition to the banks.  Three individuals had made personal loans to the owner and did not really want to accept anything less than payment in full.  The banks were offering a few grand to them to scram.  If the home and gone to foreclosure they would not have seen a nickle.  In the end there was intense drama for a few weeks but Dmitry got everyone to the closing table.  The buyers got a great house and the seller got out of a bad situation.

Buyers, you can get a deal with a short sale, but it comes at a price.  If you have the time and the patience you could be rewarded handsomely.

Tags: bloomfield hills short sale, foreclosure, short sale

Oakland County Fireworks

7/01 Fireworks in Borden Park in Rochester Hills

7/03 Fireworks during ArtBlast in Birmingham at the Birmingham-Bloomfield Art Center

7/03 Fireworks at Lincoln Hills Golf Course in Birmingham

7/03 Fireworks in the Parks at Addison Oaks County Park in Leonard

7/03 Fireworks over Wolverine Lake

7/03 Fourth of July Fireworks at Hazel Park Raceway in Hazel Park

7/03 Fourth of July Fireworks at Red Run Golf Course in Royal Oak,

7/04 Fourth of July Fireworks at Lakeside Park and Groveland Oaks Park in Holly

7/04 Clarkston Festival of Fun at Clintonwood Park in Clarkston

7/04 Lake Orion Fourth of July Jubilee at Green’s Park in Lake Orion

7/04 Annual Beach Bash at Camp Dearborn in Milford

7/04 Huntington Woods fireworks at Rackham Golf Course

7/04 Fireworks over Maceday and Lotus lakes in Waterford Township

7/04 Clawson 4th of July Fireworks at Clawson Park on Main Street

7/04 Fenton fireworks at Silver Lake Park

7/04 Fourth of July Fireworks at Mitchell’s Marina in White Lake

7/05 Oakland County Boat Club Fireworks at Sylvan Lake

Photo by James Marvin Phelps

Tags: 4th of July, oakland county fireworks

Breaking News: First Time Home Buyers Can Use $8k Tax Credit as Downpayment!

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.

Donovan’s remarks came in an address to several thousand REALTORS®, including 130 from Michigan, who are in Washington D.C. this week for the annual REALTORS® Midyear Legislative Meetings & Trade Expo.

Secretary Donovan said that important changes, which the National Association of REALTORS® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Read more here.

$8,000 First Time Home Buyer Credit Explained

Tags: First time home buyer, first time home buyer tax credit

Short Sale Can Save Metro Detroit Home Sellers

Unfortunately, the number of people who owe more than their house is worth is increasing in Metro Detroit.  If you are staying in your house, you don’t have a pressing issue, though the new housing bill that is coming out on March 4th may provide you with some relief.  More on that later when the details come out.

If you have to sell your home now, and you are upside down, there are some things you should know. Some people have the cash to bring to closing when they owe more than it they’ll net at close. Most simply don’t.

One option is a Short Sale. This is when the lenders agree to accept the shortfall and write it off. They may ask you to contribute as much as you can, or they may write off the entire amount. If there is a first mortgage and a second mortgage, then both lenders will need to agree to the outcome. Other liens will complicate the picture too.

You need someone experienced in short sales to help you. Chose wisely. The bank is not expecting to deal with you: they are want the package put together by a professional.  In order to have any success with the bank, the transaction requires great attention to detail and follow through. Banks notoriously lose short sale packets over and over.  Last summer I faxed a short sale packet to a lender at least 12 times.  I called to confirm receipt.  Each time I called in, nobody knew where it was… That’s just the reality.

You will not be paying the Realtor’s commission, or, most likely, many of the other things associated with a short sale, like tax prorations, transfer tax, etc. The bank usually pays most of those expenses.

You need to be 100% committed to the process. Short sales are not quick and easy, but with a solid plan, the pain can be reduced.

There is really nothing “short” about short sales.  They usually take much longer than the typical sale, mostly because we are waiting for banks to make decisions.

Banks usually don’t tell you how much they will accept until after you have an offer. That means we start the process without knowing how it will end.  It is important to have a very good grasp of the market.  You need an offer to get things really started. Pricing and marketing are key.  Buyers can be scared off by short sales because they don’t want to take on the uncertainty.  We have to do a good job of demonstrating that we are on top of the process.

There are some things you will need to do to facilitate your short sale:

1. Write a hardship letter. In your own words tell the bank why you are not able to pay the shortfall on the mortgage. Typically banks are looking for things like illness, job loss, etc, but just tell them honestly what the problem is.
2. Gather your last 2 tax returns, w-2’s and current bank statements and current pay stubs.
3. Talk to the bank. The banks don’t want your house, and they need to hear from you. You might run into some brick walls, but start the dialog. If you chose to work with us on the short sale, we will take over most of the bank discussions after we list the property. We will also keep you informed about our progress with the bank. We have to work together as a team to succeed, so it is important that you keep us informed to any changes in your status.

Short sales have generally not impacted a seller’s credit score as much as a foreclosure. You may wish to consult with a tax adviser to determine if you will have an tax consequences from a short sale.

Short sales can be a great path toward avoiding foreclosure and a real relief for a strapped home owners.  If you need help or guidance about working on a short sale for your Metro Detroit home, we would be happy to talk to you.

Here are some other articles we have written about short sales:

11 Things about Buying a Short Sale in Oakland County

A Short Sale Question

Tags: avoiding foreclosure, foreclosure, michigan short sale, oakland county short sale, owe more than my house is worth

We Build the Trucks

WXYZ anchorman Stephen Clark put this video up on YouTube today. Detroiters are resilient. Just watch.

Oakland County Offers FREE Loans to Buy Foreclosures

Last week Oakland County introduced a plan to help get some of the vacant foreclosed homes off the market in select Oakland County communities.  Their press release follows.

I need to call the county and ask some questions.  The program seems very generous and should help sell some foreclosed homes.  I am not sure why some communities were left off of the list.  For example, Birmingham is on it, but Beverly Hills is not.  Royal Oak Township is on, but the city of Royal Oak is not.  No go for Bloomfield Township, but a yes for Troy.  This has me questioning how communities became eligible.

As much as I know the foreclosures need to get off the market, this gives them a steep advantage over the regular resale homes that are already severly challenged for finding buyers.  The foreclosures are selling, for the most part, without much additional help.  Low prices do that.

“Pontiac, Michigan, February 17, 2009 — More families in Oakland County may be able to find homeownership within their means thanks to a new program administered by the Oakland County Community & Home Improvement Division. The Oakland County Home Buyer Program is aimed at helping low and moderate income families take ownership of vacant, foreclosed single family homes and condominiums as their primary residence.

An informational workshop for prospective homebuyers will be held Saturday, February 28, from 9 a.m. to noon at the Oakland County Executive Office Building Conference Center, 2100 Pontiac Lake Rd., just west of Telegraph Rd., in Waterford. Pre-registration is not required.

“Families who thought they could never afford their own home now have the best opportunity to become homeowners through this unprecedented program,” Oakland County Executive L. Brooks Patterson said.

Oakland County can provide no-interest loans for down payment assistance, closing costs, home improvements or other financing. The homebuyer must prequalify for a fixed rate mortgage loan from a lending institution. This loan represents 51% of the purchase price. Oakland County will finance the remaining 49% of the purchase and rehabilitation costs up to $100,000. The homebuyer must also provide $2,000 to initiate the purchase. The homebuyer only pays on the conventional mortgage obtained from their lender. Payment on the down payment and home improvement loans is deferred until the property changes ownership.

Homebuyers with incomes at or below 120% of Area Median Income (AMI) are eligible for assistance. For example, a family of four earning up to $83,900 per year is eligible under this program.

Funding for the Oakland County Home Buyer Program is provided by the U.S. Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program (NSP). This one-time $17.4 million emergency funding supplements the Community Development Block Grant (CDBG) program to purchase foreclosed homes at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods impacted by foreclosure and abandonment, and reverse the decline of neighborhood housing values.

The Oakland County Home Buyer Program covers properties in select Oakland County communities. Contact Farmington Hills, Pontiac, Royal Oak, Southfield, or Waterford directly to inquire about home buying assistance programs in their communities.”

You can find more information on the programs on the county’s web site.  If you need a Realtor to guide you through your purchase, I would be happy to assist you.

Photo by TW Collins

Tags: Birmingham mi foreclosures, oakland county foreclosures., troy mi foreclosures

First Time Buyers’ Tax Credit: Details for the Southeast Michigan Buyer

Yep, you Metro Detroit first time home buyers who have been thinking about stopping renting and starting owning now have 8,000 new reasons to get hopping and start shopping.  Uncle Sam is giving you that much in good ol’ US dollars.  You’ll see it as a credit on your 2009 tax return, so it could end up as a check in your mailbox in April.

We’ll give you the highlights:

• Eligible Property – any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
• Income Limit - Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).
• Eligible First Time Buyer – Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
• Repayment – No repayment for purchases on or after January 1, 2009 and before December 1, 2009
• Recapture – If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

Check out this link for the differences between last  year’s plan and this years.

Oh, to be a first time buyer!

Tags: first time buyer, first time buyer credit, michigan first time buyer, tax credit for first time buyers

Oh, to be a First Time Buyer in Metro Detroit…

Over the last few weeks I have had the pleasure of meeting with quite a few people who will be soon buying their first homes in Metro Detroit. They are excited about the opportunities they are seeing in places like Royal Oak, Birmingham, Beverly Hills, Huntington Woods and Troy. They should be excited. Today’s housing market has created unprecedented opportunities for them. I wish I was a first time buyer.

Housing prices are lower than they have been in more than a decade.

Interest rates are at a 50 year low.

The first time buyer’s credit provides an additional $7,500 tax credit at $0 interest is being replaced with an up to $8,000 income tax credit that does not have to be repaid. Only first time buyers are eligible. Think free money from Uncle Sam. Or think of it as $8,000 off of the purchase price. That certainly sweetens any deal… Next year, plenty of Metro Detroit first time home buyers will be getting back a hefty check from the US goverment, just because they bought a house. Not bad at all.

With lower purchase prices come lower property taxes, usually lower than the previous owner was paying. Listing tickets today will not yet reflect the change in taxes, because assessments just came out and the new tax bills are not sent out for a few months. Taxes are still a tricky issue, so do your research.

Yesterday I was out with some first time buyers who wanted to see 4 houses in Troy. We ended up seeing two because the other two were already under contract. As always, the competition for the most desirable homes will be stiff. I suspect that this spring, the first time buyer market will be especially competitive as people look to take advantage of the tax credit and market conditions.

Be prepared. An opportunity like today’s hasn’t been seen in decades.

Photo Credit K-Girl

Tags: $8, 000 homebuyer tax credit, First time home buyer, first time home buyer tax credit, michigan first time home buyer

Yes, Virginia, there are HUD homes in Birmingham, Michigan

Birmingham is certainly known for its upscale downtown, incredible restaurants and it’s wonderful neighborhoods.  We have pricey real estate here too, compared to much of the rest of the region.

On Inauguration Day, I showed Birmingham’s only HUD home active in the MLS.  To date, there are have been few HUD homes in Birmingham, but we could have more in the future.

My client asked me, “Aren’t HUD homes in bad areas?”  This seems to be a common perception, but HUD homes are the product of people who had FHA guaranteed mortgages losing them to foreclosure.  2009 FHA loan limits for Oakland County are up to $273,700, and we certainly have many homes in that price range in Birmingham.

FHA loans have allowed people to get into homes with lower down payments, and have been of particular assistance to first time home buyers.  In the last 9 years we didn’t see that many FHA loans financing Birmingham/Bloomfield Hills homes.  It was much more common to do a piggyback loan, with a first mortgage and a second mortgage to avoid PMI.  Piggyback loans gone now that underwriting guidelines have tightened up.

HUD homes are sold via incredibly transparent on-line auctions, which frees them from some of the issues that have surrounded the sales of other foreclosed homes. The bids are made through HUD approved brokers (like us), and the auction results are posted daily. Owner occupants are given preference and may bid earlier in the process, without competition from investors.

Investors also need to conduct any inspections prior to making an offer. Owner occupants are given much more leeway in this regard.

These homes provide an incredible opportunity for buyers, though one should proceed with caution.

Tags: birmingham mi foreclosure, foreclosure, HUD, HUD homes