Westland, MI

I closed a real estate purchase for one of my clients today. When I looked at her HUD statement I was dumbfounded. It was a FHA purchase. The Metro Detroit home was only priced at $73,000. But you wouldn't believe it.

The cost of the appraisal was $1150. This big lender uses an appraisal company like the HVCC. They wanted to be ahead of the game. Thanks to whoever thought of HVCC. You are a jerk. You have run up the price of an appraisal to the average consumer. Congratulations on screwing up and costing the the people who can afford it the least more money.

$1150 for an appraisal and a re-inspection. That is a rip off. I am glad we are paying some third party to gouge a person buying a $73,000 home.

For those of you don't know what HVCC is..... some politician early this year got a law passed mandating that appraisals would be ordered thru a third party. This was to alleviate the mortgage company and the real estate agent from influencing the appraiser. The intent was to prevent appraisal fraud. Now there is just out and out gouging going on. I have seen mortgage companies take a $500 deposit from a buyer and not return anything to the buyer when the house doesn't appraise.

A few short years ago you could get an appraisal for $300. So we protect the bank and gouge the consumer. Some things never change. Thanks Mr. politician!

Sad but true.

So often I get questions and emails from clients about what is happening with their home purchase. Sometimes it is out of frustration and not knowing why or what is going on that the buyer gets upset or nervous. So I like to share them so if the email or question can help another Metro Detroit home buyer then it is good.

Russ,

I have had to check into a few things about the Westland home that was not disclosed to me. This Westland home has had two previous issues with claims of flooding. Is this the reason the basement tiles are in that condition. I was not even able to go get insurance through the insurance company I wanted, because of this. Instead I had to pay more out of pocket expenses for insurance resulting in the delay of available funds. If the seller could provide me more info about this it would be great. I am concerned and felt blindsided by the whole revelation. I want to know whats going on?

This Westland homebuyer got a surprise at the very end of the mortgage process. That's when he had to get his homeowners insurance. At that point the insurance company told it was going to be more expensive because of previous claims in the house.

Whenever a Westland home or any home is in foreclosure the bank has NO INFORMATION. They don't know what the people (that were in foreclosure) did or what happened in the house. In this case this was a flipped house that was completely re-done. New kitchen, new bathrooms, new flooring. Like a brand new house.

If there was an insurance claim it was from the previous owners that had gotten foreclosed on. Two sellers ago.

The current seller as you know bought it as a foreclosure from the bank. So neither of them filed the claim and they would not have knowledge of the insurance claims from the previous (foreclosure) owner. In fact the bank does not even fill out disclosure forms as they are not required to by law. They aren't required to because they have never lived in the property and have no knowledge of anything that happened prior to owning it. The current seller only has knowledge of what has happened in the last 90 days.

When people are in foreclosure they are usually hurting for money. Insurance claims are one way of getting money.

I wish I had more info but it is impossible to get without finding the people that were foreclosed on.

In this Westland real estate market with so many foreclosures it is impossible to know what the foreclosed owners claimed on their insurance. If the insurance companies say so it is true, but the bank or the flipper do not have any information about it.

So the bottom line is the only way you can find out about if a house has insurance claims that will cost you more in insurance premiums is by a CLUE report. Only the current Westland homeowner can order a CLUE report. The Westland homeowner can order a Home Seller's Disclosure Report for $19.50 from ChoiceTrust.com. But I don't know if it will only be for the current homeowner. I hope this helps

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When you buy a Westland foreclosure you are going to need a certificate of occupancy. In the real estate business we call it a C of O. A C of O allows a new homeowner to occupy their home. The City of Westland (MI) requires a city inspection when the house is sold. The new home owner (or old home owner) must:

• pay the City of Westland an inspection fee
• the City will send over inspector to look at the home
• Westland will give the homeowner a list of corrections to be done
• the city inspectors will come back out to re-inspect the Westland home
• Once all the deficiencies are corrected then Westland will issue a certificate of occupancy
• You can't close on a home at a title company normally without a certificate of occupancy

When you buy Westland foreclosures it is a catch 22 to get a certificate of Occupancy. Banks will not do any repairs for the Metro Detroit home buyer and the home buyer can't do any repairs until the home is theirs. So the title companies have begun to take temporary certificate of occupancy. You can't move into the house but you can close on it.

Sometimes repairs are done on the sly in order to get a mortgage. The banks selling the property won't do the repairs but lenders won't do the mortgage if it doesn't meet appraisal standards. For example FHA loans require:

1. peeling paint to be scraped and painted
2. electrical issues or electrical safety issues

So if there is peeling paint on a Westland foreclosure the home buyer must paint it in order to get their mortgage but the banks won't paint it. So somehow it gets done. ( I think by elves in the night) But nobody complains that the Westland foreclosure closes and the certificate of occupancy eventually gets issued.

Russ Ravary your metro Detroit real estate agent

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My young buyer was so happy. She got her bid accepted after three previous failed bids. She was so excited. She was looking at low price homes and Westland foreclosures. The issue she had was that the houses she was looking at were in the 30 and 40 thousand dollar range.

In that range many investors will pay cash. My buyer had to get a mortgage. So she was losing out to investors because even though she had a great bid that was comparable to the investors the banks were taking the investors bids because they were cash.

I love it when one of my clients win the home they want when the cards are stacked against them. Congratulations Sarah on getting a winning hand!!!!

Russ Ravary your Metro Detroit real estate agent