Clarkston, MI

What If The Clarkston MI House Doesn't Appraise?

A common misconception is that the house must appraise for sale price and if it doesn't then the seller has to come down to make up the difference.

First of all everything is negotiable. When you make an offer on a house you can specify that the house must appraise for the sale price. Or you can specify that the house must appraise for X below sale price.

Why would you negotiate in a lower appraisal amount you ask? There are many reasons.

You may be in a multiple offer situation and this is a great way to strengthen your offer.

You may be able to get the seller to come down a bit more if they're more comfortable about your ability to close.

There are many reasons a house might not appraise and they have nothing to do with value.

First of all the appraiser does not work for the buyer. The appraiser is hired by the lender to protect the lender's interests- period.

The appraiser has to follow the guidelines specified by the lender as well as government guidelines. I recently had a sale in a subdivision in Metamora- a fairly rural area. The appraiser was told to go no farther back than 6 months but preferably 3 months and no farther than 3 miles from the subject property. The criteria was just plain silly. There aren't any other subs within 3 miles.

There may not be any comparable sales in the area. This is especially true in neighborhoods where there is a high amount of foreclosures.

If the lender uses an appraisal management company you may get an out of the area appraiser who doesn't know the area. On the buyer side of a transaction about a year and a half ago we were in a multiple offer situation. 4 people wanted this house the first weekend it hit the market. We were the strongest offer (not the highest- but strong buyers who offered incentives to the sellers other than price), and when the appraiser went out the appraisal came in at $80,000 under the agreed upon price. We changed lenders and ordered a second appraisal and it came in $62,000 higher. 2 licensed appraisers came in $62,000 apart on a house that was selling for less than $400,000.

I actually had one lender brag that the appraisers they used tended to come in low! His attitude was it put the buyer in a position to negotiate a lower price. Well, all the low appraisal did was require my buyer to pony up the difference. We had seen many of the comparable sales the appraiser used and all it did was confirm for the buyer that he was getting a great deal and was fortunate to have the difference in cash so he didn't lose the house he had his heart set on.

So back to the original question I titled this post with. What happens if the appraisal comes in low?

The seller may come down to meet the appraised value.

The buyer and seller may negotiate a price some place between the original price and the appraised price.

The buyer may have to come up with the difference.

The deal may die and someone else will get the house that you wanted enough to make an offer, put up a deposit for and pay for inspections on. And you get to start your home search over and hope that the interest rates didn't increase in the meantime.

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Choosing A Buyer's Agent

Why You Should List With Jackie Hawley

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

Jackie@JackieHawley.com

www.MiRelocation.com

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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Buing a Foreclosure or Short Sale

Jackie Hawley
Keller Williams Realty, Clarkston
Jackie@JackieHawley.com

Cell: (248) 736-6407

www.MiRelocation.com

Lake Oakland Lakefront Home Sales- Great News If You're Selling! Buyers- Play Games And You May Lose Out!

Good news for current homeowners on Lake Oakland in Clarkston and Waterford MI. Prices are up and homes are selling quickly. If you want to live or own a cottage on Lake Oakland, you may need to wait for the right house to come up, but when it does, don't hesitate or play games with the offer price or you may never get that house. Or worse you may end up in a Lake Oakland home in a year when prices are higher and interest rates will probably be higher, too!

The average sales price in 2011 was up 13% from 2010. Most houses sold within a few per cent of asking price if they didn't sell for full price or more. Of the 12 sales on Lake Oakland in 2011 5 homes sold for full price or more. One house even sold for 34 1/2% over the list price. The longest time on the market was 34 days and many sold within the first week.

There are currently 4 pending sales on Lake Oakland- 3 normal sales and 1 bank owned home- ranging in list price from $209,900-$400,000. The sad news is if you are buying there are only 4 active listings- all non distressed sales- ranging in price from $189,900-$715,000.

2010: 14 units sold
2011: 12 units sold

2010 average sales price: $194,677
2011 average sales price: $223,320

2010: 6 bank owned sales and 3 short sales
2011: 5 bank owned sales and 1 short sale

2010: sale prices ranged from $95,000-$300,000
2011: sale prices ranged from $98,700-$560,000

Please don't hesitate to contact me for additional information about homes for sale on Lake Oakland. With prices still low it is a good time to buy a cottage or second home or to upgrade to that lake house. Interest rates are still great and FHA will mortgage up to just under $300,000 so you don't need a lot of cash (liquid) in order to buy right now. FHA 203 loans will allow you to mortgage the money needed to fix up a house that has been neglected or even beat up as many of the bank owned homes are.

Jackie Hawley
Keller Williams Realty, Clarkston MI
Cell: (248) 736-6407
Jackie@JackieHawley.com

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Clarkston MI Home Purchase- Why are the Seller and I Both Paying for Title Work/Insurance?

When you get your closing statement you will probably notice charges to both you and the seller for title. A very over simplified way I've explained this in the past is that the seller is paying to supply clean title to the house and you are paying to supply clean title for the mortgage company. For example- if you have an IRS lien it can attach to your house and would have first position in front of the bank.

This morning I went to the web site for the title company I prefer my clients use- First American Title - www.FirstAm.com. They have a much more detailed explanation than the one I'm going to offer here.

There are two types of title insurance when there is a purchase with a mortgage. The company you're borrowing the money from for your mortgage (whether that is a bank, credit union, etc) will require what is called a Loan Policy which protects their interest. The cost is based on the loan amount and is less than the Owner's Policy which is the part the seller typically pays for.

The Owner's Policy is usually for the amount of the sale price and protects you, the buyer, if a covered title problem comes up later. Some of the hidden title problems that would be covered can include errors or omissions in deeds, mistakes in examining records, forgery, undisclosed heirs- basically insuring your ability to be able to pass on clean title when you go to resell later.

If you purchase with cash or land contract you will not need the Loan Policy but it is still prudent to get the Owner's Policy. The few hundred to couple thousand dollar investment is well worth it even if you have a title search performed and find no problems or if you buy from a relative. The Owner's Policy provides assurance that your title insurance company will stand behind you- monetarily and with legal defense if needed- if a covered title problem arises after you buy your home.

Writing the Offer

Financing the Home Purchase

Buying a Foreclosure or Short Sale Listing

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Jackie Hawley
Keller Williams Realty
Cell: (248) 736-6407
Jackie@JackieHawley.com
www.MiRelocation.com

Commonly Asked Questions - Clarkston MI Home Purchase- What is the Deposit For? How Much Should it Be?

When you make an offer on a house in Clarkston MI one of the questions I will ask you is: How much of a deposit to you want to give me? Partially because it is a space on the purchase agreement that needs to be filled in, but mostly the size of the deposit shows the seriousness of your offer.

The EMD AKA earnest money deposit AKA good faith deposit AKA deposit ties you to the agreement. Once the offer has been accepted I need to have that check deposited within 48 hours (2 business days). You get the deposit money back if any of the contingencies fail to clear; e.g. you find problems on the home inspection and wish to cancel the purchase agreement, you are entitled to get your deposit back.

If all the contingencies are cleared and you just change your mind and want to walk away from the house, you lose your deposit and it would go to the seller. The larger the deposit is, the less likely you will walk for no reason. Or because you found a "better" home to purchase. From the seller's perspective if you only have $500 at risk there is nothing to keep you from continuing to look at new listings and walking from the sale if you find something better. If you have $5,000 or $10,000 or more at risk, you are more likely to proceed to closing.

There are typically 4-6 weeks between writing the offer and closing. In between contingencies are being cleared; typically the home inspection, clean title supplied by the seller, and obtaining your mortgage which takes the bulk of the 4-6 week time frame. Once we proceed to closing your earnest money deposit is credited against your closing costs and down payment.

So basically, when making an offer to purchase a home in Clarkston MI bigger is better when it comes to the deposit.

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Homes For Sale In Clarkston MI

Choosing a Buyer's Agent

Writing the Offer

Financing

Buying a Short Sale or Foreclosure Listing

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