Novi Township, MI

How has the first time home buyer tax credit helped the market? I myself think it has been one of the Democrats best success stories. Obama shined with that one. I know Republicans and tea party members rabidly hate him, BUT>>>>>>. The first time home buyer tax credit did stabilze the housing values in many real estate markets across the country or at least slowed the downward spiral. I think if you ask any real estate professional you will hear that the tax credit did bring a large number of buyers into the market. The tax credit created demand. And I believe the demand in the Metro Detroit housing market was enough to temporarily stabilize the home values.

A year ago we had inventories of homes that ranged from 6 months to 2 years. Gone is that inventory. Good houses are being sold quickly. Sometimes in days. It is not unusual for a house to only last 2 weeks to under a month. A year or so ago we wouldn't take a listing for less than a 6 or 9 month period. We would not think of accepting an offer with a contingency to sell. Now those offers are being accepted. The market has shifted because of the first time home buyer tax credit. The market has improved.

Before the first time home buyer tax credit we were on a major slide of home prices. The tax credit brought investors and first time home buyers into the market. In the last year it was not unusual to see multiple bids and homes going over list price. All due to first time home buyers and the tax credit. Sure the higher priced homes were not affected but the homes under $250,000 range were.

Investors also jumped into the market. They could buy and then fix up homes to flip to first time home buyers. That also helped the market.

As for what will happen after it ends I honestly don't know. I do think demand is already dropping off. We are exhausting the first time home buyer pool. Now we are getting bad credit people applying. There are less qualified buyers out there right now. So hopefully home values won't drop after the first time home buyers leave the market because the credit expired. Hopefully the length of time houses will be on the market won't change.

I think the economy is stabilizing somewhat. People have accepted we are in this period for the long haul. Americans are spending, yes but at a slower pace. But they are spending. We are moving forward in life. Our standard of living is going to come down. We are not going to be able to wastefully spend like we did for years.

The roaring 90's are over. We lived thru it. The age of using your house as a bank is over. It's time to pay up or pay the piper as they say. We as real estate agents and home owners have to accept that prices are going to be much lower for years to come. That we may have to stay in our homes for years to come because we are upside down. The market has changed and accepting it, adapting to it will help us survive.

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My quote of the day is:

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. ~Author unknown

Yes FHA is going to reduce sellers concessions from 6% to 3% this spring. There is no exact time.

But if you are a metro Detroit home buyer now might be the time to jump into the real estate market before you have to come up with more money.

Let me give you an example of closing costs when buying a metro Detroit home.

Average closing costs are about $2200

3 1/2% required downpayment on $100,000 home $3500

Estimated taxes on some $100,000 homes $3600

So on a $100,000 you could need about $10,000 by the time you include inspections and insurance. Many home buyers don't have that kind of money. They need sellers concessions - money from the seller to help pay the closing costs. If you are planning to buy a home this spring and need help from the seller for your closing costs you may want to buy sooner. Before FHA reduces the limits

Heads up Michigan mortgage borrowers this new law isn't in totally in your best interest.

As of May 1st all appraisals are supposed to be ordered by the bank. One item that real estate agents, mortgage bankers, banks, and consumers fail to realize about this new law is: the banks being the only people allowed to order appraisals is the inability to switch banks.

I truly think that this new law will reduce appraisal fraud but there are 5 other things it will do

1. It will put the small appraiser out of business. There are many small one man operations that don't have ties to banks. It will reduce the profit margin for them. Plus the banks will put the squeeze on them to reduce the price of appraisals.
2. It will raise the cost of appraisals for the homeowner. Banks are going to raise the costs. Especially if there are middlemen involved in ordering the appraisals.
3. It will screw people out of getting the best rate. Many times mortgage brokers would switch banks if the rates dropped. That way the client could get the best possible rate and the broker would get paid. Now the banks have effectively locked the client in by the appraisal not being able to be transferred to a different bank. Many times rates drop where it would be beneficial for the client to get the rates changed. Now the client won't get the absolute best rate during mortgage rate interest drops.
4. This one item is the most important. Many people won't be able to refinance because of the appraisal. If a bank turns down a loan the customer is screwed again. They will have to pay for a new appraisal at a different bank. Every bank has their little "hangups". Some banks may have different interpretation of the rules and how underwriting conditions were met. Now if a loan is turned down at one bank the deal will be dead. Who wants to pay for a second appraisal? Especially if it may die.
5. It will slow the whole process down. Now the appraisal process will take longer. Rate locks may have to be extended or cost more to get a 45 day lock.

Sadly this will protect the all the banks but will cost many consumers the ability to get the best rate or maybe even to get their loan. For more on Metro Detroit mortgages and mortgage rates feel free to give me a call.

The underlying principle of the law is great but they need to tweek the law. They need to add that the appraisals can be transferred to a different bank at no cost.

Russ Ravary your Oakland and Wayne County Real estate agent

A big change is coming April 1 for Michigan. Anybody that is going to sell mortgages, or better put is a Michigan mortgage loan officer will have to have:

• to be fingerprinted
• have a criminal background check done (no felony convictions & no convictions for forgery, identity theft too)
• either have 3 1/2 years mortgage experience or take a required mortgage study course
• then take a state sponsored test and pass at least 75% of the questions

From what I have been told the Michigan Mortgage test is one of the hardest in the nation. Even experienced loan officers are flunking the test. The new Michigan mortgage loan officer examination tests the loan officers knowledge of all the mortgage laws such as

• Reg Z
• Respa
• Consumer Protection act

This is a great step toward better enforcement of laws that protect the consumer. I worked at a mortgage office where there was a guy stealing identities (unknown to management... he had quit and then arrested at another company.) This will keep people like him out of the Michigan mortgage industry.

Though now I believe they need to come out with nationwide standardized test with sub chapters for each state. Sometimes companies have to hire a person to sort out all the different rules and testing for each individual state. Right now it is becoming convoluted because every state has different tests and different rules which limit a person from doing business in different states.

That was done with car dealerships, and dealerships like off road vehicles like ATVs, snowmobiles. I bet a lot of people didn't know that is the reason why you can't go on line and buy a vehicle from a out of state dealer. It cuts down on out of state competition which hinders internet sales and competition.

But it is a good thing that there is now licensing for Michigan loan officers.

Do you really want to sell your home?

The Metro Detroit real estate home values have been hammered. Subdivisions like Chase Farms in Novi once had homes selling for over $600,000 have had homes sell for under $300,000. Even new subdivisions like Steeple Chase in Northville had new homes selling for over $700,000 now has homes selling under $500,000. Some Metro Detroit cities like Dearborn, Redford, and Westland have homes selling for 50% of what homes sold for a few years ago.

When you put your Wayne County or Oakland County home up for sale. You must price it right!

Have your real estate agent pull all the recent solds for your neighborhood, for your area. Look at the cold hard facts. It is bad, but you have to accept the truth and list your home at a price where it will sell quickly.

Price is the single most important factor in selling your Metro Detroit home. It doesn't matter if the house is in poor condition if you price it so it is a value it will sell. If you backs to a garbage dump if you price it low enough somebody will buy it.

You are competing with all the bank foreclosures out there. There may be 20 bank foreclosures in your price range in your city. If they are a better value than your home they will sell before yours. Then there will be more foreclosures hitting the market to replace the ones that sold.

Pricing your home to sell is your best tool. Otherwise you will be chasing the Metro Detroit real estate market down and you will be selling your home for less money in six months or a year from now.

Price it so it will sell in under 60 days!