Brian Powers

"It's a buyers Market" is the common theme in today's real estate world. And while fundamentally true (mortgage interest rates are low and prices are low), there is the underlying issue of listing inventory...or lack thereof. Simply put, buyers do not have a lot of great listing inventory to choose from right now. And the good listings that do come on the market, go pretty quickly.

To put the listing inventory into the context of raw data, consider the following:

• Macomb county listings at the end of June of this year numbered 4833. That's down from 6190 just a year ago and around 8300 at the peak a few years ago.
• Oakland county listings at the end of June of this year numbered 10,762. That's down from 14,802 just a year ago and around 19,000 at the peak a few years ago

Let's consider a yard sale. A yard sale is a place to buy something for a great price today that was worth considerably more a few years ago. Sound familiar (Real Estate)? If you think about it, our current real estate market is kind of like a yard sale on a Sunday. Most yard sales run Thursday through Sunday. On Thursday morning around 10am, yards sales around town are bombarded with bargain shopping vultures looking for anything and everything as long as it's "a deal". The most valuable items at a yard sale rarely see the end of the day on Thursday. Friday is not much different from Thursday in that anything remaining that is really of value gets snatched up by people who couldn't make it on Thursday. By the time Saturday rolls around and those who don't have the luxury of hitting yard sales on Thursday and Friday make it out, it's slim pickings. And come Sunday, you're wishing trash day was Monday because all that's left might as well go to the curb. If it's still there on Sunday, it's there for a reason...nobody wanted it.

About 18 months ago there was a lot of listing inventory on the market for buyers to choose from. The federal and state governments then decided to start subsidizing buyers to purchase real estate and it set off a flurry of buying activity. Like any commodity, the most valuable listings were bought first and quickly. Over the last year and a half just about any house worth being bought has been purchased, and most anything left that's been on the market for a considerable amount of time probably isn't worth looking at. And new listings that hit the market, desirable homes that are priced properly, will fly off the market in less than 30 days. Yes, even in this market.

So what's it all mean?

Buyers, you must have a firm understanding of your wants and needs and be ready to react quickly when a good listing comes along. If you are one to drag your feet, look at a house multiple times and then spend a week thinking about it before writing an offer, you are going to get eaten alive in this market. This is not to say you shouldn't do your due diligence, but the market is very fluid. Your agent must understand this as well and put you in a position to act. If your agent does not have you plugged into the MLS, and receiving new listings by email as they become available, fire them immediately and work with someone who understands the market we are in.

Sellers, even though it's a buyers market, you can take advantage of the lack of inventory and possibly sell your home faster, and for more money than you could a year ago. If you have been considering selling, this is really not a bad time to be on the market. Contact me to show you how to get maximum value in minimum time.

Buyers and sellers, get your FREE access to the MLS by signing up for a Listing Book account at my website.

The home buying process is supposed to be fun. Exciting. Something to be enjoyed. In my experience most home buyers truly enjoy the experience of buying a new home. It can, however, have it's ups and downs along the way. Losing out on your dream home to a higher bid, or having to back out on a home purchase due to problems with your home inspection are problems that occur from time to time. And while they may be a little disappointing to a home buyer, they rarely ruin the experience of buying a home.

I have found one of the quickest ways for a home buyer to grow frustrated with the home buying process is to spend hours online looking at home listings to get the list down to the most desirable listings that fit their criteria. The home buyer then spends another couple hours driving around with their real estate agent looking at the homes, only to find not a single prospect in the batch.

Sometimes you just can't tell if a home is a good fit or not without seeing it. That's understandable and to be expected. But oftentimes with just a few minutes of due diligence in front of a computer, a home buyer can get a better idea of how a home might line up with their needs, and might even be able to save time and frustration by being able to toss out listings without even looking at them...saving time and frustration.

I recommend buyers embrace the technology tools they have at their disposal, specifically mapping. Room sizes, layout, granite counters, hardwood floors and finished basements are all important things to consider when buying a home. But so are location, neighborhood and surrounding areas. All the premium upgrades in the world won't matter much to a home buyer if the home backs up to a junkyard, or sits next to a Walmart, etc. A quick check of the property address on a mapping program (I prefer Bing Maps at bing.com and use the Birds Eye View), can ensure the neighborhood and surrounding area meet your criteria before investing the time in going to see the house.

Here are some examples:

Make sure you don't mind power lines in your backyard before viewing this home.

Do you want your home to back up to I-94?

Gorgeous Backyard view of a...strip mall

Mortgage interest rates have been a hot topic in the news recently, as rates continue to decline. This can impact buyers and sellers in a couple of different ways.

The first for buyers is obvious. Lets assume as a buyer, based on your credit scores and debt-to-income ratio you qualify for a $600 per month payment (principal and interest only). At the time of your pre-approval, interest rates were 5.5% which qualifies you for a mortgage loan of $105,673 based on a 30 year fixed rate loan. If rates decline to 5% that same $105,673 mortgage loan will carry a reduced payment of $567 per month, saving the buyer $33 per month.

Not bad. But an even greater benefit to the buyer can be the effect lowered interest rates have on a buyer's purchasing power. This morning I was talking to one of the mortgage lender's on my team, Drew Sygit of The Lending Edge Team, and we discussed this very issue and looked at some specific examples. Let keep with the original example above, with the buyer qualifying for a $600 per month (P&I) payment and a $105,673 mortgage loan based on a 5.5% interest rate. What happens if rates go down to 5% and the buyer is comfortable keeping his payment at $600 per month? The buyer can now qualify for a mortgage loan of $111,769 with the same $600 payment. That's an increase in purchasing power of over $6000!

Let take it to a larger scale. A buyer qualifies for a $900 (P&I) payment, and with rates at 5.5% gives the buyer the ability to take out a $176,121 mortgage loan. What happens to the buyers purchasing power if rates go down to 5%? That same $900 per month now gives the buyer the ability to take out a $186,282 mortgage loan...an increase of over $10,000!

Any buyer in the market right now knows that the competition for the best listings is fierce. There just isn't a lot of good listing inventory out there, compared to the last few years. As a buyer, wouldn't you like to have the ability to offer a little more for the home of your dreams instead of losing out to other buyers? As a buyer you need to be working with a real estate agent who understands how a small decrease in something like interest rates can have a huge impact on your ability to buy a house. If you're a buyer in the market right now and it's been a few months since you received your mortgage pre-approval, you could very well have the ability to afford a better home and not even know it. I'll also add that if your real estate agent or mortgage lender hasn't discussed these things with you, it might be time to look at working with people like myself and Drew. Professionals who will make sure you are the most well-informed buyer in the marketplace.

What about sellers? Think about the examples above. When rates go down, it pushes more potential buyers up into your price range and your home becomes more marketable to sell. With the recent reduction in mortgage interest rates, your home will have more appeal to the buyers in the marketplace than it did before rates went down. If you've been thinking of selling, now might be a good time to consider putting your home up for sale. If you decide to wait and rates go up in the future, it will have the reverse effect and you will have fewer potential buyers for your home.

Thinking of Buying a new home? Start your MLS search today by opening up a free Listing Book account.

Considering selling your home? Go to my website and sign up for free market analysis of your home so you know what it's worth in the current market.

An article in this mornings Detroit News quantifies the looming "shadow inventory" of foreclosed homes in southeast Michigan that banks are carrying on their books. Nearly 44,000 properties in Wayne, Macomb, Oakland, Livingston, Lapeer and St.Clair counties are currently being held by banks after taking the homes back via foreclosure. In contrast, the current listing inventory for those same areas is a little over 30,000.

If you're thinking of selling your home now, or in the near future these numbers should be a call to action for you. As a seller, the less the supply of homes for sale, the better for your bottom line. An over-abundance of supply of home listings will drive prices down and you will sell your home for less money. Even with the recent expiration of home buyer tax credits, there are still many buyers in the market to purchase a home.

Selling before the "shadow inventory" hits the local market will save you thousands. I do many consultations with homeowners every week to discuss the value of their home. Many are surprised to find that their home value is not as bad as it was a year ago. If you're considering selling, get in touch with me so we can discuss the value of your home and see if selling now makes sense.

To get started you can call me at (248) 379-1750, or fill out a request form at my website.

I was reading an article in the Detroit News over the weekend regarding incentives that some builders and real estate brokers were offering to home buyers in an effort to maintain the momentum in buying activity in the housing market. One such incentive that really caught my attention was Coldwell Banker's Buyer Bonus Sales Event. The story, and even Coldwell Banker's own website, hails the program as one that "extends the benefits of home buyer tax credits" after their recent April 30,2010 expiration.

I was curious as to how Coldwell Banker could offer up to $8000 to home buyers so I dug a little deeper into this program. Coldwell Banker is not offering any bonus to buyer's. They are simply getting the seller of Coldwell Banker listed properties to offer a 3% credit of the purchase price back to the buyer at closing.

So what is Coldwell Banker really offering buyers? They are offering nothing more than the traditional credits and concessions that buyer's agents have always negotiated for on behalf of their buyers. The only difference is they are getting the seller to commit at the time of listing to offer this credit. And in the process, make the buyers in the marketplace feel like they are getting a special credit by purchasing one of their properties.

There's nothing wrong with purchasing a property where this incentive is being offered, but there are some precautions a buyer should take. The first is to ensure the property's list price hasn't been inflated 3% to offset this incentive the seller is offering to buyers. The second, is for buyers not to get wrapped up in a gimmicky incentive like this and lose sight of the real reasons that make a home purchase a good deal for a buyer.

Buyers, make sure you are working with an agent who understands the real needs of you the buyer, and has the market knowledge to find the home that's right for YOU, and for the best value for you the buyer. And if you are looking at purchasing a Coldwell Banker listed property, be extra cautious that you aren't over-paying to make up for this gimmick of a sales incentive.

Choosing a home to purchase for the wrong reasons can cost a buyer thousands and wipe out this 3% credit in an instant. Buyers need to ensure they work with an agent who understands this and has the marketplace knowledge to ensure they are getting the right home at the right price.