Everyone I talk with in the last few days has been keeping close track of the financial news and the hourly (even momentary) tweaks and nuances to the Federal Response to the financial crisis of the last several weeks. The landscape sometimes seems pretty bleak.
We worry as REALTORS about the impact on the housing market, our clients, communities and our own livelihoods, if we're really honest! Unfortunately I still have several conversations each week with those who are in trouble financially with regard to their current mortgage and may be sinking further by the day.
In all of the turmoil of the past weeks many have lost sight of the potential relief that if available for home owners in the form of the new housing bill (HR 3221, Section 1403) which was signed into effect on July 30, 2008. This bill requires mortgage servicers to modify loans for homeowners if they meet the requirements which are as follows:
Since most borrowers make their monthly payments directly to servicing companies it is critical for consumers to understand that the law requires these servicers to act in the best interest of the investors who actually own the mortgage. That means modifying the loan if the borrower can afford the modification terms.
Often borrowers who are in trouble tell me of the maze of frustration they experience when they try to contact their lender to attempt to work something out. It is critical to keep the following in mind when in this situation:
A sample letter that can be used during your negotiations is:
http://www.cmpsinstitute.org/pdf/SampleLoanModificationRequest.pdf
Should your lender refuse to work with you as per the terms of the law it may be appropriate to contact an attorney or legal assistance organization to ascertain your rights and the next steps to follow.
It is in the best interest of everyone if borrowers are given the opportunity to modify their mortgage terms and can remain in their home. We all need to spread the word!
When my children were young one of their favorite fall rites was a visit (or two!) to the Grand Rapids Fish Ladder Park located on the banks of the Grand River which runs through the City of Grand Rapids, MI.
The river runs through the state for many miles and eventually reaches Lake Michigan. Within the city limits it provides many spots of scenic beauty and is intersected by a number of picturesque bridges. Near the center of the city the river has a dam which creates an area of swirling waters and rapids and great fishing throughout the year. Rarely can I travel past when I don't see a hardy fisherman or two along the shoreline or in waders out on the river.
The river is home to trout and salmon who each spring make the trip down river to Lake Michigan. In the fall they reverse the trip and the salmon swim back upstream to spawn and lay their eggs. Often river levels are high, the currents are strong and there are many obstacles to conquer. One is the dam in Grand Rapids and the fish are frequently too tired to swim against the current and over the dam.
In 1974 the Grand River Sculpture and Fish Ladder was dedicated having been designed by Joseph Kinnebrew early in his career. The idea of a fish ladder or fish steps is to enable the fish to go around the dam by swimming into the ladder and jumping the steps until they reach the river level above the dam. This concept was further enhanced by Kinnebrew when he had the idea to create a superstructure above the steps from which the observer can view the action below.
It's always fascinating to view the action on a busy day. Fisherman will be casting from shore, boats or the river below the dam. The salmon can be seen in the various step levels (they are big and colorful!) and they will often clear the water as they leap from one level to another. It is common to hear audible cheers from the crowd when a fish is successful.
The views on a fall sunny day are delightful as yo
u look across the river at the city of Grand Rapids. Right now there are lots of cranes working on the medical facilities, VanAndel Institute, and the Michigan State Univ. Medical School facility. A walkway along both sides of the river allows pedestrians to stroll the riverbank and enjoy the views. A bit further to the south the DeVos Convention Center, Amway Grand Hotel, JW Marriott, Plaza Towers and Grand Valley State University buildings all are in view.
Take some time, refresh your soul, enjoy a sunny afternoon along the river where the fish really can climb ladders!
Understanding how to price a home is this market is, at best, challenging and difficult. Because real estate is so local, totally local it becomes problematic for buyers, sellers and REALTORS to actually understand their market and translate the constant media attention given to real estate currently.
One of the most often cited sources for tracking home prices if the NAR Median Sales Price reporting. These figures are truly a median measure. Each quarter they evaluate 150 metropolitan statistical areas (MSAs) and translate the results into a median home price that is expressed in a dollar figure. While this information, by nature, includes only sales in which a REALTOR participated, the numbers are very accurate since only 12% of sales in 2007 did not involve an agent or broker.
While this resource is helpful for general information it is imperative to remember that real estate is very local and various communities within a metropolitan area will very widely. Pricing a home is not easy and should not be done emotionally or with a bias. According to the National Association of REALTORS, in 2007 74% of sellers were assisted by agents in determining the list price of their property and 80% used the services of an agent to review offers once received.
Sellers should work with a REALTOR who understands their particular market and the nuances that exist within that market. They should be prepared to take the advice of the REALTOR who will suggest ways to improve curb appeal, stage the property, ready for showings, and position the property so that it compares favorably against the competition. A big part of the equation is pricing!
No more are we in a climate where a seller can "try" to get a certain price. There is just too much inventory and only the properties that show well and are priced well are getting attention. Be very aware of the competition that you face, make sure your REALTOR is weekly letting you know what the market is doing and act accordingly. It is my belief that one needs to evaluate the competition and then slide just below them in pricing. This is not a market in which you can wait to see what happens. You need to be ahead of the pricing curve to attract the buyer. Remember, a quicker sale results in less mortgage payments, utility bills, yard card, snow removal and, in many cases, double living expenses. Every month you remain on the market your gain is reduced by the cost of holding the property.
When a price reduction is in order it needs to be significant and noticeable! Don't try a $1000 price reduction! Try to price the property with a new price that exposes it to a new pool of buyers. I recently had a property very competitively priced at $249,900. After a number of weeks we reduced it to $239,900 and still were not getting activity. Finally the seller agreed to reduce the property to $229,900 and we began to get a number of showings. The buyers who ultimately wrote an offer could not afford a home over the $230,000 mark and were just watching and waiting for new listings to become available. Within one week we had gone to contract with a sale pending in a couple of weeks. Let me also add that these sellers had done everything right...from staging their vacant home, repainting almost everything, paying attention to the details that made the property look immaculate and attractive. Having done all of that it all came down to price.
It is a wise (and usually successful) seller who remembers that in real estate, unlike almost any other commodity, it is the BUYER who determines Pricing!!
I have never been a REALTOR who would tell sellers that they couldn't sell their own home because with enough time and patience they certainly may be able to do so. I have however noted often that sellers settled for less than they should have had they offered their home to a larger pool of buyers and had they been represented by a REALTOR who was negotiating on their behalf.
Recently I completed a transaction that seemed, on the surface, to be an easy deal. The sellers listed the property at my recommended price (a bit lower than the competition) and within a week we had a contract to consider. The buyers naturally wanted a great deal given the market and offered considerably lower than the list price. After some discussion the sellers countered with a reasonable counter and the counter-offer was accepted.
Inspections were completed without any problems and it seemed we were sailing to an easy close. Soon, however, we discovered that what was thought to be a subdivision was a site condo neighborhood. The sellers didn't understand this fully when they purchased nor did most of their neighbors since no one was paying dues and there was no common area! So now we had to get details on an association that wasn't active and unearth the condo docs. Lots of phone calls later we were able to do so.
Next we found that there was a mortgage recorded against the property in error and it was my job to track down both the lender who had erroneously placed a lien against my listing as well as the borrowers for that loan. Lots more legwork and many phone calls ensued before we finally were cleared to close.
Could the sellers have dealt with all of these issues? Probably; but my suspicion is that it would not have come to light soon enough and would have created enough obstacles that the sale would have been seriously delayed That may have caused the transaction to fall apart since the buyers needed a quick closing and possession.
The end result....happy buyers and happy sellers who are reunited in a new state and happily anticipating the completion of their custom build there!
Once again there is talk of football and all sorts of opinions about which team will be most competitive which signals that school is about to begin and summer is nearing its end! Those of you who know me well know that I love football...high school, college or professional. That being said it is always hard to believe another summer has flown by. With time seeming to fly by, I find it more and more important to remember to focus on what is important in my life and to stress less about what is not.
I recently came across a quote from Warren Wiersbe that I found very insightful and valuable enough to share with you.
"At some point in life, each one of us must decide what is his highest joy, for the thing that delights us directs us. Generally speaking, a child finds his delight in what he has, a youth in what he does, and an adult in what he is. The first lives for possessions, the second for the experience, and the third for character. I
f life is to be rich and meaningful, then our joys must be the highest possible."
One of the books I read this summer was The Best Question Ever by Andy Stanley. The best question ever is "What is the wise thing for me to do?" When a decision is necessary, that question helps me. So my decisions are best made when I consider what brings me the highest joy and what is the wise thing to do. My ultimate goal then becomes making my priorities less about possessions and "doing" and more about the person I want to be.
I hope that you find yourself spending time on things that bring you the highest joy and that you'll find time to consider what those things are in these waning days of summer.
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Grand Rapids, MI, Kent County, MI and Ottawa County, MI real estate consulting for home buyers and sellers. 25 years of real estate experience helping first time buyers, relocating buyers and sellers
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