Real Estate in Birmingham, Bloomfield Hills, Beverly Hills, Royal Oak, Troy and Oakland County Michigan

Credit scoring models are a mystery that boggles the mind. There is no way to know exactly how specific changes to your credit report will impact your credit score. We do know the factors that go into calculating the score - 1) Your payment histories 2) Number of accounts that have balances. 3) Proportion of balances to credit limit. 4) Length of time accounts have been opened. 5) Credit inquiries. 6) Collection Accounts and Public Records. You can read more about this in the articles I wrote entitled How to Get a Great Credit Score Part 1 and Part 2. The scoring models are updated occasionally and the changes cause different issues to play a bigger or smaller role in your score.

This year I have noticed that small collection accounts are playing a much larger role in credit scoring and I have helped 3 borrowers this year to raise their score from 80 to 120 points! That is a huge improvement. How’d you do that, you ask? Here’s the scoop:
Recently I ran a new applicants credit report and his credit score was 702. That’s pretty good but in today’s world it’s not good enough. This borrower would pay a ¾% risk premium that he would not have to pay had his score been 740 or better. On a $200,000 loan that amounts to a $1,500 increase in the cost to obtain the loan or a quarter point increase in his rate. Ouch!

Upon a thorough review of the report I found he had perfect payment histories and very little outstanding debt. His score should be a lot higher. Then I discovered a $32 collection account that had been filed a few months earlier (A collection account is filed when you owe a creditor money and they feel that they cannot recover the money – they hand the account over to a collection agency who records the collection account with the credit bureaus). I advised the borrower to contact the collection agency and tell them that he would pay the $32 if they agreed to remove the account from his report. This is very important – it does not help to pay off the account and have it show on the credit report as paid – the account must be completely deleted from the report.

He followed my advice and paid off the account and got a letter from the collection agency stating the account was paid in full and that they were deleting the record from the credit report. I provided this to the credit bureau’s (called a rapid re-score) and 48 hours later his credit score was 808!! His credit score improved by a whopping 106 points! The savings in this case was $900 in lowered closing costs because he did not have to pay the three quarter point risk adjustment. Well worth the $32 he paid.

The moral of the story here is that if you get a letter in the mail from a creditor saying that you owe 20 bucks to your doctor’s office, Cell Phone Company or anyone else, just pay it before it goes to a collection agency! I know, you’re thinking it’s the principle of the thing. You don’t owe them the money for whatever reason. The bottom line is that it will be a lot more painful to you to not pay it than it will be to just give in and protect your excellent credit rating! Never let any account go into collection or it will have a severe impact on your credit.

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
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The homebuyer tax credit has been extremely successful and has really had a positive impact on the real estate market. Hundreds of thousands of homes have been sold as a result of buyers taking advantage of the tax credit. The credit was scheduled to expire on November 30th but has been extended and expanded! The new credit will be good thru April 30th! Here are some of the specific details:

The rules for the First Time Buyer Credit are mostly the same with a couple of variations. If an individual or couple has not owned a home in the preceding 3 years they are considered first time buyers. They would receive 10% of the sales price up to $8,000. The home being purchased must be a primary residence (no investment properties or second homes). Income limits have increased to $125,000 Single and $225,000 married. Also, there is now a limit on the cost of the new home and it is set at $800,000. The other change is that the credit is good for buyers who sign a purchase contract prior to April 30, 2010 but now you don’t have to close until June 30, 2010. So, as long as you have a fully executed contract prior to April 30th you’ll get the tax credit as long as the closing takes place by June 30, 2010!

New Tax Credit for Existing Homeowners Who Purchase a New Home! This is great news. The tax credit has been expanded to include people who own a home and want to buy a new one! If you own a home and have occupied it as your primary residence for 5 of the past 8 years and you purchase a new primary residence then you may qualify for a tax credit of 10% of the purchase price of the new home up to a limit of $6,500. You have to have a fully executed purchase contract between the date the President Obama signs the new bill into law (should happen in the next couple of days) and prior to April 30, 2010 to qualify. Otherwise, the rules are the same as the first time homebuyer tax credit.

This opens the door for a whole bunch of homebuyers to get a big fat check just for buying a house! If you’re interested in buying your first home or would like to upgrade your existing home now is the time to take action. Mortgage rates are low, homes are selling at great prices and combine these factors with a big tax credit and you have to conclude that there has never been a better time to buy a house.

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
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Most Home Stagers agree, however, that Staging encompasses all 12 of these improvement projects, as a good Stager will advise if, and to what extent, these improvements should be undertaken to increase the marketability of the property.

The article can be viewed here:

http://blog.homegain.com/home-improvement/homegain-2009-top-12-home-improvements-survey-results/

I have already had an agent ask if $300 for Home Staging is realistic.  The answer is yes, a $300 Home Staging can make a major improvement in the way an occupied house shows.   Call a Home Stager for more details.

Written by Marianne Sweet
Home Sweet Home Staging, (586) 212-8400
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From my staging colleague Cindy Bryant, owner of Redesign, Etc. in Houston, TX:

Helping home sellers achieve their goal.

Offers will come faster.

Marketing strategy.

Effective selling technique.

Selling a home for all it’s worth.

Taking a tried and true approach.

Always looking better than the competition.

Get better appraisal values.

Internet photos will show a must see property.

Never giving you a bad first impression.

Gain more exposure with better listings.

Written by Marianne Sweet
Home Sweet Home Staging, (586) 212-8400
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After owning a Home Staging business for over 5 years, I think I have heard every possible objection to hiring a Stager, from “I know what needs to be done” to “I don’t want someone touching my stuff”.  The biggest objection by far, however, is the cost.  In this economy, people just don’t have a lot of money to sink into their property.

But did you know that it is possible to get a Home Stager’s expertise without a huge price tag?

The Home Staging Consultation is a great, low-cost alternative to a full-house staging.  The Home Stager will tour the property inside and out, and provide a comprehensive room-by-room list of recommendations for the homeowner to Stage their own house.  This to-do list follows proven guidelines to make the house show it’s best and hasten it’s sale.  It will include what to keep and what to store, furniture and art placement, color recommendations and suggestions to pump up the curb appeal, among other things.

Photo courtesy of blogspot.com

The consultation usually runs around $200 (depending on the Stager and square footage) and most Stagers will include a follow-up visit to check progress and fine-tune the results.  This service is invaluable to those getting ready to sell their properties and are able to do the work but don’t know where to start.  For the house that has been on the market but hasn’t received an offer, a consultation can pinpoint the reasons why the house hasn’t sold and give remedies.

If the homeowner runs out of time and energy and can’t get the work done, the Stager will gladly come back to complete the Staging and add the final “Wow” factor to the property.  Good Stagers also have an arsenal of reliable contractors (painters, handymen, landscapers, etc.) that they can refer to get trickier jobs done.  We also know which storage unit facilities will give the best deal if you need to store  extra belongings while the house is on the market.

Hiring a Stager for a consultation is a great investment in the sale of the house.  We know what needs to be done and will tell it like it is.  A note to agents … add a Staging consultation to your marketing plan.  We’ll make sure the house is ready to show, and we’ll be the “bad guy”, so you don’t have to!  We don’t mind.

Written by Marianne Sweet
Home Sweet Home Staging, (586) 212-8400
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Another agent just made my day with this email:

Hello. A client of mine had requested to see this property, but I noticed it’s pending. I was looking at the listing and felt it necessary to compliment you on your photos. You did a fantastic job with all of the photos-they look wonderful. So many people are negative in this market, and with all the boo-hoo, I thought I’d pay you a compliment when due. Great job on the photos and the sale. Please let me know if the deal falls apart for whatever reason, as I’d love to show the house.

The house he is talking about sold in a week with multiple offers. I am happy.

photo by lexnger

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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I typically refrain from tooting my own horn, but I am very excited about yesterday’s announcement from Trulia.com, the leading real estate site. Trulia launched it’s new Trulia Mayors program and chose five agents from across the country from the 400,000 agents active on the site, recognizing us as “social media role models and innovators.”

I’ve been active on Trulia since they launched TruliaVoices, a forum where consumers can ask questions and get answers from industry professionals. I think it is a fabulous resource for consumers to gather information. Personally, we love the attention our listings get on Trulia from potential buyers. Dmitry and I are committed to getting outstanding exposure for our sellers, and Trulia is a key component in our marketing strategy.

I am tickled to have been chosen and am looking forward to doing more work with Trulia and the other Mayors in the coming months.

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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In February the government amended and improved the first time homebuyer tax credit. Just to refresh your memory:

1) First time homebuyers will receive a federal tax credit of 10% of the cost of the home with a maximum credit of $8,000. You get the credit when you file your tax return for the 2009 tax year. It is possible to file an amended return for 2008 and get the credit sooner though.
2) A first time buyer is defined as anyone who has not owned a home in the past 3 years (including spouse)
3) Property purchased must be used as a principal residence (no second homes or investment properties)
4) Tax credit is refundable or will offset existing tax liability. Whatever your normal tax refund is you would get that plus the full amount of the tax credit.
5) The credit starts to phase out for individuals making more than $75,000 per year ($150,000 for a joint return)T
6) There is no repayment of the tax credit. However, if the home is sold in the first 3 years the entire amount of the credit is recaptured on sale of the property
7) Tax credit is available for qualified buyers through November 30th of 2009
The main message here is that you have to find a home and close on it prior to November 30th to qualify for the tax credit!
There has simply never been a better time to be a homebuyer. Homes are selling at great prices, interest rates are very low and if you qualify for the tax credit the government will give you up to $8,000 in cash simply to get out there and buy a house. What are you waiting for? Time is running out!

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
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Here it is very early in the  morning on Labor Day 2009.  I have been up for a couple of hours reading entries to this week’s carnival of real estate, and I am doing my best to be really happy about that!  But then, we all know that Realtors rarely take a day off.

Since Labor Day is the “workers” holiday, it is fitting that the posts that I have selected from this week’s 25+ carnival submissions are posts that were written “for the people,” not just for industry insiders.  This is my third time hosting the CORE and I have to say the submissions have changed considerably over the last three years.  There were quite a few “sploggy” entries, and I saw a LOT of Google adwords ads this morning as I visited the entries.

Without further ado, I give you the two runners up:

Here in Metro Detroit, we see lots of first time buyers out there in the market. Hopefully by now they all know that time is running short to qualify for the $8k first time buyers tax credit. For those still on the fence, Alison Paoli presents $8,000 First-time Homebuyer Tax Credit Ends Soon — Better Get Moving! posted at Zillow Blog - Real Estate Market Stats, Celebrity Real Estate, and Zillow News.

I also liked When Saying Goodbye to $1030 is a Good Idea posted at My Dollar Plan. Madison is a consumer who extols the value of the home inspection. She feels her investment of $1,030 in a house she does not own was well worth it. Madison bought the house after renegotiating with the seller to get some inspection issues resolved prior to her purchase. Of course, Madison’s tale could have had many other endings.

This week’s winner of the Carnival of Real Estate is Heidi Tiefenthaler who submitted The New Lending Regulations or The Boy Who Cried HERA posted at Central Station - The Hub for Real Estate News. I had a closing that was scheduled for last Friday that had to be rescheduled for next Thursday because of a lender’s conservative interpretation of these new lending regulations. It is causing major inconvenience for the buyer, as well as significant expense. Buyers and sellers need to be very aware of the potential impact of this legislation and plan accordingly. Simultaneous closings may become riskier to schedule, amongst other considerations.

Congratulations to the winners and thanks to all who submitted entries.

Photo credit www.redavantgarde.com

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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When potential buyers view a house for sale, they need to see rooms presented as they were intended.  The master bedroom shouldn’t be an exercise room, the bathroom shouldn’t be a pet station, the garage shouldn’t be a storage unit, and unless you have more than 3 bedrooms, resist the urge to make one an office.

This is especially important when it comes to dining areas.  People want to see where they will gather for meals and entertain their loved ones.

I recently staged a 900 sq. ft. house for a client who was using her dining room as office space.  As you can see (amongst the considerable clutter), a desk definitely does not belong there.  Aside from being the wrong use of the space, it was also the first thing visitors saw when they came in the front door … NOT a good first impression. 

After completely clearing out the area , I moved the table and chairs that were overwhelming the small kitchen and created a proper dining room.

Visitors can now see that there is room for a full size table and 4 chairs at the very least.  Showing a dedicated dining room, the intended purpose for this space, adds value to this petite house and answers an important question for the buyer.

Written by Marianne Sweet
Home Sweet Home Staging, (586) 212-8400
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Once again the Federal Government is making getting a home loan more difficult, time consuming and cumbersome. The Mortgage Disclosure Improvement Act (MDIA) has good intentions, like many government mandates, it seeks to protect us, boneheaded citizens, from every possible harm because we are apparently not smart enough to make decisions on our own or to understand what we are doing (ouch, sorry, is my frustration with issues like this showing?). Pretty soon we’ll all be required to wear crash helmets in our cars.

Regulation Z is the old law regarding Truth In Lending disclosures. Prior to July 31st Reg Z required mortgage lenders to provide a Truth in Lending disclosure to all home loan applicants within 3 days of making a loan application. A good rule for consumers as your potential mortgage lender had to tell you about the total cost of obtaining the loan you were applying for and this would be helpful for you to make the decision as to whether you wanted to use that lender or not. Many lenders, my office included, would provide potential clients with a Good Faith Estimate and Truth in Lending disclosure prior to an application being completed so they can compare us to other lenders. This is just good honest business.

The new Mortgage Disclosure Improvement Act (MDIA) takes this in a whole new direction. The new rule basically expands in a couple of different ways which will have a significant impact on the length of time it takes to get a borrower from application to closing. The first is that a lender may not collect an appraisal fee or order an appraisal until the 4th business day after a Truth in Lending disclosure is issued to the borrower. Normally if a home buyer comes to me on a Monday to apply for a purchase loan and is in a rush to get the deal to closing we could order the appraisal on Monday. Under the new rule we cannot order the appraisal until Friday and so we basically lose a week right off the bat.

The second problem starts after the loan is approved and you want to close. Once the closing is scheduled we now have to send a new Truth in Lending Disclosure to the borrowers and allow a total of 6 business days for them to receive and review the disclosure before a closing can occur. So, if your loan is clear to close on Monday we could normally close as early as Wednesday. Under the new rule we have to send out a new disclosure Monday and allow 3 days for receipt and 3 days for review and the first day the loan can close is the following Monday – another week lost.

End result – government regulation adds 2 weeks to the time it takes to obtain a home loan! I know your question already; Can the borrower waive these waiting periods? No. Because lenders will be very concerned to be following the rules no one will allow a waiver of any of the waiting periods. What do you need to do if you are buying a home? Add a couple of weeks to the anticipated closing date. The days of quickly getting a home loan are over. Plan on a 45 day time-line to get to closing.

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
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