We talked for a long time about how busy we both are and how values are creeping up in the markets that keep me busiest.  Sometimes they are even bolting up, but I like to remain conservative about my market projections.  The appraiser confirmed he is seeing increasing values, but told me that the appraisers in his office are not yet willing to upgrade the overall market status on their appraisals from declining or balanced just because they know they will face increased scrutiny from underwriters.  Yet the evidence clearly points to increasing market values.  Ask any buyer who has tried to purchase a home in Birmingham lately about the competition they have faced.  It’s not easy to be a buyer right now, and I don’t see it getting any easier next year.

I am often told by potential buyers, as they begin their search, “everyone knows it’s a buyer’s market.”  I have to find just the right way to tell them I don’t see it that way at all.  After YEARS of telling people their home is worth less than it was the previous year, I haven’t been saying that for the last few months.  I have comps that show neighboring homes selling for more than they would have last summer.  I see competitive offers on many well priced homes that are not short sales or foreclosures.  There are buyers out there who want to buy, and they are feeling the shortage of inventory.  We recently listed and sold a home in Birmingham’s Poppleton Park neighborhood and had multiple offers and over a dozen showings within the first 24 hours we were on the market.  The home sold for over asking price to a buyer who had become frustrated by the lack of choices available.

I am ready to raise the flag and say the Birmingham Bloomfield real estate market is increasing in value.  People want to live in these communities and are showing that they are willing to pay “market value.”  Like it or not, the bargains of previous years are fewer and farther between.  That said, buyers are still able to purchase homes in areas they previously thought they might never be able to afford.  It’s still a great time to be a buyer, but I think the reality of the market might be quite different from commonly held assumptions and misinformation presented by the national media about the state of the housing market.

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County

When Real Estate is listed for sale the listing contract calls for the seller to pay a set commission to the Realtor’s involved in the transaction regardless of whether that is one real estate agent or two. This means the seller has to pay the same real estate commission whether the property is sold directly through the listing agent or through a buyer’s agent.

As a home buyer you need to have your own representation – an agent specifically working on your behalf. Here are the top 5 reasons to have your own agent:

1) A professional working specifically in your interest and on your behalf to help you find the right home at the right price.

2) The Buyer’s Agent‘s fiduciary responsibility (their loyalty) is to his/her client (you). The Listing Agent has already signed a contract to represent the seller and their first loyalty is to the seller. How can they represent the seller and you at the same time and still get you the best price on the home?

3) A stronger negotiating position and better contract protection for you. You have a separate agent negotiating the price on your behalf with the seller. You also get an independent purchase agreement contract drawn up by your agent to protect you. Plus, your agent holds the earnest money deposit as opposed to the listing agent controlling your money.

4) More candid comparable sales and market transparency. You have your own agent showing you recent sales of similar homes so you can determine the correct offer price.

5) Having your own agent comes at no additional cost to you! The seller has to pay the real estate commission on the sale of real estate so it is costing the buyer nothing to retain the services of a professional realtor.

The bottom line is that it is foolish to not utilize the services of a trained professional Realtor to help you unlock the door to your new home. As a buyer, you have nothing to lose and everything to gain. So, if you’re in the market to buy a house the first step should be to find the right Realtor to work with!

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
Visit Website
Search for homes in Oakland County

Senate and House vote to extend tax credit to home buyersThe Senate and House have approved a plan to give home buyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring. It still has to be signed by the President. The consensus is that he will sign it today.

The move by Senate Majority Leader Harry Reid (D-Nev.) would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to close the sale.

The proposal would only allow people who have signed contracts to finish later. About 180,000 homebuyers who already signed purchase agreements would otherwise miss the deadline.

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County

1) The terms of the loan – Loan amount, interest rate and number of years to repay
2) The total costs of obtaining the loan broken down by mortgage costs and prepaid taxes, insurance and interest
3) The total cash needed to close including closing costs, prepaid items and down payment
4) The total monthly house payment including all taxes and insurance

Above is the old form Good Faith Estimate which covered all of the important information on one page – pretty efficient and I’d say, easy to understand.

<Here is Page 1 of the new GFE. The new form is 3 pages long. It does a good job of giving you the basic loan terms.

It loses ground on the monthly payment as it only shows the principal and interest payment on the loan and does not tell a borrower what the total monthly cost of the home is including taxes and insurance. This is a very important number!

At the bottom it gives you “Total Estimated Settlement Charges”, however, this figure includes things that, in Michigan, a home buyer generally does not pay for, and as a result, overstates the settlement costs (in my example the costs are overstated by $2,796 – quite a large amount!)

This is the Page 2 of the new Good Faith Estimate. This page is right on the money except for two items.

1) HUD has stated that the cost of Owners Title Policy should be listed regardless of who pays for it. Why, I ask? If the buyer is not paying for it, it should not be included in the settlement charges to the buyer.
2) Transfer Tax also must be included in the buyer’s settlement charges. In Michigan, the seller pays the transfer tax (in 99 out of 100 cases).

So, when you get to the buyers total Settlement Charges they are overstated, as I mentioned above, by $2,796! Maybe it’s just me, but, shouldn’t we stick to telling the buyer specifically what they have to pay for? Why not include the seller’s real estate commission here too?

Finally, Page 3 of the new form. This page summarizes the loan terms, loan payment and total estimated settlement charges. It also gives the buyer a table where they can write in offers from different lenders so they can make comparisons. This page could be pretty handy. I like it.

It also lets the borrower know that the Lender is required to honor their stated Origination Charges and that other specific settlement costs cannot change by more than 10% at closing. I actually love this because it keeps unscrupulous loan officers from quoting low costs and then increasing them at the last minute due to some contrived change in the borrower’s circumstances. Page 3 is a hit and the rules that go with it are great too.

In the final analysis, the New Good Faith Estimate should not include closing costs that the buyer does not pay. It should include the total payment including property taxes and insurance so a borrower can evaluate if they can afford the home. It also should tell a borrower what their total cash to close is including only their closing costs, all property taxes and insurance and the down payment so they are prepared for what they will be required to pay. My question – Why change a 1 page form, which has all of the necessary information on it, into a 3 page document which does NOT give complete and accurate figures to a borrower? Answer – Who knows? Your Federal Government in action. See you next time . .

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
Visit Website
Search for homes in Oakland County

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
Visit Website
Search for homes in Oakland County

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
Visit Website
Search for homes in Oakland County

Donovan’s remarks came in an address to several thousand REALTORS®, including 130 from Michigan, who are in Washington D.C. this week for the annual REALTORS® Midyear Legislative Meetings & Trade Expo.

Secretary Donovan said that important changes, which the National Association of REALTORS® has been calling for, will help consumers purchase a home. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Read more here.

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County

Last week Oakland County introduced a plan to help get some of the vacant foreclosed homes off the market in select Oakland County communities.  Their press release follows.

I need to call the county and ask some questions.  The program seems very generous and should help sell some foreclosed homes.  I am not sure why some communities were left off of the list.  For example, Birmingham is on it, but Beverly Hills is not.  Royal Oak Township is on, but the city of Royal Oak is not.  No go for Bloomfield Township, but a yes for Troy.  This has me questioning how communities became eligible.

As much as I know the foreclosures need to get off the market, this gives them a steep advantage over the regular resale homes that are already severly challenged for finding buyers.  The foreclosures are selling, for the most part, without much additional help.  Low prices do that.

“Pontiac, Michigan, February 17, 2009 — More families in Oakland County may be able to find homeownership within their means thanks to a new program administered by the Oakland County Community & Home Improvement Division. The Oakland County Home Buyer Program is aimed at helping low and moderate income families take ownership of vacant, foreclosed single family homes and condominiums as their primary residence.

An informational workshop for prospective homebuyers will be held Saturday, February 28, from 9 a.m. to noon at the Oakland County Executive Office Building Conference Center, 2100 Pontiac Lake Rd., just west of Telegraph Rd., in Waterford. Pre-registration is not required.

“Families who thought they could never afford their own home now have the best opportunity to become homeowners through this unprecedented program,” Oakland County Executive L. Brooks Patterson said.

Oakland County can provide no-interest loans for down payment assistance, closing costs, home improvements or other financing. The homebuyer must prequalify for a fixed rate mortgage loan from a lending institution. This loan represents 51% of the purchase price. Oakland County will finance the remaining 49% of the purchase and rehabilitation costs up to $100,000. The homebuyer must also provide $2,000 to initiate the purchase. The homebuyer only pays on the conventional mortgage obtained from their lender. Payment on the down payment and home improvement loans is deferred until the property changes ownership.

Homebuyers with incomes at or below 120% of Area Median Income (AMI) are eligible for assistance. For example, a family of four earning up to $83,900 per year is eligible under this program.

Funding for the Oakland County Home Buyer Program is provided by the U.S. Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program (NSP). This one-time $17.4 million emergency funding supplements the Community Development Block Grant (CDBG) program to purchase foreclosed homes at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods impacted by foreclosure and abandonment, and reverse the decline of neighborhood housing values.

The Oakland County Home Buyer Program covers properties in select Oakland County communities. Contact Farmington Hills, Pontiac, Royal Oak, Southfield, or Waterford directly to inquire about home buying assistance programs in their communities.”

You can find more information on the programs on the county’s web site.  If you need a Realtor to guide you through your purchase, I would be happy to assist you.

Photo by TW Collins

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County

We’ll give you the highlights:

• Eligible Property – any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
• Income Limit - Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).
• Eligible First Time Buyer – Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
• Repayment – No repayment for purchases on or after January 1, 2009 and before December 1, 2009
• Recapture – If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

Check out this link for the differences between last  year’s plan and this years.

Oh, to be a first time buyer!

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County

Mortgage Rate Reduction – There has been a lot of buzz about the government somehow forcing mortgage rates down to 4%. There has never been a clear answer as to how they would do this (mortgage rates are set by a free market pretty much like everything else in the USA!). This bill does not call for any specific measure that would peg mortgage rates at some direct level. It does, however, allow the Fed’s to continue to purchase mortgage backed securities (MBS) in the secondary mortgage market. Keeping this market de-thawed should allow mortgage rates to remain low as they have been for the past 8 weeks. The bottom line is that fixed rate mortgages in the 5’s are pretty great anyway!

Higher Loan Limits – One of the things this bill does is to re-set loan limits to 2008 levels. This is more important than it appears. For example, in our area of Southeastern Michigan, the FHA loan limit had been reduced from $297,500 to $271,050. This might not seem like a big deal but if you’re a homebuyer and want to purchase something that’s $300,000 then it is a big deal! Overall, conventional loan limits will remain unchanged around most of the nation because Fannie and Freddie did not reduce the limits this year so the conventional loan limit for most areas will remain at $417,000.

Changes to the Homebuyer Tax Credit – The homebuyer tax credit has been re-vamped in a couple of ways. The maximum credit amount has been increased to the lesser of 10% of the purchase price or $8,000 (up from $7,500).Now the tax credit does not have to be repaid (this is great!) unless the buyer sells the home in the first 3 years and then they have to repay the entire amount. Also, the time period has been extended and now the tax credit is available until December 1, 2009. All other income limits and first time buyer requirements still apply. The new tax credit begins on January 1. Anyone who bought a home in 2008 under the previous law is still subject to the rules of the old bill but anyone buying in 2009 is subject to these new rules even if they bought prior to the bill being passed as long as the purchase date was in 2009.
This “Stimulus Bill” is enormous – just another way for the government to grow even larger? How are we going to pay for these $800 billion dollar expenditures? What long term effect will printing all of this new money have on our future economy? Who knows! All I know is we have to head off a potential economic disaster and this seems like the best way to do that right now.

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
Visit Website
Search for homes in Oakland County

Yesterday I was out with some first time buyers who wanted to see 4 houses in Troy. We ended up seeing two because the other two were already under contract. As always, the competition for the most desirable homes will be stiff. I suspect that this spring, the first time buyer market will be especially competitive as people look to take advantage of the tax credit and market conditions.

Be prepared. An opportunity like today’s hasn’t been seen in decades.

Photo Credit K-Girl

Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
Visit Website
Search for homes in Oakland County