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

For Michiganders singing the blues about the local real estate market and declining listing prices, it may ease the pain a bit to know that the lifestyles of the rich and famous are being affected also.  Celebrities are dropping their prices by numbers that I can’t even fathom!!

Take a look:

Suzanne Somers’ Mountainside Estate
Palm Springs, Calif.

Original Asking Price: $35 million
Current Asking Price: $12.9 million

Mel Gibson’s Tudor Mansion
Greenwich, Conn.

Original Asking Price: $39.5 million
Current Asking Price: $29.5 million

50 Cent’s Mega-Mansion
Farmington, Conn.

Original Asking Price: $18.5 million
Current Asking Price: $10.9 million

Brian Bosworth’s Waterfront Villa
Malibu, Calif.

Original Asking Price: $11.9 million
Current Asking Price: $6.9 million

Nicolas Cage’s English Country Manor
Middletown, R.I.

Original Asking Price: $15.9 million
Current Asking Price: $12 million

Yikes!!  The $100k hit that my house has taken somehow doesn’t seem so drastic anymore!

Too view photos and read more information on these properties, visit Celebrity Price Choppers.

Written by Marianne Sweet
Home Sweet Home Staging, (586) 212-8400
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The New Good Faith Estimate: Is it Easier to Understand?
Over the past year the Federal Government has made some sweeping changes to the way mortgage loans are originated, how appraisals are ordered and how and what is disclosed to the consumer. The change I want to address here is a change in what’s known as the Good Faith Estimate (GFE). The GFE has always given potential borrower four bits of crucial information when shopping for a loan:

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
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There is a lot of misinformation going around about what the impact of a Short Sale is on your credit and whether you can get a new mortgage after short selling a home. Below are the current Guidelines for FHA, and Fannie Mae.

FHA has recently changed their rule so that if a short sale occurred and all of the borrowers payments were made on time (no late payments) then they may be eligible for a new mortgage as long as the short sale was due to extenuating circumstances and not to simply take advantage of market conditions (see below). As you can imagine, this may be difficult to demonstrate. Otherwise, if any payments were made late or you cannot demonstrate extenuating circumstances, then it is a 3 year period before new FHA financing can be considered.

Fannie Mae policy is pretty straight forward – It is a minimum of 2 years to re-establish credit after a short sale.

It is very difficult to predict how a short sale will affect an individual’s credit score because there are so many different factors involved; How good was the credit to begin with? How many house payments were made late? Did they pay all of their other bills on time? Etc, The short sale will most likely be reported as a settled account paid for less than the amount owed and will have a dramatic impact on credit score even under the best of circumstances.

Here is the excerpt straight from FHA:
Borrowers are not eligible for a new FHA- insured mortgage if they pursued a short sale agreement on his or her principal residence simply to
•take advantage of declining market conditions, and
• purchase at a reduced price a similar or superior property within a reasonable commuting distance.

Reference: For detailed information on converting existing principal residences into rental properties, see 4155.1 4.E.4.g

Borrowers Current at the time of Short Sale
Borrowers are considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage
•All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and
• All installment debt payments for the same time period were also made within the month due.

Borrowers in Default at the time of Short Sale
Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.
Note: Borrowers who sold their property under FHA’s pre-foreclosure sale program are not eligible for a new FHA-insured mortgage from the date that FHA paid the claim associated with the pre-foreclosure sale.

This is Fannie Mae’s Guideline:Preforeclosure Sale
A two-year period is required to re-establish credit, measured from the completion date.

Written by Ken Mascia
Prime Capital Mortgage, 248.644.1200
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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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