Detroit Real Estate

I got a call from my buyers over a month ago saying their mortgage deal was falling apart - what do we do?  I told them to calm down and tell me what was happening.  They had a pre-approval letter that said they could buy a house at the purchase price we offered and yet now the bank was saying no. 

The bank was saying said they no longer had the proper debt ratios.  They had too much debt when they included the house payment, insurance, and taxes. (as compared to their income)  My clients income had been decreasing over the last two years because of Detroit's poor economy.  We only could use her income because her husband had bad credit, so we could not use his income.

The two issues we had were the insurance was too high, and the house payment was now too high.  So here were my suggestions.

1.)  Originally the client had gotten a quote of $1500 for insurance because the house was so far out into the country.  So I coached my client to start shopping hard for an insurance policy.  Some of the tricks to get a home insurance down is to get a high deductible.  A higher deductible will have a lower insurance premium.  In their case they could switch back to a lower deductible after the loan closed.  I also said to check what would happen if they would switch their cars over to the same policy.  Neither the husband or wife smoked.  The house has updated electric and plumbing.  The house had smoke alarms hard wired in.  We were able to get the home insurance down to $550.  A savings of almost a $1000.

2.) In order to get the house payment down the buyers borrowed money to buy down their interest rate.  Lower interest rate meant lower payment.

3.) Last trick we had to do was to pay off their higher credit cards (the ones with the high monthly payments).  My clients really wanted the home so they liquidated some of their retirement accounts, (some people get a gift to pay off the credit cards)

My clients closed on the house last week.  Sure we had a lot of issues that we had to find solutions for.  But in the end we closed because the clients worked hard to overcome them.

    They got their house!

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"A champion is someone who gets up, even when he can't."~ Jack Dempsey

Last month I heard a question on one of then morning news show and I thought it could be about West Bloomfield Real estate.  The question was from a Michigan home seller.  The sellers were having to relocate and sell their West Bloomfield home.  They sold their Michigan home but because home values had fallen so much they didn't not get any money from the sale of their home.

WHAT SHOULD THEY DO NOW?

How do they buy a new home if they received no money from the sale of their old West Bloomfield home.  My suggestion is to go back to the basics.  Get an least expensive apartment and LIVE BELOW your means.  Yes you have to go back to saving.  For many people that is a foreign concept.  Whether you have lost your home in foreclosure or sold your home and got little or no money that is what you have to do.  100% loans have gone away.  There is only one 100% loan and it is a very specific loan for rural areas.  So basically you have no choice but to save.

You have to have a down payment now!  The only way you are going to get that money is to save it or have somebody give it to you.  So how bad do you want a home?

• Do you want to build equity in a home?
• Do you want a place to call your own?
• Do you want to live in a rental home forever?
• Do you want to hear your neighbors next door all the time?
• Do you want your landlord to tell you what you can and cannot do in your home?

If you want your own home again start saving.  Find a nice safe, convenient rental home or apartment that is close to your work and good schools.  Don't get the most expensive one.  I see this mistake happening all the time. 

People lose their home that their were paying $2500 a month on.  So they go out and rent a home for $2100.  They are crazy.  They need to re-think what they are doing.  Get the $1500-$1700.  Forget about appearances.  LIVE BELOW YOUR MEANS!  So you can save for a down payment for your next home.  It will be good practice for your financial future.

Whether you are planning to buy West Bloomfield real estate, Livonia real estate, or any Metro Detroit real estate live below your means for a while and save some money.  You will be glad you did.  

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I have seen homes that are absolutely beautiful upstairs and have mold downstairs.  Homes that need no work but have a moldy basement.  Those are the homes you might want to consider if you have the money and the people to clean it up. Most Michigan home buyers run at the sight of mold.  And I agree in many cases you should run.  If you can't afford to fix the cause of the mold or afford to re-mediate the mold correctly you should run.  Many times it can become a major project because the mold has come down the walls and is behind the walls.  Those types of projects can become nightmares because you don't know how bad the mold is behind the walls.

But mold in the basement is one area, I think most cash Michigan home buyers should think about the home more.  If you and your family member don't have allergies or asthma this might be a problem that can be corrected.   If you have allergies or asthma you should stay away from Michigan homes with mold.

I think there is opportunity to buy a home at a great price is when the sump pump backs up and floods the basement.  When Michigan home owners walk away from their foreclosed house they shut off the electricity.  Sometimes the bank doesn't even know the homeowners have left.  So when it rains the sump fills up, the basement floods, then the mold starts to grow.  This is what you seeing in these pictures. 

A basement flooding happens quite often in Michigan foreclosed homes because of the electricity being off.  The flooding stops as soon as the electricity is on and sump pump starts working. But by then it is too late.  The drywall is wet and the conditions for mold grow are there.  So the mold grows on the drywall.

 This foreclosed home was in Southfield Michigan.

But when the basement floods the drywall will draw up the water like a sponge.  Then the mold will grow as high up the drywall as the water got absorbed.  The water could have been one or two inches deep and cause all this mold.

What is great is that the mold can be cleaned up.  Of course whoever does the work should be qualified to do the clean up.  Masks and protective clothing should be worn.  But basically gutting the basement down to the cement walls most likely can be the solution.  Then cleaning up the cement walls and repainting can get the home back in livable shape. 

On the other hand when a Michigan home floods because of broken pipes and there is on mold on the ceiling, walls, floor trusses in the basement and on the walls of the main floor.  Then I would run the other way.  That home is a major project.  You may not be able to get all the mold out in a home like that.

So don't cross off the house with the moldy basement if you are a cash buyer.  But if you are a buyer that needs a mortgage then forget about the home and move on.  The only time I ever saw a home get bought with mold was a USDA rural housing loan.  I don't know how it slipped through.    

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Home negotiation - How to bid and win a home here in Metro Detroit suburbs.  My first piece of advice I tell most Metro Detroit home buyer that is looking at homes don't do extreme low ball bids, and expect to win the home.  Doing low ball bids is just going to create frustration, and then you are going to blame somebody for not winning the home.

I had one guy that was bidding $50,000 - $70,000 below homes that were listed at $150,000 - $170,000.  He never won one and no matter what I said he would do it again.  I finally let he go and find another agent.  He still has not one a home after 2 other agents and a year and a half of bidding.  He still doesn't get it.  He is just wasting his time.  He will never get a home doing low ball bids unless the market goes back to being a slow market.  Bidding on a home in this Southeastern Michigan real estate market is not easy.   

It is no longer a buyers market in the better cities in the suburbs. By that I mean Plymouth, Royal Oak, West Bloomfield, Birmingham, Northville homes aren't being given away.  If the house is a decent house there will most likely be multiple buyers looking at it and very possibly multiple offers.  About 40 -50% of the "good" foreclosures are going over list price. 

Yes there are a lot of low price mediocre homes in the less desirable cities.    So you and your real estate agent should know what is happening in the city you are looking in.  One way to find that out is look at the last 90 days of sold homes.  If you are buying a foreclosure then look at how the foreclosures have sold.  But also look at the regular home sales.  Especially if the foreclosed home is in great shape. 

What you should do is:

• look is at the recent sold homes in the area.
• take into account what you can afford to pay and stay within your budget (remember the taxes)
• bid according to how bad you want it
• if you love it and have to have it.... bid high....put your best foot forward
• if the home is just one of the many you like and you want a deal then put in a lower bid (not outrageously low) 
• if the house is the best you have seen then bid for it that way....don't be cheap (other people know how nice it is too.)

Making a good bid based on market conditions, the home's condition, and how much you like the home is the key to your success.  If you put your best foot forward.  By putting your best foot forward I mean what you can financially afford and at the same time what you won't feel bad if you lost the home.    So if you can afford to pay $200,000 and you bid $190,000 and you love the house and lose it.  Then regret it I don't think you put your best foot forward.  No regrets is what you want.  If it's the best house you have seen, then bid to win.

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 What problem, we have no problem, just a situation that needs to be resolved.  Yes We have no problems............... no reason to get upset, no reason to yet to get worried or upset.  We only have to search for a solution to find for the situation we are in.  In Metro Detroit real estate there are always situations, and issues that come up that need some sort of solution.

There are issues caused by bank guidelines, by asset managers attitudes, and time lines imposed by the bank.  Sometimes things get delayed.  Sometimes items that are supposed to get done, don't.  Then we have to scramble to get them done.

There are appraisal issues where the house does not appraise.  There are only a few solutions to this problem.  Either the seller lowers the sale price, or the buyer brings more money to closing, or we have to find a buyer that can pay cash, or the house doesn't get sold.

There are inspection issues.  We as real estate agents have to reduce the costs of repairs to help the sellers bottom line.  We have to make the buyer happy, we need get the repairs done to make the buyer happy.  Many times it is a give or take between the buyer and seller.

There are money issues that sometimes pop up when the mortgage person doesn't communicate the costs completely to the buyer.

There sometimes are title issues caused by probate, trusts.

We as real estate agents have to think outside of the box to get the issues resolved.  You see there aren't problems.  Only a solution that we have to find to fix the issues.  So don't get worried....we have the resources, the help from agents to find the solution to get the deal closed.  That's what we get paid for....to smooth out the bumps for you!!! 

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