Detroit Real Estate

I read that with the Home Affordable Foreclosure Alternatives (HAFA) program launch on April 5, 2010 there will be a rise in short sale mortgage fraud.  I hate to say it but it is already going on and nobody is stopping it as of now.

Here are two examples of short sale fraud I have seen.

1.)   A real estate agent takes a short sale listing.  He tries to influence the banks BPO agent to give a low price.  If he is able to negotiate a low price below market value he has a "friend" buy the property.  The friend buys the property and then the agent re-lists the property after a little fix up.  The agent gets some of the profit from the sale and gets the listing commission too.

2.)   A seller hires a real estate agent they know to get ready to list a short sale.  The sellers friend or family member with a different name gets another agent.  The buyer tells them they know of a short sale that is coming on the market. The same day the house comes on the market before anybody else can bid on it the sellers friend or family member puts in an offer.  That offer goes into the bank because the listing agent is using first in only.

Other higher and better offers come in, but the sellers agent disreguards them because they use the "first in" rule.  They dis reguard their obligation to get the best deal or highest offer for the bank.  They protect the seller.  The seller's friend or family member buys the house.  The seller continues to live in the house.  The seller's friend either leases it back to the seller, or has the seller pay the mortgage payment to them.

The short sale seller has bought their own house back at a much lower price than they originally bought it for with the aid of their real estate agent.  They have beaten the bank out of money and helped commit mortgage fraud. 

It's happening already and I don't think the banks or the FBI is going after these people individually.     

I got a call yesterday from another real estate friend.  He had gotten a call from a first time home buyer about taking them out.  The agent started talking to the first time home buyer and found out that I took them out over a year ago.  I had worked with them about six months.  We had put in 3 offers and lost them all because we did not bid high enough or the homeowner couldn't sell the house for what it would appraise for.

Then they went to another real estate agent and worked with her for a while. (I didn't know they had gone with somebody else)  Until I had gotten a call from the buyer complaining that the list I was sending them was exactly like the other real estate agents list.  IT WOULD BE.  WE CAN'T MAGICALLY MAKE HOMES APPEAR FOR SALE.

• We send you what fits your criteria.
• There aren't any "SECRET" homes
• If they aren't on the list then they don't fit your criteria or price range

The buyers had a certain payment they wanted.  They wanted a newer house, with a certain minimum square footage.   The problem was that most of the houses were out of their price range.  They would bid on them but lose them because they couldn't bid high enough.  Or they couldn't bid higher because the high taxes in the city (Southfield is one example) would put them over the payment range they wanted.  There were a few that fit their criteria.  They could buy the house, but they would turn their nose up at them over cosmetic details.

  They would look on other sites than Realtor.com, or MoveinMichigan.com and find "other" homes.  But unfortunately some of the sites they were looking on had outdated listings.  They were sold over a month ago.  Which added to their frustration.  They would not listen to the advice to look on Realtor.com for the latest listings.  "These other sites had different listings" they said.  Of course they did they were out dated listings!

So over a year later they still had not found a house.  The buyers were on to their 3rd or 4th real estate agent.  They will still be looking for a long time. 

• THE BUYER NEEDS TO CHANGE THEIR CRITERIA. 
• THE BUYER NEEDS TO LOWER THEIR EXPECTATIONS
• THE BUYER NEEDS TO UP THEIR PRICE RANGE

I have seen this happen over and over through the years.  Buyers that have unrealistic expectations that go through 3 or 4 real estate agents.  Put 5 or 6 offers in and lose them.  Look for over a year.  I lose buyers like that because they get frustrated with me telling them they need to change their criteria, Or they get frustrated with losing the houses.  Somehow they feel it is the real estate agents fault.  That somehow we can magically make their low bid become the best bid.

Unfortunately we don't have a magic wand.  I too get people that come to me from other agents that are frustrated.  I talk to them and ask them why it didn't work out with the first agent.  I work with them to adjust their criteria to find a house that fits their needs and pocketbook.  Sometimes they have to give something up.  Sometimes they refuse to become realistic and we go our separate ways.  I once met a past client with another new agent 2 1/2 years later.  They were still looking for the "special house"  2 1/2 years should be long enough to tell you it is not going to happen.

If you have been looking for over a year and have lost 4 or 5 homes then look at your criteria, your price range, your cities you want to live in. .  I know it's hard, but sometimes you have to give up something in order to buy a house that fits your pocketbook.

Russ Ravary your Metro Detroit real estate agent 

                        Search Detroit suburb home listings and foreclosures

I am going to tell you how to kill the negotiations for your new home.  So many people kill or hurt their negotiations without meaning to.

One of the keys to negotiationis to know what you want.  What I mean by that is that you can't change your mind in the middle of negotiations.  You will come across as flakey and not knowing what you want.  The other side all of a sudden will realize that you don't know what you want.  That you aren't sure of what you want and that the negotiations may never reach a conclusion.  Because you don't know what you want now, how does the other side know that you will stay on course.

My example is a client was putting in an offer on a Novi lease.  The list price was $1900  My clients offered $1750.  They were close to an agreement at $1800.  Then my client's father got involved and said they should not be paying so much that they should only pay $1700.  So my client instructed me to offer the landlord $1700 over my objections.

I did what they said.  The seller rejected the offer and leased the Novi home to another person at $1800.

The buyer killed the deal by going in the opposite direction.  They changed what they wanted midstream into the negotiations.  They started asking for more than they originally asked for in the beginning.  Another example would be when you are closing in on price and then asking for extra concessions, or the refrigerator, or free rent.

So if you don't want to kill the negotiations..........know what you want before you start negotiating.  Don't go and add more issues to the negotiations halfway through, or when you get close to acceptance.  Don't get greedy.  You will kill the deal.    

Today I had two different clients talking about houses that were unbuyable.  Why or what do I mean by un-buyable?

The first example was a newer Redford home.  The seller owed about $140,000 on the home.  They had it listed at $150,000.  They had to sell it at list price.  But the problem was is that it was only worth $100,000.  All the other homes in the area in the last six months sold for right around or less than $100,000.   My clients needed to get a mortgage.  So even though my clients would agree to pay $150,000 or $140,000 the bank would not let them buy it.  The house would only appraise at $100,000, so the bank would only mortgage $96,500 (FHA mortgage)  So my clients would have to bring a $40,000 +  down payment.  They didn't have that kind of money.

YOU CAN ONLY PAY WHAT THE BANK WILL APPRAISE IT FOR UNLESS YOU WANT TO OVER PAY FOR THE HOUSE, AND BRING EXTRA CASH TO THE TABLE.

The other house was actually a lease house that also was for sale.  The house was a Lake front home on Duck Lake in Highland Township.  It was listed at about $400,000 and leasing for $2200.  The max my client could afford to pay was $1800 a month in rent.  She wanted to know if they would take that much.  The house had been listed since last May.

It is most likely that the seller can't afford to take that little because they need to cover the mortgage payment.  So if they need that money they aren't going to take that offer because they would have to pay money each month to cover the mortgage payment.

The bottom line is that some people just don't have the money to cover the shortage or cover the loss for what the house is really worth.  I wouldn't bring $50,000 to sell a house for a loss and I wouldn't lease the house for $1800 and pay $400 a month out of my pocket to cover the mortgage.  I would stay in the house and not sell or lease it.  I just couldn't financially afford it.  So it really can't be sold unless a person is willing to pay over current market value and is willing to pay cash for the house.  Because a bank is not going to let you overpay for a home. 

P>S> I also would be telling you to walk away and look for a different house.

Search Metro Detroit home listings and foreclosures 

If you have to are a first time home buyer or a single person this question may come up when you are looking at homes. Really the bottom line is the resale value of a two bedroom home versus a three bedroom home.  When you buy a two bedroom home you will have a harder time when it comes to selling.

Simply because anybody that has a family or thinking of a family will need more than two bedrooms.  If you are single, have a small family, or are seniors and only need two bedroom then by all means is buy the house you want.  But keep in mind that it will be harder to sell.  You have to remember that you will have to find somebody like yourself to sell to.

Also a two bedroom home should be a little cheaper (less expensive) than a three bedroom home.

My quote of the day is:

Dream as if you'll live forever, live as if you'll die today.

                                                        James Dean