Monday, December 31, 2007
“Thanks. That was a very satisfying operation, and I’m very pleased with how smoothly it went. You did a splendid job of managing all the details, and your efforts are appreciated very much.”
“Thanks again for making time to come to the closing. I know you must have been very busy just getting back from vacation. We appreciate all of your help in selling our home. You helped make the process go smoothly and quickly.”
“…we were talking about how easy you make everything in this transaction, compared to our last experience. We are happy that we were able to make such a quick turnaround on this property…”
“I am still very thankful for all of you who worked so hard with me to make this possible and appreciate it more than you know.”
“Thank you for all your help and patience with me.”
“We would feel really confident referring our friends to you because you have been incredibly dedicated as we have explored this option over the past year.”
“We just wanted to say thank you for all of the time and hard work you did for us. You made us feel special.”
“…wanted to let you know I am very satisfied with the service Vance has provided. I would not hesitate to use him again.”
If you'd like to find out more about how I work, please call!
Wednesday, December 26, 2007
According to Wikipedia, a Real Estate Appraisal is defined as follows:
Real estate appraisal is the practice of developing an opinion of the value of real property, usually its Market Value. (Real estate appraisal is American usage; many other countries use the terms property valuation or land valuation.) The need for appraisals arises from the heterogenous nature of property as an investment class: no two properties are identical, and all properties differ from each other in their location - which is the most important determinant of their value. So there cannot exist a centralised Walrasian auction setting for the trading of property assets, as there exists for trade in corporate stock. The absence of a market-based pricing mechanism determines the need for an expert appraisal/valuation of real estate/property.
A real estate appraisal is performed by a licensed or certified appraiser (in many countries known as a property valuer or land valuer). If the appraiser's opinion is based on Market Value, then it must also be based on the Highest and Best Use of the real property. For mortgage valuations of improved residential property in the US, the appraisal is most often reported on a standardized form, such as the Uniform Residential Appraisal Report. Appraisals of more complex property (e.g. -- income producing, raw land) are usually reported in a narrative appraisal report.
So how does this affect you, as either a buyer or a seller?
Whenever there is a mortgage involved in the sale of real estate, an appraisal is required. The appraisal gives the mortgage lender an assurance that the real estate is worth what the buyer is paying. In the (unfortunate and unlikely) event that the buyer cannot meet their mortgage obligation, the lender will rely on the appraised value such that the lender will not actually lose money. The lender will sell the property for the amount they are owed (knowing that it is worth at least as much as they are owed, based on the appraised value), and then turn around and lend the money to the next buyer.
As a buyer, the appraisal (usually ordered by your lender) gives you an assurance that you are not over-paying for the property you are buying. Generally, though, your Realtor will have already provided you with a CMA (comparative market analysis) so that you know approximately how much the property is worth. So, is your Realtor’s CMA as good as an appraisal? Generally, again, no. A true appraisal can only be done by a licensed appraiser. Some Realtors also hold an appraiser’s license, but they are few and far between. So, the CMA done by your Realtor, and the appraisal done by your lender, should be similar in value, but not exactly equal.
As a seller, the appraisal (ordered by the buyer’s lender) gives you an assurance that you aren’t “giving” away your property. Note, however, that the lender is the client of the appraiser (in other words, the lender ordered the appraisal, so the lender gets to know of, and keep, the appraisal information to themselves). As the seller, you may not get to see the appraisal report. As in the paragraph above, though, your Realtor will have provided you with a CMA prior to your listing agreement, so you should have a very good idea of what the appraisal report should say.
Sadly, though, there are some unscrupulous appraisers, lenders, and Realtors in every marketplace. What they do is practice mortgage fraud.
For example, an unscrupulous appraiser could falsify their appraisal by coming up with a value significantly higher than actually exists. Then the lender, thinking that the property is worth the appraised value, will over-lend against the property. The extra money ends up with the buyer, who takes off with the money and leaves the property to deteriorate. Fortunately, such unscrupulous appraisers are very rare, but they do exist.
I’d be happy to answer your questions about appraisals, or provide references for outstanding local appraisers. Just ask!
Friday, December 21, 2007
In America today, you can buy just about anything besides Happiness (just ask Visa). And since you can buy just about anything, that also implies that just about everything is for sale. Realtors are also for sale. They come in all sizes, shapes and colors. Like computers, they come with different amounts of onboard memory, and with different features, goodies and gadgets. You can see them everywhere. They often have hardware attached to their ears.
Just like trying to purchase a car, it can be very difficult to decide which model is the best for you. Should you shop for what you want, or what you need? Should you get Old Faithful, or this year’s newest edition? Should it be fancy, or a base model?
With a Realtor, you are hiring someone to guide you through what may be the largest financial transaction of your life. You don’t need a pretty face. You don’t need an Armani suit. You don’t need a Mercedes to look at houses in. It might flatter your ego, but hurt your wallet. Don’t get me wrong, there are some very attractive Realtors who are exceptional at their craft, but this is one situation when judging a book by its cover is a mistake. Appearance and tools (like cars and clothes) are not nearly as important as the skill of a Realtor, which does not always wear a pretty package.
Technology can be a wonderful productivity enhancer. It can also get in the way. Have you ever seen someone chatting away on the phone while they all but sideswipe you coming out of the grocery store? And they didn’t even notice you! Tools and gadgets can make a Realtor more valuable to you. But, having all the gadgets is just not necessary. Why does anyone need a pager, a cell phone, a Blackberry and a laptop to go along with the office computer. Every single one of these devices requires attention. There may not be any attention left over for you, the client.
A couple of years ago, there was a TV commercial about motor oil – not something you think about every day. The point of the whole commercial was “You can pay me now, or you can pay me later, but you’ll be paying.” The point was clear - sometimes a bargain is not a good buy in the long run. This definitely applies to hiring an Agent.
When interviewing agents, ask each one if they are flexible on their fee. If they say “yes”, then terminate the interview. It sounds backwards doesn’t it? Realtor’s fees cost thousands of dollars. Why not try to save a few? Well, the fact of the matter is that there are no bargains on a Rolls Royce. And for your home, you want the Rolls Royce of Realtors working for you. He or she will save you much more than they cost you in the form of stronger negotiation skills and support after the sale. A Rolls Royce Realtor will take your call 6 months after closing when the furnace won’t start. A Rolls Royce Realtor will work for their clients long after they get paid.
Real Estate Agents don’t get busy by accident. They get and stay busy because they know what they are doing, and word gets around. High demand Realtors are in high demand because they have already been through a fire or two and they brought their clients through it safely. Don’t think that because an Agent is already busy, they won’t have time for you. You may have to wait a short time but it is the best thing for you. Impatience can cost you thousands of dollars.
If the Realtor has an assistant or receptionist that always has to take a message, move on. An assistant that tries to connect me immediately, or offers to connect me to a cell phone, or tells me that “He’s on the line right now, but says he can call you back in 5 minutes”, gets my business. This assistant is trying to channel business efficiently. Don’t be put off if a busy Realtor cannot pick up the phone right away. Do be put off if it takes hours to hear back from them. Every exceptional agent out there is adamant about returning phone calls quickly. If it feels like the receptionist is protecting the inner sanctum from intruders, you may be talking to the wrong Realtor. You should expect to get through to your agent at least part of the time.
Excellent Realtors are strong and confident people. They know that they are smart. They know that they are skillful. They know that they are very good at what they do. They act confidently, and can appear to be know-it-alls. They usually have very strong opinions about their industry. But, do you really want a timid General leading you into a war? Not me, I’ll take the strong-willed leader every time. Arrogance is self-centered, confidence is not. If the Realtor is completely focused on my transaction but appears to be really opinionated about how to handle things, I am probably dealing with a confident individual, not an arrogant one.
You hear this all the time, but it is one of the best ways to find out who you are dealing with. Satisfied customers will thank their agent for doing a good job. It takes a very satisfied customer to write a letter. If you find an agent with a shelf full of thank you letters or testimonial letters, then this is probably an individual who will work hard on your behalf. He or she has already done it for other clients. Those clients were pleased enough to write a letter about it. There is not a stronger proof of excellence that I can think of.
I would welcome the opportunity to discuss this further with you. Feel free to contact me.
Monday, December 17, 2007
But the question is still valid: What if you can't pay your mortgage?
Here's an excerpt from a recent post by the Wall Street Journal:
You should contact your lenders right away. If you are like most folks, you aren't answering the lenders' mail or returning their phone calls. Most think they don't need to speak with their lenders about their situations, or think they can take care of their problems, if they recognize them as such, without involving the lender.
But a large percentage also believe their lenders can't or won't be any help, or are simply too embarrassed or scared to ring them up. But all these people are wrong -- on all counts.
Your lender does not want to take your home from you! They only want to be paid back for the loan they made to you. So, if you're in trouble, call your lender right away. They will work with you to come up with a way for you to get over your trouble with making payments, and get caught up. Trust me on this!
As you all know, I review our market statistics around the middle of each month.
What I'd like to focus on this month is the overall strength of the market in, and around, Saline.
The first chart I’d like to review is shown above. I’ve tracked real estate activity for the Saline market since 1996. There is a definite seasonality to the market – strength in the summer, weakness in the winter. A reading above 25% is a “seller’s” market, while a reading below 20% is a “buyer’s” market.
It’s no surprise to learn that we have been in a “buyer’s” market in Saline since the end of 2004 – more than three years, now.
What’s intriguing about this first chart is the strengthening of the Saline market since October. What could be the cause of this?
This second chart (above) shows 2 lines. The top line shows the number of homes available for sale (listings) in the Saline area. The lower line shows the number of homes sold each month.
In answer to my question posed above (What could be the cause of this?), the strengthening of the Saline market since October is a direct result of fewer homes listed for sale. How could this make the market stronger? Well, with fewer homes competing for the available buyers, it’s more likely that any of the homes listed for sale will actually sell during the month. That’s what we mean by a strengthening of the market!
Another interesting observation from the chart is that the number of sales in the Saline area has been rather consistent since 2005! In a previous post, we learned about the three "P's" that you control when you sell. The homes that are selling now, and have been selling since 2005, are those that have consistency between the three "P's". Go back and check that post for a reminder.
So, if you're looking to sell in this market, take heart! Call me!
Saturday, December 15, 2007
Each year, the Ann Arbor News asks its readers to vote for their favorite businesses in the Ann Arbor area. It’s called the Reader’s Choice awards. The list encompasses restaurants, stores, sports, and entertainment.
If you’re looking for the best of Ann Arbor, the Reader’s Choice awards is a great place to start!
PS – My favorite burger joint, Blimpy’s, made the list again!
Wednesday, December 12, 2007
How many times have I heard that question?
Let me be clear up front – I’m not a mortgage loan officer. There is enough to learn about the business of real estate that I don’t have enough left-over brain space for even beginning to learn the mortgage business. I’d rather leave that in the more-than-capable hands of the two mortgage loan officers with whom I’ve had the privilege to work over the past many years.
That said, here’s my simplified version of figuring out how much home you can afford. It all begins with determining your budget. If you can nail down your budget, you’ll be well along your way to owning a home.
1. Determine your annual income.
2. List your expenses (beginning with basic needs, followed by your “wants”,
and don’t forget savings).
3. Prioritize your expenses.
4. Stop when you use up all your income.
Your mortgage loan officer will work with your budget figures to help you understand how much home you can afford.
And now, a pet peeve of mine. If this process looks simple, it’s because it really is simple. So why can’t our illustrious elected officials in Lansing figure this out? We still don’t have a balanced budget for the State of Michigan.
Monday, December 10, 2007
I am often asked about the property taxes on a piece of real estate – it could be a home, or a condo, or a building site for future use.
Given the state of our market (which I’ve written about previously), there are likely to be a lot more questions about property taxes in the coming year. More specifically, since the overall value of most properties In the Ann Arbor area has gone down by 15% since our market peak in 2004, most of us will expect that our property taxes will go down by the same amount.
Au contraire! (pardon my French, there).
If you bought your home since 2004, then it’s likely that your property taxes will go down in 2008. However, if you’ve owned your home for a while, and have seen its value increase until 2004, then it’s possible that your property taxes will actually go up next year. How can this be?
In seeking an answer for this question, I found a helpful post by the City of Saline, which I’ve excerpted below.
What is the difference between the Assessed Value and the Taxable Value?
Each year the Assessing Office must calculate the SEV (Assessed Value) and Taxable Value of each property. In determining the SEV, the assessor identifies area neighborhoods and uses a 2 year sales study to analyze market values within each neighborhood, comparing the sale price of a property to its assessed value. The sales study period for the 2007 assessments was 04/01/04 to 03/31/06. A review of all arms length sales within each neighborhood for the required study period is used to determine individual Assessed Values.
The Taxable Value is the value to which the millage rate is applied, thereby determining your taxes. The Taxable Value on the property is said to be: “Capped” if the property owner has not had any additions or losses on the property or did not purchase it in the preceding year. The Taxable Value is calculated by adding the CPI or 5% (whichever is less) to the prior years Taxable Value. Proposal A intended to put a cap on the Taxable Value of property so that taxpayers wouldn’t be as affected by a strong economy and significant increases in valuation, the intention was to make changes to the Taxable Valuation more gradual by tying it to the rate of inflation.
Sales prices in my neighborhood have been decreasing. Will my property valuation decrease as well?
If you’ve owned your property for a significant amount of time, it is likely that your SEV exceeds your Taxable Value. If this is the case, a decrease in market value as determined by city sales studies, would result in a decreased assessed valuation and SEV. The Taxable Value however, is required by the Michigan Constitution to increase each year by the rate of inflation or 5%, whichever is lower. In the case of a long time property owner, the SEV could decrease, while the Taxable Value would increase. The Taxable Value cannot be higher than the SEV.
How does that impact my tax bill?
Because the taxes are based on the Taxable Value rather than the SEV, even with a decrease in the SEV, the taxes could still go up.
I just bought my house. Will the assessed value automatically be half of what I paid?
By state law, a home’s Assessed Value is not half its purchase price, but half of its market value. The study period and process identified in paragraph 1 is used to determine market values. The Assessor and the Board of Review must follow the same procedures for determining the Assessed Value (SEV) of properties that have experienced a “transfer of ownership” as are used for properties that have not experienced a “transfer of ownership”.
The “Bottom Line”?
If you’re wondering about your specific property tax situation, feel free to give me a call. I’d be happy to help explain your options and advise you how best to move forward.
Wednesday, December 5, 2007
A quintessential American food.
I really like a good hamburger. Not every day, mind you, but once a week is great. Like most of us, I can cook up a good burger on the grill (except during winter – I want the burger cooked, not frozen!).
Most of us have our favorite restaurants, depending on the type of food we want to eat. For me, the best hamburger place is Krazy Jim’s Blimpy Burger, in Ann Arbor. Blimpy’s has been serving “Cheaper than food” burgers since 1953 – long before I was even a thought in my parent’s minds! Blimpy’s has won the People’s Choice “Best Burger” award from the Ann Arbor News for many years running.
The menu at Blimpy's is brief, but the possibilities are many! The mathematicians at U of M have figured out that there are 1.2 million possible combinations of burgers you can order!
When you order at Blimpy’s, you have to know the protocol:
First, you tell the fry cook how many patties you want (from 2-5).
Next, you say what kind of bun you want.
Then, you tell them if you want anything from the grill (like grilled onions).
Don’t tell them anything more than this, for now.
Then wait and watch as they cook your burger right in front of you.
As your burger is finishing up, the cook will ask if you want any cheese on your burger (don’t tell them anything about cheese until they ask you). The cashier will also ask what condiments you want.
The place can be a little intimidating to a first-time visitor, so remember this order well, and you’ll fit in like a regular.
My favorite burger at Blimpy’s is a double on a regular bun, with grilled onions and bacon. Couple it with an order of fried zucchini sticks, and mmmm….
If you haven’t been there, you owe it to yourself to experience Blimpy’s – and then keep coming back.
Monday, December 3, 2007
We all awoke this morning (Monday morning, the first day of the new work week) to find the residue of the winter storm which blew through last night. Wind gusts were up to 50mph! Snow, ice, and even Black ice were all over our roads.
Driving safely is an individual responsibility. Leaving the house this morning, most of us knew that we’d have to exercise extra caution in our morning commute.
Still, THREE PEOPLE DIED ON OUR ROADS THIS MORNING!
This is what I’m mad as hell about!
First, we have the dithering idiots in Lansing. They’re quick to raise our taxes to balance the state budget.
In Michigan, did you know that we pay 51.6 cents in taxes for every gallon of gas that we buy! This is the 5th highest rate of gas tax in the country, and well above the national average.
So, what do we get from those taxes? If you’re like me, you likely think that we drive on some of the worst roads in the United States! The roads are maintained by County road commissions. For us, that’s the Washtenaw County Road Commission (WCRC)
We read in the WCRC news update of November 21, 2007 that they have imposed layoffs in their staff. Now, I’m certain that none of the “desk jockeys” were included in those cuts. No, it’s more likely that the cuts came from the men and women who actually maintain our roads. You know, like GRADING our horribly bumpy gravel roads, or, SHOCKINGLY! Applying salt or sand to icy roads on a busy Monday morning commute.
Upon further research, I have learned that the WCRC will apply the following criteria to winter road maintenance:
1. Roads will be treated only when there is more than 2 inches of snow on the road. (A
condition we experienced this morning).
2. No weekend maintenance will be done.
So, if we get a blizzard on Friday night, I guess we’re on our own for getting around on the County roads!
If you’re like me, and mad as hell about the state of our roads, it’s time to make our voices heard! Write or e-mail to your local and state representatives. We need better results from our gas taxes!