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Why Selling Now Makes Sense

by Mark Brace

Daily Real Estate News  |  April 16, 2008
Why Selling Now Makes Sense

Home owners who are reluctant to sell because prices have fallen, should do the math, and realize that the market downturn could work in their favor, say practitioners in hard-hit, but still pricey Boston.

Their reasoning may work in many other parts of the country as well.

"People are finding houses at prices they thought they'd never see again," says David W. O'Neil of Century 21 Spindler & O'Neil Associates in suburban Boston.

O’Neil points out to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.

In general, the toughest sell is people who bought about four years ago at the height of the market, says Zur Attias of The Attias Group at Barrett & Co. in Concord, Mass. But even for these home owners, selling now may make sense as long as they can at least break even.

He argues that almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district, but on a busy street. Or it may in a great neighborhood, but it's a Cape, not a Colonial. These are things Attias calls "unchangeables."

He says it’s a good time to sell if a seller can get rid of the most negative unchangeables in his current home, and replace them with better unchangeables in a new home. Once the market really turns around, the growth will be bigger in the better house, he predicts.

Real Estate buyers are usually highly focused on the purchase price of a property. This is a legitimate concern. The purchase price is one of the most important considerations in a real estate transaction. But at the same time home buyers too frequently treat interest rates as a secondary concern. Many buyers will stress over $300 or $400 in negotiations over purchase price. But when told that interest rates dropped half a point, home buyers will often respond with a shrug.

This is frequently because it is easy to understand the difference between paying 200k and 195k for a house. But it's harder to appreciate the difference between an interest rate of 6.5% and 6.0% for a house. But interest rates can have a large influence on mortgage payments. Using a mortgage calculator first let's look at the difference between the mortgage on a 200k and the mortgage on a 195k house assuming a 6.5 percent interest rate.

200k  (6.5%)  Mortgage  $1264.13 per month
195k  (6.5%)  Mortgage  $1232.53 per month

The difference ends up being $31.60 a month.

Now let's look at the difference between an interest rate of 6.5% and 6.0% on a 200k house.

200k  (6.5%)  Mortgage  1264.13 per month
200k  (6.0%)  Mortgage  1199.10 per month

The difference ends up being $65.03 a month or $780.36 a year. A simple half point drop lowered the mortgage payment by 5.4 percent.

Interest rate changes are not that uncommon. We wrote a tool that graphs mortgage rates over time based on the interest rates provided by Freddie Mac. In the middle of 2007 we saw interest rates of 6.7%. At the beginning of 2008, interest rates were down to 5.75%. What is a little more interesting is when we switch the toggle on our tool from the interest rate to the mortgage on a 200k house based on the interest rate for that date http://www.escapesomewhere.com/blogim/mortgage_rates_broker.jpg. From the middle of 2007 to the beginning of 2008, we saw a drop in the monthly mortgage payment on a 200k house drop from $1290 to $1170, a difference of 9.3 percent. This is why when buyers say they are waiting for prices to drop 5%, it might be a good idea to tell them that the actual mortgage they would get on a house has already dropped by more than 5 percent.

In light of all the mortgage issues over the last few years, it highlights why home buyers should shop around for interest rates. All too frequently home buyers will go with the first mortgage person they meet under the assumption that everyone has roughly the same rates and that a half point isn't really that big of a difference. As we have seen above, a half point can make a significant difference in someone's mortgage payment.

In summary, home buyers should still focus on price because it will always be an important part of the real estate transaction. But if home buyers start to look at interest rates more closely, they will end up with more success in their real estate purchases and lower mortgage payments.

EXISTING HOME SALES REBOUND in Grand Rapids

by Mark Brace
The Grand Rapids Association of REALTORS reports that sales of existing homes, including single-family homes, vacation homes, and condominiums, rose to record levels in January of 2008. The Association reported 996 sales in January of 2008 - an 18.9 percent increase over the same period last year, and its strongest January sales report since 2002. This comes on the heels of the Association's report that sales of existing homes in each month of the fourth quarter of 2007 also rose to record levels when compared to 2006. Jim Fase, President of the Grand Rapids Association of REALTORS, said that this notable rise in home sales means we will likely see a faster and more meaningful recovery of the local housing industry, which will help to stimulate overall economic activity. "The average price of an existing single-family home in January was $129,500, a reduction that was anticipated in light of the increased number of sales of homes in January that were at or near foreclosure. Subprime loans and other risky mortgage products have virtually disappeared from the marketplace which means that current sales are more stable and will lead to higher home values later in the year," he said. The adjustment in the average price will also enable more first time homebuyers to purchase a home. The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) reports that Grand Rapids ranks as the fifth most affordable major housing market in the U.S. This is based on a measurement of the percentage of homes sold in the Grand Rapids area that are affordable to families earning this area's median income. "The steady increase in the number of home sales in this area gives us confidence that we may have turned the corner," Fase concludes.

Outside investors sink $150M in West Michigan properties

by Mark Brace

It's a record year in western Michigan for out-of-state investment, which likely surpassed $150 million, estimated Colin Kraay, investment adviser at Grubb & Ellis|Paramount Commerce in Grand Rapids.

In the last days of 2007, the firm negotiated the sale of 17 industrial buildings for $35 million to $40 million to California-based Core Realty Holdings - a return buyer in the region. Core in 2005 purchased several industrial buildings in Kent County and the lakeshore.

This purchase, of an undisclosed price, totaled 572,000 square feet and included 90 tenants, Kraay said. Principals of First Cos. Inc. in Grand Rapids, which managed all, built many, and owned some of the properties, organized the sale and will continue to manage the buildings.

"It was a sale we have thought about for quite some time," First Cos. President Jeff Baker said. "It's one of the biggest ones we've done."

"West Michigan doesn't often see a lot of these large portfolio sales," Kraay said, noting that the buyer sought multiple buildings in one transaction. "Core looks for stable properties with solid income potential and income growth. They saw those in these properties."

Kraay, along with brokers Chad Barton, John Kuiper and Duke Suwyn, represented buyer and seller. The firm handled a record $115 million in 2007 out-of-state investment into western Michigan, Kraay said, estimating the entire region brought in about $150 million.

"We'll probably see a little bit of a slowdown" in 2008, he predicted. "One hundred fifteen million dollars is a big number. 2007 was really an enormous year."

Investment broker Patrick Mohney of NAI West Michigan in Grand Rapids expects even larger figures in 2008, however.

"I wouldn't be surprised if in the next year, it wasn't three times that," Mohney said. "Investment's at least half the (real estate) activity going on in the area. Sometimes I'm even getting calls from people with no connection here whatsoever."

Daily calls from investors, most often in San Francisco and Chicago, continue unabated, he said. A continued weak dollar might even prompt foreign investment, he added.

"About 70 percent of our buyers for Michigan real estate come from out of state, lured by the relatively high cap rates and relatively low prices," noted Michael Cagen, associate broker at Marcus & Millichap's Grand Rapids office.
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When Selling Your Home, Using Scents Makes Sense!

by Mark Brace

Even though now doesn't seem to be the ideal time to sell your home, you can take heart in knowing that small actions may make a difference in getting your home sold.

"Scentmosphere" isn't exactly new but it is rapidly becoming a way to attempt to attract buyers.

"When [buyers] walk into a house before they actually see anything in that house, because they breathe, they are smelling. So they are actually getting an impression, whether it's conscious or subconscious, of your home -- just by the way it smells," says Rick Ruffolo, senior vice president of brand, marketing, and innovation for Yankee Candle Company.

So, right now take a deep breath. What kind of "smellment" is your home making?

Choosing to proactively make a statement in the way your home smells is just another step in helping to sell your home faster. It's the next step after curb appeal. Ruffolo says curb appeal gets buyers in the door but then they see and smell your home and begin to decide if this is the home for them.

"If it's a vacant home it can be musty. But if it's an active home it also could have [odors of] whatever activities that are going on in that house," says Ruffolo.

Are buyers going to smell the over-sized dog that traipses around the house after rolling in the newly-cut grass? Are they going to smell your son's gym bag filled with dirty socks that has been buried deep in his closet for the last five weeks? While we certainly don't all have the same preferences for scents, most would agree neither of those two things pose a welcoming aroma.

"It's not rocket science, but it is candle science," says Ruffolo.

He suggests candle fragrances such as the smell of freshly-baked cookies. "Not everybody likes to eat cookies but everybody enjoys the smell of cookies, and when I say everybody, there may be the exception here or there, but the vast majority would enjoy the baking smell. So we're always fond of fragrances that are in the vanilla family," says Ruffolo.

Fragrances such as French vanilla, butter cream, and créme brûleé that mimic baking scents are welcoming and inviting for buyers. Scents register in our brain and frequently remind us of our past experiences. Creating pleasant aromas in your newly-listed house can help the buyer to experience an emotional connection with the home.

Ruffolo says when it comes to bathrooms, great rooms, or even basements it's a good idea to try different fragrances.

"You may want to think of what we refer to as clean or fresh fragrances and those could be based in various fruits, so the citrus family is a really good one," says Ruffolo.

He says, however, there are some fragrances that you should avoid as they don't tend to appeal to the masses or they have too strong an odor.

Ruffolo instead encourages sellers to use fragrances that will instantly be winners such as vanilla, kitchen spice fragrances, citrus, and the smell of freshly cleaned laundry.

"Scent impacts the atmosphere," says Ruffolo. He says that candles are the best way to get the fragrant aroma in the air, but if you don't have time to let them burn before showing your home there are other methods that work to get the right "scentmosphere."

The company has electrical plug-in products that have oil them so they provide continuous fragrance. "If you're away from the house for a period of time, you don't have to worry about the candle being lit," says Ruffolo.

Reed diffusers are both decorative and powerful for giving off fragrance. The diffusers contain oil and the reeds help to draw the oil up and out into the room. "They don't fill a large room but they fill a nice small space very well," says Ruffolo.

But if you give every room a fragrance, is there a point of over-saturation? Ruffolo says that's not likely to happen.

"It's not like the person who put on too much perfume. A home is a very large place and it absorbs a lot of the fragrance so it would be pretty hard to overpower a house with too much fragrance," explains Ruffolo.

Ruffolo says with all the tips out there about selling a home, the scent factor is often the most forgotten.

"If you don't have a scent that you want in there, buyers are going to smell whatever is going on in that room. So if it's been closed up or doesn't have a lot of air flow [there will] be more of a musty, damp, or a less desirable scent," explains Ruffolo.

It just makes sense that if you want to create an appealing environment for buyers, pleasing scents should be part of the selling plan.

 

The Top Ten Reasons It's a Great Time To Buy Real Estate!

by Mark Brace
  1. Selection, selection, selection. There are about 10,000 resale homes on the market in Grand Rapids Metro Area, Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 3,000-4,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.

  2. No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.

  3. You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.

  4. Patience is tolerated. In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer.  Today a buyer can take their time. Look at several homes and think about your decision for a few hours.

  5. Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.

  6. There are plenty of specs. In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.

  7. Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.

  8. Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.

  9. Location, location, location. Today's buyers can find homes closer to work. In the past buyers flocked to Maricopa and Queen Creek in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.

  10. Real Financing is available. The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!

Myths of Credit Scoring

by Mark Brace
Myths of Credit Scoring

There is a tremendous amount of misinformation spun into the marketplace regarding consumers' credit rights. Here are a few examples of the most prevalent myths.

Myth #1- When I pay off an account, it will no longer be reported or be considered negative…Wrong!

Myth #2- If a negative item is deleted, it will just come right back on my report…Wrong!
Myth #3- Certain items such as bankruptcies, foreclosures, and tax liens are impossible to remove from a credit report... Wrong!
Myth #4- Disputing a credit report is easy and any consumer can do it for themselves… Wrong!
Myth #5- Creditors will read my 100-word statement and take my side of the story into account... Wrong!
Myth #6- Credit Bureaus are infallible, a branch of the government, or otherwise beyond reproach... Wrong!
Myth #7- I can get a new credit file by getting a federal ID number... VERY, BIG MISTAKE!
Myth #8-If I build enough good credit; it will offset my bad credit... Wrong!
Myth #9-A Credit Counseling Service can help me restore my credit rating... Wrong!
Myth #10-The law requires that an item remains on a credit report for 7 years... Simply not so.
Myth #11- I can’t have too much good credit... Wrong!
Myth #12 Multiple mortgage inquiries will NOT hurt your credit as long as they are pulled within x number of days. If you are telling your clients this, you are doing them a disservice. Invest a few minutes to find out the truth. (Your clients deserve it)


$ Credit Bureau Mistakes Cost You $
Results of a research study conducted by (PIRG), Public Information Research Group-Washington, DC.
• 29% of credit reports contained serious errors, false delinquencies, or accounts that do not belong to the consumer.
• 41% contained demographic information that was misspelled, outdated or incorrect.
• 20% were missing major credit, loan, mortgage or other information to demonstrate the positive credit worthiness of the consumer.
• 26% contained closed accounts that were closed by the consumer but listed as open.
•70% of the reports contained mistakes.
THESE ERRORS LOWER CREDIT SCORES AND COST YOU MONEY & CAN BE CORRECTED

Please everyone check your credit every once and a while.

What Your Real Estate Agent Knows That You Don't

by Mark Brace

When you make the decision to sell your home, you are under no obligation to hire a real estate agent or broker to help you with the sale. Nonetheless, most people prefer to hire a real estate agent in order to better protect themselves. And, it also puts them in a better position to successfully sell the home in a short amount of time.

When you hire a real estate agent, you gain access to a wealth of knowledge that can help keep you out of trouble and will help provide for a smooth transaction. Here are just a few things your real estate agent knows that you probably do not.

The Federal Fair Housing Act

According to the Federal Fair Housing Act, you cannot discriminate against someone when selling a home. The act defines seven different classes of people who are protected against discrimination. These include:

  • race
  • color
  • national origin
  • sex
  • religion
  • handicap
  • familial status

If you do not enlist in the help of a real estate agent, you put yourself at risk of violating this act if you refuse to sell your home to an interested buyer who may be in a protected class. In addition, you might even accidentally violate these laws without realizing it. For example, there are certain words that cannot be included in your advertisements for your home because they are in violation of the Fair Housing Laws. Some of these words include:

  • bachelor apartment
  • children welcome
  • couples
  • gentleman's farm
  • golden agers
  • handicapped
  • integrated
  • married
  • mature
  • mother-in-law quarters
  • professional
  • seniors
  • singles only
  • sports-minded

As you can see, some of these terms seem perfectly innocent. Therefore, it is a good idea to get the help of a real estate agent so you can tap into his or her knowledge and experience in order to stay out of trouble.

State Real Estate Laws

Although there are similarities in real estate laws from one state to the next, each state has its own set of rules that must be followed. If you do not understand these laws, or are unaware of these laws, you can inadvertently break the law when selling your home. In addition, by not being fully aware of your seller's rights, you might actually lose out on money during the transaction.

Taking Advantage of Connections

Aside from legal matters, a real estate agent simply has a vast number of connections making it possible to sell a home more quickly and for a higher asking price. Similarly, because people come to real estate agents when searching for homes, you are able to tap into a much larger market of interested buyers when you get the help of a real estate agent.

Because a real estate agent has experience with selling homes, he or she can also provide you with tips to help increase the market value of your home and to make the process go by more quickly. For example, small things such as painting a room a different color can go a long way when it comes to increasing the appeal of the home. By taking advantage of the agent's expertise, you just might have a much more profitable selling experience.

Bargain Smartly to Get the Best Deal

by Mark Brace

Bargaining is an art, particularly when the buyer wants to make a rock-bottom bid without insulting the seller.

"The offer has to be palatable and show you've done your homework," says Deb Greene, president of the Minneapolis Area Association of REALTORS®.

Sheri Fine, an associate with Edina Realty in Minneapolis, agrees. "Sometimes an unreasonably lowball offer can make a seller so angry they won't make a counter offer or deal with a buyer."

Here are their suggestions for coming up with a number that is competitive and compelling.
  • That an offer that is more than 10 percent off the list price isn’t customary and is likely to be rejected.
  • Realizes that there are other attractive homes on the market and won’t be shattered if the sellers reject their lowball offer.
  • Recognize the home’s strengths as well as its weakness.
  • Make a list of reasons to share with the seller for offering less than list price.
  • Instead of asking for the price to be lowered, negotiate other tangibles such as repairs, closing dates, and closing costs.
  • And lastly be respectful whenever you are around the seller.

Source: Star-Tribune, Lynn Underwood (11/17/07)

As the Public may not be aware yet, but the Grand Rapids Association of Realtors (GRAR) is switching technology used to run its MLS system. For the past 14 years GRAR has programmed and operated it’s own RE/Source (in-house MLS), This MLS has proved to costly and difficult to keep-up in today’s highly connected society to maintain and program. On February 1, 2007 GRAR elected to convert its in-house MLS system to an outside Provider, and Solid Earth’s “LIST-IT MLS” system was selected. The anticipated conversion date is December 6, 2007, and then all GRAR Realtors will be using a Forced over to the new MLS system.

 

For me I’m very excited about all of the extremely powerful tools that are now going to be available to the realtors that we could only dream of a for the last several years. It’s about time we as Realtor s caught up to the emerging technology to provide high quality detailed information to our Clients. I feel fortunate to have a strong computer background, and know that all Realtors are going to be on a learning curve for the next 6 months to a year. After previewing the new Solid Earth system today, I think most realtors won’t even be able to utilize all the power tools and features available, and they will continue operate the way they have been doing without embracing the technology change. Realtors will now have such comprehensive local area information that if you were buying and selling a home, you would absolutely want to consult with a Realtor, the database and statistical features will be seen as a must have to be able to accurately position a property to draw an offer, and or value a property to determine a proper and most likely offer price for any property for buyers.

For Sale By Owner people are going to be left in the dust, because they won’t be able to compete with the tools and information available to the professionals that buy and sell everyday. Again I’m so very excited we are moving to this incredibly powerful new MLS system. Looking forawrd to amazing my clients in the future.

 

Displaying blog entries 71-80 of 93

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Mark Brace, Realtor, ABR, GRI, CRS, SRES, e-PRO, A
Berkshire Hathaway HomeServices Michigan Real Estate
3000 East Beltline NE
Grand Rapids MI 49525
Direct: (616) 447-7025
Cell: (616) 540-7705

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