COVID-19’s Effect on the Michigan Real Estate Market

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During these unprecedented times, I have received a lot of questions regarding the home buying/selling process and how it is being affected by the government order to “stay in place”.  Here are the major take-aways:

  • Real estate brokers and salespersons are not “critical infrastructure workers”and therefore may not leave their homes for work.  The only narrow exception to the order is the instance where work is absolutely necessary to assist those with a genuine and emergent need, such as an immediate lack of shelter.   Real estate services, like the showing of homes and other property, open houses, and other client contact should be considered to be non-critical and travel to do so is prohibited through April 13, 2020.
  • Mortgage Lenders and Title Companies fall under the “critical infrastructure workers” category and will continue working. Lenders are working remotely, so you can still get a pre-approval, apply for a mortgage, re-finance a mortgage, and receive funds to close on a home. Title companies are offering “drive up” closing; they overnight the closing package to the buyer & seller for signatures, then you drive to the office where an employee will collect the closing documents and payments. If the buyer/seller requests to close in the building, the real estate agent will not be allowed to attend. Real estate brokerages have the ability to participate in closings via conference calls or other video conferencing methods to comply with the Governor’s order.
  • Home inspectors do not fall into the “critical infrastructure workers” category. If you have an accepted offer during the “stay in place” order, have your real estate agent include an addendum for a delayed inspection.
  • Michigan Realtors® have provided real estate agents an “Addendum to Purchase Agreement COVID-19 Condition Extension”. This addendum states that if COVID-19 causes a shutdown or work stoppage of a governmental entity or settlement service provider makes it temporarily impossible for either party to perform as required under a Purchase Agreement, or in the event Purchaser or Seller becomes the subject of a medically required quarantine, then all outstanding contract deadlines may be extended for as long as these conditions continue, but in no event longer than thirty calendar days.

If you are planning to make a move this year, this is a good time to plan. Talk to a lender to find out how much you can afford to pay each month, what amount you will need for a down payment and how much you will need to save for closing cost. Use the links above to search homes for sale, this will give you an idea of what is available in your price range. If you have a home to sell, use the link above to get an idea of your current market value.

In closing, I am always available to answer questions and provide recommendations for local lenders and service providers. You can reach me via phone, text, email or visit me on social media.

Wishing you good health, Dani

 

The Counter Offer-Negotiation Strategies for Home Sellers

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Getting an offer on your home is very exciting. Then you open the offer and realize it is not what you were expecting, and you are wondering what to do next. Answering an offer which is not acceptable is a matter of strategy.  When you receive an offer, take charge and direct the process. Here’s a list of questions to ask when you receive an offer.

  1. Deposit: How much and who has it? (Is it a serious offer, as evidenced by a sufficient deposit?)
  2. Price: What exactly are the buyers offering?
  3. Down payment: Cash or gift money from a parent?
  4. Terms: Cash purchase or will the buyer need a new mortgage?
  5. Occupancy: How soon do I have to get out?
  6. Contingencies: Is there anything that could weaken the deal?

As you go through these questions, be sure you understand the answers that are given to you.

Usually, offers aren’t great or terrible. They’re somewhere in between. List the pros and cons of the offer so you can see what the trade-offs are.  Once you have decided what you will accept, here are a few approaches to handle the offer.

Counter: The most common way to respond to a low offer is to send the buyers a counter offer. You can counter at the list price and terms or come down and offer something in between list price and the offer.

Highest and Best: This strategy allows the buyer to revise their offer, should they choose. This is most often used in a multiple offer situation but works just as well with a single buyer who needs to know their offer isn’t acceptable.

Include Terms in Negotiation: The price is not the only part of an offer which can be negotiated; the terms can also be changed. Sometimes a seller can get a higher price by offering longer escrow or including appliances.

Reject the Offer: There is no reason to respond to an offer which isn’t even close to acceptable. A sell can reject the offer altogether.

Ready to buy and/or sell a home? Call, text or email me! If you are active on social media, please look me up on Facebook, LinkedIn, Twitter and Instagram using the icons on the bottom right of this page.
Dani

Streamlining the Lending Process

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If you are starting a search for a new home, most likely you will need to get a home loan. The process might seem overwhelming if you have not obtained a loan in a long time, even more so for first time home buyers. The lending process does not need to be difficult, and by being prepared, you can streamline the process and ensure you can get the best loan for your needs.

  1. Choose a Lender: The first step is to find a lender. You might start at your bank or credit union. Another good source for referrals is your REALTOR®, family, and friends. The lender should have access to a variety of programs as well as the government options; VA and FHA programs.
  2. Be Prepared: Before you meet with the lender, gather the information you will need. Generally, you will need to provide current pay stubs, W2s, bank account statements, and the last two years of your tax returns. If you are divorced and, or, have child support obligations, bring the final court document with you as well.
  3. Understand Your Limits: Typically, you will be able to borrow up to 31% of your gross monthly income. Also, the lender will require that you have no more than total monthly debt of 36% of your gross income. Be prepared to disclose all your debt, even if it does not appear on your credit report. Your loan officer is your advocate and there to help you succeed.
  4. Please Don’t Make Any Credit Changes: Once you have started the loan process, it is critical that you make no changes to your credit. Postpone any big purchase, do not apply for new credit of any kind and do not pay off any credit cards. It’s also important not to change jobs during the approval process, even if it’s for more money. Before you do anything, talk to your lender.

Getting a home loan is not as difficult as it was a few years ago, but it is essential to plan early and do the right things. Once you decide to buy a home, speak to a lender immediately and then follow their advice, and you will find the loan process simple to manage.

Ready to buy and/or sell a home? Call, text or email me! If you are active on social media, please look me up on Facebook, LinkedIn, Twitter and Instagram using the icons on the bottom right of this page.
Dani

What are Contingencies in a Real Estate Contract?

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Contingencies are commonplace in contracts of all kinds. A contingency allows for one party or another to legally back out of a contract in the event of some specific condition occurring. They are protection against the unknown.

In real estate, there can be contingencies inserted for either buyer or seller or both. These take many different forms, and until removed in writing, either party may change their minds based on the result of the contingent event or issue.

Here are some examples of home buyer contingencies:

  • Home inspections – May identify the need for major repairs or builder oversights that a buyer is not prepared to take on
  • Specialty inspections – Mold, geological, roof inspections
  • Code Violations – An investigation into improvements made without permits
  • Lender Appraisal – Ensures the offered price is not too high
  • Sale of Current Home – Allows the buyer to back out if they cannot sell their current home in a specific time frame
  • Final Loan Approval – Loan is ready for signature and close
  • HOA CC&Rs – Review of documents to ensure rules and regulations do not infringe on the enjoyment of the property
  • Insurability – Home owner’s insurance available at a reasonable rate

Home sellers can also have contingencies included, such as one which states the sale is contingent on finding a replacement home. If the conditions of the contingency clause are not met, the contract becomes null and void, and one party can back out without legal consequences.

Contingencies are a fact of contract law, and in real estate, they ensure that buyers and sellers know their roles and obligations. Because time is of the essence, each contingency has a specific deadline. Be sure to pay close attention to these deadlines to avoid negative and costly effects on the real estate transaction.

Ready to start looking for Your NextHome? Send me a message using the box to the right, or call, text or email me! If you are active on social media, please look me up on Facebook, LinkedIn, Twitter and Instagram using the icons on the bottom right of this page.

Dani

Mortgage Pre-Qualification, Pre-Approval and Down Payment

There is plenty of real estate terms used in transactions. Needless to say, it can be confusing for both buyers and sellers trying to navigate the course, and the home loan process might feel overwhelming and difficult to understand. Faced with terms like “Pre-Qualification” and “Pre-Approval” that are often (and mistakenly) used interchangeably, it’s no wonder they find themselves wondering how to proceed. So here is the skinny on the two mortgage “Pre’s”…

Pre-Qualification

The first step in obtaining a home loan is to meet with a lender and discuss your financial situation. The lender will inquire about income, job stability, debt and credit (see example online form here at my preferred lenders site) . Once they have performed a basic review of the qualifications and run credit, they will issue a Pre-Qualification Letter to you, the potential buyer. This letter will identify the maximum sales price, down payment requirement and basic terms of the loan, such as interest rate.

The Pre-Qualification letter is used to provide evidence that the buyer has been reviewed by a lender who is couching for their ability to obtain a loan.

Pre-Approval

A Pre-Approval is quite different. In this case, the lender collects all the necessary information and proof of eligibility and has it reviewed by the lender underwriter for approval. A Pre-Approval letter is almost like shopping with cash, the only remaining piece of the puzzle is the property they are buying.

Down Payment: How much do you need?bank-loan-concept-2-1057032-1279x852

Gone are the days when anyone could buy a home with just a promise and a signature (thank goodness!). The “No Documentation” loans allowed virtually anyone to buy a house with no money down, with just a simple credit check. After the mortgage meltdown, this all changed as lenders tightened guidelines and down payments were once again required.

How much down payment do you actually need? The answer might surprise you; there are many ways to buy a home with less than 20% down payment. Let’s take a look at four economical loan options.

  • 0% Down – There are still two loan programs which allow you to buy a home for no money down; the VA loan and the USDA loan. The VA loan requires the borrower to be a qualified service person or veteran and the USDA loan is for certain areas under the Department of Agriculture (surprisingly, the areas in Michigan include suburban areas, not just rural).
  • 5% Down – Conventional loans with loan limits can allow you to buy a home with as little as 5% down. These loans do have Private Mortgage Insurance (PMI) which can be eliminated when the loan amount falls below the 20% threshold.
  • 3.5% Down – FHA offers first time home buyers a good home loan for only 3.5% down payment. Again, these loans have a limit and PMI but offer a faster entry into the housing market.

If you’re considering buying a new home, talk to a reputable local lender. I am always happy to share my preferred lender information, simply send me a message using the question box to the right.