Farmington Hills Real Estate and Events talk Michigan

Yes there are going to be quite a few new Metro Detroit foreclosures coming.  Between the moratorium that President Obama put on foreclosures and the moratorium that Governor Granholm put on them we don't have many Metro Detroit foreclosures right now.  Plus Fannie Mae the quasi government middle man is under going some procedure changes.  So some homes have been pulled off the market.

Even the big foreclosure real estate agents have a small inventory.  What has happened is that the moratoriums did not end until May.  So it takes us here in Michigan 6 months longer because of the homeowner redemption period.  So we may see a lot of new foreclosures hitting the Metro Detroit real estate market in December and January.

I hear that there are about 4000 that are about to hit.  But I don't think anybody really knows how many Metro Detroit foreclosures that will hit the market soon.

Current there are 229 Novi homes for sale as November 29, 2009.  The least expensive home is $59,900 and the most expensive Novi Luxury home is 3.99 million dollars.  The average time on the market is 204 days.  Of these 229 homes there are 50 Novi short sale homes.  These 50 homes have been on the market an average of 166 days.  Out of all these Novi homes for sale there are only 12 Novi foreclosures.  Overall there are not very many foreclosures in Novi.

I am going to break down the list of Novi homes for sale by price range.

Currently there are 18 Novi luxury homes that are listed over a million dollars.  Two of those Novi luxury homes are short sales.  The average time on the market for Novi luxury homes over a million dollars is 242 days.  In the last year only 3 homes have sold.  So that basically means that we have a six year supply of luxury homes for sale in Novi.  Those three homes that sold in an average of 160 days.

There are 62 Novi homes for sale under $200,000.   Out of the 62 homes there are 7 Novi foreclosures, and 22 of them are short sales.  The average days on the market is 167 days.  But the interesting fact is that 127 Novi homes have sold in the last year.  And the average days on the market for these sold homes is 98 days.  What that means is that Novi homes under $200,000 are selling in about 3 months if they are priced right.  If not they will be sitting on the market for about 5 months. 

In the $200 - $500,000 price range there are 105 Novi homes for sale under $500,000.  The average time on the market is 184 days.  Out of the 105 homes 5 are foreclosures and 21 are short sales.  In the last year there were 225 Novi homes that sold in the 200-500,000 price range.  Which means we really only have a six month supply of homes for that price range.  But they were still taking an average of 131 days to sell.  So the bottom line is that when you get up into the $200,000 - $500,000 range it will probably take up to 6 months to sell.

I hope this give you an idea of what the Novi real estate market is like.  if you have any questions feel free to call me with questions.   

Whether you are buying or selling Canton real estate here are 18 potential re-sale problems:

1. Unusual Easements or Restrictions
If unusual easements or restrictions were not disclosed up front, you may not be aware of them until you see the survey and title work. If you discover these, I suggest that you take a step back, and consider whether you will accept an unusual easement or restriction on your use of the property. Some examples: neighbors may cross the property to get to common areas, pets are prohibited, or major utilities cross property .

2. Lack of Yard
If a Canton home has much less yard area than others in the neighborhood, buyers tend to eliminate this choice. A steep slope may make the grounds difficult to use and maintain. Yards that have been terraced or landscaped may be exceptions. Compare your property to the yards offered by competing homes.

3.  High Tension Wires & cell towers
The general reaction by buyers to high tension wires crossing near the lot is to simply eliminate the choice.  Not many people like buying homes looking out to towers.  It reduces the number of buyers and your home will sit on the market longer.

4. Steep Driveway
In Michigan people think about how they are going to get up and down them in the snow.  People are worried about backing off the side or sliding down the hill.  I have had several women buyers that crossed off homes with steep driveways.  They were worried about snowy or icy driveways.

5. Busy Main Street
The noise related to a busy street is a turn-off to many buyers. This is more of a problem if the busy street is in front of the house and traffic is more visible.  But the are also worried about being able to pull out of their own driveway on to the street.  Also it is a big turn off for parents with young kids.  They are afraid of their kids running out into the busy road. 

6. Declining areas
If you perceive the neighborhood to be declining, this is a must to avoid. Choose areas that show pride in ownership. However, if you know the area is going to continue to depreciate then it may not be a wise choice to buy the Canton home..

7. Higher Crime Problems
If you sense that there are security problems - burglaries, drug trafficking, or safety problems for your children, take a step back and look at the facts and data on these issues before buying. These kind of problems will turn away Metro Detroit home buyers fast.  If you live in a higher crime area then your home insurance and car insurance will be higher than surrounding areas.

9. Remote Location
In most cities, areas that are closer to downtown tend to have a larger buyer pool than homes located in remote areas. However, you may choose to trade the privacy and setting of a country home with the resale potential.  If gas continues to go up will the house out of the city have a great resale value.  Or will traffic congestion make the commute to long?

10. No Comparable Sales
This indicates a possible re-sale problem. The home may be very unusual compared to homes around it, or the market may be slow. Understand the underlying reason for few or no comparable sales.  You don't want to be the largest home in the neighborhood, or the only log home, or the only contemporary home.

11. Lacks a Typical Amenity
In an area where nearly all homes are on the golf course, or have a basement, or include a garage, buyers will tend to avoid homes that lack these features. In an area of mostly older buyers, a home with the main bedroom upstairs may have trouble selling. Look carefully at what is generally offered in a given area.   Usually you want to buy a home with a basement.

12. Unusual Architecture
Homes that do not fit in to the neighborhood may have trouble selling. For example, the contemporary style home may not be a good fit in older wood frame areas.  It would be hard to sell a uniform suburban neighborhood.   In areas like downtown Northville many of the homes are Victorian style you would not want to put up a ranch in between two Victorians.  Being the "odd" architecture may reduce the number of potential buyers. 

13. Non Functional Floor Plan
Floor plans that make living in the home difficult will turn away buyers. Excessive stairs between rooms, rooms that are out of proportion, poor access to the backyard, low ceilings, few windows, and other layout issues will result in a re-sale problem. This may be an opportunity to take down walls, add windows and doors, and make creative changes to improve the functionality and value of a house. Design skill and a fairly high budget will be necessary.   Some examples are: Having to get to one bedroom through another bedroom, having only one bathroom in the bedroom.

14. Costly Improvements
The cost of certain improvements may be hard to recoup. Some examples may be imported fixtures, unusual craftsmanship, exotic woods, European appliances, non-native plants, hand decorated walls, etc. If these finishes are similar to locally available materials, they may not have a market value equal to their cost. In general many improvements will not get you dollar for dollar what you put into it.  (ie. swimming pools do not contribute the much of their cost in the value of the home.   In fact it may be a negative to some people).  A $30,000 pool may not increase the value of the home.

15. Out Dated Finishes
Most homes have some outdated finishes - from needing freshening up, to a complete makeover. This is where design skill and perseverance can completely transform a house. If you are new to remodeling, consider your budget carefully. Often the work can get quite extensive and tends to grow as the project develops.   (ie. formica counter tops in Canton homes over $250,000 is out where corian, SSV, and granite are in)

16. Insurance Claims
In some areas a home may have higher insurance bills because of previous claims from the prior home owner.  In Michigan I don't believe it is a factor.  However in flood prone areas, hurricane areas it is important to know the facts about a previous insurance claim. If it was due to a fire or flooding problem, you should have full disclosure. Large insurance claims are a red flag, and may result in difficulty in obtaining insurance on the home. Many Canton homes have had repairs covered by insurance, such as hail damage, and these are not a re-sale problem.

17. Commercial View
Homes in suburban areas that view office buildings or retail centers are less attractive to buyers. Buyers choose suburban neighborhoods for their concentration of single family homes, separated from commercial areas. Some buyers don't even like viewing parking lots or churches.  Parking lots next to a home are a concern to many parents with young children

18. No privacy
Most buyers in all neighborhoods want a certain degree of privacy in the back yard. If the house behind your Canton home looks down on your backyard or into your family room, this will be a sales objection. If the house next door is very close or turned sideways this can become a problem.  This problem can be by planting trees or bushes.

Here are another 2 pages of what adds value to your Canton home and what subtracts value from your Canton home.

Currently there are 200 Northville homes for sale on the market as of 11/29/2009.  The least expensive Northville home for sale currently is $84,900.  The most expensive Northville home is 3.5 million dollars.

                                     

Right now there are only 8 Northville foreclosures for sale.  There are 39 Northville homes for sale that are short sales.  Remember short sales are homes that the owners are trying to sell them for less than what they owe on the mortgage.  Short sales have to be approved by the bank.  They should really call them long sales because short sales can take anywhere from 2 to 6 months to complete.  Many times they don't ever get approved by the bank.

The average time on the market for the 200 Northville homes for sale is 161 days.  I am going to break it down a little more.

The 13 Northville homes that are priced over a million dollars.  They have been on the market on an average of 309 days.  Out of those 13 luxury Northville homes non of them are short sales.  There were only 3 homes that sold in the Northville Luxury home market in the last 6 months.  The metro Detroit luxury home market has a two year supply of homes.  Northville luxury homes are moving slow.

In the under $200,000 price range there are 27 Northville homes for sale. 12 of them are short sales.  The 27 Northville homes under $200,000 have been on the market an average of 194 days.  In the last 6 months 36 Northville homes in the same price range have sold after being on the market on the average of 87 days.  What that tells me that if a Northville home is priced right it will sell in less than 3 months.  In the under $200,000 range.

  

Michigan has a complex property tax systems.  Basically your Metro Detroit home is either homesteaded or non homesteaded.    Homestead basically means that you live in the house as your principal residence.  Our Michigan government has seen fit to give you a break on your Michigan property taxes if you live in the house as your principal residence.  It is a reduced rate on your Michigan property taxes if it is a "homesteaded property"

Non-homestead means that it is a commercial property, a rental property.  It means that you are going to pay full price on your Michigan property taxes on your Metro Detroit real estate.  But what happens if the property is duplex, or quad, or a property with two homes on it, or if you rent part of the property out?  

Here are the Homestead exemption Rules for how much you can claim of a property.

What about properties that have two homes one it?  What about duplexs?  What if I rent out the house to some friends?  Here are the rules right from the Principal Residence Exemption (PRE) Affidavit

  If you own and live in a multi-unit or multi-purpose property (i.e., a duplex, a quadplex, or apartment building, or a storefront with an upstairs flat), you can claim an exemption only for the portion that you use as your principal residence. Calculate your portion by dividing the floor area of your principal residence by the floor area of the entire building.

If the parcel of property you are claiming has more than one home on it , you must determine the percentage that you own and occupy

as your principal residence. A second residence on the same property (e.g., a mobile home or second house) is not part of your principal residence, even if it is not rented to another person. Your local assessor can tell you the assessed value of each residence to help you determine the percentage that is your principal residence.

If you rent part of your home to another person , you may have to prorate your exemption. If your home is a single-family dwelling

and the renters enter through a common door or your living area to get to their rooms, you may claim a 100 percent exemption if less than 50 percent of your home is rented to others who use it as a residence. However, if part of the home was converted to an apartment with a separate entrance, you must calculate the percentage that is your principal residence by dividing the floor area of your principal residence by the floor area of the entire building.

 

I recently got a this question from a Northville real estate buyer.  Does Radon pose a serious health hazard to my family?  And really what is radon? 

Radon is a naturally occurring, radioactive gas, derived from naturally occurring uranium deposits in the earth. It is colorless, odorless, and tasteless.  It belongs to the group of noble gases, including helium, neon, argon and xenon, which are all characterized by their low level of chemical reactivity.  Radon is also a naturally occurring gas in Earth's atmosphere.  Why is radon is a radioactive gas? It comes from the natural decay of uranium that is found in nearly all soils.

So then why is radon hazardous is it occurs naturally?  Radon gas is hazardous when it builds up to high levels.  Congress would like to set home radon levels to outdoor radon levels.

Radon typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation. Your Plymouth or Northville home traps radon inside, where it can build up.  Nearly 1 out of every 15 homes in the U.S. is estimated to have elevated radon levels. Radon gas can also contaminate well water but you are more likely to inhale radon particles by breathing than by swallowing water.   Because radon is nine times heavier than air, elevated radon levels build up in basements and on lower floors of your Plymouth or Northville home.

Radonis the leading cause of lung cancer among non-smokers. Radon is the second leading cause of lung cancer in America and claims about 20,000 lives annually.   Dr. Maria Neira of the World Health Orginization said that "Most radon-induced lung cancers occur from low and medium dose exposures in people's homes."   If you smoke and your home has high radon levels, you're at a higher risk for developing lung cancer. Some scientific studies of radon exposure indicate that children may be more sensitive to radon. This may be due to their higher respiration rate and their rapidly dividing cells, which may be more vulnerable to radiation damage.  (I also think that many people ship their kids off to the basement, and that kids are now spending much more time in the house).

There are two main sources for the radon in your Northville home: indoor air, the soil and the water supply. Radon enters the indoor environment from the soil by penetration of a building's foundation or by release from well water.  Radon poisoning occurs when areas without adequate ventilation build up high amounts of radon gas. This can occur in underground mines, basements and in homes or buildings. Radon, like all other radioactive elements or gases, decays over a period of time, giving off tiny radioactive particles. When these particles are inhaled, they can damage the DNA in the cells of the lungs, resulting in lung cancer.

Although scientists were aware that radon exposure caused lung cancer, the high levels of radon that can accumulate in homes and buildings wasn't discovered until 1984 when the basement of a home in Pennsylvania was found to have radon levels so extreme that the owner of house was setting off radiation alarms at the nuclear power plant where he worked.

So do Plymouth homes and Northville real estate have radon gas in them?  I would bet every Northville subdivision and Plymouth subdivision has a home that has high radon levels.   So it is always good to have it tested.  Homes with higher radon levels can be fixed.

Should you not buy a Northville home if it has a high level of radon?  That is up to you but I would say the proper solution is to have the radon mitigated.  Have a Radon mitigation system installed.

This is the first part of my series on Radon.  I hope it helps explain a little about radon.

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Over the past year I have read different blogs on somebody complaining or wondering if they should do this or that.  So here is my re cap>>>>>

1.)  You the listing agent are working a short sale.  You have an offer.  The negotiator comes back and tells you that you need to reduce your commission to get the deal done.     WOULD YOU OR WOULDN'T YOU?  I don't like being told what to do but I would, simply because I work for the seller.  It's my job to get the deal done.  Sure I would love the full 3% but I was always taught something is better than nothing.  If it will seal the deal I will take a little less to get it done.

2.) You get a phone call about your listing.  It is a new listing and somebody wants to see it but they have an agent that is not available.  WOULD YOU OR WOULDN'T YOU GO SHOW IT?  My thoughts on this one is multiple questions.  My first question to the buyer would be,  is where is the agent?  On vacation or a family member sick then I would show it.  Just unavailable just this very minute then maybe not.  I would show it because again I am working for the seller TO SELL THE HOUSE.  I think it would be wrong not to go out of the way to show the house in order to sell it especially if you are just sitting in the office.  You never know.  BUT I WOULD ALSO QUALIFY THE BUYER AND SEE THE PRE-APPROVAL LETTER BEFORE I DID THE OTHER AGENTS WORK.  Going the extra mile might make the sale.

3.)  This one I have never read on Active Rain but I have heard about agents doing this.  You are sending listings to your clients.  Some only offer 2.25% instead of 3%.  WOULD YOU OR WOULDN'T YOU SHOW THE LOW COMMISSION LISTINGS.  To me this is a no brainer.  Show the listings all of them.  Again you never know when it may be the home of your clients dreams.  Again I feel it all averages out.

4.)  Your buyer is close to closing.  He has maxed out his 6% closing concessions.  He is short $400 on the day of closing.  WOULD YOU OR WOULDN'T YOU GIVE HIM $400 ON THE SIDE TO BRING TO CLOSING.  No way that is fraud.  Any side deal that is not on the HUD is illegal.  To lose your license, to commit fraud, or to go to jail to help a client get a house is wrong.  It's best for your client to try to get the money from family.  Side deals that aren't on the HUD between the buyer and seller may come back to bite you.  It's fraud.

Bottom line for me is to help the client close the deal even if it means giving up a little extra time or a little bit of my commission.  What you would do is up to you.  It's your real estate business your commission.  And I'm not your judge so whatever you decide good for you.

May you and your family have a great Thanksgiving 

I closed a real estate purchase for one of my clients today.  When I looked at her HUD statement I was dumbfounded.  It was a FHA purchase.  The Metro Detroit home was only priced at $73,000.  But you wouldn't believe it. 

The cost of the appraisal was $1150.  This big lender uses an appraisal company like the HVCC.  They wanted to be ahead of the game.   Thanks to whoever thought of HVCC.  You are a jerk.  You have run up the price of an appraisal to the average consumer.  Congratulations on screwing up and costing the the people who can afford it the least more money.

$1150 for an appraisal and a re-inspection.  That is a rip off.  I am glad we are paying some third party to gouge a person buying a $73,000 home.

For those of you don't know what HVCC is..... some politician early this year got a law passed mandating that appraisals would be ordered thru a third party.  This was to alleviate the mortgage company and the real estate agent from influencing the appraiser.  The intent was to prevent appraisal fraud.  Now there is just out and out gouging going on.  I have seen mortgage companies take a $500 deposit from a buyer and not return anything to the buyer when the house doesn't appraise.

A few short years ago you could get an appraisal for $300.  So we protect the bank and gouge the consumer.  Some things never change.  Thanks Mr. politician!

Sad but true.

So how do Michigan property taxes work?  To explain Michigan property taxes is not easy.  But to break it down there are 2 ways Michigan properties are taxed.  The are either homestead or non-homestead taxes.

Homestead taxes - if you live in the property as your primary residence you get a reduction in your Michigan property taxes

Non-homesteaded property taxes - If the property is a commercial property, an investment property, a vacation home, or a rental property you pay full amount of taxes.

A primary residence is defined as the home as you come back to when you go away.

When you buy a home you will get a homestead exemption form from the title company.  You will have to fill it out at the closing and sign it.  After closing you have to take the form down to the city you have bought the house in.  They will take the form and "grant" you the homestead exemption.  You will get the reduced homestead taxes.

You can only claim one home as your primary residence and get the homestead exemption.  If you are married you can only claim one too.  Your wife CAN NOT claim another home as her primary residence and get the homestead exemption.

It is fraud to do so.  If you claim a property that is not your primary residence or claim multiple property you will be liable for penalty and interest.

So the bottom line is if you are going to buy a home and live in it, you will fill out the Principal Residence Exemption (PRE) Affidavit and get a reduced tax rate.  The form will be part of the closing.

I wish Michigan property tax explanation was easy so it is going to take a few different blogs to fully explain it all.  If you have any questions feel free to call me.