Real Estate Information Archive

It doesn't take a Black Friday horde to tell you that the holidays are a busy time for merchandisers, retailers and shoppers. However, what you might not know about this festive time of year is that potential Home buyers who are looking now are serious about purchasing your home.

This is one of the reasons why you, as the seller, should be as flexible as you can during this time when it comes to showing your home. It stands to reason that the more flexible you are for showings, including short-notice appointments, the more chances you'll have of selling your home fast.

In addition, sellers show consider how many decorations are put up for this time of year. Decorations are nice and can make the home more inviting. However, too many decorations inside or outside the home can be distracting. Certainly be willing to garnish your home in holiday cheer, but it would be wise to keep it to a minimum.

On the other side of the coin, if you are a potential buyer searching for a home over the holidays, remember that sellers may not have the ability to be as flexible during these often hectic months due to travel plans, hosting commitments, or any number of other valid reasons. In a word, don’t be discouraged if a seller cannot accommodate a home showing on a moment’s notice.

Both buyers and sellers can capitalize on the increased sense of urgency that is typically ratcheted up over the holidays. This is especially true for homebuyers since the vast majority of each group would prefer to close on a home purchase or sale prior to the close of the year.

To best facilitate these transactions in a timely fashion, buyers and sellers alike would benefit from the knowledge and experience of a real estate agent.

It is fine to buy a lottery ticket now and then. It is fine to take a chance on a football pool. One risk you don't want to take, however, is on your Home insurance. Most claims are going to be for broken windows and other minor issues. The real value of home insurance is against catastrophic loss. It loses that value if the coverage does not keep pace with the replacement cost of the home.

How can homeowners be assured that they are paying for sufficient coverage? Doesn't the policy increase automatically? The convenience of insurance payments going into escrow to be paid by the lending institution may render the level of coverage invisible to the average home owner. It is even possible for owners of newly constructed homes to be underinsured if the cost of construction has recently risen. Remember that lending institutions insist on coverage to balance their loss in case of fire, not yours. The wise homeowner makes it their business to keep track of their coverage, no matter who submits the premium.

There is a solution to the possible deficit in coverage. The type of home insurance you want to arrange is called Guaranteed Replacement Cost. This insures that in the event your home is completely destroyed, the cost of reconstruction will be covered in its entirety.

Have you considered the value of the contents of your home? A complete inventory of your possessions is an important component of the insurance process. The cost of electronics could be very significant if you have to replace everything you have amassed over time all at once. Furniture, artwork, musical instruments and jewelry all total more than you might imagine. Before you negotiate home insurance, make sure everything you own has been cataloged and documented. Take photos and file them electronically as well as the receipts to prove ownership and value in case of loss.

To make sure your home insurance coverage grows with the value of your belongings, perform an annual review. Discuss the results with your insurance agent. They will help you navigate your insurance options and even help you find lower rates when possible. Don't forget bundling discounts that save money.

One of the first things to think about when you are selling your Home is curb appeal. That is the magic that draws all eyes to your home when potential buyers are passing by. You want them to stop and take a long hard look as they slow down to pick up a flyer. Curb appeal is that critical element that brings your home to the front of the line. Here are a few tips to make sure your home invites them back:

An attractive entryway – Repainting or replacing the front door with a splash of color is like an engraved invitation that says, "Come on in." The path leading to the door and the lighting above or to the side both add attractive details that welcome visitors. Make sure the doorknob and hardware are painted or polished to complete the package.

Pristine yard – Whether your home has a carefully manicured lawn or desert landscaping, the key is a neat, trim exterior with no weeds, debris, or clutter of any kind. Nothing says "fixer–upper" like needless mess. Since many buyers enjoy creating their own gardens, many sellers find that potted plants provide a finished look to complete a positive vision without making permanent changes to the landscape.

Repair and update – Simple hardware replacements can bring a house forward in time by years. Shiny upgrades are inexpensive, attractive and send a message that the home has been well–maintained. Make sure all minor repairs are completed before you sell your home.

Add artistic flair – Fountains, bird baths and wind chimes all work to make the exterior pleasant and attractive. These are the finishing touches that make houses feel look unique and homey.

Shutters and accent trim – Shutters help control light and ventilation, as well as providing a measure of added security. They add another level of visual interest that stands apart from the rest of the neighborhood.

Gutters and downspouts – Replacing these and any fascia that are bent or peeling creates a visual frame around the front of the house that looks new.

When you think you are ready to list your home, take a few photos from different angles to help you spot details you might have missed. Be prepared to make more small changes your real estate agent may suggest to ready the home. In today's market, curb appeal is more important than ever before to help you get your asking price quickly.

As you navigate through the process of Buying a Home, you will find that one of the more critical components is the home inspection. To understand the value of home inspections, buyers and sellers should both be aware of what they do and do not include. While there may be some variation from state to state, home inspections typically do not look for asbestos, radon gas, lead paint, toxic mold, or pest control. If the buyer has concerns, professionals specifically licensed for each must address these issues. The focus of the typical inspection is three-fold: structural, mechanical and electrical condition of the house. The goal is not a complete laundry list of necessary repairs, nor an appraisal of worth. It is an unbiased evaluation of the home’s condition.

Step One

The process begins with a visual examination of the front of the home from a distance sufficient to view the entire exterior surface. Starting at the top and systematically moving down the wall, the inspector will review the roof, the chimney, gutters, fascia and soffits. Next, he will look at windows, doors, porches, decks and all of the structural details down to the ground. He will consider the grade or slope of the surrounding ground, inspect flowerbeds, walkways and driveways. Moving closer to the building, he will continue the home inspection by investigating details that caught his attention. Repeating the process with each wall, he will work his way around the house.

Step Two

Inside the house, he will continue the home inspection starting at the lowest level and moving up. The review starts with the floor, moves up the walls and across the ceiling. Then he will check each appliance in the room. He will open each door and inspect closets and storage areas before moving to the next room. He will look at floors, heating sources, electrical panels, outlets and switches. He will look for water damage including stains and sagging. He will check all plumbing fixtures and visible pipes.

Step Three

The home inspection will follow a checklist to insure that it is complete. Then the inspector will provide a formal report of his findings. It will then be up to the buyer to accept the property as it is, request repairs, request reduction of price to cover repairs, or decline the property. Your real estate agent will work with you to help you with your negotiation and decision.

The two most common types of mortgages are fixed rate and adjustable rate. There are several others, some of which are described below, but it's best to keep it simple as you enter the labyrinthine maze of Home finance.

Fixed rate

These loans offer one specific rate for its entire duration; however, if interest rates fall, your rate may increase.

Adjustable rate mortgage (ARM)

Adjustable rate mortgages main attraction is their relatively low initial interest rate; however, they are directly impacted by the market conditions at adjustment time. So, your monthly payment can fluctuate, up or down, dramatically over time.

Hybrid ARM

A hybrid ARM is a blending of these first two mortgages in which the interest rate starts out fixed, but after a specified length of time, becomes vulnerable to the whims of the market.

FHA (Federal Housing Administration)

This is a government-secured loan that allows people who may have trouble qualifying for other financing a home loan with one low down payment; however, the size of the loan could be limited.

VA (Veterans Administration)

Here we have another government-backed loan; this one offers eligible veterans, active duty personnel and surviving spouses competitive interest rates, with little to no down payments.

Balloon mortgage

Similar to the aforementioned hybrid ARM, a balloon mortgage starts with a fixed rate, usually at a comparatively low number. Once the fixed period ends, the lender must pay back the full balance of the loan.

Interest-only

Another hybrid of sorts, interest-only loans allow the borrower to pay just the interest for an agreed-upon term, after which the full balance of the loan is due.

Reverse mortgage

This one is aimed at senior citizens who want to convert their home equity into cash. The crucial distinction between reverse and conventional mortgages is that with a reverse mortgage, lenders are not required to pay principal or interest as long as they live in or own the home.

Interesting To Do Projects for Ann Arbor Real Estate

Retro Bowling Alley in your recreation room?  Or how about a Sweet Kids Playhouse.  Check out these two ideas for some project inspiration.  

Have fun with you next project and let us know if you need contractor recommendations or get homes for Sale in Ann Arbor by click here.

For decades, Home ownership in the United States has been partially subsidized by the tax savings associated with owning a home. Many homeowners qualify for certain tax deductions and tax credits that make home ownership more affordable.  In order to utilize certain deductions, a homeowner must itemize their tax deductions. But almost everyone is eligible to benefit from one or more of the tax benefits of home ownership. Here are a few to consider as of the date of this article:

1. Property Taxes Deduction: In many areas, property taxes can be one of the most significant costs of homeownership. Therefore, the ability to deduct residential property taxes from taxable income is an incredible savings. A property tax deduction is essentially a tax-deductible tax, so that the homeowner does not pay income tax on money that was used to pay property taxes. This particular deduction may only be used for the period of time the homeowner actually owns the home. Back taxes paid as part of the purchase arrangement may not be deducted. But anything going to the Seller on the settlement statement for property taxes the seller paid in advance can be deducted. Homeowners can only deduct the amount of property tax actually paid to their local municipality for the tax year. However, if the property taxes are held in escrow for paying taxes at a later time, the deduction cannot be taken until such time as the money is paid out of the escrow account to the taxing authority. Many local assessments for improvements or other city/county fees that one may find on their property tax bill are not deductible. Also, if any (typically partial) refund of the property tax occurs, the amount of the deduction is generally reduced by the amount of the refund.


2. Mortgage Interest Deduction: For many homeowners, the mortgage interest tax deduction is the most valuable tax deduction, and can be used to deduct interest paid on a mortgage of up to one million ($1,000,000.00). When a homeowner receives their first Form 1098 from their lender, they should know that its potential value is vast and to consult with a tax professional as to how best to take advantage of this benefit. This deduction is especially useful for most new homeowners, as the initial mortgage payments for new homeowners are primarily comprised of interest for the first several years, making for a larger deduction (until more of the payment is comprised of principal when there is less interest paid and less interest to deduct). Prepaid mortgage interest paid at closing may also add to the amount of this deduction.


3. Mortgage Insurance Premiums Deduction: Many home buyers whose initial down payment is less than 20% of the purchase price are required to pay private mortgage insurance or "PMI." This insurance can be a significant expense. Homeowners may generally deduct the premiums paid for such mortgage insurance for the current tax year on a primary residence and a non-rental second or vacation home. However, eligibility for this deduction is phased out based on income levels (check with your tax professional).


4. Points Deduction: If an owner paid discount points or "points" (or sometimes "loan discounts") to reduce the interest rate on borrowed funds as part of the purchase or refinance of a home, the cost of these points can be deductible in the year they were paid or over the life of the mortgage, depending on the type of loan and the unique qualities of the taxpayer.


5. Energy Credits: Some homeowners can receive a tax credit (either federal, state or local) for a portion of the cost of materials used for energy efficient upgrades to their residence (including doors, windows, furnaces and air conditioners, roofing materials, insulation, solar panels, water heaters, geo thermal heat pumps, fuel cells, wind turbines, and other energy efficient upgrades).


6. Home Office Deduction: Many home owners, who use a portion of their home for office purposes, may be able to claim a tax deduction for the pro-rata portion of costs related to the office space (e.g. repairs, mortgage, insurance, utilities, and depreciation). To utilize this deduction, the home office must be used exclusively and regularly as a place of business, a place to meet clients/patients for business purposes, a place of storage (e.g. for inventory or records used in the business), or a place where a majority of business work is done.


7. Gain on Sale Exclusion: Individuals can exclude up to $250,000 of gain from a primary residence from taxable income, and married couples can exclude up to $500,000 of gain. To qualify, the seller(s) must have lived in the home as a primary residence for two of the prior five years before the sale.


8. selling Costs Deduction: If the seller’s gain from the sale of a home does not qualify for the exclusion in #7 above, or the gain exceeds the maximum amount of the exclusion in #7, the costs associated with selling the home may also be available to reduce the tax burden of the seller. For example, the following costs may be deductible: title insurance, advertising and marketing expenses, broker fees, or repairs (if made within 90 days of the sale and with the intent to facilitate a sale).


9. Home Improvement Loan Interest Deduction: Interest on loans for home improvements may be deductible, provided the loan was used for a "capital improvement," such as building a deck, installing a new water heater system, or building a garage or otherwise expanding the size of the home. Many s1maller items, such as wallpaper, paint, carpet, etc. are not considered "capital improvements."


10. Construction Loan Interest Deduction: Interest on a loan used to construct a new principal residence or vacation home for personal use may be deductible for the first 24 months of the loan.


11. Loan Forgiveness Exclusion: As of the date of this article, the Mortgage Debt Forgiveness Relief Act of 2007 was extended to allow debt that is forgiven by lenders in short sale situations to be excluded from taxable income, rather than being taxed as debt forgiveness income.


12.  IRA Penalty Exemption: The ten (10) percent penalty for the early withdrawal of IRA funds can be avoided if the withdrawal of such funds is used toward the purchase of a home within 120 days of the withdrawal. This benefit is limited to a withdrawal of up to $10,000 in IRA funds for each spouse, and only if each spouse did not own a home within the two years prior to the new home purchase.

These tax benefits represent some of the biggest tax benefits of homeownership. Other tax benefits also exist. And the above analysis is an informational summary only and is not to be used, and is not intended to be used, as tax advice. When it comes to tax matters, a tax professional, Certified Public Accountant, or tax attorney should be consulted for the particular circumstances of each taxpayer, to ensure that no tax benefit opportunities are missed and to ensure compliance with law. 

HOMESTEAD TAX CREDITS - The state of Michigan has a homestead tax credit for owner occupied residences.  This amounts to approximately a 33% discount on your annual local and state property taxes.  There are deadlines for filing this paperwork however in order to get your tax savings.  There is also options to get more than one homestead credit though in most cases it is limited to just one per person/household.  CALL us to discuss your situation as they there are complex rules and regulations which vary by individual case.  

Interested in new listing updates?  Just click on the link above "Get Listing Updates" to receive new listings the day they come out automatically.  You can also contact us by using one of the options found after clicking on our home button above or call our office direct line at 734-996-0000 and ask for Tom Stachler.

In a meticulous, often confusing process like Home Buying, it's vital for you to understand at least the basic terms. Sometimes real estate professionals and loan officers will use terms like pre-approved and pre-qualified interchangeably when talking about a home loan. They are not, however, the same thing.

Pre-qualification is an estimate of how much money a lender would be willing to loan you, based on a general assessment of your relevant financial information, such as employment status, overall income and estimated value of assets.

The pre-approval process requires the lender to perform a more in-depth investigation and evaluation of your creditworthiness, culminating in a tentative commitment for mortgage funding up to a specific amount.

Here are some more details on each of these to further distinguish these similar but not synonymous terms.

Pre-Qualification

This process begins with you either meeting face-to-face with a loan officer or talking with one over the phone. You'll provide basic information about your personal credit and finances, including any outstanding debts, total income and a potential down payment amount. This data is then used by the lender to provide you with a written estimate of how much you could comfortably afford per month for a mortgage.

There is neither a commitment nor cost associated for either party in a pre-qualification procedure. Its primary purpose is to give you a realistic perspective on how buying a home will impact your month-to-month household budget.

Most real estate professionals will tell you that it's best to make pre-qualification one of the very first steps in your home-buying journey, even prior to looking at houses.

Pre-approval

In order to get a pre-approval, and the tentative commitment that comes with it, you must provide your desired home loan lender with the actual documentation (usually in paper form) of your financial details (assets, debts, income, etc).

You can expect to pay a fee for this part of the process, mainly to cover the lender's expenses incurred by running a credit check, as well as verifying your employment data and financial records.

Your pre-approval is then officially acknowledged via a commitment letter containing the amount the lender is willing to extend to you for your new home purchase.

A pre-approval is neither a guarantee of future mortgage loan approval, nor is it a legally binding contract, meaning you still have the option of choosing another lender.

The number of Home sales in Washtenaw County has increased as of September, 2012 compared to the same period in 2011, according to the Ann Arbor Area Board of Realtors. Virtually all segments of the real estate market are growing, with residential properties leading at 7.23 percent. Residential properties had an average sales price of $214,059 for September, 2012, an increase of 12.5 percent over the same period last year.

Washtenaw County Real Estate Numbers

In addition to residential properties, condo sales are up 6.1 percent, compared to this time last year, with an average sales price of $127,500. The average number of days that properties sit on the market has also improved, dropping from 76 in 2011 to 59 in 2012.

A Seller's Advantage

What do these number mean to you, an Ann Arbor area homeowner? If you've been waiting to sell your home until the economy improves, this may well be the right time to list your home. Although home sales prices have increased, the average number of listings is still lagging behind. In fact, there are 20 percent fewer properties on the market this year than in 2011. This means there are more people willing to buy property, but not more homes on the market. That's a recipe for selling your home quickly and for the top dollar possible.

Buyers are ready

Real estate sales figures aren't the only good news in the Washtenaw County and Ann Arbor area. Unemployment in our area is down to five percent, a decided improvement compared to previous years. In addition, mortgage interest rates are still at historic lows. According to the Ann Arbor Board of Realtors, many potential home buyers are already approved by their bank for a home loan and are just waiting to find the right property. Who knows? Maybe your house or condo is the new home they've been looking for.

The best way to describe the current market seems to be "just enough". Both the economy and market values are rising "just enough" to bring "just enough" sellers into the market to satisfy "just enough" of the buyer demand to keep the market moving and prices rising.

There is a significant shortage of available homes for sale. We are at a low point for listing inventories as we come off a high point for sales, creating a depleted inventory going into the fall and winter. This is good news for Sellers with upward pricing pressure through the winter months (which is a rarity). For many Sellers, the spread between what is owed and current values is still wider than they would like. This means there is a chance the sales rate could slow through the winter simply because there are not enough homes to sell. We could see a strange phenomenon of the sales rate falling (compared to last winter, but still a good pace) while prices rise.

As the market recovers, it is interesting to note that most of the issues holding back a real explosion in real estate have been artificially created, as are many of the key factors fueling the recovery. 

On the stimulus side:

• The Federal Reserve Buying Bonds (quantitative easing) helps keep mortgage rates at record lows
• Government entities, Fannie Mae, Freddie Mac and Ginnie Mae (FHA) are the funding source for nearly 90% of all mortgages
• Government refinance and short sale programs are helping reduce the foreclosure overhang

On the holding-back-demand side:

• The concern over the potential lender restrictions under the Dodd-Frank act has banks holding back on lending
• Government law suits against banks to buy back old loans have caused many to stop mortgage lending all together, restricting available credit
• Uncertainty about what will be the underwriting standards imposed on lenders going forward causes lenders to be more cautious
• Congressional inaction on extending the Rural Lending programs have reduced access to credit for many rural markets 

Combined, they seem to cancel each other out, allowing for a steady real estate recovery. Both Presidential candidates are unclear as to how they will address any of these artificial issues, so we will have to wait until next year to get a clear direction. In the mean time, Buyers keep pushing to buy and Sellers are gaining more confidence, regardless of which way the political winds blow. 

If you'd like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime.  Please review the resources and Links available on this website and we appreciate your consideration and comments.

Thank you,