The article "I Bought a Condo and it Ruined My Life" was posted on Vice recently. It was shared on Facebook with the suggestion that "this is why millenials don't buy homes." Reading through this I couldn't help but notice the similarities of my own housing situation. I also purchased in 2006 at practically the same age, before the housing market crash. However, my outcome was extremely different than Mike Tunison. My house has been a wonderful financial investment.
Zillow has a reputation for not being accurate and their "pre-foreclosures" are part of the problem. I get asked about these all the time by buyers. This home is not for sale. It is labeled as being in the process of foreclosure, but it is not a foreclosed property yet.
When someone stops paying their mortgage, the bank usually will threaten foreclosure after about 3 or 4 missed payments. Once this happens they schedule the property to go to auction at the courthouse. This auction is called the "sheriff's sale". Once the auction is scheduled, it must be printed in financial reports that are public record. Zillow claims they get this information from these financial reports.
It's spring cleaning time again. I don't know about you, but I haven't even started. Some tasks seem more daunting then they really are. The best thing to do is just start somewhere. Checklists and developing routines makes things more efficient and thus easier. Nothing is more satisfying than completing a project and checking it off a list. https://www.cleanmama.net/https://www.cleanmama.net/ is an awesome resource for cleaning and organization tips. There are a bunch of other checklists and such you can download for free on the website. Here are my top two favorite cleaning checklists-
Ken Kuiper Homes, https://www.facebook.com/kenkuiperhomes/, Kentwood, MI 49512
All-in-One Builders, http://www.allin1builders.com/, 1950 Waldorf NW, Grand Rapids, MI 49544, (616) 299-4171, email@example.com
Buying a new home and selling your current one can seem like a daunting task. The biggest struggle for most people is knowing their options and determining a realistic plan of action. Finances will play the largest role in this decision, but other factors are a consideration including the local real estate market, ease of moving, and the cost/availability of the next home and possibly an intermediate place to stay. So what are the different options?
1) Sell First, then Buy
This is probably the most common option people choose. Most people have the financial requirement to sell their current home in order to purchase another. The benefit of this type of move is you don’t have to worry about carrying two mortgage payments. The negative is you will most likely end up moving twice. An inexpensive interim option is to move in with family while searching for your next home. Others opt for flexible apartment leases. Once your home is under contract, you could start looking and bidding on homes. However, you will have to make your offer contingent upon the closing of your current home, which is a big contingency. This will work against you in a multiple offer situation, but the closer you get to the closing, the less of a risk this contingency is for a seller. If you get lucky and find something right away that you like, you may be able to coordinate the timing so you can move from one home to another. However, it is a difficult task to coordinate, and is exacerbated by a lopsided market. You may also feel pressure to compromise on the house to find something quick and avoid the double move. Be conscious of that and ensure your second home is what you really want. This option works well in any market.
In September last year, the greater Grand Rapids housing inventory started an uptick and continued for four months straight. This is the first time that has happened in the last five years or so. We went from a yearly low of 1.3 months of inventory up to 1.9 months by the end of 2016. Many were predicting the market to finally level out a little. However, from December through the end of January, inventory suddenly fell back down to 1.4 months. Last spring was a crazy market with buyers sometimes competing with 10+ offers. This year we have even less inventory than last as we lead up to the spring market. Buyers will need to be diligent, patient, and put their best foot forward in the home buying competition. Sellers have the convenience of short market times and multiple offers to choose from if the house is priced right.
If you live in Michigan and own a home, then you absolutely need to know about ice dams. Water intrusion is the number one cause of damage to homes and that damage can be very costly. Ice dams are formed when snow melts on your roof, but freezes when it gets to the eaves (the part of a roof that overhangs the walls of a building). If the ice builds up, it can form a ridge that prevents water from draining. If the water cannot drain properly, there is only one place for it to go, and that is down into your house. This can happen to any roof, regardless of age or condition. The problem lies not with the roof itself, but by heat loss through the attic due to a lack of insulation and ventilation.
In 2013, Michigan was pounded with record breaking snow. Snow and ice was building up everywhere. Never experiencing any previous issues, I wasn't aware of the potential problem. At this point, I had already owned my home for 7 years. Walking in the bathroom one winter day, I was horrified to find water streaming down my bathroom wall. I'm pretty handy and work in real estate, so I was embarrassed and angry at myself that I had not recognized the problem before it became a huge issue.
Earlier this year, the spring market was a house feeding frenzy. Popular homes were receiving 5, 10, sometimes as high as 20 offers. March and April saw a housing inventory of only 1.3 months. It is too early to call for sure, but I believe this was the peak of the rising prices for the Grand Rapids market.
Over the last four months or so, we have seen the inventory levels increasing. Each month we have slowly ticked up to the current level of 1.7 months. That is still a very low level of inventory, however, the day-to-day pace of the market is noticeably slower. Homes are still selling quickly and multiple offers are common, but it is not as ridiculously competitive as it was this spring. Experts have been predicting inventory levels and price increases to level off for a couple years now. It may be finally happening.
It will be interesting to see how things pan out for the rest of 2016 and especially leading into the spring market of 2017. If inventory levels continue to increase, it could still take a long while before we hit a balanced market. Once we reach a balanced market, we should expect to see more slow and steady growth in prices. It may be more like 3-4% per year, rather than the 8% increases we have seen the last few years.
In the last few months, the inventory level has tightened again. All the way down to 1.3 months. This is a historical low for the inventory of homes for sale in the Grand Rapids market.
Although inventory was dwindling, the number of buyers increased with the spring market. The result? Feeding frenzy is probably the most accurate way to describe the competition. If a house is priced right and in good condition, it is common place to see 5-10 offers on one property within three days of hitting the market. Open houses look like assembly lines of people going in and out. It is great to be a seller right now. Unfortunately, it is very difficult to be a home buyer at the moment. The buyers who are winning in extremely competitive situations are usually cash buyers, or buyers who have large down payments if they need financing. It makes it especially tough for first-time buyers trying to enter the market.
New construction has been going strong. Hopefully the new construction will help meet demand and eventually level out the inventory to a healthy level. For the next foreseeable future though, the shortage will remain. Prices continue to increase. The month of May brought a slight uptick in inventory to 1.4 months. An increase of 0.1 doesn't seem too promising, but we'll see where the next few months take us.
There are a lot of factors that are important to a seller when considering whether to accept a buyer's offer, especially when there are multiple offers to choose from. Here is a list of some of the most important factors a seller will look at:
1) Price- this is likely the first thing the seller will consider. Most people want the highest price possible for their home. If the buyer is asking for closing costs, the seller will subtract this amount from the offer price to figure what the net amount is. For example, let's say two buyers write offers for the same price of $150,000. However, one buyer is asking for the seller to pay $4,000 towards their closing costs, and the other is not asking for any. One offer is a net of $150k while the other is only a net of $146k. Obviously the higher net offer is usually more desirable to a seller.
2) Closing Costs- Another thing to keep in mind about asking for seller paid closing costs is the appraisal. The appraiser is hired by the bank to value the house and substantiate the purchase price for the loan. Appraisers must use past sold comparable homes to justify value. When inventory is low and demand is high, the prices are increasing at a fast pace. The increasing prices make it harder for appraisers to substantiate values. Let's say there are two offers, one for $150k no seller concessions and one for $154k asking for $4000 seller paid closing costs. The net is about the same, but the first offer is better because the house only needs to appraise at $150k instead of $154k. A low appraisal can derail a loan and the transaction.
Great info on everything real estate.