While it’s possible for another housing bubble, this housing bubble is going to be fueled by the fact that because of the baby boomers we have more homeowners dying than homeowners buying. Look no further than Japan for a leading indicator.
I buy houses in Michigan for cash fast in Ingham, Kent, Ottawa, Oakland, and Wayne county.
This is a dry video but alot of good tips to avoid a huge loss up front when buying a home.
While we enjoy fireworks, make sure you and you, your friends and your family are enjoying them safely.
We buy houses in Kent, Ottawa, Oakland, Wayne, and Ingham county.
Whether it is a shortsale, foreclosure, eviction or any obstacle, allow us at ibuyhousesmichigan.com the opportunity to help.
A great article to consider. It’s not always the price you get a home for but a variety of factors including timing, economy, social status of area, commercial real estate developments and even employment in the area. Some areas may never rebound, but to think your home will appreciate on average by 5-10% a year over the course of time would not be a good assumption. However, this is a case by case scenario and factors like if you are able to purchase significantly cheaper than renting should be considered.
4 STEPS TO LOWER YOUR PROPERTY TAXES IN MICHIGAN
I want to preface this article that I am not a lawyer, yet I have fought property taxes on multiple properties in multiple counties in Michigan with success. The process may differ slightly in each county but for the most part this is what you should expect in the process, and while there is more detail to this process than what I list, this will give you a guideline on whether you want to start the process.
1. Get comparables of properties that have sold in the last 6 months and make sure they are as close to the condition of your home as possible. It is preferable there are as few foreclosures as possible as many times the local assessor will argue that foreclosures are not an accurate depiction of the market value of homes in the area even if all there is are foreclosures. Get a minimum of three properties but preferably 4 – 5. Your entire proposal should be on one page with a 3-4 sentence paragraph describing each home as well as a spreadsheet with adjustments for comparables. So for example this is a sample paragraph of what I would say about one of the comparables:
“123 Main St is a 3 bedroom 2 bath home with a 2 car garage and 1200 square feet. Like the subject property it is all brick and built in 1978. The home was on the market for 110 days before being sold 10,000 below asking at 92,000. There were no recent updates or renovations according to country records in the last 15 years.”
For the spreadsheet you will take each of the comparables and add or subtract from the property value based on square footage, bathrooms, condition, garage, lot size, custom addons and anything that may increase or decrease the value of the home to give the home and “adjusted” value. Once you determine the adjusted value of all the homes you will average out the adjusted values to determine the price of your home. The County Tax Assessor will send you a copy of their response to justify their value so you can copy the format of their spreadsheet. Simply saying your home’s purchase price while exposed to normal market conditions is the market value while logical, will not suffice.
2. If you have made improvements in your home, make sure you file a Mathew Gaus Home Improvement Act form in the same tax year as the improvements. The Mathieu-Gast Home Improvement Act allows you to improve your home’s value without increasing the tax burden of the homeowner. Below are improvements that can be made to your home for nonconsideration of the home’s true cash value by the County Tax Assessor. The link will provide you the form and be sure to have a copy of this act, as it is common the County Tax Assessor will question it’s interpretation.
* Outside painting
* Repairing or replacing siding, roof, porches, steps, sidewalk and drives
* Repainting, repairing or replacing existing masonry
* Replacement of awnings
* Adding or replacing gutters and downspouts
* Replacing storm windows or doors, insulation or weather-stripping
* Complete rewiring
* Replacing plumbing and light fixtures
* New furnace, replacing a furnace of the same type or replacing oil or gas burner
* Plaster repairs, inside painting or other redecorating
* New ceiling, wall or floor surfacing
* Removing partitions to enlarge rooms
* Replacing automatic hot water heater
* Replacing dated interior woodwork
3. File the appeal form with your one page argument and spreadsheet by the timeframe given on your county assessment. It is best to do this in person, and have the submitted form stamped that is has been accepted and pay for a copy to keep for your records. If you do not have proof it was submitted, you are out of luck. After filing the appeal, you generally will receive a response within 2-4 weeks from the county tax assessor’s office. This nearly always results in a denial of the request at which point you must then request and then show up in person before a panel of three local residents, where you will argue your case against a county tax assessor representative. Once again there is a high likelihood that you will have a dismissal in your request unless the county tax assessor decides to lower the value of your home. Stay calm as you must know the odds are still stacked against you because the county is serving as judge, jury and executioner. Finally after this appeal you have the opportunity to pay for the Michigan Tax Tribunal to hear your argument but you must pay to have the hearing. If you wish to fight your taxes you must be prepared to go all the way to the Michigan Tax Tribunal to get heard by an impartial decision maker, normally a lawyer in the State of Michigan.
4. Be prepared and remain calm at all times. While is is frustrating that the County Tax Assessor likely has a relationship and rapport with every decision maker in the appeals process, you will certainly not support your cause if you lose your cool. Stick to the facts. You will have the advantage that the County Tax Assessor representative will be working many cases so will not have as much detail to research your case as you will. You will get a copy of the County Tax Assessor’s argument and rebuttal prior to the in person meeting and also before the Michigan Tax Tribunal hearing. Focus on the holes in their argument rather than trying to defend your claims, and double check the accuracy of the County Tax Assessor’s comparables as there may be errors such as an additional unpermited space causing a home to sell for more.
Like many Americans I looked into purchasing a manufactured house as my own home and even as an investment. Heck I even lived in one for a period of time after college while I worked in such a small community it was the only housing I could find. Below is a quick synopsis on when I would purchase a manufactured home versus traditional housing. I’m forewarning you that this is a very short list.
1. When you can get the manufactured home at rock bottom dollar.
While a manufactured home may sometimes be classified as real estate it is unavoidable that manufactured homes depreciate in value generally faster than you can pay down the loan you purchase the property on. Add into that that insurance is actually even more expensive and there are fewer lenders to work with and you may have difficulty finding a buyer to purchase your home down the road. With a traditional stick built home, your home generally appreciates in value with inflation along with the cost of building. Factor in that lot rent generally far exceeds what an HOA expense is with fewer amenities and you have buyers more willing to go to a condominium before a manufactured home to cut costs.
2. When it is too expensive to build a traditional stick built home
In areas where terrain is very difficult to get to or build on, it may be worth the savings to purchase a manufactured home because of the cost to build a traditional stick built home. For example if you are looking for a place in the mountains, deep in the woods or close to a river, building a home with foundation and septic may not be possible. Purchasing a prebuilt home with minimal equipment wastage can be a good option in this scenario especially if you are fine with a home that likely has a predetermined shelf life.
3. When you cannot afford anything else and the cost of living in a manufactured home is less than renting
Most manufactured homes have very high lot rents which often can be even more expensive that the payment on your manufactured home. Sure you may have the satisfaction of owning something but why go through all the hassle if you can just use the savings and lack of hassle from renting to do other things you enjoy or even save up for a home you really want.
There has been only one time in my entire life where I regretted not purchasing a manufactured home. That was a 3 bedroom, 1 bath 1200 sq foot permanently affixed manufactured home that was in a community with all traditional built homes. The home was on the market for $21,000 and I only offered $15,000 before it finally sold for $18,000, a full $68,000 less than what the owner bought it for only a decade earlier. I had planned to rent the home for $750 dollars so after 4 years, the home would have been paid off and whatever I sold it for at that point if I was able to would have been an added benefit. In the same time frame, you could have bought a home that would have appreciated in that market by 40% even after the 2008 housing crash. While one buyer spent the better portion of his life paying down his manufactured home only to see a loss taken from it, that same homeowner could have bought a house in the same neighborhood and built up a small retirement nest egg with $55,000 of equity. We at ibuyhousesmichigan.com will purchase manufactured homes for cash fast, but like many buyers we will do so factoring in that there are a number of factors that make them less desirable to traditionally built homes.
Thank you all to those that are serving presently and in the past.
For obvious reasons cash is king, but the devil is in the detail so look for these things when you are reviewing a purchase agreement of both a cash and mortgage buyer. You will be surprised how much more you could end up paying out of pocket for a purchase with a mortgage.
1) Seller concessions
The purchase price is what you pay taxes and revenue stamps on and it’s also what you pay your realtors your commissions on. So for example, let’s take a 200,000 purchase contract with 6% seller concessions. Real estate transfer taxes in Michigan at the time of this article are $8.60 per 1,000, which would mean that an additional $12,000 in seller concessions the seller would be paying $103.20. Because title insurance often increases from year to year I am going to just say that the different in title insurance is $86.40 based on today’s rate but could easily be higher in the near future. Factor in that you are also paying the realtor a commission on that 6% seller commissions because it is part of the sales price and you are paying $720 in this transaction. Effectively this offer in this instance would net $13,000 less than a true cash offer of $200,000. This is not even including other closing costs that could be based on the actual purchase price e.g. buyers premium, state or county specific fees. In general this is why a seller offering cash would expect a 10-15% discount in many markets. Over the course of this article I am going to factor in add to these costs using this $200,000 example.
2)Time to close
In general a cash purchase will close in 15 days or less, where it is very common for a mortgage to close within 45-60 days. Using the example of a $200,000 purchase we will be conservative in this example and say the seller has a 160,000 mortgage with no mortgage insurance on the home they currently own. With a faster closing time of 45 days that additional 30 days of interest would roughly cost the buyer over $500 in interest if they are in the first 4 years of their mortgage on their home. That is not to factor in the cost of upkeep a seller may have if they do not occupy the home or are not living in the residence but making payments to while it is on the market. Additionally, we will make an assumption that 1 month of property taxes and homeowner’s insurance would cost another $400 for this seller, and we still have not factored in mortgage insurance which could be a few hundred dollars based on the mortgage size. So adding a conservative time to close cost of $900 to our our seller concessions costs, we are now at $13,900.
3)Inspection clause and Appraisals
A purchase contract with a mortgage always requires an appraisal and an inspection which allows the buyer two outs to change their mind or to leverage lowering the purchase price on your home. If you have a unique home or an area lacking good comparable sales, you may have an appraiser value your home less than the purchase price, which would require your lowering of the price to allow the bank to loan on your home. Faced with an alternative to put your home back on the market this could be an additional time cost, and/or buyer interest cost to have to relist your home. A cash buyer may or may not offer with an inspection clause, but you rarely have to worry about an appraisal clause, so there is fewer outs for your buyer. In general, we at ibuyhousesmichigan.com offer to purchase with an inspection, but we have the inspection within 2 days, so at this point the buyer knows we are closing 2 days after acceptance of contract and we are just waiting for the title company to get paperwork to close. In the same scenario with a purchase contract with mortgage, it could be a month before the buyer has any assurance that the home will sell.
4)Dealing with homeowners versus investors
While many people don’t like the idea of someone else purchasing their home to invest or make money, dealing with prospective homebuyers can be tedious because of the cautiousness of making such a large purchase or fear of very small things that would not scare off an investor. For example, small cracks in the foundation, moisture in the basement, an old furnace or water heater, or even the request to keep furnishing or decorations that you as the seller may want to keep. I once owned a condo where the first time home buyer asked for 6% seller concessions, then continually asked for very minor repairs to the home such as tuning the furnace, leaving curtains and mirrors, and power washing the deck. By the time I ended up selling the home to her, I ended up paying another 1000 for many minor repairs that she could have done herself before she finally removed the inspection clause. At the time I had a newborn child, and here I was calling around trying to find contractors and maintenance guys to handle all these minor things the buyer wanted before she moved in, and obviously it was the last thing I wanted to do.
In general when friends ask me for advice I always tell them if they have a cash offer, versus dealing with an offer with a mortgage and concessions they should easily take a 10% discount and personally I would take a 15% discount to avoid all the hassles of dealing with a first time homebuyer and a mortgage company. If a homebuyer is purchasing their second home and they have 20% down, I am more likely to accept a purchase contract with mortgage as long as it is 5% or more than the cash offer. While an offer of 15,000 or more may sound like a lot, the devil is in the details, so remember cash is king and can actually put more money in your pocket than a mortgage purchase even though at first glance being significantly less.
I am from Michigan and I lived in some of the most segregated cities in America, yet it was not in Detroit or Saginaw or Flint that I witnessed somebody be murdered, get dragged by a car, get shot at or a host of other violent crimes. All of this happened when I lived in Oakland, CA. This all occurring less than a few miles of Oakland City Center, the epicenter of the city’s workforce and work traffic. What I learned about this rebound of Oakland, CA is that when you have a great location, sports teams and a diverse culture like Detroit, MI has, you have a recipe that only requires a secret ingredient to make it special. That secret ingredient is a large investment of capital. West Oakland nearby Emeryville, CA were traditionally one of the worst markets in the country but being only a 9 minute train ride away from San Francisco and having a large AMC 16 and hundreds of restaurants and departments stores built turned the area from one of the least desirable areas in the country to one of the fastest growing and hippest places to live. In Detroit, MI there has been multiple multibillion dollar investments from investors such as Dan Gilbert, the Illitch family and now Chinese investors. Couple that with a more favorable budget plan from filing for bankruptcy with a new stadium for the Detroit Red Wings and possibly a new MLS soccer stadium and the area is screaming for a long awaited rebound for the city that means of the “straits” because of link to the body of water. Maybe I’m biased because I am from this area, but I am also hopeful because the leading indicators of a strong real estate market are here and I’ve seen this before. I buy houses in Michigan for Cash, Fast because I look forward to being part of this state’s rejuvenation.
Good to be cognizant of if you fall into this market. Ann Arbor and Detroit in the Top 20.
Looking back over the years and the amount of homes my wife and I have purchased it brings me joy to see others purchase what we’ve created and make it their own while also helping others in the stressful process of selling their home. While my wife and I have been investing in real estate for a number of years, the number of successes we have found have also been met with many losses including the short sale of our home back in 2008. While we realize we may not always be able to find the best solution for those to speak with us, we do want to make sure you have all the tools to do what is best for your situation. Here are my top 5 mistakes for homeowners trying to sell their property, some I have made myself.
1.Starting price way too high
When a home stays on the market too long buyers tend to question why the home is on the market for that long, as if questioning whether they are missing something that everybody else didn’t. Even if the home is brought down to a more reasonable price later, it makes the buyer feel they have more leverage with negotiating a lower price because nobody else is interested. While you may not like dealing with real estate agents, and trust me my wife is one and I still don’t always like dealing with them, it is no obligation to list your home with a realtor to get an opinion of price.
2. Not making any upgrades to an outdated home
According to Remodeling magazine (http://www.remodeling.hw.net) siding replacement recouped about 92.8% of its cost according to study, followed by roofs and windows which recouped 80%. The only home improvement that recouped more than these three was a minor kitchen remodel. However, one thing I did want to note is the magazine considered a minor kitchen remodel under 15,000, which from my experience could easily purchase brand new appliances, quartz countertops and all new cabinets in a standard 4 bedroom, 2 bath home or smaller. Now you may be saying, you do not have the money to upgrade your home, but if you make the upgrade right before you sell your home, there are many contractors that can provide 0% financing even for those with poor credit. Many homeowners know they will make improvements to their home when they purchase it, but would prefer to do a kitchen or bathroom remodel rather than replace a 30 year old roof because it allows them to make their home their own. A home that is outdated while still ready to move in will sell much faster than a home that has fixing up to do.
3. Kitchens and bathrooms sell houses
If your home does not need updating and is well kept, kitchens and bathrooms are often where buyers will spend the most time in their new home and is also what may sway whether they offer on your home. Now in the previous paragraph I just wrote where your biggest return is for necessary upgrades, but in the right market kitchens and bathrooms can significantly return more than what you put into the home and more importantly sell it fast. Lastly, it is often overlooked but consider what you pay and invest in time for not selling your home if it sits on the market for months because it does not distinguish itself from other listings in the area.
4. Work on curb appeal
I can’t tell you how often I have come up to homes with other buyers where they don’t even want to walk inside of a home because they can’t imagine themselves driving up to the exterior. Keeping your lawn maintained and clutter off the front porch and driveway are easy things to do to help with curb appeal. Pets can also dictate whether a buyer walks into your home if they see a cat they may be allergic to or is afraid of dogs, so be mindful not everyone may love your pet as much as you do.
5. Wait until the last possible moment to sell their home
While this may be a dual edged sword if you are looking to sell your home at maximum price you have to be prepared to give 3 full months from when you start marketing your home to when it closes depending on the market. If you wait until the last possible moment, say after you have an offer accepted on another home, you leave yourself few options to get your home the proper exposure it needs to close for top dollar