Real Estate Formulas for Investors

There is more to real estate investment than the property itself. A few decisions need to be made before you purchase the property. You will need to know certain calculations to make the right decision.

The Question you should ask yourself first; Are you holding the property as a rental or are you going to rehab it and flip the property?

Remember, your profit is usually determined when you buy the property, not when it sells. This means, if you buy the property for the right price, you will receive the profit margins predicted.

Using a Realtor, you can get help with some of the information you will need to complete the formulas or double check the numbers. Websites like Zillow and other public sites offer FREE VALUATION but can provide inaccurate information.

Gross Scheduled Income

The Gross Scheduled Income Formula presents the amount of income your property will generate if all units within it are rented and if there are no defaults in rent payments. This can be a useful measure to compare against actual income.

Talk with your Realtor to view comparable rentals in the area. Many investors guess the rental amount or set the amount catered towards a return on investment. However, rental comps are as crucial as sales comps for marketing the property, You want to be conservative in your calculations while testing the cap in the market of your property’s location.

Real Estate Formula:

Gross Scheduled Income = Rental Income + Lost Rental Income from Vacant Units

Gross Operating Income

Gross Operating Income reflects the total income generated by an asset including additional sources of income from your rental property. A few examples would be revenue generated from parking spaces, laundry, and vending machines

Real Estate Formula:

Gross Operating Income = (GSI – Lost Rental Income from Vacant Units) + Other Income

Net Operating Income

To use the Net Operating Income formula, you first need to figure out your gross operating income. Once you have that figure, you subtract operating expenses from costs like insurance and maintenance fees.

Please note, amounts like property depreciation and interest payments do not factor into operating costs. 

Real Estate Formula:

Net Operating Income = Gross Operating Income – Total Operating Expenses

Capitalization Rate

An important formula for an investor to know is the Cap Rate. The cap rate formula compares an investment property’s net operating income against the market value, allowing investors to quickly compare property profitability.

Real Estate Formula:

Cap Rate = Net Operating Income / Market Value of Property

Cash on Cash Return

Determining your Cash on Cash Return is crucial in real estate investing. It’s widely utilized since it allows investors to compare investments and evaluate profitability. A spreadsheet is a great way to view side-by-side comparisons between properties that are similar. By setting up a spreadsheet with formulas, you can quickly calculate income and expenses to estimate returns.

To use the cash on cash return formula, you simply divide the net operating income by your total cash investment. Typically, your total cash investment will include the down payment, closing costs, renovation costs, and any other up-front fees you paid to acquire the investment property.

Real Estate Formula:

Cash on Cash Return = Net Operating Income / Total Cash Investment

Equity Build-Up Rate

Smart real estate investments do not always come in the form of immediate income. Some properties are sought after due to their potential to build equity, therefore becoming more valuable assets in the future. This simple real estate formula can help in measuring these gains.

Consulting with a Realtor is a good way to see how quickly an area is growing in value.

Real Estate Formula:

Equity Build-Up Rate = Mortgage Principal Paid (Year 1) / Initial Cash Invested (Year 1)

Price to Rent Ratio 

This figure shows projected rental income, versus the price a property was purchased for. This is useful when comparing residential real estate investments. Like other calculations, a spreadsheet with formulas can assist with quicker decisions.

Real Estate Formula:

Price to Rent Ratio = Purchase Price of Property / Annual Rental Revenue

Price Per Square Foot

The price per square foot formula proves useful when quickly comparing multiple properties. Savvy investors can use this calculation to evaluate if a rental property is overpriced before it is purchased. Your Realtor can help you evaluate this in depth by pulling both rental and sales comps, which list the price per square foot (as-is, not post-rehab).

Real Estate Formula:

Price Per Square Foot = Market Value of Property / Property Square Footage

Return on Investment

The return on investment formula allows you to calculate how much of your initial investment can be recovered annually.

Real Estate Formula:

Return on Investment = Annual Returns / Cost of Investment

Cash Flow From Operations

Successful real estate investments should require more money coming in than going out. You need to subtract your capital expenditures (roughly defined as large expenses that do not reoccur) from your net operating income to determine cash flow from operations.

Real Estate Formula:

Cash Flow From Operations = Net Operating Income – Capital Expenditures

Cash Flow After Financing

Considering that most real estate investors have borrowed money in order to purchase their investment, this cash flow formula can provide a better idea of what your cash flow is like after financing

Real Estate Formula:

Cash Flow After Financing = Cash Flow From Operations – Financing Costs

Occupancy Rate

Occupancy Rate reflects the time that an investment property is rented out or vacant over a period of time. Your occupancy rate is an important indicator of success, and a low occupancy rate can let you know that action is needed from your end.

Low occupancy can occur when properties are in need of repair. People tend to seek alternative housing if a landlord is not maintaining the property or did not complete some repairs required previously. Landlords can “promise” to fix things to get people to move in, while in turn causing them to move out as fast.

Real Estate Formula:

Occupancy Rate = Number of Days Occupied / Total Number of Days in One Year

Break Even Ratio

This figure is often used to evaluate risk when purchasing a real estate investment. Too high of a ration can indicate an up-hill battle to break even with an investment property and recoup debts.

Real Estate Formula:

Break Even Ratio = (Debt Servicing Costs + Operating Expenses) / Gross Operating Income

Gross Rent Multiplier

The Gross Rent Multiplier real estate formula allows investors to figure out the market value of a rental property. This is especially useful when selling a rental property, as it helps set the right price without wasting days on market.

You will want to compare notes with a Realtor. This calculation can help set the value based on the numbers, but it is always good to have a second pair of eyes.

Real Estate Formula:

Gross Rent Multiplier = Market Value / Gross Scheduled Income

Debt Service Coverage Ratio

This real estate formula can be used to figure out the current cash flow you have available to recoup the debt which financed your investment.

Real Estate Formula:

Debt Service Coverage Ratio = Net Operating Income – Annual Debt Service

 

Real Estate Formulas for Investors

Joseph Walter Realty

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email at info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

 

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Real Estate Listing Myths 

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Large Agencies Sell Homes Faster – False.

10 years ago, this statement may have been true, but today there is no Data that shows that Large agencies sell homes any faster than smaller agencies, or even faster than For Sale By Owners, all, when on the MLS provide the exact same information to buyers.

Large Agencies have more buyers – False.

Less than 5% of all homes sales were purchased through the company which listed the home. This is a misconception held over from before Real Estate hit the Internet.

If an Agent tells you that they have buyers, simply invite them to bring you one and offer to pay them a buyer Agent Commission.

Real Estate Teams are more productive sellers – False.

Real Estate teams are very common today.  Fact most do not work as a team, they are simply groups of realtors who work under a common “Associate” Broker within an office, they do not work in the traditional definition of a “TEAM” to buy or sell homes.

Real Estate agencies will not show discounted/flat fee listings – False.

Buyer Agents don’t know if the listing side is discounted, the only commission information which is displayed in the listing, is for the buyer agent, which is based on the commission you chose.

Discounted Commission listings receive inferior service – False.

A full-service listing requires the discount listing agent to provide the same full service that any other Full Fee (6%) realtor provides, such as: Arrange Appointments, Accept/Present Offers, Advise on Offers, Assist with counter offers, Negotiate for seller.

Discounted Commission Real Estate Offices cannot survive – False.

Companies that manage expenses and keep overhead low, can significantly reduce commissions and still be profitable.  Large Real Estate companies are burdened with high overhead, such as Expensive Rent, office staff, and utilities, and therefore must charge higher commissions to pay the bills and keep the doors open, they rely on you to pay their expenses and bills.

Zillow is a Home Buying Site – False.

Zillow is a marketing site, less than 5% of the viewers of homes on Zillow are qualified buyers, approximately 80% of the homes you see listed on Zillow were initiated by an MLS listing and were automatically pushed out to Zillow.

Real Estate Listing Myths

Joseph Walter Realty

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

 

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Pre-Qualification and Pre-Approval

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Lender Letters

When you are selling your home For Sale by Owner or even with an agent, you’ll need to understand what kind of approval is provided with an offer. Many people get pre-qualification and pre-approval mixed up but they are entirely different as to how secure their financing is.

Always inspect lender letters carefully

The mortgage industry often times provide relaxed letters of qualification or approval for clients who may or may not be able to close on the house. 

We will look at pre-qualifications and pre-approvals further below.

Pre-Qualification

What is a pre-qualification Letter

Pre-Qualifications are lender letters based on estimates of a buyer’s overall financial situation.

Estimates on debt, income, and assets are provided to the bank or lender. The lender then reviews everything and gives a price range of how much the borrower can expect to receive.

These can be done online or directly with lender. Furthermore, they are typically free to complete.

How is it Different than a pre-approval?

Pre-qualification is quick, usually taking just one to three days to get a letter. Keep in mind that loan pre-qualification does not include an analysis of credit reports or an in-depth look at the borrower’s ability to purchase a home.

The lender in a pre-qualification usually does not receive any documentation. The potential borrower is verbally providing an idea of who they are financially.

A pre-qualified buyer does not carry the same weight as a pre-approved buyer. As a Realtor, I tend to stay away from pre-qualified letters for offers and request that the borrower go back and get a full pre-approval.

Pre-Approval

What Is a Pre-Approval Letter? 

A pre-approval is an offer (but not a commitment) to lend a specific amount, valid for 90 days.

Getting a pre-approval involves extra steps for the buyer, but it further ensures a borrower can close a deal.

This type of letter is usually based on firm financial records. Bank statements, W-2, 1099, tax returns, investment accounts or credit scores are generally used.

The borrower must complete an official mortgage application to get pre-approved, and supply the lender with all the necessary documentation to perform an extensive credit and financial background check.

The lender will then offer a pre-approval up to a specified amount.

Lenders will provide a conditional commitment in writing for an exact loan amount, allowing borrowers to look for homes at or below that price level.

This puts borrowers at an advantage when dealing with a seller because they are one step closer to getting an actual mortgage.

Side note

Remember there are still conditions to be met on the mortgage side, even with a pre-approved letter.

You should always call the lender and have a brief discussion about the pre-approval letter.

Find out if there is anything major lacking from the file that could cause the loan to pause or be denied at later date.

Make sure they have reviewed credit, all documents and ask if they owe the lender anything.

Sellers

DO NOT BE AFRAID TO ASK QUESTIONS TO THE LENDER OR BUYERS AGENT!

Pre-Qualification and Pre-Approval

Service Coverage

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.


How to Get On the MLS

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What is a Real Estate Appraisal?

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What is an Appraisal?

If you have bought or sold your own personal residence, investment, or commercial property; you have probably dealt with the appraisal process.

Real estate appraisal, property valuation or land valuation is the process of developing an opinion of property value based on market statistics and property data

Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on.

As the seller or selling agent, even with the most up to date information, appraisals can come in with unexpected values.

Buyers cannot chose the appraisal company or the appraiser they use (I will not say that this is 100% of the time, but in most cases where a loan is involved, the buyer will be hands off and should remain hands off).

An appraisal is a safety net for the bank and the buyer. The bank needs to protect its loan with a piece of real estate at a specific loan to value.

Value

The location also plays a key role in valuation. However, since property cannot change location, it is often the upgrades or improvements to the home that can change its value.

Renegotiating the deal after the appraisal can be a struggle. Even through it was offered, the bank will not accept something lower and most of the time the buyer is not willing to come to the table with more money than the home is currently worth.

Buyers and their agents should also do their homework to make sure the offer they are submitting matches the value of homes in the area.

Sellers and listing agents should have comps ready to go in case the appraisal comes back lower than offer price.

You can submit these comps to the appraisal company to fight the appraisal. The more comparables shared, the higher the chance of an appraisal adjustment.

Although in my opinion there is a better chance at winning the lottery, than getting appraisers to adjust their report.

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

what is an appraisal

 

 

 

Home Valuation

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Establishing a Value For Your Real Estate

As a For Sale by Owner, how are you establishing the sale price of your home? Are you using Zillow? Listening to Uncle Joe? What process are you using to determine the value your home?

Establishing the sales price of your home is especially important to getting your home sold.

Valuation Tools

Free Valuation Sites

There are many FREE online tools and websites that offer “guestimates” on value, but many times they are not completely accurate.

Web estimates often times present comps that are outside the specific market. There are many factors at play when establishing a homes value.

Professional Valuation

Realtors

Most Realtors offer a home valuation. It is good to note that the majority of realtors are not licensed appraisers. Realtors give a generally close estimate to the market value of the home. 

Real estate professionals access active, pending and sold data from the MLS to refine property value. Finding comparable homes in the area and analyzing the differences between them.

Appraisers

An appraiser typical uses the MLS in the same way Realtors do for home valuation. The difference being, an appraiser is licensed for the sole purpose of valuation. They find more data and will inspect the home for maximum detail.

An appraisal is usually ordered by the buyer’s lender and has the power to cap your sales price.

Home Valuation Tips

Avoid Overpricing

Overpriced homes generally receive little to no showings and waste days on market, along with seller continued holding costs. Keep in mind that buyers will have full, detailed access to market activity through their agent.

Sell Quickly

Yes, days on market can negatively affect the value of the offers, Realtors know that high days on market is an indication to offer low. High Days on market can then produce offers that are “low-ball” since they see that you have been on the market for a while.

Get Help

As a For Sale by Owner we would suggest you call a Realtor or Broker. Pay them to run a report for you, do a full Comparative Market Analysis, or Broker Price Opinion. This could run you as little as $100 to as much as $300, but it is worth it.

For Sale by Owner can be a formidable task and there are many more moving pieces than expected. It can be frustrating and exciting at the same time. The goal may be to save hard-earned equity, but do not hesitate to seek a real estate professional’s assistance.

Property Updates

If you have recently updated your home, the full value of the improvements may not be returned in equity. Many upgrades you perform on a home increase the desirability, but not the value. Desirability may differentiate you from comparable properties in person, but on paper they hold little weight. 

Be especially careful about hiring Family members or friends to sell your home, your home is one of your largest assets, go with a proven professional not a part time agent.

 

List Your Property

Service Coverage

 

Home Valuation

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

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For sale by Owner Versus Using Realtor

FSBO VS Realtor

When you decide to sell your home, you have 2 options. You can either sell it on your own as a For Sale By Owner, or use a professional Realtor. Each option has the main goal to get it sold, however the methods used by each may differ drastically. Below are comparisons of how typical real estate aspects are handled by both a for sale by owner and a standard realtor.

Pricing

FSBO

When selling on your own, you will decide on the price you want to sell your property. FSBO usually will do this by looking on FREE public websites like Zillow to determine value. These sites have information, but how relevant and accurate is unknown. FSBOs also use what their neighbors have sold for or what the neighbor’s current home is being sold for. Each home will have different square feet, updates, and condition of the property itself, which will affect value. Emotional value can lead to pricing the home wrong.

Realtor

Realtors have tools that can help define a value. They have access to all the relevant comps that have sold in the area. They know which can and cannot be used for your specific home. Realtors will also walk the property to review it and then compare back to the comps. Adjustments will be made for updates, condition, square feet, appliances and more. A Realtor does not have emotion when it comes to pricing. It is based on data and the home itself.

See more on Home Valuation Here

Forms

FSBO

All forms must be purchased. A Seller must provide certain documents to potential buyers to keep in compliance. Sometimes the sellers cannot get access to the documents needed. If a buyer without an agent wants to make an offer, one of the parties must seek out a purchase agreement that both sides agree on using. You should not use a FREE or general agreement.

Realtor

Realtor has access to all documents needed to put a home up for sale. From listing agreements to required documents that must be accessible by other Realtors. A Realtor also has a good purchase agreement that has been used many times.

Marketing

FSBO

When you are selling the property on your own, you must find the best ways to get it in front of potential buyers. There are several websites out there and social media that can be used. Some of these websites connect with others, but you will be doing the marketing one by one, setting up new profiles, logins, and listings. When you make changes, you will need to login to each one and update the information and/or photos. Social media is good, but like real estate websites, you will have to post to each individually.

Realtor

When a Realtor does the marketing, they use the MLS. The MLS is a portal for thousands of Realtors and real estate professionals to search and find homes for their clients. The MLS also connects to thousands of other websites automatically sending out information on listed homes to be seen by potential buyers. When changes are made on the MLS, they are updated on the 3rd party websites in seconds. Realtors also use social media to connect with potential buyers and other Realtors. There are many platforms and sub-groups within these platforms that Realtors use. One of the biggest tools Realtors use, is email (CRM) to get the listing in front of Realtors and clients. Realtors keep solid databases of contacts to be able to market to them in a click of a button.

Showing Houses

FSBO

Someone selling the home on their own will be taking all the calls on their own, setting up appointments, tracking the appointments, and then following up on the appointments. The FSBO must find ways to verify who is coming to see the home. How does a FSBO ensure that the people coming to their home, to go into their personal space, are Realtors with potential buyers and not just people wanting to wander through the home. FSBO also must provide access information to those who request to see the home. They provide lock boxes, leave the door open or stay to let the requested viewer in.

Realtors

A Realtor working to sell your home will monitor all showing requests. Realtors use technology and tools like ShowingTime to approve or reject showings based on the needs of their clients. Those who have access to request showings through this tool are licensed Realtors, allowing the Realtor and their client the safety of knowing that the person showing the home is legit. The tool also only allows lockbox codes once the showing is approved. Another tool Realtors use is electronic lockboxes. This adds another level of security, with being able to track access when it starts and ends. It also does not have the same code being used over and over. It uses the Realtors phone to connect with the box to get to the key. Realtors also get showing feedback from the showings that allow them to analyze the thoughts of the other Realtors and clients who have seen the property.

Offers

FSBO

When an offer comes in to a FSBO, the home seller must review the doc and understand it in its entirety. Many purchase agreements have legal terms and deadlines that can affect the outcome of the sale. FSBO must negotiate with a professional Realtor. Another part of the offer is the review of the buyer’s mortgage approval. If there is a cash offer, this can be another challenge when requesting the docs to show the buyer can close cash.

Realtor

A Realtor handles offers of real estate for a living. They have seen the various wording and versions of local real estate companies and knows what to look for regarding price, deadlines, and concessions. Purchase agreements seem like boiler plates, but they can come with some legal issues if one side fails to perform. If there are issues found after the bottom line, it can be difficult, if impossible to correct. A Realtor knows what to review to not have issues. Realtors are also professionals when it comes to reviewing approvals from mortgage companies. They know the right questions to ask the mortgage companies. If a cash offer comes in, the Realtor knows how to request and review the right documents to make sure the cash is available to close.

Post Offer

FSBO

After the bottom line of an offer the seller must make their home available and handle the inspection and appraisal, along with requested walk-throughs. Depending on the outcome of the inspection and appraisal more negotiations may happen to request a reduction of price or change to the terms of the purchase agreement. This can be difficult for a FSBO since they do not have access to comps and other current information or understand the write up of the inspection. It is much harder for a FSBO to argue appraisal valuation and the buyer’s agent will not help since they want the best pricing for the buyer. They do not work for seller.

Realtor

A Realtor will handle the inspection and appraisal. Your Realtor will review both the inspection and appraisal as it comes in. If there are additional negotiations, they will review the requests and make their opinions. Some buyer’s agents look to offer one price, knowing they will ask for a reduction after an inspection. Realtors also can review inspections to see if the requests are correct or just a way of getting a price reduction. A Realtor can help argue valuation if the appraisal comes in lower than the purchase price by proving comps that are recent and that match the subject property. A Realtor who prices the house right will have the information to back up value when an appraisal comes in lower than expected.

Closing

FSBO

When documents come in for the closing. A FSBO will need to look at all the costs and understand what is being charged to them and to the buyers. A closing statement has a lot of fees, commissions, payoffs, and taxes. If there are errors in items like commission, you will need to negotiate and work that out with the buyers Realtor. Doing this can delay or cause the closing to not happen.

Realtor

A Realtor knows how to review all closing documents from the closing statement, the title work, and all docs required to sign. A Realtor will make sure that all charges are to the right party in order to have a smooth closing. Any discrepancies the Realtor should have documentation to back it up, especially commission, which is part of the listing.

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email at info@josephwalterrealty.com

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

 

For Sale by Owner and the Buyers Agent

Being a For Sale by Owner or FSBO, you will most likely still be dealing with a buyer’s agent. Many times, these buyer’s agent will seem as though they are there to help you, but THEY DO NOT REPRESENT YOU – THEY REPRESENT THE BUYER.

When you are selling a property or business on your own, be aware of the overly helpful buyer’s agent who has NO AGENCY AGREEMENT with you. They will present the offers on their forms and make all sorts of suggestions which will “HELP THE PROCESS ALONG” – most likely in their clients’ favor.

Read the purchase agreements all the way through and look for some of the following items:

  • OTHER ITEMS SECTION:
    • This is a section in almost all purchase agreements where custom requests are done, such as:
      • Seller to Pay XXX in Concessions
      • Seller to make all repairs from inspection
      • No EMD
      • EMD to be returned to buyer under all circumstances
    • Property Description Section:
      • Lists Appliances
      • Does it list other items you did not want to include
    • Taxes – make sure you are only paying for taxes on the days you are responsible.
    • Repairs – some purchase agreements have a section for inspection and municipal repairs and who pays them.

 

The buyer’s agent may also want to suggest you work with their title company. If your state allows, choose to do a split closing where you have a title company separate from theirs. Some states the seller picks the title company and other states the buyer does. There are also some states where an attorney is involved in all closings. You may want to reach out to a title company in your area to find out how your state does closings – you can call Inked Title who works nationally and someone can help provide information at 248-617-0004 or email info@inkedtitle.com

Do not feel pressured to use any services offered by the buyer’s agent.

(title company, home warranty, repair company, etc.)

 

Selling your home on your own has many moving pieces. Stay in control of your deal and stay in contact with the people you choose to provide services. A lawyer is always a good idea or a transaction coordinator to help review documents and get you to the closing with the greatest of ease.

A transaction coordinator is a licensed real estate professional who will charge a small fee or percentage of the sales price (much lower than the full service Realtor) to review docs, may help negotiate, and handle the process from offer to close to you getting paid.

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email at info@josephwalterrealty.com

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

 

 

 

 

 

Preparing for Closing

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When closing on a property, there is more than just the paperwork and the signing. Selling your home has many moving pieces and many people involved. That is why preparing for closing is crucial for it to run smooth.

Closing check list

Keys

Interior

Cleaning

Exterior

Misc.

Utility Providers

Closing Checklist

Keys

You would think this would be a no brainer, but many sellers leave only the front door keys. Forgetting the many other doors in the house have key access.

  • Garage
  • Backdoor
  • Shed
  • Interior doors
  • Other outside building or second garage

Interior

Replace the light bulbs or provide the new buyer with the NAME of the device they will need to control the lights and other functions of the house

Alexa, Google Home, or other internet home voice activated devices

Voice activated devices have passwords and set up processes the new buyer may not be able to do until their internet or devices arrive – DO NOT LEAVE THEM IN THE DARK

Cleaning

Seems straight forward, but with moving and people coming in and out of the house, many people forget to leave the home clean for the buyers.

There are cleaning companies that you can hire that can come into an empty house and get it done quickly or within reasonable time to let your buyer come into a clean home

Exterior

Much like the inside of the house, a maintained yard can also add to the welcome feel

Maintain your yard

If you have dogs, PICK UP THE POOP!!!!! Do not leave your dogs poop to be picked up by someone else

Misc.

Garage door remotes

Front door or other door keypad codes

Garage door keypad codes

Instruction manuals and warranties

Utility providers

Leave names and numbers of your utility providers

  • Gas
  • Electric
  • Cable
  • Internet
  • Garbage

What is also helpful is if you have local repair people or maintenance people you used on these items, provide their names and numbers

If you have the booklets that came with the appliances, furnace, hot water tank, water softener, fireplace, pool, well, septic or other feature, place them in a drawer that would be easy to find – this helps a new buyer ease into the home faster

Prepared for Closing

There are so many moving pieces when it comes to moving from your home. We hope it can be as enjoyable to you as it is to the new buyers. It can be a stressful time, but with the right organization and enough time (time can be the issue), your move out and the new buyers move it can be a memorable day.

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

Preparing For Closing

 

 

5 Reasons Why Homes Don’t Sell

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Listing Expiration

Even with all the benefits of listing on the MLS, thousands of listings expire nationwide daily. A common listing term is 180 days or 6 months, starting when property is first marked active on the MLS. An Expiration on the MLS usually triggers an open floodgate of hungry listing agent calls. Expired status and Days on Market are always recorded in the property’s history (PRD). Needless to say, expiration should be avoided at all costs, to do this you will need to limit days on market.

Avoid High Days On Market

Buyers jump at the chance to offer a reduced asking price when they see extended days on market. High days on market results in a downward slope of attractiveness. Every counts on the MLS

.a but can be a red flag to buyers that suggests something is wrong with the property

In the digital age, all market data is a click away for most realtors.  So selling within a reasonable timeframe is highly important.

 5 reasons Why Homes Don’t Sell And How To Avoid Them

  1. Pricing

  2. Curb Appeal

  3. Photos and Video

  4. Specific Problems

  5. Bad Advice

 

1. Pricing

Less is More

Pricing higher than what the market can bare is fairly common for sellers to do. However, being overpriced is a surefire way to limit your ability to sell. Pricing is the #1 sale killer in real estate. When the pricing on a home does not fit, it will not sell. 

A good rule of thumb is to look at changing price after a few days or more of little to no activity.

Over-pricing leads to extended days on market, which results in a downward slope of attractiveness. Although days on market does not technically affect the value of the home, it will affect the value of buyer offers. 

Owners often believe that the money put into the home increases its value, this is false. Putting money into the home can increase the value, but  $150,000 in upgrades, does not equate to a $150,000 price increase.

Pricing Solutions

A good way to avoid pricing issues is to make sure your Realtor prices it correctly. Realtors have access to all the comparable sales and can adjust for some differences in houses for the market.

Local Realtor professionals have accurate, real time data that allows them to value your property better than websites like Zillow.

More on Home Valuation

JWR Product: Comparative Market Analysis

2. Curb Appeal

Why is Curb Appeal Important?

Curb appeal is the attractiveness of a property when viewed from the street, hence the “curb”. Since the outside of a home is the first thing buyers see, putting extra time into a properties curb appeal can significantly improve it’s desirability. If the exterior catches a buyers eye, the odds of them viewing the property in person skyrockets!

Unfortunately, the saying “don’t judge a book by its cover” does not apply here. An exterior’s attractiveness is key to establishing a good first impression for buyers. If the exterior looks bad or needs work, buyers will likely skip over the listing entirely.

Improving Curb Appeal

You don’t need to put a ton of money into a home to have good curb appeal (unless there are serious issues). Maintaining the lawn and doing minor exterior maintenance is usually all it takes.

When a home goes up for sale, sellers should walk around the yard and see what can be done to improve it. Standing on the street as a buyer would is a good strategy for addressing potential 

Curb Appeal Check List

Questions sellers should ask.

  • Does the outside need a power wash?
  • Are there any tripping hazards?
  • Is there fading or chipping paint?
  • Do the windows need to be cleaned?
  • Are the gutters empty?
  • Is there any rotting wood or siding coming off?
  • Do trees or hedges need to be trimmed?
  • Any bald spots on the lawn?
  • How does the roof look?

3. Photos and Video

Today, buyers and their agents will almost always see photos and video before scheduling a showing. High quality media can instantly spark a buyers interest, while low quality media can instantly turn off potential buyers. Investing in good photos and video can improve listing activity significantly.

Cell Phone Photos

Though it is true that many cell phones today are fully capable 4k cameras, it’s recommended to avoid using  them for listing photos.

Phones and mobile editing apps are still very limited compared to professionally enhanced photos and videos shot on a DSLR Camera. Mobile formats are also often not aligned with MLS upload requirements so it is best to find correct settings online or let a professional handle it.

Too Much Photo and Video

Understandably, many sellers want to post as many pictures as possible of their property.  No matter the size of your home, overwhelming potential buyers with an abundance of photos is not advisable.

25 – 40 photos can easily represent your home, along with a video. Buyers can get bored and lose interest in the home when clicking through the photos. Use the best photos that show the best features of the home. Videos should not be movies. They should be short walk throughs of the home focusing on top selling features.

Hire a Pro

To improve interest and desirability for a listing, professional photos and video can do wonders.

Hiring a professional photographer/videographer is helpful to ensure a home sticks out and captures the attention of buyers . Many Realtors will pay for these photos and videos to be taken, but if they pay, they own the photos and they cannot be used in the future without their permission.

4. Too Much Work

Every home is unique and may have it’s own problems requiring attention. As homeowners, It is fun and exciting to customize our homes to represent ourselves, or just to be different. However, specific problems arise when it comes time to sell the home. Any Item that a buyer will want to change or update becomes a point of negotiation since it will equate to time, effort and money on the buyers side. This not beneficial to the seller

Solution

Since most buyers go into a home with their own visions in mind, creating as much neutral ground early on is important. Items like paint, appliances, fixtures, and other miscellaneous items should be attended to prior to marketing a property. Prioritize what you can and cannot do. The more updates, the better the pricing will be on the home. By putting the money into the home before, it will help make the home more appealing to buyers and many times allow for a quicker sale. Money in before saves on holding costs of a home sitting on the market.

5. Bad Advice

Bad advice can heavily add to the stress of selling a property. Avoiding bad advice in real estate will reduce headaches and get you to the closing table faster. The trick will be differentiating the good advice from the bad. Selling your home is stressful enough so getting accurate information from a professional is advised. An experienced real estate professional will have all the answers you need, or are connected to someone more experienced who does.

 

Conclusion

In the end the goal is to sell. This is a multi-step process that involves more people than just a seller and a buyer. It takes a team of professionals, from Realtors to photographers to title companies to inspectors, appraisers and administration people (and probably more that we do not see) to close a property completely. If just one thing above helps guide you to this amazing place we all love called the closing table, then we did something right today.

 

 

 

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

Joseph Walter Realty

 

Marketing your Property

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Role of Marketing in Real Estate

If you want to sell by owner, you will have to take on the role of the marketing department.

Many for Sale by Owners only rely on free listing websites or the MLS to market their property. Depending on the market we are in, this can work in your favor. However, remember your home is now amongst hundreds if not thousands in your market, all trying to do the same thing.

Additional Marketing for your property

Additional marketing for the property is a common service for experienced realtors to do. This is where a majority of our time and expenses come in. A few examples are neighborhood mailers (yes they are still a thing in the digital age), advanced web marketing, email blasts and digital marketing on all the social media platforms.

Marketing your Property as a For sale By Owner

You should start by deciding an advertising budget and how you would like to use it toward selling your home. There is no magic number when it comes to budgeting and selling your home.

Lets start simple and work our way through some marketing options and you can start to decide in your head what you feel is appropriate to spend on the sale of your For Sale by Owner home.

MLS Only Listing Marketing

This markets your property on the MLS of your local area through a Broker, but still allows you to sell it For Sale by Owner. MLS Only listings are a common and inexpensive way to get seen by the Realtors in your area. You generally pay a small fee or flat fee, and the Broker will list your home on the MLS.

MLS Only Tip

MLS Only listings should have your name, number, and e-mail as the contact information (some MLS systems have different rules, but you should have at least your number). You should also be set up with a showing application that will help you receive and reject REALTORS who have clients to see your home. These showing applications are used only with licensed Realtor/agents.

There are many companies that offer this service which ranges between $199 and $499 for the basic service. Check out  www.RealEstateFlatRateListing.com and click on the coverage by state to help list in your area.

Social Media Marketing

Facebook, Instagram, Twitter, and many other platforms draw people to them every day for personal and professional reasons. They are good platforms to market your property and be seen by people you know and people you do not know.

Posting on your personal feed will get people to know you are selling, but it will take expanding your network to get your For Sale by Owner home noticed. To do this, you can boost an ad or create an ad. When you boost or create an ad, it will ask you where you want it seen. It will have you choose a city and how far out. Your ads will show up on the social media you are using for people who are registered within that distance. You can narrow down some demographics more, but usually a general radius is best.

Social media marketing allows you to set a daily or total budget for the ad. As you move up and down it will show you an estimated number of daily and total people you could reach.

Website Marketing

Making a website specific for the home is useful when it comes to showing people more than what they can find on the MLS, social media, and flyers. With a For Sale by Owner website, you can add as many pictures as you would like, videos, more descriptions, and it does not fall within the rules of the MLS.

You can get a domain from Godaddy or another web domain seller. These companies usually have easy to build website templates. Basically, they are drag and drop websites and very inexpensive.

You can also get help building one on our site here. We can make a website for you,  just provide the photos, video links and text for $249.

E-mail Blast Marketing

For Sale by Owners typically do not have the database of emails for real estate professionals and others who may be in the market for a home (if you do, then you are way ahead of the game).

You should still email your flyers out to family, friends and business associates and encourage them to pass it along. You never know.

Open House Marketing

As a Realtor myself I am torn as to whether an open house is worth the time and effort. Many real estate professionals use open houses to collect names, numbers and email of people who are buyers looking, but may not be interested in that specific home they are doing an open house for. Open Houses bring more curiosity from neighbors and window shoppers than actual buyers.

When your house first hits the market, it is not a bad idea to try marketing your property with an open house. If anything, you can ask for feedback from those who come on price and the home itself. Feedback itself can be valuable.

Mailers and Flyers Marketing

This can be an old school method in the world of digital marketing, but it can get the word out. By letting your neighbors know your home is for sale, you could run into someone who loves the neighborhood so much they would pass along the information to friends and family.

Flyers are also good to put up around town at places people gather. Please ask for permission before placing on bulletin boards and other public spaces. You do not want to spend money printing to have it thrown out.

For real estate professionals, e-mail blasts can sometimes be the biggest part of the budget.

Word of Mouth

Tell everyone you are selling! Word of mouth self-marketing is a tool that will always be useful. You never know who is looking to buy. From your dentist to your dog groomer to your hair stylist. They speak to people all day and are a wealth of information and connected to a whole different network of people. They can be your boots on the ground marketing team.

Joseph Walter Realty

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

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What is a VA Loan?

A VA loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA).

The basic intention of the VA home loan program is to supply home financing to eligible veterans. They also help veterans purchase properties with no down payment. A VA loan may be issued by qualified lenders.

Veteran Affairs (VA) does not originate loans, but sets the rules for who may qualify. They issue minimum guidelines and requirements for which mortgages may be offered while financially guaranteeing loans that qualify.

When you are selling your home, whether it is For Sale by Owner or traditionally with a real estate agent/Realtor, you will have to understand the offers presented to you and the financing they have been approved for.

Each type of financing can be different, and each have their pros and cons.

Who Can Get a VA Loan?

The program is for American veterans, military members currently serving in the U.S. military, reservists and select surviving spouses (provided they do not remarry) and can be used to purchase single-family homes, condominiums, multi-unit properties, manufactured homes and new construction.

VA Loan Benefits

The VA loan allows veterans 103.3 percent financing without private mortgage insurance (PMI) or a 20 percent second mortgage and up to $6,000 for energy efficient improvements.

A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA; this fee may also be financed, and some may qualify for an exemption.

In a purchase, veterans may borrow up to 103.3% of the sales price or reasonable value of the home, whichever is less.

Since there is no monthly PMI, more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment.

In a refinance, where a new VA loan is created, veterans may borrow up to 100% of a property’s reasonable value, where allowed by state laws.

VA loans allow veterans to qualify for loan amounts larger than traditional Fannie Mae / conforming loans.

Standard VA guidelines state that the VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills, although there is no hard limit to the DTI for a VA home loan.

Veterans have been known to be approved with a DTI of up to 80%, if there are other factors that strengthen their loan application. These factors include a low Loan-To-Value (LTV), sufficient residual income, additional income received but not used to qualify for the loan, good credit, etc.

Let me break down the pros and cons of this type of loan. This will allow you to get some insight on how the borrower was approved and what guidelines they will be facing.

VA Loan Pros and Cons

Pros

No down payment

This is the most significant benefit. Qualified borrowers can borrow as much as a lender is willing to lend, all without needing a down payment.

FHA loans typically require a 3.5 percent minimum down payment, and for many conventional loans it is a 5 percent minimum.

On a $175,000 home purchase, that is a $6,125 down payment for FHA and a $8,750 for conventional.

No private mortgage insurance (PMI)

Usually required for conventional borrowers who cannot put down at least 20 percent. FHA borrowers have mortgage insurance that is at the time of purchase and another that is paid monthly.

PMI typically disappears once you have about 20 percent equity in your home. There is no PMI on a VA loan.

Higher allowable DTI ratio

Lenders will look at the ratio of your total monthly income to your total monthly expenses. The VA typically wants to see a debt-to-income ratio of 41 percent or less. That benchmark is higher than what you would see on conventional and even FHA loans.

It is possible for qualified borrowers with a DTI ratio greater than 41 percent to still secure VA financing.

No prepayment penalty

VA loans can be paid off early with no prepayment penalties.

Refinance options

The VA home loan program has a pair of refinance loans that can help qualified buyers lower their monthly payments or get cash back from their equity.

The Streamline refinance, also known as the Interest Rate Reduction Refinance Loan (IRRRL), is for homeowners with existing VA loans.

The VA Cash-Out Refinance allows VA and non-VA homeowners to refinance and get cash at closing to pay down debt or take care of other needs.

Refinancing may result in higher finance charges over the life of the loan.

Flexibility with bankruptcy and foreclosure

Some borrowers who qualify can be eligible for a VA home loan two years after a bankruptcy or foreclosure. The wait can be much longer for different loan types.

Cons

not for everyone

The VA loan program is a benefit you must earn, which makes it relatively rare to obtain compared to other loan products. VA home loans are only available to eligible service members who have served their country in the United States military. Spouses of veterans who have died in the line of duty or because of a service-related disability may also be eligible.

VA Funding Fee

All VA loans come with a mandatory VA Funding Fee charged by the VA. This fee goes directly to the agency and helps keep the VA home loan program running for future generations.

It is a cost you can finance into the loan, and borrowers with service-connected disabilities are exempt from paying the fee. But this is not something you will pay on a conventional loan or FHA loan.

You can learn more about how much the VA Funding Fee is, who pays what and who is eligible for a refund.

VA Loans are provided For primary residences

This is not a loan program you can use to purchase a second home or an investment property.

Sellers are not always on board

Some home sellers are not open to receiving offers from VA borrowers. A lot of this undoubtedly has to do with some of the myths and misconceptions surrounding VA loans.

 

The information here is provided for informational purposes. The writer is not a mortgage or financing professional. It is always best to discuss financing matters with a mortgage or financing professional.

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

What is an FHA Loan?

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An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan that is provided by an FHA-approved lender. FHA insured loans are a type of federal assistance.

These loans have historically allowed lower-income Americans to borrow money to purchase a home that they would not otherwise be able to afford.

Because this type of loan is more geared towards new house owners than real estate investors, FHA loans are different from conventional loans in the sense that the house must be owner-occupant for at least a year. 

When you are selling your home, whether it is For Sale by Owner or traditionally with a real estate agent/Realtor, you will have to understand the offers presented to you and the financing the buyers been approved for.

Each type of financing can be different, and each have their pros and cons

FHA Loan Benefits

FHA allows first time homebuyers to put down as little as 3.5% and receive up to 6% towards closing costs. However, some lenders will not allow a seller to contribute more than 3% toward allowable closing costs.

Since loans with lower down-payments usually involve more risk to the lender, the homebuyer must pay a two-part mortgage insurance that involves a one-time bulk payment and a monthly payment to compensate for the increased risk.

If little or no credit exists for the applicants, the FHA will allow a qualified non-occupant co-borrower to co-sign for the loan without requiring that person to reside in the home with the first-time homebuyer. The co-signer does not have to be a blood relative. This is called a Non-Occupying Co-Borrower.

FHA also allows gifts to be used for down payment from the following sources:

  • the borrower’s relative
  • the borrower’s employer or labor union
  • a close friend with a clearly defined and documented interest in the borrower
  • a charitable organization
  • a governmental agency or public entity that has a program providing home ownership assistance.

Pros and Cons of FHA Loans

Now we will look at the pros and cons of the FHA loan so you can further understand the buyer you will be working with. The pros and cons are directly about the loans themselves. By understands the good and the bad of the loan product, you can choose to accept the FHA offer or state in your MLS listing you will accept FHA loans.

One thing I would like to point out from a Realtor perspective, is that just because someone cannot afford 20% down, it does not make the offer less desirable. If the client is approved for the offer amount in purchase agreement, the offer has merit to consider.

Pros

Low down payment with low credit scores

FHA loans require a 3.5% down payment with a credit score of 580 or more, much lower than the 620-score required by conventional lenders.

Employers, close friends, family members or charitable organizations can contribute gift money towards your FHA down payment.

In contrast, some conventional loan programs do not allow gifts or restrict who can contribute gift funds for a down payment.

Lower credit score with a higher down payment

The lowest credit score for an FHA mortgage is 500 to 579 with a 10% percent down payment.

Applicants with credit problems, including bankruptcy or foreclosure in their recent financial history, may still qualify for an FHA loan.

Higher debt-to-income ratio (DTI) is allowed

Your debt-to-income (DTI) ratio is calculated by dividing your total monthly debt payments by your gross monthly income.

FHA loans allow for a DTI ratio up to 43%, although some lenders will accept a higher DTI under certain conditions. Meanwhile, a higher DTI may require a 740 score for minimum down payment conventional financing.

Housing options

An FHA loan can be applied to several housing types:

  • Single Family homes
  • Multi Family homes with up to four units
  • Condominiums
  • Manufactured homes on a permanent foundation.

Another perk: You can use an FHA loan to buy a multi family (two-to-four unit home) with a 3.5% down payment and qualify with rent on the other units as long as you live in the home for a year.

No income limits

Higher-income earners with credit problems can qualify for FHA financing with a minimum down payment. You cannot qualify for 3% down conventional loan programs, such as the Fannie Mae HomeReady® loan, if your household income is more than 80% of your area’s median income.

Cheaper monthly mortgage insurance for low credit scores

If you cannot swing a 20% down payment, lenders usually charge mortgage insurance to cover the risk of default if you fail to repay the loan. You’ll pay the same FHA mortgage insurance premium regardless of your credit score. On the other hand, conventional private mortgage insurance (PMI) premiums are much higher if you have bad credit.

Cons

Higher total mortgage insurance costs

Borrowers pay a monthly FHA mortgage insurance premium (MIP) and upfront mortgage insurance premium (UFMIP) of 1.75% on every FHA loan, regardless of down payment. A 20% down payment eliminates the need for PMI on a conventional purchase loan. You can also cancel PMI once you build 20% equity in your home.

Restrictive housing standards

The government requires that all homes bought with FHA-backed loans are structurally sound and secure, and meet minimum health and safety standards. A picky appraiser can make it difficult for a house need renovations to be approved for an FHA loan.

Lower loan limits

Each year, the FHA sets FHA loan limits by county. This may impact how much home you can buy with an FHA loan, especially in high-cost areas. In general, FHA limits are 65% of an area’s conforming loan limits. For example, conforming loan limits in most parts of the country are $510,400, compared to $331,760 for FHA loan limits for 2020.

Limited to a primary residence only

You can only use an FHA loan to buy a home you plan to live in as a primary residence. To finance a vacation or investment property, you will need a conventional loan.

Lifetime mortgage insurance expense

If you opt for an FHA loan with a minimum down payment, you are stuck with the MIP for the life of the loan. The only way to get rid of it is to refinance into a different loan type, such as a conventional mortgage. 

 

The information here is provided for informational purposes. The writer is not a mortgage or financing professional. It is always best to discuss financing matters with a mortgage or financing professional.

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

Joseph Walter Realty

 

What is a Conventional Loan?

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A conventional mortgage or conventional loan is any type of home buyer’s loan that is not offered or secured by a government entity.

Conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies. However, some conventional mortgages can be guaranteed by two government-sponsored enterprises: The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Conventional mortgages typically have a fixed rate of interest, which means that the interest rate does not change throughout the life of the loan.

Conventional mortgages or loans are not guaranteed by the federal government and as a result, typically have stricter lending requirements by banks and creditors.

When you are selling your home, whether it is For Sale by Owner or traditionally with a real estate agent/Realtor, you will have to understand the offers presented to you and the financing they have been approved for.

Each type of financing can be different, and each have their pros and cons. Let’s look at the conventional loan.

Conventional Loan Requirements

In the years since the subprime mortgage meltdown in 2007, lenders have tightened the qualifications for loans—“no verification” and “no down payment” mortgages have gone with the wind, for example—but overall most of the basic requirements haven’t changed.

Potential borrowers complete an official mortgage application, then supply the lender with the necessary documents to perform an extensive check on their background, credit history, and current credit score.

No property is ever 100% financed. In checking your assets and liabilities, a lender is looking to see not only if you can afford your monthly mortgage payments, which usually shouldn’t exceed 28% of your gross income.

The lender is also looking to see if you can handle a down payment on the property (and if so, how much), along with other up-front costs, such as loan origination or underwriting fees, broker fees, and settlement or closing costs, all of which can significantly drive up the cost of a mortgage.

Among the items required are:

Proof of Income

These documents will include but may not be limited to:

  • Thirty days of pay stubs that show income as well as year-to-date income
  • Two years of federal tax returns
  • Sixty days or a quarterly statement of all asset accounts, including your checking, savings, and any investment accounts
  • Two years of W-2 statements

Borrowers also need to be prepared with proof of any additional income, such as alimony or bonuses.

Assets

You will need to present bank statements and investment account statements to prove that you have funds for the down payment and closing costs on the residence, as well as cash reserves. If you receive money from a friend or relative to assist with the down payment, you will need gift letters, which certify that these are not loans and have no required or obligatory repayment. These letters will often need to be notarized.

Employment Verification

Lenders today want to make sure they are loaning only to borrowers with a stable work history. Your lender will not only want to see your pay stubs but may also call your employer to verify that you are still employed and to check your salary.

If you have recently changed jobs, a lender may want to contact your previous employer. Self-employed borrowers will need to provide significant additional paperwork concerning their business and income.

Other Documentation

Your lender will need to copy your driver’s license or state ID card and will need your Social Security number and your signature, allowing the lender to pull your credit report.

Most sellers tend to favor the conventional loan. These borrowers tend to be putting more down, they tend to have better credit, and they meet tighter requirements that lead to their approval. This does not mean, FHA or VA offers will not close or are inferior, it is just another or different type of financing.

As a Realtor, I do prefer conventional, but look at all offers to decide which one will benefit the client. All offers are different when they come in, just like the financing. It is sifting through all the information to decide which offer and financing meets the needs of the situation.

The information here is provided for informational purposes. The writer is not a mortgage or financing professional. It is always best to discuss financing matters with a mortgage or financing professional.

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

Joseph Walter Realty

What is a Flat Fee Listing?

Flat Fee Listings 

A Flat Fee Listing means a seller has paid their Brokerage an up-front fee for Real Estate Services. Brokers offer full services at higher costs, or limited service at lower costs.

Always make sure to clarify costs and services with broker to see what you’re paying for.

To see what an MLS Only listing is, please visit the post located  HERE .

The flat fee listing option can help save you money with a reduced rate of commission to get your home sold, but you will want to look at the terms.

There are companies that charge a flat fee and the payment is due at the closing, but there are companies that collect the flat fee when you sign up for the services. You will want to read through the flat fee contract thoroughly before signing.

Full Services

What is typically provided by Full-Service Realtors?

A full-service Realtor does a lot of work. There are more steps and processes that are handled, but that should give you the basics of what is considered full-service.

  • Property review and pricing
  • Photography/Video
  • Sign and lockbox
  • Marketing
  • Handling and following up from showings
  • Open houses
  • Review of offers and negotiating/re-negotiating
  • Review appraisals and inspection reports
  • Monitoring the deal to keep it moving toward close
  • Review of title work
  • Review of closing docs
  • Setting up and attending closings
  • Making sure you get your proceeds
  • Following up after close to make sure move went as planned

 

What is a Flat Fee Listing?

List Your Property

Service Coverage

What is a flat fee listing?

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

 

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What Is An EMD?

In many ways, earnest money can be considered a deposit on a home, an escrow deposit, or good faith money.

An EMD or Earnest Money Deposit is a deposit made to seller that represents a buyer’s good faith when buying a home.

The earnest money deposit gives the buyer extra time to secure financing and conduct the title search, property appraisal, and inspections before closing.

The amount of the EMD is up to the buyer. Normal EMD amounts are around 1% or 2%, but in particularly good markets, the EMD can be as high as 5% to 10%.

Why Is An EMD Important?

The earnest money deposit ensures that the buyer is serious about the purchase of a property and not “SHOPPING AROUND” while taking properties off the market. The EMD will be credited on the closing statements.

Sellers should look at the EMD as the strength indicator in the offer.

For example, if someone offers $500 EMD on a $500,000 home, the seller will feel as though the buyer is not serious. The seller may also feel it is not an amount worth taking the house off the market for.

If a small EMD is part of the purchase agreement, you will want to investigate further with the mortgage lender and if cash deal, proof of funds.

When there are multiple offers, every detail is important, including the amount of EMD placed to secure the property. You want to make the listing agent and seller see your deal as the best opportunity to get to the closing table.

Who holds the EMD?

The EMD will be placed with a broker, a title company, or a lawyer to hold while the real estate transaction is processing.

The escrow holder will vary, depending on the instructions for sale or the negotiated place between buyer and the seller.

EMD Loss

The buyer can be granted EMD back if situations like the following occur:

Bad Inspection

At times, the seller will negotiate or work out the issues with the inspection, but when both sides cannot agree, the EMD can be released back to buyer and deal mutually released.

Property Does Not Appraise

Markets change and properties may not appraise for the agreed upon price. Like the inspection, if both sides cannot come to terms, the EMD is released back to buyer and deal mutually released

Misrepresentation By The Seller

The property should have a seller disclosure, 100% completed by the seller. If there is something that is misrepresented, on purpose or by accident, the parties can find a way to fix the situation or mutually release property and EMD returned to the buyer.

Mortgage Cannot Be Approved

Approvals are not guaranteeing that the deal will close. There are many other factors that come into play after the purchase agreement is signed and the deal processes. If the lender ends up stating the buyer cannot continue, the EMD is returned and property mutually released.

EMD Disputes

In the case where the EMD is being disputed, you will need to review the purchase agreement to decide how to proceed – some purchase agreements have built in mediation or arbitration clauses.

You can contact the other broker, use the local real estate board, or in extreme situations, you may need to use an attorney to get the EMD released.

Both the buyer and the seller can try to claim the EMD. Therefore, having contingencies in the purchase agreement and everything in writing as the real estate deal progresses. Besides everything in writing, you will want to make sure all parties sign any changes or addendums.

Here are some situations where the seller has the right to request the EMD be provided to them:

Buyer gets cold feet and wants out:

Just because the buyer gets cold feet or decides the home is not what they wanted; does not mean they get their EMD back. The seller has taken the home off the market and accepted the EMD as good faith that the buyer wanted the home.

Both the buyer and seller will need to review the PA for deadlines agreed upon. If the buyer fails to perform, the seller is entitled to the PA.

Buyer cannot perform or close by a specific date:

If the buyer cannot perform by the contract date, the seller can request the EMD be sent them.

Buyer did not provide accurate information:

When the buyer provides documentation to the lender, and it is later found out to be untruthful and the mortgage declined, this is not the same as being denied the loan.

These are just a handful of reasons as to why a seller may have rights to the EMD. Both the buyers Realtor and Listing Realtor should have protections in place for their client.

Summary

Besides everything in writing, you will want to make sure all parties sign any changes or addendums.

Writing up a purchase agreement has more than a price to offer a seller. Realtors are professionals at making sure your offer is written to secure your interests and protect you.

Listen to the Realtors advice when they are working on your deal. They do this every day. Although, the Realtor does work for you, and in the end will submit the offer how you feel comfortable, they are the best resource for making deals happen.

 

 

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realtyat 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Michigan Licensed Broker 6505431020
Ohio Licensed Broker 2020008974
Florida Licensed Broker BK3491231
Texas Licensed Broker 9010704
Arkansas Licensed Broker PB00090741
Georgia Licensed Broker 79028

More states 2021


3275 Martin Parkway, Ste. 125, Walled Lake, MI 48390

MLS Only Listings

As a For Sale by Owner, you will get inundated with Realtors wanting to help list your home for sale. This is a natural course of business (if you use a flat fee service to get on MLS – the Realtors cannot solicit you reducing calls, emails and texts – visit www.fsbomadeeasy.com for more info). As you are selling the home on your own, it does not hurt to interview some of the Realtors in case you need some help in the future. This will save you time and weed out those you may want to use and those you will not use.

Here are some of the best questions to ask when interviewing potential agents – some obvious and some not so obvious.

  • Are you licensed in this state?
    • You will want to make sure the Realtor has a current and valid license. There are state sites that can also help you verify their credentials.

 

  • How long have you been a Realtor?
    • The length of time someone has been in the real estate industry is important. Realtors who have spent time in real estate have been through the various markets and understand how to adjust to accomplish the goals of selling the homes they represent.
    • A newer Realtor does not always mean they cannot help you.
    • Many new Realtors, who are professionals, have done their research and can be as productive as a seasoned pro. As you ask follow up questions, you will get a feeling where both the seasoned Realtors and new Realtors fit in your needs to sell your home.
    • A good follow up question to this is “are you a full time or part time Realtor?”
      • You may get a Realtor in business for 20 years who is part time, and you may get a Realtor who is new and full time. This is where your gut feeling, and additional questions come into play.
    • Are you part of a team or will you be the Realtor I am working with?
      • There is no wrong answer to this question, but you will want to know who will be handling the process of your home and who you should speak with. Communication is key.
      • A team does not mean you will get more help, just simply means they are part of a group of Realtors under someone else.

 

  • What MLS board are you currently with?
    • There are many MLS boards. You will want to make sure that the Realtor is part of the board for the area your home is located.
    • There are usually major MLS boards and smaller, region specific boards. Both can be useful, but make sure you get maximum exposure.
  • Can I get referrals?
    • Realtors typically have past clients happy to give them a glowing review. Much like online reviews, they do not always reflect how good or bad something is.
    • If the Realtor is reluctant to provide referrals is when there is red flag.
  • What are your average listing Days on Market (DOM)?
    • This number will vary depending on the time of year and the type of market we are in – buyers or sellers.
    • High days on market is not good but ask for them to explain.
    • If they seem way too low, ask how they can sell so quick for every property. Also ask how many sales they have had. They could have very few deals, which would give them a low average days on market number.
  • Have you sold a home in my neighborhood?
    • Some Realtors specialize in geographic markets. Many times, you will get a “NO” to this answer but does not mean they are not the right person for the job. Follow up with, “have you sold homes in this area?”. This will allow them to explain their market and what they have sold that compares to your neighborhood.
  • Have you sold any homes in the price range of my home?
    • Like the geographic area question, many Realtors specialize in price ranges they can acquire buyers or know how to market them.
  • How do you plan on marketing my home?
    • Like many of the other questions, you may feel as if there is a template of answers from all Realtors.
      • “We have social media” – everyone does
      • “We have email marketing campaigns” – everyone does
      • “We have buyers already” – watch out for this answer. Most people lure sellers with their “IN HOUSE” buyers who then decide on a different home after you sign the agreement.
      • “We have a database of people we market to”
      • “We will host open houses” – this is for them to collect buyer’s info more than to sell your home.
      • “We will do your photos and drone work” – everyone does
    • Realtors all have the same access to all the same tools. It is a good question to ask, but the boiler plate answers provided will not be able to help you decide if their marketing plan is different. Fancy flyers and listing presentations are for you, not how they will market your home.
  • How much will you charge to list my home?
    • The Realtor may tell you that it will be 6% – 3% for the listing side and 3% for the buyers agent side and that is typical – yes it is typical or industry standard, but YOU AND YOU ALONE WILL BE THE DECIDER OF WHAT YOU CHOOSE TO PAY.
    • Do not get drawn into the Realtors who say “NO ONE WILL SHOW YOUR HOME FOR LESS” – this statement alone is breaking so many rules.
    • Tell the Realtor what you would like or were thinking of paying both sides. You are the client, and it is YOUR EQUITY THE FEES ARE COMING OUT OF.
    • Never sign up with a Realtor pressuring you for fees. You are using your home to provide revenue for them. If they are high pressure to sell you as their listing agent, they may be high pressure through whole process. You must feel comfortable with all aspects of the Realtor.

 

  • What price do you think my home should be listed for?
    • A Realtor coming to get you to list your home should have done a comparable market analysis giving them a rough idea of your home listing price.
    • When they arrived at the home, they should have requested a tour of the home to verify some things that will affect the comparable market analysis
    • As you interview several Realtors, you will start to see numbers close to each other.
    • WATCH OUT FOR ABOVE MARKET NUMBERS OR REALTORS WHO AGREE TO ALL YOUR PRICING (sometimes you may be right on with value but watch out for those too agreeable – have them show their valuation on paper).
      • Realtors will come in with high numbers to get you to list with them, only to come back soon after for a price reduction.
    • How much will I get at close at the price you suggest?
      • Realtors should be able to provide NET SHEETS to give a rough estimate of your proceeds at close. You may need to provide some info to help fill in some costs.
      • Realtors should provide multiple NET SHEETS to show what you would get at different offer prices.
    • Once my home is listed, what happens?
      • Find out what you need to do to prepare home to get listed
      • Find out when the sign and lock box will be installed
      • Find out when the photos and drone video will be done
      • Find out when the first open house will be
      • Find out what the process is when you get an offer
    • How do I contact you if you list my house and when are you available?
      • Make sure you have easy access to the Realtor listing your home
        • Phone/Text
        • Office Line
        • Email
      • There will be many moving pieces and people coming and going into your home. You do not want an absent Realtor.

There seem to be many questions to ask when you are interviewing a Realtor. On paper it seems drawn out, but you will find in natural conversation many of the questions above will happen. We just provide a guide and insight on what to look for when interviewing potential listing Realtors.

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email at info@josephwalterrealty.com

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

Preparing an Open House

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Purpose of an Open House

An open house is a great way to get more people in your home at one time. It can capture Realtors with their clients, independent buyers, and often times curious neighbors along with people driving by.

To hold an open house, even with the help of your Realtor, takes effort and planning. Carefully preparing for an open house can give you an edge in a competitive market. Keep in mind that the impression people get, is the impression they will keep. It is much harder to get a potential buyer to see a house twice.

The following points will cover everything sellers need to ensure a successful open house

Preparing For an Open House

Curb Appeal

 the landscaping Should be done before the open house

When preparing for an open house the yard should be mowed with no grass clippings, garden raked and cleaned up (fresh flowers are nice if they are in season),

Lawns can be especially important to some buyers. If you have bare spots you can throw down seed a couple weeks before home goes on market or first open house. Fill in holes where animals may have dug as well. Simple things can fix a problem before a buyer sees it.

Always try to fix anything that could catch the eye in a negative way

Fix any chipping paint, unclean gutters, remove excess items from yard, porch and driveways. 

Interior

The inside of the home should be extra clean

If you can hire a professional cleaner that can come in the morning of or day before, this will help get you to showroom perfection. If you have pets, this is even more important when preparing an open house. People with pets tend not to smell them, the smell is likely there, no matter how clean you are. Cleaning should include the appliances, cupboards and the closets. People open everything when they are looking at a house.

Remove excess clutter

Clutter distracts from the home and the buyers tend to also get distracted. Counter tops, floors, tables, dressers and closets should be free of clutter.

In fact, you should try to reduce the amount of stuff in the closets to show how bog they are. A packed walk in closet can seem small if jammed with stuff.

Remove personal items

This includes photos on the wall. Family and kids pictures included and kids’ artwork on the walls and fridge. It may have been the best Mona Lisa macaroni craft, but it should be stored away for the open house.

Buyers want to see themselves in the home. By taking away the personalization you have, they can start to visualize their stuff in the home.

Valuables

We all want to believe the best in people, but not all people, no matter what they seem like, are good people. People tend to get overly comfortable at open houses and open drawers and you do not want something of value to disappear.

Pets

We have discussed getting the home clean of the pet smell and hair, but pets should not be at an open house. It does not matter if it is the friendliest pet in the world, a pet can turn off some potential buyers.

You also do not want the chance of something happening, Potential buyers or  a Realtor while in the house getting bit or scratched will not do any favors. People enjoy lawsuits these days.

Pets in aquariums and cages that cannot be moved are fine. You may want to put a “DO NOT TOUCH” sign on them.

Promoting an Open House

Open House by Realtor

If you are using a Realtor, ask them how they are marketing the open house. The Realtor should be using the MLS to post open houses, which feeds to many thousands of sites. They also should be doing email blasts, social media posts and calling other brokers and Realtors. On the day of the open house, your Realtor should be putting directional signs from major roads to lead people to the open house.

Never be afraid to ask your Realtor how they are promoting. They do work for you, they are getting paid with your equity, so you should know. It will help you understand the process and reduce some of your stress.

Open House by Owner

As the homeowner, you should also use your social media, especially if you have a neighborhood or community page you are involved with. People in your neighborhood are great sources of buyers. They may know family or friends looking to move into the area.

The Day of  an Open House

Open House Checklist

Make it Lit

For the day of the open house, all windows in a home should have the blinds raised. The Realtor (or homeowner) should turn on all the lights in every room. The more light the better. 

open every door

During the times people are in, this reduces the amount of touching in your home.

Refreshments

With the permission of the homeowner, the Realtor should have cookies and water. People like to snack! You can get two birds with one stone if the oven is used to make the cookies. Allowing the aroma to fill the house. If not, there is always candles or plug-ins to do the job.

(DISCLOSURE – DUE TO THE COVID-19, COOKIES AND WATER MAY NOT BE ADVISED – BUT IT’S THE THOUGHT THAT COUNTS FOR NOW)

Where Should the Owner Be?

The homeowner should not be at the open house if possible. Let the Realtor be there to help guide the potential buyers or other Realtors. They know how to interact with them.

After the Open House

Your Realtor should have had a sign in sheet at the open house. The Realtor will follow up with everyone who signed in to get feedback and see if there is any interest.

The seller should keep an open mind. The feedback is not personal, it is about the house and the needs of the potential buyers.

Listen to the feedback. If there are changes that can be made to improve the home for other showings and open houses, the feedback is where these suggestions will come from.

In the end, the goal of all open houses is to get the home sold. These are some basic steps to making sure your open house is effective. We wish you luck on getting to the closing table.

Joseph Walter Realty

Service Coverage

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

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Buyer’s Markets

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Buyer’s Market 

Definition

A buyer’s market occurs when the supply (available homes for sale) exceeds demand (the number of buyers seeking to purchase homes).

Buyer’s Market For Buyers

If you are buying a new home, a buyer’s market is the ideal time to make your move. You might be able to buy a great home for a lower cost than you would in a seller’s market. This is the best market for you to get equity from the start.

Your Realtor has the ability to view market trends regarding pricing in the area you are looking in.

Not all homes will be affected by buyer’s markets.

Sellers who do not need to sell, sellers who can wait out the current market, and specialty homes where the seller knows there is value outside of market conditions.

There are still multi-offer situations in a buyer’s market. This situation may drive the price back to asking or above. Decisions will be made to get your dream home above what you were expecting or move on to find the bargain during the buyer’s market.

Buyer’s Market For Sellers

If you are trying to sell your property in a buyer’s market, your home may remain on the market longer before you’re able to secure a buyer due to the large number of available properties. You may also have to lower your listing price or make other concessions in order to secure a buyer. Your listing Realtor should help you find ways to maximize the value of your home. There are things you can do and offer to attract a buyer who is willing to pay the right price for your home. In a buyer’s market, you want to 1) make sure your home in priced right 2) make sure your home in prepared right and 3) make sure you home is marketed right (show all the value).

Buyer’s Market For By Owner Sellers

Many people try to sell their home For Sale by Owner during a buyers’ market in order to save money on commission. For some, this will work, but for many, they may not have the knowledge of the market, and negotiations skills in order to get the maximum pricing for their home. Using a Realtor can help you make more money on the sale of the home, above what you would have paid out in commission. Realtors do the research, know the values, and can make sure the purchase agreements are not in favor of only the side of the buyer. When a buyer’s agent sees that the property is FSBO, they tend to be more aggressive with lower offer and requesting additional concessions the seller may not realize they are paying out. Call on the professionals to help guide you through this market.

 

Buyer’s Markets

List Your Property

Service Coverage

Joseph Walter Realty

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

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Seller’s Markets 

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Seller’s Markets and Their Effects

View Related: Buyer’s Markets

Definition

Seller’s markets occurs when demand exceeds supply. Meaning, there are more buyers seeking to purchase than homes for sale on the market. This often leads to multiple buyers interested in a single property, resulting in bidding wars or highest and best scenarios.

Seller’s Markets For Sellers

Value Increase

 A seller’s market is a fantastic time to sell your home. You can secure a sale price that’s higher than your listing price, or at least more than your bottom line (the lowest price you’d be willing to accept for your home).

Seller Note

Homes still need to be appraised for those using financing. If you are lucky enough to have a cash buy, this does not typically come into play.

Sellers should make sure their agents are creative in how they counter and accept purchase agreements. A good Realtor (Listing Realtor) knows how to handle purchase agreements in this type of market.

Seller’s Markets for Buyers

If you are buying a home in a seller’s market, be aware that the seller has the advantage.

Multiple Offers

If buyers are interested in the same property they will all want to get an offer in as soon as possible.

Trying to get a lower sale price will not work to your advantage.

In fact, you could lose the opportunity to purchase the property altogether if a competing buyer makes a higher offer.

There are Still Options

A seasoned Realtor works to win when competing in a sellers’ market.

Even with the offer not being the highest, there are statements and offers that can be built into the purchase agreement that will get you the bottom line and add value to the seller.

During a seller’s market, buyers may feel as though they are getting taken advantage of, and you are right.

Seller’s and the Realtors monitor the market and will know when the tide turns. Remember that markets will flip and become buyer’s markets too. 

Ultimately, You can push through these markets on either side. Missing out on your dream home for a higher offer should never be a factor that stops you from buying.

 

List Your Property
Service Coverage

Joseph Walter Realty

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email:info@josephwalterrealty.com 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers,

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When Should I Start Title Work?

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Title Work

Why Do I Need a Title Company?

A title company is more than just a place to close your property. The role of a title company is to verify that the title to the real estate is legitimately given to the home buyer. Each state has specific laws and regulations when it comes to how your property is closed and who is part of the process. You will want to call a local title company or real estate lawyer to find out specifics in your state.

When Should I Start Title Work?

The question of when to order title work is an easy one:

As soon as you decide to sell.

What to Expect During the Title Process

In the real estate industry, there are many moving pieces involved in every transaction.  plenty of paperwork,  many hands touching things associated with your property from the title company to the mortgage company to other city and state agencies. Mistakes will happen and these mistakes can cause delays or cause deals to fall apart.

Your title report is like the credit report for your property. You want it as clean as possible and only things you know and have permitted attached to it. CLEAN and MARKETABLE TITLE can save you time and make your home sale smooth and easy.

Common things to look for when you get your title ordered

  • Liens  if you have taken a mortgage or other financing on the property

  • Liens – are there any liens you do not recognize

  • Taxes – are there any past due taxes owed

  • If you have paid taxes, you can just provide proof to title company to clear this

  • Ownership – If the title is in the seller’s name

Closing

If there are errors on the closing package you will need to work with the title company in order to clear the title error.

Sometimes you will bring in the previous title company (whom you used to purchase originally) for flags that should have been cleared before.

If there are issues to clear, the title company will be able to guide you as to what is needed to clean up the issues.

The title company knows their business, so take their advice. Lawyers can be expensive, but a good team can help guide you, and save you money.

 

List Your Property

Service Coverage

Joseph Walter Realty

 

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email: info@josephwalterrealty.com 

 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.

When Should I Start Title Work?

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A Realtor is a powerful tool to use when you are selling (or buying) a home. For a For Sale by Owner, there is a hope there will be no need for a LISTING REALTOR. Saving the commission on one side of the deal by not having a listing realtor can be a significant savings (generally around 3% of the home sales price), but what happens when your home does not sell and sits on the market. When should you get a Realtor involved?

On the MLS, there is a counter called DAYS ON MARKET (DOM). This shows the other Realtors how long a home has been listed. The higher the number of Days of Market, the more likely the offers will not be what you were hoping for. A home sitting on the market is usually priced wrong, the condition of the home is not what buyers are looking for, or location is not where people are looking. Two of the three of these is curable, but which one is it?

As a home sits on the market, there are costs associated with it. These are the holding costs. The costs typically include – utilities, taxes, insurance, maintenance, and mortgage. They add up as time passes reducing your potential profit on the home. Since most mortgage payments go toward interest, you are paying out money, you will not get back. The same is true with all holding costs.

Many For Sale by Owners drop pricing thinking that is the solution. It could be but dropping the price without understanding the market may in fact hurt you. There could be another solution that could get you your price, so randomly dropping the price may not help get a buyer to make an offer. The real estate market is a funny beast. If you understand it, research it, it can be tamed and understood. It just takes the right person or company at times to assist.

We could go on and on about the different aspects of why your home is not selling, but the main question we need to answer is when you should get a Realtor involved. The best answer to this is – when the costs and time outweigh the savings on your home.

Typically you are told that Realtors charge 6% to sell your home (this is not always the fact, but it’s a on-average commission with 3% on each side of the deal – but the seller is always in charge of deciding the commission). The listing Realtor on a deal of $200,000 would be earning $6,000. This $6,000 would have been your savings if you would have sold it on your own. Let’s look at the costs for a home sitting on the market for 3 months:

                Holding Costs for 3 months:

  • Mortgage: $1400 x 3
  • Taxes: $300 x 3
  • Insurance: $100 x 3
  • Maintenance: $100 x 3
  • Utilities: $150 x 3
    • TOTAL: $6150

As you can see it would cost just over $6,000 to have your house sit on the market for three months without selling. This is 3% of your home cost already. Now after three months, you decide to get a Realtor involved. You will now be adding 3% of the Realtor cost, plus the holding costs for another 1 to 3 months (depending on when a purchase agreement is signed and closing happens – closings are usually 30 – 45 days after a purchase agreement is signed).

Your costs to sell the home are now 2 ½ to 3 times what it would have cost to have a Realtor involved, along with time you put in showing the house and maintaining the house while you were selling it For Sale by Owner. Time is valuable.

 This information is not to scare you into running out and hiring a Realtor from day 1. This information is to let you understand that you may need to get a Realtor involved to help sell your home and reduce the holding costs and time on the market. For many For Sale by Owners, mentally they are so against using a Realtor and pride takes over causing them to accumulate holding costs, make bad pricing decisions or put too much money back into the home they will not get out (updating home).

The main goal with or without a Realtor is to get your home sold either as a For Sale by Owner or with a Realtor. Both information and professionals are powerful tools.

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email at info@josephwalterrealty.com

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.