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Thursday, March 29, 2012

Home seller pitfalls to avoid

Home seller pitfalls to avoid
Do your home's features justify your asking price?
By Dian Hymer

Six years after the market peaked in 2006 and prices started to decline, many sellers are still in denial about the current market value of their homes. It's difficult for most sellers to accept the reality of today's home-sale market, whether they bought at or near the peak and will lose money selling today, or bought decades ago but are still stuck at 2006 prices.

An Oakland, Calif., homeowner recently remarked that she was aware that home prices had dropped quite a bit over the last five years. But she felt that her home hadn't lost any value.

It's hard for homeowners to divorce themselves emotionally from a home they've enjoyed. But this is what sellers need to do so that they can make rational decisions about a list price that will actually result in a sale.

This decision should be based on listings that have sold in your area that could be considered somewhat comparable to your home. Some sellers go to open houses to evaluate the competition. If you're still emotionally wrapped up in your home, the exercise can be futile. You return home feeling that the other homes aren't as good as yours.

Put yourself in the buyers' shoes. This is easier for sellers who are also buying in this market. They know what it's like to want to make sure they're getting a good deal. Your house needs to be listed at a price that is enticing to buyers because it represents a good value. In most areas, buyers are buying in a market knowing that prices may continue to decline before the market fully recovers.

HOUSE HUNTING TIP: Be wary of real estate agents who tell you that your home will sell for a higher-than-supportable price just to get the listing. Then they work on you over time until you reduce the price to market value. REALTORS® refer to this as buying a listing.

It's hard to resist the temptation of trying for a higher price than the comparable sales indicate. However, you won't be happy if your home is on the market for months with no activity, and each time you drop the price it feels like too little too late. You can end up selling for less later if home prices in your area are still declining.

Refinance appraisals are notoriously inaccurate in terms of market value -- either too high or too low. An appraiser is attempting to gauge what price a buyer would pay when there isn't a ratified contract that states what a buyer will pay. A high refinance appraisal can leave the seller with a false expectation.

Listing your home based on what you want or need to net from the sale won't motivate buyers to pay more. Buyers pay market value. They're won't overpay in today's market.

Find out what buyers are looking for in your area and see how your home matches up to their expectations. Generally, today's buyers are looking for a home that is well-located, in good condition and is priced right for the market.

If your home needs a lot of work compared to the competition, you'll either need to have work done before selling, or discount your price accordingly.

Walk-to locations are highly desirable in some areas. If your home doesn't offer this amenity, you may have to make a price accommodation.

Homes with level-in access from the street are usually at a premium. If they're difficult to find in your area, you may be able to adjust your price upwards in comparison to similar homes that sold recently but had lots of steps.

THE CLOSING: For best results, be realistic about the current market value of your home and what preparation it needs in order to sell successfully in today's market.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Tuesday, March 27, 2012

5 Real Estate Rules of Thumb: Fact or Fiction?

By Tara-Nicholle Nelson | Broker in San Francisco, CA

5 Real Estate Rules of Thumb: Fact or Fiction?

Home Buying, Home Selling | March 21, 2012 8:24 AM

We humans have a natural craving to simplify the complex. This same instinct, which explains why legends, films and fairytales from every culture tend to boil down to heroes vs. villains, also explains why so many buyers and sellers desperately seek rules of thumb for making the often scary, rarely simple decisions they face.

Reality check: your real estate transaction is not a children’s story. Grown-up life is complicated, as are money matters and relationships. Since real estate involves all three (being a grown up, money and relationships), smart buyers and sellers should cast a suspicious eye at super simple real estate rules of thumb.

Let’s take a handful of the most persistent ones head on, and decipher which of them are fact, and which are fiction.

Rule of Thumb #1: Location, location, location.
Fact or Fiction: Fact.
One of the elemental truths of real estate is that almost everything can be changed about a home - except its location. By the same token, location is essential to our ability to afford and enjoy living in a place, given that it impacts everything from:
where our children go to school (and whether or not we have to pay for it),
how much time and money we spend getting to and from work,
our safety,
the beauty, quiet and convenience of our surroundings and
the recreational, shopping and cultural options which do - or don’t - become part of our daily lives.

Location impacts whether you hear train tracks or birdsong in the morning, whether your neighbors bring you cookies or bring you drama when you move in - it can even impact your career and job prospects. The deep, numerous impacts of where we live on our experience of a home, in turn, give location a powerful role in driving whether we can resell our homes - and for how much.

The critical importance of location is one real estate rule of thumb that grows more true over time. However, the specifics of what makes a location desirable have and continue to evolve rapidly. For example, urban homes with super-short commutes to bustling job centers have grown more and more interesting to buyers as their prices have come down and gas prices have gone up.

Rule of Thumb #2: It costs more to buy than to rent your home.
Fact or Fiction: Depends on where you live.
Just today, Trulia released its latest Rent vs. Buy study, showing that in 98 percent of American cities, it's actually less expensive to buy a home than it is to rent! Of course, the type of home you might want to buy could be more pricey than what you’d be satisfied living in as a rental, and buying a home requires an upfront chunk of dough (i.e., down payment and closing costs) that renters don’t have to come up with.

But the age-old would-be buyer objecion that “I can’t afford to buy a home” is now frequently shattered by the reality that when you take all things into account, buying a home at today’s prices and interest rates can actually cost the same or less than renting at today’s relatively high rental costs in many areas.

That said, if you live in San Francisco or New York City, chances are good that it does actually cost more to buy than to rent. But if you live elsewhere, it behooves you to actually do the math, factor in the massive tax advantages of homeownership and see which is truly more expensive for you. And make sure your decision accounts for the massive opportunity costs you might incur if you don’t take advantage of today’s prices and rates to buy a home of your own and start building equity - something you can simply never do as a tenant.

Rule of Thumb #3: List it high, to give yourself bargaining room.
Fact or Fiction: Fiction.
The fact of this matter is that if you are selling a home in a strong buyer’s market, your competition is steep. The home that presents the best value for the price is the one that is the most likely to sell. Listing your home higher than what you know it’s worth is a surefire way to alienate that relatively rare specimen: a qualified buyer with a sense of urgency who might otherwise be interested in making an offer on your home. Smart buyers who are ready to leap off the fence into homeownership do their research, and may have seen dozens - even hundreds of online listings before they make an offer. If your home is overpriced, chances are good that they’ll pass your home up, even if they like it, waiting for you to get a clue and cut the price.

There are simply too many other great homes at great prices on the market. Overpriced listings are much more likely to be a source of prolonged stress and handwringing to their owners than a source of successful sales.

If you're tempted to list your home high, there’s something else you need to be aware of: the sweet spot phenomenon. Homes that are listed too high sometimes go through one, maybe even several, price cuts before they hit a sweet spot - the price at which buyers are drawn to the value like moths to a flame, sometimes even generating multiple offers over the discounted price (but below the original list price). Here’s some good news: you don’t have to wait months and months and go through the agony of showing upon showing and price cut upon price cut to get your home’s list price to the sweet spot where it sells.

Work with a local agent who has a strong, recent track record of selling homes, quickly and at or near their list prices, in your area. Then, trust their pricing advice. (You might find it easier to trust them if you select your agent after speaking with several.) It’s the most efficient way to leverage local market expertise to get to your home’s pricing sweet spot, quickly and with minimum drama.

Rule of Thumb #4: Always offer 10% below the asking price.
Fact or Fiction: 100% baloney. I mean, fiction.
Few decisions in real estate are so nerve-wracking as that of how much to offer for a home. These days, we search online for comparables, try to suss out their similarities and differences between those homes and our target property, run some more numbers - there might even be a spreadsheet or two involved. We ask our agent to talk with the listing agent, get a feel for the seller’s motivation level and figure out whether there are any other offers, then try to factor the competition level and any credits or bank involvement into our thinking. We touch base (again!) with our mortgage broker to understand how rates have changed since our last conversation and exactly what the monthly payment will be if we offer X or Y or Z.

And at the end of all that, buyers often still feel like the final decision about exactly how many dollars and cents to offer for their home amounts to something like licking their finger, sticking it into the wind, and just picking a number. And that just seems wrong, for a decision so important.

So it’s no wonder that one of the most frequently asked questions I personally receive is the request for the perfect rule of thumb of how much below asking a buyer should offer, given today’s market dynamics. My answer is now what it always has been and will be: sorry folks - move along - no rule of thumb to see here.

Every state, county, city and neighborhood has a different dynamic - as does every listing. Every seller, bank or individual, has its own particular motivations, situational constraints or influences (like how much they owe on the home, or the need to split proceeds between divorcing or sibling co-owners) and thought processes. If the seller feels they listed the place at an uber-low price, they might respond very differently to a particular offer than a seller who gets the same offer, but felt like they were building cushion into the list price. If the home is in a neighborhood where most homes sell for more than the asking price, or the property has multiple buyers vyying for it, even a full-price offer might get laughed at.

Long story short - the specifics of each listing’s situation absolutely must be taken into account when deciding how much to offer, along with the comparable sales data and the buyer’s own (a) financial concerns and (b) motivation level for getting the home.

Rule of Thumb #5: Listing your home as a FSBO will save you some dough.
Fact or Fiction: Fiction (with the occasional exception).
I know some will argue this point, but the data is unequivocal: homes listed for sale by owner (FSBO) simply sell for less than similar homes listed by agents. From my own observations, I’d also argue that FSBO listings often simply don’t sell at all, and many end up listed by an agent after wasting months and months of the seller’s time.

The fact is, listing your home for sale by owner might save you the commission you would otherwise have paid to a listing agent. But the FSBO sellers who are successful generally do offer to pay the buyer’s broker’s commission, so the prospect of saving the full 5 or 6 percent agent commissions is more realistically the prospect of saving 2.5 or 3 percent.

Beyond that, the smartest FSBO sellers also often end up:
•paying a limited service broker to list the property on MLS,
•paying for professional staging or investing in some level of property preparation, even if they do the labor themselves, and
•paying for an attorney to assist them with the disclosures and contracts involved in the sale --

all services that are frequently included in an agent’s services. And even those FSBO sellers still forgo the objective pricing advice and marketing expertise that a good, local listing agent would bring to the table, all included in the commission.

Fact is, many sellers who don’t hire an agent, but do cobble together a similar level of professional services and account for their own time spent on a FSBO listing, soon see that they’re not actually saving much money at all. And even those who think they can save soon see that there’s no savings if the house doesn’t sell - a common fate of FSBO’s on today’s market.

Sellers who already have in hand a buyer who is ready, willing and qualified to buy their home are the best suited for selling by owner, with the help of legal, title and escrow professionals, in my opinion. Most others should at least talk to several agents, discuss whether there’s any flexibility on commissions and be honest with themselves about what the prospect of marketing, preparing and selling the home DIY would really look like, before assuming that they’ll save a ton of dough by listing it FSBO.

All: What real estate rules of thumb have you heard? Did any work for you, or prove to be completely off-base? Do tell!

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Monday, March 26, 2012

Home buying much cheaper than renting

Home buying much cheaper than renting
By Les Christie@CNNMoney March 21, 2012: 5:13 PM ET

Honolulu is the nation's best market to be a renter rather than a buyer.

NEW YORK (CNNMoney) -- It's the eternal question in real estate: Should I buy or rent?

The answer has never been clearer: Buy.

In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.

There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.

Of course, many renters are not in a position to buy. For one, it's hard to get a mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy.

"Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face," Jed Kolko, Trulia's chief economist.

The nation's cheapest buyer's market is Detroit, where purchasing is only 3.7 times more expensive than renting.

Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.

The one number to watch for a housing recovery

Rankings like these, however, can obscure the factors that go into each decision.

Housing markets, even within a single metro area, typically have local submarkets. Take New York City, for example. Renting in Manhattan is more affordable than buying. But in suburban Westchester County just miles to the north, buying is the more affordable option.

The size of the home can also make a difference. In some markets, renting can be a better deal on larger homes, according to Trulia.

Readers on mortgage settlement: This stinks

In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.

The Trulia survey does not take into account home price trends, which are another factor for individuals choosing whether to buy or rent.

"People will pay more for a home if they expect prices to rise and give them a better return on their investment," said Kolko

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Sunday, March 25, 2012

Real Estate One Southeast Michigan Annual Market Trend Report 2011-2012

We are pleased to present you with a copy of the Real Estate One Southeast Michigan Annual Market Trend Report 2011-2012.

Southeast Michigan Annual Market Trend Report - 2011-2012

PDF (for printing)
Southeast Michigan Annual Market Trend Report - 2011-2012

Whether you are thinking of moving or just curious about what is happening in your local real estate market, this report has it all. It is your opportunity to have an inside view of local housing trends, forecasting, and market statistics compiled by the largest real estate company in Michigan.

As you review this report, there are a few things that we would like you to remember about Real Estate One. We are a family owned company, in our third generation of leadership, headquartered in the heart of Southeast Michigan. When you invest in our services, our people, you support Michigan workers. In addition to home selling, we offer one-stop shopping through John Adams Mortgage, Capital Title, Insurance One and Relocation America - all Michigan based companies. And most importantly, we get results, by selling more homes in our state than any other real estate company.

Please feel free to send this information along to your friends, neighbors, and anyone who would appreciate having local market information. And if you need help with anything housing related, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Tuesday, March 20, 2012

6 rules of curb appeal

6 rules of curb appeal
How to beat out competition when selling your home
By Paul Bianchina
Inman News®

It's that time of year again, when I take a moment to talk to all of you who are thinking of putting your home on the market this spring. If real estate's favorite old adage is "location, location, location," then it's got to be followed closely by, "You get only one chance to make a first impression."

You can't change your home's location, but you can certainly do everything within your power to make that first impression a strong one, so let's go over the basics of that all-important must-have for a successful sale: curb appeal.

Start with a step back

You've seen the outside of your house so many times that you don't really see it anymore. So now's the time to look at it with new eyes, from the perspective of a prospective buyer. And if you can't do it objectively, get a friend, a neighbor or your real estate agent to do it for you.

Put yourself in the buyer's shoes, and make a written list of those things that might raise some concerns for you if you were thinking of buying it. And while the front of the house is the primary focal point, don't overlook the sides and rear of the house as well. Here are some things to keep in mind:

Exterior paint: The color and condition of your home's exterior paint job is one of the single most important things to a prospective buyer. The color makes a visceral impact the moment a buyer walks up, and while you might have thought that the hot pink siding with neon purple trim was a great showcase of your individuality when you painted the house, it's going to severely limit the home's appeal.

And no matter what color the house is, if the paint job is faded and peeling, it's an immediate warning sign to buyers that the house hasn't been maintained, so they'll have their magnifying glass out to look for other defects.

If you're handy with a brush and an airless sprayer, you might just want to undertake a repainting project yourself. A long weekend and a few hundred dollars in paint can make a world of difference in how well the home shows and how quickly it sells.

If you don't want to paint the entire house -- or if it doesn't really need it -- just painting the trim, exterior doors, garage door or window shutters can make a big difference as well.

Roofing: A bad roof is another indicator of a general lack of maintenance, and may point a finger at potential structural and even mold problems resulting from leaks. Roofs are expensive to replace, but depending on your market and your desire to reap top dollar from the sale, you may want to take a hard look at the economics of re-roofing.

Talk with your agent about the pros and cons of re-roofing now versus crediting the cost of a new roof to the buyer in escrow.

Driveway and walkways: Driveways are a pretty dominant feature in most homes. Clean any oil-stained concrete, and repair small cracks before they get larger. For asphalt driveways, a seal-coat can often make a big difference in appearance and help prolong the asphalt as well.

For concrete or asphalt that's badly damaged, it's time to be thinking about replacement. You can replace the driveway with the same material as before, or consider an updated look by using paving stones instead -- they hold up well in all types of weather, and can even be a very satisfying do-it-yourself project.

How about walkways? When someone arrives, is there a clear and safe path to your front door? You may not mind walking across your front lawn, but guests and prospective buyers would definitely prefer a walkway. There are lots of options for creating a new front walkway or replacing an existing one, so check out your home center or some landscaping magazines for ideas.

Landscaping: Are things overgrown? Dead or dying? Obviously neglected? Landscaping is a huge part of that first impression, so remember to take a critical look at it.
•Fertilize and water the lawn regularly to green it up, and run an edger along sidewalks and driveway edges.
•Rake up leaves and pine needles.
•Repair sprinkler systems.
•Prune back or even remove those wild shrubs, and trim overhanging tree branches.
•Use bright flowers to create borders and accent areas that add both color and hominess to the yard.
•Consider adding new shade trees in front, which help a home look more established and appealing. Trees look best planted in odd numbers -- a grouping of three or five for example -- and the folks at your local nursery can help you with proper spacing.

Clean and organize: Finally -- clean! If you're not going to paint, wash down the siding to remove dirt and stains and get it looking fresh and clean. Wash driveways, walkways and patios. If you have a wood deck, consider a complete cleaning to restore the wood to a fresher look.

Wash all the windows, inside and out, and wash the screens as well. Polish doorknobs and light fixtures. Stow all of your garden tools and kids' toys away to remove clutter and potential tripping hazards. Take a trip to the local landfill and dump all the stuff that's accumulated in and around the yard.

Check the night view

One last thing: Check the night view as well. A home that shows well at night really creates an impression. Replace any burned-out lightbulbs, and consider adding a timer or two to keep the lights on a little longer into the evening.

Consider some low-voltage or solar lights to accent front walkways, and maybe provide up-lighting to accent trees and larger shrubbery. Keep a light or two on in the front windows as well, to add to the feeling of coziness and comfort.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Monday, March 12, 2012

5 tips to get the most bang for your buck

5 tips to get the most bang for your buck
Book Review: 'All in Good Time: When to Save, Stock Up, and Schedule Everything for Your Home'
By Tara-Nicholle Nelson
Inman News®

Book Review
Title: "All in Good Time: When to Save, Stock Up, and Schedule Everything for Your Home"
Author: Tara Kuczykowski and Mandi Ehman
Publisher: Berkley Books, 2012: 320 pages; $15

At 81, my grandmother (my dad's mom) keeps a beautiful, warm and immaculate house. And she makes it seem effortless, too. While the 20 people in her house are devouring Christmas dinner, she's doing what seems like puttering around until you realize that the entire kitchen has been cleaned.

And even on an ordinary day, she makes casual comments in passing that hint to her internal mental calendar and standards for homemaking, like, "Well, it's the second week of March, so I had the cleaners come pick up the draperies and called to schedule the carpets for next month."

She once threw her back out cleaning the top of the fridge, something I don't believe I've ever done unless I was in the process of moving.

My mom loves to clean and keep house, too. She and her friends have window-cleaning parties -- no joke! -- where one person cleans the outside and the other cleans the inside. I'd always suspected this sort of thing was generational until I started reading "All in Good Time: When to Save, Stock Up, and Schedule Everything for Your Home," by young mothers and bloggers Tara Kuczykowski and Mandi Ehman.

Touching on topics ranging from potty training to decks to flexible spending accounts and how to save money when you buy luggage, these two moms team up to offer some time- and money-saving tips in a book that reads like a savvy household management manual for digital-era families.

If your goal is to maximize the lifestyle bang you get for your bucks and the time you have to spend with your kids, here are a few of the themes they touch on repeatedly in "All in Good Time":

1. Buy off-season. Luggage, boats, digital cameras, even homes -- no matter what the household purchase is, Kuczykowski and Ehman offer readers guidance on when the best time of year is to buy it.

This is generally, but not always, the opposite of the most popular time of year to buy whatever the item is, and "All in Good Time" offers specifics. (For example, the authors point out that many bike and helmet sales occur during May, which is Bicycle Safety Month.) And they offer smart caveats as well: Buying a barbecue grill off-season might get you good discounts, but you'll be limited in selection.

2. DIY. One of the authors home-schools her children, and the other relates how her husband and a friend built a large deck for only $1,200 in a couple days' time. "All in Good Time" encourages families trying to economize on inherently costly Disney vacations to rent a locker and pack their own food, and offers tips throughout on making less toxic home cleaning solutions from pantry staples.

3. Shop online. These ladies are bloggers and it shows: They offer a number of helpful resources for those who take their discount hunting online, and surface opportunities you might never have known about on sites you already know and trust.

For example, they recommend eBay for even the bulkiest of home improvement materials, such as gift cards and other items you might not instinctively go there to find. One of the strongest suits of "All in Good Time" is its very extensive collection of their recommendations for which retailers to tap (mostly online, but also offline) for specific purchases, and when.

4. Many hands make light work. These two give specifics on how they keep their homes organized and avoid big messes by giving every family member a share of the responsibilities on a daily basis, bringing their friends in for home improvement projects, and even tapping bloggers all over the Web for their suggestions on everything from staying well during flu season to keeping garden pests away without chemical pesticides.

5. Customize your own systems. The authors of "All in Good Time" are very clear on one point: organizational and other time- and money-saving efforts and programs are unlikely to work on a permanent basis unless you create your own systems that "take your needs, preferences, and lifestyle into consideration ... and reflect your personality and vision for the space."

This theme runs throughout the book and reads as permission to forgive yourself for all the cookie-cutter organizers that haven't worked for your household before, and start completely fresh with the realities of how your family and home operate.

The high school home economics course might have gone the way of the VCR, but these authors bring "home ec" back into style and up to date. "All in Good Time" is not just for women, moms or homeowners, though all these groups will appreciate it and find it highly useful.

Anyone with a household they'd like to run efficiently and a budget for their time and money will find this book a handy reference guide or quick cover-to-cover read to help them be better stewards of their resources.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Sunday, March 11, 2012

10 Things to know about mortgage debt forgiveness

10 things to know about mortgage debt forgiveness
Real Estate Tax Talk
By Stephen Fishman
Inman News®

Over the past several years, millions of homeowners have had billions of dollars in mortgage debt forgiven, either through foreclosure, refinancing or short sales. It's important for real estate professionals and homeowners to understand that mortgage debt forgiveness has significant tax consequences.

Here are 10 things the Internal Revenue Service says you should know about mortgage debt forgiveness:

1. Normally, when a lender forgives a debt -- that is, relieves the borrower from having to pay it back -- the amount of the debt is taxable income to the borrower. Thus, a homeowner who had $100,000 in mortgage debt forgiven through a short sale would have to pay income tax on that $100,000, as an example.

Fortunately, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from your taxable income up to $2 million of debt forgiven on your principal residence from 2007 through 2012. This means you don't have to pay income tax on the forgiven debt.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude from your taxable income debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

5. The Mortgage Forgiveness Debt Relief Act applies to home improvement mortgages you take out to substantially improve your principal residence -- that is, they also qualify for the exclusion.

6. Second or third mortgages you used for purposes other than home improvement -- for example, to pay off credit card debt -- do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filling out Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness , and attach it to your federal income tax return for the tax year in which the debt was forgiven.

8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax-relief provision. In some cases, however, other tax-relief provisions -- such as bankruptcy -- may be applicable. IRS Form 982 provides more details about these provisions.

9. If your debt is reduced or eliminated, you normally will receive a year-end statement, Form 1099-C: Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

The IRS has created a highly useful Interactive Tax Assistant on its website that you can use to determine if your canceled debt is taxable. The tax assistant tool takes you through a series of questions and provides you with responses to tax law questions.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, see IRS Publication 4681: Canceled Debts, Foreclosures, Repossessions and Abandonments. You can get it from the IRS website at

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Saturday, March 10, 2012

6 Keys to Having a Zen Home Buying Experience

6 Keys to Having a Zen Home Buying Experience

Nicholle Nelson | Broker in San Francisco, CA: Home Buying, Foreclosure, Credit Score | March 7, 2012

If you sat down and tried to call up a mental picture of a smart home buyer, the person in your mind’s eye might be sitting in front of the computer, calculator at hand, running numbers and weighing out pros and cons before arriving at a sensible decision. But ask any agent: even the smartest of their buyer clients looks and feels nothing like this image. Once the house hunt begins or the offer is signed, emotions start to fray, tensions run high and stress-induced gray hairs begin to multiply (and/or get pulled out).

Your home is the largest purchase you’ll ever make. So it might seem that emotional side effects like panic and fear are inevitable. But they’re not. You do have the power to manage your emotions and have a relatively blissed-out homebuying experience. And you should seize that power; doing so will not only minimize the discomfort, it will also keep panic and fear from fouling up your decision-making.

Let me hand you some keys - the keys to having a Zen home buying experience:

1. We fear what we don’t understand. Buying a computer, a TV, even a car – these things aren’t super scary, in part, because we do them repeatedly. But we buy homes much less frequently, and the transactions are much more complex and filled with jargon that is essentially unintelligible to all but those who practice real estate for a living. On top of all that, the mistakes we stand to make when buying a home, from buying a lemon to taking the wrong mortgage, hold the potential to devastate our lives and our finances for years to come.

No pressure.

The things that create the most fear and panic in a real estate transaction are the things that we don’t understand. Similarly, conflicts, questions and concerns that remain unspoken to your spouse, your agent or your mortgage broker also hold the potential to create deep anxiety and evolve or erupt into serious problems down the road.

Zen homebuyers are the ones who tend to start educating themselves months, even years, in advance by reading books, frequenting smart personal finance sites, visiting open houses, scouting neighborhoods, and asking questions on discussion boards frequented by experts and fellow consumers. They also educate themselves intensively throughout the process by reading their mortgage, contract, disclosure and inspection documents all the way through and systematically ask the relevant professionals to answer every single one of their questions.

This question-asking piece can be tough for both the timid, and those used to being the expert. But if you want to minimize your home buying stress, give yourself a gentle shove out of your comfort zone and decide to be willing to readily admit what you don’t know and assertive about insisting on answers.

2. Ask - and allow - your experts to manage your expectations. I’ve found that buyers tend to experience real estate as an emotional rollercoaster when they (a) start out with unrealistic expectations or (b) resist the expectation management their brokers, bankers and agents are trying to dole out. There is a lot of education you can get from books and the web, but when it comes down to the nuts and bolts of making your offer on your home, and anticipating the details of your escrow and moving experience, you should look to your own local agent and mortgage sherpa to help you understand things like:
· the range of outcomes that might result from your offer,
· how long to expect things to take,
· when to expect to bring cash in – and how big of a check you should expect to write, each time, and
· when you’ll need to take off work to come sign things in person.

Books and news sites don’t offer the level of detail and local specificity for the nitty-gritty of what you need to know; as well, they also pose the danger of overwhelming you with a firehose of information, when what you really need as you get into a transaction is knowledge: specific answers to questions you actually have or issues you are likely to personally face.

Don’t just look to your local pros for expectation management and answers, though, listen to them.

3. Shatter the 8 ball. In any market climate, you are at a negotiating disadvantage if you have an urgent deadline for buying and moving. But in today’s market, when deals are taking just about ever to close, having a deadline doesn’t just put your in an inferior bargaining position - it will drive you predictably crazy!

There are literally hundreds of moving pieces to a real estate transaction, any of which can cause things to fall behind. Your appraisal can come in too low, your inspector can recommend you have a specialist come do another inspection, your lender’s underwriter can take longer than expected, and so on and so forth.

When you are under the gun because you have to close by a certain date keep your interest rate locked, you don’t have enough cash to cover the differential in closing costs if you close at the beginning of next month vs. the end of this month, or because you plain old have to be out of your old place by a certain deadline, every one of those moving pieces and steps in the transaction will become loaded with a disproportionate amount of anxiety. (And you may become tempted to make unwise decisions just to get the transaction moving!)

Neutralize the drama-driving potential of all these potential timeline tripwires by getting out from behind as many timing 8 balls as possible and injecting breathing room as many places as possible. Talk with your mortgage broker about extending your rate lock, stuff your cash cushion with as much fluff as possible, plan on some overlapping weeks – even a month – where you can be in your old place and your new one. I can vouch: minimizing your home buying time pressures will maximize your Zen.

4. You’re exceptional, but you’re probably not the exception. Your decision to buy, your work at saving and sprucing your credit, the hard work of wading through all those homes and making the hard decisions about when and where and what to buy, your brilliant taste in real estate blogs (!) – all these things indicate that you are an exceptional person. But don’t expect to create or to be the exception, or be immune to the predictable irritations and glitches of buying a home on today’s market.

Short sales take a long time. Underwriters sometimes request the same document what seems like a dozen different times. Sellers tend to take the highest qualified offer they get (even when that buyer is nowhere near as beautiful and brilliant as you!).

With that said, it’s entirely possible that you will have a super smooth transaction, or the shortest short sale ever. In fact, that is my hope for you. But if you go in expecting to be the exception to these rules of thumb, there’s a good chance you’ll be upset over and over again by things that are completely predictable and, thus, create no need for dismay. On the other hand, if you expect glitches, delays and the like, your emotional experience of the transaction will likely be smooth, even if the transaction itself contains the now-normal bumps.

5. Cultivate clarity. One extremely common cause of emotional chaos during home buying is the sense that things have spiraled out of your control. Many buyers express feeling that what started out as a very personal vision, dream or aspiration for their lives, their finances and their families is now 100% controlled by banks who don’t care about them or professionals who don’t intimately understand your wants and needs.

It’s true that not everything in your transaction is within your control, but many things are – and that’s where you should focus your energies. If you start preparing to buy months, even years in advance, by saving, working on your credit, getting referrals to professionals that you feel you can really trust and such, you are much more likely to end up with a home and outcome that satisfies your lifestyle and financial needs.

You can also optimize for this by writing out a clear vision statement for your post-buying daily life and your personal finances before you ever meet with a real estate agent or mortgage broker, so that you can walk into those meetings and clearly communicate your wants, needs, and what is and isn’t important to you. That makes it much more likely that you’ll get your needs met and minimizes the chances that your transaction will become derailed from your original intentions.

6. Manage your own mindset. The list of freak-outs that are common in the emotional landscape of the homebuyer is quite a long one:
· the fear that the seller won’t take your offer,
· the fear that you’ll pay too much,
· the fear of surprises,
· the fear of mortgage glitches,
· the fear that the seller’s bank won’t sign off on the short sale,
· the fear that the home of your dreams will turn out to have a bunch of problems,
· the fear that the appraisal will come in low,
· the fear of buying into a declining market,
· buyer’s remorse

- and the list goes on.

Ultimately, only you have the power to be the manager of your mindset. Get educated about the full range of things that may happen and plan accordingly, but avoid mentally dwelling on or worrying about hypothetical disasters and worst case scenarios.

Learn what things are and are not within your power to control, and decide up front that you will not fixate on or stress about the things that are not. For example, you can control what you offer or whether to house hunt for short sales; you cannot control whether another buyer offers more or whether the seller’s bank green lights the short sale.

If you do get a curve ball thrown at you, take a deep breath, consult with your experts and make the decision that best serves your personal vision and priorities. Then, don’t look back!

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Saturday, March 3, 2012

3 ways homebuyers kill their own real estate deals

3 ways homebuyers kill their own real estate deals
Mood of the Market
By Tara-Nicholle Nelson

I recently bought a couple of spa treatment packages for a friend's birthday (as much as a gift to myself as to her, to be sure). The package included a pedicure and a massage for the price of the massage, but had a bizarro restriction that required I pick the gift cards up at least one day prior to spa day.

The problem: The spa was across a bridge from my town. Despite my very best calculations, I hit unexpected traffic and it took me an hour's drive just to pick them up.

It's a good thing for the spa that I was literally stuck on that bridge, unable to turn around; otherwise, that would have been an undone deal. I was very clear that the value of my hour far exceeded the value of those two "pedis."

In the end, the conditions I had to surmount to take advantage of the bargain negated the value of the deal -- and then some.

And that happens much more frequently than you'd think in the world of real estate. Today's ridiculously low prices and interest rates, combined, seem like the perfect storm for finding a great deal.

But some buyers run into -- or even unwittingly create -- circumstances in an effort to cash in on the bargain that deactivate or diminish the full value they otherwise stand to gain from buying at the bottom of the market, for both home prices and interest rates.

Here are three ways homebuyers are defeating their own deals in today's market:

1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers.

Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues.

As a result, it is not at all bizarre to hear homebuyers today say they've been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion.

Alternatively, it can cause you to settle for whatever house you can get, even if it doesn't actually meet your needs -- then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted.

Both of these outcomes negate and deactivate the bargain you stood to score.

To avoid house hunting too long, it's uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust.

Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you're likely to both find homes that will work for your life and be successful in your efforts to obtain one.

2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers -- offers sellers couldn't afford to take if they wanted to -- can have the very same result.

Buyers who think they can operate strictly on the basis of buyer's market dynamics -- without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home -- are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal.

Note to "lowballers": If you don't actually secure the home, the superlow price you offered is no deal at all.

3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer.

Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges.

Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market.

This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time).

The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike.

Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Friday, March 2, 2012

Vetting your real estate investment

February 29, 2012

Vetting your real estate investment
By Inman News
Inman News®

By Leonard Baron

Lower home prices and mortgage rates are causing many people to consider taking the real estate investment plunge. But as with any big financial investment, what may be a good strategy for some may be harmful for others.

If you are planning on trading cash in lower-risk certificates of deposit (CDs) or bonds for real estate, you are trading into a dramatically higher-risk asset.

However, if you do decide to jump into the investment property game, you should make sure to vet the property investments you plan to acquire to better increase the chances that the real estate you buy will increase your net wealth, not decrease it.

This is, of course, assuming you already understand the most important item in investing: making sure the property you are buying is cash flow positive based on conservative estimates, and that it provides you a fair rate of return on your investment. (Read more about estimating cash flow on properties.)

What other items and issues does a buyer need to review when buying an investment property?

Home inspection

Most people know to always have a home inspection done when they are buying property. While a competent home inspector will note all the items working or not, the inspector is not pricing out the costs to get all those items repaired, nor other items like painting, flooring, etc., that you might plan to have done.

It's your job to put together a list of all the work and get with your contractor to price them out. Put that number into your financial analysis and note that properties in poor condition rarely sell at a large enough discount to compensate for all rehabilitation work that needs to be done!

Title abstract and insurance

When you buy property, a title policy protects you in case there is a title problem, like the seller's ex-fiancé was a part owner in the property but didn't sign off on the sale. In this case, it is the title insurer's problem and the title insurer will cover costs to defend you and settle any dispute, up to the policy maximum limit, unless the title issue was "excluded" from the title policy.

The Schedule of Exclusions will note issues the title insurance policy will not cover, like recorded easements. It is vital to review the information there as well as in the title abstract. If there is a title issue that was "excluded" from coverage, it is your problem, not theirs.

Survey, plats, legal description

Your land, lot or condominium -- plus parking spaces and storage -- will also have a defined legal description of what you own. There may be a county plat showing it and/or you might want to have a survey done of the lot lines.

Either way, you should walk the property and compare what you physically see to what is on the plat/survey to make sure you are comfortable that no neighbors' fences, driveways, etc., are encroaching on your lot.

If it is a condominium, make sure you review the recorded rights to your interior space, patios, parking spaces, storage, etc.

Homeowners association

If you are buying a property in a common interest development like a condo or townhome, you are not only buying your individual unit, you are buying into the larger entity. Thus, you are responsible for your share of the cost to pay for those, via homeowner association (HOA) fees.

There are many many risks related to HOAs; a few range from unfunded reserves for repairs and replacements to litigation and water issues.

You can do analysis to better reduce your risk of buying into an HOA that is in a disastrous state, but you have to do the hard work of doing the proper due diligence.


You also need to make sure you are getting a fair deal on your mortgage financing. Just getting a bid from one lender is not good enough. Shop around to get pricing from at least two lenders and carefully compare those mortgage bids to determine which one gives you the best fees vs. interest rate.

It's not easy to do, as the good faith estimate (GFE) forms are quite complicated, but that's no excuse for not doing the proper analysis.


Lastly, do you have the proper type and amount of insurance coverage in place? Make sure to sit down with your insurance agent and determine what you need to be adequately covered. Look into umbrella policies as well as earthquake, interior condominium HO-6 insurance policies and any other coverage you need.

Pick your real estate agent's brain so you have the proper coverage for your risks.

A real estate investment, whether rental property or a home, is the largest, most complicated and riskiest purchase you will ever make. Experienced investors know how to better reduce their exposure with the proper due diligence; you need to make sure you know how to do the proper steps, too!

It's your money, and your retirement, at risk. You don't want to find out, after disaster strikes, that you could have reviewed, analyzed, researched and done the hard work upfront to have protected yourself and avoided that issue from ever happening in the first place.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Thursday, March 1, 2012

9 Documents That Help You Reap Real Estate Tax Breaks

9 Documents That Help You Reap Real Estate Tax Breaks

Home Buying, Home Selling, Foreclosure

Technically speaking, April 15th is tax day. But for Americans who expect a refund - including many homeowners who want to cash in on real estate-related tax perks - filing sooner holds the promise of getting that check in hand, stat. If you count yourself in that number, here’s a handy guide for 9 pieces of paper you should be sure to round up as you prepare to file, in order to reap every penny of the tax rewards you’ve earned by virtue of owning a home.

1.Mortgage Interest Statement - IRS Form 1098. The meatiest real estate tax deduction on the books is the one that allows you to deduct 100 percent of the mortgage interest you paid in a year - including prepaid interest or points you might have paid at close of escrow, if you bought a home last year. By now, you should have received in the mail a Form 1098 from your mortgage lender that reports how much that interest totaled up to in 2011. If you itemize your taxes and claim a mortgage interest deduction, you must include this form with your tax form when you file.
(If you haven’t received yours yet, most lenders that have online account management services also post the form digitally in your secure account on the web. Just login like you would to make your monthly payment, and look for a notice that says you can now download your 2011 Form 1098.)

2.Property Tax Statements. In addition to deducting your mortgage interest, if you own a home you are eligible to deduct the property taxes you pay to your local city, county and/or state. You are not allowed to deduct some of the other miscellaneous expenses that some localities bundle up with the taxes they collect, like waste management and local assessments for things like street lighting, libraries and sidewalk construction. To get this deduction right, the best practice is to have your property tax statements at hand and make sure you’re only deducting what’s allowed.
If you bought your home this year, it’s highly possible that you might not even have received a property tax statement yet - if that’s the case, look to #3, below.3.Uniform Settlement Statement (HUD-1). If you bought or sold a home last year, right after closing you should have received a form called the HUD-1 Settlement Statement (hint: it’s usually on legal-sized paper and contains an accounting of credits and debits for you and your home’s buyer or seller). That form documents a number of line items which might help you out at tax time, including prepaid interest, the prorated property taxes you paid at closing, and closing costs like original fees and discount points. Some states offer tax credits for buying a foreclosure; check with your tax pro to find out if any such credits apply to you. If so, this statement might be your ticket to lower taxes.
And here’s another handy hint - if you can’t find your copy, you might have gotten it on a disk - and you can always email your real estate or escrow agent for a copy, as well.4.Moving Expense Receipts. Moving expenses are tax deductible, if your move is closely related, both in time and in place, to the start of work at a new or changed job location and you meet the IRS’ time and distance tests. Long story short, your new home must be at least 50 miles farther from your new workplace than your old home was from your prior place of work, and you must work essentially full-time. So, if you bought or sold a home and moved in 2011, you’ll need to include receipts from expenses you incurred making the move (meals not included) in your tax prep paperwork.
5.Cancellation of Debt Statement - IRS Form 1099. Homeowners who lost a home to foreclosure, or divested of one by negotiating a short sale or deed in lieu of foreclosure with their lender might receive some version of Form 1099 from their lenders, charging them with income in the amount of the mortgage debt that has been cancelled. You see, if you borrow money from someone, then they cancel the debt, that money you originally borrowed becomes income in the eyes of the IRS - and income is, as you know, taxable.

6.Utility statements for home office. For the average everyday homeowner who works at their employer’s place of business, utilities are not deductible (sorry!). But if there is a part of your home that is “regularly and exclusively” used for business, you might be able to claim that portion of your home as a home office, and deduct some portion of your home utilities and costs of painting and repairs, as a result.Talk with your tax provider about what expenses are allowable to be claimed under your home office deduction, and whether or not you should take it.
7.Income and Expense statements from rental properties. Some of you have elevated the art of home ownership to a business! If you are a landlord, your tax situation is more complicated than that of the average bear; you’ll need to have complete income and expense statements when you put your tax returns together. It might actually behoove you to consult with a tax professional to make sure you are appropriately depreciating the property over time and not taking deductions that will expose you to the risk of audits, as well as to begin cultivating a long-term tax strategy for your real estate portfolio.
8.Contractor receipts from energy efficient home improvements. Under the Nonbusiness Energy Tax Credit, homeowners who have made improvements to their homes that fall within a list of energy efficient upgrades might be eligible to claim tax credits. If, during 2011, you installed energy efficient improvements such as insulation, new dual-paned windows and furnaces, you might be eligible for a tax credit of 10 percent of the cost of these upgrades, up to $500 - only $200 of which may be used to offset the cost of windows.
9.Mortgage Credit Certificate (MCC). If you own a home you bought in the last few years using a Mortgage Credit Certificate issued by a local housing authority, that Certificate may entitle you to a pretty hefty tax credit, based on a percentage of the mortgage interest you paid - on top of your mortgage interest deduction. MCCs apply as long as you live in the home and have a mortgage on it, but they only apply to defray taxes you actually owe - you can’t use them to get a refund. In any event, your mortgage credit certificate, if you have one, is a must-have document as you start putting your tax prep plan in play.
No matter what your tax situation is, if you own a home, it absolutely cannot hurt to get some professional help and advice to make sure you maximize your deductions, while minimizing your exposure to audit. And you should always consult with a tax attorney or certified public accountant regarding your tax liabilities and implications when you buy, sell, short sell or lose a home to foreclosure.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644