What is an Earnest Money Deposit by Mitten Realty Group

Earnest money (EMD) is a deposit made to a seller that represents a buyer’s good faith to buy a home. The money gives the buyer extra time to get financing and conduct the title search, property appraisal, and inspections before closing. In many ways, earnest money can be considered a deposit on a home, an escrow deposit, or good faith money.

The EMD will be placed with a broker, a title company, or a lawyer to hold while the real estate transaction is processing. Who will hold the EMD will vary, depending on the instructions for sale or the negotiated place between buyer and the seller. The EMD is a way to ensure 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.

The buyer’s agent should make sure that there are contingencies in the purchase agreement, so the buyer will get their EMD back under certain scenarios. Some of the scenarios include:

  • 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. This is 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.

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%.

Sellers look at the EMD as part of the strength of 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.

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.

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.

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 any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

What is a Buyers Market by Mitten Realty Group

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

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 should be able to do the homework and know what the market is trending at regarding pricing for 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.

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).

FOR SALE 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.

If you have any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

What is a Sellers Market by Mitten Realty Group

A seller’s market occurs when demand exceeds supply, or there are more buyers seeking to purchase homes than there are available homes on the market. This often leads to multiple buyers interested in a single property, resulting in bidding wars. Bidding wars delay you from getting an accepted offer, along with driving up the price of the home.

FOR SELLERS: A seller’s market is a fantastic time to sell your home as you could 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). As a seller there are things you will still need to be aware of. The first is appraisal – 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.


FOR BUYERS:
If you are buying a home in a seller’s market, be aware that the seller has the advantage. If other buyers are interested in the same property, you are making an offer on, trying to get a lower sale price probably 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. A seasoned Realtor can help get creative 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.

Buyers during a seller’s market feel as though they are getting taken advantage of, and you are right. Seller’s and the Realtors monitor the market and know when the favor turns to them. Remember that markets will flip and become buyer’s markets too. Then the seller’s now feel how buyers did. 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.

If you have any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

Ways to Save Money When Buying a House by Mitten Realty Group

When you are buying your first home or your next home, saving as much money as you can is ideal. Everyone likes a good deal. There are several ways in which you can save money. Below we will discuss a handful of these saving:

 

Use an Experienced Local Real Estate Agent.

  • A local Realtor can find you the right deals, they know the market. A Realtor is also experienced in negotiations. They can suggest a good price and negotiate to get you a lower than asked accepted offer.
  • Professionals in any business usually can find ways of saving their customers money.
  • Ask your Realtor if they know other service providers you will need that provide quality service for reduced fees – like inspectors.

 

Get Loan Quotes from Multiple Lenders.

  • Lenders all have different fees that they charge to process a loan. You can use these quotes to negotiate with the one you like to get them to provide the loan for a reduced fee. If they say they are going to lose money if they reduce their fees, move on to the next lender. There are many lenders who work hard and want more business.

 

Get insurance Quotes from Multiple companies.

  • Each insurance company has different programs and rating systems when offering insurance. Compare them and use each quote against the other insurance company to get the best coverage for the lowest price.
  • Call the same company you may have car or other insurance with. They may have bundle insurance savings.

 

Have 20% Saved for the Down Payment.

  • This one saves you on your monthly interest and eliminates PMI giving you 2 savings.
    • PMI, also known as private mortgage insurance, is a lender’s protection in the event that you default on your primary mortgage and the home goes into foreclosure.

 

Increase Your Credit Score.

  • The better (or higher) your credit score is, the better your interest rate typically is. There are several other factors that come in to play, but credit score is a big one.
  • Delay the purchase of your new home if you can bring up your credit score. The lender should be able to advise you what you need to do to bring up your credit score and how it will change the interest rate you will get.
  • Your higher credit score can also save you money on your insurance.

 

Find a House that Needs some Work.

  • A house that needs some work in a good area can be a steal. If your Realtor can review the comps, along with work with you on getting some quotes for rehab (if you are not doing it yourself), you may be able to get a home below ask or market value.
  • You will want to make sure the cost of repairs, either done by contractors, or by yourself, is cost effective, and in the end does not cost you more than paying for a move in ready home.

 

Purchase a Home in Winter.

  • The time of year does make a difference when it comes to home buying. In the winter, home sales slow and sellers tend to price competitively. Which means lower than they would during the popular spring and summer home buying and selling season.
    • As a side note to buying in the winter, the inventory is limited compared to other parts of the year. You may be able to save money, but will there be the home of your dreams up for sale.

 

If you have any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

Real Estate Calculations for Investors by Mitten Realty Group

There is more to understanding investment real estate than the home itself. There are decisions that will need to be made before you purchase the property. You will need to know certain calculations so that you can make the right decision. One decision you will need to make is, are you holding the property to be rented out or are you going to rehab it and flip the property.

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

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 that offer FREE VALUATION can provide inaccurate information.

Gross Scheduled Income

This real estate formula lets you know how much 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 with your actual income.

Talk with your Realtor and get some rent comps for the area. Many investors guess the rents or place what they think they will be asking. Rental comps are as important as sales comps. You want to be realistic in your calculations. If you get more than what you expected…GREAT!

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

Gross Operating Income

This figure reflects the gross operating income in addition to all other sources of income from your rental property. This can include revenue from parking spaces, laundry, public vending machines, or others.

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 your operating expenses- things like insurance and maintenance costs. You should note, however, that things like investment property depreciation and interest payments do not factor into operating costs. 

Net Operating Income = Gross Operating Income – Total Operating Expenses

Capitalization Rate

The cap rate is one of the most important real estate formulas. The cap rate formula compares an investment property’s net operating income with its market value, allowing investors to quickly compare properties to see which one is most worth it.

Cap Rate = Net Operating Income / Market Value of Property

Cash on Cash Return

Figuring out your cash on cash return is crucial in real estate investing. It is a widely popular real estate formula since it allows investors to compare investments and evaluate the most profitable one based on the terms of financing. A spreadsheet is a good way to see the side by side comparison between properties that are similar. By setting up the spreadsheet with formulas, you can quick input the basic numbers and see which one is the best property for your investment.

To use the cash on cash return formula, you simply divide your 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 upfront fees you paid to acquire the investment property.

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 great investments 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 your Realtor is also a good way to see how quickly an area is growing in value.

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

Price to Rent Ratio 

This figure shows you how much rent you will be receiving, versus the price at which your property was purchased. This can be useful when comparing residential real estate investments. Like other calculations, a spreadsheet with formulas can help make quicker decisions.

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

Price Per Square Foot

Along the same lines, the price per square foot real estate formula can be useful when comparing investments. 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 more in depth by pulling both rental and sales comps, which list out the price per square foot (as-is, not post-rehab).

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

Return on Investment

The return on investment formula allows you to see how much of your initial investment you can recoup annually.

Return on Investment = Annual Returns / Cost of Investment

Cash Flow From Operations

Successful real estate investments will involve 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 figure out your cash flow from operations.

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 make their investment, this cash flow formula can provide a better idea of what your cash flow is like.

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

Occupancy Rate

This figure reflects the time that an investment property is rented out over a period. Your occupancy rate is one of the most important indicators of your 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 look for a replacement place to live if a landlord is not keeping the place livable or did not complete some repairs required previously. Landlords can “promise” to fix things to get people to move it, in turn causing them to move out as fast.

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 making a real estate investment. Too high of a figure when using this real estate formula can indicate that it will be an uphill battle to break even with an investment property and recoup debts.

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 allows you to set the right price the first time.

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.

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.

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

If you have any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

FSBO vs Realtor by Mitten Realty Group

When you decide to sell your home, you have 2 options. You can sell it on your own as a For Sale By Owner, and the other is to use a professional Realtor. Each one has the main goal to get it sold to the closing table, but each are quite different. How you approach the sale of your home is a choice that can make the process easy or difficult.

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.

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: A 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 any questions about real estate or would like to buy or sell a home, Investment property, or commercial property in  Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

 

An open house is a good way to get more people in your home at one time. It can capture Realtors with their clients, independent buyers, neighbors curious and people who are driving by. To hold an open house, even with the help of your Realtor (if you have one – if not, feel free to call Mitten Realty Group, LLC at 248-294-7850 – yes, an early plug of the business!!), takes effort and planning. You do this because the first impression people get, is the impression they will keep. It is much harder to get a potential buyer to see a house twice they did not connect with.

Curb Appeal: Make sure that you have the landscaping done before the open house – yard mowed, garden raked and cleaned up (fresh flowers are nice if they are in season), look for chipping paint, unclean gutters, remove excess items from yard, porch and driveways.

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.

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. People with pets tend to not smell them, but it is there, no matter how clean you normally are. Cleaning should include the appliances, cupboards and the closets. People open everything when they are looking at a house.

You will want to remove excess clutter from around the house. This 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.

While you are reducing the clutter, 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 next home. Buyers want to see themselves in the home or their kids. By taking away the personalization you have, they can start to visualize their stuff in the home.

Valuables should be locked away as well. 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 – a potential buyers or Realtor while in the house getting bit or scratched. People are sue happy 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.

Promote Open House: if you are using a Realtor, ask them how they are getting out the word. 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.

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.

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.

Day of Open House: The day of the open house, all the windows of your homes should have their blinds raised. The Realtor (and maybe even the homeowner) should turn on all the lights in every room, along with open every door. During the times we are in, this reduces the amount of touching in your home. With the permission of the homeowner, the Realtor should have cookies and water. People like to snack!! What would even be better is if the Realtor used the oven to make the cookies to allow for that smell to fill the house. If not, there is always candles or plug-ins to do the same thing.

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

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. Here is where you as the homeowner must 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.

If you have any questions about real estate or would like to buy or sell a home. Investment property, or commercial property in  Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

 

Southeast, Michigan, especially the city of Detroit is a hotspot for real estate investors across the United States and the world. There are a variety of opportunities for those looking to make money in real estate investing. There are residential and commercial properties that can be held for residual rental income and there are residential and commercial properties priced right to fix-and-flip. Both the buy and hold and fix-and-flip opportunities are different beasts, but with the right due diligence and team, you can be successful.

Before we go deeper into the Detroit market, we should clear up the stigma that surround the city of Detroit. Detroit for many years has been presented as a dangerous, crime ridden city that you would not want to do business in, have a family in, and not go there at night. Does Detroit have crime? Yes, it is a large city and crime does happen. The crime rate is higher than that of a traditional suburban area. This can go for any city, Chicago, New York City, Boston, Orlando, Los Angeles and so on.

Detroit is a growing city. Many large businesses are starting to call it home. Google, Little Caesars, Quicken, GM, many tech start-ups, along with four major sports teams all call the downtown area home.  In fact, the Detroit Pistons moved their operating from the suburbs of Auburn Hills to the downtown area where the Detroit Red Wings play, and major concerts happen. With the growth of the city, Detroit housing values are on the rise again. This is good for not only the homeowners, but for investors.

Without real estate investors, the city of Detroit and many communities would have a lack of rental properties and a higher number of blighted homes. Investors offer homes to those who cannot or do not want to own a home. They also buy homes that need repair to bring them back up to market value to rent or to sell. This brings in local jobs, revenue to the local community (supplies, food, gas and other items needed), and tax revenue. It is a win-win for more than just the investor. Many people benefit when others take interest in a community and bring outside money to spend within it.

Detroit is broken up into many districts. Over time, certain zip codes become able and drive the investors into an area, helping to drive up values and make the area much more appealing to those already there, for renters, and for people looking to buy their next home or investment property. Many of the factors that help drive up these specific zip codes have been, new construction, new businesses, improved amenities (shopping, medical, entertainment) and better forms of public transportation available.

Another factor that drives investors into an area is the type of homes available. Brick homes and multi-family properties become extremely popular to investors, as they can either get more money when they sell, or they will have more capital coming in from renting multiple units.

Price comes into play as much as the location of the property. Investors have revitalized areas that were “off-limits” if you wanted to make a profit from your investment. Investors draw other investors who do not want to miss out on the opportunity to make a profit investing in real estate. There are large areas within the city of Detroit now that are being looked at for the next major redevelopment of revitalizing current houses and enough land to create full brand-new neighborhoods.

Detroit is an endless canvas for real estate investors. With a mix of commercial, residential, land, strip centers, industrial and multi-families, the inventory allows for investors of all levels to have access to the right properties at the right pricing.

Having the right team behind you can make your investing experience much easier, especially for those who do not live locally. Mitten Realty Group has worked with investors locally, nationally, and through the world. Mitten Realty Group has an experienced team that specializes in working with investors, tracking down the right properties, analyzing them, making sure the right resources are available to accomplish the goals of the investors, verifying the title of the properties in question, getting the property for the right price and close it.

If you have any questions about real estate or would like to find out what properties are available in Detroit or Michigan, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

Becoming a home buyer is exciting. It can be one of the biggest assets you will purchase in a lifetime. There are many steps to go from wanting to become a home buyer to unlocking the door to your NEW home.

CREDIT

The first step to planning to become a homeowner, is knowing your credit. There are many resources for this that you can get copies of your credit, without having to pay or paying a small fee. Here are just a couple.

  • freecreditreport.com
  • Credit Karma
  • Mortgage broker
  • Your bank

When you get your credit report, you should review it for accuracy. Review all the debts currently reporting and those from the past. It is not just your current debts that determine your credit score, but the reporting history from the past. Common things that can cause a lower credit score or are errors on your report:

  • Late payments
  • Debt that is not yours
  • Liens that are not yours
  • Medical bills
  • Things not reporting

If any of the items on the credit report are wrong, you have a few ways in which to dispute.

  • Login to Experian, Equifax and Transunion and follow their dispute process. Provide any information you can to show that the information is incorrect and what it should be.
  • Write a letter to Experian, Equifax and Transunion disputing the items. Again include any information that you can show to correct the information.
  • Talk with the mortgage lender about getting some help correcting the issues. Many of them have programs in place to help. They want your business, so they have these tools to keep you with them.

If you do not have information as backup for your dispute, still dispute it. Do not let it sit on your credit incorrectly. It can take multiple times, but the higher you can get your credit, the cheaper your mortgage will be in regard to the interest rate.

MORTGAGE

The second part about getting ready to buy a home is to know what you can afford. You may already be working with a mortgage company with your credit report, so you are ahead of the game. Make sure you research your mortgage company and the person you are working with. You have all the tool at your fingertips. Do a google search, look on LinkedIn, and check out social media like Facebook and Instagram. You will want to be comfortable with whoever you work with as you will be with them for 30 -60 days. You can also ask friends and family if they have any suggestions, or a Realtor if you already know one. Realtors work with many lenders on a consistent basis. They should be able to give you 2 or 3 they trust.

The mortgage company will review a variety of documents to make sure you can get approved and close a mortgage. Some of these documents to gather up before getting together with your mortgage person are:

  • 2 years tax returns – w-2’s or 1099’s as well
  • 6 months of bank statements
  • Last 2 months paystubs
  • Other asset statements
    • Stocks
    • Retirement
  • Contact information for the department that can do a verification of employment

If you prepare before meeting with your mortgage company, the quicker they can start processing your approval. Once you are approved the lender will provide an approval letter that you will give to your Realtor. This letter will have the amount you can get qualified for and some other information the Realtor will use when writing up your offer once you find a home.

Just a little information on the process after the offer is accepted – you will decide if you want a home inspection (always recommended) and the mortgage company will get an appraisal. Depending on the location of the property there may be other inspections required by the city or county.

REALTOR

The Realtor will be your access to the homes you would like to see. Choosing the right Realtor is as important as choosing the right mortgage company. You will be with them the duration of the process – which can be 30 – 60 days or longer depending on how fast you find the home you want to make an offer on.

To find a Realtor, you can ask the mortgage company. Much like Realtors know mortgage people, mortgage people know Realtors. Talk to a couple of them. You can also do your research in the same way you did the mortgage company online and social media. Personality matters when it comes to Realtors and mortgage companies. You want to feel comfortable with them on a personal level, as well as know they understand their industries and what it will take to get you the home you want.

When you finally pick out the Realtor you want to work with, your Realtor should ask you some questions to help start the home search process:

  • Location, Location, Location – where do you want to live?
    • You should have cities you prefer (the Realtor may suggest other areas as well)
    • Think about how far this is from your work, your family, schools if you need them, shopping, and things you like to do.
  • What type of home do you want?
    • Do you want a ranch, 2 story, bungalow, etc.
    • Do you prefer brick, vinyl, or some other exterior material?
    • How many beds and bathrooms do you want?
    • Do you want a finished basement?
    • Do you want a fenced yard?
    • Do you prefer neighborhoods or land?
    • What other features and amenities do you want in your new home?
  • Do you want to use your entire approval or is there a budget you want to stay in?

Talk openly about what you want and need in a home. Do not feel pressure from your Realtor to settle for what they are showing you. Most Realtors should be able to send you a phone app that you can do some of your own searching on. As a professional, I tell people not to put much effort into Zillow and other websites. These are just marketing sites. Use the tools the Realtor provides.

The Realtor should also set up AUTO emails that will show up each day with new homes that match your criteria. This will help narrow down what you like and do not like, so the Realtor can set up to show the homes that capture your attention.

One of the biggest things to make clear…..NEVER, NEVER, NEVER and I will say it again, NEVER feel rushed to choose a home and make an offer. See as many houses as you need to, until you know which one is right for you. Your Realtor works for you. Your Realtor is going to receive a good commission when your home closes. Your Realtor is NOT going to live in the home, YOU ARE.

Conclusion: Home buying is a process. It will be stressful, it will be fun, and in the end the home of your dreams will be yours. We hope this helps give you an overview of three of the major points of home buying and getting prepared. There are many more steps involved, some you will be part of, some are behind the scenes. We wish you the best of luck in your home buying journey. If you have any questions about real estate, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.

 

 

Five Reasons Your Home Will Not Sell

Real estate has changed in just the last few months across the United States (worldwide as well). Professionals in the real estate business have gone from working with buyers and sellers in person to using technology like Zoom, Skype, Facetime and other video software to meet with clients and show homes. This non-personal way of business has now become the normal way of keeping business alive.

Realtors have found ways to survive and keep things moving forward in a time where the economy seems to be coming to a halt as people have been told to not work and stay at home if they are part of the “NON-ESSENTIAL” workforce. The stay-at-home orders have been both good and bad for Realtors and brokers. The good is, many people have been cleaning their homes and working outside to improve them (and to keep busy and sane). For sellers this is a good move, but is it what it will take to sell a home in the current environment we are in.

Below we will discuss 5 of the reasons why a typical home does not sell during normal times.

Pricing: This is the #1 sale killer for a home. When the pricing on your home does not fit the market, the neighborhood or the home itself, it WILL NOT SELL. Many owners think their homes have a value much higher than what the market can bare, mostly due to emotional connection. Owners also believe that all the money they put into the home makes it valued above market pricing. Putting money into the home can increase the value, but just because you did $150,000 in upgrades, does not mean your home is valued that much higher.

Pricing can also lead to extended days on market. Although days on market typically does not affect the value of the home, it will affect the value of the offer the home gets. Realtors will offer below ask when they see extended days on market. The assumption from the buyer’s agent is the sellers are or will become desperate, so lower offers seem reasonable from the buyer and their agent. This can cause prolonged back and forth with offers, and many offers to not be bottom lined.

A good way to avoid extended days on market and lower than desired offers, 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. Never hesitate to ask to see the way in which the Realtor came up with the pricing for your home. They should easily be able to show the comps and the calculations of value. Remember they work for you and are getting paid well to provide professional services.

A last note about pricing, ZILLOW values are rarely correct. Many sellers get hung up on the valuation they find on ZILLOW and it can harm the sale of their home. Local Realtor professionals have accurate, real time data that allows them to value your property better than websites like ZILLOW.

Curb Appeal: This one is especially important in today’s market (April 2020) due to people not being able to physically enter homes, but driving by homes for sale, while looking at the online pictures and videos. The outside of your home is the first thing they see. Its like the old saying “You can’t make a second first impression”

When your home goes up for sale, walk around your yard and see what can be done to improve it. Look at the exterior of the home as well. Does the outside need to be power washed, do the windows need to be cleaned, are the gutters empty, is there any rotting wood or siding coming off, is paint chipping or faded, or how does the roof look? Stand on the street as if you were a buyer and see what they will notice when they drive by. Another thing many sellers forget to do…PUT AWAY GARBAGE CANS, or at least hide them on the side of house or in the garage.

You do not need to put a ton of money into the home to have good curb appeal (unless there are serious issues that would affect the sale of the home). Maintaining the lawn and doing minor exterior maintenance is all it takes. Maybe even add some colorful flowers.

The thought behind the curb appeal is if the outside looks bad or needs work, what does the inside look like. You want them to want more. If you excite them about the outside, they will ask their Realtor to set up a tour (virtually as required at the time of this writing).

Photos and Video: Much like curb appeal, photos and video of the property are typically the first thing they see online of both the inside and outside. You will want to make sure the photos and video look professional and represent the house. Bad photos and video make the best home look terrible. Technology has come a long way. Many cell phones can capture professional quality pictures and video, but at times, they will not be enough to show the true vision of the home. Hiring or requesting your Realtor use a professional photographer is helpful to ensure that when the photos are posted on the MLS and it feeds to thousands of other websites, your home sticks out and captures the attention of buyers who will request more information and showings. 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.

No matter the size of your home, do not overwhelm the potential buyers with an abundance of photos. 25 – 40 photos can represent your home, along with 1 or 2 videos. 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. The videos should not be movies. They should be short walk throughs of the home focusing on top selling features.

Do not let bad photos be used even on a temporary basis. Some Realtors use their cell phone for the initial listing photos to get it live and on the MLS. Buyers and agent typically will not back track to see a listing twice. They do not get notified new photos or videos are uploaded. Do it right from the start and you will have a better selling experience.

Specific Problems: Every home is unique and have unique problems that may need to be addressed. When we say problems, it is from the view of a Realtor on both the selling and listing side.

One problem Realtors often see is the home is TOO specific to the current owner’s taste. For example, paint colors. As homeowners we have our own wants in the home we live in, every rooms painted in crazy colors like purple, orange, pink princess rooms, or Star Wars themed room. It is fun and exciting as we want our homes to represent ourselves, our kids or other just to be different. The problem comes in when you want to sell the home.

Potential buyers coming into the home have their own visions of what they will want. Non-traditional paint can mentally make it seem like there is more work to be done than they desire to do. You want the potential buyers to come in and see a blank canvas where they can feel it is ready for what they do want to do to the home. Paint the rooms with traditional colors before you put the home for sale and before the home has photos and video taken. 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.

Other items that can fall under specific problems are required repairs and appliances. Not all home sellers can afford to replace appliances or upgrade the home to make all required repairs a buyer would want. Prioritize what you can and cannot do. The more you do, the better the pricing will be on the home. When items seem like problems to buyers, they tend to either walk away from the home or they make lower offers, neither of which is beneficial to the home seller.

Bad Advice: We are not sure if this should be #1 or the closer to be fresh on the mind. Selling your home is stressful enough. People will be coming into your personal space. You must up and leave to allow for showings. You feel like you are always cleaning and maintaining the home. It is a like an extra job, even when you have a Realtor involved.

Bad advice can add to the stress. One of the pieces of bad advice that is known to add to the stress of sellers, includes pricing. Realtors sometimes will do anything to get the listing and will go with the sellers “WANT” when it comes to pricing. This is bad on so many levels. This leads to extended days on market as discussed above. This also leads to the Realtor coming back and wanting to reduce the price anyway to where it should be to fit the local market where the pricing should be. The Realtor already knew the pricing was off and he was already planning to request a price reduction. This is BAD BAD business for the seller who was not told what the “TRUE” price should be. If you are professional and have the facts to support the pricing you suggest, discuss it with the seller. Education is such a powerful tool. Clients appreciate facts, and in the end the Realtor can still walk away with the listing at an appropriate price.

Another piece of bad advice, or more like forgotten advice, if preparing the home for sale. Realtors want to quickly get the home to market, but do not guide the seller on items that could aid in the sale of the home – like many of the items above – curb appeal, repairs, updates and so on. They also do not discuss how to make the home more appealing by removing clutter, making sure the closets reflect the size by removing items or straightening them out, do not have dirty dishes in sink, make beds each day, and keep the house smelling fresh. These are simple things, but many Realtors do not guide the sellers on home preparation. Exterior and interior appeal are just as important as pricing.

 

Conclusion: In the end the main goal is to sell your home. 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, to appraisers and administration people (and probably more that we do not see) to take a home and get it closed. 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 any questions about real estate, please e-mail us at info@mittenrealtygroup.com or call 248-294-7850.

Thank you,

Scott Fader and Gary Brincat
Mitten Realty Group, LLC

Mitten Realty Group 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.