10.30.2009

Replacement cost vs. Market value - Home Insurance valuations

One of the biggest questions consumers have regarding homeowner's insurance revolves around the amount of insurance to place on their dwelling (home).

When purchasing a house, the mortgage company requires the homeowner to obtain insurance prior to closing. Most consumers assume the amount of dwelling coverage will be equal to the amount they paid for their house. This is incorrect in some cases.

There are different methods to determine the value of a house. Market value is the price paid for your house. Replacement cost is the price or cost it will take to rebuild your house in the same spot, same size and same quality of construction, at today's costs. Insurance companies use the replacement cost valuation. These can be two completely different numbers.

Backup of sewer and drains...Will your homeowners insurance cover this? The backup of sewer and drains as well as the failure of a sump pump is excluded. The damage you sustain from either of these problems will not be covered and you'll be responsible to pay for the loss and the clean up. If you have a finished basement, or use your basement area for storage, you shouldn't go without this coverage endorsement.

10.29.2009

7 Key Things You Should Know About Your Home Insurance

1. Do you have the right insurance?
You should know what you have, and you should know ahead of time that you are covered. Look at your insurance coverage in four key areas: the structure of your house, your belongings, your liability to others and your living expenses if you're forced out.

2. Do you have replacement value insurance? You want to be able to replace everything you lost with similar, new items. And make sure that your policy spells out that both your home and its contents are covered by replacement-value insurance.

3. Understand the claims process. Have your agent explain exactly how claims are handled, especially when it comes to writing you a check. Do you receive your entire claim upfront, or just a fraction? Does the company pay you for all the things you've lost, or only those things that you replace?

4. Take inventory. Filing a claim involves two steps -- proving you owned certain items and verifying their worth. This is a lot easier to do when you still have your things. Go through your home with a video camera & stash your video or photos in a safety deposit box with a copy of your policy.

5. Buy floaters. Many times, homeowners and renter's policies limit the amount you can collect on some big-ticket items -- usually things like computer equipment, jewelry, furs and fine collectibles -- to a fraction of the replacement value. If this is the case, you need to pick up a special policy known as a "floater" or "endorsement" for each of those items.

6. Keep pace with inflation. Talk to your agent to verify that your coverage amounts are still realistic. And when you make an improvement, add it to the total.

7. After a life-changing event, call your agent. Getting married or divorced? Are the kids moving out -- or back in? The amount of insurance you need -- and the items you want to cover -- change over the years. Be sure you keep your policies and inventories up to date.

10.28.2009

6 Home Self Defense Tips

Tip #1
Make your home security system like an onion, not an egg. A good example of a layered defense is rosebushes outside the window, double-locked, barred and safety coated side windows and something difficult to climb over inside under the window.

Tip #2
Pretend to be a burglar Walk around your property and ask yourself: How would I break in? Examine your house from the street, where are the blind spots? What are the most vulnerable areas and, therefore, likely to be attacked?
Tip #3
Consider the area that the lock sits inA lock is not enough, you must also address the area around it. You need to extend your thinking about security measures to 18 and twenty four inches around the lock itself. That is the area you must protect.
A pinewood door frame will splinter and give way after a few savage kicks. The backdoor deadbolt can often be bypassed by just breaking a window and reaching through to unlock it.

Tip #4
Treat inside garage doors the same as an outside door Criminals often cruise neighborhoods looking for open garage doors. Once an open garage door is found, they pull in, close the door, park their car and then start piling your possessions into it.

Tip #5
Get and close blinds or shutters-- especially on rooms where there is expensive equipment.
Thin, sheer drapes --although attractive -- also allow burglars to look inside to see if there is anything worth stealing

Tip #6
Create a neighborhood watch on your block. Even just the signs often send would-be burglars elsewhere.An alert and involved community is the criminal’s nemesis. It is often reason enough for him to try business elsewhere.

Did You Know?
Over 40% of home burglaries are termed by police as "no force" entries. Open windows and unlocked doors make easy targets.

for more tips, visit http://www.nononsenseselfdefense.com/homesecurity.html

10.26.2009

Detroit Housing Woes


Selling or refinancing a home in Detroit is further complicated by new appraisal rules while home prices continue to decline.


The odds of getting a house to the closing table are affected by appraisals done by appraisers who are completely unfamiliar with the area. The resulting appraisal comes in lower than the price the seller & buyer have agreed upon and problems with who is going to pay the difference kill the deal. Excerpts from articles in the Detroit News & New York Times pinpoint the problems . The ray of light in this challenging market is that the number of unsold homes fell in every Midwestern city last month from a year ago.

Fed appraisal rules sink home values
New regulations kill home sales, industry groups say
Louis Aguilar / The Detroit News

Federal actions intended to stabilize inflated real estate prices that led to last year's financial meltdown are instead depressing prices and killing some sales in an already weak market.

At issue is the Home Valuation Code of Conduct for mortgages securitized or held by Fannie Mae or Freddie Mac, which deal with about 70 percent of U.S. mortgages.

The new rules, which took effect May 1, were intended to prevent cozy relationships between appraisers, agents and brokers that could lead to bias, fraud and inflated home values.

But a chorus of industry groups representing builders and real estate agents say the new rules have damaging, unintended consequences: Some appraisers, they say, are unfamiliar with communities and neighborhoods, so they undervalue property. And that can kill a deal when the agreed-to sales price was significantly higher than the appraisal.

The National Association of Realtors says 20 percent of its members report losing more than one deal because an appraisal came in well below the purchase price agreed to by the buyer and seller. The National Association of Home Builders contends the code is impeding new construction as well. More than half of the 500 builders who responded to a recent survey said at least one of their new homes was appraised at less than the cost of construction.

Metro Detroit real estate agents tell horror stories about the new appraisal rules.
An out-of-state appraiser, for example, valued a Grosse Pointe home at $270,000, although the seller and buyer agreed to $360,000. A lakefront home in St. Clair Shores listed at $480,000 was appraised at just over half that. And three appraisals on a new home in Detroit's Woodbridge Estates ranged from $150,000 to $230,000.

"We lost the sale because the couple didn't know what to believe," Realtor Todd Craft, of City Life Realty in West Bloomfield, said of the Woodbridge properties. "That's what we are dealing with now."

If an appraisal falls below the negotiated sales price, the lender can refuse to finance the deal or require the buyer to come up with the difference. Or the seller may lower the price.

While home sales are up in Metro Detroit, thanks to the buyer's market, prices continue to plummet. The median sales home price in Metro Detroit in Sept. was $65,500, a 23 percent drop from a year ago, according to Realcomp II Ltd., a Farmington Hills-based real estate listing service.

Existing and new home sales aren't the only ones that are affected. The new rules also impact homeowners who want to refinance their mortgages, because they need to get an appraisal as part of the process.

"In a city like Metro Detroit, where there are pockets of stable and upcoming areas, the new appraisals make it tougher for someone who doesn't know the area to come in and get an accurate gauge," said Brian Cooley, a Realtor with O'Connor Realty Detroit in Corktown.

Midwest Home Resales Post 6 Pct Annual Increase

By THE ASSOCIATED PRESS
Published: October 23, 2009


Home sales in the Midwest increased in September as a soon-to-expire tax credit for first-time buyers and glimmers of an economic recovery brought more people to the closing table.

The National Association of Realtors said Friday that there were an estimated 110,000 resales in the Midwest, up 5.8 percent from September last year. The median sale price for the region fell 1 percent to $147,600, marking the smallest decline in the country.

Nationally, home resales rose almost 8 percent from a year ago, without adjusting for seasonal factors. The median sale price fell 8.5 percent to $174,900, the Realtors association said.
-- Biggest price decline: Detroit continued to lead in an unfortunate trend as the median sale price dropped almost 22 percent from a year ago to $65,000. The lower prices have brought in investors and bargain-hunters, however, and sales rose more than 3 percent last month.

The city, hammered by losses in its key automotive industry, has seen massive numbers of foreclosures and distressed sales, which typically sell at a significant discount and make it virtually impossible for conventional sellers to get anywhere near what they want for their homes. Michigan has also struggled with job losses, posting the nation's highest unemployment rate of 15.3 percent last month.

Thomas Bush of Real Estate One in Shelby Township, Mich., a Detroit suburb, said he estimates fewer than 10 percent of homes going on the market these days are conventional sales and prices are back to 20-year lows.

''I don't think we've seen what the auto problems are doing to the market in Detroit,'' he said. ''We're seeing the effects of bad mortgages, bad choices. What happens when all the other stuff comes?''

-- Inventory highlight: The number of unsold homes fell in every Midwestern city last month from a year ago, according to the AP-Re/Max report. Indianapolis, Detroit and Cleveland led the region, with inventory drops of more than 29 percent each. Wichita, Kan., had the smallest, shaving just 0.2 percent off its backlog.

10.19.2009

Housing Deflation Easing


Michigan & 5 other states continue to suffer the largest percentage of foreclosures. The 1st Time Buyers Tax Credit has helped move the inventory in the lower end of the market, but when banks still don't respond in a timely manner to short sale offers, many buyers walk away. In the mean time, victims of foreclosures are starting to check into shelters. Historically, it was renters who lost their home to foreclosure & had to rely on shelters - now shelters are seeing more homeowners as the recent article from the New Times explains.
The following article by Mike Colpitts, highlights some of the high & low points in the hardest hit foreclosure states outlook:
Housing Deflation Easing
The rapid decline of housing prices is easing in many of the worst hit markets with slower housing deflation, according to a study of the most severely affected markets by Housing Predictor. The impact may lead to improving conditions and could soon signal a bottom to the market in some areas of the country. But there are a bevy of mixed signals.

Only six states account for the largest majority of foreclosure notices, according to Realty Trac, which are regarded as the worst affected areas in the real estate crash: California, Florida, Arizona, Nevada, Illinois and Michigan. The study found that 72% of the states markets studied have seen slower deflation or increases in home values.

All six states were heavily targeted by national mortgage lenders during the real estate boom, including many lenders that are now out of business. The over-whelming majority of foreclosures taking place are now from either Option Arm mortgages or conventional loans made during the peak of the boom.

Nevada and California account for the highest number of foreclosures followed by Arizona. Twenty-seven percent of all foreclosure notices made in the third quarter were issued in California.

Short sales in which banks cooperate to reduce the principal owed on a property to sell it to a new buyer are becoming more popular after the Obama administration pushed bankers to cooperate in exchange for receiving billions of dollars from the federal government. But bankers are still excessively slow in responding to buyers offers to purchase property, awaiting additional government financial assistance.

The first time buyer federal $8,000 tax credit has also acted to improve sales in lower price ranges, but has yet to make a dent in higher ranges. After four years of falling home prices in the harshest impacted areas of the country, conditions are finally beginning to improve. But whether the inroads made so far will last moving into the final quarter of the year, seasonally a slower time for housing sales, is a lingering question.

Strategic foreclosures are increasing. Strategic foreclosures occur when homeowners who have lost so much equity in their property decide to stop making mortgage payments and walk-away from the mortgage. A recent Housing Predictor survey determined that 32% polled said they would walk away from their mortgage if housing prices continue to decline. The movement could lead to an astounding number of foreclosures, topping 25-million properties before the foreclosure epidemic is finally over and trigger the worst financial crisis the U.S. has experienced.

It seems unfathomable to imagine. But it also seemed unimaginable to consider just weeks ago that it could be possible for a foreclosure notice to be filed against a property every ten seconds, the rate at which notices are being filed today.

The Obama administration and Congress are embroiled in the healthcare debate, which makes daily headlines, while millions of homeowners are being foreclosed in the worst financial crisis since at least the Great Depression. Critics are now arguing the financial crisis in housing alone is the worst in U.S. history.
This article has been republished from Housing Predictor. You can also view this article at Housing Predictor, a real estate analysis and forecasting site.

10.13.2009

READY TO BUY A HOUSE, NOW WHAT? Pre-qualifying vs Pre-approval?

Pre-qualifying is not the same as Pre-approval.

What is the difference between pre-qualifying and pre-approval?

A pre-qualification is normally issued by a loan officer, who, after interviewing you, determines the dollar value of a loan you can be approved for. However, loan officers do not make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you pre-qualify, he/she then issues you a pre-qualification letter. This pre-qualification letter is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on.


A pre-approval is a step above pre-qualification. Pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval certificate. Getting your loan pre-approved allows you to close very quickly when you do find a house. A pre-approval can help you negotiate a better price with the seller, since being pre-approved is very close to having cash in the bank to pay for the house!

Once you're pre-approved, you may have some advantage over other buyers. A seller likes to deal with a pre-approved buyer, and may even make concessions since the sale is guaranteed and not contingent upon financing. Pre-approval for a mortgage is, of course, subject to a satisfactory property appraisal and title review.

10.02.2009

FREE PUMPKINS IN BIRMINGHAM, MI

Free Family Fun!

Max Broock Annual Great Pumpkin Giveaway

What: Complimentary Pumpkins

Where: Max Broock Giant Pumpkin Patch
300 S. Old Woodward
Max Broock Parking Lot

When: Sunday October18th11:00-3:00

Contact Me Now to Receive Your Card to
Redeem Your FREE Pumpkins!

10.01.2009

5 Ways to Find the Right House & Keep It


The idea isn't just to buy a home. The goal is to keep your own roof over your head.
1. Create a wish list. Write down housing wants and needs. What city are you interested in - Birmingham, Bloomfield, West Bloomfied, Franklin - narrow down your area(s)/neighborhood(s) of interest.Include all the physical characteristics you want or need. Include style, size, layout and room configuration. Look at the number of bedrooms and bathrooms, and the basic amenities you must have. Include critical features such as location and services and a home's proximity to good schools or public transportation lines.
2. Get Pre-qualified for a Mortgage You need to know exactly what you can afford to pay each month to mortgage. Don’t buy more than you can afford or you won’t be able to keep that roof over your head
3. Browse for housing. Realtor.com and other websites offer home valuation features and neighborhood data on trends in local markets. Use features to determine how a listing compares with nearby, comparable properties in terms of value, actual sales prices, home features, neighborhood characteristics, and more.
4. Work with an expert. Finding a professional real estate agent who will represent your best interests can make the difference in location, negotiating the best offer, and closing the home of your dreams. Look for a full time real estate agent who has experience in the desired location, who knows the market and trends.
5. Get the complete picture before you visit. You can't know everything about a community from an online listing. Schools, crime, and proximity to shopping and work all impact property values.
6 Make sure the property details are reliable. Buyers need know when a listing has experienced a price change. Look for Web sites like Realtor.com that updates listings frequently, including price changes. Fresh and reliable information is critical. Your realtor can sign you up to receive daily updates on your target area – what’s new, what’s changed price, what has an offer.