This is my first re-blog. Even though Danilo is in another area, his message is just as relevant here.

The Woodward cruise is over.

But for vintage car enthusiasts, the cruising season continues next week  in St Clair Shores. From 5-7 PM on Wednesday August 27, Harper Avenue will be filled with classic cars from Old 8 Mile road to Martin (11 1/2 mile).

Its the annual Harper Avenue Charity cruise to benefit Kiwanis childrens charities. You can donate at 20 locations along the route or buy t-shirts on site or at the official cruise website here.

So, if you are into cruising with your classic or just watching, pay us a visit on Wednesday the 27th and remember, its for a good cause.

So You Want To Buy a Bank Owned Property.
Separating Fact From Fiction.

You’ve decided it’s time to take to advantage of the current market and buy a house. And, if you are like a large percentage of buyers in St Clair Shores today, you will probably be looking  at some bank owned properties. You will also be bombarded with stories and advice about dealing with the unique challenges associated with them.

So, let’s look at the basics. But before we start, a disclaimer. I am licensed in Michigan and this post will be based on the system in place here. Every state is different and things that may be true here could be totally different where you live. If you have questions ask a local agent or attorney.

First, how did these houses get where they are?  The short answer is: the homeowners could not make their payments and the lender has foreclosed, in other words taken the property back. In Michigan the process can take up to 10 months and the homeowners can be living in the house all this time. Sometimes people in this situation don’t keep up the same level of care they normally would and the house may suffer. The house may sit vacant and suffer vandalism or outright theft. I have seen them stripped completely. I have seen them in new construction shape. Most of these houses can be a good deal, at the right price.

Now they are listed for sale. Lets look at some of the myths about them.

Number one: Banks have so many of them they are just giving them away.

It’s true they have more homes than they ever have and they do want to sell them. But they are in business to make money, and even though they are losing money on virtually every home they sell, they want to minimize the losses they take. The have set the prices based on what are called BPO’s (Broker Price Opinions they have received from several Brokers before listing the property.)  They will consider the condition of the property when they give these opinions so theoretically they will be priced right even in horrible shape.

Number two: They are all in bad neighborhoods and in terrible shape.

While Detroit has consistently been among the leaders nationally in foreclosures, the suburbs aren’t immune from the forces driving the rise in bank owned properties. There probably isn’t one single subdivision anywhere in the tri-county area that hasn’t had bank owned properties on the market. In St Clair Shores where I live, we have even had some of the high six figure lakefront homes show up as REO’s. I have seen homes in pristine condition in all price ranges.

Number three: The banks are so hard to work with they aren’t worth the effort.

There are challenges to working with bank as sellers. Sometimes you may have to wait a while to get an answer when you submit an offer. I have waited a couple weeks and I have had an answer in hours. If they have multiple offers they will ask for your “highest and best”.  At that point you must decide how badly you want the house and possibly adjust your offer. When they accept your offer they will add a multiple page addendum to your purchase contract which will virtually gut yours and tilt the transaction in their favor. Make sure you read this before you sign it. For the most part you can’t change any of the provisions in the banks addendum’s.

One other thing to keep in mind as a buyer. When you go to closing you are more than likely not going to get your keys at the table, even though these are vacant houses. The banks are sometimes behind when it comes to getting signed documents to the title company and will usually send them in a day or two so be prepared for that possibility.

Looking for something to do the weekend of July 24-27?

Come to the St Clair Shores AquaFest 08. Locals will remember this as the annual Venetian Festival.

The fun takes place along Jefferson Avenue between Nine and Ten miles roads, The "Nautical Mile" here in the Shores, and gives visitors a chance to see what the Lake St Clair waterfront and area bars, restaurants and marinas have to offer.

It starts with the Nautical Mile Car Cruise on the 24th 6-9 PM. Come and see classic cars and enjoy DJ music along the route. All the local businesses will be participating in this event.

On the evening of the 26th you can watch the Nautical Mile Boat Parade of Lights. Boat owners decorate their boats with every kind of light you can imagine, its a very cool event.

There will be other events all weekend long at the various establishments as well as street vendors, casino nights and food and music.

Come out and see what the St Clair Shores waterfront has to offer. The festival is located on Jefferson avenue between Nine and Ten mile road in St Clair Shores around 10 miles east of downtown Detroit.

If you are an agent, you have heard this question from a potential buyer. If you are a buyer you have probably asked it.

A BUYER AGENCY AGREEMENT? Why should I sign this? I don't want to commit myself to one agent when I can have several of them working for me. If I sign this you wont have any incentive to work hard on my behalf.

The reality is that none of that is true.

A good experienced agent will not work under those conditions. They know that every agent has access to the same MLS listings. The good agents will however have a better knowledge of the inventory, they will know that the great ranch with 3 bedrooms, basement and a garage that looks like your dream home on paper is actually too far from the elementary school for your kids to walk. They will know that the house that is such a bargain has a tax bill that will double when you file your Property Transfer Affidavit and at that point you can no longer afford it.

Would you expect a good attorney to work for you for a month and then let you decide whether or not to pay him, of course not. You would talk to him and decide to either use his services or not up front.

It's the same with a quality REALTOR. Sit down with your potential agent and let them explain what they do and what you can expect from them. LISTEN to what they say. If you are serious about purchasing a home you will appreciate how much this person can simplify the process and remove a lot of the trepidation you are probably feeling at the start of the process. Let them go over the paperwork involved, it's not as bad as it seems. Again LISTEN.

An agent in this situation is actually going to work harder for you. As you may or may not know, agents only get paid when you close on a property. They don't get a salary or mileage or anything paid by the brokers. They actually have to pay for just about everything they use in one way or another.  So they have a financial investment in you. By signing the Buyer Agency Agreement you are assuring that agent of getting paid for their efforts.

If you have several working for you, none of them are actually working for you. They wont be giving you their full attention until they are sure they are in a position to get paid. Would you want to be in that situation at work? Your boss gives you the same project as two of your coworkers. You all have to use the same tools and when the job is done your boss just decides who gets paid and who makes nothing. Would you give 100 percent under those conditions? Not after being on the wrong end of the boss's whim a few times.

Most of the time a buyer agency agreement states that the seller is paying your agents commission. If you do your homework, LISTEN to your agent and choose a good one the agreement will be a good thing for you.

www.terrylynch.com

Are you relocating to the Detroit area? Are you into boating or fishing? Then you should seriously consider St. Clair Shores.

St Clair Shores is a city of just over 60,000 on the shore of Lake St Clair which sits between, and is connected by the Detroit River to Lake Erie to the south and by the St Clair River to Lake Huron to the north. It covers approximately 11.5 square miles and has almost 5 miles of shoreline.

The area from 9 mile to 10 mile road along Jefferson Avenue has most of the commercial ventures on the shoreline, and is known as “The Nautical Mile” All the marinas, restaurants and taverns are here, spread out among condos, dive shops and other assorted businesses. The rest of the shore has lakefront homes, both on the main lake and the many canals that lead to it. While the homes on the lake itself can easily surpass 1 million dollars, some canal front houses are now going for less than $200,000.

If you don’t live on the water you can park your boat at one of the many marinas in the area or you can use the boat launch behind city hall or drive a few miles into Harrison Twp and use the launch at Metro Beach. Fees for the season range from around 1500 dollars for a smaller boat to 3 times that or more for a larger vessel. Fees to launch at the public sites will total around $20 but get there early, parking spots for your trailer will go fast.

The lake is known for great fishing. You can charter a boat and have a knowledgable captain take you to the best spots or go out on your own and find them yourself.

St Clair Shores is a great place for waterfront living but that is only a small part of the city. But since this post is about the water I'll save the rest for another time.
So,if you are looking for lakefront property in St Clair Shores give me a call at 586 630-2464 of visit my website www.terrylynch.com.

All photos copyright Terry Lynch 2008

I remember my first baseball game at Tiger Stadium in Detroit. It was 1969 and I was 13. The Tigers were playing a night game against the Baltimore Orioles.

I was a huge baseball fan and I'll never forget the look of the green grass and the smells of the stadium. I went with some of the kids in my neighborhood, courtesy of one of the dads who worked at GM and had company season tickets.

We sat in the upper deck behind home plate...awesome seats, and the Tigers won 4-1.

Over the next 25 years I probably saw another couple hundred games, sitting everywhere from the nosebleed bleacher seats to the "Tiger Den" with waitresses bring beer and dogs to your seat.

I sat in the left field seats for game 4 of the 1984 world series against the San Diego Padres. What a great place to watch a game. I'll always remember my trips there.

Well the Tigers are now playing several blocks away at Comerica Park and the old stadium is just in the way ( so they say).

All efforts to find a use for the old girl, including a plan by Hall of Fame broadcaster Ernie Harwell, have seemingly failed and the wrecking ball has started its work. Apparently they haven't done any demo on the lower deck, hoping for a last minute reprieve to maybe save part of it as a museum or historic site.

I'll cross my fingers and hope that at least some of it will survive

BUYERS CLOSING COSTS…… THE BASICS

Most buyers ask the question early in our relationship, what are my closing costs going to be? Well here is the basic answer. You cost will vary depending on your loan program, seller concessions and differences in how taxes are prorated, etc.

I’m licensed in Michigan and taxes are paid differently in different parts of our state so this is specific to my area, southeast Michigan, the metro Detroit area. Your state may be completely different, even in the way transactions are closed. Here, you generally have all parties at the closing and everyone walks away with signed documents, keys and checks, unless you have a bank owned property which means you may wait a day or so for keys and seller signed documents. But this post is about costs, so I wont go any farther about the actual closing.

The first cost you might encounter on your settlement statement will be your Loan Discount or Origination fee (or both). These are commonly called “points” and equal 1% of your loan amount. You usually pay these to get a lower interest rate.
The other costs I’m going to talk about will be a range based on my past experience and could vary.

Next you will find your lender fees. These will include:

1. Appraisal- the value placed on you home by a state licensed appraiser  $250-450.
2. Credit Report. $10-25
3. Tax service fee- a one time fee paid to monitor the paying of your taxes and insurance. $50-100
4. Flood certification- a determination of your homes flood status(do you need flood insurance?) $10-25
5. Application fee (some lenders may call it an underwriting fee, document preparation fee, etc) $300-600

There may be other fees in this section depending on the lender, review fees. Etc.

The next section will show your prepaid interest charge. This will vary depending on the time of the month you close.
This is how it works:
Mortgage interest is paid in arrears. This means when you make your payment on the first of the month, you are paying the interest for the previous month. (So when you make a payment on May 1st you are paying the interest for April)

For example, you are closing on March 15th. Your first payment will be due May 1st, which will pay Aprils interest. On your settlement statement you will be charged the interest for March 15th through March 31st.

If you are getting an FHA mortgage you will also find your upfront Mortgage insurance payment here. Again, this charge will depend on your mortgage amount.
If you are paying your first year of homeowners insurance as part of your costs it will also show up here.

Next section will show your escrow account if you have one. It will show how much you are initially contributing to the account to make sure there is enough money in the account upfront to pay taxes and insurance when they come due. This will vary depending on the time of year you are closing in relation to how taxes are collected in your area. This amount can vary a great deal.

Next is your closing fee to the title company and mortgage title insurance policy. The closing fee can vary widely but in my experience they are usually $250-500 for a real estate purchase. The title company may also add a couple other fees…email, overnight, recording processing fees to do some of the things they do outside the closing.

 All lenders require that you provide them with a title insurance policy protecting their interest in the property. The amount will be equal to the loan amount and should be roughly the same no matter which title company is used. The rate is based on the loan amount and this is a one time fee.

Then come the recording fees. You will sign a mortgage which will be recorded at the county and become part of the public record. In our area they have a charge for the first page of around $14-18 and $3-4 dollars for each additional page. So, a mortgage will cost around $60-100  to record ( they average 11-15 pages and may have riders attached if it is a condo, investment property or etc.). The deed you receive from the seller will also be recorded which will cost and additional $18 –25.

After that it is the survey. This is a mortgage survey, not a stake survey. It doesn’t guarantee the lot lines it just shows that the house is on the right parcel and is inside the lot lines. $150-400

Another common charge you will see is a transaction fee from your REALTOR. Most of the time this fee is between $150-400.

So, this is a basic primer covering closing costs. If you have any questions about part of this post or any other real estate issues you can email me at tlynch@terrylynch.com. Make sure you put "REAL ESTATE QUESTION" in the subject line!

EVICTION 101

What is the most important thing I tell first time investors when they come to me looking for a rental property?

Learn how to get your tenants out of the property! If you are involved in rental property long enough you are going to have to evict someone.

I want to preface this post with a disclaimer……I AM NOT AN ATTORNEY AND I CAN NOT PROVIDE LEGAL ADVICE. This is just my personal experience. I live in St Clair Shores Michigan and the law here is almost certainly different than yours in some way.

The process here begins with:

The Seven Day Notice to Quit. This is a request for the rent within seven days. If not paid the tenant is ordered to vacate. This can be mailed or personally delivered, I mail it. I do get delivery confirmation from the post office just in case and I will print it from the USPS site after delivery.

If they haven’t paid and are still there after 7 days the next step is:

File the Complaint and get a court date:

Go to the court, get the forms, fill them out, pay your  fee and you will get a court date. (make sure you ask about copies, our area requires two for each occupant and two more for the court) St Clair Shores handles the service of the documents so we don’t have to worry about it. In some areas you may have to hire your own process servers. The court dates here are usually two weeks or so down the road. Next:

Show up for court: I suggest you prepare your judgement ahead of time (The clerks may tell you they will do it, but do it yourself) They will give you the forms. Most of the time the tenants wont show up, but even if they do the judge doesn’t have any leeway. If they haven’t paid they are out….no excuses or extenuating circumstances allowed. Once the judgement is signed the judge will issue an eviction order. This gives them ten days to vacate, after which you can have the sheriff show up and put them out physically. Keep in mind you will have to schedule the sheriff being there and pay a fee and they may not be available the exact day the order ends

The total cost for this in St Clair Shores is around two hundred dollars but that varies widely I’m sure.

This is a basic outline of the process, it could be completely different where you live, even in other Michigan cities, always check with your court clerk.

Right now is a great time to be purchasing rental properties. Just make sure you are up for the work that goes with it.