Every time the real estate market turns, someone potentially benefits and someone potentially loses out. When property values soar, home owners worry about paying higher property taxes. When values worsen, the end never seems in sight. In the current downturn, the losers are clearly identified as those facing foreclosure or who–because of market, job and credit conditions–feel like they have nowhere else to turn but towards using their house as an ATM machine or selling at a deeply reduced price.

The good news–if you can call it that–is, there are some mighty good deals to be had these days, and one needs to look no further than yesterday’s front page of The Free Press to see what we’re referring to. See the picture of the house below–the one with all the arrows pointing toward it?

Here’s a better picture:

If you had to guess how much this house is selling for–based just on the above image alone–what would you say? $750,000 to $1,000,000? After all, it has:

• 7 bedrooms
• 5 full bathrooms
• 2 half bathrooms
• Living room
• Dining room
• Family room
• Breakfast room
• Florida room / Sunroom
• In-law quarters
• Library
• Partially finished basement

All told, this mansion built in 1905 has over 7,000 square feet (7,187 to be exact), but because of current housing conditions, it is priced to move, and move quickly. Before we tell you the asking price, read the following clip from yesterday’s The Free Press:

Struggling housing market has Detroit’s gems slashing prices

January 19, 2008

BY ZACHARY GORCHOW
FREE PRESS STAFF WRITER

How can you own a house worthy of a millionaire, at a price typical of your standard three-bedroom, two-bath bungalow?

It sounds too good to be true. But in fact, buyers can find scores of historic, large homes available for astonishing bargains — some under $200,000 — in beautiful Detroit neighborhoods, deals that real estate agents say haven’t been this good in decades.

The listings are eye-popping, like the stunning six-bedroom, four-bath, 5,500-square-foot, 1923 colonial in the Boston-Edison neighborhood for $249,500 — about $45 a square foot. Or the five-bedroom, three-bath, 2,700-square-foot colonial in the University District for $149,900. If it’s a Cape Cod you’re eyeing, there’s the seven-bedroom, three-and-a-half-bath, 4,650-square-foot home in Indian Village for $314,999.

But what frustrates real estate agents and owners is the struggle to sell such historic gems — even at these prices. And some have slashed their asking prices by tens of thousands of dollars…

…The real estate market is sluggish everywhere in metro Detroit, and prices have plummeted.
But it’s in Detroit where prices have dropped the most, said Ron Simpson, the outgoing president of the Detroit Association of Realtors… Buyers have long been able to get more house for their money in Detroit than most suburbs, but today’s deals in the city are at “a whole new level,” Simpson said. …

… In the West Village on the city’s east side, when residents learn of someone interested in buying a house in Detroit, they recruit them to their neighborhood by taking them on a one-on-one tour and introducing them to the neighbors, said Bill Swanson, 33, a West Village resident who has conducted some of the tours. Four people have bought homes in the neighborhood in the last year thanks to this effort, Swanson said. “Once you meet people and realize it’s a great neighborhood, it makes buying in the neighborhood really easy,” he said.

Indian Village is another prized area in Detroit. There, a seven-bedroom, six-bath, 7,187-square-foot colonial is listed for $349,995. “A comparable house somewhere else would be millions,” said Joy Santiago, the house’s real estate agent. “It definitely should have gone by now. These are really good prices.”

That’s right… the 7,000+ square foot house referenced above–it’s in the Indian Village section of Detroit–is priced at just $349,995! In many other markets, this historical gem would sell for around $800k to $1 million. Interested in learning more? Here a few additional shots, this time from the interior:

To learn more about this property or others like it, call our office today and ask for Joy Santiago. The office number is (586) 751-0000.

Whenever a new technology affects your industry, you have three choices: resist it, accept it, or embrace it. This is especially true in Real Estate. Realtors who resist technological advances usually lose their competitive edge (not to mention that they also risk losing touch with their customers, literally).

Here at Ralph Roberts Realty, we believe that the earlier we adapt to new technologies, the sooner we can master them and keep up with changes as they mature. The latest technological innovation we have embraced is videoconferencing.

Now you may be asking yourself, why on Earth would a Realtor need access to a videoconferencing platform/system. After all, isn’t the process of buying and selling Real Estate based largely on face-to-face interaction and relationships?

While it is true that the vast majority of residential Real Estate transactions involve physical interaction, not all of them do. Take for instance the serious out-of-state Real Estate investor who wants to size you up before making an in-person visit, or the prospective homeowner who lives in another part of the state or is out of town on business and finds that it is more convenient to participate in a videoconferencing session than to drive 8 hours or cut short a business trip just for an initial or intermediate face-to-face encounter.

Having access to a robust and stable videoconferencing platform allows our office to offer yet another way for you to meet with us to discuss important matters. Our high-end videoconferencing experience puts you in charge, which is exactly what it is like when you come to our office to meet with us in person.

If you would like to learn more about our videoconferencing capabilities, please call our office at (586) 751-0000.

According to a recent study, Detroit had one the three highest foreclosure rates among the nation’s 100 largest metropolitan areas during the first six months of this year. Detroit’s woes–one foreclosure filing for every 29 households–ranks it second in the nation. The metro area, comprised of Wayne County, reported 28,705 foreclosure filings, which translates into a 26 percent increase from the previous six-month period and nearly double the number reported in the first six months of 2006.

If you are one of the many Michigan residents caught up in this subprime lending/foreclosure mess of ours, this blog entry may interest (no pun intended) you.

First though, a little background information: Subprime lending is highly controversial. Opponents say that the subprime lending companies engage in predatory lending practices such as deliberately lending to borrowers who could never meet the terms of their loans, thus leading to default, seizure of collateral, and foreclosure. Proponents of subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market.

The controversy surrounding subprime lending has expanded as the result of an ongoing lending and credit crisis both in the subprime industry and in the greater financial markets. This phenomenon has been described as a financial disease which has led to a restriction on the availability of credit in a number of financial markets. Hundreds of thousands of borrowers have been forced to default and several major subprime lenders have filed for bankruptcy.

Well, last Friday, in a widely publicized address from the Rose Garden, President Bush said that a bailout is out of the question: “A federal bailout of lenders would only encourage a recurrence of the problem.” This is certainly true. Bailing out the lenders would simply lay the burden on taxpayers and provide the carpetbaggers with another opportunity to pillage.

The President did reach out to some distressed homeowners–those with good credit histories who could probably pull themselves out of their current crises with a little help from the federal government. The FHA (Federal Housing Authority) will be given more flexibility to assist homeowners who have subprime mortgages. Homeowners may also be spared having to pay additional taxes in the event that the lender forgives a portion of their debt. Perhaps this will encourage lenders to work out reasonable solutions with homeowners.

Nevertheless, what about all the other consumers–what about hard-working American families who are too deep in debt to be saved? What about the children of these people who are going to be uprooted from their neighborhoods and the school districts where all their friends go?

Government officials, lenders, and people who have not been victimized by the shoddy lending practices of the last decade are quick to judge. After all, they are not the ones paying the price. The people who are suffering are the same people who usually suffer in these situations–consumers. These are the people who were sold ARMs (adjustable-rate mortgages) that ended up costing an arm and a leg. They were told that they could refinance before the rates went up or could build higher credit scores by making their payments on time and then refinance with a low interest rate mortgage later.

Then, the bottom dropped out of the housing market, making it nearly impossible for these hard-hit homeowners to refinance. Some of these loans even came with stiff prepayment penalties to further discourage people from refinancing. These folks were led down this path simply because they trusted an “expert” in a fancy suit with a silver tongue who failed to warn them of the looming trouble and the risk they were taking on. Where are these smooth talkers now? Probably out of work and seeking more fertile fields to ply their trade. They turned the American Dream of Homeownership into a nightmare, but they certainly are not the ones having to wake up to it.

Instead of letting them off the hook, they should be forced to take ownership of the problem they created. Instead of waiting around to see whether the federal government is going to bail them out, they should be actively pursuing the homeowners they led astray and offer them real solutions that can help these distressed homeowners regain their financial footing.

For some Real Estate investors, the recent downturn in the housing market looks like opportunity. Some of the most aggressive investors go after foreclosures; homes that people have lost after they have fallen behind on mortgage payments or taxes. In light of the fact that John Wiley & Sons just released our founder’s latest book, “Foreclosure Investing For Dummies,” Ralph recently sat down with The Washington Post’s Mary Ellen Slayter to talk one-on-one about the pros and cons of investing in foreclosures and how investors can minimize risks while maximizing returns.

An edited transcript of the conversation follows.

Tips From a Foreclosure Investor

Sunday, July 1, 2007; Page F06

Q. Who is a good candidate for investing in foreclosures?

A. It’s right for someone with a secure job, solid cash flow and lots of cash on hand — someone who wants to make some money on the side. If you’re married, your spouse needs to be on board, too. I like for people to use their own money. But if you don’t have enough cash but you’re willing to do the work, find a partner. My first “bank” was my grandmother. I didn’t pay her interest, but every time I made a deal, I took her out to lunch. If you really want to do it, you can always find sources of investment capital.

And who’s not a good candidate?

Anyone who thinks this is easy money. It’s a myth, perpetuated by all these late-night TV gurus, that you can get rich quick doing this. If you’re in financial trouble, this is not going to bail you out.

Why would someone want to look into this now?

There’s never been quite so many opportunities for individual investors to buy foreclosures. There are just so many of them. Before, the market was chiefly controlled by good old boy networks, through the banks’ brokers.

How does it work in declining markets, which are the ones that are most likely to have lots of foreclosures?

You account for this in the price you pay for the property. You make your profit when you buy, after all; you realize it when you sell. There’s a formula in the book that helps you adjust for a soft or flat market. My wife once pointed out to me that no matter what the economy looks like, people are still going to buy and sell houses. They’re still going to get married and start families. Even if 10 percent of workers are laid off, the other 90 percent are still working. They will still need housing.

Describe the perfect property for the foreclosure investor.

It should be in a good neighborhood. And you should be able to see clearly what you need to do to fix it up and sell it.

What kind of work is usually involved?

All kinds of things, inside and out. Look at the doors, windows, roof, concrete — everything. Properties that are in foreclosure aren’t always in great condition. After all, the owners couldn’t afford the mortgage payments. They probably couldn’t pay for maintenance either. It’s important to have a thorough, professional home inspection before buying. But if that’s not possible, then you should at least inspect the outside of the property yourself — all four sides.

You’ll also need staging (making the property look pretty) to move the property if the market is slow. Once you start working, multitask to fix things up as quickly as possible. Timing is everything. Every day you keep a house off the market, you’re losing money.

What types of properties should investors avoid?

Don’t buy if there are a lot of distressed properties on a block.

Don’t invest in foreclosures long distance. You need to be able to see what you’re buying. And don’t touch pre-construction projects.

Also, avoid any deal in which somebody promises you cash back at closing. This is never legal. Stay away from that.

What are some other things that potential investors should keep in mind?

Always have a Plan B. Not every house on the market sells right away. You may need to rent the place out for a year or two after you fix it up. This isn’t necessarily a bad thing. It can lower the tax rate on your capital gains .

And be prepared to lose money sometimes. Even I don’t hit home runs every time.

What about guilt? Do you ever feel bad that by profiting from foreclosures, you’re making money off other people’s hardship? How should people handle those feelings?

Of course you can feel guilty. So don’t take advantage of people. You’ve got to try to make it a win-win. Sometimes the best thing to do is help the person keep their house. I’ve run into situations like this, including one in which the woman who co-owned the house just got behind after one bad event. She didn’t want to ask for help from her family. But instead of buying the house after foreclosure, we made some phone calls that helped her keep it. You’ll get more opportunities that way than being a vulture. And you’ll sleep better at night.

For more information about Ralph’s latest book, “Foreclosure Investing For Dummies,” please read this blog entry on his other site, AboutRalph.com.

To order “Foreclosure Investing For Dummies,” go to Amazon.com.

Finally, if you or someone you know is interested in investing in foreclosed properties, please contact the office. Our staff is ready, willing and able to advise you in the best strategy for your situation.

The recent trend in the Michigan housing market has prompted those of us who care to ask the question ?¢‚Ǩ‚Äú how did so many homeowners get so upside down in their homes? I suppose this question has a three part answer?¢‚Ǩ¬¶the declining market, the foolish homeowner, and the crazy mortgage/lending industry.

The declining market is out of the average homeowner?¢‚Ǩ‚Ñ¢s hands. We find ourselves having to place our faith in our legislature to keep our economy strong and in businesses to continue to invest in Michigan. Placing our faith in either, as of late, seems foolhardy at best, and certifiably insane at worst. The two groups of people we are forced to rely on are on opposite sides of the Grand Canyon without a bridge?¢‚Ǩ¬¶or even materials to build one.

The foolish homeowner problem almost always exists. Homeowners always believe their house is worth thousands more than it actually is. Just ask them, and you?¢‚Ǩ‚Ñ¢ll see. If a house has sold within a 4-mile radius of their house for $200,000, their house miraculously is the mirror image of that house and is suddenly worth $200,000 or more. After all, their house has a 2 1/2-car garage and that house only had a 2-car garage.

Based on their irrational exuberance built into the self-assessed values of their own homes, homeowners began using their homes as ATMs to cash out all of the equity in their homes. In some cases, they even cashed out more equity than they had built up in their homes. All they needed to justify it was a job, the notion that the house ?¢‚Ǩ?ìaround the corner?¢‚Ǩ¬ù sold for hundreds of thousands of dollars, and that housing values would continue to rise indefinitely.

The more people I talk to overwhelmingly point their fingers at the crazy lending institutions that loaned marginal borrowers unbelievable amounts of money. I hear it every day how insane it was for a lender to loan 100% or in some cases more than 100% of the value of the house, interest only, 3-5 year ARMs, with a debt-to-income ratio nearing 50%. What did the lending institution think would happen when (as every market eventually does) the Michigan housing market hit a bump in the road? Check that, what did they think would happen when the market even thought about a bump in the road, let alone what the market is doing right now in Michigan?

More and more I see homeowners who (partly to blame) took out these crazy loans, and more unbelievably I see lenders who issued them. The mortgage industry literally bit the hand that was feeding them, and in some cases they ate the whole arm. By setting homeowners up for almost certain failure, the industry didn?¢‚Ǩ‚Ñ¢t do anyone, especially themselves, any favors. In record numbers, Michigan homeowners are unable to sell their homes for what they owe. In record numbers, Michigan homeowners are unable to refinance their homes because of lack of equity. In record numbers, Michigan homeowners are staring escalating interest rates in the face as their ARMs mature. In record numbers, Michigan homeowners are simply walking away from their homes, no longer able to afford them. In record numbers, Michigan homeowners are filing bankruptcy or losing their homes in foreclosure. In record numbers, Michigan homes are sitting vacant ?¢‚Ǩ‚Äú for sale as a bank-owned or REO property. And in record numbers, lending institutions are seeing the fantastic profits realized during the lending boom, slowly melt away.

Only now are people questioning the loans that were given and the criteria used to issue them. The people I talk to are blaming the lenders most of all. They argue that the lending institution, even if not ethically bound not to issue some of these loans, should not have issued them purely for profit. The ?¢‚Ǩ?ìlend to anyone?¢‚Ǩ¬ù policy of some organizations has served only to turn a slumping Michigan housing market into one that appears to have jumped from the plane without a parachute. What I hear the most is that ?¢‚Ǩ?ìthey should have known better.?¢‚Ǩ¬ù Lenders made obtaining loan approval for huge loans as easy as getting a credit card. The caveat always used to be ?¢‚Ǩ?ìbuyer beware,?¢‚Ǩ¬ù but it seems now that it?¢‚Ǩ‚Ñ¢s become ?¢‚Ǩ?ìborrower beware.”

I keep hearing that ?¢‚Ǩ?ìWe?¢‚Ǩ‚Ñ¢re Michiganders, and Michiganders always find a way to survive,?¢‚Ǩ¬ù but to do that we need to hold our businesses, legislators, lenders, and even ourselves to a higher standard; we need to make wise decisions; and we need to pick ourselves up, dust ourselves off, and move on. We need to practice a little more fiscal responsibility and realize that deficit spending on any level is irresponsible and dangerous.

Dorothy Bourdet has an interesting article in this morning’s online edition of The Detroit News (about our local real estate market). Key takeaways include:

• Over the past few years, acres of Metro Detroit soil that once fed corn and soybeans have been sliced into neat subdivisions with new colonials and trilevels. Now, those new homes are putting unwanted pressure on the housing market, adding to the mound of buyer options.
• Between 2001 and 2004, slightly more than 62,000 building permits were issued in Wayne, Oakland, Macomb and Livingston counties, according to Clarkston-based Housing Consultants, Inc. The pace has slowed since but the impact of that new-home surge lingers.
• While the seller’s market would undoubtedly be tough without the glut of new homes, the added competition makes it even tighter… Acres of new subdivisions have given buyers an option they didn’t have before.

If you would like to talk with us about the Warren/metro-Detroit Real Estate Market, please call our office today at 586-751-0000.

Detroit Free Press staff writers Amber Hunt and Ruby Bailey present a compelling argument for why now’s such a great time to buy real estate. From this Sunday’s online edition of the Free Press:

Owning a cottage Up North has been a dream of generations of Michiganders, but now the dream is in limbo for many and second homes aren’t selling like they used to. Properties in northern Michigan, where vacation homes are the bread and butter of dozens of real estate agencies, are going wanting.

“I’ve never seen anything like it,” said John A. Rowling, who runs his own agency in Lexington. “I’m glad I’m 88, and I’m glad the show’s about over.”

For buyers, there’s a big upside: People who’ve long wanted to buy their vacation or retirement dream homes only to watch prices climb every year finally have a buyer’s market. “It’s not all doom and gloom,” said Dennis Stanley, broker and co-owner of Coldwell Banker Pete Stanley & Associates in Au Gres, northeast of Standish.

On Friday, Stanley sold a home that had been on the market 510 days. The 700-square-foot cottage, along 50 feet of sandy Saginaw Bay beach, sold for $190,000 — 17% less than the original asking price of $229,000. “Properties are selling,” he said. “Sure, not as fast as we’d like, but we have nice properties and our location is wonderful.”

Click here for the rest of the article. And if you’re in the market for a house–be it a primary residence or vacation home–give us a call, because now truly is a great time to be looking!