Real Estate Costs, Fees and the Mortgage-Backed Securities System

Residential Real Estate is Not an Asset; it’s an Expense. It is a “Non-liquid assets” that cannot be sold or converted into cash easily without a significant loss of investment and time.

That’s why before you buy or sell real estate, contact an independent, third-party professional to advise you properly before you buy or sell your residential property. The Real Estate Industry is a thirty trillion-dollar industry; it’s incredibly complex and loaded with regulations, state and federal laws, good and bad guys, and gals. And more changes have taken place since 2017 that impact real estate costs than the previous 30 years.

If you’re a person who appreciates an honest assessment, then please read on. Residential properties generate no income for their owner; they do, however, create expenses. Let’s start with real estate taxes, property insurance, mortgage insurance, and utility bills.

Now add the ongoing time-suck of interior and exterior maintenance. Now the big one; having to pay contractors when you’re unable to DIY (Do It Yourself) and those costs can bleed you dry. Yes, your home has cash (equity value.) However, you can’t tap into it unless you sell or refinance-which is another costly expense.

Appraisers are State Credentialed and Certified Real Estate Appraisal Experts. Appraiser fees are on average, incredibly modest ($550), and clients gain a wealth of unbiased third-party data and insight into your home and where it stands in your market.

When compared to the Real Estate Salesperson that Markets a modest $200,000.00 home, with the average and typical fee of 6% This will cost a homeowner approximately $12,000. Not including transfer and local taxes, which could run between $1000 and $6000.

Mortgage and Refinance cost. That depends on your FICO score and Lending institution. This process can set you back from a low $2800.00 for the best FICO score up to $9000.00, and beyond.

Every single residential home produces expenses, and you need to view it through that lens. For each dollar you tie up in your home, that’ll be one dollar you can’t invest and use to grow your wealth.

Your Home Budget Painted by the Numbers

  • Create a spreadsheet of your spending priorities:
    Automobile(s) and required insurance, maintenance, fuel.
  • College savings and Loan Repayments
  • Breakfast and Lunch Costs
  • Entertainment, Recreational Expenses like Travel Trailer, Vacations, Technology
    Retirement Funding, Healthcare Costs, Life Insurance
  • Costly Bad Habits
  • Add 10% extra wiggle room for unexpected expenses.

Now subtotal, and subtract from your current single or combined monthly income. In the Lending world, this is Debt to Income (DTI) and what is left is what you can afford to them.

That loan you just closed at your local Lender, will be sold within two to four weeks after you close the mortgage deal, to Government-backed institutions. They are publicly known as Fannie Mae, along with others. They bundle your home mortgage on the open market to thousands of global Investors every single day.

This exchange or process is called a Mortgage-Backed Securities (MBS). And according to The National Association of Realtors report, as of late 2019, 93% of all home sales involve a mortgage, and 88% of repeat home buyers have mortgages as well.

Only a *Certified Residential Real Estate Appraisers have the day to day knowledge, experience, and credential on what the lending system (MBS) requires.

No one else in the involved transaction has the professional credentials to inform you of how the complete Mortgage-Backed Security system works like an affordable and skilled Certified Appraiser. Not the Real Estate Broker/Agent or the Local Lender. After all, they’re required by law to hire a qualified Appraiser.

Trust Real Estate Appraisal Services PLC. Residential Appraisals, Valuation and Consulting Services in Grand Rapids and West Michigan. Data-driven, clear Scope of Work and solution Based Data Services: Deep dive historical and current trends, Suburb Location analysis. We always walk our clients through the best and worst-case scenarios of our products/services. Schedule your Appointment Today?

*A State Certified Appraiser credential allows for Complex properties of any type or Value. State Licensed Appraisers are not allowed to perform complex appraisals. Choose wisely, choose Trust Real Estate Appraisal.

Trust Real Estate Appraisal Services PLC

Hire us before you buy or sell real estate in Grand Rapids of West Michigan. Unbiased, third party market appraisals, valuations and Real Estate Consulting. Our clients receive far more value that what we charge in Fee's.

9 Reasons why the 1st Time Home Buyer Hire a Real Estate Appraiser

In a Real Estate transaction, the decision is on you – the buyer or sellers; make it an informed one by hiring us.

1) Real Estate Brokers and their Agents are not Lenders, Title Examiners, Certified Appraisers, and especially, they’re not Attorneys.

2) When Real Estate Agent’s List a property to market, 92% as of late 2019 Home Buyers will be Financing that home with a Mortgage-Backed Security (MBS).

3) Both the Residential Real Estate Broker and their licensed Agent’s core competency is to market and sell real estate. They do not possess either the Education, License, Experience, and regulatory compliance as NAR Ethics mandates.

4) Residential Brokers and their Agents are to advise their client’s to speak and or to engage the most relevant licensed professional for their customers’ best interest. In the context of financing a mortgage, Lenders are required by law to hire a qualified Licensed or State Certified Residential Appraiser.

5) Real Estate Agents are not responsible for either a higher than the market price or lower than market price “Comparative Market Analysis (CMA).” Only a qualified State Licensed and Certified Appraiser is the acknowledged expert.

6) In closing, if there is to be Mortgage Lending in your transaction in 2020: It’s Individual Lender Policy, Rules, and Stipulations. Then Federal and State Agency rules. And finally, The Uniform Standards of Professional Appraisal Practice (USPAP) which is the recognized ethical and performance standards for the appraisal profession in the United States.

7) USPAP was adopted by Congress in 1989 and contains standards for all types of appraisal services, including real estate, personal property, business, and mass appraisal.

8) Compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions. Continuous updates and Appraisal education occurs every two years.

9) In closing, appraisers have the credentials, continuous education, information, and analysis they need to deliver unbiased and thoughtful opinions of value. This is unlike the “Comparative Market Analysis (CMA),” which is simply a non-standard, non-compliant, subjective marketing and real estate sales tool.

Want to know more about Appraisers? Go to the source

Five Outdated Seller Beliefs Debunked

Rose Colored Glasses Are Out-Dated Too

Any seller who has not sold a home in the past five years is in for a shock, everything they thought they knew about selling a home has changed.

Home Sellers, here are the new rules of engagement which you could easily make a few costly mistakes and jeopardize our chances of a timely sale.

Three Major Changes that have altered the homebuying and selling landscape forever.

Change 1: HGTV. Buyers spend countless hours watching HGTV and have developed extremely refined tastes. They know what they want, and what (in their minds when they look at homes for sale…”As Seen On TV”.

Change 2: Mobile Devices and HIDEF, Highspeed Internet. Expect No Mercy. Today’s sellers have between seven and 10 seconds to sell their home, and those seconds are on a mobile device anywhere on the planet — not in any home for sale. If a buyer does not like your online listing, they’ll move on to the next, in a heartbeat, never to return or review.

Change 3: Internet Real Estate Web Sites. Realtor.com, Zillow, Trulia, Opendoor and a host of broker-owned sites have populated the internet with user-friendly websites that provide property data, historical facts, HD pictures, automated valuations, neighborhood and school info, and more. All the above has completely removed the need for buyers to visit in person to determine if they like a home.

These three changes have not only revolutionized the way buyers search for homes, they have transformed what they buy as well.

Historically, there were three groups of buyers:

Top-tier buyers: Buy move-in ready homes that had all the amenities they were looking for.

Middle-tier buyers: Buy homes in “original” condition, for a decent price and then improve the home over time with sweat equity.

Bottom-tier buyers: Are contractors and flippers looking for distressed properties they could buy for 60 percent to 70 percent of retail value.

The middle tier, which historically represented a significant percentage of market sales, is disappearing. Todays group is paying more to obtain move-in-ready homes that look like the finished properties they have seen on HGTV.

In the past few years, we’ve seen sweeping societal shifts as homebuyer wannabes, for many reasons, are less willing or even capable of fixing up a home they’ve purchased.

With buyers moving away from “original condition” properties they perceive as needing upgrades, homes that appear in the middle tier are being forced down into the bottom tier and need to be priced accordingly. Sellers who do not understand this new reality stand to end up with far less than they imagined.

Seven Reasons iBuyer Direct Offers Are A Bad Deal for Home Sellers.

IBuyers (a moniker for platforms using new technology to make offers on homes and close quickly). Those IBuyer purchase offers aren’t designed to benefit the home seller; they are intended to benefit Corporate Shareholders. The Sellers are conditioned to get low offers and will pay equal or higher fees than from a typical Real Estate Broker and Agent.

1) Inaccurate valuations.  Zillow’s “Zestimate” is like all the other “Valuation”(Non-Appraisal) web sites. They simply exist to get eyeballs and personal information from their website for advertising or transaction purposes. 

2. Low Offers. No person, especially a Corporation that wants to purchase your home directly (With No Market Exposure) will not be offering you “Market Value.”

3. Serious Fees add up quickly. Most folks wince at the average 6% Fee Real Estate Agents Charge. Some Sellers have associated the iBuyer low offer to the average 6% Realtor fee.

Here’s the math: Not only will you, the seller, get a less than real market offer, there are Fees on top of that, like “Experience” Fees, Service Fees combined, exceeding what the Real Estate Agents would have charged you.

Still not convinced? When you sell your home, would you rather pay an agent who represents your interests or a company that serves their interests?

4. A majority of markets don’t need this ‘Service”. In many residential communities across the country, currently have tight Inventory, homeowners don’t even have to put money into updates or upgrades. Too many individuals want to buy homes.

5. Reducing Inventory will Raises Prices. Housing inventory continues to set record lows. Buyers are frustrated, bidding wars and home values escalate.

6. Home Buyers are Competing with Flippers. Investors don’t always flip houses for buyers. They often rent them out. Although not all renters are poor caretakers, there isn’t much incentive to put effort and care into a property.

Get enough renters on the street, and the curb appeal drops significantly. Renters come and go.

7. The negative effect of low offers. Imagine if two or three homes on your street are taking an instant offer. If this becomes a trend, appraisers may not be able to disregard the data.

Moreover, if you, the seller, make an immediate offer, you are messing with your neighbors’ home values.

That might not be your problem today, but it could be in the future.

Who benefits from instant home purchase offers? 

Instant home purchases are designed to benefit the IBuyer or investor under the guise of convenience to the seller.

How Can Sellers Protect Themselves?

 Contact a State Certified Residential Real Estate Appraiser. Their core mandate is to protect the Public Trust in Real Estate Transactions. The Average Fee for an independent Market Appraisal is 500.00, which is pennies on the dollar compared to paying the IBuyer Fees.

And, at the very least, interview a Licensed Real Estate Agent for a Comparative Marketing Analysis before accepting an instant offer.