Inspired Real Estate For Today

In Grand Rapids, the rates of foreclosures have increased dramatically over the past year.  Kent County is averaging about 100 foreclosures a week right now.  The crisis is a result of a number of factors including lay-offs in the furniture and auto industry over the past several years as well as more buyers opting for adjustable rate mortgages which are adjusting upwards and increasing payment levels significantly. 

As a real estate agent, I have negotiated foreclosure and pre-foreclosure sales for my clients.  Each part of this process is gut-wrenching and often laden with anxiety and guilt.  The fact is that unwanted, disruptive events can come suddenly into anyone's life; illness, a bad financial decision or investment, job loss, business failure, death or divorce can plunge anyone of us into a situational crisis that is unexpected.   But, there are some disturbing  patterns that are evident amidst all this chaos.

The Mask: 

  Traditionally, a mask is worn to cover and conceal one's true identity or activity.  Perpetuators of crime hide behind it's anonymity to shield themselves from prosecution.  The crisis in foreclosures in West Michigan is mask which veils a broader dimension of involvement beyond those whose homes are being forfeited.  Perhaps, the nature of the injury could be succinctly stated as creating inventive methods and means to over-extend financing to individuals in a manner that puts them at severe risk for default. 

Lending models are extremely accurate in their predictive ability to determine default rates.  Adjustable rate mortgages have historically been viewed by the lending industry as a high risk alternative.  But in the last couple of years adjustable rate mortgages and interest only loans have skyrocketed with double digit increases.  The temptation to be over-extended/leveraged on debt has knocked on our door in different forms.  Sometimes it has arrived as a letter, a call or fax describing an incredible "teaser" rate for a few months or years. In other instances, the delivery was via loan officers willing to finance anyone or anything for a fee.    We have been regaled by TV commercials starring incredible testimonials of individuals who got out of a debt crisis by creating more debt! 

Many segments of the industry and society have been co-conspirators; appraisers created inflated values to buttress shaky real estate transactions.  Sometimes the misdeed was the action of a homeowner in concert with a buyer who created fake documents to substantiate a false transaction or an investor allegedly "flipping a property".  But, the point is that somebody designed the letter, somebody made the call or TV commercial;  the appraiser, loan officer, Realtor, homeowner & buyer where not nameless or faceless.  Who is the somebody? The somebody is us.  Everyone who chose to turn a blind eye or to participate, everyone who knew the truth and ignored it, everyone who was consumed with greed or who was just plain ignorant.  

 All of us have worn the mask.  The crisis in the real estate industry is not unrelated to our collective choice as a society to be irresponsible in our spending habits and personal decisions.  In fact, we no longer refer to ourselves as humans, we are now called CONSUMERS, a term which may reflect some unconscious desire to divorce ourselves from the implications of our decisions.  The consequences have now returned home to roost...literally as all of us are being confronted by the prospect of potentially thousands of homes placed on the market because of a foreclosure proceeding.

The good thing about a mask is you don't have to wear it, it can be removed.  An African proverb says: At anytime that you choose to wake up, it becomes morning for you.  We can each choose to wake up and take individual responsibility and control for our financial lives.  We can remove the mask and take a critical look at our personal spending habits.  We can choose to walk away from transactions which are not financially wise or prudent.  We can choose to say NO to acquiring additional credit and increasing our debt load.

The crisis has spurned some positive results.  Housing affordability has never been better.  Last year, ABC News featured Grand Rapids as one of the most affordable places to live in America!  In the past 12 months, I have witnessed an urgent call to education amongst real estate professionals and mortgage lenders. There is more widespread understanding of what constitutes illegal activity and this light makes it more difficult for darkness to hide misdeeds.  There are obviously many more lessons to be learned, and all of us will be learning them.

*For a List of Free Foreclosures in Grand Rapids, MI  & Nationwide...

 *Special note:  The FBI recently offered classes to real estate agents, brokers and mortgage lenders in Grand Rapids, Michigan to educate the industry about the disastrous consequences of lending & real estate practice which constituted the practice of fraud .  Most agents have never had this type of information presented so starkly and clearly.  As a result of these classes and other situations, the Grand Rapids Association of Realtors has established a FRAUD HOTLINE available to the public to report suspicious activity and has beefed up its Professional Standards recommendations to ensure better education and enforcement of the transactions done by its members.

Search for Home Listings in Grand Rapids & Surrounding Areas by School District:

We place a high degree of importance on education in West Michigan.  We have a number of Award Winning school districts in the area.  You can search for homes in the school district of your choice by clicking the links below.  In additon Grand Rapids has a number of Charter Schools which provide excellent options for our children and their families.  If you would like detailed information about any of these communities, our office can provide a detailed E-Neighborhood profile which will provide address information, class to teacher ratios, and expenditures per pupil in additon to other valuable data.  This report can be prepared for comparisions of up to 4 different areas at a time.  One more Value Added Service provided by the agents of Audu Real Estate!

Search the Local MLS for Homes in

Byron Center School District,

Allendale School District,

Cedar Springs School District,

Caledonia School District

Comstock Park School District,

East Grand Rapids School District

Forest Hills School District,

Grand Rapids School District

Grandville School District,

Wyoming School District

Peering Through the Bubble & Climbing the Palaver Tree!

"We don't yet see things clearly. We're squinting in a fog, peering through a mist. But it won't be long before the weather clears and the sun shines bright! We'll see it all then, see it all as clearly as God sees us, knowing him directly just as he knows us! "

1 Corinthians 13:12  Quote from Message Bible

On any given sunny day, all along the African coastline, discussions range from the mundane to the serious, but without fail, the colorful, often loud and lyrical prose of spirited discussion usually includes at least a little of what is known in colloquial terms as "palaver" .  As a child, I was warned not to create "palaver" an admonition which usually occurred when I was about to involve myself in some major mischief.  I always equated palaver with confusion and trouble. However, a recent google search revealed over 813,000 results for this enigma of a word.

One thing is clear, palaver is generated by people. It's an oral tradition which affixes meaning to events sometimes with little relevance to the actual facts at hand.  It is also closely related to tribal wisdom and strives to create sense out of the insensibility and foggy events of everyday realities.

For a couple years, the chieftains of media have pronounced the source of all the mischief in the real estate industry. The palaver was re-packaged in western terminology as the bubble.  The trouble was the bubble...whatever that was....it was growing too big, it was in danger of exploding and creating even more trouble...more palaver.  It took some doing, as palaver often does;  for palaver usually requires a catalyst or initiator to really get it going.  So as the bubble, which the media chieftains defined as the healthy real estate industry,  grew more rotund it needed more and more hot air to make it grow larger so it would finally do something...like burst!

In regions like the Midwest and communties such as Grand Rapids, Michigan, the whirlwind gathered gusto and grew the bubble, such as it was, very large.  The furor was fueled by wars, and rumors of wars, lay-offs and corporate closings and finally the auto makers joined the fray in announcing record losses.  Just like the childhood story of the big bad wolf that huffed and puffed until the house fell down, the bubble began to wobble and dance and shimmy dangerously...definitely the stuff of palaver.

But is palaver real?  According to wordhut.com, palaver can be described as "

1. (n) loud and confused and empty talk; "mere rhetoric"

2. (n) flattery intended to persuade

3. (v) have a lengthy discussion, usually between people of different backgrounds

4. (v) influence or urge by gentle urging, caressing, or flattering; "He palavered her into going along"

5. (v) speak (about unimportant matters) rapidly and incessantly

As, I reviewed the sales statistics of the last year at the Grand Rapids Real Estate Board, there are mixed results.  The last 2 years have been challenging, but to hear folks talk at the water cooler, this year was definitely worse than last.  The statistics show something different.  In comparing the last 2 quarters of 2005 with the last 2 quarters of 2006, Kent County had a POSITIVE correlation  in the average price listed to average home sale price.  (2005 - 85.4% to 2006 - 91.3%).  This means that although there were more homes on the market this year, home purchases in the last 2 quarters of 2006 closed for almost 10% more than last year.  This is good news.  I heard a newscast in December which mentioned a 3.4% increase in sales activity nationwide.  In Ottawa County, the difference was not as dramatic, but it was still there (2005 - 82.6% of List price on average vs. 2006 - 85.3% of list price.) While it's not raining "hallelujah" yet, things could be a whole lot worse!

 A wonderful Mentor has always encouraged me to look for the trends that "whisper" long before the loud broadcast begins.  We are still in the midst of a correction here in Michigan, but not a bubble.  There is nothing to burst, as we have always had a conservative, balanced increase in our market which averaged between 3-5%.  In December of 2006, single family home sales increased from 605 units to 682, a 12.7% improvement over 2005.  So, in 2007, let's AVOID the palaver, Realtors on the ground, doing transactions daily are not "peering through a glass dimly" or trying to cajole meaning through the warped frame of a bubble.  We can choose to create a solid reality through our diligence and hard work.  I think that when the weather clears, we will all be surprised to see the changes the wind blew in!

 African tradition also incorporates another very different framework for the word palaver.  It is referred to in the context of the Palaver Tree.  In this forum, the very best of indigenous African culture and oral tradition can be experienced.  The Palaver Tree is the African "tribal council", a forum where the issues and problems of the day are discussed with input and wise guidance from village elders who may be men or women.  In this way, problematic issues find resolution after much discussion and debate.  It seems to me, that the Active Rain Network and Realtown Blogs are modern cyber versions of the Palaver Tree!

We Welcome Tom Vanderwell of Fifth Third Bank as a Guest Contributor on our Blog.  Tom's weekly insights  about the mortgage industry are enjoyable reading and also educational. 

Please contact Tom at: thomas.vanderwell@53.com for the Latest Mortgage Rates  as well as information on the wide variety of loan options he has available. 

 So from Tom.... Here's the latest on interest rates.  Since they really haven't hardly budged since last week, rather than ramble on about nothing, I'm going to take a minute and share a few reactions to the activities that have been taking place literally just outside my office downtown over the last few days.   So, here are some reactions/conclusions:

1. President Ford was a man who wasn't afraid to do what is right even if what's right isn't popular.

2. I thought it was really neat how often he was referred to as "Gerald Ford, husband, father, grandfather, great grandfather, and the 38th President of the United States."  He had his priorities straight.

3. According to the numbers that I heard, more than twice as many people came to pay their respects in Grand Rapids in 17 hours as did in Washington DC in 2 1/2 days.  I think that speaks very highly of the value that people in West Michigan put on people who are deeply religious, value their family and act with integrity.

4. The fact that some of President Ford's sons spent time personally shaking hands with the people who waited in line for, in many cases hours, (it only took about an hour when I went through) speaks very loudly about how much they appreciated the reaction of people in West Michigan to the life their father lived and the difference he made.  I guess the overwhelming reaction I had to all of the fanfare, the crowds, the military protocol, the news coverage, and it all was basically that West Michigan, even in these tough economic times, still places a very high value on integrity, family, religion and doing things right.  

We've got a lot to be thankful for in West Michigan.   Thanks for listening!  

Tom Vanderwell Mortgage Officer Fifth Third Bank

Office(616) 653-5375 Cell (616) 292-7559 Fax (616) 825-6085

111 Lyon St. NW Grand Rapids, MI 49503

thomas.vanderwell@53.com  

Quote of the week: "I want to thank my predecessor for all he has done for our nation."  President Jimmy Carter, January 3, 2006

  Zillowing the Zillow!

  Yep, I actually decided to do this.  You may ask, exactly what I was doing.  Well, zillowing is a verb I've invented to describe the action of going on-line to check your home value through a site called zillow.com which will give you what is known as a zestimate of your homes value.  Since, as far as I can tell from my research and dictionary searches, both zillow and zestimate are not established nouns in the English language, this calls for an invention of a verb to ascribe meaning to the actions performed in tandem with these newly minted terms.

Being a real estate broker, I make it my business to be astute about the correct valuation of property.  This activity can be described as capricious as it involves the skills and investigatory acumen of a statistician, the nuanced inclinations of a researcher and the exquisite artistry and discriminatory palate for distinction and public sentiment of a gossip columnist to determine what any given home listed in a community should be listed for at any particular period of time.  Oh, I forgot to mention, the skills of a politician to deliver this information when it is not presumed to be very palatable to a seller's sensibilities with dexterity and hopefully persuasion strong enough to create a saleable listing!

So, my zillowing began on-line in the most obvious place, I zillowed my own home.  After all, this was one place that I could presume a high level of expertise having supervised the construction details a few years ago.  I was surprised to find that with 67 Million homes being searched by the Zillow, they could not locate my home.  I was perplexed; even Map quest now knew that I existed and certainly every catalog company, utility company and junk mail company known to man seemed to have no problems whatsoever locating me.

Undaunted, I zillowed a neighbors home to check to see whether my entire community had somehow been the victim on an on-line alien abduction and Voila, I found out that my home was indeed on zillow.com, albeit with a wrong address.  Apparently, although our address had been changed by the county several years ago, the zillow computers had not registered this fact.  This gave me some concern as proper identification of the parcel or property you are marketing or selling is Real Estate 101...thou must not sell thy neighbors property inadvertently by virtue of improper identification.

Relieved to have located my home, I checked the zestimate.  it was duly noted that as I, the homeowner, had not updated my data zillow.com was doing the best it could with the information it had access to.  Obviously, they had not yet contacted me and I was pleased to see an invitation to update my information to improve the accuracy of the database. The two most recent sales had occurred within the past 3 years and the home that had sold just prior to my home being built was now just a little under a decade old. 

I was surprised to see how arbitrary and sometimes downright inaccurate the analysis of my neighborhood was.  The homes that were given as comparables were often much older bungalows, literally light years apart in terms of value, so much so that any appraiser worth his license would have been embarrassed to list them as "comparables".  My much newer home with more square footage was tens of thousands of dollars below the value of a home that was significantly older but which was the most recent and appropriate comparable.  I noted ruefully that it would have been nice if our county property tax assessor agreed with the zestimate when it came time to pay my property taxes, but alas...he was not fooled. 

The most extraordinary surprise occurred when I tried to correct what I knew to be obvious flaws in the zillows zestimate from an intimate knowledge of my home's interior and layout.  Zillow.com had invited my input as the homeowner and I was happy to perform this community service.  My attempts to enhance the accuracy of the zestimate ended up deducting a whopping $60,000 off my value.  Now, I knew that I was dealing with a remarkably deceptive system which was purporting to provide a level of information and knowledge that it could not consistently deliver and most disturbingly might not accurately evaluate even when it was given additional data. 

This gave me real pause for concern.  I thought of all my clients who had or were in the process of selling their homes and future homeowners who would be marketing their homes within the next year.  How could they sift through the overwhelming media hype and reach an appropriate conclusion given what I as a seasoned professional had just experienced first hand.  It should be noted, that Zillow.com does recommend that you consult a Realtor and now I knew why.  Serious financial damage could occur to a most valuable asset, your home equity, if you came to the wrong conclusion. 

Recently, I came upon this post on a Blog from an individual who deals with condominiums.  Apparently, if you own a condominium, Zillow.com can only evaluate your entire building and gives this as the value of your unit.  Hmm.... This also creates a challenge if your zestimate includes such a building as a comparable due to its proximity to your home location. 

Well, I decided to test my zillowing skills on a number of my listings, holding the zestimate with the respect I would give to a proverbial "grain of salt".  Sometimes, Zillow's zestimate indicated that I was on target with regards to pricing and sometimes it decided I was not.  The comparables used to make this determination were sometimes not even in the same community or neighborhood, which made it amazing that they sometimes got the average prices right! 

What concerned me the most was the prices I saw for homes sold by Homeowners on-line through Zillow for 50% or less than their neighborhood.  And, there were a significant number of these in their database.  I wondered if these former owners truly understood the extent to which they had lost money.  This is even more disturbing given the foreclosure crisis in many parts of the country. I am sure that if I had gone to any of these owners and said, here's a bucket full of dollars equivalent to half the value of your home, would you like to join me in a money burning party or perhaps we could just throw the money out your windows, they would regard me with something several degrees below disgust.

Obviously, I do not know the details of the homeowners who choose to sell their homes so far below market value, perhaps they weren't even humans...maybe they were organizations such as banks who were ridding themselves of foreclosed properties.  However, I am reminded that my obligation as a professional Realtor to my home owner/seller is to sell their home for the highest possible price, at the least inconvenience to them in the least possible time is an increasingly valuable service.  For in zillowing, I learned that data can mislead, and there are some things a computer just can't do right if at all!

For further research on on-line services to assist in the determination a home's value, you may investigate the links below:

http://www.housevalues.com/

http://www.homegain.com/

http://www.realestate.com/

http://www.zillow.com/

Or you can contact me on-line at http://www.auduhomes.com/  or info@auduhomes.com to obtain professional counsel regarding a wise approach in considering how best to utilize information and technology to market your home intelligently. This may include an on-line marketing service as a part of your strategy.  We will work with you to determine what makes sense for your home in your community!  Lola Audu, CRS GRI an associate Broker with Audu Real Estate has earned the prestigious E-Pro Designation from the National Association of Realtors for competence and training in on-line transactions