I firmly believe a local appraiser is more knowledgeable when appraising in an area they are familiar with. However, value appraisals and mortgage appraisals can differ. Make sure whichever appraiser you choose uses information from both local MLS's (Oakland and Macomb) otherwise they can miss a lot of comparable properties.
Karen Paytas, GRI, CMS
Real Living Kee Realty
Not only should you look/make an offer on homes 15-20k above your price range, you should lowball the offer. If they don't want to sell to you, screw them and walk away. Don';t negotiate upward. In the current market, only look to buy, if its less expensive than rent.
If the annual rent on a similar house is in the 4-5% of the expected sale price, by all means rent. You will be better off in the long run. Assume you stay in the house you buy for 5 years. You have to pay about 2.5% annually in prop taxes. You'll have to pay closing costs in the range of 9-10% on the round trip buy and sale. If you take out a mortgage (lets say 5 year ARM since in this case you sell in 5 years), you'll still pay about 2.75% annually after tax for the mortgage interest. So, that's a total of 7.25% annually. If the house stays flat (value), you'll lose money by buying the house. Also, keep in mind that if there is any inflation over those 5 years, you'll lose that much as well if the house value stays flat. If inflation goes back to the long term average rate of 3%/year, your house would need to go up by about 26% over 5 years to break even with a rent that runs at an annual cost of 5% of the expected sale price (when you don't include the effects of leverage).... more
Good point, another issue I bumped into with a home that was near foreclosure and had been uninhabited for over a year - when I recently returned there was visible mold climbing the walls - if the home has not been ventilated or cared for for a while, then a bad issue may be even worse.
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