Local Experts Discuss "Reality of Realty"

Local real estate experts
discuss ‘Reality of Realty'

By Christa Buchanan
C & G Staff Writer

To help keep consumers abreast of the ever-changing real estate industry and market, Keith Stonehouse, vice president of Franklin Title Agency, has organized monthly "Reality of Realty" seminars.

They feature real estate professionals from every aspect of the field - U. S. Bank mortgage loan officer Ted Edginton, TJT Financial Services credit specialist Tim Thrift, Keller Williams Realtor and foreclosure expert Richard Kallabat, Glenn Maas Agency insurance rep David Haugk and licensed appraiser Dante King of All Good Appraisals and Stonehouse - discussing the trends in each speaker's particular niche and answering audience questions.

"The idea is basically kind of a laid-back educational seminar about what's going on in the real estate market," said Stonehouse during the March 3 seminar in Royal Oak.

Designed to resemble the actual process that one looking to buy a home would go through, each presenter spoke in the order that a potential homebuyer would see them, detailing the home buying process.

Essentially, said Stonehouse, the first person a potential homebuyer should talk to is a mortgage broker (Edginton) to see if they qualify for a loan; if not, then the person should consult a credit specialist (Thrift) to find out how to improve their credit so that they can get a loan. After that, he said, the person needs to find a Realtor (Kallabat) to aid in the search of the home. Once a home is found, the person will need to look into obtaining homeowners insurance (Haugk) and have the home appraised (King) to find out its true value. The last step, said Stonehouse, is with him, getting the title insurance and all the paperwork in order for closing.

Each presenter spoke on how the current market has affected changes in each presenter's aspect of the real estate industry.

To start, Edginton discussed changes in the mortgage industry, including the relatively new concept of "risk-based pricing," in which one's credit score plays a big factor in interest rates, making it important to improve one's credit before seeking mortgage approval.

"The process starts with me - if I don't think there's a place for you under my umbrella ... I'm going to tell you to clean your credit up," said Edginton.

To that end, Thrift spoke on the increasing importance good credit plays in obtaining favorable interest rates, how to obtain a credit report, the three national credit reporting agencies - Experian, Equifax and Transunion - and ways to go about disputing discrepancies in a credit report.

If there are negatives on a credit report, Thrift said, consumers should take advantage of the Fair Credit Reporting Act and file a dispute, because the credit agencies "often can't validate things such as collections" and will have to remove the item. Another way to increase a credit score, said Thrift, is to not close credit cards that have been paid off - this leaves more available credit, which in turn can increase a credit score.

To obtain a free credit report, visit annualcreditreport.com or call (877) 322-8228. For those inundated by pre-approved credit cards, Thrift said, there is an opt-out service.

"You can go to the FTC.gov Web site or call 1-888-5-opt-out. It's similar to the do-not-call registry. It's good for five years and within about 30 days the mail should cease," he said.

Kallabat began by discussing the movement toward "going back to the way home buying used to be."

"It used to be commonplace where people would save their money, work hard, have 20 percent down and pay off their home in 30 years. ... Everything has escalated to the point now where you're able to purchase a home that you really can't afford," he said.

As "a lot of things are difficult to comprehend, and each story is different," he suggested consumers meet with a consultant for professional advice no matter their situation.

King then gave insight on the appraisal process, which involves understanding all the market dynamics, from housing stock, values and sales to mortgage, title and insurance policies.

Now, said King, appraisers have to find a home's "true value" in a market that has, among other issues, three levels of sales: foreclosures, which are selling far below true market value; investment properties in which foreclosed houses are bought, fixed up and sold slightly below value; and real property being sold by the homeowner at value.

He also discussed how foreclosures are affecting housing values, including the difference in value of a "warm house," which is lived in and cared for, and a "cold house," which is vacant.

Haugk started by discussing the "three key terms" that determine the cost of residential insurance: mortgage indemnification, which is essentially protection for the amount needed to pay off the loan; the market value, or what the house is currently worth; and replacement cost, or how much it would cost to rebuild.

A lot of people, said Haugk, especially with changing market values, do not have enough coverage on their homes.

Stonehouse spoke on the legal end of things, discussing title insurance and the closing process: checking to see if taxes are paid, the owners are legit, there are no liens on the property, etc., and "from there, the fun part - waiting for approval."

"I pull the background check on the property. ... We get everything lined up legally and get all the paperwork ready," Stonehouse said.

Meanwhile, said Stonehouse, he is dealing with the bank, the mortgage broker and the Realtor and getting all the paperwork in order for closing.

"Now it's time to do the closing and sign all the paperwork. ... Then we cut the checks," he said, to the mortgage company, real estate agents, for any back taxes and to pay off the old mortgage. "Then, we take the mortgage or deed and make sure it's recorded," ending the buying process.

The "Reality of Realty" seminars, held the first Monday of every month, not only give consumers the latest information on the ever-changing real estate market, but also contribute to local charities. Half of the $20 admission fee, which includes refreshments, goes to a local charity - the March 3 event benefited the Boys and Girls Club of Southeast Michigan. The next event is 6:30 p.m. April 7 in the Washington Building, above D'Amato's, 222 Sherman in downtown Royal Oak. For more information, contact Stonehouse at (248) 894-4785.