Understanding Real Estate Lingo…How the Absorption Rate Impacts Your Home Showings When You Are Selling Your Home.

There are a number of terms which real estate agents use to place  markers on what is happening or likely to happen in the marketplace .  One of the most frequently used terms is, the Absorption Rate.  The Absorption Rate is defined as the amount of months that it would take to deplete the current housing inventory in a particular real estate market if homes continue to be Sold at the current rate.

An Absorption Rate of six months is generally considered a Balanced Market.  Absorption Rates greater than six months are considered to be an advantage for Home Buyers while lower Absorption Rates give Home Sellers the upper hand.  Currently, the Absorption Rate in many communities in West Michigan is less than 5 months

Suppose you are currently trying to sell your home in Grand Rapids, Michigan  and have found that you are not receiving a lot of requests for home showings.  How can the Absorption Rate help you determine what you need to do to sell your home?

It is important to know what the Absorption Rate is for your specific neighborhood, not just your larger community.  If the rate is less than six months and especially if it is below four months, the market is talking to you and it would behoove you to listen if selling your home is your ultimate goal.  A home with little showing activity in a Hot Seller’s Market is either over-priced or shows poorly in comparison to other similar homes.

The remedy for this problem is to either lower your home sale price to reflect the current market realities and/or invest money in acquiring the professional assistance of a home stager to help you set up your home for success.

Audu Real Estate on Time…Specifically Timeline!

With the launch of Facebook Time, we’ve updated our page.  We love having a larger banner space to highlight the unique community in which we live here in Grand Rapids, MI.  Our page is frequently updated and reflects items of general interest as well as blog posts which we think are interesting and will be of benefit to our clients and readers.  Take a moment to take a peek!  Click on the picture.


Understanding the Difference Between Balanced, Buyers’ & Sellers’ Markets in Real Estate Lingo…

Spring has arrived early in West Michigan in more ways than one.  The Grand Rapids Association of REALTORS® released its’ February 2012 Statistical Report which indicates that based on PENDING SALES, there is only 4.5 months of Housing Inventory available.  That’s incredibly good news if you’ve been thinking about selling a home.  Have you wondered how to judge the status of the current real estate market?

Well, here’s a Short Primer about Inventory Levels which can be used as a Rule of Thumb to determine what’s happening in the Real Estate Market and provide some guidelines to assist in determining when to sell and what to ask your real estate agent.


Balanced Real Estate Market (aka as a Transitional Market) refers to a market which has approximately 5-7 months of home inventory supply available.  You will often hear agents reference 6 months as the mid-point of a Balanced Market.  This level of economic activity reflects a time in which neither the Home Seller or Home Buyer is adversely impacted by supply and demand issues and the playing field can be considered somewhat level.  The reference to the transitional nature of this type of market is that the situation is more like a see-saw, which will eventually tip in favor of one side or the other. (Buyer vs Seller’s Market)


Should the see-saw mentioned previously flip to the right, Inventory levels would begin to rise precipitously above the 6-7 month level.  The rise in the supply of homes available means more competition on the market for Home Sellers who eventually will need to lower their prices or give more concessions to secure a sale.  In 2008, Inventory levels in West Michigan rose to approximately 14 months of supply overall in West Michigan due to the Housing Crisis and the increase in Distress Sales.  Buyers in the market place at the time sometimes secured homes at far less than 50% of their value in a Balanced Market.


When housing Inventory levels dip below 5 months Supply as they have in February 2012, the Market has clearly transitioned into a Sellers’ Market.  Based on Pending Sales, we would run out of homes to sell in less than 5 months!  Amazing, especially when you consider how long we’ve heard all sorts of harsh statistics about the demise of the housing industry.


In closing, here is another number which you should know  to respond or react to today’s real estate market.

The average Pending Sale is approximately 15% HIGHER than this time last year at just under $126,000.

Picture courtesy of Joseph Turk Reit on flickr via Creative Commons license

Turning Foreclosures into Rentals…Will this Solve the Housing Crisis?

I read with interest the announcement from Bank of America today regarding the new Pilot Program through which On the edge - photo credit, Lola Auduhomeowners who were in danger of foreclosure/default proceedings would turn over their deeds to their homes and become renters.

The aim of this Foreclosure to Rental Program is to create a process through which distressed home owners will eventually be able to ‘buy back’ their homes by restructuring their debts and obligations while paying rent for a period of time.

Just about this time, almost two years ago, my brother and I had an extensive conversation about an idea he had about restructuring the loan process to deal with the crisis of distressed housing.  He wondered what I thought of the idea since I was in the real estate industry.  I thought his concept was fascinating!   In fact, he wrote a series of blog posts about his thoughts and I shared Parts 1 & 2 on my Active Rain Blog in April of 2009.

Here’s a link to his SOLUTION in which he explains the process of restructuring through a Lease Buy Back Program.  It just shows that you never know where insightful ideas can come from…  Bambo Bamgbose is a CPA and Executive with E-Management, a IT firm based in Silver Springs, Maryland.

According to the Press Release, this program is targeting homeowners who are underwater on their home loans and are delinquent by at least 60 days.

The move is intended to stabilize communities and home prices by allowing more home owners to stay in their homes and reduce the high costs associated with the foreclosure process.

A Mighty Fortress…

A Mighty Fortress is Our God ~ Words by Martin Luther

A mighty fortress is our God, a bulwark never failing;
Our helper He, amid the flood of mortal ills prevailing:
For still our ancient foe doth seek to work us woe;
His craft and power are great, and, armed with cruel hate,
On earth is not his equal.

Did we in our own strength confide, our striving would be losing;
Were not the right Man on our side, the Man of God’s own choosing:
Dost ask who that may be? Christ Jesus, it is He;
Lord Sabaoth, His Name, from age to age the same,
And He must win the battle.

And though this world, with devils filled, should threaten to undo us,
We will not fear, for God hath willed His truth to triumph through us:
The Prince of Darkness grim, we tremble not for him;
His rage we can endure, for lo, his doom is sure,
One little word shall fell him.

That word above all earthly powers, no thanks to them, abideth;
The Spirit and the gifts are ours through Him Who with us sideth:
Let goods and kindred go, this mortal life also;
The body they may kill: God’s truth abideth still,
His kingdom is forever.

Calculating The Cost of Selling Your Grand Rapids, MI Home…Things You Should Know

What is the cost of Selling a home in West Michigan?


Glad you asked!  This is a Valid Question.  Sometimes, the real estate process can feel as though the Costs are not readily discernible or understandable.  Because a real estate transaction coordinates the services of different specialities such as title work, required inspections, real estate services and state and local sales tax, this can be a little intimidating.

To simply the process, I’ve compiled a comprehensive list of costs that may be a part of a real estate transaction.  Your home is unique however, so to get a detailed analysis which relates to your specific situation you should contact a qualified real estate specialist. I find it helpful to think about the Costs of Selling Your Grand Rapids, Mi home in 3 categories.  They are as follows:


Home Warranty:  If you choose to purchase one will run approximately $350 ~ $375 for the average single family residence.  If your home has additional amenities which you would like covered by the program or has been vacant for some time, you will want to get a certified quote from the company you choose.

Home Staging:  An appointment will typically run between $100 ~ $150 for an initial consultation.  If further work is ordered, this is usually quoted on an hourly basis plus costs for materials.  Home Staging can significantly enhance the Value of a Home and may actually increase your Net profits by thousands of dollars.

Home Inspections/Appraisals:  These are usually paid for by BUYERS.  However, some home owners prefer to know about issues before their homes go on the market, so these items are not a detraction to potential buyers. An appraisal ordered prior to placing you home on the market can be a powerful support to a Certified Market Analysis performed by a Real Estate Broker.  These 2 items will range between $195.00 ~ $375 for an appraisal and $300 ~ $450 for a typical set of complete inspections.

Home Repairs:  To facilitate your home sale, you may have to do some minor or major repairs.  If a new roof is required, this may cost several thousand dollars.  On the other hand, a little painting and sprucing up may be a much smaller investment.  Like staging, home repairs more than pay for themselves in faster and better offers for your home.

Sales Related Costs

Title Insurance:  The cost of obtaining Title Insurance on your home will vary depending on the sales price of your home.  Most title companies will also provide a credit back to you if you have refinanced within the past 3-5 years.  Your buyer will also be required to purchase a smaller policy to protect the interest of the mortgage note holder.  Since these costs are revised from time to time, you should contact your real estate agent or title company to get the exact figure.  At Audu Real Estate, our clients are provided with this number when they sign a listing contract and/or sell a home.

Sidewalk Inspection:  The city of Grand Rapids mandates that all home owners in the city has this inspection done at the Point of Sale.  The cost is $45.  If the inspection indicates that repairs have to be done to the sidewalks, then the home owner must take care of these repairs in order to sell the home.  The city will provide estimate and a list of approved contractors.  The work must be done according to very explicit specifications.  This cost can become a lien on a home if the work is not completed satisfactorily prior to the home in question being sold.

Commissions:  Real Estate commissions will vary based on a number of factors in the transaction.  In the Grand Rapids area, there are companies that offer Flat Fee Services in which your home is simply placed on the MLS for several hundred  dollars.  As a full service real estate company, we understand that the competition for homes is fierce.  We provide a full menu of services which include: multi-media marketing on traditional and emerging web portals, a comprehensive strategic pricing analysis, automated response feedback, regular market updates, Open House services, Staging, Negotiation and Transaction Management Services.  We also offer rebates to clients who utilize our services for more than one transaction.  You many contact us for a detailed breakdown of our costs.

Sales Transfer Tax:  These costs are similar to a tax on the sale of your home.  These fees are charged by the State of Michigan and the local government area when a home is sold in Grand Rapids, Michigan.  The fees are assessed per $500.  However, a simple way to quickly calculate how much you will owe based on the price for which your home sells is to assess approximately $8.60 per $1,000.

Processing Fees/Concessions:

Closing Fees:  When your home closes, you will typically utilize the services of a Title Company to handle all the escrows, facilitate signing of the documents and disburse funds. The fee for this service is split between the buyer and the seller.  The seller’s fee has averaged between about  $175 ~ $200 in most closing offices in the Grand Rapids, Michigan area.

Overnight Fees:  When you close your Loan, the Title Company will overnight your loan documents to your bank.  The fee typically charged for this service is $25 ~ $30.

Administrative Fees:  Many real estate companies will charge a Fee to process a transaction.  This typically ranges between $195 ~ $295. 

Buyer Concessions:  These are fees which are typically only asked for WHEN you actually have a ready, willing and able buyer who wants to purchase YOUR home.  The amount requested may vary.  Typically they are 3-6% of the Sales Price.  This money can be utilized by the buyer to assist with down-payment or mortgage costs.  They may also be tax deductible to you as a seller…you should consult with your tax adviser about this.  This fee enables a buyer who may not otherwise have been able to purchase your home to do so.

**Over-Pricing FEE:

Yes, there is a Fee for over-pricing your home!  Last year, home owners who over-priced their property in Grand Rapids, Michigan paid a penalty of approximately 15 ~ 25% of their home’s initial asking price in order to sell.  It’s expensive to over-price your home.  Over-pricing helps to sell other home’s in the neighborhood which are more in line with market values.  Over-pricing costs also include additional mortgage payments and home maintenance costs. 

To Avoid this penalty, please feel free to contact Audu Real Estate for a comprehensive written assessment of the costs of Selling AND a Comprehensive 15-20 page strategic Pricing Analysis.


This post was originally written in 2007.  As we approach Spring, you may be thinking of selling your home, so we thought it would be good to revisit this blog.  Please feel free to contact us with your questions or comments.  Copyright 2007 Audu Real Estate  All Rights Reserved

Positive Home Equity For Many Homeowners…Is It Time to Sell Your West Michigan Home?

Realtors® servicing many segments of the greater Grand Rapids metropolis are reporting an interesting trend…not enough  housing inventory for the buyers they are taking out to purchase homes.  In fact, many listing agents are finding that they are entertaining MULTIPLE offers on some homes.  Earlier this year, one of our listings in Grand Rapids sold within two weeks and had several offers.

A recent report by Corelogic,  one of the nations leading real estate trends and research organizations reveals that at the end of the last quarter of 2011, over 77% of the homes in the United States were in a positive equity position.  The report also indicated that  11.1 Million homes (or 22.8 percent of mortgages) in the United States were in negative equity and an additional 2.5 Million borrowers had less than 5% equity in their homes (which is defined as near negative equity) thus bringing the total of mortgages with a deficit equity or near deficit equity position to approximately 27.8 %…a slight increase from the 27.1% in the previous quarter.

This means that the majority of homeowners in the United States have a positive equity in their homes.  For home sellers who have been pummeled with a continuous barrage of negative news, there is some hope on the horizon.  In West Michigan, we have had almost 12 months of improvement in the average housing price.  Inventory levels are currently below 5.2 months supply which is indicative of the beginnings of a Seller Market.  (Balanced market is defined as 6 months of inventory)  The chart above highlights the trend until the end of 2011.

Folks, the spring real estate market is here!  If you’ve been wanting to sell your Grand Rapids, Mi home, but didn’t think you could, it’s time to get a second opinion.  If you’re a part of the 30% of homeowners in the United States who don’t have ANY mortgage on their home, that fact alone may equate to some value when buyers are faced with the prospect of long drawn out negotiations with banks through the short sale deficiency process.

To determine if you may be time to Sell Your Grand Rapids, Mi home, consider the following:

1.  Do you own your home Free & Clear of any mortgage debt?

2.  Have you lived in your home for more than 10 years?

3.  Is your home free from any 2nd or 3rd party liens?

4.  Would you like to move into another home?

If you answered YES to one or more of these questions and you have been thinking about selling your West Michigan home but didn’t think you could afford to do so, please contact us for a confidential assessment of your home value in the current market.  In fact, we may even have buyers who are already working with Audu Real Estate for which YOUR home would be the perfect fit.  Don’t delay…Call us at 616-791-0511 today.