Tuesday, January 31, 2006

Bay Harbor Residents File Suit Over Contamination

Bay Harbor homeowners Richard and Robin Franks have sued the Bay Harbor Company, CMS Energy and developer David Johnson, alleging that pre-existing kiln dust contamination near their home was never disclosed to them when they purchased their lot on Coastal Ridge Drive in 2001 for $710,000.

The Defendants have filed responses to the suit asking that the case be dismissed. According to lawyers for CMS, the Franks purchased the property "in an as-is condition and specifically subject to soil examination by (the Franks)". Johnson's attorneys, who also represent Bay Harbor, claim in their response to the suit that the Franks were given a "purchase information booklet" that contained disclosures about the kiln dust contamination at the time of the sale. They also characterized the suit as an "extortionist campaign."

A hearing on the Defendants' motion to dismiss the case has been scheduled for March.

Bay Harbor homeowners file lawsuit [TC Record Eagle]

Monday, January 30, 2006

Michigan Principle Residence Exemption - What You Need to Know

In Michigan, one's principle residence is exempt from taxes levied by local school districts for school operating purposes. "Principle Residence" is defined by statute as "the 1 place where an owner of the property has his or her true, fixed, and permanent home to which, whenever absent, he or she intends to return and that shall continue as a principal residence until another principal residence is etablished."

Additional guidance is contained in the instructions for completing the Homeowner's Principle Residence Exemption Affidavit. Generally speaking, a married couple cannot claim two principle residences unless they actually live apart and maintain two separate residences. An owner can only claim a principle residence exemption if, as stated in the affidavit, the property being claimed is actually one's principal residence, which is described as "the place you intend to return whenever you go away. . . the address that appears on your driver's license or voter registration card. The Treasury Department's instructions also provide that ". . . you may have only one principal residence at a time. Vacation homes. . .which you do not occupy as your principal residence may not be claimed."

If it is determined that you improperly claimed a personal residence exemption, you may be subject to additional tax, interest and penalties. If you have any questions regarding your qualifications for the personal residence exemption, you should contact your local tax assessor or a qualified real estate attorney or tax professional.

Friday, January 27, 2006

Agency Disclosure Laws Largely Ignored

´╗┐If you haven't read the Realty Times article Agency Disclosure Worse Than Ever, you need to do so. It is a real eye-opener.

Here are some excerpts:

". . .NAR found that only 30 percent of homebuyers were disclosed at first meeting; 28 percent when the contract was written; 22 percent weren't disclosed at all, and one in five were uncertain if they were disclosed at all. A shockingly low number of first-time buyers were disclosed at first meeting -- only 23 percent. . ."

Comments Laurie Janik, general counsel for the NAR, "Almost all states require disclosure of agency relationships. These statistics are truly disappointing to me. I would have thought the numbers on compliance with agency disclosures would be increasing year by year as agents become accustomed to making them on a regular basis."

In Michigan, state law requires written disclosure of all types of agency relationships available to a potential buyer or seller, and the duties that each agency relationship creates, before the disclosure by the potential buyer or seller to the licensee of any confidential information specific to that potential buyer or seller. MCL 339.2517.

The real estate industry (including Realtor controlled state regulatory commissions and agencies)has proven that it does not have the capability of regulating itself with respect to the issue of agency disclosure. In many instances, the failure to comply with agency disclosure laws constitutes a deceptive trade practice which is harmful to consumers. If the states will not act, the federal government should. Perhaps it is time for the Federal Trade Commission to once again get involved with the issue of agency disclosure, after more than a twenty year hiatus and with no apparent progress having been made. The level of noncompliance with agency
disclosure laws is shameful and must be addressed.

Agency Disclosure Worse Than Ever [Realty Times]

Wednesday, January 25, 2006

Ambitious Lake Charlevoix Development Planned

A developer announced plans to turn the site of the former Wolverine Power Supply Cooperative coal burning electric plant in Advance into an upscale luxury condo-marina development. Fred Taylor, of Rome, Georgia (and formerly of Ellsworth) plans to meet with Eveline Township officials today to outline his plans for the site, which is located on the Southern shore of Lake Charlevoix, just West of Boyne City.

In an industrial reclamation project akin to a micro Bay Harbor, Taylor would like to build 84 luxury condominiums on the site which boasts 1900 feet of lake frontage, with each condo to be approximately 2000 square feet in size, and with asking prices from $650-$850K. In addition, two marinas are planned, with 52 slips on an inland harbor and 84 slips on Lake Charlevoix.

The developer plans to spend $52 million on the "Sommerset Pointe Marina and Condos" project. He anticipates that once permits are secured, construction of the project will take 18 months to two years.

Condos May Rise at Boyne [TC Record-Eagle]

Friday, January 20, 2006

Blogs Level the Playing Field for Consumers

Blogs are proving themselves to be an important resource for real estate consumers, with many blogs containing previously unavailable information regarding neighborhoods, properties, and even service providers such as real estate agents. Blogs are reporting on both the good (how great a neighborhood or broker is, for instance), the bad (e.g., a development which is overpriced or poorly maintained), and the ugly (warning buyers away from incompetent or dishonest brokers).

Much of the qualitative information found in both blog posts and comments is not readily available elsewhere, and is being provided by objective market observers and consumers, as opposed to salespeople with an agenda. I have been studying numerous real estate blogs over the last year or so and must say that I am intrigued by the medium's potential for consumers.

I am an inveterate information junkie. When I am shopping for a TV, computer or other electronic gadget, my first stop on the information highway is reading the comments made by purchasers on websites such as newegg.com or buy.com. When making travel plans I can't help but read the reviews about various hotels and resorts on web travelsites. Can you imagine being in the market for a home or condominium and having the ability to get these same types of objective reviews from residents, owners and market insiders? Blogs have his capability, and it will only be a matter of time before their full potential is realized.

Real Estate Blogging for Real Estate [CNNMoney.com]

Thursday, January 19, 2006

Emmet County Comprehensive Plan 2007

The Emmet County Office of Planning & Zoning is inviting everyone to attend several Open Houses which have been scheduled to discuss the goals of the Emmet County Comprehensive Plan 2007.

What is your vision of the County's future? How do you want Emmet County to look? What additional community facilities/services would you like to see in the County? Your opinions are important. Come and participate in the important planning process for the future of Emmet County. The open houses are scheduled from 5:30-7:00 p.m. and refreshments will be served. Here are the dates and locations:

Monday, February 6th - Mackinaw City Public School Multi-Purpose Room, 609 W. Central, Mackinaw City, Michigan.

Tuesday, February 7th - Pellston Public Schools Board Room, 172 N. Park Street, Pellston, Michigan.

Wednesday, February 8th - Bear Creek Township Hall, 373 N. Division Road, Petoskey, Michigan.

Thursday, February 9th - Harbor Springs City Hall Board Room, 160 Zoll Street, Harbor Springs, Michigan.

For further information contact Brentt Michalek, Emmet County Office of Planning and Zoning. Phone (231) 348-1731, E-mail: bmichalek@co.emmet.mi.us.

Thursday, January 12, 2006

FSBO Website Takes Off in Madison

Operating out of a spare bedroom, a 38 year old former social worker and her cousin have put together what is believed to be the largest For-Sale-By-Owner (FSBO) website in the country.

Charging just $150.00, and with a filing system which consists of a stack of papers in the bedroom closet, FsboMadison listed about 2,000 homes in 2005 and said that about 72 percent of its listings sell. The success of the site is partially attributed to the fact that liberal Madison is a hotbed of "anti-business" sentiment, a place where bucking the system is a "civic pastime", and the perfect breeding ground for a "free-market real estate revolution."

The manager of Wisconsin's biggest real estate broker's Madison office refers to the for-sale-by owner model, which has garnered a twenty-percent share of the Madison residential real estate market, as "a commission-avoidance scheme."

Owner's Website Gives Realtors Run for Money [New York Times]

Friday, January 06, 2006

Proposed Elimination of Home Mortgage Interest Deduction

The President's Advisory Committee on Tax Reform has recently proposed eliminating the home mortgage interest deduction, along with deductions for property taxes and state and local income taxes, and replacing these deductions with tax credits.

An analysis of the proposed "simplification" of the tax code performed by the National Association of Home Builders (NAHB) suggests that the proposal to eliminate the popular home mortgage interest deduction would effectively result in tax hikes for many home owners.

In addition, several economists have theorized that elimination of the home mortgage interest deduction would result in the wholesale devaluation of homes as an asset class.

It sure doesn't seem like the proposal does much to simplify the tax code. Higher taxes don't sound too good either, nor does the prospect of my home being devalued. Political commentators have suggested that the Advisory Committee's recommendations are DOA, and have no chance of passage in Congress. For the sake of current and future homeowners, let's hope the pundits are right.

If we are really interested in simplifying the tax code, serious consideration should be given to the FairTax proposal. The FairTax is a non-partisan proposal (HR 25/S 1493) that abolishes all federal income taxes, including personal, estate, gift, capital gains, alternative minimum, corporate, Social Security, other payroll, and self-employment taxes, and replaces them all with one simple, visible, federal retail sales tax. Although I have not studied the FairTax proposal, the idea of not having to prepare and file an annual federal income tax return for myself and my two businesses sounds quite appealing. For more information check out Americans for Fair Taxation.

Thursday, January 05, 2006

Petoskey Real Estate Market Slows - Prices Remain Stable

Sales in the Petoskey Real Estate Market slowed considerably in 2005. Despite the slowdown in sales, prices remained remarkably stable. Sales volume measured by residential units sold sank to 260 units in 2005 from 326 units in 2004, a decline of over 20%. This number compares with 294 units in 2003 and 291 units in 2002. Sales measured by total dollar volume shrank from $95.5 million in 2004 to $77 million in 2005, a similar decline of almost 20%.

Despite the depressing sales figures, prices remained stable. The median home price actually rose from $180,000 in 2004 to $195,000 in 2005, a gain of over 8%. This continues an upward trend which saw a median home price of $176,000 in 2003 and $170,000 in 2002. The average price of a home also increased, from $292,882 in 2004 to $296,245 in 2005. In another sign of price stability, the sales price to list price ratio remained stable at 92.78%, compared to 93.37% in 2004, 92.7% in 2003 and 92.4% in 2002.

Interestingly, only 31.82% of the number of homes listed in 2005 sold, a huge drop from 2004, when 57.8% of the number of homes listed sold. In 2003 73.5% of the number of homes listed sold and in 2002 an incredible 92.09% of the number of homes listed sold. These percentages are reflective of both a weakening in demand and a large increase in inventory. The number of residential units listed in 2005 shot up almost 45%, from 564 in 2004 to 817 in 2005. This compares to 400 listings in 2003 and 316 listings in 2002.

NOTE: Based on information from the Northern Michigan MLS for the period from January 1, 2002 through December 31, 2005.