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A Military Relocation Guide to the Sault Ste. Marie Housing Market

Has your family just received PCS orders to Sault Ste. Marie, Michigan? Or do you live here already, and are struggling to find a place to live? Perhaps you have a home and are looking to sell it before you PCS. Regardless of your situation, a growing home shortage and changing market has made it increasingly difficult to navigate the housing market in Sault Ste. Marie. This article highlights key aspects of the housing market to help you assess your options to rent, buy, or sell your home.

Coast Guard Housing

Securing a home in Coast Guard housing can be difficult if you arrive when few units are readily available. Even if housing is available, a majority of the homes here are small, which can be especially challenging for larger families who need more space. For more information about your family’s eligibility to enter CG housing, email CS1 Rice at Ronald.D.Rice@uscg.mil or contact CG Housing directly at 906-635-3206.

The Local Rental Market

One alternative is to search the rental market, but in Sault Ste. Marie, rentals are scarce, both in number and quality. Your only remaining option may be to enter the housing market, but as many of us in the military have already experienced, finding a home in an unknown market can be scary and costly unless you connect with the right Realtor. That’s why I recommend choosing a Realtor who is also a military spouse, because unlike other agents, a military Realtor fully understands what you’re going through. Their unique experience can influence your ability to find you the right home. Right now, I am the only Realtor in Sault Ste Marie and the surrounding Eastern Upper Peninsula who is also a military spouse. You can email me laurela@remax.net or contact me directly at 915-491-6910. Or you can check out my article titled, The 5 Must-haves of a Great Realtor to help you find the right Realtor for you. https://your-home-is-here.com/2020/04/17/5-must-haves-of-a-great-realtor/

To search available rentals in the area, email Joan Reed with Woodside Rentals at 2woodsiderenatals@gmail.com or contact her directly at 906-440-1494.

The Local Housing Market

Like rentals, housing inventory for home sales in the Sault is also low, but buyers are aplenty. This and other factors have driven up the cost of housing, albeit the average price of a home is still affordable, around $117,000. Although a majority of homes sold in 2019 ranged between $120,000-140,000, homes between $100,000-120,000 holds the majority for most homes sold this year to date. But a growing number of homes in 2020 have sold for between $140,000-250,000, which has drastically increased the average home sale by over 19% at about $141,000. This is a huge change in just a short amount of time. The historical appreciation for this area is between 1-2%. It remains to be seen how long appreciation rates at that level will last. That should be considered when purchasing a home.

Purchasing a Home

If you decide to buy a home in the Sault, you can use this data to purchase a house that has resale value. That means buying a home that most local buyers can afford, between $100,000-140,000. If you make cost-effective upgrades to areas of the home that matter most to buyers, such as the kitchen and bathroom, you can raise the home’s value quickly and potentially sell it for more. And because more and more buyers can afford homes at a higher price point, you will still be in a position to sell your home quickly. Selling your home in a timely manner is a necessity to us in the military who don’t have much time to sell our homes. It can come as a huge relief to know that the only mortgage you have to worry about is the one you’ll acquire at your next billet.

Renting Out Your Home

In the event that you cannot sell your home before you get transferred, or say you wish to keep you house and rent it out, finding a trusted property management company to manage your property is the best way to protect your investment. They will charge around 10% of the rent, but it’s a fair price to pay to ensure that the property is maintained. To inquire with a local property management company in Sault Ste. Marie, you can contact Joan Reed with Woodside Rentals at 2woodsiderentals@gmail.com or 906-440-1494.

If you found this article helpful, please provide your feedback in the comment section for this article or follow me on instagram at https://www.instagram.com/your.home.is.here/

5 Must-haves of a Great Realtor

The internet has given home buyers so many options to find a real estate agent, but without knowing what qualities to look for, it can be difficult to ride the wave of information overload. And if you’ve just received orders and are set to PCS, it’s likely that finding a home is only one of many things on your to-do list.This article highlights 4 qualities to help you quickly identify the right Realtor who stands out from all the rest. Find an agent who represents you, has the heart of a teacher, devises a unique strategy designed to meet your goals, and if possible, is a fellow Coastie.

I wrote this article before social distancing guidelines were put in place, but the tips discussed are still important, now more than ever. It’s especially crucial to find a Realtor who can fulfill the roles laid out below. It will take a creative Realtor to guide you through the challenges we currently face as a nation. 

  1. A Representative 

Navigating the ins and outs of a new community is a unique challenge that most Coasties are familiar with. But to be truly successful, especially in a novel housing market, it’s crucial to partner with a Realtor who represents you fully. Choose an agent who is accessible and attentive to answer your questions and address your concerns. An agent can’t truly understand your needs unless they take the time to listen. For many Coasties, purchasing sight-unseen is the only option. A representative Realtor is your eyes and ear who utilizes not just pictures, but virtual walkthroughs to give you a more realistic layout and condition of the home (digital marketing is quickly evolving and differs from city to city, so ask your agent what virtual showing options are available). If you have family and friends in the area, a representative Realtor could encourage them to come along and offer further feedback during video tours. What if you’re moving to a community with no connections? Reach out to your unit’s Housing Office for guidance. In several of my showings, I’ve invited the Local Housing Representative to virtual tours, and buyers were highly satisfied with his input. Once you’ve found the right home, your representative Realtor should attend inspections and re-inspections alongside you or on your behalf if you can’t physically be there. A representative Realtor makes every effort with every resource to give you every bit of confidence, because you need to be assured that you’re making a wise decision. 

  1. A TEACHER

The road to closing takes many twists and turns before getting there, so it’s little wonder why buying a home can be stressful. Find a Realtor with a heart of a teacher who breaks down the process into clear and manageable steps, so you feel confident about your purchase. As excellent problem solvers, teacher-oriented agents help you address military-specific challenges: they keep you informed of VA home loan policy changes, connect you with local VA loan specialists, and team with the Local Housing Representative to help you weigh the pros and cons of buying in that market, just to name a few. The Coast Guard moves us often, so it’s likely you’ll buy several homes while you and/or your spouse is in the military. Therefore, it’s essential to find an agent who ensures you can apply a deep understanding about the home-buying process to future purchases. 

  1. STRETEGIC 

Studies have shown that owning a home is a top priority for a majority of military families. It’s necessary to find a Realtor who will help you find the right home that meets your goals. Your home is more than a place to hang your coat – it’s an asset designed to meet long term goals like paying for your child’s college or killing debt. For most of us Coasties, the main goal is to resell our home in 3-4 years time when we PCS to a new station. So find a Realtor who will help you devise a plan that increases your ability to resell at a profit. Although this will be unique to you, a strategic Realtor tries to negotiate up to 10 % off a home’s list price, even during a seller’s market. How that’s accomplished will vary according to the agent, but here are a few things to ask: 

  • Does their market analysis consider when the home was purchased, and for how much? 
  • How much were buyers willing to pay for homes that compare to yours in the last 6-8 months? 
  • What is the home’s assessed value? 

A compilation of these data will determine an appropriate starting point for negotiations within 10% of list price. Negotiating the price is key because buying under market value forces equity from day one. Additional appreciation will come from what buyers and sellers are doing in the housing market, both locally and nationwide. Furthermore, you can force appreciation if you make modest upgrades in the right areas of your home. In the end, it literally pays to find a strategic Realtor from the start.

  1. A FELLOW COASTIE

The right Realtor is the one who faces the same challenges with many of the same frustrations that you do. Like you, Coastie Realtors weather the storms of change and uproot their families to another community. We can channel that empathy to combine our shared experience and expertise to bring you home. When it’s time to PCS, you can connect with other Coast Guard families through local social media groups to find a Coastie Realtor in your new community. They’ll provide the helpful feedback to start your search. To connect with CG families in the Sault, join https://www.facebook.com/groups/143440139048999 .

5. COMMITTED TO FAIR HOUSING

Serving clients in meaningful ways is of utmost importance to the best Realtors. They understand that continued education is central to that service to providing fair and equitable treatment to all clients. Continued education covers a range of topics that affect real estate in light of current events including fair housing laws, internal biases, and diversity. The best Realtors take the time to self-analyze with the intention of rooting out internal biases that can perpetuate systemic descrimination in real estate. In my own experience, I’m committed to ask myself the tough questions that many of us ask ourselves – what can I do to end racial injustice in my community?  I have also partnered  with fellow agents to carry out best-practices that combat descrimination in the field. So ask your agent how they’re continuing their education? Are they doing the work to provide clients with equitable treatment?

VA Funding Fee – Pay it Wisely

If you plan to purchase a home using a VA loan, you won’t have to make a down payment, but it’s likely that you will have to pay closing costs out of pocket. The funding fee is one of the costs associated with buying a home with a VA loan. It varies depending on whether you’re a first time home buyer or whether you’ve used it in the past. The fee increases for subsequent purchases using a VA loan, but you can lower it if you put money down. If you meet certain qualifications, including but not limited to having a 10% or more service-related disability, the funding fee may be waived entirely. If you don’t meet that qualification, there may be the option to roll the funding fee into your overall loan rather than pay it out of pocket at close. Weighing several factors can help you determine whether that is the best option: how much your pay for the home, how high it appraises, and how long you intend to own the home before resale can help you decide if you should pay the VA funding fee up front at closing or roll it into your mortgage.

Sales Price

Depending on how the local housing market is performing in your area, you may be able to purchase a home below market value. Buying a home at a discount will give you in-built equity at the time of purchase. The greater the gap between what you pay for a home and what the market says it’s worth, the more room you have to roll the funding fee into your loan without exceeding the home’s market value. For example, let’s say that you just successfully negotiated the price of a home down 10% from $110,000 to $100,000. Keep in mind this is the second time you’ve used the VA loan to purchase a house, so you’ll be charged a 3.6% funding fee of $3600 since 3.6% of 100,000 is $3,600. Now let’s say when the home is appraised, it’s valued at 115,000, but because you were able to negotiate a lower price for the home, you have plenty of room to roll the cost of the the VA funding fee into your loan. Plus, you now have equity in a home that costs $113,600, but that’s worth $115,000. And you still have $3,600 in your pocket to spend on modest upgrades to force even more appreciation! Suddenly your home is more than just a place – it’s a budding investment.

*Remember, the VA funding fee will vary, depending on your qualifications. For more information about the specific fee you would be charged, refer to the table at the end of this article.

Appreciation

Annual appreciation is usually something that happens over an extended period of time like 10-20 years. A home sold today is almost guaranteed to sell for much more than what it went for a couple decades ago. That’s just the nature of inflation. But for a military family, the time you spend living at any given station lasts at most 4-5 years. That’s usually not enough time for your home to benefit from annual appreciation. So it’s crucial to have enough cash on hand to make modest upgrades to your home – the cash you could have otherwise spent on the VA funding fee that can now be thrown into redoing a bathroom or upgrading a kitchen. Those kinds of upgrades may not cost very much money, but if done right, can go a long way to force your home to appreciate quickly. This is especially likely if the market is hot, but even if it isn’t, statistically, you can recoup about 80% of the costs you spent to make those upgrades. The result? If you recall from the example I gave you earlier, even though you rolled the VA funding into your loan, you still had a little equity in the house from the beginning. Now, after spending the extra money remodeling the bathroom, your home’s value instantly shot up to $120,000! If you continue to update the home, by the time you’re ready to relocate, you will have positioned yourself to potentially turn a profit on what has become a full blown asset.

The VA loan is arguably one of the greatest benefits afforded our military families, and when used effectively can have profound impacts on our financial futures. The funding fee might be considered a roadblock to building your asset unless you know how to pay it wisely. By considering how to make use of price, appreciation, and time, you greatly increase the likelihood that your home will be more than a home; it will be an investment. With the right strategy the old adage, buy low sell high, can apply even to us in the military.

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