Got Radon? Now part of a home sale

Another piece of paper will be added to the home sale transaction, beginning January 1, 2008. The Illinois state legislature has mandated that any home sale contract dated January 1, 2008 and beyond must be accompanied by a radon disclosure provided by the seller to the purchaser. In a similar fashion to the existing lead paint disclosure requirement, the seller(s) must attest to their knowledge of the existence of radon gas in the property being sold. The disclosure form and a pamphlet explaining the reasons for concern about radon gas in homes has been issued for use by real estate professionals just this week.

Radon has been identified as a health risk, and some communities in the Chicagoland area seem to have more of a problem with radon than others. Your local real estate agent should be able to discuss the radon concern with you, and provide the required disclosures and pamphlet to every seller. To learn more about the radon risk and our state's new requirements surrounding a home sale, visit this website: http://www.radon.illinois.gov/availpub.asp

or

phone 1-800-325-1245.

Coincidentally, a recent episode of the television program "Extreme Makeover: Home Edition" told the story of a family whose home was filled with the dangerous radon gas.

Making the home buying process a little safer for everyone is the goal; raising awareness of radon is part of the solution.

ARM Loan Due to Reset Soon? Check This Out!

There will be unprecedented numbers of ARM loans due to reset in 2008. Is your home loan among them? Regardless of your home town, free help is on the way from the Illinois Department of Housing Authority. This free session should be on your calendar:


Chicago
Saturday, December 8, 9AM -2PM
Wright College
4300 North Narragansett
Chicago, Illinois 60634

Representatives from the following companies will be there to discuss and assist homeowners who are concerned about their mortgage situation:

FIFTH THIRD BANK
HARRIS BANK
ELITE MORTGAGE SOLUTIONS
WELLS FARGO
CITI

Chicago dweller? Evanston? Buffalo Grove? Schaumburg? Winnetka? Wilmette? Highland Park? You're all in good company. Head on down to the IDHA seminar.

Time to Buy a Home? You Bet!!

My in-house mortgage specialist was smiling yesterday when he informed me about the latest mortgage rates that dropped within the past 2 days. It is so encouraging to know that rates are STILL at an historical low point:

For "conventional" loan amounts (under $417,000)
30 year fixed is 6.25%
15 year fixed is 5.875%

3/1 ARM is 5.625
5/1 ARM is 5.875

For "jumbo" loans (over $417,000)
30 year fixed is 6.875%
15 year fixed is 6.50%

3/1 ARM is 6.00%
5/1 ARM is 6.125%

This is truly exciting information for you if buying a property is in your immediate future. With a good credit score, the mortgage money is a bargain. Don't hesitate, jump in and find a terrific home at a terrific price, with terrific financing! It's a triple play, if you would think of it that way: selection, price, and financing.

California fires - victim relief

The horrific events in California strike at the heart of every American's soul. Losing your home or business to such a terrifying event seems unimaginable. Please consider making a donation to the American Red Cross to help our California neighbors who are in crisis.

http://www.redcross.org/donate/donate.html

MEDIA, MEDIA, GO AWAY, COME AGAIN SOME OTHER DAY!

It seems EVERYBODY wants to talk about the real estate market "crisis" as soon as they see my realtor name tag on my jacket. The newspapers and television news is covering the so-called market crisis on a routine basis. Today was no exception. I had a first meeting with a great couple who are starting to pursue their first home purchase. They had few questions, but the first one was "so what about this real estate market crisis - is it "ok" for us to make a purchase at this time?"

The answer is "yes," this is a good time to buy in our Chicagoland market. The primary reasons for that answer are this: our Chicagoland economy is basically very sound, our home valuations have risen gradually over time (not fueled to a frenzied pace by investor buying), and mortgage money is still relatively cheap.

Sure, the market has cooled down, and home values have stopped soaring by 5-8% every year. But buyers and sellers are still signing contracts and closing transactions, but simply at a slower pace than the frantic pace that we experienced between 2000 and 2005.

Mortgage availability? Easy, as long as the buyer(s) have a good credit score, good debt ratios, and can verify income. Yes, the subprime mortgage market has done a major melt-down, blocking some buyers from entering the real estate market. But as we have seen, those sub-prime loans were largely granted to buyers who did not have the income to support the mortgage payments. No home buyer is well served by being granted a loan that they cannot afford. And that goes for the so-called "jumbo" loans as well (loans made for any amount over $417,000).

Talk to a great agent if you want to purchase a home (or sell a home), and talk to a trusted mortgage specialist about getting the financing you might need. With the right professional assistance, buyers and sellers are still coming together and getting people what they need: a closed transaction. In the past 30 days, no fewer than 27 homes were under contract within 30 days of going on the market on the North Shore alone. And one has already closed!

Agents and Home Inspectors

As a Realtor racks up more than a handful of transactions, he/she becomes aware that there are many breeds of home inspectors in the field (just as there are many breeds of real estate agents, of course!).

Home inspectors should aim for a network of appreciative agents (buyer and seller agents alike), who can be looked upon as a source of ongoing client referrals. Makes sense; every hard working business owner wants constant referrals to keep the bottom line healthy. So why do some home inspectors make it HARD to recommend them?

One home inspector that my buyer client employed managed to test the patience of this agent, and the home seller as well. I actually had to experience not one, but two inspections by this same inspector because my client went under contract on two different properties before a successful conclusion of his desired transaction.

What was the problem, you might ask? Time. That inspector took no less than 4 1/2 hours at each property. The time was not simply reviewing every nut and bolt in the property; that I might at least understand. The time was spent largely in explaining, in a never-ending stream of consciousness, every component and system in the house to the buyer, how everything works, thorough instruction on maintenance of those components and systems, going well beyond what the intent of the home inspection provision as stated in the current area multi-board contract. The current boilerplate contract states "The home inspection shall cover only major components of the Real Estate, including but not limited to, central heating system(s), central cooling system(s), plumbing and well system, electrical system, roof, walls, windows, ceilings, floors, appliances and foundation. A major component shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety." So, the buyer is guaranteed the right to gain assurance that major components are operating properly. Period.

If a buyer wants a deeper understanding of HOW the central humidifier works, for example, it would be appropriate to seek out a home-buyer workshop on "How to Maintain Your New Home Purchase" or perhaps read up about a component online, or borrow a book from the library, or or or or.....

In one instance I had to continually reassure the home SELLER, who was being polite by staying outside on his screened porch so the buyer could follow the inspector in privacy on a very cold day, that the inspector was "almost done", over and over. I have heard a story from another agent that she once witnessed a home inspection that went on for some eight (that's 8) hours, in a very small property.

And recently I have had the opportunity to correct blatantly incorrect information stated in the inspector's report to the home buyer. Such as (I am paraphrasing here) "The screen insert is missing for the kitchen storm door...should be replaced..." After the inspector left the property, I went into the attic, where the inspector had also been, picked up the screen insert that was leaning against the wall in plain sight, brought it into the kitchen, checked the screen insert for fit with the storm door, and promptly emailed the buyer's agent that I have placed the reportedly missing screen insert in the kitchen for the buyer to utilize as desired. This same inspector stated in the written report that carbon monoxide detectors were missing, and must be placed in the home, per the 2007 Illinois requirement. Once again, I emailed the buyer's agent to state that indeed there WAS a CO detector mounted just outside the bedroom doors (in compliance with the law), and said detector was functioning, evidenced by the digital readout face. Conversely, this same inspector missed a couple obvious flaws in the property that I would have wanted disclosed, if I had been the buyer agent.

It takes many people, specializing in varied professions, to take a property transaction from start to finish. Home inspectors are an important link in that transaction chain. Home buyers need to employ an inspector who will take care to do a fine job on the inspection. But the key word here is "INSPECTION." The home inspector should INSPECT, not LECTURE, and not hand out incorrect information. Do a good job, get more referrals.

What Can a Realtor Do to Sell a Property?

In my last post, I mentioned the activity called "reverse prospecting." What is it? As a licensed agent who subscribes to the two local multiple listing services, I have the ability to identify other agents who have registered buyer clients who are a potential match for my listings.

I cannot read the identity of the buyer client, but I can read the name and contact information of the agent who is working with that buyer client; this is done through the MLS software. In this slower moving market, it is definitely a benefit to my seller client to be able to place a phone call to each of those listed agents, and draw their attention to the listing I am trying to sell.

When I am searching for a property for a buyer client, I am diligent in reviewing the MLS several times a day for new listings, and consider every single one with careful scrutiny. But guess what! Not all agents do this, take these extra steps to find the right property for their clients. So it is really important for a listing agent to make those phone calls to agents who might have the perfect buyer in their portfolio of clients.

A personal phone call will not only engage the buyer agent in conversation about the fact the listing EXISTS, but it can also answer questions about the property, clear up any misunderstandings about the listing, and otherwise eliminate objections to the property: "Doesn't that condo building forbid pets?" "That used to be the case, but two years ago the Board of Directors changed the by-laws, and now cats and small dogs are allowed!" "Wow, that's great news! My buyer client has a cat. I'll bet she would love to see the unit. When can we see it?" Not only have I aroused interest for my seller's property, I have alerted a buyer agent to a listing that might be his/her client's perfect next home.

And so, a showing! And maybe a buyer willing to make an offer to purchase! And all it took was a phone call. Enough said.

Elm Tree Village sales in 2007 - tough!

There is a unique and lovely townhouse complex in south Evanston called Elm Tree Village. Built in the mid-1950's, this collection of 36, 2 bed/1 bath red brick homes covers the length of an entire city block, from Washington south to Cleveland, along Dodge Avenue.

It is not unusual to see anywhere from 2-5 of these units to change hands in a year. But to experience 5 of them all on the market simultaneously? Wow. Each seller has a very different reason to be selling: one is relocating to Wisconsin to enter a graduate program at the University in Madison, another is moving to northern Illinois to be closer to the workplace, yet another is moving within the complex to gain the advantage of an updated kitchen and bathroom!

The significance of this glut of units for sale is this: the small pool of buyers who are interested in this type of property will pick off first one of these units, and waiting for the next buyer to step in and make an offer could potentially take many more weeks, if not months, given the slow market we are experiencing. Each of the units has its advantages and disadvantages, and each buyer will perceive those units very differently, depending on their preferences for end unit vs. being a "sandwich," updated kitchen and bath vs. original equipment, etc.

The somewhat happen ending is that suddenly, 3 of the 5 are under contract. The first one to go (contract dated June 12) was a surprise, imho, to most agents. The next contract did not happen until July 5, and then quickly another one on July 6.

Getting a home sold under these circumstances takes extra diligence; I worked the reverse prospecting tool very hard, stirring up energy and interest in my listing among the 5. Ultimately, it was the networking that paid off, bringing in a buyer.

More topics for another day.

Real estate is not simply buying or selling properties

I had a fun afternoon today, helping a client search for just the "right" condo or apartment to rent for awhile. The search is focused in Chicago's Loop area, which means investigating numerous hi-rise buildings with varying amenities.

Yes, licensed real estate agents can help a client with a rental property, either to list the property in the multiple listing service, or to work on behalf of a would-be tenant. As a listing agent, the compensation for handling the rental process is typically the equivalent of one month's rent. As the tenant's agent, compensation is paid out by the listing broker. The client pays nothing for a Realtor's assistance in finding the right rental home.

We are in Chicagoland, which means there is a huge offering of rentals on the internet, particularly CraigsList.com. Often we find that Craigs List provides larger numbers of rentals than does the MLS. I always advise a client to search Craigs List, in addition to having me arrange suitable rental property appointments.

Choosing the best rental property for a client might involve coaching that client to go down a mental checklist of features and benefits that sometimes parallels a home purchase, sometimes not. In the case of hi-rise buildings in Chicago's Loop, considerations are these: 1) location - does this address give you easy access to your daily activities; 2) car parking - do you have a car, and if so where will you park it, and what price will you expect to pay to park this car; 3) monthly rental fee - can you afford it!!?; 4) VIEW VIEW VIEW - Chicago means Lake Michigan for preferred views from a unit's windows (no lake view? thumbs down!); 5) condition of the unit - are the kitchen and bathroom updated? Walls painted? Carpet clean?

My client found a perfect place to rent today, and was confident the moment we walked in the front door of the unit. This confidence came from having viewed many other units over the past several days, giving a basis for comparison. When this perfect place was revealed to us today, we knew it was "the one." Everything was right: location, price, views (this is a corner unit with lots of sunlight and attractive things to watch out the windows, not just the rooftops of neighboring buildings), good general condition, etc. We pounced on it immediately, got an application form and lease from the listing agent, and expect to tie down the lease tomorrow.

Client happy. Realtor happy. Job done.

Movin With Susan: So... How's the Market Doing?

Movin With Susan: So... How's the Market Doing?

HUH?

Here is one creative seller! I received an internet "lead" in my email today, a lead which comes to me from a MLS listing I have posted on the national Realtor.com website.

The "lead" I received, which is intended to put a person in touch with me because they saw my property listing and want either to purchase that property, or otherwise ask me to assist in a purchase or a sale of their own property with the aid of a Realtor.

When I opened this email, I found it was a solicitation from a private condo owner to bring her a buyer for her property. This condo IS listed on the local MLS with a local brokerage, a brokerage that is known to be a "discount" broker. I find it very curious that this owner/seller is now putting in obviously considerable time to market her condo, despite being listed with a broker in the MLS. Think I'll give her a call!

When the Owner Sets the Price

Ok, it's not a science, pricing a home correctly to sell.

But it IS an art! An art based on careful analysis of "comps" and knowledge of the market trends, pertinent community information, the exterior and interior decoration/staging, etc.

When a homeowner decides to sell his/her home without representation by a real estate agent and sets the price for the public to consider, the result is usually a vastly overpriced home. Heck, even agents who have their OWN home to sell tend to set the price way too high to start with. We can't help it - it's our own castle we're talkin' about here! ;-)

And FSBO (for-sale-by-owner) sellers are not only those folks who have a sign stuck in the front yard that they purchased at the local hardware store. These sellers also might choose a high profile internet-based FSBO service, or one of many so-called discount brokers to get their home entered into the local MLS.

The FSBO discussion is a large topic, not to be even skimmed over in this post. Suffice it to say, if the home is overpriced, it won't sell. And what's the point? I have personally watched a homeowner in my own neighbor try to sell his home for over a year now. He first tried selling with an internet FSBO service all last summer and fall. He is back on the market this spring with a real estate broker, but still vastly overpriced. I know this gentleman wants and needs to sell the property, but I also know he won't get what he is asking. The homeowner is wasting precious market time, the broker he has listed the property with is spinning his wheels trying to sell a property that won't sell at anything close to the list price.

Sellers, the message is this: The buying public won't pay you what you think you NEED to get for your home. The buyer does not CARE what you need to get from the sale. The buyer will only pay you what the correct market value of the house is, or LESS, depending on how desperate the seller becomes. Price it right, the first day on the market, and find your buyer quickly!

What is "the closing"????

Somebody has a home to sell. Somebody wants to buy it. The stage is set!

The usual process goes like this: buyer writes a contract offer to purchase, the offer is negotiated, eventually the buyer and seller agree on all terms and conditions (or not!), perhaps some "earnest money" is deposited on account by the buyer, home inspection happens, attorneys for both sides hammer out the fine points, and .... Ta Da!!... this thing called "the closing" appears on everyone's calendar. What is it? Who attends? What happens? When?

In truth, quite a bit happens at the closing, but in keeping with the spirit of good blogging, I'll keep this brief.

The buyer and the seller (or their legal representatives) sit down with a title company officer ("the closer") to finalize the transfer of the property. Mortgage documents are signed and faxed to the lender, any monies that are pertinent to the transaction are accounted for on the "HUD-1" (otherwise known as the RESPA form), any past-due accounts on the property are verified as satisfied (property taxes, liens, special assessments, condo assessments, etc.), the "closer" asserts all the documents are correct and the money columns balance for the transaction, approves the deal, and suddenly thousands, maybe hundreds of thousands of dollars, or a few million dollars (houses can be costly in Chicagoland) suddenly fly around the closing table. The mortgage company gives the buyer his/her loan dollars, the buyer gives the seller his/her funds to purchase the property, the attorneys get their fee, the Realtors for both sides take home commission checks to their brokerage, the title company collects its fee,...

If any of these pieces do not fall property into place, the closing is blocked from its normal conclusion. And any seasoned real estate agent can tell you, that is one stressful situation. Every person involved in the transaction has a lot riding on the closing, not the least of which is the property transfer. If the deal does not close, somebody might not have a place to sleep that night (buyer or seller), moving company plans are blown off track, the subsequent closing for the seller might be delayed because they seller does not have the funds to close on their new property they planned to close on that same day. You get the picture.

Extreme preparation and cooperation is key in making a closing happen according to plan. If you have never purchased a property before, take heed, follow your lender's instructions, your attorney's instructions, and your agent's instructions. Or be prepared for a very troubling episode.

Some Fun This Weekend

Summer in Chicagoland - so many opportunities to have some fun with family or friends, or just by yourself!

The headliner for this weekend is probably the Printers Row Book Fair, an outdoor affair that centers around South Dearborn in Chicago, between Congress Boulevard and Polk. Admission is free, but some events with special guests require a free ticket (http://www.printersrowbookfair.org/). With some famous guests whose names appear on world-class literature like Sara Paretsky and Joyce Carol Oates and Studs Terkel, you just can't stay away. Something for everybody, including special events for the kids. The weather for Saturday and Sunday promises to be sunny, around 80 degrees both days. Be green, take public transportation, and enjoy!

So... How's the Market Doing?

Time to take a look back at the month of May on the North Shore where my Baird & Warner office is located. I thought it would be interesting to see how many properties came on the market in May (defined as a listing date between May 1 and May 31), and how many of them are already under contract (or perhaps even closed!) This is just a quick snapshot, covering the broad spectrum of property offerings: new construction, resale, a cancelled/new listing situation (ask your friendly realtor what that means!), etc. Generally speaking, it seems there is plenty of buying opportunity on the North Shore.

ROLL CALL:
Single family/ condo or townhome
(# under contract or closed) (# under contract/closed)

EVANSTON 107/ 193
(24, or 22.4%)/ (27, or 13.9%)

WILMETTE 84/ 4
(15, or 17.8%)/ (0)

KENILWORTH 4/ 0
(1, or 25%)/ (0)

WINNETKA 45/ 1
(8, or 17.7%)/ (0)

GLENCOE 26/ 5
(5, or 19.2%)/ (2, or 40%)

These numbers are gathered from the Multiple Listing Service of Northern Illinois.

PMI (or How I Learned to Stop Hating my Lender and Loving Tax Reform)

Back in the good ol' days, if a home buyer did not have at least a 20% downpayment towards the purchase of a property, the mortgage lender stuck a little gift called PMI (private mortgage insurance) onto the home buyer's monthly mortgage payment. This PMI was, in fact, an insurance policy to protect the LENDER from possible future default on the loan by the BORROWER. But the borrower was forced to pay for the insurance policy, and received no benefit from having that insurance policy applied to his/her loan. The additional charge on the monthly mortgage payment could easily run anywhere from 0.19% to 0.9% of the total loan amount. Things were rather dismal for the borrower when it came to PMI.

Until now.

Effective in 2007, a tax reform measure regarding PMI now gives the borrower a reason to smile just a little bit. Here's the scoop: if household income is less than $100,000, mortgage insurance premiums are now tax deductible, just like mortgage INTEREST is deductible. Hoorah! This tax reform change applies to PMI, as well as FHA mortgage insurance and the VA funding fee. The purchase of a home or the refinance loans that involve such mortgage premiums must have closed on or after January 1, 2007.

For more detailed information on how this tax change might be helpful to you, please talk with your tax advisor, or contact my local (Winnetka) Baird & Warner mortgage expert, Reed Brunzell, at 847-446-1855.

Realtor recommendations on Service Providers

Before I became a Realtor, I would heed the warnings of the media and well-intended friends on accepting recommendations from a Realtor for a mortgage lender, a home inspector, or other such service providers. My own instincts told me "There must be a selfish motive for a Realtor to give me specific recommendations on mortgage brokers, home inspectors, etc. Otherwise, why would the agent bother to suggest one company over another? Shouldn't I always find my own service providers, keeping that selection independent of my real estate agent?"

Fast forward to the present time, which finds me well into my real estate career and a sufficient number of transactions to my credit that give me a foundation of knowledge that I lacked before entering this business.

A Realtor (a designation earned only by those licensed agents who belong to their state and national professional association of real estate professionals) is obligated to follow a Code of Ethics. In Illinois, agents and brokers are also required to follow the dictates of the state's license law. One of the basic tenents of the Code and the law is giving honest service to clients and customers (more discussion on another day on the difference between a client and a customer!) Providing a client or customer with a recommendation for mortgage brokers and home inspectors certainly has the potential for fraudulent personal gain by the agent. HOWEVER, if the agent is following the dictates of the Code and the law, such recommendations will be provided to a client/customer only with the intention of providing a high standard of service to that client/customer and help him or her reach the goal of buying or selling a property.

Why bother giving recommendations at all? Because - when a home buyer or seller hires someone to provide service related to a real estate transaction, and that service provider is unqualified or unknowledgeable or dishonest or inept, the transaction can oft times fail to close, and sometimes cause financial harm to the buyer and/or the seller. I had two such situations recently.

The most disturbing example was a buyer client; this person worked very hard to find the "just right" property to purchase as a first-time buyer. This buyer needed a mortgage to acquire the property, as most buyers do. The deal "fell" because the buyer's mortgage broker could not deliver the mortgage to close the transaction. A conversation with the mortgage broker who is based in my office in Winnetka, revealed how the buyer could have certainly obtained the mortgage needed, including monies to help pay for closing, and a program to provide continuing income tax advantages over the life of the loan, above and beyond the standard deduction for interest on the mortgage loan.

The buyer worked several weeks to identify the right property for purchase, negotiate the contract, pay for a professional home inspection, pay the real estate attorney for what added up to several hours of work on the transaction, only to end up empty handed and nervous about trying again to purchase something else.

If a buyer or seller can feel there is reason to trust his/her agent, then it follows that the agent's recommendations for service providers can be trusted as well. It is in the best interest of the CLIENT to opt for excellent service on a mortgage, a home inspection, and an attorney. And if it's good for the client, it's just plain 'ol good for the agent as well.