Real Estate Information Archive

Good Faith Deposits - Earnest Money                                

After many months of searching, you have found your ideal house. You want to give the impression that you are serious without appearing to be too eager. What should you do? In the marketplace, "money talks."

There is no absolute rule about how much "good-faith" deposit you should put down--but it is a tool to make your point with the seller. The typical $1,000 will hold many homes for you, except in larger-home markets where it may be critical for you to show that you are an especially serious and able buyer. You don't want to make a deposit that is too large in case there is a problem getting your money back, but if your offer is substantially below the asking price, a larger deposit--$5,000 or $10,000--might influence the seller. If you make a low deposit with your offer, be sure to provide for an increased deposit when the offer is accepted or upon removal of the contingencies ie home inspection and attorney review or a house to close contingency.

Good News!

I just came across the AP-RE/MAX Monthly Housing Report for Feb. 2010. Now that I know where to find it, I will be posting this new information every month for your understanding about market conditions in Chicago land.

Just for the record, most Realtors feel that a 6 month supply of inventory is a balanced market. The last couple of years we had a 2 year supply of housing available. Inventory is dropping, and because prices have dropped, sales are happening. This is a little light of sunshine.

Is the Window Closing for a 5% Mortgage?

There's still some time to get a 5%  mortgage, but that window of opportunity is closing. As of April 1, the government will stop buying mortgage related debt, which may send interest rates to higher levels. Since November of 2008, the Federal Reserve has snapped up over $1 Trillion worth of mortgage backed securities. This has kept interest rates at the artificial lows over the past year. Our rates have been on a 30 year fixed rate from 4.875% - 5.25% range.  Jay Brinkmann, chief economist for the Mortgage Bankers Association, has reported that the "buy down" from the government was .4%. It is his prediction that the demand for better returns will surely be seen by a few rate hikes.

How much higher do you think it will go? The experts are reporting that by December rates on mortgages will be between 5.5% and 6%. Brinkman's magic ball projection will be 5.8%.

For the past month, the Realtor's statistics is showing some improvement and stabilization of prices. Housing prices are still soft but the decline has slowed way down. If the window of opportunity to lock in a 5% loan is closing  and the Buyer's tax credit expires, where then will be housing prices go and how much smaller will the Buyer pool go?  I'm undecided over these complex issues the market will soon be facing.

Recently I wrote an article for the Illinois CRS Chapter, Feb. 2010 named Are You On Top of Your Game. This what I wrote:

Most Realtors in Illinois have had no experience with pricing homes in a recession or a depressed market, so we are learning by gathering data from our MLS, watching the inventory for market changes and trying to adjust our brains from the "was value" in the past, to the new, ever changing market of "now value". Never before have we seen so clearly on an appraisal report that indicating the "appraised value is of this date". The value of 2005 for a home, is not the value of 2007, and surely not of 2010. I overheard one agent saying to another "Welcome to the Wild, Wild West." It certainly been a rollercoaster ride the past few years with no sign of the appreciation of values we had in 2003-2005 anywhere in our near future.

So if Realtors are having difficulty comparing sales, conditions and pricing between the short sales, foreclosures and the regular owner market, how can our buyers and sellers understand it? How do we explain and show the new values to the consumer? What is Market Value? The definition from the appraisal community is:

Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transation after propert marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

A foreclusure is similar to Liquidation Value and lately seems to appear at about .50 on the dollar. These asking prices are really an opening bids at an auction, forcing a sale by lowering the price to the ridiculous. A short sale, is similar but the dollar value ofter starts at the price that the Bank should be "whole" with the owners lowering the price to prove to the bank that they are trying to get the highest price possible and an attempt was made to recapture all of its investment. Often times though this can lead to longer market time and encourages the lower offers. The question now becomes, how does all this affect our normal seller. This requires that we explain to sellers about the other influence in our pricing.

The Bank appraisers recently appear to be treating all these sales as equal. They take a 1 mile radius of the area, 3-6 months back and find comparable sales of similar square footage of the building and similar land size, amenities and styles. If he can find those comparables, that is the appraised value. If he needs to expand his search he will find our new normal, the special types of sales. A coroporation who is trying to rid of an asset, an owner with the threat of foreclosure and/or financial difficulties, and finally the homeowner who has owned his home and left his accrued equity and appreciation to stay in his home.

Today, we arm ourselves with graphs and statistics along with comparables to substantiate the value to the client. Terradatum Agent Metrics recently spoke at my Board of Realtors. The host, Peter Krause, reiterated some thoughts on pricing that are worth sharing:

1. No two buyers will value a property the same way, so buyers are always looking at a range.
2. Everone is entitled to an opinion of value, but there is only 1 set of facts.

After touring through the market pricing graphs in the program, it showed that overpricing or testing a value is not free. When a property starts at a much higher list price to begin with, the end pricing was more lower than sales where they started their price appropriately. He recommended that you talk of facts rather than emotions of the sale. I remember taking a CRS Listing Course a few years ago. the teacher said, "An overpriced listing is worthless" and I believe our current market confirms it. The Challenge in this market is determining the price while trying to stay on top of the moving price point.

This article was written to Realtors, who have optained the CRS designation. To have this designation, it requires many hours of learning and study, a volume of past business. CRS designees are in the top 4% of the Realtor community.

Some facts for buyers and sellers about Short Sales in Illinois

What is a short sale?

A short sale is when a homeowner is "short" -when the amount owed on his or her mortgage is higher than the current market value. It is one method of disposing of your home without having the lender foreclose for lack of mortgage payments. For example, you bought a home for $350,000 and obtained a 95% loan. Now, 2 years later, the conditions in the market are dictating a $280,000 sales price and you've lost a job, or cannot afford to continue with the monthly mortgage payments. Obviously, your in a terrible situation.

A short sales is an agreement with the lender that the will allow you to sell the property for less than the mortgage. The cost of foreclosure is a huge burden to a lender and involves a great deal of time in Illinois. The lender will consider many factors: how much loss the lender will suffer, the hardship of the homeowner, if a modification of the loan will keep the status quo.

When does a Short Sale occur?

Smart qustion! A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less that the full balance of the loan at closing. A buyer makes an offer, the offer is accepted by the owner, and if the mortgage company allows the property will be "sold short" of the total value of the mortgage.

Are there homeowners qualifications to preform a short sale?

Financial hardship: There is a situation causing the homeowner to have trouble affording their mortgage. Examples could be: death of a spouse, unemployment, illness, divorce.

Monthly income shortfall: A lender will want to see that you cannot afford or soon will not be able to afford the existing mortgage to the bank. The lender may recommend a modification of the terms of your loan if it fits their standards in underwriting.

Insolvency: The lender will want to see that you do not have the significant liquid assets that would allow you to pay down your mortgage. Full financial disclosure from the homeowner is required.

This is a complicated process that taxes the expertise of experianced professionals. I hold the CDPE, Certified distressed property expert designation, and  can assist. I believe I have the resources to help "clear the fog" by having you research your options with other professionals. I believe it is critical to enlist an experianced attorney in short sales to negotiate in your interest as well as talking with your tax accountant.

If you have any questions or feel you may qualify for a short sale, please contact me for a free consultation. Understanding your options now could mean all the difference in the world. I'm trying to help by solving the foreclosure crisis one homeowner at a time is what I'm aiming to do.

Jan's Gems!

So you've decided to sell your home. Great, the housing market is alive! Now.... roll up your sleeves! Truly, now more than ever thanks to HGTV, the market is in a "beauty contest" besides the normal price war. This has always been the case in my 21 years, but when the "going gets tough", the sellers with the most desire to maximize either their price or timing on the market, will so some sprucing up.

1. Make the most of your First Impression. A well mainicured lawn, neatly trimmed shrubs and a clutter-free porch welcome your prospects. So does a freshly pained or at least a clean front door. If it's autumn, rake the leaves; if it's winter, shovel the walk ways and please use salt. Make it easy for the co-broker to access your property. While you're looking outside, clean the gutters of debris! I can't tell you how many times, my buyers made comments on the forest growing out of the gutters.

2. Wash the siding and clean the windows inside and outside. Try a newspaper to dry the windows--I found it makes it "streak free".

3. Check your faucets and light bulbs. Leaky faucets mean lack of maintenance. Lights that don't turn on? Instead of the light bulbs, the buyers feel it's a switch or electrical problem.

4. Think safety for your prospects and guests! Remove items on the stairs, festooned extensions cords, slippery throw rugs and low hanging lights (place a table under these.)

5. De-clutter and re-arrange the furniture. Remove the spare chair or table if you don't use it and rearrange the sofa and chair to give the most of the floor space to see. Pack up those knicknacks and other non-vital decorations. Open up the bookcase shelves to 50% filled. A decorator friend told me that additional space could be for that cute knicknacks that ties in the decor. Another friend suggester consider painting the back of the shelves a slightly lighter shade of the same color. According to her, it ties the room together and opens the bookcase.

6. De-clutter the closets and pantry. Highlight the storage space, don't clog it. Buyers aren't being nosey, but seeing their storage possibilities.

7. Open up in the Daytime! Let the sun shine in. Light expands a room. In the evening turn on the lights because it's welcoming. Consider timers.

8. Make your bathrooms sparkle! Bathrooms sell homes, so let them shine. For added allure, display your best towels, mats and a nice clean shower curtain.

9. Watch your Pets. Dogs and cats are great companions, however not when your showing your home. Pets have a talent for getting underfoot, or running out the door. So do the unknowing guest a favor, keep Kitty or Spot outside, caged or at least out of the way. Smells are a problem, also. The litter box has to be clean, the dog bed washed. Please don't mask with the plug ins everywhere, it just doesn't smell clean.

10. Think Volume with Music. Rock and roll will never die, but blasting could kill a sale. Turn down the volume on the stereo or TV. 

11. Keep a low profile and please don't apologize! The co-broke knows her buyers and what's important to them, let the broker try to sell those features to the buyers. Every home has a short coming! Please do not highlight it...let the buyer decide and see.

12. Don't turn your home into a Second-Hand Store When prospect come to view your home, don't distract them with offers to sell the furnishings you no longer need and don't want to move. A discreet note near the highlight sheet makes some sense.

13. A carpet credit? New Carpet will help sell your home, not a carpet credit. Again, first impressions are important. If you have hardwood floors under the worn carpet, consider exposing the hardwood for the buyers to see.

14. An empty room? A end table and lamp would be nice with a silk arrangement in the corner or how about a picture in the corner for a focal point?

Great Beginnings at 2096 Sutherland Place, Hoffman Estates

View the Virtual Tour pictures!

In the heart of Barrington Square Subdivision, on a quiet cul de sac, resides this Piedmont model Single Family attached townhouse. Serviced by John Muir Academy Elementary School, and Eisenhower Jr. High, Hoffman Estates. Hoffman Estates High Schoolalso services the area with its award winning status. Attractive subdivision is well maintained by the association and is FHA APPROVED. This stately townhouse style 2story home is in a mid-street location facing south and offers new exterior doors and newer vinyl windows, finished basement, formal dining room and has been lovingly maintained through the years.

Wood laminate entry, separating the living room from the dining room, flows through to the formal dining room. Entrance the eat in kitchen with refinished pecan cabinets. Easy clean up will be yours with the custom ceramic tile back splash and newer counter top. Notice the new goose necked faucet. In 2007, the appliances were replaced with a built-in microwave, dishwasher, gas stove and refrigerator. The eating area views the private backyard and patio. There is a new backdoor with blinds between the glass. Across from the door is the powder room with new medicine cabinet and lighting. Here's the entrance into the finished basement which offers a great nook for your computer station.

Easy entrance into the recessed lit Living room with 3 yrs new carpeting. Freshly painted, too. Up the wood staircase with the same runner carpet is a hallway to the two bedrooms, and closet.

The double door master offers triple closet doors and organizers, ceiling fan with light kit, new thermal pane windows that pop into for washing. Entrance to the Jack & Jill updated bathroom. Windowed bath with new tub surround and glass shower doors. Plenty of lighting and cute glass corner cabinet. The other door leads to the other huge bedroom which has a double door closet, new windows and the same newer carpet.

The finished basement is divided between the recreation area, which has painted white paneling and the laundry/workshop and mechanical area. Plenty of storage here. The home is protected with American Home Shield Warranty until 9/2010 for your Peace of Mind. View more listing information at http://www.JanMcnulty.com/property/2096-Sutherland-Place-Hoffman-Estates-Illinois.

Waycinden All Brick Ranch

Location, convenience and wonderful condition! With shopping, expressway entrances and exits, metra stations, parks & schools all close by to make your life easier. Devonshire Elementary School, and Friendship Jr High are exellent schools for your children. Award winning Elk Grove High School with its high value per student services this area. Recent noteworthy improvements include 2009 NEW archectural roof, NEW furnace & central air! 

You'll notice the circular drive artfully secludes this quality all brick 2255 square foot home, which features 3 bedrooms, master suite, 1st floor fireplaced family room, separate dining room, unfinished basement and 2 car attached garage. The ceramic tile entry opens to the hardwood floored living room, hard wood floored family room as well as access to the garage and basement doors. Gleaming hardwood flooring with lovely bay window to the archway step up dining room for elegance and great flow. The dining room has an entrance to the company sized kitchen. Please keep in mind that the average ranch in Waycinden is 1400 square feet. You'll be amazed at our size and floor plan.

The owners updated with new silver hardware to coordinate the new stainless steel appliances. Huge picnic sized eating area views the cedar deck and fenced yard as well as the family room.  The beamed family room is highlighed with a floor to ceiling brick raised hearth fireplace with a lovely mantel. Three bedrooms, all with golden oak flooring and large closets for storage. Rare Master suite has walk in shower bath as well as a nice deep closet. Plenty of wall space for your furniture needs in the bedrooms. See more listing photos and info on http://www.janmcnulty.com/property/481-Dempster-St-Des-Plaines-Illinois.

Unfinished basement and storage galore. If you are looking for a separate room in the lower level, this L shaped concrete walled basement has a natural divider.

Jan's Gems on Des Plaines

The Des Plaines Fire Department anounced that an independant agent, ISO insurance services offices, has changed the classification for corporate Des Plaines from Class 3 to Class 2 as of March 1, 2010.

According to ISO, a community's investment in fire mitigation is a proven and reliable predictor of future fire loss. The better the rating a city has, the lower the cost for fire insurance. Des Plaines Fire Chief,Alan Wax stated, "the upgrade reflects the continuous dedication to improvement in public savety services by the City".

Individuals have been encouraged to call their insurance company to determine the affect of the new & improved classification.

New classes on CPR. cardo Pulmonary Resuscitation can be found by calling 847-391-5342. Des Plaines Fire Dept. offers Heartsaver CPT with AED, automated external defibrillator instructions.

Spring Cleaning?

Cubside collection of brance starts April 5 with a collection every month per zip code. Residents are reminded that the branch clippings must be on the parkway by 7 AM, bundles of 2 or longer, but no bigger than 6" in diameter. and not to obstruct the sidewalks and streets.

Calll Arc disposal for grass clippings rules.

Did you know that Cable Channel 17 broadcasts the City Council Meetings on the first & Third Monday starting at 7pm? New online video archives can be found at http://desplaines.org/video. Program scheducle is available by hitting this link.

The Frisbie Senior Center is assuming responsibility for the City of Des Plaines Meals on Wheels (home Delivery Meals Program.). Volunteers should call Dennis Rosa at 847-768-5944 for more information. Next door to the Frisbie Senior Center is the New Des Plaines Resale Store.