Losing value may inhibit your desire to sell

140772_FullWith the recent news that home sales did increase slightly in the month of August, unfortunately, it wasn’t so true for the Midwest in general.  The Midwest home sales decreased about a total of 6%.  Now, I hate to be the bearer of bad news, but I want to make sure you’re educated before you decide if now is the right time to sell.  If you have a need, such as a relocation, new job, divorce, budget concerns, etc., by all means, you need to sell. 

However, there is a very interesting article from Smart Money that will give you some signs that your home may be losing value.  This should help you determine if now is the right time for you to sell, especially if there’s not a strong need.  Losing value in a home will not affect you unless you have an immediate need to sell.  If you plan on being in your house for years to come, there are no worries whatsoever. 

The article states, “‘Individuals who are staying put for at least the next five to seven years will likely recoup the lost value of their home,’ says Amy Bohutinsky, a Zillow.com spokeswoman.”  She goes on to say to be wary of borrowing money from your mortgage, however. 

So what are the signs?  Some are more obvious than others.

1. Foreclosures in your neighborhood.  Some of these may be easy to notice because of riders on the real estate signs that say “Foreclosure” or “Bank Owned.”  You may have heard gossip from another neighbor.  You can contact your local Realtor to look up the property to see what the status is.  As homes go into foreclosure, it creates a domino effect in the neighborhood, effectively lowering surrounding homes’ values.

2. Homes with excessive market time.  Any home sitting on the market without a sale for more than 3 months can be another factor.  It’s generally a good time for the seller to lower their price, which means that a price for another home in the area would most likely be lower, unless there is a significant difference in features of the home. 

3. Homes in disrepair.  This is one you probably haven’t thought about.  If you see homes in your neighborhood in need of a new roof, siding, have missing paint, etc., there’s a good chance that homeowner may be unable to afford to make those repairs.  Unfortunately, this could affect the value of your home.  It may be worth it to have a neighborhood pow-wow to determine if anything can be done to help everyone out and keep home values steady for the time being.

If you have questions about your home value, or need to know if a neighbor might be in foreclosure, please be sure to visit me online.

When to consider backing out of a real estate transaction

Let me just preface this blog by saying that you should always consult a real estate attorney prior to signing any contract you are not comfortable with or you have questions about.  In Illinois, a real estate contract has a clause written in allowing for five days for an attorney to review a contract prior to it becoming finalized.  However, this is not a reason to say you no longer want the property.   As a buyer, once you sign that contract you should want to move forward with it.  There may be some reason to consider calling off the deal.

void1. Home inspection issues.  After your home inspection, you may find some items that are in need of repair.  Some could be as simple as replacing an outlet, fixing a stove burner, or replacing a light bulb in a closet.  However, you may run across some larger issues such as a damaged roof, broken furnace or water heater, or even structural problems.  If you’ve asked the seller to repair the items you want fixed and the seller refuses, this could be a reason for walking away from the deal.  Especially if there are items that are considered unsafe or unsanitary.  Some sellers will choose to offer a credit in lieu of a repair so that you can fix it yourself.  Consider this option if it works for you.

2. Liens.  When conducting a title search on a property, you will find out if the home has any liens against it.  This can happen because a seller refused to pay a contractor’s bill or taxes haven’t been paid.  Make sure that someone conducts a search for all liens prior to closing.  You don’t want to move forward with a deal to later find out that it’s your responsibility to pay the debts because you now own the house.

3. Permits.  Another important item to research is whether the seller obtained all permits for any renovations or remodeling they did on the home.  This can be found out with a call to the City or Village Department.  This could hurt you if you sell down the road and the buyer asks the same question.   You would be responsible since you are now the owner of the house. 

4. Mortgage problems.  In Illinois, you’re guaranteed to no longer be responsible for purchasing a house if it turns out that you cannot obtain financing.  You won’t be required to buy the house if it turns out that you can’t get an approval for the amount you’ve requested.  It’s always important to have a pre-approval prior to writing a contract so you don’t spend unnecessary time and money.

Sellers should think twice before backing out of a contract because they get a higher price from another buyer.  I’ve seen too many of those deals fall apart and then the seller comes back seeing if the first buyer is still interested.  By this time, they’re usually long gone and under contract on another property.  Definitely consult with your Realtor and attorney prior to doing this.

Another important thing to consider is that if you follow the rules of your contract, you should be able to obtain your deposit back if you do choose to back out.  If you walk away for another reason, you might forego your monetary deposit.  Again, it’s imperative that you consult a real estate attorney to help you through your transaction. 

If you have more questions on your real estate contract or are ready to purchase a property, please visit me online.

Positive Chicago real estate news

Lots of interesting news to come out of the Chicago/Illinois area this past week.  The first is extremely beneficial to buyers purchasing a home and getting mortgage assistance.  Bankrate.com conducted a recent survey of closing costs for buyers throughout the country.  It turns out that Illinois was located extremely close to the bottom on that list.  What great news for those with empty wallets these days!  empty_wallet49 states were surveyed and Illinois ranked 43rd on that list.  Lenders were surveyed in the largest city in each state and asked about closing costs for a buyer purchasing a $250,000 house with a $200,000 house.  So understand that this buyer would have a $50,000 down payment, or 20%.  Combining points, title fees, underwriting, title insurance, and various assorted other costs, the total amount of closing costs in Illinois would average $2,486.  The national average was $2,732.  Texas came in at the highest and Nevada came in at the lowest. 

Important things to take away from this survey are that this amount doesn’t include escrow fees or taxes.  You’ll also want to consult with multiple lenders to determine costs prior to choosing one to go with for your mortgage.  Ask them what the common costs are and how much their company charges.  It varies from lender to lender on the miscellaneous fees.  You can also talk with a mortgage broker who will determine which company that they work with can offer you the best deal.  So don’t go with the first referral you get.  Definitely talk to them but put your feelers out to other companies, as well.

Other interesting Chicago real estate news this week is the merger and acquisition of several local real estate companies. 

Warren Buffett’s company, Berkshire Hathaway, purchased Koenig & Strey.  Koenig & Strey has 21 local offices and around 900 agents working for them.  They’re going to keep the name Koenig & Strey.  They’re also looking to expand into more areas that their agents live in and are familiar with.  In a recent Chicago Sun-Times article, Doug Ayers, president of the company stated that the company is seeking to expand into communities where its agents live, noting that Koenig & Strey opened offices a year ago in Schaumburg and in the far north side Edgebrook and Sauganash neighborhoods.

Prudential Preferred Properties has acquired Rubloff, and will now be named Prudential Rubloff Properties.  They have 17 offices throughout the area and will be the fifth-largest brokerage in the area based on dollar volume of transactions.  More information on this deal can be found here.

If you need some recommendations for mortgage lenders that can help you obtain financing or need assistance finding a property to meet your needs, please be sure to visit me online.

News you can use for first time buyers in this market

As I’ve made aware several times, the time to take advantage of the first-time buyer tax credit is before December 1st.  The offer of the $8,000 tax credit is currently set to expire at the end of November, and you would need to close on your residence on that date or before in order to qualify.  If you’re in the market to purchase your first home (or you haven’t owned a home in the past 3 years), these important facts will help you learn everything you need to know.  For more on who is eligible for the tax credit and more specific details, be sure to click here.

1. Understand that the Mortgage Disclosure Improvement Act is now in existence.  This act went into effect July 31st.  It basically states that if there are additional costs that affect your APR, you need to get a new Truth In Lending statement a week prior to closing.  What this means to you is that your closing could be delayed.  If you know of any changes that could affect your mortgage affordability/interest rate, be sure to let your Realtor and mortgage lender know as soon as possible.  Some of these changes could be a change in your take-home pay from your job, an FHA home inspection, etc.  first-time-home-buyer

2. Don’t forget about closing costs.  You may know that you can afford the down payment for your home, but don’t forget about those additional costs such as attorney fees, lender fees, title fees, and transfer tax, if it applies.  Be sure to speak to your lender up front about these costs and know what to expect.  Your lender should be able to come up with an amount you need to bring to closing prior to the closing occurring.  In Illinois, you will need to have this money as a cashier’s check made out to yourself.  And remember to bring your photo ID.

3. Be careful who you choose as your Realtor.  It’s great if you have a friend of a friend of a friend or your cousin’s mother’s boyfriend’s neighbor is a Realtor.  They could end up being a great agent for you.  On the other hand, they may not.  You’ll want to use someone who is knowledgable about the area you’re looking in.  If it’s a someone a family member or friend gave you the name of but they work in a completely different market, chances are you’ll be better off with someone local.  Make sure you ask for references and get referrals for a Realtor from people you trust, or those you know who closed in the past year.   As a first-time buyer, you might also want to work with someone who specializes in working with first-time buyers and is familiar with the tax credit.

4. Make sure as a buyer you know that you do not need to pay for a Realtor’s services (this is true in Illinois.)  If you are interested in having Realtor representation for for sale by owners, a Realtor may ask that you cover some of their commission if the seller refuses to do so.  If you are looking at homes in the MLS, the sellers pay the commissions out of the money they make on the home.  Understand this as you’re negotiating with them. 

5. The first closing can be overwhelming.  As you’re in the room looking at the stack of papers that could total the number of pages in an encyclopedia, take a deep breath.  The mortgage company requiers your signature on several pages just making sure you understand how the process works.  Make sure you have your attorney accompany you to the closing.  They will explain to you each paper that you sign so that you feel comfortable.  Don’t hesitate to ask questions.  It may be overwhelming, but it’s wonderful being handed the first set of keys to your new home! 

View this great article for more tips. If you do have more questions, please be sure to visit me online.