Can you handle being a FSBO?

Everyone is trying to save money.  You’ve probably seen a lot of people offering their homes For Sale by Owner to avoid paying a Realtor’s commission.  While this tactic works for some, it doesn’t work for everyone.  The spokesperson for ForSalebyOwner.com even had this to say, “It’s more work to sell your home without a broker.”   AOL Real Estate posted a great article on questions to ask yourself before you attempt to sell FSBO. Before attempting this, you need to be able to answer yes. I wanted to go over some of the main ones.

1.  Can you price it competitively?  People will skip right past a showing of your home if the house is priced too high.  Even if you spent thousands of dollars renovating over the past couple years, it’s hard to recoup that in this market.  Make sure you’re priced competitively based on other comparable sales in the area with similar features to your home.  You might need to have a Realtor pull information for you from the Multiple Listing Service.

2. Can you market it?  How are you advertising your home?  Besides the red and white sign in the front yard, how will people know it’s for sale?  More than 90% of buyers search for their home on the Internet.  You need a licensed Realtor to have it listed in the Multiple Listing Service and Realtor.com.  So make sure your home is getting the exposure it needs for people to contact you.  You need to be comfortable getting out there and spreading the word.  It’s like being your home’s own salesperson.

3. Can you be available?  If you’re gone all day at work and aren’t available to handle showings very often, going FSBO is probably not the best solution.  Many buyers still view homes during the day.  You won’t want to throw on a lockbox and give out the combination to complete strangers.  When Realtors do this, they verify the agent is licensed prior to providing that information.  You’ll want to be there to let all potential buyers in.  If this doesn’t work for your schedule, definitely consider hiring a Realtor.

4. Can you negotiate the forms?  A real estate lawyer can definitely (and should) help you with this.  You’ll also want to learn about how the process works beforehand, especially if you’ve never sold a home before.  You need to know about the different contingency periods, home inspections, and how long a buyer has to secure financing.  Before signing anything, consult with an attorney.

These questions should help you determine whether you’re capable of handling this on your own.  If you have any questions on the process or need to speak to someone, please visit me online.

Prep your home to sell in fall

I don’t know about the rest of you, but I can’t believe how fast this summer has gone by.  In two days, it’s going to be September.  It seems like it was just yesterday that school was ending for the summer.  Maybe it was the consecutive high temperatures we’ve had in Chicago, but this summer flew by.  So for those of you who will be putting your homes on the market for the fall or for those of you who have your homes listed but want a better chance of it selling now, here are a few tips to get your home sold this fall.

1.  I can’t stress the importance of curb appeal.  I’ve said it before and I’ll say it again.  I’ve had buyers decide not to look at the interior of a house because the exterior was so neglected.  Your home could look like the Taj Mahal inside, but if the outside isn’t taken care of, it probably won’t matter.  So make sure leaves are raked and clear of the driveway and walkways.   Keep the lawn mowed.  Nothing is more unappealing than a front lawn that looks like the rainforest.  Trust me; I’ve seen it.  Keep gutters free of debris so that they drain properly.  If you get snow early, make sure to shovel any area that a potential buyer will walk on.  Again, I’ve had people not able to reach the front door because of 12″ of snow blocking the path.  If your home is vacant, make sure to go back to take care of these items or hire a service to handle it for you.

2. Keep windows clean.  Nothing brightens up a room more than a sunny day.  When the sun is shining through those windows, it’s pretty obvious if they’re covered in grime or dust.  The house will look bigger and brighter if you open up curtains/blinds to let the sun shine through clean windows.

3. If you have rooms that are painted dark colors, considering lightening them up with something neutral, or even a light yellow color.  It will make the room feel larger, brighter, and even cooler, especially as it gets dark earlier.  Buyers will be able to get a better sense of what the room looks like if they come to view your home in the late afternoon/early evening.

More great tips can be found here.  If you’re ready to get your home on the market, I’d love to help you prep it for fall.  Please visit me online.

What’s most important in selling your home

I read a great article this morning in the Chicago Tribune. It talked about why sellers might be upset that the home they’re selling isn’t going under contract and why their neighbor’s home might be.  It listed some good points as to what will help get buyers through the door to get a sale.  Given the current housing market, homes aren’t selling as quick as they used to.  Market times are up, but given the right conditions, these tips will hopefully get your home to sell faster.  I want to go over a few of them.

1. Price.  This is the absolute most important reason why a home is not selling.  If you’ve had 30 buyers through the door and don’t have an offer yet, this is a good reason as to why not.  It’s probably overpriced.  This is not the right economy to “test the water” and list higher than market value for your home.  It will just lead to your home sitting on the market for longer and becoming stale for buyers.  If you need to sell quickly due to a divorce or relocation, for example, you will need to price your home below market value.  Make sure you discuss comparative properties with your Realtor as to what a good price should be.

The article also made a good point that you shouldn’t list your home for $299,900, thinking it will look better than $300,000.  You’re missing out on all the buyers who are looking for homes from 300-350 or 300-400K.  If you have a buyer looking from 250-300, your house will get noticed on both lists.

2) Curb appeal.  I cannot stress enough how important this is.  There’s a home in my friend’s neighborhood that just went on the market.  It looks like a jungle in the front yard where it’s impossible to find the front door.  It doesn’t take much time or money to trip the trees, rip out the weeds, and mow the lawn.  If I were a buyer looking for that home and I drove up for the first time, I wouldn’t even bother going inside.  So make sure your lawn is mowed, you have easy accessibility from the street or driveway to the front door, and even plant a few flowers with bold colors to make the front pop. 

3) Clear the clutter.  I’ve mentioned before how I’ve shown homes with dirty dishes in the sink, dirty laundry on the floor, and so much clutter in one room that you can’t even walk through it.  If you’re selling your home, now is the time to cut back.  Put some belongings in storage.  Clean out half your closet.  Make sure to remove family photos from the walls.  And do the simple things: put your dishes away, set the table, take your lotion and contact solution off your vanity and put it in a cabinet or drawer.  The less stuff of yours showing up, the better.

4) Internet marketing.  Make sure your home is being shown in the places where the buyers are looking.  It might be important for you to make sure your open house is showing up in the newspaper and there’s a big photo of your home there, too.  This is not where the buyers are looking anymore.  You want to make sure your Realtor is advertising on the proper sites: Zillow, Craigslist, Realtor.com, etc.  Ask any agent before you hire them what they do in terms of advertising and how many buyers will see it.  Find out how quickly the sign gets placed in the front yard.

These tips will help you sell a lot quicker.  If you have questions about if your home is ready for the market, please visit me online.

Congress considers possible real estate tax burdens

Congress is considering two new tax burdens, both of which will have a significant effect on real estate and real estate owners. 

The first will mainly affect those who are landlords or those who own rental properties.  Anyone owning real estate that collects rental income will be affected.  If you have had any work done by anyone on your rental property, you would be required to fill out the proper 1099 forms for all service providers who performed work on the property.  This can include regular handymen, roofers, electricians, painters, etc.  You must have paid them at least $600 in the last calendar year.  Landlords would be charged a penalty for failing to fill out these forms.  Most people haven’t used these forms before and could require them to have to hire a tax professional for assistance.  This creates a financial burden on many.

The second proposal is to tax carried interest rates at a higher rate than the current capital gains rate.  This is when you go to sell an investment property and are taxed on any money you have gained.  For example, if you bought a property for $100,000 and later sold it for $200,000, you have gained $100,000, which is what you’d be taxed on.  This money is considered a capital gains, and taxed at a lower amount.  Congress is proposing to get rid of the capital gains rate.

The National Association of Realtors strongly opposes these two proposals.  Aside from not wanting to see clients negatively affected by this, the market is still in flux.  We’re still dealing with many foreclosures and home values decreasing across the country.  These proposals will only delay getting the market back to a stable position. 

We’re asking for you to write to your senators and Congress representatives to let them know how strongly you oppose this.  I’ve included a sample letter below, thanks to Creative Real Estate Investing Guide.  Please let them know your thoughts on this issue.  You can find the contact information for your State representatives here. I’d also love to hear any comments.  You can leave a comment or visit me online.

Sample letter:

Dear [decision maker name inserted here],

I am a property owner and your constituent. Reports indicate that Congress may vote this week on a spending and tax measure that could include two harmful tax provisions directly affecting real estate. I urge you to oppose these changes.

The first would require that ALL landlords provide an IRS Form 1099 to all contractors they do business with if they pay that contractor $600 or more in any given year. The proposal would apply even to those who own just one property. This is a trap for the unwary. Since many of my clients are “little guys” looking to supplement their income with real estate investments, any proposal requiring them to file Forms 1099 would impose new expenses and subject them to penalties they are ill-equipped to pay. Often these small landlords don’t use tax professionals; if adopted, this proposal could force them to incur the expense of hiring tax professionals. This proposal is burdensome and overreaching. Oppose it.

I also oppose a proposed change to tax carried interest at ordinary income rates. A real estate investment however, is fundamentally different from a hedge fund or financial instrument investment. An investment in real estate is nothing like playing with other people’s money. Real estate is a fixed asset held for a long period of time. The worst thing about this proposal is that, for the first time, a particular type of real estate investment gain would no longer qualify for capital gains treatment. This is a terrible precedent. Oppose it.

The real estate industry, in all its commercial, multi-family and individual investment categories, is still very fragile and likely to remain so. These proposals are ill-advised, inopportune and potentially destructive. Keep our real estate market recovery on track by opposing these measures.

Sincerely,

[Your name here]

Coldwell Banker’s plan to extend the tax credit

As an agent of Coldwell Banker, I wanted to talk about what my company is doing to continue to stimulate the housing market.  With the tax credit expiring last week, starting on Saturday, they announced a Buyer Bonus Sales Event.  Since many agents had buyers who would have missed out on the credit if it had really expired when it was supposed to in November, Coldwell Banker decided to do something about it since it did expire on Friday.

Sellers participating in this event will offer a credit of 3% (up to $8,000) for buyers at closing.  The contract has to be signed prior to July 31, 2010, but right now there is no set deadline on a closing.

Jim Gillespie, the president and CEO of Coldwell Banker Real Estate LLC said, “Without restrictions such as household income caps, the Coldwell Banker Buyer Bonus Sales Event allows for greater participation for all homebuyers.  And our sellers have a unique opportunity to allow their home to stand out from the competition in their marketplace.”  So no one is limited by this event.  Anyone (first time buyers or repeat buyers) can take advantage of this bonus.

To find a home participating, you can go to the Coldwell Banker Web site and check the box labeled Buyer Bonus Properties in your search criteria.  As you drive around neighborhoods you’re looking at, you can also see those that have a special rider on their yard signs.  Feel free to call your local office to find out if the property you’re interested in is participating.

Sellers planning to sell their home and want to participate, be sure to let your agent know.  You’ll get the benefit of national television advertising, promotion on the Web site, as well as social media outlets such as Facebook and Twitter.

This is a great chance to get some money back if you were unable to participate in the government’s program.  If you’re interested in selling or buying, please be sure to visit me online.

New construction condos to quickly disappear

Do you have your heart set on all new wood flooring, stainless steel appliances, dark granite counters, and unbeatable views?  If you’re interested in purchasing a new construction condo in the Chicago area, now may be your last chance.  The availability of these condos is quickly coming to a standstill. 

According to this Chicago Tribune column, there are only 2 new buildings planned to go up in 2011: the 86-unit Ritz-Carlton Residences and the 198-unit Lincoln Park 2520.  In 2012, there are no condo projects planned at all.  This is all according to Appraisal Research Counselors’ report, which surveys the area bordered by North Avenue, Cermak Road, the Chicago River/Ashland Avenue and Lake Michigan.

In the past, on average, about 2400 new condo units are available for sale each year.  So next year we’ll see a total of 284 and in 2012 nothing?  That’s highly unusual for a city that sells thousands upon thousands of units each year. 

This information is good news for current condo owners who are hoping to sell and won’t have to compete with the amenities that new construction brings or the lower pre-construction/early construction pricing. 

It should also help stabilize the market a bit.  If all that’s available is condos for resale, those will end up selling (people need to buy), and we won’t have such a huge inventory of new, new, new … more units available than people looking.

I’ve actually been surprised at the number of new construction subdivisions I still see going up in the suburbs when I drive through.  A lot of that construction looks like it’s stopped midway, possibly because the builders have run out of money or just choose not to work in the cold.  The builders are stuck because they need to build to turn a profit but the number of people buying in this housing market has really dropped. 

If buyers can concentrate on purchasing resale condos and homes, it will help the market pick back up.  It will lessen the inventory until the market gets back on its feet and can start building new construction again. 

What are your thoughts?  Do you think it’s right that there’s nothing new planned for the city in the upcoming years?  Would you like to see inventory go down?  Please leave me a comment or visit me online.

HUD flipping rules

In an earlier decision to limit the number of home flippers, HUD stated that you couldn’t sell your FHA-insured home in under 90 days.  They were doing this to obviously discourage people from flipping.  They’re just reneged on this ban in a hope to stabilize the market a little bit.

I’m trying to understand why they would want to discourage flippers at all.  Won’t this help eliminate a lot of the foreclosures out there by having them be remodeled and updated and drive up values for homes? 

They say they have lifted this ban just temporarily. They’re leaving it in effect for one year.  So now buyers can use FHA-insured financing to purchase HUD-owned homes, bank-owned homes, or through private sales.  They will let them be resold as soon as the buyer want it to.

HUD is imposing a few conditions.  They include:

1. The buyer and the seller cannot be related in any way.  This prevents a dishonest deal from occurring.

2. If the buyer will obtain a big profit by selling the house quickly (20% or more than what they bought it for in the past 90 days), an appraisal must be done to determine if improvements are enough to justify a higher sales price. 

More information can be found on HUD’s Web site here.

As I said earlier, I think lifting this ban will mean good things for the economy in terms of raising house values, letting fewer foreclosures linger for too long on the market, and getting people buying houses again.  What are your thoughts?  Do you agree or disagree?  Please leave me a comment or visit me online.

Government proposal to help with short sales

If you’ve been a buyer looking to purchase a home and put an offer in on a short sale, you know that the paperwork and the wait times can be excruciating.  I’ve seen cases where buyers have had to wait months – as many as 6 – to hear from the lender about whether the short sale has been approved.  The Obama administration is working on a new proposal that would help streamline the short sale process and hopes to roll it out over the next few months.

As a reminder, a short sale is when the lender is willing to accept a less amount of money for the property than what is currently owed.  The lender needs to determine if they will make more money this way than if the home went into foreclosure by the homeowner no longer making payments and then being able to resell it.  This is what can lead to extremely long wait times. 

So what the government is proposing is quicker turnaround times.  They haven’t named a figure yet, but hopefully it will be a maximum of X number of days to get a response from the lender.  They’re also proposing uniform documents required by everyone.  No more specific paperwork for each lender that makes each short sale request different.  They’re proposing to pre-approved short sale terms.  This has the potential to mean that it will be accepted no matter what if it meets a certain percentage back to the lender or if the buyer has a certain amount of financing covered.  That’s still up in the air.

The proposal also includes financial incentives for everyone who takes part.  This includes $1,500 back to the homeowners to help out with relocation costs and having to move.  So a benefit to having to short sale your house will help a lot of people out.  Especially if they need to rent right away and don’t have any money at their fingertips.

Mortgage servicers would earn $1,000.  Investors purchasing the home would get $1,000.  That can help with a lot of remodeling costs, if they’re needed.  Even real estate agents wouldn’t be forced to cut their commission if the bank asked them to.  We’re still waiting to see all the details related to the plan, but the news seems positive thus far.  A streamlined process and money for all involved … what’s the negative?

I’d love to hear your thoughts on this.  Please leave me a comment or visit me online.  More info can be found here.

Tips for selling during the holidays

Now that Thanksgiving has passed, it seems like the Christmas and holiday decorations have started to go up.  If you are going to be selling your home this holiday season, I wanted to offer some advice to not deter buyers and to make sure it’s in selling condition.

1. Keep your decorations to a minimum.  I know that you love your 15 foot Christmas tree and it’s the focal point of your living room.  However, you want to make sure that buyers can see and appreciate each room for what it is.  You don’t want rooms in your home to be overshadowed by holiday decorations.  Buyers need to know the size and shape of a room and too much stuff can get in the way.  This is true with the exterior of the home, as well.  Don’t blind your buyers pulling up to your house.  Keep it simple.  The other reason you don’t want to go overboard is because not everybody celebrates the same holidays that you do.  It shouldn’t prevent someone from viewing or purchasing your home, but if you over do it, you could turn some buyers off.

2. Be wary of safety.  Make sure all plugs and extension cords and other plugs you have out for your decorations are safely tucked away.  Don’t cover staircase railings with decorations where buyers can’t grab on.  Hide all of your presents.  Don’t leave them out and wrapped under a tree.  You could get a curious child unwrapping your gifts before someone can stop them.

3. Make it easy to enter.  Keep your driveway shoveled and your walkway clear.  Throw down some salt if it gets really icy.  If you’re going to be out of town during the holidays, make sure you have someone planned to shovel for you.  I’ve had plenty of buyers unable to view a home because there was so much snow we couldn’t make it to the front door.  If you have buyers coming in from out of town, this could be their only chance to see your home.  Don’t risk losing that chance.

4. Along those same lines, make your home available.  I know it’s hard during the holidays to always want to show your home, especially if you’re entertaining.  However, try to move your festivities to another location so you don’t miss any showings.  

I’d love to her any additional tips you have for selling during the holidays.  If you are ready to sell, please be sure to visit me online.

Location near Metra boosts sales

trainWhile the housing market is in flux throughout the country and the Chicago area, there is good news for those of you that live near a Metra station.  According to a recent survey by Re/Max, housing prices in 2009 declined less in the Chicago suburbs that were located near the Metra than in other Chicago suburbs.

Great news for those in the Evanston area and other North Shore suburbs with locations near the stations.  There were three lines that had the strongest results: North Line (that runs through Evanston, Winnetka, and Lake Bluff), the BNSF (Riverside, Western Springs, and Lisle), and Heritage Corridor (Summit, Lemont, and Lockport).  The number of homes sold in these areas were less than the rest of the suburbs.  They also showed housing price declines of less than 7% and an increase of market time as less than 10%, much lower than the rest of the suburbs as a whole.

More results on the study can be found here.

So what does this mean for those in the area?  This is what sellers should do if they are listing their homes for sale:

1. Include your location to Metra in all remarks and advertising.  Advertise if you can walk to the station.  Let buyers know it’s only a 5 minute drive.  This is a huge benefit to buyers, especially those that are moving in from out of state and aren’t completely sure how they’ll get to their jobs in the city.  Even those that have gotten a new job might not know how easy it is to get downtown if they’re used to a previous job in the suburbs.  This can be a huge selling point.

2. To go along with that, insert a map to the Metra station in all of your brochures that are created for your home.  Show how easy it is to get to, and you might even want to include a Metra brochure with all the different lines and train schedules for your buyer.  If you’ve got a great looking station near you, include a few photos of that in your brochures, as well.  A map will definitely help prove how close you are.

3. Post flyers of your home at the Metra station, if possible, or hand out cards with your Realtor’s information to people you sit next to on the train.  You never know if the commuter next to you is looking to buy a home closer to the line!

For all map, schedules, and ticket information to provide to your buyers, you can view the Metra’s Web site here. If you’re ready to sell your home on the North Shore and need the expertise of a Realtor who frequently sells in the area, please visit my Web site.