Archive for September, 2010

Selling Your Chicago Home In a Down Market

September 23, 2010

Yes, there are still qualified buyers out there, but the supply of Chicago homes for sale is far greater than the demand for them, and today’s buyers can afford to be very selective. Your house may have excellent curb appeal and be beautifully staged, but if you really want to sell in this market, you must be realistic, flexible, and creative when it comes to pricing, availability, flexibility, and motivating the buyer to purchase your property.

PRICING:

A few years ago, you probably could have sold your home for what you think it is worth today–or even more–but that is most likely no longer the case. Of course, the thought of taking a loss is a bitter pill for you to swallow, but if that’s what the recent sales in your neighborhood indicate, you may have no choice. It is important that you and your Realtor, after reviewing comparables, be objective and set a realistic price that will draw buyers. Keep in mind that the buyer is looking for the best possible deal and will avoid even looking at an overpriced house.

AVAILABILTY/FLEXIBILITY:

  • Exposure and showings. Since so many potential buyers go first to the internet to scout out homes, make sure that your Realtor has your listing on his website. Also make certain that your Chicago home is always available (and ready to tour) for showings. A realtor’s lockbox is a good way to ensure unrestricted entry for agents.
  • Closing dates: Again, you need to be as accommodating as possible. Many buyers want a closing date as quickly as possible, and it is helpful if you are prepared to at least consider such a request.
  • Negotiating terms of the contract: If you have a solid offer from a qualified buyer, resist the temptation to quibble over relatively unimportant matters. If refusing to leave the drapes or an appliance is going to kill the deal, you may well regret your inflexibility later.
  • Timeliness: In the current market conditions, you no longer have the freedom to take a few days to think about an offer made on your Chicago home. Buyers will expect a response (preferably one with few, if any, counters) within 24 hours. Waiting longer than that too often results in a withdrawal of the offer.
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Chicago Home Buyer Protection Plan – Buy For The Future

September 16, 2010

It was only five or six years ago that Chicago home buyers bought with one thing in mind reaping an almost instant profit their investment. The market was appreciating by leaps and bounds and you could turn around and sell the property you just bought at a sizeable profit.

Short Term Investing

Many of the buyers I worked with back then were ‘twenty and thirty something’, upwardly mobile with lifestyles in constant flux. They bought with the idea that they would be in their new home from 3-5 years, but the reality was often shorter (2-4 years). Job changes, marital/partner changes, income changes, increase in family size, no longer wanting roommates, tired of the neighborhood, and rapid appreciation instigated many moves, and buyers bought for the short term knowing they could easily sell with a profit, and move on to something that was better suited. They invested for the short term. At the time, short term was a wise investment.

Long Term Investing

In today’s market, I have these same ‘twenty and thirty something’ Chicago home buyers, but I am advising that they buy for a longer term. Short term real estate investing is not where it is at. For instance, I am working with two newly wedded couples who are planning a family. One is on the price cusp between a really great 2 bedroom condo or a 3 bedroom, which has the size they will require in a few years, but is older, or in a lesser valued location.  My advice is to buy with their future size needs in mind. They can’t just think about what their needs are for the immediate future or even 2-3 years, but need to think longer term…4 to 6 years.

Another couple I am helping buy a Chicago home loves penthouse condos, and have already committed to a 3 bedroom, but are realizing that they should adjust their taste to accommodate their future need for few stairs because carrying the baby, car seat, stroller up 3 flights of stairs will be impractical in 2-3 years.

Should I Invest In a Chicago Home

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FHA Announces Changes In Mortgage Insurance Rates For Chicago Home Buyers

September 9, 2010

Congress has authorized FHA to change the amount charged to borrowers for both the Up Front and the Annual Mortgage Insurance (MI) premiums. These changes as outlined in Mortgagee Letter 2010-28, are effective for all FHA case numbers assigned on or after October 4th, 2010.

Here are the six things you need to know about these changes if you are buying a Chicago home:

  1. The MI premium changes apply to purchases, regular refinances and streamline refinances only (reverse mortgages have different MI premium changes).
  2. The current Up Front MI premium is 2.25% of the loan amount and the new Up Front MI premium will be 1.0% of the loan amount for all standard FHA programs.
  3. The current monthly MI premium is .55% and the new monthly MI premium will be .90% if the Loan-to-Value is GREATER than 95% on 30 year loans. Since most buyers put only the minimum 3.5% down this applies to most loans.
  4. The current monthly MI premium is now .50% for Loan-to-Values EQUAL to or LESS than 95% on 30 year loans and the new monthly MI premium will be .85%.
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Chicago Foreclosure Trends – July 2010

September 3, 2010

There were 39,006 Chicago foreclosure homes for sale with 5,252 new foreclosures in July 2010. The average selling price of a Chicago home was $271,493 in July and the average foreclosure selling price was $117,816, a savings of $153,677 according to RealtyTrac.com.

Chicago Foreclosure Geographical Comparison

Chicago foreclosure activity in July was lower 0.19% higher than national statistics, 0.07% higher than Illinois statistics, and 0.06% lower than Cook County numbers.

Chicago Foreclosure Activity by Month

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