Chicagoland Home Buyer & Seller News & General Real Estate Information
The Value of a Real Estate Professional
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Value of a Real Estate Professional
Why hire a professional real estate agent to help sell your property? Do you have the time, experience, sources of information, and contacts to do the job yourself? Would it go as smooth as it could? Would it give you a more personal time? Would you obtain a higher price? Here are just a few areas in which a professional real estate agent earns his or her commission:
Pricing Considerations
A professional’s insight in determining a pricing strategy for your property can keep you from missing an opportunity by undervaluing or wasting time by overpricing. Experience evaluating competing properties and market trends is a first ingredient for the best transaction experience.
Marketing Expertise
· Preparation. Your agent is skilled in recommending repairs or cosmetic work that have proven to minimize time on market and maximize both prospect interest and sales price.
— Exposure to the public. Your agent will know how to use flyers, open house days, and especially mailing to and meeting with ex-clients and other qualified buyers. The National Association of REALTORS® studies show that that 82% of real estate sales are the result not of advertising, but of agent contacts through previous clients, referrals, friends and family, and personal contacts, including…
— Exposure to other industry professionals. Your agent will utilize a Multiple Listing Service or other cooperative marketing networks. Once your property is listed, it is statistically likely the buyer will be the client of another agent associated with yours.
— Advertising: media and frequency. It takes experience to know what works in advertising. Ads generate phone calls to the real estate office but statistically have minimum effectiveness selling a specific property. Overexposure of a property in any media may give a buyer the impression the property is distressed or the seller desperate.
Security
Working with a real estate agent ensures showings will be supervised. You can instruct unchaperoned buyers to call your agent for an appointment so they can be prescreened, you will be safe, and you can do your final polish before the showing.
Negotiating
— Middleperson. Most buyers prefer to negotiate with someone they perceive as an unbiased, not emotional, and professionally trained. They are more likely to express objections to agents with the hope of resolution, when they otherwise might move on to another property rather than talking to you directly.
— Objectivity. Evaluate proposals privately without compromising your marketing position.
Monitoring, Renegotiating and Closing or Settling
— Overwhelming volume of steps. The process of appraisals, inspections, and financing involves a lot of possible pitfalls. There are many required legal forms and processes.
— Experience reading and following escrow instructions. Instructions must be clear and complete. Your agent is the best person to objectively help you communicate these issues and move the transaction to closing (or settlement).
— Inspectors and other professionals. Your agent can meet specialists and negotiate regarding repairs needed to complete your contract. Industry contacts provide resources for workpersons in many areas with knowledge as to their historical skill and reliability.
Foreclosure Fraud Video
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View this Freddy Mac video to get the low down on Foreclosure Scams.
What Is "Seller Rent-Back"?
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What Is "Seller Rent-Back"?
 In home purchase transactions, there are many times when the buyer and the seller are simply unable to agree upon a specified closing date. The Real Estate Agent involved can negotiate a 'rent back' period that is agreeable to both parties. This means the transaction technically closes, the loan for mortgage financing is funded, and ownership of the property is transferred into the buyer's name. However, the buyer does not take occupancy of the property until several days later. Instead, the buyer sets up a rental agreement in which the property is leased back to the seller for a temporary period that everyone has agreed upon.
While this strategy is fairly common, it is important to make sure the seller is not occupying the property in a lease agreement for more than 30 days* after the close of the purchase transaction. This would constitute a big problem for the new homeowner. After 30 days, the lender would view this as a non-owner occupied purchase, and it would cause the terms of the loan to change radically.
*This requirement can vary depending upon the lender. Always verify that the timeframe is permissible prior to drafting such an agreement.
The Home Equity Line of Credit
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The Home Equity Line of Credit
 Home equity lines of credit have become increasingly popular, and there are many types of loan programs available in this genre. This type of credit line is not meant for day-to-day expenses as a credit card would be, however, many consumers use their home as collateral to obtain an equity line of credit to pay for higher ticket items such as educational expenses or home improvements.
Borrowers may want to compare the advantages of a traditional second mortgage over an equity line of credit. But they should not compare these programs based on the Annual Percentage Rate (APR) alone. The APR in an equity line of credit is based only on the periodic interest rate, and does not include other charges such as points, maintenance fees or transaction fees. Conversely, a second Trust Deed takes all points, fees, and other charges into account when calculating the APR.
If someone you know is interested in an equity line of credit or a traditional second loan on their mortgage, I can provide them with a spreadsheet to compare available loan programs to review with their financial advisor.
Preparing Your House for the Market
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Preparing Your House for the Market
 If you're selling your home, make sure your home has "curb appeal." Remember, you can't change a first impression. If your home looks like a diamond in the rough, think about putting a small investment into cleaning up the outward appearance.
Imagine that you are seeing the property as a potential buyer. You'll want to do a little yard work - clear away dead shrubbery, and trim your trees and lawn. Weed the flower beds or plant some flowers that will bloom in season. Make sure the driveway is not stained, and if you can't afford to paint the home entirely, at least make sure the front door and immediate entryway is immaculate.
Fresh and clean are still the keywords to making a good first impression once the potential buyer walks through the door. Unless a particular window is facing an eyesore or a neighboring building, open the drapes and let the sun shine in! Put your dog in the back yard or garage so he's not jumping on the new people who just walked in.... they might have allergies! There is much you can do to improve the look of your home, without investing a great deal of money.
Dealing with Debt After Retirement
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Dealing with Debt After Retirement
 Reverse mortgages designed to help "house rich, cash poor" seniors meet their day-to-day expenses have gained popularity. Equity is taken out of the home, so debt increases and equity diminishes over time, (unless the property value increases and offsets this use of equity).
Many lenders offer reverse mortgages, and most are set up so that there is no monthly payment as long as the owner or co-owner(s) reside in the home. There are no minimum income requirements, and most plans allow the owner to retain title to the property until they have lived in a different permanent residence for at least 12 full months, sell the property, die, or the end of the loan term is reached.
The Home Equity Conversion Mortgage (HECM) is the only type of reverse mortgage insured by the Federal Housing Administration (FHA). Even if the original loan on the home was not an FHA loan, the reverse mortgage can be.
Seniors should first consider all their options and take a realistic look at monthly expenses. The AARP warns not to take too big of a chunk out of home equity, as this may affect the ability to collect Social Security Income (SSI). As an alternative, the retired home owner can consider downsizing to a smaller dwelling, or relocating to a less expensive neighborhood. Visit http://www.aarp.org for more information.
Home Seller Information on Showings & Open Houses
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Showings and Open Houses
Planned open house appointments will allow you to time to prepare. But oftentimes, the window of opportunity to expose your property to a motivated buyer can be small. So every time you leave your home, make sure it is ready for an unexpected showing.
General Preparation
When preparing your home, think about the techniques used to show builder’s model homes or what you might do to prepare for honored guests.
- Review pointers from “First Impressions” checklist, particularity regarding cleanliness, clutter, and repairs – interior and exterior.
- Create as light, cheerful and serene an environment as possible.
- Open drapes and light lamps including those in closets, basement or attic.
- Add a welcoming touch by filling candy dishes and putting out fresh flowers.
Bedrooms
- Make beds, put clothes and toys away, keep decorator pillows orderly.
- Turn blinds so slats are uniformly open. Put on light if room is dark.
Bathrooms
- Put out a clean hand towel, fresh soap and soap dish.
- Put commode lid down and ensure tissue supply is adequate.
- Potpourri dish can provide a nice sight and scent.
Kitchen
- Put away last minute dishes and conceal countertops articles.
- Simmer a few drops of vanilla on stove.
Dining Room
- Arrange inviting centerpiece.
- Consider setting the table with fine china and linen.
- Light chandelier.
Living Room/Family Room
- Straighten pictures on walls.
- Adjust couch cushions and throw pillows.
- Dispose of newspapers and drink containers, and polish tabletops.
- Light fireplace in winter.
Entryway
- When exiting just before buyers arrive, turn around at front door and see what the prospect’s first impression will be. What is the first thing you notice from that vantage point? Is it an asset?
Notify your neighbors of scheduled open house days, and assure them they’ll be welcome. Their eagerness to discover decorating ideas for their own homes may actually result in them turning up a buyer among their friends.
Reasons That Sellers Overprice
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REASONS THAT SELLERS OVERPRICE
A. Ego Involvement
Most sellers feel their home is unique. Their emotional feelings about the uniqueness of their home lead them to overprice it.
B. Others “Gave Theirs Away”
Most people feel that they can strike a better bargain than others did in selling their home. This feeling of superiority leads them to overprice their home.
C. Market Trends Have No Relavance
Sellers have the feeling that their house is unique, and think that it won't be affected by market trends. The seller might believe that the fact that similar other houses in the area sold for less is not relevant for their house.
D. Misinformation
Often sellers become the victims of misinformation and end up overpricing. The sources of such misinformation include friends, relatives, neighbors, other agents, and the Internet, etc.
E. Costs and Appreciation
Usually sellers overestimate the cost of additions and upgrades to their house and the appreciation in its value. They price their house to recover the total cost of additions and upgrades. Appreciation is relative to the marketplace and how their house fits into that market.
F. Recapture All The Improvement Costs
Sellers like to recover all the costs they incurred over time in house improvements. Usually they inflate these costs and end up overpricing.
G. Financial Needs Determine Value
Rather than realistically pricing the house based on facts, many sellers relate the price to their needs. Thus if their needs are high, they set a higher price for their house. If a seller were moving to an area where house prices are higher than the value of their existing house, the sellers may overprice the existing house.
Mold Fears in the Home
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Mold Fears Overgrown Says Fed Study, Should We Test Buyers Instead Of Houses?
"Though the experts said mold and indoor dampness were associated with respiratory problems and symptoms of asthma in certain susceptible people, they found no evidence of a link between mold and conditions like brain or neurological damage, reproductive problems and cancer. They based their conclusions on a review of hundreds of scientific papers and reports but warned that the research was limited and that more studies were needed." "Panel Finds Mold in Buildings Is No Threat to Most People," The New York Times, May 26, 2004
The Chicken Littles of the world suffered a set-back last week when a lengthy study by the federal government showed that for most people household mold is about as dangerous as spoiled ketchup.
For several years, worries about mold -- the successor to overblown and unfounded asbestos and radon fears -- has been making its way through the media and legal circuits, producing both fees and trepidation along the way. Now buyers and sellers with common sense need merely turn to the Institute of Medicine, a part of the federal government which "strives to provide advice that is unbiased, based on evidence, and grounded in science."
The IOM tells us what we already know: Mold is everywhere and has been with us since humankind first moved indoors.
"Mold spores are regularly found in indoor air and on surfaces and materials -- no indoor space is free of them," says the IOM in a new report, Damp Indoor Spaces and Health.
Given that every cubic foot of indoor space has mold, it follows that all of us would be wildly sick if mold -- by itself -- was a general health hazard. This just isn't the case.
The better approach is to think of mold in the same way we regard bee stings and allergies to peanuts, serious medical threats to a few but worries of little if any consequence to the rest of us.
Mold plainly produces allergic reactions in some people, and some reactions can be severe. But most people, most of the time, have few if any difficulties.
Here's what the study found:
- There is "evidence of an association" between household mold and upper respiratory (nasal and throat) tract symptoms, cough, hypersensitivity pneumonitis in "susceptible persons," wheeze, and asthma symptoms in "sensitized persons."
- There is "limited or suggestive evidence" of an association with "lower respiratory illness in otherwise healthy children."
- There is "inadequate or insufficient evidence to determine whether an association exists" between household mold and dyspnea (shortness of breath), asthma development, airflow obstruction (in otherwise healthy persons), mucous membrane irritation syndrome, chronic obstructive pulmonary disease, inhalation fevers (nonoccupational exposures), lower respiratory illness in otherwise healthy adults, acute idiopathic pulmonary hemorrhage in infants, skin symptoms, gastrointestinal tract problems, fatigue, neuropsychiatric symptoms, cancer, reproductive effects, rheumatologic and other immune diseases.
What's interesting is this: The symptoms -- or lack of symptoms -- associated with a damp house and a damp house with mold are virtually identical.
From a real estate perspective, the federal study suggests that the time has come to seek a better balance between buyers and sellers.
Buyers routinely demand appraisals, title exams, surveys, and home inspections. Sellers want to know if purchasers have the cash and credit to buy the property.
But in addition, why shouldn't sellers seek to limit future mold claims?
Sellers might want to consider a new real estate contingency: Buyers and all prospective residents of a home should be required to obtain medical tests within 10 days of making a purchase offer showing they are free and clear of any significant adverse reactions to household mold, spores and fungi.
The failure to take such tests would automatically end any seller liability for such conditions. And, if the test results are positive, seller liability would again be terminated because the buyers have a previous condition, know about the condition prior to closing, and are on notice regarding the problem. If the afflicted buyers withdraw from the sale, fair enough -- they should get their deposit back in full. As a matter of full disclosure, of course, the results of their tests would have to be revealed in any future home purchase or lease.
"It is impossible," admits the Environmental Protection Agency, "to get rid of all mold and mold spores indoors; some mold spores will be found floating through the air and in house dust."
However, mold requires moisture, so one way to at least limit mold is to check for leaks, seepage and dampness and to make repairs and clean-up as required. Mold may not be a problem for most of us, but proper housekeeping can make it less of a potential concern for everyone.
Written by Peter G. Miller
Seller Spruce Up Tips
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WHAT DOES YOUR HOME LOOK LIKE THROUGH
THE EYES OF A BUYER?
This is an important question to ask yourself when preparing to sell your home. The following checklist will give you an idea of what should be done to your home so that it looks its best.
Outside
Invest in landscaping where it can be seen at first sight. A well manicured lawn, neatly clipped shrubbery and cleanly swept walks create a good first impression. Cut back over-grown shrubbery that looks scraggly or keeps light out of the house. Keep lawn closely cut, edged and free of weeds. Paint your house if necessary. This can do more for sales appeal than any other factor. If you decide against painting, at least consider painting front shutters and window frames. In winter, walks should be free of snow and ice. Inspect roof and gutters. Any missing shingles to replace? Repaint/wash front door and garage door. Doorbells and porch/outside lights must be in working order.
Living Areas
Have all plaster in top shape. Fix cracks, nail pops and visible seams in drywall. Check ceilings for leak stains. Fix the cause of the damage, repair and repaint. If painting and decorating, stick to conventional white and easy to work with neutrals. If you have a fireplace, clean it out and lay some logs in it to make it look inviting. Wash windows and replace any cracked or broker glass; make sure all windows open/close. Replace burned out light bulbs. Be sure every light switch works. Straighten up the closets, get rid of excess, store out of season clothes; closets look larger. Use room deodorizers to eliminate musty odors. Lubricate sticking or squeaking doors.
Kitchen
Most Important room in the house.Make it bright and attractive. If dull, paint cabinets and put up new curtains. Remove any appliances that you keep on your counters (toaster, coffee maker, can opener), remove canister sets and all knick-knacks. Clean counters make the room look larger. Leave a luscious aroma in the kitchen, i.e., vanilla, cinnamon-apple tea, etc.
Bathroom
Repair any dripping faucets. Replace old caulking around tubs, showers. Provide fresh, colorful towels. Keep sinks and mirrors shining. Remove all personal items (make-up, medication, etc.) from counters and sink tops. Use special cleaning products to remove all stains from toilets, tubs and sinks. Use of potpourri, flowers and tasteful deodorizers enhance your bathrooms.
Basement, Attic, Garage
Clean out attic, basement and garage and dispose of everything you are not going to move. Package everything you won't need until you are settled in your new home. Make sure there is plenty of light on the stairs to the basement. If your basement is dark and gloomy, paint ceilings and walls a light color. Vacuum the garage floor and stack items against the walls to make it appear larger.
Home Showing Instructions
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WHEN YOUR HOUSE IS BEING SHOWN
• Keep draperies and shades open to let in light and make rooms appear
larger.
• Remove and/or replace items not included in sale, if possible (chandeliers)
• Tag items not included that cannot be removed (water softeners)
• Turn on all room lighting
• At night turn on porch light and outdoor lighting in front and back
• Neatness makes a room look bigger. Avoid clutter.
• Keeps all steps clear of hazards
• Wash dishes, put away clothes, straighten up newspapers, etc.
• Make up beds with attractive spreads.
• Keep pets out of the way when showing. One type of prospect is annoyed,
another's attention is diverted.
• Avoid having too many people present during inspections. The potential
buyer will feel like an intruder and will hurry through the house. Do not allow
children to tag along on the tour.
• Keep any toys in children's rooms.
• Keep the radio, stereo, TV turned down.
Remember to be a seller you have to look at
your home like a buyer
8 Mistakes Sellers Can Make
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8 Big Time Mistakes
That cost you money when selling your home
.
#1 Basing asking price on needs or emotion rather than market value. Many times sellers base their pricing on how much they paid for or invested in their home. This can be an expensive mistake. If your home is not priced competitively, buyers will reject it in favor of other larger homes for the same price. At the same time, the buyers who should be looking at your house will not see it because it is priced over their heads. The result is increased market time, and even when the price is eventually lowered, the buyers are wary because "nobody wants to buy a house that nobody else wants". The result is low offers and an unwillingness to negotiate. Every seller wants to realize as much money as possible from the sale, but a listing priced too high often eventually sells for less than market value.
#2 Failing to "Showcase" the home. A property that is not clean or well maintained is a red flag for the buyer. It is an indication that there may be hidden defects that will result in increased cost of ownership. Sellers who fail to make necessary repairs, who don't spruce up the house inside and out, and fail to keep it clean and neat, chase away buyers as fast as REALTORS® can bring them. Buyers are poor judges of the cost of repairs, and always build in a large margin for error when offering on such a property. Sellers are always better off doing the work themselves ahead of time.
#3 Over-improving the home prior to selling. Sellers often unwittingly spend thousands of dollars doing the wrong upgrades to their home prior to attempting to sell in the mistaken belief that they will recoup this cost. If you are upgrading your home for your personal enjoyment - fine. But if you are thinking of selling, you should be aware that only certain upgrades are cost effective. Always consult with your REALTOR® BEFORE committing to upgrading your home.
#4 Choosing the wrong REALTOR® or choosing for the wrong reasons. Many homeowners list with the agent who tells them the highest price. You need to choose an experienced agent with the best marketing plan to sell your home. In the real estate business, an agent with many successfully closed transactions usually costs the same as someone who is inexperienced. That experience could mean a higher price at the negotiating table, selling in less time, and with a minimum amount of hassles.
#5 Using the "Hard Sell" during showings. Buying a home is an emotional decision. Buyers like to "try on" a house and see if it is comfortable for them. It is difficult for them to do if you follow them around pointing out every improvement that you made. Good REALTORS® let the buyers discover the home on their own, pointing out only features they are sure are important to them. Many sales are lost by overselling. If buyers think they are paying for features that are not particularly important to them personally, they will reject the home in favor of a less expensive home without the features.
#6 Failing to take the first offer seriously. Often sellers believe that the first offer received will be one of many to come. There is a tendency to not take it seriously, and to hold out for a higher price. This is especially true if the offer comes in soon after the home is placed on the market. Experienced REALTORS® know that more often than not the first buyer ends up being the best buyer, and many, many sellers have had to accept far less money than the initial offer later in the selling process. The home is most saleable early in the marketing period, and the amount buyers are willing to pay diminishes with the length of time a property has been on the market. Many sellers would give anything to find that prospective buyer who made the first, and ONLY, offer.
#7 Not knowing your rights and obligations. The contract you sign to sell your property is a complex and legally binding document. An improperly written contract can allow the purchaser to void the sale, or cost you thousands of unnecessary dollars. Have an experienced REALTOR® who knows the "ins and outs" fully explain the contract you are about to sign to you, or have your lawyer review it before acceptance.
#8Failure to effectively market the property. Good marketing opens the door that exposes the property to the marketplace. It means distinguishing your home from hundreds of others on the market. It also means selling the benefits, as well as the features. The two most obvious marketing tools (open houses and print advertising) are only moderately effective. Just 1% of homes are sold at open houses, and advertising studies show that only 3% of people purchased their home because they called on a print ad! Agents use these tools to attract future prospects, not to sell the house. The right REALTOR® will employ a wide variety of marketing activities, emphasizing the ones believed to work best for your home.
Being aware of these Big Time mistakes will help ensure
you receive top dollar for your home when the time
comes to sell your home!
Pre-Inspection
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SMOOTH MOVE MARKETING PROGRAM
When was the last time you crawled under the eaves of your attic? Checked your furnace’s heating chamber for cracks? Inspected the areas beneath your bathrooms for hidden wood damaging leaks? Looked for termites, wood borers and fungus?
Unless you answered “recently,” your buyer’s home inspector may be the first person to see these areas in years. Are you willing to bet your home sale he won’t find any problems? If so, just toss this letter aside.
But if you’d rather problem-proof your sale, keep reading to learn how Sandra Nickel’s Smooth Move program can eliminate post-contract inspection hassles and even put more money in your pocket at closing!
Long before your buyer’s inspector can make them into a really big deal, the Smooth Move inspection identifies all the pesky little items that need your attention in your home. If you’re handy, you will probably fix most of them yourself.
And should the Smooth Move uncover some larger problem, you’ll have plenty of time to get competitive bids. And you can have the work done at regular rates instead of paying time-and-a-half or even double time because closing is just a day or two away!
How a REALTORŪ Can Help You
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Selling your home?
It's a complex transaction that takes time, effort and expertise. It takes a real estate professional.
Here's how a REALTOR® can help you:
A REALTOR® knows the current real estate market and can help you set a realistic, competitive price.
A REALTOR® is familiar with the local home loan market, knows if seller assistance is advisable, and can help you decide the type of financing that's best to expedite your sale.
A REALTOR® knows how to figure the approximate net proceeds from your sale, based on types of loans, your outstanding balance, and closing costs.
A REALTOR® knows how to add sales appeal to your home at low or moderate cost.
A REALTOR® knows where to find prospective buyers. Most homebuyers prefer to work with a real estate agent. Serious prospects are 'qualified' as to their affordable price range before they are shown through your home.
A REALTOR® can tap an even larger market, if necessary, through referrals and marketing techniques.
A REALTOR® frees you from the problems associated with showing your home. The REALTOR® handles all phone inquiries, makes appointments, and does the actual showing and follow-up. Your time is your own and your home is not exposed to anyone who has not been pre-qualified.
A REALTOR® is a skilled salesperson who knows how to merchandise your home effectively.
A REALTOR® maintains objectivity in responding to possible criticisms by the buyers and in presenting offers and counter-offers until an agreement is reached.
A REALTOR® knows how to help the buyer meet local financing requirements and go about obtaining a mortgage loan.
A REALTOR® can familiarize you with the closing procedures by explaining them all in advance.
A REALTOR® usually attends the closing with you.
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