Rates Drop

The 30-year fixed-rate average sank to 5.82 percent, and the 15-year fixed rate fell to 5.4 percent. The 1-year adjustable held at 5.53 percent.

That's good news if you want to buy a home...

The Nadir of Short Sales

I've written a lot about short sales in the last few months. While they certainly remain an option for distressed homeowners, they are not without their frustrations--for the seller, buyer and agents. Two examples from the last few weeks:

1. On one of my short sale listings, the bank rejected the contract (at $195K,) saying that the property was worth at least $235K and they wouldn't take anything less. Unfortunately, the property simply will not sell at that price. If it was worth $235K, it would have flown off the market in April when it was listed at $229K. The bank has put my seller in the impossible position of demanding more than the property is worth.
   
2. I have just taken another short sale listing and have been informed by the bank that the maximum will pay in brokers commissions is 4%--substantially less than the industry standard of 6% which was listed on the contract. This will no doubt affect the amount of traffic we receive (many buyers' agents don't appreciate getting paid less than industry standard for their work and simply won't show the listing.) Realtors provide the valuable service of facilitating the sale of property and our commission is the price of doing business. By cutting that commission, the bank has again put my seller in an impossible position.
   

If either or both of these properties goes into foreclosure, the bank will receive far less than they would have had the homes sold with a short sale discount. This is a lose, lose, lose situation for everyone.

Real Estate Facts to Consider

There has been plenty of negative news about the state of the market right now. Much of it is justified but also overblown. Here are some things to consider that may bring some perspective on the soft market we are seeing today.

• Even though national housing prices are likely to dip around two percent this year, 2007 will still be the 5th best housing year on record.
• The East and West Coast typically flex higher and lower than the middle of the country, so it's not surprising that when the housing boom started back in 2002, prices skyrocketed in California and Florida, while going flat in other places.
• Rapid price gains are unsustainable, and will always overcorrect before settling back to normal rates of appreciation.
• Those believing that price gains would go on forever are the ones who were likeliest to get hurt -- speculators and homebuyers who bought beyond their true means.
• Most foreclosures and delinquencies are concentrated in the subprime market, and those who qualify for conventional financing are still seeing extremely favorable interest rates.
• Homeownership is not a quick in and out purchase like stocks. Wealth is built over the long term, which is one reason why homebuying is heavily subsidized by tax savings and generous loan programs that enable people to get into homes without large downpayments.
• Stocks and houses aren't the same. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield nearly $24,000. The same investment as a down payment on a $200,000 home at a normal appreciation rate of 5 percent would return nearly 5 times the stock market return, or over $110,000.
• While some markets have reported major losses in home values, they also have extenuating circumstances such as major job loss as is the case in Detroit, or overspeculation, as in parts of Florida. For many communities, home values are going up, not down.

I would also emphasize that real estate remains a "local" game. If you have questions concerning your market, consult a professional in your area.

First Time Home Buyer's Workshop Nov 29th

Thinking about buying a home but don't know where to start?

Have questions about the home buying process but you don't know who to ask?

Do you want reliable information but not a high pressure sales pitch?

Attend this free First Time Home Buyer's Workshop. It's a great way to educate yourself about the home buying process--giving you greater confidence as you move forward toward your goals for home ownership.

In my presentation, I will cover a variety of topics including:

* The home buying process from start to finish.
* Financing options for first time homebuyers.
* Tax information on bridging the gap between renting and buying.
* Samples of a different types of properties across different price points.

Date: Thursday, November 29th
Time: 6 pm, lasting roughly 1 hour with ample time for questions
Location: Chase Bank 3335 N Ashland, Chicago, IL 60657
I will be joined by Adam Lawrie, Home Finance Specialist with Chase.

Please register at http://www.agentbarclay.com/homebuyersseminar.html
Seating is limited so be sure to register early.

News and notes for Monday Nov. 5, 2007

With woeful news out about the economy adding to an already unsteady housing market, there are many theories as to what are the root causes of buyer and seller squeamishness. Of course, there is plenty of blame to go around too. Loan officers? Appraisers? Greedy, unrealistic sellers? Promise the moon Realtors? Broderick Perkins says it's for sure not the media's fault.

Speaking of the blame game, appraisers may have to pay the piper over the issue of inflating their appraisals. Appraisers are supposed to offer an independent opinion of a property's value--resisting any pressure from banks to give a specific number in order for the loan to go through. Now there is news that the attorney general of New York, Andrew Cuomo, has sued a major appraisal management company for allegedly giving in to pressure from one of the largest lenders in the country, Seattle-based Washington Mutual.

David Reed writes that the Mortgage Reform and Anti-Predatory Act of 2007 is a bad idea at the wrong time.

On a sad note, I'm not the first Rock and Roll Realtor. That would be Linda Stein. Blanch Evans writes of her amazing live and her horrific, untimely death.

Man, that's about all the news I can take today. Hope tomorrow is a little brighter...

Mortgage Confusion

A survey conducted on behalf of the AFL-CIO yielded some surprising and ominous returns regarding what homeowners understand about their mortgages.

The survey conducted by Peter D Hart Research Associates questioned 500 homeowners with adjustable rate mortgages. It found that a majority of those surveyed fail to understand the most basic points of their loan programs:

• 18% of those surveyed don't know their current interest rate
• 20% don't know how their rate is determined
• Almost half (47%) don't know what factors will determine the amount of their rate adjustment
• 73% don't know how much their monthly payment will increase the next time their rates adjust.
  

Not surprisingly, many of the respondents expressed dissatisfaction with their lenders or loan officers:

• 49% say they aren't very informed about their mortgage terms and conditions
• 56% don't recall their lender telling them how much they would pay when their rate adjusts
• 40% say they don't know where to turn for help and guidance should they experience difficulty paying their mortgage.
• 77% say the government should do more to regulate the mortgage lending industry in order to protect consumers
  

In general, borrowers who obtained their loans directly from a lender or bank fared better than those who worked with a mortgage broker.

Not surprisingly, lower income borrowers were worse off than their high-income counterparts. Regarding their rate adjustment:

• 80% said they will likely have to cut back on essential items once their rate resets, compared to only 20% of high income borrowers
• 37% of low income borrowers said they may face foreclosure
• 18% say they may have to give up health insurance because of payment increases

Following the results of the survey, the AFL-CIO has announced a "Save My Home Hotline" 1-866-490-5361 to offer free advice and counseling from the US Dept. of Housing.

More Short Sale Info

I've written a bunch about short sales recently. They are, unfortunately, becoming common in today's market. Here are two more articles that shed some light on this type of transaction. Phoebe Chongchua writes that short sales may be the solution for delinquent homeowners. And Broderick Perkins discusses the tax ramifications of a short sale.

I will be posting more information on this trend in the coming days. If you have questions, don't hesitate to email me and I'll be happy to discuss your specific situation further.

HUD rules against seller funded down payments

Lew Sichelman writes that HUD says "no" to seller-funded down payment assistance. Sellers are, by FHA rules, not allowed to fund the downpayment necessary for any FHA loan. DPA's are a way for buyers to roll the required 3% down payment into their mortgage by writing a contract for 3% above the agreed upon price. The seller then gifts the 3% surplus to a non-for-profit organization who, in turn, gifts that money to the buyer. It's 100% legal and it really works.

I should know. When I bought my first home in 2001 I was a hard working professional musician with outstanding credit and no money for a down payment. My lender told me and my wife at the time about AmeriDream, one of the non profits mentioned in the article. 7 years and two houses later I have been very successful in my personal real estate ventures. I never would have been able to do it without programs like these.

I hope that the FHA reconsiders their position. I am living proof that there are responsible would-be home owners out there who can and should buy a home--they just need help with the downpayment.

Pricing strategy

Correct pricing is crucial to selling a home in any market. Particularly in slower times, it is even more important to price the home realistically based on the most up-to-date market statistics. Many home sellers are obsessed with the idea of over pricing their homes in order to leave "negotiating room" or because they "have to get" a certain value for their home.

The harsh truth is the market doesn't care how much you need from the sale. Period. A good real estate agent will give you a detailed analysis of your home's value based on recent closed sales. If the fair market value of your home is less than what you need you have options: not selling, selling and paying the difference at closing, readjusting your plans for your sale proceeds, etc. The one option you can't count on is a buyer giving you more than what the home is worth!

Of course, it is typical to list the home slightly above market value, but it is important that the seller be realistic in their mark up. In Chicago, the average home sells for about 4-5% less than list price. Therefore, homes that are obviously marked up higher than 5% are at risk for being ignored. By pricing close to market value, you actually increase your chances for showings, offers and, ultimately a quick sale at the best price a seller could reasonably expect.

M. Anthony Carr recently wrote in the online news service Realty Times:

"If you price right, actually you don't have to come down at all. Many of the houses in our market area are selling for the asking price. These are the houses belonging to sellers who dared to meet the buyers in the market instead of hoping the buyers would come up out of the market to make an offer.

Forget nudge room, fudge factor, and space for negotiation. Place the house on the market at a bold price -- then hold the line."

Truer words have rarely been spoken. You home sellers out there take heed!

Great painting tips

Today's Trib featured a great article on painting techniques for tricky jobs. I wish I had read this article a few months ago--before I painted my entire house!

It talks about cutting in around windows, painting radiators and ceilings as well as a few other hard to reach places. To read the full article, click here.

It's the first of the month. Do you know where your assessments are going?

So you bought a condo. You pay the mortgage. You pay these things called assessments. You wish they weren't as high but whaddya gonna do? You're not really sure what they pay for. You're not really sure how they are figured. You just pay them and move on.

Look, it's time to take your head out of the sand. I am amazed at the number of condo owners who don't have a clue what their monthly assessments are paying for or what their association's annual budget is. The condo association exists to defray the cost and responsibility of maintaining the building. But you as an owner should know what your association is doing and how it is spending your money.

Consider these questions:

• Who is your management company or is your building self managed?
  
• What do your monthly assessments pay for?
• When does your condo association have their regular meetings?
  
• Who is your association president? Who is the treasurer?
• Do you have--or have easy access to--copies of your association's current budget proposed budget for next year, rules, declarations, etc?
• How much does your association have in reserves?

Condo associations come in all shapes and sizes--from small, self managed groups that meet for coffee once a month to large buildings whose assessments pay for many common-area amenities. You don't need to be the board president but you should, for your own sake, know what you are paying for. If you don't, it's time to start asking some questions. Get in touch with your president and/or treasurer. Request current copies of the budget breakdown. Attend the next meeting. It's your association--make it work for you.

FHA loans--a great option for many first time buyers

Did anybody catch Robert Siegel's piece on the resurrection of FHA loans on All Things Considered last night? It was an absolutely wonderful exposition on the Federal Housing Administration's history dating back to the Great Depression. In it, he discusses how FHA backed loans--once a popular choice for first time home buyers--fell out of favor in the late 90's. Consumers instead preferred the easier, quicker loan packages offered by mortgage companies that catered to high-risk buyers with poor credit, low income or no money for a down payment. Now that many of those companies have closed their doors do to poor management (in part because they recklessly handed out high risk loans to buyers who then defaulted,) the tried and true FHA loan is once again proving a valuable option. If you are looking to buy a home and considering what kind of loan program would work for you, do yourself a favor and listen to this piece. You can hear an audio recording of the story by clicking here.

Short Sales

Unfortunately, I am talking with more and more homeowners that are in trouble. They either bought their property or refinanced it at the height of the market a few years ago. Their expectations of appreciation haven't been met or, in the worst cases, their home's value has decreased slightly. Now they are faced with the prospect of selling their home and, after paying closing costs, they won't be able to pay off their loan.
A short sale is exactly that--the lender will essentially forgive a portion of the debt allowing the homeowner to sell the home for less then what they owe the bank. As you can imagine, banks aren't too thrilled at the prospect of losing money but they have their reasons to take this option as well. They might make more on the short sale than if the property goes into foreclosure, for instance.
For a more thorough explanation of short sales, here is a great article that outlines the basics of a short sale. As always, getting the right representation is essential. Working with both an attorney and a Realtor who has experience with short sales is crucial to a smooth, successful transaction. If you have any questions about short sales, in the Chicago area, please don't hesitate to email me: jbarclay@prupref.com

Apartment rents are going up

It stands to reason that, as the housing market slows, more and more people are renting. Many are would-be first time home buyers that just aren't ready to make the leap yet. Still some are homeowners that are choosing to return to renting for various reasons (that is the subject of a whole other post.) In any case, as the demand for rental units rises, so then does the cost of renting.
Nationally rents rose again during the second quarter with the Western US leading the way. Over time that has begun to hit renters where it hurts. Rising apartment rents have put a crimp in renters' budgets, according to data from Apartments.com. A recent survey taken on the website showed more than 60 percent of respondents spending more than the recommended percentage of their income on rent, with 20 percent devoting more than half of their annual salary on rent.
As for Chicago, if rents continue to rise, it is reasonable to think that we may again see an rise in home sales--just as we did in the "boom years" of 2001-2005. However, with more and more restrictions in the mortgage industry, first time buyers will probably not be given as much financial latitude as they had during the boom. So, while you may be renting now, be sure you are building up some savings for a down payment!

Preparing your home for an open house

Buyers are drawn to homes that appeal to their senses. This is important to remember when preparing your home for an Open House. Through sight, sound and smell, buyers should leave your home with a lasting impression. Here are some tips to showcase your home in the best-possible light.

Exterior
Start outside by inspecting the front of your home from across the street. Does it have curb appeal? It should look inviting, with a trimmed lawn and flowerbed and a freshly painted front door. Polish door handles and knockers and replace worn items such as a rusty doorbell. Consider adding a new doormat and flowering plants at the entrance. Do the windows need cleaning? Be sure to remove oil stains from the driveway.

Next check the side and back yards. Add some flowering plants to the back as well. Rearrange the outdoor furniture to look inviting. Put away gardening tools. Tidy around the grill area.

Interior
Now focus on the inside of the home where cleanliness, space, smell and lighting are key. First, get your house in tip-top condition by cleaning and clearing away clutter. Steam clean and vacuum the carpet. Make sure your floors are waxed and shiny. Touch up nicks on walls and make sure the porcelain sinks and tubs and metallic fixtures shine. Your kitchen and bathrooms should pass the white glove test. Be conscious of any lingering odors such as smoke, pets or strong-smelling foods. You may need to air out your home prior to the Open House. Consider grinding fresh lemons in the garbage disposal or even baking chocolate chip cookies. And don’t forget to empty all trashcans.

Next, set the mood. You want buyers to be able to picture your home as their own. Consider rearranging the furniture so that rooms look more spacious. Add accessories from rooms with too many furnishings to those that appear bare. Look at your countertops in the kitchen and bathrooms and the tops of your bureaus. Do they seem cluttered? Clear away and store as much as possible. The idea is to make your home appear spacious.

Lighting is also an important factor in creating an inviting atmosphere. Bright lights provide a cheerful environment and make a small space appear larger. Pull back all the drapes and open the blinds. Turn on all the lights. Make sure all the light sockets have working bulbs and install the maximum-wattage bulb that is safe for that fixture. For rooms that you want to have a warm, cozy feeling, use softer lights.

Don’t forget little touches such as fresh flowers, lighted candles in the bathrooms, new logs in the fireplace, or a bowl of fresh fruit on the kitchen counter. You may even want to set your dining room table with color-coordinated table settings.

An Open House is a terrific way to show your property to many people in a short amount of time. However, keep in mind that buyers may see seven or eight homes in a single day. The most memorable home will be the one that seemed the brightest, the most spacious and the most cheerful. So, don’t rely on buyers to use their imagination.
Help them capture it. Work with your real estate professional to get more tips on creating an unforgettable home.

How Important is a Home Inspection?

Should a buyer get a home inspection for a home they are buying? Should a seller order a home inspection prior to putting the property on the market? There are advantages for both. Simply put, a home inspection is a visual examination of both the physical structure and major systems of the entire home including: walls, ceilings, floors, decks, exterior covering, the roof, foundation, insulation and ventilation, plumbing, electrical, heating and air conditioning. It is not an appraisal to validate the value of a home, nor a pass/fail exam. A third-party inspector will give a report on the physical condition and suggest repairs.

Buyers
For buyers, a home inspection clause in the written offer that makes the purchase contingent upon the findings can provide peace of mind. If a serious problem is found, it allows room to renegotiate the purchase price or “opt-out” of buying the home altogether. However, this is usually uncommon. Typically, the seller will already have told the buyer about any major problems. More often, inspections reveal less serious defects that aren’t enough to warrant backing out of the transition. However, knowing about these minor problems can prevent major disasters down the road. In addition, if specified in the inspection clause, the cost of the repairs can be at the seller’s expense.
Another advantage to having a home inspection is it offers buyers an opportunity to become familiar with their new home and learn about maintenance to help in its upkeep. Although not required, it’s recommended that buyers be present during the inspection. This allows them to observe the inspection; ask questions about the condition of the home; and receive an objective opinion.

Sellers
For sellers, conducting a home inspection (or pre-inspection) before listing their homes puts the control back into their hands. When the buyer inspection finds problems, it can impede negotiations and cost the seller more in repairs. By having a pre-inspection, the seller can help eliminate any surprise findings after an offer has been made. The seller can make repairs before placing the home on the market and possibly even increase the value of the home.
A pre-inspection can also serve as a great marketing tool. Sellers are required by law to disclose any known defects in the home. Having a pre-inspection report available for buyers tells them that the seller has nothing to hide. It also gives them a clearer picture of the condition of the home.
If there are major problems found during the pre-inspection, it gives the seller an opportunity to disclose the condition up-front, making it less likely for the buyer to pull out of the deal or try to renegotiate the price.
Knowing the true condition of a home can bring peace of mind to buyers and sellers; and be one less hurdle in the home buying and selling process. Talk to you agent about when you need to contact a home inspector or to get a referral to a qualified professional.

Question and Answer

Here is a question posed to me last week by a friend of a past client. It touches on an area that a lot of home owners have questions about: how the work the do now (or don't do now,) will impact the future sale of their home. Read on to see my answer.

Q: I am wanting to put a 5' wooden fence in my backyard to replace the 4' chain link. My boyfriend wants us to fence the south side and the back (at the alley), but leave the long section on the north side with the chain link and just plant shubbery.

I understand his desire to save some money in the immediate, but I wonder if when it does come time to sell (not planning on being there forever-prolly only about three more years), I am concerned that a potential buyer might see a partial fence as a job not completed.

Do you think it matters?

A: You pose a really good question. I think I understand the nature of it but just to be clear: you & your boyfriend are weighing the merits of spending more $$ now to enclose 3 sides of the back yard with a fence vs. saving $$ by only enclosing 2 sides with the fence and planting shrubbery to enclose the 3rd, while still leaving the chain link. Is that correct? If so, let me ask a few questions...

1. Are the shrubs already planted on the north side? If not, you need to realistically weigh the costs of the planted vegetation. I'm neither a gardener nor a professional fence-maker (?) but I do know that plants cost money. If your main reason is to save money, make sure you are working with all the figures. You may only be saving a fraction of the cost over the fence (esp. if you are having the shrubs professionally installed.)

2. How is the rest of your house as far as upkeep, upgrades, curb appeal, etc. Please be honest--it's for your sake not mine. Remember that buyers are ultimately looking at a package deal. You may have state of the art kitchens & baths but if the home looks like crap from the street, many buyers might never make it through the door. Likewise, if you spend a ton of money on the outdoor space but the inside shows relatively poorly, you might be limiting yourself to a small pool of buyers.

Without seeing the house (and you are welcome to send me pics,) I'm inclined to say spend the extra $$ and complete the fencing. A common complaint I hear from buyers who reject a property is that the seller's "cheaped out" on a repair or upgrade. If the buyer gets that impression then they are probably going to ask themselves "what else did they cut corners on?"--not a question you want to have to answer when you are trying to sell your home. Also, the buyer will on some level be thinking "if I buy this place, I'm eventually going to want to replace that chain link..." While you will not get a dollar-for-dollar value on your improvements your home will probably show better. That will lead to a quicker sale and, quite possibly, a higher sale price.

Hope this helps.

Smaller may be better

I ran across an interesting article on an emerging trend of building smaller homes. That's right, smaller. No need to adjust your monitor...
I don't know how much we are going to see of this in Chicago. Let's face it, even the newest, biggest McMansions that are built on double-wide lots (50'x125') pale in comparison to your typical suburban monster in the square footage department. Even your typical Chicago single-family home built on a standard lot (25'x125') ranges from about 900-2000 sq. ft., depending on how many levels of livable space there are.
It's interesting to note that many builders are responding to many consumers' concern for more storage space. Is it because we need that much more to keep ourselves happy or is it that we just can't through any of it away?
To read the full article, click here.

Under Contract!!!

For those of you following my own home search story, I have found a home! I just went under contract and we are in the middle of attorney review. We had the home inspection already so things are moving along smoothly.
The contract negotiations went very smoothly. I even found out later that the other agent on the deal is a drummer too! Small world. Seriously, it's nice to do deals with pleasant, intelligent agents. We are of course both trying to get the best deal for our clients but it doesn't have to be an unpleasant experience.
The house itself is a registered bungalow (for more information about Chicago Bungalows, historical designation, how to register and the benefits of registering, visit www.chicagobungalow.org.)
The house is in fairly good shape but the home inspection turned up a few items that we are still negotiating on. I cannot stress enough the importance of getting a home inspection. It's the best way to safeguard your investment from a safety aspect. It also gives you an idea of any hidden costs associated with future repairs. Finally, if nothing else, a good inspector will walk you through "the care and feeding of your new home." It's like an instruction manual on the home, mechanicals, appliances, basic repairs, etc.
Assuming the rest of attorney review goes well, I should close on Aug 1. So...who wants to help me move?

Are you covered?

A few years ago, I came home from a routine grocery run to find that my garage door was left open (perhaps by myself, although I think my tenant with whom I share the garage was the culprit. Either way, it doesn't matter now.) I was horrified to discover that some very valuable drums that I had left in the garage while I ran my errand had been stolen. Horrified? I was downright heartbroken! However, I found out--to my surprise--that my homeowner's insurance actually covered personal property in the detached garage. My insurance company did me right and wrote me a very decent check to cover my loss. I even briefly considered naming my next child State Farm Barclay..."

However, many people aren't so lucky. Unfortunately many people find out after a loss or catastrophe that they were not covered for the damages incurred. I would encourage everybody to review their homeowner's policy and find out if it needs updating and adding or reducing coverage.

Here is a list of points to consider from the National Association of Insurance commissioners.

NAIC's InsureUOnline website offers the following tips:

• Add insurance coverage as you enhance the value of your home, and acquire expensive possessions, such as furniture, computers, stereos and televisions and other electronics. Keep in mind computers and other high-end electronics may require special coverage.
• Alert your insurance company when making any major home improvements that cost $5,000 or more. Update your homeowners insurance policy to reflect the new enhancements and prevent being underinsured.
• Maintain your property by clearing clutter and other dangerous conditions to reduce the potential for liability suits. In many states, you could be held legally responsible for the actions of anyone who drinks in your home and then has an accident in your house or after leaving it. Your policy should protect you against lawsuits due to these types of liability issues.
• Backyard items, such as a trampoline, pool, hot tub or spa may require you to increase your liability coverage through an umbrella policy.
• As you acquire more valuables -- jewelry, family heirlooms, antiques, art -- consider purchasing an additional "floater" or "rider" to your policy to cover these special items. They're typically not covered by a basic homeowners or renters policy.
• It's a good idea to make an inventory of all of your personal property, along with a photograph or video of each room. Also, save your receipts for major items and keep them in a safe place away from your house or apartment so you'll have them if you need to file a claim and substantiate value.

I still haven't found what I'm looking for.

Buyer's market?!? Looks like somebody forget to tell the people selling houses that I want to buy! Seriously, there are some pretty stingy sellers out there who aren't budging much off their asking price. I have made offers on two separate properties now and haven't been able to reach terms with either one.

I am finding out what I already knew about the nature of a slow market. Chiefly, it all depends on the seller's motivation/need to sell. Sellers who have a lot of equity in their home (and thus, more financial flexibility to give on their asking price,) are more able to strike a deal with buyers. Sellers who, for one reason or another, do not have much equity are forced to be stubborn and get the price the need to get whether the market bears that out or not.

In any case, the two properties in question were decently priced but a little more than what I wanted to spend. Still, it doesn't cost me anything to write an offer so I put in a fair but admittedly low offer. Alas, neither seller was in a position to give and, at the end of the day, no deal was to be had.

However, the third time is a charm, right? I've got my eye on a place that is priced very attractively and has what I'm looking for. I am in the process of reviewing comperable sales to determine what I want to offer for the home. Check back soon for an update...

It's so important for buyers to take advantage of the information that is out there. If you are serious about buying a particular property, make sure your Realtor does his/her homework: find out what the home is worth; when did the current owners buy and what did they pay for it? What improvements have been made since they bought? Try to find out why they are moving. Have they had any offer on the property thus far? A good, tech-savvy agent can access many of these answers online. The more info you can get, the better you can negotiate your price!

Buying a foreclosure property

A lot of people ask me about foreclosure properties. With all the news of mortgage defaults and homes going into foreclosure, the general sentiment is that this is an easy, cheap way to get a house. My response to that is generally, "no" and "probably not." Here's a great article that details what to look for and what to watch out for if your are considering buying foreclosure property.
Click here to read.

And you may say to yourself: "this is not my beautiful house!"

So my house hunting has begun in earnest. Man are there a lot of crappy homes out there! There are also some nice ones, too. I count myself lucky because, being in the biz, I'm used to reading and analyzing listing sheets very quickly. Thus, I've been able to process a lot of data and weed out homes, areas, etc online. That being said, at some point you just have to walk into a place and decide if it is a good fit. Some random thoughts on my search so far:

I'm basically looking in two different price ranges: "the fixer upper" price range and the "nothing more needs to be done with this house for a while and it's a damn good thing because after I buy it I won't have any money left in the bank" price range. I have been house poor before and I'd rather not revisit that state.

I cannot stress enough the importance of driving by prospective properties before a buyer considers purchasing. I've saved myself a lot of time by eliminating properties based on a "drive by." Now you have to know what to look for: a home could be beautiful on the inside and just need some new siding or tuckpointing. I'm also looking at the neighborhood and asking myself "is this the block I want to raise my daughter on?" If that answer is "no" then I don't care how nice it is inside.

As for safety, I find myself referring to the CPD's citizen I-cam site. It has proven invaluable for seeing what (if any,) crimes are being committed on certain blocks. Note: I'm trying to post the link to this site but the server is busy. Check back later...

And one more thing...Ever since I started blogging about my own homebuying experience, I seem to be inundated with friend requests from mortgage/real estate myspace cites. Coincidence? I think not. I guess if you use a few keywords like "I'm gonna buy a house," you can expect to get that kind of solicitation. If any of these people seemed reputable that wouldn't be bad but they all look pretty shady.

Go on. Take the money & run

So a few weeks ago, I was approached by a business owner in my neighborhood who wanted to know if I was interested in selling my home. I was not but I told him that I would listen to his offer. He asked me how much I would for it.

Whoa, stop right there. Don't try this at home. I am a professional! Seriously, because this is my business, I have a lot of experience in pricing homes--I do it day in day out. This is where most homeowners could easily get "taken" by selling their home for much less than its true worth because they don't know it's true worth.

Not only did I know what my home was worth, I knew that any potential offer would have to be well above that amount for me to take seriously. So I was in a great position to "name my price" knowing that after all, I didn't have to move. After much consternation on my buyer's part, he agreed to my price. He admitted that he planned to raze the property to use the land for parking. It will be sad to see my house go but I have to be pragmatic: If my home were to appreciate at a realistic rate (keep in mind the market is in a slump,) it would be another 5 years before I could see this much for my home.

Another upside to selling to a developer is that I could also set my closing date, other terms and have scavenger rights to my home. Simply put, I could take or sell off everything in my 2 flat: appliances, cabinetry, light fixtures, wood trim, doors, etc.

So now that the contract is signed, I have to find a new place to live! more on that next time...

A new client

An interesting client

If you have read my blog with any regularity, you have noticed that I don't tell too many war stories of my everyday life as a realtor. This is largely due to the fact that I don't want to talk about my clients too much online out of respect for their privacy.

Well it just so happens that I am working with a client who doesn't mind having his story shared throughout the blogosphere...and that client is me!

Through a strange turn of events, I am in the process of selling my residence and buying a new place to call home. Among other things, this affords me the opportunity to tell a very real account of what it is like to sell one home, buy and move into another--the good, the bad and the hideously ugly wall paper...

So check back over the next few weeks to view this online "diary" as is were. I'm excited to see how this all turns out!

Learning From Recent Mistakes

First, a few questions...and be honest:

Do you keep track of your monthly budget and expenses?
Do you check your free credit report at least once a year?
Do you pay off your credit cards regularly?

Well, if you said no to any or all of the above, you're not alone. It seems that most Americans of our generation don't really take their finances that seriously. Consequently, many of these same people find themselves in financial distress as a result of the current housing slump.

However, with every adverse situation comes an opportunity to learn (a "teaching moment" in parent lingo.) Here is a great article on some basic steps we should all be taking to get our financial house in order. Click on the link to read it.

6 Smart Buys to Help Save the Planet

By Kara G. Morrison
The Detroit News
Published April 19, 2007

Sunday is Earth Day, and with that in mind, we went out looking for six great buys that are almost a no-brainer for building a better planet:

1 Compact fluorescent lightbulbs. This may be one of the easiest ways we can save the planet. Replacing just one regular bulb in your home with a compact fluorescent one would save enough energy to light more than 2.5 million homes for a year, according to the Environmental Protection Agency. Sure, they cost a tad more, but they last up to six times longer. Manufacturers are making them look like regular bulbs, not just the squiggly designs. Four compact fluorescent 60-watt bulbs are $11.69 at Costco.

2 Water clock. Target.com and ThinkGeek.com sell an amazing little digital clock that runs on water. No batteries, no cords. Just fill up the four chambers on the back and set the digital display. $15.99 at Target.com.

3 Hand-crank flashlight. Brookstone sells the Readylight hand-crank flashlight radio. Crank for 30 seconds for up to 60 minutes of power. This handheld flashlight has five powerful LED lights, an AM/FM radio with telescoping antenna and a built-in (quite loud) siren with a flashing red light for emergencies. It's $50 at Brookstone stores or Brookstone.com.

4 Solar charger. Why don't we all have one of these? SolarStyle, a Baltimore-based company, makes a pocket-size solar charger that uses the sun (or any available light) to charge your cell phone, Blackberry, digital camera, GameBoy and even your iPod. The SolarStyle SC002 model comes with seven connectors (for phones and gadgets) for $55.99 at SolarStyle.com.

5 Cleaning products. Green cleaning products such as Seventh Generation (from Burlington, Vt.) and Mrs. Meyer's have a following. Seventh Generation (sold at Whole Foods) says if every U.S. household replaced one box of regular tissue with its 100 percent recycled box, we could save 283,000 trees, about 1,000 garbage trucks of landfill space and 102 million gallons of water. Seventh Generation two-ply facial tissue is $1.99 at Whole Foods.

6 Trees. Planting a tree offsets carbon emissions and acts as insulation for your home. Join the non-profit Arbor Day Foundation, and you'll instantly get 10 free flowering trees, oak trees or Colorado Blue Spruce trees. A six-month membership at ArborDay.org is only $10, including the trees. Members can buy additional trees at steep discounts.

Copyright © 2007, Chicago Tribune

Saving the Earth, One Light Bulb at a Time

Did you know...
Compact florescent light bulbs use at least two-thirds less energy than standard incandescent bulbs to provide the same amount of light, and they last up to 10 times longer. Compact florescent light bulbs also generate 70% less heat, so they are safer to operate and can also reduce energy costs associated with cooling homes and offices.

To read more about the benefits of these bulbs to both the environment and your wallet, click here.