Is it Still a Buyer’s Market??

The answer is yes and no.  There are some interesting fluxuations happening in the Chicago suburban real estate market since last Fall.   Many qualified buyers are having a hard time buying a home because there is a lot of competition.  Multiple offers are rampant right now , changing the market to a Seller’s Market on certain properties and areas,  and putting buyers in the position of competition.

Foreclosure properties are the most cause of the competition, but not exclusively.  Great interest rates and good prices continue to bring more buyers into the market – many looking for the cream of the crop – price, location and condition.  This is often forcing multiple offers and very quick market times.   In many cases, we are seeing some of this due to deliberately underpriced listings by sellers and listing agents to achieve multiple offers quickly and create a bidding war between buyers.  And it is working with the result closing properties at prices over the list price quickly and leaving many buyers frustrated and searching.   If the property is in good condition, good location and great price – there is no coincidence that many buyers are interested.

Many of the most competitive price ranges in any market are the lower-end first-time buyer markets.  If you are in that market, be ready for more competition as a buyer and movement more to the seller’s market.  The more of you looking at the same homes, the more chance for a bidding war.

Also, since the robosigning moritorium, many banks put properties on the market with a teaspoon and bottlenecked the market with fewer available properties.  This also helps pricing when fewer inventory is available – remember your supply and demand economics from econ101.   We are seeing still some holdback, but the stream seems a little steadier in 2013.

Buyers need to be aware that listing prices are just that – prices that can go up or down.  Depending on the seller and the competition – they are negotiable, but all are trying to achieve FAIR MARKET VALUE.   But distressed properties are the catalyst for a lot of the activity and are setting the pace for pricing.

Sellers of non-distressed properties can benefit from the number of buyers on the market, but will be hurt if pricing is not competitive with these properties.  In some markets with a lot of foreclosures, buyers with outdated properties or properties that need work will be compared with distressed properties.  Pricing must be reflective in order to sell.   However, some buyers want turnkey, move-in ready homes.  Sellers with upgraded or turnkey properties at a fair market price can benefit from these buyers who see everything on the market that needs work and are willing to pay a higher price for an improved no-work property.

In these cases, buyers need to be aware of this when comparing distressed and non-distressed properties.  You get what you pay for.  If you are willing to do some work to a property, you can benefit from a lower price.  But if you want a move-in ready home, be ready to pay for that and do not compare pricing with distressed properties that need work, unless you factor that into your thought-process on price.

So, how do buyer’s and sellers wade through the waves of inconsistencies to arrive at their designation of a purchase or sale?

Buyers – get a good Realtor and do your homework.  Decide up front how much you are or are not willing to do to improve the home and make sure you and your Realtor discuss what pricing is Fair market for what you are looking for.   If you are going to go into the more competitive price range, be ready to get into bidding wars and don’t be focused on the list price and getting a “deal” paying below list.  Even full price is often not going to win the bid in this case.   If you hold to a certain midset on paying for a home ”x” under list or not participating in bidding wars, you will be losing a lot of opportunities.   Prices are still low compared with historical values, so most homes are still deals.   And sometimes you will need to adjust your thoughts on one thing for another – price vs. improvements.  Remember, the properties that require more work are going to get deeper discounts and will be slightly more negotiable – again depending on market value.

Sellers need to do the same thing in the opposite camp.   Don’t focus on what you paid and what you expect to get.  Market value is the only determining factor.  Get a good Realtor to help you compare your home with what is on the market.  Listen to what they say and don’t be duped by those trying to gain the listing by telling you what you want to hear.  Both will waste your time and put you further from your goal.  Unfortunately, buyers will compare your homes to distressed properties.  That is the market.  You need to decide if your home is going to compete based on price or improvements.  If you have more to offer, you can ask for more.  But if you require similar work, be ready to compete head to head with the distressed properties.  But, be careful about outlay for improvements.  Again, consult a professional to ensure you will get your money worth from any improvements.  Otherwise, the time and expense is not worth it.

In this ever-changing market place, buyers and sellers need to keep in mind that there is great benefit in buying and selling in this market.   But there many perils and inconsistencies that can derail you.  The media, word of mouth gossip and non-professional opinions are constant influences often send you down the wrong path.  It is important to weigh that information with professional opinions  and do your own homework to make informed and accurate decisions that will get you to the closing table.  The market is the only thing to listen to.

Home Sellers – To Update or Not to Update – That is the question.

Should I price my home to sell – warts and all – or do some updates to sell faster?  This is a real tough one in this market.  Yes buyers do want it all.  They want an updated home at the best price.  But many times, since that is not available they need to decide whether or not they want a move-in ready home or do they want a better price.  But, most of the time, they will choose one or the other.

Priced at market value, homes that are staged sell 50% faster than homes that are not staged.  White walls, lace curtains, pink carpeting and tiles, turn off buyers and make it hard for them to picture themselves living in the home.  We live in an instant society.  And a lot of buyers work and have lives that are too busy to redo a home.

But on the other side of the coin, foreclosures at great prices, warts and all, rarely stay on the market very long.  As a regular seller, you can’t compete with the foreclosure pricing.  Just like alternative programming during football games, you need to offer the opposite.  Sometimes they are willing to pay.  And often, the good ones go fast.  So, what can you do to inexpensively make your home appeal to the masses.

The trick is to keep in mind the price point you need to be at and spend as little money as you can to make the home look more appealing.

1.  Get rid of the wallpaper.  This can be done yourself or hired out, but do it right.  Don’t paint over it.  Remove it.  Nothing turns off a buyer more than wallpaper.

2.  Paint.  White walls, non-neutral colors in main living spaces (can get away with in kids bedrooms) are a turn off.  Warm tones – carmel,  camel neutral colors that are not too light and not too dark are what make buyers feel at home.

3.  Change the appliances.   New appliances, mostly stainless are what people are looking for.    Sometimes black appliances are a good substitute.

4.  Change the carpeting.  Worn or stained carpeting, non-neutral colors, turn offs.  Prices are pretty good on carpeting these days.   This is the biggest expense you will have, but keep your price point in mind.  Don’t get cheap carpeting, but don’t go overboard either.  Upgrading the pad can make up for a little less expensive carpeting.

5.  Make kitchens and baths look new.  Changing cabinets can be very costly.  But changing the counters to a granite (look for sales) or even a nice formica that resembles granite in the kitchen and baths or marble in the baths can make a huge difference.  New faucets can be a change.

6.  Change the light fixtures or augment them.  Light fixtures can be inexpensive and can make a big difference.  Too much glass or brass often are nos.  Sometimes shades can be added to expensive fixtures to update a little.

7.  Change knobs/hinges on doors.   Brass looks dated to many buyers.

8.  Clean and clean out.  Seems a no brainer, but you really need to make the house look like no one lives there.  Get rid of clutter in rooms and closets – makes rooms look small.  Store things.  Keep the house looking company clean all the time.  Nothing on the refrigerator, counters, floors, etc.  Not easy, but helps.

9.  Drapes – easy to change – very little cost.  Make sure to show the light in homes when showing.

10.  Furniture – no, they are not buying the furniture, but you would be surprised how buyers are put off by older or dated furniture.   Slipcovers and pillows are a good change for couches or it may be a great time to get furniture for the new place and put in the old place.  There are companies who rent furniture, but they can be costly.

Remember, the first rule of marketing is to cater to your target market.  It works in retail and it works in selling homes.

Still a Buyer’s Market – Or Not?

For the last few years, it is has been a buyer’s market where inventories climbed and prices dropped.  Things are starting to change, so is it still a buyer’s market?  The answer is yes and no.

Prices and Sales are Climbing…  Illinois Association of Realtors showed October as a stellar month showing definate signs of increases on all avenues.  In October home sales soared 37.3 percent over previous-year levels in October and median prices increased 3.0 percent.  Statewide home sales (including single-family homes and condominiums) in October 2012 totaled 11,775 homes sold, up from 8,577 in October 2011. The last time this many houses sold in October in Illinois was in 2006 when 13,067 homes were sold.

The statewide median price in October was $133,750, up 3.0 percent from October 2011 when the median price was $129,900. The October median price reflects a 12.9 percent gain from the year’s low point of $118,500 in February 2012.

A few factors contributed to this rise. Interest rates are still low and buyers are finally realizing the bottom has hit and are buying while prices are still good.  Also, inventories have been decreased this year as banks have been putting less foreclosures on the market as a result of the “robo signing” suits in many states.  And finally, many sellers are becoming more tuned in for the pricing in the market and pricing their homes to sell.

What does this mean for Buyers?  It means, for the really good homes – price, location, finishes or all, it means you need to act faster and work with a broker to know what the market is worth.  Low balling doesn’t work if prices are fair.  These “good homes” are getting a lot of attention and multiple offers and are getting at list price, over list price or close to list price.  Regardless of price, even the luxury market homes are getting attention if they are priced right.  There are still a lot of homes out there, but if you are seeing something you like – jump on it and be fair with the price before you end up in a bidding war.  Remember – you are still buying at 10-20% below normal pricing.  You will still have equity.

What does this mean for Sellers?  For sellers, the raise in prices and lull in inventory (maybe temporary) means a light at the end of the tunnel, but it is a long tunnel and a small light, so it depends on sellers to not overprice homes and have them ready for sale.  Depending on the market and price, most buyers want the best price and least work.  And most mortgage lenders want move-in ready homes to loan.  So sellers who put a little money into updating their homes can sell faster and get maximum benefit, but price is still the most important idea.  Having an appealing more updated home and a good price will make it get more attention, sell faster and rise above the rest to maybe get multiple offers and price.  Sellers have to accept the new norm on pricing as the norm. and then their home will move faster.  Remember, as a seller, you too can get a better price on what you are buying and a great interest rate.

Buyers – When to Get Off the Home Merry-Go-Round

There are a lot of choices out there.  More homes to choose from than have ever been available.  Foreclosures, short sales, move-in ready homes…for some buyers it can be a merry-go-round of which homes you like best, which one is the best for you, etc.  And the problem is, there are always more new homes coming on the market every day.  You keep seeing homes but you just can’t decide.  The problem is – low prices and interest rates are not going to last forever.  But the biggest problem is the homes you like are not going to wait forever either.  Someone will buy them and you are left with regret.  There are other buyers out there and if you like it, so may someone else.  But there is always something keeping you from making your move.

How do you know when to say yes to a home and get off the merry-go-round?  Here are a few tips and tricks to give you some clairty.

Process of Elimination: Define what you want, don’t bother with the rest.  After you have seen a few homes, you should get to know what you like and what you don’t like.  If you don’t want to do any work, forget the foreclosures and probably older homes.  They all need some kind of work.  You will not be able to take advantage of some of the savings of a foreclosure home, but you will be able to eliminate a number of homes that you will not like and are attracted to just because of the price.  Remember, the pictures are not always the home.  Look at homes that have been recently rehabbed.  Look for move-in ready in listing comments.

If you do not want to draw out time or are easily heart broken, stay away from short sales or low-priced foreclosures.  Short sales take months to resolve and more than 50% of them don’t work for one reason or another.  If you are not patient or if you get too emotionally involved – eliminate them from your search.

And if you get easily heartbroken or frustrated, don’t look at short sales or low-priced foreclosures.  Many low-priced foreclosures are priced below market in order to entice a multiple offer situation. Often buyers get easily frustrated because they bid on multiple offers and keep not getting the home of their choice.

Use scientific method:  Home buying can be a very emotional experience.  You want to feel connected to your home, but you also want to make the right decision.  Sometimes separating the emotion from the equation and using a scientific method helps make the decisions easier.  Assign a numbering system to major things you want/need in a home.  The price, location, size of the yard, room sizes, rooms included, upgrades, etc.  Give each item a number and then add it all up.  The numbers never lie.  You really did it yourself – you assigned each number, which indicates how you really feel.

Stop looking for Mr. Right- Find Mr. Right now.  This is a home, not finding a mate.  It is not the rest of your life.  This home should last you an average of 5-10 years – maybe more.  It should suit most of your wants and needs and make financial sense.  It does not have to be love at first site. It doesn’t have to be perfect – there are always trade offs.  But it needs to be the one for you right now.  If a home satisfies most of your needs and wants and it is a good investment, you will learn to love it.  Ask yourself two questions.  Can I see myself living in this home?  If this home went off the market, how would I feel?  The right and true answers are the indicator.  Also remember – there is not just one home for everyone, but if you wait too long, the ones you want will be gone.

Listen to people, but not too many people:  If you made every decision in your life by committee, you would never leave your home.  Friends and family you trust can be a good resource for information.  And you can and will listen to them.  Take all of their information and take it in perspective.  Most people you know are not experts in real estate.  There are a lot of rumors and stories of “someone I know….”  The most important thing to is to include your Realtor in your group of consultants.  They are the experts and will be able to tell you exactly what you want to know and give you the real truth.  If you don’t trust them and their experience – don’t use them.   You wouldn’t let everyone choose the cut of your hair or the medications you take for an illness – trust the expert you chose or find one you can trust to help you.

Cold Feet?:  Just like Goldilocks, if this one is too cold and this one is too hot…what if one is never right?  Is your hesitance to buy the homes have to do with the homes or are you just getting cold feet?  Buying is a big decision, but you can’t move forward if you don’t take a step.  If you are looking at home after home and it is always something that prevents you from buying, you really need to think if you are sabotaging your own efforts because you are scared.  Again, it is a big decision, but you wanted to do it for a reason.  Buying is nearly always a good decision.  You can waste money on rent and never get anywhere.  Or you can live with family and never get anywhere.  Focus on the reason you started to look for a home.  Keep your eye on the prize and use the above tips and tricks to figure out the right home for you right now.

Preparing to Buy? Here’s what to Do

Yes. It is a great time to buy. Interest rates and prices are at all-time lows while inventory is at record highs. But what if you can’t buy right now or if you timetable is not right now, but in a few months.  What can you do to prepare to buy?

GET YOU FINANCIAL HOUSE IN ORDER…
Lenders are looking for 5 things to qualify you for a mortgage. Assets (money to close and out out down). Credit score 620 to 640 and up. Income. Low or no debt. And job stability. Lenders will look all factors. All five don’t have to be stellar to make it a go, but if at least three are no good, that is likely a no. But some of these things can turn around fast with a little knowledge and determination.

Credit. The score is a minimum standard for lenders. The better the score, the easier it is on other factors. Get your score online form a reputable company. Make sure you are not signing on to any kind of long term reporting.

Look at your report and identify anything that is not yours. Pay off debt and collections. Too many opens and too much are the problems. Recent collections hurt most. Get new credit lines to make a positive impact. See my credit blog to get more in detail about the steps to improve credit.

Too much credit can also hurt. It is a fine balance. Fico scores also reflect how much revolving credit you have. Reduce the amount of credit cards keeping one or two major bank cards and maybe a store or two.

Debt. Debt and credit often go hand in hand. But debt also has a direct effect on your home buying power. Too much debt each month will reduce the amount you can pay in monthly mortgage.

Lenders are looking for 42 to 45 percent of your gross income to be spent on Mortgage and any contracted monthly obligations like car and student loans, minimum payment credit card debt, etc. (do not count utilities in that). So, the lower your debt, the more house you can get or the less work you will do to fix it up.

Income and job stability are also issues that go hand in hand. You have to have income. Jobs are six month minimum on the job in most cases. Some lenders like as much as two years on the job. All lenders have different rules and there are exceptions. Gaps in work (-unemployment) are the hardest to overcome, but you can definitely ask.

Your w2 income and adjusted gross income as stated on taxes are considered in qualification. So if you take a lot of deductions or if you are self employed, the income on your tax returns minus deductions is what will count as your income, not what you say you make.

Last but not least money and assets. Bank statements and 401k, stock, etc. tanglible assets are considered by banks to cover down payment and closing costs. You want to show the money on paper (in the bank) for at least two months. Cash on hand is not considered. You need a paper trail.

So you need to make a plan – month by month. How you can save money and apply it to pay off debt first.

FIGURE OUT WHAT YOU WANT AHEAD OF TIME
There are a lot of homes available right now.  Once you have your financial house in order, you need to see what you want in a real house.  Try to come up with a wish list of what you want out of a neighborhood, schools, transportation access, etc.  And what you both want and need out of a house.  What you don’t like.  And despite what you can spend, what you are comfortable spending.  And know how much or how little work you are comfortable doing.  The best home for you may need a little work.  Distressed properties today often need a little fix up, but you need to decide what you want.  A little up front homework and discussion will help you get your game plan so when you speak to a Realtor to help you, you can have a pretty good direction.  Especially if there is more than one person making the decisions.  Get on the same page as much as you can.  It will save you a lot of time and grief once you are looking if you know what you want.  Looking at homes can sometimes be overwhelming.  This way you can focus a bit.  It is ok to change your mind, but it helps to have a foundation for a start.

FIND A GOOD REALTOR
Even if you need a few months to get things in order, you should start looking for a good Realtor to represent you.  It doesn’t cost you anything and will save you money and headaches when they will help you with everything from getting a good lender and inspector to finding and contracting a home.  They will also protect your interests to ensure you don’t overpay for a home and get the best deal and are not taken advantage of.  The real estate market now is tricky, but a good Realtor can be your guide and successfully help you navigate the waters.  They will also answer all your questions and educate you on the process every step of the way.  This is what you should be looking for in a Realtor, knowledge, expertise, communication and willingness to help you every step.

RE Marketing Consultants is a licensed Illinois real estate brokerage specializing in helping and guiding buyers, sellers and investors through today’s real estate market to achieve their dreams and goals of home ownership and investment benefits.

 

Purchase and Rental Scams – Buyer Beware

The Internet is a vast and wonderful thing but can also be a breeding ground for corruption and crime.  Case in Point – Internet Real Estate Scams are rampant taking advantage of the current market and economy.

Rental Scams:
I recently had a potential renter call me about one of my rental listings.  She found me on Trulia after reading the same post on another consumer internet source for a much lower amount.

It turns out someone copied my listing from a listing source and put it on a open consumer site and pretended to be the owner who lives out of town and tried to solicit money from potential renters.  A scam.

Another client told me (before I started to help them) they were charged money for credit checks or applications to rent and didn’t get the place.  That one is harder because most landlords do credit and background checks and charge for them.  Some can be real.  What I usually recommend is make sure you are in the running before you give them anything and ask that they agree to you first and pending credit check.  This one can be tricky – may be legitimate and maybe not.

Another client recently told me that they were dealing with a landlord who would sell them the home – rent to own.  Rent to Own can be very legitimate, but I encourage you have the downpayment or anything more than a security deposit held with a legimiate escrow source like a Realtor, title company, attorney, etc.  to protect your interests.

Foreclosure Scams:
Another client recently asked me about a home that was listing at a very small price – much less than half of real value.  It was a company that said they give out foreclosure lists, but you have to give them your credit card information and pay for the list.  I looked up this company online and
found many consumer complaints about charging the credit card and selling information.

I have heard of these scams before and decided to share some of what I have found.

1.  Most of the time, if it sounds too good to be true – it is.  Always be on your guard.

2.  If they ask you to pay for a listing or your credit card or to send money without meeting someone or seeing the property, it is probably suspect.  Real landlords are not going to rent to someone without getting proper background checks, etc.  And someone really selling a home legitimately is not going to ask you to pay to find out about it.

3. Anyone can launch a website.  Google the name of the company and see what comes up.  If there are complaints – ask more questions and research more.

4. Use a Realtor.  Realtors can help you with rental properties and help you with purchases.  And Realtors only deal with legitimate properties on the MLS for a reason – we know they are legitimate.  There is no cost for you and you can ensure that things are done the right way.  How do you know that the person is the owner, etc.  Sometimes Realtors will deal with owners, but they will ensure you as their buyer is protected as much as possible.

5.  If you insist on dealing with an owner on your own – get an attorney involved and ensure this person has the deed and the right to sell or rent the property.

A home is a big deal whether you are renting or owning and you don’t want to be cheated or victimized by scams.  Do yourself a favor and consult experts to help you.  And do your homework.  They are legitimate deals in the market now, but there are also a lot of scams.  Be careful and remember to ask questions.

Falling in Love with a Home – Reward or Punishment?

Valentine’s Day is just over and a great time to celebrate love and reflect on the rewards of being in love.  Falling in Love with a home when you are house hunting can be both rewarding and perilous and in today’s market and incorporates a new kind of buyer beware.

Buying a home is a big and wonderful commitment.  Not only is the place you live, but it is your largest investment.  As such, it is sometimes difficult for people to separate the heart from the head.

You need to like your home very much, if not love.  You are there every day.  You decorate it, you have memorable occasions and events there, you relax and entertain there.  It is part of your life.  But, it also has to be a sound investment, good price, and have potential for resale to grow your investment.  And remember, it will likely not be the house you have for the rest of your life.  Balancing those two things become both the pleasure and pain in buying a new home.  I always try to be the good sounding board for my clients to help them create that balance and introduce all the pros and cons.  But ultimately, it is their choice.  Here are a few of the tips I give them to make the best decision for them.

1.  If you love the home, make sure the other side is there.  Is it a good price, good area, have resale potential or problems.  Just because you love it, doesn’t mean someone else will

2.  At the same time, don’t throw away a good investment just because you didn’t have love at first site.  If you like a home meets all your criteria and makes good sense, think about why it is not a love connection.  Is there no furniture and it doesn’t look homey?  Can things be reasonably changed so you like it more?  Unlike a mate, you can change some things about a home.  Could you grow to love it?

3.  Sometimes it helps to be scientific.  Make a list of what you want and need and rate them.  I devised a rating system for my buyers so that if they want to see what hits all the buttons, they can add up the ratings and see what makes sense.  What did I like and dislike?  How much?  Ratings helps quantify the search and sometimes sheds new light on the choices.

You need to really like or love your home – certainly not hate it.  But beware falling in love too hard for a home can expose yourself to hurt feelings.  You need to have a thick skin.  Ultimately, this is a business transaction, not personal.  It feels personal to you and sometimes to the seller (if they own and/or are living in the home), but if the seller decides to go with another offer or doesn’t want to agree to your price or if the deal doesn’t go through, you need to move on.  Don’t worry about the one that got away.   Buying now is an excellent idea.  Interest rates will never be lower, prices will never be lower and inventories will never be higher.  With so many homes, sometimes it seems hard to find the right one.  But just remember, there may be more than one “right” for you.  There are always more homes out there.  Don’t get discouraged or frustrated – keep your eye on the prize and you will be happy in your home.

Suzanne Hamilton, RE Marketing Consultants, Inc. helps buyers in the south, southwest and western suburbs of the Chicago area find the best home for them with excellent customer service and professional experience and expertise to provide step by step assistance and make the home buying process as easy as possible.  Call 888-788-9544 to find out how you can take advantage of today’s market and find a home for you.