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Thursday, March 31, 2016

Green Tip of the Month - Indoor House Plants

Many indoor plants not only look nice but they also act as natural air conditioners. Research has shown that they can remove up to 87% of indoor pollution in 24 hours.  
Draecana, spider plants, peace lilies and Areca palms all act as air purifiers. 
Placing a yucca in the bathroom has also been found to be a good way to neutralize any odors from the bathroom.

Source: The Little Green Book of the Home by Sarah Callard

Check out:  9 Houseplants That Clean The Air And Are Basically Impossible To Kill

Thursday, March 24, 2016

Open House Etiquette

Going to an open house this week? 

Here are some things to consider:
  • Wear warm socks and tie-less shoes (mules, flats, loafers, moccasins, etc.). The agent is probably going to ask you to take off your shoes. 
  • Please sign in. The agent needs to let the homeowner know whom has been in the home.  If you do not want the agent to contact you, just let them know. They won't be offended. Also, if you are working with another Realtor, let the agent know that as well. 
  • It's likely that the agent there is representing the seller. If you're interested in the property, be thoughtful about what you say around that agent.  They will undoubtedly relay the information directly to their client.  
  • On the other hand, it's possible that the agent holding the Open House may not be the listing agent and may not know much about the home. If you have specific questions, the agent can find out more -- just ask. 
  • If you have children, hold their hands - don't let them run around.  Also don't let them touch or play with anything.  You're in someone else's home.  Better yet, consider getting a baby sitter. Touring homes is a boring and fatiguing experience for little ones. 
  • Again, the agent is representing the seller -- some questions are off limits -- like the sellers' personal situation and motivation. Don't be surprised if the agent will refuse to answer certain questions. 
  • Don't be offended if the agent follows you around or asks for identification.   You are a stranger to them.  
  • On a personal note, I find it incredibly annoying when a person touring the home starts arguing with me about the price or other aspects of the home. I'm just doing my job by showing the property and representing the sellers' wishes. The last thing I want to do is get into a debate about the merits of the price or home. If you have an opinion like this, call me later after the Open House is over and I'll be happy to discuss it then. 
Open Houses are optional -- many sellers on the North Shore never want to have their home open to the public. If you genuinely want to see a property, make an appointment with your agent. If you aren't working with an agent, then call the listing agent.

Don't wait for an Open House -- you may miss out and never get to see the property!

Thursday, March 17, 2016

It's business.

Have you seen the segment on The Ellen DeGeneres Show about real estate?

I hadn’t seen it, when someone sent me a segment about Realtors and their personal ads. 

It was very funny. In case you haven’t seen it, check it out on YouTube. 

It got me thinking. What kind of sellers would pick a Realtor, who advertised himself as a space lamb, to represent them in the marketing of their home? As Ellen said, tongue in cheek, “So when it comes time to make the most important financial decision of your life, pick the space sheep.”

Coincidentally, during social situations within the last week, I found myself in conversations with three different people talking about selling real estate. (Not surprisingly, this conversation happens to Realtors pretty often.)

These three different people shared with me the reasons they used to pick their Realtors. I found their selection criteria quite amazing:

“Well, we felt we had to pick this ‘girl.’ She was the daughter of good friends of ours.”
“...I really had to pick her to be the Realtor, because we go walking together every morning.”
“...she’s an old friend. We play tennis together. She wouldn’t understand if I picked someone else.”
Don’t get me wrong. I respect people who value loyalty and friendship. Through the years, I've worked with a number of my good friends. And who’s to say that good friends can't be fantastic Realtors? 

But, while you want to like your Realtor and feel comfortable working with them, I really question whether friendship and loyalty should be the primary factors that go into selecting a Realtor.

Like I said before selling a home is not personal; it’s business. 

Originally written for Patch, June 26, 2012

Thursday, March 10, 2016

When things go wrong ... or 6 reasons why real estate deals fall apart

I wish every real estate deal was smooth sailing.

 Sometimes they are.  Everything goes right.  

The sellers are pleased with the offer and are ready to move on.  The buyers feel excited about their new home.   The inspection goes well.   The house appraises out for the purchase price.  The lender is on top of their game.  The attorneys are working diligently to keep the deal moving forward.  And finally,  I'm working with a co-operating agent who is kind, constructive and pleasant.  

Deals like these are the ones that every agent covets and appreciates.... 


Because these deals are rare.  When it happens, it's really wonderful and somewhat unexpected.

Most every real estate transaction has some bumps in the road and getting to the close can be a challenge.  But the deals that really break your heart are the ones that fall apart completely.   Sadly, I have had a couple of those too.  I think everyone knows someone, who has experienced a real estate contract that doesn't hold together.   

Here are the top six reasons I've seen and/or experienced, why a sale never makes it all the way to the close:

1. The inspection doesn't go well.

This has been the most common reason I've experienced why deals fall apart.  I've had several deals where the buyers have exercised their option to cancel the contract using the home inspection contingency clause.  They were uncomfortable with something that showed up in the report.   Maybe mold was discovered in the house - or radon - or asbestos.  Issues like these make buyers very uneasy.   
Or perhaps the sellers refuse to address the issues in a way that satisfies the buyers.  Todays' buyers are leery of taking on issues when they don't need to -- they can find homes that have been well maintained are are gravitating to that sort of property.  
How to prevent this?  I encourage my sellers to have a pre-listing inspection.  We all have regular physical check-ups.  Perhaps our homes need them as well.  Head off any issues before the buyer gets the home inspected.   Disclose or repair known issues ahead of time.   
2. The buyers are unable to get their financing.
This is probably one of the most frustrating of situations.  In my opinion, if the buyers can't get their financing, the buyers' agent didn't do their job very well.   No offer should be written by an agent, when the buyers haven't been pre-approved or they don't have the resources to purchase the house.
How to prevent this?  If you're the seller, ask to see the buyers financial capability and pre-approval letters.   
If you're the buyer, meet with a mortgage lender upfront and make sure to be honest with an accurate picture of your financial resources.  Mind your FICO score to keep it strong.   Consider ALL the expenses (landscaping, utilities, taxes, etc.).   Don't make an offer on a property you can't afford. 
3.  The house doesn't appraise for the purchase price. 

For an agent this is AMAZINGLY frustrating.   You've worked hard with another agent to settle on a purchase price that both parties feel is fair.  Then some appraiser comes in to tell you otherwise.  

After the credit crisis, we actually had appraisers from places as far away as Joliet and Rockford come to the North Shore to do our appraisals -- it was ludicrous.   I had one guy who appraised a listing for almost $300,000 less than the purchase price.   He used totally irrelevant comparables to get to that price.  Even the buyers and their agent felt the appraisal was ridiculous.  I felt sorry the buyers -- they had to scramble to find a new lender.  
When the buyers are stretching or are on the fence about a house, the low appraisal may tip them over the edge and they'll want to pull out of the deal.   
 How to prevent this?  If you're the seller, make sure your agent provides complete information to the appraiser: survey, tax information, relevant comparables.  (While I always do this for my sellers, some appraisers ignore the information and do what they want.)
If you're the buyer, protest the appraisal and ask for new one.  Consider a new lender.   Try to renegotiate the purchase price.   If all else fails and you really want the house and can swing it, put more money down and ask for smaller mortgage.   
4. The buyers are unable to sell their own home, so they back out of the deal.

Sometimes buyers make an offer on a home, before they have sold their current home.   There is no harm in this and often buyers can carry two properties simultaneously.  But sometimes they are unable or unwilling to carry two properties.   I understand their desire to purchase the "home of their dreams" and their willingness to gamble on their own house selling in a timely fashion. 
Sometimes the buyers' buyers back out of a deal.   When this happens, your buyers can't or don't want to own two homes, so there is a domino effect.
How to prevent this?  If you're the seller, you need to be clear about what contingencies you'll accept on an offer -- and the ones you won't.   If you have two offers that are relatively comparable, it may make sense to give more weight to the offer from the buyer who doesn't own anything over the buyer who still owns a property.   
5. The buyers or sellers get cold feet or have a change in their lives.
It happens.   There is buyers' remorse or sellers' reluctance to let go. 
The sellers think they're getting transferred, but their job prospects change, so they decide to stay put and not sell the house.  Maybe someone gets ill and the move is too much to deal with...
The buyers change their mind for one reason or another.   They lose their job.  Another house comes on the market they like better.   Maybe their own house didn't sell as quickly as they thought it would.... or maybe they liked the look of the house better when they only spent 20 minutes in it -- as opposed to three hours during an inspection.  
With one situation, the house had a swimming pool.  On the very week of the inspection, a child died in a swimming pool accident in one of the western suburbs.  These buyers had small children.  I can't help but believe, it was that incident that caused them to back out of the deal. 
How to prevent this?: It's hard to really prevent this.    
Sellers: Be clear and certain before you put your house on the market that this is something you want to do.     
Buyers: Go into the process with the knowledge there’s a "honeymoon" period, followed by a whole lot of stress, paperwork, and check writing that will be a bit overwhelming.  Visit the house multiple times before you make an offer to be sure that you feel good about the property.  Focus on the end game -- owning a wonderful new home.  
 6. Something small gets blown out of proportion.  
Even relatively little things can bring negotiations to a complete standstill,  if buyers or sellers (or their agents/attorneys!) get emotional or take things personally.   I've seen buyers and sellers argue about very minor issues from an inspection to the point, where a deal sometimes collapses.  They may win the battle, but they lose the war.   
Sometimes there is conflict between the attorneys.   Often people use friends or family members, who just happen to be lawyers, to handle the contract.   Not all lawyers are alike.  Attorneys come with different specialties.   A litigation attorney has a very different orientation than a real estate attorney.  
How to prevent this?  Try not to take things personally.   Keep things in perspective.   Some issues really don't matter in the grand scheme of things -- focus on the big things; not the trivia.  Remain patient - try to understand the other party's point of view.  Most problems can be solved.
Make sure to hire an attorney, who specializes in local real estate matters.  (When it comes to real estate transactions, there are even differences between counties and municipalities.)  You wouldn't ask a dermatologist to perform open heart surgery, so why would you ask a corporate litigation attorney to handle a residential real estate contract?
Buying/selling a house is a bit like running a marathon.   There are moments of exhaustion, when you wonder whether it's a race you really want to run.   But getting to the close and "crossing the finish line" is wonderful!   

You just need to prepare for the race -- and pray you don't trip and fall in a pothole!  

Thursday, March 3, 2016

Predicting the Future

My dad was an internist.   I was always a little annoyed when we were at a social event, and some person would start asking him for free medical advice.  

The question might begin, "Hey Phil, I've been having this pain in my stomach..."

My dad would patiently answer any questions he could.  But I was always thinking: go make an appointment and see him in his office.   How can he tell what's wrong without doing an examination?  

I came to realize, this situation was just a hazard of his profession.   Something similar is more than likely to happen for any professional.  Investment brokers get asked for stock tips... Attorneys get solicited for free legal advice... Interior Designers get asked decorating questions ... and on and on.

The same is true for real estate professionals.   The cocktail party questions are usually,  "Is this a good time to sell/buy a house?" or "How's the market?" 

I'm more than willing to answer these kinds of questions. 

But the questions that always stump me are the ones, when people ask me to predict the future.   

"Should I wait until May to sell my house?" or "What's the market going to be like in June?"

I'm not a sooth sayer.  I can't read tea leaves.   I don't know how to look into a crystal ball.  I don't know what's going to happen in the future any more than the next person.  I can only make predictions based on the current scene and past situations.  But that's about it; anything else would be conjecture. 

There are so many factors that go into the future of a housing market: local employment conditions, credit availability, world economic conditions, oil prices and even the presidential election. 

Look at North Dakota.  Only a few years ago, fracking sparked a shale oil craze in North Dakota.  It brought in thousands of unemployed workers to the state and created a housing crisis. Real estate developers followed suit. Now falling oil prices have reversed the situation. (North Dakota’s Housing Boom Is About to Go Bust)

So how does one predict the future?

In my opinion there are three things to consider that might help one figure out the future likelihood of a healthy real estate market:

  1. How robust is the local job market?  What's the unemployment level?  Are we gaining or losing jobs in our town/county/state?  In our particular market, where do the jobs stand with wage growth?
  2. Does the current inventory match the current demand?  How quickly are we absorbing new inventory?
  3. Can buyers get financing?  How available is credit?
Answering those questions can sort of help predict the future... 
... but the future is pretty much a mystery.   Things happen that we can't control or predict. 

Only a very select few predicted the financial meltdown in 2008.   (Go see The Big Short!)  

The next time someone asks me to predict the future of the housing market, maybe I'll bring out some Tarot cards...

Tuesday, March 1, 2016

How's the market? As of March 1, 2016

So the market keeps movingLots of new inventory keeps coming on every day.  We’re beginning to see more and more buyers out there looking at homes.  It feels like Spring might be just around the corner soon -- I hope! 

And how was the real estate market in February?

The first report shows units sold, the second presents the median prices.  

As you can see, the inventory is still pretty high in communities where there are a lot of high-end properties (Kenilworth and Lake Forest).  But there is real shortage of inventory in many of the communities.  The months of inventory is the probably the best barometer of the health of a market.  Anything less than 6 months is considered a sellers' market -- anything more than 8 months is considered a buyers' market.  The median sales price is holding steady in most of the communities and going up.  

In the next chart I show the high-end sales for each community.  Only one house (in Lake Forest) sold for more than $2M in the month of January.  The trend is a little challenging because during the month of February, 57 new listings came on in that same price point.  More interesting to me is that no houses at all sold in Kenilworth or Glencoe.   I appreciate that people don’t like moving in the winter months, but I found that fact a little surprising.

There are currently 232 houses for sale on the North Shore that are priced greater than $2M.   During the month of January, 1 house closed in this price range:

Sold this Month
# for Sale
Highland Park
Lake Forest
Lake Bluff

In summary, February could have been more robust, but like I said, Spring is just around the corner and hopefully things will pick up!

Source: MRED (Midwest Real Estate Data) Multiple Listing Service