Keeping up with Chicago's North Shore Real Estate Market!

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Thursday, August 25, 2016

Green Tip of the Week - wear a sweater

“Some of the changes are so easy... Just put on a sweater instead of turning on the heat.”

Read about Ashton Hayes - one village that reduced their carbon footprint by 20% -- just by having fun!

English Village Becomes 

Climate Leader by 

Quietly Cleaning Up 

Its Own Patch

In Ashton Hayes, residents have banded
together to cut greenhouse emissions with
solar panels, wine-and-cheese nights
and no politicians.

Thursday, August 18, 2016

It ain't over until the fat lady sings...

Recently I was at the close for a client, who was purchasing a home. The clock was ticking away. I had been sitting in the title office for over two hours and was concerned because I had another appointment and needed to leave. The attorney was confident that everything was fine - no problem, etc.  So I left.

I found out later, that they didn't get the close done on the property until 5:30 that evening. The lender was asking for documents. Information was not in the right format and who knows what else was a problem. But they did close. Whew.

That delayed and complicated close was utterly symbolic of that entire client experience. I won't go into details. Suffice to say, it had been a long and uphill journey to make it to that particular close.

Buying and selling real estate is not for the faint of heart. It's high drama and hard work -- certainly made harder by the increased regulation of lenders, a surplus of housing stock causing disappointed sellers -- as well as skittish buyers, who have been burned by the recent housing collapse. It feels like sitting through Wagner's Ring Cycle with all the ups and downs of dramatic opera. Hearing the proverbial fat lady singing is truly a joyous and grand finale... because sometimes you need to play out every scene in the opera - multiple times!

And even when it's over, not every client is thrilled with the performance. Sellers feel like they are "giving their house away" and buyers are concerned and wondering, if they paid too much for the property. 

So what are the plot twists, dramatic pauses, 
crescendos, tragedies and triumphs of selling real estate these days?

The right home
Buyers today have incredibly high expectations. They have been watching HGTV, trolling or studying copies of Architectural Digest and expect to find the perfect house.

Spoiler alert -- there is no perfect house.

We live in the way we want to live.  We paint walls the colors we like and put up wallpaper than suits our fancy.  We hold onto family mementos and furniture.  I don't know any family who lives like a photo in AD. Most of us have kids' stuff,  junk mail and, in my case, unwanted dog hair around the house. As much as I try to keep my house clean and updated,  I know it will take me months to get my house ready to put on the market.  And even then,  I know it will only appeal to a limited number of buyers.

Finding the right house can take months and even years. I have clients with whom I have working for over a decade -- they still haven't found the right house.

The showings
Which leads us to the sellers' hurdle -- the showings. With every showing there is the optimistic thought, "Is this my buyer?" 

For a seller it's amazingly stressful to keep or get the house ready at a moment's notice only to find out that the buyers aren't interested in their home.  Every once in a great while, a new seller finds their buyer within the first week or so -- but that's essentially an anomaly.  Even for houses that are pristine, well-maintained with new baths and kitchens, a buyer may not surface for a few weeks or even months. Believe it or not, every showing that leads to a rejection by a potential buyer, feels just as painful for me as it does for my clients.

The offer
In the last few weeks I've had multiple agents congratulate me on one of my listings going under contract.  Don't get me wrong it's a wonderful feeling to get an offer on a property.  Of all the houses for sale on the North Shore,  I'm thrilled that these buyers picked my clients' home to buy.

But it goes without saying, the negotiations can be high drama. The buyers don't want to pay any more than they have to and they want to close to their own timetable. The sellers are hoping to, at very least, break even from what they have put into the house -- a challenge that has become increasingly difficult in the last 10 years.  There are highs and lows throughout the offer process.  Offers don't always lead to contracts.

Sometimes buyers and sellers simply won't budge from their position and the much coveted offer disappears.  Poof.  This particular act within the opera can get repeated over and over again. I had one seller, who was remarkably determined to get his way.  He rejected three offers before he finally accepted the fourth one.  Sadly, that fourth offer happened to be 3 years later and $300,000 less than the first one.

Sellers feel "You're not on my side" if you encourage them to take a perceived lower offer.  Or they will feel upset, if the second offer is less than the first: "I wish you had told me to take that first offer!" (I probably did.)   Buyers feel the same way, if they feel pressured into something.  They get angry if they missed an opportunity because of a few thousand dollars. 

I have found that getting to a signed contract can be a major fortissimo in the operatic drama of home buying.

The inspection
The inspection process is, without a doubt, my least favorite part of this business. Sellers love their homes and believe they are perfect. Inspectors believe it is their job to find every little thing wrong with the property. 

The buyer is being told, that the house they have just decided to buy is a disaster. The sellers are being told, that their beloved family home is a wreck. This scene creates anger, frustration and tension between buyers and sellers. Often agents and attorneys get caught in the crossfire during the inspection review as they try to council their clients.

I have had a few deals fall apart because of the inspection. In these cases, the buyers were rediculously unreasonable or trying to renegotiate the purchase price - or - the sellers were inflexible, felt insulted or were just plain stubborn.  Sometimes it's a combination of both attitudes.

I had one deal fall apart because the seller wouldn't deal with radon issues. Based on the language in the contract, the buyers had every right and expectation to ask for remediation. When the seller refused to remediate the problem, the buyers walked away -- permanently.  The seller was stunned. He lost a fabulous offer for over 97% of asking price because of a $1,800 problem that could have been easily remedied.  Amazing.

The appraisal
Another tricky drama in the buying process has been the appraisal by the lender. After working weeks to get a deal under contract and through the inspection process, some appraiser spends 20 minutes in the house and then writes a report stating the purchase price is wrong.  I had one situation where the appraisal was nearly 6% less than the purchase price.  Everyone involved, including the buyers, was dumbfounded.  The buyers really wanted the house so they needed to find a new lender.  A low appraisal can sometimes kill a deal altogether.

The cold feet
During the last two years, I have experienced two transactions where the buyers backed out of pending contracts within days of the close.  I had one buyer back out on the day before the close. It can be pretty shocking, when a buyer is willing to walk away from earnest money to get out of a deal.

It doesn't happen often, but when it does, it is truly a tragic scene.

The lending process
But nothing creates more drama, angst and scenes than getting through the financing process with a lender.  In the last several years, I have had multiple closings delayed -- one for over a month -- while the lender processed a loan.   Calling the lender tends to be a waste of time -- you end up in a voice recording loop (i.e, "Press 1 to pull your hair out.").  When you finally make contact with an actual human being, it becomes clear the person hasn't a clue what they are doing or why they are asking for yet one more piece of documentation.   

Within the last few years, I have had three sellers jump through hoops to get out of their homes to meet an aggressive close date, only to find out that they could have taken their time.  The worst part is now that their homes were emptied and vacant,  putting them back on the market was difficult -- so nervously waiting out the lender is becoming the norm.  It is a stressful situation that has been made worse by the new TRID regulations handed down by the Dodd-Frank Act. 

Given the stresses of securing a mortgage, cash deals have become even more valuable.

The close
So now we are at the very last scene -- the finale. The chorus should be coming together and everything should sound in harmony.

But even then there can be high drama. The money hasn't arrived from the lender; the survey has presented encroachments on the property, the walk-through presented issues in the home or.... 

The latest tragedy is a recent scam of hacking wire transfers -- the buyers' funds are simply gone.    

In one of my closes, the lender had failed to lock the loan rate and the buyers were shocked to find their mortgage payment would be higher than they had budgeted. The buyer actually walked out of the title office in order to produce the letter that had said the loan rate had been locked.

I've never had a property not close as planned, once I've gotten to the title office -- knock on wood.  But I have had my share of drama at the title office.

Is it ever going to be time for the fat lady to sing?
In my career, I think that I have had one experience that was a complete breeze. The buyers were paying cash. The sellers had their home in perfect condition. Everyone was happy. Closings like that are such a joy --- and a rarity. When they happen it's like listening to Mozart rather than Wagner.

I've learned that in today's real estate market that patience and perserverance are key. And it's only when the close is finally over and everyone is hugging and shaking hands, that I can finally hear the fat lady singing.

And trust me, she's singing Handel's Hallelujah chorus!

Thursday, August 11, 2016

Marketing Myth

When I was a kid, Thursdays were special.   Both the Wilmette Life and Life magazine would appear in our mail.   I can remember consuming both of them as I soon as I got home from school.  I loved looking at the pictures in Life -- from the Mercury astronauts to Hollywood stars.

And I'd work my way through the Wilmette Life seeing if I could recognize the pictures of people I knew.  I'd jump to the middle of the magazine and see what movies were playing at the local theaters.    There were usually some grainy real estate ads, that I rarely glanced at -- I'm sure my mother looked at those ads more than I did.

From what I can tell, today's kids don't even look at magazines.   If they want to see something, they go straight to their cell phones.

My reading habits have changed as well.  I subscribe to the New York Times digital version and get a summary of the news every morning as an email.    If I want to go the movies, I pull up my Fandango app to see what is playing locally.

I hate to see it -- but print and print ads seem to be going by the wayside.

When I first got into real estate, everyone encouraged me to put in print ad to announce my business.  I did.  While it certainly didn't bring in any business, it did provide an awareness to others.   I still have print ads from time to time, but I must admit, they seem like a waste of money to me.

It's so interesting to meet with sellers today.  The savvy ones ask me about my Internet strategy.  The others, who are somewhat out of touch, worry about print ads.   It's a myth to think that print matters when it comes to buying and selling homes.

Fact -- print ads don't sell houses.   Print ads might provide awareness and let people know some of what is available on the market.   They provide realtors a way to market themselves.  But with that said - today's buyers (especially first time home buyers) rarely look at print ads.  They go straight to the Internet to study, what is for sale.  Many buyers have set up automated notices to let them know when something new comes on the market.

If you're selling your home ask your agent about their Internet strategy -- that's really all that matters.  Less than 2% of prospective buyers look in newspapers, magazines or home buying guides when starting the search process. What do most buyers do? 

(Scroll the chart to see all the numbers.  Source: National Association of Realtors)

Sunday, August 7, 2016

How's the Market as of August 1, 2016

Hard to believe that summer is coming to an end in a few short weeks.  It's really been lovely this summer -- as it always is on the North Shore.  

So how was the market in July? 

This next chart shows units sold, the second presents the median prices.  

The units sold in July were mixed across the North Shore as compared to 2015.   What's interesting to me is that while median prices are fluctuating, sales continue to go up in certain communities.    

I study inventory levels to really have a sense of how local markets are doing.  I highlighted in green, red, and blue.

Green = balanced market

Blue = sellers' market
Red= buyers' market

Evanston, Wilmette and Northfield  clearly have a shortage of homes for sale.  Lake Bluff is the only community that is balanced.  The others are still buyers' markets!  Good time for shopping in these communities. 

In the next chart I show the high-end sales for each community.  The highest sale was newer home in the heart of Winnetka closer to town.  It sold quickly in less than a month.

There are currently 257 houses for sale on the North Shore that are priced greater than $2M. During the month of July, 12 houses closed in this price range:

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

Enjoy the last days of summer... loving this weather!

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