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Thursday, October 26, 2017

Green Tips - Plant a tree

I think that I shall never see...

Fall is a great time to plant trees.  
Most deciduous shrubs can easily be planted in fall.  Trees that can be successfully planted in the fall include alder, ash, buckeye, catalpa, crabapple, hackberry, hawthorn, honey locust, elm, Kentucky coffee tree, linden,maple, sycamore, pines, and spruces. Get some tips from the Morton Arboretum.  

"Advocates knew intuitively the importance of trees, but had no way to prove it. Now, though, thanks to software tools developed by the U.S. Forest Service and studies by social scientists.. the data tell the story: Trees are infrastructure. They cool the air, soak up climate change-inducing gases, protect against flooding, reduce people’s stress levels and raise property values. Studies even show that shoppers spend more money at stores on tree-lined streets."  source: Money Growing on Trees

Thursday, October 19, 2017

The Rules (continued)

In April, I shared with you Jones's Rules of Real Estate.

After careful reflection and conversations with fellow agents, I decided add to my original list of 15 Rules.   I am now adding Rules 16 - 21, to create Jones's 21 Rules of Real Estate.

Rule #16 - New construction doesn't stay new.
New construction turns into a used home, so buyers beware.  There is a premium price for new construction... but - just as with a new car - once you "put some mileage on" the house, that premium price erodes. The value of a property begins with the value of its location.  An old home in a desirable location is going to have a better long-term resale capability than a brand new home in a marginal location.
Rule #17 - The house sells the house. 
Agents don't sell homes.   Their role is to facilitate the marketing and sale of a home, but the house has to sell itself.  Buying a home is not only a practical, financial and strategic decision -- it's also an emotional experience for buyers.   They have to envision themselves in a home before they will buy it. 
So sellers, stop looking to your agents to "sell your home."  Your agent may be great at getting people in to see the house; negotiating a contract and assisting with the details of the sale.   However, all the marketing, encouraging and pushing will not make a buyer buy something they don't want.  If agents had the power to make a buyer buy your home at the price you want, trust me -- they would.   Agents simply don't have that kind of power.   
Rule #18 - A home is a place to live -- it's not an investment. 
If I had a dollar for every time a seller said to me, “I have $XX invested in this house and I’m not going to sell it for less than what I have in the house,” I would be a very wealthy agent. 
  • Everything in your house depreciates with time.   That new kitchen, which was installed ten years ago, is not new.   "Newer" construction that is 30 years old is not new.   
  • Maintenance expenses are not capital improvements.   
  • Landscaping improvements help with marketability but rarely increase the value of the house.
Any money you've put into the home historically is somewhat irrelevant.   The value of a home is driven by the market.  Yes, often you will make money on the sale of your home, but don't bank on it.   Just remember a home is no substitution for retirement savings.    
Rule #19 - More often than not, when it comes to figuring out the fair market value of a home, the buyer usually knows best.
Sellers, I know you don't want to hear this, but it's usually the case, that buyers know best. They are out there going to open houses, touring properties, studying the comparables in the MLS and familiarizing themselves with the market.   They know when a house is a good value... and they also know when a house is overpriced.   
That's not to say that there isn't wiggle room in negotiating or some buyers don't know best.  But sellers think seriously before you "test the market" or before you let a buyer walk away.  The next buyer may not be so forthcoming or willing.  
Which brings me to... 
Rule #20  "The first offer is usually the best offer."
Rule 20 is actually a classic real estate adage.  There are exceptions and a seller might get more the next time around, but the probability is slim.   The market is littered with sellers who rejected an early offer, only to find the next offer less desirable.    A general rule of thumb:   The longer the market time, the lower the offers become.
 Rule #21 - Take the long view. 
I've seen buyers and sellers quibble over cents, when there are literally thousands of dollars involved.   Keeping a house empty or maintaining an expensive property can be like throwing money away.  Yet I've seen sellers do just that, when they could have accepted a reasonable offer.   Walking away from a purchase over a few thousand dollars only to kick yourself later is both penny-wise and pound-foolish.  
Sellers: Consider this, "What is the value of 'done'?"   
Buyers: Consider this, "If you really love the house, think of those extra dollars as something that will be amortized over time."
Look at the big picture.  There is always middle ground and it's worth trying to find it.  

Like I said before -- if everyone understood The Rules, this business would be so much easier!

So here is my list of rules for now -- although like Gibbs, I might keep adding to the list. 

Thursday, October 12, 2017

But everyone else is doing it...

Buying a home -- it's the American dream, right? 

As someone who has owned four properties and rented at least four places, I'll take ownership over renting every time. You don't really have to answer to anyone and can change things the way you want them. There is security in knowing you have a roof over your head that is yours and not someone else's.

So, as someone whose bills get paid, by a job of helping people buy and sell homes, I'm a little reluctant to endorse renting, too.  But sometimes leasing a property is the better option.

So if you're thinking about buying home -- ask yourself these questions first:

#1  - Am I buying this home because I want to, or because it seems to be the thing that everyone else is doing?  
I confess -- that was the reason I bought my first home.   It was impulsive and hardly well thought out... all my friends were buying and I wanted to own a property too.   If I had to do it over again, I would have waited a few years and really studied the market and learned more about buying and selling real estate.   I'm glad I bought something, but I would have probably bought something different for a much better price, if I had really given it more thought and spent some time educating myself.

#2 How much debt do I have?  
If your bills are consuming up to 50% of your gross income every month, you may not be able to afford a mortgage payment on top of expenses. Lender guidelines have changed since the financial meltdown of 2008.  Your debt ratio will need to be low or you will never get through underwriting. Pay off your student loans and credit cards before applying for a loan.

#3  What's my credit rating?
If your credit score is below 620 might, you also might find it difficult to get a loan.  If your credit rating is so so, consider waiting, and make changes to your spending habits to improve your FICO score.

#4 If I'm buying a home with someone else, how secure is my relationship?
A home is a major asset and it can't be split in half.  If your relationship with that other person is shaky: financially and/or emotionally, what will happen if you break up?  Through the years I've dealt with a number of divorce or divorcing situations.  Trust me when I say, it's hard enough to co-own a home, when your relationship is on the rocks -- try selling a home with someone you don't like anymore.

#5 How secure is my job?
If you have any doubts about the security of your job, do not buy a home.  (..unless, of course, you can pay cash for the property and don't have to worry about mortgage payments...)

#6 Do I like to move a lot? 

Buying a home is a long-term commitment. If you are one those wander-lust people, home ownership may not be your gig.   I used to travel a lot with my job and had apartments in many cities -- but I always kept my home in Chicago.  Some people really don't want to be tied down like I did -- they want more flexibility.  If that is the case, rent.

#7 Is the market declining or improving?
So many people got swept up in the booming housing market before 2008 only to watch in horror when property values tanked.    You really can't time the market, but be thoughtful and understand where prices are heading.

Sometimes renting is truly the best option.   There are all sorts of calculators out there that can help you with your decision.  This article in the New York Times is pretty helpful:
Can I Afford to Buy a Home?

Thursday, October 5, 2017

Scouting out the neighborhood

one of the interesting trends we are seeing in real estate are buyers purchasing properties sight unseen.   The Wall Street Journal wrote about it in June.   While these types of offers are more common with foreign buyers and in markets, where homes are selling quickly, I've experienced it myself twice in the last couple of years.   The buyers saw the house on my iPad as I gave them a tour using Facetime.

There is no doubt that technology has enabled us to present our properties almost as if we're there in the house.   With three-dimensional photos, virtual tours and now virtual reality experiences the buyer can get a very good feel for the home and property.   Tech startup VirtualAPT offers a robot that can film virtual tours in 3-D. The robot can record a real estate professional guiding a tour of the property and then produce a video within 15 minutes.  An agent can even drive around the neighborhood with their iPad to give the buyers a sense of where the home is located.   With Google maps, buyers can see traffic patterns and the locations of key highways to house.  

With all this technology, why bother looking a the house if everything is there to be analyzed?

Well, it's not.  

Yes, buying a home has some analytical aspects to it.   Is it a good value for the price?   How does this neighborhood stack up for re-sale capabilities?  How far is it from the schools, highways, trains, etc?

But, to the best of my knowledge, technology hasn't mastered your instincts, your sense of smell, the ability to walk around the neighborhood and meet the neighbors, to get a picture of how the home fits into the neighborhood.

All the marketing and technology available to us, can never tell the whole picture.  

Buying a home is a sensual experience.
  • Smell – is the home well ventilated or does it smell stuffy, damp or odorous? Maybe there was a smoker in the house...Pets can also leave odors. Are there air fresheners plugged in everywhere?  Maybe the sellers are trying to hide odors. 
  • Sound – Are there squeaking doors or noisy appliances?  Can you hear the train as it goes by?  Can you hear the traffic during rush hour?
  • Sight – While virtual tours can tell some of this -- it can't tell you if there hidden spider webs or dirty shelves. A clean house is a loved home -- only by seeing it yourself can you tell whether it's a really clean house. 
  • Touch – same with touch -- does that banister have a sticky feeling to it?
Buyers need to turn off their computers and really see the home at all times of the day -- and night.
  • What's the commute like?  How easy is it to get to the train station?  Try it out for a few days.  Is it going to work for you for years to come?   
  • What's the drive to the airport like?   If you do a lot of travel, that can become a pretty big issue.   (One of the things I love about Lake Forest is how easy it is to get to the airport.   When I grew up in Kenilworth, getting O'Hare was tough, because driving out Willow Road took forever.   Evanston was even worse-- Dempster is a long road...)
  • How easy is it to get the kids to school?   Growing up in Kenilworth it was great -- Mom just sent us out the door and we walked to Joseph Sears and New Trier.   She loved it -- never had to drive us anywhere.  But that's not true with every suburb.   Make the trip and figure out how easy it will be to get the kids off to school nine months out of the year. 
  • What's the neighborhood really like?   Walk it several times at various times and various days.   Talk to the neighbors -- they're going to be your neighbors.   Can you see yourself living next door to them?   Do they have three dogs that bark constantly?  Do they mow their lawn and keep their yard clean?   Do they throw wild parties at night?
  • Drive to and from the grocery store, the gas station, Costco -- whatever stores you know you're going to frequent on a regular basis.  How convenient is the house to those venues?   
  • If the opportunity presents itself, check the home out on holidays.   One of the surprises that I experienced, was that some of my neighbors like shooting off fireworks on the 4th of July.   I've gotten used to it, but can't say that I like it very much.  
I've met a number of buyers along the way, who fell in love with the house and bought the house, without really understanding the neighborhood and environs.   The house may be great, but it's not everything.   And while technology is a useful tool --  it's not the only tool.  A little reconnaissance and footwork are critical.   Be sure to scout out the neighborhood too!

Sunday, October 1, 2017

How's the Market, October 1, 2017

October is here -- where do the days go?   I've been gone much of September traveling across the country.   Every day was a new adventure and such a contrast of housing -- from the modest bungalows in Southern Illinois to adobe structures in the Southwest to the mega-mansions of Beverly Hills... the ways we live -- it was interesting to see!
While I was gone, business kept moving.

So how was the market in September?

This first chart shows units sold, the second presents the median prices.  
The units sold in September were mixed across the North Shore as compared to 2016.   The continued uptick of sales in Lake Forest was very encouraging...   Median prices are tending to remain constant or decreasing.    
I study inventory levels to really have a sense of how local markets are doing. I highlighted in green, red, and blue.

Green = sellers' market
Blue = balanced market
Red= buyers' market

With the exception of Lake Forest,  the North Shore is looking great for sellers, although it's a little more challenging for buyers in some of the other communities.  In Evanston, Lake Bluff, Northfield and Wilmette there is actually a shortage inventory.   All the communities are doing better this year and we're seeing more sales and a healthy market.  

In the next chart, I show the high-end sales for each community.  The highest sale was a newer home (2010) with three acres of property on Onwentsia Road in Lake Forest. 

There are currently 198 houses for sale on the North Shore that are priced greater than $2M. During the month of September, 6 houses closed in this price range:

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

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

Enjoy the remaining days of autumn... sure has been pretty!