My Favorite Virtual Tours

These are some places that my team and I have listed for sale. Take a look at these beautiful homes using a 360 degree virtual tour...very cool stuff!

Beautiful 5BR/5.5BA Custom Built Home

HUGE 3BR Restored Vintage Condo In Lakeview

Another Enormous and Beautiful Home 6BR/5.5BA (potential short sale!)

Mark-to-Market

What determines the market value of property? Think about what the term market value means... Market value is the highest amount that someone in an open market is willing to pay for something.

That's why today's real estate market is very tough for sellers. Many fail to realize that market value is not determined by how much was originally paid for the property, or by how much the property's value "should have" increased since you bought it. A property's market value is equal only to what the market is willing to pay for the property NOW. This is dependent on a number of factors, specifically factors related to the economy. When unemployment is increasing, credit (lending) is tightening, the dollar's value is falling, people are losing equity in other investments, and cost of living is still rising... the market value of a given property will decrease. Why? Because in a market like that, people have less buying power and tighter budgets. Unfortunately this is the case today.

The best way to determine the market value of your property is to get as many potential buyers in for showings as possible. The more people that see it, the more opportunities you have to receive offers.

Of course, before you get showings on your property you have to decide on a listing price. Sounds like a catch-22, right? Not really. Your realtor should be familiar enough with the market to know what properties similar to yours have been selling for in recent months. This is why it is very important you sit down with your realtor and have them do a comparable market analysis (CMA) for you before listing your property for sale.

I'd rather have a seller price their property lower and leave minimal negotiation room, than price the property too high (to leave room for negotiation) and not get any showings. With as much housing inventory as there is right now, people do not have the time to see everything. So they'll start from the lowest priced properties and work their way up. Don't let your property be the last on the list for viewing!

I'd also rather see a seller get 5 low offers that they have to turn down and finally get one good offer, than not get any offers at all because the property was priced too high to attract showings.

My point? Price your property reasonably and you may even end up with a better offer than if you'd priced it too high!

Ever Wondered About... Closing Costs??

Especially for a first time home buyer, but also for a repeat home buyer, it may be difficult to estimate all of the costs involved in purchasing a property. Below I have itemized all of the approximate costs involved in closing a home for your reference.

Note that it usually costs you nothing to use a realtor when buying, except that if you don't, you might unknowingly overpay or miss some necessary details and paperwork.

Also, before getting scared away by the length of this list, keep in mind that this is an extremely detailed breakdown and many of these charges are VERY MINIMAL, some under $100. Add these to a mortgage financed over the span of 30 years and the additional burden is hardly noticeable.

- Loan Application Fee is paid to the mortgage company for the appraisal and credit report $350-550

- Final Inspection and Recertification of Value $75-$100

- Points may be paid to the lender at closing in order to "buy down" your interest rate

- Private Mortgage Insurance (PMI) is required when the loan is greater than 80% of the home's value. It runs about 0.52% of the loan amount annually, or higher if the loan is over 90%.

- Prepaid Interest - you pay interest on the mortgage from the date of closing through the end of the month

- Underwriting Fee is charged by the lender $250-$400

- Processing Fee is paid to the mortgage broker to process the loan $150-$200

- Document Preparation Fee is the cost to prepare the closing documents $200-$250

- Tax Service Fee is charged by the lender to obtain tax bills and monitor payment of taxes $60-98

- Flood Certification Fee is charged by the lender to determine if the property lies in an area at risk for flooding $25-$30

- Lender's Title Insurance Policy insures your lender's interest in the property is a first mortgage $150-$400

- Settlement & Escrow Closing Fee is paid to the title company to act as a lender's agent in handling the closing $100-$350

- Transfer Taxes vary by local ordinance but are $7.50 per $1000 of purchase price in Chicago

- Escrow/Reserves vary by month of closing

- Tax Reserve Fund, if required by the lender, will be a couple months worth of taxes put into escrow

- Attorney Fee varies by attorney $400-700 total or an hourly rate

- Recording Charges to record the mortgage and assign a mortgage and deed or release $60-$130

- Property Inspection is optional (but usually recommended) $250-$500

- Lead Based Paint Inspection is optional $200-$350

- Homeowner's Insurance varies by location and property

- Service Release Premium is compensation paid by the lender to a mortgage broker 1%-1.5% of loan amount

FHA/VA Loans may also include:

-Commitment Fee charged by the lender to lock the rate and points $250

-Mortgage Insurance Premium paid to HUD to insure mortgage against default. A one-time premium is required on all single-family and 2-4 units of 2.25% of loan at closing. Annual premium is .5%, paid monthly on all property types.

- Origination Fee charged by the lender 1% of loan amount

Chicago 2016!

The major contenders for the 2016 Olympic bid include Rio De Janeiro, Tokyo, Madrid, and my personal favorite - Chicago. The final vote won't be for about another year and a half (Oct 2, 2009), however there is much planning that must take place before we even know for sure who the winner will be.

Holding the Olympic Games has historically proven to improve the city's economy drastically. The Games injected $7 billion to Sydney's economy, bumped Barcelona up to a tier 1 tourist destination, added 140,000 additional jobs in Vancouver, and increased Beijing's residential property values 59%.

In Chicago, about $1 billion of venues would be built to accommodate the Olympics. Experts predict that the games would bring an additional 250,000-500,000 tourists to Chicago for 5-7 years after, and would create 1/2 - 1 million square feet of additional downtown absorption due to the need for sales offices, vendor locations, support sites, etc. In other words... while the city might be crowded with tourists for a couple months, just IMAGINE the immense economic benefits our city will gain for many years thereafter.

The exciting thing is if Chicago gets the Olympics, the plan is to integrate most of the events into the city limits, rather than setting up a megaplex structure 50 miles out like many other host cities have done or plan to do. Notable locations planned for various events and support sites include:

- Lincoln Park: Tennis center, triathlon start

- United Center: Basketball

- McCormick Place: Paralympics, press center

- University of Illinois Pavilion: Boxing

- Soldier Field: Football

- Northerly Island: Beach volleyball, BMX biking

- Jackson Park: Hockey

- Washington Park: Olympic Stadium (will be built for a 70k capacity, which will be downsized after the games to a 5-10k capacity)

- South Loop along the Lake (near McCormick): Olympic Village where the athletes will live (this will be comprised of 2300 four-bedroom units, which will later be retro-fitted to mostly 2 bedrooms and sold to the public)

Check out volunteer opportunities to help promote the Chicago bid at http://www.chicago2106.org/ and keep in mind the great benefits you'll reap should the Olympics end up in our city eight years from now.

Invest Creatively

You know it's a buyer's market. You think it's a great time to invest in real estate because you know that prices are low and are bound to turn around at some point. But you don't have enough cash. Or you're not sure the rent you'd receive would cover the mortgage. But you know the appreciation over time would be worth investing now. If you're interested in investing in real estate for the long-term but aren't sure how to fund it, consider an often-overlooked asset that can be used for investing in property. Your retirement fund.

Since 1974, the IRS has permitted individuals to self-direct their Individual Retirement Accounts (IRAs). The majority of the population will open a brokerage account and buy some equity shares (stock) in a company they think will be a winner. They'll buy shares of a mutual fund or invest in the money market. Or they'll invest their 401K in a few of a handful of funds offered by their company. And the more conservative investor will choose notes and bonds. But a retirement account allows you to invest in ANYTHING that is held for investment purposes. So why limit your investments to financial securities? It is unbelievable to me that only 3-4% of existing IRAs are invested in alternative assets!

Before I go further, let me clarify to avoid any confusion. Please understand that what I am talking about is different from BORROWING from your IRA in order to purchase a home. I'm referring to actually investing your IRA funds in a piece of real estate which is to be held as an investment only. You don't borrow from the IRA and pay it back; you are directly investing the IRA funds into the property itself, rather than a stock, bond, or other similar security.

There are a number of restrictions on investing your IRA in real estate, however if you find a great opportunity, it is well worth speaking with a qualified person on whether this can be done or not. You'll need to speak with several professionals, including an attorney, CPA, financial advisor, custodian, and of course a realtor to help you find the property and deal with processing the transaction. But it can be done!

Your options span from a rental property in Malibu, a strip mall in Arizona, vacant land in Montana, pre-construction in Chicago, a fixer-upper elsewhere, or even a hog farm in Iowa. Anything goes. The basic rules require that the property must be held for investment purposes only - that is, you and/or your family cannot live in it or gain any benefit other than the cash flow (which flows back into your IRA) and appreciation it provides.

Next time you open your retirement account statement and cringe at the dwindling numbers due to today's economy, think about what other options you have as far as investing in a tangible asset that will provide long-term appreciation.

Contact me for more info.

Market Stimulus

Part of the economic stimulus package that President Bush signed into law last week is going to positively impact the real estate market. In addition to the tax rebates many individuals can expect to receive in the springtime, there is another benefit of this package that is more directly related to real estate.

Fannie Mae and Freddie Mac are government sponsored enterprises that help keep the mortgage market liquid by purchasing mortgages from banks & lenders; they then sell those mortgages to investors. This keeps the lending institutions from "running out of money to lend" and allows them to continue to provide financing to homebuyers like you and me. Fannie & Freddie currently cap the size of the loan they will purchase at $417,000. Part of the economic stimulus package is to increase this "conforming loan" size to $729,750. These "jumbo" loans usually draw higher interest rates, but with the passage of the law, interest rates on these larger loans are expected to decrease.

NAR forecasts that the increase in the conforming loan limit will result in:

~500,000 refinanced loans and could help reduce foreclosures by as much as 210,000

~300,000 additional home sales potentially generated

~reduced housing inventory

~home price increase by 2-3 percentage points

Additionally, part of the plan is to increase the size of FHA-backed loans to the same limit of $729,750 from a previous $362,790. FHA provides insurance on various loans and is backed by the U.S. Dept of Housing & Urban Development (HUD). The insurance on these loans allows more homeowners to purchase homes with low or no downpayment due to the decreased risk to the lender. Increasing the loan size limit on these loans will make home purchases more affordable for many.

Just Listed! Gold Coast!

1br/1ba in coveted Newberry Plaza in the heart of the Gold Coast! $289,900.

Please Refer to...

My line of business is heavily reliant on referrals. So for my post today I am going to refer you to someone else's blog post that I think will be interesting to anyone curious about the real estate market's affect on the availability of financing.

http://www.themortgagereports.com/2008/02/how-the-declini.html

The Real Estate Paparazzi #2

Some updates on much-anticipated Chicago downtown developments:

Trump International Hotel and Tower: Today's opening of the 92 story luxury development on the Chicago River at Wabash may be picketed by the hotel workers' union Local 1 of UNITE HERE. Five floors of the building will be staffed by 300 workers. Hotel officials and Local 1 have failed to come to agreement on whether the hotel's workers will be allowed to decide if they'll be a part of the union.

The Spire: Just two weeks ago sales opened on the over-1000 unit, 150 story building expected to be completed in 2012 at 400 N Lake Shore Dr. Prices range from $750,000 to $15 million, starting at about $1400/square foot. Expectations are that nearly half of the buyers will be from overseas. The low value of the U.S. dollar to many foreign currencies is sure to help meet that expectation. Construction of the building is still in a sub-ground phase where workers are drilling foundational supports into the ground.

Is Now The Time To Buy?

I've gotten this concern very frequently from hesitant buyers. "I don't want to buy now because I'm afraid prices will drop even more in the coming months." Here are two things to consider:

1. Real estate is a long-term investment. If you plan to buy a place and then sell it in a year, then yes, you should be concerned about where prices are heading soon. However, if you are like most buyers and expect to hold onto your property for 3-5 or more years, there are sure to be natural ups and downs to the value of your property anyway. There is nothing you can do about that and you'll NEVER know when the price is at its absolute lowest. Waiting for prices to drop and drop and drop could potentially leave you in a situation where prices suddenly skyrocket, and where does that leave you?

2. Home prices are not the only thing to consider. Mortgage rates change just like home prices change. What if you KNEW that home prices will drop in 6 months? Well, then you might wait 6 months to buy your home. But what if you also KNEW that mortgage rates would rise in 6 months? Then what would you do? For instance, a P&I payment on a mortgage for a $300,000 home at 5.5% interest would be $1703/month. However, if the price of the home FALLS 3% but at the same time, mortgage rates go up 0.5 percentage points to 6%, your monthly P&I payment would be $1744. So, you'd actually be paying MORE per month for a home that cost less.

View this blog from a respected mortgage industry leader for more insight to the mortgage market and where rates might be headed. And this article from NAR will help you understand how the real estate market is predicted to fare this year.