Real Estate Information

When someone calls us in today's market to list and sell their home, the first question we have to ask is, "what do you owe on your home"?  It's a questions we typically don't want to ask, but so often sellers are upside down on their mortgage that they don't even know it.  We have to decide whether the seller can even sell or if they need to sell.

What is a short sale?  Click on short sale to find out...

Before listing a short sale, we must first find out if the seller qualifies.  So often we find sellers doing a short sale and they don't even qualify.  Some uneducated realtors, not familiar with short sales, are advising their clients to list and sell their home as a short sale, and most often they don't qualify.  What qualifies you for a short sale?  There are many aspects to qualifying for a short sale, but in basic terms, if you can show a hardship such as divorce, job downsizing, job loss, lost wages, balloon loan rates, job relocation etc. you may qualify.  You must first show that due to these circumstances, you can no longer afford your current mortgage loan.  Most lenders will want you to do a loan modification, but in most cases, the payment doesn't lower enough to help with the overall monthly payment.

Once you have your home listed as a short sale and have an accepted offer on your home, the contract along with all of your financial statements go to the sellers lender for short sale approval.  We have seen these approvals take anywhere from 60 days to 8 months.  There are dozens of reasons why it takes so long, but depending on whether you have a single loan or you have two on the home, it can take awhile.

Short sales..

The Good:  Short Sales can help save your home from foreclosure.  Foreclosure is by far worse than a short sale.  Any many cases with a short sale, you can purchase a new home within 2 years as long as your credit is repaired.  With a foreclosure, it can take anywhere from 7-10 years to regain a good credit standing which can help you purchase a new home.  Also short sales sell for approximately 30% more in price than a foreclosure, which helps the neighborhood and the overall market.

The Bad:  Short sales are never easy.  Be prepared at the end of all of this hassle and months of waiting, the end lender may not accept your short sale.  As a seller, you have to get the approval from all lein holders which means your tax's, mortgage(s), neighborhood association and anyone else attached to the home that hasn't been paid.  Just one of those leins could hinder your short sale.  If just one decides not to release the lein, then your home can face foreclosure.  Our advice is to try to keep up with association payments and tax's even if you can't pay the mortgage.  That will ease the short sale process.  The less you have leined on the property, the better.

The Ugly:  The ugly is exactly what it is.... UGLY!  Even though you clearly qualify, you've done all the right things to guarantee a successful short sale, the reality is your lender doesn't have to cooperate.  We've seen so often that lenders just simply don't cooperate and decide to foreclose on the property anyway.  The two major culprits to this is Chase and Bank of America.  These two institutions are the most difficult to work with when it comes to short sales.  They promote that they work with homeowners, but the fact is that they do, but they make it very difficult.  Many times it depends on the negotiator you get on the other end of the transaction.

In summary, is a short sale great?  No, not by a long shot, but in my opinion it's a better solution that a foreclosure.  Many foreclosures could be avoided if more people knew about short sales which in turn would help home prices stabilize.  My wish is that banks like Bank of America, Chase, Wells and others would be more proactive and pre-qualify sellers for a short sale.  Once qualified, the process would be easier.  But until Banks decide to do more, the American people will continue to lose their homes to foreclosure.

What do you think?  Have you or anyone you know been through a short sale or foreclosure?  Let us know your experience.

If you want to know more about short sales or believe you qualify for one, visit our Chicagoland Real Estate Website at www.DickersonTeam.com

When will they ever learn?  There was a time in real estate where if you simply had a pulse, you could get a home loan.  We all saw the storm coming, but no one did anything to prevent it.  So now we've fixed the housing market right?  Wrong..!!  Like everything else, we decide not to go back to the way things were, we decide to over react and swing the order of things as far right as possible.

So where does the housing market stand today?  After 3 years of foreclosures, short sales, sliding home prices, lender fraud, stimulus acts and big bank bailouts, lending institutions still don't get it.

This past July (2011), home sales dropped again 1.3% after a 2.4% gain in June.   So why the drop after such a good June market.  Did buyers fall off the face of the earth?  We're more jobs lost in that month?  Did interest rates jump higher slowing down purchase contracts?  Nope... analysts blame lender stricter underwriting standards, low appraisals and looming foreclosures.

Personally, we have witnessed lenders sabotaging mortgage loans.  We have witnessed unthinkable underwritting issues, incredibly low appraisals and just flat out saying no to well qualified buyers.  We sit there and watch the news and read the reports where large banks complain about the foreclosures in our market, and how much it's costing them each month.  Wouldn't it make sense that if you ease lending back to "normal" levels, buyers could purchase homes quicker and in return ease upcoming foreclosures and eventually raise home prices again?  But since lenders continue to place stricter regulations on borrowers, things can only get worse.  There are a lot of homebuyers out there right now wanting to be able to take advantage of this historical real estate market.  But without normal lending practices, these buyers can't get approved.  It's pretty simple really, no approval... no purchase... no purchase... longer market times... longer market times...  lower prices... lower prices... lower equity...  lower equity...  foreclosure.

If you're looking for foreclosures in the Chicagoland area, go to www.DickersonTeam.com and contact us for our FREE List of the best foreclosures in and around Chicago Il.

Remember the good 'ol days when sellers could just about ask anything for their home and there was someone out there willing to pay for it?  Ah, those are some great memories.

But like anything else, what goes up, must come down.  As homeowners, we were spoiled of having it our way, or the highway, for many years during the real estate boom.  I'm not telling you anything you don't already know. 

But what I will tell you is, that in this market, setting the right price is critical to getting your home sold.  What we tend to find, especially with realtors who typically don't sell many homes in this market, is that their listing prices are all over the board.  Either their price is too high (which happens when they list the home at what the owner "thinks" it's worth), or it's way too low. 

One way to figure out what your home is worth is to know your market.  You can get to know your market by driving around and writing down homes that are for sale in your direct neighborhood.  You can then call the listing agent or go online to find out the price.  After that, find 3 realtors to interview and have them do a CMA (Comparable Market Analysis) on your home.  But before you let them in the door, be sure to ask them a few questions first.  Find out how long they've been in business, how many homes they have sold in the last 12 months and how many of those homes were listings.  It's important to find the right realtor before you can find the right price.

When you have a CMA done, be sure that the listings are from your neighborhood.  Make sure that the realtor has a price per square foot analysis and photo's of the properties so you can compare their home to yours.  Don't get stuck on the price's of your competition.  Look more at the homes that have sold in the past 6 months.  This will determine what buyers are actually willing to pay for a home comparable to your s in your local market.

A good realtor should be able to outline through an excellent CMA presentation exactly what your home is worth and what you need to do to get it sold.  Be sure to always keep an open mind when it comes to selling your home.  We have never met a person who didn't believe their home was worth more than what it actually is.

If you're looking for a realtor, be sure to follow our blogs.  We also have a blog about how to hire the right realtor for your home.

Many times my wife and I find ourselves in a situation of taking over a listing that simply could not sell with the original listing agent.  When doing this, we ask a series of questions to the homeowner of how they came to making their decision when hiring a real estate professional.  The answers vary, but overall the common answer is... "we didn't know how to hire the RIGHT realtor to sell our home".

My wife and I are always amazed how homeowners will do tons of research when choosing a dentist, doctor, lawyer, accountant etc.  But when it comes to real estate, their largest investment, they don't do the proper research and hire the right realtor to represent them in their sale. 

So what questions should you ask a realtor before hiring them to sell your home?  Below is a list of questions they may help.

• How many home sales do YOU, not your Broker, sell on average per year?
• How many homes do you sell per month?
• How many of those sales are listings?  How many are buyers?
• Do you consider yourself more of a buyers agent or a listing agent?  (*there is a difference*)
• Are you a full time realtor?
• How many years have you been doing real estate?
• Have you sold any homes in my area?
• What do you know about my neighborhood?
• What marketing are you going to do to promote the sale of my home?
• What commission do you charge and how much do you pay the buyers agent?
• Are there any hidden fees and do I pay anything if you Don't sell?
• How long of a listing contract do you require?

When a realtor does a CMA (Comparative Market Analysis) on your home, the CMA should have their Broker information, their recent sales history, comparable listings of solds, pendings and active listings, marketing plan and commission structure.  If a realtor can not show you the difference of what they can do for you for 6% compared to 5%, then something is wrong.  As a business, we all have overhead, and in real estate, our overhead is marketing and broker costs.  If a realtor is going to do the same for you whether it's a higher commission or lower commission, then the odds are they aren't true listing agents.

What is the difference between a listing agent and buyers agent?   A huge difference...!  A buyers agent simply works with potential buyers looking in a wide variety of areas and price ranges.  There is no cost to a buyers agent except for time and transportation costs.  A listing agent is a realtor who not only has the money to spend on selling your home, but that they actually invest in the sale of your home.  This is what I mean.  A listing agent uses their resources to design a marketing plan that best fits your homes desired sale.  Each home my be different and require different types of marketing to sell it.  For example, a low cost condo typically attracts first time home buyers.  While a luxury living estate home attracts buyers who typically have purchased many homes over the years and know exactly what they're looking for.  Each buyer group has a different way of how they look for their new home.  A first time home buyer will look online and in print ads to find their new home.  They will be looking for incentives such as "no down payment", "low interest rate", "free closing cost's", etc. because they are typically  short on cash.  While an Estate buyer is more strapped for time, not cash.  They will either hire a realtor to tour the desired homes for them.  Or they will go online to look at luxury homes with numerous photo's, virtual tour and community and school information.

When hiring a listing agent, they should have different marketing plans set up already for different segmented market listings.  If I were listing a home in a retirement community, I would most likely put most of my marketing efforts into local print ads.  I do this mainly because older generations still use newspapers and magazines to look for new homes they are interested in.  As a listing agent you MUST know the market of each home you're trying to sell.

A good thing to remember as well, most true listing agents aren't the cheapest.  This is because they are actually invest their money along with their time to sell your home.  They are usually in the top 5% in sales in your local market.  The old phrase is still true today, "the top 5% of realtors do 90% of your local business".

In closing, I wouldn't always recommend going with your relative or a "friend of a friend", unless they are good.  And if you ask the questions above and remember some of the key points we've touched on in this blog, you will know right away, who the best realtor is to list, market and SELL your home! 

Good luck on choosing the right realtor for your home, after all, it is your largest investment you'll ever make.

If you need any real estate assistance or have questions in Chicago or the surrounding suburbs, visit us online at www.DickersonTeam.com, we'll be happy to help.

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.