Monday, May 21, 2007

Sweeting the pot...too much of a good thing?

Ahhh...those lovely buyer incentives...they just want to reel you in, don't they? Don't get me wrong buyers incentives can be great...hey, who won't take a year free assessments or a free car? Yes, a free car. Take a drive down the Kennedy expressway and check out the screaming banner that say "Buy a condo, get a car." I'm half tempted just to call to see what kind of car they're "giving" away. I would have taken a picture, but driving and taking a picture at the same time could present some motor vehicle issues, if you know what I mean. The sign has been up for months and months, so it just got me wondering, what would drive a developer to offer a car to a potential buyer. And apparently they're not the only ones....I just saw an ad on craigslist with the same come on, but certain "conditions" have to be met to get the car. Never mind that whoever is holding the mortgage is really going to hate trying to value the property given the unusual addition of a car!

Before I get too far into this discussion, let me say, not all incentives are bad, nor all they all acts of desperation. Incentives whether you're looking at a resale or new construction, can just be used as a tool to distinguish yourself from the competition. For example, pre-construction pricing is just an incentive to get you to buy early in the construction process, and developers will partner with lenders for discounted rates. Or for a resale you might see a year paid assessments or some other sort of closing credit.

Ok, now back to this car deal. Let's be realistic, they're not going to be giving you a Lexus or a BMW, but it's certainly a hell of a way to distinguish yourself from the competition. So, let's say that the car is worth $18,000, sounds like a good number right? And let's assume that they developer is actually paying $18,000 for the car. So that could be construed as an $18,000 discount right? Well, kind of. In this case, I would want to raise the question of why is the developer offering such a "large" incentive. A plasma tv is one thing, but a car? As an agent the first thing I would be doing is checking the comps to make sure that the unit is priced in line with other new construction in the area. If it's not, that's a red flag. Next, does the property have a major flaw that is hindering it's current sale? If so, that's another red flag. Incentives, especially substantial ones, can become tricky and red flags in and of themselves. Which leads to the next question, is the developer artificially inflating the price on the home to offer the incentive? If the price is in line with the comps, then probably not, but buyer beware. They could be and all this means for the buyer is a potential train wreck down the road when they try to resell. Welcome to the legally gray area of buyer incentives.

So you ask, why not just take the dollar amount of the incentive off the price? Sure that would make sense, and that's what many developers do, but that also eliminates the wow factor of it all. And sometimes people just feel like they're getting a better deal if there is some type of incentive, period.

Ultimately, when it comes to the bottom line, the incentive should work for the you, the buyer. Paid assessments, a discounted mortgage rate, a closing credit, all those kind of things clearly work for the buyer, but if there are any red flags, it's time to do some digging. Be careful not to be drawn in by the "deal" because in the long run it might not be such a great deal after all.

Image from

Tuesday, April 24, 2007

Chicago real the top of the list again

There's no doubt about it I love Chicago....grew up here, went to school in Ohio, lived in Washington DC for awhile, and after that stint decided I need to get back. My now husband was determined on moving to Seattle and all I could say was, "doesn't it rain there most of the year?" It wasn't happening. So needless to say here I am and so are a whole lot of other people according to Chicago is apparently the most popular city to move to followed by Houston, Austin, Los Angeles and Atlanta. Being a Chicago native, I thought that was pretty cool but I've also noticed the trend in my day to day work. I'm talking with people from all over the country whether they're relocating for job reasons or are in the process of moving back to be close to family, etc. In fact one of my clients seems to be making his way around the country...he was living in Los Angeles, moved to Houston for work and is now being relocated by his employer to Chicago. Another client who was originally from Milwaukee who currently lives in Manhattan is now coming back with her husband and wants to maintain their city lifestyle. And Chicago seems to welcome all. Like I've said before, there is something for everyone in this city and I think that is so much part of it's appeal. If culture and museums are your thing, it's here, if you're into sports, name it we have it...even a new lacrosse team, the Chicago Shamrox. Our neighborhoods are pretty distinct from one other...high-rise living does not suit all...and that variety (high-rise life, bohemian chic or just a traditional quaint neighborhood), it's all here.

And though some might disagree with me, relative to other big cities, Chicago is pretty affordable. Check this out....the estimated average single family/condo price for some of the "big" cities....

San Francisco - $602,000
Los Angeles - $545,000
New York City - $454,000
Miami - $340,000
Chicago - $309,000

And to all those people that are wondering how all these new construction projects popping up everywhere are going to sell, well there's your answer.

Image from

Monday, April 16, 2007

Chicago Real Estate and the Olympics...a match made in heaven?

Since Chicago was a finalist for getting the U.S. Olympic bid I've talked to many buyers who suddenly have a renewed interest in the South Loop and other neighborhoods on the south side of the city. Or my favorite..."I was talking to my friend and they said I should look in the South Loop because Chicago might get the Olympics." Hey guys....we just got the bid and still have 2 years to see if we actually have the good or bad fortune, depending on which side of the fence you're on, of hosting the Olympics. But if and when Chicago does get the Olympics, not only will it make a profound impact on the city as a whole and the south side in particular, but it's bound to also have an impact on real estate. This impact will certainly be felt potentially as individuals buy property in the area, but the largest impact could be created by the Olympic Village that will be built to house the athletes. The proposed plan for the Village would create somewhere in the ballpark of 5000 units that post-Olympics fervor would most likely be converted into market rate and affordable housing. It would be quite the project and some developers are quite excited about its possibilities. The creation a new "neighborhood" is too much for some developers to pass up, while others are a little sceptical. While no one developer would be taking on the project alone, I think its still somewhat daunting for most....the prospect of selling 5000 units that are part of a single, though multi-faceted project. For a little added perspective, that's nearly 25% of all the condos that were sold citywide in 2006. The whole idea and what it would take for all of this to come together is not for the faint of heart that's for sure.

One can only begin to image how it would change the real estate landscape in the near South Side and for the very near future there will be many more questions then answers. When Barcelona hosted the Olympics in 1992 they did many of the same things that Chicago is planning and turned into a once "blighted" area (not my words as I've never been to Barcelona, but that of another author) into a thriving and vibrant community. If that was to happen purchasing in the "Village" could be a great all around option for homeowners and investors alike. Anything is better then the truck parking lot that currently exists on the site. On the downside, if all that is hoped for doesn't happen, will resale values tank? Will these condos sit on the market like white elephants?

I think Chicago has an amazing future, real estate and otherwise. I'd love to see the Olympics come to Chicago in 2016 and see the "Village" thrive. I don't have a magic wand or crystal ball (though sometimes I wish I did), but I'm just betting there are a lot of people out there who would like to own their own piece of great Chicago history, and a condo in the "Village" might be that piece....time will only tell.

For full details on all the Olympic happenings check out Chicago 2016.

Photo courtesy of Chicago 2016

Tuesday, April 10, 2007

So you think you know what you want in your new home?

So you think you have it all figured out right? You know exactly what you want in your new home....vintage, garage parking, wood-burning fireplace, balcony and the list goes on. You've been all over the internet and yep, that's the complete package. What if I told you that many buyers that I've worked with and am currently working with have started out with one picture in their head only to have the picture change once they start getting into properties. Sometimes priorities change like "I'd rather have a little more space/better location and forget the fireplace" or "I'd rather have less space and live in my ideal location." You name it, I've heard it. And is that a bad thing, no way, I'd rather see you end up with a home that really suits you and your lifestyle. Sometimes its the property that you least expect to interest you is the one that sends your home search in a tailspin or maybe after seeing a few homes with a particular "desired" characteristic, that characteristic loses its charm. The reason I mention this is that I think buyers feel like they have to have it all figured out before they start looking for a home, and that is so not the case. The internet is a great tool and puts all this information at your fingertips, which is great, but why add the additional pressure of having to have it all figured out to your already busy life. Also, sometimes going in with all these preconceived notions, buyers might miss a property that might be ideal except it doesn't have the fireplace or the parking is a space instead of a garage. If it had everything else that you wanted, wouldn't it be at least worth checking out? I think so. The other thing I find that comes up are the things that you don't necessarily think off right of the bat. I was out with a buyer last night that didn't realize how important being on a tree-lined street was to her until she started seeing properties. The first time I'm out with a buyer I always ask them to tell me how they feel about the places we saw....what they liked, didn't like, etc. There is always a point in the conversation where the sentence starts with, "I thought I was going to like ........... and I didn't" generally followed by a reason why. What's interesting is the reason is not always what one would expect and it could be anything under the sun, but more often than not its how something feels. Despite all of our rational thoughts about our needs, feel or some other emotion creates the bottom line. Like I always tell myself, don't over think all works out for the best in the end.

Monday, February 19, 2007

The one selling tip you won't see on every other real estate website

Everyone knows that when you're selling your home it's the little things that can make all the difference in the world, some are pretty lose the dead plants. Yep, had a listing were the friend of the seller that was residing in the condo until it was sold promised to remove the 4 foot high once green things, now brown and crunchy. And who hasn't seen one of the many lists that exist on the web how to prepare your home to be sold...clean, repaint if necessary, lose the clutter, yada yada yada. So let's assume that you're not going to repaint, but you've lived in your home and there are some marks on the walls to say the least. Or let's say that your about to vacate the home your selling and your once pristine white closests are now slashed with major black smudges. Especially when a home is vacant, small details like closet smudges stand out and seem to give the home an almost dirty lived in feel. Not good, especially after you've gone to all the effort to make your home show as well as possible. And nothing is worse than trying to get marks and whatever else off those painted walls. I've found a little trick that gets that stuff off your walls in a flash. I haven't a clue how it works, but the Mr Clean Magic Eraser takes everything off with next to no effort. I always take a few erasers to my listings do a quick run through on the walls and closets. Instead of potential buyers having their attention drawn to the black smudges that inevitably occur in closets and on walls, they're instead noticing the professional organizers that the seller had installed or the custom wood blinds. While these are minor details, the details are what can make all the difference.

Sunday, January 21, 2007

Bears are going to Miami!

Congratulations to the NFC champion, Chicago Bears! And congrats to Lovie Smith on being the first African-American head coach in Superbowl history. Here we come Superbowl XLI!

Wednesday, January 17, 2007

Buyers who go it alone...the flipside of FSBO

As realtors, we spend a lot of time talking about for sale by owners or FSBOs and you can't pick up a copy of a real estate publication without it talking about FSBOs. But sellers are not the only ones that choose to work on their own, there are plenty of buyers out there that choose to purchase a home without an agent. And of course there is an acronym for them as well, BUBBAs (buyers unrepresented by a buyers agent). Yep, I'm totally serious and it really makes you wonder who comes up with this stuff. Last year 23% of buyers did not use a real estate professional to make their purchase. Of that 23%, 13% purchased directly from a developer or developer's agent, 9% purchased directly from the seller, and that 1% that was up for a real challenge purchased a foreclosure or trustee sale. While those numbers are not huge, seeing that made me wonder what would motivate someone to purchase a property without an agent.

With the wide availability of all sorts of real estate information on the web, from listings to how-to guides, I can see why people would try to navigate a purchase themselves. While that didn't answer the why in my head, it was answered for me this weekend when I was out with a first-time buyer. They loved the properties I showed them and wanted to continue working with me. Then here came the question, "how much do you ask for commission and what kind of agreement do we need to sign." Despite the vast amount of information out there, these were two basic items that are clearly misunderstood. As a buyer, you do not pay your buyers agent a commission, that is taken care of for you courtesy of the seller. As far as a buyer agreement goes, I stand with my broker on this one, I don't have my client's sign them. Period. My relationship with my clients are built on mutual trust. Call me idealistic, but if my client's don't trust that I am doing the best possible job in their interest then the agreement is meaningless anyway.

Another point that comes to mind is the potential dollar signs that seem to spring into people's heads. The "if I don't have an agent then the seller might give me a better deal because they don't have to pay a commission to the buyers agent." This scenario gets a little trickier because the agreement on commission is between seller and the listing agent and both would need to agree to a reduction in commission. And whose to say that the seller is willing to give up their potential savings to a complete stranger.

That's not it...we realtors make it look so easy, sign a couple documents and you're all done right? While sometimes transactions do go very smoothly, others seemed destined to hit every bump in the road. Let's back up a minute though, before you ever get to signing contracts, you need to determine what to offer for the property. You offer too much, you get a quick acceptance and seller willing to give you a break because they're getting what they want and then some, or you offer too low, the seller is insulted and won't even counter. It's easy to say that you take x% off the price, but even a blanket statement like that can be inaccurate depending on the neighborhood. Market time and motivation are only some of the factors that come into play when making an offer.

Everyone is entitled to do their own thing, and I respect that. One of the things I always ask a buyer or selling thinking of going it alone is, "how much is your time worth?" Who isn't busy these days? We all have our jobs and other responsibilities that we need to meet. Do you want to spend your free time going to open house after open house not really knowing if that particular property really meets your needs or trying to hammer out difficulties that arise? In the beginning it's always a lot of fun, but after a while it's burn out time. Remember that "weekend" project that turned into weekends. Yeah, it's kind of like that. Study after study has shown that we have less and less free time compared to previous generations, so my thought it why not make the most of it.

The resources available on the web for buyers is astounding and I think it will continue to be a great resource for buyers and sellers alike. And if you start hearing the term BUBBA, don't blame me, it wasn't my idea.

Friday, January 12, 2007

The spring market has arrived, so why is it so cold?

So you always figured the spring real estate market started in March/April, yeah, in the spring. WRONG! Guess what in real estate "spring" starts shortly after the first of the year and continues through June. So we in real estate tend to get a jump start, but so do the buyers. While plenty of people still move after June, when that hot muggy summer starts rolling around, most people want to be on North Avenue beach or in the cool air-conditioning.

Since the beginning of the year I'd have begun working with several new clients, from first time buyers who made it their New Year's resolution to stop renting, to existing homeowners who are ready to make that next move. Many of these clients are in a position where they want to be in their new home in that March/April timeframe, so we're aggressively looking now. Some of my clients have more time so it's casual. I've always been an advocate of giving yourself more time as a buyer, so you're not in a pressure situation as you near your deadline.

For you potential spring sellers out there, my advice...don't wait until March to put your home on the market, unless you have a really good reason not to. You might have already missed that buyer who is looking for exactly what you have. It doesn't hurt to break away from the pack, it's just another way to distinguish your home for potential buyers. And if you're one of the seller's with a really good reason not to list early, don't fret, there is still 3 months left in the market, make the most of it. Most importantly, regardless of when you're placing your home on the market, make sure you price it right from the start. That one factor can make all the difference in the world.

While the weather might be deceiving, spring is here, so make the most of it!

Photo courtsey of Charlie James

Wednesday, January 10, 2007

From PMD to Condos? Not if Daley can help it

So, A. Finkl & Sons is leaving it's longtime home on Cortland. For those of you not familiar with the creatures that seem to emerge when you drive down Cortland Ave between Clybourn and Elston, here's a brief synopsis. A. Finkl & Sons is a specialty steel supplier that has been part of Chicago since 1879. Until recently it was family-owned and's being acquired by a German company. In the chain of events since then, Finkl will be leaving their Lincoln Park home and moving to the old Verson Steel site on the South Side. So one would assume the vacated area would then become the latest "conversion." If the answer were only that simple. The area is a planned manufacturing district, or PMD, and is currently only open to industrial development. So therein lies the problem....residential developers are banging down doors to get into what could be a multi-multi-million dollar development, but until it's no longer a PMD only industrial developers can purchase it. According to Crain's, Finkl could get 3 to 4 times as much money from a residential or retail developer than an industrial developer.

Will it happen? Well, Daley has been a big proponent of keeping manufacturing jobs in the city and of PMDs in general, it will be interesting to see what happens. Having lost industry to cheap land in the suburbs, I think Daley would do almost anything to keep industry at the Finkl site, we'll see how "open" he keeps his mind. The potential lack of industrial interest could make it a moot point, but I'm sure he'll be keeping an eye on tax revenues that the site will generate either as industrial or as residential/retail.

So assuming the area's PMD status is removed, what happens next? Right off the bat the bidding war will begin, but what would the vision for the area be? What would this conversion be like? Obviously, the Finkl plant would be razed, but with a blank slate to work with, would it turn into a homogenous area without any character? I have to agree with the Chicagoist on this one...I'd rather keep it industrial if that's going to be the case.

Having grown kind of fond of the Finkl plant, I must say, I'm going to miss it. I always felt like a little kid trying to see what's going on inside and waiting for one of those monstrous machines on wheels emerge. Residential development could be great for the area and it would be nice to see that section of the Chicago River cleaned up. Only time will tell.

Picture courtesy of Erik Unger

Thursday, January 04, 2007

Who is on your real estate team?

It's not a joke, do you feel like you have a team working for you? Your agent, your attorney and your lender are your team, all working towards the common goal of getting you into your new home. I was having a discussion with a first-time buyer client about the process of buying a home, everything from pre-approval, to the appraisal, and finally closing. And like most first-time buyers, she had a mini-meltdown when she realized everything involved in getting from point A to point Z. Explaining that many of the specifics points happen behind the scenes and don't require direct action by her, like the mortgage commitment and title search, seemed to get her to breathe a little easier. Yes, the process can seem overwhelming and stressful, but that's where having a great team can help. When my client's have an accepted offer, the first thing I do is get in contact with my client's lender and attorney. They need to know who I am and more importantly they need copies of the accepted contract, etc so they can get started on their ends. By making their jobs easier, my goal is to help relieve some of my client's stress and anxiety. It's one more task completed and one less thing for my client to worry about. A good lender and attorney can do the same thing. You might have seen my previous rant on how not to hire a real estate attorney, and this is one of the reasons why. A good attorney can answer your questions and even help smooth out even the bumpiest of transactions. Sometimes attorneys don't want to share too much information with the real estate agent, so it's always important to let your attorney know that it's okay to share information with your agent. A good lender gets you the financing you need, and follows through until your closed. One of the things I love about my mortgage guy is that he's upfront. He doesn't play games and he gets the job done. I told him he's not allowed to go on vacation because no one else stays on top of the process like he does. Needless to say, he doesn't listen to me. It's amazing how much smoother a transaction can go when I am able to freely communicate with the attorney and the lender and vice versa. Ultimately, it's important to get recommendations whether it's from your agent or friends and family, don't discount the importance of the roles these people will play in the completion of your home purchase or sale.