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.