Marion Digre - Real Estate Agent - Oak Park Area, IL

Home Warranty Advantage

2011-12-14T11:18:00.000-08:00

Homeowners Insurance is great – it covers a lot of things like fire, theft and vandalism – and in case there is a storm that causes significant damage, the policy’s right there to protect the owner. But what about a policy that looks after the interests of the property while it is listed on the market and one that works to the advantage of both sides of the buying and selling fence? A home warranty is a perfect supplement to a homeowner’s insurance policy and it broadens the overall coverage in a variety of ways. Here is a rundown of the variances between the two and how a seller getting a warranty policy on their home for sale is a great tool!

The Benefits of a Home Warranty Policy

While home insurance largely covers catastrophic incidences and damage, a home warranty policy goes far beyond in that it addresses the home including wear and tear items. Also, maintenance and repair is typically included in a home warranty policy. As a selling tool, this is fantastic, because during the process – or even after the home is sold – for up to 13 months, the areas of the home covered under the policy are warranted. Oftentimes, a buyer will come across an issue with something in the home that could become a deal breaker but with the added peace of mind of a warranty, the seller can sit back and relax knowing that most things will likely be covered. Examples of things that fall into range of coverage on a home warranty are flooring, plumbing systems, electrical systems, and wear and tear of these areas plus also the furnace and in come cases, the roofing or other major components of the home.

Home Insurance Policy Advantages

The single biggest difference between a home warranty versus a home owners insurance policy is that the latter covers the basic replacement value in general if there is a major catastrophe such as a storm that causes damage, fire, theft or vandalism or personal liability. There is not personal liability coverage under the home warranty policy, rather it focuses on the “used” contents of the home.

How a Home Warranty Policy Helps in a Real Estate Transaction

Home Warranty of America is a company that provides very good coverage under their policy (for a list of their benefits, click here) including 13-months of free seller coverage, with coverage beginning on the first day of their home being listed for sale. The free coverage period for the seller lasts for up to 180 days and the policy is only paid for upon sale of the home at closing. The best part of a home warranty policy is that even after the buyer has taken possession of the property, the coverage continues. That means that as a seller, you will not have to contend with any last minutes issues that can and do come up. When applying for the warranty, be sure to choose coverage that addresses all potential concerns you may have for the home so that if there were a need for repairs or coverage, you would have it provided as a benefit.

An industry association held a study in which it was determined that not only do homes sell up to 50% faster when there is a home warranty policy in place, but also the selling price typically comes within three percent of the list price. In today’s real estate market – this is an advantage that any seller would want to avail!

Avoid Making Lowball Offers and How To Handle One That Finds Its Way To Your Table

2011-11-29T12:38:00.000-08:00

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So many sellers these days are finding themselves in a quandary when they take a look at the offer they receive on their home. The prevailing question among them is, “Why are the buyers trying to beat us up? We’re not all in distressed sale situations!” With the market the way it has been lately, it’s no wonder that buyers feel they can step all over homeowners selling their homes. The process of making and accepting an offer, no matter how low it might be, can be managed tastefully however, by following these guidelines for both buyers and sellers.

Steps To Take Before Making An Offer On a Home

Find out what kind of sale it is. If the property is being sold as a short sale or foreclosure then you might handle it differently than if it were a regular re-sale where the seller is not in a distressed situation. It’s important to be careful of not offending sellers that may just be looking to move up into a better home by making an unrealistic offer on their home. By doing so, you can risk losing the house if the sellers choose not to entertain your offer at all.

Learn whether other buyers out there have made any offers on the property you are considering. The presence of one or more additional offers drastically impacts the likelihood of success when it comes to providing a winning bid on the home. Consider whether losing the sale is a risk you are willing to take by making too low an offer.

Be prepared with documented knowledge of the home’s true market value. When you go to make an offer this will have a significant impact on the viability of your offer when you can corroborate the amount with the current market value of the home. It is important to do so based on comparable, like-kind properties located in the same vicinity.

Make sure a prequalification letter, demonstrating that you are a serious contender for the purchase of the home, accompanies your offer. When sellers see that a lender has reviewed your application and is willing to entertain your loan, they will likely take your offer to heart and continue with negotiations. Sellers now often prefer to deal only with prospective buyers that have a prequalification letter on hand at the time of making an offer.

Communicate the reason for your offer if it is substantially lower than the asking price. Many times potential buyers make lower offers as a means to compensate for repairs that may need to be done or to accommodate other things such as purchasing new major appliances. Sellers do appreciate the need for a home to be move-in ready and when any repairs that may be needed are documented and supported with quotes from contractors, the offer then makes more sense to the seller and reasonable negotiations can begin on that basis.

What To Do When You Receive a Lowball Offer

It is important to keep in mind that given the soft market we are experiencing right now, there are less buyers vying for more homes so they will try to get the best deal possible. Try not to take it personally, rather handle it professionally by discussing with your agent how to respond to the lowball offer.

Any offer received is a good offer. Since negotiations begin with that very first step – an offer should be viewed by the seller as a starting point.

Buying and selling real estate is purely a business transaction and it should be treated as such. It is not anything to be offended about.

Keep in mind that a sale is not possible without negotiations and negotiations are not possible without an offer. So when an offer is presented, it’s a good thing.

The process of selling (and buying) a home is like a rollercoaster ride. It is important not to get too disheartened if a low offer is received. As with the many ups and downs that can occur during the process, it is usually something that is overcome in a way where all parties are satisfied.

Do not underestimate the power of making a counter offer. Not only does it communicate to buyers that you value your home and believe you have priced it effectively, but it also brings to light just how serious the buyer is about purchasing the home. Believing that the prospective buyer is not realistic or serious can hinder your chances of securing a successful sale.
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The key on all sides of the fence is communication. As long as there is an open line of communication between all parties – no matter how low an offer may be, if it is the right home for the right buyers, the sale will most likely happen. Happy negotiating!

Buyers Are In The Driver’s Seat While Sellers Are Riding Along

2011-11-14T11:18:00.000-08:00

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If it is a buyer’s market and these buyers are buying properties, then obviously there are properties on sale. But what makes sellers want to sell during a time when clearly the other side has the edge? Believe it or not, there a several reasons for sellers to want to get in on the action nowadays, despite it not being the best market ever. In this article, we take you through those reasons so that if you are a homeowner who is contemplating whether or not to sell, this may help you decide.

Confidence The Sale Will Go Through

Buyers are in for the best deal of their lives, in terms of the low, low interest rates available to them right now. Though this does not impact sellers directly, what it does do is to almost ensure that their home will be sold. Looking back to the late 1980s when interest rates peaked at an all-time high of about 18%, many sellers had their plans set on moving contingent upon their home being sold, only to be smacked with the buyer’s offer being rescinded. The reason for this was that by the time buyers finalized their loan, the interest rates climbed yet again – leading to an unprecedented high cost of mortgages and their inability to afford them. On the flip side, today sellers are now confident that their sale will indeed go through as a result of the great rates and low home prices available to buyers.

More House – More Gain On Investment

Given that housing prices are down at the present time, current homeowners who are considering moving up and buying a better home are able to realize this because of the reduced housing values. They are comparing the choice to either remain in an existing home, wait until the market rebounds and the existing property appreciates again – with selling now and buying a new home worth more right now that will also appreciate once the market recovers. Looking at an example of a $100,000 home that is currently worth $80,000 in the down market – if the homeowner was to remain in the home and wait until it gained its lost value, it could take anywhere from five to ten years. Similarly, if the homeowner opted to sell the existing home for $80,000 and move into a $200,000 home currently valued in the down market at $160,000 – in the same five to ten years, the gain would be $40,000 – twice as much as the first home. Adhering to this philosophy, many homeowners are jumping on the real estate bandwagon again and buying up into new homes after selling their existing ones.

Exhausted Patience Waiting For Market Rebound

Many homeowners have been sitting the market out, waiting for recovery since the beginnings of our current real estate down market. Five years later, they are seeing no change in the market and in fact can see home prices that have not yet hit rock bottom. These homeowners have come to realize that it is a better choice to sell now and avail the opportunities that present themselves with low interest rates and the potential to incur significant gains on their real estate upgrades within the next five or ten years.
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Each individual situation is a different one so it is highly advisable to consult with an experienced Realtor who can guide you and help you determine whether it makes sense for you to hold on to your property a bit longer to join the masses who are selling now to reap benefits later

Energy Conservation In Your Home This Winter – Protecting the Environment AND Your Wallet

2011-10-27T12:12:00.000-07:00

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One of the most significant money mongers is the heating bill in a home – especially during the coldest winter months. And one of the best ways to address the heating efficiency in your home is to take a few measures that will ensure efficient running, ending up in less waste and more money in your pocket. We’ve put together some tips to help get you started this year on the winterizing energy kick you and your house can benefit from:

Seal Gaps In Doors, Windows and Access Points

Many people underestimate the power of proper seals in windows and doors and how keeping a bit of draft out can make all the difference in keeping the home warmer all winter long. For a few dollars, you can buy a caulking gun and some caulk to re-caulk the draft spaces – plus you can replace door seals if they are corroded. You will be surprised at how much of a difference this change makes. This is something that should be checked every year, though it may not be necessary to do it each year. The savings can add up to several hundred dollars year-round and also positively affects cooling efficiency during the warmer months.

Get An Energy Audit Performed

Depending on where you live, you can request a free energy audit from agencies that come out and perform a thorough check on your home and its energy use. You will also benefit with a pack of energy saver light bulbs (usually up to $100 worth of bulbs). You can find a list of reputable agencies to perform free energy auditshere. All in all, the savings can pile up quickly when you take a few steps to actively reduce energy use in your home.

Have Regular Maintenance and Service Checks Done

By having the major heating and cooling appliances in your home regularlychecked and serviced, not only can you prevent major expenses from occurring by catching problems before they surface but you can also preempt any issues from developing. Keeping your appliances in good working order will result in them running better, producing better results and spending less energy to accomplish these results.

There are many functional and financial advantages to getting energy efficiency upgrades for your furnace system as well. Minor changes can have a major impact on the amount of money it costs to heat (and cool) your home since fuel costs are significantly reduced.

Harness the Sun’s Energy

Since grade school we have learned about the power of the sun’s energy and this could not be truer in practical life. A lot of homeowners have no idea of how much warmth they can generate in their home just from the heat from the sun’s rays. Depending on the position of your home, you can heat up a room quite a bit by keeping the shades open. Skylights also have a good deal of impact on the heat (and light) of a room.

Cut Back on Excessive Energy Usage

When possible, turn extra lights off, use electrical appliances only when necessary, turn the TV off when it is not being viewed, and set your thermostat on an automatic timed schedule. These measures and other similar things will reduce the expenditure of energy in your home and you will notice a sizable reduction in your electric and heating bill. For even more success, get the entire household involved so that it is a collective effort.
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There are myriad ways to conserve on energy. On the Internet you can find many resources for tips and tricks on how to make adjustments that end up helping to save money while protecting our environment as well.

With So Many Foreclosure Flops, the Best Opportunity for 2011 Lies in Flipping ‘Em

2011-10-17T08:08:00.000-07:00

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Most people these days are wary of making any investments in the real estate industry until the financial situation improves – however, with some time and effort the current gloom and doom outlook need not be. For the right investor, seizing opportunities that lie in REOs (Real Estate Owned properties) and making improvements upon them could be the perfect solution to keeping within the real estate arena yet doing so with considerable less risk. Here, we’ve put together some basics on what to consider when looking at a property to flip.

Assess Your Budget

Like any investment, purchasing a property with the intent to put more money into it to improve upon and correct existing problems, needs to be done with a well thought out plan. The very first thing to consider is what budget you can set aside for this endeavor. Keep in mind that many times a home that was previously owned by private owners and then subsequently foreclosed, has a chance to have hidden “surprises” and structural problems that are unexpected. When you are assessing your budget for a flip project, be sure to include an extra margin amount for those sometimes lurking beneath the surface and unforeseen expenses.

Review the Property

When looking at potential flip opportunities, we strongly suggest having a building inspector review the property for a clear picture of what you may be getting into. The types of homes that are ideal for flipping are the ones that simply could use a bit of updating; new floors, updated kitchen appliances, fresh landscaping. If what you come across are systemic problems, like bad plumbing, a weak foundation or an inadequate roof, it is best to steer away from that property.

Make a Plan

Many novices doing a flip for the first time make the mistake of not researching the steps needed and also failing to create a clearly outlined plan of action. When you embark on a flip knowing all the potential costs, having identified the vendors/suppliers you prefer to work with for the scope of the project and you know exactly what you want to change versus what you want to leave as is – the success quotient is much higher. It goes without saying that a project of this size without a plan of action is a recipe for disaster.

Be Disciplined
A lot of homebuyers who have ventured into property flipping recount having slipped out of their budget or letting the time frame and schedule lag significantly behind. It is very important not to steer away from your original plan, as much as possible. There will be times when you will have no choice but to handle something you hadn’t planned for in the first place, but generally, you will need to be vigilant about budget and schedule.

Choose Vendors Wisely
A very common mistake committed by inexperienced self-contractors during the process of fixing up a home for resale, is that the vendors and suppliers they choose are not certified or qualified with enough experience. While it may be tempting to hire the lowest costing service providers to handle your home improvement tasks, doing so can end up disastrous and even cost you thousands of dollars. This holds especially true for the larger improvements made to a property, such as a basement finishing or a kitchen/bathroom extension and remodel. The old adage “you get what you pay for” is one to be taken seriously when it comes to flipping a property and hiring qualified subcontractors is an investment within your investment that you can’t afford to ignore.

Be Realistic
Finally, when putting your property on the market after you’ve made all the necessary improvements, be careful not to overestimate the cost. By remaining realistic when pricing the property, you will most likely ensure serious buyers considering your property. Inflated prices will only hurt your chances to sell within a reasonable profit. Another thing to remember when putting up the home for sale is to be open with potential buyers. Being forthcoming about the circumstances, your involvement in fixing up the home and in what capacity it was purchased – will create goodwill with your potential buyers and even open up the door for more successful flips in the future.
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Transformation of properties, in order to improve and increase their resale value has been a phenomenon long-standing, however during the last decade or so the occurrence has multiplied. Especially with the number of foreclosures listed these days, now is the perfect time to buy and hold, or better yet, flip the property and make a handsome profit on it in the process!

Three Mistakes Sellers Make That Get In The Way Of Selling Their Home

2011-10-03T10:08:00.000-07:00

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With the housing market as it is these days, when sellers put a home on the market to sell, they should definitely do everything they can to get that home sold! There are three common mistakes made by many sellers that if avoided, can make the difference in a successful sale or no sale at all.

The Home Is Not In Saleable Condition

If there are major issues with the house that have not been tended to and cared for, the chance of selling the home will obviously be slimmer. This goes for things like siding, exterior doors, windows, furnace and other components. Aside from functionality and curb appeal, buyers also notice cosmetic things such as worn carpet or worse, stained and dirty flooring, scuff marks on the walls or dents from moving if it’s a vacant home. Clutter, dirt, foul odors from either smoking or pets and general disarray are also problems that get in the way of buyers being able to see the house for what it really is.

Make an effort to spruce up the exterior. If possible, invest in some light landscaping unless you already have a decent exterior. Do make sure everything is neat, clean, walls freshly painted and carpets steam cleaned. Have a cleaning person do a once over on the home, even if it is vacant – so that the fixtures, floors and windows are appealing.

There Are Too Many Location Obstacles

People seeking a home usually have something in mind, particularly in terms of location. Not location “where in the city?” – but location “what’s nearby?” If the property is backed up to a main road, it is usually not as desirable. If there is a commercial area very nearby, lending to a noisy street all day and night long, buyers will usually turn away.

Factors that do make your location workable and even desirable include being in a good school district, in a neighborhood where housing values have historically tended to be higher than other neighborhoods or even the existence of a nearby park or recreation area. If these things are not present the best way to compensate is to focus on, feature and highlight other high selling points of your house. And if the location ends up being a deal-breaker, then compensate the buyer with price or other concessions.

The Selling Price Is Unrealistic

The single biggest hindrance to a home selling, let alone selling successfully – is its price. If your home is the highest priced home in a neighborhood of many “for sale” signs, then buyers will naturally gravitate to other homes on the same street. If your price is set according to the amount you paid rather than the current value, then in a market like the current challenged one, you will suffer lackluster interest from buyers.

The best way to manage pricing of your home is to connect with your Realtor, who will be well versed in appropriately pricing properties. Not all Realtors are created equal, so do your homework and select one with a good track record of home sales and with a good amount of experience. Your agent will likely conduct a detailed comparative market analysis (CMA) to determine exactly what homes that are similar to yours are priced at and recently sold for in your vicinity. It is very important to set a realistic price and unfortunately the price that is set based on the current market is not what you may have expected based on what you might have paid for your property.
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Aside from these three factors, homes also don’t sell if the seller is not flexible or willing to go with the flow. Try to be reasonable in your expectations and hire a Realtor you can trust so you can be comfortable taking his or her advice to help you achieve successful selling results!

Is a Real Estate Investment a Smart Move Right Now?

2011-09-14T12:46:00.000-07:00

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Here’s a quiz…

TRUE OR FALSE:
1. Home prices have come down over 50%.
2. Over 6% of households are in foreclosure.
3. The suspension of foreclosures by major financial institutions will delay recovery of the real estate market.

The answer for each is – IT DEPENDS.

Prices of homes have come down considerably in the last few years. Foreclosures are also increasing by an alarming rate. This does not mean, however, that there are large amounts of foreclosures today. The numbers are still relatively low overall.

What does this mean? Because foreclosures make up such a small percentage of households in our market, if some were suspended the impact would be insignificant.

It is important to recognize that real estate markets are local, that prices all over the country haven’t taken a complete nose dive, and that the market isn’t flooded with foreclosures.

We, as consumers, have been inundated with a continuous stream of negative news from the press because extremes, whether booms or busts, get attention. Five years ago, good news about the real estate market was exaggerated.

Now the statistics from the worst market in the country are generalized as if they were occurring everywhere. That’s why it’s so important for understand the complete real estate picture to separate fact from fiction.

Here’s another quiz:

TRUE OR FALSE:
Now is the best home buying opportunity of a lifetime.

The answer for the real estate marketplace is TRUE!

Here’s why:

1. The Market
We have clearly seen the bottom of the market. Unit sales have dropped after the April 30, 2010 expiration of the home buyer tax credit, but annual sales have been stable for three years.

2. Interest Rates

Interest rates are at generational lows. It is hard to believe they will go much lower, and they will definitely rise as the economy begins to improve. We would normally think of 5.5% as a terrific interest rate but the current rate of 4.25% is outstanding. A buyer borrowing $250,000 over 30 years will save $2,700 each year over the life of the loan. That’s a total savings of $68,000!

3. Quality of Life

It’s not unusual to hear conversations about the rent versus buy scenario. There are some advantages to renting in reality, but buying is usually the best choice. The best communities are made up of owners who care about their properties. Owning a home is one of the best ways to take control of our future.

Houses are more affordable than they have been in years. Stable prices and incredibly low interest rates allow buyers to purchase more for their money so they can enjoy living in a house that better meets their lifestyle needs.

4. Long-term Investment

Right now, many people are carefully considering whether or not to buy a home. Lack of confidence in the economy and the job market are holding them back. But there is only so long to wait before this opportunity ends. If life circumstances dictate a move, it’s best to act now. We can’t imagine that conditions will get much better for potential home buyers in this area!

In five or seven years, you will probably be glad you bought a home, or be sorry you didn’t. It’s best to make sure you have the knowledge to make the right choice now, or else you will look back and say, “I should have bought when prices were good and interest rates were low.”

Seven Ways A Home Remodeling Job Can Take a Turn For the Worst

2011-08-29T14:24:00.000-07:00

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Unless you’re a “Do-It-Yourself” guru chances are that, like most people, when it comes to a remodeling project for your home you are going to have to rely on the services of a professional. We’re here to tell you that it is not as simple as picking up the phone, inviting someone over to do the work and “voila!” everything’s perfect. In fact, if you are not careful there are major repercussions of a bad remodeling job that can take years and thousands of dollars to recuperate. Here are seven things that wreak havoc – and if avoided can mean a successful renovation project in your home.

Choosing the Wrong General Contractor

This is the single biggest mistake committed by those looking to save some money, want to speed up the process or simply don’t know any better. Ill-informed homeowners who are hasty in selecting a GC run the risk and often suffer major consequences after having chosen someone who isn’t properly licensed, has a bad history of performance, lacks experience or is unscrupulous.

Before hiring a GC make sure you check them out, trust them and feel comfortable with them.

Not Being Precise in Specifications

Unless the job is extremely simple, there will be intricate details to iron out before beginning the project. For the GC to provide an accurate quote on their services, they will need a clear picture of exactly what is expected of them. A common mistake made by property owners is to allow the contract to be written in basic terms. This leaves a lot of guesswork and gray area – plus consequently a lot of leeway for the contractor to decide what and how the work will be performed.

Account for every last detail on the contract, in advance.

Revolving Door Plans

Unless plans are outlined in advance in a clear-cut manner that leaves no room for major blunders, there is always the potential of major mess-ups. One surefire way to confuse the GC and cause a lot of damage (both monetary, time and the relationship with the contractor) is to constantly change plans.

Carefully consider what you want done, plan it thoroughly in advance and stick to the plan.

Underestimating the Costs

One of the easiest ways to ensure a renovation project “goes under” is to miscalculate the amount of money it will cost to have everything in the plan completed. Underestimating costs leads to an unending cycle of trying to keep up and it can ultimately end up in total project breakdown. If there is not enough money to complete a job for which the costs were not accurately assessed, it can mean unfinished projects that sit there for weeks or months till funds can be generated.

Thoroughly research how much everything will cost; get multiple quotes on service, materials and labor.

Losing Focus

Not keeping your eye on the tasks at hand that were established to begin with is one of the best ways to let things wander out of control and end up in a whirlwind of unfinished projects that have little to no direction. An example of losing focus is if the original project is to replace kitchen appliances and install backsplash tiling and halfway through the project the homeowner decides to change the countertops too. Had this been determined in advance, the GC would most likely have removed the old counter tops, made new assessments and measurements regarding the backsplash and then proceed. The wasted time, money and energy that would go into changing plans in the middle would be significant.

Know what you want to have renovated, plan it in advance and don’t deviate from the project.

Forgoing Quality for Savings

To put it simply, if you are cheap you will end up with cheap results. A lot of homeowners make the mistake of skimping out on quality to save a few dollars but in the long run it ends up costing them a lot more. Whether it means having to redo the same renovations later after they don’t last long enough or less-than-perfect results, using cheap materials or a bad contractor is a major mistake that many people make when remodeling their home.

Check with your GC, research the varying levels of quality available for materials – and buy the best quality you can afford.

Ignoring Things Below the Surface

Cosmetics and aesthetics are indeed a huge part of renovations but too often that is the only thing that property owners and bad contractors worry about. By not looking beyond what is visible and ignoring the important foundations of the project, the risk of breakdown are imminent. Not only does this translate to a huge waste of money if and when the project needs to be repaired or redone, but also the functionality of the remodel is impaired.

Ensure that all aspects of the project are performed using top quality workmanship, materials and specs.

There is a lot of information on the Internet, in home improvement department stores and through quality contractors. A great way to avoid a lot of mishaps is to use known vendors that have long-standing relationships with your local Realtor.

Exploring the Main Differences That Makes a Short Sale a Better Choice Than a Foreclosure?

2011-08-15T12:00:00.000-07:00

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Just a couple years ago, most people usually thought they had to give up their home in a foreclosure when they faced a financial stonewall. However, since then the phenomenon of short sales has been on the rise, leaving homeowners a bigger, better and brighter option for the present and future. In this article, we explore the comparative differences between the two so you can gain an edge when deciding which is better for you.

Purchasing Power

After walking away from your mortgage through a foreclosure, you can expect to feel the negative impact of it for five years, in terms of being able to purchase another home. Even then, like a bankruptcy, a foreclosure is something you will perpetually have to report no matter how long it has been since the home went into foreclosure.

Though these days you see a lot of talk about the financial and credit impact foreclosures have on homeowners, the unseen part of it is something to be dealt with. Going through this process can leave a lasting emotional hole in people who otherwise were law-abiding citizens, going about their normal lives when all of a sudden they are faced with severe financial hardship and must resort to extreme measures. That, or if the value of their home has dropped well below the amount they paid for it and they see very little hope for the future.

Short sales are much simpler. They will affect your purchasing power for a mere two years, often just the amount of time it takes to get back on one’s financial feet. Not only that, there is no requirement to report a short sale transaction.

Credit Outlook

There are two main areas that are of concern when it comes to your credit – your credit score and your credit history. In case of a foreclosure, credit scores drop a whopping 200 to 300 points. This can have a significantly negative impact on your ability to purchase big-ticket items or secure loans in the future. Not to mention it takes years to rebuild a credit score that has dropped that low. In terms of credit history, a foreclosure remains visible on your credit report for anywhere from ten years or more, rendering each future potential lending transaction either useless or very hard-pressed at getting approved. The overall impact you will see on your credit will be for about three years.

Short sales are far easier on your credit outlook, in that the point drop is only about 50 on average and the transaction itself will impact your credit profile for as relatively little as 12 to 15 months. The one thing to keep in mind is that if you have defaulted on any payments or if you already have a weak credit profile, the post-short sale point drop on your credit report can be more than just 50. Also, there is no formal reporting or declaration of a short sale on your credit report like a foreclosure although the transaction will show up as either settled or not paid in full.

Amount Still Owed

Usually there is a gap in the amount owed after owners walk away from a property and the bank assumes responsibility. In case of a foreclosure, given the amount of processing time and resultant vulnerability and exposure of the property, the value can and often does drop greatly after vandalism and from sitting there unused. The Deficiency Amount (also called Judgment Amount) is the difference that remains after the bank calculates what was owed on the property at the time of foreclosure and when they sold the home. Because of this vandalism and vulnerability, the amount of value drop is far more than with a short sale, when the homeowners are still residing in the property during processing. The bank has the legal right to pursue homeowners for the amount difference.

Short sales differ in that not only is the deficiency amount much less, but in most cases your attorney can negotiate a waiver of that amount so you don’t have to pay for it.

Is It the Right Time to Sell or Stay Put and Wait For Change?

2011-07-29T09:54:00.000-07:00

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These days so many homeowners are wondering if it’s the right time to move on and move up into a better home. So many questions ensue. How long will it take for the market to be back to normal again? Will today’s interest rates go on indefinitely? How can I tell before they begin to climb again? If I wait long enough will my home’s value come back up to what it was just a few years ago? The answers are not so simple but one thing is for certain. Property values take time to climb up and rebound after bouts of the situation that we are facing at present. Here are some pointers that will provide further insight as to why selling sooner may make more sense.

When Incomes Go Up – So Do Property Values

Many industry experts believe the only way for home prices to go back up is for buyers to have higher incomes. Based on this assumption, a good number of homeowners’ expectations that their property will miraculously gain 20% to 30% of value on the market within the next year or so are sufficiently unrealistic. Keep in mind that the average annual income increase nowadays is anywhere from three to five percent, which translates to a waiting period of until at least 2017 before you will regain housing values from a few years ago.

How Long Will It Take For the Job Market To Improve?

As we find ourselves in yet another double dip recession and the nation is struggling to deal with the economy, the unemployment rates in many states continues to plummet or stay where it’s at; a dismally low level. No one can say how long it will take for the job market to improve but analysts predict that though progress will be slow it will happen.

Interest Rates Are At “Go Get ‘Em” Levels

Being able to finance a home was much easier just a few short years ago but having said that the fact of the matter is that now, interest rates make up for the otherwise detailed and careful application and approval process. While in the midst of a 30-year low, interest rates at about 4-4.5% clearly indicate this is a very good time to buy a home. Of course, for owners of existing homes this can mean a loss on the property they sell but by moving into a home that will most likely increase in value in a few years’ time it offsets the loss.

Keep Living But Live Happier

Why not wait for the market to improve before selling your existing property and moving into another? The return on investment can be significant when you factor in the changed interest rates regardless of improved property values. Consider this: Sell an existing home for $200,000 today and buy up into a new home worth $320,000 at the current low interest rates, versus wait for 5-7 years to sell the home, which by then might be worth $220,000. The interest rates by then to purchase the same new house worth $350,000 will be at least a couple percent higher. The end result is about $12-$15,000 in savings by selling and buying sooner – and that many more years of happiness.

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A few other things to consider are whether or not you are willing or able to maintain your existing home or would you prefer moving into a condominium or relocating to a warmer climate? Would this be a perfect time to sell your property and invest in a dual home that can also be rented out for some additional income? Also, how can you be sure your property value will not dip even further as you wait the market out? Wouldn’t you want the freedom to at least be able to get into a newer home, at a great price because of the current housing prices?
The best way to really know what steps to take is to contact your Realtor for an in-depth consultation and to learn whether now is the perfect time for YOU to sell.

How to Make a Buyer WANT Your House! Staging your house, before it’s too late and you lose the sale

2011-07-12T07:42:00.000-07:00

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If you’ve shopped for a home, chances are you’ve come across one that you really wish you hadn’t visited in the first place. True, houses for sale ought to have a certain “lived in” quality to them, because they are to be lived in after all, but the art of tactfully balancing just the right amount of homeliness with neutrality is not so simple. You need to know what you’re doing when you prepare to set up your house and show it to potential buyers. We’ve put together some great tips for home-sellers so you can get the same results you’d get by hiring a professional staging company.

Fix Up the Place

One of the biggest mistakes homeowners make before putting their house up for sale is to neglect areas in the house that need attention. Folks, don’t leave that faulty step unrepaired, only for a potential buyer to step on, slide off of or worse, get injured on – FIX IT! You might think potential buyers won’t notice but they are walking around on your premises like hawks, noticing each little detail. The good news is that they are noticing the first-rate stuff too, so as long as you have the home’s amenities in order and other major areas in tip-top condition, you should be in good shape. Here’s how:

Get Rid of the Clutter

If you want to successfully sell your house, you need to get those potential buyers to imagine they already live there. Too much clutter, hobby-oriented items or personal possessions that most people may not be able to identify with, can easily get in the way of that vision. Organize things in stylish storage bins or better yet, have a garage sale before the open house and get rid of unwanted stuff. You have to move soon anyway, why not kill two birds with one stone? A clean and organized home will seem like a clean slate to buyers, who can then see themselves moving in without much hassle and settle in effortlessly.

Stay Neutral

Skip the tie and dye sofa cushions, shaggy 70s rug and don’t light incense on the day of your open house. While you’re at it, don’t fill the space with gender-specific things either. Buyers should walk into a neutral ground – literally. Light to medium colors, preferably in beige tones, are the simplest way to pull buyers’ attention away from other personal aspects of your home that they may not be able to identify with. Beige goes with almost anything so if someone considering purchasing your home can imagine their things in the space, then you’ve just crossed one of the most major hurdles in home-selling – making a buyer identify with the home.

Make It a Modern, Inviting Environment

If you don’t already have them, invest in a few modern decorative accessories to improve the look of your space while lending an air of style and taste and making it more enticing. It doesn’t have to take much but depending on how you set it up, you can enhance a given space with a few simple additions and deletions. Take your over-crowded study and rearrange the bookshelf to display only a few strategic but essential books, like a leather-bound set of encyclopedia or some literature classics. In the same way, leave a few children’s toys in a child’s room but be sure to display them tastefully.

Put a Few Finishing Touches in Place

The idea is that you want your house to be sold – and you probably want it sold fast. If you are careful to respect the people who are visiting your space to decide whether it’s the right one for them, then you are doing something that a lot of homeowners neglect to consider. Taking down a piece of controversial artwork that may make a potential purchaser uncomfortable could be the one bargaining chip that could make or break the sale. Arranging for all those who currently live in the home to be away during the open house and while showing the house being dressed in a way to present a good impression are also great ways to tip the scales in the right direction.

It’s very simple. You need to make the potential buyer feel right at home from the get-go. If from the moment they walk in and smell cinnamon cookies baking makes them wish this was already home – then you’re already two steps ahead and can call the open house a success! Of course, a signature on the dotted line is where the real success lies and as long as the buyer feels at home, chances are that if everything else lines up – the sale is a winner!

What Are FHA Loans and How Do They Benefit Me As A Consumer?

2011-06-28T08:45:00.000-07:00

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The Federal Housing Agency (FHA) doesn’t directly offer loans. Instead, its purpose is to provide mortgage insurance for Americans to purchase or refinance a principal residence.
To put it another way, the mortgage loans are funded by private lending institutions (mortgage companies, banks, savings and loan associations, etc.), and those mortgages are then insured by FHA/HUD.

The Benefits of FHA Loans

If you qualify as a prospective homeowner, these loans have three great benefits. First of all, your down payments are lower. Second, closing costs are also lower. And, finally, it’s easier to qualify for credit.

Who Qualifies?

FHA has programs for:

• Home buyers
• Seniors
• Fixer uppers
• Manufactured housing and mobile homes
• Energy efficiency, etc.

If you’re a home buyer, a FHA loan can be a good deal for you. See the eligibility requirements below. Later, I’ll cover the fixer-upper category requirements. Check with the FHA on other programs.

Home Buyer Programs
These programs have the following eligibility requirements:

• You must meet standard FHA credit qualifications (judged by the individual’s credit record).
• You’re eligible for approximately 96.5% financing.
• You’re able to finance the upfront mortgage insurance premium into the mortgage.
• You’re also responsible for paying an annual premium.
• Within this category, the eligible properties are one-to-four unit structures. As of this writing, the loan limit for a single-family home in Cook County is $410,000

The 203(k) Program for Fixer-Uppers
The 203(k) program issues loans to allow you to buy or refinance a property. In the loan, you can also include the cost of making the repairs and improvements.

The loans are provided through approved mortgage lenders nationwide, and they’re available to buyers wanting to occupy the home.

The down payment requirement for an owner-occupant (or a nonprofit organization or government agency) equals about 3.5% of the acquisition and repair costs of the property.

There are several steps to obtaining such a loan:

• You find a fixer-upper and sign a sales contract after doing a feasibility analysis of the property with a realtor.
• The contract should state that you’re seeking a 203(k) loan. It should also state the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
• You then select an FHA-approved 203(k) lender and arrange for a detailed proposal showing the scope of work to be done. The proposal should include a detailed cost estimate on each repair or improvement of the project.
• The appraisal determines the value of the property after renovation.
• If you pass the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs.
• The amount of the loan also includes a contingency reserve of 10% to 20% of the total remodeling costs. It’s used to cover any extra work not included in the original proposal.
• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
• The mortgage payments and remodeling begin after the loan closes.

You can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it’s estimated to take to complete the rehab.

• Escrowed funds are released to the contractor during construction through a series of draw requests for completed work.
• To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines there will be no liens on the property.

Whew, somewhat complicated, isn’t it? Well, we’re dealing with a government program! But, FHA loans can be a good deal for you, and I’m available to guide you throughout the entire process. Just give me a call today!

Understanding the Difference Between Online Resources and a Realtor When Pricing Your Home

2011-06-13T12:17:00.000-07:00

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The Internet can be a great resource for a host of things centered on buying or selling your home but in some cases, the most you can expect to gain is a basic understanding of things. For something as serious and important as pricing your home to either value it or sell it, relying on the Internet can only go so far. Here we’ve outlined some key differences between the figures you will yield from online sources versus those that have been compiled by your local Realtor.

ACCURACY IS VITAL

In today’s market especially, accurately pricing your home to sell is essential. With it being a buyers’ market, you will have to gain a solid understanding of all factors that contribute toward your property’s value. There can be negative repercussions of pricing a home either too low or too high. One such scenario is if there was a seasoned buyer who had taken the time to research in advance of searching for homes. That buyer’s knowing what to expect in the local market seeing your overpriced home could result in a turn-off and you could lose the sale. By the same token, you stand to get the shorter end of the stick in case of not knowing what you could have charged. Spending a little more time and/or expense can make a huge difference in the end outcome.

ONLINE TOOLS AND CALCULATORS

There are more than several websites where anyone can log on, put in their zip code and be given an instant “analysis” of their real estate value. The figures that appear as results from searches made through online resources stem from a conglomeration of several weeks and sometimes months of data collected from a particular region.

Websites such as www.zillow.com, www.realtytrac.com orwww.trulia.com offer a great way to get a generic idea of the value that homes in your region are going for or have gone for recently. As an added resource to other services also offered on these sites, the goal is not to assist homeowners in assigning a selling price on their property based on the data, rather to offer a snapshot on sales and pricing data for the area. In fact, for many people it is the perfect tool to add an extra edge when determining the fair market value of your home, along with other factors.

PROFESSIONAL COMPARABLE MARKET ANALYSIS

While online real estate tools are a great way to get a preliminary idea, they are only going to yield a figure that will show you where to start. To get an accurate assessment, you will need to avail the professional services of a Realtor. The only way to get an accurate “reading” of what the market rates are for homes in your vicinity and your neighborhood in particular, is to have a comparative market analysis conducted by a Realtor who understands your neighborhood. There is a good chance that they have dealt with properties in the area on a first-hand basis, regularly interact with the agencies and organizations that deal with homes in your neighborhood and are familiar with the people in various facets that you will end up needing to interact with yourself, as the seller of your home.

Realtors conduct a detailed Comparable Market Analysis (sometimes also called Competitive Market Analysis) through a series of data compilation of area homes and properties, considering factors such as amount of land, the square footage and number of bedrooms or typical amenities in the neighborhood. But homeowners can also opt to delve into accurate detail about their property’s value by relying on an independent appraiser. Also, through the use of CMA data the County Tax Assessor determines the value of your property taxes.
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When you are pricing your home to sell, it is vital that you use all available resources. At first, it makes sense to “shop around” and get to know the generalities before you head for the specifics. And as with most transactions dealing with your real estate world, it is always best to rely on your Realtor for quality, effective and accurate information that is relevant to you and YOUR market.

Investor – Do You Know the Seven Basic Principles of Real Estate Valuation?

2011-05-31T09:33:00.000-07:00

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With knowledge and mastery of the seven principles listed below, you’ll be able to valuate properties with an objective eye and sort out the good deals from the ones that are “money pits.”

Before we get to the principles, be aware that all of them relate to a fundamental maxim of real estate –“the highest and best use” of a property.

In a legal sense, “highest and best use” is the use of a property that makes it the most valuable to a buyer or the market.

In a business sense, it means one single use will result in maximum profitability through the best and most efficient use of the property.

Okay, here are the seven principles:

Principle 1: Demand

In plain old English, do buyers want or need to own or possess a property and do they have the money to satisfy that need?

If, for example, you have a home (or rental property) in an upward-trending neighborhood, then you can anticipate a good-to-great demand that will allow you to charge accordingly!

Principle 2: Utility

The term “utility” refers to a property’s intended use; e.g., single-family home, rental property, retail function, industrial use, etc.

The gist of this principle is that you want a property to fulfill its intended purpose. That way, it’s in high demand in the right market.

Here’s an example of unfilled purpose: a six bedroom house in a neighborhood filled with two and three bedroom houses.

Principle 3: Scarcity

Put plainly, “scarcity” refers to the fact that the value of a particular property is set by comparing it to similar properties.

In technical real estate language, the “theory of substitution” states the following: “The value of a property replaceable in the market tends to be set by the cost of acquiring an equally desirable"substitute" property.”

Principle 4: Transferability

“Transferability” refers to the ease with which ownership rights are transferred from one owner to the next.
As you can imagine, investors love properties that are easily transferable (or relatively so). At the same time, they hate properties encumbered by liens, judgments, etc. because such legal issues eat up time and money and can ruin an otherwise good deal.

Principle 5: Regression

When a property’s value is negatively affected by surrounding properties, then you have a situation of “regression.”

The price of your property deteriorates when the nearby properties are of lower value, have inferior construction, or are just plain in lousy condition.

Needless to say, you don’t want to buy the best property in a bad neighborhood. You’d simply be throwing your money away!

Principle 6: Progression

“Progression” is the opposite of regression. In this case, a property’s value rises upward because the surrounding properties have better quality, are in better condition, and possess a higher value.

Another way to spell progression is “opportunity!” In other words, you can purchase a sound but neglected/unmaintained property in a good neighborhood.

Then, by bringing the property up to neighborhood standards through repairs, maintenance and upgrades (“rehabbing”), you have the ability to gain great value at a very low cost.

Principle 7: Conformity

“Conformity” refers to the fact that property values are maximized when a property conforms to (is similar to) the properties surrounding it.

Of course, the opposite is also true. If a property doesn’t mesh well with surrounding ones, its value decreases.

So, for example, if you buy a neglected property, you should renovate it to conform to neighborhood standards, but not over-improve it. Over-improvement can push that property into a higher cost bracket and limit your opportunities for selling or renting it!

In summary be aware that there many variables that can affect the highest and best use of a property. Zoning, re-zoning, the path of progress, etc. – all these factors can change the value of a property. That means, as an investor, you need to stay on top of the market!

Want to learn more about the fundamentals of the real estate market? If so, contact us to discuss this matter or any other real estate matter of interest to you! We look forward to talking with you!

OK. You Win. Stop Listening to Real Estate Agents!

2011-05-13T14:58:00.000-07:00

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Each day we attempt to give truthful insight on the current housing market. If we report what is perceived as negative news, some in the real estate community come down on us hard. However, when we explain that we think now is a great time to buy, we get an avalanche of feedback from the general public attacking us for being nothing more than puppets for real estate agents across the country. Today, we don’t want you to listen to what we think about the opportunities that exist for buyers in this market. Instead, we want to report on what some members of the investment community are saying.

The Wall Street Journal

Jim Woods wrote an article earlier this year for Market Watch, part of the Wall Street Journal’s digital network. Its title: Why your best investment is a house. Mr. Woods compared the investment potential of real estate against other asset classes such as stocks and precious metals. Here was his conclusion.

One reason your best investment right now could be a home has to do with the relative upside of getting in on an asset class while it’s at the bottom versus buying into other asset classes that could be near a top. Consider for a moment the tremendous upside we’ve seen in stocks, precious metals and agricultural commodities over the past 12 months…

If you’re a long-term investor looking to put money to work, now is not really the best time to get into any of these three asset classes. However, with home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today…

Mr. Woods went on to talk about the financing portion of the purchase:

Yes, mortgage rates still are near historical lows, but if we see these rates rise, then the cost of a new home could climb significantly. So, now could really be the best time to pull the trigger on that home purchase — and it could also be your best investment right now.

Fortune Magazine

Shawn Tully, senior editor at large for Fortune penned an article recently which was titled: Real estate: It’s time to buy again. In the article, Mr. Tully explained:

Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

Let’s state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction … The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.

Bottom Line

Neither of the two media sources mentioned above has ever been accused of cuddling up to the National Association of Realtors. However, both have come to the same conclusion. It’s time to buy real estate. Perhaps we should listen to them.

Reposted from the KCM Blog with permission from Steve Harney at KeepingCurrentMatters.com

Maximize Your Space; Putting All That Stuff in Its Place!

2011-04-29T13:28:00.000-07:00

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Everyone loves a ton of space. Whether in your closet, garage or anyplace else in your home, there always seems to be the need for more room. So what happens with all that stuff we’ve accumulated over the years? It keeps getting piled up, adding clutter and making our space much more uninhabitable than it really needs to be. The easiest way to circumvent the problem of very tight spaces is to open it up. How, you ask? Simple. Play around with creative storage solutions, use any and all unused space around you – and things will start falling into place, literally.

Imagine yourself walking into your home office, only to be greeted by stacks of paper, unruly computer and technology equipment and wires, storage boxes, books and more. It’s not that your obsessive-compulsive next door neighbor with the perfect home office has less stuff. It’s just that he knows how to work with the space he has to utilize it to the best of his needs. With these few simple steps, you can be on the road to being able to focus on the things that really matter.

Double-Decking and Triple Stacking

Closets

The most obvious place we see a ton of wasted opportunity is the closet. On the one hand, a closet is designed to store and maintain our most personal of possessions. But if you take a closer look, nine times out of ten, the closet space just isn’t very functional. Yes, there is some hanging space. Yes, some shoes can be stored on the floor and for most people there is at least one shelf above all this, to put items like folded sweaters and handbags on. Unless you’re one of the very lucky people who have a walk-in closet the size of most homeowners’ master bedroom, chances are you are lacking in sufficient closet space.

By installing simple and easily affordable stacked storage units, the dead space that is typically from the top of your shelf to the ceiling, and also that which is from the floor to hanging clothes – can be utilized. Set up your hanging areas in a way that double-deck your pants storage and other shorter items. The shelf space overhead is a great place to keep seasonal items that rarely need to be accessed.

Stairs and Landings

There is always room under or over staircases. Whether it’s your basement stairs that leave a wide-open opportunity to keep things under wraps or the gaping section overhead where there is a staircase and foyer area – the prospects are limitless. Consider using the basement gaps to house your washer and dryer units. Large, cumbersome appliances are never aesthetically pleasing. So to be able to keep them semi-hidden and devote that extra room to recreation or an entertainment space is very useful to homeowners.

Kitchens

If you’re not careful, over the years the amount of kitchen that can be accumulated is tremendous. One method used to keep homes within reason in terms of stuff is to purge and purchase. Many people employ a policy of donating or selling old items before bringing in the new; a great way to maintain balance. But for the rest of us, that is just not practical. One great way to use extra space in the kitchen is to hang a pot rack. Not only does it add character to your kitchen, it also frees up a ton of kitchen cabinet area.

Staying Together in Groups

Families know only all too well the need for space, space and more space. The larger the family, the more stuff keeps coming in – and there’s a good chance these people are not among those who purge and purchase. So what is the solution opportunity here? Organize, stack, store and keep together items that are similar. If your six-year-old insists on owning every single Matchbox car that ever was, you will need to find a viable and practical solution to store his collection. Keeping all his cars in one large bin is a great way to maintain his room, yet provide him the much-needed accessibility to his possessions. This basic rule of thumb applies to all areas around the house. Grouping kitchen utensils, stationery or a million little hair doodads owned by your very particular, up and coming teenager is the way to maintain available space and use up the dead variety.

Deep Down Under

EVERYONE knows that monsters live under the bed. Ok, well maybe not. But if you install a couple of under bed storage drawers and make that the place where all art supplies are stored, you will be doing your child a huge favor. Not only will it free up her desk but it will also keep her room neat and provide more area for her to hang out.

It’s NOT Always What’s on the Inside

The garage is the single best opportunity to maximize wasted space. You can hang peg board on the walls, put up tools, small bins and other clever storage knick-knacks. Avid cyclists often hang their bicycles overhead in the garage. Floor-to-ceiling garage cabinetry is another way to replace clutter for the cars in your space.

Who says you have to move into a five-thousand square foot expanse? With just a little bit of creativity, an open-minded attitude, some innovative methods and the will to implement, you CAN change the entire look of your smaller home – almost “doubling” it in appearance and tastefully maximize every last bit of space available. The only thing you may find challenging is knowing about and finding all that “hidden” dead space in your home so you can work at making it useful!

What’s the One Unbreakable Law of Real Estate?

2011-04-13T11:23:00.000-07:00

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“Perform due diligence!” is the one law you should never break in any kind of real estate deal – residential, multi-occupant, or commercial!

What is due diligence? It’s a common phrase for the evaluation of a property and its surrounding environment before you commit to buying it.

Due diligence has two objectives. First, you want to reduce or eliminate risk! Needless to say, you’d be making a large investment and will want to know exactly what’s right or wrong with a property before you sink any money into it.

Two, due diligence allows you to uncover real bargains, especially for investors. On the surface, one property may look like a “loser,” but a closer inspection may reveal that the building is structurally sound and requires only minor and inexpensive maintenance and repairs.

One part of due diligence is what you’d expect – the physical inspection of the property. The other part is the inspection of the documents and records concerning that property. In Illinois, typically that would be the job of your attorney.

In this article, we’ll just talk about the physical inspection portion of due diligence.

Physical Inspection of Properties

Below, we’ve listed all the inspection tasks which should be performed by a professional inspector. Of course, you should visit the property as well. Many times, a quick “eyeballing” can reveal any obvious signs or poor maintenance or decay - a leaky roof, wet basement, foundation cracks, cracks in the walls, plumbing leaks, etc.. In those cases, you’ll know you don’t need to waste any further time on that property.

As we mentioned earlier, such an inspection may reveal that you’ve actually got a bargain on your hands instead of a “dog.” In such a case, you’ll want to purchase or invest in that property quickly.

What happens when you find problems in a property and still like it? Well, then, you can require that the seller correct those problems or reduce the price before you finalize any purchase.

In general, defects fall into two categories. One category contains the obvious defects – wet basements, peeling paint, broken windows, leaky plumbing, warped floors, etc.

The other category contains the more expensive and dangerous hidden defects. These can include corroded pipes in the walls, roof or window leaks that don’t show up until it rains or snows, subtle cracks in the foundation.

Obviously, you want to make sure these hazards are spotted before you ever finalize a purchase. They can cost you a lot of money in the long run, not to mention the fact that they can send your blood pressure through the roof!

What Do Professional Inspectors Look For?

Below are the items inspectors examine when they check a property:

• Overall structural integrity
• Property drainage/landscaping
• Walks and drives
• Foundation, footings, crawl space, basements, sub-flooring, decks
• Exterior walls, siding, trim
• Windows, doors, cabinets, counters
• Gutters, downspouts
• Roof, roof shingles, roof structures. chimneys, attic
• Floors, walls, ceilings, etc.
• HVAC systems
• Plumbing systems, (fixtures, supply lines, drains, water heating devices, etc.)
• Electrical system (wiring, service panel, devices, and service capacity
• Energy conservation/safety Items
• Insulation & ventilation
• Moisture intrusion/mold

And, of course, we can’t forget the voracious appetites of….bugs!

Do You Know the Risks and Rewards of Buying a Home?

2011-03-29T14:58:00.000-07:00

Every financial decision you make in your life has its rewards and its risks. Home-buying is no different. The key, of course, is to maximize the rewards and minimize the risks. That calls for objectivity on your part. So, to help you make an objective decision, we've provided a list of both rewards and risks below. Review the list to see if you're a good prospect for owning a home!

Rewards

The "intangible" reward of buying a home is, of course, the joy of owning it and creating a home for your family. Nearly everyone desires this reward! However, there are also several concrete financial rewards that can be earned through home ownership.

The first financial reward is appreciation. In spite of the recent "mortgage meltdown" and price declines, it's a fact that, on a historical basis, your home is worth more when you sell it than when you bought it. A home purchase is a great long-term financial investment.

Financial flexibility is the second benefit and is derived from appreciation. When your home appreciates, you can sell it at a higher price. You can then use the profit to buy a bigger and better home…tap into the equity (what your home would sell for minus what you owe on the mortgage)…pay college tuition for the kids…use it to fund your retirement…or any other goals you have in mind.

The third goal is leverage. Buying a home allows you to use borrowed money (the mortgage) to profit on later price increases (appreciation) on property you haven't paid for.

The fourth and final benefit is that of tax breaks! You can deduct property taxes and mortgage interest and keep up to $500,000 of capital gains!

So, as you can see, home ownership is a wise investment in your future!

Risks

As I stated earlier, every financial decision has its risks as well as rewards. Therefore, it's wise to know what those risks are upfront, so you can decide how you want to deal with them. Review the following risks to make sure you're ready for the responsibility of home ownership.

The first risk is a decline in value. We've seen this risk come true in the recent "mortgage meltdown." The value of homes declined from 2006-2009.

Although, historically, this doesn't happen often (and prices are on the rebound), it still tells you there's no guarantee that the value of your home will appreciate.

Over the long-term, however, home prices do tend to appreciate, and, believe me, home ownership is far less risky than the stock market!

The second risk is maintenance costs. It takes money to maintain a home - roofing, heating, cooling, siding, paint, etc. This fact means that you must have the income to pay for routine maintenance costs as well as the inevitable big-ticket items (water heaters, furnaces, etc.) that come with long-term home ownership.
The third risk is the loss of other investment opportunities. In the short-term, alternative investments (stocks, bonds, etc.) may give you a greater return in less time if their value rises faster than that of the homes in your neighborhood.

In such an event, you might do better as a renter or investor. However, keep in mind that, as stated above, this is a short-term strategy.

The fourth risk is lack of flexibility. Purchase of a home ties you down to a specific neighborhood and city. Many people like this fact because it allows them to "set roots" in a community. However, if you're a person who prefers to be "foot loose and fancy free," then home ownership may not be for you.

For example, home ownership doesn't make it easy for you to take a new job elsewhere or move to a different location. And, if you have to put the home on the market in a hurry due to a divorce, job loss, etc., then you can take a heavy financial hit.

The final risk lies in the fact that if you have a large mortgage payment, it can make it hard to invest money elsewhere (savings, investments, vacations, etc.).

So, there you have it - a complete list of the rewards and risks of home ownership. If you'd like help in analyzing how these factors apply to your specific situation, contact us at 708-386-1400 today!

FSBO - Your Advantages and Disadvantages - Why Shouldn't I Try to Sell My Home by Myself?

2011-03-09T12:43:00.000-08:00

Many home owners think about selling their own home but relatively few attempt it. Why? Because it's an extremely time-consuming and often exhausting process, especially if you're working a full-time job! It's the Realtor who takes this burden off your back. Selling homes is our full-time job!

Nonetheless, we don't discourage you from putting your home on the market and attempting to sell it yourself.
But before you do it, we do encourage you to become extremely knowledgeable about the process and aware of the both advantages and disadvantages of it.

Below, we've provided information on the benefits and drawbacks of doing a "For Sale By Owner" (FSBO) sale.

Read it carefully and then make your decision!

Advantages of Selling Your Own Home

Of course, the biggest advantage a FSBO is that there's no commission to be paid to a Realtor. You get all the proceeds from the sale, minus any marketing costs you incur.
A second advantage is that you have complete control of the transaction. You don't have to rely on anyone else. You're totally independent.

A third advantage concerns your equity. If it's low, you have the possibility of selling your home without having to write a check.

A fourth advantage is that you don't have to rely on a Realtor to schedule showings, answer inquiries, etc. You can do all of this yourself!

Disadvantages of Selling Your Own Home

Perhaps the greatest disadvantage is the tremendous amount of time you have to put into the sale.

It's a time-consuming process to do all the paperwork, the marketing and advertising, the showings, etc. by yourself - not to mention the hours it takes to get acquainted with all the legal, financial, and other issues. You must be prepared for this.

A second disadvantage is the costs in terms of marketing and advertising. If you don't know exactly what you're doing, this can be very expensive!

A third disadvantage is that you won't have access to the Multiple Listing Service (MLS) which is our number one tool for disseminating information on a listing. You'll end up hunting for buyers one at a time, a very inefficient, ineffective, and frustrating process.

The fourth disadvantage relates to your knowledge of the market. If you're not knowledgeable about it, you may not price your house correctly.

That is, you may underprice it or overprice it. If you underprice your home, you lose money. If you overprice it, you lose buyers. By the same token, if you do find a buyer and you're not experienced at negotiation, you could be taken advantage of.

A fifth disadvantage relates to a belief of some buyers. They believe that since you're selling the house by yourself and not paying a commission, then they're the ones who should get the savings instead of you!

Our Advice: Do your homework before considering selling your home by yourself! And, if you do decide to go the FSBO route, be fully prepared in all aspects of home sales!

If you'd like more information and advice on selling your own home as well as our real estate services, contact us.

What’s Up with This Down Market?

2011-02-28T07:51:00.000-08:00

What has happened with property values in Oak Park since the prices started falling after 2007? We thought you might like to know so we pulled the information for this report from Midwest Real Estate Data LLC which is our Multiple Listing Service on February 21, 2011 and this is what we found.

The average single-family home price in Oak Park is down about 21% from the peak of 2007. A very interesting thing, and we think a hopeful statistic, is that the average price rose last year in 2010 about 3.5% over the 2009 average price. We are beginning to regain some value! The 2010 number of sales was down 23% from the volume we had back in 2007.

Detached single-family homes were moving at the rate of 24 per month in 2010. As of February 21, 2011 there were 157 active single-family home listings. So, if the homes continue to move at the rate they did in 2010, our current inventory is about a 6.5 month supply. This is considered a balanced market – in other words there is a balance between supply and demand. Our prediction for single-family homes in 2010 in Oak Park is a somewhat flat market with prices remaining about the same with the possibility of a small increase in average price.

The “attached” single-family home market is made up of condominiums and townhouses. This segment of the market in Oak Park has not performed as well as “detached” single-family homes. This is significant as Oak Park has 297 condominium buildings that contain 4500 units. There are also many townhouses in this area.

One bedroom condominiums are down in average price about 40% from 2007. The volume of sales is down about 68% from 2007. As of February 21, 2011 there were 105 active 1 bedroom listings for sale. If 1 bedroom condos continue to move at the same 4.66 per month pace we had in 2010, the current number of active listings represents a 22.5 month supply of inventory. So our prediction for one bedroom condos in 2011 is that it will firmly remain a buyer’s market with an extreme oversupply and continued decline in price.

Two bedroom condominiums/townhomes are down in average price about 35% from 2007. The volume of sales is down about 60% from 2007. On February 21, 2011 there were 105 active 2 bedroom listings for sale. If 2 bedroom "attached" dwellings continue to move at the same 8 per month pace we had in 2010, the current number of active listings represents a 13 month supply of inventory. Our prediction for the two bedroom condomium/townhome market in 2011 is that it will remain a buyer's market with an oversupply and continued decline in price.

In our opinion, the recent market statistics signal an opportunity for buyers, especially for single-family homes. If you are contemplating a condo or townhouse purchase and your minimum timeline for staying in your home is 5 years, we think this is a buying opportunity, especially if you can take advantage of the low asking prices for bank-owned and short sale properties. We’ve seen some deals in the distressed property arena that we think could work well for even short term ownership.

There are many signs that seem promising for the future of property values increasing over the next few years.
New construction housing starts are at the lowest point in generations.

Interest rates are historically low.

Property values have taken a big hit. Prices are rolled back to the lowest point in almost a decade or even more, depending on the area.

With the average age of a first-time buyer being around 30, the corresponding birth rates about 30 years ago show that tremendous numbers of people will be “coming of age” to enter the real estate market over the next few years. Those statistics coupled with the extremely low number of new homes being built, show us that demand could easily begin to outpace supply within the next few years. So it could be an excellent time to buy real estate right now!

We are compiling a comprehensive written market report which will be available soon. This report will cover Oak Park and the surrounding towns of Forest Park, Berwyn and River Forest. Just contact us and we can mail the report or email it to you. We’d be happy to discuss the opportunities in real estate with you today!

Could a VA Loan be Right for You?

2011-02-11T14:56:00.000-08:00

We’ve got a special place in our hearts for our military servicemen and women. That’s why we understand the needs of our military clients and their families. It’s the reason we take such pride in providing the best service available for those we hold so close to our hearts.

In keeping with our commitment to our veterans, we wanted to share some critical information regarding VA housing loans so many of our clients are eager to use. Here are a few of the questions we hear, and we hope the answers will help you decide if a VA loan is right for you.

Who is eligible for a VA loan?

According to http://www.valoans.com/ you may qualify for a VA loan if:

- You enlisted and began service before Sept. 7, 1980, or served as an officer before Oct. 16, 1981
and
- You’ve served at least 90 days of active duty during wartime; and/or
- You’ve served at least 181 days of active duty during peacetime
- You were not dishonorably discharged
- After Sept. 7, 1980, you served a minimum of two years of active duty and were not dishonorably discharged

- After Oct. 16, 1980 you served as an officer for a minimum of two years of active duty and were not dishonorably discharged

- You’ve served six years with the National Guard or as a reservist, were not dishonorably discharged and meet other specific criteria

- You are the surviving spouse of a veteran and you meet specific criteria

What are the advantages of a VA loan?

VA loans are the best mortgage loans on the market for these reasons:

- They are the only true 100% mortgage loan that does not require any down payment.
- They are free of most of the junk fees that affect other loans.
- They do not require private mortgage insurance (PMI).
- The home’s seller is required to cover a portion of closing costs, including paying for a termite inspection.
- A VA loan is assumable which allows another eligible veteran to take over the loan at whatever rate you locked in, even if current market rates are much higher, which is a huge selling point.

How do I apply for a VA loan?

While many traditional lenders can do VA loans, we’d encourage you to call us first so we can match you with one of several of our preferred lenders who excel in processing VA loans. In addition, here are a few other tips.

- Be sure to secure your Certificate of Eligibility (COE) for Home Loan Benefits as soon as you think you may be ready to purchase a home. Click here to download an easy-to-follow guide for how to apply for your COE.

- Examine your credit report to be sure all of the information is accurate. Experts recommend that you do this up to a year before you plan to buy a home so that you have time to clear up any mistakes or take action to reconcile any negative information that may appear. Even if you don’t have that long, you should still carefully review your credit report so you can see what the bank will see.

- Once you have your COE and you’re comfortable with your credit report, you’re ready to talk with the lender to begin the process, and we’d be happy to help you with everything.

How does a VA loan work?

While a VA home loan works much like other types of loans, there are a few things you need to know.

1. You will be assessed a one-time funding fee that could range from 1.15% - 3% of the loan amount, depending on whether you’re a first-time home buyer or not. Often this fee can be incorporated into the final loan amount.

2. Even though in most cases a VA loan does not require a down payment, if you do put down at least 5%, the government will reduce the one-time funding fee amount.

3. The money that funds your loan comes from the private lender, not from the VA. The role of the VA is to issue a loan guaranty, which promises to pay the lender a certain percentage of your loan if the bank has to foreclose on your home.

The good news is that applying for a VA loan is relatively simple and straightforward, especially once you’ve secured your Certificate of Eligibility, and we’re here to help however we can.

Thanks to all of those servicemen and women for their bravery and their dedication to duty, and our gratitude to their families for their strength and support. Please let us know if there is ever anything we can do to be of service to you!

How a Down Payment on a New Home Makes a Molehill Out of a Mountain!

2011-01-24T12:00:00.000-08:00

Believe us, your down payment on a new home affects nearly everything you can think of in the buying process - the loan programs you're able to qualify for, the size of the interest rate, the amount of closing costs, etc.

The basic rule is this: the more you have to put down on a down payment for a home, the more options you have!

This rule is true because, like all lenders, mortgage lenders dislike risk. They're in the business of making money by lending money. So, the more money you put down, the lower the risk, and the more lenders like your deal.

And, that's not all. If you have enough cash for a large down payment, then more choices open up to you! You can choose conventional fixed rate loans, adjustable rate mortgages, VA, FHA, graduated payment mortgages and all the variations of each of these programs.

By the way, when you combine a good-to-excellent credit score with a large down payment, you'll definitely get positive attention from loan officers!

Acceptable Sources for Down Payment Monies

In general, lenders want to see adequate funds available for a period of at least sixty (60) days in your account. The usual methods of proof of these funds are either a Verification of Deposit form or two months' worth of your most recent bank account statements.

So, if you're person who keeps money "under the mattress" or somewhere in your home, this isn't acceptable. It has to be deposited in an account (bank or investment) for at least two months (preferably longer).

In technical terms, this is called "seasoning." And the reason behind it is this: First, by having money in an account, it shows you have the ability and discipline to save money and, thus, are a good risk from the lender's point of view. Second, it demonstrates that the money is likely yours and not a personal loan from a family member or a friend. Lastly, and obviously, it shows you have enough money on hand for a down payment.

In general, here are sources you can use for a down payment:

• Checking account
• Savings account
• 401k account
• IRA account (have to meet specific guidelines)
• Money market account
• Stocks
• Bonds
• Mutual funds
• Certificates of deposit and other liquid assets.
• Sale of an asset, etc.

Frankly, in this New Age of Frugality, the safest method is to simply save the money for a down payment. This teaches you financial discipline which is good for all aspects of your life, and it means you don't have to rob other assets to pay the down payment.

We'd be happy to discuss and suggest many different ways of obtaining down payment money. Contact us today.

"D.O.M." Your Way to better Value When Buying a Home!

2011-01-11T08:47:00.000-08:00

The term “D.O.M” refers to the number of days a house is listed for sale on the market; thus, “DOM” or “Days on Market.”

Generally speaking, the longer a home is on the market, the more willing a seller is to negotiate. And that means you might be able to get a good deal!

However, notice that we said “generally speaking.” We put in that disclaimer because there are several reasons a home might be on the market for a long time.

One is that it might simply be overpriced. If that’s the case, then you’re in an excellent position to negotiate since the sellers may be anxious to sell the home.

A second reason may be someone has already put an offer on the property, but their financing, credit rating, etc. hasn’t met the requirements of the deal. In short, there was something wrong with the buyers, and nothing wrong with the home. Again, there may be an opportunity for you in this situation.

A third reason is that someone made a simple mistake in the Multiple Listing Service (MLS)! Perhaps the home got listed in the wrong ZIP code or the wrong neighborhood, or the price was simply wrong and listed too high. Now, normally, MLS is very accurate, but, as always, it’s dependent on humans entering information into the system, so mistakes happen!

Fourth, the house may have stayed on the market for so long because the owners simply refuse to negotiate! A real estate agent can help you identify these individuals for you so you don’t waste time and energy on a sale that will never happen.

Finally, a home may stay on the market for a long time because there is something wrong with it either structurally or cosmetically or both!

Depending on the situation, this can also be an opportunity for you as a buyer! You can use it as a bargaining tool; that is, either the home seller fixes the defects or lowers the price to account for the cost of repairing those defects.

However, you should always, always get a home inspection done on such houses! (Or on any house you’re considering, for that matter!). It prevents you from buying a “money pit,” in which you have to throw a small fortune in order to get defects repaired.

Here’s the short and long of it: DOM can sometimes get you a great value in a home; however, you need the expertise and guidance of an experienced real estate agent to pinpoint such values! We can provide you with that expertise. Contact us today!

Are Bi-Weekly Mortgage Payments Worth the Time and Effort?

2010-12-27T08:23:00.000-08:00

In most cases, yes! It’s essentially a process by which you make extra payments on your mortgage. That way, you save interest costs and pay off the loan faster.

How Does It Work?

You make a payment to your lender every two weeks instead of once a month. This means that each payment is equal to half of the monthly amount due. The result – you’re paying the equivalent of 13 full payments rather than the usual 12.

It gets even better! The full amount of the extra payment is applied toward the principal. And because the principal balance is the amount on which interest is calculated, paying down principal results in a reduction in accrued interest!

Let’s look at a traditional payment monthly schedule vs. a bi-weekly schedule so you can see exactly how it works.

Example 1: Traditional monthly payments

Let’s assume you have a loan balance of $250,000 with a 6 percent interest rate and a 30-year loan term. In this example, your monthly payments are $1,498.88. So, over the life of the loan, you’d pay a total interest of about $289,595.

Example 2: Bi-weekly payments

Using the same loan balance and terms described above, the difference would be the following:

• $749.44 paid every two weeks

• About $225,490 paid in total interest

• This results in a savings of more than $64,000 in interest!

• In addition, the loan is paid off in 24 rather than 30 years

Bi-monthly payments are still a good strategy if you’re an individual who doesn’t plan to keep your house for 24 or 30 years. Why? Because bi-weekly payments still reduce principle, even over a short period of time.

For example, in the first year, the principle is reduced by nearly $1,600. And, at the end of the fifth year, the principle amount has been reduced by about $9,000!

How Do I Arrange Bi-Weekly Payments?

The first task is to contact lenders to find out if they do offer a bi-weekly payment schedule.

If they offer one, ask what the participation requirements are. In typical situations, lenders require you to have payments automatically withdrawn from your bank account since they dislike processing checks every two weeks.

Often, it’s the case that a one-time fee is charged for this service. The fee can be minimal or be in the several-hundred-dollar range, depending on the lender.

So, after all these benefits, how can there possibly be disadvantages to bi-weekly mortgage payments?

Well, the first disadvantage relates to a situation I mentioned above - the lender’s fee is very expensive for the service provided. In such a case, the costs may outweigh or cut down your overall savings.

A second disadvantage occurs when paying bi-weekly is too hard on your budget. Upfront, you need to make sure that you have the money available for the increased payments.

The final potential disadvantage relates to the length of time you plan to stay in your home. That can affect your overall savings on interest.

I recommend that you weigh the pros and cons of bi-weekly mortgage payments by using one of the many online calculators. Just enter your numbers and the calculator will give you a comparison.

If you’d like the assistance of an expert on the subject, contact us immediately!

Why Use the Services of a Real Estate Agent?

2010-12-14T07:28:00.000-08:00

This question is often asked, especially by homeowners who consider selling their homes by themselves.

The fundamental first answer to this question is that an experienced Realtor is an expert at what he or she does. Through hard work and education, they’ve acquired a set of skills that make the process of home buying and selling a lot easier than it would be by doing it yourself.

So, what are the skills in the set I’m talking about?

Well, for one thing, we have the skill of being the go-between. For home sellers, we’re the people who handle people and calls and separate the “wheat” (real buyers) from the “chaff” (non-buyers) without you ever having to deal with such situations. In Internet terms, we make sure you’re not “spammed” with worthless offers and target real deals for you. For home buyers, we’re also the ones who save you a lot of time by making sure you’re looking at appropriate properties and neighborhoods right from the get-go.

And, speaking of neighborhoods, an experienced Realtor will know them inside-out or will know how to find the latest information on them. That means we can suggest neighborhoods based on what is important to you – schools, home values, architecture, etc.

By the same token, an experienced agent will also be able to show you the neighborhood price trends and find you recent home sale information that is comparable to the home you are considering in order to help you determine its value.

We can help guide you toward properties that fit your individual needs and are comfortably within your price range. Frankly, it’s not in our best interest to put you into a home beyond your means or that’s not right for you. When that happens, we lose clients and money!

So, we’ll do our best to work within your price range and, based on current information (market supply, demand, etc.), we’ll come up with the best negotiation strategy possible. Current information can include cost-per-square-foot of homes, ratios of list-to-sold prices, knowledge of the buyer/seller, etc. All this information is gathered by the agent and used to formulate solid offers.

Another important skill experienced Realtors possess is objectivity. We have the ability to stay out of the emotional process that often occurs with the buying and selling of a home. Instead, we present your case in the best light possible, all the while holding your information confidential from any competing interests.

Another Realtor skill is our ability to network with other service providers (home inspectors, attorneys, lenders, etc.) Professionally, we can’t recommend one specific vendor over another. However, we do keep lists of vendors with excellent reputations. This service allows you to choose the best provider for your particular situation.

Now, here’s one Realtor skill that everyone truly appreciates – the ability to handle tons of paperwork! Today, purchase agreements can run 10+ pages, and that doesn’t even include all the state and federal disclosure statements that are required in the current market! Heck, a real estate file can end up being 2-3 inches thick with paperwork these days!

And it’s not only the heavy paperwork handled by Realtors; it’s also the attention to detail within that paperwork. It’s their job (or a lawyer’s, depending on the state) to make sure all the information is correct because if it isn’t, it can end up costing the client hundreds of dollars.

Maximize Your Real Estate Investment with People Skills

2010-11-19T07:44:00.000-08:00

You know, you can be the most knowledgeable real estate investor around…the master of every financial “trick” available…and it still won’t matter without the one indispensable skill – the ability to connect with people!

For you, as an investor, it’s vitally important to work well with many different people - buyers, sellers, lenders, realtors, appraisers, contractors, etc. After all, they’re instrumental in helping you achieve your success. Without good relations, your career goes nowhere.

Now, if you’re one of those individuals who feels he or she isn’t blessed with natural people skills, I have some good news for you – you can learn how to deal effectively with anyone inside (or outside) the real estate business!

Here’s all you have to do – learn the practical tips below and then practice them every day! Soon, everyone will consider you the “natural!”

Tip 1: Listen Effectively!

I know, I know…everyone tells you to listen well, but they don’t tell you how to do that! In this article, I tell you exactly how!

Listen twice as much as you talk! Sometimes we get in such a hurry to make a deal that we forget to listen. Remember, people in a negotiation want to feel that you understand and have some consideration for their needs and frustrations. So, listen closely to the concerns of the other party in the negotiation and show an interest in where they are coming from. Also, remember that this is actually an effective business technique; that is, once you know a person’s needs, you can shape your offer more closely to meet those needs – and your real estate purchase or sale is made!

Use prompts! “Prompt” is a term for a technique to keep people talking so you uncover their needs. It involves using short phrases like, “Tell me more…Go on…I hear you….Go on…Uh huh,” etc. When you use these phrases, people know you’re listening and want to hear more of what they have to say. If you are in a position to communicate directly with the buyer or seller on the other side of your real estate transaction keep this in mind.

Use positive body language! Positive body language techniques include: a relaxed, yet alert posture…making good eye contact…nodding your head…leaning slightly forward…and making note of what people say. Never do the opposite during a meeting or interaction: answer phone calls, read papers, fidget, interrupt, and so forth. This is the height of rudeness and tells people that they’re not important to you. This is a sure way to lose deals and money as a real estate investor!

Summarize! This is not only a great technique for letting people know you’re listening to them, but it also keeps the conversation on track. So, at strategic points in a conversation, you might say, “Kim, what I hear you saying is that cashing out of your building is a good idea but that it could be just as important to you that you have a steady stream of income for your retirement.” This could be an effective way to convince the seller to carry some paper on your investment.

Hint: Don’t overdo the techniques I just described above (for example, summarize constantly, prompt all the time, etc. If you do that, you’ll end up being seen as manipulative and turn people off. Remember, you are NOT trying to manipulate people, just to uncover the best way to work with them for a successful win-win transaction. Instead, fit these techniques into the normal flow of conversation. With practice, you’ll soon be an expert!

Tip 2: Match the Customer’s Language and Speaking Style!

As we all know, people are more comfortable with others who are like them. So, for example, if a person has very high energy and talks fast, you can match those characteristics.

Or, if they’re very deliberate in their speech, then you can adopt those traits as well. Again, don’t go overboard with this technique. If you do, people might think you’re making fun of them and get very irritated. Remember you are just trying to find the best way to relate to the party on the other side of your transaction.
Also, try to match their dominant style of thinking. For example, some individuals are emotional; some want “big picture” ideas; some are analytical and demand only facts and figures. If you can match their particular style of communication, you’ll connect more easily with them.

Guideline 3: Stress Benefits, Benefits, Benefits!

The fact is, sometimes we get so interested in making a deal for ourselves that we forget to stress the benefits for the seller, the buyer, the lender, the contractor or anyone else we deal with in the business of real estate investment.

So, remember to always answer the eternal question of the other person first, “What’s in it for me?” If you do that to their satisfaction, you’ll make more profitable deals and connections. And also remember that many needs are common (e.g., save money, make money, get security, etc.), but everyone thinks that their need is unique. So, listen closely and show them that you understand those needs!

In real estate investing, you may not always or often be speaking directly to the person on the other side of the transaction. Your agent may be the one doing the talking. Please be assured that we understand the techniques for negotiation and bringing the parties together in agreement and we strive to do the best job possible to produce results for our clients.