“Should I do a pre-listing inspection?” That’s a question I often get asked. My advice is not to do it. I could put 10 inspectors in a house and get 10 different lists of things to repair.
"You don't want to waste time, energy, and money doing a pre-inspection."
The reality is that most buyers will do their own inspection. The pre-inspection is going to give you one list of around 10 items, and when the buyer comes in, they're going to pay to have another inspector who’ll give you a different list. If you had a pre-inspection list, you might be frustrated because now you’d have another list of items to repair.
I've had situations where inspectors have said that X needs to be fixed, then other inspectors come in and say that it doesn't. You need to be careful because you don't want to waste time, energy, and money doing a pre-listing inspection when the only inspection that matters is the one that the buyer is going to do. That's the one you need to deal with. However, if you have a major issue, chances are that you're going to have to fix...
If you’re considering buying a home within the next three to 12 months, have you thought about what needs to be done first? Here are my recommendations for what to do when preparing to purchase a property:
1. Talk to a lender. The reason you want to speak to them this early is that you need to confirm the status of your credit, what you can qualify for, and if debts need to be paid off before moving forward. The better your credit score and the less debt you have, the lower your interest rate will be. Your lender will tell you if there’s anything you need to do. For example, they may say that instead of putting so much money down on a house, it would be better if you paid off your car loan.
"Start doing your due diligence early—it can be fun!"
2. Drive around and look at different areas. Find out which areas you’re interested in purchasing in because you don’t want...
FHA financing can be a great way to make an offer on your dream home, but some sellers avoid offers that use it. To understand the issue, it’s helpful to think about it from the seller’s perspective. An FHA-backed offer comes with hurdles they can avoid by accepting a cash or conventional offer. Let’s go over the main problems.
With an FHA loan, an appraiser is required to inspect the property. If they find any issues, the seller is required to fix them before the mortgage lender can approve the loan. In contrast, cash or conventional buyers can accept the home without the fixes. They can even waive the appraisal upfront.
"Perception alone could stop sellers from choosing an FHA offer."
Another issue is the perception that FHA buyers don’t have extra funds in case the home doesn’t appraise at list price. This may not be the case, but the assumption alone could stop sellers from choosing an FHA offer. If you make an FHA offer and you do have extra funds, notify your agent so they can alleviate the seller’s fears.
The term “as-is condition” has different connotations for different people. So when a seller calls and says they want to sell their home as is, I ask what that means to them.
Often, they want to list as is because they don’t want to update their property. That’s fine because we’ll consider that when deciding on a price. However, for some sellers, it means something like the furnace is out and they don’t want to repair it, but that’s something we’ll have to disclose. Some people think they can list their home as is and no one will ask for inspection repairs, but the issue is that as-is listings sometimes have negative connotations for buyers.
That means we need to be extremely careful when listing a house as is. The only time I advise it is when there are issues that won’t be handled. If it’s a cosmetic problem, the buyer understands that they’re buying it as they see it, like if you didn’t remove wallpaper or replace the carpet. However, if something major needs to be fixed, such as the roof, we need to disclose it. Sellers need to be smart about using the term “as is” when selling because it could turn buyers away....
Lately, we’ve had some sellers ask why they aren’t seeing multiple offers or getting as many showings as anticipated. Every property is unique, and some receive more activity than others. The more unique your property is, the less activity you may get. The real estate market has shifted over the past few months, so people aren’t getting as many offers as they were.
Staging or decluttering might help, and if your price isn’t appropriate, you won’t get multiple offers either. When you price correctly, you receive multiple offers that drive the price up, but if you price too high, you won’t get multiple offers—you may get one, then sell for less. Buyers are smart and will see that your home is overpriced and make an offer on another house; if you price too high, you’re helping someone else sell. We’re starting to see more inventory, so if your real estate agent is talking about reducing your property’s price, you want to listen to them and seriously consider it.
The market has slowed down in Illinois, and we’ll likely see a point here in July where it slows even more. Though we’re technically still in a...
We’ve been hearing for so long now that it’s a hot seller’s market, but if you’re in the industry, you likely felt the change around mid-May or at least the end of the month. I spoke with an appraiser the other day, and they felt the change too. If your home wasn’t on the market by May, you may have missed the peak, but that doesn’t mean it’s all over;it just means the intensity is slowing down some. Buyers are getting a bit more time to think, they aren’t having to make split-second decisions, and they aren’t competing with as many other buyers as they were.
Nationally, our median price is currently $350,000, but in the Chicagoland area and a little south of that, it’s $262,500. A lot is going on in our market; it’s still a wonderful time to jump into it. We likely have another month before the market changes again because we’re moving toward having the more typical market that we saw before the pandemic.
If you have questions about our market or would like to know the median price in your area or town, I’d be glad to help you. Give me a call or...
In this competitive home-buying market, we’re seeing certain issues come up after an offer is accepted. One of the main issues is low appraisals. When an appraised value is lower than the agreed-upon price, a decision needs to be made by both parties.
Buyers are crafting their offers to suit sellers who are nervous about the competition for their homes. We’re also seeing buyers forgo inspections and purchasing homes as is. They’re offering post-closing possession to sellers who are anxious about being able to find a new home quickly. This allows them to stay in their current home for a little longer while searching for their new home.
"Buying a property with structural issues will haunt you."
The one big concern I have with offers like this is if you choose to buy a property without an inspection. Even if you don’t plan on asking for repairs, it’s still important to have someone look at the house before you buy it. If you’re buying a property with structural issues, it's going to haunt you for years to come. There were situations back in 2007 and 2008 where this happened, and...
Back in April 2019, there were over 47,000 properties for sale on our MLS. In April 2020, we still had over 40,000 properties for sale. At the end of April 2021, however, there were under 20,000 properties for sale on the MLS. Inventory is down over 50% in just one year.
This market is being driven by this lack of inventory. Prices continue to rise as demand for homes remains high. When is this going to change?
"Take advantage of this extreme demand by selling now."
If I had a crystal ball, I’d tell you. However, we’re keeping a very close eye on things as we head toward the end of the foreclosure and eviction moratorium. I predict that we’ll see some more inventory hit the market at this point and things will get a little better for buyers. As inventory expands, the market will change.
If you’re a seller, this means that now is probably the best time for you to sell. Don't expect this market to last forever...
A real estate attorney completes necessary tasks in every real estate transaction. They are going to order title, plan a survey, schedule well and septic inspections, and more. They charge a flat fee, usually around $500.
Sometimes there will be a postcard in the mail when you’re selling that advertises a real estate attorney for $199. You need to be careful about who you’re hiring. You want a real estate attorney, not somebody who is going to end up in court. The people who send these types of mailings usually aren’t true real estate attorneys, and they tend to cut corners.
"Your real estate attorney is there to protect you."
A true real estate attorney will maximize the money in your pocket. They can provide you with opportunities to save money on title, help the inspections to come out in a better place, and their knowledge of city/village requirements is paramount.
The most important thing is that your real estate attorney is there to protect you. Take this situation we had last week: Someone hired an attorney who spends time in court. The property did not close on time and is not closing, and the blame...
We have a hot seller’s market, but there are four common misconceptions about it that I want to clear up:
1. You need to know where you’re going before you can sell. The problem with that is that home sellers are not accepting contingencies in today’s market. They’d rather sell to a buyer without any contingencies, of which there are many. To get around this, you want to negotiate favorable terms when selling your current home. You may be able to negotiate a leaseback agreement or an extended closing to give you time to find and close on your new home.
2. Your home’s condition doesn’t matter. You may be able to get away with a little more today, but you will get more money for a home in better condition. Go through your home with a trusted professional and see where it makes sense to spend a few bucks to get a few bucks more back.
3. You can price above the market. Appraisal issues are going to get in the way. Pricing above the market may result in buyers staying away. If you do price above the market, your home’s just going to sit there.
In a hot market like this where home values keep rising and rising, a lot of homeowners are asking if they should still sell today even if they won’t be able to find a new home right away because of how low the inventory is.
In my opinion, right now is a great time to sell even if it means you have to rent for a while before you’re able to find your new home. I recommend having an agent come out to your home, assess its value in today’s market, and give you an insight into what might happen if you wait versus if you were to sell now.
If you want to sell at the height of the market, the time might be right now. If you have any questions about your specific situation or real estate in general, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.
If you’ve been keeping an eye on the real estate market, you’re probably aware that interest rates have gone up by 1% since last month. What does that mean for you? To keep it simple, if you were pre-approved to buy a house a month ago at $300,000, today you would only be approved for $270,000.
The general rule of thumb is that a 1% increase in the interest rate decreases your buying power by about 10%. This affects home sellers, too. Their pool of buyers shrinks as rates go up, and housing values will go down as well.
We could absolutely see a change in this market due to an increase in rates, so we’ll make sure to keep an eye on it for you moving forward.
If you have any questions for us about interest rates or real estate in general, don’t hesitate to reach out via phone or email today. I look forward to hearing from you soon.
How do you buy a new house if you have to sell your current one and you don’t have anywhere to go in the interim?
I was recently asked this question by a home seller, but they didn’t realize that in this situation we usually close both transactions on the same day. We close on the house the client is selling in the morning, and close on the new home a couple of hours later. This way, no one ends up homeless.
You can sell and buy on the very same day so you don’t have to move twice.
Granted, there’s probably a lot of stuff in the moving truck from...
Sometimes I’m in appointments with people who are struggling to figure out what to do with their home. They’re unsure whether they should sell, rent, or stay in their house. I like going over each option with them. What does it mean if you rent it, what are you going to get in rent, does that cover the mortgage, is there any extra money there? What does it mean if you’re going to sell it, how much money are you getting out of it, where are you going to move?
Occasionally people are in a position where they owe more than they can sell it for and they have to consider a short sale. We do many short sales, and I love helping people who are in a difficult situation and don’t know what they want to do. We lay out all your options and hopefully help you gauge what’s best. You don’t have to figure out your next step alone.
If you or anyone you know needs some guidance about your options, we’d be glad to assist you. Please give us a call or send us an email. Also, contact us if you have any questions about real estate. We’re happy to help.
Some agents charge fees on top of their commission. I’ve heard of agents charging transaction fees, cancellation fees, and even fees for photos. Before you decide who the best agent is, you need to know what you’re going to be charged.
Like our team, some agents simply charge you a commission with no additional fees. Because we aren’t charging you these fees, we don’t get paid until you sell your property.
I don’t agree with charging extra fees.
I don’t agree with charging extra fees because my philosophy...
As a homebuyer, when you get to the closing table, you’ll need to pay closing costs to complete the purchase of your home. The good news is, there are ways to reduce those closing costs.
For example, you can ask the seller to provide a closing cost credit. In reality, you’re wrapping those costs into your mortgage, but it still reduces what you’ll have to pay at the closing table.
You can also elect to close at the end of the month (or as close to the end of the month as you can). If you close on the 6th you will have to cover 24 or 25 days of prepaid interest. If you were to close on the 28th you would only have to pay two or three days. The closer to the end of the month you close the less money you will need to bring to the table because you will pay less in prepaid interest.
Lastly, if you’re a veteran or active-duty member of the Armed Forces, you can get benefits through your VA loan.
If you have any questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d love to help you.
Posted by Dan Bennett on Friday, October 18, 2019 at 7:00 AMBy Dan Bennett / October 18, 2019Comment
The National Association of REALTORS® surveyed their members for the release of their Confidence Index.
The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices, and market conditions.
Homes across the country are selling quickly, in an average of just 31 days.
Posted by Dan Bennett on Thursday, October 17, 2019 at 7:00 AMBy Dan Bennett / October 17, 2019Comment
No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.
A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.
The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements: home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.
In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets....
Posted by Dan Bennett on Wednesday, October 16, 2019 at 7:00 AMBy Dan Bennett / October 16, 2019Comment
If you’re searching for a home online, you’re not alone; lots of people are doing it. The question is, are you using all of your available resources, and are you using them wisely? Here’s why the Internet is a great place to start the home-buying process, and the truth on why it should never be your only go-to resource when it comes to making such an important decision.
According to the National Association of Realtors (NAR), the three most popular information sources home buyers use in the home search are:
Online website (93%)
Real estate agent (86%)
Mobile/tablet website or app (73%)
Clearly, you’re not alone if you’re starting your search online; 93% of home buyers are right there with you. The even better news: 86% of buyers are also getting their information from a real estate agent at the same time.
Here are 3 top reasons why using a real estate professional in addition to a digital search is key:
1. There’s More to Real Estate Than Finding a Home Online. It’s a lonely and complicated trek around the...