Archive for December, 2008
RECORD KEEPING 101 FOR HOME OWNERS
December 29th, 2008 categories: Selling
How long has it been since you moved? Several years, several months–no matter what the time frame, here is a question for you–where are the records of your move, the sale of your last home, purchase of your present home? How about a New Year’s Resolution to find those records, get them all together on one place and organize them? Why is this important?
First thing that comes to mind is the IRS–any profit on the sale of your home may be taxable if you have made significant improvements. You must be able to document the cost of any and all improvements. We all know that the IRS can be villainous–and they will be if your record keeping is imperfect. Every expenditure for your new kitchen, bathroom, family room, wood floors, etc. should be documented with the receipt and even the canceled checks.
An inexpensive accordion file will hold everything–closing papers from your purchase showing closing costs, all records of your upgrading expenses during the time you own your home and any and all related information–you will be all set when you decide to sell. Another good idea is to keep this file in one place all the time and let somebody else know where it is. What a wonderful sense of relief you will have when it is time to sell–everything is in one place and not scattered through a desk top and/or several file folders!
Related Articles: Before You Buy A Condo, 12-08, Can’t Sell–Think About Renting!, 12-08, How Much Will My Home Sell For?, 11-08
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EMPTY NEXT FAQS – 5TH EDITION
December 19th, 2008 categories: Lifestyle, Market Trends
We’ve talked about a lot of things in these FAQ posts–condo versus co-op, building rules, how to figure out which neighborhood you want to live in–a lot of things. We haven’t talked about lofts. Basically there are two types of lofts, Hard lofts and soft lofts.
Hard loft characteristics are:
- An unfinished appearance–almost raw.
- High, high ceilings, 10 feet or more.
- Original brick work walls, hardwood or concrete floors.
- Exposed elements such as duct work, pipes, and electrical pipes.
- Usually very large windows because in a previous life the building was a factory and the workers needed all the natural light they could get.. In fact some people feel that it is NOT a loft unless it has large windows and was a factory.
- Openness–very few room partitions and the ones that exist may not reach the ceiling.
The characteristics of a soft loft are:
- They are, indeed, softer–finishes are much more what we are accustomed to.
- High ceilings and large windows are also frequently found in the soft loft.
- Carpet or new hardwood may replace the original factory floor if the building was formerly a factory.
- Open floor plans can also be found but they will probably have more definition of the individual rooms–floor to ceiling walls or the top few feet finished with glass brick.
- Ducts, electrical work, and plumbing are often concealed.
- Generally speaking, condos and soft lofts have more in common than hard lofts and condos.
Lofts can be fun to live in–I have sold a number of them and one of my favorite stories is about a loft I had for sale. It was a hard loft–originally it had been a brassiere factory. Frequently a visiting parent will tag along when a child or grandchild is home shopping. One showing for this home produced just that sort of potential buyer–middle-aged client accompanied by an elderly parent. I was going through my spiel about the original use of the building when the parent looked me in the eye and said that she knew it was a brassiere factory because her sewing machine sat right there and that was the oil spot from her machine! What fun! Real estate is an adventure!
Related articles: Empty Nest FAQS 4th edition, 12-08, Empty Nest FAQS 12-08, Empty Nest FAQS 2nd edition, 10-24, Empty Nest FAQS, 9-08.
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BEFORE YOU BUY A CONDO. . .
December 18th, 2008 categories: Buying
Here are a few thoughts about buying a condo versus buying a single family home. In a single family home the owner is responsible for all the maintenance inside and outside of the home–lawn care, snow removal, exterior paint or tuck pointing, landscaping. In a condo the association takes care of all of those items and the cost is prorated over all the owners and included in the monthly assessment. In addition a condo owner may have amenities that would be unaffordable in a single family home like a swimming pool and a great work out place. So, what do you give up in a condo? Well, since a condo is a form of community ownership, you give up freedom. Most condo associations have a Rule Book that tells you what you can and cannot do. In a single family home the owner sets the rules. For example, if the building permits dogs, you probably have to use the freight elevator to take the dog in and out. You may not be able to have a washer and dryer in your home. The use of propane for balcony barbecues is usually prohibited. The price, the location, the floor plan, the view–everything may be perfect–caution should still be the byword.
Things to look out for include:
- History of assessment increases and special assessments. If there have been special assessments, what was the money used for?
- Percentage of owner occupancy. If the percentage is low (under 70% usually), it may be more difficult to get a mortgage.
- If you are thinking of buying in a development, be especially diligent in getting information about the developer’s financial condition–too many people have been burned by belly-up developers.
In Illinois we are very, very lucky–we have a great Condominium Property Act and Section 22.1 requests all of the necessary information to help the buyer make an informed decision. Twelve months of minutes, current financial statements, a statement about current law suits or judgments, a statement about insurance coverage for the association–these are just a few of the items that must be provided to a buyer in Illinois.
The problem isn’t with getting the information–it’s about what is done with it. So very many headaches could be avoided if prospective buyers just read the documents. Too many buyers are in love with their new home and don’t read anything. Read, study, inhale the information provided to you. Since Illinois is an attorney approval state, your attorney should look over some of the information with their educated eye. The rule book is key to your happiness in your new home–are the rules ones that you can live with and want your neighbors to live with? Please do find out if you can have both Fluffy the cat and Attila your 75 pound German Shepherd in your home! If you would like a copy of the 22.1 rider, just call me 312-981-2360 or e-mail me.
Related Articles: Loans Still Available (10-08), What Do I Have To Do To Buy In Today’s Market (11-08), How To Move Out Of Your Rental Politely (12-08).
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PROPER PACKAGING FOR YOUR HOME SALE
December 17th, 2008 categories: Selling
Don’t we all love getting presents? A beautifully wrapped package that contains who knows what delight is one of the great pleasures of life! Have you ever thought about packaging your home for sale? Perhaps you should think of your Realtor as your packaging consultant. Ask your Realtor to come and do a walk through to give you suggestions. If your Realtor suggests hiring a “stager,” DO IT. The Realtor may be willing to share the cost with you. Here are a few other suggestions for beginning that packaging.
- If you have a patio, front yard, or balcony–be sure that all the plantings are neat and cared for, that any furniture is well-maintained and tastefully placed–no tatty chairs with plastic webbing broken or loose. Better no furniture than trashy looking furniture.
- Be sure the front door is clean–repaint if necessary–remember this is the potential buyer’s first impression of your home–it should make them anxious to see what wonders are inside.
- Once inside everything should sparkle–clean, clean, clean everything. The windows should be squeaky clean, the stove should be squeaky clean, the refrigerator should be squeaky clean–everything your mama ever taught you about cleaning should be done and even more if you can think of anything.
- Either rent a steam cleaner and clean the carpet or hire someone to do it. Replace badly worn carpet with a cheap grade of carpet and an expensive grade of padding–feels great and costs less.
- If you can get away without painting–so much the better. Be sure to check for chipped paint and smudges on the walls. If you have unusual paint colors, chartreuse, black, emerald green–might be a good idea to re-paint to a neutral color that doesn’t detract from the size of your rooms or the available light.
- And do be aware of any odors in the home–pet odors are particularly offensive, smoking odors are also on the prohibited list. Exercise great care to be sure your home smells good.
- Organize all the closets and if you have one, your garage. Empty your closets to the point that they actually have spare room–the prospective buyers will feel that there is so much room you couldn’t use it all. Clean all cupboards, closets and storage spaces–throw out everything you can. Think carefully because moving charges can add up quickly, especially on never or little-used items that you will probably wonder why you ever bothered moving in a year or so.
- Small improvements can add pizazz to your home–perhaps a new faucet and cabinet knobs in the kitchen, a new front door knocker–that sort of thing. New tile in the bathroom if it is chipped or cracked is a good idea. Look at your home critically–most of us just take our home for granted–think “Would I want to buy this home–what would it take to make it more attractive?”
- To sum it all up CLEAN, DECLUTTER, DEPERSONALIZE! Unfortunately that depersonalize means cutting down the three hundred precious pictures of relatives to three. I once had a wonderful listing, it had huge rooms, great lake view, super building AND a whole wall of family pictures dating from the late 1800s–well, it eventually sold even though I kept losing potential buyers to the family picture gallery.
If you would like a professional opinion about what needs to be done to YOUR home to make it more saleable–312-981-2360 or e-mail.
Related Articles: To Remodel Or Not To Remodel And When, 12-08, How Much Will My Home Sell For, 11-08, Agents May Say “NO” To A Listing, 11-08.
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RENTERS SHOULD ALWAYS BUY!
December 16th, 2008 categories: Buying
Twenty years as a full time Realtor have given me the conviction that renters should always buy if they possibly can. Just think of that rent check in terms of hundred dollar bills being burned each month–really, who can afford to do that? Of course I DO understand that there are obstacles in the path of home purchase–unpaid college loans, job uncertainty, and other individual concerns. Let’s think of a few advantages a home owner has over a home renter. Probably your monthly rent is your biggest expense except perhaps your taxes.
- You ARE making a mortgage payment–your property owner’s! Usually a rental property has a mortgage and the owner uses the rent proceeds to pay that mortgage. Wouldn’t you rather be making your own mortgage payment?
- When you own, you can either move or not move–it’s your choice. If the owner of your rental property decides to sell, you may be out of a place to live. If the owner raises the rent to an uncomfortable amount, you may have to move and moving is expensive. Unless you take out an adjustable rate mortgage, your monthly mortgage payment remains the same, month after month after month. Suppose your owner has a boomerang child who needs a place to live besides the parental abode–again you could be out of a place to live.
- Decorating–you can do WHATEVER YOUR HEART DESIRES! Probably not a good idea to get too crazy with permanent fixtures like the kitchen counter tops or the color of bathroom sinks, tubs, etc., but wall colors can be anything you want–you like electric blue–every wall in your home can be electric blue! You like orange shag carpeting–go for it!
- Feeling good about yourself–when you open your front door–it’s your HOME–your castle! You feel financially sound and grounded and other people probably perceive you in the same way. There is pride of ownership.
- Financially, buying makes sense. You are building equity–slowly but surely. And isn’t that better than lining your landlord’s pocket and building his equity with your dollars?
- Timing–now is a great time to buy. Inventory is high, prices are declining, loans are available and interest rates are GREAT. We never know when the market has hit bottom or when the market has hit high until it starts to go up or down–it is impossible to predict either. If I were renting, NOW would be the time I would buy.
If you are beginning to think about buying a home, I can e-mail listings to you. or if you have questions, Just call me at 312-981-2360 or e-mail me.
Related Articles: How To Move Out of Your Rental Politely, 12-08, How To Get The Buyer And Seller Together on Price, 12-08, Real Estate And The Internet, 11-08, Appraisals In Today’s Market, 11-08, Loans still available, 10-08.
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HOW ARE REALTORS PAID?
December 15th, 2008 categories: Market Trends
How do I earn a living? That is a good question! The flippant answer is hard work–and that’s the truth! The real question is who pays me? Is it different if I am representing a buyer rather than a seller? Here are a few thoughts about the process.
- Realtors are not paid a salary–most of us work on a straight commission basis. If a Realtor has a licensed assistant, the assistant is usually paid an hourly wage or a salary by the Realtor.
- We receive nothing until a transaction closes–we have to pay for feature sheets, post cards, brochures, and advertising. If we have an open house for brokers, we frequently offer lunch or gift certificates or both–the Realtor pays again. Never mind about our car and all the expenses that go along with a vehicle. We also pay for our cell phones and our computers. All this done in the expectation that we will sell a property. These are some of the things that we spend our money on and think about the TIME spent showing property, accompanying inspections, holding open houses, arranging buyer’s showings and going on them–a lot is done before a property actually closes.
- Okay, so we arrive at the closing–this is almost payday for the Realtor. At the end of the closing a check is cut to the listing broker’s sponsoring brokerage. For me it is Baird & Warner. The amount is the percentage of the sales price that is stated in the listing contract.
- Next step to payday–the listing brokerage cuts a check for the brokerage sponsoring the buyer’s Realtor.
- Final step, the sponsoring broker for both the listing agent and the buyer’s agent pay each agent their percentage of the commission. The sponsoring broker retains a percentage of the total commission and the agent gets the balance. The per cent to be paid to the buyer’s broker is clearly stated in the listing contract and on the Multiple Listing Service entry.
- We cash our checks and hope to sell another home soon.
And so it is–what we do to get paid and how the process works. If you have questions, please call me, 312-981-2360, or e-mail me.
Related Articles: Agents May Say No To A Listing, 11-08.
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HOW TO MOVE OUT OF YOUR RENTAL POLITELY
December 11th, 2008 categories: Buying
Many new home owners are first time buyers–especially today because they don’t have to sell a home before buying one. Now, let’s just suppose that you have found the perfect home, your mortgage commitment has arrived and you are absolutely jumping for joy and excited as all get out about finally, finally being in a place you OWN.
What about that place you rented awhile ago? You know every flaw, every idiosyncrasy, and you can hardly wait to shed the dust of the place from your shoes. Let’s think about this–you probably had to put a month’s rent for a security deposit–right? Could you use that month’s rent for the inevitable trips to the hardware store when you move into your new home? Of course you could–so here are some suggestions about how to get it back. If possible, vacate early–if that isn’t possible ask your landlord for a day or two to clean the place.
- Give notice as soon as you have a closing date–30 days is usually acceptable. To be sure, check your lease early on in the looking process–don’t wait until you have made a final decision.
- Find out exactly what condition the owner or manager expects–most people understand that you lived there and some wear and tear is to be expected.
- Spend a little money and either clean the carpet or have it done professionally.
- Don’t repaint unless you have some sinfully scarlet or plummy purple walls that alter the neutral colors that were there when you moved in. Do be sure to get rid of all smudges and fingerprints on the walls.
- Empty everything–cupboards, closets, storage locker, closets–leave nothing behind for the next person. Remember one person’s junk is another person’s junk.
- Clean, clean, clean–vacuum, dust, wipe out kitchen cupboards, wipe out the refrigerator, make the stove sparkle, wash the windows–just do all the things your Mama taught you to do to make a place immaculate. If you just plain don’t have the time or energy what with moving and all, hire someone or a service to come in and do the cleaning.
- If you have damaged something–be honest about it with the owner or manager. Find out if they want you to repair the damage or if they would like you to pay for it and have their person do the repair. If they want you to pay for it, do ask them for a copy of the bill from the repair company.
- Everything is pristine–now is the time to make an appointment with the owner or manager of the property to walk through so that, hopefully, your security deposit can be released to you.
My wish is that this information is helpful to you–questions? Call me at 312-981-2360 or e-mail me.
Related Articles: How To Get The Buyer And Seller Together On price, 12-08, What Do I Have To Do To Buy In Today’s Market, 11-08.
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TO REMODEL OR NOT TO REMODEL AND WHEN?
December 10th, 2008 categories: Market Trends, Selling
Many sellers have asked me about do-overs for kitchens and bathrooms and the advisability of replacing carpeting with hardwood floors before listing their property. Unless the kitchen and bathrooms and carpet are really, really GROSS, gross beyond belief, my advice is always DON’T. It just doesn’t make any sense at all to remodel to sell–if remodel you must, then do it for YOU, not some stranger who may not like the granite or appliances or the wood stain. Do it in time to enjoy the new whatevers before selling.
Just think about it, remodeling is expensive and time consuming, it can take from weeks to months for new materials to just arrive at your home. Right now we are in a declining market. It is very possible that you won’t recover the cost of the do-over. To my way of thinking it is better to adjust the price of the home to account for carpet and an older kitchen and older bathrooms than to try to raise the price by remodeling. Let the buyers decide what THEY want to do.
If you would like me to come take a look at your home and give you my impression–please call me at 312-981-2360 or e-mail me.
Related articles: How to Get the Buyer and Seller Together on Price, 12-08, How Not to Sell How to Sell Your Home, 11-08, Agents May Say “NO” to a Listing, 11-08
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EMPTY NEXT FAQS 4th Edition
December 5th, 2008 categories: Buying, Lifestyle
At the top of the “must have” list for many transplants from suburb to city is GREEN SPACE. Many of them won’t look at a home that without either a balcony or a patio. Frequently the patios or balconies with the most plants belong to people who have just moved in from the burbs and are missing their yards and plants.
Rules can be a source of frustration and friction such as:
- I have to reserve the elevator! What are you talking about–this is MY HOME! Yes, indeed you do have to reserve the elevator! Think of the chaos and expense if two new homeowners tried to move into the same building at exactly the same time.
- I have to use the freight elevator to take my dog out? Yes, you do in most buildings. My dog is so small–can’t I just carry him/her in my arms? No, not usually. This is for the comfort of the owners who don’t like dogs and don’t want to ride the elevator with one. My dog weighs 70 pounds–the building I want to live in has a 35 pound weight limit–what’s with that rule? Many buildings have very stringent weight and quantity limits for pets–this is a requirement your agent should check carefully when making showing appointments. The board application will usually have a space for information about the animals who will share your home and you really have to be totally honest at that time. If a dog puts on a lot of pounds after you move in–well, I have never heard of a board conducting a doggy weigh in but I guess it COULD happen. . . .
- I HAVE to keep my doors closed so that I don’t have any cross ventilation? Yes, you do. Most buildings have a rule about leaving doors open. For one thing it increases the building’s costs for heating and air conditioning halls. For another it violates the privacy of your neighbors–they truly don’t want to see you walking around scantily clad, they don’t want to hear your side of a phone call or your television program as they go in and out of THEIR home.
So there it is–a few more things to think about when you move into the city.
Related Articles: Empty nest FAQs 3d edition (11-08), Empty Nest FAQs 2d edition (10-08), Empty Nest FAQs (10-24)
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CAN’T SELL — THINK ABOUT RENTING!
December 4th, 2008 categories: Renting, Selling
Many home owners, especially condo owners, are finding that their homes aren’t selling and are wondering if renting is a viable option. It is certainly something to think about. Most agents today are willing to take a listing both for sale and for rent. Would we rather sell than rent the home–of course! Having said that, it makes sense to give the best possible service even if that includes renting a home at many less dollars than you would receive for selling that home. If, as an owner, you are faced with two mortgage payments, two tax payments and for a condo, two assessments each month, renting might make sense. Even if the rent doesn’t quite cover all the expenses it can be a powerful help in that direction. Probably one of the most common mistakes owners make is overpricing the rental listing. Sounds familiar, that’s what most sellers do too! It does not matter what you need to cover your expenses–fair market rent is just the same as fair market value for a sale and the market sets that value. Another area that gives prospective landlords a problem is screening prospective tenants. At a minimum a credit check and a background check should be pulled. A litigation check is also a good idea. Another thing to consider is the landlord’s ability to handle necessary repairs–are you suited to a midnight call that a hot water heater is leaking or the furnace has stopped operating in zero weather? It isn’t just a question of collecting a rent check each month–a certain amount of management must be done also. Here are some things to think about:
- If you own a condo, does the condo association allow rentals? Most do with the requirement of a 12 month lease. The particular association that I live in allows rentals only after one year’s ownership. Coops most usually do not allow rentals.
- Think about repairs–you might be inclined to postpone a repair, just live with something minor, but your tenant will want prompt service. It might be a good idea to set aside $100 or so each month to cover the costs of repairs.
- Pets–do you want them or not? They can scratch hardwood floors, they can make messes, they can be a nuisance to the neighbors–is it worth it? Many owners charge a substantial amount for permitting pets in a rental. The amount can be determined by the number and size of the pets.
- Inspection–the landlord should walk through with the tenant just before the tenant takes possession to be sure that the home is in the same condition when the tenant leaves–
- Security deposit–In the Chicago market this is customarily one month’s rent. The tenant should not be allowed to use the security deposit as their last month’s rent. Any additional deposit for pets is over and above the security deposit.
- References–three is about right and DO check them. This will give you additional information that is not on the credit check.
Renting is certainly something to think about. If you have more questions than I have answered in the article, Please do call me, 312-981-2360 or e-mail me if you have a question.
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