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301 Greenview Drive, Crystal Lake, IL 60014

773.818.9054 office/cell
866.381.4238 efax

Check out my interview, Expert Advice on Buying a Foreclosed Home on Illinois Homes, one of the top sites for Illinois homes for sale, including Wheaton, IL real estate. Illinois Homes also services Michigan homes for sale and Pennsylvania homes for sale.

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Tuesday, September 28, 2010

Top 10 Most Affordable Cities All in Midwest

The latest list ranking most expensive and the most affordable housing markets in the country is out, and Chicago is not included on it.

Coldwell Banker Real Estate LLC recently released its Home Listing Report, which found a $1.7 million difference between the nation’s most expensive and most affordable cities to buy a home.

The report surveyed more than 18,000 four-bedroom, two-bathroom properties listed on ColdwellBanker.com between February and August of 2010 in close to 300 real estate markets.

The average listing price of the homes was $353,000.

The results are below.

The top 10 most affordable housing markets and their average listing prices for the same time period:

1. Detroit, Michigan $68,007

2. Grayling, Michigan $84,625

3. Sioux City, Iowa $85,967

4. Cleveland, Ohio $87,240

5. Muncie, Indiana $100,314

6. Norfolk, Nebraska $107,814

7. Kansas City, Missouri $112,449

8. Canton, Ohio $114,325

9. Port Huron, Michigan $116,267

10. Topeka, Kansas $116,343

The most expensive city in Illinois to buy a house is Deerfield, with an average listing price of $552,918 for Feb. through Aug. 2010. The least expensive: Rockford, with an average listing price of $174,566.

The top 10 most expensive housing markets and their average listing price for February through August, 2010:

1. Newport Beach, California $1,826,348

2. Palo Alto, California $1,479,227

3. Rye, New York $1,325,500

4. San Francisco, California $1,325,103

5. La Jolla, California $1,210,300

6. Greenwich, Connecticut $1,195,614

7 Wellesley, Massachusetts $1,080,458

8 Pasadena, California $1,043,683

9. Honolulu, Hawaii $1,026,821

10. Santa Barbara, California $1,024,661


7:55 am cdt 

Friday, September 24, 2010

Is Housing Still in a Slump?

From today's Wall Street Journal:

For months, home buyers and sellers have been stuck in a curious stalemate, with sellers reluctant to lower prices and buyers staying on the sidelines.

New data suggest the standoff eased slightly last month, as sales of existing, or previously owned, homes rose 7.6% from July's extremely low levels, according to figures released Thursday by the National Association of Realtors.

But while the housing market may have halted a slide that began in April after federal home-buyer tax credits expired, it still faces a long recovery, and buyers remain scarce. The August figures were the lowest for any month since 1997 except for July.

And while the number of unsold homes fell 0.6% in August to 3.98 million, it would still take 11.6 months at the current sales pace to clear the inventory. That's the second highest figure since the realtors' group began tracking the data in 1999, behind July's 12.5 months.

"The only way to sell a home in this environment is to drop the price," said John Burns, a housing consultant based in Irvine, Calif.

The housing numbers have prompted a debate among economists about how much further prices need to fall to resuscitate sales. Home prices are likely to fall another 2.2% this year, according to the consensus estimate of 114 economists and housing analysts surveyed this month by MacroMarkets LLC, a provider of hedging products.

The picture varies from region to region. Home prices in several Florida and Nevada markets are likely to fall at least another 5%, while parts of Texas and Oklahoma could post modest gains over the next year, said Eric Fox, vice president of statistical and economic modeling at Veros, a real-estate analytics firm in Santa Ana, Calif.

Nationally, prices in July fell by 0.5% on a seasonally adjusted basis following a 1.2% decline in June, according to figures this week from the Federal Housing Finance Agency. The S&P/Case-Shiller home-price index issues its report on July prices next week.

Consequently, sellers face a difficult decision: get off the market or cut the price. Sonja Brisson decided to get out. After listing her home for three months, she began interviewing prospective renters on Tuesday. Ms. Brisson, who is moving to live with her fiancé, will lose money renting her Seattle town home, but said it was better than competing with distressed sales going for 30% less than what she paid for her property.

Renting the home is "just a total crapshoot," she said. "Nobody saw this coming, and nobody can see the end of it."

Weak demand in the housing market comes amid other signs that the economy is improving, but at a painfully slow pace. An index of leading economic indicators, which aims to help predict where the economy is headed, rose 0.3% in August after increasing 0.1% in July, the Conference Board said Thursday.

Much of the lingering weakness in demand is linked to sluggish improvement in the job market. Some 465,000 people filed new claims for jobless benefits last week, up 12,000 from the week before, the Labor Department said Thursday.

Without jobs, families are still relying on tactics they employed during the recession—such as households doubling up—to make ends meet. That's pulling down demand for housing and, in turn, prices and construction.

"As those jobs get created, people who have been doubling up will start moving out of those homes and demand will pick up," said Patrick Newport, an IHS Global Insight economist. "As that happens—it's going to happen very slowly—the glut will start coming down."

The weak economy is just one reason why buyer psychology remains depressed. The housing market also faces a "shadow inventory" of four to five million potential foreclosures that have not yet come to market but could put pressure on prices if they do.

"Why do you rush out today to buy something when you think there are going to be millions more for sale soon," said Michael Feder, chief executive of real-estate data firm Radar Logic Inc. The question, he said, is "how much lower do prices have to go to attract the buyers?"

Even investors, who have been active over the past year buying homes at what they believed were big discounts, are pulling back. "They think everything will be cheaper next year," said Mr. Burns.

As prices fall, more sellers could find themselves in Patrick Minton's shoes. He's already dropped the price on his Seattle home to $400,000, which is less than what he owes. He'll already have to pay transaction costs out of pocket.

The home hasn't received any offers, and he isn't willing to cut the price any more unless his bank agrees to a short sale. Mr. Minton, a 42-year-old software developer, listed his home in July after getting divorced and said he'd stay if the bank would let him refinance at current rates. "It's not the bank's fault that the house isn't worth what I paid for it, but unforeseen things have forced me into this position," he said.

While 11 million borrowers are underwater, or owe more than their homes are worth, another 2.5 million will join them if prices decline just another 5%, according to CoreLogic Inc., a real-estate analytics firm.

"They're between a rock and a hard place," said Glenn Kelman, chief executive of Redfin Corp., a real-estate brokerage that operates in nine states. "They'd capitulate if the bank would let them."

That is suffocating the market because those sellers are also would-be buyers. "Right now, we have investors and first-timers in control of the market, and until that changes, we will never be on the mend," said Mark Hanson, an independent housing analyst in Menlo Park, Calif.

The housing market will eventually need more buyers like Robert Gifford, who spent six months with his wife scouring their Beacon Hill neighborhood in southeast Seattle before pulling the trigger on a sale in July.

When it came time to sell their smaller home this month, they didn't dawdle. They cut the listing price by around 10% to $334,000, and it quickly went to contract.

"We didn't want to become an involuntary landlord," said the 31-year-old engineer.




12:24 pm cdt 

Thursday, September 23, 2010

Housing Starts Up in August
Good news for builders. The Washington Business Journal is reporting that builders broke ground on more homes in August, led by a jump in apartment construction.

Overall starts also rose in the region that includes Washington.

The Commerce Department said housing starts in August were up 10.5 percent from July, and 2.2 percent higher than a year earlier. Building permits, a sign of future building activity, also rose in August, up 1.8 percent from July, but still down 6.7 percent from a year ago.

Construction starts on apartment projects of five or more units jumped 42.7 percent in August and were up 53.1 percent from a year ago.

In the South, housing starts rose 7 percent in August and 2.8 percent from a year ago. Construction of single-family homes in this region was down 6.3 percent, compared with August 2009.

A report Monday from the National Association of Home Builders showed confidence among builders remains well below levels considered optimistic, though the group's confidence gauge was unchanged from August to September.

Read more: Housing starts up in August - Washington Business Journal
8:39 am cdt 

Wednesday, September 15, 2010

10 Reasons to Buy a Home Now

The Wall Street Journal today had a great article on 10 reasons to buy a home today. I'm reprinting the reasons below:

1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.

5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.

6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.

10:07 am cdt 

Monday, September 13, 2010

I was recently asked to put together a presentation for a group of professionals on buying foreclosed properties. I thought it was informative so I am reprinting it here:


Market conditions have caused an influx of foreclosures to hit the real estate market. The price may be right, but you must be careful for pitfalls when dealing with these types of properties, and know what to expect going into the transaction. These are NOT typical real estate deals.

1)     Make sure your Contract is accurately dated when submitted to the Bank.

                The Bank will take several days, maybe even weeks to respond to your offer. Then, before signing off on your offer, besides perhaps negotiating or giving you a counteroffer, they will give you a multiple-page Addendum to review and sign. Make sure your Contract’s closing and mortgage dates are padded to allow for this. Any changes to the Contract after it is signed must be done by Addendum, and the process is tedious and time-consuming.

2)     Have an attorney review the Addendum from the Bank before signing and attend Closing with you.

                Some Addendums require that the Buyer of a foreclosed property pay both Buyer and Seller’s side of transfer taxes, among other things which will be discussed later in this document. I have also encountered gross misrepresentation within the listings on these properties, so have an attorney double check things like deeded parking, roof rights, etc. Also have your attorney check the assessment and/or real estate tax amounts.

3)     Have a good home inspection. And make sure you do a final walkthrough prior to Closing to make sure the property is in the same condition as the time of Contract.

                A home inspection is more important than ever on these types of properties. The Seller Bank will not make any representations, nor will they be liable for any issues with the property. You will sign many documents stating and restating that the purchase is as-is. You are responsible for doing your own due diligence for the purchase. You may be responsible for having utilities turned on, or having the property winterized. You will also likely be responsible for the fulfillment of any village inspection requirements.

4)     Be prepared for delays, roadblocks and problems.

                If you are buying this property using a lender, inevitably there are issues to be encountered. Title issues, property condition issues and condominium association financial issues are just a few. Have your attorney also check for tenant rights and rights of redemption.

5)     There are financial differences.

                You will not get the typical 105 or 110% tax proration credit at closing. It will be 100%. Additionally, if you are buying a condo, pursuant to Illinois statute, you may as a purchaser be responsible for up to six months’ worth of past due assessments prior to the time the bank took the property over in foreclosure. This can add up, especially if you are also paying Seller’s transfer stamps! You will also be charged anywhere from $50-$200 per day for every day that you don’t close past your Contract closing date if it is your lender’s delay. Make sure your lender is aware of your closing date and will be ready to close on time.

6)     Closing these properties is different.

                You may not be closed for up to 72 hours after you sign your documents. The documents may need lender approval which may not happen right away. As a result, you may not have possession of the property immediately, so do not schedule movers or appointments for the day of closing. Also, make sure you change the locks! You do not know who may still have keys or access to the property. Be prepared to sit at the closing table with no representation from the Seller Bank. Their attorneys very rarely show up to closing and pre-send and pre-sign documents.

3:14 pm cdt 

Wednesday, September 1, 2010

Can You Refinance?

Terry Savage of the Sun-Times just had a great article on the ins and outs of refinancing. Rates are at record lows, but what's the criteria?

To refinance your mortgage, you need to meet three basic criteria:

Good credit -- If your credit score has dropped below 720, you might be turned down for a loan -- or you could be forced to pay a higher rate. Your lender should check your credit score at no cost, or you can pay $15.95 at www.myFICO.com.

Equity in your home -- Falling home prices could have wiped out your initial down payment or any home equity. Before you pay for an appraisal or application fee, make sure your lender runs a free "automated valuations model" on your property, checking comparable properties in your neighborhood. Then, pay for an appraisal if your lender is reasonably confident that you have at least 20 percent equity in your home to qualify for the refi.

Income -- Even if you have good credit and equity in your home, you still might not qualify if you or your spouse is unemployed. Just keeping current on all your bills to maintain your credit rating isn't enough. You'll have to prove your earnings history for the past two years.

Which new mortgage?

Most people blindly refinance into another 30-year, fixed-rate mortgage. You can use the calculators at Bankrate.com to see how much you'll save on monthly payments at lower rates.

If you're younger, still working and need the break on monthly payments, then stick with that 30-year deal. But if you've been paying on your existing loan for a while and are getting closer to retirement, you might want to consider a 15-year loan. The rate will be about a half a percent less than on a 30-year loan, but, because of the shorter pay-out time, a 15-year loan often doesn't lower your monthly payment, and it could even increase it. Still, you'll have the security of a fully paid home when you retire. Or you can always take the 30-year loan and make extra principal payments every month.

No matter what the term of the loan, make sure that it's a fixed rate. Don't fall for any adjustable-rate loans -- even with a very low interest rate -- because those will have to be refinanced again down the road. If all this money-creation leads to inflation in the future, rates will move much higher. If instead, rates move even lower, you can always refinance again.

Cost to refi and dangers

It's not just the quoted mortgage rate you want to consider. It's the annual percentage rate, or APR, that takes fees and costs into consideration. For example, a lender might quote a mortgage rate but then charge additional "points" (each point is 1 percent of the loan amount) and fees for arranging the deal. So focus on the APR, which takes those costs into account. The quoted rate and the APR should be within a quarter point.

Also, be aware that if your loan is a jumbo loan (above the $417,000 limit for loans insured by Fannie Mae and Freddie Mac), you will likely pay a higher rate.

And be sure to ask about the total monthly payment. You might be required to put property taxes and insurance costs into escrow as part of the deal, which could increase your monthly bill.

Where to find your mortgage

There are two ways to get a mortgage -- directly from the lender or through a mortgage broker. Either way, you'll have to supply a lot of documents to prove your income and submit to extensive credit checks, as well as an appraisal of the property.

Then, after this process called "underwriting," you'll be given a "lock" on a rate for probably no longer than 30 days, during which you have to close on the deal. (If rates drop further after you lock in a rate, some lenders offer the option to "float-down" for free.)

Online matching services, such as QuickenLoans.com and LendingTree.com, allow lenders to compete for your loan deal. But you'll have to sort through those that contact you with offers.

To find a mortgage broker, you can use GuaranteedRate.com or AmericanStreet.com, or you can Google mortgage lenders in your area. But be sure to read the consumer reviews for that company on Yelp.com or Google, or check the Better Business Bureau. This is too important a transaction to trust to blind luck or rate advertisements. And that's the Savage Truth.


12:42 pm cdt 

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