Karp Real Estate

Ready to move on, but you feel paralyzed by the market?

You are not alone.  Many people are thinking about moving from their current home into something smaller, larger, or to a retirement community, but they are afraid that they are stuck because of all of the negative press about the real estate market.

While it is true that if you have a property to sell right now, you aren't going to get the same dollars for it that you would've 2 or 3 years ago, there are still many good reasons to sell now instead of waiting. Here are my top 5 reasons to sell now, not later:

1. If you sell your home in the current real estate market, that means you will also be able to buy in this market.  With low prices and incredibly low interest rates, you can get a terrific deal in the current market.  A low price on your new purchase and a great interest rate can more than make up for the lower price on the home you sell.
2. You can get more house for the money in today's market.  So you may be able buy more house now than you would've been able to afford a couple of years ago.
3. There are tons of distressed properties available right now that need a lot of work to make them livable. Buyers that are looking for a nice home in move-in condition don't have much to choose from. If your home is in good condition and you price it competitively, you can sell it quickly.  I've seen several of these homes end up with multiple offers, yes multiple offers in today's market.
4. When the federal government extended the tax credit for first-time home buyers, they added a credit for existing home owners. If you've lived in your home for at least 5 of the past 8 years, you may qualify for up to $6,500 income tax credit (contact me to find out if you qualify). Time is running out on this deal - you must have a sales contract by April 30th to qualify for the credit.
5. Retirement communities are struggling to reach capacity right now. Many of these communities are offering huge financial incentives to lure to residents. If you sell your home now, you can take advantage of these special offers.

If you are interested in learning about foreclosed properties, go to my foreclosure website at www.ForeclosuresOnTheNorthShore.com

This month I became the exclusive licensee in Highland Park for www.teardowns.com. If you or someone you know has a property that needs a major rehab or is a possible tear down candidate in Highland Park, please contact me. I can market these properties to our unique database of builders and remodellers that are looking for this type of property - and the best part is that you can save significantly on commission when you list your property with teardowns.com.

 

Thank you for reading!

How is the market doing?

I am always getting this question (some people are just asking to be polite, while others really want to know).  Here are my general observations and assessments of the current market conditions in the Chicago are:

• Buyers are looking for bargains.  In fact, many well-priced properties (including short sales and foreclosures), are experiencing multiple offers and sales over the asking price.  I am working with several buyers and have been in competitive bidding situations in Chicago, Glenview, and Buffalo Grove.  And I have a Des Plaines property under contract (my sellers) that also had multiple offers.  The driving force on all of these was a GREAt price versus everything else that is out there.  This recent article from Real Trends substantiates my first hand experience - this is going on all over the country.
• First-time buyers were out in full-force during Q4 of 2009, and since the tax credit has been extended they are out there again.  While January and February can be "sleepy" time for the market, that is not the case for the less expensive properties that attract the first-time buyers.  Home owners that are waiting to sell until the snow melts are missing out on the buyers looking to collect $8,000 from uncle sam.
• There are so many distressed properties (short sales and foreclosures) that are in terrible condition.  When something nice comes on the market, if it is priced competitively, it will sell quickly. 
• After the distressed properties, the next most common properties available for sale are the estate sales - homes and condos that were owned by the parents of baby boomers.  Many of these properties haven't been updated in over 20 years and are "stuck in time" with outdated decorating,  cabinets and appliances. Some of these are terrific opportunities for first time buyers IFthe structure and mechanicals have been taken care of over the years.  There is also a glut of condos available from these homeowners.  However I'm finding that many first time buyers are afraid of purchasing the older condos and town homes because they don't want to get stuck in a condo or town home complex with a bunch of old fogies...
• PRICE - this is what everyone is asking about.  The bottom line is that inventory levels are still much higher than sales.  For example in one north shore suburb there were over 20 properties sold last month.  Sounds great, until you hear that there are over 600 properties listed for sale.  Basic economics will tell you that prices are not going to go up while inventory (supply) exceeds sales (demand). 
• The banks' role in the real estate market - don't get me started...that is what I say to people.  The way that the banks are handling the short sales and the foreclosures makes me angry.  They are preventing the real estate market from working properly.   Short sales keep falling through the cracks because the banks are taking too long to make decisions and then the buyers move on to something else.  Or, the banks deny the short sale and then the property goes into foreclosure, only to be sold at a lower price than the original short sale price 6 - 12 months later (and after the bank has incurred additional expenses).   A good market exists when all players have complete access to information about the market and can make logical purchase and sale decisions.  Unfortunately the banks are taking too long to make decisions and their decisions are not based on market information (I wish I knew what they are basing it on!).  I am sure that there are some banks that are working through these difficult sales quickly, but they are the exception, not the rule.

Would love to hear from you!

Thanks for reading.

nsk

 

Mortgage holders holding up real estate market recovery - still!

The banks and other mortgage holders and NOT behaving rationally and that is delaying the recovery of the real estate market.  Here is a real-life example that I have came across recently:

A Tale of Two lots

Mr. X bought a very small house on a huge piece of property a couple of years ago.  He subdivided the property into two lots (all legal), tore down the house, and put together plans to build two houses on the property - one for himself and one to sell. Unfortunately when he tried to get financing to build the first house, he couldn't get a construction loan.  Making matters worse, as the economy worsened he fell behind in payments on the original mortgage.

So, Mr. X hired a real estate agent to sell the property and a lawyer to try to get him out of this mess.  By this time the value of the vacant land is well below what he owes to the bank, so he is looking at a short sale situation.  His lawyer talked to the bank about various options (loan modification, deed in lieu of foreclosure, etc.).  During this period the bank realizes that the collateral for the mortgage, the house, is gone.  Mr. X didn't know that he had to get permission from the bank before he knocked down the house. Of course the bank is not happy about this.  The bank hired another real estate agent to do a Broker's Price Opinion (BPO) - this is to tell the bank the approximate market value of the property (and it is cheaper than getting an appraisal).  Then the bank instructs the real estate agent hired by Mr. X to lower the asking price to the BPO price.

Within less than a week of changing the price, there are two cash offers on the property.  One is over the asking price.  The buyer wants to close asap.

The entire deal is contingent on the bank approving the short sale.  The bank set the price, and the contract is over that amount.  Seems like a no-brainer - sell the property and move on.

But not so fast. The key contact at the bank says that they have to make a decision as to whether or not they want to do a "work out" for Mr. X (if they don't do a "work out" then they will foreclose instead). Since he tore down the house without their permission, they are behaving like a deer in the headlights - they don't know what to do.  I've already been through this process with another property.  If the bank decides to foreclose instead of taking the short sale it will cost them more money than if they just take this deal. There are real estate taxes, property maintenance - even an empty lot requires maintenance - and legal fees, plus the cost of various people at the bank having to deal with one more property.  The whole process could take them 6 - 12 months! And in the end, the sale price will probaby be even lower than the current deal that is on the table. 

And the biggest problem is that if the bank doesn't accept the offer within a reasonable amount of time the buyer will take their cash offer somewhere else. The bottom line is that the bank is acting irrationally.  The house is gone, get over it.  Foreclosing on the property is just going to make a bad situation worse.  Take the money and move on to the next deal!

And speaking of buyers taking their $ elsewhere, my next post will be about the pitfalls of shortsales. I have 4 short sales pending and two short sale listings...