Lockboxes are always punctual.

This one is for my Chicago agents. We like to think we’re pretty savvy here in the big city – cutting edge! But there’s one area of the biz where our suburban counterparts have us beat: covering showings. Specifically, they don’t. We do—and it’s silly. Here are four reasons why you’re wasting your time, buyers’ time, and their agents’ time every time you show up at your listing:

1.  Buyers feel more comfortable with the place to themselves

Let’s start with the classic case for lockboxes. With the house to themselves, buyers feel more at-home. That’s how we want them to feel, isn’t it? They’re free to open cabinets, closets and windows. They can generally take their time in a low-pressure situation. You’ve heard this before.

“Hey, I know how to handle a showing,” you say. “I back off, I let them look around and I only get involved when they have questions.”

I know. You=pro. But there’s more…

2.  A piece of paper is a better tour guide than you are:

“But wait,” say the buyer agents. “I hate fumbling around looking for a lockbox, trying to find the right key, walking the wrong way off the elevator. Kills my flow!”

True. There’s a right way and a wrong way to tell other agents how to show your listing. Here’s the wrong way: “LB code 1-2-3-4 on fence.”

Here’s the right way. First, the buyer’s agent gets a showing confirmation that tells them exactly where the lockbox is. Which key opens which door, and which lock. Which way off the elevator the unit is. Which door it is (hint: the one with my business card on it). As soon as she opens the door, the first thing she and her clients see is this. It’s not your standard brochure with 5 pictures and a laundry list of features, but a step-by-step guided walk-through tour with pictures of key features for highlighting and later memory recall. It directs them to the amenity floor. To the garage with the pull-down staircase to the attic full of additional storage. To every part of the property you want them to see without you buzzing in their ear about how great the area is (speaking of, it should have a list of area features).

Today’s consumers want information on demand—not blasted at them while they’re busy thinking about something else.

3.  Eliminates the scheduling constraint

This may surprise you, but buyers are often seeing more than just one listing. Sometimes they’re seeing, like, eight. In a row. You’re full well aware scheduling all this can be total chaos. I know it’s fun to take a half dozen trips up and down Halsted on a Saturday, but it’s bad for the environment. And as a buyer’s agent, you know a little piece of you dies every time a listing agent tells you “I can’t do 1 p.m., can you come by at 10:30 a.m.?” To put it bluntly: if buyers can’t get in to see your listing, they can’t buy it.

4.  Keeps buyers in your listing

I’ve observed this phenomenon over the years, as I’m sure you have. There comes a moment in every showing where there’s nothing left to ask. The scene plays out like this:

Listing Agent: “Anything else I can answer for you?”

Buyer (on the spot): Not…that I can think of?

Buyer’s agent: I think I’m good.

Listing Agent: Alright… well… feel free to email me if you think of anything.

[All: Exit stage left.]

See? Everybody leaves. Now think of the listings you’ve shown your buyers sans listing agent. When the lister isn’t there, this doesn’t happen. Instead, buyers stay. They look at the master bath again. They plop down on one of the stools and start reading the brochure. They ask their agent all the questions they would have asked them in the car, in the house instead. If they like the place, they hang out and start to imagine living there.

So do yourselves a favor, and more importantly, do your clients a favor:

Spend that time following up with buyer’s agents, sending them virtual floor plan tours, or creating a video walk-through of the property. Spend that time making deals and serving your clients. Stop crashing your own showings. You’re wasting everyone’s time.

Okay, I’m exaggerating, but not by that much. I’ve been closely following the month’s supply of homes in popular downtown Chicago neighborhoods for a while now. It tells us, based on how many homes are sold each month, how many months it will take to sell the number of homes currently on the market. It essentially tells us whether it’s a buyer’s market or a seller’s market. A “healthy” market is often considered between 4 and 7 month’s of inventory. Well, the April numbers are out. Can you guess whether it’s a buyer’s market or a seller’s market in any of these Chicago neighborhoods?

• Lincoln Park: 2.5 month’s supply, down 65.8% from April 2012
• Wicker Park: 2 month’s supply, down 70.8% from April 2012
• West Loop: 1.9 month’s supply, down 63.9% from April 2012
• River North: 1.7 month’s supply, down 62.5% from April 2012

I could go on, but I think you get the picture. If you were thinking of selling your home, now might be your shot.

By: Mike McElroy

If you’re trying to sell something, your instincts tell you to price it a bit higher than what you’re willing to accept. Okay, sometimes a lot higher. You want to allow room for negotiation right?

These days, maybe not.

If you tried selling your house in the last 5 or 6 years, I can understand why you’d feel that way. Since the housing crash, bargain-shopping buyers have pretty much had their way with sellers whose listings sat on the market for months, even years. Sellers received offers for 20% or 25% off their list price. It wasn’t uncommon to see properties sell for 10% to 15% less than the asking price (although in many neighborhoods more typical discounts ranged 7 to 8 % of the final list price).

Sellers, there is good news.

Even though it will be a while before prices again reach their 2006 levels, you no longer need to build in a big negotiation buffer into your list price. In fact, you shouldn’t. Here’s why:

In March of 2011, there were 18,729 homes for sale in Chicago. This time last year (2012), there were 14,361. As of March 2013, only 8,089… Whoa.

In March of 2011, there was a 12.4-month supply of homes, meaning it would take just over a year to sell homes on the market at that pace. Last March (2012), the supply dropped to 8.7 months. Today, it stands at 3.8, a number which is less than healthy.

In March of 2011, Chicago homes sold on average for 87.3% of their original list prices.

Last March: 88.4% … This March: 93.7%.

The bottom line: any property listed at market value is going to get snapped up in a few short weeks, at a very high percentage of list. Many places sell for more than list. In the West Loop, condos are selling for 98.2% of their original list price, up from 90.8% a year ago. 

The reason? Bidding wars.

I recently wrote a column for the Chicago Sun-Times with some advice for buyers who find themselves in bidding wars. Unfortunately for them, some buyers didn’t read it. Good news for you, Mr. & Mrs. Seller, it’s very common for hot listings to receive multiple offers in today’s market.

One final note of caution: you may be psyched to get an offer for well over your asking price, but remember, if the buyer is getting a mortgage, your home will still need to appraise for the contract price. Appraisals are based on previous home sales, and they don’t always reflect appreciation. So beware over-eager buyers.

Otherwise, enjoy the new seller’s market.

Join us this Wednesday as YPN presents Matt Dollinger!

Brought to you in part by Access Chicago Realty

(Click Image for Link to YPN Website)

Chicago Association of Realtors (YPN)
April’s Monthly Breakfast Meetup
Wednesday, April 24th
9:45 a.m.

CLICK HERE to RSVP via the Facebook Event

Dan will head up the firm’s leasing division and will be in charge of day-to-day operations as well as mission and strategy. Dan will also support the firm in its work with buyers and sellers of condos and investment properties.

Originally from Osceola, IA, Dan graduated from University of Iowa with a communications degree in 2009 while simultaneously serving in the US Air Guard. Dan currently lives in Lincoln Park, where he is active in his church and volunteers for Kids Enjoy Exercise Now. In his free time, he plays in his church basketball league and teaches tennis at the East Bank Club.

Dan’s negotiation skills, commitment to customer service and deep knowledge of the luxury apartment market make him a valuable asset to Access Chicago Realty.

Barely 12 months ago, buyers could confidently peruse piles of listing sheets before making a lowball offer and getting a nice discount off the list price.

Not anymore. Last month, there were about 44% fewer homes on the market in Chicago than in February of last year, according to Midwest Real Estate Data. The city had only a 3.8-month supply of housing units, compared to an 8.9-month supply a year ago.

Surprise: it’s a seller’s market. And that means many homebuyers are likely to find themselves in a bidding war.

I’ve seen it more than a few times over the last year. You hunt and you search and you think you’ve found a winner. You and your agent pore over comps and market stats. You figure out what the seller paid for the home and what they owe on it. Your agent grills the listing agent to find seller hot buttons. You construct the perfect negotiation strategy, and submit your offer, ready to get the deal of a lifetime.

Then you get the call, and hear the crushing news that more buyers are hearing these days: “We have received multiple offers. Please submit your highest and best offer by tomorrow at 5 p.m.”

So now what? A good listing agent won’t tell you much about the other offer. It could be $20,000 less than yours or $20,000 higher. There could be one other offer or four. You’re going to have to put your best foot forward. Here are three tips to help you fight for your new home and win:

#1 Remember: It’s not all about money

Sometimes it is about timing. Pick a closing date advantageous to the sellers. Can you close quickly, saving the sellers money? Or can you close later, giving them time to find a new home? Find out what matters to them.

Have your agent select a brief (five days or less) attorney review and inspection period. This will minimize the amount of market time a seller could potentially lose if you were to back out of the contract as a result of something found during the inspection. It will also give the seller more time to confidently search for a new home.

Important: This requires you to have your act together. Who’s your inspector? Who’s your attorney? Call both of them before you put the contract in so you still have time to do your due diligence. Finally, make a large earnest money deposit – say 5 to 10 percent of price – to show the sellers you’re serious. They know a buyer with some skin in the game is less likely to jerk them around and then bail on a contract.

#2 Make the seller like you

An offer with a well-written cover letter stands out, and it never hurts to try to relate to a seller. Are you newlyweds buying your first condo? Are the sellers moving out because they just had their first child and need more space?

Great. Play up the nostalgia. Have your agent tell the sellers a bit about yourself and why you like their property. When evaluating multiple offers as a listing agent, I find this is a nice touch. Agents often fire off contracts with no cover letter and little presentation. This gives the impression that their clients aren’t as committed to buying the property, and I’m likely to convey that to a seller.

Then, go back to #1 and make sure your agent emphasizes those points in the cover letter. Tell them what you do for a living and how thoroughly your lender has pre-qualified you (Tip: get thoroughly pre-qualified). Sellers should get the impression that you are a buyer with no potential financing issues who is committed to buying their property.

#3 Pay what the property is worth to you

This one should go without saying, but sometimes buyers get caught up in the emotions of the process. Overpaying for a property isn’t winning, and neither is stubbornly sticking to a lowball offer.

Have your agent put together a detailed comparative market analysis to determine the fair market value of the property. From there, as I always say: “add love, subtract fear.” It’s okay to pay a touch more if you really love the place, especially if you’ve been looking for awhile. But keep in mind, the property will need to appraise for this price if you’re getting financing. And it’s okay to bid a bit less if you feel you have other strong options.

I took a buyer to see three condos that each had been on the market for three months. That was a Thursday. My buyer left for the weekend to go skiing. When he came home, all three had offers in on them, and two of them had multiple offers. That’s the residential housing market in Chicago right now.

My final word of advice: “buyer be ready.” Get all your homework done before you make that offer. If you want to survive in this sellers’ market, you have to be ready

Link to Article: http://searchchicago.suntimes.com/homes/18701351-793/in-a-sellers-market-3-ways-for-buyers-to-win-a-bidding-war.html

As featured in Sun-Times Media

For the past several years, it’s been a buyer’s market. Prices dropped every quarter and no one knew whether to buy or sell or sit tight.

Over the past eight months or so, things have changed. As a broker who has witnessed some exciting bidding wars that could only have one happy buyer, I can attest that you need to be fast on your feet and financially prepared – able to account for every last penny.

If you are a first-time buyer, especially, it pays to avoid several common financing errors if you want to win the house of your dreams.

Mistake #1 – Waiting too long to work on your credit

In order to get the best interest rates possible and avoid punitive FHA insurance premiums, homebuyers need a FICO score of at least 740. It can take some time to build up that kind of credit, but there are strategies for doing so, says Steven Bloom, a loan officer with A&N Mortgage in Chicago. For example, a mortgage broker might tell a buyer to pay off a certain credit card, or open a $2,000 credit line while keeping the balance at zero.

“If they wait until it’s time to get pre-approved, and their credit scores are 675, then it could take another 30-90 days to improve their scores,” says Bloom.

Many homeowners wait until they’re about to put an offer in to get pre-approved – another mistake – only to find out they don’t qualify for the rate they thought they did and can’t actually afford the home, which brings us to…

Mistake #2 – Waiting too long to get pre-approved

Many buyers have noticed the market shifting, but the word hasn’t gotten around to everyone yet. So, for the record: although prices and rates are still low, many neighborhoods in Chicago are sellers’ markets.

One more time: it’s a seller’s market out there. Why? Because there are more people who want to buy well-priced homes than there are well-priced homes. It’s that simple. The market times for homes have been falling for months now in most Chicago neighborhoods, and we’re now sitting on as little as four months of inventory in some areas.

So how to you snag your dream home amidst all that competition? By making your offer stand out in more ways than just the price. By being pre-approved in advance so your agent can submit your offer quickly before someone else eats your lunch. And listing agents are smart. They know the difference between the back-of-the-envelope pre-approval some lenders are giving out and the thorough letter that says this buyer can buy a house. According to Dan Kreuger, a loan originator with BMO Harris, your lender should:

*Pull your credit report, all three bureaus, and go through the report to look for any red flags.

*Verify your income. The lender should ask you to bring your two most recent year-to-date paystubs, and two years of w2′s to determine if you have income sufficient to support the cost of the home. If you are self employed, or have fluctuating income, the lender may also ask for your last two years of tax returns. You may want to have these ready just in case.

*Verify your financial assets: A lender should ask to see 60 days of bank statements for all of your financial assets. They should verify that you have enough money set aside for the down payment, closing costs, and required reserves.

*Many times, the lender will also run these figures through an automated underwriting system to confirm you eligibility.

Mistake #3 – Taking the credit card to Bloomingdale’s before closing

This one is a heartbreaker. You’ve cleared all the hurdles: the exhaustive search, the negotiations, the inspection – you even got your mortgage approved. Then, right before closing, the bank runs your credit again. They see that you just spent $6,000 on new furniture, raising your debt to income ratio, dropping your credit score, increasing your mortgage rate…and leaving you unable to afford your new payment. Yikes. You don’t want make that call to the Bloomingdale’s delivery department – just wait until you close to pick out the perfect new sofa.

There are plenty of pot holes on the road to financing your new home, but working with a good lender, you should be able to avoid most of them.

Bottom line: Be prepared.

Mike McElroy is the owner of Access Chicago Realty, Inc., in Lakeview, which assists buyers, sellers, renters and investors in Chicago.

Worth it

The thought of moving in the winter conjures painful images of wading through knee-high snow drifts, carrying stacks of wet boxes to a moving truck, stuck in the snow. But in honor of the wacky weather we have been having, here are some reasons to reconsider your aversion to a winter move.

1. You will get a better deal in the depths of winter.Summer creates a perfect storm of high prices and short market times. College kids are arriving for school, recent grads are getting their first places, and parents are hoping to land in just the right district before the school year starts. And, of course, it’s nice out.

The result is a mad scramble for housing that most summer movers think is the norm. When it comes to rentals, you can save as much as 10 percent in the wintertime, in my experience.

2. There is plenty of inventory. Because there are fewer people moving in the winter, apartments stay vacant longer – as much as three times longer. That means there actually is a greater supply of rentals than you will find in the warmer months.

For example, right now the Chicago-area MLS lists 36 two2-bedroom units for rent in Lincoln Park. On average, these listings have been waiting for a renter for 38 days. In rental time, that’s an eternity. Back in May, those two-bedrooms in Lincoln Park rented in 19 days. Watch the 2012 trend since then:

• June: 14 days until rented
• July: 12
• August: 19
• September: 17
• October: 22
• November: 33

Market times peaked this year back in February at 58 days! So renters – plan accordingly.

And for home buyers

Prices may be lower… Home buyers may find sellers more likely to accept a lower offer in the winter than they would be in a busy summer market. Case-Shiller home values are even adjusted to account for a spike in prices during the spring and summer. Sellers, dreading the prospect of putting their own moving plans on hold for another few months while they wait out the snow flakes, might just bite on that lower offer.

…but inventory shrinks. Unlike the market for rental properties, for buyers, however, there will be fewer options in the winter. This is because sellers are trained to list their homes in the warmer months, and they aren’t bound by a 12-month lease cycle. And this year in particular, greater-than-anticipated demand has stripped the market of much of its inventory. If you’re buying a home, it can’t hurt to start perusing the listings for cheap deals now. If you find one, go for it. But don’t stress if you don’t see your dream home right away. There will be more to choose from after the Super Bowl.

So yes, it’s cold out. But if you’re a renter, this is your shot. Just ask anyone scalded by this past summer’s frustrating rental shortage.

And if you’re a buyer, start getting your “house in order” when it comes to financing and finding a real estate agent. And don’t be afraid to make a more aggressive offer on a property that’s been sitting for a while.

You know what? It’s feeling warmer already. I might just go open a window.

Mike McElroy is the broker/owner of Access Chicago Realty, Inc., in Lakeview, which connects Chicago buyers and sellers, renters and landlords, and investors and property owners – even in the depths of winter.

Try not to live in THIS neighborhood

So you’ve decided to brave the congestion, hidden speed bumps, zealous meter maids, pot holes, annual fees and wayward pedestrians that plague the motored life in our city.

Either out of desperation or insanity, you’ve decided to become a Chicago driver. You’re going to need all the help you can get.

As a Chicago Realtor who logs 50 or 60 intra-city trips a week, I feel your pain. Fortunately, you can take some of the edge off your road rage by considering one of the more driver-friendly neighborhoods when you choose where to live.

I considered two important factors in these rankings: cost and convenience (or lack of congestion). I also focused on neighborhoods relatively close to the Loop, as these tend to provide the most access to the rest of the city. The price information below comes from an MLS survey of rented units in last nine months:

SOUTH LOOP
Median 2-bedroom condo price: $335,000
Average 2-bedroom rental: $2,270
Average parking rent: $200
This ‘hood takes the gold for its overall well-roundedness. It has quick access to I-90/I-94, I-55 and Lake Shore Drive. The congestion is minimal, (unless the Bears are playing), so on an average day you’ll sail down Michigan, Indiana or 18th Street. Street parking is usually metered, but plentiful. Off-street parking will run you about $200/mo for a heated garage space, which isn’t bad for downtown.

BUCKTOWN
Median 2-bedroom condo price: $359,000
Average 2-bedroom rental: $2,112
Average parking rent: $125
Note: I’m talking about Bucktown, not its twin Wicker Park, where there is no street parking to be heard of unless you drive a Kids Wheels car. North of North Avenue, you’ll actually find some pretty decent street parking, especially East of Damen.

If you do want off-street parking, it’s cheap: from $75/mo for an outdoor spot to $150 for a garage spot. Add to that easy access to I-90/I-94 via three different on-ramps and relative proximity to downtown, and you’ve got the makings of one drive-tastic neighborhood. Only the congestion on Damen and Milwaukee knocks it out of the number one spot.

EAST LOOP / LAKE SHORE EAST
Median 2-bedroom condo price: $535,000*
Average 2-bedroom rental: $2,900
Average parking rent: $275
Here’s a sleeper. Yes, you’ll pay some of the highest parking costs in this hood – $225-$275/mo. That’s why it’s third. But it’s on the list because you can’t beat the convenience.

(*Revised; and by the way, this is the median price, but you can easily find a condo in the high $300,000s to low $400,000s.)

In order to take advantage of this convenience, you have to make like Batman and navigate Chicago’s network of lower and service level streets. Many parking condo and apartment building garages in this ‘hood have exits directly onto Lower Wacker, Lower Randolph or Even Lower Wacker (also known as Service Level Wacker). Get to Lake Shore Drive in under a minute (seriously). Get to I-290 in three minutes or to I-90/I-94 in four minutes via I-290 (trust me, it’s faster than Randolph, even if you backtrack a bit).

RUNNERS UP
The West Loop offers many of the benefits of the South Loop, but only if you stick close to the highway. West Lakeview offers fairly easy parking options and the congestion could be worse (as long as the Cubs aren’t playing). But the long slog to either I-90/I-94, Lakeshore Drive or downtown via Ashland or Halsted knocks it off my list. Mike McElroy is the owner of Access Chicago Realty, Inc., in Lakeview, which assists buyers, sellers, renters and investors in Chicago.

When you search through the latest listings of Chicago homes, you first find those that fit your top-line needs. Then you winnow down that list. Some of the candidates will seem more appealing than others; and some will seem to be over- or underpriced.

Before making a final judgment on which homes bear a closer look, the most successful homebuyers also factor in qualities that may not be at the top of their own personal priorities list, yet which make a difference to the majority of homebuyers. In other words, they keep in mind the most important qualities that add value in market terms – that add investment value to homes that are principally your personal residential choice. Some of the more important ones:

• Location has a huge impact on a property’s long-term price. Are amenities close by? Close enough to walk. Are homes in the immediate area well maintained? Is the property on a desirable block, or located next to a busy road?
• Taxes impact the overall cost of long-term cost – and when homes are listed, those figures are significantly displayed. Also important is whether there are any pending issues you should be aware of — like a sewer bond or other pending taxes.
• Condition will become a major factor in years to come — forward thinking will pay off in terms of overall value. A 20-yr-old water heater, for example, is going to cost sooner rather than later.  Homes with excellent roof and foundation condition can add exceptional long-term value.
• Chicago homes with potential are homes with unrealized value. With smaller properties, it’s worthwhile to consider how doable it would be to add rooms or expand its square footage.  Even if you don’t end up adding square footage, if homes are small for the neighborhood, a future buyer might.

This November’s historically low mortgage rates make it a terrific time to give me a call. Together, we’ll find the Chicago homes that are good fits for your family – as well as great long-term values.