Robert Darrow, @properties

Your Guide has the most wonderful clients.  Adam and Nikko love their Chicago home so much they write about it regularly.  Expecting in Spring, new posts are all about preparing the Little Bungalow for the arrival of Junior.

Check out the latest post.

Congratulations Adam and Nikko!

The City of Chicago Residential Landlord and Tenant Ordinance (RLTO) requires the City Comptroller to set the rate of interest to be paid on security deposits held by landlords. The rate is calculated annually based on a formula tied to actual market rates.

The new rate for 2010 of 0.073% applies to all residential rental agreements in which the lease term begins from January 1, 2009 to December 31, 2009. The amount of interest paid on security deposits is determined by the rate in effect on the date the lease term commences.  Owner-occupied buildings of six or fewer units are not required to pay interest on security deposits.

City code requires that a general summary of the RLTO and a separate summary on security deposits, including the required rate of interest, be attached to each lease.  Revised summaries containing the new rate of interest are being printed and will soon be available from CAR. Copies of the revised summary will be sent to each CAR office as soon as they are printed. These revised summaries should be attached to each lease executed during 2009.

Your Guide’s mind reels knowing that there’s an entire city bureaucracy devoted to making sure Landlord don’t screw their tenants out of their 66 cents (on a typical $900 security deposit.) 

Entertainment, wine, and cooking enthusiasts will covet this modern Lakeview home with superb amenities for luxury living: hardwood floors, granite countertops, spa baths, Viking and Sub-Zero appliances, skylights. Wait, it gets better: five fireplaces, media room in basement, brick wine cellar, custom woodwork and built-ins, and audio everywhere. This exceptional home is within walking distance to Southport Corridor and Roscoe Village – so ditch the car to enjoy the city’s best dining and shopping.

1735 West Newport

List price: $1,050,000

Residents in Chicago and Cook County should be on the lookout for their Property Tax Bills this week.  Your Guide’s arrived yesterday.

Normally your first installment tax bill is half of last year’s bill.  Not so, this year.  Check out a friend’s Facebook status update:

Sneaky State of Illinois. First installment property taxes are out and the State decided that the first installment should be 55% of last years total and not the 50% it has been for decades. I’m sure they just accidentally forgot to publicize that. Spineless, sneaky bums – throw them all out this election!

From the Sun Times article:

Get ready to dig a little deeper, Cook County homeowners.

Under a new state law, you’ll be forced to pay slightly more of your property tax bill up front so county agencies, municipalities, school districts and other local governments can improve their bottom lines.

Sweet.  Illinois Tax Payers have to send along more money up-front so taxing bodies can have more money sooner, all while the State of Illinois is more than six-months behind in paying it’s bills. 

Homeowners that have their taxes paid from escrows should check the status of their tax bills.  You can do so at the Cook County Treasurer’s website at www.cookcountytreasurer.com. 

Both buyers and sellers ask about timing the market, and this Spring is no different.  Your Guide is advising sellers that are ready to go on market and buyers that are already out hitting the pavement. 

This year will prove to be unique.  There are several factors that will have greater influence of the cycle of sales this year than the normal seasonal cycles. 

Superbowl

The first milestone in a normal selling year is the Superbowl. (Read last year’s spring market kick-off post here.)  But this year, Superbowl is later than normal.  With itchy buyers already out shopping, smart sellers are already on the market, or just about ready to get on the market. 

If you START prepping for your Spring market sale just before Superbowl (which is February 7) and get on the market a few weeks later, your selling season is critically short.  Give yourself the extra three weeks of breathing room if you can get to market this weekend.

Home Buyer Tax Credit

The Home Buyer Tax Credit expires at the end of April, although closing can occur through June.  This is going to drive the Spring market, but will also move Summer buyers early in the season.  With some Summer buyers under contract ahead of schedule, we are predicting a slower than normal summer selling season.  This is another solid reason for sellers to push to get their homes on the market as early as possible. 

Fed influence on interest rates

The Fed runs out of money at the end of February.  Currently, the Fed is pushing interest rates artificially lower than the market which is why we currently have both conforming and jumbo loans as low as 4.875% and hovering around 5.0%.  When the Fed can no longer afford to push rates lower at the end of February, we are expecting rates to jump a bit; then continue rising to over 6%.  Historically, still a great interest rate, but with buyers used to rates near 5%, this will have a cooling effect on sales.

Your Guide received this email this morning from @properties founder Thad Wong:

The worry price is the price at  which a home is offered where a potential buyer will say, " I am worried that someone else may buy this!"

This is very real, and where your listings need to be priced if the goal is to sell them. Buyers today are setting the pricing for which homes will sell.  They will also pass on a home because, in most of our neighborhoods,  there are more than a few homes available in that same price range with similar amenities.  Your listing needs to be the best priced home within the category it is competing against, or, if the home has a defect similar to backing up to the El or expressway, it needs to be priced where the competing homes are smaller and in much worse condition giving the buyer a valid reason to buy a home with a defect in today’s market.

Today’s market, by the way, is at the 35 year average with 5% of families actively in the market.  So, here we are:  in an average market with above average financing challenges that are gradually becoming easier; ever so slowly I will admit.

Great advice.  You can bet that if you invite me over for a listing presentation in the next few weeks, you’ll hear this in some form or another.

Last week Your Guide wrote about our quest for a new hot water heater.  I had originally hoped to get a high-tech “green” tankless water heater. 

Check out the post here

The demands of our house didn’t match up with the ability of the tankless systems to provide water to the whole house from a central location.  In a four-story townhouse with baths and appliances on each level, the recommended installation calls for medium capacity tankless heaters installed in a few different locations.  And each unit, installed, could cost up to $2,000.  We’d need 2.  Maybe 3.  Ouch!

On Monday, we had our new, “old fashioned” water heater installed in the same place as the old one.

Our unit retailed for $458, and we paid $300 for installation.  Of course, comparing the price of this installation to multiple tankless water heaters makes choosing a no-brainer.

We chose the same size – 50 gallon – and went with the “standard” brand from Menards – Richmond Water Heaters.  Richmond offers a “good/better/best” range of models in various sizes.  We settled on the “better” – or mid-quality – version.  No reason other than it seemed to make sense to move up from the lowest version. 

Choosing the best water heater for your needs brochure

Our installer suggested moving up to the “best” and we took his advice.  Upon opening the carton the water heater came packaged in, we were immediately surprised how large this water heater is.  It’s ENORMOUS.  Which we found strange since it’s the same capacity as the old one.

But after further inspection we were pleasantly surprised to find out that the large size is due to extra insulation and a few other energy saving features.  Our model should operate at about a 25% savings over the old model.  And it’s is efficient enough to get an “Energy Star” rating.  Nice!  We can apply for a couple of tax breaks and rebates with this model.  Definitely worth the $40 bump over the price of the next lower model.

Your guide has seen new houses with multiple water heaters in separate locations.  Normally these installations are in upscale homes with 4 or even more bathrooms, plus ultra-luxury bath features such as body sprays, rain showers, and multiple-person Jacuzzi tubs.  It might make sense to switch out a tank-style water heater for a new tankless water heater.  But in traditional installations throughout Chicago where one water heater provides hot water to a whole house from a utility room, replacement with the same type of technology seems to make the most sense.  It’s nice to know that “green” or energy conscious choices are available.

Tom Skiling at WGN TV and Chicago Tribune posted more interesting statistics on Chicago snow falls on Sunday.  On Sunday, Tom delved into the year-to-year trend for Chicago snow totals over the last 82 years.

Interestingly, about ten years ago, snow fall totals dropped dramatically.  In the 10 year period 1978/79 to 1988/89 snow totals averaged 57.5 inches.  By 1998/99 the yearly average dropped to less than 35 inches. 

Of course, during the construction and sales boom of the late 1990’s to early 2000’s is when most associations started budgeting for snow. 

Previous Articles:

Average Snowfalls for a typical Chicago winter

For you Association Officers – more Chicago snow related information: First Snowfall; Snow totals by date

Each month Zillow emails me to tell me how much my house is worth.  I write about it each time so we can all live the dream.  (All the articles here.)

I’m delighted to receive this Holiday Bonus in my email this morning:

Slowly but surely, we’re clawing back to first-half 2009 levels.  Ahh, the good old days!

If all the months that I’ve been receiving updates on the townhouse, I think this month might be the most accurate.  One of my neighbors is on the market for $570,000 but has not sold.  One offer with a contingency, but that offer fell apart.  So it’s still on the market.

I’d love to know if you think there is value in upgrades and electronics.  The one for sale is pretty bare-bones.  Mine has a whole bunch of toys.  If giving advice to customers, my advice is normally that the bonus features don’t add value.  $25,000 in electronics, though?

Your Guides find themselves in the position to need a new hot water heater for the home.  If we were purchasing a new water heater for a rental unit, the choice would nearly be a no-brainer.  We’d go out and find the cheapest and smallest tank-style hot water heater we could find at the local Home Depot or Menards.

($278 at Home Depot)

Most of our units are one bedrooms or very small two bedroom apartments, and each apartment has its own water heater so the tenants pay their own water-heating expenses.

But for our home, the advantages of a tankless system seemed quite attractive:

• We would gain an entire closet
• The new water heater would last three times as long
• Less expensive to operate
• Instant on hot water
• Limitless supply if all bathrooms and appliances were in use at the same time

Plus, this video from This Old House made it sound like hot-water Nirvana.

So we started asking around for referrals to companies that provide, and install, these new water heaters.  What we heard back from colleagues was not as encouraging.

From one co-worker:

Although tankless are very popular there are several drawbacks and I never recommend them especially if clients plan on drawing hot water for multiple sources to be used at the same time. Much of the energy efficiency achieved by a tankless can also be achieved by a high efficiency water heater or a solar powered water heater. And if you are replacing an exisiting water heater there is minimal added expense to connect to existing piping and no rerouting of venting, so long as the water heater is placed in the same location.

From a second:

From my experience going tankless also causes some new piping to be put in as well, whereas a water heater is a much simpler replacement. In my experience multiple use at the same time is not great for a tankless as it does not know how to evenly distribute the hot water that is being demanded so you end up with an uneven distribution. And with rebates available from energystar.gov as well as

http://www.conservationrebates.com/programs/chi/chi_index.aspx

You would most likely save more cash going for regular size water heater that is highly efficient. But you don’t get that storage space!
Tankless water heaters at this point in their technological development are sorta “green bling” in my humble opinion.

And a third:

There is no rage to a tankless hot water heater…trust me I should know because I researched them for my previous house and plumbers really do not prefer them over the standard natural gas fired model. In fact they do not produce enough hot water as efficiently as a standard model unless multiple units are installed which really increases your cost, so depending on the size of the home, it is not uncommon to have several units stacked to insure hot water.

I ended up with 2- power vent 40 gallon “STATE” top line gas fired water heaters with carbon monoxide sensors built on the units. The cost is around 900.00 per heater unit but you can get much less expensive models for 350.00 and up at Home Depot or Menards. I purchased for a deal at a plumbing supply store and my power venting system is usually more money. (Depends on how you have to vent the unit)

There are thresholds to where you are really going green especially when you’re using more energy than you need in specific instances. In Europe they have been using tankless for years but they live in much smaller spaces and use less water. They do not have car washes in shower stalls like you see in some ridiculous bathrooms with multiple body shower heads accompanying a rain head. These will tap through your hot water in minutes.

In our house, it seems we would need one unit to power the whole house with a purchase price of around $1,200 plus installation of another $1,000 for a total of $2,200.

Or we could get a nicer tank-style unit for $800, and pay another $200 for installation for a total of $1,000.

We also learned that the savings on our gas bill will only be around $70 to $100 per year, making the investment a 10 to 20 year payoff.

So unfortunately I am not going to get the amazing new hot water heater.  Rather in our installation, it seems the best course is to go with the more traditional installation.