Robert Darrow, @properties

Archive for the ‘Sellers’ Category

Yikes, there’s nothing like advertising how long your listing has been on the market than having jarringly dissonant photos compared to what the place looks like today.

This townhome is actually a beautiful and architecturally stunning property.

At least the photos will be back in season in 5 months.

Teresa in St. Paul says it best:

When I look at property photos on the MLS, I am reminded of winter.  It is August yet there are property photos where the homes are covered in snow.  Those photos let the buyer know that the home has been on the market forever and that the seller does not care much about it.  Not enough to even check to see how it is being marketed.  Nothing says neglect like a property photo with snow in it at the end of August.

Today was spent working price reductions from sellers whose properties haven’t been getting activity. 

In order to complete the journey, you must pass certain obstacles.  In real estate, it’s the same as in the jungle.

I passed both without any harm.

From the update a couple of days ago, it’s clear that the number of homes selling in Chicago is down – as it is across the region and the nation.  Let’s see what prices are up to in today’s post.

From Crain’s Chicago Business and the Associated Press:

A closely watched housing index shows home prices fell by the steepest rate ever in May, as the housing slump continued to deepen nationwide.

The Standard & Poor’s/Case-Shiller 20-city index, released Tuesday, is off 15.8 percent for May compared with a year ago, a record decline since its inception in 2000. The narrower 10-city index has fallen 16.9 percent, its biggest decline in its 21-year history.

The Chicago market didn’t fare as badly, with prices down 9.4 percent in May compared with May 2007; prices were down 0.3 in May percent over April, according to the indices.

The figures quoted are for the City of Chicago, and include houses, condominiums as well as 2-4 unit buildings.

One bright spot for prices continues to be condominiums.  For the period ending July 1, 2008, prices for condominiums are up 10% from the same time period last year.  If you have your condo or townhouse on the market right now, don’t let buyers and their agents use the newest information from the media about declining home values against you.  You have a little bit of leverage in an otherwise bleak market.

So "Short Sales" and Foreclosures are all over the news lately.  These terms are also being tossed about an awful lot in Real Estate Advertising and Marketing.

I wonder why Realtors and Real Estate Companies are so willing to advertise the distressed nature of some of the homes for sale?

A number of real estate experts have been quoted on regional blogs and in local media that the sales price for homes that are identified as "Short Sale" or "Foreclosure" properties is in the range of 20% to 43% below the value established in a CMA (Comparative Market Analysis) of similar homes in the same area.

I can understand that a home that has already been foreclosed on, and has been vacant for some time, may very well need to be discounted due to the home falling into disrepair from being vacant for a period of time.

But what about the home where the seller has fallen behind on their mortgage payments and the foreclosure process is just getting underway?  Here in Illinois, it’s possible for a home owner to remain in possession of a property for as long as a year before the foreclosure process results in the final eviction of the residents of the home. 

I sold my first pre-foreclosure condominium about 13 years ago here in Chicago – way before the huge wave of foreclosures happening right now.  The owner of a condominium in a desirable high rise in Lincoln Park lost her job and couldn’t make her mortgage payments.  As the mortgage company started the foreclosure process the seller listed the condo for sale with an aggressive Re/Max agent who marketed the home through all his company’s normal marketing channels.  None of the marketing for this condo mentioned that the home was in foreclosure, and my buyer paid full retail price for the condo affording the seller a small profit after paying off her outstanding mortgage. 

As the condo was in perfect condition and completely salable, the question comes to mind: 

Should my buyer and I have known about the status of the mortgage before making an offer?

If so, why?

My company has a whole company e-mail address for agents to get the word out about open houses, new listings, company announcements and the like.  An informal survey of the bulk of the email received yesterday and today reveals four emails addressed to the company promoting a new listing that is in pre-foreclosure or will be a short sale.

Other blogger’s have noticed a marked increase in the advertising and marketing of properties and their pre-foreclosure or short sale status through the Multiple Listing Service and even in their newspaper advertising.  Yikes!  I have not seen the practice being adopted too frequently here in Chicago.  Yet.  But a search of all property types, for the words "foreclosure" or "short sale" reveals 161 listings.

But this begs the question:  If you have a listing where the seller is having trouble making payments on the mortgage but the home is in otherwise perfectly marketable condition, should the Realtor reveal the status of the mortgage in the marketing for the home?  Even though the disclosure of this information will virtually guarantee that the home will sell for a discount of 20%, 30% or even 40% off of its full market value?

I am sure I know the answer to these questions.  It’s : No.

Here’s one for you, though:  Lots of buyers love to ask why the seller is selling?

What do you say when a buyer asks you why the home is for sale?  Or why the seller is selling?  Or why are the sellers moving?

Or even more direct:  Is the seller in foreclosure?  Is the home in foreclosure?

My favorite answer when the question is asked during a home showing is:

"Why, they’ve decided it’s time to move!" Delivered in the sweetest voice and with a broad smile like it’s the most natural answer in the world.

Usually this will stop the line of questioning.  Sometimes a potential buyer will follow up with a serious look and repeat the question.  In those instances I’ll meet their icy stare and tell them that I can’t answer the question.

About one in 100 will ask me why? 

Of course it’s because it’s my duty to promote the best interests of my clients.  And revealing anything about their reasons and motivations for moving is a violation of my duty to them.

Which brings us back to the "Short Sale" or foreclosure status.  Doesn’t it make sense that announcing to anyone and everyone this info also violates the duty that you have to your sellers?

I’d love to hear from any of you especially if you’re in the real estate industry. 

Sellers hate getting ready for showings.   Living in your house while it’s for sale is completely different from normal living.  All your stuff is put away.  Your closets are half-packed into storage.  You feel like you’re living in a staged home all the time.

Well – here’s your salvation!  This list of handy items will make your prep for showings and open houses a cinch, and a twenty-minute step-by-step routine to get the house ready for those pesky buyers.

shopping list

• Have kids & toys? Wicker baskets, decorative boxes or barrels with lids
• Feather duster or Swiffer duster
• Clorox or other handy countertop wipes
• Extra laundry baskets or decorative clothes hampers
• Vacuum cleaner

to do list

• Work from top to bottom
• Master bedroom – Clothes in hampers or baskets. Shove in closet
• Master bedroom – run duster over dressers & night stands
• Master bath – shove everything under counter
• Master bath – wipe counters with Clorox or handy wipes
• Master bed & bath – 4 minutes
• Kids room – clothes into the hampers or the baskets; shove into closets
• Kids room – run duster over dressers, stands and furniture
• Kids room – empty any smelly trash or diaper genie
• Kids room – 4 minutes
• Vacuum this whole floor – 4 more minutes
• Living room – magazines & mail – toss into wicker basket
• Living room – kids toys – toss into decorative boxes/barrels/containers with lids
• Living room & dining room – run duster over the furniture
• Living Room – fluff the sofa cushions
• Living room & dining room – Swiffer the wood floors or run the vacuum
• Living room & dining room – 6 minutes
• Kitchen – shove everything into pantry or cabinets
• Kitchen – wipe down counters with countertop wipes
• Kitchen – wipe down appliances with stainless appliance wipes
• Kitchen – Swiffer the floor
• Kitchen – 5 minutes
• Den or basement – repeat the living room process – 5 minutes
• TOTAL TIME: 24 minutes

If you only have 20 minutes, then skip the den or the basement.

Alternate – skip the vacuum and the Swiffer, and concentrate on tossing items into handy storage containers.  You should be able to accommodate a showing with nearly zero notice, or have a stress free lead up to your showing.

A seller asked me recently if she should plan to be home or away during real estate showings at her home?

One of the reasons sellers think it could be helpful to be present for a showing is that they are worried a buyer or their agent might not be able find everything, or that they should be present to point out important features. 

Other sellers just wish to be there to see reaction to the showing firsthand.

Sellers should be aware that at the very least buyers feel uncomfortable when they are present, and that it can actually kill a sale. Buyers often won’t even open closet or cabinet doors when the seller is home, and when they cannot view a house comfortably, they’ll hurry up and move on to the next one.

It’s best to be gone for a little while longer than the expected time of the showing.  Here in Chicago, that usually means heading out 10 minutes before the appointment time, and returning 30 minutes after. 

Most agents and their buyers do try to arrive within the scheduled showing time, but sometimes it isn’t possible. They may get stuck in traffic, or the house they saw prior to your showing took longer than expected. It happens, and sometimes it happens too late to be fixed by a phone call.

Some Tips:

If you are worried about theft of small items, you should store them away. Packing up collections and small personal items is part of the process you should have already gone through to prepare your house for showings.

Pets should be out of the house during showings, especially large dogs, since many people are afraid of them. A gruff bark coming from inside the house is enough to make some home buyers turn around at the front door.

While Chicago is not suffering the mortgage crisis as painfully as residents of the Coasts, Florida and Las Vegas, more and more foreclosure news has been creeping into the news lately. 

A roundup of foreclosures in the news in the last month:

March 3 Crain’s Chicago Business

Foreclosure flu spreads:  14,250 foreclosures in 2007, a 46% increase over 2006. 

Northwest Side neighborhoods like Albany Park, Logan Square and Portage park saw their numbers more than double, according to a new report provided to Crain’s ahead of it’s scheduled release.

Those areas drew newcomers in large numbers in recent years as first-time buyers sought affordable alternatives to pricier city neighborhoods like Lincoln Park, Lincoln Square and Lakeview.

Tower builder tie-up: Related Companies and Magellan discuss a combo as two major projects falter.

Talks to combine two of the Chicago area’s largest developers come at a critical time for Related Midwest LLC.  The luxury condominium developer is struggling with a slow sales start at its two newest projects and has been without a president.

Related Midwest LLC developments include:

• 340 on the Park – already completed
• Canyon Ranch Living – planning
• Pestigo – Planning
• Roosevelt Square – Under construction

Magellan Development is currently building several high rises at Lakeshore East on the New East Side.

Decline seen in apartment sales

Sales of Chicago-area apartment buildings could drop 30% this year, to $1.08 billion, from a record breaking 2007,  according to a report from CB Richard Ellis, Inc.

Signs of the slowdown were evident late last year, a time when sales activity typically spikes as investors hurry to complete deals before yearend.  But only 42% of the Chicago deals close din the second half of last year, as opposed to 69% in the last 6 months of 2005, the previous record year when sales totaled $1.89-billion.

March 10 Crain’s Chicago Business

A Sterling example of condo Bust:  Foreclosures, falling prices: a bad omen?

Over the past three years, lenders have filed 95 foreclosure suits, accounting for about $40-million in loans, on condominiums in the 389-unit high-rise, fueling a big drop in condo values throughout the building.

The tower represents a worst-case scenario in a downtown condo market that is weak but so far hasn’t seen the falling prices and rising foreclosures that have afflicted once-hot markets like South Florida.  The real test for condo owners will come over the next two years, when downtown developers are expected to complete more than 10,000 condo’s, an unprecedented jump in supply.

A nice building in a superior location seems an unlikely victim of rampant foreclosures, but artificially propped up prices along with developer incentives may have played a part in its unfortunate predicament.

American Invsco Corp attracted a lot of investors with incentives such as two years of free taxes, two years of free assessments, and artificially propped up cash flow.  One incentive offered to make up the difference between the rent and the mortgage + tax + assessment payments for a two year period. 

It was too good to be true for some buyers.  As the incentives wore off, many buyers saw their monthly payments soar to unsustainable levels.

A trickle of foreclosures in 2004 grew to a flood in the next three years.  Nearly 1/3 of foreclosures involve owners with multiple units in the building.

An American Invsco spokesman blames the Sterling’s troubles on the depressed market:  "It has nothing to do with our program."

In more stable neighborhoods where the inventory supply is more limited and there is not as much speculation, the number of foreclosure epidemic seems quite limited.  In the Lakeview neighborhood, for example, only had 126 foreclosures, but this represented a 94% increase from 2006. 

It’s interesting to watch the tale of two cities developing right inside the borders of Chicago.

Sunday, April 6

942 North Fairfield – Open Sunday from 11 to 1

Six luxurious condominiums inside a restored Greystone.  Just reduced some prices this week. Two beds from $255,000

www.fairfieldgreystone.info

Warren Corner Condominiums – Open Sunday from 2 to 4

2036 W. Arthur and 6504 N. Seeley

Twenty condominiums ready for occupancy located in West Rogers Park near Warren Park. Great pricing with homes priced from $135,000.

www.warrencorner.info

Your trusty guides have several closings scheduled for today; one day before the dreaded increase in the Real Estate Transfer Tax is supposed to take effect.  To no avail.  The City of Chicago and local Title Companies have conspired against forward thinking buyers and sellers of property trying to beat the deadline.

The City of Chicago requires that you PURCHASE your stamps by the end of business TODAY.  Even if you close this afternoon, then dash down to the City Clerk’s office and get it the line that stretches out the building, the bureaucrats have vowed that the office will not stay open one moment late to accommodate the rush.

Might it make sense that if you close today, and then head to the Clerk’s office with your HUD-1 showing that you closed on your property on March 31, that you would be covered? 

Of course not.

And, if your Title Company actually were to send an associate down to the Clerk’s office with a bunch of closing paperwork, the City Clerk will only sell the Transfer Stamps for three transactions.  If you have more than three transactions, you must leave the window and start over again at the end of the line.

Nice.

Your guides have finally heard that the construction will begin this summer on the new Dominick’s grocery store located at the now-vacant parcel at 3030 North Broadway.  You’ll recall that this parcel was the site of the former grocery store which burned down in 2004.

The project is a five-story building with 45,000-square foot Dominick’s grocery store at street level and topped off by 53 condominium units.   Commercial space also includes a National City Bank.

Phase one construction is expected to begin this summer.  Residential units are being marketed by @properties.  Dominick’s is expected to open in fourth quarter 2009 and the residential units ready for occupancy 90 to 120 days later.