The internet is changing (for the better) the way people shop for and view real estate.
There is an new Iphone app that allows you to search listings from your Iphone. The nice thing about this app is that the GPS in the phone senses were you are located and will automatically map listings near you. Or you can search specific addresses. Then it shows you detailed listing with plenty of pics.
I have been playing around with it and it works very well.
This add-on for google maps is a little hard to find. When you open google maps, there are two search boxes. Click the second box and a drop down list appears. Select real estate. Then type in whatever address you are interested in in the first box. A map with red dots representing properties for sale near that address will pop up. Then you can use street view to zoom in and see how the neighborhood looks. Chicago magazine wrote about it recently, so it must be cool.
The attorney approval clause included in real estate contracts lets the attorney approve, disapprove or make modifications to the contract (other than price) within 5 business days after the contract is signed.
There’s one situation in which the attorney approval clause can be very dangerous. It’s this: Let’s say the Seller accepts an offer from Buyer 1. During the attorney approval period with Buyer 1, the Seller decides to accept another offer from Buyer 2 (almost always for more money than Buyer 1 offered). Seller tells his attorney to “kill” the contract with Buyer 1 under the attorney approval clause.
I don’t have many hard and fast rules in my practice, but here’s one that I do follow: I refuse to kill the contract with Buyer 1 using the attorney approval clause if the sole reason is to get the Seller more money from Buyer 2. The reason I do (or don’t do) this is that there is an implied element of good faith in the attorney approval process and you can’t just toss out Buyer 1 for no reason other than price. It specifically says in the attorney approval clause that modifications to price cannot be made. Plus, killing Buyer 1’s contract just invites litigation.
In the last two weeks, I have had two separate transactions in which the attorney for the Seller tried to kill the contract with Buyer 1. In both cases, Buyer 1 recorded the contract against the property and both parties filed lawsuits in court to stop the Seller from selling to Buyer 2. (I represented Buyer 2 in both cases.) In the first transaction, Buyer 2 dropped out as soon as they heard of the court fight. The parties are still sorting out the second transaction. So much for the “slow” real estate market.
Watching these two transaction unfold reinforced my belief that if a Seller uses the attorney approval clause in an aggressive manner like this, he or she is likely to end up in court.
Beginning 6/1/09, fingerprinting will be required for deeds that transfer Illinois residential real estate. In the past, deeds simply required a notary. Now, the notary must take the right thumbprint of the seller and on a separate “notarial record.” The notary has to keep the notarial record for seven years. Thankfully, this does not apply to deeds to living trusts.
This is a really dumb law. It simply adds an extra layer of hassle to a real estate sale. Attorneys will not want to notarize deeds anymore because of the seven year record keeping rule. Title companies will charge to create and store the original notarial record and Sellers will be forced to come to a closing that they otherwise would have been able to skip.
There were many fraud cases involving the sale of real estate in the past few years, but I doubt that getting a thumbprint would have prevented any of those.
Here’s a piece on the fingerprinting requirement from CBS (thanks to Matt Hernacki of ReMax Unlimited for pointing out the CBS story).
Recent, real-life case: Buyer makes offer on house being sold as a short sale. In the offer, buyer refuses to put down any earnest money and wants authorization to negotiate directly with the seller’s lender.
So the seller would be out-of-the-loop in negotiations with his lender to try to unwind the single biggest (failed) investment of seller’s life. And he is supposed to trust a complete stranger with negotiating a way out of the mess. This buyer also added, “Don’t worry, not many people know about this technique yet,” as if the buyer talking with the seller’s lender direct was an ancient secret passed down on a piece of paper to Moses right after the ten commandments.
My client said no to this proposal. I can’t think of a single reason why a seller in a short sale would let the buyer negotiate directly with the seller’s lender. It’s just a bad idea.
You are much better off having an experienced attorney or real estate agent, who is working for the seller, handle the details with the lender.
This buyer above was an investor with an out-of-state phone number. Investors are now jumping into the short sale game. They form an LLC and make multiple offers on short sale properties, often with no earnest money. They make very low offers. Most offers are way, way below the asking price; many times up to 40-50% below asking price. Some investors don’t even make a written offer, but want an option agreement.
This gives them an option to buy the property if they can beat down the price enough with the lender. They can also walk away from the option at any time.
If you are facing a short sale of your property, here’s some steps that you need to take to get things rolling:
1. Prepare a hardship letter explaining why the payments can’t be made.
2. Put together recent pay stubs and a list of assets.
3. Ask your agent to print out the listing history and pricing history of the property.
4. Give your attorney or realtor written authorization to deal with your lender and send it to the lender.
5. Make contact and find out who will be the “negotiator” with your lender.
6. Ask the lender to order a Broker Price Opinion (BPO) right away so that you will know how much the lender thinks the house is worth.
7. Be very courteous, gentle and kind to the negotiator. If you steamroll him or her and tell him war stories about your years of short sale experience and how “It’s always done like this…” you will go to the bottom of his or her very large pile of cases.
8. Prepare a closing statement showing the amount the lender will net and be careful not to underestimate anything because the figures are hard to change once they are approved.
Most of all don’t trust negotiations with your lender to the buyer.
Bensenville is one of the few towns that requires a certificate of occupancy for closing. The village inspects the property and a creates a long list of code enforcement items that need repair. In the closing I am handling now, the village asked for 38 repair items. Either the seller has to repair the items or the buyer must agree to do the repairs after closing. This is kind of tough, especially since many buyers and sellers don’t know about the certificate of occupancy. If you don’t get the certificate, the buyer could get dragged to housing court after closing.
On a positive note, they have a grant program in which they give $5,000 to homeowners to repair these items. The buyer does not have to pay back the grant, but must submit to annual property inspections.
The Illinois Association of Realtors keeps real estate closing statistics. Read ‘em and weep…
In the Chicago area, the number of sales, comparing 2006 to 2005, was down about 12%.
The number of sales from 2006 to 2007 was down 20.5%
So far this year, the number of sales is down again from 2008 to 2007:
1st Quarter- 29% down
2d Quarter-33% down
3d Quarter- 22% down
October 08- 17% down
November 08- 32% down
It’s will probably down about 30% for 2008 after you add it all up.
So, basically the real estate market has lopped off close to 60% of its volume compared to 2005 (generally considered the peak).
Wow, I need a drink.
“Short sales” are sale of real estate where the seller does not have enough money to pay off the existing mortgage(s). The lender reduces the amount owed voluntarily. The “forgiveness of debt” is taxable.
However, there is an exception if you sell your primary residence in a short sale and have lived there for at least two years before you sell. In that case, there is no tax due on the forgiveness of debt.
Unfortunately, this rule does not apply to any investment real estate or to second homes. If either of these types of properties are sold in a short sale, the amount of the loan that is “forgiven” is TAXABLE to the seller.
The exemptions on Cook Co. real estate taxes used to be :
1. Homeowner’s exemption;
2. Senior citizen exemption;
3. Senior Freeze.
We just got four more exemptions (disabled, disabled veteran, Long-Term Occupant and Returning Veteran). It used to be hard to understand, now it’s impossible!
If you are considering buying a property in Cook Co. you should know what exemptions are on the property, so that you get the correct tax credit. The easiest way to do this is to look at a copy of the second installment tax bill. Unfortunately, the Cook County Treasurer does not break down the exemptions on their website.
The next best way to check the exemptions is to use the Cook County Assessor’s website. Here is how to do it.
FHA loans were largrely abandoned from about 1999-2007. They have made a big comeback and now account for a large part of the mortgage market, especially for first time buyers.
Here’s a good summary of how FHA loans work.