Archive for the ‘General Real Estate’ Category

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In these days of tweets, facebook updates, and “Google Street View”; future buyers and sellers are much more informed than in previous years. The availability of general real estate data and specific information on homes on and off the market is staggering. I cannot imagine the years before the internet when heavy books were used to advise agents of the properties that were on and off the market. Finding homes is so much easier than it was before.

At the same time though, many of these large websites seriously lack in specific areas. Once a property has been found is when the real estate agent’s true colors shine. Comparables, offers, counter offers, accurate pricing, pricing to gain attention, negotiation, inspections, closing costs estimates, mortgages, and recommendations to respected companies and professionals.

With all this in mind, feel free to glance at this article “5 Ways big Data Is Changing Real Estate” on Mashable.com and let me know what you think.

-Kyle

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Why do mortgage interest rates change?

First lets look at how mortgage rates work and how mortgages work. The first step in the process of a mortgage is for the bank to lend money to someone to buy a house. They use the house as collateral for the loan. This is all pretty obvious and the definition of a mortgage, but the tricky part is that all the interest rates on these loans are not actually controlled by the bank, at least not usually. It is known to happen on rare occasions that a bank will hold a loan in its own portfolio but again this is rare. This brings us to learn about…

The secondary mortgage market and Aggregators

Meet Mr. Freddie Mac and Ms. Fannie Mae. You probably all have heard these names before but who or what are they?

They are corporations who invest in mortgages. These corporations were originally started by the government decades ago to allow banks to more easily find secondary buyers of mortgages. Because the government started these corporations, they are called Government Sponsored Enterprises (or GSE). The interesting part about this is that now they are not directly affiliated with the government. They are just private corporations like Coke, Inc. or Google, Inc., but because they are so important to the way in which the US and home mortgages work… they are given special treatment.

“…Lenders grant them favorable interest rates, and the buyers of their securities offer them high prices. This is partly due to an “implicit guarantee” that the government would not allow such important institutions to fail or default on debt.[9] This perception has allowed Fannie Mae and Freddie Mac to save an estimated $2 billion per year in borrowing costs.[10] This implicit guarantee was tested by the subprime mortgage crisis, which caused the U.S. government to bail out and put into conservatorship Fannie Mae and Freddie Mac in September, 2008.”

So, Freddie Mac and Fannie Mae get special treatment but there are definitely other investors who buy mortgages from banks. Most are mutual funds and Institutional investors. Together anyone who buys a mortgage from a bank to sell it to someone else is considered an Aggregator.

Why is this important to me?

These corporations and aggregators have standards. For example: Fannie Mae may require that the condo building in which your future dream condo is located needs to have no owner owning more than 20% of the units in the building. These standards allow these bundled loans to be treated as a group in order to be sold in a more organized way. No one wants to buy loans if they don’t know about them and have an assurance that people will pay them back.

Finally once these loans are grouped and organized, they are called Mortgage-Backed Securities (MBE’s) and are sold to Wall Street and are included in many mutual funds. These MBE’s are broken up into “shares” like “stocks” in the stock market, but because they are different and not a share in the company but rather a share of a mortgage, they are called Tranches. Traders invest and withdraw money through buying and selling Tranches in the same manner as they do Treasury Securities and Bonds.

So how does all this help you understand mortgage rates?

So when you are trying to understand why mortgage rates have changed you really need to understand how the secondary mortgage market works and specifically how the Wall Street Traders are treating the mortgage-backed securities.

One of the best ways to do this is imagine yourself as either a Trader or a personal investor on Wall Street. You have in your account about 500 million. Due to inflation you are losing every year 1.2% or every day about $16,438. (using Sept. 2013 inflation rate) This is not good. You need to invest in something that will at least beat inflation and hopefully make some serious money, but you also want to control your risk, so…You can invest in government bonds, large fortune 500 companies, mutual funds, and… mortgage-backed securities.

So the answer to all this lies in why you, as an imaginary investor, would choose to invest more or less in mortgage-backed securities as compared to other assets. As interest rates rise on mortgages, expected returns rise on these tranches.

So will they go up next month or not?

A good barometer for interest rates (for 30 year fixed) is to use the 10-year treasury bond. This is because most people end up selling their home after 10 years even though they get a 30-year mortgage. So, as 10-year treasury bonds go up, interest rates usually go down.

Link to a 10-year bond Treasury note investment:

http://www.marketwatch.com/investing/bond/10_year

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Chicago-area home prices keep climbing

 

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Chicago-area single-family home prices were 8.7 percent higher in August compared with the same month last year, the 10th straight year-over-year increase in a closely watched index.

Chicago-area prices rose 1.6 percent in August compared with July, according to the S&P/Case-Shiller indices released today.

The 20-city index rose even more than Chicago year-over-year, up 12.8 percent compared with August 2012, according to the indices.

“Both composites (10- and 20-city) showed their highest annual increases since February 2006,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement. “All 20 cities reported positive year-over-year returns.”

His statement noted that while all 20 cities rose in August compared with July, “most cities showed deceleration compared to July.” For example, Chicago-area prices rose 3.2 percent from June to July.

In the 20-city index, prices rose 1.3 percent from July to August.

On a seasonally adjusted basis, prices rose 0.1 percent from to July to August in the Chicago area and 0.9 percent in the 20-city index.

Local prices are down about 24 percent from their peak in September 2006, according to S&P/Case-Shiller data.

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8 Tips for Adding Curb Appeal and Value to Your Home

By: Pat Curry

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Here are eight ways to help your home put its best face forward.

The way your house looks from the street — attractively landscaped and well-maintained — can add thousands to its value and cut the time it takes to sell. But which projects pump up curb appeal most? Some spit and polish goes a long way, and so does a dose of color.

Tip #1: Wash your house’s face

Before you scrape any paint or plant more azaleas, wash the dirt, mildew, and general grunge off the outside of your house. REALTORS® say washing a house can add $10,000 to $15,000 to the sale prices of some houses.

A bucket of soapy water and a long-handled, soft-bristled brush can remove the dust and dirt that have splashed onto your wood, vinyl, metal, stucco, brick, and fiber cement siding. Power washers (rental: $75 per day) can reveal the true color of your flagstone walkways.

Wash your windows inside and out, swipe cobwebs from eaves, and hose down downspouts. Don’t forget your garage door, which was once bright white. If you can’t spray off the dirt, scrub it off with a solution of 1/2 cup trisodium phosphate—TSP, available at grocery stores, hardware stores, and home improvement centers—dissolved in 1 gallon of water.

You and a friend can make your house sparkle in a few weekends. A professional cleaning crew will cost hundreds–depending on the size of the house and number of windows–but will finish in a couple of days.

Tip #2: Freshen the paint job

The most commonly offered curb appeal advice from real estate pros and appraisers is to give the exterior of your home a good paint job. Buyers will instantly notice it, and appraisers will value it.
 
Of course, painting is an expensive and time-consuming facelift. To paint a 3,000-square-foot home, figure on spending $375 to $600 on paint; $1,500 to $3,000 on labor.

Your best bet is to match the paint you already have: Scrape off a little and ask your local paint store to match it. Resist the urge to make a statement with color. An appraiser will mark down the value of a house that’s painted a wildly different color from its competition.

Tip #3: Regard the roof

The condition of your roof is one of the first things buyers notice and appraisers assess. Missing, curled, or faded shingles add nothing to the look or value of your house. If your neighbors have maintained or replaced their roofs, yours will look especially shabby.

You can pay for roof repairs now, or pay for them later in a lower appraisal; appraisers will mark down the value by the cost of the repair. According to Remodeling magazine’s 2013 Cost vs. Value Report, the average cost of a new asphalt shingle roof is about $18,488.

Some tired roofs look a lot better after you remove 25 years of dirt, moss, lichens, and algae. Don’t try cleaning your roof yourself: call a professional with the right tools and technique to clean it without damaging it. A 2,000 sq. ft. roof will take a day and $400 to $600 to clean professionally.

Tip #4: Neaten the yard

A well-manicured lawn, fresh mulch, and pruned shrubs boost the curb appeal of any home.

Replace overgrown bushes with leafy plants and colorful annuals. Surround bushes and trees with dark or reddish-brown bark mulch, which gives a rich feel to the yard. Put a crisp edge on garden beds, pull weeds and invasive vines, and plant a few geraniums in pots.

Green up your grass with lawn food and water. Cover bare spots with seeds and sod, get rid of crab grass, and mow regularly.

Tip #5: Add a color splash

Even a little color attracts and pleases the eye of would-be buyers.

Plant a tulip border in the fall that will bloom in the spring. Dig a flowerbed by the mailbox and plant some pansies. Place a brightly colored bench or Adirondack chair on the front porch. Get a little daring, and paint the front door red or blue.

These colorful touches won’t add to the value of our house: appraisers don’t give you extra points for a blue bench. But beautiful colors enhance curb appeal and help your house to sell faster.

Tip #6: Glam your mailbox

An upscale mailbox, architectural house numbers, or address plaques can make your house stand out.

High-style die cast aluminum mailboxes range from $100 to $350. You can pick up a handsome, hand-painted mailbox for about $50. If you don’t buy new, at least give your old mailbox a facelift with paint and new house numbers.

These days, your local home improvement center or hardware stores has an impressive selection of decorative numbers. Architectural address plaques, which you tack to the house or plant in the yard, typically range from $80 to $200. Brass house numbers range from $3 to $11 each, depending on size and style.

Tip #7: Fence yourself in

A picket fence with a garden gate to frame the yard is an asset. Not only does it add visual punch to your property, appraisers will give extra value to a fence in good condition, although it has more impact in a family-oriented neighborhood than an upscale retirement community.

Expect to pay $2,000 to $3,500 for a professionally installed gated picket fence 3 feet high and 100 feet long.

If you already have a fence, make sure it’s clean and in good condition. Replace broken gates and tighten loose latches.

Tip #8: Maintenance is a must

Nothing looks worse from the curb–and sets off subconscious alarms–like hanging gutters, missing bricks from the front steps, or peeling paint. Not only can these deferred maintenance items damage your home, but they can decrease the value of your house by 10%.

Here are some maintenance chores that will dramatically help the look of your house.

  • Refasten sagging gutters.
  • Repoint bricks that have lost their mortar.
  • Reseal cracked asphalt.
  • Straighten shutters.
  • Replace cracked windows.

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As I represent buyers, I see these properties often. The properties that are very nice but are simply overpriced compared to the many properties that have sold around them. They just sit on the market for months and months. Usually the reason it is priced so high is that if the property doesn’t sell for a certain amount the owner will not be able to pay the money they owe.

Regardless of the reasoning, it is not a good place to be as a buyer. There are a few very unique ways to find a buyer that are very rarely used but can sometimes help in situations like these.

#1: FACEBOOK

Take it upon yourself to advertise your own property. Buying a property from a friend makes buyers feel at ease; with that in mind post to facebook the photos of your home. Make sure that all your friends and friends of friends know that you are trying to move and why. People are interested in you; use this to your advantage.

#2: INCENTIVES

All Buyers love incentives. Offer to pay the special assessment. Offer to pay for some closing costs. Offer to pay for rental parking for the first year. Sometimes these incentives are more valuable then another few dollars included in a mortgage.

#3: WRITE ABOUT WHAT SEPARATES YOUR HOME
I advise many buyers when they are at the end of negotiations to write a letter about why they like the home and a little information about themselves and what they plan to do with the home. Simply writing a letter from the heart can go a long way in transforming a negotiation from lose-lose to win-win. The same strategy works for sellers. If you have a possible buyer lined up then write the letter to them, if not then write the letter about how great your home is in general and how much the future buyer is going to enjoy it. It is always good to help the buyer imagine themselves in the home and using the home to create their dreams.

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The Chicago Rental market is the highest this year than it will be in the next 30 years. Large rental building will make a big dent next year in the rental market in the Chicagoland Area. One way to help your rental unit stand out is to make sure when people see it they are impressed.

Obviously the first steps in this process are to clean the unit after the previous renter has left. Very few rentals get top dollar if they are not clean when they are rented. Additionally this includes any normal maintenance items; clean air vents, HVAC filters, clean windows, repair towels racks, change locks if appropriate, make sure the garbage disposal is in working order.

Now you are ready to make your rental truly shine:

1. Light.

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Look at this picture above. Which desk would you rather work at?

Light is so incredibly important. How many people do you know who live in caves? I suggest removing those normal light bulbs and install bright light bulbs. Even if it is only for showings. Next open all the blinds. People love natural light in their home. It makes people feel clean, alive, and healthy, so take full advantage of the light that does enter your home. Does your unit not have much light? Why not take advantage of one of the newest fashion trends by buying and installing a large mirror near the natural light coming into the home. Specifically the fashion is to buy a very large mirror with a large thick frame and lean it against a wall. This makes the environment feel brighter and larger.

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2. Color

Color has a double edged sword in rentals. Color can be incredibly attractive but painting walls is not a good decision. There is a great compromise though. First paint all the walls white or eggshell or a similar color. Make sure that the color of the walls is not disrupting to anyone. This is about making your unit attractive to the largest amount of people possible. People see white as blank and ready for their own customization. People see a colored wall as used and as someone else’s home.

Instead of painting walls colors; install bright items. Weather this be pictures, art, furniture (even if it won’t stay when they move in), wall trim, curtains, rugs, table clothes, napkins, towels, shower curtains, flowers, soapdishes, or even the frame to your new mirror. These items make the place seem friendly but the potential renters know they these are easily removable so it doesn’t detract from their desire for the place if their fashion sense doesn’t match yours. (yes, we all know yours is better. )

3. Show the benefits

When people see a rental unit, they usually only see it once. Regardless just as if they were buying a condo or home, people wonder what it will be at night and at different times of the day. Solve this question for them by taking photos of the views at different times during the day/night. Have these photos pasted next to the windows they were taken from. This shows the potential renter how great it will be when the city lights are lit. Don’t have views? Simple, do not do this. You want to draw attention to the benefits of this place not the downsides.

Another opportunity is location and ease of transportation. If this is something your unit has, then show it! Give each potential renter a list of the nearby items of transit and their proximity to you in terms of distance or time. “It only takes 2 minutes to walk the 2 blocks to the EL.” or “The Ashland bus comes right in front of the buidling and can take you to xxx in 10 minutes.”

Got any questions? Shoot me an email. I’m 100% free advice.

Kyle

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FLWHomesAsk a typical person to name an architect and chances are the first name that comes to mind is American architect Frank Lloyd Wright (1867-1959). In and around Chicago there are several properties that are designed with the Wright stuff, typically including not just a structure but also furnishings incorporated into the overall living experience.

From Wall Street Journal here is a link to a nice photo slide show of Wright features.

There is also a video about moving a Wright house in New Jersey to a less flood-prone site.

FLWH

 

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