Chicago Illinois Area Real Estate Trends, and Tips for Home Buyers

Currently - a known methamphetamine lab in Illinois does not have to be disclosed...

Rick Hauser — Wed, 30 Apr 2008 02:00:00 +0000

I think disclosure should be required....

Thankfully - the Illinois House is considering a bill that would add “methamphetamine lab” to the list of disclosures home sellers and real estate agents must make to potential home buyers.

The bill is sponsored by Rep. Mike Smith, who says there had been a rash of meth lab discoveries and arrests in his district south of Peoria in recent months.

Representative Smith says he sponsored the bill because residue from meth labs can cause serious health problems, including cancer, neurological damage and damage to the

Currently, there are no real standards to determine how cleaned up a meth lab must be before the home can be returned to the market.

What should a buyer look for before choosing an agent to represent them?

Rick Hauser — Thu, 17 Apr 2008 17:53:00 +0000

What should a buyer look for before choosing an agent to represent them?

1. Ability to help a buyer evaluate homes
2. Skill in negotiation
3. Undivided Loyalty
4. Proof of savings and past client satisfaction.

An Exclusive Buyer Agent covers the negative aspects of a home as well as the positive - in a consultative role - versus a "sales" role. We give them the pros and cons of a property rather than trying to sell them one. I might show my buyer a number of homes in a given day - and it might be that I would not recommend any one of them (or unless the price came down to an acceptable level - as price fixes everything at some point.)

A couple of people who were referred to us - said that a past client (or past clients) - told them that we had told them when "not to buy a property" and that is what they were looking for.

An Exclusive Buyer Agent buyer agent is focused on:

1. Finding the best home for the buyer
2. Helping the buyer buy it at the best possible value (frequently aligning their compensation with the buyer's interests vs. adverse to their interests as is typical - ie - an agent representing the buyer getting paid more when the buyer's price goes up.)

3. Helping the buyer save money on a loan (shopping lenders) - vs. referring them to an "in-house" lender.

An Exclusive Buyer Agent's role is to consult and counsel and protect a buyer.

They typically have:

1. A higher level of experience serving buyers and better negotiation skills.

2. They also have unwavering/undivided loyalty to buyers - never having any "dual agency" conflicts of interest.

Questions to Ask Any Agent Before You Hire Them

The Ummel Verdict Is In - Buyers Need to be Careful in Choosing Their 'Buyer Agent'

Rick Hauser — Thu, 17 Apr 2008 17:08:00 +0000

The Ummel Verdict Is In - Buyers Need to be Careful in Choosing Their 'Buyer Agent'

Good article. Exclusive Buyer Agents go way beyond analyzing comps (which is a given) - to looking at recent market trends and statistics, neighborhood information, city plans, community plans, and helping the buyer do Due Diligence on other things.

Interestingly - the general public and many Real Estate agents - don't even know that Exclusive Buyer Agents exist.

Exclusive Buyer Agents are experts at collecting information on the seller's situation - while keeping their buyer client's situation confidential.

Because Exclusive Buyer Agents are specialists - they a very good at what they do.
Since they are generalists - some "buyer agents" may spend 95% of their time listing property for sale and representing sellers - or may have dual agency conflicts of interest.

Village of Deerfield Files Suit versus ComEd

Rick Hauser — Thu, 17 Apr 2008 15:27:00 +0000

Nothing like a city getting angry over the quality of power that it receives...
This is one thing to consider if you are planning on buying a home in Deerfield.
Perhaps it will get fixed due to the suit..... Time will tell.... Excerpt -

The Village of Deerfield filed a class action lawsuit today against Commonwealth Edison charging the utility company with gross violation of its agreement to provide reliable service to its 18,000 residents.

Deerfield officials say that during the period from 2000 until 2007, the village suffered 82,347 individual customer power outages during 1,377 separate electrical failures. They said "Only 13% of these outages were weather-related."

Steve Harris, Mayor of Deerfield said - "ComEd has given us no other option than to seek a legal remedy to their gross and willful dereliction of duty." "After years of patience while listening to ComEd's unfulfilled promises to fix these problems, we now turn to the courts to adjudicate our claims."

Reportedly - several Deerfield residents have been told by ComEd employees that the infrastructure in the Deerfield area "absolutely needs to be updated."

Judith Adamson, a Deerfield resident for thirty years said, "ComEd tells us that the problem is that our utilities are underground and connect to old above ground poles and switch boxes and it would be too costly to revamp the system."

The class action lawsuit filed in Lake County Circuit Court on Thursday charges that ComEd violated the Illinois Public Utilities Act and their franchise agreement with Deerfield and its residents by failing to provide adequate and reliable electric service and failing to maintain infrastructure necessary to provide that service. It calls for compensation for actual damages as well as punitive damages for ComEd's willful refusal to repair and maintain its electrical systems and circuits.

From 2000 to 2007, ComEd's Franchise Reports confirm Deerfield suffered 1,377 total outages that lasted 5,576 hours. The reports show only 13% were attributed to weather related causes. The Franchise Reports also show that the total amount of outages have increased steadily during the last three years. During this period, outages due to failure of ComEd's electric underground equipment have risen dramatically.

ComEd's Annual Reliability Reports cite ten circuits that serve Deerfield as appearing on their list of top 1% worst performing circuits in its Northeast service area from 2001-2006. In addition, these reports show at least one circuit serving Deerfield has been included as a top 1% worst performing circuit for ComEd's Northeast service area in every year from 2001 to 2006. Moreover, the report proves there are other circuits serving Deerfield that are performing even worse than those on ComEd's 1% worst performing list, but they do not appear on that list.

"I have been told by ComEd workers that the feeder to our area of the Village is very old and worn out and that is one reason for the outages," said Deerfield resident Richard Beaton.

Article About Buyer Potentially Losing 50k Deposit With Builder

Rick Hauser — Wed, 19 Mar 2008 15:41:00 +0000

Here is a good story about why any buyer needs representation when dealing with a builder

The three biggest mistakes are indeed:

1. Not using a buyer's agent
2. Opting to use the builder's preferred finance company

3. Signing a standard builder contract without adding any of your own protections and contingencies.

Agree with the article - that many builders insert carefully worded fine print into sales contracts that naturally favors them in court -- language that necessitates careful legal interpretation by a party on the buyer's side -- before the documents are signed.

Many builders make it a practice to retain deposits after buyer cancellation due to wording that favors the builder - and not the buyer.

Agree that builders are in a world of hurt now and grasping at straws like others in the housing game - and as the market tightens, they are simply less likely to be flexible.

Builders offer extra incentives if you'll just be so kind as to use their mortgage company (or the incentive is a great rate - but an inflated sales price.)

Feel free to read my other articles about builders: (It's a pet peeve of mine because the public is getting raped - without the knowledge they need before going in.... They sign in without representation because "we were just driving buy" "we didn't realize" "they never disclosed that if we signed in alone we'd lose our ability to obtain the representation we want. No one told us."

Builders in the Chicago Area Offering Nice Price Off Discounts on New Construction

Don't Visit New Construction Without Representation

Article About Toll Brothers Hawthorn Woods Country Club Development. Don't Sign In Alone Without Representation!

Interested in Del Webb Grand Dominion in Mundelein Illinois? Don't Sign In Alone Without Representation!

As an Agent - Make Sure you ID a Short Sale Situation Up-front. Listing Agents Aren't Revealing it. Protect Buyer Clients Who Have a Timeline

Rick Hauser — Fri, 14 Mar 2008 14:23:00 +0000

Many homes that are for sale in various neighborhoods in the Chicago area, are not occupied anymore - and a number of them are pre-foreclosure or foreclosure properties. Others - will be short sale situations.

Homes that are currently occupied may be listed for a figure where the seller will come up short after paying off the principal balance of their loan(s).

If the seller can't cover the shortfall - it will be a short sale situation - meaning that the lender will have to pick up some of the shortfall.

It is important to note that many agents are not advertising that their listed property will be a short sale in the remarks section of the MLS sheet - because they don't want to dissuade a buyer from writing an offer on the property.

Short sale situations can drag on for quite some time - and many buyers have certain time-lines. Negotiations with the lender about how much of the deficiency the lender will pick up can take time.

If a buyer client wants to get into a home in the next 60 days - it might not happen if they are buying into a short sale situation.

So - it is important that the agent representing the buyer find out as soon as possible from the other side what the seller's equity is (which can sometimes be gleaned from the tax record) at the moment - and if there will be a short sale situation - and if so - how much -- so that the buyer isn't blindsided with delays.

As a rule of thumb - the larger the deficiency - the longer the negotiation can take with the lender.

With any short sale situation - we give the buyer "an out" in the contract - if the seller's short sale negotiations with the lender are not concluded within X days.

Our buyer client can then seek a deal elsewhere.

Another Article About The Buyers's Market

Rick Hauser — Fri, 14 Mar 2008 01:40:00 +0000

I enjoy reading various articles that supposedly knowledgeable journalists write - because there are usually quite a number of mistakes or gross generalizations in every article that need to be picked apart...

We agree - buy smart & buy cheap and read Ilyce Glink's

"100 Questions Every First-Time Home Buyer Should Ask."

We don't agree that you should conduct preliminary research online at Web sites like Zillow.com, Trulia.com and greatschools.net -- these are pretty awful sites in general.
Zillow is extremely inacurrate. Trulia only has a small subset of homes in the MLS (very small subset).

And you won't need cash for your closing costs if you purchase a home through us. We have the seller pay for all of your closing costs.

By the way - there are MUCH better databases on schools than greatschools.net
(Something we provide our clients with..)

Just want to get a handle on what is out there? Email us at info@relocationadvisorsgroup.com and we'll set you up on a familiarization feed - of exactly what you are looking for (please be as specific as you can) -- from the ENTIRE MLS - not just a small sub-set of it.

Should you think about becoming a client at some point - we'll sit down with you in a mutal Q&A session to really explore your needs in greater depth.

Have a nice day :-)

The Definition of an Exclusive Buyer(s) Agent

Rick Hauser — Tue, 11 Mar 2008 00:52:00 +0000

Exclusive buyers' agent: A licenced real estate practioner who represents only buyers and neither accepts listings nor works in an brokerage which represents the interests of sellers or accepts listings.

Exclusive buyer agency

1. A real estate brokerage that employs only buyers' agents and never engages in the agency representation of sellers.
2. A real estate brokerage that exercises a fiduciary obligation to serve only buyers interests, thus being independent of all obligations and inducements owed sellers.

Exclusive Buyer Agency observes the virtue of the Common Law axiom that an agent may represent a seller or a buyer, but never both.

We believe most buyers want their interests to be represented -- but not necessarily by a "buyers' agent" that is employed by and owes allegiance to a "seller agency"

There are real differences between being the agent for a buyer, whose primary goal is to find and beneficially purchase the ideal home, and the seller agent, whose goal it is to reap the highest possible profit for the seller.

We are building a business based on the principle of providing consumers with a clearly defined choice -- representation independent of interest or obligation to any other party.

Thus, we provide our clients with the opportunity to make informed choices based on purely objective guidance - in what is usually the most expensive and important purchase of their lives.

Hilarious Parody of the Typical Real Estate Salesperson

Rick Hauser — Mon, 10 Mar 2008 22:54:00 +0000

This is pretty funny.....A parody of the typical Real Estate "salesperson"

It was apparently paid for by the Virginia Assn of Realtors to help "train" agents in the state not to be so sleezy...

In contrast - as Exclusive Buyer Agents - act as your trusted advisor, advocate, and personal Real Estate coach - guaranteeing you unbiased home showing and no dual agency conflicts of interest (since we are never on the seller's side and never list property for sale)

We tell you what is WRONG with a property - not "selling" you on it....so you don't have to worry that you are being "sold up a river"

I can't stand salespeople myself.....

That's why I do what I - consult - rather than "sell" a buyer something.

Unfortunately - many people fall for the slick sales type...

We don't SELL homes in the Chicago Illinois area - we help people buy them - with their eyes wide open...

Buyer Agent Article - San Francisco Chronicle

Rick Hauser — Fri, 29 Feb 2008 15:28:00 +0000

Newspaper article in San Francisco on using a buyer agent. Too bad they didn't educate people more about the difference between a buyer agent and an exclusive buyer agent...

There is a nice valid point here about traditional agents:

"Buyers should keep in mind, however, that because the agent receives a commission only when the deal is done, there is an incentive to close a sale - possibly at a higher price to earn a bigger commission - even when it might not be in the buyer's best interest. To get around this conflict, some buyer's agents work for a flat fee."

The other way around this is via use of retainer agreements - where the retainer is reimbursed to the buyer at closing - but if the buyer doesn't buy anything - the agent still gets compensated for their time. In addition - this doesn't happen when an Exclusive Buyer Agent structures their compensation where they have a flat fee - plus perhaps the addition of an incentive plan. IE - make less when the buyer's price goes up - and a little more when the buyer's price goes down.

Some exclusive buyer agents structure their compensation to be aligned with the buyers interests. (We do for example - if our buyer client chooses that) When the buyer's price goes down - the agent can make a little more - and when the buyer's price goes up - the agent makes less.

The tendency of a traditional buyer agent can be to get the buyer to come up to get the deal done since it is easier and less time consuming than getting the seller to come down in price. Since many of them don't work on retainer - they only get paid if a deal gets done. The buyer is none-the-wiser that they could have perhaps gotten the house for 20k less if their agent had taken a few more days in negotiation and really worked over the seller - with everything they had. But time is money to the agent - it is easier to just "make a deal" - which really isn't in the buyer's best interests...

When an agent's incentives are aligned with the buyer's incentives - that is when you see them work their butt off to get the best possible price for the buyer. There is no substitute for an experienced, professional negotiator. Many traditional agents are poor negotiators unfortunately...

A good negotiator is worth their weight in gold.
Exclusive Buyer Agents are specialists - always working for the buyer - never on the seller's side.

A "buyer agent" may spend 95% of their time listing property for sale - and only calling themselves a buyer agent when they are working with the buyer. Their main priority is their seller clients - and they don't have much experience working with buyers. But of course - the buyer hears "buyer agent" and they think differently...

Unfortunately - the public is in the dark about the existence of Exclusive Buyer Agents. Only two states (Ohio and California) disclose their existence to the people in their State. The other state Real Estate Associations are too controlled by the mega-brokerages to be willing to disclose this consumer option...

About Short Sales...

Rick Hauser — Wed, 27 Feb 2008 23:31:00 +0000

If you are in the market to buy a home, or if you are selling a home - you have no doubt heard the term "Short Sale".

If a seller owes more on the property than what it is worth - a short sale is one option. A seller in this situation needs the lender to accept a "short" loan payoff, or in other words accept less than the full amount due on the loan.

So how does that effect you - the buyer? A short sale require the lender to agree to the reduced pay off. Therefore, when you negotiate on a short sale, you are negotiating with two parties:

1. The seller who owns the property
2. The lender who holds the loan.

You need the approval of both parties to get your offer accepted - so the process can be long and tedious.

It is important to make sure the seller has received preliminary approval from the lender, because if the lender does not agree to the terms you will have no contract.

We question the seller and/or the seller's agent to make sure the process is in place, and that the bank will cooperate. This process requires the seller to submit documentation to the lender demonstrating hardship, along with evidence that the market value is less than the outstanding loan.

It can be a long, drawn out, and ultimately aggravating experience. Often, you are dealing with layers of bureaucracy, and this can slow the process down.

You want to make sure that you have interest rate protection during this process. In a normal transaction, buyers will typically lock in interest rates for 30 to 60 days. That may not be enough time for a short sale, and you want to avoid being 45 or 60 days into the sale only to find out that your rate lock expired, and your interest rate just went up 1/4%.

We usually include in the purchase agreement a time frame for lender approval, with a clause that gives the buyer the right to cancel the transaction if the lender does not approve the sale after a certain period of time. In this way - our buyer client is free to pursue other properties if the lender is dragging their feet.

There can sometimes be issues at closing - if the owner is still living in the home. Often times, sellers in this situation are angry and frustrated, and on occasion can damage the property, remove appliances, fail to maintain the landscaping, leave the property dirty and full of debris, or take other actions that will cost you money.

We protect you with a walk through prior to closing - and if the seller is still there - we would make certain demands (depending on the situation) at the closing table to compensate you.

Since the seller theoretically has no money, any issues at close typically have to be negotiated with the bank.

Lenders like to sell properties "as is" in these situations, as they do not want to get into negotiations over property repairs. This is okay, if you have a good inspection - and know what you are dealing with (or not.) We will cancel the contract for you - if the inspections uncovers issues with the property that you don't want to deal with.

We can certainly request that the bank resolve certain issues. They are under no obligation to do so, but if the request is reasonable and it makes business sense for the bank to agree, they usually will.

Short sales can be fairly straightforward, or very complicated. This depends on the stance of the lender. Some banks are much easier to deal with than others when it comes to short sales.

As always, you should seek out an experienced, professional Exclusive Buyer Agent to help you navigate these waters.

Countrywide Exec's go on a Skiing Trip

Rick Hauser — Fri, 22 Feb 2008 17:08:00 +0000

This seems a bit over the top" for Countrywide exec's to go on a skiing trip etc. with their financial problems A little extravagant - especially in light of public perception and their performance - don't you think?

Good News - The Illinois Association of Realtors is opposing state legislation that seeks to restrict cash rebates to home buyers

Rick Hauser — Wed, 20 Feb 2008 23:23:00 +0000

The Illinois Association of Realtors is opposing state legislation that seeks to restrict cash rebates and other rewards offered by real estate professionals to unlicensed persons who engage in real estate transactions.

Thankfully - our state association is a bit more advanced in their thinking in some areas - than other state associations such as Wisconsin - which is back in the stone age with it's rules that really put a buyer at a disadvantage most of the time.

The U.S. Department of Justice has taken legal action in other states to undo restrictions that prevent real estate agents and brokers from rebating a portion of the money they receive in a home sale to consumers.

Unfortunately - flying in the face of the DOJ and what is best for the consumer - Illinois state Rep. Robert S. Molaro, D-Chicago, in House Bill 4313 - seeks to amend the state's Real Estate License Law Act of 2000 to state that "no licensee shall give or pay cash rebates, cash gifts or cash prizes to an unlicensed person who is a party to a contract to buy or sell real estate."

When our clients have a buyer brokerage agreement with us - anything extra in a commission payout by the listing firm goes to our buyer client. In this way - we can ensure totally unbiased home showing in relation to the payout.

Traditional agents could potentially have biases in pushing a higher commission payout properties, on their buyer client - all else being equal. Why? Because the agent (split w/their broker from the broker) may get 4% vs. 2.5% for example.

The Illinois Association of Realtors (IAR) was mostly opposed to the bill because they felt that it put Realtors at a disadvantage as compared to builders - who were excluded from the proposed rules.....

The IAR legal counsel stated: "We think it may put some of our members at a disadvantage because it only applies to licensees," he said, as it would allow builders and developers to offer rebates and other cash rewards to consumers that Realtors, as real estate licensees, could not offer.

The IAR STILL does not allow consumers in Illinois to learn about the existance of their option for Exclusive Buyer Brokerage representation in the State's Consumer Disclosure Brochure - claiming that Exclusive Buyer Brokerage is a "business model" - falling under buyer agency. Nothing could be further from the truth.

Use of a buyer agent (they and their company list property for sale) has significantly different implications for a buyer as compared to using an Exclusive Buyer Agent (they and their company never list property for sale / represent sellers.)

Buyer agents are "designated agents" (which is dual agency in sheep's clothing) that can still get in dual agency situations in Illinois if their broker allows it - whereas - every agent in an Exclusive Buyer Brokerage can be behind all of the brokerage's clients. They are not a designated agent - but rather a true agent for the buyer. Buyers have no chance of Dual Agency conflicts of interest using an Exclusive Buyer Agent in Illinois - because EBA's never represent sellers.

Unfortunately - the only State Associations making the public aware of Exclusive Buyer Agency as an option are Ohio and California.

In any case - regarding the main topic of this post.....the bill, introduced Jan. 9, was assigned to a committee on Feb. 13 and a staff member for Molaro said it will not likely be heard in committee this week. The good news is - because of this - from a practical standpoint - the bill might be dead since state sessions are short.

Toll Brothers Co-Founder's Daughter Walks Away From Buying a Toll Brothers Home

Rick Hauser — Tue, 19 Feb 2008 02:50:00 +0000

Ok - I've heard of people walking away from the purchase of their new construction property - but this one is pretty funny.

Wendy Topkis - the daughter of Vice Chairman and co-founder Bruce Toll of Toll Brothers - informed the company last month that she and her husband "did not intend to make settlement" on a $2.47 million home they had previously agreed to purchase.

Toll Brothers said it intends to pursue its rights under the agreement of sale.

Toll Brothers said expects a 22 percent decline in home-building revenue for its first fiscal quarter, ending Jan. 31st.

I wonder how hard they will hold Wendy's feet to the fire.....

Locally - sales at Toll Brothers Hawthorn Woods Country Club has been slower than expected - and they are dealing with re-sale units in that same complex - competiting with their new construction.

I live just up the road from there - in what I consider to be a much better development (more unique and better built custom-built homes and a beautiful lake) - and in any case - I created a real golf green in my backyard.... complete with sand traps and water hazard.... :-) So - I can golf for free anytime I want :-)

Interesting in purchasing a home in Hawthorn Woods Country Club? DON'T SIGN IN WITHOUT AN AGENT! Obtain representation first. Builders will not pay out their commission if you want to be represented by a professional after you sign in alone. They love it when you do that - because you'll have no one on your side - fighting for your best interests.

If you are thinking about purchasing a home in Hawthorn Woods Country Club - as professional negotiators (We are Exclusive Buyer Agents - never representing sellers or builders - so we are always on YOUR side) - we'll help get you a much better deal than you'd ever be able to get on your own. Feel free to contact us for more information.

Are you 55 and older in Lake County Illinois & want to retire in Lake County?

Rick Hauser — Tue, 19 Feb 2008 02:48:00 +0000

You may want to consider 55 and older retirement communities. They offer you a no-maintenance lifestyle - giving you more free time. For example - Dell Webb Grand Dominion located off of Route 176 in Mundelein is a fairly new development. Pre-opening pricing is already gone - though we can help you negotiate a similar deal if you work through us.

When touring there with clients - unfortuantely - we still see many people signing in without any representation. Unknown to most consumers - you lose your ability to have representation on properties you tour on your own. (unless you want to pay a rep what the builder normally would have paid out)

The builder doesn't pay out their typical 3% once you sign in on your own - and they don't discount the property by that for you either. You don't have an expert negotiator on your side at that point. Reps at communities such as Del Webb or other new construction developments start salivating when people sign in on their own.

The Dell Webb Grand Dominion development pricing starts at $277,500 for a 1.197 sq ft Fairlawn model, and goes up to $491,000 for a 2,833 sq foot Rosemor model with a 3 car garage. There are 12 single family ranch floorplans that are available.

The monthly assessments range from $152/month to $178/month for "The Estate Series" Landscape care, snow removal (after more than two inches of snow), seal coating every other year, use of the recreational facilities incluidng the fitness center, bocce ball courts, tennis courts, indoor and outdoor swimming pools and spa are included for a maximum of two residents per household.

Dell Webb Grand Dominion has some golf deals worked out with Steeple Chase Golf Club as well.

All in all - the development can be appealing to those who want to retire and not do it down south.

If you want to go to the southern part of the US or Mexico to retire - contact us - as we know of some very nice places to retire - and agents who can help you through the process.

If you are considering Dell Webb Grand Dominion - please please please - for your own sake - have representation.

Give us a call - and you'll save thousands - and most likely - tens of thousands of dollars when you purchase into Dell Webb Grand Dominion. Our office is located right around the corner from the development. Call us at 847-566-7558 for more information.

Maryland thinks about Reducing re-set time to 60 days from 180 days for listed property. In Illinois - it is 91 days

Rick Hauser — Fri, 25 Jan 2008 05:22:00 +0000

In most states - the MLS calculates the number of days a property has spent on the market as a consecutive figure. That amount resets to zero if the property is taken off the market for a certain amount of time. Maryland had it at 180 days - but is thinking about reducing it to as little as 60. Here is an article about the re-set time in Maryland.

In Illinois - for many years - a property had to be off the market for 181 days before being re-listed if the market time was to show zero in the MLS. Then in 2004 - that figure changed to 91 days - and it has been 91 days ever since (re-ratified in November, 20007) with the exception of the summer of 2006 - when the board changed a rule - which only lasted a few months. See the attached for the reason they dissolved it.

At that time - if a property was de-listed and then came back
on the market - it would show zero days on the market - even if it had only been
off the market for a day or two. MLS rules states that if a property is re-listed - it had to have a new listing agreement.

What happened in the summer of 2006 - was that there were so many "new listings" with no new listing agreements - MLSNI had to fine the agents a few hundred dollars - but nevertheless - the statistic in the MLS still zero'ed out. There were so many agents doing this -- re-listing property without new listing agreements - that it became a big headache for MLSNI - and they could not keep up with all the infractions. Here is the postcard that they sent out at that time after they re-thought everything.

So - in September of 2006 - they re-instituted the 91 day rule again. Agents and brokerages put pressure on MLS systems to minimize the number of days a property is off the market - to reset the clock to zero. In some states where total market time (including time with past agents) isn't listed on the agent copy of the MLS sheet (it is in Illinois) -- this can help sellers (if agents are lazy and don't look up the property history).

"The Nest" - Provides a Nice Page of Home Buying Tips...

Rick Hauser — Fri, 25 Jan 2008 05:12:00 +0000

The Nest Article -- Home Buying Tips -- They give good advice - stating that you should interview three agents if you can -- and remember there are real estate companies that work for just sellers, some that work for sellers or buyers, some that try to work for both at the same time, and others that just work for buyers.

"The latter companies are called Exclusive Buyer Agent Companies (EBA), and it is worth making sure one of your interviews is with an EBA. Visit NAEBA.org for more info."

We couldn't have stated it any better....

Jumbo Loans Finally May Get Help...

Rick Hauser — Fri, 25 Jan 2008 04:52:00 +0000

If you are a homeowner trying to sell - and your property is over 500k in value - you were probably hurt by the fact that after the lending crisis started - lender jacked rates for jumbo loans by 1-2 percent or more over existing conforming loans under 417k.

That meant that if someone wanted to purchase your home - it would cost more than normal - meaning that you had to lower your price more than normal - meaning that you
got really hosed by the lending crisis. Hopefully - that will change to some extent - though the proposal only boosts the conforming loan to 625k.

It took too long - but finally - a $150 billion economic stimulus plan being negotiated by the Bush administration and congressional leaders could include a temporary boost in the $417,000 conforming loan limit on mortgages eligible for purchase or guarantee by Fannie Mae and Freddie Mac.

The government-sponsored enterprises, or GSEs, may soon be allowed to back loans up to $625,000 nationwide and $700,000 or more in high-cost areas.

The Bush administration had previously tied any increase to the conforming loan limit to tighter regulatory oversight of Fannie and Freddie, where accounting scandals led both companies to fire top managers and restate several years of earnings.

Congress has been deadlocked on legislation overhauling oversight of Fannie and Freddie for several years. House leaders of both parties have agreed to increase the conforming loan limit to $625,000 for one year, although Senate lawmakers and the Bush administration had not signed off on the idea.

Some Senate Democrats had been pushing for an even larger increase in the conforming loan limit in high-cost areas like California and Florida.

The administration still sees an increase in the conforming loan limit as tied to GSE reform.

Jumbo loans that exceed the conforming loan limit have become more expensive and harder to find since August. Wall Street investors have drastically scaled back purchases of securities that had been a primary source of funding for jumbo, alt-A and subprime loans because of fears about rising defaults and falling home prices.

In states like California and Florida (or in the Chicago area where many homes are over 500k),the increased cost and reduced availability of jumbo loans has been blamed for worsening the housing downturn.

The National Association of Realtors maintains that raising the conforming loan limit to $625,000 would prevent 140,000 to 210,000 foreclosures, bolster home prices by 2 to 3 percentage points, and increase economic activity by $42 billion.

California Gov. Arnold Schwarzenegger this week urged Congress to pass legislation to raise the conforming loan limit to $625,000 in high-cost housing markets, saying about half of all home purchases in the state require mortgages that exceed the current limit.

Fannie and Freddie may report as much as $16 billion in fourth-quarter write-downs tied to the declining value of securities backed by subprime mortgage loans. The problem is more pronounced at Freddie Mac, which could be forced to declare $11 billion in write-downs.

Some Qualifications and Exclusions of the Tax Forgiveness on Short Sales

Rick Hauser — Fri, 21 Dec 2007 16:51:00 +0000

The Mortgage Tax Forgiveness Bill Was Signed by the President Yesterday (see the post below this)

The bill:

- Excludes the debt forgiven on a qualified principal residence from the definition of gross income subject to income tax (Sec. 2).

- Reduces the income tax breaks on most gains from the sales of non-primary residences using a formula based on the amount of time that the taxpayer actually lived in the property during the five-year period before the sale (Sec. 5).

The Mortgage Forgiveness Debt Relief Act of 2007 amends the Internal Revenue Code to exclude from gross income amounts attributable to a discharge of indebtedness incurred to acquire a principal residence.

Limits to $2 million the excludable amount of such indebtedness.

Reduces the basis of a principal residence by the amount of discharged indebtedness excluded from gross income.

Disallows an exclusion for a discharge of indebtedness on account of services performed for the lender or any other factor not directly related to a decline in the value of the residence or to the financial condition of the taxpayer.

Sets forth rules for determining the allowable amount of the exclusion for taxpayers with nonqualifying indebtedness and who are insolvent.

H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007

Rick Hauser — Fri, 21 Dec 2007 16:02:00 +0000

Yesterday - the president offered a Christmas present to many people who have suffered the agony and humiliation of losing their home due to a short sale, foreclosure, deed in lieu of foreclosure or any similar arrangement that relieves the borrower of the obligation to pay some portion of their debt. He approved what passed by the Senate on December 14th - after many months of debate by the Senate..

On December 14th - the Senate passed H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007. Initially sent to the Senate on October 4th, the Senate passed this legislation on December 14th.

When debt is forgiven on a home loan, the homeowner must normally count that debt forgiveness as income and pay taxes on it. The bill -- an amendment to H.R. 3648 creates a three-year exception for debt forgiveness on home loans – helping families already unable to meet their mortgages to avoid incurring large tax bills as well.

The bill also extends a provision allowing homeowners to deduct mortgage insurance payments from their taxable income.

In addition to tax relief for debt forgiveness and mortgage insurance payments, the bill includes:

- Tax relief for volunteer firefighters and emergency medical technicians
- Help to expand housing options for college students with children
- Protection of tax relief for homeowners after the death of a spouse
- Flexibility to help co-op tenant/owners deduct real estate taxes and mortgage insurance

The bill is fully offset by increased penalties for failure to file S corporation returns or partnership returns, and new requirements for the payment of corporate estimated taxes.

Comment -- Before - the forgiven debt from a short sale was taxable income, Individuals in already unfortunate situations most likely faced IRS actions because they did not have the money to pay the additional taxes. Even bankruptcy did not get rid of the tax burden. This legislation will relieve that additional burden and may also encourage families to work with their lender to negotiate terms for a short sale (rather than letting their home fall into foreclosure), knowing they will now not be subject to an IRS bill.

Link to Kiplinger's Personal Finance Article - In a Market Where Negotiation Counts.... Find an Exclusive Buyer Agent

Rick Hauser — Mon, 26 Nov 2007 23:54:00 +0000

Kiplinger's Personal Finance Article - In a Market Where Negotiation Counts.... Find an Exclusive Buyer Agent

The article states, "In a market in which negotiation counts, you'll do well to hire a buyer's agent to help you identify good prospects and to frame and negotiate your offer (to find an exclusive buyer's agent, go to www.naeba.org). Look for one who is knowledgeable about your area's new-home market -- its dynamics, values, builders and subdivisions."

The only problem with the paragraph is that they should have put the word "exclusive" in front of - buyers agent -- when stating -- "you'll do well to hire a buyer's agent."
As a buyers agent works for a company that lists property for sale and may represent the seller 99% of the time... whereas an exclusive buyer agent and their company never represent the seller.

The article mentions how builders can try to make the buyer use the financing partner of the builder..... Which again - relates to some of my posts below...about lender steering..

A good agent will help you compare the lender's offerings with those of another lender, analyzing the good-faith estimate. Instead of getting extra material things thrown in - see if you can have them NOT give you the material things - and get yourself an added price reduction instead...

The article also give you tips on how to select a good home builder.... All in all - it is one of the better written Real Estate articles I've seen in a long time - meaning - accurate facts.

This Realty Times Article Highlights Information That is Valuable to Home Buyers

Rick Hauser — Mon, 26 Nov 2007 22:49:00 +0000

This Realty Times Article Highlights Information That is Valuable to Home Buyers
Including a link to The National Association of Exclusive Buyer Agents

It talks about the disadvantages of "one stop shopping" (as I also mention in my my recent blog post) -- how agency disclosure is at very low levels, how the public really doesn't know the difference between a so-called buyer agent (who may list property 95% of their time - but only calling themselves a buyer agent when they are working with a buyer) - and an Exclusive Buyer Agent.

In fact - many traditional Real Estate agents haven't even heard of an Exclusive Buyer Agent - and have no clue what they are...

Check out the link - it's good reading....

Joint Venture Agreements Between Brokerages and Wells Fargo

Rick Hauser — Mon, 26 Nov 2007 22:26:00 +0000

Recently - the founder of Long & Foster, the Washington DC area's largest residential real estate brokerage, urged his thousands of agents to recommend the company's in-house mortgage lender more often - and stop working with outside lenders such as Bank of America.

In an e-mail to all Long & Foster agents and managers, Wesley Foster Jr. chastised his workers for funding mortgages through other lenders - instead of using Long & Foster's affiliate, "Prosperity Mortgage."

The e-mail sparked criticism, with some Long & Foster agents, consumer activists and others raising concerns about whether Long & Foster is trying to profit at the expense of their clients' interests.

Foster said he wrote the memo to make agents understand that each time they use Prosperity, they're helping Long & Foster.

HUD/RESPA rules state it is illegal "if the agents or office managers receive kickbacks or fees for doing nothing more than referring services."

However - this is not the first such joint venture revenue or profit sharing agreement that I have heard of between Wells Fargo and a brokerage - so apparently - such corporate agreements give a loophole - so that such revenue or profit sharing is legal.

RESPA may want to tighten up on their rules a bit...

This is another piece of evidence that many Real Estate companies pressure their home-buying customers to use an in-house lender or lender that is co-located at the company's office.

Stephen Brobeck, executive director of the Consumer Federation of Americas stated: "It will not serve the interests of their customer and may even erode the credibility of their agents."

One Long & Foster agent said that they found the e-mail "troubling" because it implies that agents should strive to make the company more prosperous, even if it means undermining a client's interests.

I noted previously in a blog post - that a large local Real Estate brokerage here in Chicago has penned the same type of joint venture agreement with the same company - Wells Fargo. So - Wells Fargo appears to be penning such agreements with major Real Estate companies across the USA - to help pad the brokerage's bottom line - in exchange for their agents pushing business to Wells Fargo.

Is sending your clients to a specific lender such as Wells Fargo - looking out for their best interests in a fidicuary manner?

A fidicuary means that you are looking out for someone's best interests. If you are looking out for their financial best interests - wouldn't you help them shop for the best loan rates and fees - and not steer them towards a lender because it will make your broker's company more profitable?

The brokerage company's financial interests are being placed ahead of the client's interests. That is not being a true fiduciary. The Wells Fargo loan may or may not be the best for the client. How would you know unless you compared? You wouldn't!

Real estate firms promote these arrangements as one-stop shopping - telling their buyer client "it is convenient" "just use Joe here in our office" (who either pays the office rent or their company has one of these joint venture agreements with the brokerage - which exploits a loophole in existing RESPA rules - to put money in the brokerage's pocket.

I wonder how many brokerages have retaliated against agents who didn't make referrals to the in-house or joint venture lender?

Do agents get an extra year end spiff - which isn't formally tied to the in-house referrals - but still based on the number of in-house referrals? I don't know.... I'm just asking the question...

We Warn Our Buyer Clients About "Staged Homes"

Rick Hauser — Tue, 30 Oct 2007 20:22:00 +0000

We warn our buyer clients about staged homes. It is easy to tell when a home is staged....and when I see one - I point it out to my client - and try to have them picture the home stripped bare of the decorations.

Here is an article talking about the member survey taken by NAEBA - The National Association of Exclusive Buyer Agents - the association that Relocation Advisors Group Inc. - the Exclusive Buyer Brokerage for Chicago - and Chicago's Northwest Suburbs belongs to.

Before I became an Exclusive Buyer Broker - I was personally trained by Barb Schwarz in California - in her most advanced home staging course, after her the initial designation. So I know what home staging is - and what Barb teaches - and what the drawbacks are to a buyer. We know how to warn our buyer clients what to look for.

In reference to her comment in that article - it is not true that homes are never staged to cover things up. I've seen it happen any number of times - from rugs put over discolored floors to things covering up holes in walls.

Barb was even noted on a national TV show during the past year - talking about spray painting dead grass in the yard with green paint. Now - if that isn't a cover up - what is?

We insure that our buyer client pay the "unstaged price" - not the "staged price." Typically staged homes can be overpriced. The seller is trying to get more than the home is really worth. That is their whole rational behind staging it in the first place...

Kiplingers Personal Finance - Use an Exclusive Buyer Agent

Rick Hauser — Tue, 30 Oct 2007 19:50:00 +0000

A recently Kiplingers article talks about the benefits of consumers using an Exclusive Buyer Agent.

Another Kiplingers article interviews five Exclusive Buyer Agents from around the country - on what the "buyers market" looks like in their area.

And the Kiplinger link to negotiating a good purcahse contract with a home builder.

We don't ever have our buyer clients accept builder financing for goodies. They get the goodies - and we help our clients shop for the best loan - which may or may not be the lender that the builder is tied to (usually not.)

Unlike other agents - we know how to analyze a Good Faith Estimate for our buyer clients - and we take the time to shop for the best loan for our client. On average - we save our clients $30,000 or more over the life of the loan.