North Shore Views
Archive for the 'Selling a home' Category
Ever since the housing market meltdown, it has become fairly typical for home buyers to ask sellers for closing cost credits. This is just a way of getting a “discount” from the seller and reduces the amount of cash the buyer needs to bring to the closing table.
Today at our weekly office meeting, Betsy Hanrahan from PHH Home Loans helped clarify how much of a buyer’s closing costs a seller can pay. The amount that is allowed depends on the type of financing the buyer is getting. However, in every case, the total of the credit cannot exceed the total amount of the buyer’s actual closing costs:
Conventional financing with less than 10% down payment
- The maximum amount of closing costs a seller can pay is 3% of the purchase price.
Conventional financing with 10% or greater down payment
- The maximum seller contribution is 6%. Read the rest of this entry »
Probably not. One month of data does not a trend make. Lower sales activity could have to do with the fact that we had a colder January this year than last, keeping some potential buyers indoors.
But more likely it is because there are so few homes for sale. The months supply of homes for sale is at its lowest point in more than three years and good houses are selling quickly, often with multiple offers. Would-be home buyers are scratching their heads in confusion. Wasn’t this supposed to be a buyer’s market?
Not any more. A recent article in the Wall Street Journal explained why willing and able home buyers are walking away empty-handed and frustrated because they can’t find a home to buy. In a nutshell, here’s what’s going on:
1. A lot of homeowners who bought between 2002 and 2008 are underwater on their mortgages. For all intents and purposes they are trapped in their homes until prices rise above what they owe on their mortgage.
2. Even those who are not underwater have lost significant equity on their homes with the decline in prices. That equity is what would have enabled them to put a down payment on a bigger house. They, too, are stuck until prices rise. Read the rest of this entry »
The other day when we were on a listing appoitment in Wilmette, our client asked “How long does it take to sell a home in Wilmette?”
That’s a question we get asked a lot. The best indicator of how long it will take is to look at average days on market in your town or neighborhood for the past few months. In a “normal” market the average days on market is 180 days, or six months. If the number is significantly higher than that, you are in a market that favors the buyer. Less than that means it’s more of a seller’s market.
The market’s been so bad for so long that people are surprised by the numbers we show them. The average market time is 137 days, or 4.5 months for homes sold in Wilmette in the past three months, indicating that we are no longer in a buyer’s market.
You can get an even better idea of what to expect when you sell by looking at market time for houses in the same price range as your home. The numbers can vary alot depending on the price. Right now in Wilmette houses are selling in well under 100 days for for homes priced below $2,000,000. If a home is priced in the “sweet spot” for this area ($700-999,000) the average market time drops to 30 days or less. However, once you get over $2,000,000 the market time jumps way up to 256 days, or eight and a half months.
Source: MRED LLC – Wilmette single family homes. July – Sept. 2012. Deemed reliable but not guaranteed.
While looking at average days on market is a good way to get a general sense of what’s going on out there, averages can also be misleading. Some houses sell in days, while others languish unsold for months. How quickly YOUR house sells will depend on its location, its condition, how well it shows and whether you set the list price correctly at the outset.
We are North Shore real estate specialists and one of the top teams in the area. If you would like to schedule a buyer or seller consultation with the Come Home North Shore team, please contact us at 847-881-6657 or send us a note here
Are you considering selling your North Shore home but owe more than your home is worth in today’s market? If you sell your home through a short sale and your lender forgives your debt, you normally would have a tax liability for the amount forgiven. In other words, the IRS treats the forgiven debt as income and you are taxed accordingly. But if you sell by the end of 2012, the Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income.
The act is scheduled to expire at the end of 2012 and no one knows if it will be extended. If it’s not, and you later sell your home in a short sale, you will have to pay tax on any part of your mortgage that is cancelled or forgiven by your lender.
Here’s an example: You borrowed $300,000 to buy your home. You’ve repaid $20,000 and owe $280,000. But your home is only worth $210,000. If you sell it for that and your lender forgives the balance, you will be taxed on the $70,000 balance.
Needless to say, the consequence of waiting to sell can be significant.
You can learn more about the Mortgage Forgiveness Debt Relief Act here. You should consult your accountant to understand the tax consequences of selling your home. If you would like help determining the value of your home in the current market, Come Home North Shore can provide you with a competitive market analysis as well as information about the short sale process. Just give us a call at 847-881-6657 or send us a note.
And, inevitably they say, “But we don’t want to leave money on the table. How can we be sure that we are not pricing our home too low?”
Easy. Since the market determines the value of your home, the market will also tell you whether you’ve priced it too low, too high or just right.
Here’s how to read the signals that the market is sending you:
If you get lots of showings and some of the people are coming back for a second look, chances are your home is priced just right and you should soon get an offer.
Read the rest of this entry »
I hear that a lot from North Shore homeowners after I tell them what their house will sell for in today’s market.
And I can certainly understand that sentiment. Many of us (me included) have homes that are worth less than we paid for them. And the prospect of losing money on the sale is not an appealing one.
I tell my clients that, if they don’t need to move or don’t have a burning desire to do so, it may not make sense to sell now, because prices are at their lowest point in several years, and are only just now starting to turn the corner.
However, if you do need to move or really just want to get on with your life, consider this before you conclude that it makes good financial sense to wait. You could be waiting a long time and in the meantime you are putting your life on hold.
When you go to buy or sell a home on the North Shore of Chicago you have literally hundreds of real estate agents to choose from. How do you choose the agent to guide you through the transaction? Do you hire a friend who has her license? Or the agent you met at an open house? Or the one your sister-in-law used?
According to research done by the National Association of Realtors, most people (61%) hire either someone they know or an agent who was referred to them. The rest look for the agent who seems to have the most signs and ads or the one who answers the phone when they call the number on a yard sign. For the most part, however, people do not tend to evaluate agents against any specific set of criteria. But they should. After all, your home is the biggest investment you will ever make, so you should reassure yourself that the agent you hire is highly qualified to represent you in the transaction.
The inventory of single family homes for sale in New Trier Township (Wilmette, Winnetka, Kenilworth, Northfield and Glencoe) is at a seven year low. Good houses that are priced right are hot commodities right now, and we’re seeing more multiple offers than we’ve seen in years. Sales year to date are up 13%, time on market is down to 3.6 months and months supply of inventory is down to 5.5, the lowest level in four years.
Although all of these measures point to a strengthening of the housing market, the one lagging indicator is prices. The average selling price for 2012 year to date is down 11% from last year. How is it that all other signs seem so positive but prices are still down? It’s because we are at an inflection point, where the price slide has finally stopped, but has not yet turned the corner. In the next few months we can expect to see upward pressure on prices driven by high demand and low inventories.
Does that mean we’ll be back to the double-digit price increases we got used to during the boom? Don’t hold your breath. What we can expect is a return to the modest year over year increases that were typical in the decades before the boom.
Now more than ever the key to getting maximum price for your home requires the expertise of a professional agent who knows how to work through multiple offers and negotiate the best deal for you. We are North Shore real estate specialists and one of the top teams in the Wilmette, Winnetka and Glencoe area. If you would like to schedule a seller consultation with the Come Home North Shore team, please contact us at 847-881-6657 or send us a note here.
Many people think real estate agents on the North Shore get paid an awful lot of money for what they do. They think, “Wow, if that agent sells my house for $400,000, and the fee is, let’s say, 6%*, they make $24,000! What a cushy job!”
Let’s forget for the time being all the work the agent does to get that house sold, all the knowledge and skill she provides or how much money she invests in marketing and advertising that house (which comes out of her own pocket). The point of this article is to explain who gets that 6% commission* (or whatever fee the seller and the broker have negotiated in the listing agreement).
For simplicity, think of the commission as a pie cut into two pieces, each of which is then divided into two more pieces, for a total of four pieces. The first time the pie is cut, half of it goes to the seller’s (listing) brokerage and half goes to the brokerage that represents the buyer in the transaction. Each of those halves are then divided between the brokerage and its agent. This time it’s probably not split into equal parts. The split depends on the agreement each individual agent has with the brokerage she is affiliated with.
The point is that the listing agent doesn’t get the whole $24,000 in the example above. She more likely earns between $6,000 and $8,400. And keep in mind, that’s her gross commission. Out of that she has to pay fees, insurance, marketing, taxes and a host of other expenses, just like any other independent businessperson. In a hot real estate market an agent can make a pretty good living. But in a slow market, where houses languish unsold for months, it can be tough to survive, which is why hundreds of thousands of agents left the business after the housing bubble burst.
So now you know. Your agent isn’t getting rich off the sale of your house. She’s just getting a piece of the commission pie.
*This is merely an example for illustrative purposes. Commissions vary from broker to broker. It is illegal for brokerages to make agreements with each other about what commission fees they will charge.
It’s called Fast Customer. If you need to reach the customer service department of a company and want to talk to a real live human being, here’s all you have to do: 1) download the Fast Customer app onto your phone (it’s free). 2) Send a text message with the name of the company you’re trying to reach to 936-225-5757. 3) Wait a few minutes and you’ll receive a phone call from a customer service representative from that company. That’s it. No more phone tree or endless loops, no more waiting on hold. No more “Please stay on the line. Your call is important to us.” You can just get on with your life until a live customer service rep calls you.
Even if you don’t have a smart phone, you can use Fast Customer’s service through your Internet browser.
Of course, when you want to reach us at Come Home North Shore, you don’t need a fancy app. Just call us at 847-881-6657 and one of us will always answer your call. Now that’s customer service!