Real Estate Articles

Hiring a REALTOR®

The biggest mistake buyers make is to start shopping for a home before they select a REALTOR®. Rather than interviewing candidates and making an informed choice, they drive off with an agent who happens to be holding an open house in their preferred neighborhood. Or they pick a REALTOR® whose name is on a for-sale sign or who answers the brokerage’s telephone when they call about a home advertised in the newspaper.

A top agent will rarely hold open houses personally, nor will a top agent sit around the office answering cold telephone calls. Productive agents are busy with repeat and referral business from former clients and personal marketing efforts.

There are exceptions, of course. Some solid agents enjoy holding open houses. And some enthusiastic newly licensed agents use floor time to build a client base. It’s okay to hire a REALTOR® who does these activities, but you shouldn’t hire someone based primarily on the chance encounter of one telephone call, one open house or one for-sale sign.

Sellers make similar mistakes. Some select a REALTOR® because he or she sold a few other homes in the neighborhood or sent out seed packages last spring. While these "neighborhood names" may be worth considering, sales and seed packages shouldn’t be the sole factors in hiring a REALTOR®.

Another common mistake among sellers is to hire a REALTOR® because he or she states a high opinion of their home’s value. An agent may suggest an inflated price to flatter the seller and capture the listing, only to have the agent argue for a price reduction after a few weeks, or an agent may suggest a low price so they can sell the home quickly or attract multiple offers. Rather than being a factor in selecting a REALTOR®, pricing decisions should be made in consultation with the agent, based on market trends, recent sales of comparable homes and how soon you want to move.

The right way to hire a REALTOR® is to know your own needs and find someone who will meet those needs. Talk to several agents and take notes. Start by getting some background information about the agent. Ask: How long have you been in the real estate business? What special training or qualifications do you have? Do you have an assistant? What are your strengthens in negotiating? How many buyers/sellers did you work with in the last year? How many of those people bought/sold a home through you? What is your view of market conditions? Then find out whether the agent is experienced with low-downpayment financing, condominium associations, lease-options, multiple offers, high-end homes, disclosure concerns or other special needs you may have. Finally, get a list of references from the REALTOR®.

Hiring a Real Estate Professional

One of the biggest mistakes buyers make is to start shopping for a home before they select a real estate professional. Rather than interviewing candidates and making an informed choice, they drive off with a real estate professional who happens to be holding an open house in their preferred neighborhood. Or they pick a real estate professional whose name is on a for-sale sign or who answers the brokerage’s telephone when they call about a home advertised in the newspaper.
There are some very important things you should consider when choosing a real estate professional. One of the first considerations is who the agent represents during the process.

It’s important to know the differences between a real estate professional who represents a seller (the "traditional" role of a sales associate), a real estate professional who represents a buyer, and one who represents both. In most areas, real estate professionals are now legally obliged to disclose, in writing, information on the various types of real estate agency relationships that exist.

· Seller’s Agent – A real estate professional becomes a seller’s agent by entering into a listing agreement to represent the seller’s interests. Seller representation may also be created when a real estate professional shows a property on the Multiple Listing Service and "buyer agency" has not been created. The seller’s agent can provide information to assist the buyer, but they must place the interests of the seller first. A buyer should not disclose anything to the seller’s agent they do not want the seller to know.
· Buyer’s Agent – A real estate professional becomes the buyer’s agent by entering into an agreement to represent the buyer. A buyer’s agent can assist the seller, but does not represent the seller. The buyer’s agent must place the interests of the buyer first. A seller should not tell the buyer’s agent anything they would not want the buyer to know, because the buyer’s agent must disclose any pertinent information to the buyer.
· Dual Agent – Dual agency occurs when a real estate professional represents both the seller and the buyer. It can also occur when the listing or seller’s agent works for the same real estate company as the buyer’s agent. In most states, the buyer, the seller, and the agent must agree in writing for the creation of dual agency. The dual agent is required to treat the buyer and seller honestly and impartially. In dual agency, the agent’s duties are more limited and there is potential for conflict of interest.

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Whether you’re looking to purchase a condo in a high-rise, a greystone in the Gold Coast, a loft in Bucktown, or a multi-unit building in Lincoln Park, Chicago’s real estate market has something for everyone. Chicago’s real estate market also offers lots of opportunities in commercial real estate. Whether you’re looking for office space, an entire building, or a warehouse to store a large inventory, you can be sure you’ll be able to find it in Chicago’s real estate market. There’s a lot to like about Chicago, from its beautiful skyline, efficient public transportation system, financial district, and various ethnic neighborhoods, it’s truly a great place to call home.

Chicago’s real estate market provides opportunities for almost anyone associated with real estate. Although competitive, home appraisers, real estate agents, lenders, insurance agents, home inspectors, and leasing agents should not have a difficult time finding business in Chicago being that there are around three million people in the city alone. Couple that with the financial district and the fact numerous national companies are based in the Chicago area and you can see why Chicago is a great place to call home. With the use of the city’s public transportation system getting around the city is extremely easy, efficient, and will help save you money with today’s higher fuel costs.

1031 Tax Exchange

Taxpayers planning to sell, purchase, or construct real property should review the possibility of conducting an Internal Revenue Code Section 1031 like-kind exchange to defer federal and general state income taxes on the capital gain. To qualify, property owners must exchange real or personal property (relinquished property) for other property of a like-kind (replacement property).

"Like-Kind" has reference to the nature or character of the property and not to its grade or quality. The fact that any real estate involved is improved or unimproved is not material. Unproductive real estate held by one other than a dealer for future use or future realization of the increment in value is held for investment and not primarily for sale.

The fact is real estate that can be exchanged under IRC Section 1031 is "like-kind", is extremely broad and is supported by numerous Revenue Rulings and Private Letter Rulings that have addressed this subject.

By utilizing the 1031 tax exchange you will be able to increase your, leverage, cash flow diversification, consolidation, and increase depreciation.

HOW TO GET YOUR HOME SOLD (IN A BUYER’S MARKET)

I think just about everyone would agree that the Chicago real estate market is officially a buyer’s market. What exactly does that mean? The definition of a “buyer’s market” is when there are more sellers than buyers, thus creating larger supply than demand, and if you ever took an economics course, you would conclude that prices would then have to fall until there was balance. Fortunately, that doesn’t have to be the case.

The days of selling your home the moment it goes on the market or a few days later for the listing price or even more are over, so how do you get your home sold in this type of market? First, you will need to find the value of your home’s value in today’s market. This can be accomplished by either hiring an appraiser (for a fee), or a local licensed real estate agent (this service is usually free). Since real estate agents offer this service for free, it’s generally a good idea to get 2-3 opinions. They will analyze your home and compare it to similar properties in the area that have sold, as well as, ones currently on the market.

Assuming you are satisfied with the current value of your home, the second step is to determine the best approach to selling it. You may want to try selling it FSBO (for sale by owner), listing it with a full service real estate company, or a discount real estate company that will list your home in the MLS for a flat fee. There are pros and cons to each approach.

FSBO-

Pros:
-Doesn’t need to pay a commission, therefore can be more flexible on price

Cons:
-Limited exposure-home will not be listed on MLS or Realtor.com
-Pay all advertising out of own pocket
-Having to schedule and attend all showings
-Must be there for open houses

Discount Real Estate Company-

Pros:
-Inexpensive to list your home on the MLS
-Will explain real estate terms and contracts
-Assist with negotiating

Cons:
-Having to pay money out of your pocket before your home sells
-Responsible for all advertising costs
-Must offer commission to buyer’s agent if home is sold through the MLS
-May have to schedule and attend showings, and open houses

Full Service Real Estate Company-

Pros:
-Costs you nothing until your home sells

-Home will be listed on the MLS & Realtor.com in addition to other real estate publications and websites
-Will provide a free home evaluation
-Does not need to schedule or attend any showings
-Will handle all negotiations
-Will explain real estate terms and contracts

Cons:
-Commission is due upon sale of the home


If you decide to list your home with a full service real estate company, I recommend interviewing multiple agents prior to making your final decision. Prepare a list of questions, such as, what will you do to get my home sold? Are you a full-time real estate agent? How long have you been in the business? You should also ask for a couple references of both previous and current clients, and contact them to see if they were satisfied with their service.

In a buyer’s market it’s very important to get the most exposure possible for your home, so if you decide to list with a real estate agent, make sure they have a solid marketing plan that will maximize your home’s exposure.

Here are some additional tips to help get your home sold:
· Price your home competitively
· Make sure your home is clean both inside AND outside. Curb appeal is important because the exterior is the first thing a potential buyer sees, and a good first impression can go a long way in selling your home.
· Consider paying for a professional home inspection. This way you will be aware of any problems before a potential buyer will. Nothing kills a deal faster than a major issue with the home inspection.
· Offer incentives. If your home’s flooring is worn and/or outdated, or you plan on taking some of your appliances, offer some form of compensation up front.
· Assist with buyer’s closing costs. This will usually appeal to first-time home buyers, as well as, cash-strapped buyers.

NEW CONSTRUCTION TIPS

Choosing the right builder for your new construction home

· Start creating a list of new construction home builders:
1. Talk to family and friends who have bought a new construction home and ask about their experiences.
2. Contact a real estate agent in the area(s) you are interested in buying a home.
3. Search the Web
4. Look in the real estate section of your local newspaper. Some will even have a New Homes section.


· Do your homework on new construction:
1. Get a recent list of homes the builder has built. They may even be able to provide you with names and phone numbers.
2. When speaking with current owners, make sure you have a notebook to take notes. Try and speak with as many owners as possible and have questions prepared ahead of time like, Are you happy with your home? Was your home built on-time? Have you had any problems? If so, were they fixed in a timely manner? Would you buy new construction from this builder again?
3. Look at the quality of work. Does the home builder use quality materials? Check out the quality of the cabinetry, trim, drywall, windows, etc. in the builder’s new construction homes

Other items to be aware of when dealing with new construction:
1. Warranties- What type of warranty does the home builder offer? Most home builders offer a 1 year warranty to repair or replace items that may be defective. You should get the exact terms and coverage in your purchase agreement though.
2. How much money does the builder require up-front, and is there any additional money due prior to closing?
3. Inspections- Does the home builder offer “inspection periods” throughout the building process?
4. Punch List- This is a list comprised by the buyer. It may contain small items the builder has yet to complete, items that have been installed improperly, etc. An agreement between the buyer and home builder will determine the time period the buyer has to submit these issues.