Wednesday, April 30, 2008

Oswego Market Report, April 2008

Oswego, Illinois SOLD April 2008

Real Estate Market statistics for Oswego, Illinois April, 2008. 2 separate categories are included - Single Family homes (Detached Single), Condos & Townhomes (Attached Single).
If you would like a more detailed report of your specific neighborhood please don't hesitate to contact me.

Montgomery Market Statistics, April 2008

Montgomery, Illinois SOLD April 2008

Real Estate Market statistics for Montgomery, Illinois April, 2008. 2 separate categories are included - Single Family homes (Detached Single), Condos & Townhomes (Attached Single).


If you would like a more detailed report of your specific neighborhood please don't hesitate to contact me.

Oswego Comm. Garage Sale May 16th & 17th

Friday, May 16th
Saturday, May 17th

Oswego will be having it's annual community garage sale in a few weeks - Friday May 16th and Saturday May 17th. The garage sale is sponsored by the the Environmentally Conscious Oswego Commission. You can sign up for the garage sale at the Oswego Village Hall. In order to be included in the advertising in the Oswego Ledger Sentinel and the Prairie Times, you must sign up by May 9th and pay the $10.00 advertising fee. Once you sign up - you will receive a garage sale sign that needs to be returned when the sale is over. For more information, call Lisa Dicke at 630-554-3622

Monday, April 28, 2008

For Sale By Owner Top 10

For Sale By Owner. Everyone wants to try to save a commission. Here's an answer you wouldn't expect from a Realtor. Give it a shot. Yes, you heard me. Put a sign in the yard and see what happens. If you're lucky, you'll sell your home for more than you hoped and have no problems. Congratulations. You're among only 16% of for sale by owner sellers who successfully sell their home without a REALTOR. The other 84% of For Sale By Owner Sellers end up using a REALTOR. I like to compare selling with a REALTOR to building your own home. Can you use a hammer and a saw? Sure, most people can. Maybe you even have some skill. I'm not bad when it comes to electric -but I can't seem to do a single plumbing job with screwing it up. If I spent the time and took the training - I am confident I could be a plumber too. But plumbing, electric, carpentry, concrete work, roof work, etc. I don't have the time or desire to learn all those things. I'd rather pay someone I KNOW would do a good job. The same thing goes for real estate. Yes, you CAN do all the things a REALTOR does. With enough time and training - you might even be good at a few of them. But all of them?
If you're determined to sell your home by owner - nothing I or any REALTOR says will change your mind. Hey, I don't blame anyone for trying to save a few dollars. But the problem often occurs when By Owner sellers keep walking down the same path-when nothing is working. Perhaps the biggest decision you'll need to make isn't whether you should sell by owner or not - the decision will be when do I give up on selling by owner and start using the services of a REALTOR. Even my own sister tried selling by owner. They put out the word to all their friends and family, put the sign in the yard and waited for an offer. They had lookers -but no offers. 3 weeks later - I listed their home for sale. For her, it was an easy decision because she knows what I do for my clients. But you may think - what is a REALTOR going to offer me that I can't do for myself? In honor of David Lettermans top 10 list - here are the top ten things to consider when selling by owner:

  1. BRANDING YOURSELF AS A SERIOUS SELLER- When buyers look at homes for sale by owner, they often get the sense the seller isn't serious. Maybe the house hasn't been prepared for the market or maybe the sellers don't respond quick enough to buyers questions. Also, By Owner sellers will often tell buyers "I Don't need to sell". While this is often an attempt by the seller to position themselves for negotiation, buyers take it as a sign the seller isn't serious about selling. When a REALTOR lists a home for sale-buyers know that the home is ready to go.
  2. MARKET PREPARATION- I'm not just talking about preparing the home for sale. I'm talking about preparing you, the seller, for the sale. Yes, preparing the home is very important. Those who have sold by owner often list "Preparing the Home for the Sale" as one of the hardest aspects of selling by owner. You want to improve your home enough that is attractive and ready for buyers - but not over improve for the neighborhood and risk having an overpriced home. You want to consider little things like leaving the lights on for showings or bringing buyers into the neighborhood from a particular route. A REALTOR looks at your home like a buyer would and helps you do the same. Walk in the front door - what do you see? No, it's not your beautiful collection that took you 10 years to assemble. It's clutter to the buyer. Preparing the seller for the sale includes what to expect for showings, offers and "give backs" a buyer might request to close the transaction.
  3. TRANSACTIONAL EXPERIENCE - The average years of experience for a REALTOR are 13. During this time - we have been involved in the purchase and or sale of over hundreds or thousands of homes, townhomes, condos or apartment buildings. Each transaction has it's own unique set of circumstances. As a professional, we can draw on those experiences and share them with our clients as we walk through the home sale or purchase process. Yes, sometimes a home sale goes through without a hitch. If you are doing it on your own - you have a lot of learning to do in a very short time period. If you're lucky - you will have no problems. But what if you do have problems? Who pays for the inspection? Should you hold a mortgage? How much extra value does that remodeled bathroom add? Are these buyers serious enough that you should take your home off the market and sign a contract? Waiting until these questions come up in a negotiation may be too late.
  4. PROFESSIONAL CONTACTS - Each time I help homeowners buy and sell a home I always refer them to people I know and trust - loan officers, appraisers, attorney's. Maybe you've had an experience when a Realtor just pushed you too hard to use one of their "friends" and you didn't like it. As Realtors, we see many home sales fall apart for a variety of different reasons - someone missed a deadline, there was mis-communication to the buyer, seller or lender. Sometimes a buyer or seller gets upset after the closing because of an un-noticed defect in the home or cost at the closing table. The Reason so many Realtors try to get home buyers & sellers to use people we recommend is because these are people we trust. We have closed many transactions with them in the past, we probably even use them ourselves when we buy or sell real estate. In short - we know the professionals that will protect our clients in an honest and professional manner. If you know someone like this, wouldn't you recommend them?
  5. PRICING EXPERIENCE- pricing a home is a very important part of the home sales process. Yes, I'm going to quote statistics from the National Association of Realtors (NAR). I've often heard these numbers discounted because they are "self-serving". But let me ask you this - who tracks the sales of homes on a nationwide basis more than any other group in the united states? Who does the government quote when they are preparing statistics on the state of the economy? The NAR - That's who. When I list a house -I spend a lot of time going over recent sales in the area - comparing neighborhoods and features, taking things like time of year or market cycles into consideration to make sure I can price a home properly so it will sell quickly. Homes that are overpriced stay on the market too long and the inevitable question from buyers is "Why has that house been on the market so long, what's wrong with it?".
  6. GET MORE $$$$ - plain and simple. In 2006, homes sold with a REALTOR sold on average for 32% more than those sold by owner. Buyers know the game too. They know that you aren't paying a commission - so they are likely to bring you discounted offers because they think you are saving money. When a REALTOR is showing your home - they will pull up comparable sales in the neighborhood to show the buyer realistic values. Your listing agent will already have done this when you listed your home - so these comparable sales will often overlap. This works to your benefit.
  7. EXPOSURE, EXPOSURE, EXPOSURE - Realtors are in the business of selling properties. That's what we do. That means we have established marketing procedures to get the word out about your house. We have certain websites we know produce traffic. We talk about the houses to our colleagues and potential buyers. We hold open houses and do agent tours. We are out there every day trying to think of creative ways to get those listings sold.
  8. THE REALTOR TOOLBOX- just like a carpenter or a plumber, REALTORS have tools to get the job done. I create single property websites for my listings, I have fliers designed to give enough information to make my phone ring, I have strategies to renew interest in a property when things are slow. I even blog about the homes I have listed. Hey, it's a full time job ;)
  9. KNOWING THE COMPETITION - this is related to pricing. REALTOR's are touring neighborhoods and houses on a daily basis. We know when a house 2 streets over goes on the market - we know how it compares to your house. We are even prepared to answer those questions when someone makes an offer compared to that "Other House". Is it in the same school district? Same neighborhood? Same Homeowners Association? All these things affect value -knowing how to answer these kinds of objections or questions helps you get the most money for your home.
  10. PROFESSIONAL REPRESENTATION- All of the above are good examples of how a REALTOR will professionally represent a seller. But another thing to consider is that extra layer of "distance" you get from the transaction. Selling by owner means you are walking around the home with potential buyers. They are constantly reminded that this is "your" house, not theirs. When a REALTOR takes a buyer through the property, it immediately helps the buyers start seeing it as "their next home". There are also buyers out there who count on finding an uneducated seller. Maybe they are slipping something into the contract that benefits them in an unfair capacity. Maybe they are being less than honest when painting their own financial picture in order to negotiate a better deal. As REALTOR's, we have seen all the tricks and know how to prepare for them. We also help keep everyone level headed in the transaction. It's often hard not to get offended or angry when someone low balls your home or talks about the defects. REALTOR's can help lay out these problems in a matter of fact way and respond rationally so as to keep the transaction on track to a close.

I hope all these tips help you when it comes time to list your home. It's a buyers market today and now, more than every - it pays to have someone in your corner who knows how to make things happen!

Monday, April 21, 2008

Want a website for your house?

A new feature I'm offering home sellers is a website just for your home! Everyone I list a house for always asks me "When are the photos going to be online, can you send me a link?". Well, wouldn't it be easier if I could just tell you to look up your address on the web? Now you can. I'm creating a website just for every house I list. Each home I list will have the following features available on the web:
  • Custom web addresss
  • Aerial View
  • School Info
  • Community Info
  • Photo Gallery
  • Home Description
  • Demographic Info

Here are some of the websites I've created for my current listings:

Call me today and get a website for your home!

Saturday, April 19, 2008

New Fannie Mae/Freddie Mac Foreclosures

Two new properties coming up for sale. These are foreclosures being offered by Fannie Mae/Freddie Mac. They are not yet listed but I get notified before they come on the market. Contact me for more details:

Harbor Drive, Oswego Illinos. 4 Bedroom, 4 bathroom. Not yet priced.
Cascade Ridge Drive, Plainfield Illinois 3 Bedroom, 2.5 bathroom. Not yet priced

For a property that is not yet priced, I would help you pull comparable property sales and determine what the value is.

Thursday, April 17, 2008 - Lisle Ranch

Okay, I have to shamelessly plug this house as both a new listing and the WebHomeOfTheWeek - it's my sisters house! 502 61st street, Lisle IL. is now on the market. This property is located in an unincorporated area of Lisle and sits on over 3/4 of an acre. What makes it the web home of the week is the fact that it is an excellent value! Most of the homes in this area are selling in the $400-$500k range or are much smaller. Similar properties on much smaller lots in the area are going for $320-$360k. With over 2000sf and a full basement - priced at $389,900 it represents an excellent value for the neighborhood.

This property needs updating - including the kitchens and bathrooms. But it's certainly not a handyman special. The outside has been painted, new shutters were added and the owner is constantly spending time improving the landscaping.

This property has a lot of space and is one of those foolers from the road. For an older home, it has amazingly wide open spaces between all the rooms.

Tuesday, April 15, 2008

So what is a real lease option?

I was out showing rental houses today to a client who is moving to the area from Pennsylvania. Last week he had the whole family out and I showed them around different areas and tried to give them a feel of neighborhoods. They are truly a great group of people and I really want to do whatever I can to help them.
As we were viewing rental properties tonight - it seemed like almost every one was listed For Sale, For Rent, Lease Option or Rent with Option to Buy/Rent to Own. Because of the market slowdown - many sellers are willing to do whatever they can to work out a deal with someone who is interested in their house. That's good news for buyers - it is now a Buyers Market. But just because the owner says they are giving you an opportunity to own- doesn't mean it is a good opportunity.
People often tell me they are interested in a Rent to Own situation but the term has been thrown around so much that the original context has been lost. Many landlords will say "Rent to Own" or "Rent with an Option to buy". When all they mean is - you can rent the house - and if you decide to buy it, you are more than welcome to. This is not a true Lease Option/Rent to Own situation.

RENT TO OWN - in a typical rent to own situation, the landlord is going to give you a credit each month for part of your rent payment. Say $200.00. Over the course of a year, you will accrue a credit of $2,400. This credit can then be used as a down payment or to pay for closing costs. This will depend a great deal on what the lender will allow. The lender usually wants to see that you are paying above market rent - thus making it a legitamate pre-payment of funds towards the purchase of the home. You may be able to just have the seller pay your closing costs - but then, in todays market - you will probably need some sort of downpayment.

LEASE OPTION - in a lease option you are purchasing an "Option" to buy a property at a future date. Typically, a buyer will give the seller a down payment, say $5,000. This payment is made to purchase the option to buy the home. Usually, you would determine and fix the purchase price at the time you purchase the option. Sometimes you will agree to pay market price at the time of the sale. In todays market, this makes no sense. Values are not going up - they are going down. And "Market Value" is a highly debatable issue. Who determines what the market value is? The seller? That doesn't work. In todays market It makes more sense to wait and see where the value is in a year or two.

A Dog Park in Boulder Hill?

Spring is here....and it's time to take the dogs out! I have two yellow labs, Baily (female) and Cody(Male). Wouldn't it be nice if there were a dog park in Boulder Hill? Maybe it's a dream - but I keep trying to think of a good location for one. What about in that area by the utility poles? I'm sure that wouldn't be a very popular with people who back up to the area.

Tomorrow I am taking my dogs to renew their Rabies shots - and then we're heading to the dog park! The question is coming up more often when I work with buyers - where is the closest dog park? Last year I spent a lot of time visiting dog parks in Aurora & Naperville. Lincoln Park in Aurora is the park I visited most last year. It's off Prairie avenue just west of Rt. 31. Take Prairie over the tracks and hang a right on Haywood. You'll see the dog park there.

Last year I met a great group of people who went to the park at the same time everyday. You need to get a license from the Park District but it's not expensive. There are also a couple very good dog parks in Naperville off 75th street - one near book and the other near Rt. 53. For more information on Dog Parks in Illinois - visit the Illinois Dog Park list at

Monday, April 14, 2008

New Listing - Wooded lots in Dixon.

If you're looking for an opportunity to get far away from the hustle and bustle of the suburbs - how does Dixon sound? Unincorporated Southern Dixon. These 2 lots are side by side in The New Landing section of Lost Lake near the border of Ogle & Lee Counties.

I wont kid you - if you're driving from the Naperville/Aurora Area - it's a haul. Probably 45 minutes to get there. If you like a quiet country drive - you'll really enjoy the long stretch down Flagg Road from Rt. 251 in Rochelle. On my first trip out there - I thought I was lost! The picture above will tell you that you've arrived. But remember - it's the western entrance. If you're coming from Rochelle off Rt. 251 - it's the second Lost Lake Entrance.

The lots are a little over a quarter acre with the lot line on the road frontage being wider than it is in the back (St. Francis Drive Curves).

Both lots are priced at $7,500 dollars each - $15,000 total. There are some guidelines for building - typical covenants, rules & regs for a community that lay out minimum square footage, set back, etc. For information on the community visit To see a full listing sheet on 506 St. Francis Drive or 508 St. Francis Drive, visit

Here are the new Boulder Hill Condos!

I finally got a chance to tour the new Boulder Hill Condos off Boulder Hill Pass - down behind the shopping Center at the Rt. 25 Entrance. These apartment buildings are being converted to condos as they are sold. Prices start at $75,900 for a one bedroom unit and go up to $120,900 for a 3 bedroom townhome.

There are two units you can view as models - both have been furnished by IKEA and look really nice!

These units are similar in size (but more updated) as the Deer Run Condos off Rt. 31 in Oswego. All units will have association dues but heat will be billed separately. Some of the standard home features will include:
  • New Windows
  • Wall to Wall Carpeting (laminate wood upgrades offered)
  • Custom Window Treatments
  • 6 Panel Colonist Doors & Trim
  • Designer Lighting pacakge
  • Appliances
  • Central Air
  • and more!!

For more information, floor plans or to tour the models call me at 630-846-4663.....Bo

Saturday, April 12, 2008

Rainy Day Real Estate

It's a rainy day today in chicagoland and I often hear sellers say to me "It's lousy weather outside today, no one is going to look at the house". Well, the exact opposite is usually true. When the weather is bad people often have nothing else to do. They will be sitting at home looking at houses online or driving around neighborhoods. Good weather means buyers have lots of choices - do something outside, work on the house, visit any number of outdoor attractions. But you can bet if someone is looking at your house in lousy weather -they are a serious buyer. Some sellers are worried about people tracking mud and water through their house. Most agents will have the common sense to remove their shoes and ask clients to do the same. If yo'ure really concerned, put a sign up in the foyer or the door buyers will enter in and ask them to remove their shoes. Or, ask your agent to provide booties. Personally, I find that booties don't work. Water soaks through them and mud can still fall off the exposed parts of shoes. Asking someone to remove their shoes isn't a big deal. For buyers - here's a tip. Where slip on shoes the day you view homes.

Friday, April 11, 2008

Vacant Houses-what to do about them.

I just finished viewing a vacant home that I will be listing for the bank in Sandwich. While I was there the neighbor approached me to learn more about the house. I showed her around the property and we talked about the neighborhood and the real estate market. As a listing Realtor for a vacant property - it's always nice to get to know the neighbors. They can keep an eye on things and let me know if anything weird happens. For the neighbors, I think it gives them peace of mind knowing they can call someone local if there is a problem.
Neighbors often face a lot of challenges when the house next door is vacant. Sometimes the property can become a magnet for vandalism, vagrants or just kids looking for trouble. If the property is owned by a bank - it is always managed by a property management company or Realtor. Most banks or property manangement companies will post a sign in the window stating who is manging the property and leave phone number to call. Some communities even require that a sign be posted if the property is a rental property (Chicago for example).
Most propert management companies will take care of things like major repairs & lawn maintenance. They probably aren't going to shovel the driveway in the winter. But in the summer months - someone should be cutting the grass on a weekly basis. Most villages have an ordinance in place that regulates how long the grass can grow. If it gets too long - the village will send a notice and/or fine the homeowner.
If you're interested in buying a vacant house - the property management company or bank can also help. I can tell you from experience that this is hard to do. It's out of the norm. No one wants to deal with you. Banks are not setup to sell properties. They sell through Realtors. That doesn't mean you can't get it done - but be prepared for an uphill battle. A vacant bank owned property is in between the time that foreclosure took place and the property officially being offered for sale through a Realtor. Banks will sell properties like this - but my experience has been that the people on the other phone just don't want to deal with you.
Finally, if you expect that the vacant property is being used by kids to party or by homeless people to sleep in - call the police. Immediately. This kind of situation can quickly get out of hand (especially in bigger cities)...and the house can become a real nuisance. The important thing to do is create a paper trail. Keep track of how you talked to and when. What you reported. Get copies of police reports whenever possible. Then, when you call next time - you can refer to these notes. It's much harder for someone else to dismiss you when you are well prepared!

Thursday, April 10, 2008

Who's house is it?

As I was showing houses this week, we arrived at one of our appointments to find the homeowners still home. This made my clients uncomfortable so we skipped that particular home. Some buyers wouldn't care and would actually welcome the chance to ask questions directly to the homeowner. This can then, in turn - make the homeowner uncomfortable. I have had sellers tell me "This is my house, i'll do what I want". And that's true. It's your house. But aren't you trying to get someone else to buy it? Buyers will sometimes remark "that guy was rude".
The reason Realtors tell their clients to leave the house and take down things like pictures and collections is an important one. From the moment those buyers pull up in front - they are thinking of this as their next potential home. As soon as they see the homeowner - it becomes someone elses home. Sometimes the response I get from sellers is "They aren't going to not buy my house just because I was home". True. But most times the decision to buy a house is an emotional one. We fall in love with our house, we can see ourselves living here, I can see the kids riding the bike up and down the block. Many suddle things can influence a buyers decision - so it's important to given them every advantage. Put away the pictures, go next door to the neighbors during a showing or take a drive. Yes, it is your house. But do you want to keep it that way ;)

Wednesday, April 9, 2008

Stop Foreclosure with Program 3648

If you bought your home a year or two ago - you might be in the situation many homeowners are. You owe more than your house is worth. Because of the market slowdown, homeowners are seeing houses in their neighborhood sell for less than they did a couple years ago. This can become a scary prospect when you are forced to sell your home due to relocation, a lost job or death in the family. That's why the president and congress passed House Bill 3648 - the Mortgage Forgiveness Debt Relief Act of 2007. More commonly known as Program 3648.
Prior to program 3648, here is what happened. Lets say you fell behind in your mortgage payments, lost your job or just couldn't keep up with the bills. You decided to sell your house and get out from under the mortgage. You bought the house for $200,000 but could only sell it for $150,000. The bank would then issue a 1099 to you at the end of the year for $50,000. That meant that you would have to report $50,000 on your tax return and pay taxes on it. Can you imagine? What a tax bill.
Thankfully, congress and the president reacted to the market and created program 3648. The Mortgage Debt Forgiveness act means you are no longer liable for taxes on that difference you didn't pay the mortgage company. Now, there are some rules that apply to this program. It has to be your primary residence for instance. And you also need to make sure the mortgage company isn't going to come after you for the difference. If you have questions - you should always ask your accountant or the person who prepares your taxes.
As I talked about earlier this year, when you sell your house for less than you owe the bank it's called a short sale. Nationwide, only about 10-15% of short sales are actually approved. In order to make this kind of sale work it's important to know what you're doing. Recently, I partnered with a processing company that works with most of the banks in getting these kinds of sales approved. There are other options you can persue and I would be happy to discuss those with you anytime.

Tuesday, April 8, 2008

You know...the house with the purple bathroom

It was a beautiful weekend for showing houses this past saturday and sunday and I had the pleasure of working with a family from Pennsylvania that is moving to the area. Because they are from out of state - just remembering what town we were in was a challenge. They are moving here for a job in naperville, so we were looking at houses in the surrounding area - Oswego, Montgomery, Naperville, Plainfield, Aurora & Bolingbrook. On Saturday we viewed 10 or 12 houses in a matter of a few hours. It can be hard enough for someone locally raised to remember what house was in what town and which subdivision. An even more daunting task for someone not familiar with the area.
One of the tricks I use to help buyers remember each house is what I call the TripleR . That stands for Rating, Room & Remember. First off- after viewing the house I like to ask the buyers to rate the house on a scale of 1 to 10. This rating might change after viewing another house - but it really helps both buyers and the realtor to remember just how interested they were in that house. The second R stands for Room. In every house one room usually stands out. Was it a small master bedroom? A luxurious master bath? Or an amazing finished basement. By keying in on one room it will help remind you of something that really stood out in that house. Finally, the third R is Remember. Pick one thing overall that stood out about the house. Maybe it was the purple bathroom. Maybe the house with 2 rabbits in the basement (seriously, that's one of the houses we looked at), or maybe just the house that said "WOW". Later when you are talking about the house you can say "you know...the house with the purple bathroom" and everyone will know what you are talking about!

Monday, April 7, 2008

Spring is here-again! Time to make a decision.

Yes, spring is here again! It seems like we got a teaser back in february with a few warm days and we all though spring was here! Well, with the warm weather the last few days I have seen a definite increase in phone calls and home viewings. Warm weather signals a time of change - and that brings home ownership to the forefront. People thinking of buying or selling usually get off the fence in the spring and start getting serious. For buyers, the decision is a little easier. They decide it's time to buy - and they start looking. But for sellers - there is a process involved. That's why it's important to get off the fence now and get your home listed. Lets say you are thinking of listing your house next week - mid April. You list the house and wait for an offer. At the very least - you can expect your home to be on the market a month. If you are priced aggresively, it will sell quicker. After a month on the market - if you get an offer, then you are typically another 30 days from closing. That is if nothing goes wrong. If the buyer doesn't ask for an extension for financing. If there is nothing to repair. If all goes well and you can close 60 days from next week - great. But as someone once said "I believe in hoping for the best but preparing for the worst".
What if you don't get an offer in the first 30 days? And then you reduce the price and sell for 60 days? And then you get a buyer in June - but they want to wait until the end of July because they are taking a family vacation. Or, heaven forbid - they have to sell their house first. You can see how quickly time can spiral out of control. Yes, you get to decide whether you take that offer. But sometimes these things don't come up until after the deal is signed. We have 4 months of summer and then fall will be here. In many areas - 90 days is the typicl market time. Add another 30 days to close - and you are 4 months out. Think of it this way - every month you wait to put your home on the market brings you a month close to Christmas. And you don't want your home to still be on the market this christmas do you ;)

Friday, April 4, 2008

Foreclosures & Short Sales - Part 3

Okay - I was a little late getting part 3 finished! But the nice weather is definitely helping the market so things are getting busier! In the final installment of Foreclosures and Short Sales - lets look at what happens when the bank finally forecloses. When the bank takes your house - it's called foreclosure. In Illinois - it requires a "Judicial Foreclosure". That means the bank must take you to court and basically SUE to take the house back. They cannot just file paperwork and take your house because you didn't make your payment. Once the bank has filed all the necessary paperwork for the foreclosure, the bank goes to court and the judge awards a "foreclosure" which means the sale of your property is ordered in order to settle the debt with the lender/mortgagor. The judge in the case schedules a date for teh sale of your home at auction. In Illinois - the county sheriff's department actually handles the auction/sale. Sheriff's department auctions are typically handled on the same day every month, and often weekly. On the day of the auction anyone can bid on the property.
After the auction - sometimes you have what is called a "redemption period" where you can buy the property back by paying the bank what you owe. To see if you have a redemption period you must check your mortgage paperwork. If you are still living in the house after the auction sale - don't worry. They aren't going to knock on your door that day and tell you to get out. But your days are numbered. It's usually a good idea to be out by this time if you can. Within a day or two of the auction, someone will probably come by the house to verify if the property is occupied or vacant. If the property is occupied - they may ask you to leave or try to intimidate you. If that doesn't work - they will have to go back to court for an eviction. within 2 weeks to a month they will most likely get an order for possession. At that court date - the judge will set a date for possession and you will have to be out that day. If you aren't - the sheriff will forcibly remove you from the property. The party is over.
So...after all that back and forth in court - the house is gone. Now the bank owns the home. Because of the court costs involved in a foreclosure - it often makes financial sense for the bank to do a short sale before going through all this legal mess. Because the work has just begun. Now that they have the property back - they have to sell it. First they hire a property management company to check the property for repairs, make sure utilities are on, winterize the property if it is winter and perform any other necessary maintenance. Then the bank orders an appraisal to see what the property is worth. Then they put the utilities in their name- more monthly costs. Finally, they hire a realtor to list and sell the house. Now they have commissions, utilities, property management costs, closing costs, repair, maintenance and upkeep costs. You can see how all this quickly adds up for the bank. Very rarely is the bank actually going to make money off taking your home. Banks are in the lending business - not the property business. They dont' want your house.
Now that the bank has all these added expenses - they are also going to try and get as much as possible for the property. When a bank owns a home it is called "REO" or "Real Estate Owned". Banks will negotiate on the sale of a property just like any other homeowner. But they also want to get as much as possible. Typically they are looking for 75-85% of market value. What is market value? That's a pretty hot topic these days. If everyone could agree on what market value is - I think we would all be better off!
If you are someone interested in buying a foreclosure -you actually have a better chance of getting a good deal in a short sale situation. I hope this discussion has helped shed a little light on the foreclosure, pre-foreclosure and short sale process. I am by no means an expert - but I've been doing it long enough that I think I've learned a thing or two!

Thursday, April 3, 2008

Foreclosures & Short Sales - Part 2

Continuing the dicsussion on short sales & pre-foreclosures - why would the bank let you sell your home for less than you owe them? In the long run - they save money. Banks are in the business of lending money. Not managing real estate. As any agent who ever listed a bank owned property can tell you - the bureaucracy at a bank is nearly impossible to deal with. They make managing and selling a property harder. Despite what many people think - the bank does not want to keep your house. They want their money. And if they don't get it - they want to make sure the "asset" is protected and doesn't lose value.
As a Realtor, it isn't uncommon to look at a vacant house that is in the process of foreclosure - and it's trashed. Holes in walls, appliances all missing, garbage everywhere. The banks see this too - and it costs them money. So, again- why a short sale? Foreclosing on a house costs time and money. Months to complete the foreclosure process, attorney fees, lost interest on their money. Then, after they foreclose - property management fees, repair fees, utility fees, sales costs, etc. The list goes on. So if the bank can get a reasonable amount for the property - it just makes financial sense. That doesn't mean they will take "Any" offer. A lot of investors walk in with offers that are 50 cents on the dollar. My experience has been they don't take those offers. But every now and then they do - and tha'ts what investors are hoping for! But if the bank can get 75 cents on the dollar? 85 cents on the dollar? That's good for them.
So what does that mean for buyers? It means they have a chance of getting a home under market value. In a market where real estate prices are declining - they have a little cushion. It also brings a "perceived value" to the table. When buyers hear foreclosure- they automatically think they are getting a good deal. I always caution buyers that we still have to look at recent sales to determine if the property is a good price. Many times buyers will list pre-foreclosures for the amount they owe the bank. Many times - it is overpriced. So it's important to look at recent sales - I'm talking the last 3 to 6 months. Not a year ago - last year was a different market.
Tomorrow I will conclude this series as I talk about Foreclosed homes - or properties the bank has already taken back and is ready to sell.

Wednesday, April 2, 2008

Foreclosures & Short Sales - Part 1

Everyone is talking about foreclosures these days, even me. In March alone - I wrote about foreclosures 3 times. You've probably heard a lot of terms thrown around - foreclosure, pre-foreclosure, short sale, loss mitigation, REO. What do they all mean? In part 1 today, I am going to talk a little about pre-foreclosure and short-sales. In part 2 tomorrow - I will talk about Foreclosures.
A "Foreclosure" is when the bank takes your home back because you haven't been paying the mortgage. The "Foreclosure Process" is highly regulated by the state - and lenders must follow a certain process to foreclose on a home. "Pre-Foreclosure" is typically what you are going through before the bank actually takes the home. For the purposes of this blog, I will use the term "Pre-Foreclosure" to discuss what happens before the bank takes the home. In the "Foreclosure" section I will talk about how the property is auctioned off and what the bank does with a property once they have foreclosed - or taken the home back.
The foreclosure or Pre-foreclosure process takes about 6 to 8 months. This is from the time you miss your first payment. There are several different types of foreclsoure you may have heard of; Judicial Foreclosure - where the judge awards foreclosure to the bank, Deed in Lieu of Foreclosure - where you give the property back to the bank to avoid foreclosure, and Consent Foreclosure- where the court enters a judgment of foreclosure and gives the title to the lender. More details about these processes can be seen here.
During the pre-foreclosure process you can also sell your home. You can do this even if you sell your home for less than what you owe the bank. This is what we call a short-sale. In a short-sale, someone like myself works with you to put together a package of information the bank wants to see and then negotiates the sale with the bank. In order for a short-sale to work - the bank and anyone else with a lien on your property must approve the sale. This usually means they want to get paid! If you have a first and second loan - both lenders must agree to the terms of the sale. The second lien holder or mortgage holder usually gets very little - but if they don't take something and the bank forecloses - they get nothing.
If you are in pre-foreclosure it's important to start doing something very quickly. Too many times I see people ignore the problem or wait till the last minute to try and do something. The last month before the bank forecloses can be a very difficult time to get a deal done. Typically it will take 30-60 days just to negotiate with the bank and get a deal accepted. So if you are 30 days from foreclosure - it may be hard to get it done.
In part 2 of foreclosures tomorrow I will talk about why the bank would accept a short-sale and why buyers will be interested in purchasing your home.