Given that it’s Superbowl
Week (Go Giants!), I thought we might go with a football theme today. I can’t
tell you how many different people I hear proclaim that they are the
quarterback of the real estate transaction – the agent, the loan officer, an
attorney, accountant or financial planner. But for goodness sake, the
buyer/borrower had better be the one calling the shots. Not that everyone else
doesn’t play an important role, but the buyer/borrower is the one most impacted
by the choices made.
Here’s my opinion of how the team
works best:
§ Head Coach (Your Loan
Officer) – Your loan officer should be the Head Coach. After careful
analysis of your income, credit and assets, this is the person in the best
position to make sure you are playing to your strengths and minimizing your
weaknesses. Your loan officer can discuss the economic
realities of homeownership, while listening to your quality of life concerns.
(How often you’ll be able to eat out or vacation, for example.) The loan
officer can set up the game plan.
§ Offensive Coordinator
(Your Real Estate Agent) – Your real estate agent is your offensive coordinator. Armed
with the game plan (which includes your limitations), the agent calls the
plays, counseling you on the geography, the competition, the best ways to
negotiate your way to your personal touchdown. Agents know the playing field
(the inventory and the market). If you hire them to represent you, they can
disclose the weaknesses of your competition (the seller).
§ Offensive Line (Your
Attorney, Accountant and Financial Advisors) – Your attorney,
accountant and financial advisors are your offensive line. They are there to
protect you from the blitzes that come from outside (sellers, title issues, tax
consequences, and protecting your assets). Not the glamour positions, but vital
to any success you are going to have.
§ Running Backs and Wide
Receivers (Your Friends and Family) – Your friends and family are the running backs and wide
receivers. They often receive the glory and attention, but honestly, if
everyone else doesn’t do their job, they rarely ever see success. Bad game
plans, weak play calling, poor execution on the offensive line or by you, as
quarterback, leave them merely as names on the roster.
As
with any team, communication is the most important component to getting the
desired results. Being the center of the action on the field, the
quarterback (you) needs to honestly talk with your coaches and coordinators, so
they can help direct you on the proper play calling. Simultaneously, you need
to heed the feedback from your offensive line, running backs, and receivers to
filter wise advice from emotion. Be the quarterback of your own home-buying
process and you’ll be more likely to realize your dreams (and not the dreams of
someone else).
Bucktown, Chicago
-
Announcing 2131 West Cortland Avenue, a 2,400 sq. ft., 3 bath, 3 bdrm single story. Now
MLS®
$685,000
- Come-N-Get it!.
Property information
PRIVATE ROOF TOP DECK
• single story
-
MLS®
$450,000
- PRICE REDUCTION!
Bucktown, Chicago
-
WELCOME TO 2214 NORTH AVE. - PENTHOUSE LIVING IN THE HEARTOF BUCKTOWN
AMAZING SUN DRENCHED SOUTH FACING BUCKTOWN PENTHOUSE UNIT W. ELEVATOR.
BUILT IN '06 WITH ALL THE BELLS & WHISTLES.
3 LARGE BEDROOMS, 2 FULL BATH.
FRONT AND REAR DECKS
HUGE PRIVATE ROOF TOP DECK W. SWEEPING SKYLINE VIEWS.
HIGH END FINISHES W. OPEN FLOORPLAN
GOURMET KITCHEN WITH BUILT-IN WINE FRIDGE.
OVERSIZED MASTER SUITE W. WALK-IN CLOSET & SPA BATH.
SURROUN SOUND THREW OUT THE UNIT.
SEPERATE DINING AREA
2 BLOCKS FROM BLUE LINE
LESS THAN A MILE TO 90/94
ATTACHED HEATED GARAGE +25K
EXTRA STORAGE
ITS A MUST SEE
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Old Irving, Chicago
-
Announcing a price reduction
on 4445 n kilbourn, a 4 bath, 8 bdrm single story. Now
MLS®
$550,000
- PRICE REDUCTION!.
Property information
Old Irving, Chicago
-
Announcing a price reduction
on 4445 n kilbourn, a 4 bath, 8 bdrm single story. Now
MLS®
$550,000
- PRICE REDUCTION!.
Property information
River North, Chicago
-
Announcing a price reduction
on 521-630 N FRANKLIN, a 1,250 sq. ft., 2 bath, 2 bdrm single story "NO LOFTED BEDROOMS". Now
MLS®
$325,000
- INCREDIBLE LOCATION.
Property information
Comparing Real Estate To Other Investments
We recently posted Real Estate: Today’s Golden Opportunity comparing the current housing market to the market for gold about a decade ago. Some commented on the fact that you can’t compare gold to real estate as an investment as gold is a very liquid asset and it would take more time and effort to sell a house. We were not trying to make the case for real estate vs. gold as an investment in our blog. We were just showing that all investments go through cycles and that the best time to buy any investment may be when everyone is saying not to.
However, since the subject of comparing real estate to other investments has come up, let’s take a closer look. There are two major advantages to investing in a home of your own rather than another option:
You Can’t Live in Your IRA
When you buy your own home you are not taking available dollars away from another investment. You are replacing one housing expense (rent) which has no potential for a return on investment with another (mortgage payment) that does give you an opportunity for a return. We realize that there has been research showing that over the last 30 years renting has been less expensive than owning. That research also says that if you invested the entire difference between the rent payment and mortgage payment you may have done better financially. There are two challenges with this conclusion:
- Today, in the vast majority of the country, renting is actually more expensive than owning a home.
- History has proven that tenants DO NOT invest the difference in their rent and mortgage payments.
Today, study after study shows that owning a home is no more expensive than renting a home. However, even if this wasn’t the case, history shows that owning a home creates greater wealth.
Paying a mortgage creates what financial experts call ‘forced savings’. The Joint Center for Housing Studies at Harvard University released a study earlier this year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners:
“[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”
There Are Tremendous Tax Advantages to Investing in a Home
There is no doubt that selling an investment such as gold is easier than selling your home. However, this liquidity comes at a price. The price is called capital gains. That is the tax you pay on any financial gain you receive from the investment. This tax doesn’t apply the same way when you sell your primary residence:
Theresa Palagonia, a CPA and the Accounting Manager for the firm G.S. Garritano & Associates, was good enough to explain the Home Sale Exclusion Rules:
“You may qualify to exclude from your income all or part of any gain from the sale of your main home.
Maximum Exclusion
You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true:
- You meet the ownership test.
- You meet the use test.
- During the 2 year period ending on the date of the sale, you did not exclude gain from the sale of another home.
If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions listed above.
You may be able to exclude up to $500,000 of the gain on the sale of your main home if you are married and file a joint return and meet the requirements. (Special rules apply for joint returns.)
Ownership and Use Tests
During the 5 year period ending on the date of the sale, you must have:
- Owned the home for at least 2 years, and
- Lived in the home as your main home for at least 2 years
Certain exceptions exist in which you may qualify for the exclusion without satisfying the tests listed.”
Bottom Line
Every investment has pros and cons. That is why there is such an assortment of great opportunities. Real Estate has been, is and always will be one of those opportunities.
ATTACHED HEATED PARKING
• 1,420 sq. ft., 2 bath, 2 bdrm apartment "1420 SQFT"
-
MLS®
$200,000
- INCREDIBLE SHORT SALE
South Loop, Chicago
-
INCREDIBLE SHORT SALE OPPORTUNITY
QUICK CLOSE - SHORT SALE APPROVED BY THE BANK
ATTACHED HEATED GARAGE - NEVER HAVE TO GO OUTSIDE
OVER 1400 SQFT - LOCATED AT 1917 S STATE ST.
FRONT AND REAR PRIVATE DECKS
HARDWOOD FLOORS
HUGE MASTER SPA BATHROOM
SEPARATE SHOWER AND JACUZZI TUB
42 INCH CABINETS
GRANITE COUNTER TOPS
GAS VENT LESS FIREPLACE
SMALL 4 UNIT BUILDING
BUYER WILL BE RESPONSIBLE FOR PAST DUE HOA FEES
BRAND NEW ON THE MARKET!!
Property information
Burr Ridge Village Center, Burr Ridge
-
Announcing a price reduction
on 11660 German Church Road, a 519,544 sq. ft. single story. Now
MLS®
$3,975,000
- 750,000.00 price DROP.
Property information
Unbelievably, the holidays are already upon us. We've barely enjoyed
Indian summer, and it's already time to order the turkey, invite the relatives,
and spruce up our homes for Thanksgiving. Does your pre-holiday to-do list
include painting your dining room "yam orange" to match a favorite
side dish? If so, better hope you're a home "owner" rather than a
home "renter," or your landlord may enforce a "mashed potato
beige" color scheme.
In addition to free rein on decorating, home ownership has other distinct
advantages. These days, believe it or not, that includes affordability. That's
right. Trulia's Rent vs. Buy Index tells us that Chicago ranks as a city where
it is more affordable to buy than to rent. Why?
Skyrocketing apartment demand for starters. Crain's Chicago Business
(10/31/11) reports that 2011 will be the strongest year for local
apartment-investment sales since the end of the housing boom. As a result,
landlords are pushing rents and good apartment deals are increasingly hard to
find.
Also, as consumers continue to feel less than confident about where to invest
harder-than-ever earned dollars, home ownership still represents a stable,
long-term investment. Couple that with record low interest rates and yes, even
the chance to build equity; and Chicago remains a good place to host a lifetime
of Thanksgivings.
So, even though home prices haven't been rising at a rate that makes ownership
as attractive as in years past, here's a toast to turkey and dressing amidst
your yam-hued walls, and maybe even a few bucks leftover for Black Friday.
Wishing you and yours a Happy Thanksgiving and a joyous holiday season. And
please remember that even though the holidays are here, I remain available for
your real estate needs. I'd love to be thankful for your referrals as well!
Let's say one morning you wake up and realize that, yes, buying a home is the right thing to do for yourself. You're tired of throwing away money on rent and figure that it's time to get into a home of your own. But you have reservations.
After all, if it's your first time, you've got questions. You might be a little nervous that you'll mess up, and it's normal to feel that way. You are probably spending hundreds of thousands of dollars and making the most important financial purchase of your life.
You will find that being an informed individual about the home buying process is empowering for you. Lucky for you that you came to the right place. So let's get started buying your first home!
Consider if Buying a Home is For You
Many people harbor secret fears about buying a home, and some of those fears are justified. Not everybody is cut out to own a home, and if you're one of those people, it's better to find this out now than when you're under contract.
- Renting vs. Buying
You might decide that renting is better for you than buying, because buying a home has its drawbacks. - Reasons to Buy
On the other side of the coin, there are many more benefits to buying. Keep these reasons in mind if you start to get cold feet. - Should You Buy a Home Before Getting Married?
Tips for home buying with a partner or significant other before tying the knot, plus how to handle the financial details of homeownership without plans to ever marry.
Before Buying a Home, Get Your Finances In Order
Line up your financing, set aside a down payment and study the loan programs available. By doing your homework, you will know exactly how much you can pay and what it will cost you.
- Order a Free Credit Report
Give yourself time to clean up a credit report that contains mistakes. Dispute errors. Try to reduce your monthly debt obligations now by paying down those loan balances. - Find a Lender
Check out places to get a mortgage and compare rates and fees. Start with your own financial institution, then interview a few mortgage brokers and choose a loan product you completely understand. - Determine a Down Payment
The more you put down, the lower your monthly mortgage payment. Here are 12 places to find a down payment. - Consider FHA Loans
FHA loans carry competitive interest rates, come with minimum down payment requirements and allow sellers to pay some or all of your closing costs. - Get a Preapproval Letter
Showing the seller you are already preapproved for a loan gives you an edge during offer negotiation.
Pick a Real Estate Agent to Help With Buying a Home
With so much information available online, you might wonder why you need an agent at all. But all local markets vary from one another, and a good agent can guide you by giving you information based on experience and market knowledge.
- Why Hire an Agent?
An agent with experience can help you to avoid making mistakes such as choosing the wrong home or offering too much. - Find a Real Estate Agent
Start by asking your friends and family member for referrals. Make sure you are comfortable with your agent before committing to work with that person. - Follow Protocol for Working with Agents
Here are 10 tips to prevent you from messing up or saying the wrong thing to an agent.
Learn How to Avoid Home Buying Mistakes
The best way to avoid making a mistake it to learn from the mistakes others have made. Buying a home in a desirable location is your best defense. Remember: location, location, location.
- First-Time Home Buyer Tips
Start your search online, and don't rely on print because most homes are not advertised in the newspaper. - Preview Homes for Sale
Ask your agent to look at homes before showing them to you, and tour only those that fit your parameters. - Avoid the Top 3 Home Buying Blunders
Protect your earnest money deposit by writing contingencies into your contract. Here's how to make sure you buy the right home.
Make an Offer and Negotiate Like a Pro
Although buying a home is not like buying a car, for example, you can still negotiate to get a good price.
Get a Home Inspection and Read Disclosures
Never buy a home without getting a home inspection. Most states have laws about the types of disclosures you are entitled to receive.
- What a Home Inspection Covers
Go through this list and make sure your home inspector doesn't miss anything crucial. - Material Facts
Besides disclosing lead-based paint, which any home built before 1978 can contain, sellers should notify you of major defects. - Do a Final Walk-Through
Always do a final inspection a few days before closing to make sure the property is in the same condition as when you agreed to buy it.
Closing on Your Home
Transactions generally close within 30 to 60 days after your offer has been accepted. Remember to reserve movers or a moving truck early because many people move at the end of the month.
- Home Insurance
Shop for insurance rates carefully. Often, the company that insures your automobiles may offer you the best policy rates. - Title Insurance Policy
You might think you don't need a title policy, but it's the cheapest form of insurance you can buy, and you pay the premium only once. - Home Buying Closing Process
This covers every step of the home closing process, from the beginning to the end.
Homeownership: Reports of Its Death are Exaggerated
There have been a growing number of reports announcing the death of American homeownership over the last two years. Some have said we are evolving into a rental society and even challenge the long standing belief that homeownership should be a part of the American Dream. They look at the falling rate of homeownership as proof of their point. Others say that the younger generations no longer see the value in owning over renting.
However, this past week, two news items might refute these points. First, DSNews reported the homeownership rate actually increased in the last quarter; the first quarterly increase in two years.
“After falling to a 13-year low during the second quarter, the homeownership rate posted a highly unexpected rise in the third quarter, according to a Census Bureau report.”
Then, Fannie Mae released their 2011 3rd Quarter National Housing Survey. We will cover this report in more detail on Wednesday. But we do want to mention a few findings the report highlighted. Both Generation Y (birth date mid-1970s to mid 1990s) and Generation X (birth date mid 1960s to mid 1970s) have stronger beliefs in the importance of homeownership than those of the general population.
Here are the numbers for the three major reasons to buy (as per the survey) with the percentage who believe in each reason:
1. It is a good place to raise children and provide them with a good education:
- Generation Y: 84%
- Generation X: 81%
- General Population: 80%
2. You have a physical structure where you and your family feel safe:
- Generation Y: 77%
- Generation X: 79%
- General Population: 76%
It allows you to have more space for your family:
- Generation Y: 76%
- Generation X: 77%
- General Population: 73%
Both generations also believe in homeownership as an investment. 70% of Generation Y and 66% of Generation X see homeownership as a safe investment while 64% of the general population believes so.
Bottom Line
This country’s belief in homeownership is anything but dead. The younger generations have the same if not a higher level of belief than earlier generations. As the economy improves, more people will make the move into a home of their own.
River West, Chicago
-
Announcing a rent/lease reduction
on 710-910 W Huron, a 3,500 sq. ft., 3 bath, 4 bdrm single story. Now
MLS®
$7,050 USD
Monthly
- Huge 4 bed, plus terrace.
Property information
River West, Chicago
-
Announcing a rent/lease reduction
on 1409PH-910 W HURON, a 3,500 sq. ft., 4 bath, 3 bdrm single story. Now
MLS®
$7,500 USD
Monthly
- HUGE outdoor terraces.
Property information
great split 2 bed 2 bath
• 1,150 sq. ft., 2 bath, 2 bdrm single story
-
$2,000 USD
Monthly
- WOW Hurry won't last
South Loop, Chicago
-
Highly upgraded split 2 bedroom in the heart of South Loop,
Attached garage parking, plus 200.00
Hardwood Floors, custom backsplash, all stone baths- upgraded vanities- undermount sinks- in-unit laundry, all A+ finishes!
Rent includes: Heat, A/C, Gas, Water, Doorman, TV/Cable, Exercize Room- all you pay for is electric and a land line if you want one.
Property information