NEW - THE ONLY REAL TIME HOME VALUE ANALYSIS

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@properties offers THE ONLY interactive Comparative Market Analysis (CMA) that pulls data in real time from the Multiple Listing Service (MLS). 

It is the best tool that I have come across to give you an accurate picture of the value of your home. 

Reach out to me and I will put together a CMA that you will be able to reference anytime you are curious about what the market looks like in your area.  Whether you are looking to sell or just want to stay on top of the market, this is a tool that every homeowner should have. 

Also, I am happy to advise you on things that you can do to help add value to your home for when you are ready to sell. 

PREPAYING 2018 PROPERTY TAXES

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Tax season is on the horizon and big changes are ahead – the new tax bill will go into effect on January 1, 2018. Depending on your individual situation, there may be a few things you can do now to prepare for those changes, including maximizing your 2017 tax deductions.

Under current tax law, homeowners can deduct taxes paid to state and local governments, including property, income, and sales tax.

The new law caps the deduction at $10,000, either for property taxes in addition to state and local income taxes, or sales tax.

By prepaying property taxes that would otherwise be due in 2018, some taxpayers may be able to claim a deduction on their 2017 individual income tax return that would otherwise be lost in 2018 under the new legislation.

If you and your tax advisor decide to prepay your taxes, here is a list of prepayment options.

In Illinois

  • Cook County residents may prepay the 2017 1st installment tax bill (55% of the total 2016 bill) at cookcounytreasurer.com.
  • DuPage County residents may prepay up to 105% of their 2016 real estate tax bill at dupageco.org.
  • Lake County residents may prepay up to 100% of their 2016 bill. Any balance will be billed in 2017. More information is available at lakecountyil.gov.
  • McHenry County residents may prepay a deposit of any amount toward their 2017 bill at co.mchenry.il.us. The deposit amount will be held until 2017 tax bills are issued. Any difference must be settled by the due date of the 1st Installment.
  • Will County residents may prepay a minimum of 50% and a maximum of 110% of the 2016 bill at willcountytreasurer.com.

Additional details can be found in this local news story or this local news article.

Taxpayers who fall under the Alternative Minimum Tax (AMT) will not receive a benefit from pre-paying. So before making any payments or claiming deductions, it’s always important that you check with your personal tax advisor for advice specific to your property or portfolio.

This post originally appeared on the @properties blog .

HOW TO WIN WHEN MULTIPLE OFFERS

I just found a place for myself that was everything I have been dreaming of in a home in Chicago.  It has outdoor space, a private entrance, carrara marble in the kitchen, and walking distance to the 606.  It even had things I didn't know I wanted like garage parking next to my door, 10' windows and high ceilings.  I found it on Top Agent network and they had multiple offers within hours of it being listed off market. (note - make sure if you are buying a place with an agent that isn't me you ask them how they find off market properties)

Now, I knew that it was going to be hard to beat out other offers.  When I looked at the space I had found out they hadn't found their next home yet and in this market I know that could be a very stressful thing for the sellers.  No one wants the stress of a 30 - 60 day close on the home they are selling if they don't know where they are going.  

CLOSING DATE

So, I wrote the offer with a blank in the close date and told them that they can just let me know when they find a place to buy.  I knew they were anxious to move by the beginning of the school year so I wasn't worried about it taking too long.  

INSPECTION

I also told them that while I wanted to get an inspection I wouldn't be asking for any credits.  Typically things that come up in inspection are minor things and in a competitive market like this it is best to offer a price where you feel comfortable doing a little work.  Removing your expectations that a house be in perfect move in shape is key.  

IMPORTANT - don't sign AS-IS in the contract.  If something huge did come up in inspection like a structural issue I wouldn't have been able to back out of the deal without my earnest money being at risk.  I just promised in my offer email that I wouldn't ask for credits. 

CASH OR REMOVE APPRAISAL CONTINGENCIES

Anytime you can make a cash offer it changes things.  The sellers number 1 fear is that you will not be able to get financing.  If you have a cash offer close to a financing offer typically the cash offer will always win.  

Yet, the other thing you can do is remove the appraisal contingency.  This you can only do if you have cash to pay the difference between what the property appraises for and what the contract is for if the appraisal comes up short. In a hot market like we are in there is always a fear for the seller that the appraisal will come in low.  If this happens and the buyer doesn't have the money to cover the difference between the appraisal and the offer price the deal will fall apart unless the seller lowers their price.

The comparative properties for this property where a tad lower than what I offered.  It was going to be hard for the person to get financing that offered 20k more than I did.  So even if it looked like a lot of money the probability of that buyer being able to get financing was slim. 

I made my offer as sure of a deal as I could.

THE KEY IS UNDERSTANDING WHAT THE SELLER NEEDS. 

MUSINGS ON RENTING VS. BUYING

I just had a client who really wanted to buy and as we sat and discussed her goals and where she wants to be in five years and ten years we came to the conclusion that renting made a lot more sense for her.  I want to help my clients find and create a home they love whether it is renting or buying.  If you are struggling to figure out what is best for you please reach out and I can help you analyze the pros and cons. 

RENT IS CRAZY IN CHICAGO

It is hard to find a situation where renting is cheaper than buying in Chicago right now.  A new report puts the average 2 bed rent in Chicago at $2254.  Unless you love commune living and would like a ton of roommates. Well, its not that bad, but in all honesty in most situations it makes more sense to buy then rent right now.

I just bought a new place that would rent for $2700+ yet my mortgage, taxes, HOA dues and insurance add up to $2200.  I am getting a lot more for my money by buying and if I decide to move somewhere else in the future it is a great investment property.  My cash on cash return the first year would be 17%.  Not a bad investment. 

RENT VS. BUY CALCULATOR

The best tool I have found to analyze whether it makes sense financially is this New York Times calculator.

If you are curious what you could buy with what you are paying in rent contact me and I will send you some ideas so you can get a picture on if it would make sense for your situation. 

YOU DON'T NEED A LOT OF MONEY FOR A DOWNPAYMENT

You can get an FHA loan for 3.5% down and Guaranteed Rate offers a 1% down program that is pretty amazing.  I know crazy.  Read more about it here.

Also check out this list of my favorite lenders and see the different programs they offer.  Associated Bank is offering a 4% grant right now for certain census tracks and/or income levels. This can help cover your closing costs or go towards your downpayment. 

TAX BENEFITS

You can deduct your interest, mortgage insurance premiums and your real estate taxes.  There are also more deductions to be made if you have a home office. 

For example, if you paid $4000 in interest, $5000 in real estate taxes and $600 in mortgage insurance. This is $9600 in deductions you have.  If your tax bracket is 25%, then that is a $2,400 credit against your tax liability for the year.  You owe $2400 less in taxes than you would have if you were renting!

There is also a program called TaxSmart which gives you an income tax credit for 25% of the interest paid on your mortgage.  There are income limits to this program and it has to be your primary residence. So in the above example if you were enrolled in this program you would also have another $1000 credit to your tax liability.  Both my favorite lenders Barry Schwartz of Perl Mortgage and Kyle Perks of Guaranteed Rate can speak to you more about this program. 

PROTECTION AGAINST RISING RENTS

Rents have increased dramatically in Chicago this past decade. Are you picturing yourself staying in Chicago a long time? If you buy you wont have to worry about being priced out of the neighborhood you have come to love. 

FORCED SAVINGS

This is great if you are not good at saving money.  Buying is a way to force yourself to save.  As you pay off the balance of your mortgage you are building equity in your home.  Plus if you buy right in a growing area your home will continue to appreciate giving you even more equity.  

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MORTGAGES: WHAT YOU NEED TO KNOW BEFORE YOU START YOUR HOME SEARCH

The first and foremost thing to do is to meet with a lender and make sure you have all your ducks in a row.  Sometimes we have things in our credit that we can make fast adjustments to, like paying off a credit card, that can significantly impact our credit score.  Taking care of these things ahead of time will position you to get the best mortgage terms possible.  Even if you don't want to buy this year it doesn't hurt to speak with someone so you are ready when the time comes.

A good lender will take time to fully understand your goals and find you the best loan for you without over extending you.  Just because you qualify for a $500,000 house doesn't mean that it is a smart idea. No one wants to be house poor and have to say no to vacations and nights out because their mortgage is too high.  Your lender will be able to help you figure out what monthly payment with mortgage, taxes, insurance and HOA dues will be ideal for you and what price point range we need to be in when we start looking for your new home.

You also will need a pre-approval letter to put an offer in on any place you find on your home search so this is a must before you even get started.  In many areas of Chicago right now you have to be ready to put an offer in the day the house goes on the market or you are going to miss out.  

TIPS:

Since mortgages are so heavily regulated the qualifications are largely the same. Going with a larger mortgage broker typically opens up more options with not only loan programs but down payment assistance programs as well.  Check out my list of favorite lenders here. 

DID YOU KNOW?

You only need a credit score of 580 to buy.  

You can buy with as little as 1% down. 

CLOSING COSTS EXPLAINED

WHAT ARE CLOSING COSTS?

I have found that even with my experienced home buyers closing costs can be a source of confusion and unknown and this doesn't have to be.  While somehow it is impossible to have an exact number til right before you close you can come up with a pretty good estimate of what they are going to be.  

CLOSING COST BREAKDOWN:

TITLE CHARGES AND TRANSFER TAXES:

Title Company Charges (sellers choice) - $1000 - $2000

City of Chicago Transfer Tax - $7.50 for every $1000 purchased ($2,250 for a $300,000 place)

State of Illinois: $3

LOAN COSTS:

Loan origination fees (this is the cost of getting a loan) - $1400-$2000 (Barry Schwartz at Perl Mortgage waives half his lender fees and is amazing)

Appraisal (depends on property type) - $400-$800

PREPAID ITEMS & CREDITS:

You will have to pay for -

Mortgage interest for the remaining days of the month you close in

Homeowners insurance for a year

3-5 months of real estate taxes (goes into an escrow account with your lender)

3-5 months of HOA dues (goes into an escrow account with your lender)???

You will receive a tax credit from the seller for the portion of the year they were still the owners. This is because you will be paying this years taxes next year as our bills in Chicago come after the year that the taxes are accrued. 

OTHER COSTS:

Attorney - $450 - $800

HOW CAN I PAY FOR CLOSING COSTS?:

If you do not have enough money for your down payment as well as the closing costs you can sometimes negotiate a credit with the seller to help you cover your closing costs. The amount you can receive in closing cost credit at close is dictated by the type of loan that you are getting.

For a conventional loan

  • Less than 10% down you can get up to 3% of purchase price.
  • With 10-25% down you can get up to 6% of purchase price.
  • With over 25% down you can get up to 9% of the purchase price.

For an FHA loan that requires a minimum of 3.5% down you can get up to 6% of the purchase price.

Here are examples for a $180,000 place , a $380,000 place and a $700,000 place.