Eric Marcus

In 2007, Chicago Association of Realtors (CAR) made a big step and switched from the Supra lockbox system to the Sentrilock system.  CAR recognized that very few city agents were using the lockboxes or the remote Supra keys.  In 5 years of showing homes in the near north side neighborhoods of Gold Coast, Lincoln Park, Lakeview, Bucktown, Wicker Park, Lincoln Square, Old Town, South Loop,   I never got the chance to use the little Supra key remote to open a lockbox and get the keys to a home.  

The new Sentrilock system has several nice features including one that allow access to buyer agents that don’t have Sentrilock keycards.   Its time for Chicago listing agents to start using them!

It certainly is a positive service to your seller when you show the home yourself.  In my first few years as an agent, I appreciated that the other agent showed the property because we generally don’t get the chance to preview homes before showing our buyer clients.  However, after a few years in the business, I discovered that many of my client purchases were often IN SPITE OF the listing agent’s direct interaction rather than DUE TO the listing agent’s interactions with my buyers. 

My biggest headache is when I call to schedule a Saturday showing on the prior Wednesday and the listing agent tells me they are out with a buyer all day and cannot show the property at all.   That is a disservice to their client that I am sure their client rarely knows about.  I am sure this listing agent-client conversation does not occur very often,  “I am busy with another client all day Saturday, so no one can see your house.”  What if I have an out of town buyer that is going to make a decision over the weekend and will miss your house if I don’t show it then?   

I know there are certain circumstances where the seller will only allow the listing agent to show the house or where its not practical to put 20 keys to a multiunit building in a lockbox.  However, I certainly don’t think its necessary for every property in city to be shown by its agent, when agents around the country take advantage of various secure lockbox systems. 

In this market environment when every showing is precious, I highly suggest you take advantage of the Sentrilock system.  It allows you to assign a specific one-day code to a specific agent if the buyer agent does not have a Sentrilock keycard.  If you don’t use this system or other safe method for getting keys to buyers agents then you are not likely working in your clients best interest.

One of my clients is moving out of the country.  We sold his unit and took some video of the furniture he has for sale.

Contact Dave directly at 312-804-6016 or at Davpppr@yahoo.com if you would like to see any of the furniture.  All good stuff.

I have been encouraging many of my clients to refinance over the last couple of months.  Many are successfully saving hundreds of dollars per month! A few have been told they cannot refinance because they do not have enough equity in the property.  They may have originally financed 95-100% and/or the property value has declined.

This week new Fannie Mae refinancing guidelines came out that will allow many, many more borrowers to refinance. 

Read the Making Home Affordable Q&A and it may shed some light on the situation.  If you are carrying a loan above 6% or if you have an adjustable rate mortgage and would like to lock long-term rate, you should definitely consider a refinance.   Call your mortgage broker right away to take advantage.  If you need a referral for one, I can give you one as well.

Also, if you know anyone else looking to purchase a home in Chicago, take advantage of the rates near 5%, low prices and a potential $8,000 tax credit, ask them to give me a call.

Eric Marcus, ESM Realty 773-244-1110
Your Real Friend in Chicago Real Estate
http://www.esmrealty.com

 “When others are greedy be fearful, when others are fearful be greedy” - Warren Buffet

Why is this a great time to be a buyer in Chicago?

I’ll give you five excellent reasons:

1.  Choices of homes are greater than ever before. In Chicagoland there are 10% more homes on the market than at this time last year, and 60% more homes than at this time in 2005.

2.  The 4^th quarter (October-December) is always the slowest quarter of the year. With so much on the market, you are going to get a great deal on a property without much competition from other buyers.  Many sellers are looking for any reasonable offer.

3.  Rents are going up all over town. After years of stable rents, landlords have finally been able to raise the rents and that trend should continue for a few years. If you continue renting, you are going to end up throwing away an increasing amount of money every year.

4.  Interest rates are relatively low. 6.5% for a 30-year fixed mortgage is at the lower end of the spectrum for rates over the last 25 years. Its been lower but these are great rates. If the rates go down, more buyers will be in the market and you will have more competition for places.  Be prepared to put 15-25% down or more for investment property.

5.  Sellers are more negotiable than ever! In prior years it was common to pay very close to the list price or higher to purchase a place. In the last few weeks my buyers have been signing contracts for prices substantially lower than list price and even lower than prior sales of comparable properties.

Give me a call at 773-244-1110 to talk about the perfect home for you. Go to my website at www.esmrealty.com to see testimonials from other buyers and you’ll see why you should choose me to represent you on your next purchase. 

Hello!  I always advise my clients who purchase condos to make sure that they get insurance for their unit because the condominium association insurance policy usually does not cover the contents of your unit.  

I have learned in the last couple of days that you also have to be very diligent about what you are getting for your insurance.  Yesterday I spoke to Kevin E., a buyer of one of my listings, whose building burned down 6 weeks after we sold him the unit.  I asked about his insurance experience because I knew his plan was to remodel the kitchen shortly after closing.  He told me that he literally received the policy in the mail the day of the fire. 

When Kevin reviewed the policy, he saw that his insurance agent only gave him the most basic coverage even though he answered a 100 question form explaining that he wanted more extensive coverage.  The basic policy only covered about $30,000 in damages.  The demolition and cleanup of his unit was $7,000 and the cost for his clothes to be professionally cleaned was $3,000, leaving him $20,000 to replace all of his belongings.  His new kitchen had cost him $20,000, so everything else including about $15,000 for wood floors alone will have to come out-of-pocket. 

Kevin said the basic insurance policy cost about $500/year while full protection would have cost $200 more.  He is in battle with his insurance company since he requested more coverage, but the agent gave him less.

The bottom line is to review your policy and your association’s insurance policy to see what is covered and what is not.  When in doubt, over insure your property with the additional riders because they don’t add much to the cost of the premium compared to what it will cost if you have a major loss.  Call your agent right away and find out what you need to do to get the maximum coverage. 

Please pass this knowledge along to anyone that you know who owns a condominium; it could save them a catastrophic incident down the road.

As always if you know anyone looking to buy or sell real estate, please tell them to give me a call.  http://www.esmrealty.com

The latest weekly numbers are out for the City of Chicago and the market is continuing the weakness it experienced since last fall.  

The number of single family home sales fell 43% vs. the year ago period and 51% vs. the 2006 period.  Condo sales were down 31% vs. last year and 39% vs. 2006.  Multi-unit sales are down 64% from last year and 75% from 2006. 

There is an interesting divergence between prices and sales on the condo side of the market.   The median sales price for condos has actually been increasing.  This means that the people who are buying are spending more than they would have before, my best guess is they are getting something much nicer for the money.

Going forward I predict that the sales decreases from last year will not be as steep since the mortgage rate decreases in January should start showing up in the March numbers.  Speaking with other agents in the area, most agree that February has had a definite pick-up in activity vs. the last several months.  Once our brutal weather warms up, the number of homes that sell should increase. 

The big question is how much inventory will come on the market in March.  I know I have a lot of sellers waiting on the sidelines until the weather gets better.  I anticipate the number of listings to go up by 20% by the end of March.  It remains to be seen whether there will be enough buyers to meet the increase in supply.

If you ever would like to discuss a particular Chicago neighborhood, feel free to contact me at

esmarcus@sbcglobal.net

Type 1= Single Family DetachedType 2 = Single Family AttachedType 3 = 2-4 unit Buildings

Due to all the recent activity with interest rates, I have received many questions about refinancing from my clients who have bought over the last few years.  Since you may be thinking about refinancing I thought I would share some of the things I have discussed with those clients.

1.  The Federal dropped interest rates 1.25% over the last 10 days, does that mean mortgage rates dropped by 1.25%?

The answer is a definitive no. When the Federal Reserve (the Fed) drops interest rates, they are dropping interest rates on what is called an overnight lending rate.  That means the rates will drop for short-term loans.  Since a mortgage is typically a 30-year instrument it does not drop in lockstep with the Fed rates.  In fact yesterday, when the fed dropped the rate 0.5% the mortgage rates were up about 0.125%.  Today they are back down about 0.125%.

2.  Is there a better indicator of what mortgage rates are doing?

If you track stock prices or anything like that online, you can also track the 10-year Treasure Note yield (See the link below).  If you add 2.125% to whatever yield that is, you should be close to today’s 30-year fixed interest rate.  Note that the $2.125% add-on is what is has been for the last few months, but a year ago it was more like 1.5%.   The higher margin is due to the fact that mortgages are seen as much riskier to lenders than they were a year ago.

http://finance.yahoo.com/q?s=%5ETNX

3.  My friend got 5.25% last week on a 30-year fixed rate mortgage.  Why can’t I get that today if the Fed lowered rates?

If your friend locked that rate in on the day (or part of the day) the market got that low last week, he/she was very lucky because the mortgage rates jumped up almost as fast as they dropped.  See the chart for the last month on the link above and it will become very clear.

4.   So is this a good time to refinance? 

Every situation is different and the rules have changed dramatically over the last months (and still change every day!) over the types of programs that you can use based on your credit, downpayment amount (or current equity in your home) and the value of your home.  I suggest calling your mortgage broker to discuss this as well.

Last week Caryn and I locked in a rate for an investment property that was 1% lower than the rate we got in the fall when we purchased the property.  So we are refinancing to save $120 per month.  We are using a slightly higher rate so that we will avoid closing costs in case rates go down more and we want to refinance again.  However, we are still sticking with the 5-year ARM that we have that readjusts in April 2009 because the rate is still much lower than what we can get in the market today.

5.  None of this makes sense to me, can I call you to talk about it? 

Of course!  This is one of the many things I love to talk about to help my clients make the best decision they can with the information that’s available.   It’s best to call my office phone at 773-244-1110 and I will get back to you by the end the day or first thing the next morning.  Feel free to pass this along to anyone else you know that is having questions about refinancing.

MARKET UPDATE

Statistics above provided by the Chicago Association of Realtors

Type 1s are single family homes

Type 2s are condos

Type 3s are multi-unit buildings (2-4 flats)

Eric’s commentary:   The number of single family homes and condos coming onto the market is less than in previous years but not as drastic as the reduction of the number of sales taking place.  However, the number of multi-unit buildings coming on the market is still increasing while sales of these buildings continue to plummet.

Sales volume last week was down nearly 70% from 2005 levels for single family homes and 50% from 2005 levels for condos.  For multi-unit buildings there is barely a market - sales are down 78% from 2005 and over 53% from 2006 levels.

It’s interesting to note that the median sales prices are holding steady for condos and houses but declining (finally!) for multi-unit buildings.   I think median sales prices are staying strong in condos and homes because people who decide to buy tend to decide what they want to spend for their homes in advance.  However, now they are getting something much nicer for the same amount of money than they would have over the last couple of years.

Regarding investment propeties, prices (and the corresponding monthly payment) have been way too far out of line compared to the rents properties were attracting.  I think the decline in prices we see will continue for the pure investment properties until the rental market catches up to the prices.

If you would like to discuss any of my observations or discuss jumping into the best Chicago buyer’s market in years, send me a note at esmarcus@sbcglobal.net.

Lakeview is geographically bounded basically as North of Diversey, South of Irving Park, East of Damen to Lake Michigan.  Within that larger zone, there are several different mini-neighborhoods, East Lakeview, Central Lakeview, Southport Corridor, Roscoe Village, and Wrigleyville to name a few. 

In spite of all the gloom and doom in the news, properties in this area have maintained values of the last year. 

I analyzed sales from the first 8 months of 2006 and sales from the first 8 months of 2007 and came up with the following for single family homes and condos:

In the 2007 period, the number of homes sold was down significantly from 2006.  1,551 condos and 82 single family homes have sold so far in 2007.  In the same period in 2006 1,869 condos and 118 single family homes sold.  2007’s activity represents a 17.8% decrease in volume from 2006.  Perhaps this is why so many people think the market is bad.  There is simply less activity from the year before.

 However on the pricing side 2007 average home prices are exceeding 2006 in almost every category albeit only slightly.   The average 3 bedroom condo sold for $545,689 in 2007 vs $539,507 in 2006.  The average 1-2 bedroom sold for $312,382 in 2007 vs. $309,778 in 2006.  The average 4 bedroom single family home sold for $1,191,263 in 2007 vs. $1,010,695 in 2006.  

The category that seems the most affected by the market slowdown is the 5+ bedroom market that has had a 36% decrease in volume and the average price has declined from $1,721,686 in 2006 to $1,573,341 in 2007.   There at 59 5+ bedroom homes on the market as of 8/19/2007 which would represent an 18-month supply of homes at the most recent sales pace.

What this means is that homes in good condition are selling for steady prices compared to 2006.  Since there is a significant decline in the volume of sales, I believe that units that are not updated to today’s standards are not selling as well and therefore are not dragging down the price of homes actually sold. 

If you are thinking about selling its probably a good idea to look around your home and to go ahead and update the things that you know need updating to make your home attractive to today’s buyers.   Changing to stainless steel appliances and granite countertops in the kitchen are two EASY things you can do to make a quick spruce up to your home.    Replacing worn carpeting and painting your home a neutral color are less expensive things but sometimes more difficult things you can do to dramatically improve the odds of selling you home for a good price.

If you ever would like me to check the condition of your home to get it ready for sale, please feel free to call me at 773-244-1110.  

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