Nov

25

Do Not Want to Sell in the Current Chicago Market? Rent!

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2250 N. Ohio's Rooftop Pool
My listing at 2250 N. Ohio which is listed for sale as well as for rent at $4,750 a month.

I’d like to tip my hat to Jeff Kerr over at the ChiTown Living Blog for pointing out this informative article in the Chicago Tribune about what homeowners need to consider when renting out their homes.

As I’ve mentioned before, this is a conversation I have with my own clients from time to time. Of the 40 properties I have listed for sale at this time, five are also listed for rent.

There are a number of benefits to renting out your home, especially in the current market, but there are also some pitfalls to be considered.

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Oct

29

Attorney Peter Marx Explains Short Sales

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Peter Marx

Earlier this fall, Chicago attorney Peter Marx came to our weekly sales meeting at Coldwell Banker’s Gold Coast Office. He had been invited to speak to us about “short sales.”

Until this year, I had never been involved in a short sale. Now, I have good friends who purchased a condo in a conversion in 2005 and have since seen the interest rate on their loan reset to an excessive rate (over 9%) and the husband lose his job. My team and I at Coldwell Banker have been trying to help them sell their condo for a price in excess of their mortgage amount but have received no offers. So, just last week, we canceled and relisted their home at a price that is more than 10% below the principal balance on their mortgage. When we get a buyer, we will work with Peter to contact their lender and negotiate a short sale.

Given that short sales are becoming more frequent in our Chicago area residential market, I asked Peter if he would consider writing a guest post for the blog that I could share with our readers. If you’re considering a short sale yourself or are just curious about this arrangement that has been grabbing headlines, you will find Peter’s post very helpful. - Jenny

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Oct

15

Making the Least of Your Property Taxes

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It’s property tax time again, and if you’ve cracked open your recent bill (or a copy of the Chicago Tribune), you know that while your home’s value may have dipped in the past year, your taxes almost certainly haven’t.

If your bill is more than expected, you might investigate the following potential money saving options:

Protest your taxes if they are higher than comparable properties in the area. You might start by calling your real estate agent to ask for help in researching what your neighbors are paying for their property taxes. Then call your real estate attorney to see if they can represent you in a protest filing. If so, know that they are typically compensated based on a percentage of any reduction obtained.

If your real estate tax bill is for your primary home, you should be receiving a “Homeowner’s Exemption.” Depending on the value of your home, this can amount to more than $1,000 in savings per year. You can verify if you are getting the exemption by looking at the Cook County Treasurer’s Website. Click on the “Exemption History” link and then enter your PIN number.

If you are not receiving your Homeowner’s Exemption, you can file a Certificate of Error with the county and get money back. Attorney Kent Novit has helped several of my clients with this process for a nominal fee. His number is (312) 332-2407 ext. 203, and his email address is novitlaw@covad.net.

If you are over 65 years old, you qualify get a Senior Citizen Homestead Break.

In the meantime, don’t forget your second installment bills are due November 2, 2008. If you miss that deadline, then penalties start to accrue.

UPDATE: Alderman Gene Schulter of the 47th Ward has released this notice regarding the filing of assessment appeal complaints for Lakeview township residents.

Sep

16

Should I Rent or Should I Buy?

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In recent months, a few of my Chicago luxury real estate clients have sold their homes and opted to move into a rental.

Their motives vary widely. Some want to put the proceeds from their sale in the bank and wait for the right home to come along. Others are in a volatile career or financial situation and are reluctant to commit until they achieve more stability in their lives. Still others are renting because they have difficulty meeting the new down payment requirements that lenders require. The decision about whether to rent or buy your next home can be a complicated one - particularly when you throw in unpredictable careers, personal relationships, and market forces beyond our control.

If your decision to rent or to buy is primarily a financial one, then you might want to check out a tool from The New York Times. They have simplified the financial aspects of the decision with their online calculator. You simply enter the variables (rent costs, mortgage rates, property taxes, etc.) and you’re shown a real-time graph of when it’s best to rent and when it’s best to buy.

The difference in costs can easily exceed tens of thousands of dollars, so this is an important calculation to make. An additional rent vs. buy calculator can be found here.

On the flip side, as a residential real estate professional, I am occasionally involved in the rent versus sell discussion with my sellers. After they have moved out and are paying the expense of carrying two homes, they are sometimes feeling some pressure. These sellers have the option of adjusting the price of their home to help get it sold, but occasionally that strategy is ineffective or would require them to drop below their comfort zone. Their home may also be saddled with the stigma of a lengthy market time which makes it difficult to attract serious prospect buyers.

In that case, I may suggest we simultaneously list their home for sale and for rent with the goal of boosting the odds of cutting their carrying expenses. Renting gives a seller the opportunity to cover some or all of their cash flow while waiting until the market for their home improves.

Before listing a home for rent, I always ask my sellers if they are prepared to lease it out for more than one year. I suggest they consider a three to five year time horizon. It is not uncommon to have to repaint or refinish floors after tenants move out, and the costs can outweigh the benefits if the term of the rental is too short. I also suggest that we time our lease so that it ends just as the market is picking up. In Chicago, the first quarter has historically been our most active selling season over the years. In an ideal world, I would love to see my leases end on the last day of December, followed by a couple of weeks of clean-up and possibly staging, and then listing no later than mid-January. That would be an ideal transition.

So, no matter what side of the market someone is on, the rent vs. buy argument can still be an important one.