FOR SELLERS

What is my home worth?

A good Realtor who sells in your neighborhood can help you determine your home’s current market value. Although there is more than one method to determine the value of a home, the most common is the completion of a “Comparative Market Analysis,” also known as a CMA. A comparative market analysis is an evaluation of recently sold “comparable” homes over the last 6 to 12 months that will summarize the sales data for similar homes in your area. This data will show you what other homes have been selling for and how your home compares to these other properties. From this data, your home’s current market value will be determined. Knowing this value will help you determine whether you’d be interested in selling or not. There is no cost to having a market analysis. Realtors provide them for free. To derive a more accurate market value, it’s recommended that you utilize more than one type of home pricing methodology as a cross reference, such as the “inflationary method,” or the “income-approach” depending on the property type. An experienced Realtor will be well versed in all of these methodologies.

How do I choose a real estate agent?

The first step in choosing a real estate agent is to seek someone who has sold other homes in your neighborhood and/or to get referrals from friends or neighbors. Selling a home is a complex transaction so you want to seek someone with experience. Number of years in the business is a good indicator. You also want someone who knows your neighborhood. Ask for a list of recent homes they have sold near you own as evidence of their track record. Once you have the name of a potential Realtor, you’ll want to reach out to them to set up an introductory meeting so you can interview them in person. This will give you a chance to evaluate them to see if they have the experience you need AND if you think you’d enjoy working with them as your advocate. If you don’t feel comfortable upon your initial meeting, it’s recommended you interview more agents until you do.

When is the best time to sell?

A good Realtor can provide you with data on values and market times to help you get a better understanding of how the market in your neighborhood is now. By looking at a graph of the “Average Sale Price” you can see if prices are heading up, or going down. You should also look at the “Average Days on Market” to get a sense of how quickly homes are selling. Although homes are sold all year long in Chicago, typically the strongest months for selling are February, March, April, May & June. The month with the least amount of housing inventory and the most buyers looking is February. Many seller are surprised to learn this. The housing inventory peaks in late May, making it a good time for buyers to be looking, but not always the best to time sell, as you have more competition as a seller. If you’re contemplating selling, you’ll want to see a “MSI” analysis (Month’s Supply of Inventory) for your property type and location. This will tell you when is the best or worst time to put your home on the market by giving you a sense of exactly how many competitors you will have and how many buyers there are at various times in the year in your area.

What are the costs involved in selling my home?

Your real estate agent or attorney can provide you with the estimated costs of selling your home. The commission charged to sell a property is always negotiable between a seller and their real estate broker and can vary by the property type and the price point.

What should I do to prepare my home for sale?

If you’re thinking of selling in the near future, it’s recommended you reach out to a Realtor to have them stop by and take a look at your property. A successful real estate agent spends hours every week showing homes to buyers and as such, they know what buyers are looking for in a home and what they are not. In general, you want to minimize the amount of personal possessions and furniture in your home as most of us have too much which can make a home seem cluttered and small. Staging your home for sale before going on the market can help you make 8 to 10% more when you sell. Buyers today are pickier than in the past. While “fixer uppers” used to be a popular choice, today’s buyers “just want to move in.” It’s all about instant gratification. Enlist the help of a Realtor or stager to achieve the absolute best results you can. I personally stage all of my properties with the assistance of a professional stager prior to going onto the market. Even doing the simplest of things to improve how your home shows and appeals to buyers makes a huge difference in whether you sell or not and also for how much money you get once you do receive an offer.

What is the difference between list price and sale price?

The list price is the asking price for a home. The sale price is what the home sells for once a sale occurs. It is the price that the buyer and seller both agree to while negotiating a real estate contract.

How much room in my asking price do I need to leave for negotiation?

The average difference between what a seller is asking for their home and what they sell it for is around 5% in Chicago, although in some highly desirable neighborhoods, the percentage is much smaller. My own two-year average for all of my properties sold is 1.8%. Pricing too high above the average negotiating margin for your neighborhood puts you at risk of overpricing your home.

How much notice will I have once a buyer requests to view my home?

Typically buyers today request showings one day prior to the day and time they wish to view your home. In some cases, you may have two to three days notice. Every once in awhile, especially in a hot market where homes are selling quickly, a buyer may request to view your home on the same day, only giving you a few hours notice. Keep in mind that you always have the right to say no to any request made. It is, however, always recommended that whenever possible at all you allow an interested party to see your home. Remember that buyers can’t buy your home without seeing it first…. and it only need one person to fall in love with your home in order to have a sale.

What is a listing agreement?

The listing agreement is the marketing agreement you sign when you hire a real estate broker to sell your home. It spells out the terms of your agreement; your asking price, the fee you’ll pay to have your home sold, the length of time of the agreement, etc.

How long does a listing agreement last?

The length of the term of a real estate listing agreement is always negotiable and varies from broker to broker and by the type of property that you have. Many real estate agents will ask you to sign a one-year contract. Don’t ever agree to this. No residential property takes one year to sell. The average market time in most Chicago neighborhoods is no more than four months and in some cases only 30 to 60 days. You do, however also need to factor in the time it takes to get to the closing table as well and this adds another 45 to 60 days on average. As such, the maximum necessary agreement time would be 6 months (which is in fact the average contract time in the Chicago). My own marketing agreements with sellers are usually for 150 days or less.

How long will it take to sell my home?

The average market time in most Chicago neighborhoods is between 30 to 75 days.  It can be less in a very desirable location and is almost never any longer than 100 days.  10)  What is my role in the selling of my home?

Your role as the seller is to work with your Realtor in preparing your home for sale and to have your house ready (clean and de-cluttered and looking good) whenever a buyer wants to see your home.  By having your house ready and allowing access to your home for buyers you’ll be doing what you need to do.  Everything else, quite frankly, will be taken care of for you by your Realtor and your real estate attorney once you have an actual sale.  

Once I have a contract on my home, how long do I have before I have to move out?

The closing date in a contract is always negotiable between the buyer and the seller and as such, can be whatever is agreeable to both parties. However, the typical real estate contract in Chicago will call for a closing in 45 to 60 days and sometimes up to 90 days. In other words, once your home goes under contract, you’ll most likely have around 45 to 75 days to vacate.

What is a “contingency?”

A contingency is anything that is built into a real estate contract as a requirement of the purchase. Common real estate contingencies are; a home inspection contingency, an attorney approval contingency or a mortgage contingency. A contingency is something that has to occur in order for the contract to proceed to closing. If a contingency doesn’t happen successfully, the contract can be cancelled by the buyer or the seller. Your Realtor and real estate attorney can guide you through the details of any contingencies and what they mean to you for the sale of your home.

FOR BUYERS

Do I need to speak with a bank or a mortgage broker before I start looking for a home?

While not absolutely necessary, it is wise to speak with a mortgage lender before you start home shopping. Don’t panic. It’s not as bad as it sounds. With less than 20 to 30 minutes on the phone or online you can get a very good idea of how much you can spend and what your payments would be at various price points. A good mortgage broker will just need to get a few basics about your financial situation and then they can tell you for up to what amount you’d qualify. It’s a good idea to get a copy of a pre-approval from them as you’ll need it down the road if you submit an offer on a property. Most sellers expect to see a pre-qualification letter accompanying any offers they receive.

Do I need a Realtor to buy a home? What are the advantages of having a buyer’s agent?

The home buying process has lots of steps and deadlines.  Having a good buyer’s agent at your side as your advocate will not only make it easier, but will assure you avoid any mistakes along the way.  When you work with a buyer’s agent, they’ll also help you determine what is a fair market value for any home you’re considering buying.  The last thing you want to do is over pay for a property and be unable to sell it down the road for what you have invested into it.  A good buyer’s agent will help you strategize to get the best price you can when negotiating an offer with a seller.  

Do I need to have a home inspection once I find a house?

Once you have an accepted offer on the home of your choice, you’ll definitely want to perform a home inspection. The inspection will identify existing physical issues with the home, electrical, plumbing or structural. As the cost of correcting such issues can be high, you want to know what you’re getting into. If something is revealed that is correctable, you can ask the seller to repair, or provide you with a closing credit toward the cost of correction. Either way, you need to know. Make sure to hire a licensed Home Inspector to perform the inspection. Better not to use your Uncle Bob for this… no matter how handy he is.

What does it mean when a property is listed as “Contingent” or “Pending?”

A contingency is anything that is built into a real estate contract as a requirement of the purchase. Common real estate contingencies are; a home inspection contingency, an attorney approval contingency or a mortgage contingency. A contingency is something that has to occur in order for the contract to proceed to closing. If a contingency doesn’t happen successfully, the contract can be cancelled by the buyer or the seller. If a property is listed as being “Contingent,” or “CTG” on a website, it means that the seller has accepted an offer with a buyer already but there are contingencies that have to be removed before the contract is final. Once all contingencies are removed, the status of a property becomes “Pending,” or “PEND.” At this point, all contingencies are waived and the buyer and the seller are just waiting for the closing day itself to transfer ownership.

What is a foreclosure?

A foreclosure is the legal process by which a homeowner’s rights to a property are forfeited due to failure to pay the mortgage. If a homeowner doesn’t resolve the past due balance, the home eventually becomes the property of the lending institution, or the bank. A foreclosure home is usually priced slightly below market value, making it attractive to buyers. A foreclosure is, however, sold “as-is” and there can be additional costs at the closing table, which is why the property is priced below market value.

How do I know if home values are going up or down in a neighborhood?

A good Realtor can provide you with data on values and market times to help you get a better understanding of how the current market in any given neighborhood. By looking at a graph of the “Average Sale Price” you can see if prices are heading up, or going down. You should also look at the “Average Days on Market” to get a sense of how quickly homes are selling as this can give you an idea of whether the market is slowing down or picking up, which could also indicate appreciating or depreciating values in the area.

How do I know if the home is in a good school system?

Local Laws prohibit Realtors from rendering opinions on the quality level of a particular school, but you can research test scores and other measures of school quality online via a variety of websites, including CPS.EDU, the Chicago Public Schools Website.

How do I know if a neighborhood is safe?

Local Laws prohibit Realtors from rendering opinions about the safety of a neighborhood, but you can research crime statistics online via a variety of websites, including chicagopolice.org, the Chicago Public Safety Website which keeps track of crimes by the neighborhood and location.

How many homes should I look at before making an offer?

There really isn’t a right or wrong answer to this question. Some people are quick to make decisions while others just aren’t. I can tell you that most buyers need to get out and view properties at least once or twice before they have a better sense of what’s available and what they truly want or don’t want in a home. Typically it’s only after seeing a few properties (usually at least 5 to 10) that buyers really start to feel comfortable enough to make an offer. Whatever number it takes for you, don’t feel pressured to make a decision until the right home comes along.

What is an earnest money deposit?

Earnest money is money paid to confirm a contract. The basic reason for providing an earnest money deposit is to tell the seller you’re a committed buyer and that you “earnestly” wish to buy their property. Assuming your offer is accepted, the earnest money will go toward your downpayment and closing costs. If not, the earnest money goes back to the buyer.

After my offer is accepted, what are the next steps?

After you have an accepted offer on a home that you love, the next steps are; 1) Scheduling your home inspection. This first week is your opportunity to have the property physically inspected for any material defects to make sure you’re happy with the condition of the home. If not, you can cancel the deal or ask the seller to make corrections. 2) Sending the contract to a real estate attorney of your choice in order to make sure that the legal provisions of the contract are acceptable to your interests. 3) Making application with your mortgage lender by supplying them with a copy of your contract to purchase a home. This is also your last chance to shop around should you want to see what the best rate and terms are that you can get for your loan. 4) After the first three steps are satisfied, you need to schedule your movers so you’re ready to move into the home once it’s yours. 5) Enjoying your amazing new life in your awesome new home!

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