Atland Group

Case Study: due diligence pays off in multiple offers

mhulett — Mon, 23 May 2011 13:24:59 +0000

Believe it or not but we ran into another multiple offer recently. These still can happen in a strong buyers market and often do happen when you’re looking on the lower end of price ranges. Which of course is the tune of the day in the real estate world. Here’s how it went down… I represented the buyers in this transaction. We went to put an offer in on a Wrigleyville condo and immediately upon notifying the listing agent of our intent, we were informed that they just received another offer, and in fact it was a relatively strong offer. I explained the pros and cons to my clients and they agreed that it was priced very well, and a strong fit for what they were looking for. So, we proceeded. Since we were not willing to go to full price, we came in relatively strong on price (leaving some room to go up slightly if need be). We also got the buyers and the property fully pre-approved in this case. I know what you’re thinking… How can u get a property pre-approved, typically it’s only the buyers and NOT the property. Not so, in today’s world a good agent and lender make it practice to make sure the building is just as finance-able as the buyer. We also offered to put all of the earnest money up front, before attorney approval period. This gives the seller piece of mind that the buyers are truly vested in the purchase. The sum in this case was $20,000. In any case, that shows serious intent. Additionally we opted for a relatively fast closing, 30 days. Since the home was empty we knew this would be ideal for the seller. All said, we were not in the lead after submitting the offer. Regardless, at the time the listing agent allowed both offers to come back with their highest and best offer. We came in now at full price with all other terms being the same. In the end we secured the property and we didn’t even have the best offer. We found out later at the closing that the other offer was indeed higher in price. Here is what made the difference – after chatting with the other agent (to try and find out any nugget of information I could on how to get an edge) I realized that the seller really needed this to close as he had just recently identified an investment property that he wanted to purchase. I immediately knew the angle – they would probably bite on a lesser price if it was close and they knew the buyer was stronger. He couldn’t afford to get 3 weeks down the road only to find that the buyer can’t really get the loan or something else had gone wrong. I proceeded to sell the listing agent on the fact that my buyer was working with an entire professional team (attorney, lender, home inspector) that I had previously worked with. I knew all these people to be highly competent and professional. It worked! Like in any industry – ego, laziness, and incompetence can kill a deal quickly. Luckily I had worked with the selling agent before so he knew me to be experienced and trustworthy. The seller saw value in this and our team. It felt like we got lucky but when I think back to all the phone calls and strategy discussions it took to make this happen, luck seemed less likely than good old fashion hard work and simple due diligence.

2 most effective things you can do to sell your home

mhulett — Mon, 29 Nov 2010 23:41:45 +0000

When it comes to selling your home there are many factors that lead to a successful sale. A few concerns that we hear from sellers are… marketing, open houses, beautiful photographs, etc. While these are indeed important, there are TWO items that you must be 100% accountable for in order to sell regardless of your property type.

1.) Price. This is the single most important element to selling your home. Check out my past blog Overpricing: the chain reaction. The bottom line is simple math: price is ultimately determined by the market, not the seller or an agent with a full bag of tricks. A higher offer price reduces the number of showings and a reduced number of showings equals longer market time. This invaribaly equals price reductions. In short, unless you enjoy all the work, inconvenience, and expense involved in properly preparing your home for showings, price it right. That means according to the market and comparable properties in your neighborhood. In a down market, you’ll likely have to price below market averages. In an up market, you can often get away with asking a little more.

2.) Condition. The way that the home presents itself is absolutely critical. A cheap price can overcome this but lets face it, who wants to leave money on the table? Now let me tell you one other secret. When I prepare a home for sale I’m always concerned about what buyers subcontiously take away from the showing. It’s the feeling they leave with. I’ve sold hundreds of homes and I can tell you right now, no agent can “talk somebody into” a home. The home positively must sell itself. My general advice is to think of your home as open, airy, and clutter free - then make that happen. Here are a few examples of subcontious items: clutter free closets – this tells buyers there is plenty of closet space and storage in the home; open up the floor plan so that there are no bottle neck areas – tight spaces leave buyers with the impression that the room is too small; or maybe even childrens toys stacked in a corner – besides telling buyers there is no storage, you just told them your not a detail person. Neatly stacked bins with labels immediately shows that you take care of your things. Perfect, now you just told them that you’re neat and everybody wants to buy a house from someone who takes care of their stuff:) Good luck!!

Short Sale & Foreclosure 101

mhulett — Fri, 13 Aug 2010 16:47:13 +0000

Many people ask what the difference is between a short sale and a foreclosure. Here it is nice and simple in 2 real world examples…

Short Sale: someone would like to sell their home but it’s now worth less than what is still owed on the mortgage. IE: Bill wants to sell his house but it’s real market value is now only $250k. He still owes the bank $290k. He is “upside down” by $40k on this property. Since Bill doesn’t have the finances to cover this loss, he now has to “sell short”. In other words, ask the bank to cover the loss. These deals can get very sticky as there are often 2nd mortgages on the home, unpaid bills, etc that all need to be settled prior to this property transferring ownership. They also have a reputation for taking some time but that is not always the case.

Foreclosure: This is when someone has already lost their home to the bank, typically due to not paying the mortgage. IE: Bill lost his job and could no longer pay the mortgage on his home so he therefore let it go into the foreclosure process. This process often takes a minimum of 6 months, sometimes up to 14-16 months.

Both can be great deals but it’s always buyer beware. Neither will come w/ disclosures or guarantees. If you plan to buy a short sale, make sure it’s already bank approved or listed with a very experienced short sale broker that can get the job done in a timely fashion. Otherwise, these transactions can take many many months to mature. This could tie up your earnest money and stop you from moving forward on other opportunities. Foreclosures are easier in the sense that they are already controlled by the bank. Some banks still take quite a bit of time to respond to offers, but many now have faster processes in place for this. Be prepared for some handy work as the homes are often left in marginal to poor condition. If you have the stomach, these can be great opportunities for the right buyer.

5 property traits that crush your home’s value

mhulett — Fri, 13 Aug 2010 16:13:27 +0000

This blog came about because I recently toured a home for sale that was beautifully renovated and exceptionally clean and well maintained. The problem was that it was right on the Metra tracks, land locked w/ no parking. When reviewing the comparables to establish the homes value, we had to significantly consider these factors. Here are the 5 most common characteristics that we find negatively effect a homes value in Chicago:

1.) Lack of natural light

2.) No parking

3.) On or very near the EL/Metra

4.) Bad floor plan / small rooms

5.) Located on a busy street

The effect on value varies as the degree to which the property is subject to the above. If your property has 1 or more of these characteristics, don’t worry - there is still a buyer for every home! You’ll just need to play up the homes strengths more, especially in the marketing and photos, and minimize the downside(s). Often these homes experience longer market times. Just be prepared for this and as always, price it competitively and make it show exceptionally!

Overpricing: the chain reaction

mhulett — Thu, 12 Aug 2010 20:46:29 +0000

THE CHAIN REACTION OF OVERPRICING YOUR HOME

Many sellers make the mistake of trying to start high on pricing, hoping to sell their property at the highest possible price, then assuming that they can lower the price down the road if the property does not sell. This can be very damaging to the end result. In fact, it’s highly counter-productive. Here’s why:

YOU HAVE A REDUCED NUMBER OF SHOWINGS

The #1 rule in selling is to generate consistent showings for the property. Overpricing results in a reduced number of showings. With little activity, your chances of selling the property reduce dramatically.

MANY BUYERS WON’T EVEN KNOW ITS THERE

Since most buyers typically look within a specific price range, you are excluding potential candidates by pricing above their interest level. Sometimes the smallest price adjustment can open your property up to a significantly larger pool of buyers.

SELLERS ALWAYS ASK “WON’T BUYERS ATLEAST MAKE AN OFFER?”

At first glance this seems like sound logic. In reality, overpriced listings deter buyers from further interest in the property because they mentally “move past it” thinking their offer and efforts would be in vain since they’d offer a much lower price anyway. That lower price as it turns out is typically a more accurate measure of its true market value. In the end it has the exact opposite effect as intended.

OVERPRICED PROPERTIES SELL YOUR COMPETITION

If you’re a seller, the best thing that can happen to you is overpriced competition. It makes your property seem like a great deal! That spurs further interest and eventually offers. So why would you want to help sell the competition?

THE CHAIN REACTION… LONGER MARKET TIMES CREATE BUYER HESITATION, LOWER OFFERS, AND A WEAKENED POSITION DURING NEGOTIATIONS.

Once buyers realize a property has been on the market for a long time TWO things immediately come to mind. 1.) What’s wrong with this place? 2.) They must be getting desperate! In addition, as trivial as it may sound during the pre-listing process, it’s important to consider the time commitment and frustration associated with long market times. It’s a significant amount of work to properly prepare and continuously maintain a home for sale.

It is imperative that the price is thoroughly researched with comparable properties in the area. Additional factors such as your competition and the current state of the market also play a large role. If your property is priced correctly, you’re taking the foremost step in selling your home for the best price possible in the shortest amount of time. Good luck!

Home sale strategy working against you?

mhulett — Thu, 12 Aug 2010 20:41:26 +0000

Marketing is great. Cooperation with the MLS and area brokers is great. Flyers, brochures, emails and open houses are great too. They all certainly help get the word out about your property. Do they help SELL your property? No, a home always speaks for itself. Every buyer from a rookie to a pro is looking at 2 things:

1.) Price

2.) Condition

That’s it. And in that order. If your home hasn’t sold then it’s highly likley that one or both of the these elements is working against you. Maybe your neighbors similar home just sold for $20k less (price). Or possibly, the paint chips and cracked tiles have turned off buyers (condition). Of course you can change these so think it through. If you don’t have the discretionary funds to make it show like a million bucks, then lower the price to compensate. There is a lot you can do with very little money to make a home show better. Cleanliness and clutter-free are the two best places to start. Priced too high? Well then it better show like a million bucks! Even then, that’s going to be an uphill battle. The moral of the story: take care of these concerns BEFORE you list the property. Any Realtor would be happy to supply you with comparable properties and talk you through them so that you are priced competitively. Likewise, they’d be happy to offer home staging tips or refer a professional who could offer even more detailed suggestions.

Single most important buyer question

mhulett — Thu, 12 Aug 2010 19:46:57 +0000

When looking to purchase a home in Chicago there are dozens of variables competing for your attention: neighborhoods, #of beds, # of baths, outdoor space, garage parking, pet friendly, laundry in the unit, price point, and on and on! To help focus the search I found that a great starting point is to ask yourself one simple question and then to pay close attention to your answers. What 3 things must your next home absolutely have before you’d even consider purchasing it? Think it through as it will likley change over the next few days. Once you’ve decided, stick to your guns. If the potential home does not meet the criteria that you have outlined as imperative, then don’t schedule a showing. It’s clearly a waste of your time and counter-productive to your search. The point is to get you focused on what you need, not what you want.

Glossary – X,Y, & Z

mhulett — Thu, 12 Aug 2010 18:29:42 +0000

Sorry, We couldn’t think of any real estate terms that begin with x,y, or z:)

Glossary – W

mhulett — Thu, 12 Aug 2010 18:27:18 +0000

Walkthrough:
A common clause in a sales contract that allows the buyer to examine the property being purchased at a specified time immediately before the closing, for example, within the 24 hours before closing.

Warranties:
Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.

Prepared by and used with the permission of the FTC.

Glossary – V

mhulett — Thu, 12 Aug 2010 18:25:30 +0000

Veterans Affairs (U.S. Department of Veterans Affairs):
A federal government agency that provides benefits to veterans and their dependents, including health care, educational assistance, financial assistance, and guaranteed home loans.

VA Guaranteed Loan:
A mortgage loan that is guaranteed by the U.S. Department of Veterans Affairs (VA).

Prepared by and used with the permission of the FTC.