Being Negative or Being Honest?

In a recent conversation with a client who wanted to become involved in a transaction that I felt he did not have the wherewithal to close in today's current lending environment the client told me he wanted to stop hearing the negatives. I should focus on the positives. What can be done?

Priding myself in being a solution oriented Realtor, I thought about this. I called several real estate and lending professionals gave them this client's scenario. My first instinct was to refer my client to another agent who might be better able to help him with his purchase. The second group of calls where to lenders to verify that my thoughts on the viability of how he thought he could finance properties. Both the lenders and real estate agents confirmed what I had expressed to my client.

I read a blog this morning about no listing is a bad listing. One of his points was that the agent who says this is because they lost the listing to another agent just has sour grapes. I have lost very few listings to other agents. Of recent, many of the listing appointments I have gone on have decided not to list now because of they financial circumstances do make sense in this current market. We then focused on positioning themselves for the future. The few listings I have lost to other agents have been listed at considerable higher prices than I advised. The other agents either where more willing to take the listing at a price the market could not bear or told the sellers what they wanted to hear.

Whether the news is good or the news is bad, I never like to sound like a "Debbie Downer". I just try and relay my professional opinion and advice in the best way I know how for my clients. Many times it is looking at what they can do either in the short term or long term. It is finding the answers. Unlike in the past where money was flowing from the banks, there is not always immediate gratification.

As a Realtor, our clients hire us not to tell them what they want to hear but for our honest professional opinion. I guess it is all in the delivery but in some cases there are cannots and no solutions available unless the client can come up with the cash. Sometimes that is the only solution.

The Changing Dynamic of Negotiations: The Quality of the Seller

In the past real estate agents always entered into negotiations with the perspective that buyers and sellers have different points of view. For sellers who bought their homes in the last years, they are looking at the same issue that the buyers are looking at: How much is the check going to be that they have to bring to the closing table?

Home Sellers
It seemed to me that over the past year or so sellers where jumping on the short sale bandwagon. Recently it seems that if they have to sell they are opting to write a check at the closing and rent for a while until they regroup and position themselves to be homeowners again.

Home Buyers
In the past weeks home buyers have been going forward submitting offers. Very different than just a few months ago, they are not throwing out "low ball" offers. Buyers are working with their Realtors® and strategically putting together offers. More importantly than what the active comparable properties on the market are they are taking into consideration the last closed as well as pending sales. Those pending sales could very well be the closed comps when it comes time for that buyers appraisal. No one wants to get into the situation of a property not appraising for the agreed upon purchase price.

It is no longer what the price the seller wants to get for their home or what the buyer can afford. It is putting a qualified buyer together with a qualified seller at the closing table.

What These Means to Realtors
Rather than quickly getting to agreeable terms, real estate agents will be going up and back between the parties as each side carefully reevaluates their position with each counter. It will be our negotiating skills as professionals to get the buyers and the sellers together on price and terms that can both handle. We need to continue to be an active party to the transaction through the closing.

Chicago: Still A Great Investment

Over the past year or so the Chicago 2016 Olympic Committee under Mayor Daley's leadership has been running around putting a funding package together to move Chicago forward to make it "Olympic Ready". Being the knocked out in the International Olympic Committee's first round stunned most but everyone has to remember that Chicago is still the same great city that made it to the final rounds.

All the same reasons that so much private money was raised to fund the Olympics had they happened remain as to why Chicago is still the same great city for moving many of the plans forward. We obviously don't need the game venues but we look at the opportunities for jobs, housing and transportation. The redevelopment plans of many of the neighborhoods need to just be tweaked but are still viable.

Chicago already is one of the best cities. We need to continue to grow our commercial, residential and tourist opportunities. If you have never been here before, explore Chicago.

Chicagoans should remain as resourceful as they have been in the past and move forward, not stop. We need to leave the door open and work towards so many of the other global opportunities we can bring to the city.

Low Ball Offers: Still Offers to Be Negotiated

One of my observations in this current market is the difference between the complainers who seemed to be challenged in getting anything to close and the problem solvers who look at the challengers as opportunities. You are successful or not. There is no longer an in between.

There has been a lot of moaning and groaning about low ball offers. If you don't get the offer there is no opportunity to turn it into an executed contract and eventually a closing. If the buyer's agent can get his client on paper and an earnest money check they now have an emotional attachment to the property.

It is the seller's agent job to take the offer and get their client to counter the buyer. In some cases it is a matter of getting the seller to be realistic to the value of the property today. In other cases it is going to be keeping the buyer engaged until they get to terms the seller will accept.

It is called negotiating. That is why buyers and the sellers hire real estate professionals. We are the middle men that take the emotion out of the negotiation and get the job done in the best interests of our clients. Not every offer will work. Not every one will close. It is not where you start it is where you end up: The closing table.

The Chicago 77 - Chicago's Neighborhoods starting with Edgewater

For many months I have been writing about market updates and observations for the Chicago 77 Real Estate Blog.

The blog was started by Rod Holmes to speak to Chicago's real estate market. Rod is a partner in Chicago Style SEO working primarily with real estate firms to improve their Internet marketing. The blog name comes from the 77 official community areas that make up the City with Big Shoulders. As I was writing my update for Monday, it occurred to me I have never really told the stories of any of these communities, many in which I have lived, worked in and enjoyed all they have to offer.

As an active member of the Goverment Affairs Committee for the REALTORS®, as well as chairing the committee on and off throughout the last decade, I have had the wonderful opportunity to visit all 77. I have gained great insight through Brian Bernardoni, the Govermental Affairs Director for the Chicago Association REALTORS® driving and walking the streets, visiting with members, businesses and residents as well as the local alderman.

Next week I will be taking on that leadership postition again for another year. I look forward to getting back to Chicago's gems again, its neighborhoods,

Today, my first neighborhood story was posted. I started with number 77 first and will be zigzagging through the city over the next months. Please read my short story about the Edgewater neighborhood.

Price Changes Continue to Drive the Market

In the first week of the Fall 2009 real estate market 26% of the homes currently listed for sale in the United States had price reductions according to Trulia. This is the fourth month in a row that there has been an increase of price reductions taken. Locally, Chicago's active listings saw an average price decrease of .4% last week. List prices are down overall 18.5 % compared to last year.

With sellers aggressive sending out the message they want to sell by lowering prices buyers have been re-engaging in the market place. Many Realtors®are getting more showings on the listings resulting in multiple offers in some cases. With the decreases in the price of market rate properties, many buyers are opting not to go after distressed properties to avoid issues that can arise in short sale and foreclosure transactions such as undetermined closing dates and the cost of fixing up the properties.

Some sellers are opting to remove their homes from the market rather than sell at a further reduced price. The question remains as to how long will they have to wait it out. A few who have to move are trying to rent their homes in an over saturated rental market. Rental pricing is not always meeting the monthly expenses on the properties.

If the property is priced more than that local market can bear it still won't sell even with the price reductions. When putting together offers, buyers and their agents are basing it all on the last three closed comps in the last 90 days.

To follow Chicago Area Listing Inventory and keep up to date on new listings and price changes click here

Chicago’s Fall Market 2009: Buyer, Seller, and Agent Expectations

The week after Labor Day traditionally marks the beginning of Chicago’s fall real estate. As this has been a period of non-traditional activity, I have thought carefully about what are my expectations. The strengths and weaknesses in the marketplace will depend on what type of property in what area at what price. There is no blanket citywide answer. The one constant about Chicago real estate is that it is local to the building, the block, and the neighborhood.

Buyers
Overall there will be fewer home buyers out there than in years past but more than we have seen in the first months of this year. The majority of buyers have gotten themselves in a stronger position financially, coming into the transaction with larger down payments or just paying cash. Those who have the wherewithal to purchase are now actively engaging. These buyers have the opportunities to take advantage of short sales and well priced homes. If they are contracting to purchase a short sale they must have a clear understanding, no matter how financially qualified they are to buy, that the transaction is controlled by the sellers’ lenders.

The strength of the lower end/first time buyer will depend on how the government reacts to the rising default rates on Federal Housing Authority (FHA) loans as reported in the Wall Street Journal. If FHA is forced to tighten its guidelines it will impact a large number of new construction and conversion condominiums which have typically been entry level products. FHA loans became popular with the demise of subprime mortgages, enabling purchasers to get into homes with only 3.5% down payments.

Sellers
Regardless of market conditions it is still about the space. If the space works for the potential buyer then pricing becomes equally important. Over the last months home values have been leveling off. With that said, overall values are significantly lower than in years past. A home’s value is based on the last three sales in the last six months of comparable properties. Because of specific areas of high inventory levels, high rates of default, and foreclosure there are still pockets of the city that will continue to see devaluation.

What you paid for the home factors into your decision to list. Can you afford to sell it now for the current market value or do you have to sell? If you have to sell, will it result in a short sale? Most listings will not get many showings but each and every one is an opportunity.

REALTORS®
There continue to be far fewer of us. It is down to 10% of real estate professionals doing 90% of the business. To get a transaction closed is a combination of the years of expertise, number of transactions, and the experience of working as a REALTOR® in this perfect storm of the last eighteen months. These are the agents who have the skills to bring the offers, get them negotiated, and get a higher percentage of successful transactions in an environment where many contracts never get to the closing table.

The marketing of properties has changed as quickly as the real estate market itself. It is no longer about the Sunday paper, the glossy magazine ads, and entering listings into the MLS. It is all about Web 2.0 and social media. Knowing how to use the brand your brokerage offers, supplemented by the brand you have created for yourself as an agent to get your listings the greatest exposure. A professional agent must know where listings go and how to get them optimized. Saying, “the listing will go into the MLS and will be on the Internet” is not providing a service.

With a decade of experience as an active REALTOR® I am optimistic. It is about overcoming objections, finding solutions, and understanding how to market. It is also gaining knowledge from my transactions as well as from the expertise of my colleagues. It is about constantly educating myself to accomplish what I am hired to do: the sales and marketing of real estate.