Buy or Rent? Buying is Starting to Make Financial Sense Again

Originally Posted on Chicago's Real Estate Blog, The Chicago 77, June 29 2009

This week’s Crain’s Chicago Business (PDF) is reporting that the relative cost of owning vs. renting is swinging back in favor of home ownership across the U.S. and in Chicago. The Chicago real estate market is already seeing signs of this with an increase in pending home sales. There are great expectations that June’s sales numbers will finish off what should be a strong second quarter. Realtors® see this trend continuing as many of their buyers have reengaged and are actively looking at properties and going forward with offers. Tire kickers have become purchasers. As sellers have been adjusting their prices, buyers have making repositioning themselves regarding financing. Borrowers are expanding their lending options, taking advantage of the $8000 tax credit and creating greater equity in their purchase with larger down payments.

Disappointment Creates Opportunity

Roosevelt Collection, a 342 unit new construction condo building in Chicago’s South Loop is now going to be rental apartments according to this week’s Crain’s Chicago. Many new construction buildings sold as condominiums are ultimately ending up as rentals.

There is always a positive out of a negative.

The purchasers who entered into contracts on these units at the height of the market should look at this as opportunity. They now can take advantage of today’s prices and inventory. Currently on the market buyers can get new or almost new units and take advantage of historically low interest rates especially in neighborhoods like the South Loop and West Loop where the inventory is plentiful and full of brand new buildings with empty units.

To view Chicago's listings click here.

The Value of Open Houses

The ongoing debate of as to if open houses have any value. This is my professional opinion. In any transaction there many different avenues to how a buyer finds a property. The same road does not get us a contract 100% of the time. As a Realtor®, it is my job to provide my clients a 110% effort to sell their home.

According to a study that Harris Interactive® conducted on behalf of Trulia, 91% of buyers will visit open houses during their home search with the internet being their primary resource to find them. (Click here for the complete release from Trulia).

I have had success stories of selling listings through open houses just as I have through the many other tools that I use to market my listings. That is why I continue to have them week after week. Open houses are just one piece of the pie in marketing properties. It is our job as professionals to offer our clients a complete package of services to achieve the goal for which we were hired: sell their property.

Open houses create opportunity just as all of the other means that we market properties. Yes, it is also an opportunity to pick up other business as many buyers coming through have not yet established a relationship with another agent and that property is not right for them. Yes, there are weeks that few to none come through. Yes, there are weeks that there is a lot of traffic with no real bites. It is all worth it for the one that comes through and writes the offer. It only takes one.

To discount open houses as not being a viable tool would be the same as discounting any of the other means that we use as real estate agents to market properties.

Hope & Change “Chicago’s Good Neighbors”

At a dinner On May 21, the Chicago Association of Realtors presented the 2009 Good Neighbor Award winners. As I saw the recipients walk to the podium to receive their awards, the words of the evening’s emcee kept running through my head.

In his remarks, Brian Bernardoni the Government Affairs Director for the Association said, “There is a yin and yang; there is a balance the concepts of HOPE and CHANGE present – they need to work together. Without the inspiration of HOPE people will not find resources for CHANGE. And without prospects of CHANGE there is no HOPE. Developers and REALTORS® in the room know these words all too well.”

Hope and Change
They are words we heard through the presidential election as a Chicagoan worked to create hope that change will happen. Locally those words define the work, dedication and partnerships of the developers, banks, Realtors®, and in many cases the City of Chicago through its Department of Community Development. The award winning projects where scattered throughout Chicago, from North to South East to West. They were residential, commercial and mixed use renovations and new construction. Working together their work filled vacant lots, abandoned buildings, and in some cases the starting point for hope there will be change for an entire community.

Affordable Housing Without Displacement
This year’s Bruce Abrams Award winner—the program’s highest honor—was awarded to Benjamin Van Horne of Greenline Development for the Greenline Condos in the Woodlawn Neighborhood. With this 37 unit project, Mr. Van Horne achieved his goal of quality affordable housing without displacement. He was able to do this in cooperation with the City of Chicago’s Department of Community Development.

Saving a Historically Significant Building
Another winner that stuck out in my mind was one of a colleague of mine at Sudler Sotheby’s International Realty, Ron Meadows. In the Lincoln Square neighborhood where even in this current real estate market, developers are still tearing down and building new condos and single family homes, Ron saved a building built in 1893 with historical significance from a developer who was going to tear it down. He took this structure, known as the Alley House of Lincoln Square, did a total renovation and is maintaining it as a rental property in an area where there is very little rental inventory left.

Every award recipient has their own passionate story about their project. They all faced challenges. But they saw through them—all to make a difference. Project by project, partnerships bring about change throughout the entire city and hope in many neighborhoods where it did not exist before.

Mr. Bernardoni went on to say “When you INSPIRE HOPE and bring about CHANGE – you build this city. You are all winners and great Chicagoans. Thanks for doing your part.”

Orignally posted on the Chicago 77 Real Estate Blog

What Constitutes an Expert in Social Networking?

What math class did they teach "loyalty" + dollars = “experts”?

We are becoming so dependent on these sites for our “expert” advice. Is one an expert because they pay to play? How do we qualify those who we are taking advice from? When did an expert become a paid advertisement? Social networking had become the means in which we get ourselves out there. It is our new means of exposure and with any advertising there is cost involved. But when did our expertise become based on how much we pay or in this case, how much our company spent over the years.

When doing my evening round of “social networking”, I saw a posting that appeared to go out to the entire local Realtor® association calling for members to apply to be one of their “experts” on their new real estate social networking site based on shared knowledge of “experts” with hefty fees involved for the those who participated. As a big social networker who has been successful converting leads from this medium, I looked at the qualifications they were seeking, and thought I might have a chance to be part of this new venture.

Thinking I had a great resume, I applied. After all, I have been an active Realtor® in the area for a decade participating in hundreds of transactions myself representing buyers and sellers in new development and the secondary market as well as short sales. I also had the benefit of gaining knowledge from others in an agent support capacity in my company. Reporters call me and I have been published and posted internationally regarding real estate. Unpaid publications called me the “expert”.

For almost my entire real estate career, I have served the Realtor® community volunteering thousands of hours of my time for the Realtor® Association (the same one he had addressed the posting to) at the local, state and national level as an advocate on behalf of the real estate community and home owners. My years of association participation afforded me the opportunity to canvas the entire city. I received the President’s Community Service award, one of only a few. I have also been greatly involved in my local chamber of commerce in the same capacity.

I went to the online application, filled it out and inquired how long the process was to find out if I was accepted or not. The response was I am not currently being considered because he will only “reward loyalty” at this point. They are only accepting real estate agents as “experts” whose companies have done business with a company the creator of this site has.

In the posting to an association with over 13,000 members it did not specify that if the company you are with did not spend money with him, you need not apply.

Past and Present

For many weeks now, the showings on homes have increased. The potential buyers coming through listings seem to be highly qualified both financially as well as in their commitment to buying a home. Sellers have made their adjustments to the market and buyers are taking notice. As a real estate practitioner, the art of the deal keeps evolving but I am busy working with clients in the buying and selling of homes. There is no longer anytime to sit back and have the discussion what happened to the market because I am busy working. Contracts are being negotiated. This is my market indicator.

As someone who relies on the RSS feeds for news as I am running around throughout the day coming to my blackberry via Google Reader or Twitter, I see some positive market indicators and them some negative. When I sit down at the end of the day and read the postings all the way through, I see much of the negative is old news, reports that are coming out with first quarter data. In this dynamic environment, 60-120 days ago is not a measure of what is happening now. We can use some of that information as guidelines for our offers but that was then and this is now.

Agents All A Twitter About Signs

You can tell the times have changed as to how we get our information. In 140 characters or less, word of an old sign ordinance spreads like the Swine Flu.

Many, many years ago, the City of Chicago passed a sign ordinance banning signs from being placed in the public way. There are fines ranging from $100-$500 associated with this offense making each sign you put in the public way a very expensive lead.

Every so often the Chicago Association of Realtors is informed that real estate agents are violating the law either by various aldermen’s offices or members of the public. Periodically, the association communicates to its members they are violating the law with their open house signs via the communication of the current time. At first the Chicago Realtor newspaper, then the magazine. Now it is posted on their website and warnings emailed out to its members. All along there has been outreach to the designated brokers.

As a long time member of Chicago Association of Realtor's Government Affairs Committee, I was well aware of the weekly violations and complaints coming into the association as well as all of the years of ongoing outreach efforts the association does to make its members aware of all legislation that affects our industry. Most of the Chicago Real Estate community has ignored the sign law like it did not apply to them until last week.

Mary Ellen Podmolik of the Chicago Tribune article about a certain alderman and the sign ordinance posted early Friday. Within minutes many of the Tweeters were all in a Twitter about this law they claim to have never known about and how it will fringe on their business. It was spreading like a wild fire on Twitter as it kept being re-tweeted. As someone who keeps Seesmic(a desktop platform that integrates Twitter and Facebook) running in the background of her computer and is on Twitterberry when she is away from it, the uproar is still continuing days later.

What occurs to me is that these same real estate agents used the same medium they are expressing their rage in to promote their open houses they would have quality prospects coming through their listings rather than somebody who stumbled over a sign on a corner a block away. Buyers who are real purchasers have typically toured the home virtually online before coming to the property. They have downloaded the list of the homes they want to visit from a variety of sites including brokerages websites, open house portals or Googling.

The odds of a qualified buyer finding your listing is a lot better optimized/advertised online via websites, portals, good SEO, syndication and social networking than putting signs at every corner in the neighborhood that the Chicago Department of Streets and Sanitation could throw away or fine you. Is this a quality lead at the cost of $500 per lead?