Newsletter - March 2014

 What’s a Move-Up Buyer to Do? Recovering Northern Illinois Real Estate Market Poses Timing Concerns That Homeowners Seeking a New Residence Can Overcome

CHICAGO, Feb. 18, 2014 - Selling one home and buying another is never a simple task.  As market conditions change, so does the nature of that challenge.  Today, in the metro Chicago real estate market and across much of northern Illinois, the seller-buyer confronts an active market with rising prices and strong demand but a relatively limited inventory of homes for sale.

It’s a market that makes any home easier to sell if it is presented and priced properly, noted Rich Toepper of RE/MAX Unlimited Northwest in Crystal Lake, Ill.  On the other hand, it means that sellers who want to buy another home could find their choices limited and, in some instances, intense competition for the most attractive properties. 

Toepper has been seeing growing interest from homeowners in trading up to a nicer home, whether that means something larger, or with better features or a more desirable location.  One reason for the increase in move-up activity, he believes, is the realization by homeowners that trading up lets them take advantage of the fact that demand for moderately priced homes has recovered faster than demand for those with higher price tags.

“Sellers of a home worth $225,000 may be getting $25,000 or $30,000 less than they would have six years ago, but the home they then can buy today for $325,000 probably would have sold for $400,000 or more in 2008,” Toepper said.

One question RE/MAX brokers hear regularly from clients who want to sell one home and buy another is: what should we do first?  Given current market conditions, Toepper and many other brokers recommend getting that next home under contract before listing the current residence.

Following that strategy, however, isn’t without complications.  Buying before selling means buyers won’t know exactly how much they’ll get for their existing home.  It also brings up the question of whether their offer on a new home should be made contingent upon selling their current residence.

According to Tim McCaslin of RE/MAX Sauk Valley in Sterling, Ill., adding such a contingency to an offer can work against a buyer in a competitive situation, so it’s best to avoid it if possible.  McCaslin advises buyers to consider two things when making that decision.  Is the home they want to sell likely to attract a buyer quickly, and if it doesn’t, can they afford to own both their current home and a new home for a few months?    

How can you judge if your home will sell quickly?  McCaslin suggests asking your broker about the local market.  How many days are homes like yours taking to sell?  How should you price your home to assure a relatively quick sale?  And what steps can you take to maximize the appeal of you home? 

“If you’re comfortable following your broker’s advice on pricing and getting your home in shape to show beautifully, the outlook for a quick sale should be excellent,” he said.  “The only caveat is that an unusual home typically takes longer to sell than one with a traditional design.  For example, if a house has four bedrooms and 2½ baths, but two bedrooms and the half bath are in the basement, finding the right buyer may take longer than it would if all four bedrooms and two full baths were on the second floor.”

Another thing that can help make it easier to buy and then sell, according to Warren Davis of RE/MAX Premier Properties in Chicago, is to get the financing for both the purchase and sale firmly in place.

“Make sure your own mortgage financing is pre-approved.  You don’t want the financing for the home you are purchasing to fall through – especially once your existing home is under contract,” said Davis.  “And expect the same of your buyer.  If you get multiple offers for your home, you may want to choose the one that poses the fewest financing issues.  That way you can move ahead with more confidence.”

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Average 30-year mortgage rate up to 4.33%

WASHINGTON — Average U.S. rates on fixed mortgages rose this week but remained near historically low levels.

Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan increased to 4.33% from 4.28% last week. The average for the 15-year mortgage edged up to 3.35% from 3.33%.

Mortgage rates have risen about a full percentage point since hitting record lows roughly a year ago. The increase was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases. Deeming the economy to be gaining strength, the Fed proceeded last month with planned reductions of its bond purchases, which have helped keep long-term interest rates low.

The housing market is expected to deliver another year of solid gains, helped by an improving economy. Most economists expect home sales and prices to keep rising this year, but at a slower pace. They forecast that both will likely rise by about 5%, down from double-digit gains in 2013.

Government data released Wednesday showed that U.S. home construction fell in January for a second straight month, but the weakness in both months reflected severe winter weather in many parts of the country.

In a similar vein, U.S. homebuilders' confidence in the housing market declined sharply this month as the rough weather battering much of the nation keeps many would-be buyers at home, according to the National Association of Home Builders/Wells Fargo builder sentiment index issued Tuesday.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan also remained at 0.7 point. The average rate on a one-year adjustable-rate mortgage rose to 2.57% from 2.55%.

The average fee declined to 0.3 point from 0.4 point. The average rate on a five-year adjustable mortgage increased to 3.08% from 3.05%. The fee held at 0.5 point.

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 10 Tips for a Safe and Sound Home

There is little that is more important than feeling secure in your own home. While we can only control a small bit of the world around us, here’s some basic information to keep a home safe.The goal of securing your home is two-fold: protecting your possessions, but also protecting the people who live there. Security professionals advise “deter, detect and delay” tactics. These 10 tips cover a lot of ground, so keep them in mind and you will be well on the road to greater peace of mind.

Check your doors, windows and all locks: Deadbolts and secure, steel outer doors are important, as are secure windows that lock. A huge majority of burglaries are no-force entries, where culprits gain access to your home through an unlocked window or door, so check them frequently. Keep trees and shrubbery trimmed to prevent access to windows and decks on upper floors. If a door or window is in an out-of-the-way place that is easily accessible, consider securing it with bars or an outer security door. Simply placing a piece of wood in sliding glass doors or windows can prevent entry. Automatic garage door openers ensure that access to your garage is controlled. Studies show that the more difficult it is to enter the home, the greater the chances are that the burglar will move on.  

Have adequate lighting: On the outside of your home, lighted entryways and flood lights with motion sensors ensure that everyone, including you and your neighbors can see who is entering your abode. However, care must be taken to replace burned out or disabled bulbs, and to place such that there is minimal annoyance to neighbors. Inside your home, ensure that there is adequate lighting so intruders are easily visible. 

Create limited entries with a perimeter and gate: Gates and fences can provide a feeling of stable security or of paranoia, depending on how they are used. Tasteful fencing can create a feeling of “place” that provides a positive look and feel to your home, while also adding a deterrent and a delay to criminals. Limiting vehicular traffic to your property and creating barriers to individual entry make your valuables more difficult to remove, and cameras at these points of entry can more effectively capture any activity.

Be a friendly and observant neighbor: Neighborhoods with a “community watch” where each person is looking out for the next provide a sense of security. Generally people know each other and who lives where. This activity makes it easier to talk about crime and helps homeowners to solve problems. Let neighbors know that you are crime conscious, and encourage them to be so, too. Provide your neighbor with contact information if you are leaving on vacation so that they can be in touch should there be unusual or unexpected activity around your home.

Be discreet: While you do want neighbors to be informed to some degree, advertising more widely that you will be away from your home is less desirable. When seeking to find a house sitter or pet sitter, avoid advertising the dates of your travel. With an increase in social media and local email lists, people who are outside of your immediate circles could gain access to your plans and make use of that information.

Put on a good show: When you are going to be away from home for any period of time, one deterrent might be to make it look like someone is home. Often people who break in are simply looking to steal valuable items and prefer not to encounter people at all. Keep shades as they would normally be open or closed, and use timers to control lights and even music. Increasingly, “smart home” technology can enable homeowners to control the environment from a distance. Consider stopping deliveries or better yet, have someone stop by daily or stay in the home to pick up mail and newspapers, and to check on the house while you are gone.

Get a dog: In addition to companionship, a dog could be an excellent deterrent to a burglar. Barking serves as an alarm, helping to detect an intruder as well, but often seasoned criminals know how to deal with dogs by feeding them treats (sometimes laced with poison) or locking them in a room. Still, this added unknown might keep a less determined stranger away.

Get a security system: There are many types of systems with and without monitoring available. Some produce loud alarms that are designed to alert neighbors, others are silent and contact police. With the advent of inexpensive cameras, homeowners can set up video surveillance as well. While it is good to have a system in place and to post that a system is in use, beware of giving away too much information so that criminals don’t know which system they are dealing with. Typically these systems monitor entries, but many also include motion sensors. Using these systems requires some understanding on the part of the homeowners so that false alarms are not triggered. Also note, these systems require power to run, so during power outages unless there is a backup power source they will not be functional and other preventative steps will be required.

Get a safe: Using a home safe to secure valuables, guns and ammunition is an excellent idea. Consider using it to store important paperwork, like deeds, wills, other legal documents, social security cards,passports, as well as computer backups and photos. While safes are often quite heavy, ensure that they are bolted down so they might not be easily stolen in their entirety. Safes can also provide critical “delay time” – enabling police to arrive before the contents are looted.

Don’t leave your keys around: If a burglar sees a car in a garage or driveway and the keys are present, the temptation might be too much. In fact, you might be providing a vehicle to take more items than the burglar was intending to originally take! Keys to additional homes or properties are invitations, as well. Have a place for keys that is not well known or easily seen.

Having an eye for security can be like a game. The winning move is to create a home that provides you with a real feeling of security because you have addressed the issues. It isn’t paranoid to “think like a criminal” and imagine that your home is full of valuables. Take the time to follow these tips, and you can deter, detect, and delay crime in your home.

RE/MAX has been the leader in the northern Illinois real estate market since 1989.  The RE/MAX Northern Illinois network, with headquarters in Elgin, Ill., consists of 2,000 sales associates and 100 individually owned and operated RE/MAX offices that provide a full range of residential and commercial brokerage services.  Its  provides comprehensive information about the network and about residential and commercial property for sale in the region.  The northern Illinois network is part of RE/MAX, LLC, a global real estate organization with 90,000+ sales associates in 90+ nations.

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