Homebuilder ratings

Here's a JD Power survey rating Chicago area homebuilders.

Congress tackles on the "Housing Bubble"

Take a look at the various testimony from the Senate Banking Committee here on "The Housing Bubble and Its Implications for the Economy." All the written testimony is posted in PDF.

Paying on time to lower mortgage rate

Saw an interesting mortgage product written about recently...might be worth a look for your or your clients. It's a fixed-rate mortgage that allows for significant rate reductions if you pay on time. HSBC has a version that allows for up to 10 reductions of up to 40 basis points each over a 10-year period.

Here we go with 4.0!

I’ve been to a presentation or two and read some decent reviews of the new Multi-Board Residential Real Estate Contract 4.0 put out by the Illinois Real Estate Lawyers Association. If you’re an IL Bar Association member, take a look at the August 2006 Real Property newsletter from the Real Estate Law Section Council. If you’re a lawyer practicing in the real estate field in the Chicago Area, take a good hard read of the Contract because there are some substantive changes from version 3.0 and you likely need to be changing some of the ways you do things. My thoughts…

Condo/Townhome parking space. Note lines 16-17 of the Contract that allows for the Seller to choose deeded space, limited common element or assigned space. If you’re representing Buyers, be vigilant on this! I’ve heard of pending attorney malpractice cases that have arisen because of Buyer’s lawyers not nailing down the status of parking on a condo unit and getting surprised at a closing where we find out that Seller did not intend to sell his parking place.

Personal Property. Note the all important “Outdoor Playsets” language has been added to the real property list. Also, there’s an Items NOT included space. All joking aside, I had a great playset issue last summer which the Contract was silent on the issue and yet the Buyer wanted it (we represented Sellers). So we took the position quickly that this was personal property and asked the Buyer’s attorney if they wanted to buy the playset because the neighbor was willing to buy it for $500. Buyer ended up paying some $400 to $500 for it. Some of these fixtures vs. personal property issues are great opportunities to make your client some money.

Attorney Review and Professional Inspection. Note on each of these that if there’s no agreement within 10 days the default language says the Contract is null and void. This probably saves a step. Now if there’s not agreement after 10 days the deal’s dead without the need for a termination letter.

Homeowner/Flood Insurance (paragraphs 12, 13). New language allows a Buyer to opt out of the Contract if they can’t get insurance on a place within 10 days of acceptance. I would suggest that in your practice, you need to be telling your Buyers up front now to contact their insurance agent immediately to keep this opt-out viable. The old “bring proof of insurance” to closing won’t give you an out under this contingency because the 10-day window will be gone. A similar 10-day window exists for a Buyer IF flood insurance is required. To clarify, the flood insurance contingency allows a Buyer to get out of the contract if flood insurance is required, period.

Seller representations regarding special assessments & Special Service Areas (paragraph 21). This language I suppose is potentially helpful to a Buyer in that Sellers have a greater responsibility of disclosure. I almost think it goes too far and puts too great of a burden on Sellers. Frankly, unless you’re on your condo board I think most condo owners aren’t going to be too aware of any “proposed/pending” special assessment until the need to pay for it. Re. the Special Service Areas, the language might be helpful. I suppose that too often someone might not see this until they get a title insurance commitment at which time it might be too late to stop the deal.

Closing Cost Credit. Note paragraph 33 allows for this figure to be included clearly in the Contract versus the old policy of scribbling a credit amount on page one of the Contract.

Loan Status Disclosure. This new disclosure requires a Buyer’s lender to report on Buyer’s loan status with different status choices: Prequalification w/o credit review (or with), Pre-Approval, Approval. This is useful, IF USED (Get it from your Buyers!).

Dig through a copy yourselves...the items I've listed are only the changes I find particularly relevant. There are more!!

Good article about lawyers' roles in real estate sales

Any lawyers out there who are not ISBA members might be well advised to pick-up a copy of the August 2006 Illinois Bar Journal...there's a good lead article regarding lawyers' roles in real estate statewide...here's the link (not sure if you must be a member to access). The piece provides a nice discussion contrasting the parts of IL where attorneys are typically involved in residential real estate versus much of the state where that's not the case.

Much of the discussion is the typical conflict between lawyers and the one-stop shopping that many of the big lenders and/or Realtor groups are trying to pitch. I found the discussion of the ethical concerns lawyers face when they only participate at a very limited level (deed preparation only) quite interesting...probably something you should avoid as counsel.

Commissions to agents...

Here's a link to Mary Umberger's September 10, 2006 column from the Trib. She piggy-backs nicely on my 9/5/06 posting (maybe she reads the blog) and quotes some additional data in finding that real estate commissions are more accurately closer to 5% on average; not 6%.

Back to blogging

Sorry for the dearth of posts recently. Along with the usual busyness that accompanies our legal practice, I've actually been out on the conference circuit for the IL State Bar Assn. discussing...yep, you guessed it, BLOGGING!!

More bashing of traditional real estate agents

Take a look here for another piece from the NYTimes discussing some of the difficulty various consumers have found when using the "refund" real estate agents (Redfin, Ziprealty, Buysideinc.com). The piece doesn't really contain any new analysis...I've posted on it before and the WSJ had a thorough piece on the phenomenum some two months ago.

The piece of the story I haven't seen reported is one I find in my personal experience representing people buying/selling real estate as an attorney. That is, most of the traditional agents I've worked with on my last few deals haven't been charging 6% commission anymore. I've seen as low as 4% on a listing agreement I reviewed last week. I know 6% is the "traditional" commission but I'd really be curious what most traditional real estate agents are currently charging as their commissions...I think an informed analysis would be closer to 5% than 6%.

Teardowns may not affect assessed value

Here's a blurb from the August 27, 2006 Tribune about a reported policy by the Cook Assessor whereby older homes on blocks with teardowns can be compared with each other, but not with the new homes. According to the Assessor's office, this policy went into effect in 2005 and is playing a role in the 2006 reassessment of city properties.

It sounds sort of murky to me and I haven't seen anything office from Houlihan. Don't hesitate to protest I say!