Closing Real Estate in Chicago

Goodbye/Hello

2009-03-13T10:57:00.004-05:00

This wasn't quite the celebratory transition I had in mind but life events have simply made it necessary so here goes...

2-3 months ago now I finally got around to moving this blog's content to its own Website using Wordpress. That's what all the blog consultants out there say to get your own site so people like Google can't just shut you down (i.e. Google owns Blogger). And for a couple months I was just posting in both places with the intent of making a big, sexy announcement about the move once the "new" site was up to speed. Well, the new site isn't quite where I want it yet but just because I'm falling behind with the double posting and don't want you to think I'm just stale. Here's the BIG, SEXY ANNOUNCEMENT:

COME JOIN (AND UPDATE YOUR RSS READERS AND LINKS) THE NEW, IMPROVED FUN OVER AT:

CLOSINGCHICAGOREALESTATE.COM

Divorce the House Before the Spouse

2009-02-10T20:44:00.002-06:00

Not necessarily my view but some interesting thoughts put forth here. Some bits from the article:

“If you’re still linked through the house, than you’re not really divorced,” says Kelly Lise Murray, a Harvard-trained lawyer and Nashville real estate agent...

But Murray, who describes herself as a “divorce real estate advocate,” says people tend to underestimate the “ghosts” that go along with keeping the house. The place is often so filled with memories, both good and bad, she says, that “it’s not the family home anymore. It’s a huge lodestone...”

Then there’s the even bigger issue of hidden debt. Ideally there will have been no secrets between the husband and wife. But money is a major cause of divorce, and in many cases, one spouse has no clue that the other one has rung up big bills that have become undisclosed liens against the property...

I think the premise above contains two particular advantages.

First, the divorce case is quickened and potentially "cleaner." I can't tell ya how many cases I have now that are just sort of lagging because of an inability to sell real estate...nothing too much happening but no final closure either. Of course no one can control market conditions.

Second, there's way too much guesswork in setting some value on a marital residence at some time fairly arbitrarily plus there's a lot of unknown and moving factors that have to happen for the typical refinance with buyout or sell in the future and distribute proceeds in some pre-set manner...now that's messy!

No Earnest Money: You Can’t Be Serious

2009-02-10T20:21:00.000-06:00

Oh, but I am.

Here’s Wikipedia’s definition:

An earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.

I’ve been working with a long term client regarding sale of real estate over the last months. And won’t go in to many details here but there was a shocker regarding a recent offer and contract (where eventually the buyer’s backed-out of the deal) where the listing real estate agent didn’t require nor take any earnest money from these buyers when they made their offer and subsequently backed-out.

UNBELIEVABLE!

And in the end the result may have been the same but it sure would have been nice if the potential buyer’s had a little skin the game…ya know, I think it’s called leverage.

An Interesting Retort From a Commenter

2008-12-20T14:06:00.002-06:00

Thought I'd post a nice comment in full from local blogger and Realtor Eric Rojas. Like I tell my wife, disagreement is good, it provides more ideas rather than just agreeing with one idea...

I might disagree with your "waiting game". There is no guarantee the right deal will be there for you later. I personally have offered on a foreclosure (lost in a multiple offer) and have won a multiple offer short sale for my clients on another place this month.
Meaning, many preceived the prices as agood deal and jumped. This is still very rare, even in our worst months here after Red October.

You did acknowledge people could jump if it's a steal. But finding the combo of good location, good building, good price is still tough... especially if you don't write and offer.

I know of sales happening now that are $50K less (give or take) than previous sales on units for sale simply because the buyer wrote an offer (did not have to wait and compete when the price finally would be lowered).

Anyway, I'm biased here, but also put my own money where my mouth is. Making an arbitray decison when it's better to buy based on the current market is like trying to time any market. I think if a home is what you want and you have a good understanding of the location... and you can afford it... take a shot.

If you were in the market today (say renting and needed a place for your growing family) you'd wait another 6 months even though a great house becomes availble?

Ethanol Subsidies and No-Money-Down Mortgages?

2008-12-20T13:18:00.002-06:00

Who would have known? I saw this piece in the WSJ describing a mortgage program buried within the Department of Agriculture.

To be eligible for a USDA-backed loan, a borrower can't have income that exceeds 115% of the median county income, and the loans are restricted to areas with lower population density -- generally towns of no more than 25,000 residents. So while home buyers in big cities aren't eligible for the loans, residents of many of America's fastest-growing towns and exurbs do qualify. The loans that come through the program are made by private lenders, then insured by the government and sold to Ginnie Mae, a federal agency that sells mortgages to investors.

Here's an overview from USDA. Likely not eligible in Cook but maybe in a collar of a collar county.

New Tax Breaks for Homeowners

2008-12-20T12:57:00.002-06:00

A nice little reminder/overview from Kiplinger's regarding end of year tax planning for homeowners.

Notably, the new up to $7,500 tax credit for new homes brought from April 9, 2008, through June 30, 2009 and the Private Mortgage Insurance deduction for homes bought since 1/1/07.

A Second Wave of Mortgage Disaster

2008-12-20T12:01:00.002-06:00

I saw the above on 60 Minutes last week...not exactly a cheery prognosis for the holiday season. Here's the full text of the story. Obviously just one person's quote, but still...

"We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we're probably about halfway through the unwinding and bursting of the bubble," Tilson explains. "It may seem like all the carnage out there, we must be almost finished. But there's still a lot of pain to come in terms of write-downs and losses that have yet to be recognized."

It May Be Time to Think About Buying a House

2008-12-10T13:21:00.003-06:00

I saw the piece over the weekend in the NYTimes but hadn't gotten around to reading it until today. It's been their most read article for nearly a week now so I thought I'd give it a skim. An important and true opening 'graph:

Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.

But when is the right time? At least around Chicagoland, unless you can get a steal, I'd wait 6 months before buying anything. My view is that surely until the new administration comes into office things will remain dour. Then, I'm expecting Obama to make a big economic push right away but it will still take 2-4 months from legislative passage until that stimulus gets into the real economy. With greater confidence, I don't think you lose much by waiting until spring 2010.

As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines.

How should you proceed if you're planning to buy a home in the next 1-2 years?

Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.

You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.

John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.

While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable.

Remember the tax credit and it's expiration date.

Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.

Mortgage Fraud Incidents up 45% Year-to-Year: We're #3!

2008-12-04T16:34:00.002-06:00

Saw this reported here. Some snippets from the piece:

Reported incidents of mortgage fraud grew by 45 percent in the second quarter compared to the year-ago period, as borrowers misstated their financial information to maneuver around tighter lending standards, industry data released Tuesday showed.

Florida properties led the way with about one-fifth of mortgage fraud incidents reported in the second quarter, the Mortgage Asset Research Institute reported. California was second, and Illinois third, the data showed...

The largest increase in mortgage fraud in the first half of this year involved borrowers misstating their financial profile, which is not surprising as borrowers try to get around stricter lending guidelines, the report said.

Some basic examples of fraud included false bank statements made on computers and pay stubs with white correction liquid on them, said Jennifer Butts, the institute's director of operations.

See it's not all the big, bad lenders. Now that the election's over perhaps some acknowledgment of fault on the part of buyer's signing these mortgages is at hand.

That’s the Problem, there was NO CANCER CLAUSE!

2008-12-04T16:31:00.001-06:00

Saw this in a recent What’s Your Problem? column in the Trib. regarding a builder’s failure to return an elderly couple's earnest money deposit. A sad tale, the husband got cancer and subsequently died and thus the couple didn’t want to purchase the home. The potential buyer’s relied on the developer’s oral promise that they’d refund the earnest money if the gentleman got cancer. I read that in the end they did get 3/4 of the deposit back.

But really, would you expect a developer to honor an oral promise regarding an earnest money refund? Get it in writing!

Choosing a Real Estate Attorney

2008-12-03T17:27:00.001-06:00

Nice video over on YouTube from a local practitioner I know well. Who'd have thunk it. I've had like 3 deals with this guy, good lawyer for your smallish condo development projects. Never knew he was high-tech. I don't think his firm even has a Website.

Guide for Single Woman Buyers

2008-11-28T17:58:00.001-06:00

Saw a review of the above in the Sun-Times.

Developers Using Auctions to Sell Inventory

2008-11-28T13:41:00.002-06:00

Thought this was an interesting overview reporting from a Florida real estate auction done to sell a developer's condos. I used to think of this as limited to the foreclosure scene but not anymore. We have a client who's going to do one of these shortly so I'm very interested and will be reporting more in the near future.

As long as you can set a minimum bid, what's to lose?

Questions to ask Prospective Agent?

2008-11-28T13:19:00.002-06:00

Here's the story and the list from the Tribune's piece:

•How long have you worked in real estate, and how long have you been licensed?

•Are you a Realtor? What professional designations do you have, and what special skills do they certify?

•Do you work alone, or do you have an assistant or support staff?

•How often will we be in touch during the searching and buying process?

• Can I look at homes without you?

•What makes you stand out among your peers, and do you have references from clients?

•Will you act as a buyer-broker, or do you represent the seller?

•How will you get paid, and may I have that in writing?

•How many other buyers are you representing?

A fair list I suppose. On the Listing side, I'd want to see a full marketing plan as to how he/she would be marketing your home...very specific: Internet, newspaper, signage, open houses, ect. Surely view other property's he/she has currently listed.

On either side I'd want to know about community connections. When I think of an agent or two I work a lot with and think highly of, they are individuals who have a home in the community, perhaps have kids who've gone through or are in the schools, are involved in things like service organizations, Chambers of Commerce, ect.. I can think of a couple who are on the local school board.

I'd say the "real estate" stuff is more of a minimum bar to get over and the non-real estate knowledge and networks are how to really find an excellent real estate professional.

Citibank follows JPMorgan Chase's Lead

2008-11-19T13:56:00.002-06:00

Here's the recent piece about Citibank's plan to impose a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes. You'll recall we previously reported Chase's similar plan. I'm not sure how much longer Citibank's going to be in business themselves.

Buffet Buying Bargins?

2008-11-11T09:59:00.002-06:00

Here's Mary Umberger's full column recently about HomeServices of America's (HSA) plan to expand its real estate business during the economic downturn. HSA is part of Buffet's Berkshire Hathaway Corp. Some excerpts:

HSA apparently thinks the current sag in housing makes this the ideal time to spend some money, and has set aside a minimum of $200 million to expand its existing brokerages and to buy distressed realty companies at bargain prices, according to its chief executive, who told me the Minneapolis-based company is eyeing Chicago.

"Our goal is to be in the top 60 to 65 markets," said CEO Ronald J. Peltier. "Chicago is one of them, and we definitely will be there. We're positive that timing and opportunity will converge in the not-too-distant future."

What's your plan as the economy sours? I think it may be time for this author to launch his long-planned brokerage business.

The Difference Between Real and Personal Property

2008-11-07T17:59:00.002-06:00

That's the topic of Lew Sichelman's piece this week. But the real question is what's the difference between personal property and a fixture, Lew. And I think a thorough lawyer in a residential real estate transaction spends a good amount of time during his initial contract review with a client discussing fixture/personal property issues. You might say this "crap" is too small to bother with but the way I look at it is one item like a refrigerator or AC unit or something protected or gotten due to good lawyering just about pays your $500-$600 attorney's fees.

Here's my recent story involving a personal property dispute...

The issue involved a backyard play-set which I think is a pretty gray area...it's not clearly personal property that a Seller can remove nor a fixture that must stay with the home. In my case I had the Sellers and I recall asking about how it was attached to the ground and was there a concrete foundation in the ground. Well, I think in my transaction the Buyer's attorney was sort of asleep at the wheel. So during the time between contract acceptance and closing I shot a letter off to the Buyer's attorney asking if his clients wanted to buy this playground set or Sellers were going to sell it to someone else, in other words assuming this was personal property and my clients will take it if Buyer's don't buy it separately. If Buyer's lawyer had really analyzed the situation it may actually have been a fixture but I'll pat myself on the back and suggest my great lawyering got another check for $400 or so at closing to my clients.

Be on top of this stuff...it seems small but it can make you look good if you're thorough!

Face Tough Times, Don't Ignore your Mortgage Problems

2008-11-07T16:39:00.002-06:00

Here's a nice recent overview from the Trib. of many of the "help" programs out there for homeowners...

Hope for Homeowners

Designed for borrowers who are under water with their mortgage but can afford a new one insured by the Federal Housing Administration, the new program will insure up to $300 billion of refinanced, troubled mortgages into 30-year, fixed-rate loans.

A new mortgage cannot be more than 90 percent of a home's new appraised value, meaning lenders must agree to write down a portion of the loan and the new mortgage amount can't exceed $550,440.

The catch? Lender participation is totally voluntary. The other potential hitch is that if the loan in question carried a piggyback loan, any subordinate lender would have to agree to release their lien on the property.

Call the existing lender or a new lender to see if you qualify. The program runs through Sept. 30, 2011.

FHA Secure

The year-old program offers FHA-insured mortgages to borrowers who are either current or delinquent on their non-FHA adjustable-rate mortgage. The loan-to-value ratio of the new loan depends on how many payments were missed so a gap loan may be necessary. Delinquencies must have occurred because of payment shock associated with an interest rate reset or the recasting of an Option ARM.

If you don't currently qualify, stay tuned. The federal government is considering extending the end date of the program, now Dec. 31, and may also expand the program's eligibility to include borrowers with fixed-rate mortgages, Burns said.

A list of approved FHA lenders is available at www.hud.gov/ll/code/llslcrit.cfm.

Hope Now

The national private partnership of housing counselors, mortgage servicers and investors was established to assist borrowers who are afraid to call their lender directly or don't know where to turn for assistance. Callers to the hotline, which operates 24 hours a day, seven days a week, receive help in contacting their mortgage servicer or an appropriate housing counselor. The phone number is 1-888-995-HOPE.

Illinois Statewide Foreclosure Prevention Network

The state program offers counseling to families and works with lenders to refinance borrowers into 30-year, fixed-rate mortgages that carry interest rates of 5 to 8 percent, closing costs of less than $1,000 and no prepayment penalties.

Typical participants have a credit score of at least 590 and while they have kept up with their payments, an interest-rate adjustment is, or would, make the mortgage unaffordable. For more information, call 1-877-793-3470.

Local housing advocacy groups

Many local groups work directly with lenders on behalf of troubled borrowers to modify the terms of mortgages.

Another plus of contacting your local group: Some mortgage servicers and lenders have given counseling agencies a better set of phone numbers so it's easier to reach a decision-maker. Some agencies also operate their own aid programs, so it pays to ask. For instance, in July the Northwest Side Housing Center began piloting an effort to provide troubled borrowers with "gap" loans of up to $50,000 that cover the difference between a refinanced loan and the loan it is replacing.

Buy & Bail

2008-11-05T13:17:00.003-06:00

Note HUD's recent announcement about the so-called buy and bail situation where you supposedly rent out your current home to get that income in order to buy a new home.

Massive Effort to Save Mortgages

2008-11-05T13:03:00.002-06:00

Here's a broad overview regarding what all the big lenders are doing in terms of mortgage modifications from the WSJ.

JPMorgan Extends an Olive Branch

2008-11-05T12:53:00.002-06:00

A couple key announcements from JP Morgan Chase here and here.

The first piece outlines Chase's plan to halt new foreclosure filings for the next 90 days or so. The second examines their plan to expand their mortgage-modification program. Some program specifics:

In addition to Chase loans, the program will also be offered to customers with loans held by Washington Mutual Inc. and EMC. JPMorgan acquired Washington Mutual last month after the bank became the largest in the nation's history to fail. EMC was a mortgage unit of Bear Stearns Cos., which JPMorgan acquired in February...

JPMorgan's enhanced program will include the opening of 24 regional counseling centers, the hiring of 300 additional loan counselors, new financing alternatives, reaching out to borrowers with pre-qualified modification terms and a new process to independently review each loan before it is moved into foreclosure.

My Experience in the Cook County Treasurer's Office

2008-10-31T15:45:00.002-05:00

Just a brief follow-up from yesterday's post...

So I took a little field trip today down to the Treasurer's Office in the County Administration building at 118 N. Clark Street to get my client's duplicate tax bill copy (client is out-of-state). And I would honestly give the office high marks for customer service! They have several people ready to assist you even before you enter the office so that you're not having to waste time up at the counters filling out paperwork. There are also several service personnel circulating around the office...two cheers for Maria Pappas!! I'd be hard pressed to think of the last time I've experienced good customer service in Cook County or Illinois government (except my dad who used to be a great TV spokesman for IDOT during the 90s).

That being said, what's up with the power trip over getting a copy of a tax bill?? Anyone, anywhere can view Cook County property tax bills and general property information over the Internet, yet they guard the release of duplicate tax bills copies like Fort Knox. Only the homeowner can get it unless you have a power of attorney (I have to pay them $1 for a duplicate due to their failure to send one to my client). I was fortunate to get a copy, I didn't have a POA but did have an Order appointing my client executor of the home owner's estate with me listed as the attorney of record.

Learn from a First Time Homeowner

2008-10-30T17:16:00.002-05:00

7 tips from a first time homeowner (full article)...

1. Owning a home is more than a mortgage.

2. Always have cushion of cash for home repairs.

3. You can save a lot of money as a do-it-yourselfer.

4. But some jobs are worth hiring out -- if you can afford it.

5. Buy used.

6. Having a yard is harder and more costly than you think.

7. You must plan and prioritize.

The Opposite of Making a Bill Easy to Pay

2008-10-30T16:02:00.002-05:00

I'm no Warren Buffet but I thought I heard somewhere that in business it's a good idea to try and make it as easy as possible for your customers or clients to pay your bills. I know we're always thinking about this issue with our monthly client statements whether it means accepting credit cards, sending statements via e-mail, allowing Internet bill pay, or just including a self-addressed stamped envelope so all a client has to do is write a check and drop it in the mail. You'd be amazed at what a difference just enclosing an envelope and $.42 stamp did for speed of client payments.

And then there's the Cook County Treasurer's Office...

We represent the Estate of a gentleman who died within the last 6 months or so who owned a home in Cook County. There's upwards of $800,000 in this Estate working it's way through probate court and no surprise the home has yet to sell. And we need to pay the 2007 Second Installment tax bill. But for whatever reason my client, the executor of the Estate, who has had the decedent's mail forwarded to his house hasn't gotten the tax bill.

Well, the Treasurer will not let us pay the bill unless we have an original tax bill coupon included with the check. They don't want our money! A check with a PIN and address and for the specific amount listed as due on the Website isn't enough...they want their coupons!

So I'll be stopping by the Treasurer's Office tomorrow as part of my Daley Center morning and ordering a duplicate tax bill copy at the County Administration Building.

Why is the coupon so important? Isn't it the tax revenue they're after?

Mary and Me

2008-10-27T13:31:00.002-05:00

I don't like Zillow nearly as much as Mary but I too do enjoy finding creative Buyer's incentives like this one from Mary's Sunday column:

The latest: The Brixton Group has partnered with designer Matt Lorenz, winner of Bravo TV's "Top Design" competition in 2007, to offer his services to buyers at its C/A 23 condo development at 23 N. Aberdeen St. Anyone who buys one of the building's 48 units through the end of January will get a $30,000 allowance that can be applied to the designer's fee and any furnishings the buyer chooses in consultation with him.

Real Estate Publication

2008-10-27T12:41:00.002-05:00

If you're an Illinois real estate practitioner you must subscribe to the ISBA Real Estate Law Section Council newsletter. And I'm just a humble ISBA member myself but for $20 a year you get a good newsletter that is published nearly monthly. As a former editor of an ISBA publication, I'll be the first to say some of them suck and aren't worth $20 but the real estate newsletter is excellent!

Speaking of the above, October's edition had a couple good refresher articles on both condominium resale representation and navigating short sales. Here's the link (you must be a member) or find a hard copy. My commentary...

First, regarding condominium resales, I agree with the author for the most part but would make a couple additions. He hedges a bit on the attorney's review of condo declarations, bylaws, and rules/regs. You must review these! And quite frankly even though the documents are thick, once you get experienced you just need to find the use and occupancy part of the declaration generally and the rules/regs. That's where it will address things like pet restrictions or rental restrictions...those are the two I look for. I got a client out of a deal once with earnest money returned because she didn't like the fact that her dog couldn't use the building's elevator. Second, among the documents that you must request and make deal contingent on, you should also include 1-2 years worth of Board of Manager meeting minutes. See what they've been talking about in terms of building issues and repairs.

On the short sale topic, my only addition would be that yes if you have the Seller you need to modify the K to be contingent on Seller's lender approving the transaction but also add, "without Seller's taking on additional personal liability." I've been speaking to a bank on a transaction lately about a possible short sale and they're always mentioning the possibility of the Seller signing a separate note. Don't get hooked into this one.

Cook County Foreclosures

2008-10-27T12:23:00.004-05:00

Thanks to the Tribune for a nice chunk of articles regarding foreclosures in Cook County. Here's the central article with some links within including some helpful hints and a timeline.

Another Case Study Regarding Why NOT to Buy New Construction Condominiums

2008-10-27T12:10:00.002-05:00

I'm going to go to my grave repeating the mantra, "new construction condominiums are the worst type of property to purchase (repeat)." Because it's TRUE! Here's another story from the Suntimes...and this is a frequent happening and the facts in the story are pretty typical of the trouble with new construction condominiums...

Residents of 1841 S. Calumet, a tower marketed as Museum Park Place, charge that Enterprise Cos. cut corners on the project, resulting in water leakage in the roof, walls and basement. They said Enterprise has refused to acknowledge responsibility for the defects and that the condo owners may face special assessments worth thousands of dollars each to pay for repairs...

Formerly a machinist, Dempsey said he now works in sales in the steel industry. He said he regrets moving into the building. "I had a 60-year-old house in the suburbs that was in better shape than this new high-rise," Dempsey said...

Newer isn't better!

MacArthur Foundation's Chicago Foreclosure Grants

2008-10-17T12:18:00.002-05:00

Take a look at some of the places MacArthur's been making grants locally...maybe there's some help for your situation!

Cook Evictions to Resume

2008-10-17T11:25:00.002-05:00

Here's the piece from the Tribune. It's hard to tell from the article what has changed although a new standing Order by Judge Kinnaird, presiding Judge with the Cook Chancery Division is referenced but I don't see it on the Circuit Court's Website. Anyone have a copy? I'll have to look around the chancery division the next time I'm down at Daley. From the article:

The new order will require banks to document the names of all tenants in a foreclosed building as well as when they were notified about impending foreclosure proceedings.

The new order, drafted by Dorothy Kinnaird, the presiding judge of the Cook County Chancery Division, does not create new laws. Instead, it is formalizing those laws and offers another measure to make sure that the proper procedure is followed when it comes to tenant notification.

Making a House Look Like a Home

2008-10-16T11:21:00.000-05:00

Make an empty home look more inviting:

•Clean. Top to bottom. A fresh coast of paint will do wonders. Clean or replace the carpeting, redo the wood floors. Wash the windows, appliances and bathrooms.

• Spruce up the exterior. Trim the shrubs, throw down new mulch and paint the front door. Hire a lawn service to keep the grass mowed.

•Power up. Keep the juice on so the air conditioning keeps the place cool—or the furnace keeps it warm,, depending on the season. Visitors will need to turn the lights on if they tour at night.

•Window treatments. Keep them up. And clean them too.

•House sitters. Consider using a firm that places people and their furnishings in house. These folks agree to keep the place clean, show the house on a moment's notice and move out within 30 days.

• Experienced agent. Make sure that your agent has experience selling empty houses. Maybe the agent has some extra furniture he can put into your former home to make it look more enticing.

•Leave-behinds. If any room in the house has no ceiling fixture, leave a small lamp plugged into the wall so it can be seen at night.

•Leave appliance manuals on the kitchen counter. If you don't have them, order them. Also leave a list of your last 12 months' utility payments for visitors to view. Another idea: photos of how the place looked furnished.

•Security. Consider installing some type of alarm system. At the very least, put your lights on a timer. Also, notify your insurer that the house is going to be empty and ask what steps need to be taken to keep your coverage in force.

That's Tacky

2008-10-16T11:12:00.000-05:00

I know they do nothing at the closing, but I find it really tacky when real estate agents don't show up at the closing and I just think it's bad business. It's like yeah I'll take my $10,000 commission but I'm much too busy to sit at a closing table for 90 minutes.

First, in the current market you're not too busy. Second, there are several persons at closings typically who you may want to meet and schmooze. There may be some 4 sellers/buyers, 2 lawyers, 2 Realtors, and a mortgage person. Any of those people are potential clients and a Realtor covering a different area or a mortgage person could be great referral sources.

Special Assessment Escrow?

2008-10-16T11:08:00.000-05:00

Just thought I'd mention this as another tool to use on the Buyer's side. I represented a buyer earlier this week at a closing and we used this to sock away $5k just in case there's a special assessment in the next six months. In my particular situation a review of condo board minutes over the last year suggested a couple big projects may be happening soon so I just wanted to protect my client. But in a soft real estate market why not use this as the default position on the Buyer's side. Protect your client for another year.

Hope for Homeowners

2008-10-11T13:04:00.000-05:00

Here's an overview of the program aimed at homeowners behind on their mortgages that was contained in the Housing and Economic Recovery Act of 2008 passed in July.

You're eligible if

•The home is your primary residence, and you have no ownership interest in any other residential property.

•Your mortgage was originated on or before Jan. 1, 2008, and you have made at least six payments.

•You cannot pay the existing mortgage without help.

•As of March 2008, your total monthly mortgage payments were more than 31 percent of your gross monthly income.

•You can certify you have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain your existing mortgage.

Here's HUD's link.

You're NOT a Circuit Court Judge, Mr. Dart!

2008-10-10T07:15:00.000-05:00

Here's a piece from the Sun-Times regarding suit filed against the Sheriff for his failure to follow court orders.

Time for a Little Self-Help??

2008-10-08T16:01:00.000-05:00

So if a court has given you possession of a property but the Cook Sheriff won't evict, how do you regain possession of a property?? Sounds like a funny little riddle, no? Well, probably not as funny if you represent many plaintiffs in foreclosure cases and you've now been told by the Sheriff that we're NOT going to follow court orders and we're NOT going to evict foreclosure tenants!

Here's the Sheriff's press release.

Forensic Loan Audits

2008-10-08T12:42:00.000-05:00

I read it about these for the first time here. You Walk Away is the company sighted in the article that does these though I'd imagine this is something many lawyers or accountants could accomplish. Here's a snippet from the piece:

The reviews aren't cheap. The fee could be as high as $3,000, depending on how much is owed on your mortgage. But if an error is found, it could be the 2-by-4 between the eyes you need to force the lender to move you up to the front of the long, long line of borrowers who are looking for ways to hold on to their homes.

I surely know my documents in a typical loan closing package but I don't pretend to know all the causes of actions that potentially come from loan package errors. But this should motivate us to bone up on the Truth-In-Lending requirements and the Real Estate Settlement Procedures Act to protect our clients.

Hot Off the Presses

2008-10-06T18:21:00.001-05:00

Just heard this from a reliable source:

I'm happy to report that the City Council Finance Committee today unanimously passed Ald. Burke's proposed Ordinance to bar transfer taxes on the transfer of interest in marital home real estate pursuant to Judgment for Divorce or Separation,, including an amendment which I suggested making the proposal retroactive (to 1992!). I led off the testimony which also included Mario Ventrelli of the Schiller firm, Helene Snyder on behalf of the CBA and a Woman victim of the harebrained idea was was a client of mine which started this whole thing.

Note that they intend to NOT exclude business real estate, and there was no discussion of second homes.

I expect the proposal to pass.

Can FHA Shoulder Loan Burden?

2008-10-06T18:07:00.000-05:00

An interesting read...FHA's volume up 10 times from its low just a couple years ago back when the sub-prime money flowed freely.

IL Attorney General Settles with Countrywide

2008-10-06T17:15:00.000-05:00

Sub-prime superstar Countrywide Financial settled lawsuits with several states including Illinois regarding alleged mortgage fraud. I have a couple loans with good old Countrywide, not sub-prime but maybe there's some $$ in this settlement for poor, old me. An overview of the settlement:

The bulk of the settlement—$8.4 billion—represents the reduction in principal and interest payments for Countrywide customers who hold adjustable-rate and fixed-rate subprime mortgages. In addition, Countrywide expects to waive $56 million in prepayment penalties and $79 million in late fees. The firm will pay $150 million to people already forced out of their homes and another $60 million in relocation costs for people in the process of being forced from their homes.

Condo Boards "Right of First Refusal"

2008-10-02T13:56:00.000-05:00

Saw this little nugget from Oak Park's Village Board encouraging condo boards of managers to amend their declarations to no long allow for a right of first refusal. Here's the piece.

The Oak Park Village Board this week passed a resolution intended to promote easier financing for condominium purchases by doing away with the authority known as "the right of first refusal."

The resolution, proposed by real estate brokers, urges condo boards and associations to relinquish their authority to prevent the sale of a condo unit to a buyer who's not to their liking...

He said the Federal Housing Authority will not guarantee a loan for the sale of a unit in a building in which the board holds the right of first refusal, Mancuso said.

Consequently, condo units in such buildings are effectively outside the reach of prospective buyers who need the special rates and low down payment possible with an FHA loan, he said.

Does anyone know the history of this right? As a condo assn. attorney and working with residential buyers/sellers for several years, I have never seen this right exercised and now its stifling sales.

Closing Real Estate in Michigan

2008-10-02T12:49:00.000-05:00

I'm not sure what the closing costs are but the sales price: $1.75 for a home in beautiful Saginaw, Michigan. Sold on eBay.

36 Days and Counting!

2008-09-29T18:32:00.000-05:00

Until your second installment of property taxes is due in Cook County. Hey, they beat last years December due date.

2nd Installment Due Date - The due date for the Tax Year 2007 Second Installment is Monday, November 3, 2008.

How Smart of a Home Seller are You??

2008-09-12T11:53:00.000-05:00

10 question quiz from Kiplingers...I missed one.

Vacation Homes and 1031

2008-09-11T11:41:00.000-05:00

Saw a little nugget in the ISBA Real Estate Section Councils newsletter regarding whether you can do a 1031 exchange using a typical vacation home. I.e. would that sort of property be "held for productive use in a trade or business or for investment."

Well, the tax court said no and here's the decision.

Be Careful when drafting Orders of Possession

2008-09-11T09:49:00.000-05:00

Since one of my personal pet peeves is people who don't take responsibility for mistakes and blame others instead, let me say up front that I made a mistake! On Cook County's Orders for Possession there are 4 places where you write the Defendant's name and in a recent case I accidentally wrote the Plaintiff's name in one of those 4 places. And because of that, the Cook Sheriff would not evict and I had to go back to court and correct that error.

On the lawyer end, I think the teaching point is draft Orders (or have a secretary draft) at your office before court. In many areas of practice where there's uncertainty about what a court will do this isn't possible, but in eviction land with Orders of Possession I think it is. On the Sheriff side, do you really not know the correct defendant in my scenario?? Hmmm.....

Chicago Transfer Tax and Divorce

2008-09-11T09:23:00.000-05:00

Okay so we all know that it costs $7.50 per $1,000 of purchase price for the privilege of purchasing property in the City of Chicago. However, there are several types of transactions that are exempt from the transfer tax. Some of the obvious ones being transactions where consideration is under $500 and to correct former deed errors. One area that in my experience used to be exempt at least in practice used to be situations where people got a divorce and one former spouse quit claimed a residence to the other former spouse.

However, in speaking with attorneys of late and the folks over at the Cook Recorder, they're now actively enforcing the transfer tax ordinance in these divorce/quit claim deed situations. The City of Chicago transfer tax form has some specific language noting that divorce scenarios are NOT exempt. So in the near term make sure you're dealing with this in marital settlement agreements, ect. As high as the tax is, it can start to be real money. Saw this in the Sun-Times regarding Alderman Burke's attempts to make divorce transfers exempt.

A Property's Walkability Score

2008-09-03T12:11:00.000-05:00

I'm not sure walkability's a word but you get the gist. Here's the Website: www.walkscore.com. Some more data for you when considering a home purchase.

New Cook County Circuit Court Judges: Cook County Sheriffs Deputies

2008-09-02T13:08:00.000-05:00

I saw this mildly concerning piece in today's Sun-Times regarding new procedures in the Sheriff's office regarding renter evictions where the eviction is resulting from a property owner's foreclosure. For those of you not familiar with eviction procedure in Cook County, a court gives you what's called an Order for Possession for a property. You give this Order to the Cook Sheriff's eviction department who eventually will be the person(s) actually doing the evicting. It's my understanding that 1 day prior to the Sheriff showing up, a notice of the eviction gets placed at a unit giving some warning of the removal.

Now the new policy:

Starting today, deputies who enter homes where no one is present will hold off for seven days, leaving a brightly colored sign on the door to let renters know they have a week to provide proof of occupancy.

If the tenants prove they are living there as renters, the eviction will be called off, Connelly said. In the past, if no one was home, the eviction would take place.

How and to whom are tenants going to "prove they are living there as renters"? Let me start by saying I certainly would feel for a renter in this situation. However, doesn't the above strike you as in essence the Sheriff acting as Judge? There are many ways to stop an eviction properly but they should involve a judgment made by the person whom our system gives the ability to make said judgment, i.e. Circuit/Associate Judges. Now the Sheriff's getting in on the action and of course not in a way favorable to Plaintiffs.

The Home Equity Door Slams Shut

2008-08-21T15:53:00.000-05:00

I suppose no surprise that lenders are tightening up on HELOC funding as reported here by Kiplinger's. I still advice Buyer's post-closing to open up a line of credit if possible...you don't have to use it but it's nice to have it available in an emergency.

Does this Really Happen?

2008-08-21T15:31:00.000-05:00

Saw this piece in the Times regarding letters that low ball Buyer/Offerers send to Sellers accompanying their low ball offer. Here's one example from the piece:

Dear Seller:

I’m writing to let you know that I would like to make a bid on your property. I love the area and am committed to buying a house nearby. And your home fits my needs.

But given that my offer is well below your asking price, I also feel I owe you an explanation.

First, consider the big picture. Nationwide, home prices in the first quarter of 2008 fell 14.1 percent compared with the same period a year earlier, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index.

That’s the biggest decline in the 20-year history of the data. And just in case you’re wondering, during the housing downturn of the early 1990s, the decline was never worse than 2.8 percent.

Not only that, earlier this month, the National Association of Realtors pointed to the huge number of existing homes on the market. As of the end of April, the total number was 4.55 million. At the rate people are buying right now, that represents an 11.2-month supply.

So buyers have options right now. A lot of them. I’m no different. Your home is great, but it isn’t unique. Few homes are. I know this may be hard to hear, since you’ve spent years creating memories here. But you may be waiting a long time if you hope to find a buyer with the same emotional connection that you have.

My mindset is hardly unique. We’ve all been reading the headlines. The accompanying articles appear prominently in major newspapers and sit on the Web pages where people check their e-mail every day. Everyone sees them, and the psychological impact is real.

Has your real estate agent laid any of this out for you? Maybe so, and you didn’t want to believe it. But it’s also possible that your agent, afraid of offending you and losing the listing, simply doesn’t want to initiate that sort of discussion. It may be worth sitting down for a candid reassessment.

It will be tempting to view my low bid as an insult. Please don’t make that mistake. Your home is genuinely appealing, and I wouldn’t have written this note unless I was serious about buying it. Getting a firm offer in this market is an accomplishment. So congratulations!

Oh, and one more thing. You presumably need someplace to move. My guess is that you’ll find these same points compelling when it’s your turn to buy. You just might succeed in buying for a better price, too.

I look forward to hearing from you soon.

Yours Truly,

The Realist

Should U File a Tax Assessment Appeal?

2008-08-21T14:27:00.000-05:00

Oh that's a question I'd answer on a case-by-case basis but here's a decent Tribune overview.

Condo Trouble w/ FHA Loans

2008-08-21T13:43:00.000-05:00

Just catching up on my real estate reading and saw this piece from a couple weeks back in the Trib.'s real estate section regarding FHA restrictions related to buying condominiums. Here's the money 'graph:

FHA rules wreaking the most havoc locally are a requirement that a building must have four or more units. That means buyers of a condo in a three-flat need not apply. There's also a rule that a building's condo association cannot have a "right of first refusal" as part of its declarations of covenants and restrictions. Frequently in place but seldom used, right of first refusal enables an association to turn down a prospective buyer and then buy a unit from a seller.

I can't say I've ever dealt with this problem first hand but that's likely because FHA loans weren't used much until the last year. The right of first refusal restriction seems like it potentially has the greatest impact. From my experience more than 50% of condo associations include rights of first refusal. What's the history of those provisions?? I mean I've never heard or seen an association exercise it's right...getting it waived is generally a formality.

New Housing Bills

2008-07-25T12:47:00.000-05:00

Take a look at the Housing Bill passed in the House yesterday and expected to pass Senate today or tomorrow and the President has suggested he'll support...here's a nice overview.

Couple tidbits...new tax deduction for first-time home buyers of $7.500 or 10% of the purchase price, whichever is smaller. Also, a new $500/$1,000 tax deduction if you're a homeowner who takes the standard deduction.

Interesting Market Analysis from Zip Realty CEO

2008-07-25T12:27:00.000-05:00

My Recent Experience Representing a Foreclosure Buyer

2008-07-24T16:13:00.000-05:00

I think this was my first experience representing a purchaser of property buying from a bank who now owned the property following a foreclosure. It was a good learning experience and surely different that a "typical" residential real estate purchase...

My client found the property she ended up buying on BidSelect, a Website that seems to focus on selling foreclosed properties. On its face it's a listing of properties like any other brokerage. However, when she wanted to place a bid, she had to get a real estate agent who had some code that allowed the agent to actually place the bid.

There were two periods where there was more waiting than a normal transaction. First, once the online bid was made it was around 10 days before you got a response. Then once there was this online acceptance, my client's real estate agent had to send a written offer with a standard real estate contract and Fannie Mae's contract addendum to the management company who formally accepted the contract on Fannie Mae's behalf.

Fannie Mae's contract addendum DID include an inspection contingency...my client had 10 days to do an inspection and potentially reject the property. I doubt any repairs would have been done.

Once my client did get approved by her lender the closing proceeded fairly typically. We closed at First American Loop. The Seller's attorney was one of the big Chicago area foreclosure law firms...they were fine. The problem was the Seller's real estate broker as I wrote about previously here.

All in all I'd recommend this route of purchase (the Chicago area property was under $75,000 for a 4 bedroom house) with one caveat...be prepared to risk your earnest money. In my transaction my client did start to have cold feet and I gave the notice required pursuant to the property inspection period to get out of the deal. Yet it was nearly impossible to get anyone at First Preston Management (Fannie Mae's rep.) on the phone. My client subsequently changed her mind but an earnest money return didn't feel likely.

Employer Assisted Housing

2008-07-12T13:36:00.000-05:00

For some reason I didn't see this item get through the General Assembly...the state approved a law giving employers a tax credit of 50 cents for every dollar they invest in Employer Assisted Housing (EAH). Here's the piece from the Christian Science Monitor. If you really want to encourage your employees investment in the community this might be something to consider.

Fannie, Freddie, and You

2008-07-12T13:23:00.000-05:00

Now that's a fun group, right?

An interesting article in the Times explaining how the recent troubles of Fannie Mae and Freddie Mac might impact the average home buyer or person with some average mutual fund investments. Has anyone ever really understood what the Fannie and Freddie do? And what's the difference between the two? Read he article...

The impacts seem to be expected higher mortgage rates longer term and if any funds you own are invested in the two companies they may have taken a hit.

Joliet "Blossoming"

2008-07-12T12:58:00.000-05:00

Interesting overview piece in today's Tribune entitled Joliet blossoming into the place to be. It seems Joliet just passed Naperville to move into the 4th position in city rankings in the Land of Lincoln. Take a look at the piece. Joliet's one of those older communities with a gritty reputation but it definitely has some upside. It has a very distinct downtown with a Metra stop and the Des Plaines River right there. Sounds like there are some good deals.

I'm not with the Chamber of Commerce or anything but my first lawyer job post law school was in the South Suburbs and I'd get to Joliet about once a week for Will County Court work...very nice court to practice in by the way. I'm not a NASCAR fan but there is that minor league baseball team and I am a fan of the I & M bike trail...one of the best in the area.

Tales from the Closing Table

2008-07-12T12:36:00.000-05:00

We've all had our slow closings before for many reasons....slow wiring of funds, Seller/Lender slow in submitting figures to the title company or submitting wrong figures which then take time to be corrected, lender's loan processor goes to lunch during the closing and isn't available to give approval to cut checks, Buyer did a walk-thru the morning of the closing and there was water coming through the ceiling from the unit above, ect., ect.

I think the good real estate attorney, lender and agent simply have prepared clients for these potential events and then it's no big deal. Go grab lunch and perhaps the deal will have funded in a couple hours; don't have your stuff on a moving truck!

I ran into a new one yesterday and perhaps the dumbest reason yet for a 5+ hour closing. The Listing Real Estate broker was slow in WALKING over the earnest money overage that had to be included in my client's escrow. Seriously! 11am closing was a little slow for various reasons but by about 1:30 pm everything was ironed out and we call this listing broker and they say the money is in route (title company and broker are within 3/4 blocks of one another). Apparently they sent it over with some commercial messenger service who likely had many other deliveries. Well, at 5:20pm I got a call from our closer saying she'd gotten the earnest money check and the deal was closed.

And we were waiting on a check for $107. After the buyer's agent and listing agent's split the commission the listing agent's commission was just less than the $1,000 commission. So instead of the "normal" situation where the listing agent keeps the interest money towards its commission here they had to bring part of it back.

Our 6 hours wasn't worth that $107...nice work!

"Redfin" Mary

2008-06-30T21:12:00.000-05:00

Mary Umberger touted Redfin's entry into the Chicago market in this week's column.

That would be Redfin, the maverick start-up that operates mostly online and refunds two-thirds of its portion of the commission to its clients. Chicago is its eighth market.

Unfair "Combine" Criticism

2008-06-30T20:51:00.000-05:00

I saw this little nugget recently that combines a couple of my favorite subjects, Illinois' "Political Combine" and the practice of real estate law. The piece touched on a lawyer close to DuPage County Board Chairman Robert Schillerstrom makin' some money off of the O'Hare expansion.

A former law firm associate of DuPage County Board Chairman Bob Schillerstrom has been paid more than $112,000 representing Chicago in routine real estate transactions related to the proposed expansion of O'Hare International Airport.

William Thomas made $112,623 between April 2005 and April 22 of this year, according to records obtained by the Tribune. Thomas was hired by the city just months after Schillerstrom closed his law office and began working as a partner in a local office of the Indianapolis-based law firm Ice Miller.

But lets be fair Tribsters...his rates ain't exactly out-of-this-world. If I charged at those levels I'd be out of business:

Thomas made $350 for each real estate closing and $150 an hour for other real estate-related legal work, according to city records obtained by the Tribune.

Tenant Friendly Courts

2008-06-27T16:21:00.000-05:00

I wanted to share an experience from life on the circuit earlier this week that speaks to the above.

I was in court ostensibly just to get a continuance and issue an Alias Summons. My client/landlord is in the process of suing two defendants, a landlord and a personal guarantor, for money and possession of a rental unit. It's a commercial property.

A money judgment and Order for Possession had been entered at the first court date against the tenant/entity. I was in court this week because we hadn't yet gotten proper service on the individual guarantor.

So I step up on my case and summarize the above to the court and say I just want a continuance and an Alias Summons to issue...should have been a 5 minute court date. Instead I virtually had to retry the case against the first defendant (different judge from first court date). The court wanted to see all the orders, questioned the rent and demanded the rent ledger that provided the basis for the judgment. I thought my Order for Possession was going to get vacated and I was the only person in court (no defendant). Just a tale to beware.

I hear many of the pro bono tenant groups out there talking about how terrible tenants have it in the forcible courts but that's not my experience.

Touble in "Condo-ville"

2008-06-25T13:40:00.000-05:00

Saw this sobering article entitled Collateral Damage for Condo Owners. It's a sad tale of the impact that foreclosures are having on unit owners who haven't had financial difficulty themselves when their fates are tied to others due to the shared responsibility that is condo living.

Barbara Sanz has never missed a mortgage payment, but the plunge in real estate is punishing condominium owners like her anyway.

Four years ago, she bought her first condo in a glassy new Miami tower when the building was filling up. Now nearly one in six residents in the 43-story building is battling foreclosure and their contributions to the building association are shrinking. Each of the remaining owners has had to chip in an extra $1,000 assessment and $50 more a month for cable and Internet. That is on top of Ms. Sanz’s $450 monthly maintenance fee.

Even though she pays more, her building has broken washers and dryers and unusable exercise equipment, and her hallway is spotted with mold.

The question I'm asking myself is how does one protect themselves hypothetically from buying into a building where there are a high number of foreclosures? The 22.1 disclosures required by the Condo Property Act can be helpful but I can envision scenarios where the 22.1 "snapshot" wouldn't tell the full picture. I suppose the level of reserves or association savings is even more important now with the foreclosure concerns. If the condo association is small enough you could do a quick look at the recorders office to see if there are any lis pendens notices on any properties but that's not a fail safe. And that's probably not realistic if it's a 300 unit high rise or something.

Any ideas?

680--the New 620

2008-06-25T13:07:00.001-05:00

I'm not a lender but I do know that generally higher is better when it comes to credit scores. This was a recent syndicated column from Lew Sichelman regarding the increased importance of high credit scores.

Just a few months ago, a credit score of 620 would garner the best mortgage rates and terms. But many lenders now require a minimum of 680 for a prime loan. And some won't lend to anyone whose score is below that.

The full piece has some nice, legitimate overview information regarding steps to increase your credit score.

680--the New 620

2008-06-25T13:07:00.000-05:00

Neumann Homes 1 Day Auction

2008-06-23T17:26:00.000-05:00

Get yourself a deal from the misfortune of poor Neumann Homes:

Twenty-six new homes and 23 partially completed homes are slated to be sold in an upcoming auction for a bankrupt home-building company.

The auction will be at 1:30 p.m. June 28 at the Westin Hotel, 400 Park Blvd. in Itasca. Registration begins at 11:30 a.m. The incomplete homes are all under roof, sheathed, and at trim stage or beyond...The properties may be reviewed at the auctioneer's Web site, www.nrc.com/807.

The Rule Against Perpetuities

2008-06-20T17:45:00.000-05:00

I had to post a little something about this case...I mean how often does "The Rule" ever come up anymore? Ah that was fun learning early in my law school career.

The rule against perpetuities at common law provided "that an interest sought to be
devised to be good must vest, if at all, not later than twenty-one years and nine months after
some life or lives in being at the creation of the interest." Johnston v. Cosby, 374 Ill. 407,
410, 29 N.E.2d 608, 610 (1940).

Here's the case:

Robinson v. North Pond Hunting Club, No. 5-06-0436 . Because second land trust agreement for hunt club contains no revocation clause, it violates rule against perpetuities and is void. Further, deed purporting to transfer plaintiff's 40 acres to second land trust is nullity because grantee is non existent entity. Therefore, first trust agreement, to which plaintiff is not a party is still valid; and plaintiff still owns his 40 acres. Case is remanded to circuit court to determine issues with regards to equitable mortgage resulting from construction on plaintiff's acreage.

I mean it doesn't get much better than a discussion of "The Rule," land trusts, and partition for the real estate lawyer.

"Notice" Provisions Matter

2008-06-14T12:16:00.000-05:00

Often times people get too casual regarding Notice provisions contained in contracts and it can be costly. Notice of course is simply how a party to a contract must communicate contractual issues to another contract party...it's whether you can fax an attorney modification letter or lease termination notice to another party. And quite frequently before things get contentious Notice formalities get ignored and nobody cares. But if things ever get to the litigation stage, Notice formalities can be everything so do Notice right all the time.

Here's the recent case (Genesco v. 33 North LaSalle Partners , No. 1-07-2782) where simply a tenant didn't follow the lease's Notice provisions and therefore the tenant DID NOT properly terminate the lease. The case gets a bit complex with various equitable arguments but the basic fact was simple: tenant sent lease termination to the wrong address. So instead of a $30k lease termination fee they're on the hook for the rest of an approx. $1 million lease (high-end Loop property).

No Change in FHA Loan Max in Chicago Area

2008-06-13T17:48:00.000-05:00

I hadn't been following the issue that closely but saw this today regarding FHA loan maximums being increased around the country in several high priced markets but not in good old Chicago. We're still at $417K. The move was part of the Economic Stimulus Act of 2008 passed by Congress in February. There's a lot of crying by real estate agents in the piece but the statistical basis put forth by the federal government seems legit.

HUD officials say the decision to exclude Chicago and most of the Midwest was simply about numbers.

They calculated the high-cost areas by looking at the median home costs for metropolitan statistical areas and smaller "micropolitan" areas outside them. Then they broke it down to the county level and took the highest median home price, multiplying it by 125 percent. If that number came out to more than $417,000, they raised the jumbo loan limit...

In Chicago, HUD looked at the 14 counties that make up the Chicago metropolitan statistical area and found that in 2007 DuPage County had the highest median cost, at $328,000. So they multiplied that by 125 percent and it came to $410,000, less than the old limit of $417,000.

I didn't hear any worries from the poor Realtors about government liability on loans that people default on and the resulting impact on taxpayers.

The "One Voice" Rule

2008-06-10T16:25:00.000-05:00

Of course the originator of the "One Voice" Rule is the Big Tuna, Bill Parcells, of pro football fame. Wherever he's been head coach only he is allowed to communicate with the media. Other members of the coaching staff cannot. To some degree I suppose you can't argue with his success.

I think the Rule can be analogous to lawyers in residential real estate transactions or their lack of involvement depending on the situation. I represented a guy selling his home a couple weeks back and the buyers did not have an attorney. The day of closing did not sound pleasant for the buyers and it was mainly because they didn't have "One Voice" to listen to. The delays were fairly standard things...the lender was running behind. Closing had initially been set for 9am and around 4pm the day preceding I could see where things were headed so we pushed it back to 12pm. But even this turned out to be too early and I just kept in touch with the title company and lender regarding receipt of the loan package, ect., ect...worked on things at home. Unfortunately the buyers didn't know who to listen to. So all morning their frustration is growing because they don't know what was going on and one of them apparently was going to be leaving the area for a month and they had to close that particular day. I even communicated with them a bit trying to describe who they should be listening to but by that point they weren't really able to listen to anyone. I even offered to draft a property power of attorney for them if the wife indeed wouldn't be able to be present after the closing day. But they listed to the lender and got the closing shortly before noon.

Personally I ended up timing it just about right on...showed up about 1:45pm and was in and out in about an hour and got my checks the next day. The deal funded just before 5pm.

This probably isn't reason #1 to use a lawyer in a residential real estate transaction but it should be considered. Someone who knows what they're talking about and has only your best interests in mind. These guys wasted a day for what should have been one hour at a title company.

Mortgage Foreclosure Videos

2008-06-10T16:02:00.000-05:00

Our friends over at Illinois Legal Aid Online have produced a nice series of videos giving an overview of the mortgage foreclosure process in IL.

It Works with Used Cars, Why Not Your Home

2008-06-09T17:49:00.000-05:00

I'm speaking of ZipRealty's new "24-Point Inspected and Certified" sales program for their listed properties. Here's the news:

ZipRealty's sellers can opt to have their home inspected by a state-licensed home inspector and offer the buyer a home warranty for a combined fee ranging from $500 to $560, depending on the state. The inspection includes 24 specific areas of the home, including the attic, foundation, windows, doors, fireplace, kitchen, electrical and plumbing systems. Homes that meet the inspection standard in each category will receive the "24-Point Inspected & Certified" designation. Potential buyers searching for homes in good condition will see the "24-Point Inspected & Certified" designation on both ZipRealty.com and Realtor.com, as well as on home flyers and signs at the property.

Cutting through the BS, they're asking you to pay them $500-$600 for a home inspection and 1-year home warranty. In this current market climate nearly every seller should be including those two items regardless. Pay for the warranty at closing and have an inspection report available to every buyer coming to view the property and deal with repair issues raised. Particularly on the inspection, why use Zip's "conflicted" person instead of your own independent professional?

Top 5 Cities Surviving the "Housing Bust"

2008-05-10T09:55:00.000-05:00

Charlotte, Portland (OR), Seattle, Dallas, and Boston according to SmartMoney. Texas has done amazingly well during this downturn...they've been like a separate country during the last year or so of general this malaise.

And frankly if you actually look at the Chicago/Illinois figures instead of the falsely alarming headlines, we ain't so bad here. Beneath the headline announcing a 27% drop in IL home sales the other day was this:

The median price of a home in Chicago increased 5.4 percent in the first quarter, however, to $295,000 from $280,000. Condominiums prices in Chicago moved up a hefty 8.6 percent, the Realtor group said.

Take a RepoHomeTour

2008-05-09T15:34:00.000-05:00

Did ya see the RepoHomeTourChicago.com bus out in the NW 'burbs a couple weeks back? Hey more power to them I say...the foreclosure crisis can only fairly be seen as a business opportunity for people in a position to profit from it. The Trib. had a piece on the tours a couple weeks back. Interesting article, what's distasteful about buying homes from a bank? I think if you asked the Fed. Chair about spurring the economy, home buyers are a good thing.

Slow Times for Real Estate Sales and Real Estate Blogs

2008-05-09T14:45:00.000-05:00

Forgive me for the dearth of postings lately. It's just kind of depressing in the whole field. I could post the quarterly foreclosure numbers or another monthly or quarterly drop in home sales. But I don't want to be a blogger based solely on secondary reporting. So....

Well last week one residential deal died and one residential new contract came into the office. The number of forcibles coming in both landlord and association stuff has been ramping up as the economy ramps down. And most importantly, the two homes around the Chicago area where I have some $25,000 in attorneys fees pending payment based on the sale of real estate post-trial, no offers in about a year in both cases.

Cook's Eviction Process In "What's Your Problem"

2008-05-09T14:17:00.000-05:00

A pretty realistic example of how things work in Cook County evictions in this week's What's Your Problem column in the Trib. The column asks readers to write in about their problems and then the columnist gets involved to help and solve the problem. If you work in this field at all the story of the 88-year-old landlord isn't unusual. She got an Order of Possession in mid-January but didn't finally get her tenant evicted until earlier this week (May). Frankly the article portrays the Cook County Sheriff better than many of the cases I've been involved with. I've written in this space before about our last Order of Possession that actually went all the way to eviction and it took 9 weeks for the Sheriff to appear. Frankly this piece mentions that the Sheriff was out to the property in less than two months but the Landlord wasn't there when they arrived.

Eventually the LL got outside the 90-Day window (735 ILCS 5/9-117) to enforce an Order of Possession and she had to go back into court to get the Order renewed.

Another More Personal Barometer of the Real Estate Market

2008-04-29T11:09:00.000-05:00

Just wanted to post a quick nugget about a personal experience that might say something about the health of our Northwest Suburban real estate market. So one of the non-profits I'm affiliated with had a fundraising event over the weekend. A nice event with raffles, silent auctions, ect. and with some 250 attendees. Myself, a local Realtor, and a certified home stager had a package of lawyer representation in a residential transaction, a comparative market analysis, and a free home staging as an auction item which probably retails for $1,000 or so. Well, the allowable opening allowable bid was $50.

0 bids. Not too scientific but I did find it surprising.

Another Reason NOT to Buy a New Build

2008-04-26T13:31:00.000-05:00

There are many reasons NOT to buy a new-build home whether condo, townhome, or single family home...unknown property tax liability (no credit at closing), very limited warranty protection from developer, well-protected Seller (from liability that is), house settling (i.e. smallish repairs), and under-funded associations. At various home buying speaking engagements I'll often share my opinion that a new-build condo is the WORST type of home to buy. Because of all the above reasons with the under-funded association issue underlined. When you read of the $20k special assessment horror stories it's nearly always a new-build condo where the developer sold everything off quick, it was crappy, and the association was hardly funded.

Just to add another log to the fire, I see Kimball Hill filed for Chapter 11 protection last week following many other local builders, including Neumann Homes. ANOTHER REASON not to buy a new-build. If your Seller/Developer files bankruptcy while you're under contract with them to build a home, get ready for a lot of delays and possibly a quick refresher on the US Bankruptcy Code so you can get your earnest money back.

The Long Term Impact of Foreclosure

2008-04-23T08:47:00.000-05:00

Here's the full piece from Ken Harney (He's syndicated but usually appears in the Sunday Trib...the best real estate finance writer going). But he brings up some facts that are new to me about the length of time that foreclosure or "walkaway" will impact you.

On March 31, Fannie Mae sent out new guidelines to lenders aimed at walkaways and other foreclosure situations. Fannie will prohibit foreclosed borrowers from getting another mortgage through it for five years, unless there are "documented extenuating circumstances." In those cases, the prohibition is three years.

Even after five years, borrowers with foreclosures in their files will have to put at least 10 percent down and need minimum FICO credit scores of 680.

Freddie Mac, Fannie's rival, counts foreclosures as major blots for seven years, and a senior official said the company is aggressively pursuing walkaways "to preserve our deficiency rights" where permitted by state law.

PowerPoint from IL Housing Development Authority

2008-04-23T08:44:00.000-05:00

It's from their series of Homeowner Outreach Days that they've been holding of late.

IL Statewide Foreclosure Prevention Network

2008-04-23T08:39:00.000-05:00

A statewide resource of 15 non-profit housing groups...888-995-HOPE.

The Illinois Statewide Foreclosure Prevention Network is a coalition of 15 non-profit
housing groups providing default and foreclosure counseling to families at danger of
losing their homes across the state of Illinois. The group, organized by NHS of Chicago,
first came together in May of 2007 to identify ways to work together and to garner
additional resources to support these important services.

BofA to Drop Option ARMs

2008-04-23T08:32:00.000-05:00

Probably a good move as Bank of America tries to spiff up its image as they try to get regulatory approval for their Countrywide buyout.

A House of Many Colors

2008-04-22T17:10:00.000-05:00

Or just make sure you choose the right ones...at least if you're looking to sell your home. Here's the piece and the list:

•Yellows, overall, are not selling.

•Orange is popular outside the U.S. but isn't selling well here. An exception: deep corals as accents.

•Purple isn't a big seller, either, but our tastes in the color have shifted dramatically, from "Grandmother's soft lavenders" to wine and true purple, used in small amounts.

Other trends to keep in mind as you decorate to court your home's next resident:

•Granite in the kitchen isn't going away, but Turner sees a preference toward granite on the more subtle side.

•"Case goods" is industry jargon for big-furniture cabinetry, but what happens there also influences what's on the walls in your kitchen. Recently, dark-chocolate colors have dominated, but she says wood is lightening up toward a warm, medium brown. Cherry remains the favorite, Turner said.

•"Black and white is emerging big in the marketplace, and it will be huge in 2009 and 2010," she said. Throw in accents of red, and you'll have a combination with a strong influence in the European design market, she said. Another driver of all things red: the Olympics in China this summer, she said.

•Blue has always made us feel "safe," Turner said, and it's not going away. "Combined with brown, we expect it to be around a few years, and browns are huge right now."

Question: Cook County Evictions

2008-04-17T08:38:00.000-05:00

Do they ever answer their telephone? Anybody ever been to their window in Daley 702? You have to go there in-person to give them the Order of Possession to move forward with scheduling an eviction. Of course at least in regards to Cook County the word used shouldn't even be "eviction" any longer because that's no longer what is done. Now it's a "Change of Locks case."

A Fading Legal Precedent: The Merger Doctrine

2008-04-11T17:30:00.000-05:00

Alright so the Cliff Notes definition of The Merger Doctrine (that doesn't do justice to my first year Property professor) is that in the context of a real estate transaction, all of the pre-closing agreements (generally the various contractual terms) "merge" into the deed at closing thereby extinguishing a parties right to sue based on a contractual term post-closing. Thus creating some sense of closure at closing.

However, our IL Supremes have cracked open the door a bit in Czarobski v. Lata. The case dealt with your plain old 105% tax proration. The buyers were to get a 105% prorated credit at closing of the last ascertainable tax bill, UNLESS, the bill was based on a partial assessment. So at closing sellers gave buyers the 105% credit but the bill was based only on a partial assessment. When the real bills came out the buyers were some $10,000 short.

So buyer sues seller based on mutual mistake of fact and misrepresentation. The Supremes ruled that the "merger doctrine" did not apply here and here the buyers suit was remanded for further action at the trial level.

Those Evil Mortgage Brokers

2008-04-11T16:36:00.000-05:00

Well, lets not over-generalize...I mean I don't like all those lawyer jokes.

But, new research by the Center for Responsible Lending shows that subprime borrowers with brokered loans pay significantly more than their counterparts who deal directly with lenders.

In the first four years of a mortgage, a typical subprime borrower who has gone through a broker pays $5,222 more than if he or she obtains the loan directly from a lender.

Here's the full report & an Executive Summary, plus a Sun-Times overview.

So How Many Disclosures Must a Title Agent Make in a Real Estate Transaction??

2008-04-11T15:38:00.000-05:00

I can't totally do this topic justice here, but a must-read for real estate practitioners is in the March '08 IL Bar Journal entitled "Ethics and the Attorney/Title Agent" (password protected) by Attorney Michael J. Rooney. Essentially he runs through the various conflicts of interest that exist in the typical real estate transaction where a Seller's attorney is representing a client but also acting as an agent of a title insurance company. He also talks about a scenario where an attorney would actually be representing the title company as client.

First, he reminds us that the IL Title Insurance Act requires the lawyer acting as a title agent to complete and distribute a "Disclosure Statement Controlled Business Arrangement." OK, I do see these disclosed in most transactions.

But he talks about other disclosures that frankly I've never seen before...have you?

Essentially one disclosure discloses to the Seller what you're doing as a title agent, the cost, and their right to seek title insurance from another provider (See IL Rules of Professional Conduct 1.7(b), 1.8(a) and 2.3). The other again to your Seller is an "Adverse Client" Disclosure and Consent, essentially warning of a potential conflict of interest between a Seller and a title company (IRPC 1.7(a)).

Well, add another couple of forms to the closing pile.

Property Values Do Go UP TOO!

2008-04-11T14:57:00.000-05:00

I saw our friends down in Springfield passed legislation that would put Cook County on an annual reassessment schedule rather than our little triennials that I so now enjoy. Sounds like a tax grab and more expense for the Cook Assessors office.

Here's the quote from the bill's sponsor:

Rep. Kevin Joyce (D-Chicago), the legislation's sponsor, said the current three-year reassessment cycle is "not fair and equitable."

"We need to make sure that . . . people aren't paying an undue burden," Joyce said.

Or how 'bout having our taxes RAISED every year instead of just every three years. Rep. Joyce, yeah we are in the throes of some real estate strain but the value of real estate has only dropped like twice in the last 25 years so lets not overreact.

Top 50 Markets by Affordability

2008-04-09T16:55:00.000-05:00

Interesting list from Bizjournals...we check-in at 33/50 with 50 being MOST expensive. I'm a big San Antonio fan...nice climate, golf courses and not too far from the Gulf...here's to a second home there.

The Value of Home Staging

2008-04-09T16:39:00.000-05:00

Here's the recent Tribune article. The premise of home staging is logical...something akin to appearance matters; of course. But a quote from the piece:

Ninety-three percent of staged homes in the U.S. sell 31 days or less, according to Barb Schwarz, of International Home Staging, which offers a home-staging accreditation program.

Come on.

Chicago "CTA Portion" Transfer Tax Refund?

2008-04-09T16:02:00.000-05:00

Alright I'm confused already and it's only been effective 9 days...so we don't just have a real estate transfer tax in Chicago any longer now we have the "City's portion of the tax" and the "CTA's portion." Okay, the old tax (City portion) is the same old $7.50 per $1,000 to the Buyer. The new tax (CTA portion) is $3.00 per $1,000. We've reported on this subject several times before in this space.

However, now I've gotten this "CTA Portion of the Real Property Transfer Tax Refund Application" form and I'm totally stumped. Here's the language:

Section 3-33-060 (O) includes a refund for the CTA portion of tax for transfers to transferees who are age 65 years or older, who occupy purchased property as their personal dwelling for at least one year following the transfer, if the transfer price is $250,000 or less. This exemption is administered through a refund administered by the Chicago Tax Assistance Center of the city's Budget Office located at 121 N. LaSalle, City Hall, room 604. Application forms are also available online by clicking here.

What does this mean, i.e., who's eligible for the refund? 65 years and old and a transfer price $250k or less...ok, I understand that. But the refund relates to the CTA portion of the tax and the person must "occupy the property as the principal dwelling place for at least one year following the transfer." So we're refunding the Seller paid tax but in order to get the refund you must live in the property at least one year following the transfer (the property that you've just sold?).

So, who is eligible for this refund???

Is it like some suburbs where if you've paid a Seller transfer tax upon sale but then buy again in the same community, then you're eligible for some sort of refund of that Seller transfer tax? I haven't got a clue.

Lawyers: Single-Handedly Keeping the Chicago Real Estate Market Afloat

2008-04-07T13:06:00.001-05:00

And we're leaping tall buildings in a single bound...

Hey I'm just re-reporting from another source here:

A study by Jones Lang LaSalle Inc.'s Law Firm Group has found that lawyers take up a healthy chunk of downtown Class A office space.

It found that 14.2 percent of the 25.4 million square feet of Class A office space in the West Loop is occupied by law firms. For the nearly 14 million square feet of Class A in the Central Loop the figure is 25.1 percent.

"Demand from law firms … has driven the development of seven of the last eleven projects built in the Central Business District," says Jones Lang LaSalle.

We Buy Ugly Homes

2008-04-04T17:34:00.001-05:00

HomeVestors' top 10 cities for real estate investment:

DALLAS - (April 3, 2008) - HomeVestors® of America, Inc., the company famous for its "We Buy Ugly Houses"® billboards and America’s #1 Home Buyer, has named the top 10 markets for real estate investing in the first quarter of 2008. They are as follows:

1. Dallas, Texas

2. Houston, Texas

3. Atlanta, Georgia

4. Fort Worth, Texas

5. St. Louis, Missouri

6. Philadelphia, Pennsylvania

7. San Antonio, Texas

8. Denver, Colorado

9. Minneapolis, Minnesota

10. Phoenix, Arizona

Anyone ever sold property to them? I've got a couple clients looking to dump properties quick.

Tax Day is Coming...

2008-04-01T15:29:00.000-05:00

So we all know the rule that if you've used a home as your primary residence for at least 2 of the last 5 years then you know $250k/$500k (single/married) in profit is exempt from capital gains tax upon sale. But even if you don't meet the two year rule, you might be able to shield some of those profits from taxes...here's when.

House Swap

2008-04-01T15:24:00.000-05:00

or you might try HomeExchange.com.

Buyer's Incentive Idea

2008-04-01T14:30:00.000-05:00

Saw this one advertised at a local Metra station...Seller offering to pay 6 months of Buyer's condo assessments. Only likely $1,200 to $1,800...but it's something.

Hillary and this Blog

2008-04-01T14:18:00.000-05:00

Finally Senator Clinton's legitimate tie to this blog. Here's today's story about Clinton owing more than $3,000 to her alma mater, Maine South in Park Ridge as she starts to feel the financial strings tightening.

And the tie to this blog...

Well, I'm a resident of Maine Township and if Ms. Clinton keeps stiffing us I'm expecting my property tax bill to take a hit.

Words to Describe the Subprime Crisis...

2008-03-29T10:45:00.000-05:00

I think it's the best description I've seen about the current mortgage malaise from my favorite former member of the Bush cabinet, Paul O'Neil:

NYT: It’s so hard to understand how the subprime mortgage crisis has triggered a financial crisis of global proportions.

A: If you have 10 bottles of water, and one bottle had poison in it, and you didn’t know which one, you probably wouldn’t drink out of any of the 10 bottles; that’s basically what we’ve got there.

We're Top 10!

2008-03-27T17:30:00.000-05:00

I guess it's not so bad here (maybe I'll stop trying to relocate). U.S. Census Bureau released the top ten growth metro areas from 7/06 to 7/07. We're seventh and the only Midwest location on the list. As for other large, Midwestern cities...get the net.