I thought that I'd share my latest experience with a relocating buyer.

We've been working together since April. They knew that they wanted Naperville but just weren't too sure on which sub-division. The decision was made by their son's after-school sports events. They decided that they wanted to be close to his school and activities, even though it meant a longer commute for Dad.

So, we looked at more homes. The wife and I would go out during the week and then report back our findings.

On one of these trips we looked at a vacant, relocation home. And, many of the homes on the market are vacant! The wife liked the location...on a cul-de-sac so her son could play; the husband liked the big yard as he gardens.

The original listing price was right around $550,000. I worked out comps and gave them to the buyers. They studied listings in the area as well as in the sub-division. And, then they called me and said that they wanted to make an offer.

OK...I'm ready! I meet with them and the husband says: "Here's where we're starting our offer: $450,000." Wow. A serious buyer starting $100,000 below the listing price.

And, yes, he did come up and the seller did come down. But, neither the agent, the seller or relo laughed at our offer. That tells me that times have changed. The fact that they wanted to work with this offer...to put it together contrasts with the market we had in 2006, where an offer like this would have been refused.

So, is this a good time to buy? YES! If your credit is good...above 740 is best...and you have down payment funds. Rates are reasonable. Inventory is aging.

And, you can get a really good buy. NOW! I suspect by next Spring many of these "deals" will be history.

According to high government sources reported by both the New York Times and the Washington Post late last night the government is planning to take control of both Fannie Mae and Freddie Mac.

This move, which I thought might have happened last weekend, will protect the quasi-governmental agencies while they continue to operate.

According to the NY Times, over 70% of the mortgages written are backed by either Fannie or Freddie. As part of the take over, there will be changes in the operational aspects of the company.

The take over will also wipe out both the common and preferred stock holders. And, as many pension funds held stock in these companies that will make some people very unhappy.

The take over will end up costing the taxpayers lots of money. Expect billions. And, expect our taxes to increase to cover this. But, it will keep the fragile mortgage market together. And, we need that.

Those of you old enough to remember back in the early '90's when the government also did a take over of Long Term Capitol Management, will know that these forced moves insure against greater chaos.

Can Fannie and Freddie Survive?

“Washington-based Fannie Mae and Freddie Mac, have lost a combined $3.1 billion between April and June,” according to an article in the Chicago Tribune today, August 20, 2008. “The two government-sponsored companies are the largest source of funding for home mortgages in the U.S,” the paper added.

Now we know that government can not, repeat, can not, afford for these lenders to go under.

So a rescue plan will be devised…probably by the end of the year.

And, who will pay? Why, you and me and every other tax payer. But, keeping these quasi-governmental companies alive is necessary, as they’re the only ones doing low down payment mortgages.

And we thought that a $3 billion loss was a lot of money. Wait till this is over…and the total will probably reach $5 billion.

Could this have been prevented? Yes…but that’s another story.

© 2008 Move UP to Naperville Blog, Eileen Landau

Yesterday I was out "on tour." That's where listings are available for agents to see without an appointment.

And, I noticed the following at one of the listings:

1) the lawn was brown and weedy

2) the cement pad at the front door was severely cracked and coming apart

3) there were weeds in the landscape area near the front door

4) the screen door was ripped

5) there were rust stains on the front door

Now, these were just the front door impressions. In today's market, when a buyer has a choice of 25, 50 or even 100 homes in his price range, if your home doesn't have curb appeal you're not going to get the buyers into the house.

Remember, that almost all of our listings are online and they either have the exact address or a map which shows the approximate block. I know that most of my buyers do drive-bys of property to cull the list. They'd take a pass on this one.

So, what are the things that sellers need to know in today's market?

1) Price

2) Location

3) Condition

4) Financing

Price: It can't be low enough! If all the similar homes have sold between $375,000 and $390,000, then don't expect a buyer to pay $400,000 or more. It's not going to happen!

Location: Next to freeways/tollways or busy commercial streets, electric high wires, landfill dumps, devalue the property. Could be by 2%; could be by 10% or more.

Condition: It must look like a model! Store your "stuff." Or better yet, have a garage sale and what you don't sell, donate. Hire a home stager.

Financing: FHA/VA financing permit a first-time buyer to get into a property. Don't hold out for "conventional" financing. And, do offer to help with closing costs.

Now, the above only applies IF you're motivated to sell!

And, if you're motivated to sell...then contact me!

C  Move UP to Naperville Blog, Eileen Landau

What I see as key real estate trends for 2009

1) Social

A) Increasing numbers of SENIORS. Many will keep on working past their "normal" retirement age as they've lost money in the stock market in the past 8 years.

B) Pent-up demand from first-time buyers as they establish new households.

C) People staying in place while aging. My "average" client has now lived in his home for 19 years.

D) More real estate people using Linked-in, YouTube and FaceBook.

E) Fewer real estate companies and agents. Those that survive take larger market share.

2) Economic

A) Continuing high rates of unemployment. Fierce competition for jobs in distressed areas such as Ohio and Michigan.

B) Relocating buyers will negotiate so that their old home is no longer their responsibility.

C) Lenders underwriting standards will continue to evolve into stricter guidelines. Strange concept that buyers will have to have funds for a down payment in addition to a job.

D) The foreclosure states of California, Florida and Nevada will be inundated with foreclosure properties. The lenders will not have enough people to handle them efficiently.

3) Technology

A) Increased use of online search engines for buyers. Expect that over 90% of all buyers will be surfing real estate on line.

B) Increased use of 'smart' phones. More Blackberry and I-phones which receive email and permit an immediate reply.

C) More agents writing unread, poorly written blogs.

D) Lead generation companies coming between the potential client and the agent and charging hefty fees.

E) Newspapers in print format disappear. We get our news online or from TV or podcasts.

4) Political

A) The candidates will make promises but their actions after election will be too late and too weak.

B) The American taxpayer will bail out the banks and Fannie Mae/Freddie Mac to the tune of several billion dollars.

C) The economy will remain sluggish and until the overwhelming housing inventory sells off, prices will remain depressed.

D) California, Florida and Nevada will take several years to recover

5) Fringe drivers or Black Swan Events. (Black Swan are events that are so outside the realm of possibility that they surprise most everyone. Thanks to Doug Kass of Real Money for introducing me to this term.)

A) A terrorist attack on U. S. soil decimates an entire city. The shock, much like 9/11, causes us to sit and watch the developments on TV, forgetting our business for at least a month.

B) A flu pandemic kills millions of people world-wide. The U.S. is put on curfew and only essential services and service providers are allowed out. Eventually, this will occur.

C) A war over an oil pipeline causes gasoline prices to soar over $6.00 a gallon. People on fixed incomes can’t afford to heat their homes and shelters are overcrowded.

D) Potential buyers trying to buy and finding that the underwriters demand their wallets and their lives (an old Jack Benny routine), continue renting.

I write a real estate prediction blog every year. Here’s the link to what I wrote: http://moveuptonaperville.blogspot.com/search?q=predictions”

© Move UP to Naperville Blog, Eileen Landau

I was out showing Romeoville townhomes this morning. Priced between $160,000 and $200,000. Just off of Weber Road.

The subdivision is newer, under 10 years of age, and there are about 8 units on the market. We've now seen four...and two of the properties are possibilities.

However...one of the units that we walked into required us to wear dark sunglasses! The home was painted with bright oranges, yellow-greens and red. And, you saw all those colors at once. The property has been on the market over 300 days, and I'm betting that every buyer who walks in...turns around and walks out.

But, that's a mistake. The unit has a great floor plan and as far as we can tell, it looks larger than the others and it's reasonably priced. But not sold. Which means that my buyers should be able to get it for an even better price!

Sellers...when your agent tells you to "neutralize" your house...don't get upset. In this market your home has to look, smell and be a model home...or it won't sell. Period. End of discussion.

And, also...if you're having a showing...please don't lock your screen door. We can't get in. Yup, this also happened this morning. Showing was confirmed too. But, no way to get at the Sentrilock!

And some people think real estate is boring!

The new "housing" bill has a few interesting things to say about Reverse Mortgages.

These are "mortgages" where the lender pays you while you stay in the house. For many people that's the only way that they can maintain their property as living on a fixed income (social security and perhaps a pension) just doesn't cover the inflationary rise of medicines, utilities and food.

One of my clients, took a reverse mortgage when she turned 62...and that made her life good.

However, there are some drawbacks...high closing costs and a limited amount of money that you can withdraw. So, if you want to do this...investigate and compare your options.

The new bill attempts to limit the fees, as its loan origination fee is set at 2 per cent of any loan under $200,000. Higher loans will have a fee of 1 per cent up to a maximum of $6000. Should make these loan much more appealing to seniors.

The other thing the bill will attempt is to control the high-pressure sales people who insist that you buy an insurance product as a condition for getting the loan. Don't fall for it. Take your kids, grandkids or borrow somebody who is a logical thinker and let them ask the questions while you digest the information.

Many seniors are afraid to ask questions, especially, if they don't understand something. Should I ever need to do this, I'm taking my teacher-daughter who will look cooly at the sales person and challenge them as to why.

It's so nice to know that I have logical kids who don't accept what someone says. I'm sure it's going to save me time and money.

Here are some questions that you as a consumer might want to ask the agent that you hire to represent you.

1) How long have you been in the business? I started in real estate back in the pre-historic days. 1976 to be exact. Took a full year of business courses which included real estate sales and management. And, passed my exam and got my assigned desk in a brand-new office with several other brand-new agents. No computers in those days. No electronic keyboxes. No internet. We kept a black notebook and made changes to it on a daily basis. We toured all the new listings several times a week and attended mandatory weekly meetings, even though we were independent contractors.

2) Are you a REALTOR? I am a card carrying REALTOR, a member of the National Association of REALTORS, the Illinois Association of REALTORS and my local association, Mainstreet Organization of REALTORS (MORe). As REALTORS we subscribe to an ethical model to run our business. We are governed by many rules and regulations.

3) What certifications do you hold? I passed the Broker's exam in 1982. Then I started the classes to earn my Certified Residential Specialist designation, and received the award back in 1987 after 3 years of classes. I also took several classes toward my Graduate REALTOR Institute. And, then in 1998 I took the Accredited Buyer Representation course. And, most recently in 2005, I completed my course work for e-Pro, proving that I'm a certified internet expert. And, while I was taking these classes I was coached by the following people: Tommy Hopkins, Mike Ferry, Steve Shull, Matthew Ferry, Tom Ferry and Mark Strothers. I attended lots of seminars over the years, both learning and presenting and networking with agents all over the country.

4) What is your specialty? I really enjoy working in residential real estate. I started my career as a listing agent and now with the internet I've found that I'm working mostly with buyers. So, my experience in both sides of the business is vast.

5) Can I have a list of past customers? Yes…and you'll find testimonials on my websites with former clients' names right there. And, yes, they've agreed to have these made public. I've closed 900 sales at this point...and that's a lot of homes!

6) Who is your Broker? Can I call him? Of course you can call him. John Veneris-630-515-9500. And, please be sure to say why you're calling. I've worked with John for over 30 years. And, he's a great manager, in fact, he was Manager of the Year when we were at Re/Max many years ago.

7) Is this your full-time job? YES! I spend vast amounts of time previewing property; emailing information to clients; answering questions; showing homes; going to inspections; and solving problems. Full time...but I do take time off. Saturday nights are reserved.

8) What makes you different? I never thought you'd ask! I'm highly analytic. Really. Many of my clients are engineers, doctors, lawyers, teachers and scientists. And, I do have a very logical system as pertains to buying a house. I'm also good at negotiating. I don't get angry or upset. And, as I've seen so many "strange" things, that I can roll with the punches. This market that we're in, is a slow market, and many agents don't know how to work foreclosures, bank real estate owned or short sales. Time is a great teacher. I've seen interest rates as high as 18% in 1982, to a low of 4.5% back in 2005. A great agent adjusts to the market and educates her clients at the same time.

Any other questions? Add a comment.

© 2008  Move UP to Naperville Blog, Eileen Landau

My 2008 Real Estate Predictions-Revisited and Revised August 1, 2008

It's hard to write a blog that contains downbeat news. 2007 was just awful for real estate. And, 2008, I believe, will even be worse. Wow! How true.

This housing depression is almost as bad as the depression in the 1930’s. Some people feel it is worse!

According to RealtyTrac there are over 200,000 homes a month in the foreclosure process, and they expect that number to increase. By next summer we may have 2 million homes across the country in the foreclosure process.

Yes, the Case-Shiller monthly housing report of 20 major metropolitan areas has shown that every area has decreased housing prices and increased inventory. In my sub-division homes have dropped anywhere from $75,000 to over $100,000 in price.

And market times have increased. And, this means:

1)Increased Inventory. More and more homes coming to market. Yes, lots more homes just sitting, for months in many cases. In fact, many sellers have opted to rent their homes. And, the rentals are also sitting.

2)Increased Market Time. In Naperville currently it's about six months for a home to sell. The average market time is six and one half months. The average list-to-sell is 94%. In the past six months about 67% of the listed homes have sold.

3)Decreased Prices. Sellers who have to sell will reduce their price. Most sellers have reduced their prices by 10 to 20 per cent!

4)Increased Inducements. Sellers will offer to pay for closing costs; homeowner's association payments; and repairs. More seller contributions to get to the closing table.

5)Tighter Lending Requirements. Those marginal buyers who might have purchased a home two years ago are now shut out of this market. Indeed. Especially when purchasing a condo or townhome with an association. The underwriters want every document. They’re even reading the budgets and checking out the reserves. This is also taking longer to get to closing.

6) Fewer Relocation buyers. If a relocation buyer cannot get his home sold, then he's not taking the new job. Or, if the relocation appraisal price to buy his/her home is too low, again, he/she may not take the job. And, as so many companies are “rif”-ing (reduction in force), many new hires are rightly concerned that they may not have a job a month, or six months from now. And, also the number of companies filing for bankruptcy has increased exponentially. And, companies are downsizing both in physical locations and in employee numbers.

7) Fewer buyers. Many buyers are afraid to buy and watch the value of their newly purchased home decrease. So, they will continue to rent for another year or two. Why buy now if prices will be lower next year? Good point, although sometimes you just have to bite the bullet. If you’re planning on staying in your newly purchased home for five years, you should be fine.

The effects of the "sub-slime" mortgage mess will be felt within the entire economy. The notion that the credit problems can be "ring-fenced" or limited are naive. Someone or somebody will have to come in and rescue the lenders, the builders, the insurance companies that underwrite these loans. If it is the government...then, in essence, it will end up being the tax payers.

Hmmmmmmm. I must have a crystal ball. Could you have imagined a credit mess this worldwide?

The general economy will slow as gasoline stays above $3.00 a gallon (currently it's $4.00 a gallon) and heating oil continues to climb. There will be less discretionary funds available for home improvement, home decorating, eating out, entertainment, vacations, hotels, airplane flights and purchasing new cars. Food price will continue to rise as the cost of grain will increase as we manufacture more ethanol from corn. We've seen the reports that consumer spending was at the low end for holiday gifts. And, the only area showing strength was electronics.

The consumer's pockets are near empty and his house, which was his personal piggy bank, is not longer worth what it was two years ago. And, as most Americans, we live from paycheck to paycheck and have little to no savings for an emergency.

In our Naperville market, prices will continue to come down and market time will expand. In my sub-division, a home which was priced originally at $630,000 finally sold at $500,000. And, its competitors are still on the market...unsold.

Buyers will need some money for a down payment to purchase. At least 3% for a FHA loan. Now, it will be 3.5% down payment, plus 1.5% for FHA insurance.

And, documentation and verification will be required. Buyers will wait as they expect prices to continue down. The question is how long until prices start to go up? No one really knows. We can guess. Perhaps 18 to 24 months will be necessary to get the inventory cleaned out.

I now expect that we’ll see improvement in the Spring of 2010, that’s almost 2 years out.

It's going to take time...after all the bubble was approximately five years so it would not surprise me that we have another 2 to 3 years left. And, that can be a very long time.

The lower end of the market will have more activity as those prices are reasonable and affordable, especially if interest rates stay under 6.5%.

The higher end of the market, especially the million dollar spec homes will sit and sit and sit. And, it amazes me that several builders are still putting up these McMansions…which just sit and sit. There are several million dollar homes near Hobson Road which were built in late 2006. They are still unsold!!!

However, this too shall pass! Do we have the patience? That’s my mantra…patience and more patience!

Copyright 2007 and 2008 Move UP to Naperville Blog, Eileen Landau

Eileen's Naperville Single Family Stats for July, 2008

Currently we see the following market statistics:

NAPERVILLE SINGLE FAMILY LISTINGS

ACTIVES

Bedrooms #Active Avg LP Avg Market Time

ALL 1356 680,191 194 DAYS

3 284 381,389 160 DAYS

4 860 669,062 196 DAYS

5+ 189 1,222,604 236 DAYS

SOLDS (in the past 6 months)

513 HOMES SOLD

67 PER CENT OF MARKET SOLD

$470,542 AVERAGE SALES PRICE

94 PER CENT LIST-TO-SELL RATIO

Based upon today’s Case-Shiller monthly housing report, prices are still dropping in all the top 20 metropolitan areas.

No surprise. Fewer lenders also…and much harder underwriting standards are causing many sales NOT to close.

Be prepared to document everything and it will take longer to get to the closing table.

Buyers with less than 10% down payment will find that the only available funds are under an FHA program.

Conventional lenders are requiring more down payment.

Are you thinking about buying? Call me at 630-961-2600 and let's talk.

© 2008, Move UP to Naperville Blog