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Real Estate FAQ’s

 

Buyers Faq's

I’m ready to start looking for a home now what? 

So you are ready to purchase a home. Where do you start? A great place to start the process is with engaging a real estate professional. Anyone can show homes but only a qualified real estate broker will help you navigate the process from contacting a financial planner, introducing you to a qualified lender and discuss your needs and wants to find you the right home. They should have access to off market properties as well as the MLS (Multiple Listing Service) to ensure you see everything that is available that fits your "must have" list. Qualified real estate professionals bring expertise and guidance that will make sure that you not only find a home that you love but one that will appreciate and will be marketable when you are ready to sell. 

Pre-qualified vs Pre-approval

There is a major difference between a pre-qualification and pre-approval. A pre-qualification letter is a very basic evaluation of your financial health. It is based off of debt to income ratios and debt service ratios. A lender can put together a pre-qualification letter in minutes over the phone. In today's competitive market a pre-qualification letter is not sufficient to put together a qualified offer on a property.

A pre-approval letter involves a much more involved analysis of your entire financial health. A lender will require you to provide the following documents: past two years of tax returns, past two years of W2's, last two pay stubs, past two months of saving and checking statements and any investment accounts (IRA, 401k). A lender will also request your credit to make sure that everything is in order to issue a pre-approval letter. This process normally takes 24-48 hours from the time you submit the documents to the time the lender issues the pre-approval letter. Pre-approvals are valid for 90-120 days.

The pre-approval letter is included with the offer to show your ability to close on your new home. The listing broker will take into account which bank issued the pre-approval and the terms of the pre-approval. Offers without pre-approval letters are considered much weaker than offers that include a pre-approval letter from a strong lender. 

I found the right home. Now how do I write an offer?

In order to write an offer your real estate broker will either use the CAR (Chicago Association of Realtors) Condo Real Estate Purchase contract for Chicago purchases or the Multi-Board contract for suburban deals. All the documents can be signed electronically and written up in a few hours. Included with the offer will be your pre-approval letter to show that your finances have been reviewed by a qualified lender. 

My offer was accepted. What’s next?

After your offer has been negotiated and accepted you will post the first round of earnest money. The amount of earnest money will depend on the size of the purchase but it is customary to post between $1,000 and $5,000 for the initial earnest money. This check will be made out to the listing brokerage and will be held in an escrow account until closing. This money is not at risk until after you pass inspection and attorney review. Earnest money is collected within 48 hours of the accepted contract unless other arrangements have been made. 

The inspection process.

Once the contract has been accepted and earnest money has been posted, your broker will coordinate the inspection of the property. Your broker should be able to introduce you to a inspector that they trust and respect. Inspections are normally performed within 5 days of the accepted contract. The inspection will take between 1-4 hours depending on the size of the property. You should be present during the inspection so that the inspector can show you their findings and explain the severity of each deficiency. They are hired to find issues with the property so don't be alarmed when they are brought to your attention. By attending the inspection you will get a better grasp of the severity of each deficiency rather than just reading the inspection report. Within 48 hours of the inspection the inspector will produce a report with all the findings of his/her inspection.

Attorney Review

Why is it important to hire an attorney?

Your attorney is in place to make sure you are protected throughout the buying process. Attorneys provide the most value during the attorney review process and closing. During attorney review your attorney will be working on your behalf to get you the most inspection items and the highest credit possible. They will also work to negotiate the best terms for future tax bills. These items alone bring you more value than their legal fees.

The attorney is also pivotal during the closing process. They review each document to ensure that the fees, credits and figures are correct. They also explain each document to make sure you understand what you are signing. 

Once you have the inspection report you will work with your broker and attorney to craft a response to the sellers. The report will list all the deficiencies of the property and you will have an opportunity to request the deficiencies be fixed or that a credit is issued at closing. Generally deficiencies that are less than $250 to correct are omitted from the list. 

Once both parties have agreed upon the inspection items the attorney review process will be concluded. At this point you will post the remainder of the earnest money and you will be committed to the purchase of the property. 

The appraisal process  

If you are financing the purchase of your new home the lender will require that the property is appraised. The appraisal process is designed to protect the lender so that if you default on your loan they have enough equity to recover the remaining loan balance. 

About 90% of the time the appraisal will come back at or above the purchase price. If it does not you will have the opportunity to renegotiate the purchase price with the seller. If a home is purchased above the appraised amount it may require you to post additional funds to achieve an 80% loan to value ratio. Your lender will better be able to direct you if you run into this issue. 

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Closing Day

Either on the day of closing or the night before you will perform your final walkthrough. During this process you are looking for anything that may have been damaged since you were last in the home. You are also looking to make sure that all items that were requested during attorney review were resolved. Final walkthroughs can take anywhere from 15 minutes to an hour depending on the size of the home.

After the final walkthrough you will head to the Title company for the closing. You will need the following items in order to close on your new home:

  • Identification
  • Proof of homeowners insurance
  • Certified cashier's check or wired funds for the down payment, closing costs and any other money needed

A few days prior to closing you will have a call with your attorney to confirm what you need to bring with you the day of your closing.  You should also confirm the final amount that needs to be wired with your mortgage broker and wire the funds the day before closing. 

During the closing your attorney will be with you to walk you through all the paperwork and explain what you are signing. They are also there to check the documents prior to signing to make sure title, fees and figures are correct. 

I need to live in the unit for a week after close. Can I do that?

Post close possession is not ideal but is allowed in some circumstances. The seller must agree to a per day cost and you may need to post additional funds into escrow to ensure that the property is not damaged during your stay. Unless absolutely necessary, this option is discouraged. Consider the storage of your furniture and additional moving costs as part of the transaction costs. 

What costs should I expect to incur during this process?

Attached is a general guideline of the costs associated with the purchase or sale of your home. 


Sellers FAQ's

I want to sell my house where do I start?

After engaging a real estate professional the best place to start is in the brokerage office. I encourage all my clients to carve out 1 hour so that we can discuss the objectives of the sale and figure out the best way to achieve the desired outcome. Some clients have a strict time frame which dictates the pricing strategy and other clients have more flexibility in regard to price and closing date. Because every situation is unique, it's important to sit down and make sure that everyone involved is on the same page and share the same goals. The process I use ensures a superior and consistent service level. 

What is the timeline for selling my home?

Below are the steps involved in selling your home. I pride myself on the process I use to ensure a consistent service level and superior results for all my clients. My process is tailored to each individual client but the timeline below will give you a better idea of the work required to sell your home.

  • Initial meeting with your real estate broker
    • Understand your goals and timeline
    • View the property
    • Give advice for showing your property
  • Provide property pricing analysis
    • Active properties - current competition
    • Contingent/Pending properties - those properties currently under contract
    • Closed properties - recent properties that have sold and closed. These properties will be the focus of buyers and appraisers.
    • Expired and Cancelled properties - rejected by the marketplace
  • Sign listing agreement and fill out disclosures
    • Details of the listing agreement
    • Agency relationships
    • Illinois real property disclosure
    • Lead paint disclosure (if applicable)
    • Radon disclosure (if applicable)
    • MLS Exemption form - Approval for date to submit to MLS
  • Discuss logistics of showing the property
    • How best to communicate showing requests & appointments
    • Keys and alarm code
    • Work that needs to be completed prior to placing the property on the market
      • Painting
      • De-cluttering
      • Staging
  • Photographer
    • prior to listing the property on the market, we have a professional photographer shoot the property. These images are uploaded to the MLS, Zillow, Trulia, Realtor.com and other online real estate portals.
  • Order property domain
    • Your listing will have its individual domain and website so that all interested prospective clients can access pictures, floor plans, the property brochure and contact information directly.
  • Order property sign  
    • If your building allows, we will order a property sign to be installed on the property, please let us know any building restrictions that the homeowners association requires. 
  • Create and publish brochure
    • Each listing receives a custom property brochure. Our in house designers produce the layout of the professional piece that is handed out to prospective purchasers. The brochure features detailed property information, our professional images and a map of the surrounding neighborhood. 
  • MLS Input - Approximately 1 week after photography
  • Online advertising / marketing
    • Enhanced online exposure on Zillow, Trulia, Realtor.com & 30 other real estate focused websites.
    • Facebook / Instagram Marketing. 
    • Monitoring traffic patterns to evaluate how much activity is coming through varying online sites, and adjust accordingly.
    • Here is a link to more information on the marketing materials
  • Just Listed E-announcement
    • We contact our clients, prospects and brokers in our contact database with customized emails including a "Just Listed" E-blast announcement of your new listing. 
  • Open Houses  
    • We will work as many open houses required to get the unit sold. The most effective time to host open houses is the first 3 weeks of the unit being on the market. We will drive traffic to the open house through online and offline marketing strategies. 
  • Cross Marketing Efforts
    • We consider ourselves a tightly integrated network that has the ability to expose our properties to a very targeted and knowledgeable group of real estate professionals working with active buyers. 
    • Your property will be aggressively marketed to this sphere in an attempt to expose potential buyers to the property. Contact will be made with these agents via the efforts described above.
    • We will also use the reverse prospecting tool in the MLS to find buyers who may be interested in your property. We reach out to the brokers of these buyers directly to try to further spark interest.

I have an offer now what? 

Some of my clients are concerned if they receive an offer in the first weekend on the market for close to or at asking price. Some people interpret this as they have underpriced the unit but you must remember that the first 3 weeks on the market is the time that buyers are most focused on the unit. And if a buyer has been looking for an extended period of time or has lost other offers they may be more motivated to write an offer at asking price. 

Once you have received an offer for your unit we will evaluate it and form a response. The customized process I implement positions your home in the best light in comparison to other comparable properties. We will pull 3 similar units in the area that are priced above your unit and include them with our response. This strategy helps to show the value of your home and strengthens our counteroffer. 

The inspection process

I highly recommend my sellers have a pre-inspection performed on you home. The reason for this is it creates leverage with the buyer. Once you sign the offer the buyer has the leverage in the transaction. Depending on what they find in the inspection they could ask for a significant credit on the purchase price. If we have our own inspection report completed before we list the property we will know the deficiencies of the unit and can correct them to ensure we don't have an issue during attorney review.

The other reason I encourage my clients to get a pre-listing inspection done is that if we have a multiple offer situation we can offer the inspection report to each of the offers and see if any of the buyers are willing to accept our inspection report and waive any credit. This can significantly add to what you net on the sale of your property. 

The attorney review process

The attorney review and inspection period will coincide with one another, but the attorney won't engage until we have the request from the buyer. If the buyers accept our pre-listing inspection, this should be a very easy process. If the buyer performs the inspection then we will wait for the inspection report to be generated and the response from the buyers attorney. They will likely pick 3-5 items that were found in the inspection and ask for them to be fixed or a credit to be issued at closing. The size of the credit varies dramatically depending on what the inspector finds during their inspection. 

After the buyers have issued their request, you will formulate a response with your attorney. Once you and buyer agree on the amount of credit or the fixes attorney review will conclude and the buyer will post the remainder of the earnest money. 

The appraisal process

After attorney review has concluded the lender will request that the unit is appraised. To ensure that the unit appraises for what it was sold for we prepare a packet for the appraiser that includes the following:

  • Listing sheet
  • Floor plan
  • Copy of contract
  • 3 comparables
  • Property manager contact info

This packet (unique to my closing process) helps support the selling price of the unit and has resulted in many successful appraisals for our clients.  

which updates are buyers looking for?

The two areas that are most likely to sell your home are the bathrooms and the kitchen. If you are planning a remodeling project prior to listing focus on these areas of your home. There are plenty of ways you can remodel on a budget and your broker will have contacts for trusted contractors that can make improvements that will decrease your market time and increase sale price. 

Remember that the final purchase price is only one portion of the net calculation. You have carrying costs such as assessments, insurance and taxes that you will have to cover while your home is on the market. A 30 day close vs a 90 day close can significantly impact the final price you net for the home. 

Should you upgrade your home prior to listing? If so, what upgrades should you make and which should you pass on? Jack Kalinski from Kali Group shares a few minutes with me discussing how to prepare your home to sell.

 

What costs should I expect to incur during this process?

Attached is a general guideline of the costs associated with the purchase or sale of your home. 

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