The week after Labor Day traditionally marks the beginning of Chicago?s fall real estate. As this has been a period of non-traditional activity, I have thought carefully about what are my expectations. The strengths and weaknesses in the marketplace will depend on what type of property in what area at what price. There is no blanket citywide answer. The one constant about Chicago real estate is that it is local to the building, the block, and the neighborhood.

Buyers

The Jay Pritzker Pavilion

Overall there will be fewer home buyers out there than in years past but more than we have seen in the first months of this year. The majority of buyers have gotten themselves in a stronger position financially, coming into the transaction with larger down payments or just paying cash. Those who have the wherewithal to purchase are now actively engaging. These buyers have the opportunities to take advantage of short sales and well priced homes. If they are contracting to purchase a short sale they must have a clear understanding, no matter how financially qualified they are to buy, that the transaction is controlled by the sellers’ lenders.

The strength of the lower end/first time buyer will depend on how the government reacts to the rising default rates on Federal Housing Authority (FHA) loans as reported in the Wall Street Journal. If FHA is forced to tighten its guidelines it will impact a large number of new construction and conversion condominiums which have typically been entry level products. FHA loans became popular with the demise of subprime mortgages, enabling purchasers to get into homes with only 3.5% down payments.

Sellers

Regardless of market conditions it is still about the space. If the space works for the potential buyer then pricing becomes equally important. Over the last months home values have been leveling off. With that said, overall values are significantly lower than in years past. A home?s value is based on the last three sales in the last six months of comparable properties. Because of specific areas of high inventory levels, high rates of default, and foreclosure there are still pockets of the city that will continue to see devaluation.

What you paid for the home factors into your decision to list. Can you afford to sell it now for the current market value or do you have to sell? If you have to sell, will it result in a short sale? Most listings will not get many showings but each and every one is an opportunity.

REALTORS^®

There continue to be far fewer of us. It is down to 10% of real estate professionals doing 90% of the business. To get a transaction closed is a combination of the years of expertise, number of transactions, and the experience of working as a REALTOR^® in this perfect storm of the last eighteen months. These are the agents who have the skills to bring the offers, get them negotiated, and get a higher percentage of successful transactions in an environment where many contracts never get to the closing table.

The marketing of properties has changed as quickly as the real estate market itself. It is no longer about the Sunday paper, the glossy magazine ads, and entering listings into the MLS. It is all about Web 2.0 and social media. Knowing how to use the brand your brokerage offers, supplemented by the brand you have created for yourself as an agent to get your listings the greatest exposure. A professional agent must know where listings go and how to get them optimized. Saying, ?the listing will go into the MLS and will be on the Internet? is not providing a service.

With a decade of experience as an active REALTOR^® I am optimistic. It is about overcoming objections, finding solutions, and understanding how to market. It is also gaining knowledge from my transactions as well as from the expertise of my colleagues. It is about constantly educating myself to accomplish what I am hired to do: the sales and marketing of real estate.

We would like to thank Sergey Gabdurakhmanov for sharing today’s photo via the Creative Commons License.

Regardless of real estate market conditions, our clients hire us to get their properties sold. Sorting through this week’s news and numbers regarding how we market those listings, there still seems to be a huge disconnect between how most agents think their listings are marketed and the realty of the fastest growing resources that the consumers are getting their information from.

Just Being in the MLS Does Not Cut it Anymore

Internet use is evolving and isn't going to go away

It is all about turning your listing into a story now. The websites that are gaining most of our consumers attention are not depending on the information feeding from the MLS. They are looking for agents to contribute information on their listings. Our consumers are buyers, sellers and other Realtors®. They are going in masses to sites like Zillow and Trulia, sites that take basic information from feeds, but are looking to the listing agents for more pictures, open houses and additional descriptions about the property. Sites like these mix social networking and listing data. They offer free blogs and question and answer pages to engage professionals with consumers. The sites are doing a good job evolving as social media evolves.

Blockshopper.com is another example of MLSs losing their relevance in marketing both agents and listings. They pull their data from tax records. Owners can “claim” their homes. Agents who establish accounts can add notes to their listings and previous sales. It shows transaction history of the property. This site is a work in progress, as every site needs to be.

Does Your Broker Do Your Showings?

Think of it this way: it is the agent, not the broker, (the difference explained here) who has viewed the property, evaluated the pricing, condition, and sales potential. You now have platforms to communicate all of this information. The new generation of sites depend on broker feeds as a foundation and build upon that with agent participation. What prospective sellers see on these sites is your first interview and then the follow up in getting a listing. When buyers are searching for a property what they see online about your listing is the first showing and if there is any interest it is the third showing. The brokers provide agents with the tools but it is the agents that sell the properties. It works the same way in the virtual world.

These sites are growing at a faster pace than traditional sites because they are providing the transparency the consumers are looking for.

As I had time to reflect over the holiday weekend, I thought back to all that happened in the month of June.

My Personal Market Activity

Roses...not rose-colored glasses

Buyers re-engaged in the marketplace, resulting in sold properties. Sellers who want to sell are listing at prices to sell, not just to list. Communication between the Realtors®, lenders, buyers, sellers and attorneys is key in keeping the deals together and getting them closed.

I have received negative comments in response to my positive outlook on the market?the first signs we are seeing of stabilization from the numbers that are being published. I have run into agents I know who are amazed when I say I am busy. They are thinking of getting out of the business. I am not, ?wearing rose colored glasses? as commented on one of my blog postings. Rather than walk away in frustration, I decided I have to continually educate myself to the dynamics of the ever changing market. Learn from my most current experiences. Most importantly, work to solve the problems that arise from each of the challenges that come with every transaction.

Americans deserve the opportunity to achieve and sustain the American dream of homeownership. It is still recognized as one of their most important assets. I am a Realtor®. This is what I do.

Sign 'O the Times

Here?s a question real estate agents are hearing lately??With so many short sales out there?does that mean the market is getting worse and should I be concerned about buying now verses later this year??

The answer, in a word, ?No.? Short sales certainly seem to be on the rise due to a variety of reasons: it can depend on:

• when someone bought their property (at the height of the market perhaps)
• the down payment
• drops in home prices and values
• did the owners take out a 2nd mortgage
• and of course just the overall economic crisis (i.e. rising unemployment)

All these factors are contributing to the increasing number of short sales. This creates many challenges for real estate agents and their clients. People want to get a handle on what is happening and how to navigate today?s real estate market.

What is a short sale?

A short sale is simply a transaction in which the lender (or lenders) agree to accept less than the mortgage amount owed by the homeowner. In some instances, the difference is forgiven by the lender, and in others, the homeowner must make arrangements with the lender to settle the remainder of the debt. Ouch!

Are short sales different from a foreclosure?

YES! Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. A short sale can also be the best option for a homeowners who are ?upside down? on their mortgage because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

Stay tuned! Next week I?ll discuss the specific challenges faced when dealing with a short sale and how to find the best real estate agent to work with to navigate the short sale process!

We would like to thank TheTruthAboutMortgage for sharing today’s photo via the Creative Commons license.

As prospective buyers are sitting back, waiting, and speculating about when to take advantage of the bottom, it appears we have hit a plateau. One of the most effective ways for pricing to stabilize and then see appreciation is depleting inventory.

Signs Home Prices in Chicago Are Stabilizing

Sun Rise Over Belmont Ave...Maybe Over the Chicago Real Estate Market Too?

According to the Illinois Association of Realtors, May marked the fourth consecutive month-to-month increase in home sales for the Illinois housing market and the third monthly increase in the statewide median home sale price. Locally, IAR reports home sales were up 18.7 percent to 5,634 homes sold in May 2009 compared to 4,747 home sales in April 2009. The Chicago median price increased 2.3 percent to $225,000 in May compared to $220,000 in April 2009.

Properties Not Hitting the Market

With the average time people who are remaining in their homes on the rise, the number of market-rate units coming into the marketplace is decreasing. Although the banks are carrying a large inventory of REO (bank owned) properties, some are using other vehicles besides putting them on the open market working with local and state agencies to help stabilize communities hardest hit by foreclosures. Many new developments originally marketed as condominiums are being converted to rentals.

Where are the Buyers Coming From?

Traditionally, we have been able to identify which parts of the market where strongest for potential purchasers. Over the last year or so it has been a roller coaster. One of the largest segments that have always driven the market is first-time home buyers. They fell out of the market when it became almost impossible to buy with less than 10% down. However, they are now back. Lenders have now found options for these home buyers such as FHA. The $8,000 first-time home buyer tax credit seems to have stimulated this segment of the market as well.

This is also one of the greatest opportunities for current homeowners to buy up. Although the seller might be seeing the downside on what they get on the sell-side, they are able to take advantage of the pricing on the buy-side, which keeps the scale tipped toward the good.

For the last year, I have seen so many buyers trying to find that dream home, only focusing on short sales and foreclosures. After losing out on a variety of properties for one reason or another, real home buyers are now looking for a home that works for their needs and negotiating to get a good value for the marketplace.

Although the numbers are not what they once were, we still are seeing a significant number of people relocating and buying homes. Chicago is also still a strong market for second homes. There are some investors in the market taking advantage of pricing as well.

The Key to Getting to the Closing Table

Although many contracts had been written over the last year, many did not come together. It now seems that real estate agents, attorneys, and lenders are working at finding solutions to getting properties under contract and the mortgage brokers and bankers are problem solving the ever changing lending guidelines. Professionals who have faced the challenges of the market and educated themselves through seminars and out there working are taking their newly learned skills to achieve the goal: getting the property closed.

We would like to thank John Picken for generously sharing today’s photo via the Creative Commons License.

Baird & Warner Consolidating Offices

Two weeks ago Sudler|Sotheby’s closed their 1650 N. Wells Street offices and relocated all of their agents to their head offices at the Polmolive Building at 919 N. Michigan Ave. and to their recently aquired offices from Sussex & Reiley at 912 W Armitage.

Over the weekend Baird & Warner announced to their agents that they are also pulling out of their offices in the Old Town area. They are closing their office at 1510 N. Wells as well as their Bucktown/Wicker Park offices at 1936 West Division Street. Many of the agents will be moving to the Lincoln Park offices at 2762 N. Lincoln Ave.

We can only expect further consolidation in the industry.

Are you pulling a dinosaur behind you while trying to sell your home?

Is your real estate agent evolving or are they a dinosaur? And you know what happened to the dinosaurs?

• The bulk of their explanation of their marketing of your home is connected to the MLS and print ads.
• The rest of their presentation talks about Realtor.com, their company’s web site and bundle the rest under ?all the others.” They think they can get away with simply stating it will be ?on the internet?.
• When you are not getting offers or activity they talk about canceling the MLS listing and how it will “refresh” the listing when in the realty is it no longer fools the agent or the consumer. It just irritates both of us.

The tools of marketing of a property have changed over the years as the consumers (potential buyers) have. Many of the listing agents say they have embraced the methods but how could they when they clearly don?t understand exactly how information is reaching the buyers?

Marketing Techniques Constantly Change

It?s constantly educating one?s self by attending seminars, webinars, and Internet searches. Where I get my best stuff from is the shared information amongst my piers. Although the major brands all have unique but extensive interactive marketing programs that distinguish one broker from another, the true optimization of a listing is done by the agent who knows how to use what the brand offers and then take control of their own listings.

The discussion a listing agent should have at a presentation should include keywords like syndication, SEO, and social networking. Tomorrow this list will likely change. Interactive marketing is a fluid medium. Every day I find new tools or improvements to services I am currently utilizing. This affords me the ability to enhance the marketing I am offering my clients on an ongoing basis. How we service our listings can no longer be services limited to a presentation updated by the brokerage periodically. The ability to grow with the dynamics of the medium differentiates one agent from another.

When agents say they did not get a listing or lost a listing because of marketing, it?s almost always because they think by being in the MLS or fed to their company?s website they have done their job in marketing a listing. This is the agent that is still talking about Sunday?s ad in the newspaper (is there still such a thing?) and does not know how to overcome talking about advertising that is obsolete.

Where are the consumers going? How to you get the information to find them? What websites are relevant in the home search in your marketplace? That is a discussion for the next post.

We would like to thank Mykl Roventine for so generously sharing today’s photo via the Creative Commons License.

Online Social Networks Can Boost Business

Amazingly, many agents out there are natural born networkers. Some…not so much. It doesn’t always come naturally. Networking is getting out there and meeting new people in a business or social context. The purpose is to meet people in the same line of work for referrals and maybe even a little fun. There are many venues in which to network. This is not easy for some if they are shy or socially challenged.

Office Meetings Aren’t Dumb

First rule of thumb as a real estate agent would be to attend any and all office meetings. What better place to meet other agents that know a lot about the industry. Also attending broker’s opens and open houses. Again, a chance to meet other agents that may have advice or more experience in certain areas.

Meet With Other Professionals

Meeting mortgage broker’s, attorney’s, title specialists, home inspectors, etc. can take place at socials like Agent Magazine Parties, National Association of Realtor awards parties, etc. These are a great opportunity to begin working with new professionals who can help both you and your clients.

Of Course…the Internet

Another fabulous social networking place is the Internet. This is great for those who are socially challenged. LinkedIn is a great business referral site. LinkedIn strengthens and extends your existing network of trusted contacts. It’s a networking tool that helps you discover inside connections. Other very helpful tools to keep you connected to your family, friends, and business associates are Facebook, Chicago RE Connect, MySpace, Twitter, etc.

Personally, I find networking to be as easy as checking my e-mail every day. I network at parties, events, and online. I always mention that I am a certified appraiser as well as a real estate broker. You never know whom you may be talking with or what their immediate or future needs are.