DeKALB – Want an idea of just how much of a seller’s market it is this spring? It took longtime local real estate agent Bernie Stefani all of three days to sell a house down the street from his.
Was it priced to move? Did it fill a void in the market? Was it because spring is a hot time for house sales? Has the market recovered that much?
Stefani says yes, to all of the above.
“The move-up market, those houses between $125,000 and $175,000, is what we’ve been missing these past several years,” he said. “It’s a great time right now, if you’re a seller. It’s a seller’s market.”
According to the the trade association Illinois Realtors, home sales in the state climbed 9.6 percent in March compared with a year ago, with average home prices going up 10.7 percent. Homes are moving faster, too, at an average of 67 days, compared with 77 days a year ago.
If you’re a buyer, there’s good news for you, too: Agents are bracing for dozens of listings to go live in the coming weeks, Stefani said.
Looking to buy? Your first appointment is with a lender, to get pre-approved for a loan. If you don’t have a bank in mind, a real estate agent can refer you.
Don’t just start looking at houses hoping to write an offer on the spot. That mentality contributed to the market’s collapse in 2008.
“We want to know not what you think you can afford but what the lender knows you can afford,” said Stefani, who’s worked in real estate more than 20 years, the bulk of them with his current agency, Elm Street Realtors in Sycamore.
Lenders have many types of loans at their disposal, depending on your circumstances. There are advantages to be gained with proper planning. For instance, if you can put 20 percent down on a loan, you’ll avoid having to pay private mortgage insurance.
Once you know what you can afford, an agent has the most up-to-date, comprehensive information on listings. Don’t trust the zestimate Zillow.com generated for you.
“They don’t know anything about the physical information of these homes,” Stefani said. “They’re just taking it from public record.”
Agents have access to disclosures that agents of sellers must sign off on, which can often clue the buyer into a house’s flaws. There might be a reason a slam-dunk property has sat on the market for nearly a year. Or maybe it’s because the seller priced it over the market, and has refused to budge.
Finding the house is only part of the process. Once an offer is accepted, costs remain – some mandatory, some optional. You’re going to have closing costs. You’ve also got five days from the time you sign the contract to have the house inspected, which Stefani recommends.
“If you don’t do the home inspection, or you don’t respond in that five-day period, and there’s a major issue, you have no recourse.”
Inspections typically cost between $300 and $400, and take two to four hours, and Stefani recommends you bring an attorney along. If there’s a flaw, the attorney can write a letter saying it needs to be fixed, and if it isn’t, you can walk away from your contract without penalty.
If you’re selling
There’s a magic formula that, once cracked, will get a seller the maximum price for a house.
Contrary to popular belief, it’s not location, location, location. It’s location, condition and price. Combining the first two factors will result in a price, which the seller can go with. If they’re “dreaming,” as Elm Street Realtors owner Nancy Edwards puts it, they can price it over the market.
If you go that route, set an alarm for two weeks out.
“The first two weeks are the most crucial to a seller. Once those two weeks are gone, especially in this market, your house is not new anymore,” Edwards said.
Agents go over a net equity sheet, made up of about eight factors, such as what is owed on the home, taxes and tax proration, to determine what you should expect to get from a sale.
Once you pick your price, there’s more work to be done. Agents advise on staging and generally making your home alluring. That means no dishes sitting out.
“Do you want to have the best $125,000 house? Of course you do,” Edwards said. “If you want the best, you have to prepare it to be the best.”
Agents solicit feedback from buyers who see houses, then relay that information to the seller.
Whereas agents don’t charge buyers for their counsel, they typically charge the seller about 2 percent commission. Elm Street’s fluctuates between 5 percent and 7 percent, situation to situation.
You have questions; they have answers
One of the greatest dangers for a buyer or seller is assuming they understand things that they don’t.
What’s escrow? Ask now, not later.
“It’s dangerous to not ask questions,” Edwards said.
The only thing agents can’t give is legal advice. Having survived the Great Recession, without reducing staff, the Elm Street brokers have learned a lot, too. They took classes from lenders in foreclosures and short sales, processes much more complicated and drawn-out than garden-variety sales.
After about six years of recovering from the market collapse, the market is starting to see a return to the 3 percent property value increases that were historically typical.
“A lot of people don’t understand the market is coming back,” Stefani said. “It’s back. Right now.”
One key piece of advice: Avoid inadvertently instigating an argument between agents. When you pick an agent, stick with that agent. Don’t call another one on a listing, or work with another at an open house. See something you like? Call your agent.
“Things could get contentious,” Stefani said. “When you’re online, when you see a sign in front of any owner, call me. Do not call that listing agent. I’m old school – unless I’m on my death bed, I’ll answer my phone.”