What’s this I hear about all these multiple-offer situations?

Chicago has seen the same trends affecting the rest of the country, where inventory is extremely limited.  This has resulted in a particularly competitive environment for buyers. Price is not always the most important factor for sellers. Here are some tools that come in handy:

What if I don’t find anything I like? I’ll feel bad for wasting your time.

You shouldn’t. Our job is to help you make a decision, and sometimes that decision is NOT to buy. Ultimately, we value lifelong relationships, not transactions. We intend that you’ll feel protected, guided, and well-served to the extent that whenever you think “real estate,” you think of us. If buying isn’t what’s best for you, we don’t want you to do it.

 

I’ve heard that sellers can cover closing costs. Is that true?

Sellers are focused on their net. You may request a credit for closing costs as a part of your offer, but it effectively reduces the amount the seller will receive. Depending on the market, and how much demand a particular property is drawing, we may need to strategize, so that this doesn’t weaken your offer.

 

What’s earnest money?

Earnest money is your consideration in the deal. That is, it’s your “skin in the game.” The seller will flag the property “contingent” or “pending” in the MLS, which will likely preclude any further showings from being scheduled. Your earnest money is part of your down payment, will be held in an escrow account, and will meet you at the closing table. It is highly protected, and can only be released to the seller in the event that you default on your contractual obligations.

 

What’s an appraisal?

An appraisal is an opinion on value by a licensed professional hired by the bank, but who works for a third party. His/her opinion of value will establish the value on which the bank will lend. That is, if the appraised value is less than the purchase price, the amount the bank will loan you, or the terms of the loan may change.

 

Why do I have to go to a title company to close?

The title company is an insurance company. They insure the transaction against any challenges to your claim of ownership. The seller pays for your policy, so they get to choose which title company will host the closing.

 

What’s the deal with real estate taxes?

Here’s the deal:

  • They go up.
  • They are paid in 2 installments, with the first installment (usually due in April) being a calculation equal to 55% of the previous year’s total bill. The second installment includes any adjustments to the annual taxes from the Assessor’s office.
  • They are paid in “arrears,” meaning that we pay taxes in 2018 for 2017. Thus, after you purchase, you’ll receive a bill for days when the seller owned the property. Your attorney will negotiate, based on the most up-to-date information from the Assessor’s office, to get you an appropriate credit for this bill. You will receive this credit at the closing table.
  • Your lender will most likely set up an escrow account for your property taxes, and will pay the tax bill for you.
  • Your taxes will likely change in 2 instances: (1) every 3 years, when the Assessor’s office re-evaluates property values; (2) when a work permit is filed for a particular property with the city. A closed sale does not typically alert the County to adjust your assessed value.
  • Taxes can be appealed. You will need an attorney for this, who will be paid a portion of what he/she is able to save you. If you are part of an Association, it’s typically in your best interest to do it as an Association.

 

I’m putting less than 20% down, so I’m going to have PMI. When can I get rid of that?

Private Mortgage Insurance (PMI) is assessed on buyers who are putting less than 20% down on their purchase. It’s an extra insurance policy the bank takes out and makes you pay for. You can get rid of PMI in 2 cases:

  • You pay down the principle to 80% of the original purchase price.
  • You order (through your lender) an appraisal of your property, and prove that the loan is equal to 75% or less of the appraised value.