Realty Freak

Does the IAR Hate Poor People?

The Illinois Association of Realtors claims it supports affordable housing measures; it just seems like they don't ever want them funded.  The IAR's opposition to Illinois SB 3001, sponsored by Senator Susan Garrett, is a case in point.  What is even viler than the IAR's opposition to an affordable housing trust is the disingenuous, fear mongering used to rally support to their opposition.  

In this email the IAR suggests that a $5 recording charge is going to increase the cost of housing.  This, simply put, is nonsense.  The IAR also warns that the fee could reach the astronomical sum of $10, but fails to point out that this outrageous increase couldn't go into effect until the year 2020. 

Huge spikes in housing costs from a $5 recording fee aside, the IAR brings out its’ tried and true anti everything it doesn't want argument, the dreaded slippery slope.  The Slippery Slope is a fallacy in which a person asserts that some event must inevitably follow from another without any argument for the inevitability of the event in question.  Allow a $5 recording fee and soon it will be $5,000 argues the IAR.  The slippery slope is the last refuge of the demagogue and reprobate and the IAR should abstain from its use. 

Tell your state representatives that you support affordable housing measures and SB 3001.

Tax Credit a Bad Idea (Again)

I have to agree with Jack Hough and his WSJ article that the U.S. doesn't need more home-buyer perks.  The best way to get people into homes is to let the artificially inflated housing market continue to correct itself.  The $8,000 first time buyer tax credit and the new $6,500 tax credit for existing homeowners that purchase, though relatively ineffective,  slows the correction and robs the treasury of badly needed funds.  Let's hope this is the last NAR/banking housing "stimulus" scheme we see. 

The Biggest Lie In Real Estate

I got another email from one of those staging companies today and no surprise it included a lie that has been repeated so many times it is accepted as truth.

I would like to introduce _____ who services the Lake County, North Shore and Northern Illinois areas.  Staging is a vital marketing tool that statistics reveal will sell homes 35% faster and for 6%-9% more money then homes that are not staged.

PLEASE someone show me these statistics as they appear in an actual scientific study or journal.

Deceitful or Stupid?

Let's say you have $300,000 to spend on a condo and you don't own a car.  You go to your favorite real estate website, plug in your criteria and you find this listing.

"Great!"  you think to yourself, "it's just what I am looking for and since I don't need the $25k parking space I can afford it."

Problem is, this listing agent (like many other Chicago real estate agents) knows that the seller will not sell the unit unless the parking space is sold with the unit.  "Bull Shit!" you say and I agree with you.

If the seller won't or can't sell a condo without the parking space then it is deceitful to list the unit without the cost of the space in the list price.  Listing a condo for $299,000 with a $25k parking spot that has to be purchased is no different than listing a condo for $299,000 but demanding and extra $25k for the kitchen.

Besides, any marketing novice can tell you that "included free" sells.  So is this bait and switch practice deceitful AND stupid?

If You Talk To Your Agent

Dear owner of 700 W Van Buren unit 1209,

If you happen to talk to your agent could you please tell him that I would really like to show your  home.  We have been calling for three days without a response.

CMA, A Guess By Any Other Name

Many studies have addressed how people make important decisions, one of the classics was conducted way back in the 1970s, by Daniel Kahneman and Amos Tversky.  Even at this time, psychologists knew that people often make decisions that aren't supported by seemingly obvious evidence.  In the study researchers had asked people which of two hospitals was more likely to have a day with at least 60% male babies born, a hospital with 15 births per day, or one with 45 births per day.  Most people said that the chances were the same in each hospital, but in fact there should be more variance in the male-female ratio in the smaller hospital, which means it would have more 60-percent days.

It should be obvious that 3 or 4 comparable properties is not a big enough sample size to make any kind of rational decision about a properties value, yet it is the standard industry practice.

Keep Guessing

Real estate agents in the NY time article are in a tizzy about the  adjectives used to describe listings, but they are all just guessing.  I doesn't seem to occur to any of them to test the effects of different words.  Steven Levitt describes the effects of descriptions on sale price and days to sale in his paper Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions.

In our own internal study we found a strong correlation between agent remarks and perceived curb appeal of properties.

A Little Effort Please?

Real estate agents are notoriously known for taking creative license in describing their listings, but lately I am seeing more examples of the other extreme.   Check out the remarks for this listing of 3500 Lake Knoll Dr, Northbrook, list price $699,000:

“Allow 48 hour notice to show.  Subject to lien holders approval”

That’s it!  And no interior photos either.   You would think that after 143 days on the market the listing agent could at least make an attempt to get people to visit the property. 

The Bottom Or A Bump

For two weeks in a row, there has been new evidence that the housing market is improving. On Jan. 26, the National Association of Realtors (NAR) reported that existing-home sales posted an unexpected increase in December, as growing numbers of homebuyers responded to improved affordability and historically low interest rates.

According to NAR, existing-home sales -- including single-family, townhomes, condominiums and co-ops -- increased 6.5 percent in December compared to November. In addition, the inventory of unsold homes fell nearly 12 percent, another encouraging sign.

On Tuesday, NAR also announced that its Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent. A sale is listed as pending after the contract is signed, but before the sale has closed, so a rise in this index is a sign of more home sales in the coming months.

All of this sounds great, but two weeks does not a trend make.  Inventory will rise and fall with the seasons and as the owners of overly seasoned listings finally come to terms with the market and make the necessary price reductions needed to sell those properties.

One of the key indicators of a recovering real estate market is going to be the jobless numbers.  Until those start to fall don’t expect an increase in real estate values.

Click the link to search the closed MLS listings in Chicago, Evanston, Highland Park, Deerfield and the rest of the Chicagoland area.

Market Time Doesn’t Matter

Question:
How long does a property have to be de-listed from the MLS before it can be re-listed as a new listing? Also, I've heard that most realtors consider the weekend after the super-bowl to be the start of the spring market for Chicago, but I'm skeptical; this sounds a bit early to me. I'm considering listing my SFH in lakeview and know that it will show better when the backyard is at least starting to get in better (post-winter) shape. I'm trying to balance possible detrimental effects from a long market-time vs. my desire (but luckily no necesity) to move.
-Joe

Answer:
Much  research has been done on the effects of market time and sale price and the empirical evidence is clear, there is no effect. (See my whitepaper ) You need to concentrate on price, so your real question should be “how long until I know I am at the wrong price“.  We use a proprietary algorithm to help our clients with this question.

Research also shows that you are likely to receive a higher price for your property in the dead of winter than in the spring, so you are very close to missing that window.

My advice, don’t let your yard or market time become a distraction to the real issue, price.

To learn more about market time and pricing visit our Chicago, Highland Park and Deerfield Real Estate office.