What's Special About a Special Assessment?

If you are considering buying a condo unit one thing you will hear often is "assessments." An assessment is what you will pay monthly to the Home Owners Association. This fee is there to help pay the building's bills along with paying for any work that needs to be done on the building. Unfortuantely, sometimes the amount of work that needs to be done is far greater than the amount the building has saved up. This is where a "special assessment" comes in.

A building that is well run will be putting a portion of every units monthly assessment into something called a reserve account. This account is there in order to pay for work that needs to be done or for emergencies. Good buildings will be putting 10% of every units assessment into this account. The idea is not to have to touch this account unless it's absolutely necessary. But sometimes major projects need to happen and the amount in this account is not enough to cover it. In this case, the building will vote on levying a special assessment in order to pay for the work. 

A special assessment can vary from millions of dollars in very large buildings to even a few hundred dollars in smaller buildings. After the total amount is agreed too. It is then split up among the units based on the ownership percentage each unit has. There are typically two ways to pay for a special 1: out of pocket upfront or 2: increasing your current assessment amount by a certain amount to pay of the special over time. 

Finding out if there are upcoming specials in a building or if there are current ones is part of the buying process. You will find this info out within the first few weeks of getting an offer accepted. If you find out there are specials you can back out during this time. But its possible there might not be a special for a number of years down the road. Sice no one can predict the future it is possible you will have to deal with one at some point during your ownership there. The best advice is to make sure you are buying into a building that plans for all necessary work and is putting plenty of money into the reserve account for future work. Make sure to ask your agent about any specials in the building you are interested in. They should be able to find this info out before you ever make an offer.

What's The Price Per Square Foot?

I touched on price per square foot in earlier blog posts. Just as a reminder, WE DO NOT CARE ABOUT PRICE PER SQUARE FOOT IN CHICAGO! I can not tell you how many times I have had this conversation with people. Look, I get it, we are in an over-informed environment. We have so much information in our pockets I understand how it can all become overwhelming and confusing. Let me take the confusion out of it. Chicago is the ONLY major housing market in the whole world that does not base its prices on price per square foot.

If you have watched enough Bravo Million Dollar Listing shows you have heard price per square foot used quite often. In cities like New York and Los Angeles price per square foot is used to determine to price and used in comparing comparable properties. The difference with Chicago is that there are 77 different neighborhood. Read that again..77!!! It impossible to do price per square foot for each of these. Not to mention, people tend to measure square footage differently as well. Some people include balconies (which you are not supposed to), some include an area that if 50% or more below ground (again not supposed to), and some people just guestimate the heck out of the space. This is why it is common to see a "0" on the area on the MLS where it says "square foot." 

How do we price properties then?

We base our price just on what similar properties sell for and not the price per square foot they sold at.

When is price per squre foot used?

The few times we do use price per square foot is in new construction and in high-end luxury buildings like the Ritz-Carlton, Waldorf Astoria, or the Aqua tower. 

Otherwise, dont worry about the price per square foot. It'll save you the headaches of trying to do the calculations anyways.

Yes, You Need a Home Inspection!

I often asked if I recommend getting a home inspection. Do you get your car looked at when the check engine light comes on? YES, YOU SHOULD GET A PROPERTY INSPECTION. I really cannot stress this enough. Pay the money, its worth every penny! When you are viewing properties you are not going to be looking at the electrical panel, testing the water heater, or looking for leaks You are going to be seeing if your furniture fits, if the layout works, and if it gets enough natural light.

A professional home inspector is vital to the transaction. These people are the ones who can help save you thousands of dollars or better yet, prevent you from buying a money pit. A professional inspector is going to be looking at and for everything in the property. Electrical, plumbing, appliances, along with roofs and foundations if its a single family home. Their job is to mark down every single red flag they find and provide all of this in a report for you to review. Now don't freak out if the report comes back with a lot in it. They will be marking down every ding and scratch they find. So, a lot of the report may be cosmetic or very minor things that comes with buying something used. This is normal! What you will want to focus on are the big items. The ones that can be very expensive to fix or can cause harm. For example, the electrical box is wired wrong and is a safety/fire hazard or the stove doesn't work. 

Once you review the report you and your agent will talk over any issues that concern you. KEEP IN MIND, YOU CAN ONLY NEGOTIATE ON MATERIAL DEFECTS AND SAFETY HAZARDS. Read that last sentence like a hundred times and remember it. Unless you are buying new construction you can not negotiate on cosmetic issues like scratches on the floor or paint issues. This comes with the territory of buying something used. You're agent will advise you on what is the best way to negotiate these major items with the sellers.

NOTE: If new construction you will ask the developer to fix everything on the report. Since its new it needs to be perfect!

Make sure you are hiring a great inspector with a great reputation. Ask your agent for recommendations and do your own research. There are inspectors out there whose business model is to try and kill your deal so they can get a second inspection out of you in the next place you get an offer accepted on.

I Want to Give Thanks!

One of the reasons I love the holidays is that it makes people remember that even though we are all busy we still need to take a few minutes to give thanks for all that we have. So that is what I wanted to do in my blog this week. In the last 10 years, I have met some amazing people in a career and industry that I love and am so passionate about. This is something I do not take for granted.

So first, I want to thank all of my clients that have allowed me into their lives and trusted me to help them with the biggest financial decision of their lives. I understand how difficult a decision this can be and not having the right person there to help could end up in disaster. I have met and helped some amazing people over the years. Some that I am still close with and that means everything to me. When a client uses me again or refers me to someone they know, it shows that I had their best interests in mind and they trust me. There are few feelings in this world better than that!

Secondly, I want to thank the people who have supported me in my career. Mainly my family and friends. When I first started it was tough sledding. I was not earning much of an income but those around me saw the desire I had and encouraged me to follow what I believed in. 10 years later those same people are still encouraging me every day of my life!

Lastly, I want to thank my industry peers. I have had the pleasure of friending some of the best people in the world who not only supported me but also encouraged me to go after my goals. It would be easy for them to look at me as a competitor but to be looked at as a friend is amazing!

I want to leave you with this, be thankful for everything in your life. Stop and think about all you have. The people in our lives are who make us who we are. Thank them and make sure you let them know how they have helped make you what you are!  

Don't Believe Every Zestimate You Read!

We live in an amazing time right now. A time where we have access to unlimited amounts of information that fits in the pockets of our pants. Did you know there is more technology in our smart phones that in the spaceship Neil Armstrong stepped out of on to the moon! It's crazy! But all of the information could also work against you. What is real and what is fake? Fake news is all around us and in real estate, it is no different. Many of the sites consumers access are filled with data that is sadly, mostly inaccurate. 

One of the biggest sites, if not the biggest is Zillow. Zillow is full of lots of great information. Great details on the property, things to do in the area around the building, and of course the listing photos. The one thing it really can't do, is give you an accurate price of that property. Zillow's pricing estimate or ZESTIMATE is not a true representation of the market value of that property. A Zestimate is just an estimate based on an algorithm that takes into account, beds/baths, size, and location. A Zestimate does not look into the condition of the property, the floor level it's on if it's in a large condo building, the view, which way the unit faces, and if has parking or a balcony.  The ONLY way to get the true market value of a unit is for a real estate agent to pull the comparables or "comps" for that property. A Zestimate is OK to start with when looking at pricing but when it comes to making an offer, make sure your does a market analysis for you. Let the professional show you the value based on all of the factors I mentioned above.

Also, a quick note on the tax assessors assessment of value. I've had clients bring up this value as well when it comes to the market value of a property. The tax assessor uses a similar algorithm as Zillow. It is just an estimate and not the true value. Think about it; there are millions of properties in Chicago, do you really think the city sends people out to assess each one? We don't have the money for that no matter how may parking tckets I have gotten this year!

If you want to see an example of a market analysis please look at Chapter 11 of the CHapter Resources tab of my site. I have a sample one you can download there. 

Best Time to Buy Real Estate?

I am often asked, "when is the best time to buy?" In Chicago, this is a relatively easy answer, WINTER! Yes, you read that right. It is best to buy when its freezing cold, 3 feet of snow on the ground, with skin piercing winds. OK, a little extreme in that last sentence, especially as mild as our winters have been in the last few years. But let's think of our winter season as a typical one where it is cold and not one where were wearing shorts to Christmas dinners.

During the winter time, a few things happen. 1) The amount of buyers in the market goes way down and 2) seller's that are just "testing the market" go away leaving only real sellers in the market. The two biggest selling and buying season in Chicago are spring and fall. This is when the most buyers are out there and when most sellers will list their properties. Once the holiday months come around, many of these people put things on hold until spring. It's not a lot of fun to look at properties or deal with showings during the holidays. But that is when the best opportunity for deals exist.

When the holidays come around, seller's that tried testing the market will pull their properties off and wait until spring before relisting. This leaves any properties on the market as people who really need to sell. These sellers know its annoying to have to leave for showings in cold weather and are only doing so because they truly need to unload their place. Plus many need to sell before the end of the year for tax reasons. For these reasons many more sellers are willing to negotiate off their price and are willing to take less just to get the property sold. 

On top of this, the buyer pool goes way down so your competition for these properties is not as tough as it is in spring and fall. People buying usually do so during the warmer months because that is when things like leases are ending, its more fun to look during the warmer months, and there is typically more available to look at.

So keep in mind, if you really want a "deal" like everyone says they do, look during the holidays and winter time. Don't wait until the weather warms up or you will likely be paying more than you want to.

Buying a Condo Can Be Scaaaarrryyyy? Buyer Beware!

Ok, its Halloween so a little extreme on the title but if you are considering buying a condo there are some things you are going to want to be aware of. The main thing is, you want to make sure you are buying into a financially solid and well-run building. Now, this might sound like a no-brainer but its important enough to keep repeating. Buying into a good building will make sure your investment will be an appreciating asset and not a depreciating one. No one likes to lose money right?!

So what do I mean by a "good building?" Well, there are a few things that you will want to make sure you find out about ideally before you make an offer:

  1. What are the current reserves of the building?
  2. What is the ratio of owners to renters in the building (or ownership percentage)?
  3. Are there any special assessments currently or planned?
  4. Are there any lawsuits or litigation currently in the building?

These four questions are ones you or ideally your agent should be asking. A good agent will try to get this info before looking at the property but sometimes it won't be available. In these instances, they can typically find it out later before making an offer. Below is a break down of each to help you better understand them.

Reserves: This is the amount of money the building has in an account for a rainy day. This is the money that can be used to fix or address any issues with the building.

Ownership Percentage: It is very important that a building has 50% owners but ideally more. This is because lenders want to see 50% or more to lend int he building. If there are too many renters and people cannot get a loan, the value of the building goes down as only cash buyers can purchase there and cash usually gets a discount. Plus owners take better care of the building than renters do. 

Special Assessments: This is what a building will call for IF there is not enough money in the reserves account to cover whatever is needed to be done. The building's association will agree to have everyone help pay for the project out of pocket. This could cost you thousands of dollars. Plus lenders won't lend in a building with a special assessment so it can hurt your value as well.

Lawsuits/Litigation: These can also hurt your value. If someone is suing the association or if the association is suing someone like for example a developer, lending becomes difficult in the building and again, the values will go down as cash-only buyers will be able to buy in. 

If it is a small building and self-managed sometimes its hard to find this info out before placing an offer. Don't worry though. During the attorney review period, your attorney will be requesting this information from the association for you to review. IF for some reason you still can't get the info your lender will also be requesting it. So don't worry there are plenty of layers of protection in place to make sure you are making a smart decision.

Don't Loose Focus!

I get it, house hunting can be a lot of fun. It's what we see on TV every day from shows like House Hunters and Million Dollar Listing. But reality is nothing like those shows. House hunting is not as glamorous as it seems. Honestly, the process can be frustrating as all hell! Especially in a hot market where properties sell faster than they come on the market. This is why I tell my buyers to get focused!

 

What do I mean? Look everyone likes to look at real estate. It really is cool to check out different types of properties, neighborhoods, and styles. But realistically, doing all of that is not going to help you find the property you ultimately want to buy. For example, if you have a budget of $250,000 do you think it makes any sense to look at properties that are listed at $500,000? NO! Don't even go to the open houses. People, STAY WITHIN YOUR BUDGET!!! I can not stress this enough. Once you speak to your lender and find out what you can afford and stay in that range. The more you wander outside of your range the more unrealistic your range becomes.  Think about it. If you look at a brand new property way out of your price range, do you really think anything you see after that is going to compare? Heck no! Stay within your budget at all times and this means open houses as well.

Also, don't get caught up on finishes or upgrades properties have. Your focus should only be on the layout, natural light, building, and location. The finishes you can always change. You can upgrade a kitchen or bathroom and refinish or replace flooring but you can not change the layout natural light or location of that property. You can not take that unit and put it on the other side of the building away from the brick wall it looks at. So when you walk into a property make sure to focus on if the space works for you.

Remain focused from day one and you will find what you are looking for a lot faster and be a lot happier!

Build Your Team or Pay!

When you are buying a home there are a lot of "moving" parts and people involved. Yes, that was a pun. But seriously, not only do you need to make sure you hire the right agent to represent you but you also will need an attorney, lender, and home inspector.

Most people who buy in Chicago do not realize that Illinois is what is called an "attorney state." This means that we use real estate attorneys to handle all of the paperwork once an offer is accepted. This is different in most states where the real estate agent handles all of these items. I can not stress this enough, make sure the attorney you hire is a REAL ESTATE ATTORNEY. Yes, there is a huge difference between some who does real estate full time and someone who only has real estate as part of their practice. A real estate attorney will know what to look for in all of the paperwork and will protect you better than a general attorney. Attorneys are typically paid at the closing, a one time fee, around $500-$600. Note: they are not paid hourly like a typical attorney.

Lenders are the money people. These are the people who are going to know your deepest darkest money secrets. Well, not really but you get the idea. They are going to know your personal financial situation, so make sure you are working with someone who you are comfortable with. These people need to know how to do loans in Chicago as well. Especially if you are buying a condo. Most lenders can do a single family home, but condos in Chicago are a lot different. Anyone who does not work in Chicago a lot is going to drop the ball which could cost you time and money. Mainly if they can not get the loan approved.

Lastly, your home inspector. These people are worth their weight in gold. ALWAYS HAVE A PROPERTY INSPECTED. You don't have to have an inspection but that's like going into battle without a weapon. You never know what can be wrong with a property and an agent is not going there to look for these issues. Hire a good property inspector to inspect the property. A good inspector will be able to point out any issues that can cost you money either right away or in the future. Inspections only cost a few hundred dollars but they can save you thousands!!!

Putting together a good team can be the difference between buying a solid property that will appreciate and one that will be a money pit. Your agent should be able to recommend good people for you. But if not I highly recommend doing your research online. Of course, you can always as me a well.

 

Why Are There No New High Rise Condos?

If you have been driving around Chicago in the last few years you will have seen a lot of cranes int he air. In fact, right now there are currently 50+ cranes reshaping the Chicago skyline and landscape. With all of these cranes you would expect there to be a lot of condos coming to the market soon. Well no. Most of the cranes you see right now are either helping to raise rental buildings or office buildings. The few condo buildings you do see will need very large pocketbooks. Any new condo building going up will have units priced around a million or more. 

Why is this?

The main reason you do not see high rise condo buildings going up is the cost of building them far exceeds the profit margin for the developers. Developers are in the business to do one thing, make money. Becuase materials and labor costs have risen so much in the previous years it is affecting builders bottom line when it comes to developing lower priced high rise condos. This is why you see the big price tags. If a developer is going to put up a condo building it is going to be a luxury one right now. 

How does this affect the market?

In a healthy market supply and demand equal each other. Right now, demand is far greater than supply. Typically this void is filled by new construction. Since that is not possible currently in the mid price point the market continues to be a seller's one. The hope is one day some of these rental buildings will become condo buildings creating more units to hit the market and balance things out. unfortunately, that is far from happening. So in the meantime enjoy the gorgeous new buildings and hope that you know someone buying in them.

What Area is For You?

If you read my previous blog post, you would have found out that there are 77 neighborhoods in Chicago. 77 fricken neighborhoods! Yes, this is a very large city overall. If you look at a map you can see just how big Chicago really is. But not every area is created equal. Not every area offers the same types of properties, nightlife, and neighborhood feel. So where should a person start narrowing down where to live?

There are a few questions I will ask buyers when I meet with them:

  1. Do you need to be close to public transportation or the highway?
  2. What type of property do you want to live in?
  3. What type of neighborhood do you prefer?
  4. Do you need parking or outdoor space?
  5. What is your price point?

Once I have this conversation, then I can get a better feel for what people are looking for. For example, if someone needs to be close to the expressway then they are going to be looking on the west side of the city. If they need public transportation then areas Like Lake View, Lincoln Park, and River North might be best. If they want a single family home and do not have a million plus budget then they will need to look on the west side and northwest sides of the city, west of I-90/94.

Many buyers I meet with have really no idea of where they want to live. It is totally OK if this is you. What I suggest doing is have some fun and go explore different areas. Go grab a drink and dinner, or get lunch. Walk around the areas at different times of the day. Go for a drive around in the areas and stop in at open houses to get a feel for the type of properties are available there. This should be your research time and trust me, the more research you do up front the more likely it will be that you will find the place you are looking for. If you are looking at many different types of areas and properties it will be impossible to make a decision. This will cause you to miss out on properties you really want. 

So my advice, do your research up front. Speak to your agent about different areas you are considering. Your agent should be able to help narrow them down for you. Then once you know where to focus start your property search for real and start seeing the properties you are most interested in. If you do this, you will be able to move fast on the one you feel is right for you and won't miss out on your dream home!

Chicago is Not Like Any Other Market

If you read the title of the blog it can easily look like I'm about to start bragging about my hometown city. While I do love this place and think it's amazing, that is not what I want to talk about. 

Let's start with Bravo. Yes, the TV station. Have you ever watched any of the Million Dollar Listing shows that run all year long? My guess is you at least have seen a few. For the record, I love them, I think they're entertaining as hell! At some point during the show, the agents will be negotiating with either another agent or a seller about the price of the property. As funny as it is to hear them go back and forth, there is one thing that is constantly talked about: COMPS. A "COMP" is just another word for a comparable property. Meaning that they are comparing the house they are representing to another one to determine price. While arguing you will hear them say something like "the house down the street sold for $1,000 a square foot." Then you will see them calculate the price in their head based on the size of the property. This is where Chicago is unique.

WE DO NOT CARE ABOUT PRICE PER SQUARE FOOT!!!

This is something that not a lot of people know about here. Chicago instead bases their price off what other similar properties are selling for, not the price per square foot of them. Please keep this in your mind as it is very important. Chicago has 77 different neighborhoods and it would be impossible to do price per square foot for each. Not to mention many neighborhoods have neighborhoods within that neighborhood i.e. Wrigleyville is really a smaller neighborhood within the larger Lake View neighborhood. 

I really want you to understand this. It is important when you are considering what offer prices to put in on properties. Your agent should run what is called a Comparative Market Analysis or CMA on any property you are interested in making an offer on. This CMA will compare the subject property to similar ones in the area. The CMA should give you a range of the value of the property. 

So when you are "running numbers" and creating your excel spreadsheet analysis please do not look a the square footage in terms of pricing. Yes, its good to know the size but that is only one factor that goes into figuring out a price. Also, as you will see by the example on 

NOTE: The only time we do calculate price per square foot in Chicago is in new construction and luxury high-rises like The Waldorf Astoria. 

Why is a Pre-Approval so Important?

I get asked the question a lot "I'm thinking about buying, where do I start?" I'm always excited when people ask me this instead of something they heard off a Bravo show like "What is the price per square foot on this 900 square foot condo?". Asking an agent where you should start is important. If that agent tells you anything besides "you need to speak to a lender," find yourself a new agent. The pre-approval is the most important part of the buying process! Read that last line a few times and get it ingrained in your head. IT NEEDS TO BE DONE FIRST!!!

Why is a pre-approval so important? Well, you cant build a house without building a foundation first right? Well, you can't make an offer on a property without a pre-approval (unless you are paying cash, which is a whole other story). 

Getting a pre-approval is not a difficult process. But I highly suggest asking your agent for a recommendation and speaking to a few lenders. Don't get trapped by the promotions of getting approved quickly you hear on TV or the radio, they are not the same as speaking with a true lender. As with agents, not all lenders are created equal. But it is important to work with a lender who knows what they are doing and has done loans in Chicago. Chicago is a unique market and not all lenders can get loans approved here. Trust me I've seen it a million times where a buyer goes with some big bank who promises them the world, then completely under delivers. Smaller local banks are usually your best option since they are focused on the Chicago market and know what it takes to lend on the different types of properties here. I also mentioned earlier about speaking to multiple lenders. I always suggest speaking to at least 3 lenders and having them compete for your business. Lenders know you are speaking to other lenders and they need to work to earn your business. When you are speaking to them do not just get hung up on the interest rates. Also, discuss what fees the lender has and if there are any lender credits they offer. Make sure to work to get the best deal you can get and be comfortable with the lender you choose. Most important, these people are going to know your financial situation so you have to trust them. 

Finally, you should never look at a property seriously without a pre-approval. Imagine if you found the home of your dreams and you want to make an offer but have to wait a day or so to get a pre-approval and in that time it gets sold. You would be devastated. So make sure you get this done first so you are ready to act quickly and pull the trigger on any home you want to buy!

Not All Agents Are Created Equal

There are over 12,000 "real estate agents" in Chicago. I put real estate agents in quotes because there are over 12,000 people who have a real estate license, it doesn't necessarily mean they are a real agent.

I guarantee if you ask 5 people you know someone likely has a license or knows a family friend who has one. The reality is, to get a real estate license is not the hardest thing to do in the world. And a lot of people have a license just to help friends and family out. You know, earn a few extra bucks on the side. Weekend warriors! A.K.A. soccer Mom's haha. I'm just joking, but at the same time, I take what I do very seriously. There is so much to know when you are a full-time agent. To this day, I am still learning on daily basis and that won't ever stop. I write this because it amazes me how many agents I run into who have no idea what they are doing. They have a license just to make some side cash but at the same time, they are representing the biggest financial decision of peoples lives! I don't know about you, but I wouldn't trust a part time doctor to operate on me!!!

I understand my last example is an extreme one but I want it to hit home. Real estate is looked at as a sexy and glamorized job because of shows like Million Dollar Listing but in reality, it's a grind and a lifestyle. It's a major commitment of time, energy, and resources. There are a lot of very good agents in the city of Chicago. People who have been doing this for a long time and know how to protect you and best serve you. Agents who know what to expect and can help guide you through a transaction with your best interests in mind. These are the people you should be interviewing. 

That brings me to my next point; INTERVIEW AT LEAST 3 AGENTS! I'm dead serious about this. You will be spending a lot of time with this person, you have to trust them and know that they have your best interests in mind. Not just chasing a commission check. In Chapter 4 of my Chapter Resources section of my website I have a list of questions you should be asking any agent you interview. Here is the link for you as well: https://www.mikeopyd.com/chapter-4-1/

Remember this is the biggest and most important financial decision of your life, do not trust it to just anyone!

The First Step Every Buyer Should Take

I don't know about you, but I feel rental prices have gotten just ridiculous now. I mean $2,500 a month for a 1 bed/bath in River North? Do you know what you could do with that money?! I understand some people are new to the city and need to figure out if its right for them to buy or where they want to be at but still, it is a lot to throw away. And that is essentially what you are doing because you are not building equity, you are just lining someone else's pockets.

OK, so you realize you would rather not throw that money away and decide to buy, now what? Buying real estate for the first time can be very overwhelming. There are so many moving parts plus IT'S THE BIGGEST FINANCIAL DECISION YOU WILL EVER MAKE!!! So where should a buyer start?

The first thing every buyer should do is speak to a mortgage lender and get pre-approved. A lender is someone who can help you determine what you can afford to buy based on your financial situation. On a side note, they can also let you know if there are any red flags in your finances that could affect your buying power. Red flags that you may want to get fixed before you actually decide to buy. Your lender is going to look through your finances, pull your credit, and give you an over view of what your price range will be. This might sound a bit intrusive but it's completely necessary before you ever start looking at properties. Think of it this way, you can't build a house without building a foundation first right? Well, you can't make an offer without a pre-approval, so it makes total sense to get this done first! A pre-approval is the foundation for your purchase.

The pre-approval process is typically not a long or difficult one, so getting this major step out of the way should be simple. There are a lot of lenders in the city you can go to but not all of them are created equal. If you have an agent you are speaking with, they will likely have a few recommendations they can make for lenders they trust. If you are not speaking with an agent, then do your research like you would be looking for a good restaurant. Google Chicago lenders, check out reviews on sites like Yelp! and Zillow. You want to make sure you are working with a very good lender in the beginning.

A couple of things to consider. You want to make sure you are working with a lender who knows the Chicago market. Chicago is a unique city and not every lender (for example, someone from California) may know how to lend here. Trust me, I've seen it before from the big banks where they "promise" they can get the loan approved but then ask the buyer to sign addendums for a 2-month extension. It's best to work with someone local. Second, speak to a few lenders. It's your right to use who you want and it is always best to speak to a few lenders to see who you feel the most comfortable with and who is going to give you the best deal. It's not just about the interest rate so make to ask about all of their fees. Finally, pick a lender who you like and stick with them throughout the process. I can't stress this enough. If you end up getting an offer accepted on a property and then decide to switch lenders, it's a huge red flag for the seller's side and could cause major issues or even the deal to be canceled.

If you are beginning your search and want a few good lenders to speak to I am happy to make recommendations so please do not hesitate to reach out!

10 Years After The Crash

It's hard to believe it's already been TEN years since our country and the world for that matter fell into the worst depression ever seen. Ten years goes by fast and a lot has happened since that time. Although it probably feels today like it flew by, it certainly did not feel like that at the time.

I was just getting into the industry then and I saw first hand over the coming years how the banks royally screwed over the American people. The amount of distressed properties were insane back then. Most of them were due to the fact people could not afford their mortgages after their "teaser" interest rates expired. Imagine thinking you are realizing the "American Dream," buying a house for your family only to find out months later that the mortgage payment you thought you had to pay skyrocketed and now you're left with bill collectors calling and past due notices piling up. It was a brutal time but there is always a silver lining to everything and I always try to look at things that way. Becuase of what happened, people became resourceful and as a country, we worked to pull ourselves out of that horrible time. 

OK maybe it wasn't as simple as that, but you get the picture. Now ten years later we are seeing a resurgence in new construction everywhere. Home prices are rising all over Chicago and people are realizing how affordable it is to buy versus rent. Its almost impossible to go anywhere in the city and not see a construction crane or a "coming soon" sign on a fenced off area. Unfortunately, most of what we see is either a rental building or office building. Any new condo buildings being built are for luxury buyers looking close to or above the $1M price point. 

These new buildings are a sign of where we are now. Unfortunately, the costs of building are very high and developers are reluctant to build any high rise condo buildings in the mid price points (around $500K) because the profit margins are so small. Long story short, the Chicago market in the near future is going to continue on the path its on. We won't see a true recovery to the pre-recession market until developers start building mid price high rise condo buildings or some of the new rental buildings are converted into condo buildings in the same mid price point.

For now, we are going to continue to see a shortage of inventory and a seller's market. If you are a buyer looking to buy make sure you are fully prepared in all aspects going in. Speak to your agent and be ready to move quickly. The good properties do not last long!

 

 

How It All Began

10 years ago I had no idea what I was going to do with my life. I just quit my job in Boston and moved back Oak Forest, IL to live with my parents. I was 25. I had no job, a little bit of money I saved, and really wasn't sure what was next for me. Oh ya, the country was also going through the worst recession it has ever had. Not a great time to be quitting a secure job and trying to find a new one right? For a few months before leaving Boston, I had been applying for jobs in Chicago and actually scored a few interviews. But, that's as far as they went. I didn't have a ton of experience and in reality, no one was really hiring back then. Most companies were actually letting more people go than bringing them on. On top of that, my background was in finance. If you have ever seen the movie "The Big Short" then you know what it was like in the finance world during that time. 

After a few weeks of trying to find a job, my money was starting to run out (I probably should have done a better job of saving while in Boston), and I was starting to panic. At one point I actually thought about going back to school to get my Master's degree. Let's just say I am not a huge fan of school so you can see how the desperation was setting it. As I was researching jobs I came across an article about investing in real estate. Even though I was pretty much broke and had no money to invest, I called the one person I knew in real estate, my cousin Sam. My cousin had been a top realtor in Chicago for a long time so I figured why not give her a call and ask a few questions. 30 minutes later I was hooked! I knew exactly what I wanted to do, I wanted to become a realtor! 

2 weeks later I had my license and was ready to dominate the Chicago real estate market! And here is where reality slapped me in the face. In my excitement of finding a "job" and figuring out what I wanted to do with my life, I forgot one thing; IT WAS THE RECESSION AND NO ONE WAS BUYING REAL ESTATE!!!  Something that I probably should have considered. But being young and nieve, I didn't. 

I would love to say that I was one of those immediate success stories you hear about. You know the ones where the agent gets her license and sells $10 million her first year and is a top producer winning awards and being recruited by every company out there. Well if you think about the exact opposite of that, that was me. I did one deal my first year and a handful of rentals. Not really an immediate success story. My second year was more of the same, but my third year was a little better and I started to see all the hard work I put in those first years pay off.

Looking back at those first years in the industry, I wouldn't trade them for anything. The amount of knowledge I was about to acquire back then is what got me to where I am today. I dedicated those first years to learn as much as I could. I asked a million questions, I read everything I could get my hands on, I shadowed any agent that would let me and did not waste any time I had. I am successful now because of everything I went through and learned back then.

Fast forward to now, gathering all of that knowledge and helping first time home buyers over the years is what Inspired me to write a book about buying for the first time in Chicago. I know first hand how scary and exciting buying a first home can be. I went through it myself a number of years back. I have also seen it with my clients. My goal is to help anyone who is nervous or scared about buying for the first time.  I want to prepare them so they know what to expect and can be comfortable through every step of the process. If I can prepare a buyer before starting the buying process then that person can have confidence going in and not be overwhelmed.

I look forward to sharing more of my knowledge in future blog posts. If anyone has any questions for me please do not hesitate to reach out any time. My info is below. 

Cheers,

Mike

MIKE OPYD
MANAGING BROKER | OWNER

REMAX NEXT

1046 W Kinzie Ste 301 | Chicago, IL 60642
Cell: 312.929.8910
Office: 312.620.3446
mike@remaxnext.com
www.remaxnext.com
#1 Agent on Truepad
Chicago Agent Magazine “Who’s Who” Realtor 2014, 2015, & 2017