Purchasing a home can be an extremely time consuming and daunting process, especially for first time homeowners. There are an overwhelming number of variables that enter into the real estate equation, which can be exceedingly difficult to not only understand, but ensure you are getting the best deal for your time and money. Despite the fact purchasing a home is a subjective process (in that every buyer is different in their wants and needs), there are a number of characteristics common to all prospective buyers.
You SHOULD pick a real estate agent who suits you. This is a judgment that you will have to make when you are first starting the process of purchasing a home. Check out the agent’s profile and career history on the internet, through recommendations by family and friends, or publications like Crain’s and Chicago Magazine.
You SHOULD explore financing options, which includes shopping various mortgage lenders to ensure you get a stable and low interest rate. Additionally, it would be very helpful to get preapproved for a loan, which will give you leverage in negotiations, as well as a clear idea of how much you can afford. Research is extremely important when purchasing a new home.
You SHOULD do as much research as possible. A knowledgeable real estate agent, attorney, and lender can all be instrumental in helping to navigate the purchase, however you are still ultimately responsible for signing the papers. Therefore, help your self by hitting the books (or internet), pounding the pavement, and generally asking a lot of questions.
You SHOULD set your priorities for exactly what you want from your new home. This includes separating wants from needs, since there is a good chance you will have to compromise in some way. Determining the features, amenities, and location you absolutely required will help considerably in sorting through the vast number of homes on the market.
You SHOULD NOT completely pigeon-hole yourself after seeing a property that you like, especially if you have not seen very many properties. That is not to say you should ignore a home you really like just to see a bunch of properties, but it is certainly important to get a real flavor of what is out there.
You SHOULD NOT make unreasonably low offers or overly arduous demands when you have decided on a home. The real estate market on average is leaning toward a buyer’s market, however this does not mean sellers are willing to comply with excessively difficult demands or small offers. This is especially true in Chicago, where the market is relatively strong, and homeowners are unwilling to simply accept any piecemeal offer that might come their way.
Living in Chicago isn’t cheap. Our gas prices are among the highest in the nation. We pay a lot for milk, too. Housing prices, while not outrageous, are certainly not inexpensive. And now, Chicagoans will have the dubious distinction of paying the highest sales taxes in the nation.
Chicago will soon boast the highest taxes in the nation. That’s right. Starting in November, thanks to an increase in the Cook County sales tax, shoppers buying in the city of Chicago will pay a total sales tax of 10.25 percent. This figure doesn’t compare favorably with other major cities, including New York and Los Angeles, both of whom have sales tax rates under 8.5 percent.
The question I’ve been asked is this: Will the increased sales taxes hurt property values? Will the taxes cause buyers to avoid purchasing a home in the city and instead look elsewhere? My response? The increased sales tax may be a burden, but it’s not a large enough one to make buyers avoid the city. The reason for this is simple. Chicago has too many positives to offer.
We have wonderful entertainment options, a wealth of varying neighborhoods, top-notch sports teams, ample park space, tons of wonderful restaurants and a thriving theater scene. We have internationally respected tourist attractions like Millennium Park, the shopping districts along Michigan Avenue, Wrigley Field and the Sears Tower. We’re getting impressive new buildings like Trump International Hotel and Tower by Donald Trump and the Chicago Spire by world renowned architect Santiago Calatrava. Our architecture is known the world over. Summer here is marked by major concerts, street fairs and huge events such as Taste of Chicago.
In short, Chicago is an amazing place to live. No one wants to pay higher taxes. But if you do have to pay them, you might as well live somewhere as wonderful as our city. If you’re worried that increased taxes will chase away buyers, you can relax. There will always be more than enough buyers who want to take advantage of all that Chicago offers.
Homebuyers often ask me a very similar question, "What features should I look for in my new home if I want to guarantee that the house I buy will appreciate over time?"
Most buyers are thinking about updated kitchens, large master bedrooms and spacious bathrooms when they ask this question. But there’s one thing they forget about: proximity to public transportation.
A growing number of homebuyers here want to live within walking distance of the El or Metra train. They want to take these public transportation options to work instead of fighting their way through rush-hour traffic on the Ryan, Edens or Stevenson. And with today’s gas prices, a trip on the El makes a lot more sense than does idling in traffic in a sports car.
Developers around the Chicago region recognize this. Municipalities do, too. That’s why so many suburbs are creating what are known as transit-oriented developments. These feature high-density housing – condominiums and apartment buildings, usually – located within walking distance of public transportation. They also include grocery stores, restaurants, theaters and shops, all within walking distance of each other. The point is to keep people out of their cars.
The Chicago area is fortunate to boast several of these communities. Downtown Naperville is a prime example, as is downtown Wheaton, Oak Park, Elmhurst and several others. In Chicago itself, transit-oriented developments have existed as long as there’s been an El. Consider the Southport neighborhood, one of the city’s most vibrant. It’s possible to live, shop, dine and play here, all within walking distance of the CTA’s Southport Brown Line stop.
The same can be said of the Lakeview, Lincoln Park, Bucktown and Wicker Park neighborhoods, among others. So when you are considering purchasing a home, and you’re looking for an amenity that will help your new residence retain its value, look at the public transportation options surrounding your potential new home. If you’re within walking distance of the train or El, that’s good news.
One of the biggest challenges of my job is to match my clients with the right neighborhood for them. The reason? It's no cliché that Chicago is a city of neighborhoods, and each of these neighborhoods has its own personality.
For younger clients looking for an affordable condominium in an up-and-coming area - one with art galleries and trendy shops that appeal to younger families and single buyers - I can point to Chicago's West Loop neighborhood.
The West Loop is on my mind because the Chicago Tribune this weekend ran an extended profile of the neighborhood in their Sunday Chicago Homes section. The story correctly states that this Chicago neighborhood is still a great place for buyers looking for reasonably priced condominiums located near the city's downtown hub. The West Loop certainly isn't right for every buyer - Those with larger families might want to look in a more established area of the city or a close-in suburb - but for buyers looking to get into a neighborhood that is still growing, the West Loop might be an ideal match.
For those with an eye for trendy, loft-style properties, exciting nightlife opportunities, fabulous dining, and boutique shopping, the West Loop is a hotbed of activity. It is true that in the past, the West Loop may have had a somewhat negative connotation associated with it, however as Bob Dylan sang, "The times, they are a-changin'." It is now a neighborhood emerging as a very sought-after place to live.
The Tribune story highlights once again the amazing diversity of the Chicago market. There are homes and neighborhoods here for everyone. Problem is, it's often easy to overlook that one community that may be perfect for you. It's why I always recommend that when buying, you work with an experienced, knowledgeable Chicago REALTOR®, one who knows all those often-overlooked gems of the Chicago area.
During the recent housing boom, I often heard from buyers upset that housing prices were rising too fast, homes were selling before they even had a chance to make an offer and sellers were unwilling to budge from their initial asking prices.
Well, all that has changed. We are now in the midst of the best buyers’ market I’ve seen in Chicago in years.
So, if you’re looking to buy a home in one of Chicago’s top neighborhoods, places like the Gold Coast, River North, Lincoln Park and Lakeview, I have one question: What are you waiting for?
Just consider the latest statistics from the Illinois Association of REALTORS®: The median home sales price in the Chicago area during the second quarter of this year stood at $250,000. That may seem like a healthy number, and it is. But in the second quarter of last year, the median home sales price stood at $256,000.
This means that there are plenty of bargains out there for buyers. Sellers are motivated. Not only are they setting lower initial asking prices for their single-family homes and condominiums, they’re willing to negotiate on everything from sales price to needed repairs to closing dates.
This doesn’t mean, though, that buyers can expect to “steal” a house. Remember, prices are already down. Buyers can’t expect to lop 20 percent or more off a seller’s asking price. Buyers should be careful, too, not to propose an insultingly low offer. This gets the negotiation process off to a bad start, and good things rarely follow extreme lowball offers. Comparisons to other nearby home sales still matter, even in this market. So if a house down the street from the one you like sold for $350,000, don’t expect to get your dream house for $300,000 just because the market is sluggish.
I know many buyers are still waiting, hoping to see asking prices drop even lower in Chicago. No one has a crystal ball, and no one can predict the future. But I have years of experience to back me up when I say that now is as good a time as any I’ve seen to buy residential real estate. If you’re debating about whether you should jump into the market, my advice is to dive right in.
Mario Greco is the #2 full-service residential real estate agent in Chicago. He has sold over $575 million in Chicago real estate since 2002, and leads a group of 8 agents and 9 office personnel.
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