Fox Valley Illinois Real Estate Blog

That’s right!   Several experts think so, possibly later this year!   See the This Month in Real Estate Video below:

This Month in Real Estate January 2011

Okay, so incredibly low interest rates (lowest since 1971!), lots of inventory to choose from, and low prices (Econ 101, lots of inventory, low demand).   What else does a buyer need to be motivated to make the move now?   Nothing right?

Well, just in case, here is one more reason.   After October 4th, 2010, the mortgage insurance rate will increase by over 63%.   Take a look at this link to see the impact on a buyers’ monthly payment.   If you can get the loan, and can stay in the property you purchase for at least the next 7 years, the time is NOW!

1st time homebuyers already under contract, but fighting to beat the June 30th closing deadline might breathe a collective sigh of relief if a few Senators get their way.   They are looking to push the closing deadline back to September of 2010.   This extension could especially help the purchasers of short sale properties, which are notoriously slow to close.   Check this link for the whole story from CNNMoney.com.

According to the National Association of Home Builders the average size of a new home is down from the year 2000.   That decrease may reflect more than just a economic choice among buyers.   Check out This Week In Real Estate below for more.

In working with buyers and watching the market Fannie Mae has had some of the most aggressively priced homes to hit the market.   Many go under contract within 7 days of being listed in the MLS.   Now buyers will have even more incentive to look at Fannie Mae owned properties.

Any buyer that is going to occupy the home they purchase from Fannie Mae will be eligible for 3.5% of purchase price to use toward their closing costs.   Offer must be accepted between January 28, 2010, and May 1, 2010.   Or, if the buyer so desires, that 3.5% could be used toward the purchase of appliances.   Couple this incentive with the 1st time home buyer tax credit, and the reasons to get out an buy a home are tough to refute!

Check out this article from the Washington Post for even more details.

Looking to buy or invest in real estate?   Many of the best deals are bank owned foreclosures, or pre foreclosed homes.

Check out this link for Oswego Il.

Need a search for another community or area?   Contact me and I’ll set it up for you!

The first time homebuyer tax credit has received a lot of press, and had enough impact for the Federal Government to extend into 2010.   Watch this video from Keller Williams to find out how much impact it had!

Many areas of the the far west Chicago suburbs have subdivisions with a somewhat hidden cost.   Buyers need to be aware that in addition to their mortgage, property taxes, and homeowners association fees, there may be an addition cost associated with being an owner.   Many new subdivisions have SSA’s, or Special Service Areas.   This is a technique that allows a subdivision’s ongoing maintenance cost of its public areas to be borne by the residents of the subdivision, rather than the village or home-owner’s association.   Often this extra fee is included in the property tax bill for the home.   The fees are commonly used to cover the cost of maintaining landscaping or water retention areas.   This amount is often included in the published property tax bill, and shows up when a home is listed by an agent as part of the property taxes.

Some subdivisions have SA (Special Assessment) fees.   These are typically much more costly than SSA’s, and often are not included in the property tax bill.   SA fees are usually used to fund the cost of a a subdivisions public infrastructure.   The building of roadways, sidewalks, street lights, etc are all common costs covered by an SA.   The village initially funds the cost of this infrastructure, and then is paid back by a subdivision’s residents over time through the SA.   The SA usually has the option of being paid off early (unlike the SSA, which is generally “forever”), saving the homeowner a lot of money in interest.   Otherwise residents receive a bill yearly for the SA, which includes a portion of the payment going to pay off the SA, and a portion is paid for interest.   It is very similar to a second mortgage.

So what is the cost?   Costs for either vary from area to area, but typically the SSA is lower than the cost of an SA.   In Montgomery all of the active SSA’s have the potential for an annual cost of $1.10 per $100 of equalized assessed value of a home.   Equalized assessed value is 1/3 of the assessed market value.   So if average equalized assessed value for an area was $100,000, the average SSA per property per year would be $1100.   In Montgomery the SSA has only been applied at $.30 per $100 of equalized assessed value however, so in our scenario the cost per property per year would be $300.

By contrast, the SA fees in Montgomery typically started at $1600 for the first year, and increased on an amortized schedule to cap somewhere around $2500 in the final year.   SA’s usually last 28 years.   Obviously an additional $1600+ per year severely cuts into the buying power of a buyer.   Most of the time SA and SSA’s are disclosed in the MLS listing by the agent, however I have seen occasions where the existence of such was not disclosed, and marked as “unknown” on the MLS listing.

The message?   Do your homework!   If you are a buyer, pick an agent familiar with the area your are shopping in!   Call villages and towns to learn of areas with SSA’s or SA’s.   Don’t get your heart set on a home that fits your dreams and needs, but   not your budget.

Check out this video with details on the extended first time buyer tax credit, and the added tax credit for current owners

The bulk of real estate sales continues to be pre foreclosed and foreclosed properties, largely because they are, square foot by square foot, the best deals on the market.   With the number of foreclosures on the market and more on the way, cities are reacting to ensure the integrity of neighborhoods, and long term property values.   This is equating to some additional costs for buyers.

The saavy buyer already has some upfront costs when purchasing a property.   I always recommend, and nearly all of my clients do, a home inspection.   This can run from $250 to $400.   In addition, more and more buyers are electing to have their potential new home tested for radon.   This test can run from $180 to over $200 depending on the footprint of the home and the layout of the living spaces above.

In addition to these costs associated with purchasing any home, bank owned properties are bringing some extra expenses.   Many of these properties have been winterized by the property preservation departments of the owner/bank.   This means that the water has been shut off, pipes drained, gas shut off, and often the electricity.   A buyer on this property must pay to have the home “de-winterized” for their property inspection.   The buyer then must pay to have the property re-winterized, whether they decide to pursue the purchase of the home or not.   This cost has typically been around $300 to de- and re- winterize.

A second cost to buyers of bank owned properties is being instituted by local cities and villages.   Both Romeoville and Aurora now have a mandatory city inspection of all bank owned properties paid for by the buyer before a certificate of occupancy can be issued for the home.   This inspection can also hold up the closing of the sale, and the new owner may not occupy the property without the inspection.   The new owner is also responsible for any repairs, if any, that the inspection turns up. The inspection is mainly for safety and building code issues.   In addition to this, the city of Romeoville now also mandates an air test for mold for all bank owned properties, at a cost of $200 or more.   If mold is found in the air, it must be professionally mitigated and the property must pass a second air test before the buyer may close on the home.

The reasons for all of this testing is not just to make the purchase of a bank owned home difficult or to raise revenue for the city.   Municipalities are simply taking action to ensure the quality and integrity of their neighborhoods.   An unaware buyer purchasing a home with mold, then becoming extremely ill, could result in the home going right back into foreclosure.   Buyers must make sure that the “deal” they are getting is good enough to cover all of these potential costs.   Agents may want to call the cities that they do business in and be sure you can educate your buyers on what each city is requiring.