The Tanner Trails subdivision located off of Tanner Road in North Aurora is finally nearing completion despite a bankruptcy filed by the primary builder - Neumann Homes in October 2007. Many residents were concerned with the unfinished status of several of the streets and parks. However, in a decisive move, the Village of North Aurora utilized credit extended on the behalf of Neumann Homes to complete several projects around the community. The end result is an excellent community of just over 500 homes on over 350 acres of land surrounded by several parks, conservation areas and area hiking and biking trails.

Initial construction began in 2003 at Tanner Trails and it instanly became a popular place for buyers seeking large new homes at a reasonable price. Escalating home costs in 2004 and 2005 pushed home values in the subdivision from the low to the high $300,000’s yet interest in the homes remained brisk, even through the beginning of the market downturn in 2006. Currently, Tanner Trails represents a great place to look for resale values. Due to the size of the community, competition from the number of homes on the market continues to drive home prices downwards. If you’re looking for North Aurora homes for sale, make sure you keep Tanner Trails at the top of your list.

Buyers really have it good in today’s market. In some cases, too good. I have found in several circumstances that the extreme number of homes on the market right now is causing an interesting problem. The wide selection of choices available is causing some buyers to get “burnt out” of house hunting.

The problem begins with the buyers trying to see every home available in a certain market range. While this sounds like a pretty good strategy if you’re buying a home, consider that depending on the area and price range, a search of all homes available could yield hundreds of homes in the initial search with between 5 and 10 new homes appearing for sale every day. At first, buyers feel like kids in the candy store, but soon realize that going through hundreds of homes takes a lot of time and energy. Unfortunately this has caused many buyers to just give up on hunting altogether in frustration.

Back when we were at the crest of the housing wave and homes were selling rapidly, seeing every home out there made sense - there was less selection and buyers needed to often make quick choices. This made a “larger to smaller” approach to home searching make sense - there was a much smaller pool. In today’s market where there is an extreme housing glut, a “smaller to larger” approach makes more sense.

Buyers have to shift gears and be more selective in the initial searches. There are many great homes to choose from so chances are, you’ll be able to find exactly the home you’re looking for - it pays to be really picky in the beginning. If you don’t find what you’re looking for at first, then widen the search. Just remember a couple ground rules: the good homes still go fast even in today’s market. If you spend a week going through all your choices, by the end of that week, some of the best ones on your list will be gone. It’s better to start with a smaller list and add to it if you don’t find what you’re looking for. Also, don’t be afraid to go ahead and make an offer if a home you see fits your picture. I’ve worked with buyers that found the perfect home but wanted to continue to look and see “what else is out there” only to find that 3 days later, another buyer bought their perfect home while they were out looking at dogs. DONT LET THIS BE YOU!

Finally, it’s very important that you work closely with your REALTOR and be specific about your search requirements. If you’d only buy a home with a basement, it doesn’t make sense to see homes without one. If you’re thinking of looking for a home to buy this year, I’d love to talk to you about how I can make the search process easier. Just give me a call and I’d be happy to meet with you: 630-346-1041.

If you’re shopping in the $400-500,000 range, you really have the run of the store. You can pretty much choose your community, area and style of home. If a new home is on your shopping list, you might want to consider one of the custom homes located in The Reserves at Tanner Trails in North Aurora. There are currently several spec homes and builder models available in this community of custom and semi-custom homes located at the far western edge of North Aurora real estate.

R.A. Faganel Builders is currently offering a 4BR/2.5BA full-brick-front custom spec home packed with upgrades for around $435,000 and they’re also offering their builder model for sale featuring 4BR/3.5BA and over 3300 square feet with a natural stone front - also packed with upgrades for around $520,000. Another builder currently offering a spec home is Wyndham Deerpoint Builders who are offering a fully-built Richmond floorplan spec home featuring a gourmet kitchen with granite tops, 2-story fireplace and 4BR/4BA for right around $450,000. These prices and availablility is highly subject to change, so if you’re in the market to buy, jump on one of these deals before they’re gone.

I’ve seen a lot of folks predicting a lot of things about the housing market. First, know that real estate is local. Market conditions in other parts of the country will change differently than our area. I feel it’s impossible to “peg” the market in general as far as what’s going to happen. However, in our area, I see a lot of optimism for this year. Let’s take a look at the factors:

There hasn’t been a lot of market activity over the past couple years. Buyers have been waiting for a good deal. Foreclosures are moving briskly but there’s an ever-plentiful supply. This has made it difficult to impossible for existing home owners to move. This pressure has created pent-up demand in the market.

Mortgage rates are extremely low right now. Close to the levels they were back in 2005 before Greenspan messed them all up. Lenders have tightened restrictions but those that can buy will be getting a good deal on loan rates.

There is increasing national attention being put on the housing crisis and the extreme number of foreclosures. The government may be stepping in at some point this year to stem the tide of foreclosures. Once the foreclosures slow, values will begin to rise.

Rentals are now getting harder to find and rent prices are rising. Rent prices are now getting higher than the cost of owning a condo or single-family home. This increases the number of buyers in the market as renters decide it’s better to buy than pay more in rent.

We’re now entering the spring market - a naturally busy time. This should reduce inventory as buyers begin to take up the slack. If the number of foreclosures begins to slow, we’re going to see a further reduction in inventory for the fall. This points to the possibility of an uptick in the market beginning this fall. I predict conditions will remain flat during the spring and summer as the existing inventory begins to be eaten up by buyer demand but this fall we should see a slightly better market.

What does this mean for home buyers? If you haven’t yet entered the housing market, now is the time. You want to buy when the market is at or close to bottom - not after it has started to recover. If you’re looking for the point at where there’s the biggest inventory at the lowest prices, put yourself in the position to purchase this spring and summer.

The foreclosure “crisis” we’re experiencing now (up 57% in some areas from 2007 levels) is affecting everyone - not just the homeowners who’s lives and credit are turned upside down by this unfortunate experience. If everyone knew how much this situation is affecting everyone, there might be more impetous to solve things. Here’s a quick breakdown of how the current situation is affecting YOU:

As homes go under foreclosure and banks take possession of the homes, they are eventually listed on the market at 20-30% under market value. Because of the limited number of buyers right now, this might mean that out of 20 homes in a subdivision currently on the market 3-4 might be foreclosures priced at 20-30% under the others. These mostly aren’t homes that are “torn up” in the traditional foreclosure sense - these are often homes in good condition. For a buyer that sees two homes that are very similar but one is priced 20-30% lower, the choice is obvious. What this means for homeowners trying to sell homes is that they’re forced to compete with the foreclosures and drop prices or not sell. This drops market values in an area as sellers have to constantly compete with a continuous stream of foreclosures. The homeowners pay for this crisis with dropping home values.

For buyers, purchasing a foreclosure at 20-30% under market value sounds like a sure thing. However, many buyers that haven’t contacted a loan officer in a while might be suprised to find that they can no longer qualify for a loan. Due to tightening restrictions on income ratios, credit scores and downpayment requirements, many buyers who want to buy and may be capable of affording a home will not be able to get a loan. Also, for the buyers that can get a loan, banks are borrowing money from the federal government at a greatly reduced rate (everyone’s been hearing about the dropping fed funds rate) and then turning around and lending that money to buyes at higher rates (rates have stayed the same or slightly risen while the fed funds rates has dropped) in order to generate more income on the loans being writted and to offset the losses taken by the increased number of foreclosures. The buyers pay for this crisis with tightened restrictions on loans and higher interest rates.

Of course, the most highly impacted party in a foreclosure is the homeowner being foreclosed upon. Not only do they have to endure a severe lifestyle change, but credit scores will be greatly damaged by a judgement of foreclosure. This means that they will be unable to buy for the foreseeable future (especially with increasingly-tightening lending restrictions). All of the foreclosures and buyers unwilling to commit to a purchase have driven up rental prices and made rentals hard to find. This compounds the problem by forcing families that have been foreclosed upon to pay more for a place to live.

This foreclosure “crisis” we’re currently experiencing has a ripple effect that touches everyone - no matter who you are. If you don’t feel it now, you soon will as your home value drops or rent goes up. It’s time for everyone to take responsibility for this mess and make the right moves to get these homeowners some help or otherwise reduce the rate of foreclosure for everyone’s sake.

The latest statistics show that the foreclosure rate in our area has risen 57% since March of 2007. A foreclosure is truely a sad event. It results in a family loosing one of their most important possessions. Shelter is a basic human need so when a family - often with small children - looses their home, it puts them in a survival situation. Often, the turmoil associated with a foreclosure can be devastating to a family - tearing apart husbands from wives and even children from mothers and fathers.

It’s easy to look on people experiencing a foreclosure as bad people - irresposible - someone that did something they weren’t supposed to do or didn’t pay a bill that was due. However, the truth of the matter is that many foreclosures are the result of situations that aren’t predictable. Still others are the result of a lack of information and education during the buying process.

Often, a foreclosure is the result of financial hardship - the loss of one’s job, sickness or other unforseen circumstances. As our country stands on the brink of a recession, jobs are getting difficult to find. Companies are cutting back and laying off. For single-income families, the loss of that income is devastating and often un-expected. My own father was laid off several months ago and has been looking for a job ever since to no avail. If he had to provide for a family and pay a mortgage at the same time - if this would have happened 20 years ago - we would have likely  joined the many people facing the decision of whether to spend an unemployment check on food or a mortgage.

Sickness can also place someone in extreme financial hardship. The inability to work combined with incomplete healthcare coverage - insurance companies seem to love denying claims nowdays - leave folks at thier most vulnerable the inability to earn income combined with a lot of extra healthcare bills. Again - a financially devastating situation that is nearly impossible for single-income families to bear.

The truth of this is that, these situations can happen to anyone at any time - they are the unforseen bumps in the road of life. For homeowners without a mortgage or enough equity in their homes, sometimes these events can be weathered. For the rest - foreclosure is often the result. These are not bad people - they are people who loved their homes. I see it almost every time I enter one of these homes - schoolwork and A+ papers on the fridge, toys, family pictures and heirlooms left behind in the chaos. These aren’t people who knew this would happen to them. It’s easy to think of people experiencing foreclosure as “those people” who did something wrong. However, we need to keep in mind that if this was a choice these buyers had when they purchased the home - if the loan paperwork had a box you could check that said “Foreclosure in 2 years” - I don’t think anyone would check it.

If you’re in the market to buy or sell a home, eventually you’ll encounter an appraisal. Most folks know that it deals with home values but many might not understand exactly how important a role the appraisal plays in the home buying process.

First it’s important to distinguish between two different types of home value estimates. First, the report a real estate agent often does for a home seller in order to arrive at a list price for the home is commonly known as a Comparative Market Analysis. However, this is almost never an actual “appraisal”. An appraisal is a home value estimate that is compiled by a licensed real estate appraiser. The appraiser is often hired by a lender, bank or other mortgage company to determine an official value of the home for loan purposes. The distinction between a market analysis and an appraisal can sometimes be very small but in other ways very large. For example, the way a real estate agent prepares a comparative market analysis is by examining the sales prices of similar properties in the area (known as “area comps”). A real estate appraiser may use this same technique to arrive at the value of the home, however appraisers often have several different methods they can use.

Perhaps the biggest distinction between the value arrived at in a comparative market analysis and that of an appraisal is that only an appraisal is accepted by lenders as an “official” estimate. This creates an interesting situation because the appraisal can sometimes differ from the value arrived at in a comparative market analysis, especially if the appraiser is using a different method than pulling the “comps”. This is perhaps one of the biggest issues that can occur between buyers and sellers after an offer on a home has been negotiated and accepted. Consider the following situation:

A real estate agent estimates the value of a home using area comps at $325,000 and a buyer comes allong and offers full price for the home. Later, the lender hires an appraiser to do an official appraisal on the home and they use a square footage method for determining the value and arrive at a value of $300,000. Now there’s an issue because the lender is unwilling to lend more to the buyer to purchase a home than the home is actually woth. So the end result is, in order for the sale to progress, the seller must agree to reduce the sales price by $25,000.

In many ways, a home is worth what someone is willing to pay for it, however, that value must still pass muster by the appraiser. This is perhaps the biggest reason why pricing a home correctly from the beginning is so important. Many sellers have the idea that by pricing the home high initially, they can always “get lucky” and find a buyer willing to pay more for the home. However, because the home has to eventually pass the appraisal, even if the home were to sell at an inflated price, it wouldn’t pass the appraisal.

A horse is a horse of course of course…..now the famous Mr. Ed is trying his hand at real estate in Northern Illinois. This week we saw the much-anticipated merger of the MLSNI and MAP MLS - two area multiple listing services (basically big databases of real estate information). In doing so, the area brokers decided to incorporate both systems into a brand new organization. The name of the company they came up with is Midwest Real Estate Data (LLC) - or MRED for short. It’s not known whether the area brokers were thinking of the acronym when they came up with this company, but it’s definately going to be fun in the future consulting the famous MR. ED for homes.

What isn’t known is whether or not they will incorporate the horse’s voice into the program. I can see it now: logging in you’ll be welcomed, “Hello…..I’m Mr. Ed”. Or how about, doing a search would result in “No Properties Match Your Search Requirements…..Willlbuuuuurrrr”.

With the passing of the first day of spring on March 21st as well as the completion of Easter Weekend, the spring market is officially here. Things are looking promising with a lot of activity in the early weeks of March so there are a lot of things to be optimistic about. Interest rates are again low (5.6% at one point last week), home values are at a low point, pent up demand is there, economic stimulus checks are in the mail, tax returns are comming and the government seems honestly concerned about the foreclosure rate - to the point of taking action to reduce it. All of these factors point positive and if you haven’t started to hear rumblings in the media about a possible recovery in 2008, you soon will.

If you’re entering the market this year - whether to buy or sell - this next couple weeks you have to start thinking about how to prepare. Sellers - get those homes freshened up and get them on the market to take advantage of the early activity. Buyers - start contacting your local real estate professional (630 - 346 - 1041) for advice on how to start the process. 2008 should be a defining year for the real estate market as well as the economy - you need to be aware of what’s going on at all times and your local real estate professional is the key to helping you understand the market and how to come out ahead.

Many folks have heard the term “Short Sale” used recently amid the housing downturn of the past couple years. However, there is a lot of mystery involved as to what this is, exactly. I’m here to discuss several of the main concepts of these types of sales. If you watch the property market closely and have always wondered what the ins and outs are of these types of sales, hopefully this post will help you make sense of the process.

A short sale in the basic sense occurs when a property owner attempts to sell a property for less than they owe on it. This is usually due to some type of financial hardship on the part of the property owner or the inability to meet scheduled payments on the home. In essence, here is a rundown of the short sale process:

1. Property owner is late on one or more mortgage payments or is able to prove the inability to pay in the near future
2. Property owner or appointed attorney contacts lender and obtains a short sale packet that lists the requirements the lender has in order to approve the short sale
3. Property owner lists the property for sale with a REALTOR at the home’s actual value
4. Property owner agrees to an acceptable offer from an approved and willing buyer
5. Property owner or appointed attorney contacts lender again with the contract and all short sale documents
6. Lender appraises the property and either approves or denies the short sale or makes the buyers a counter-offer

There are many things that are often misunderstood about the short sale process. The first is usually the list price of the home. Many property owners feel that they can price the home for whatever amount they choose and the lender will approve the sale. In actuality, the lender usually will only approve the amount that the property is actually worth - determined by the appraisal. In many cases where the contract is for a price substantially less than the actual appraised value of the property, the lender will counter the contract at its actual value. The lender always has the final say in the value that they will accept for the property - not the seller.

Another aspect of the short sale that is often confusing is the addition of a second mortgage. If there is more than one mortgage on the property, both lenders must approve the short sale to release title to the property. In many cases, a second mortgage holder has a subordinate lien position on the property - this means that if the property goes into foreclosure, the primary lein holder will be paid first and whatever is left over then goes to the second lien holder (and on down the line). Because of this, it is often in the best interests of second mortgage holders to negotiate with the homeowner and allow the property to be sold BEFORE foreclosure - but the situation puts them at a very weak negotiating position. Often, second mortgage holders are offered a $1,000 settlement on a loan for many tens-of-thousands of dollars. However, because the second mortgage holder must write off on the sale of the property, they do have a final say-so in the ability of the short sale to go forward. In several cases, second mortgage holders have forced property owners to sign personal notes of repayment in order to approve the short sale. When a second mortage is involved, often things become many times more complex.

If you are a homeowner and are having trouble making payments, a short sale may be an option to consider. You have to keep the following in mind: you will almost never get any money out of the property, you have to be able to prove some type of current of future financial hardship and depending on your circumstance, the short sale may or not be successful. Perhaps the two most important factors you should look for if you feel a short sale might benefit you are a real estate agent who knows the short sale process and will advise you properly and an attorney to help you get everything the lender needs together and negotiate with your mortgage holders.

On the other hand, if you are a buyer buying a property through short sale, the primary thing you need to have is patience and an open mind. You are buying a property from a seller who likely has no additional money to put into the property. The sale is always subject to lender approval and time from offer to close may be 3-4 months or more, or even never. You might also end up being asked to pay for property liens and other expenses that the seller of the property is unable to pay. The end result is that you usually get a property well under market value but you have to be patient and put up with a lot. Again, the most important thing for you is to be working with a real estate agent experienced in short sales who can advise you throught the process.

For more information on short sales please call me directly at (630) 346-1041