I received this message from the National Association of Realtors® (NAR) in my email box this afternoon: NAR Update: Congress Extends and Expands Tax Credit (pdf-file). President Obama still needs to sign this bill which apparently will happen tomorrow.

Major update here: Evidently, existing homeowners may take advantage of a tax credit as well, this time around, up to $6,500. Regarding eligibility, please consult with your tax advisor or attorney, because I am not him.

Update November 6, 2009: President Obama has signed the above mentioned bill today, as CNN/Money reports.

It’s been a homecoming of sorts, at my old (business) stomping grounds when I was associated with a real estate company that displays the Rock of Gibraltar, about five years ago. 6430 N Central Ave. in Edgebrook’s central business district, has been home to RE/MAX Cityview for the past year, and is now my new office as well.

The three years I spent at RE/MAX First Class Realty in Skokie were rewarding, from a business point of view, as well as socially, as I met a number of new and familiar colleagues, and Skokie clients. But given the fact that my business centers around Edgebrook, Sauganash, Gladstone Park, and Forest Glen, there was a need to relocate back here. Obviously, in Edgebrook, we’re not suffering from a shortage of real estate offices, and since I bleed RE/MAX red-white-and-blue, the decision to join RE/MAX Cityview was fairly simple. My sincere thanks go to the owners of RE/MAX First Class Realty in Skokie, the Kontos family, for providing me with a first-class business environment during the past three years, and for whom I have the utmost respect. I will miss them and most of my colleagues there, but it was simply time for a change.

RE/MAX Cityview in Edgebrook is owned and operated by Robert and Ramina Padron, a super dynamic couple who are on the fast track to turning this office into a neighborhood real estate powerhouse. I’ve only been here about two weeks, and I already feel at home. Here are a couple of snapshots of my cubical, and of our conference room:

My new office

Conference Room

During my first week, not only did Rob help me hook up my computer to the office/printer network, he also FIXED my PC with a printer problem that I was having for about the past year. And that’s because Rob is not only the broker/owner of this office, but he also has a information technology background. Right up my alley. Rob and the office staff have really done a tremendous job in making my transition super easy, as switching offices even within the RE/MAX system poses some significant administrative challenges. As if that wasn’t already enough of a nice welcome, check out what I ran into the other day, walking in to the office:

Welcome sign

I’m really not much of a ham, actually, more a shy kinda guy, but I suppose that at least all the visitors to Happy Foods now know that I work at RE/MAX in Edgebrook. Thanks Rob and Ramina. You guys really know how to make your new associates feel welcome. And I’m not even talking about the delicious designer cookie basket I found on my desk on my second day in the office.

So, now that we’ve got the big news out of the way, it’s time for you to visit me at my new digs. Whether you’re selling or buying real estate in Edgebrook, Sauganash, Forest Glen, Gladstone Park, or anywhere else in Illinois for that matter, contact me. I am as close as your phone, or email program.

● Borrowers rush in as mortgage rates slip below 5% (Chicago Tribune)

● Chicago single-family-home sales jump, but condos are still suffering (Chicago Tribune)

● Short sales spread across real estate market, leaving frustration in their wake (Chicago Tribune)

● Local home sales up for 2nd straight month (Chicago Real Estate Daily / Crain’s)

● How this week’s FOMC statement affects mortgage rates and homeowners (The Mortgage Reports / Dan Green)

● What the housing ‘rebound’ means for you (CNN Money)

● Rents could skyrocket due to tax increases (Chicago Sun Times)

Be sure to visit one of the 60646 weekend open houses. Have a great weekend.

The widget on the front page of 60646 Blog indicates that the deadline for the $8,000 first-time home buyer credit expires on November 30, 2009. While that’s true technically, mortgage broker Dan Green throws us a curveball with this post, opening our eyes as to why postponing, delaying, or, *gasp* procrastinating the closing of your first home purchase until November 30, 2009 might be fraught with a variety of pitfalls. Here’s the thing: Generally, I don’t like to pimp promote any mortgage broker’s business on 60646 Blog, but anyone who has the foresight to alert the home-buying public about potential scheduling conflicts that may arise in conjunction with an important tax date, deserves to be a recommended read on my blog. Having said that, I recommend that you take a couple of minutes to read “Forget November 30, 2009 — Make November 16, 2009 Your Personal First-Time Home Buyer Tax Credit Deadline.”

Addendum: The Chicago Association of Realtors® in an email provided the link to this article today, regarding the extension of the $8,000 Tax Credit.

While showing one of our listings to a buyer’s agent and her clients today, she asks me the following questions:

Q1: So, is this house a short sale, or a foreclosure?

Me: Uh, neither. I would have mentioned it in the listing sheet, if it were.

Q2: (After I had already mentioned to her two seconds earlier that the sellers are not aware of any material defects in the house, and have put this down in writing on the disclosure form) So, are there any problems with water in the basement?

Me: Not to the sellers’ nor my knowledge. The disclosure form is clean.

On her way out the door:

Q3: So, how flexible are the sellers?

Me: The ball is in the buyers’ court. It all starts with an offer from the buyers.

Here she was, and hadn’t even had a chance to talk with her clients to see whether or not they liked the house at all, and already she wanted to know how negotiable the sellers are. She was fortunate that I was in a good mood today, otherwise I would have asked her if she wanted to know exactly how much below asking price our clients are willing to accept.

Moral of the story: When your property is on the market for sale, and you are asked questions by a buyer’s agent or by buyers, always be sure to defer them to your real estate professional, as you may run the risk of compromising your negotiation position. Unrepresented sellers (FSBO’s) are a bit at a disadvantage here, but if you do get uncomfortable by certain questions posed to you, please defer them to your attorney.

In Illinois, the Real Estate License Act of 2000 governs among other things, the relationship between the public and real estate professionals (licensees). Illinois lawmakers’ intention has been for sellers and buyers of real estate alike to be professionally represented in any real estate transaction. Prior to approximately 1995, only sellers used to be represented by their listing agent. Brokers who would introduce their buyers to a piece of property weren’t really working on behalf of their buyers; they were rather sub-agents working for the listing agent on behalf of the seller. The legal landscape changed in 1995, when the Real Estate License Act started mandating that real estate buyers had to be represented by their own agent who owed them full fiduciary duties. It took several years before the general public got used to the idea that suddenly they too could “have their own people” (as in “have your people call my people”) when purchasing real estate. Eventually, most buyers got the hang of this “buyer’s agency” thing (a few agents are still working on grasping this concept).

With the ubiquity of listing information on the web though, the concept of designated agency has again become somewhat confusing for many real estate buyers. Case in point: We received an email this morning from a buyer who wants to see a few homes that are for sale in Sauganash. How did they find these properties and yours truly, for that matter? On 60646 Blog, of course, where we bring you the entire residential real estate inventory for sale in 60646, fresh off the MLS press, twice daily. The buyer goes on to say in the email that he’d like to see these homes on Wednesday, but that his agent won’t be accompanying him on that day. I call the gentleman because I’m suspecting that he’s under the impression we’re the listing agents for these properties he’s interested in. Sure enough, that’s what he thought. I explain that we’re not, and that we’d be acting in the role of his buyer’s agents were we to show him these homes. But I’m calling him as a courtesy to his agent (you’re welcome, btw), to let him know about this misunderstanding, because I sure wouldn’t be happy if another agent drove my buyer clients around to show them homes that are for sale. Mr. Buyer was very thankful for my having cleared up the misunderstanding.

How did this misunderstanding originate in the first place? Ubiquity of listing information on the Internet. You see, those members of the Multiple Listing Service who would like to display the listings of other brokers on their own web sites are free to do so, as long as they opt in to Broker Reciprocity, and display the Broker Reciprocity logo, along with the listing broker’s information on displayed listings. The overwhelming majority of brokerage firms in our MLS have opted in to Broker Reciprocity. Consequently, consumers now have access to the same database information that Realtors have, multiplied to the n-th degree. As a result, buyers who are looking for homes on the Internet, may not always be able to ascertain right away who the listing firm/broker of a particular property for sale or for lease is. Here’s how you can quickly pinpoint the information of listing brokers/firms for all listings that we display on our website:

As a buyer, if you’re already working with an agent and a particular listing catches your eyes, have your agent contact the firm/broker that is listed under the “Listing courtesy of xyz realty firm” to make arrangements for a private showing. And if you’re not working with a buyer’s agent yet, contact us, and we’ll be happy to show you any property that you’re interested in looking at, live and in color.

There are numerous ones, I guess. But laziness and indifference towards one’s buyer’s needs are the ones that annoy me the most. Case in point: Christina and I were hired to sell a couple’s house in Skokie last week. We managed to sell it within a few days (more about that in another post), and as of last night, the contract was approved by both buyers and sellers.

While I was negotiating the contract with the buyer’s agent yesterday, another agent calls Christina to inquire about the property. Christina tells her that there is a party seriously interested in the house, and has actually submitted an offer. However, their offer has not been approved by the sellers as of yet, and that she’d encourage the (second buyer’s) agent to show it to her buyer. The agent’s response: “Nah, I don’t want to waste my time. Just give me a call, in case the deal falls apart” (not verbatim).

Excuse me? I mean, with gasoline prices flirting with the $4 mark, I understand that many agents prefer not to make unnecessary road trips. But skipping the showing of a property to one’s buyer client, because it just went under contract, is (ahem) reckless, not to mention a breach of one’s fiduciary duties. You see, when a buyer’s sales/purchase contract is accepted by the sellers, there is still a long road to be traveled before the parties can meet at the closing table to finalize the transaction. There is the home inspection that may change the buyer’s minds about their particular purchase decision, there are the attorneys who may make modifications to the contract (except to the price and dates), there is the appraisal that may come in below the agreed-upon sale price, and most importantly, there is the buyers’ mortgage application that still needs to be approved by their lender. The metaphor “walking on eggshells” comes to mind here. Any one of these hurdles can send the transaction into an uncontrollable tailspin, at any point in time.

These risk factors are what we call “contingencies”. While all parties to the transaction are collectively holding their breath, waiting for these contingencies to be removed one by one, we listing agents (at least those of us who earn our living) aren’t sitting on our hands, making plans for our next vacation in the Carribean. No ma’am, we realize that the old adage in real estate is: “It ain’t sold, until everybody walks away from the closing table”. Hence, we continue to show the property to other buyer prospects. Why? Because, we’d like to have a backup plan in place, in case something bad happens to our first transaction. Why then would a buyer’s agent dismiss a property, only because it just went under contract, or is about to be “sold”.

I’ll tell you what we’d do, when we’re on the buyer’s side, and encounter a CTG property: We show it, and not only that, if our clients like it enough to own it, we write up a contract on it and submit it to the sellers (via their listing agent) as a backup offer. I mean, I understand the concept of a buyer’s market and the fact that there is lots of inventory to choose from, therefore it’s no harm to skip one property and go on to the next. But let’s be honest here: When your buyer walks into a house or condo that is just what they were looking for (love at first sight, so to speak), a buyer’s market doesn’t mean much any longer now, does it?

I’m not an attorney, so the content of this post is not meant to provide you with legal advice. But as a Realtor, I deal with real estate sales contracts on a daily basis, and over the years, I have witnessed numerous cases in which one or both parties to a real estate transaction have inadvertently or deliberately breached the terms and conditions of a real estate sales contract to which they had previously agreed, in writing. Often times this has led to lawsuits, wasted time and resources, as well as headaches for most of the participants in the transaction. I am here to tell you that this ugliness can be avoided, provided that one understands a few basic transaction rules.

For those folks who are not familiar with real estate sales contracts, please note that in most parts of Chicagoland, buyers who work with a Realtor submit a standard 11-page (Multi-Board 4.0) purchase contract to the seller(s). This contract is sanctioned by the Illinois Real Estate Lawyers Association, as well as 14 Realtor Associations in Northern Illinois. Buyers simply need to fill in a variety of blank spaces, and voila, they have a bona fide offer.

There are four important contingencies in this contract that exist to protect the positions of both sellers and buyers.

1. Attorney Review (Paragraph 9)

The respective attorneys for the Parties may approve, disapprove, or make modifications to this Contract, other than stated Purchase Price, within five (5) Business Days after the Date of Acceptance. Disapproval or modification of this Contract shall not be based solely upon stated Purchase Price. Any notice of disapproval or proposed modification(s) by any Party shall be in writing. If written notice is not served within the time specified, this provision shall be deemed waived by the Parties and this Contract shall remain in full force and effect. If prior to the expiration of ten (10) Business Days after Date of Acceptance, written agreement is not reached by the Parties with respect to resolution of proposed modifications, then this Contract shall be null and void.

2. Professional Inspection (Paragraph 10)

Buyer may secure at Buyer’s expense (unless otherwise provided by governmental regulations) a home, radon, environmental, lead-based paint and/or lead-based paint hazards (unless separately waived), and/or wood destroying insect infestation inspection(s) of said Real Estate by one or more licensed or certified inspection service(s). Buyer shall serve written notice upon Seller or Seller’s attorney of any defects disclosed by the inspection(s) which are unacceptable to Buyer, together with a copy of the pertinent page(s) of the report(s) within five (5) Business Days (ten (10) calendar days for a lead-based paint and/or lead-based paint hazard inspection) after Date of Acceptance. If written notice is not served within the time specified, this provision shall be deemed waived by the Parties and this Contract shall remain in full force and effect. If prior to the expiration of ten (10) Business Days after Date of Acceptance, written agreement is not reached by the Parties with respect to resolution of inspection issues, then this Contract shall be null and void. The home inspection shall cover only major components of the Real Estate, including but not limited to, central heating system(s), central cooling system(s), plumbing and well system, electrical system, roof, walls, windows, ceilings, floors, appliances and foundation. A major component shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety. The fact that a functioning component may be at the end of its useful life shall not render such component defective for the purpose of this paragraph. Buyer shall indemnify Seller and hold Seller harmless from and against any loss or damage caused by the acts or negligence of Buyer or any person performing any inspection(s). Buyer agrees minor repairs and routine maintenance items are not a part of this contingency. If radon mitigation is performed, Seller shall pay for a retest.

3. Mortgage Contingency (Paragraph 11)

Seller [check one] __has __has not received a completed Loan Status Disclosure (see page 11). This Contract is contingent upon Buyer obtaining a firm written mortgage commitment (except for matters of title and survey or matters totally within Buyer’s control) on or before _______________, 20___ for a [choose one] __fixed __adjustable; [choose one] __conventional __FHA/VA __other____________________ loan of $__________________ or such lesser amount as Buyer elects to take, plus private mortgage insurance (PMI), if required. The interest rate (initial rate, if applicable) shall not exceed ____% per annum, amortized over not less than _____ years. Buyer shall pay loan origination fee and/or discount points not to exceed _____% of the loan amount. Buyer shall pay the cost of application, usual and customary processing fees and closing costs charged by lender. (If FHA/VA, complete Paragraph 35.) (If closing cost credit, complete Paragraph 33.) Buyer shall make written loan application within five (5) Business Days after the Date of Acceptance. Failure to do so shall constitute an act of Default under this Contract. If Buyer, having applied for the loan specified above, is unable to obtain such loan commitment and serves written notice to Seller within the time specified, this Contract shall be null and void. If written notice of inability to obtain such loan commitment is not served within the time specified, Buyer shall be deemed to have waived this contingency and this Contract shall remain in full force and effect. Unless otherwise provided in Paragraph 31, this Contract shall not be contingent upon the sale and/or closing of Buyer’s existing real estate. Buyer shall be deemed to have satisfied the financing conditions of this paragraph if Buyer obtains a loan commitment in accordance with the terms of this paragraph even though the loan is conditioned on the sale and/or closing of Buyer’s existing real estate. If Seller at Seller’s option and expense, within thirty (30) days after Buyer’s notice, procures for Buyer such commitment or notifies Buyer that Seller will accept a purchase money mortgage upon the same terms, this Contract shall remain in full force and effect. In such event, Seller shall notify Buyer within five (5) Business Days after Buyer’s notice of Seller’s election to provide or obtain such financing, and Buyer shall furnish to Seller or lender all requested information and shall sign all papers necessary to obtain the mortgage commitment and to close the loan.

4. Sale of Buyer’s Real Estate (Paragraph 31)

THE FOLLOWING OPTIONAL PROVISIONS APPLY ONLY IF INITIALED BY ALL PARTIES
____ ____ ____ ____ 31. SALE OF BUYER’S REAL ESTATE:
Initials
(A) REPRESENTATIONS ABOUT BUYER’S REAL ESTATE: Buyer represents to Seller as follows:
(1) Buyer owns real estate commonly known as (address):
_________________________________________________
(2) Buyer [check one] __has __has not entered into a contract to sell said real estate. If Buyer has entered into a contract to sell said real estate, that contract:
(a) [check one] __is __is not subject to a mortgage contingency.
(b) [check one] __is __is not subject to a real estate sale contingency.
(c) [check one] __is __is not subject to a real estate closing contingency.
(3) Buyer [check one] __has __has not listed said real estate for sale with a licensed real estate broker and in a local multiple listing service.
(4) If Buyer’s real estate is not listed for sale with a licensed real estate broker and in a local multiple listing service, Buyer [check one]
(a) __Shall list said real estate for sale with a licensed real estate broker who will place it in a local multiple listing service within five (5) Business Days after the Date of Acceptance.
For information only: Broker: _________________________________________________
Broker’s Address: _________________________________________________ Phone: ________________________
(b) __Does not intend to list said real estate for sale.
(B) CONTINGENCIES BASED UPON SALE AND/OR CLOSE OF BUYER’S REAL ESTATE:
(1) This Contract is contingent upon Buyer having entered into a contract for the sale of Buyer’s real estate that is in full force and effect as of ____________________, 20_____. Such contract shall provide for a closing date not later than the Closing Date set forth in this Contract. If written notice is served on or before the date set forth in this subparagraph that Buyer has not procured a contract for the sale of Buyer’s real estate, this Contract shall be null and void. If written notice that Buyer has not procured a contract for the sale of Buyer’s real estate is not served on or before the close of business on the date set forth in this subparagraph, Buyer shall be deemed to have waived all contingencies contained in this Paragraph 31, and this Contract shall remain in full force and effect. (If this paragraph is used, then the following paragraph must be completed.)
(2) In the event Buyer has entered into a contract for the sale of Buyer’s real estate as set forth in Paragraph 31 (B) (1) and that contract is in full force and effect, or has entered into a contract for sale of Buyer’s real estate prior to the execution of this Contract, this Contract is contingent upon Buyer closing the sale of Buyer’s real estate on or before _________________________, 20_____. If written notice that Buyer has not closed the sale of Buyer’s real estate is served before the close of business on the next Business Day after the date set forth in the preceding sentence, this Contract shall be null and void. If written notice is not served as described in the preceding sentence, Buyer shall be deemed to have waived all contingencies contained in this Paragraph 31, and this Contract shall remain in full force and effect.
(3) If the contract for the sale of Buyer’s real estate is terminated for any reason after the date set forth in Paragraph 31 (B) (1) (or after the date of this Contract if no date is set forth in Paragraph 31 (B) (1)), Buyer shall, within three (3) Business Days of such termination, notify Seller of said termination. Unless Buyer, as part of said notice, waives all contingencies in Paragraph 31 and complies with Paragraph 31 (D), this Contract shall be null and void as of the date of notice. If written notice as required by this subparagraph is not served within the time specified, Buyer shall be in default under the terms of this Contract.
(C) SELLER’S RIGHT TO CONTINUE TO OFFER REAL ESTATE FOR SALE: During the time of this contingency, Seller has the right to continue to show the Real Estate and offer it for sale subject to the following:
(1) If Seller accepts another bona fide offer to purchase the Real Estate while the contingencies expressed in subparagraph (B) are in effect, Seller shall notify Buyer in writing of same. Buyer shall then have ____________ hours after Seller gives such notice to waive the contingencies set forth in Paragraph 31 (B), subject to Paragraph 31 (D).
(2) Seller’s notice to Buyer (commonly referred to as a “kick-out” notice) shall be served on Buyer, not Buyer’s attorney or Buyer’s real estate agent. Courtesy copies of such “kick-out” notice should be sent to Buyer’s attorney and real estate agent, if known. Failure to provide such courtesy copies shall not render notice invalid. Notice to any one of a multiple-person Buyer shall be sufficient notice to all Buyers. Notice for the purpose of this subparagraph only shall be served upon Buyer in the following manner:
(a) By personal delivery of such notice effective at the time and date of personal delivery; or
(b) By mailing of such notice to the addresses recited herein for Buyer by regular mail and by certified mail. Notice served by regular mail and certified mail shall be effective at 10:00 A.M. on the morning of the second day following deposit of notice in U.S. Mail; or
(c) By commercial overnight delivery (e.g., FedEx). Such notice shall be effective upon delivery or at 4:00 P.M. Chicago time on the next delivery day following deposit with the overnight delivery company, whichever first occurs.
(3) If Buyer complies with the provisions of Paragraph 31 (D) then this Contract shall remain in full force and effect.
(4) If the contingencies set forth in Paragraph 31 (B) are NOT waived in writing within said time period by Buyer, this Contract shall be null and void.
(5) Except as provided in subsections to subparagraph (C) (2) above, all notices shall be made in the manner provided by Paragraph 27 of this Contract.
(6) Buyer waives any ethical objection to the delivery of notice under this paragraph by Seller’s attorney or representative.
(D) WAIVER OF PARAGRAPH 31 CONTINGENCIES: Buyer shall be deemed to have waived the contingencies in Paragraph 31 (B) when Buyer has delivered written waiver and deposited with the Escrowee the additional sum of $____________________ earnest money within the time specified. If Buyer fails to deposit the additional earnest money within the time specified, the waiver shall be deemed ineffective and this Contract shall be null and void.
(E) BUYER COOPERATION REQUIRED: Buyer authorizes Seller or Seller’s agent to verify representations contained in Paragraph 31 at any time, and Buyer agrees to cooperate in providing relevant information.

Conclusion: One might be tempted to refer to the above as legal mumbo-jumbo, but please note that this is the verbatim language of the real estate sales contract that is utilized in our neck of the woods. It is enforcible in a court of law, and it does spell out relatively clearly what is expected of the parties to a real estate transaction. Contingencies are safety mechanisms, for both sellers and buyers, and as long as the parties to a real estate transaction understand this and adhere to the prescribed duties, chances are that they are both going to walk away happily from the closing table, instead of from the judge’s bench. Please consult with a real estate attorney for any matters relating to real estate contract contingencies.