Tag Archives: buying a home

Quality Control Week #2: Recognizing Low Quality

Hey all! Sorry about the silence last week. Between business and the recent floods in my neighborhood it was absolutely frantic. As always, my clients come first.

So when we left off we were talking about the factors that make for a high quality home. Today we’re going to talk about how to spot symptoms of poor construction and quality when you’re in a showing. After all, a home with even medium quality construction will suffice for many of you, especially for renters who are only going to be living there for a short while. Poor construction and materials, however, can be dangerous and costly. You would not want to purchase a cheaply-made home without budgeting time and cash for major capital improvements to occur before you move in.

Sometimes it's easy to spot a cheap knockoff. Here's how to spot them when you're looking for real estate.

Sometimes it’s easy to spot a cheap knockoff. Here’s how to spot them when you’re looking for real estate.

Preparations

You’ll want to do a little research before you get started.

Learn the names of the current specialty appliance lines.

I recently worked with a buyer who rejected all homes with American appliances. If the kitchen had Maytag, GE, Whirlpool or Frigidaire appliances it was immediately off the list. He was only interested in imported labels like Bosch, LG and Samsung. In truth, every manufacturer has different lines of appliances with varying levels of quality and warranty. For example, GE currently has it’s basic line, as well as the Cafe, Profile and Monogram lines. Whirlpool Corporation owns the Amana, Maytag and Whirlpool labels, each label having multiple lines of appliances. There’s a big difference between a regular GE fridge and a GE Monogram fridge – a difference of several thousand dollars and several years of longevity.

The seller of a kitchen full of Amana (budget line) and no-name appliances will expect you to replace them when you move in. They’re basically placeholders. However, a seller who’s sunk a lot of money into top of the line gear will expect you to recognize their taste and pay more for it.

The same goes for IKEA. Yes, they’re known for cheap furniture, but some of their lines are well-respected for durability.

Take a trip to Home Depot

Home Depot is not known for their contractor-grade supplies. If you see a home that’s been outfitted with nothing but Home Depot fixtures, you can be pretty sure that the owner has been skimping on quality. It’s worth taking a look around to see what the cheaper stuff looks like, especially the lighting fixtures, bathroom fixtures and kitchen cabinets.

Oh, and if you watch a lot of HGTV, remember that their main purpose is to drive business to their advertising sponsors. They can make crappy cabinets look nice, but a TV show won’t show their durability over time.

Your Testing Kit

Appliances and cabinets are easy to test, but testing the structural quality of a home is the toughest thing to do. Here’s some things you should bring with you that won’t draw a lot of attention.

A scarf

You’ll want to make sure that door frames and walls are straight and not sloping or bowed. A slightly heavy winter scarf will do as well as a plumb-line to accomplish this test. Hold it up to the wall or door and make sure it stays flush all the way down.

A marble

Uneven floors can indicate foundation problems. You don’t need a level to tell you if the place is sitting pretty, though – a simple marble is enough. Lay it on the floor and see if it stays put.

A ballpoint pen

Any basic ballpoint of normal barrel size will do. That’s about the minimum size hole that a mouse could fit through. You want to make sure that baseboards and floorboards meet with no gaps larger than the tip of your pen. You’ll also want to make sure that any gaps around pipes are smaller than your pen. Pay particular attention to the areas under sinks and in the mechanical room.

You can also use your pen for listening tests. Tap it against things to get an idea of their interior composition. If you’re tapping against something solid and well-insulated, you shouldn’t hear anything at all. If you’re tapping something cheap or hollow, it will sound much louder. (Don’t forget to try it on the floors, too.)

Things to Look For

As many of my physician friends like to warn me, symptoms don’t always indicate the same disease. However, if you spot a large number of these problems in the same property it’s probably best that you move along.

Air

When it comes to the components that make up your home, you want as little air as possible. Window frames and doors are the main places where a seller, landlord or developer can get cheap on the materials by installing lots of air. Hollow-core doors and hollow-frame windows are simply not as durable. You want windows and doors to serve as insulators as well as security features, and air just isn’t as good at either as something solid.

A well-built window frame will be chambered and filled, not hollow. (Image from wikipedia.)

A well-built window frame will have many chambers, like this one, and be filled with insulation. (Image from wikipedia.)

Too much air in the walls – in other words, insufficient insulation – is also a problem. On a sunny day, head to the side of the house closest to the sun and hold your hand up to the inside of the walls. (Or on a snowy day, hold your hand up against the inside of any exterior wall.) If you feel too much of the outside temperature through the wall, you could be dealing with an insulation problem.

Stopgap measures and concealers

This one only works if the home is still occupied, but it’s definitely worth considering. Don’t get me wrong – I love duct tape and WD-40 as much as any other geek, but they’re still stopgap measures. A truly “fixed” item will not use either one. Pest control items scattered throughout the house are also a temporary fix that should really be remedied through more thorough means.

A lesser known fact is that the Chicago city inspector will fine a landlord who’s got visible damage to the sills and lintels that hold windows in place on the outside of a building. However, if the damaged sills and lintels are covered so the inspector can’t see them, they will escape the fine without solving the problem. Those sills and lintels are what keep water OUT and heat IN – you really want them to be intact, not just covered up to hide a deeper problem.

Systems with single Points of failure

When it comes to major fixtures in the home, you really don’t want any system to have a single point of failure. For example, the recent flood in Albany Park demonstrated the problem with sump pumps – many of them were hooked to the electrical grid without battery backup. During the flood, power was cut to many homes, rendering their sump pumps useless.

Of course, when your street looks like this even a sump pump can't help you much.

Of course, when your street looks like this even a sump pump can’t help you much. (Albany Park 2013, photo by me, unfortunately.)

Similarly, a furnace should have a manual cut off switch attached in case the thermostat fails, and outlets close to sources of water should have breakers built in.

Lack of Detail

While a simple aesthetic is certainly valid, complexity can in some cases be equated with quality. As we discussed last week, moving parts add to the usefulness and the expense of something like a kitchen cabinet. High levels of detail in trim indicate custom builds and considerably more care invested in the installation. Basic cabinets and plain walls will look frumpy by comparison. It isn’t just the visual impact that matters, either. While you certainly want your home to make your guests say “wow,” you also want it to last for a good, long time. Lack of detail can imply lack of quality – plain cabinets can be nice and sturdy, but you’ll definitely want to take a closer look at them than ones with lots of crown molding and heavy detail.

You should also pay attention to items that seem out of place. If you spot a contractor-grade ceiling fan in a home otherwise furnished with custom-grade decor, it may be a sign that the wiring behind the fan is faulty, resulting in multiple replacements over time.

Lastly, it’s worth considering how the moving parts, well, move. Do drawers and doors slam shut or do they quietly glide closed? Do faucets and drains open and shut fully and smoothly?

We Need to Go Deeper.

These tests are all quite superficial, and failing any one of them alone is not reason to walk away from a house. If you decide to put in an offer on a home, your inspector will be able to more thoroughly test everything so that you’re aware of major problems. Unless you’re planning on gutting the place, you definitely need to probe deeper than this before you get all the way to the closing table. However, basic awareness of quality and some quick on-the-go tests can save you from getting under contract on a clunker.

I’ll be back Friday (I promise!) with a special take on quality for folks who are looking for rentals. See you then.

Quality Control Week #1: What Affects Building Quality?

You probably know that there are different grades of quality when it comes to food. The USDA has three different grades for poultry, eight for red meat, and hundreds for fruits and vegetables. Similarly, building materials come in four different official grades: building, quality, custom and ultra custom. I would add “commercial grade” to those standard four. As the quality goes up, so does the cost; in some cases it increases exponentially. Homeowners must always walk a fine line between material quality and cost, but many are unaware of the differences and how they affect the bottom line.

Condo boards also face tough decisions when it comes to major capital improvement projects. Expensive materials will last longer – in fact, they may well outlast the current residents’ tenure in the community. Convincing condo residents to take on large special assessments for maintenance that they won’t be around to use is a difficult task. (more…)

What’s Your Sign? (How to Tell if YOUR Housing Market Has Recovered)

If you’ve been following the housing market at all, you’ve probably seen articles about how the housing market is recovering, mortgage rates are slated to rise, and prices are climbing again. However, as the inimitable Dennis Rodkin recently pointed out in Chicago Magazine, the Chicago housing recovery is happening in fits and starts.

Oh really? (Cover © Chicago Magazine)

Oh really? (Cover © Chicago Magazine)

As we’ve discussed before, even if you live in Chicago, when it comes to housing you don’t live in Chicago. You live in a district of Chicago with its own boundaries, attractions and demographics. Those districts in turn contain many different types of housing, not all of which are truly comparable to your current home or the one you want to buy. Statistics that may be useful on a national or citywide scale are useless when it comes to determining the right time for you to buy or sell.

Today we’ll be looking at how you can determine what section of the market you should be watching and how to figure out whether or not the market has recovered.

What’s Your Market?

Much like your personality can theoretically be affected by the motions of the stars, planets and other cosmic bodies, there are also many factors that contribute to a home’s real estate horoscope.

Local Attractions & Neighborhood

The name recognition of a neighborhood will do a lot to dictate when your market recovers. Trendy neighborhoods that everyone recognizes will come back faster than the ones nobody knows about. Areas closer to the El trains and Metra stations will come back faster than those that require a car. Give some thought to which type of neighborhood you’re in and base your comparisons on similar areas. In other words, if you live in Hermosa you should not be using Wicker Park as a barometer.

Single family/Townhome/Condo

Condos and townhomes are popular among younger families, older folks and singles. There’s different types of condos to consider, too. Skyscraper towers with their $700+ assessments attract a far different population than small, self-managed walk-up conversions.

Single family homes generally attract an older, more stable population. But some will target ranches and split levels while others will want bungalows, Georgians or Victorians.

Uniqueness

Do you own/want a Prairie Style house in a neighborhood full of Colonials? Or a vintage walk-up on Sheridan Road? A 3 story loft built into the chimney of a Chinatown noodle factory? Or this contemporary beauty that’s nestled in the middle of pre WWII brick in Lakeview? The market for non-conforming properties is always the toughest to gauge in terms of speed and price. If you’re trying to sell or buy something that’s out of whack with its surroundings you need to be aware that the market statistics in your immediate surroundings only marginally apply to you. They’ll have an effect on price, but less impact on market time.

Beautiful story, but that would have been a very hard house to sell.

Beautiful story, but that would have been a very hard house to sell.

Age of Property

New constructions and rehabs fresh out of the developer’s hands are in a totally different market from owner-occupied homes. Buyers interested in one will have a very hard time shifting gears to consider the other.

Current buyers are used to seeing nothing but rehabs on the market, since it’s been dominated for years by conversions of distressed properties while homeowners waited out the downturn before listing. Meanwhile, sellers who have occupied their homes through the downturn may have pushed too-small homes to their limits, or run short on funds to maintain them. If you’re trying to sell your home of the past ten years, you cannot consider the performance of the prefab Green Tech home they just built down the street.

Nearby Schools

As poor as Chicago’s public school reputation may be, proximity to a good school (public or private) will still buoy up the surrounding neighborhood. NorthCenter and Edgebrook have both largely survived the downturn with minimal loss in value due to their strong public schools, while their neighbors Irving Park and Jefferson Park took a tumble without similar strength to anchor them.

Lender vs Cash

Who is likely to buy your building? Someone who needs a loan or someone with cash? At low prices and very high prices, cash buyers can cause a feeding frenzy. In the middle price ranges you find mostly buyers with mortgages, especially between about $150k and $450k. Cash dominant areas are going to seem to move more quickly because it takes less time for a cash deal to close.

Price

This should be a no-brainer, but you really do need to consider your budget/target sale price as part of determining your specific market. The markets under $100k and over $1m have been on the upswing for several months already. In the middle we’ve seen slower growth.

Politics

The politics of a neighborhood will affect how quickly your market recovers. Some folks don’t want to live in TIF districts. Others may shy away from high property taxes in a particular area, or only want areas with blue recycling carts. Given the long history of some members of the City Council some folks may have sworn to never again live in Alderman So-and-So’s ward. The city, county and state also court buyers into some neighborhoods with down payment assistance and lower loan interest rates.

Figuring out what portions of the market to watch is like finding your Chinese astrology symbol on a placemat.

Figuring out what portions of the market to watch is like finding your Chinese astrology symbol on a placemat.

What to look for

So you’ve determined that you should be watching for new construction single family homes in the Bell school district, or perhaps you’re looking for a 1960’s condo along Harlem in Montclare. Now that you know what types of homes you should be watching, what signs should you look for?

  1. Shortening market times. This means how long it takes a property to sell. You can find this information on many real estate sites. Just look at the date the listing was posted and when it went under contract. An average of 3 months is good. Anything shorter is great. Anything longer and you’ve still got a long way to go.
  2. More resales. As owners surface from underwater status, more of them will list their currently-occupied homes for sale. When you start seeing homes on the market while the owners are still living in them, that’s a very good sign.
  3. Fewer renters. In a rising market, the homes temporarily occupied by renters will return to the sales market. A good chunk of those renters will convert to buyers. Many of them were waiting for their credit to recover after short sales in the late 2000’s.
  4. Homes selling at list price or higher. Realtors aren’t going to turn around and start listing homes at higher prices. They will let buyers in multiple offer situations bid the prices up over list. For a long time now we’ve seen the average sale prices of homes at anywhere from 50-95% of their list prices. When that tips over 100%, your market is on its way back.
  5. Homes sitting under contract for 60+ days. A house is “under contract” if the seller has accepted an offer but the deal has not yet closed. For years now, contingencies in sales contracts have been plentiful but one specific type of contingency has been largely absent – the home sale contingency. This means that the purchase of a new home is contingent on the buyer selling their prior home. In the slow market, most places have been under contract for 30-45 days even when lenders are involved. If you start seeing homes under contract for 2-3 months, you can bet there’s a home sale contingency involved. This is a very good sign.
You cannot simply price your house higher than the market and hope to lead the market recovery.

You cannot simply price your house higher than the market and hope to lead the market recovery.

What does this mean for you?

If the market is starting to come back, then the price for your home of choice (or your current home) will be rising. However, sellers should not assume that they will immediately surface from being underwater, nor should buyers panic and think that prices are going to skyrocket out of reach. There are still a lot of foreclosed homes that the banks need to sell off, and the underwater homes may have a lot of appreciation to do before they can resurface. Even if the sections of the market jump 10% this year, remember that an average, sustainable appreciation rate is more like 3% per year.

Realtors may call you and try to convince you that now is the time to buy or sell, using national or citywide statistics. Before you jump on board with them, make sure they’re looking at the right “horoscope” for your particular home of choice.


 

Friday I’ll be back to discuss the taboo against listing prices on “for sale” signs, and how it might be leaving the door open for scammers. See you then!

Three Little Pigs Get a Windfall (Or, Mortgage Discount Points FTW)

Once upon a time there were three little pigs. (I’m surprised I haven’t done this in the past year.) The pigs have a grand adventure in store for them involving building supplies and poached wolf, but for today we’re starting at the beginning of their story, and that means it’s math time.

Yay math time!

Yay math time!

They were each sent out into the world to make their fortunes. When it came time to buy housing, their mother gave each of them a surprise gift of $5000 in addition to the money they’d already saved.

Now, let’s say that they’d each saved up the same amount of cash, had similar credit scores, and all bought $300k townhouses in the same development using FHA loans with 3.5% down. (I know that isn’t how the story goes, but I’m not talking about construction materials today.) However, each one chooses to do something different with their $5000 gift from their mother.

Pig #1: $5000 on new appliances.

The youngest pig spent the extra $5000 on new appliances for his kitchen. He got a new Fridge ($1300), a new stove ($1300), and a new washer and dryer ($1200 each). Ten years later when he sells the property he’ll have spent $154837 in debt service on his mortgage. His appliances would be close to the end of their useful lifespans, so they won’t contribute much to the value of his home. In fact, he might have to replace them all again in order to sell the property.

Maybe he got something awesome like this modular stacking refrigerator.

Maybe he got something awesome like this modular stacking refrigerator.

Pig #2: $5000 towards the down payment.

The middle pig was quite content with the appliances that the developer provided, so he chose to add $5000 to his down payment. This lowered the amount that he had to borrow from the bank. When he sells his property ten years later, he’ll have paid $152163 in debt service. This means he’ll have saved $2674 over his younger brother. He’ll still have to replace the appliances before he moves out, but he’ll at least have saved a nice bit towards the cost.

I should note here that given the same 3.44% interest rates on their loans (which happens to be the current national average), it doesn’t matter what the down payment was nor what the cost of the property was. Over 10 years, the savings will always be $2674 if you add $5000 to the down payment.

Ok, so it's a pug, not a pig. Still, if you saved $2674 you'd be saying "neener neener" to your brother too.

Ok, so it’s a pug, not a pig. Still, if you saved $2674 you’d be saying “neener neener” to your brother too.

Pig #3: $5000 towards 1.5 Discount points.

We’ve talked about mortgage discount points before. Basically, for a fee equal to 1% (one “point”) of your loan paid up front, your interest rate lowers by a specific amount, usually 0.25%.

The eldest pig used the $5000 to purchase 1.5 discount points on his mortgage, lowering his rate by 0.375%. His brothers got loans at 3.44%, but he came in at a cushy 3.065%. Over the next ten years he will spend $147686 on his loan, saving $7151 compared to his youngest brother. This means he’ll actually make a profit on his mother’s gift! (Thanks, Mom.) He’ll also have accrued $3055 more in equity on his townhome than his younger brother, meaning he can replace the appliances and still walk away with a nice $5000 in savings.

Needless to say, the eldest pig made the smart move here.

You bet it feels good, little piggy.

You bet it feels good, little piggy.

The moral of the story is that cash at closing can be spent in many different ways, and that bulking up your down payment is not always the best way to go. First time buyers rarely think about mortgage discount points. In fact, residential buyers often don’t consider points at all, unless they are required to pay them in order to get a loan in the first place. However, if you have the cash to spare and today’s already ridiculously low rates aren’t good enough for you, spending some extra dough to push the rate down even further can have a very good effect on your bottom line. Of course, your mileage may vary and you should always run the numbers yourself after a hearty conversation with your lender.

We also learn that an extra $5000 can go a very long way. When saving cash to purchase a home, every bit helps.

See you Monday.

Anatomy of a Showing: Is Same-Day OK?

The matter of booking showings with very short notice has come up several times with my clients lately, so I thought I should address it for everyone. With the recent holidays the time required for booking a showing has been longer than normal, but even in normal circumstances there is a fine balance required to get you in to view a home or apartment.

Requesting a showing with very short notice is like springing a pop quiz on the current residents.

Requesting a showing with very short notice is like springing a pop quiz on the current residents.

The Process of Booking a Showing (more…)

Assessing the Association

I was recently talking with a first time buyer about the assorted contingencies that she’ll have to fall back on if she puts in an offer on a property. For those of you not accustomed to real estate lingo, contingencies can be thought of as “escape routes” – they’re reasons you can use to get out of your purchase contract. If you’re working off of a standard Chicago area housing contract to purchase a condo, you’ll usually be able to use the following reasons to get out of your purchase contract:

  • Inspection contingency (Major problems with the property found by a licensed home inspector)
  • Lawyer review contingency (Problems in the purchase contract language)
  • Home sale contingency (If you have to sell your current home first before you can buy a new one)
  • Loan contingency (No loan, no property.)
  • Condo association contingency (Problems with the bylaws or financial status of the condo association.)

Plane image adapted from a United Airlines safety card. Thank you for flying CondoAir.

I mentioned that buyers often do not see the bylaws, financial statements and meeting minutes of a condo association until just a few days before closing.

“Isn’t that really late in the game to be finding out that kind of information?” she asked. “Shouldn’t you know the financial health of the association before you make an offer?”

(more…)

Could Your Property Pass a Section 8 Inspection?

If you’re involved in the rental business it won’t be long before you hear about Section 8. Chances are good that you’ve heard of it even if you aren’t involved with renting. It’s bandied about by NIMBY residents who don’t want poor people living in their neighborhood. You see, “Section 8” refers to a portion of the US Housing Act of 1937, which authorized the government to pay rent on behalf of residents who would not otherwise be able to afford it. While it generally is used by low income residents, it’s also used in some occasions to assist people who have lost their homes to natural disasters, as was the case after Hurricane Katrina.

In Chicago it’s administered by the Chicago Housing Authority and utilizes two main types of homes: those owned and managed by CHA, and privately owned apartment buildings throughout the city.

… Not that Section 8

(more…)

10 Things that Renters and Home Buyers Forget to Check

“Do you have any questions?”

I always ask this at the end of a showing. It’s really an unfortunate question, don’t you think? Unless you’ve prepared well and assembled a list, it’s easy to forget a few of the big questions when you’re in the middle of a showing. Here’s a few you can take with you next time. They may help you to avoid some major annoyances. Some you can answer on your own, while others will require feedback from the listing agent or landlord.

1. Do the doors close securely?

Look at the outside doors. Do they have deadbolts and doorknob locks? Are there privacy chains or latches on the inside? Is there a peephole or some other way to see who’s outside without opening the door? Is it possible to accidentally lock yourself outside on the porch? Now look at the interior doors. Can you close the bedroom door securely? The bathroom doors? Is it possible to accidentally lock yourself into or out of a room? What about the kitchen? If you have pets, is there an area where you’ll be able to securely store their extra food? (more…)

Mapping Chicago by School performance

Happy November everyone! Hope you all had a great Halloween. Operation Porchlight was a great success and I’ll have a report on it for you very soon. I’m still assembling all the results and feedback, though, so it may be a week or two before I can get to it. In the meantime, I wanted to share with you the results of some recent research I did for a buyer client.

These buyers are open to many neighborhoods in Chicago, but want to be able to send their kids to a good public school. So I utilized some of the new technology available through Google’s Fusion Tables to make a map for them.

Of course, I am personally no arbiter of school quality so I went to a source that is. I made a list of all of the elementary schools ranked on GreatSchools.org as either an 8, 9 or 10. Greatschools bases their rankings chiefly on test scores using a 10 point scale, with 10 being the best. They also offer the opportunity for students, parents and school faculty to give feedback. I included magnets, charters and neighborhood (“district”) schools in the list, but did not include private schools. I find them to be a very useful resource for both objective and subjective critiques of not only the grade schools that I surveyed but also the high schools and private schools.

After assembling my list of schools I paid a visit to the fabulous data warehouse for Chicago public information located at data.cityofchicago.org. I pulled down the freely available geographic locations for each of the schools on the list, including the attendance boundaries for the schools that have them. I mashed it all up in a fusion table. Enjoy.

(more…)

9 Experts Every Home Buyer Should Have On Their Team – Part II

Real Estate wasn’t the first industry to require a 9-person team.

On Wednesday I covered the first five experts that most buyers will need to have lined up before they start looking for a home. They were the credit counselor, the lender, the Realtor, the wingman and the handyman. Between those five you should be able to get from day one of your search to a signed contract to purchase a home. However, it’s a long way from a signed contract to the day you move in, and there’s still a lot of ground to cover. Let’s look at who’s involved in the second half of your purchase.

6. Attorney

Once you sign a purchase contract, your Realtor can’t touch it anymore. Unless your Realtor is also a licensed attorney, they are not allowed to write legal documentation or provide you with legal advice. Therefore, once you and the seller sign on the dotted line it’s all in the hands of your lawyer and your lender. Your Realtor may be able to nudge them along in order to meet certain deadlines, but he/she cannot take any direct action from that point forward.

Your attorney is your lifeline if things go south once you’re under contract. They will be the ones to help you terminate the deal if something is discovered in the inspection or in the condo documentation that you don’t want to deal with. They’ll review the agreement and look for any weird clauses. Postal workers and meter readers generally have the right to walk on your land, but some homes allow other people to cross their borders. Your attorney will make sure nobody else has a claim to the property and notify you as to who has a right to enter your property after you buy it.

7. Inspector

You don’t have to have your home inspected before you buy it. Personally, unless you’re planning on tearing the property down and rebuilding, I really recommend that you get an inspection. Housing inspectors can alert you to appliances that are about to fail, structural issues that could cost you a lot of money, and identify signs of pest infestations. They are also able to alert you to potential fire hazards and environmental issues that could endanger you and your family.

Even – or, I should say especially – in the case of an “as-is” purchase where the seller will not do anything to resolve issues with the property, it’s still important to know what you will need to pay to repair early on in the game.

8. Insurance Agent

If you’re buying a single family in Chicago you will need to provide proof of a homeowner’s insurance policy in order to close. If you’re buying any type of property with a loan you will need to have insurance. If you’re planning to escrow your property tax payments instead of paying them direct to the county twice a year, your lender may require you to escrow your insurance payments too.

Buyers considering properties in multiple neighborhoods may want to consult with an insurance agent before you make an offer. Some policies may be affected quite drastically by such elements as the age and construction material of the property, its proximity to a fire station, and the crime rates in the immediate vicinity. If you’re buying at the top end of your monthly budget, the cost of your insurance premiums is definitely a valid concern.

Either way, once you’re under contract you don’t want to forget that you need to purchase insurance before you get to the closing table, and provide proof of purchase to your lender.

9. Movers

I have seen any number of high end buyers spend months fussing and fuming over their choice of home, and then hire any old moving company off of Craigslist to handle their furniture. Your movers will determine if your first day in your new home is a pleasant or miserable. Take some time to shop around. If you’re moving into a condo building make sure that you check on the building’s moving policies. Do they require entry through the rear? Is there a service elevator? Do they allow weekend moves? How about time of day, do you have to reserve an elevator? Can you move in after 5pm? Will your movers have to carry your stuff up the stairs? Outdoors? Where can they park the truck? Is there an alley?

You definitely want to find movers who are insured, experienced, and familiar with Chicago. I’ve seen moves delayed when drivers didn’t realize how low the CTA and Metra bridges are on the north side. I’ve seen movers get frustrated with trying to get sofas up a stairwell and abandon them halfway up. I have also seen a truly effective team that cleared 3/4 of a two bedroom apartment while I was showing it. Buyers who’ve just purchased a new home are usually not in a position to pick up a whole bunch of new furniture as well. Make sure your crew can handle your stuff properly.

The Economic Implications

This belongs here because I say it does.

I would be remiss to not end this two-article essay with a little social commentary. As many as 9 people may need to lend their expertise in order to get you into your new house. I didn’t even touch on some of the high end specialists like interior designers and feng shui consultants. Many of the experts who work in these fields are independent contractors or entrepreneurs. Couple this with all of the people who are assisting the seller – agents, attorneys, staging experts, photographers and more – and you begin to see why the housing market and the economy are so tightly linked.

Regardless of how your politics fall, the single most important way you can affect the economy is to get involved in the housing market. Even a small purchase helps to boost the smallest business owners in a way that very few other purchases can do. The only other two things you can do to cause an equally large effect on so many incomes are to get married or have a child – I have to say, homeownership has the lowest entry cost and the easiest exit strategy of the three options.

Did I miss someone? Do you think I went overboard with my team recommendations? Let me know if the comments. I’ll be back on Monday with a return to investigating eviction statistics in Chicago.

9 Experts Every Home Buyer Should Have On Their Team – Part I

Real Estate wasn’t the first industry to require a 9-person team.

First time buyers tend to focus entirely on their choice of Realtor when it comes to choosing the associates that you’ll work with over the course of the purchase and moving process. It’s their general hope that a Realtor will be sufficiently well-connected to hook them up with all the other experts that they will need to get the job done right. This is potentially true.

However, no Realtor can know every expert in every area, and very few can know precisely what issues will arise during the course of your particular search. While your Realtor may be able to make some very solid recommendations for these 10 roles, your personality type and learning style may demand someone outside of their sphere. As is always the case here at StrawStickStone, I recommend doing some research on your own to find the team members that are best at making you feel comfortable with the process.

1. Credit Counselor.

If you’re like most of the renters out there, your credit is not in the best condition. You’ll need a credit score in the high 600 range to even be considered for a loan, and in the low to mid 700’s to get a prime interest rate. According to Andrew Ross, the NYU professor who recently wrote the controversial “Are Student Loans Immoral” for Newsweek’s DailyBeast.com, 41% of the college class of 2005 is already delinquent or in default on their student loans. These former students are now in their late 20’s, what used to be prime position for becoming first time buyers. They will need help.

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