Tag Archives: insurance

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.

Not all Insurance Policies are Created Equal

This is not the time to be learning about your insurance limits.

I serve as property manager for my condo association. Lately our insurance for the property has gotten pretty expensive so I have been shopping for a new policy. I had the following interesting exchange with one of the insurance agents:

Me: Yes, I’m also a real estate blogger.
Agent: Oh wow! [Company name] doesn’t let its sales agents have blogs, so could you please please do me a favor?
Me: Maybe…
Agent: Can you tell your readers about actual cash value vs full replacement cost? Please?

So hey, here we go. (more…)

When your apartment is a crime scene

I don’t recommend reading this article while eating. We’re getting a little gross today.

Crimes and situations requiring the presence of the police unfortunately happen quite often in apartment buildings. As the density of people living together increases, so do the odds that one of them is doing something illegal. As we discussed on Monday, sometimes all the background checking in the world can’t clue you in to a tenant’s mental illness, deranged behavior or upcoming nervous breakdown.

We’ve spoken before about how landlords can prepare for worst case scenarios but we haven’t discussed what really happens when the first responders have to step in and take over. Unfortunately I’ve had to deal with many situations of this nature – I’ve dealt with stalkers, domestic violence, parking lot hit & runs, drug busts, marijuana gardens, suicides, gas leaks, hoarders, fires, break-ins and death from natural causes. (This would be one of the reasons I left property management in favor of brokerage.) If your apartment becomes a crime scene, here’s what to expect, what to do, and what to avoid.

(more…)

10 Things You Can Do Regularly to Save Money

Many of you reading this blog are saving up for a down payment, security deposit, cash purchase of investment property, or a similar major expense in the near future. With slim paychecks and rising expenses it can be difficult to squirrel away the recommended 20% of every paycheck.

When I transferred from property management to brokerage I knew I was going to take a pay cut for a while as I rebuilt my business. Here are some of the things I’ve done to cut my expenses. Maybe they’ll work for you, too.

  1. Don’t pull your scores – real FICO scores are expensive. But definitely check your credit report.

    Check credit reports regularly. You get one copy of your report from each of the three credit bureaus every year. I usually pull one at the start of the year, once over Memorial Day weekend and once over Labor Day weekend. The dates go in my calendar. The FICO credit scores are not free. And the Scores offered by many of the “free” credit score websites that have popped up lately are not FICO scores. They use a different scale. The free reports you can obtain through annualcreditreport.com are just a list of your open accounts, but for checking accuracy that’s all you really need.
    My Cost: $0 and 15 minutes. My Savings this year: $0, but I learned that one old collection account had dropped off of my report this year.

  2. Call insurance companies annually. Did you know that health insurance plans since the beginning of the year have had to cover preventive care 100% before your deductible? Do you even remember what your car insurance deductible is? It’s always good to check with each of your insurance providers annually to find out if you can get a better rate. That goes for homeowner’s/renter’s insurance, business liability insurance, landlord umbrella policies, car insurance, and health insurance for the self-employed. You won’t always get cheaper insurance if you call, but it’s always worth the effort.
    My Cost: $0 and 25 hours. My Savings this year: $75 in car insurance plus $5580 in health insurance plus $120 for annual checkup now covered by insurance.
  3. There are other sites out there that allow comparison shopping but they’re owned by corporate entities. Plug In Illinois is the state-sponsored site and likely to be more neutral.

    Switch electricity suppliers. Hey Chicago! You don’t have to get your power from ComEd. You don’t. It’s worth looking into other options, especially if you have central AC. New carriers in the area offer lower prices. Investigate your options at the Illinois Commerce Commission’s “Plug in Illinois” site.
    My Cost: $0 and 45 minutes. My Savings this year: About 5% off my bill plus the good feeling of knowing that my electricity is now coming from renewable sources.

  4. Track cell phone usage. Do you know how many minutes are on your cell phone plan? How about the date when your contract expires, if you’re on a contract? When was the last time you used all of your minutes or text messages? Have you been with your cell phone provider long enough to earn a new phone? Do you not know? Maybe you should check. It’s especially useful to track your voice minute usage and make sure your plan suits your current lifestyle.
    My Cost: $30 for a new smartphone last year. My Savings last year: No savings but I got a phone and a mobile broadband router for the same price I’d been paying for just voice service on my old carrier. (I’m on a 2 year contract so I’m holding tight on this until next year. The expiration date is definitely in my calendar!)
  5. Appeal property taxes regularly. I’ve discussed this at length in a prior article about property taxes. You get a window for appealing your taxes every 3 years, and under certain circumstances you can appeal outside of that window. If any home similar to yours has sold nearby you in the past year, it’s worth trying to appeal your taxes based on their sale price.
    My Cost: County filing fee. My Savings this year: About $200/mo.
  6. Always get multiple estimates. Calling around for estimates can be annoying and you always feel like you’re being a pill. However, you learn in the process about the task at hand, and businesses that won’t provide an estimate are not going to remain in business very long. Treat your bank account like it’s a business operating account. Allow yourself a certain amount of petty cash for expenses, but if a purchase will require more than your petty cash allowance then go do the proper research.
    My Cost: $0 and a few hours of time. My Savings this year: $500 on a dental treatment and $700 on an exterminator.
  7. Chicago’s got some of the best water in the world. (Lake Michigan photo by John Chimon)

    Learn to love ice water. Beverages cost more than food. This is true for most restaurants, and especially for alcoholic drinks. Pop & sugary juices are not healthy either. With the exception of my morning coffee (homemade, french press, black) I stick to ice water from the tap for most of the day.
    My Cost: My portion of the water bill in my monthly assessments. My Savings this year: At 20 cents per can of soda, at least $113.75 so far this year, plus the wear and tear on my pancreas.

  8. Shop slowly. This started with my mother’s habit of carrying items around with her in the store as a “test drive” before purchasing. She generally does not make a purchase unless it’s on her shopping list or she’s toted it around with her in the store for a while. In my case I use my 2 week “Do I need an Ipad” test on pretty much all of my major purchases before I even walk into the store. Mom has picked up on this test and was recently using it herself. She’s quite the frugalista, so I’m very pleased.
    My Cost: Quite a bit of time doing research. My Savings this Year: At least $700 on an iPad, $200 in unnecessary clothing & shoes, and $80 in makeup.
  9. Be nice. Win stuff.

    Buy low, tip high, stay consistent. I don’t want my thriftiness to hurt the individual workers. I want them to be able to afford to go shopping too. Tips are 100% take home for the laborers, while unit cost is retained by the corporation. Whenever possible, especially in the service industry, I make sure to tip high and I frequently reap the benefits if I’m a returning customer.
    My Cost: Minimal. My Savings this Year: At least $80 in free beers from grateful bartenders, plus $30 from being able to go longer between manicures.

  10. Refinance the mortgage. Much like insurance, you won’t always win on this one. However, as long as mortgage rates stay below what you currently have and you stay on top of your credit score, you have at least a shot at a successful refinance of your loan. This is the one scenario where the cost may outweigh the savings. Make sure you run the numbers before you go ahead with the refi. Check with a different lender at least once a year, or once every 3-5 years if you recently refinanced.
    My Cost: About $700 in 2010 for a HARP refi. My Savings: About $28k in interest.

Do you have a money-saving tip to share with us? Let me know in the comments!