This is a re-work of a letter published here last fall, but the sentiment is so appropriate, I thought it justified an update. Of course, you will recall the popular movie of a couple of years ago called The Perfect Storm!   It was an unlikely but memorable name, and The Perfect Rainbow is a lot more positive!  And this is not to say the storm we have had was perfect, but it was a pretty darned good one. So it’s good that we should expect a pretty-darned good rainbow. 

And that’s what we believe prevails, market wise, so it’s an appropriate analogy.  It’s a bit counter-intuitive, because the media and others have installed high levels of wariness, but we do not recall circumstances any more promising in recent years.We surely must be bouncing along at the bottom of a now-pretty-flat curve, and….

• There is good inventory from which to choose, and more coming onto the market fast, with the “spring thaw”.  (The last letter revealed inventory characteristics now being corrected with new stuff.)
• The values are stable and realistic, and not likely, it appears, to go lower.
• The competition is not yet outrageous, but building.
• Money is easily available, at all-time low rates, (but rates appear anxious to rise.)
• The affordability index is at an all time high.
• On top of all that, some of you are going to have these enormous tax credits of $8,000 (or $6,500 if it’s a move-up,) available to you. Those are huge cash paydays, for those contracting before April 30, and closing before July 1.  We’ve put up a blog describing the requirements, under Local Homes Markets. 

Of course we would more than ever recommend great care in buying; to minimize risks and maximize enjoyment and resale.   That is where we come in.  

And that is simply, The Perfect Rainbow, and since it’s happening in the spring, it could be also be part of  ”The Spring Thaw!”

 On a totally different subject, we’ve enjoyed a lot of fun with the “New Year’s Cards”.  We hope you enjoyed them, too.   Obviously, there was a bit of trickery intended.  

Mary couldn’t make the first photo-shoot, so we made arrangements to “Photoshop” her in after taking a separate picture.  At that point, we thought it might be fun to add me, a second time.   We also hope you saw the lit fuse on the firecracker.  That was a three-foot-long sparkler that we found on the internet, although it didn’t show up on the picture as well as we might have hoped.

 And don’t know about you, but spring sure is on the air!   We’re also noting a big uptick in traffic, and much increased traffic on our site…maybe that’s part of the “Spring Thaw,” too.   

Merrill Ottwein

I wanted to get this data “up” for viewing as soon as possible, so here are the summaries comparing the homes markets in 2008 and 2009.  Of course, we’re not comparing 2009 with other better years in the middle of the decade. But this data shows 2009 wasn’t far from 2008.  The average DOM (Days on the Market) showed the biggest change, reflecting the fact that the market was indeed, slow.   

Residential Sales (entire southwest IL MLS area)

Statistical Comparison 1/1/2009 - 12/31/2009

Total MLS	2009	2008	% Chg	Units Cl. 2009	Units Cl. 2008	% Chg
Sell Vol	$862,573,021	$919,661,535	-6%	6935	7064	-2%
List Vol	$907,256,091	$963,483,660	-6%
Avg.Sale	$124,380	$130,190	-4%
Avg List	$130,823	$136,393	-4%
List/Sell Ratio	95%	95%	0%
Med. List Price	$118,900	$119,900	-1%
Med. Sell Price	$112,000	$114,500	-2%
DOM	170	128	33%

But the good news is that volume and values weren’t that far off, and the ratio of list price to sales price identical!   That’s amazing to us. As we’ve stated before, the averages (sale price, list price, etc.) really don’t mean that much as a statistic.  They can easily be skewed by volume, and indeed, we did (and do) see more activity in the lower prices, and much less in upper values, so we believe that comment to be truly reflecting what’s happening to the market.  For the future:  We’ll have more in a few days, but we see (and are seeing) greater market activity, and we’re seeing a firming of values, which basically is good for all of us, and for buyers and for sellers.  It means that we’re at the bottom of the curve, where it’s “flat”, and that’s good too.  The future should be “up”, even if it’s slow.  It should therefore be an excellent time to buy a home.  The statistics indicate values are stabilizing, but don’t yet show increased demand.  And the interest rates are steady, but expected to rise as more enter the market and “pump priming” diminishes.  And if you qualify for the one time tax credit still available….that’s an extra bonus. Altogether, stabilizing data and good news. Merrill and Home Buyers Relo

While home shopping usually slows down in the winter, this winter is now showing signs of being quite different, thanks to the extended—and expanded—first-time home-buyer tax credit, now law.

The new law extends the tax credit for first-time home buyers and opens it up to some existing homeowners as well: The credit is now 10% of the home price, up to $8,000 for first-time buyers and up to $6,500 for repeat buyers. All buyers must have a binding contract on a house in place on or before April 30, 2010. The sale must close on or before June 30. 2010.

To be considered a first-time home buyer, an individual must not have owned a home in the past three years. And to be eligible, existing homeowners need to have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased. The credit is only for principal residences..  .

The tax credit can be used for any single-family home, including condominiums, co-ops and townhouses. Vacation homes do not qualify and the tax credit can’t be used on homes that sell for more than $800,000.The government also expanded the number of people who qualify for the tax credit by increasing income limitations - up to $125,000 for individual taxpayers and $250,000 for joint filers. The previous limitations were $75,000 for single filers and $150,000 for joint filers.The tax credit does not have to be repaid if the buyer stays in the home at least three years. If the property is sold during the three-year period, the full amount of the credit will be recouped on the sale. (And while this information is virtually quoted from “The Illinois Association of Realtors”, individuals are still encouraged to see their accountants for detail.)

But here at Home Buyers, we’re already seeing the influence of this new offering.  It seems that many potential buyers watched the first go-around of credits come and go, with news of a second round of benefits a poorly kept secret. Furthermore, the general economy seems to be on the mend, and the so-called “bottom” of the real estate market a little more clearly just behind us.

A quote from “Market Watch”, by RISMedia, a reliable national real estate news service : “The credit isn’t expected to have as large of an effect on move-up buyers as it has on first-time buyers.  The maximum tax credit is about 4% of the average purchase price for first-time buyers, but about 2% of the average purchase price for move-up buyers.”

We’ve had this additional question here that we still haven’t had answered.  If an individual’s tax liability is less than the credit, what happens to the balance?   We here believe it’s lost, but don’t put that down in the fact column yet.

“Market Watch” also gives these 5 tips for using the benefits…a few slightly paraphrased by us at Home Buyers Relo:

1. Don’t procrastinate. Start searching for a home now. Getting an early start will give you a better chance of finding the right house before the credit deadline. And before you start house hunting, get preapproved for a mortgage, and do a realistic assessment of what you can afford. Buyers who have to sell an existing home should price it aggressively from the beginning to drum up interest and get a buyer as soon as possible.  (Buyers with homes to sell could have a hard time making this work.  Buyers sitting in apartments have an advantage.)

2. Don’t count on another extension. The credit won’t be available forever.  (We don’t think it will be extended!)   The first round gave significant help to the national market for homes, (credit for purchases of 350,000 to 400,000 homes,) and RISMedia thinks this second round will have an even greater impact…the intended result achieved, hence expect termination.

3. Mind the interest rates. Mortgage interest rates are low right now, but will likely rise next year. Higher rates will affect your monthly mortgage payments, thus the affordability of the house you are buying. Average rates on the 30-year fixed-rate mortgage have been hovering around 5%, but when the government stops buying large amounts of mortgage-backed securities, rates could rise.  We advise that you lock in as early as you can….they will go nowhere but up in the future.  As the economy improves, so will interest rates rise!

4. Select a lender early and keep in touch.  We advise that you pick a lender early and have the financing ready, as on a separate track that you can easily merge once you select the home.   And then, stay in close communication with the lender, providing ALL of the information he or she wants as quickly as possible.  Good communication is important in making sure the loan closes on time.  The sale of a present home, and especially “short sales” will complicate the process awfully, adding time and unpredictability.   (“Short Sales” involve more debt than the sale price can cover so that lender approval and cooperation is required…complicated and hard to plan.)  

5. Don’t take shortcuts or lower  your standards.  Don’t skip any of the steps you would normally take just to make the tax credit deadline.  Make sure you see the appropriate options and make the wisest choices.  Make sure the house is a good fit for your needs and get a home inspection. Skipping steps could cost you in the long run.   We at Home Buyers think this is extremely important.  We’ve always advised careful development of buying decisions, and these “times” demand that diligence, tax benefits aside.   Don’t lose track of important safe-buying objectives, or get distracted by the tax benefits. 

Call with any questions.   Merrill Ottwein

What a lovely introduction into fall that we are having.  And that, after a great summer.  This is what makes us glad we live where the seasons are so prominent.  Hope you enjoy this march of the seasons in your new “Chapter.”

 

But life goes on in this lovely setting.  We are coming off the peak of the relocation season, not quite the peak of recent years, but not bad either.  I know that we are beating the trends in our practice, by large margin, and looking for reasons for that benefit, we believe we have found it.

It is simply, you!   Our former clients have continued to send referrals to us, from among their friends, relatives and co-workers, and that has made all of the difference!   So again, we need to deeply thank you for that consideration, and recognize that it is not done lightly!  And again, we need to promise that we will never betray that confidence.  It is undoubtedly one of the most precious assets we have.

We do also recognize there are several ways that you make that happen.  Sometimes, it is a direct referral of a name to us, or our name to a friend or co-worker.  Sometimes, it is a simple notice to that friend or co-worker that our web sites are a good place to start a search and pick a real estate agent.  Either way, we would like to hear of your action, so that we can express personal appreciation for it.  

These web sites, by the way, are undergoing major updating, which should be coming soon.  There are some special ways they will involve you, which we will disclose soon.

Last month, we recognized that Chris Mitchell of ourO’Fallon office had been elected as Secretary of RASI…the Real Estate Association of Southern Illinois.  He had been on the Board of Directors, but was asked to run, and against stiff competition, won.  Installed a week or so ago, he’ll become President of the association in 2 years.  We’re proud of the lad, but it will take him on many journeys, local and otherwise.

 We mentioned that he joined his mother, Nancy Jo Mitchell in thusly becoming active. Nancy Jo has served on the Ethics Committee of the same board for many years.  It’s a very responsible position and we’re glad she’s been there.

We need to note that Merrill was again prominently quoted in a nationally syndicated real estate column.  Called Smart Moves, by Ellen James Martin, it appears in papers nationwide, but seldom, strangely, in

St. Louis.  A week ago it was printed however, on the front page of the Real Estate section of the St. Louis Post Dispatch, relating to first time home buyers and safeguards to their safety.   

Here is an interesting exercise.  In a Google Search, type Ellen James Martin Merrill Ottwein.  Over 1,000 references come up with both names, many for the same article, but over the years, there have been a lot of them.  Merrill met Ellen when he was president of The National Association of Exclusive Buyer Agents, and the relationship followed.

Speaking of which, the National Association of Exclusive Buyer Agents is still growing rapidly and is becoming a force in national referrals of buyers.  They have a new consumer website at www.naeba.com, with additional information at www.naeba.org.  Merrill was a charter member and its first Treasurer, and as mentioned above, its fourth President.

Which then reminds us to mention that because of the growing popularity of truly exclusive representation (where the agency no listings at all,) agencies such as ours are cropping up in most decent sized towns and certainly, in most military communities.  We would be pleased to assist you in such a referral.  Call Debbie or Merrill.

The purchase deadline for first time buyers to reap the $8,000 tax credit is just around the corner, considering it’s harder nowadays to get around the corner!

While this site is intended primarily for existing home buyers that have been clients of ours in the past, and so are homeowners already, almost everyone knows of potential first-time buyers among family and friends, and those are the ones for which this message is intended.For them, the ticking sound is the sound of time creeping up on the expiration of the $8,000 tax credit for first time home buyers.Of course, it is only July and the credit does not expire until Dec. 1.  But unless the federal government decides to extend or expand the credit – kind of a long shot — it may be time for potential first time buyers to get the process started.

First, remember the rule:  it is not that a contract must be signed before Dec. 1 or a loan approved by then. The sale has to close before Dec. 1.But even this scenario is tempting fate, but we believe buyers should have a purchase contract signed by mid to late September, so they have 45 to 60 days to safely close the purchase.  Buyers who want to be in a new home by Thanksgiving need a contract by mid September for sure.

Under normal circumstances, buying a home is a complicated process, particularly after the fun of looking at potential homes descends into financial minutia.  The process is normally difficult, especially for first time buyers, who have not been through the process before.

But that process has become much more laborious in these times.   We have seen all kinds of surprises in the appraisal and lending processes.   One simply cannot count on the old timetable.   New appraisal rules have kicked in and we are seeing St. Louis and other out-of-area appraisers groping for local data and statistics, and taking lots of time.  Lenders are taking lots more time and are being super careful about everything.  Also, it can take significantly longer to get an answer back on an offer for a distressed property than a traditional one.  It seems that everything is dragging out and taking longer.

And we want to be very careful ourselves in supporting the search process, making sure that all viable options are considered, and a comfortable confidence is built.   We still want the usual careful analysis of resale potential for all finalists.

The bottom line is that it is not too early to organize the search and get the financing efforts started.   These two functions need to be considered as on parallel tracks, merged at the moment necessary after the search identifies the single best option. 

In fact, some kind of commitment from a lender needs to be in hand before offers are made.  That is a most important tool for us in making the offer look good to the seller. (Sellers are more careful nowadays, too, as they want a deal that really closes, and closes on time.)  So financing surety up front goes a long way, in building buyer confidence, in making it easier for the sellers to say yes and for the whole process to go smoothly.

Then finally, there is little doubt that the $8,000 incentive is working as intended.  All of us in the business have seen a growing interest in taking advantage of that, so many in fact, that last minute congestion at the closing offices (title companies) could even be a possibility.

So we surely do not mean to be discouraging.  We just want to say that under these modern circumstances, it could take longer than usual to close on a transaction, so it is not too early to get it started.  And while it may be formidable, we are there to make it safe and comfortable.   Like a lot of our most challenging lifetime efforts, the reward will surely be worth it!   We hope you might convey this sentiment to family and friends that are in a position to take advantage of the incentive AND get into a new home by Christmas, or even, Thanksgiving. 

Late June Real Estate Market Observations: (within is a discussion of ”Defining a Good Deal”!)

The real estate markets appear to be slowly normalizing, but it still is a strong buyers market with the elements of “The Perfect Rainbow” (a previous blog,) still very much prevailing.  It surely must be an historic “Good Time to Buy” period!  The national and local news media continue to report higher numbers of transactions, and we’re certainly noticing that locally.  Prices too are stabilizing, especially on the better options, and foreclosures are way down, especially locally.

So those factors in “The Perfect Rainbow”….

Great inventory from which to choose

• Still-incredible interest rates, but appearing anxious to rise
• Modest competition, but there’s more all the time!
• An “affordability index” at an all-time high
• A phenomenal $8,000 tax credit available for many of you – (“first time” buyers.)

(there’s a separate blog on this subject.)

We’ve mentioned many times that the good local markets in Metro East never ever were as “bad” as many parts of the U. S., and that’s a firmly-held observation.  The correlation is that the “bubble” was never as large as those “other parts”.   And we would like to claim an influence borne of careful buying, but we have yet to hear from a single former client that they’re enduring foreclosure.

And so market improvements appear to be real, and that comforts everyone.  We still think it takes careful attention to the principles of buying wisely, and of course, we’re prepared to help with that.

And on the subject of “buying wisely”, we’re observing an emerging market condition that could stand discussion.  It can make a difference to present and future buyers….is important for them, and us to understand. 

It’s a fact of this current market that the price-spread between high quality properties and lower quality, (because of condition and location, mostly,) is much, much higher than that which had been considered normal.  As we’ve discussed it in our offices, it’s really not hard to understand, but there’s a consequential buying lesson here, too…and a classic buyer’s trap.  

Buyers are simply being more discriminating, more careful in their comparisons.  And they are NOT taking on properties of lesser quality when they have better options.  And that “quality” relates to both the livability of the home as well as their resaleability, the latter often otherwise overlooked.

In the slam-bang years, buyers were overlooking more faults, but they aren’t nowadays, especially with our help and direction…for we are augmenting that critical focus if not insisting on it…and in fact, we always have.

But we also believe these “lessons” will be well-learned, and will become a part of our home buying culture for perhaps years to come…home buyers will be more critical.  And the spread of values (prices) between good and poor properties will remain larger.  And that means we need to prepare for these future buyers when we buy now.  And that’s good for the whole principle of “wiser  homebuying”.

This of course challenges the classic definition of a “Good Deal”.  We’ve always advocated that the quest for discounts alone was not necessarily part of the “Good Deal”.   In fact, I’d like to quote here from our long-standing principle defined in “Wiser Homebuying”.  Everything in this article from here to the end was written years ago and quoted word for word, but it still is truth, only reinforced by the current markets.  It includes the reference to the “traps”.

This if from “Buying Goals, the Quest for Discounts vs. Picking Cherries” “But most important: The quest for discounts in our opinion, is not the most important buying goal…that one is setting up the best resale possible (see the next page).    Worse, looking for discounts can often be competitive and even distracting.  Read on! 

B.   Picking  “Cherries”  There’s only one hard number that appraisers and realtors work with in evaluating homes….and that’s price per square foot.  In any category, homes are actually priced all over the place….above and below that average.   Homes above the average (we call them “cherries”) are there because of superior upgrades, location, setting, site, location, maintenance….many things.  Homes below the average are there because they don’t have these features. 

We strongly believe our buying goal should be to “pick cherries”…..pick the best home we can find in the category, with superior upgrades, location, setting, site, location, and maintenance, with resale all set up. To begin with, the “system” has already drawn the price of that home down to the average when pricing was defined.  The seller may still believe it’s worth more, hence carries strong reluctance to lower it anyway.  But if he gets a lot of interest in the home, and multiple offers, that resistance turns to cement.  On the other hand, homes actually below the norm (lacking all those good qualities) could easily be priced higher than they deserve; they’re drawn to the average, too, and their owners will support that pricing direction.  But if it doesn’t sell as quickly as he wants, or if he gets no action, and especially if he’s in a hurry, you may catch him at a time where he’ll consider a substantial discount.   You know what?   Big deal!  Even with a discount, it could still be a bad deal, especially if has one of those incurable diseases such as a bad location, a miserable floor plan, or any number of  things. The real points: Discounts are rare in “cherries”.  

Discounts and “cherries” are usually incompatible goals.   Discounts are largely not under our control.  Picking cherries is much more under our control (with your concurrence and teamwork). In fact, the quest for discounts, without balance, is a dangerous quest!  It’s almost classic misdirection, away from a longer term but more valid objective, to a get-it-now one.  The latter is okay when buying a truck, which is inevitably going to depreciate the minute you drive it off the lot.  But homes appreciate, and that’s a totally different game.  That makes it an investment, and worthy of a totally different set of standards.             A quest for “Cherries”, at a fair price, is a much more valid and enduring goal. 

            It’s no sin to pay a fair price for the perfect home, with resale set up.            It’s a serious sin to pay too much for a disadvantaged home… even if you get a discount! Any small discount you might leave on the table in an effort to button up the purchase of the home is inconsequential in the long run…consider it the hedge against the risk of losing the home in the first place. And the following is taken from our piece; “Mistakes That Buyers Make” 

3.    Approaching negotiations like you’re buying a truck.  The pitfall here is that you cannot let the short term quest for discounts cloud the much more important long term quest for appreciation, expanded in a previous section. Remember the two big differences.  A home is an investment, a truck is not.  There are many trucks you could buy, but there could be just one home that’s appropriate.  A home is a long term investment that should appreciate in value….like buying a growth stock.  A truck depreciates when you drive it off the lot….so it’s 1^st cost is a much bigger issue.        (To continue the analogy, if we consider the purchase of a home to be a purchase of a growth stock….then its livability is the “dividend” you might hope for during the holding period.   And that’s what were trying to do….long term and short term benefits; growth and dividends!)                                                      End of Quotations:  We hope this helps explain the phenomenon we’re seeing about price spreads, and helps set up a healthier buying attitude….we believe it to be a profound truth.   Of course we’ll talk about it openly when we see you. Merrill Ottwein

Foreclosures drop sharply in April in metro-east; experts hope the worst is over for homeowners

BY WILL BUSS - News-Democrat tool nameclose tool goes here The number of foreclosures filed in St. Clair and Madison counties dropped dramatically in April compared with the first three months of the year.Foreclosure filings dropped from 163 in March to 39 in April –a 76 percent decrease.In

Madison County, filings fell by 64 percent — from 145 in March to 51 in April. Local real estate professionals are encouraged by the latest numbers and hope it could mark the beginning of a rebound in the housing market.“I would say that at some point you’re going to be at the bottom of the barrel,” said Al Suguitan, executive director of the Greater Gateway Association of Realtors in Glen Carbon. “This could be the beginning of a reduction.”“I certainly hope it is,” said Dan Tatum, the president of the Realtor Association of Southwestern Illinois in

Belleville. “It’s very encouraging news. That is a significant change.”The latest data also represents the first significant decline for the year. Foreclosures filed in St. Clair County in January reached 122 and 119 in February.Foreclosures in

Madison County had topped 153 in January and 130 in February.Illinois Association of Realtors Director of Communications Mary Schaefer said the association expected the federal stimulus package would help slow the rate of foreclosure as some mortgage companies have placed a moratorium on foreclosures and bring relief to first-time homeowners in the form of an $8,000 tax credit.“We anticipated that would be leveling off in the market,” Schaefer said. “We are starting to see that.”She also reported that the National Association of Realtors’ latest statistics from March, indicate the homes sales index in the

Midwest is up 8.2 percent for the month over March 2008.Tatum and Suguitan said they are optimistic the latest figures could be a sign of a turn around.“It’s very encouraging number,” Tatum said. “If it continues in May and even into June, then we’ve got something going there. We will cross our fingers

About the “Real Estate Tax Equalization Process”  in Madison

County. 

Recently, the owners of every parcel of real estate in Madison

County received a notice that their assessed value had been increased.   Every parcel has had, in fact, an “Equalization Factor” imposed. 

Edwardsville

Township’s factor was 1.0322, meaning the assessed value had been raised by 3.22%.  (It’s the same process that was performed in St. Clair county about a year ago, and the subject of our Blog # 12, titled “O’fallon Real Estate Taxes”, which is still posted here.)

First, this is in response to state-managed reviews, township by township, which claim that properties have been, on the average, under-assessed, hence the need for the adjustment, across the board to every parcel.  It’s a process that’s legally required in the state of Illinois “quadrennially”…every 4 years.  It’s performed under state supervision by the County

Board of Review, a part of the Treasurer’s office.  (It excludes foreclosures and sales of distressed properties, a controversial provision that’s provided in the law.) 

So what can one do?   The fact is, for this kind of assessment, not a lot.  Ordinary procedures for protesting individual assessments don’t apply here, although they might still be invoked if the overall assessment is simply deemed too high.  Ordinarly, these protests are made on individual parcels after the Assessor does his job and reports to the owner, where objections are somewhat easily filed with The Board of Review itself.  But this equalization process is not in that “ordinary” category. Here, the Board of Review is leveling the “Equalization Factor” against every single property; (In fact, The Board of Review by doing this is indirectly criticizing the Assessor as not having done his job properly…hence the need for the overall adjustment.)  And that makes a great deal of difference in how objections are made: Since The Board of Review is applying the state imposed “Equalization Factor”, an individual owner cannot file an objection with the local board for that reason.  It instead must be done directly with a state agency called, “The Property Tax Appeal Board”, (web site: www.state.il.us/agency/ptab, which web address is on the back of the card.) And the complaint there can only be with the “Tax Equalization Factor” set.  That agency is not prepared to deal with individual assessments otherwise.  In my mind, that makes it nearly impossible, surely improbable, for individuals to win, (visualizing Don Quixote’s “Windmill Tilting”.)   I anticipate that the local Board of Review would also discourage you from making this appeal. 

So this “bottom line”:  Individuals should work through the math and see how it affects them.  Take the assessed value after the equalization factor is applied and multiply it times 3, (because assessed values are 1/3 of real.)  Compare that number with what you’ve paid for the home, or what you think the home is really worth.  In the several cases I’ve worked through, these new assessed values, after “equalization”, are still a bit under the purchase price, making it difficult to lodge an objection.  However if the new assessed value is substantially higher, than I would still go to The Board of Review and file an appeal, (not for the equalization factor, but just because it’s overall, too high.)  You would then need to prepare a presentation for the Board of Review based on “comparables” (valuations of homes equal to yours,) in the ordinary way in which taxes are challenged.  We can help you with this. Sometimes, a “Realtor’s Opinion” will help, (but probably not ours, if we helped you buy the home.)  A purchased appraisal might also help.  We could help select that help. Your protest should be filed with the County

Board of Review, which office is in the courthouse annex at 157 N.

Main, Edwardsville, phone #: 692-6210.  All of the process and the rules are also posted on the county website; www.co.mad.il.us, under  “Assessment Info”.  Or call 692-6210 for some guidance. There’s a time window here, too, so look for it. Sorry about the discouraging word….Merrill 4/15/09.

The following is a verbatim copy of an article that originally appeared in the wall street journal (in ‘Smart money’).  It’s presented here because it has good advice for 1st time home buyers, but it also, in paragraph 4, advises they should use an “Exclusive buyer agent”, and links to the national association of exclusive buyer agents, (in paragraph 4.) That’s significant because merrill was a founding member of this organization, its first treasurer and its fourth president.  (Also see “About us” for more detail.) 

Deal of the Day by Deal of the Day by Lisa Scherzer (Author Archive) 10 Mistakes First-Time Home Buyers MakeThe declining home values that are plaguing homeowners are just one of the factors creating an opportunity for prospective home buyers. Standard & Poor’s latest Case-Shiller index, which tracks home prices across 20 major U.S. cities, reported that values dropped 19% in January from a year earlier.Those depressed values, combined with near-record-low mortgage rates and government incentives (an $8,000 first-time home buyers’ tax credit included in the stimulus bill), are luring more first-time home buyers into the market. Indeed, a recent Century 21 Real Estate survey found that more than three-quarters (78%) of potential first-time home buyers say now is a good time to buy.If you agree, be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-timers make.

1. Not knowing how much house you can afford.Many novice home buyers spend a lot of time researching homes – comparing kitchen layouts and backyard square footage – but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get pre-approved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can’t.

2. Assuming foreclosures are great deals. Just because the previous owner owed $450,000 on a house before the bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a

Chicago real estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you’ll likely reap by buying a lower-priced foreclosed home.

3. Letting your true feelings show. No matter how much you’ve fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, they will gain the upper hand in negotiations.

4. Failing to find a good buyer’s agent. Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively — and should be looking out for their best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers (exclusively.) Or consider using an agent recommended by a relative or friend. Interview each candidate about their experience, if they’ve worked with first-time buyers before and what kind of service you’ll get from them.

5. Underestimating the costs of owning a home. Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many home buyers don’t anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, CFP and president of Baehr Family Financial. Consider the age of your new home and how well it’s been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.

6. Failing to budget for property taxes.Property taxes – and the likelihood that they’ll climb over the course of your time in the house – should be factored into any home-buying budget, says Baehr. To get an idea of how much you’ll be paying, call the local assessor’s office or talk to people in the neighborhood.

7. Assuming your first offer will get accepted.As home prices get even more affordable, competition is bound to heat up. “You can’t assume you’ll walk in there, make the offer and get it,” says

Clark. Try not to get discouraged if you lose out on the first – or second – house you make an offer on.

8. Skipping the inspection.Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Company. The seller isn’t likely to tell you there’s mold in the basement or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector – independently of the realtor – to ensure there’s no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple web search with your zip code.)

9. Doing too much too fast. Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home’s value. But that’s not always the case – especially in today’s market. Instead, buyers need to exhibit patience and make changes over time.

10. Failing to include a contingency clause in the contract.A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in under the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin.(Corrected April 6, 2009: As originally published, we stated that a contingency clause protects home buyers if the appraisal comes in above the purchase price. In fact, protections kick in when the appraisal value is under the purchase price.)

Ah, the march of the seasons! No matter how many we’ve seen, it’s always a thrill. There are always a few tentative peeks into springtime, and always a few reminders that winter doesn’t give up its grip easily. Then the burst of blossoms and greenery that testify it’s finally real. In fact, it seems to get hot, quickly! It doesn’t take many days for us to wish for a cooler breeze on our faces.

The papers are still saying that this is a rough period for home buying and sales…and of course that’s true. (We wish however that it would not become such a prominent contribution to self-fulfilling prophecy.)

But there is a bit of good news creeping in, too.  The stats demonstrate that the sales-curves and the value-curves are getting flatter nationally, in the St. Louis area, and in southwest Illinois. Our offices as of this middle of April are approaching normal in traffic and it appears, in buyer confidence, a very important factor.  And our web sites are getting much more traffic. 

Our communities obviously are part of the nationwide picture, but we surely haven’t been on the worst end, or even average part of that spectrum. Stats are out for 2008 that indicate an 18% drop locally in sales volume from the year before, and a 2 or 3 % drop in average values.  Now 18% is significant, but it still means that 82% of the previous year’s volume was at least matched.  That’s not “dead” by any means.

It’s the impression that values are “way down” that bothers us.   The stats say the average values are “down by just under 3%,” which itself is not a really big figure, but that figure could be terribly skewed.  Let’s say that first time home buyers were a factor in 2008 (and they were) so that the volume of sales on the lower end of the spectrum was prominent.  That itself would lower the “average”.  

We do see a few cases of really soft pricing, (and long periods “on the market”) but those properties usually have other problems that our buyers aren’t going to want at any price.  Problem properties are definitely harder to sell nowadays, and they stay on the market a lot longer. When these sellers finally give in to these much-lower prices, that skews the averages a lot!

So we bristle a bit whenever we see the media report “big drops” in average price.  The “average” is simply not a good overall measure.  And it certainly doesn’t represent the mainstream locally.

That bias aside, we’re certainly seeing “stable” pricing on better properties.  That stability is good for sellers of course, but it’s good for buyers, too…because they want the future to remain stable, too.   So beware of “average” asking prices, too….also not a good measure of trends.)

We’re still counseling that it’s a good time to be a buyer, but that buyers can’t expect big discounts, either, (or won’t want those discounted properties.)  The rule, “It’s still not a sin to pay a fair price for a good home.”   Of course, we continue to advocate extreme care in their selection, with great attention to resale factors.  To wrap up this thread, we have recently even had a couple of cases where our buyers competed with another buyer, when we picked on a fairly-priced “cherry”, one of those ideal properties we look for.  The whole point; the market is more stable than “news” would have it, especially in our good local communities.  It’s a good time to buy, (carefully,) but buyers dare not have expectations of big discounts on the better properties, or they’ll miss them!

First time home buyers, and relocating home buyers are the most prominent in the market right now.  Buying is almost a “must” for relocating families, and first home buyers are really seeing that this is a good time to be a buyer, (and they have no home to sell!)  Any that don’t have to move, are still mostly waiting.

Builders appear to be a bit more aggressive this spring, too, so there’s some new-home inventory coming onto the market, much of it not listed. (We’ve recently had a couple of good buys in this category.)

So it is really a great time to be buying. The pricing, as stated, is “realistic”. Mortgage rates are incredible, and mortgage money locally is still more than available. Our local banks have weathered very well and appear normally healthy.

We do believe buyers need to use care and caution, and that’s where we come in, supporting the best decisions possible. Ironically, the two classes recited as being “prominent”, first home buyers and relocating families, are considered the most “vulnerable” to a lack of good representation.  The former because they haven’t done it before, and the latter, because “smart” and “experience” aside, they’re still unfamiliar with the buying climate in a new home town

With 2008’s records tabulated, our agency enjoyed a pretty good year.  Paul Ottwein received his 8^th straight high-production award, (making it a “Lifetime Award”.)  He was surpassed only by several teams, or by a couple of individuals winning not by dollar sales volume, but by listing volume, and specializing in low-priced foreclosures.  And he did that with only one side of every transaction!  The O’Fallon office was down a bit as fewer military families appeared to be moving around, and many moving looking at rentals, but the production was still respectable.  (Ironically, “Awards” have been discontinued in the Belleville Board of Realtors.)  Three of our agents, Denise Carter, Nancy Jo Mitchell and Paul Ottwein also won 2008 awards for “Highest Client Satisfaction”….by St. Louis Magazine.

Some new resources are available. The “Blog” section of our websites has postings on the market and the company, and this letter will be posted there for public viewing.  The “Blogs” are getting steadily increasing attention.)

Prominent is an article under “Philosophy” that tells about our new use of a Robert Frost couplet in our marketing.  We’ve used it internally before, but decided it may be better at claiming a difference (as in our brand of service,) than trying to do it otherwise.  It’s from “Two Roads in a Wood”.  It’s on the front pages of our web sites now, and the subject of the blog article.  It’s kind of the poetic version of “off the beaten track!”

We also have some copies of our first-ever, (and probably, last-ever!) “Newcomers’ Calendar”…”For the Fun of It”, (of living in Southwest Illinois.)  It’s less of a calendar than a short historical review of events important in southwest

Illinois, and it’s gotten good reviews for the content.  One former client picked up 10 copies for use in her office; we were delighted. We have them in our offices, or call 800-231-5588 and we’ll send a copy.

Enjoy spring!