RE/MAX Reports Low Inventory of Homes in Metro Chicago Real Estate Market Poses Challenges Buyers Can Overcome with Swift Action and Proper Paperwork
Chciago, IL (PRWEB) July 24, 2013 -- Everyone knows that old truism: the three most important things in real estate are location, location, location. But Joe Myalil, a real estate broker with RE/MAX Suburban in Arlington Heights, Ill., thinks this old saying needs an update.
Today, the three most important things in real estate, in his view, are timing, timing, timing.
Blame it on the low number of homes for sale in the metropolitan Chicago real estate market. The area, like many across the country, is in the middle of a low-inventory market. This has driven up competition for those homes that are for sale. That is good news for sellers, as housing prices in the Chicago area have steadily risen since the start of the year, but buyers are finding this low-inventory market to be challenging.
"For buyers, timing is everything today," Myalil said. "If buyers don't act quickly, someone else will snap up that home they want."
Fortunately, buyers can successfully navigate today's home-selling market, even if the number of homes on the market remains low relative to demand. According to Myalil and other RE/MAX brokers in the metro area, buyers must be ready to make an offer as soon as they see a home they like. This means buyers must get pre-approved for a mortgage loan before they start shopping, and they must be willing to make full-price offers.
In multiple-bid situations, which are becoming increasingly common, buyers might have to bid above list price if they want to nab the home of their dreams.
"This is the market that sellers have been waiting for," said Joanne Levicki, a broker with RE/MAX Unlimited Northwest in Huntley. "The low inventory is starting to bring housing prices up. When sellers put their homes on the market, they go right away."
This trend is showing no signs of slowing. The number of homes for sale in the nine-county Chicago metro area was down to 34,600 units at the end of June compared to just under 49,600 units a year earlier, RE/MAX reports. That June 2013 inventory number represented slightly more than three months of supply of homes at the June sales pace.
While inventory is down, demand remains high. Home sales through the first half of 2013 jumped 27 percent in the seven-county Chicago area when compared to the same period one year earlier. This has caused housing prices to rise. RE/MAX reports that the median home price in the Chicago area stood at $170,000 for the first six months of 2013. That's up 6.25 percent over the January-June median price last year.
Broker Thomas Domasik, with RE/MAX 10 in Palos Park, Ill., said buyers must be pre-approved for a mortgage loan if they hope to succeed in this market.
It's important that buyers know the difference between pre-qualification and pre-approval. In a pre-qualification, mortgage lenders estimate how much they'll be able to lend borrowers based on the income, debt and asset data that the borrowers provide.
A pre-approval is a more rigorous process. Borrowers must provide lenders with documents, such as tax returns, paycheck stubs and bank statements, verifying their income, assets and debts. They'll also give lenders permission to run a credit check. When pre-approval is done, lenders will provide borrowers with a letter stating exactly how much mortgage money they are willing to lend.
Buyers with pre-approval letters are attractive because sellers know they have access to financing. That greatly lowers the odds of a real estate deal falling apart.
Because of this, Domasik said, sellers are more likely to accept the offer of a pre-approved buyer over one who isn't, all other things being roughly equal.
“Buyers have to be prepared in this market,” Domasik insisted. “If buyers aren’t pre-approved, sellers often will receive another offer from buyers who are. Those without approval for a loan will lose out.”
Bob Krawitz, a broker with RE/MAX Signature in Chicago, warned that buyers must be prepared for a bidding war. Attractive properties in today's low-inventory market often generate multiple offers. Frequently, buyers who want to win these homes will have to make a full-price offer. They might even have to offer more than the home's list price.
“The pendulum swings back and forth in real estate,” Krawitz said. “We were in a buyer's market. Now the pendulum has swung again. This has become a seller's market.”
It's not unusual for buyers today to make a solid, even a full-price offer, and lose out on a Chicago-area home, Krawitz reported, but buyers shouldn't let this discourage them. Even in a market as tight as Chicago's right now, there is always another home out there.
“Once buyers do find that home they want, they won't care about homes they lost out on," Krawitz said. “Buyers just need to put lost homes behind them. The Chicago area has many great homes. There will be another great home out there.”
RE/MAX has been the leader in the northern Illinois real estate market since 1989. The RE/MAX Northern Illinois network, with headquarters in Elgin, Ill., consists of 2,000 sales associates and 100 individually owned and operated RE/MAX offices that provide a full range of residential and commercial brokerage services. Its http://www.illinoisproperty.com and http://www.remax.com websites are leaders in consumer visits among real estate franchise brands. The http://www.global.remax.com website allows consumers to search properties around the globe; http://www.theremaxcollection.com is a specialized portal of luxury properties across the U.S., and http://www.remaxcommercial.com displays commercial properties available nationwide and abroad. The northern Illinois network is part of RE/MAX LLC, a global real estate organization with 91,000 sales associates in 90+ nations. The RE/MAX organization has been recognized for numerous industry honors for excellence, and its Associates continue to lead the industry in professional designations, experience and production. Nobody in the world sells more real estate than RE/MAX. RE/MAX is the official real estate partner of Children’s Miracle Network Hospitals and the national sponsor of Susan G. Komen for the Cure®.
Laura Ortoleva, RE/MAX Northern Illinois, 847-428-4200 224, [email protected]
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