Corcoran talked Chicago real estate with Make It Better, including insider details on the housing market, what potential homebuyers need to be doing, and what helps to sell a house.
Make It Better: What can you tell us about the housing market in Chicago and the northern suburbs based on the Local Market Index?
Barbara Corcoran: Chicago, you know, has just begun to turn around. You’ve had good numbers for the last three or four months, and you’ve recovered part of the value you lost in the housing market when the bubble burst. But it’s been appreciating roughly about one percent a month, which is great news if you think about it.
One thing for sure, unequivocally, is you totally turned the corner in the real-estate market and prices are continuing to go up, and I bet you didn’t think you’d be hearing that two years ago.
What tips do you have for potential homebuyers based on this information?
If you’re a buyer in the area, the smartest thing you can do is to get smart about buying. And how do you do that? You go to Homes.com and you actually check out what everything has been selling for. Put in your location and they will turn up immediately every house that’s available for sale right in that neighborhood.
But the most important thing after that, once you start zeroing in on a house, is to click on the mobile app and ask for what are the recent selling prices. You do it by the week, the month, the year, the last five years. But you should really know not what homes are ‘asking,’ but what the last four or five homes like the one you’re looking at have actually sold for.
I think when you have more information based on fact, what happens is you make a smarter choice; your negotiation goes better; and you don’t find yourself in a position in a market where you go, “Whoa, things are getting hot around here. Oh my God.” You don’t lose your head and overpay for a house because you really have a sense of what the value of that house is.
What did Homes.com take into consideration when creating the Local Market Index?
They simply measure where Chicago is now relative to where it was before the bubble burst, the best-case scenario to where it is now. And it has turned and it is collecting about one percent a month of its lost value. So they keep publishing reports showing exactly how far up out of the ditch Chicago is climbing.
Why I like that is because a lot of homebuyers are caught in a position where they’re overbidding a property. All of a sudden, “Oh, I didn’t know the market was this high. How did I lose that house? What do you mean it’s gone?” What happens is they could actually measure that, hey, it’s OK to pay a little more for the next house because look what’s happening.
Values are going up, up, up, and there’s so much room for growth. And that’s what you have in Chicago, a turnaround town that still has a lot of room for growth. You’ve got a wide window here for buyers to consider buying and feel smart about it because they bought within the low. Not at the low, because that happened probably nine months ago, but within the long low as things come up out of the ditch.
What questions should potential homebuyers be asking?
The first question, of course, is if you could ask the homeowner directly or the homeowner’s representative, the broker who has the listing, why they are selling. Now that might be a rude way to do it, “Hey, why are you selling?” That’s not what I mean. “Hey, where are you moving to? Oh, terrific, I love Cincinnati. Have you found anything yet? What are you buying, a house? Oh, you’re going to a condo. Great! Is that market good? Have you gone out looking?” You’re after the gold in a negotiation, which is how motivated that homeowner is. Because if they’ve already mentally left their house, if they’ve already bought something or they’re taking two trips out to look for something, they might have an offer. You’ll get that information if you’re friendly and just have a conversation with the homeowner or the broker. And that is a great guide for how low you should be.
The second thing, you don’t even have to ask, just go to Homes.com. Check out the very important field that tells you when the home was listed. The home that was on the market for two months, is someone still in never-never land, a homeowner who’s still dreaming the sky’s the limit.
Go to the listings that have been on the market that are priced higher than even you want to spend and go to those listings instead. Shop that market on anything that has been on the market five months or longer. It takes about a five-month window for a homeowner who’s not selling to get really discouraged. And those are the homeowners, even though that price is higher, you can often put in a low bid and get the bigger and better house with the better school district, the better backyard, simply because you timed your buy well and you went for the vulnerable homeowners who are tired of having people traipse through their house. They already bought the condo in the town they’re going to to be near their grandchildren and they can’t wait to get out.
What should sellers know?
The seller should know that the number two reason why everyone chooses a particular house […] after location, [is] light. It was sunny. It was bright. And so, if you’re into dark colors in your living room, that’s cool. If you like red velvet drapes, that’s cool. But when it comes time to sell, get rid of everything that sucks up light in your home. Again and again, you pull out the lampshades that are dark—put in bright ones. Up the wattage in the light bulbs. Take down the drapes. Bleach your floors light. Whatever you have to do, because even if it’s not your taste, when it comes time to sell, that’s what sells best, the happy home, and people associate light with happiness. And those are the ones that win the beauty contests. And those are the homeowners that get the most money.
Photo courtesy Barbara Corcoran.