Chicago Real Estate: Buying
If you’ve decided to buy a place to live then hopefully you’ve had a long internal debate about renting versus buying. The decision of course is 100% dependent on your situation. Why are you here and for how long? Do you have a job? Does the job that moved you here maintain the services of a relocation company? I’d certainly recommend anyone who’s very new to the city to rent first. The neighborhoods that strike your fancy are almost certainly going to shift, as the neighborhoods are naturally shifting themselves.
With the exception of college and travel, I’ve spent my entire life in this city and each period in my life reflects a shifting preference born of circumstance and an inherent impulse to say “yeah, this feels right.” But once you have the lay of the land and you’re near certain you’ll be here more then a few years, then there’s no shame in making an investment in the process. The key is to focus on realistic expectations, and this sounds damn obvious, but buy someplace you want to live, not someplace you just think is going to do well. That way you’ll always get something out of your new place.
“Oh I have a pretty good idea of what’s available out there,” you say. Do you? I find one of the greatest misconceptions out there right now is that since a buyer has access to the MLS then their information is complete or correct. Check out my article on real estate agents & MLS for a full rant on the Mutliple Listing Service.
Did you hear it’s a buyer’s market? Anything and everything is negotiable right? Well, not so fast. Just because most places are worth next to nothing these days doesn’t mean their mortgages are worth next to nothing. You might be the Perry Mason of negotiations, but most people aren’t going to sell their house owing money to their bank, regardless of how badly they need to move.
Oh, it’s a foreclosure, is it? That’s where the bargains are! Except when the bank slaps you with an iron clad nondisclosure form and you find out during your inspection that the roof needs replacing. Unless you have a healthy dose of experience in real estate I suggest getting professional help to buy a foreclosure or short sale — the headache banks will supply you with is reason enough.
First, talk to a couple mortgage brokers or banks, see what their rates are and most importantly what you can afford. Know the difference between being prequalified and preapproved. Prequalified is when some number monkey or website runs your second hand information through a calculator and tells you what you can probably afford. Preapproved means an actual bank looked at your financial papers and informed you of what they’d be willing to lend you. Thankfully the days of getting screwed into taking on more then you can afford are at least temporarily over. Banks are going to pick you and your finances apart like an archaeologist before they ever give you a penny. And then the place you want to buy must be in good financial shape, too. Why? Because they are putting up all the money you dope, it’s more their purchase then it is yours. Having said that, make sure you don’t spend so much money that you can’t afford to blow a little cash on beer and takeout food once and awhile. Nobody wants to be mortgage poor.
Now, use a real estate agent you trust and figure out what the hell you’re looking for. The MLS and your agent are worthless to you if you’ve got no clue what you want to buy and where you want to live. I trashed public MLS searches earlier but it’s not like everything you look up on the Internet is misleading, it just doesn’t give you the full picture either. Use your MLS access to find properties your agent missed or explore neighborhoods and property types you weren’t initially considering. Right now there are gobs of inventory left over from the real estate boom. A lot of it is crap, but a lot of it is good, too. People still have growing families, new job opportunities and lives that move from place to place. Everything is always shifting.