Rapid Exit, Suburban Influx: Are you Ready for the Move?

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Life in the midst of a global pandemic has forced us to take it day by day creating a “new normal” in our everyday lives. Nothing can be taken for granted anymore.

Unemployment at record highs and Federal interest rates at record lows has created a bubble that Americans were waiting for to burst. Although looking a lot like the market crash of 2008, it was apparent that the U.S. government was not going to let history repeat itself.

The real estate market is surprisingly stronger now than it ever has been. Advancements in technology have raised buyer and seller motivation through the roof. Rather than taking a personal day at work to tour a property, buyers are able to view a handful of properties in a minimal amount of time with virtual tours. Not only making the process efficient, but also enjoyable as there are so many tools at your disposal.

Current Market

According to a report by the Illinois Association of Realtors, Chicago currently has historically low inventory levels. This means that properties are on the market for a short period of time before being bought. Current inventory averages about one to two months of available market property.

In October, Chicago experienced a year-over-year sales increase of 21.9% while raising the median price 14.5%. For the entirety of the state, Illinois saw sales rise 39% with the median price up 14.2%.

Along with having the highest average rent, River North and River West have the highest rate of population leaving the city. A large population of Chicago is ready to give up their small condo for a large suburban house.

Leaving Chicago

Living in the big city has always been a hot commodity with all it has to offer (loop work locations, restaurants, nightlife, etc.) . However, that seems to be changing with the new society we have had to adapt to. Both individuals and families have been craving more space and expressing a need for backyards. Home offices have become the norm and privacy and security has been something many have been adding to their home search checklist.

March to September of last year showed a 10% increase in change of address forms from Chicago, revealed by the U.S. Postal Service. But where are these people all going? Some are saying goodbye to Illinois, but many are transitioning to life in the suburbs. Neighboring suburbs in DuPage County welcomed a large city population into their cities.

City life is all fun and active until you add a pandemic into the mix. People feel unsafe with the density of the population and quite frankly are looking for the flexibility the suburbs have to offer.

With the low interest rates mentioned earlier, home owners are taking full advantage of refinancing their mortgages allowing them to keep a little more cash in their pocket making home owners confident in the transition over to the suburbs.

Moving Forward

The real estate market is on no path to slow down anytime soon. Fear and uncertainty have decreased the number of listings forcing the current market to appreciate respectively. Along with that, properties are being sold quicker than they ever have been.

Are you ready to move out of the big city? Don’t worry, there is no rush. Although nearly 40% of adults are considering moving away from the urban setting, according to a recent Harris Poll, the bright city lights we all love, make the big decision a tough one.

Whether you are thinking about selling your city condo or moving to the suburbs, a real estate attorney is an essential role in the process. Contact Tannehill Law today if you are seeking professional legal guidance to assistance you in your next move today.

Written by Sean Tannehill with co-author Melissa Tannehill.

Three Important Tax Benefits of Owning Real Estate

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Tax season can be a stressful time for everyone. No matter how much you prepare, it’s not unusual to get to February and learn that you owe the Government more than you originally thought. This year is particularly complicated in light of COVID-19 and the extension of the new tax deadline to July 15, 2020. 

While there is no way to avoid the stresses of tax season this year, there are ways that you can make it go a little smoother next year. One of the most impactful things that you can do in the year ahead is purchasing a home. 

There is a handful of tax benefits that Illinois homeowners see around tax season including deductions, credits, and tax-free profits. 

Deductions

When you are looking to legally lower your tax liability, a deduction is one of the easiest ways to do so. When looking to deduct, you should consider what expenses you have incurred over the year, and subtract it from your gross income. When you own a home, there are a variety of ways to achieve this. 

  • Mortgage Interest Deduction

This allows you to deduct interest paid on your mortgage. There are different regulations and limits set on this depending on marital status and how you file. Taxpayers can deduct mortgage interest paid on up to $750,000 in principal. Investment property mortgages are not eligible for the mortgage interest deductions, although mortgage interest can be used to reduce taxable rental income. 

  • Mortgage Point Deduction

Many homeowners also have eligibility to deduct paid mortgage points from their taxes.  Mortgage points are fees you pay in order to decrease the interest rate. Each of these points costs 1% of the overall loan amount. If you choose to pursue this route, you can deduct the points over the life of the loan or in the year they were paid.

  • State and Local Taxes Deductions

When purchasing a home, it is important to consider the deductions for state and local taxes. This includes any property taxes that you pay on your home. There is a $10,000 limit per/household for these deductions. 

Many Illinois residents find this deduction cap to be a disadvantage because of the state’s higher property tax bills.

  • Home Office Deductions

If Americans have learned anything from the latest COVID-19 pandemic, it is that many jobs can function remotely from the home. If you are considering adding a home office to a new home, then this is another valuable item that you can to write off. 

In order to qualify for this deduction, the space that you assign as the office must be used regularly for business. The space must also be exclusively for business. This means that you cannot just add a desk to a bedroom and write off the entire space. 

Credits

In addition to the tax deductions that you can receive when you own your own home, you can also be entitled to credits that reward you for making your home more energy-efficient. The residential energy-efficient property credit will offer 22% to 30% of the cost back to you if you make improvements in the home that follow a more Green living standard. It is an incentive set in place to help encourage homeowners to make eco-friendly changes to the home. Some of these changes might include but are not limited to, adding solar panels, a solar water heater, wind turbines, or geothermal heat pumps. 

Tax-Free Profit

If you are looking to sell your home, you can still receive tax benefits in the coming year. Unlike most profits, the capital gains accumulated when selling a house can be tax-free up to $250,000 (if you are single) or $500,000 (if you are married filing jointly). In order to qualify for this benefit. The house must have been your primary residence for at least two out of five years before the final sales date.

Remember to bring your Settlement Statement to your accountant if you purchased or sold a real estate during the tax year. If you are looking to purchase or sell a home or investment property and would like to know more about tax benefits and consequences, contact your accountant and Tannehill Law today.

Three Steps to Take to Prevent COVID-19 From Plummeting Your Investments

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In times of a pandemic, the world can go into disarray in every sense. This behavior is not without reason. When the medical field starts reaching full capacity and the traditional flow of supply and demand is thrown off without warning, there can be an understandable amount of fear and frustration.

One area that really sees an impact during these emotional times is the economy. If you are looking to keep your investments afloat during the economic hardship of a pandemic, the task is not impossible, it just takes a few strategic steps.

Avoid Impulse Purchases

As we have all witnessed in the past couple of weeks, times of global hardship can cause the population to react in a variety of ways. A major pattern seen during these times is impulse buying. This can be as simple as clearing the shelves of toilet paper, or as drastic as investing in every stock that is selling for below-market value. No matter where your impulse is calling you to spend, it is important to take a step back and think strategically. What you do with your money during times of global crisis is more detrimental to your finances than at any other time. When the economy is in disarray, it is important that you save the money that you have and only make well-thought-out purchases and investments.

Watch and Study Numbers

While it is important to avoid spending money impulsively, many have already invested money in IRAs and stocks, and these people might find benefit in moving their investments around to more feasible markets. If you have money invested that you have the flexibility to gamble with, then you might consider moving your own investments depending on the wave of the economy and your long term plan with the money. If you are looking to get the most out of your investments, in the long run, it might be worth watching the numbers in a variety of investment markets. By watching the number you might be able to identify areas that are coming in significantly below market value, and you might be able to enter the market while it is low. This does not mean to jump impulsively into an investment market, it simply means to watch the numbers and try to enter the new investment game when the numbers indicate that it is likely the time to jump.

Look Into the Real Estate Market

If you have previously considered investing in property, or if you feel a pull to remove your investments from the stock market but don’t know where to invest instead, this pandemic may provide a rare opportunity for you to enter the Chicago area real estate market at a great price. In the panic of a pandemic, people often begin to list their houses out of fear. This creates a market that is much more catered to the buyer, as many people list their houses low and are more open than usual to negotiations in hopes of just getting out from under the immediate pressure of homeownership. If you have adequately prepared and saved to purchase real estate whether as a primary residence or an investment property, you could have an advantage over the market that you will likely never see in another circumstance.

If you are interested in investing in a new home or property while the market is low, and you are looking for an experienced attorney to guide you through the process from beginning to end to help ensure that you are getting the fairest deal, contact Tannehill Law today.

MOST IMPORTANTLY… do your best to stay safe and healthy!

What are the Pros and Cons of Listing Your Home for Sale by Owner?

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We live in a “Do-It-Yourself” culture. With the internet and its vast resources, people can teach themselves to do just about everything on their own now and save thousands of dollars while doing so. You can use the internet to self-publish your novel, completely redo your entire kitchen, or list your home for sale.

For Sale By Owner, is a growing phenomenon in real estate, and it is the top choice of many people looking to sell their home.

What Does “For Sale by Owner” Mean?

When someone lists a house as “For Sale by Owner,’ it simply means that the homeowner is listing the house without any assistance from a real estate agency. Instead, the home is being directly listed and sold by the owner of the home. This means that everything in the process that would previously go through an agency including but not limited to, inspections, negotiations, open houses, and showings, will instead be handled by the owner of the home.

Like most business strategies, there are both pros and cons to choosing to sell a home For Sale by Owner.

Pros

  1. Opportunity to Save on Costs– The number one reason many sellers choose to sell their homes themselves, rather than include a real estate agent in the transaction, is to save on costs and get more money out of the sale. In most real estate transactions, the real estate agent is paid for their work by collecting a percentage of the total sale. Without a real estate agent conducting the sale, the sellers will not need to pay a commission.
  2. More Control of the Sale and Negotiations– When an offer is accepted on a home, and the inspection is conducted, a new game of “back and forth” begins as the buyer and seller negotiate until they agree to a deal that both believe to be fair. In some cases, this can be settled in a matter of two emails in a couple of hours. However, in many cases, this back and forth can go on for weeks before both parties come to an agreement. When a real estate agent is involved, this correspondence will go through them before it reaches the seller. Sellers sometimes see the “middle-man” as an extra barrier to the negotiation process. Many people find a more direct approach to negotiations to be a benefit of selling a home without an agent.
  3. May Be More Appealing to Buyers– Just as the above points may appeal to sellers, they may also appeal to the buyers as they are often hoping to purchase, close on, and move into their new home as soon as possible. As a seller, your For Sale by Owner home may appear more attractive to a buyer who is also looking to cut out the extra person in the transaction, and speed up the process.

Cons

  1. May Not Appeal to All Buyers– While some buyers may see a For Sale By Owner home to be an easier process, others may want the guidance of a seller’s agent to help guide the transaction. If this is the case, some buyers may eliminate your home as an option before they even have time to view it. By using a real estate agent, your home will be listed on the Multiple Listing Services (MLS), allowing a vast majority of Buyers the ability to view your home.
  2. Ease of Showing Your Home to Attract more Buyers: When using an agent, the agent will schedule showing and do their best to attract potential buyers to view your home to encourage more traction that will result in an offer.
  3. Higher Risk of Contract Complications– When you use an agent, you will likely be going through the process a professional who has walked through the steps countless times before. Unless you deal with contracts and home negotiations every day, you may not have a clear idea about what specifics to look for, and what loopholes to avoid. Many times, without professional or legal help, you could agree to something you did not intend to.
  4. Could Cost More in Time and Money– While cutting a real estate agent out of the transaction may end up saving you the extra closing costs, it might not always end up saving you money in the end. Many times a real estate agent can advise you through the process, and help you to avoid extra or unnecessary costs. If you are not familiar with the process or the logistics behind it, you could end up spending more money than you save.

Five Steps to Take If you are Thinking About Listing Your Home “For Sale By Owner.”

  1. Research and Understand the Market– First and foremost, you must remember that you will be dealing with experts in the field, and to get the most out of the endeavor, it is essential to make yourself a sort of expert as well. Before you list your home, be sure to research both the market and the process. Be sure to cover all your bases to leave no room for error.
  2. Clean and Organize the Home– Most real estate agents have an eye for the details that need to be changed, fixed, or decorated in a home to appeal to the buyer. They know how to display the home and capture the listings in a way that will generate more interest. Without an agent, this responsibility will fall on you as the seller. Be sure to take the time to present your home in a way that captures the best aspects and appeals to your target.
  3. Look for Platforms to List and Market Your Home– One of the most important aspects of selling a home, with or without an agent, is marketing. Real estate agents have access and experience with all of the most effective marketing and selling platforms for homes. When selling a house as For Sale By Owner, it is important that you do your research and ensure that your house is listed on all of the necessary channels to get it seen.
  4. Consult with a Legal Real Estate Expert– As mentioned before, no matter how much you research the process, it is hard to compete with experts in the business. To avoid signing into a flawed contract, be sure to get an expert’s opinion on the matter.

If you are looking to sell a house For Sale By Owner, but you are looking for a legal eye to review any contracts or documents contact Tannehill Law for legal expertise to assist you in the process every step of the way.

 

Five Reasons Your Chicago House Buying or Selling Experience is Hotter when the Weather is Cold

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The city of Chicago comes alive during the warmer months. People flood to the beach or Wrigley for a day in the sun.

This excitement seems to step down a notch during the winter months. Suddenly, people are rushing from one building to the other to escape the wind. They are curling into their blankets, and only leaving the house when they absolutely have to.

Winter in Chicago isn’t exactly the time that anyone wants to do much of anything, and that includes house searching.

Real Estate simply has more curb appeal in the spring, when the grass starts to get green again and the front foliage begins to fill out, however, what many people don’t acknowledge when looking to buy or sell a house, is all of the benefits they can experience if they choose to pursue the marketing in the winter.

Here are just a few reasons why buying or selling real estate during Chicago’s winter months can be more beneficial than entering the process in the spring/summer months:

Less Competition

Whether buying or selling, winter months become a less desirable time for people to move. As a result the inventory and demand is very low as most buyers and sellers tend to wait out the cold and start the buying and selling process in the springtime.  Less competition in the home search means far less negotiating required of both buyers and sellers. This helps to ensure a much smoother process for all involved.

More Pressure on Both Sellers and Buyers

In most cases, if someone is buying or selling their home during winter months, there is an urgency to move quickly. They may need to relocate, or they may be looking to upgrade to a home that better accommodates a growing family. Regardless of the reasoning, the combination of the need to sell or buy and less demand on the market puts the buyer and seller in a position to move quickly. Transactions with motivated buyers and sellers will often be a little more lenient on price and post-inspection demands. Sellers listing their homes during winter months are likely motivated to sell quickly.  Alternatively, Buyers who are motivated to move during winter months are typically more serious and ready to make reasonable offers.

More Year-Round View of the Home

During the summer months, there is one thing that an inspector can’t determine, and that is how well the house can handle the cold Chicago winters. If you buy a home during the winter, you will know when viewing the house just how well it can handle cold weather. You will be able to see the way the house looks without the disguise of foliage. You will be able to see how well the heater works, and most of all, you will be able to tell very quickly if there are any flaws in the insulation. Many summer buyers face a hard reality, not to mention a large utility bill, in the winter when they find that their new home can’t quite manage in the cold weather the way they did in the summer.

Buying in the winter can help to save you some cold nights and an outrageous bill to fix the heater or flaws in the insulation.

In addition, when selling a house in the summer, your buyer may require more expensive tests to investigate how “winterized” the house may be. This addition in the inspection could end up costing you money, even if the house is insulated and ready for the long winter ahead. When you sell your home in the winter, the buyer will be able to see for themselves just how well the home can handle the harsher weather, and may spare you the extra steps and negotiations in the inspection.

Year-End Bonuses and Taxes

Many find the end of the year, or tax season, to be the best time financially for them to purchase or sell real estate. Many people receive year-end bonuses or are eligible for tax incentives. This money can help with the many financial factors involved in buying a home, from the down payment to any renovations needed before or upon moving into a new home.

This money can also benefit the seller who may be facing real-estate fees, closing costs, or a down payment on a new home.

Start Fresh When Spring Hits

A house is rarely exactly how you want it when you first move in. When you move in during the winter months, it allows you to start fresh in the beginning of spring with landscaping and other yard work and renovations rather than spending your whole summer on these projects. This allows you to have more time to enjoy your new home and yard before the winter returns.

If you are looking to sell your home in the winter, you can benefit from the flip side of this. You will not have to worry about spending money to landscape the home to increase curb appeal for the sale. Most people looking in the wintertime will be looking more at the home itself rather than the money spent on landscaping and foliage.

Buying or selling real estate, no matter the season, is a big decision and can be huge investment for the future. If you are looking to buy or sell real estate but want to ensure that you are getting the fairest deal you can, hire an attorney to review the contract, assist with negotiations, and guide you throughout the process.

Contact Us today, and let us help you with your home-buying process.