Large inventory good for buyers

It wasn't long ago that being a home buyer in the Chicago area could be a nerve wracking experience. Homes were in short supply, and their prices were soaring ever higher. Desirable properties often sparked bidding wars. Buyers who took time to mull over their alternatives before making an offer frequently found the property they were considering was suddenly under contract to someone else.

It was standard practice for buyers and their real estate agent to walk out of a home after seeing it for the first time and, if they liked the property, sit down in the agent's car and write an offer on the spot.

Today, however, the landscape has changed for buyers across the metropolitan area. The challenges they face are significantly fewer and different in character, says Jim Merrion, regional director of RE/MAX Northern Illinois.

"I think the image of the current market that has been conveyed to the public is of something approaching a runaway buyer's market, but that generally isn't the case," said Merrion. "What we are seeing in most places is a market where properties that are properly priced and well maintained continue to sell quite readily.

"These days, the big advantage for buyers is that the inventory of residences for sale has risen a great deal. The ability to find a home that delivers what they want at an attractive price is greater than we have seen it in nearly 20 years."

Barbara Bailey of RE/MAX All Realty in Richton Park, Ill., reports that news coverage of the slowdown in home sales has brought out a lot of would-be buyers.

"We're seeing considerable interest, especially in entry-level homes, by which I mean properties priced at $150,000 or less. If they are in good condition, they are selling fairly quickly," said Bailey. "Plus, there are attractive financing programs out there, especially for first-time buyers."

In most markets, buyers find that sellers are more willing to negotiate all aspects of a transaction than has been the case for some years, according to John Wiedbusch of RE/MAX City, Realtors in Chicago's Norwood Park neighborhood.

"Prices are more flexible, and buyers are definitely seeing more incentives, such as seller contributions toward closing costs and the like," said Wiedbusch. For example, he tells of recently taking a buyer to look a house that didn't have a garage, and the seller was offering a $10,000 credit to build one.

"Many sellers are now willing to consider contingencies based on the buyer's ability to sell his current home. Sellers aren't eager to accept those contingencies, but if the buyer's house is priced reasonably and is being aggressively marketed, they often will do it," he said.

Another plus for buyers in the current market, according to Dan Mooney of RE/MAX Signature in Chicago, is that builders are delivering more value in their units.

"Features that were upgrades or add-ons three years ago are standard now, especially in the condo market," says Mooney. "The stainless appliances are top quality. The granite counters are thicker. The washer and dryer are full sized rather than being a smaller stackable unit. Whirlpool tubs are standard in almost all master baths, as are showers with multiple showerheads or a steam-room feature. Many baths now have radiant heating in the floor. Where parking used to cost extra, now one parking space is standard with many condo units."

The main reason sellers are more flexible these days is because inventories of unsold homes are well above historic norms, according to David Shallow of RE/MAX Professionals Select in Naperville. However, inventory levels do vary by community.

"In the western suburbs, for example, the closer to the city a community is and the higher its relative prestige, the smaller the inventory of homes for sale tends to be right now," he reports. "In some areas, inventories have increased only slightly in the last year or two. But when you go farther out to communities with a lot of new construction, the inventories can be enormous. Buyers need to understand that not every market area is the same and act accordingly."

Where inventories are large, some buyers are a bit like the proverbial kid a candy store, contends John Charleston or RE/MAX "10" in Oak Lawn, Ill.

"They just don't know which one to choose, and that can become a reason to put off the decision. Our job is to help them narrow down the choices. I urge buyers to make a list of the features they want, the locations they prefer and the price they feel comfortable paying. Then we focus in on properties that meet those criteria," Charleston said.

"By using Web sites like www.illinoisproperty.com and looking at virtual tours, buyers today can do much of their shopping online, and that's wonderful, especially when they have a list of 40 favorite properties they are trying to narrow to 10."

Even with the great home shopping tools available over the Internet, some buyers like to walk through a lot of homes before deciding. Mark Zipperer of RE/MAX Edge in the Lake View area of Chicago, reports taking one client out to visit 56 properties in three days not long ago.

"Some segments of our market have substantial inventories that give buyers an amazing array of choices. However, in some areas and some price ranges, properties are moving fast. The Gold Coast is a good example. A vintage condominium in good condition, especially those priced above $600,000, can sell in a week because demand is strong there. Buyers even can find themselves in multiple offer situations, just as they might have two or three years ago," reports Zipperer. "The difference today is that buyers are quicker to walk away from multiple offer negotiations because in many instances there are other excellent choices available."

Deb Borgeson of RE/MAX Showcase in Long Grove, says that even as an experienced agent, she is impressed with the many excellent deals that buyers can find these days. However, one challenge they face is to understand the specific circumstances of the property they want to buy.

"Some homes are priced at or just below market value to sell quickly, while others are priced above apparent market value to give the sellers room to negotiate on price, and it is important for buyers to know the difference. Recently, I've seen buyers walk away from wonderful opportunities because they made an offer 10 percent lower than the list price and felt the seller should meet them more than halfway," said Borgeson.

"That can be a good strategy in some instances, but in other cases it is just self defeating. Buyers need to understand the different pricing strategies that sellers are using, and a good real estate agent can help them do that."