A buyer's market can open the door to a larger home

Today's conditions are the "most phenomenal buyer's market" Patty Ancona has seen in her 32 years in the business.

"I would suggest that anyone who is looking to move up to a larger home go ahead and do it," said Ancona, a broker with Keller Williams Success in Barrington.

"You may sell your current house for less, but you will also be able to buy your new house for less, and when you sell that new house in six or seven years, you will see more of an appreciation than you would if you stayed in your current house," she said.

Ancona said low interest rates right now are another reason act.

However, if you are a homeowner who is looking to sell your last house or to downsize, Ancona has less enthusiastic news.

"Wait a few years if you can," she said. "The law of supply and demand is at work here, so this is not the market in which you want to just put your house on the market and see what you can get."

How does the Chicago area market differ from the national market?

"We have offices in Barrington, Palatine; Mission Viejo, Calif.; and Panama City, Fla., so I have seen what is happening around the country."

The housing situation in Florida and California is much worse than it is in Illinois, Ancona said, and in some areas within those states, crime in neighborhoods with lots of foreclosures is becoming a problem.

"I don't think we're at the bottom yet. There are still so many houses on the market and more are about to come on the market."

Do you see more movement in any specific sector - i.e. single family, condominiums, townhouses?

"I am selling all categories. But most people aren't selling unless they need to move forward. I have sold several condos for young people who have gotten upside down on their loans and the parents are bailing them out so that they can move on with their lives.

"I am seeing lots of instances where people have gotten in trouble and they now have no place to go but to move in with parents or in-laws. This situation is bringing extended families back together again.

"People of all ages borrowed against the equity in their homes and now that homes are going down in value, they are stuck. This should be a big lesson for all of us. Don't borrow against your home."

Are people changing how and where they shop for homes?

Ancona said it used to be that people had a specific town in mind and they would only look in that town.

"Today most buyers are open to looking at several towns, unless they have children who they want to keep in a particular school district. Now buyers just want to be in a 30- to 40-minute driving radius from their job, and empty-nesters want to live close to their grandchildren."

Recently, Ancona said, she has also had a number of retired couples approach her saying they had taken much of their money out of the stock market and are looking to invest it in real estate since the prices are so depressed.

"Most have been looking for properties in the $150,000 to $180,000 price range that they can fix up and then either flip or rent out."

Very knowledgeable buyers know that the best deals today are real estate-owned properties (REOs) that have gone back to the mortgage broker after not selling in a foreclosure auction, or corporate-owned properties, Ancona said.

"I sold a 3,800-square-foot house with no basement, which backs up to the entrance ramp of I-355, for $160,000 recently. It was a REO. And I had a corporate-owned house in Kildeer that was built six years ago for $2.6 million. When the owner got transferred a year and a half ago, they had to sell it for $1.6 million - a million less than it cost to build it.

"REOs and corporate-owned properties are better to deal with than short sales. Those are too emotional and sometimes the bank yanks it out from under you. With REOs and corporate properties, you usually have an answer to your offer in a day or two and you can close in 14 to 30 days."

What steps need to be taken to help strengthen the Chicago area real estate market?

"The excess inventory needs to be cleared out so that people once again feel a sense of urgency to make a decision. Except with REOs, people are just looking, watching and waiting. They aren't jumping.

"They feel that time is on their side because it will be another year or so before things really start to move again."