Properly buy downtown Chicago real estate like a grandmaster chess champion. If you brace yourself with these moves, then you’ll checkmate your opponent every time.
Move 1: Notice of No Agency
What is it? — When you bump into a real estate broker at a coffee shop and start talking real estate. You are not in a relationship with that broker at that present moment. Obviously, this would appear as common sense. However, the State of Illinois Real Estate Act (under Article 15: Section 15-35) states that a broker must nevertheless disclose in writing that the broker is not acting as your agent.
Why necessary? — The State of Illinois wants to protect you from disclosing any confidential information to a licensee. A broker is to have you read the non-agency agreement prior to any consultation so that you know not to divulge any confidential information prior to deciding on an agency relationship. You can sign the Notice of No Agency and then immediately sign your exclusive buyer broker agreement.
Move 2: Sign Exclusive Buyer Broker Agreement
What is it? -- An exclusive buyer broker agreement is a written agreement between the buyer and the sponsoring broker. In a nutshell, the buyer appoints the broker as the exclusive representative of the buyer. This written agreement meets the requirements of Section 15-75 of the Illinois Real Estate Act.
Why necessary? -- The exclusive buyer broker agreement establishes -- in writing -- who is actually representing the buyer. It grants the broker the exclusive right to represent the buyer in the purchase of property. Therefore, it avoids confusion and specifies which broker the buyer has chosen to work with. Furthermore, the buyer broker agreement has a dual representation provision designed to alert the buyer of dual agency.
Move 3a: Add Client to MLS Database Drip
What is it? -- MLS stands for multiple listing service. The MLS database is only accessible to licensed professionals. Upon signing your exclusive buyer broker agreement, we will add you to a custom database search. This provides you automated daily updates and status changes on property for your target area.
Why necessary? -- It’s the most accurate accounting for new and currently available inventory. Much of the information on third party internet sites is not getting properly updated with status changes. Basically, if you want the most relevant, up-to-date and accurate accounting of available property in your target area, then a direct MLS drip to your email inbox is key. We will create this direct MLS feed for you when signing up.
Move 3b: Send Buyer Market Analysis & Explainer Video
What is it? -- Viewing daily MLS listings for your target area is only part of the solution. You must also receive pricing information on the actual closed sales for similar property in your target area. This CMA -- comparable market analysis -- report is beneficial. We will also send you a brief and customized video tutorial that explains the findings in the market analysis report.
Why necessary? -- It’s the first step in appraising the value of property in your target area. In fact, a lender providing a mortgage will look at this same information. If you plan to know how to price property and submit offers like a pro, then knowing what other properties in your area recently sold -- and at what price -- is vital.
Move 4: View Property – Live Property Tours
What is it? -- Appointments are set to walk thru individual properties that peak your interest.
Why necessary? -- Obviously, it’s necessary if you plan to live in the property as your primary residence. If you are buying for investment, and live outside the United States for example, then you can purchase the property without viewing it -- and based off of our recommendations. Really, it’s up to you.
Move 5: HK Value Analysis
What is it? -- An internal valuation method that we conduct and that is unique to HK Creative Investments and HK Luxury Realty. When you’ve narrowed your property search down to your final contestants, we’ll pull out our microscope. We use specific calculators -- not mortgage calculators -- to mathematically compare your favorite properties against one another. This value analysis affords you the same level of scrutiny that a professional fund manager would use. Hedge fund managers use these tools; most brokers don’t. The reason for this is because the vast majority of real estate brokers ignore the income approach when valuing residential real estate.
Why necessary? -- We use this compass to get objective direction on which property has the greatest value. And which type of loan (if any) is priced best. It’s one last layer of protection we use to aid your buying decision. Of course, you can choose to buy whichever property you prefer; even if the numbers don’t justify it. We provide the data; ultimately, you decide what you prefer to do.
Move 6: Submit Purchase Offer & Open Escrow
What is it? -- A hard contract is a purchase offer that is submitted with an earnest money check attached. The escrow account is an account specifically used to hold earnest money. When a meeting of the minds takes place, the confirmation and consent to dual agency (if applicable) must also be signed as provided under Article 15: Section 15-45.
Why necessary? -- Because the seller must accept your offer. If the seller rejects the buyer’s offer, then a meeting of the minds has not taken place. Offers submitted without earnest money are incomplete.
Lastly, Under Section 15-45 of Illinois Real Estate License Act, a broker (licensee) may act as a dual agent with the informed consent of all clients in the transaction. Dual agency is a relationship in which the same licensee is representing both the buyer and the seller in the same transaction. If this happens to be the case, then both the seller client and the buyer client must agree to a broker's dual agency.
If all parties to the transaction do not agree to the dual agency, then the broker must provide a Notice of Referral Fee. In other words, a broker shall not receive a referral fee for referring a client to another licensee unless written disclosure is made to each client in that transaction. Whenever applicable, either a dual agency or Notice of Referral Fee is to be executed when any offer contract is signed.
Move 7: Clear Attorney Review Period
What is it? -- The attorney review period is a contingency period. It affords the buyer time (typically 5-7 days) to dig deeper into the property for hidden problems. And allows the buyer’s attorney time to review contracts and any legal documents.
Why necessary? -- This period is used to conduct the property inspection, search for hidden Title flaws, verify the 22.1 disclosure report (if condo), order lender’s appraisal and finalize the buyer’s loan. Any defects that are discovered can be utilized by the buyer to negotiate for a better price; or the buyer can choose to step out of the contract altogether if the defects are deemed unacceptable. Otherwise, if all things check-out as expected, then the closing date can be scheduled. Note: earnest money is non-refundable after attorney review deadline.
Move 8: Scheduled Closing
What is it? -- Assuming attorney review items are complete. The closing date should be scheduled for within 30 days.
Why necessary? -- Closing deadlines must be met. One reason why is because the buyer’s final loan approval has a deadline. Plus, if you’re buying a distressed property -- like a bank foreclosure or discounted payoff for example -- then your accepted offer is typically valid with the seller for 30 days.
Move 9: Final Walk-Thru
What is it? -- The day prior closing you should walk-thru the property one last time to assure that nothing has changed on the premises.
Why necessary? -- This will assure that the condition of the property has remained unscathed since your initial property inspection. Note: this only applies for regular sales. Bank-owned property and discounted pay-offs are sold AS-IS/WHERE-IS. If you’re buying a property from a bank’s foreclosure department, then you agree to buy it from the lender in whatever condition you receive it.
Move 10: Closing Day
What is it? -- The day that all monies and the Deed legally exchange hands. All escrow items (documents and money) must be present at the Title Company in order to close the transaction properly.
Why necessary? -- If everything runs as planned, it's the day you get your keys. And it’s necessary so you can receive free and clear Title to the property. Title is ownership of the property; and it is witnessed by a written Deed. Preferably, a General Warranty Deed. However, expect to receive a Special Warranty Deed if you’re buying a bank foreclosure or discounted pay-off.
If you're looking for the A-Z (expert!) luxury Chicago real estate solution, then