Buying or Selling a Home

LETTER 1: MY HUSBAND AND I ARE LOOKING TO BUY A CONDO DOWNTOWN. WE FOUND A CONDO THAT NEEDS UPDATING. WE DON'T MIND DOING THE WORK, BUT WHEN I LOOKED UP THE VALUE ON A FEW WEBSITES, OTHER CONDOS IN THE BUILDING SOLD FOR HALF OF WHAT THE SELLER IS ASKING. HOW DO I FIND OUT THE RIGHT NUMBERS?
 

ILYCE: WHILE I LOVE THE INTERNET, IT DOESN'T COMPARE WITH ASKING YOUR BUYERS AGENT TO PULL UP COMPS THAT SHOW ALL OF THE HOMES THAT HAVE RECENTLY SOLD THAT ARE SIMILAR TO THE ONES YOU'RE LOOKING AT. SO, ASK YOUR BROKER TO DO A COMPARATIVE MARKETING ANALYSIS, WHICH IS USUALLY A TOOL SELLERS USE TO PRICE A UNIT. YOU'LL USE IT TO FIGURE OUT WHAT YOUR OFFER SHOULD BE. ALSO, ASK YOUR BROKER FOR DETAILS ON OTHER UNITS THAT HAVE SOLD, SO YOU KNOW WHETHER EVERYTHING THAT'S SELLING IS IN TOP CONDITION OR NOT. YOU CAN THEN ALTER YOUR OFFER DEPENDING ON WHAT NEEDS TO BE DONE TO THE UNIT. LET'S HAVE LETTER 2. 

LETTER 2:  I OWN 14 RENTAL UNITS, ALL WITH POSITIVE CASH FLOW. I'M THINKING OF SELLING ONE UNIT, BUT HOLDING THE MORTGAGE SO I CAN HAVE A STEADY STREAM OF INCOME. IS
THIS A GOOD IDEA, AND HOW DO I PROTECT MYSELF? 

ILYCE: 14 RENTAL UNITS? WOW, THAT'S GREAT. BUT WHILE YOU APPEAR TO BE A VERY EXPERIENCED LANDLORD, ACTING AS THE BANK CAN BE A BIT RISKY. WHEN YOU HOLD A MORTGAGE, YOU RUN THE RISK THAT A BUYER WON'T PAY. IF THAT HAPPENS, YOU MAY HAVE TO EVICT THE BUYER, AND THAT'S ALWAYS A HEADACHE. THEN, YOU MAY HAVE TO FORECLOSE ON THE PROPERTY. MEANWHILE, YOU WON'T HAVE POSSESSION, SO THE PROPERTY COULD BE DAMAGED. ON THE OTHER HAND, EVEN IF YOU GIVE THE BUYER A BELOW-MARKET MORTGAGE, YOU'LL EARN MORE THAN IF YOU LEFT THE CASH IN A SAVINGS ACCOUNT. IT COULD BE VERY GOOD FOR YOU AND YOUR BUYER. I CAN'T MAKE THIS DECISION FOR YOU. BUT BEFORE YOU DECIDE, TALK TO YOUR REAL ESTATE ATTORNEY AND REAL ESTATE AGENT. YOU'LL WANT TO THOROUGHLY PREQUALIFY THE BUYER, RUN A CREDIT CHECK, CHECK REFERENCES, AND CALL THEIR CURRENT LANDLORD. 

LETTER 3: OUR HOME IS FULLY PAID OFF AFTER ONLY 8 YEARS, BUT NOW WE WANT TO SPEND $50,000 UPGRADING AND REMODELING. SHOULD WE PAY CASH OR TAKE OUT A MORTGAGE?

ILYCE: IF YOU HAVE THE CASH, YOU SHOULD PROBABLY USE IT RATHER THAN BORROWING THE MONEY. IT NEVER MAKES SENSE TO BORROW AT 7 PERCENT WHILE YOU'RE EARNING 2 PERCENT ON YOUR CASH. THE ONLY REASON YOU'D TAKE OUT A MORTGAGE IS IF YOU HAD A BETTER USE FOR THE CASH, OR IF YOU DIDN'T HAVE ENOUGH TO PAY FOR THE JOB.

ROSEANNE: SO ILYCE, YOU'VE GOT A NEW BOOK, OUT, 50 SIMPLE STEPS YOU CAN TAKE TO DISASTER-PROOF YOUR FINANCES. 

ILYCE: YES, AND I'LL BE TALKING ABOUT SOME SIMPLE STEPS YOU CAN TAKE TO DISASTER-PROOF YOUR FINANCES THIS WEEK. TOMORROW NIGHT I'LL BE AT THE SKOKIE PUBLIC LIBRARY AT 7 P-M AND ON SATURDAY, I'LL BE AT THE BARNES & NOBLE AT OLD ORCHARD AT 2 P-M.

ROSEANNE: AND AS ALWAYS.. YOU CAN CHECK OUT ILYCE'S WEBSITE AT THINK GLINK.COM.