Episode 2 – Buying a home in the Chicago area with Rich Harty of Harty Realty Group
This is Listen Up Home Buyers, the only podcast offering Home Buying advice and tips from true buyer agents and now here’s your host Victoria Ray Henderson.
Victoria Ray Henderson 00:09
Hello and welcome to Listen Up Home Buyers. I’m excited to chat with Rich Harty. He is the broker and owner of “Harty Realty Group” in Chicago, Illinois. Hello, Rich. Welcome.
Rich Harty 00:21
Hi, how are you today?
Victoria Ray Henderson 00:22
I’m doing great and I’m so glad to talk to you and excited to hear about the market in Chicago. I was doing a little research before we got on the phone, read that Chicago is the 3rd largest metro area. What is it like to be doing real estate in such a huge market?
Rich Harty 00:38
I think it’s really been great in terms of— I started out real estate when I was in my mid 40s and I think it’s been really exciting. Just seeing all the market activity that’s in the city. You know, we have the city and we also have the suburban area and I cover not only Chicago, but also the surrounding Lake County and Cook County areas as well.
Victoria Ray Henderson 01:07
Yes, that’s a huge area. You’re talking about millions and millions of people, right?
Rich Harty 01:12
Yes, probably in excess of 4 million people.
Victoria Ray Henderson 01:16
You know, in the Washington DC area where I am. We have Northern Virginia, Washington DC, and we have McHenry County, and all into Baltimore. So I mean, because we’re we cover such a vast area, when somebody asks me about market conditions, I laugh because it’s completely different in Potomac, Maryland, than what it’s like to buy in the district and I’m sure it’s similar.
Rich Harty 01:40
Yes, absolutely and market conditions really mean there’s so much that has to do with the condition of the property, and sellers expectations for what they feel the property is? — What their expectation is, of being able to sell the property and what the real market conditions are?
Victoria Ray Henderson 02:02
You make a really good point, I just had this conversation over the weekend with somebody who said, “Hey, do you think this townhouse is priced high?” And I said, “Yeah, I do. When I ran comps, it was priced high and they said, “Why do you think that is?” A lot of times you have a seller who values that property and that listing agent is having a hard time convincing them that it’s not worth what they’re thinking. You’re absolutely right. So many different facets and how that list price comes about.
Rich Harty 02:35
The sellers’ motivations, I mean, are they trying to price it so that they’ve got money to pay for their son or daughter’s education. If they’re trying to pull money out of the house and they’ve got financial goals. Are they trying to save for retirement? Are they trying for the next home? Or what are their motivations? And you always hear that people are trying to test the market. I think it’s important to understand when you’re working with a seller, who price the home wasn’t— like you just mentioned, was it the agent, that price the home; was it the seller that price the home, because oftentimes, those are in conflict with each other.
Victoria Ray Henderson 03:14
That’s right and I always tell my buyers like you, we only work for Home Buyers, I always say, “Time will tell, time is going to tell if it’s priced”, we have our eye on a particular property, we wrote a contract on it came in under what they wanted, we’re told that the seller was a little bit insulted and that property has been on the market for two and a half months and so now, I just wonder, what’s that relationship for the listener, and for the person on the house, but that’s not our problem. Do people come to you and ask you the basic question: How much does it cost to buy a house? How much am I going to have to save? How does it all break down?
Rich Harty 03:59
Yes, I think it’s important for them to break it down into you have your down payment, you have your closing costs and you also need depending on the condition of the home money in order to maybe simply paint or refinish hardwood floors, remove and replace carpet, or perhaps do a more major renovation. So, I think it really depends on what your goals are in terms of the home that you’re looking for. But I think it has to be broken down whether or not you’re going to put down 5%, 20%, maybe even more, and then being able to have those things to make sure that you’re not squeezed once you close.
Victoria Ray Henderson 04:49
And then when you advise, especially first time Home Buyers, what do you tell them about closing costs?
Rich Harty 04:56
Closing costs generally range, I would say in a minimum $7,000 by the time you factor in the attorney inspection, title charges generally say try and put somewhere around $7,000 together to make sure.
Victoria Ray Henderson 05:14
So that’s in addition to the down payment, and of course, anything that you’re saving for repairs?
Rich Harty 05:18
Victoria Ray Henderson 05:20
Did I understand it correctly when I read a little bit about you? Do you come into this with a background in construction?
Rich Harty 05:26
We do. My background is 30 plus years of residential construction.
Victoria Ray Henderson 05:31
So that’s pretty handy for a Home Buyer.
Rich Harty 05:33
Yes, I work with a lot of first time homebuyers and because of that, I’m able to really work with them and educate them on the home, and the condition of the home. Now, I would say it’s okay to buy a home with old windows, as long as you understand that the windows are old, and they need to be replaced. So ideally, the homes that I’m trying to find for my buyers would be something where some of the major mechanical components have been addressed, like the roof or the water heater furnace systems, not only the furnace located in inside the home, but also the condenser on the outside. You know, there’s two separate components there.
So just replacing a furnace can be upwards of $55 to $6,000. Now, a water heater might be 15 $100. So just really being able to educate the buyer, as we’re walking through, something as simple as trees too close to the home, there’s a cost associated with making sure that the landscaping and everything around the home is in the right condition as well.
Victoria Ray Henderson 06:42
That is right, the drainage and it’s funny, you’d mentioned trees, I just got off the phone with a guy that I’m meeting tomorrow at a house in Georgetown, there’s a beautiful, huge heritage tree in the backyard and all these big limbs are hanging all over the roof deck. So I’m getting a bunch of estimates, because you’re absolutely right, that’s a cost and Washington DC, they’re very strict about what you can do with trees and if you do the trimming the wrong way, or you cut down a tree without checking with the city, you could be fined a lot of money.
Rich Harty 07:16
And that brings up another, you might have permit costs, which might be a couple $100. So it’s really important that buyers understand all the costs that they’re going to need to address once they close.
Victoria Ray Henderson 07:29
Do you have this conversation with your rear buyers where you’re walking through a house, and suddenly Chip [phonetics 07:35] and Joanna Gaines comes up in the conversation because everybody loves them. I do too and you wish you could hire chip to come in and knock out the walls and do all the work and do his magic. They do make it look pretty easy.
Rich Harty 07:51
The renovation… as if the renovation is just going to happen at easy and there’s so much that needs to go into it. I often recommend to my clients that they wait at least a year before they undertake any major projects. Just get to understand the home and understand how you’re going to live in the home and to use the space. How you anticipate from that early walkthrough may not be the same as how you feel about it a year later.
Victoria Ray Henderson 08:21
When you’re doing these walkthroughs. When you’re touring with your clients, what are some of the common things that you find yourself seeing and saying again, and again?
Rich Harty 08:29
Really just looking at…. What I provide my clients is an opportunity to be an extra set of eyes because of my experience. So in terms of looking at hardwood floors, let’s say making sure that they’re in good condition. Let’s say $3 a square foot to refinish the floors. Just having that conversation, just kind of really….. Every time we’re walking through a home just reminding them about and playing devil’s [phonetic 09:01] advocate and making sure that they understand exactly what the condition of this home is. They’ve always wanted to live in a certain part of town or the street is beautiful but at the end of the day, what’s it going to cost to own this home and what’s your financial outlay? So that’s the conversation that we’re having, every time we walk through the front door.
Victoria Ray Henderson 09:23
In the district again and again a common conversation we have is, “Can I knock this wall out?” You know, the galley kitchen was in…. You know, that was they sequestered the woman to the kitchen, they even put doors on the kitchen because I don’t want to see her doing her work while she’s back there but now, of course, we don’t live like that. Everybody wants that open kitchen and a common thing that we have a discussion about is, “Can I knock this wall out?” And can you tell me a little bit about what you tell clients when they ask that question?
Rich Harty 09:55
Well, there’s a couple of things. First of all, I’m not an expert. I would have somebody come in a structural engineer or a carpenter. We might end up using that as part of our inspection process, if we’re really going to go down that road, and we really want to understand exactly what we can and can’t do, I’ll go ahead and reach out to different tradespeople, maybe a carpenter or an electrician, a plumber, and ask that they come to the inspection. There’s a couple little ways to find out, you know, you go down and look at the beam line, and see the how the house is framed here in Chicago, oftentimes, we have basements.
So we’re able to go downstairs and see which walls might be load bearing and then, something that’s important that people don’t think about, you take out the wall but there may not be hardwood floor, there’s not going to be hardwood floors or flooring underneath that wall. There’s electric in that wall, generally, there may be a return or heat duct in that wall. It’s not just about removing that wall, looking at the ceiling, on how does that ceiling tie into the rest of the home? So do you have to repaint the entire first floor? Let’s say…. Or are you able to work, because of soffits and whatnot to make sure that your work is contained within a certain area. So it’s those little things that make a difference. It’s not as simple as just saying, let’s, take this wall out.
Victoria Ray Henderson 11:25
Yes, that’s a really [crosstalk]
Rich Harty 11:28
Generally you’re able to take— You know, there’s ways to resupport things. So you’re pretty much take any wall.
Victoria Ray Henderson 11:35
As long as you put a supporting beam in.
Rich Harty 11:37
To some degree, right? But it’s all these other items that people aren’t thinking about and then just trying to come up with a solution that allows them to work within their budget, and get the space that they need.
Victoria Ray Henderson 11:52
So really, it comes down to evaluating properties and when buyers fall in love with something kind of walking them through… yes, it’s got that beautiful granite countertop. It’s got this and that but let’s look at the bones. [Phonetic 12:06]
Rich Harty 12:06
Exactly. The bans on the home [phonetic 12:08] [crosstalk 12″09] and I’m always playing devil’s advocate with my clients, and I tell them that it’s not that I don’t like the house or don’t think that this is the right home for them. I’m challenging them to make sure that they’re thinking about everything, so that they understand once they close, it’s theirs and I want to make sure that they know when they’re sitting at the closing table that they’re as confident as possible as they’re supposed to be. I think it’s important for people that understand going into this process, what their goals are, and the idea that they may be in a home longer than they anticipate and I think they really need to have that conversation to make sure that they’re buying the right property.
We’ve lived through the crash or the downturn in the economy and I think before that, especially like in the city where people, they might have bought a one bedroom condo, they were young, they weren’t married, pretty soon they got married, and the downturn in the economy came, and they wanted to start a family and there they were stuck with a property that wasn’t worth what it had been previously and it turned into a financial nightmare for a lot of people unexpectedly. They were just going about living their life. So I think it’s important for people to know what their goals are and plan things out a little bit further out. So that they make sure that if there is another downturn in the economy, that they’re able to weather the storm,
Victoria Ray Henderson 13:49
Rich Harty, broker and owner of Harty Realty Group in Chicago. Thank you so much for joining me.
Rich Harty 13:55
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