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Chicago Now

Our main blog has been moved to chicagonow.com/getting-real
but we occasionally post articles here as well.

Articles for ‘Developers’

How The $7,500 Tax Credit Works

Sunday, October 26th, 2008 by Geno Tucci

Article reprinted with the permission of Geno A. Tucci, Sr.

The government is offering a credit of up to $7,500 for First Time Homebuyers who purchase a new primary residence between April 9, 2008 and July 1, 2009. There is a misconception that these funds are a grant, they are not. In fact, itʼs a loan from Uncle Sam but it is interest free.

When you file your tax return youʼll get a tax credit, which is applied to your income tax filings and you get a bigger refund or you owe less taxes. Although, at the onset it may seem more complicated than itʼs worth, it is actually quite simple and is a great way for new homebuyerʼs to get some cash on hand just after the big purchase. Let me try to simplify it further.

To start, the program is only offered to folks who make $75,000 maximum earnings per year if filing single, or $150,000 if filing jointly. If your income exceeds this there may still be the possibility of a partial credit, but nothing if you make more than $95,000 per person per year.

To get the credit you would close on the property as usual. Then come tax time, if you fit that income bracket, you claim the available $7,500 credit on your tax return. For example, if you owed $1,000 on your federal taxes normally, your return would be $6,500. If you were getting $2,000, you would instead get $9,500.

Going forward, over the course of the following 15 years you would pay back the credit, remember interest free, as part of your tax filings. The figure comes out to roughly $500 due per year. This works the same way, at tax time if you were getting back $1,000 normally, you would instead get $500, and pay back the other $500 towards the annual principal owed.

Something to consider is that in the event that the property is sold before the 15 years, the balance would be due at the time of sale. However, if there is no appreciation the loan is forgiven. Likewise, if the property is converted to a rental or investment property the outstanding balance of the loan would be due at the time of conversion.

This and other government programs exist to help homeowners. The trouble is that homeowners and especially new homebuyers arenʼt made aware or are often times confused by these programs. 

Please feel free to contact me for more information on this or any other loan related issues:

Geno A. Tucci, Sr.
630-640-5031 (cellular)
gtucci25@yahoo.com

Real Estate Karma

Wednesday, August 6th, 2008 by Gary Lucido

Nothing irritates me more than a lack of basic ethics among certain Chicago real estate professionals. It’s an endemic problem in the industry, and one that motivated me to enter the industry. However, maybe there’s such a thing as real estate Karma, as my recent experience with a certain real estate developer has led me to believe.

The names in this story are being withheld to protect the guilty and to protect me from a slander lawsuit. Of course, if it’s true then it’s not slander but then I would have to pay my lawyer to prove it and I like my lawyer but I would rather not pay him for defending me against a slander claim.

The story begins with my client who was looking for a condo. We finally found what appeared to be a nice garden unit. However, on a subsequent visit to the property we encountered one of the other residents of the building who not so subtly let it be known that he and his wife were having issues with the developer. They had been the first people to buy in the building and they had a laundry list of problems that they felt the developer needed to address. However, according to them, the developer was either not responsive or didn’t fix things properly. Since they mentioned that many of these issues had been uncovered during an inspection of the property I asked them if I could see a copy of their inspection report. Karma #1: the developer had unresolved issues with a buyer and now it was coming back to haunt them. Oh…did I mention that the property had been on the market since August of 2007, starting at $219,000 and was now listed at $169,000?

I then went through this issue list with the developer who either claimed that the issues had subsequently been fixed or that they really weren’t problems or that they would be fixed. My client and I discussed our strategy and decided to make an offer contingent upon some important subset of these issues being fixed. Once we did that it became much clearer exactly where the developer was on each of these issues and what they were willing to do: not much. In addition, some problems that were supposed to have been fixed “next week” had still not been fixed. So our mistrust of this developer was growing rapidly. I’ll skip past a few rounds of negotiations but let’s just say that we dropped our upper limit in order to compensate for the problems and our mistrust of the developer.

Finally we agreed on terms and scheduled the inspection but between the last time we had seen the unit and the inspection it had rained – rather heavily. I think you can see where this is going – especially since this was a garden unit. When the inspector arrived he didn’t even set down his bag before pointing out that not only did the unit have water damage but that there had been an attempt to hide it. The lower two feet of many of the walls had been repainted. The inspector also found evidence of mold and, as a side note, there were serious deficiencies in the electrical wiring. That’s 3 material defects that are required disclosures by law.

We ran into that other resident of the building again and he confirmed that he had seen workmen in the unit during the past couple of weeks replacing carpeting and drywall – repairs that are purely cosmetic and won’t stop the water from coming in. I think that pretty much killed the deal right there. Within a week the listing price dropped to $159,000 and a week later it dropped to $155,000. Did I mention that when I went by the developer’s office to present the offer there were several large Mercedes in the parking lot?

Fast forward to Monday of this week. It rains in biblical proportions. Tuesday morning the listing on this unit is canceled. Coincidence? I think not. Let’s just say that in response to an inquiry my sources have now confirmed that there was extensive damage to the unit and once again the developer is making cosmetic repairs. Karma #2: they didn’t fix it correctly and now they are having to fix it again.

This is a rather interesting situation. The developer is required to disclose these problems to potential buyers. Think they will? If they don’t they can be sued by the buyer. If they do who is going to buy the place? Or will the developer just throw in a lifetime supply of drywall and carpeting? If the developer doesn’t fix the water leakage do they expect the condo association to fix it? There is a paper trail a mile long documenting this problem and there are numerous witnesses to the aftermath. Think the association will allow themselves to get stuck with this problem?

What goes around comes around.

Elegant Union Row Underpass & Railroad Track Living In Chicago

Monday, June 2nd, 2008 by Gary Lucido

With the extreme shortage of real estate in Chicago (yeah, right) I guess it should be no surprise that developers are scooping up every available scrap of land for housing developments.

The Union Row development in the 600 block west of 16th. street may signal a new trend in the gentrification of underpasses and railroad tracks. Check out these photos of the spectacular view of The Dan Ryan and the railroad tracks from these townhomes:

Along tracks

As you can see, the railroad tracks will provide hours of entertainment for the myriads of children who will play on them, while the Union Row homeowners will literally be a short walk from all major forms of transportation.

Next to underpass

The underpass will also provide great shade during the afternoon sun, saving lots of cooling dollars during the hot summers.

View from underpass

This view from the underpass should remain unobstructed until a developer decides to actually build a house under the underpass.

Between buildings

Even with the back fence folks will be able to see the train tracks and the Dan Ryan. No need for these folks to get a traffic report in the morning. All they have to do is look out their window.



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