Kelsey Shaw Chicago
Chicago, IL

What You Need to Know About Tax Proration

Now that we know all the steps of a home purchase & have the terms down, let’s talk about taxes. While taxes may be the last thing on your mind as you advance through the home buying process. Yet, there are important tax considerations that need to be worked out before you get to the closing table. This post will tell you what you need to know about tax proration.

Property tax proration is a way to split property taxes fairly to ensure that each side is paying for the specific time that they were owners of the property. Since Illinois property taxes are paid in arrears, tax proration ensures that the buyer is fairly compensated for the tax bills they will receive after the closing, for the period in time in which the seller still owned the property.

Your real estate broker can help you better understand what tax proration is, how it works, and how it is calculated. Once you have a home under contract, your real estate attorney will work with the seller’s attorney to determine the exact amount due to you during the attorney review process.

The Calculation

Below are six facts about the tax proration process. When you reach this stage, your real estate attorney will guide you along with the help of your real estate broker.

The Facts

  1. Sellers will take responsibility for the property taxes up until the day the property is officially closed. The buyer takes on the property taxes from the day the purchase is final.
  2. Tax proration may be a large dollar amount on the closing statement, because it is prorated to the day of close.
  3. The real estate attorney and/or broker can check the county assessor’s website to determine any exemptions or freezes and anticipate changes to the tax bill. Also, always be sure to file for your homeowners exemption after closing!
  4. With new construction or rehab properties, there is special attention that needs to be paid to the real estate tax credits and prorations. This is because the property upon which the listed taxes are based is no longer the same property that is now being assessed as rehabbed or new.
  5. Unlike paying your rent or mortgage on the 1st of every month, 2019 property taxes are paid in 2020 so therefore taxes are prorated at a slightly higher amount because taxes will likely go up.
  6. An escrow account is used in cases where the parties are not certain of the anticipated change in the real estate taxes and cannot agree to a final credit until the bills come out. The seller sets money aside in the escrow account and those funds are issued once the tax bill arrives.

Whether you’re a buyer or seller, it’s important to understand tax proration so that when you arrive on closing day, you’ll feel fully informed and prepared. Be sure to consult your real estate broker as early as possible in the homebuying process so you are comfortable with all of the steps to come!

Chicago, IL

Terms You Need to Know When Purchasing Your Home

Welcome back to my #homebuyerseries! After last weeks all encompassing guide, I am excited to continue to virtually educate on the in’s & out’s of buying your next home! I am going to post smaller bits & pieces that are quick reads. This week’s focus is on all of the real estate terms you are likely to encounter throughout your purchase.

Pre-approval vs. Pre-qualification – A mortgage pre-approval is an estimate of the amount you can borrow based on a lender’s verification of your financial documents, employment and credit history. Pre-approval is essential in a competitive home-buying environment because it immediately demonstrates to a seller that you are a qualified buyer (keep in mind it is not an actual loan commitment, but it gives you an important head start on the process). Pre-qualification, on the other hand, is an informal, preliminary assessment of your borrowing power based on basic information you provide to a lender.

Comps – Short for “comparable properties”, comps help determine the current value of a property. They are chosen based on property attributes like price, location, condition, features and other criteria.

CMA – Also known as a Comparative Market Analysis, this pricing tool is an evaluation of a home’s current value based on recent comps. Once you’ve found a home you love, your broker will prepare a CMA to help you formulate an offer.

@tip: @properties has an exclusive, interactive CMA that is the first continuously-updating CMA platform in our local market. Contact me if you want an up-to-the-minute, accurate CMA sent directly to your inbox.

Appraisal – If you are obtaining bank financing, the bank will order an appraisal, which is an opinion of a home’s value. Unlike a CMA, an appraisal is performed by a licensed appraiser who must follow a number of established guidelines. While appraisers use the same data as real estate agents to find comparables, they have additional guidelines to follow in order to protect the lender.

Pocket Listing – Also known as an exempt listing, a pocket listing is a property that has a signed listing agreement but is not yet listed on the Multiple Listing Service (MLS). This approach is typically used by sellers who want to protect their privacy or pre-market their home before it’s ready to show.

@tip: With the help of @gent – @properties’ exclusive internal communications app – our brokers are alerted to pocket listings that match your preferences before anyone else!

Contingency – A condition that must be satisfied before closing occurs. These conditions are written into the contract and typically include things like a home inspection, mortgage financing or the appraisal. If you include a home inspection contingency with your purchase agreement, for example, you have the right to have the property inspected within a specified time period, and can cancel the contract or negotiate repairs depending on the results.

As-Is – When a home is listed for sale “as is”, it means the property is being offered in its present condition and the seller does not intend to make any repairs or improvements. As a buyer, you are usually advised to include an inspection contingency as part of the contract, giving you the option to walk away from the deal based on the inspector’s findings.

Fixed Rate vs. Adjustable Rate Mortgage – Two types of mortgages available to homebuyers. A fixed-rate mortgage has the same interest rate through the entire term of the loan, while an Adjustable Rate Mortgage (ARM) is a loan in which the interest rate periodically adjusts based on a specified index. Also, what is PMI.. more on that here.

Earnest Money – A deposit, given by the buyer to the seller, which secures the contract until closing and lets the seller know you are serious about the transaction. An initial deposit must be given with the contract, and the balance of the earnest money is usually due upon attorney approval. Earnest money is typically held in an escrow account until the closing, when it may be applied to the down payment and/or closing costs.

Closing Costs – Expenses and fees associated with a real estate transaction that are paid at the closing. Examples of buyer closing costs include a loan origination fee, title insurance, survey, attorney’s fee, home inspection fee, appraisal and credit report fees, and prepaid items such as escrow deposits for taxes prorations and insurance.

Title Insurance – An insurance policy that protects the buyer or lender against defects or problems with the title when property ownership is transferred. Title insurance protects against claims for past occurrences, while other forms of insurance protect against future events.

Of course, there are SO many more terms to know, more details to be aware of, and steps involved in purchasing your first home. This is just a quick guide to get the conversation started. As always, if you have any questions – I’m here to help!

Chicago IL

Tips & Tricks to Renting an Apartment in Chicago

Tips & Tricks to Renting an Apartment in Chicago

Spring in Chicago is peak rental season & it can be overwhelming navigating the market on your own. As a real estate broker, I don’t just represent sellers & buyers, I also help renters find their place in Chicago – for FREE. These are a few of my tips I share with my clients prior to them renting an apartment in Chicago.

When to Start

My advice is always to start your search at most 60 days prior to your ideal lease start date. Some over-achievers like to start a few months ahead of time, but unfortunately that is time wasted. It’s good to understand the market, but something online now won’t be available in a few months & the prices may increase/decrease depending on the time of year. Landlords are required by the state of Illinois to provide their tenants a renewal notice of at least 30 days prior to lease expiration & 90 days at the very most. Therefore, most landlords don’t know if the unit will be available until 60 days prior to lease start.

How to Determine Your Budget

Most landlords will follow a simple rule when qualifying their tenants, 3×1 rent to income ratio. Therefore if you net $6000 a month, your rent should be around $2000 a month. You should try not to exceed more than 30% of your monthly income on living expenses. This is a normal metric landlords use to qualify tenants, however there are exceptions to every rule & some landlords will over look this.

Additionally, be aware of your credit. If you have a less than desirable credit situation, be up front about it & see what options you have. Every apartment will require a credit & background check, so before you pay for them to run your credit understand where you are at & be upfront about it.

Choose Your Neighborhood

Chicago has 77 recognized neighborhoods, with numerous sub-neighborhoods in between. It can be a tough choice figuring out what neighborhood is right for you as each is so unique & have so much to offer. There are many things to consider, but the items below should be the most important.

  • Price
  • Proximity
  • Amenities
  • Lifestyle

This is a great article on some of Chicago’s most popular neighborhoods.

What Fees Should You Expect

When renting an apartment in Chicago renters often overlook are the fees associated with renting. Working with a broker is FREE, so that’s one fee you don’t need to stress over 🙂 Depending on the style of building, type of unit, area of the city, etc. fees vary. Below are a few fees you will want to be aware of when signing a lease:

  • Application Fee
  • First month’s rent: due at lease signing to secure the unit
  • Security Deposit or Non-refundable Move-In Fee: due at lease signing
  • Utility costs
  • Move Out Fee
  • Elevator Rental Deposit
  • Admin Fees
  • Renter’s Insurance
  • Lease Registration Fee
  • Pet Registration Fee
  • Pet Rent

Why You Should Use A Real Estate Broker

Finally, my biggest piece of advice is to use a Real Estate Broker. This is a free service to you as the landlords want us to bring them qualified tenants & while third party websites can be a great resource – they are not always reliable. Use a Broker who knows the market & understands the process, don’t waste your valuable time searching endlessly when you can have someone do the work for you. Broker’s have access to reliable, accurate, & available listings currently on the market.

If you do use third party websites, please be smart. While I always recommend working with a broker, I have had clients have good experiences with Hotpads, Apartments.com, and Domu. It’s common sense but don’t meet strangers off Craigslist or send funds in advance of lease signing. Research the subject address & do your due diligence that the property is actually for rent, the lease is legally binding, & you are legally able to occupy the unit. Know what your rights are – Read up on Chicago Renter’s Rights.

If you have any questions about this information above or are interested in renting in Chicago reach out to me & I will make it easy for you! Also, check out my favorite apartments hacks here.

Happy Renting!

My First Event!

Last Thursday I hosted a client appreciation event – Past clients, current clients, & future clients (aka friends) all came out for a few hours for a post holiday celebration. Events during the winter in Chicago are always hard & I was worried the below freezing temps would keep people away, but luckily we had a great turn out. I hosted the happy hour at Point & Feather in River North with my preferred lenders Altizer & Paloucek Group. (Fun fact: one of my clients contacted them on Sunday, were pre-approved on Monday & had their offer submitted by Monday afternoon – Yay!)

I wanted to do something to show everyone how truly grateful I am for their support & what shows your appreciation more than an open bar 🙂 In addition to the cocktails, appetizers, & great company, I put together a little gift basket to give away. I’m a huge supporter of small businesses & local companies; I think it’s extremely important to ‘shop small’ & stay local because that means supporting my neighbors & my money is staying in Chicago – and I am here for it!!

The thought came to me to put together the ‘Made in Chicago’ basket – A collection of my fav Chicago made items to highlight different neighborhoods throughout the city. Everyone seemed to love each thing I chose to include & had plenty of questions about everything, so it was fun to talk about each & what neighborhoods they represented.

The biggest hit was most definitely a candle from Wrightwood Candle Company, based in Lincoln Park – because everyone loves a new candle! This company was started by a friend who I went to high school with & I was excited to collaborate with her to include her amazing candle in my giveaway. Wrightwood Candle Company creates eco-friendly, clean burning, and sustainable artisan crafted soy-coconut candles – each scent if hand picked from premium grade fragrances infused with essential oils.

Next were six craft beers from a few my favorite breweries in Chicago:

And finally, the ever popular RXBARS & RXBAR Nut Butters, a company based out of River North. I have been an RXBAR fan for years & once I found out they were headquartered just a few minutes away from my office, I had to include. Oh, & of course a triple-insulated water bottle because everyone can use that 🙂

I wanted to do something to THANK both my clients & friends who have all been so supportive of my business; whether using me as their Broker or recommending me to their friends & family who are looking to make a move in & around Chicago. I feel too often that people don’t show their appreciation for their clients, so I want to make sure everyone that works with me knows that I truly appreciate them & am so thankful that I get to wake up everyday to a job I love working with people I adore.

For those who braved the cold – THANK YOU – & for those who couldn’t make it, there will be many more in the near future 🙂 A HUGE THANK YOU to the Altizer Paloucek Group for co-hosting with me & answering everyones questions. I look forward to working with many of you in the near future as this spring market, and hopefully the freezing weather, heats up. As always, don’t hesitate to reach out to me for all of your real estate needs: renting, buying, selling, or investing – I’m your gal!

11 Things To Do During December In Chicago

December in Chicago

Chicagoans will always tell you there is no time to be in the city like Summertime & they just tolerate the winter… I BEG TO DIFFER. There is no time better than December in Chicago. There are endless activities & options throughout our cities 77 neighborhoods, but in an effort to keep it short & sweet, I have chosen my top 11 things to do during December in Chicago & I hope you can fit them into this crazy holiday season.

  1. Christkindlmarket – Inspired by the Christkindlesmarkt in Nuremberg, Germany, which began in 1545, the Christkindlmarket Chicago brings a cherished German and European tradition with international flair and local charm to Chicago. Different from the magnificent mile, the vendors at this open-air market offer unique & classic items that can’t be found elsewhere. My favorite booths to visit: Beer & Spiced Wine tent obviously (don’t forget to get the souvenir mug!), German Steins & Souvenirs, Dinkel’s Bakery for some strudel, &  Frank’s Ornament House for glass blown ornaments.
  2. Christmas Around the World at MSI – The Museum of Science & Industry is an often overlooked tourist attraction, but people don’t know what they are missing! Located in the beautiful Hyde Park neighborhood, just steps away from Lake Michigan & minutes from downtown Chicago, MSI has one of my FAVORITE Christmas exhibits, Christmas around the World. More than 50 trees & displays to represent holiday traditions from cultures around the world & one magnificent, floor to ceiling 4 story tree.
  3. ZooLights – Hosted by Lincoln Park Zoo, ZooLights is a family favorite activity with musical light shows, carolers, live ice-sculture carvings, adult beverages, & more. A fun, free event that I make sure to attend year after year. Make sure to pick a warm(er) night as it can get pretty chilly strolling around the zoo at night – or go in & check out the exhibits; my favorites are the Africa Experience (specifically Mr. Hippo) & the Primate House.
  4. Butch McGuires – A well-known restaurant & bar in the Gold Coast, Butch McGuires provides a spectacular holiday experience. With over 45,000 lights, a 2 tier model train, wonderful Christmas displays, & ‘Christmas in your Mouth’ shots.. December in Chicago is not complete without this quintessential holiday visit IMO.
  5. Christmas shows – Full disclosure: I have NOT seen any holiday shows, but I plan to because Chicago has some of the best shows & world-class actors. The shows on my list are A Christmas Carol & The Nutcracker.
  6. Ice Skating at Millennium park / Maggie Daley Ribbon – Just below The Bean sits Millennium Park’s McCormick Tribune Ice Rink. Admission is free & skate rental is available for a nominal fee. Just east of the park is the new Maggie Daley Ribbon. Unlike a traditional rink, the Ribbon provides an unconventional skating experience that is really fun. Both have the gorgeous, sweeping Chicago skyline in background & are a must visit – perfect for date night!
  7. Ride the Polar Express – If you love the Polar Express like I do, then you will definitely want to check this out. A magical one-hour trip through the tunnels, rail yards, and neighborhoods along the Chicago River set to the sound track of Polar Express.  You’ll be able to punch your golden ticket before hot chocolate & cookies are served by dancing chefs.
  8. Winter Wonderfest – For those who have children, or are a child at heart, this is a great activity for some family friendly fun. I remember going to this when it first opened & it truly was an incredible experience & memory I will always cherish. Visit with Santa, ride the rides & giant slides, indoor ice skating, and holiday decor that will be sure to get you in the holiday spirit.
  9. Holiday Flower Show at Lincoln Park Conservatory – For a warmer activity, stop by the Lincoln Park Conservatory to check out the holiday flower show! The conservatory is a favorite of mine year around, but this holiday season they will be featuring poinsettias, trees, sparkling lights, and a model trains that traverse through the plantings. This year will feature photos from 1940s through 1960s, celebrating memories of holidays past.
  10. Music Box Christmas Sing-A-Long – Music Box Theater is a vintage movie theater in Southport Corridor & has been hosting a Christmas Sing-A-Long for the past 35 years. It is such a fun, unconventional, & old-fashioned Christmas experience I am always recommending to people who want to get away from the hectic downtown tourist attractions. You walk into the theater & have the usual movie theater offerings like popcorn & candy, but also a full bar to aid in your singing abilities. Once seated you are welcomed by Santa Claus himself who leads the audience in singing some cherished Christmas carols with the lyrics projected onto the screen. Be sure to come ready to sing & if you’re seeing a It’s A Wonderful Life, don’t forget your jingle bells!
  11. Millers Pub – Years ago my boyfriend & I were at the Christkindlmarket & en route to the Christmas Tree in Millennium park, but it was FREEZING & my hand was in a cast from breaking it the night before (long story) so I begged him to let us go inside somewhere to warm up. We stopped in Millers Pub & have made the visit a tradition ever since. We grabbed two seats at the bar & ordered their infamous ‘Tom & Jerry’. What’s a Tom & Jerry you ask? The drink starts with a carefully prepared batter made from eggs, sugar, cream of tartar, vanilla extract & ‘enough spices to fill a Christmas stocking’, including cinnamon, nutmeg, clove, & allspice. The batter traditionally lives in a punch bowl, ladled into mugs, add rum & brandy, then pour in hot water or milk, and stir quickly; the egg whites will rise to give the drink a foamy crown. If that doesn’t spark your interest, they have other warm holiday drinks & as well as an impressive cocktail & spirits list.

As always, Chicago is full of amazing ways to spend this holiday season; these are just my tried & true suggestions. Am I missing a favorite of yours? Let me know how you plan to spend your time this season.

Where to next?