It Always Feels Like Somebody’s Watching Me!

At first glance, this picture does not look particularly controversial or even interesting. But if you look closely, there is something extremely important going on here. Mark Zuckerberg, CEO of Facebook, has placed a piece of tape over the webcam on his computer. It’s a remarkably low-tech solution to a fairly high tech problem, which is that hackers have figured out how to access the camera in your computer to spy on you.

The process of hacking a webcam is a bit too complicated to explain concisely here. If you are curious about the details, I recommend checking out episode 5 of the Hackable? podcast.

How you can protect yourself:

First and foremost, be skeptical of any link or attachment you receive in your email in box. If you get a link or attachment from someone you do not know, don’t click it! This is how they get you. If you have any question, contact the sender to make sure they actually sent the content to you before you click the link or open the attachment. Better safe than sorry.

Secondly, cover your camera! Zuckerberg’s low-tech and low cost solution works great! You can use tape or a post-it. If that is a little too boring or lacking in style, or you don’t want to have to rip a piece of tape from your camera when you want to use it, you can get a little slider device from etsy.

It’s a scary world out there when people can, in some cases, peer right into your bedroom through your computer camera. Fortunately, protecting yourself is fairly easy and cheap.

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please shoot me a line!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

What Is Airfare Hacking?

Some of you know that I just got back from a short trip to see the sites in Warsaw, Poland.  Whether it is a good idea to lose and gain 7 hours in the span of 5 days is debatable, the trip was a great success.  The best part is that the whole trip cost about $1,000, including airfare.  It all starts with something called “flight hacking.”

This is not a complicated as it sounds.  There are a few tools that are easy to use, which can have you traveling the world for dirt cheap.

Scott’s Cheap Flights

The best flight hacking tool I have encountered is Scott’s Cheap Flights.  Click on the link and sign up to be on his email list.  It’s free to use, and 3-4 times per week, you will receive emails with relatively inexpensive airfares he has found, with instructions on how to book.  There is a premium option, but I use the free one.  I have used SCF to book a flight to London for $505, Warsaw for $351 and Vietnam/Thailand for $430 this year alone.  I would say that Scott should start paying me for the number of times I have endorsed him, but he is responsible for me taking 3 vacations abroad this year.  I should still be thanking him.  Follow him on Facebook and Twitter as well, because he typically releases the deals on social media several hours before emails go out.

Fly Almost Free

Another tool that is similar to Scott’s Cheap Flights is Fly Almost Free.  The concept is the same, except this site claims to have automated the cheap flight finding process.  I have not yet used FAF, but it appears to be legit.  I will have to expand on this once I have used it to book travel.

Google Flights

If you don’t want to wait around for an email, you can always head over to Google Flights and use its calendar tool to quickly find the lowest fares for any trip you want to take.  You can also set up alerts where Google shoots you an email when a particular airfare changes.  With a little patience and creativity, you might find the vacation of your dreams is much cheaper than expected.

There is more out there, but I think you get the gist.  Now is a fantastic time to travel!  Airfares are low, and the dollar is strong.  If you manage to book a trip using these tools please leave a comment below!  I would love to see where everyone is going!

Although this topic isn’t law or real estate related, as always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

Financial Planning In The Era of Marriage Equality

Everyone should have some kind of financial plan.  For many people, this does not become clear until they get married and start a family.  Once there is more than one person to think about supporting, it becomes fairly obvious that a plan must be in place in order to avoid bad consequences for spouses and kids.

Most financial planning instruments were devised before America embraced marriage equality.  As a result, these devices and mechanisms make assumptions about families that, in many cases, no longer suit the real world.  As a result, it is a good idea to make sure that you have a financial plan in place that will fully protect your family.

I borrowed the above graphic from Prudential, because I think it gives a good jumping off point to see where some of the issues may exist.  It is worth noting that the graphic is from a piece of advertising, so take it with a grain of salt, because there may be certain biases.

If you would like to know more about this sort of thing, I would be happy to speak with you!  An attorney is a great resource for estate planning and other protections you can put in place for your family!

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

6 Myths About Homebuying — Translated

I came across an interesting article on Yahoo about “Homebuying Myths” (click here to see the article).  The article has some interesting information, but there are some things that I think could be added to make the article more helpful.  Here is what I would add —

Myth 1 – You don’t need a 20% down payment to buy a home.

This is true.  In fact, most of my clients do not put down 20% of the purchase price when they buy a home.  FHA insured loans require only a 3.5% downpayment, and there are other loan products that require as little as 5% down.  However, when you borrow more than 80% of the purchase price, your lender will require that you pay for mortgage insurance.  The details vary, but I generally see payments in the neighborhood of $100 per month paid for about the first 10 years of the loan.  This is in addition to principal, interest and escrow items.  Although this should not necessarily deter you from buying a home, it is worth taking into consideration when determining how much to put down up front.

Myth 2 – Your credit score is good enough.

Another fair point.  I would add that one easy way to increase your credit score is to ask your credit card companies for a credit limit increase.  You may even be able to do it in a few minutes online.  By increasing your available credit, you reduce your credit usage as a percentage of the available credit.  This, in turn, should increase your credit score.  Just don’t go and use all that new credit!

Myth 3 – Loan pre-approval determines your price range.

This is an excellent point.  Lenders make money based on how much you borrow.  They don’t care that you won’t be able to take a vacation for the next 5 years, because your mortgage payment has you tapped out every month.  Reality check that monthly payment before you start looking at that 4 bedroom McMansion.

Myth 4 – Once I make the offer, the hard work is done.

I may be off base, but I don’t think people really believe this.  But if you were under that misconception, just know that the contract is only the beginning of a long process.  One great way to make the process easier is to have a great attorney at your side to guide you (Hint hint!).

Myth 5 – Your home purchase is non-negotiable.

Well, duh!  But let’s put this one in proper perspective.  Yes, everything is negotiable.  However, sellers aren’t dumb.  When you ask for closing costs to be paid, in the seller’s mind, it’s a deduction from the price offered.  There’s no free money, so the Seller will take that into account when they counter.  Some people will gross up the price in order to include a closing cost credit.  This is fine, but it is important to understand that you are really just wrapping the closing costs into the amount borrowed and paying interest on it over 30 years.  While that may work for you if you don’t have a lot of cash in your pocket to bring to closing, you’ll save interest in the long run by paying the costs up front.  Closing costs are a fact of life when you buy real estate.  The better strategy is to make sure your lender isn’t gouging you on their closing costs, regardless of who is paying them.

Myth 6 – You bought the perfect home.

Of course, there is no such thing as perfect.  The best way to prevent regret is to do try to avoid a case of “oneitis” once you zero in on a home to buy.  Believe me that there is always another property out there for you.  If you keep that in the back of your mind, it will be easier to make the decision cut loose from a home that is increasingly looking like a lemon.

What do you think?  Anything else to add?

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

Federal Judge Dismisses Lawsuit Accusing Zillow of Conducting Appraisal Without License

This is a follow up to my post last week about some of the controversies surrounding the real estate website Zillow.  To bring yourself up to speed, click here

Welcome back to the post!  At the time of publication a lawsuit was pending against Zillow accusing the website of violating Illinois law by conducting appraisals without a license.  The Plaintiff in the lawsuit sought an injunction stopping Zillow from publishing its Zestimates in Illinois, as well as unspecified compensatory and punitive damages.

In what could be called a big win for Zillow, Judge Amy St. Eve held today that Zillow is not violating Illinois law, because Zestimates fall into an exception in the Illinois Real Estate Appraiser Licensing Act (the Act).  The exception provides that non-licensees may “procure an automated valuation model” from publicly available data without obtaining an appraisal license.  Judge St. Eve found that development of Zestimates by Zillow are clearly the procurement of an automated valuation model.  As such, Zillow does not need to be licensed.

The Court’s holding is significant, there was a substantive determination that Zillow is not breaking the law.  Had the Court simply based its holding on a technicality, it would leave the door open for further attack.  As such, the ruling provides a significant precedent for Zillow to rely upon should it be sued again, or if the State of Illinois were to bring an action against Zillow to enforce the Act.

So, it looks like Zillow is, in fact, here to stay.  Moreover, Zillow continues to expand its offerings with its “Instant Offers” pilot program.  (Hat tip to Cleo Aquino of Superior Realty for the heads up on this.)  The program launched in May 2017 in the Las Vegas and Orlando markets and allows sellers to make their property available for cash offers from 15 select large private investors with closing in as little as one week.  The program will expand to Phoenix next month.  Whether Zillow will see success with the program is anyone’s guess (it looks a bit predatory to me, to be honest…), but it certainly looks like Zillow is looking to take a more active role in the market.

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

Is Zillow Helpful or Harmful?

Zillow is a real estate listing website with a twist — each listing has an estimate of the value of the real estate, which Zillow calls a “Zestimate.”  That twist has been controversial among homeowners, especially when the Zestimate is lower than expected. In April of this year, a homeowner (and lawyer) in Glenview filed suit against Zillow alleging that the Zestimate for her property is unfairly low and prevented her from selling her property for the market value.  The case has since been dismissed, but another lawsuit filed shortly after remains pending in Federal Court, and the larger debate about Zestimates continues to swirl.

For its part, Zillow takes the position that a Zestimates is a “prediction of sales price” and is not a substitute for a professional appraisal.  According to Zillow, although Buyers and Sellers can use the Zestimate as a starting point, they should work with a licensed broker and appraiser to determine an accurate price for real estate.  Does Zillow unfairly downplay the potentially negative effects of publishing Zestimates?

The controversy poses some interesting questions.  For instance, is there anything inherently wrong with Zillow taking publicly available data and publishing its opinion as to the value of real estate?  My knee jerk reaction is that, like all Americans, Zillow has the right to publish its opinions.  However, right to publish an opinion is not absolute, and opinions about the value of real estate (i.e. a real estate appraisal) are regulated by the State of Illinois.  If a Zestimate is an appraisal, Zillow must be licensed (which it is not and has no intention of becoming licensed).

The Illinois Real Estate Appraiser Licensing Act of 2002 (225 ILCS 458/1-1, et seq.) is the relevant authority, and it defines an appraisal as “the act or process of developing an opinion on value,” and the Act requires a license to “develop a real estate appraisal.”  Seemingly, Zillow may have an issue, a Zestimate is an opinion on value, the development of which seems to require a license.  Zillow takes the position that it is not subject to the Act, because it is not performing opinions of value in exchange for money for a particular client like a traditional real estate appraiser.

Another question is whether there is any harm done to homeowners as a result of the publication of Zestimates.  In other words, are Zestimate actually hurting people?  This is a difficult question to answer.  Among real estate professionals, Zestimates are not considered to be reliable.  I am comfortable in saying that Zestimates have almost no effect valuations made by real estate brokers or appraisers.  The more difficult question to answer is what effect, if any, do Zestimates have on the general public.  To the extent that there are brokers involved in the transaction, probably not much.  As for those not working with brokers, I would be interested to hear your opinion, because I am too far inside the industry to know!

Perhaps there is room for compromise.  Perhaps there is a need for an appeal process whereby an owner could request a manual review of the valuation.  Zillow could allow for homeowners to voluntarily opt out of publishing valuation entirely.  Maybe new laws or regulations are needed to provide legitimacy and oversight for this relatively new aspect of the real estate market.

Interestingly, other sites, such as Redfin and Trulia, have joined Zillow in publishing opinions on the value of real estate.  Even the National Association of Realtors publishes value estimates at Realtor.com.  In other words, potentially inaccurate internet values are probably here to stay.  Buyers and sellers can avoid the possible pitfalls by working with an experienced broker, who will be able to sniff out bad information and give good advice.

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!  And if you are looking to buy or sell property, I would love to set you up with one of my fantastic real estate brokers.

Condo Rental Caps – How The Board Can Prevent You From Renting Your Place

Most condo owners prefer that their neighbors are owner-occupants.  As a result, many condo boards enact rental restrictions or even outright ban rentals.  If validly done, the condo board can levy fines and file lawsuit to stop you from renting your unit.  Here is how to determine whether your board’s restrictions are enforceable.

Most buildings don’t start off with rental restrictions.  Developers want to cast the widest net possible for buyers, which means they want to be able to sell the new units to both owner-occupants and investors.  Rental restrictions tend to scare off investors.  As a result, rental restrictions tend to be enacted only after the condo board has been turned over to the unit owners.

On its face, rental restrictions seem counterintuitive.  Why would anyone voluntarily give up that right?  One reason is that it is a way to maintain unit values.  Most buyers cannot qualify for a purchase loan if a condo is less than 50% owner-occupied, which severely restricts the pool of potential buyers.  Property that is difficult to sell tends not to be particularly valuable.  In addition, renters tend to be less invested in the quality of a building long term and can be rather transient.  This can have the effect of lowering the quality of life for owner-occupants.

Restricting or banning rentals in a building is not a simple matter.  In order to be valid and enforceable, such a restriction requires an amendment to the condominium declaration.  Amending the declaration requires the vote of at least 2/3 of the ownership interests to pass.  Obtaining a super-majority in favor of a rental restriction can be quite a difficult task, and many initiatives to institute rental restrictions fail.  Interestingly, until recently, it was an open question whether a rental restriction could be enacted  by the board as a condominium rule rather than an amendment to the declaration.  About a year ago, the appellate court in Illinois made it clear that a rule without an amendment is not an enforceable rental restriction. Stobe v. 842-848 West Bradley Place Condo. Ass’n, 2016 IL App (1st) 141427.

The consequences of an enforceable rental restriction can be significant.  Renting a unit in violation of a restriction will probably at least get you fined.  Worse, the board will probably also sue you for possession of the unit or an injunction against renting it.  If your tenant is evicted, they will probably sue you for breach of contract.  The whole thing quickly becomes expensive and messy.  Before that happens, it is crucial to understand whether your association has a valid rental restriction, and what your rights are to rent your unit.  Before you buy a condominium that you intend to rent out, make sure you review the board’s rental policies before making a costly mistake.

As always, please do not hesitate to contact me at 773-632-8330 or patrick@loftus-law.com.  And finally, as always, I am honored by your referrals.  To learn more about my practice, please contact me!

 

Per Crain’s: South Works Site Has New Developer On Board

Vacant since 1992, the former U.S. Steel South Works site is set to be purchased by WElink and Barcelona Housing Systems.  Both companies specialize in environmentally friendly construction.

Thanks to Crain’s Chicago Business for reporting the story.  Any comments on how you think this news will affect economic development in South Shore neighborhood are appreciated!

In Defense of Real Estate Broker Commissions

I hear it all the time from home sellers.  “Why do Realtors make so much money?”  I’ve heard a few variants on the sentiment, ranging from the more diplomatic, “Realtors don’t seem to do much work to earn their commission,” to the more direct, “this commission is horse s**t!”   I submit to you, however, that Realtors more than earn every penny of their commissions.

My first point is quite simple — You don’t realize how much work a Realtor actually does.  If your Realtor friend goes for spa treatments every day, they are not closing deals — it’s that simple.  Prospecting and networking for clients takes a lot of time.  Once those clients are found, if they are buyers locating properties and setting up showings takes time and effort.  If they are sellers, preparing presentations to homeowners who may or may not list with you takes time and effort.  They prepare and present offers.  They negotiate.  They work with their clients all the way through to closing, often on a daily basis.  Realtors work weekends and holidays, because the rest of us aren’t available to look at property during normal working hours.  A successful Realtor is someone who works extremely hard.

The next point is also fairly easy to understand — Realtors are sales professionals, which means their compensation is tied to results, rather than the amount of time spent.  Let’s face it, most sales jobs are not salaried positions.  It’s all about value added.

A good agent adds value by using their expertise to help you find good properties in the right neighborhood at the right price.  Or if you are seller, they can pinpoint the right price so that the property will move quickly.  They use their experience in sales and negotiation tactics to the table to cut the best deal possible once you’ve started negotiating.  Once you are under contract, a good agent will make sure the appraiser has the right comps to do an accurate appraisal.   These are just examples of some of the numerous things that Realtors do that add real value to the process.

Not convinced?

My next point is a little more nuanced.  You might ask why we need real estate brokers at all (you might be a amused to know that one of the first Google autofills when you type ‘why do real estate agents’ is ‘exist’).  The answer to the question gets into the reason agents of all sorts exist in the first place.  For example, why do actors and athletes have agents negotiate their contracts?  Most of us have never needed someone else to negotiate the price of goods or our salary for us.  Part of the answer is that the more complicated and nuanced the negotiation, the better you will do having an expert negotiate with you.  And let me assure you, negotiating a 6 or 7 figure real estate transaction is as complicated and nuanced as it gets.

Take the example of NFL player Russell Okung, who defiantly announced in 2015 that he would enter free agency without an agent.  Of course, most of us know that athletes and entertainers regularly use agents to negotiate salaries and endorsements.  Okung proceeded to sign a five-year deal worth approximately $10.6 million per year with the Denver Broncos.  Not too bad, considering that he doesn’t owe a cut to an agent, which can be up to 3% ($318,000 per year in this instance)!  In fact, the amount he saved alone would put him in the top 3% of all earners in the US according to CNN Money.

Sadly, Okung only earned $8 million from that contract.  You see, NFL contracts are voidable by the team at any time.  The only money a player is guaranteed is the up front signing bonus, which is why you so frequently such large bonuses for players.  No agent would have let him jeopardize his future by signing such a risky contract.  Especially given the well know effects that playing in the NFL has on the human body and brain.  Okung essentially gave up millions to save $318K.

It is well accepted that athletes and artists who represent themselves tend to get emotionally involved.  It’s not easy to hear that you are not the best at your craft anymore or that you are not the box office draw you once were.  Likewise, home buyer and sellers tend to have difficulty keeping their emotions out of the mix.  It is not easy to hear that your kitchen is dated or the school district is sub-par.  Suffice to say, you do not want to end up making a Russell Okung-like mistake when selling or buying the most expensive thing you may ever own.  The best way to avoid such a mistake is by hiring a Realtor.

Finally, if you don’t buy some of my more squishy reasoning above, you will be happy to find out that the numbers support the fact that, in most cases Realtors add more value than they take away from a real estate transaction.  For example, according to the National Association of Realtors (NAR) in 2015 the typical for sale by owner (FSBO) home sold for $185,000, while the typical agent assisted transaction had a sale price of $240,000.  Granted, this is a very general statistic, but it is striking, nonetheless.

Setting a listing price for your home is difficult to do objectively.  It is easy to fall into the trap of setting a high price just in case someone falls in love with the home and just has to over pay.  In 2015, 18% of FSBO sellers found setting the sale price to be the most difficult aspect of selling their home.  Overpriced homes sit on the market longer than necessary, which increases carrying costs and stress.  The longer a home is on the market, the less attractive it is to buyers who begin to wonder what must be wrong with it.  These sellers typically end up accepting lower prices in the long run, and a good agent won’t let you fall into that trap.

Likewise, it is easy for a buyer to fall into the trap of throwing a lowball offer out there to see if you can get the seller to bite.  A lowball offer is just going to piss off the seller, who will probably not engage in negotiations with someone who does not seem serious.  A good agent will steer you away from this tactical mistake that could cost you the home of your dreams.

This blog post is not long enough to be an exhaustive analysis of the value that Realtors add to real estate transactions or give all the reason they are worth it.  I don’t expect everyone to be moved to change their opinions on the matter.  However, I hope that I have given you some things to consider when thinking about Realtor commissions.  I maintain that real estate brokers earn every penny they make.  To be honest, they may suffer more from bad PR than anything else.  Sometimes they make it look a little too easy.  In this instance, looks are deceiving.  I will leave you with a final musing — if a real estate license is a license to print money, why aren’t you selling real estate?  Wouldn’t you like to have a job where you make too much money?

Mindfulness & The Law

The topic of mindfulness is near and dear to me.  Last year, I was in a bit of a funk when I was fortunate enough to stumble on Dan Harris’s podcast.  Some of you may know Dan as the 10% Happier guy.  Dan had a man named George Mumford on his podcast.  I really liked the way George talked about this thing called mindfulness, so I decided to download is audio book, “The Mindful Athlete,” and my journey began.

Mindfulness has a lot of definitions, but perhaps the best is from one of the first people to bring the practice of mindfulness from India to the western world, Jon Kabat-Zinn.  He says that “mindfulness is awareness that arises through paying attention, on purpose, in the present moment, non-judgmentally.”  You might also say that it’s the practice of removing yourself, at least momentarily, from the narrative going on inside your head.  By noticing your surroundings and the thoughts in your head, you become more present.  In time, the practice provides a way to get to know and understand yourself better.

What does that have to do with the law?  As lawyers, we tend to get wrapped up in results.  I want nothing but good things to happen for my clients, and dammit I’m going to move heaven and earth to create good results.  This creates a lot of anxiety, because you think a lot about things that might happen, especially the bad things.  Constant anxiety about things that might not even happen is no way to live life.

The practice of mindfulness allows me to notice when I am dwelling on outcomes instead of being present.  The world happens in the present, and that’s where I want to be.  The mindful lawyer understands that things will happen (or nor happen) in the future no matter what.  By being present, the mindful lawyer can take confident action knowing that he or she has the necessary skills to expertly guide clients through challenging episode of life.  There is no need to be anxious or fearful of outcomes that are out of our control.

Don’t get me wrong, I am always worried about you guys.  I just have a better sense of when I’m letting it get out of hand.  Mindfulness makes me a better, more complete person; and therefore, a better and more complete lawyer.

I will wrap this post up with some resources that I use or have heard positive things about with respect to the practice of mindfulness.  My personal practice is to meditate in the morning with an app called “Lucid.”  It is geared toward athletes, and I fancy myself a very amateur athlete.  It speaks to the neanderthal part of me.  In the evening I sit for 20 minutes of awareness of breath meditation.  There’s nothing magic about meditation, and you can’t do it wrong.  If you aren’t ready for 20 minutes, start with 1 and go from there.

I have also heard good things about an app called “headspace.”  Once in awhile, I like a guided meditation.  YouTube is great for that, because it is free.  Check out The Honest GuysJason Stephenson or Michael Seeley’s channels.  Or you can just go on YouTube and search “guided meditation.”  Pick something that looks interesting and give it a go!

No call to action on this entry.  If you are interested in a discussion on mindfulness, feel free to leave a comment below!