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This is a question clients frequently ask me. The general rule for our area is 1-2% of the list price. If you are low-balling, it is generally better to offer more earnest money so that the sellers understand that you have the financial resources to pay for the home (it is just that you disagree with the listing price).

If you have a strong pre-qualification letter or pre-approval letter with at least 10-20% down, you can offer less earnest money. However, if you are putting that much down, you might as well use a portion of that for earnest money and offer less in your purchase price. (Remember, your earnest money goes toward your payment at closing).

These are just a couple strategies. The amount of earnest money you offer is one variable among many when you’re putting an offer together. As you weigh different options and limitations, the appropriate amount of earnest money becomes clear.

One more thing: I always recommend giving only a small percentage of the earnest money at contract acceptance, i.e., after the sellers sign. The larger balance of earnest money should be deposited with the listing office only after the home inspection and attorney review process has been completed. That way, in the unlikely event that the home inspection goes badly, the buyer has less money tied up in escrow. Sometimes it takes a week to get a refund of the earnest money. If the seller protests (which rarely, rarely happens) it could take much longer.

If you locked in two weeks ago, it could have cost you thousands of dollars.  Rates went way up at the beginning of June, and over the last five days, they’ve come way down.

You can’t predict where interest rates are going, but you can lock in when they’re low.   And, right now they’re low.  In April and May, they were also low.  We had a little blip in June, but generally speaking, 2009 has been an awesome year for low interest rates.  Historically speaking, there hasn’t been anything like it.

If you have job security and you’ve been thinking about moving, you’ll find great opportunities in this market.  I can remember back in 2004, when friends of mine, just starting their families, were finding the areas where they grew up  had become prohibitively expensive.  Now, clients and friends are finding beautiful homes in Inverness, Barrington, and Palatine affordable again.  And, with a decent downpayment and a good job, the financing couldn’t be better.

To get more detailed information on local rates, click on the Zillow widget in the right margin, below.

According to the Illinois Association of Realtors, sales for April were up 9% over the sales for March of this year. That is a healthy increase and a sign of significant buyer activity in the market.

Given the increase of energy and hustle I’ve seen in my office, I expect the second quarter numbers to be much stronger than the first quarter. First quarter numbers largely reflect winter months; whereas, the second quarter covers April, May and June, the peak of the spring market.  This year I’ve seen a radical difference in these two quarters with regard to open house attendance, home showings, and most importantly contracts.

As I’ve said in previous articles, I don’t think this is a sign of a complete recovery. In fact, I would expect summer sales to be slower than the spring, as they are every year. But, I’ll take whatever good news I can get and the second quarter numbers promise to bring some very good news, indeed.

In today’s market, appraisals are pretty strict.  If the contract price of a home can’t be supported by comparable properties in the area, the home won’t appraise out.

In other words, if a seller can get a buyer to over-pay for a home, or if a buyer overpays in the heat of a dual offer, the appraisal serves as a stop-gap measure to protect the buyer and the bank making the buyer’s loan.

Banks are very concerned about the validity of appraisals today.  If an appraisal looks questionable, loan underwriters will send out an additional appraiser for a second opinion before clearing a home to close.

What happens if a home doesn’t appraise out?  Well, a few things could occur.  The buyer may have to put more money down for a down-payment, the seller will have to reduce his or her selling price, or second and third appraisals are ordered.  This is not a situation a buyers want to find themselves in.  And, it is rarely a good idea to put more money down.  Additonal appraisals should be ordered, or the seller should reduce his or her price.

Get ready!  With all the rain we’ve been having, it should be a spectacular year!

If you buy your tickets by June 14, they are just $40.00.  After that, they are $50.00. Proceeds from the faire support Hands of Hope initiatives to combat poverty and illness in Africa.

There are a lot of activities and events at the annual Barrington Country Garden & Antique Faire, but the main event is visiting three Barrington Hills estate gardens.  Every year, it is a breathtaking tour of gorgeous garden vistas and lavish beds of plants and flowers.  You can enjoy a gourmet lunch accompanied by entertainment in a lovely open air tent after your tour.

You can’t take pictures of the houses or gardens on the walk, but I think animals are o.k..  In the above picture, I am hanging out with a goat I met at the faire last year (I’m the one on the right!).

The problem with real estate statistics is that by the time you get the data, the news is old.  The market has changed, and more importantly, the season it covers has passed.

The best reports tend to be quarterly because those reports show trends more than the monthly reports, which can over-emphasize blips or anomalies in the market. But, again, the problem with quarter reports is that by the time you get them, the market may have shifted significantly.

The shift from a winter market to a spring one tends to be the most dramatic of them all.

Take, for example, the quarter one reports for 2009, which I dutifully posted on my blog a couple weeks ago (see post below).  They paint the picture of an extraordinarily slow market with desperate sellers.  And, that is how the market was in January, February and March.  But, in April, as sellers dramatically cut their prices and interest rates hit record lows, buyers were out in droves.

My colleagues and I were finding ourselves in dual offers, quickly selling homes, a fast-paced market, and high sale-to-list ratios.  This was not a complete turn-around or complete recovery, but it was radically different from the snail’s pace of a market we had in February.

Now, watch, just as the market slows down a little for the summer, the quarter two reports will come out and confuse everyone all over again.  See the article on the dramatic rise in home sales in April just posted by yahoo this morning.

Does this mean real estate statistics are useless?  I don’t think so; they provide an excellent sense of context and give you a larger sense of what is going on in your local market.  For example, current stats show that prices are significantly lower than they have been over the last few years, and that is important information that tends to shift more slowly.

I will continue to post our local stats and keep our “Local Stats” category (in the right margin) updated.  But, keep in mind that the current word on the street is often just as important and sometimes more important than the old news in the media.

The chart compares the first quarter of 2009 to the first quarter of 2008.

*The Chicago Metro Area is what the U.S. Census Bureau calls the PMSA, the Chicagoland Primary Metropolitan Statistical Area. It includes the following counties: Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will.

Source: Illinois Association of Realtors

The chart compares the first quarter of 2009 to the first quarter of 2008.

Note that Inverness data is spread between the 60067 zip code and 60010; this report does not have separated data for Inverness.

Source: National Association of Realtors

Here is a little taste of how I enjoy summer in the Barrington-Palatine-Inverness area.

• Skipping through the tulips at the annual Barrington Garden Walk.
• Checkin’ out the cool cars on Thursday evenings in downtown Barrington at Cruise Night.
• Walkin’ the dogs through the quiet fields and woods of Penny Road Pond.
• Slurping shakes and inhaling dogs at Kookers.
• Enjoying wings and drinks on the patio of Wool Street.
• Listening to 80’s bands at Streetfest in Downtown Palatine.
• Barbecuing with friends on the shores of Lake Barrington.
• Buying multiple colors and shapes of tomatoes at Barrington Farmer’s Market.
• Going for a nature walk with my nieces and nephews at Crabtree Nature Preserve.
• Enjoying nachos and drinks al fresco at Nellies or Lamplighters.
• Bird watchin’ at Baker’s Lake.
• Walking the dogs and shaking off ticks at Younghusband Prairie.
• Swimming and sliding at the Family Aquatic Center in Palatine.
• Cooling off with ice cream at Deer Park’s Cold Stone Creamery.
• Taking the Golf carts out for a spin in Lake Barrington.
• Skipping stones at Cottonwood Park in Palatine.
• Pretending I know how to golf at Makray Golf Course.
• Buying flowers at Palatine Farmer’s Market.
• Bike riding in Barrington Hills.
• Hitting the driving range at Twin Lakes.
• Grilling brats and corn on the cob on the patio with Jeff and the wiener dogs.

What do you like to do in our area in the summer?  Drop me a line and I’ll post your comment.

Palatine’s Farmer’s Market opens this Saturday for its 18th year.  The Farmer’s Market is open every Saturday during the summer from 7:00AM until 1:00PM.

The market features fresh, seasonal produce.  All the produce is grown and harvested at farms in the Midwest and sold by the farmers. This week’s seasonal specials include strawberries, asparagus, rhubarb, mushrooms, lettuce, hanging baskets, and potted herbs.  New specials arrive as produce comes into season.

You can visit the Palatine Farmer’s Market near the train station, at Smith and Wood Streets.

Barrington’s Farmer’s Market starts June 18.