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FOR BUYERS

We meet to determine what’s most important to you in a property. This is when we discuss size/style/location/features and separate the ‘wants’ from the ‘must-haves.’ I’ll answer any questions you have.

I’ll refer you to a handful of trusted lenders to determine exactly what you can afford to buy, and get pre-qualified and pre-approved for your loan. Note: You can use any loan officer you like, but I’d prefer if you’d use someone I know we can trust. It’s a jungle out there.

Based on the criteria we’ve established, I’ll set up an MLS search, send the listings to you, you’ll look them over, let me know what you’d like to see, and If the search needs refinement, we’ll do another pass until we get it right.

This is the fun part, visiting all the properties you want to see. Once there, I’ll point out the good stuff as well as the bad stuff and advise you as to what changes can be made easily and inexpensively. The visits won’t stop until you’re happy.

Once you’ve found something you love, I’ll draw up an offer. This is the point at which my approach starts to diverge from other agents. Most agents will advise you to write an attractive offer so as not to offend the seller. (That’s real estate agent code for ‘I want to get this deal done fast.’) I advise offering just enough to get the seller to counter and let the negotiating begin.

Once favorable terms have been agreed upon, of course.

Here’s what needs to happen: you’ll select your loan with the lender, the lender will set up an appraisal, and I’ll communicate with your attorney for the closing. I’ll also arrange for the inspection, and counsel you on what you should and shouldn’t expect for the seller to address.

As with selling, you’ll think I’ve abandoned you because after weeks of constant contact, not much happens between signing and closing. The walk-through is for making sure the sellers did everything they promised and that nothing has happened to the property since signing the contract.

You’ll sign the papers and I’ll be there for moral support, Celebrate!

An indispensable guide to buying… even if you’ve done it before.

Evan Kane, Lead Real Estate Scientist
Member American Real Estate and Urban Economics Association
 
Almost all real estate agents have an infinite supply of confidence but most of the advice and recommendations they give are made with anecdotal, arbitrary, subjective, and incorrect information. This paper will provide the reader with information to quickly tell if a real estate agent is a credible expert or not.

There are two simple methods used to expose the uninformed real estate agent. The first method is to identify an agent that is parroting tried and true (but incorrect) talking points, some to the extent that they become memes(1). The second is to examine the methodology (if any) used to make predictions of a properties’ market value.

Talking Point: Long Market Times Lead To Low Sales Prices
Since the mid-1970s researches (Miller,1978; Asabere, Huffman and Mehdian, 1992; Yava and Yang, 1995) have been looking at the relationship between sales price and time on the market (TOM). The empirical evidence on the relationship has been unpredictable and inconclusive. What is interesting to note is that all of the studies were very clear in showing that market time has no impact on sale price, but price can have an effect on market time. In fact Miller’s full sample model showed a positive correlation of market time on sale price.

But Miller is clear to point out that there is no apparent benefit of longer marketing periods in terms of achieving greater real selling price(2). What is most clear from all of the research is that list price, home atypicality, and the degree of over or under pricing are very important determinants of market time.
 
Talking Point: We’re #1
 
In a study looking at the effects of brokerage on residential home sales (Jud, Seaks, Winkler; 1996) found that within a multiple listing service no one group of agents or firms has an advantage over any other. Specifically the number of sales of the listing and selling agents had no statically significant influence on market time, nor did the number of sales of the listing and selling offices, nor did the franchise the broker belonged. Additionally, homes that sold within the same broker office did not sell any faster than homes listed and sold by different broker offices. A separate study (Jud and Winkler, 1994) shows that there are no differences among brokers in the sale price of homes within an MLS.
 
Talking Point: Offering a Bonus to Selling Agents Will Reduce Market Time
 
Perhaps the most naïve and damaging idea among uninformed agents is that offering a bonus to the selling agent is a way to reduce market time or increased sale price. An award winning study on the impact of agent bonuses (Johnson, Anderson and Benfield, 2004) showed conclusively that offering a bonus resulted in a lower sale price (decrease of 3.6%) and a longer time on the market (35 days)
 
Methodology of Price Analysis: EDA vs. CMA
 
Predicting the most likely sale price of a property can only come from analyzing the comparable market assets (property features) effect on observed transactions (sold properties). The most common and accepted method used by investment analysts, researchers, expert witnesses, and economists is Exploratory Data Analysis (EDA). EDA was developed by Princeton University professor John Tukey and was a groundbreaking approach to learning from data.
Working from an exploratory point of view and primarily using statistical regression analysis, the expert agent detects patterns and formalizes a hypothesis from the patterns of correlation discovered. Primary to this task is to explain variation in sale price between similar properties. To do this the expert agent considers quantitative (continuous numerical values) and categorical variables (groups an observation belongs) and then measures the effect of those variables on sale price. Once the effects of variables are know they can then be applied to the subject property. It should be pointed out that not all variation can be explained, some will be naturally random and other variation will be caused by (the not necessarily rational) human behavior of home buyers.

In comparison to EDA the Comparative Market Analysis (CMA) favored by most real estate agents contains a very high potential for data bias because supporting data is “hand picked” by agents from a very narrow data set. A CMA does not keep the analysis of the data independent from the subject property, very often resulting in a self fulfilling prophecy. Most CMA reports do not make any attempt to make quantifiable adjustments for differences in property features and those that do have not been empirically verified.

This paper has shown how a consumer can quickly ascertain the competency of any real estate agent by listening for un-factual talking points and asking they type of analysis used for property valuation.

Notes

As defined by Richard Dawkins in The Selfish Gene (1976): “a unit of cultural transmission, or a unit of imitation.” “Examples of memes are tunes, ideas, catch-phrases, clothes fashions, and ways of making pots or of building arches. Just as genes propagate themselves in the gene pool by leaping from body to body via sperms or eggs, so memes propagate themselves in the meme pool by leaping from brain to brain via a process which, in the broad sense, can be called imitation.

Real Selling Price is the sale price minus opportunity costs.

 References
Yavas, A., and Yang, S., 1995. The Strategic Role of Listing Price in Marketing Real Estate: Theory and Evidence. Real Estate Economics (23): 347-368
Asabere, P., Huffman, F., and Mehdian, S., 1992. Mispricing and Optimal Time on the Market. The Journal of Real Estate Research (8): 149-155
Jud, G., Seaks, T., and Winkler, D., 1996. Time on the Market: The Impact of Residential Brokerage. The Journal of Real Estate Research (12): 447-458
Knight, J., 2002. Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes. Real Estate Economics (30) 213-237
Miller, N., 1978. Time on the Market and Selling Price. AREUEA JOURNAL (6) 164-17
Pasymowski, E., 2006. Econometric Solutions for Real Estate Valuation Automated Valuation models – Friend or Foe. Pan Pacific Congress of Real estate appraisers, Valuers and Counselors 2-4

How to vet. Read this before signing a contract with
a real estate agent.

Evan was fantastic. He knows the North Shore well … He uses calculations and science to help determine pricing, which worked for us, as we entered into a “bidding war” and won. He is terrific, friendly, honest, and a great person to work with. I look forward to working with him again, at some point in the future and sending many friends his way when they are looking to buy. (Also, Evan has a “guy” for everything. Anything I’ve needed since moving into the house, Evan has provided great contacts for me!)
— JILL RHODES, LAKE FOREST
 
My family and I were relocating to the Chicago area from the East Coast and we needed a real estate agent who could work with us long distance to find a home for us. During our search, we called Evan as we found his listing on Zillow. He returned our call quickly the same day and offered to work with us! From the very beginning, Evan was very responsive to our calls and emails. He immediately started sending us MLS listings matching our requirements. As new ones came in, our list updated automatically. My wife and I were able to put together a list of homes we liked and made arrangements to fly to Chicago to spend time looking at the homes we picked out. Evan set aside several days with us driving us all over the North Shore house hunting, even with our three kids in tow. He was very patient through it all and made us feel welcome. Once we found the home we liked, Evan negotiated a fantastic price. He then helped with the inspection process and closing after our offer was accepted. Evan was there through the entire process and always made time to help us and answer questions. This was especially helpful as were 1000 miles away on the East Coast.
— ROBERT BROWN, GURNESS
Evan is great. He is extremely knowledgeable about his field. He is a good negotiator. He works hard to ensure that his clients are very satisfied. The complimentary floor plan of our home was a great benefit. Most importantly, Evan makes the process fun. It was a pleasure working with him, and I would highly recommend him to others.
— BRIDGETTE & NATHAN FERRARO, GURNEE
Evan helped me purchase my first home. He and I looked at quite a lot of properties. Evan was patient and knowledgeable. I never felt pressure to make a decision before I was ready. His schedule was flexible enough that we could always find a good time to meet. He helped negotiate a great price on my new home and I would recommend him to anyone.
— BRIAN CHAMPION, BUFFALO GROVE
Evan was always patient and available when we needed to talk to him or see a property. He was always flexible and understanding to our needs. With his good sense of humor and utmost professionalism, we always looked forward to running around looking at homes with him. Evan not only found us our dream home but made the process easy and fun. We wouldn’t think twice about who to use in the future when buying another property and highly recommend him to anyone in need of a realtor.
— ISRAEL & SHELLEY GROSS, CHICAGO
My husband and I recently worked with Evan Kane to purchase our first home. The experience was wonderful. We started our search two years ago, but decided to take a break in order to save more. When we picked back up this year, it was like getting reconnected with an old friend. Evan is incredibly knowledgeable in many ways. Looking at houses was a lot of fun, but he also points out a lot of things that we would have never known about. Ultimately we found our “forever home” and we all knew it right away. Evan’s expertise with the negotiating process was fantastic. We are so glad that we used Evan and would highly recommend him to anyone looking for a realtor!
— JENNIFER & CURT PAGE, SKOKIE
As expected, Evan Kane again provided services of tremendous value, and we were able to find and (very) successfully negotiate for the purchase of a wonderful home. Evan knows his industry, his market, and how to meet and exceed the needs of his clients. We will definitely be recommending Evan Kane to our family and friends.
— ARI FOOTLIK, CHICAGO, NORTHBROOK
Evan was wonderful to work with. He was super generous with his time and expertise. Perhaps, most importantly, he was patient with us as we bought our first house. He never rushed our decision making process and continually connected us with the additional resources.
— TRACY FULCE, EVANSTON
I believe that Evan is a great guy and very able agent- his thorough understanding of the business, great research and negotiating skills brought us excellent results in our house hunt. Also personally he was a pleasure to work with and he exhibited highest standards and ethics, and was a true advocate for us. I can without reservation recommend Evan Kane in any capacity, business or personal.
— JIM FEDER, HIGHLAND PARK
Evan Kane is a wonderful realtor who helped us tremendously in the process of searching and purchasing our first home. The process took approximately 6 months and it was frustrating for us at times, but Evan never got annoyed, he was very positive the entire time. He has been very communicative and answered all of our questions and concerns very promptly. The folks he works with/recommends for the closing are also all very great!
— JESS MAISH, EVANSTON
As first time home buyers, it was truly a pleasure to work with Evan on the purchase of our new home.
From the very beginning, Evan demonstrated a vast knowledge of the local market and a superb ability to identify listings that will be of interest to us. He quickly recognized the main features we were looking for in a new house (and a new town!). Furthermore, he was able to quickly modify the search criteria every time we changed our mind about something. That combination of knowledge and adaptability made the property search process easy and enjoyable for the family.
We truly enjoyed the time spent with Evan visiting listings of interest. Evan always took time to explain both desirable features and points of concern in each of the properties we visited. We truly appreciate the open discussions of pros and cons. In fact, we learned a lot during this process. Importantly, Evan was always able to narrow new searches based on our feedback and come up with new listings that will fit better to our (sometimes changing) requirements.
Evan’s expertise and negotiation skills were also instrumental during the bargaining process. Communication and timing play a big role at this stage, and Evan’s response was always timely and reliable. His approach to negotiation is extremely effective and we are pretty sure he save us a few headaches. Furthermore, communication was always straightforward, with clear goals and limits. Overall, we are very happy with the outcome.
After we reached an agreement with the sellers, Evan was also very helpful during the rest of the process, from the property inspection to the closing appointment. He also provided a great deal of advice on how to prepare for each step. Being first time home buyers, this information was very helpful.
— JOSE & YELVIS NAPOLITANO, LIBERTYVILLE
Evan was a pleasure to work with. This was our first house, and Evan helped us through every step. He was extremely flexible with meeting and was able to help us view several houses throughout a few weekends. He also has a lot of knowledge with properties, specifically damage/odd spots in the house. He was with us for every step of the way, and I cannot thank him enough for helping us with our first home purchase.
— JON WONG, PROSPECT HEIGHTS
Evan provided great service to us in our home search, giving us the benefit of his thoughtful analyses of the market and our candidate properties clearly and in the right level of detail, helping us through the emotional ups and downs of the process, and handling the necessaries flawlessly and in our best interest.
— KEN NOVAK, EVANSTON
Evan was excellent at replying to my emails or calls in a very short amount of time and was available at any time of the day. Scheduling viewings was a breeze and Evan always made sure that the properties were accessible at times when I needed. Evan was a professional at all times and yet made it seem that I was working with a friend. I have recommended Evan to my peers and will continue to do so.
— MEGAN TWIBELL, CHICAGO
Evan was a pleasure to work with from the start. He took time to understand what type of home we were looking for and did not hesitate to advise if we selected homes that were missing any of our ‘musts’ which we really appreciated! He has a wealth of knowledge about homes, locations, home values, various home repairs and many other things ‘home’… which he shared with us without hesitation and with honesty.
— SUSAN NYANZI, ROSELLE, CICERO
I would highly recommend Evan Kane for all real estate needs. Evan is very knowledgeable in the real estate industry, informative, great negotiator, and has the experience level to help buy/sell homes in a timely manner. Evan Kane has always been our point of contact for all real estate needs, and I will continue to recommend his services to others.
— TYLER WILLIAMS, GURNEE, LIBERTYVILLE
This is the second opportunity I have had to work with Evan. This was an easy process to find the perfect condo in the city for me. Evan quickly realized what I was looking for and we found the perfect place. He is so experienced it becomes a stress free experience.
Evan doesn’t stop at helping you find the perfect property. He is there for you throughout the process of figuring out what you want through supporting you through closing. When financing became challenging, it was Evan who matched me with the bank. It is amazing how many quality resources he has and shares. From search to closing and everything in-between, Evan is there to help.
Not having sold or purchased that many homes, the process leading to approval and closing clearly demonstrated all that I didn’t know. Evan never made me feel like I was asking too many questions, should have known the answer or just needed support on my decisions.
Evan also referred me to a great real estate attorney. I have used her with both of my experiences. I had heard horror stories about closings. Not for me. I had my trusted advisors on either side of me and in just over an hour I had my keys, handshakes and hugs all around and a special gift!
I am also selling a property with Evan as my third experience. It is just as smooth as the prior. I know that I will sell for the right price with Evan leading the process with research, solid metrics and attention as if I am his only client!
—BEVERLY CHANA, CHICAGO
 
I’ve purchased 3 homes and this was by far the best experience. We must have looked at over 40 properties and the whole time Evan was gracious, available and supportive. He made the experience fun and exciting even as our timeline tightened and we HAD to find a property. We ended up finding a place at the last minute that was even better than we had hoped! Thank you for making this an easy and fun experience!!
— JORDAN LEASURE, CHICAGO
Evan is a great guy, who always finds exactly what you are looking for in a house. He is very welcoming, and helps you understand the entire process. Evan is willing to work with you throughout the entire process, and do whatever it takes. He is always going to “battle” the problems that arise, rather than having you deal with them alone. I loved the fact that he was always available to me, no matter how many times I called him.
— BRAD EARNEST, ZION

Former clients review our services.

Evan Kane, Lead Real Estate Scientist
Member American Real Estate and Urban Economics Association
 
Professor Max Bazerman always starts the first day of his Harvard MBA class the same way.  He holds up a 20-dollar bill and offers it up for auction to the class.  He has two rules for this auction:
 
•  Rule number 1: bids must be made in $1 increments.
•  Rule number 2: the runner-up must honor their bid, meaning that, although the winner will take the 20-dollar bill, the second place finisher too must pay the last bid he or she made, but receive nothing in return.
 
What Professor Bazerman is doing here is teaching his Harvard MBA students how to negotiate.
“The pattern is always the same,” he explains.  “The bidding starts out fast and furious until it reaches the $12 to $16 range.”  This is the point when those with weaker wills start to drop out.  Meanwhile, like moths to a candle, the last two students get locked in.  One bidder has bid $16 and the other $17; the $16 bidder must now bid $18 or suffer a $16 dollar loss.  Neither student wants to be the fool who paid good money for nothing.
This is when students start to exhibit the same behavior as many people trying to buy or sell a home.  They become committed to a strategy that is not geared towards winning but rather towards trying not to lose.  In behavioral economics this is called ‘Loss Aversion’, which refers to the strong tendency of people to avoid loss rather than acquiring gain.  A very powerful motivational force, some studies have shown that the perception of loss is, psychologically, 50% more powerful than perceived gain.  Combine this loss aversion with cognitive dissonance – the tendency of people to reject evidence that is contradictory to a belief – and the effect on the bottom line can be devastatingly costly.
In Bazerman’s Harvard MBA class, students will continue bidding: $21, $22, $50, $100, up to a record of $204…  Indeed, in all the years Bazerman has been teaching, he has never lost a penny of that 20-dollar bill, but he does donate all the proceeds to charity.
Oh, that we all had attended Bazerman’s class on negotiating.  In real life, and specifically real estate, I have seen people waste thousands of dollars and incur incalculable anguish, frustration and heartache for fear of losing the best terms.  Sellers may reject multiple offers, or refuse to reduce their list price, all the while ignorant of the carrying costs of the property.  Buyers, on the other hand, might endure months of excruciating commutes or marital stress rather than pay a penny more than they think the property is worth.  Conversely, sellers might accept a lower offer than necessary and buyers might over-pay for a perceived dream house while ignoring alternative properties.
How can one avoid making costly, seemingly illogical decisions?  I recommend that, before entering in to any important negotiation like a real estate transaction, you should have a very clear idea of the costs – both financial and emotional – you will incur if you do not reach an agreement.  Professional negotiators call this your ‘Best Alternative To a Negotiated Agreement’ (BATNA).  By investing a small amount of time and energy in understanding your BATNA, you can better assess your reservation price or the point above or below which you will not go in a negotiation.
If Professor Bazerman’s students all took the time to understand their BATNA, the cost of that 20-dollar bill would never exceed a few dollars.   Similarly, albeit on a much grander scale, if you understand your BATNA in your next real estate transaction, you will avoid making decisions that are contrary to your long-term best interests.

But Miller is clear to point out that there is no apparent benefit of longer marketing periods in terms of achieving greater real selling price(2). What is most clear from all of the research is that list price, home atypicality, and the degree of over or under pricing are very important determinants of market time.
 
Talking Point: We’re #1
 
In a study looking at the effects of brokerage on residential home sales (Jud, Seaks, Winkler; 1996) found that within a multiple listing service no one group of agents or firms has an advantage over any other. Specifically the number of sales of the listing and selling agents had no statically significant influence on market time, nor did the number of sales of the listing and selling offices, nor did the franchise the broker belonged. Additionally, homes that sold within the same broker office did not sell any faster than homes listed and sold by different broker offices. A separate study (Jud and Winkler, 1994) shows that there are no differences among brokers in the sale price of homes within an MLS.
 
Talking Point: Offering a Bonus to Selling Agents Will Reduce Market Time
 
Perhaps the most naïve and damaging idea among uninformed agents is that offering a bonus to the selling agent is a way to reduce market time or increased sale price. An award winning study on the impact of agent bonuses (Johnson, Anderson and Benfield, 2004) showed conclusively that offering a bonus resulted in a lower sale price (decrease of 3.6%) and a longer time on the market (35 days)
 
Methodology of Price Analysis: EDA vs. CMA
 
Predicting the most likely sale price of a property can only come from analyzing the comparable market assets (property features) effect on observed transactions (sold properties). The most common and accepted method used by investment analysts, researchers, expert witnesses, and economists is Exploratory Data Analysis (EDA). EDA was developed by Princeton University professor John Tukey and was a groundbreaking approach to learning from data.
Working from an exploratory point of view and primarily using statistical regression analysis, the expert agent detects patterns and formalizes a hypothesis from the patterns of correlation discovered. Primary to this task is to explain variation in sale price between similar properties. To do this the expert agent considers quantitative (continuous numerical values) and categorical variables (groups an observation belongs) and then measures the effect of those variables on sale price. Once the effects of variables are know they can then be applied to the subject property. It should be pointed out that not all variation can be explained, some will be naturally random and other variation will be caused by (the not necessarily rational) human behavior of home buyers.

How to make decisions that are in your long-term
best interest.

“Rent to Own” is one of those catchall phrases that has no real meaning.  What people are referring to with the phrase is either an agreement to rent

with an option to purchase or rent with the right of first refusal.
Renting with an option to purchase means that at the end of the lease you will have the option to purchase the property, at terms agreed to at the beginning of the lease, before the property can be offered to any other buyer.  In this agreement both sides are hedging that the value of the property will have changed in their favor when the option is exercised.  A market where prices are likely to decline is beneficial for the seller, a market where prices are likely to increase would benefit the buyer.
Renting with a right of first refusal means that if during the term of the agreement the owner chooses to sell the property, the owner must present the terms of his choosing to you before any other buyers.
Typically, the renter pays a premium for an option or a right of first refusal.
Without a written agreement for an option or right of refusal “renting to own” is just renting.

Option to purchase? Right of first refusal?

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