Death and Taxes - The Blog

Researching "This Old House" in Cook County

When my wife and I bought our current home, we were told that it was built in 1906.  That made me curious about (1) whether this was indeed true and (2) the previous owners of our house.  So, I made a trip to the Cook County Recorder's office yesterday to see what I could discover. 

The Recorder's office is located in Room 120 of the City Hall - County Building at 118 North Clark Street (here's a map). 

If you are planning on doing this type of research, you should bring along a deed for the property you are researching, including the PIN (Permanent Index Number) and the legal description.

You'll need to go through Room 120 and down the stairs to the basement.  There you can ask an employee to help you find the book where records for your property are located.  Books are arranged by information included in the legal description.  My home is located in "Section 18, Township 39 north, Range 13 east," so I was pointed to one of the books labeled 18-39-13.  There I found two pages containing a list of all of the recorded documents for my home since it was built in 1906 (ending in 1985 -- all documents after this date are available online here).  Some of these documents (especially those related to mortgages) aren't really important to me, but I am interested in the deeds by which previous owners bought and sold the property. 

There is a document number next to each document, which you can copy down and take to the microfilm library down the hall.  (For some older documents an employee will need to help you by converting the old numbers to microfilm numbers.)  You can then get the microfilm and a viewer, and print out the documents you want.

Happy hunting!

A List of Oak Park-owned Real Estate

In Part 1 of my two-part article on "Oak Park's Kelo Problem," I noted that "[t]he village of Oak Park owns a LOT of real estate, and its portfolio continues to grow."  How much real estate are we talking about?  The Wednesday Journal recently published a list of Village-owned properties:

1125-1133 Lake St. (the Colt Building)

1145 Westgate (office building)

1113 Lake St. (Los Cazadores restaurant)

1121-1123 Lake St. (retail building)

1112-1118 Westgate (office/retail building)

2-10 Chicago Ave. (mixed-use building)

2 North Boulevard (parking lot)

708 Lake St. (Tasty Dog restaurant)

130 N. Marion St. (former Sawyer Business College)

301 S. Oak Park Ave. (empty lot)

710-24 Madison St. (empty lots (3))

250-60 Madison St. (former Shepherd Volvo)

239-45 Madison St.

301-07 Madison St.

826-28 S. Oak Park Ave. (empty building)

The same issue lists tax revenues from twenty new construction projects undertaken in Oak Park since 2000.  The tax revenues from these projects? $4,131,914.  I wonder how much tax revenue the fifteen village-owned properties would generate if they were privately owned?

Zillow 2.0

This weekend's Chicago Tribune reported (here - registration may be required) on some exciting new changes to the Zillow website.  You can now:

1. List your home for sale, either by owner or with the assistance of a realtor.  If you are selling by owner, you can also consult the site's Real Estate Wiki; or

2. If you're not sure you want to sell but want to test the waters, set a "Make Me Move" price for your home (i.e. the price at which you would be willing to sell).

Buyers can also now perform searches of homes that are for sale or for which the owners have established a "Make Me Move" price.

Previous changes to the site allow owners to "claim" their home and create a more accurate estimate of its value by adding more accurate information about amenities and repairs.

Fun stuff, to be sure.  But the question is, will sellers and buyers really come to Zillow to transact business? 

A Real Estate Sale in Brentwood

I've written previously (here and here) about the possibility that former homes of the famous and infamous could garner increased interest (and price tags) when their owners go to sell.  But if the home was the site of an actual murder, there's always the chance that the value will decrease because of the "creep out" factor.  Defamer handles this issue in its own irreverent way, here.

Commissions in a Slow Real Estate Market

I've been trying to figure out what bothers me about this Bob Bruss column, in which he suggests (to a person trying to sell his house in a buyer's market) "increasing the sales commission to 7 percent with 4 percent going to the buyer's agent who produces an acceptable buyer."

There's always a conflict of interest involved with real estate brokers, especially with respect to buyer's agents.  A buyer's agent gets paid if (and only if) his or her client buys, and the amount of the agent's commission is dependent upon the price of the real estate purchased.  What if the buyer's agent pressures the buyer into purchasing a house the buyer doesn't really want (or a particularly high-priced house), simply because of the commission the agent will receive?

A similar problem exists if you increase the commission going to the buyer's agent.  (Mr. Bruss even suggests more direct -- or, if you prefer, more vulgar -- ways of appealing to buyer's agents. These include "offering buyer's agents incentives such as the home seller's car, a Hawaiian vacation, and various other special incentives to get a property sold.")

Mr. Bruss wouldn't consider offering these types of incentives unless he felt that buyer's agents can successfully persuade their clients to purchase house A instead of house B.  But what if house A and house B are identical in all respects other than the commission to be received by the buyer's agent?  Or, what if house B is actually a much nicer house than house A, but offers a lower commission?

By increasing the buyer's agent's commission, what you are really doing is hoping that some buyer's agent will behave unethically in steering his or her clients your way.  Isn't this just a bribe by another name? Is the real estate market so slow that it's really come to that? 

Real Estate Attorney's Fees

I'm a member of a transactional law e-mail group that is a part of ISBA (the Illinois State Bar Association).   Every few months or so, there is a round-robin discussion of attorney's fees among the group's residential real estate attorneys.  The general point tends to be that real estate attorneys feel like it's difficult to make a living doing this type of work because of the constant price pressure, which stems from two things:

-the presence of real estate attorneys who offer to handle closings at rock-bottom prices (like $200).  Presumably these attorneys are using non-attorneys to do most of their work (preparing documents, clearing title, etc.); and

-the influence of realtors, who may tell their clients that they shouldn't pay more than a minimal amount for a real estate attorney.

Illinois attorney TJ Thurston offers his take on the issue here.  I mostly agree with Mr. Thurston's assessment, with two exceptions:

1. Mr. Thurston states the following:

I have nothing against paralegals and secretaries performing the clerical and non-legal tasks in a transaction (such as calling the county assessor to determine if there are outstanding taxes due on the property). I DO have a problem with attorneys that allow paralegals or secretaries to perform the unauthorized practice of law (UPL), which is both illegal and an ethical violation.

The problem is that attorneys alone are in charge of deciding what constitutes UPL, and attorneys have abused this power in the past.  Does a given type of work appear lucrative and challenging?  It's deemed "legal work."  Is a given type of work mind-numbingly boring?  Sounds like something a secretary can do.

There's legal ethics (as defined by the Illinois Rules of Professional Conduct) and there's real world ethics.  Having a non-attorney perform legal work may be a problem from a legal ethics perspective, but from a real world ethics perspective, the more important issues are (a) does the person I hire know how to do this job, (b) am I aware of this person's qualifications, and (c) is this person charging a fair price for this work.  There are plenty of non-lawyers who have the competence to handle the legal work involved in real estate transactions, and there are plenty of lawyers who are not competent to perform this work.

2. Mr. Thurston also suggests that there is an insurance element to hiring (and compensating well) a real estate attorney:

Sure, you may be saving some money [if you hire a low-cost attorney], but you are running the risk of serious mistakes; mistakes that might cost you thousands of dollars. If the transaction goes bad, what are you going to do?

That may be the case, but where are the figures to back it up?  How often does a real estate deal go bad?  Is the rate 1 in 2? 1 in 50? 1 in 100? 1 in 1,000?  My sense is that real estate attorney's fees are where they are because the market/public has assessed the risk of a deal gone bad, and found that it isn't significant.

On a personal note, my experience has been this: I liked doing real estate transactions, and thought I did a good job (I did all of my own work, and was constantly available to my clients by phone and e-mail).  My experience is that most realtors are overpaid and most attorneys are underpaid.  The market doesn't agree with my experience, and votes with its collective wallet.  I therefore found it difficult to make money as a real estate attorney, and as a result have pretty much stopped practicing in this area of law.

Update #2: Oak Park

I recently did a two-part post on Oak Park's Kelo problem (post #1 and post #2).  Part of the problem involves the "vision thing" that all Oak Parkers are seemingly born with -- or acquire when they move here.  Everyone seems to have an opinion about what businesses should and shouldn't be here.  For example, in this week's Wednesday Journal, we have...

1. Dennis Murphy's vision of Oak Park, online here.  (Mr. Murphy owns the popular Poor Phil's restaurant -- try the oysters.)

2. Features Editor Ken Trainor's vision of Oak Park, as set forth in his article (here) entitled "Why doesn't Oak Park actively recruit interesting retail?"  Mr. Trainor's article makes little sense to me.  He begins by complaining about empty storefronts, which I understand -- there are so many in Oak Park that an artistically-inclined friend of mine wants to make a poster (similar to those "Doors of Ireland" ones) showing "Vacant Storefronts of Oak Park."  But Mr. Trainor then goes on to say:

Just around the corner, through the Metra overpass, Bill Sullivan has opened a real estate/legal office, filling one of the more prominent storefronts on the Marion Street mall. Bill's a terrific guy and community pillar. His business is an excellent addition to the downtown Oak Park mix, but should it be taking up a prominent ground-floor storefront? Seems to me that should be reserved for retail.

This is Oak Park's problem in a nutshell.  Mr. Sullivan -- an acquaintance who used to have his office next to mine -- takes a chance on downtown Oak Park, purchasing and moving into a prominent storefront.  The thanks he gets? Being told that he shouldn't be there.  Welcome to Oak Park, Bill.

Interestingly enough, The Wednesday Journal's offices are on an underdeveloped street in Oak Park, one that could be turned into a promising retail area.  Maybe if enough of us tell the Journal we don't want them there, they'll leave and a Restoration Hardware will move in!  What's that? You don't want a Restoration Hardware?  Well, I do, so there.

Realtors and Oak Park's "For Sale" Sign Ban

In the past, I've blogged about Oak Park's ban on "for sale" signs (here). 

I've recently spoken with two Oak Park realtors about the ban.  Both of them informed me that the realtor community in Oak Park works very hard to made sure that the ban is kept in effect.  One local realtor told me last week that, when she started working in Oak Park, she had a client (seller) who wished to display a "for sale" sign.  She was told by another realtor that she shouldn't allow such a display, because it would give her a bad reputation in the community, and other realtors might not want to work with her.  As a result, the realtor convinced her client not to display a "for sale" sign.

I find the above very troubling.  One of the reasons why the ban is still in effect, even though clearly unconstitutional, is because the individuals most active in selling Oak Park real estate have a vested interested in retaining it.  A "for sale" sign is one cheap method of advertising real estate for sale that doesn't require the services of a realtor.  If you eliminate the ability to display a "for sale" sign, you are making it more difficult to be a FSBO ("For Sale By Owner") seller.  That means more business for the realtors, and no incentive to push for a ban, even though it seems like "for sale" signs = more potential buyers becoming aware that a given property is for sale = a net plus for sellers of Oak Park real estate.

Oak Park's Kelo Problem, Part 2

Last week I talked about Oak Park's Kelo problem.  You may say to yourself, "I understand that Oak Park likes to restrict the ability of owners of real estate to use their property, but so what?"  To my mind, there are two negative consequences to Oak Park residents:

1. Businesses have started to leave Oak Park for other localities that are more business-friendly.  If you're looking for proof of this fact, look no further than Madison Street.  If you drive through Oak Park on this street (going West from Austin to Harlem) you'll see a pretty blighted area.  But if you continue West on Madison into Forest Park, things change -- you'll see a vibrant area full of funky shops, nice restaurants, etc.  Businesses have lots of choices in where to locate -- why put up with the hassles of Oak Park when you can go to a nearby village that actually wants to help you succeed?

2. Real estate taxes in Oak Park have skyrocketed, making it hard for some residents to continue living here.  I spoke last week about the real estate owned by the village (and therefore not on the tax rolls).  This fact -- along with rampant government spending -- has created a totally expected result: skyrocketing real estate taxes.  My real estate taxes went up "only" 10%, but other residents report increases of 40% or 50%.  Or even more -- here are the property tax numbers for an Oak Park property my client sold on Thursday:

2005, 1st installment: $563.91
2005, 2nd installment: $1,976.26

In Cook County, the 1st installment always equals 1/2 of the previous year's taxes, so we know that the 2004 taxes for this property were $1,127.82.  That makes for an increase of more than 225%(!) from 2004 to 2005.  Yikes!

Oak Park has always prided itself on its (ethnic) diversity, but the net effect of its restrictions on property will quite obviously lead to a reduction in the village's (economic) diversity.  And, as this editorial makes it clear, Oak Parkers have no one but themselves to blame for this predicament.

Oak Park's Kelo Problem, Part 1

Oak Park, Illinois, where I live, has had what I call a "Kelo" problem for quite some time.  And now its residents are finally being forced to come to grips with it.

What's a "Kelo" problem?  The name comes from the (in)famous U.S. Supreme Court opinion in Kelo v. City of New London (125 S. Ct. 2655 (2005)).  Kelo involved an attempt by the city of New London, Connecticut to condemn ("take") privately owned real estate so that the property could be redeveloped.  The Supreme Court ruled -- to the dismay of lots of people -- that New London's actions did not violate the Fifth Amendment to the Constitution, which states in relevant part that private property shall not "be taken for public use, without just compensation."  The question in Kelo was whether the planned development of the property -- to create things like a resort hotel, conference center, office space, and residences -- really was for public (as opposed to private) use.

The Supreme Court's decision in Kelo -- that the development was for public use -- strikes me as wrongheaded on a number of levels, but I'm more interested in (and troubled by) Kelo as an example of the overexaggerated role of government in the development of real estate.  The idea behind New London's actions in the Kelo case is that government should be actively controlling and planning the usage of the property within its boundaries.  This is certainly a belief shared by the village of Oak Park -- and many of residents.  Consider the following:

1. Oak Park's village code attempts to ban "for sale" signs from appearing on private property.  I say "attempts" because, as I discussed here, this provision is clearly unconstitutional.  That being said, the provision is still on the books and (more importantly) still adhered to by Oak Park residents and realtors -- there are no "for sale" signs on private property in Oak Park.

2. Oak Park recently banned smoking in all restaurants.

3. The village of Oak Park often seeks to control which businesses come in to Oak Park.  The most recent example involved Oak Park telling Lane Bryant that it is a "niche" business, one that doesn't fit the "kind and quality" of shops desired for the building it wanted to occupy.  This story was picked up nationally and proved quite embarrassing, as some folks saw it as evidence that Oak Park hates fat people (see this blog, for instance). 

4. The village of Oak Park owns a LOT of real estate, and its portfolio continues to grow.  The village has just purchased the Colt Building at 1125-33 Lake Street, and may also purchase the building at 1145 Westgate.  The price tag?  Just under $5 million for the Colt Building alone.  The reason given by the village for the purchases?  According to its press release (pdf here), the purchases "could mean more flexibility in determining how downtown will look in the future."

5. The village appears to use its zoning powers as a sword rather as a shield.  Consider this language from the village's website on planned developments:

A Planned Development (PD) is a special process for approval of larger developments within the Village. An applicant for a PD typically is seeking relief from some aspect of the Zoning Ordinance such as height or set back requirements. The applicant must demonstrate that the Village will receive compensating benefits in return for zoning relief.

(Emphasis in the original)