Home Buying in 60654>Question Details

Nigel B, Home Buyer in Chicago, IL

About 33 W Ontario and Cash Offers on Foreclosures

Asked by Nigel B, Chicago, IL Wed Feb 18, 2009

H: I'm looking for three types of information. The first concerns the viability of buying a unit at 33 W Ontario in Chicago. The simple question is this - is it a good idea to purchase a unit in this building? I like the building, the location and the units in it. Assuming it's a good idea, what would be the price range I should expect to pay for a 2 BR, 2 BR on, say the 35th floor?

The second question involves making a cash offer on foreclosed units in this building. If, a foreclosed unit is listed at, say 410K, is it realistic to make the bank a CASH offer of 350K? How about a unit where the most recent comparable sale is 700K - is it realistic to make a cash offer of 600K or an offer with 30% down of 600K?

Finally, does anyone know what the average time on the market has been for 2 and 3 BR units in this building?

Thanks in advance for any information or advice.

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Answers

5
This building has had some foreclosures in it, but if you like the building, I dont see anything wrong with buying in there.
There is 11 2bed/2bths on the market ranging from 399K-549K. So thats what you can expect for an asking price.
As to a cash offer of 350K on a 410K, that doesnt sound bad to me. But ultimately its were ever you feel comfortable. The worst thing the bank can say is no. (and banks are looking for cash offers) I hope you the best of luck !

Matt Laricy
Americorp Real Estate
Brokers Associate
708-250-2696
mlamericorp@aol.com
1 vote Thank Flag Link Wed Feb 18, 2009
There are other concerns you should be having with regards to foreclosed or short sale units. It is becoming more common for the incoming buyer to have to pay off liens with regards to the condo association. While I also like the building, I disagree with some others comments. The fact there are and were a lot of distressed sales and continue to be, I would be cautious as this does have an impact on overall perception and values in the building. It is complex but the building could also be running way low or over budget due to the fact they are not receiving assessments on the units that are in foreclosure or being sold as a short sale. The long and short of it is do your due dilignece and proceed with educated caution. While we have had some challenges in the real estate market, the sky is not falling and some buildings and locations in the city are doing ok. Negativity sells and reality lasts. Do your homework, dot your I's and cross your T's and you should be ok. Cash is always king but I would also be looking into some sort of low interest rate while they are avaialbe and invest some money elsewhere. In the long run it is better as you will also have an additional investment and be able to right off interest.
0 votes Thank Flag Link Thu May 7, 2009
Hi Vacation,

Did you end up making an offer? What did you offer and how did it go?

Thanks,
George
0 votes Thank Flag Link Fri May 1, 2009
Hi Vacation:

Is it a good idea to buy in this building? That depends on what your concerns are.

Yes, at one time this building was among the top 3 buildings in terms of foreclosures and short sales (along with the Sterling and River City -- all Invsco projects), thanks to developer incentives-driven sales. Once the "paid taxes, assessments for one year!" offers expired and those ARMS adjusted... well, you get the idea.

This does not mean it's a bad building. It's a great location, and a handsome building, too.

12 months ago the stats were (keep in mind these are combined averages and do not take into account floor number, etc.)

2 beds: average list price: $400,467/ average sale price: $392,483/ average market time: 81
3 beds: average list price: $938,250/ average sale price: $854,417/ average market time: 132

but 6 months ago they were:

2 beds: average list price: $365,000/ average sale price: $365,000/ average market time: 65
3 beds: average list price: $774,900/ average sale price: $700,000/ average market time: 82

If your concern is that you will purchase and then have values decline even further, you're not alone. It's what is keeping many buyers on the fence. However, you will see the market times are relatively "short" compared to many other buildings. They DO sell because it is a great location and the units are nice. It depends on what your long-term goals are for the purchase.

As a side note: If you are looking for an investment, be sure to look into rent limitations. There may be a cap on % of units allow to rent, etc.

Good luck!
Patti
0 votes Thank Flag Link Fri Feb 27, 2009
Patti Pereyra, Real Estate Pro in Chicago, IL
MVP'08
Contact
Hey Vacation,

I cannot speak to the issue of opinion in reference about 33 W Ontario or average market times as I have no information on those subjects. However, the financing aspect I can address.

A cash offer always looks the most appealing of offering types. However, and as we all know, you should obtain financing IF... the key is IF, you can qualify for the financing that is relevant and needed. In terms of how low to offer, that depends. It depends upon the market time of the property, how the selling agent responds to your questions related to interest and activity relevant to that property, the investor's balance sheets and effective inventory of foreclosed properties, current foreclosure comps... and a list of other factors I won't bore our readers with. I will say this. If it were me, I would find 1 or 2 properties (to start) I was really interested in. I would pull title to verify lien amounts. I would have a good realtor with access to market data pull up VERY accurate and similar comps that are foreclosed (short sales are not within this topic of discussion so we'll keep this simple). This way, we have some leverage. First, we know approximate value with recent sales. I use the word approximate very loosely here. Secondly, we know the balance and types of liens. If there is a 2nd mortgage you can automatically discount it. The second lien holder will almost always take a complete loss.

So in your example of a sales price of $410, let's assume liens of $300k for the 1st mortgage and 110K for the 2nd. Let's say the market time is long - 270 days on the market with 2 price reductions (for example), the selling agent indicates there is very little interest/activity in the property, the bank foreclosing is Countrywide and we know they have a gazillion foreclosures on their books and finally, current comps are lower via what the realtor forwarded; $290K to be exact. Using cash, I may offer one of a few different ways: 1.) 80% of the 1st lien amount ($240K) ...OR 2.) a dollar amount between the comparable sale amount of $290K and the lien of $300K, somewhere in there. It would just depend on how the math works (we have the data, right?). In this scenario, 2 is more realistic as the bank may not take a 60K haircut regardless of other market variables. If financing, I would offer 95% of the first lien amount, or maybe 10% less than the lowest documented comparable sales, whichever is more realistic.

It really is a feel-type of exploration when determining how to offer. For the 700K comp scenario above - it is unlikely the bank would take 600K if the balance owed was that or more, the comparable sale for 700K is within 30 days, the unit is in superb condition, the market time is under 6 months... but, to be honest, I would offer a bit less than the balance owed on the first lien and see how the seller/REO bank responds. There are many variants to analyze and obstacles around which you will need to maneuver so the deal comes together. It takes a very experienced professional to help you navigate these markets and achieve the right outcome and investment. Hope this has provided some insight Vacation. We appreciate you as a consumer and customer alike and look forward to helping any way we can. Contact me if needed.
0 votes Thank Flag Link Wed Feb 18, 2009
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