Home Buying in Chicago>Question Details

Jamie, Home Buyer in Chicago, IL

Loft shopping in Chicago

Asked by Jamie, Chicago, IL Thu Feb 26, 2009

I've been looking for property in the city of Chicago. Should I be using the avg sq ft pricing provided on this site as a guideline when trying to figure out what a fair price is to offer on a loft? Or is there a rule of thumb that lofts fetch x% more per sq feet vs conventional condos/single family homes? Due to my budget, the areas in the city that I can afford don't have very many old loft conversions so I can't really go by the comps. It would be great if any local real estate agents could chime in. Thanks :)

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Wayne Beals’ answer
Jaime,

The best way to establish values for residential properties, cono, townhome, or single family is using relevant comparables from previous sales in the market area, and if available, the particular building, subdivision or block. Evidence of closed sales establish comparables from which a market price that a buyer is willing to pay can be determined.

An example of this would be a condo building with lake views on one elevation and city views on another. Almost without exception, a unit in a building with superior views will be more valuable to the available buyer population. The more recent the closed sale being considered as a comparable, the better. In the current market conditions, comparables closed with 3-6 months are considered reliable. You will need to adjust the value of a unit you are considering relative to the attributes of that unit (i.e. views, condition, upgrades, size, floorplan, etc.) vs. a closed sale. This is where the experience of a agent counts most for buyers today.

Investors will typically view value in terms of $/sq. ft. This makes the investment process more objective. Investors are constantly struggling to restrain subjective reactions to property from their decision making. For example, if you are looking to buy a commercial building, you are willing to pay a price per square foot based on the average rental income per square foot of that building. This is only one factor investors use in choosing between a twenty unit residential apartment building and a 32,000 sq. ft. retail-residential mixed use building, for example.

Sometimes you hear residential agents speak in terms of sq.ft. This is a very macro-economic view of the residential market. It helps our buyers determine the neighborhood they want to consider. For example, if your agent says that in South Loop, Condo prices range from $200-$380 sq.ft. Using this information, you know you need a minimum of 1500 sq. ft., and you have a budget of $300,000.00, you should also consider other areas. When I am listing a property, I can recommend a price to my seller that is much more specific, because the factors that affect a properties value are absolute.

Hope this helps.

Best of Luck and always willing to be of service.
0 votes Thank Flag Link Sun Mar 1, 2009
Adding to Scott's comments, measuring value/price by sq ft is not the best means to establish a fair price. It would not be entirely accurate unless all comparables utilized are absolutely accurate...which means either a survey, an appraisal has been provided, or you took the measurements yourself...for all comps. However, keep in mind The mathematics of value are not nearly as important as the feel of value when purchasing a primary residence. Of course, the opposite is true of investment purchase. So look at a ton and if it the comps and feel support the value, go with it.
0 votes Thank Flag Link Thu Feb 26, 2009
No offense to Trulia, but I would not use any stats from this website to purchase a home. They are just not that accurate. For price for square foot, you need a realtor to assist you for some building/area comparisons, but most important to know are recent sales in the building you are interested in. A special note about lofts (older ones): they are huge headaches since the building is very old. Water seeps in and there are a lot of issues which leads to special assessments. Next time you are driving, notice that scaffolding is on many of these lofts (usually situated in West Loop or on six corner intersections on the North Side).

I hope that helps! I love lofts and lived in one for five years (Regal Lofts on Diversey) but you have to be careful.
Web Reference: http://www.1sthomegroup.com
0 votes Thank Flag Link Thu Feb 26, 2009
It really depends on what part of the city you are looking in. Square foot prices are not always the best way to go. In order to answer your question I would have to know your budget. and timing. Since credit is tight I would also have to know how much you can afford to put down. Depending on the building you might be able to get an FHA loan, plus with the new programs and the $8,000 tax credit, you might be able to afford more than you think. If you think you would like to discuss this please let me know.
0 votes Thank Flag Link Thu Feb 26, 2009
There is no set formula to compare condos to lofts and in the end many buyers look at both so you can't ignore condos just because you're going for a loft specifically. If you want to figure out value you'll need to look at home sales for similar properties in the area in the last 3-6 months.

Sq ft can be misleading because the figure is calculated in many different ways and is often- literally- made up. Also keep in mind something with a great floor plan that effectively uses every inch to it's advantage will likely show better than something 100 Sq Ft bigger that doesn't.

If you need some help running detailed figured I'm happy to help.
0 votes Thank Flag Link Thu Feb 26, 2009
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