Home Selling in Lincoln Park>Question Details

444wfullerton, Both Buyer and Seller in Lincoln Park, Chicago,...

Sell now at a loss, and purchase to get a good value, or hold on and wait for values to rise?

Asked by 444wfullerton, Lincoln Park, Chicago, IL Thu Aug 12, 2010

We purchased a high rise condo in Lincoln Park in 2006 for 225k. We recently had an appraisal (because we are refinancing) the appraisal was 210k. We completely remodeled the kitchen (20k spent). Our assesments are unfortunately getting very high (almost $500 dollars).

My question is, how do we know when a good time to sell is? Is it better to take a loss now and purchase a place at a great value and much lower assesments, or is it better to hold off, continue to pay the high assesments and wait for home values to go up? Should we wait until we can sell our place for around 250k to cover our upgrades and seller's commision?

When we sell this will be our first time, so looking for some general advice as well.

Thanks!

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444,

The bulk of previous answers have been accurate and provided good advice. One thing to consider is that in your building now there is one short sale one bed under contract (it was listed at $185k) and two other one beds actively listed for $193k and $220k. I mention this because it is important to be sensitive to your competition. You are cognizant that if you sell now you will take a loss. I perceive the crux of your question to be whether you will offset this loss with any gains you achieve in a purchase.

Without hesitation I suggest that your gains by purchasing now, whether in Lincoln Park or Lakeview, will more than offset your losses. Since 2008 I have had a number of clients in the situation you describe yourself to be in who sold the homes they had purchased just a few years earlier in order to "buy up." The purchase levels ranged from the mid 500s to more than treble that and in each instance my clients were more than satisfied that the equation came out in their favor.

Of course your circumstances are your own. To engage in the next purchase you will need a downpayment. In speaking with a lender to determine the amount you will need you may determine if you have the wherewithal to qualify for a loan, in what amount and at what rate. As several earlier commenters have made reference, rates today are preposterously low. This, along with buyer-oriented pricing, makes today's buy market extremely attractive and may tip your scales in favor of making a switch.

One other thing - your building tends to have multiple units available at any given time. I don't think 444 will experience any significant notching up with the passing of one or three years. The building likely will stay flat, disallowing any capricious gain on your part.

Any questions, don't hesitate to reach out to me. My contact information is available via my profile.

Best regards,

Tom McCarey
Expertise in Negotiation, Luxury Home Marketing and Buyers' Representation
The Real Estate Lounge Chicago with @properties

Zillow has named my blog one of Chicago's Best! Find Out Why!
1 vote Thank Flag Link Thu Aug 12, 2010
I think the benefit of selling now outweighs waiting it out. Has the assessment increased significantly every year? If you consider this transaction as an upgrade then it’s definitely an opportune time to buy since you’ll get a better price with larger homes with lower assessments.

Mike Yun, Broker
Jameson Real Estate
(414) 526-8998
0 votes Thank Flag Link Mon Aug 23, 2010
It's really a question of your need to move and your available downpayment (assuming you are buying again.) If you are planning to upgrade, you may be able to offset a loss on your current condo by buying right. Challenge is that to buy, you need a downpayment. Assuming you have that downpayment, I would start shopping what you want to buy and consider the two transactions as a net net result. We all expect the real estate market to eventually rebound -- but, when? Interest rates are amazing. 444 fullerton is a marketable building. If you are at a point where you need more space (or getting there), it may be time to make a commitment to selling and lock into a longer term mortgage on a new place and take advantage of the buyers market. I do a lot of business in your area and can assist you. My office is nearby. Please contact me to set up a meeting time. SK
0 votes Thank Flag Link Tue Aug 17, 2010
Lots of good advice here for you. My only comment is to reiterate what several others have said:
1. Don't be waiting for prices to go up as a trigger for your sale. Most of us think that will be a very long wait.
2. Make a decision based on what is best for you financially and in terms of what you want/need for housing.
3. There are great values in all markets and price points. Look at your home as more than an investment. It is a vehicle that will change in value and use over time, and you should stay focused on what it can bring to you in the next move, not just what the profit/loss will be at the point of sale.

Dave
0 votes Thank Flag Link Tue Aug 17, 2010
Hi 444wfullerton,
You know you are not alone, many homeowners who have bought within the last 4 years or so, bought at the
top of the market, and we are currently in a buyers market, i.e. there are many more properties on the market than there are ready and willing, and approved buyers, therefore prices come down and your condo will only be worth what a ready and willing buyer wants to pay for it, but more so the buyers can cherry pick from all that is out there.

You should of course sit together with a Realtor/lender and look at your finances and consider all your options

But if you intend to sell because you want or need a larger place, this is the right time to sell.....
as you will make up any loss on your current property by buying a larger more expensive property, if on the other hand you are just looking to buy a similar property in Lincoln Park again, and just want to save on the assessments, then may be not...

But I am not familiar enough with your plans, your family, your home needs and you finances, so a bit hard
to make good solid recommendations... The only thing that I can say is that waiting for prices to go up will take a while, my feeling is that the market will stay flat for a while, and the economy and jobs need to change before pricing will go up... plus we still have foreclosures and short sales!!!! so in your case you need to ask yourself what your plans are for the next 5 years
It may take a while before you can get more for your condo, and the fact that it appraised at 210 K may not bring you that from a buyer!!!!

I hope this helps you a bit, if you want to have more input, let us know what your general plans are and where you would move to, single fam. home in the subs? highrise low rise mid rise, townhome???

Good Luck to you!
Edith YouRealtor4Life
Your Chicago and Northshore Expert
0 votes Thank Flag Link Thu Aug 12, 2010
Whether it is best to sell and buy is a totally subjective question.

Depending on how your finances stand, it may be financially better for you to sell now and purchase (as you say) a new, larger home at a lower price due to the market.

If, based on your recent appraisal, the value of your current home is 16% less than it was when you purchased it at the height/near the height of the market (not considering upgrades - as the cost of upgrades is often not recoverable), it only follows (broadly but logically) that you will be saving more on a larger, more expensive home than you will be losing on your current one. Definitely something to consider.

Can you afford to come to the closing table with cash to cover your loan, if necessary?
If you have to do so, will you have sufficient cash for a downpayment on a new home after doing so?

There are also more personal considerations - like whether your family has outgrown the current home, how much stress a sell/buy will put on you all, how secure you feel in your employment, and whether you like your current home and enjoy living there. And on and on . . . .

The best bet for you is to find an excellent, experienced real estate expert to assist you in carefully and closely evaluating the value of your current home and to help you formulate an ideal plan for selling your condo and buying a new home (he or she will also work with you to adjust your ideal plan for the realities of the current market as needed). A good, professional, ethical agent will not push you to sell and buy - but will help you to get all of the information you need to make a good decision for yourselves.
Web Reference: http://www.dreamtown.com
0 votes Thank Flag Link Thu Aug 12, 2010
The Wall Street Journal article is at the following link:

http://online.wsj.com/article/SB1000142405274870442130457538…

I'll post it to my LinkedIn account as well.
0 votes Thank Flag Link Thu Aug 12, 2010
You and lots of other people are asking the same questions. Lincoln Park has not been hit as bad as other neighborhoods, but it clearly has been hit. You need to crunch some numbers. Can you afford to take the loss and still have the $$$ to buy something else? If you buy now the prices you get should be better than if you wait 2-4 years and interest rates will likely be lower. If you wait you will be paying a higher price with a higher interest rate, but you will also have more money to spend by getting a higher price for what you currently have.
I have come across people doing both.....taking the loss to move on and others waiting for the market to change. 444 Fullerton has always had a higher assessment than many of the other buildings in that area. In order to go from 210K to 255K you need an average price appreciation of 5% for each of the next 4 years. The odds of that happening from the way the market looks now is slim to none. You might need to be there 5+ years to get to 250K...........but who really knows..............

philip
0 votes Thank Flag Link Thu Aug 12, 2010
This is a question I am being asked with increasing frequency lately. Unfortunately, there is no one answer. To make these decisions you will need to consider a reasonable expected selling price for your current home, your ability to pay any shortfall that you might have when selling, your needs in a new home, how long you might live there and the price of upgrading. Home affordability is at or near all time highs which can make upgrading an attractive proposition. Again, this should be considered according to your interests and not based on any formula. Consulting a REALTOR, your financial advisor and a mortgage lender would be a good place to start. There was a good article in the Wall Street Journal recently that might be of help, I'll post a link to is shortly.
Web Reference: http://www.bengagliardi.com
0 votes Thank Flag Link Thu Aug 12, 2010
Our appraisal was done about 2 weeks ago.
0 votes Thank Flag Link Thu Aug 12, 2010
FIrst off, if this is your first time selling, you should go out and get a good agent to help you sell your property. Interview two or three agents. Have a list of questions for them, and see what they can do to help sell your place.

As to what you should do. Well it depends on how much time you have. Prices are still in a free fall. Whats under priced today is overpriced tomorrow. Sales are definitley up, but prices are down. If anyone tells you that prices are on the upswing, they are lying to you, or they dont know what they are talking about. You probably wont see a rise in prices for at least 5 years. So if you sell now, yes you will take a loss. But think of the place you will be able to buy that you couldnt maybe of afforded before.

If you have any other questions, feel free to ask me.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
708-250-2696
mlaricy@americorpre.com
0 votes Thank Flag Link Thu Aug 12, 2010
If you can sell at a loss and still have the funds to buy next, that is the way to go. Interest rates are at an all time low so you will save 1000's on your loan costs over the length of the mortgage. Rates are likely to go up when home prices go up! 1% on a 300K loan for a 30 yr fixed is close to 100K...

Home prices have started to stabilize, and now with lowest prices and rates, it is the best time to buy!

free cma by email from Hyblhometeam@gmail.com
0 votes Thank Flag Link Thu Aug 12, 2010
If you wait out the market, you will probably be waiting at least 3-5 years. As you have probably heard, now is not a great time to sell, but you can also get a great deal on another place. It can almost become a wash. How recent was your appraisal?
0 votes Thank Flag Link Thu Aug 12, 2010
It's always a good time to sell when you need and want to sell--and a decision only you can make based on your finances, wants, needs, lifestyle, etc. Unfortunately none of us can answer with accuracy as to where the market will lead tomorrow or down the road, as none of us really knows--we all know today.
0 votes Thank Flag Link Thu Aug 12, 2010
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