You’ll Never Believe What the Old Town $500,000 Bidding War House Sold For: 315 W. Eugenie
We last chattered about this 3-bedroom historic farmhouse at 315 W. Eugenie in the Old Town Triangle Landmark District in June 2013.
See our prior chatter here.
If you recall, it was listed at $500,000 and bids were due within 72 hours.
We debated the strategy of listing it for a low price and whether or not the bidding war would result in the highest price – or if money was going to be left on the table.
Many of us thought it would sell for over $700,000.
The sale just closed for (drumroll please)…$675,000.
Remember, the house was built in 1897 on a 24×120 lot.
It is one of the rare Old Town lots that actually has a 2-car garage.
The house still had the original windows, hardwood floors and trim.
It had an unfinished basement with just 6 foot ceilings.
It was marketed as a fixer. The listing said buyers should bring their contractor.
Back in 2009, it was listed for $1.05 million and didn’t sell.
Are you surprised by the sales price?
Are bidding wars the best way to get maximum returns out of a property?
Burt Fujishima at Coldwell Banker had the listing. You can still see the pictures here.
315 W. Eugenie: 3 bedrooms, 2 baths, 2200 square feet, 2 car garage
- Last sold before 1987
- Originally listed in 2008-2009
- Was listed in 2009 for $1.05 million
- Withdrawn
- Was listed in June 2013 for $500,000
- Best and highest offer due by 12 pm on June 12, 2013
- Sold on July 15, 2013 for $675,000
- Taxes of $13766
- Space Pak
- Bedroom #1: 16×12 (second floor)
- Bedroom #2: 14×12 (second floor)
- Bedroom #3: 18×7 (main floor)
If you want to have an auction then have an auction but don’t play this dangerous game. It’s better if everyone can see the current bid and there’s enough time to react. That’s how you get the highest price, not with this approach.
So you think they could have gotten even more than 675k, Gary?
As a resident of old town (south of North, however), I wanted this thing to go for big money. I think the realities surrounding the contraints of rehabbing it due to the Old Town Triange rules severely limit the potential of the house, and increase the cost. Still $675K sounds silly low to me.
If the rehabbing rules weren’t as stringent, it would have sold for much much more. $675,000 still is a lot of money for people who will also need to do a ~$500,000 renovation project in addition to that, especially with increasing interest rates.
“need to do a ~$500,000 renovation project ”
What do we think this place would be like after $500k, in compliance with OTT limitations? I don’t think that $500k of reno gets you a $2m result.
How much would this sell for if it were move in ready with central ac installed and the usual suspects or dark hardwood, Viking, granite etc? Considering the lot is on the small side and the basement is useless at 6ft tall what’s the discount from a generic SFH and the premium over a town house?
“If you want to have an auction then have an auction but don’t play this dangerous game. It’s better if everyone can see the current bid and there’s enough time to react.”
“That’s how you get the highest price, not with this approach.”
Gary, you have absolutely no idea what you are saying. Sealed bid auctions are one of the most common, if not THE most common, forms of auctions for a reason. When you are dealing with what we would all agree is an emotional investment, in an auction process (which is in itself emotional), it forces you to underestimate your chances of winning (particularly in an upmarket where you have been repeatedly outbid on prior homes), and under these conditions it has been proven that buyers usually submit bids much higher than optimal.
Auctions are actually a truly complex form of game theory with surprisingly complicated mathematics involved. Interesting stuff.. you should learn about it.
“How much would this sell for if it were move in ready with central ac installed and the usual suspects or dark hardwood, Viking, granite etc? Considering the lot is on the small side and the basement is useless at 6ft tall what’s the discount from a generic SFH and the premium over a town house?”
I can’t imagine putting in ~$200k to update all mechanicals and put in kitchen/baths/other finishes appropriate for a $1m house without also blowing out the 100+ yo foundation (frame house, so you can lift it and replace the whole foundation), so you’d at least have a full-height basement, too, for the $300k+ into it. And then I think you’d have a ~$1.3m house.
Gary is right. He has represented me on a number of offers where the homes were priced ridiculously low in order to cause bidding wars. I bid WAY over list on all of them but lost out to cash bidders. I’m surprised to see these homes end up closing at list or just slightly above list.
In one instance, the seller accepted my offer and the listing agent was on her way to meet him to sign the contract. While she was en route a lower cash offer came in so I lost out again.
I’m assuming the cash offers are from people with personal lines of credit or are developers with access to other financing. It’s a little tough to come up with $675,000 in cash and then also do the redevelopment. My $500,000 figure is the minimum I thought you could do it for. Obviously could spend a lot more especially if you are raising the basement so the ceiling is higher. Not sure OTT would allow that though. Maybe you could just dig further down like they are doing in London quite a bit these days.
“Obviously could spend a lot more especially if you are raising the basement so the ceiling is higher. Not sure OTT would allow that though. ”
Defintely dig down; could *not* raise the house and stay in compliance. But given the age of the building, and the need to excavate 2+ feet, you’d want/need to replace the foundation walls, too, so, ‘lift’ the house and repour.
And I know you were using $500k as a baseline, but I’m still curious what you think the end result would be ‘worth’ if you spent ‘only’ $500k on reno. I think you have a *maybe* $1.5m house, if you do it perfectly.
ps: If you spent $500k and kept a 6′ height basement, and are complying with the “no changes visible from the street” what the hell are you doing to the place? And who’s the target for the $1.5m house with a musty, over-sized, leaky crawlspace?
“That’s how you get the highest price, not with this approach.”
“Gary, you have absolutely no idea what you are saying. Sealed bid auctions are one of the most common, if not THE most common, forms of auctions for a reason.”
I guess no one believes in revenue equivalence.
“I guess no one believes in revenue equivalence.”
As I suggested.. surprisingly complicated field of game theory/mathematics
” I bid WAY over list on all of them”
That sounds as if you are contradicting yourself, Milk.
Can you please ‘splain, Ze?
I offered more than the cash buyers in every instance.
“Defintely dig down; could *not* raise the house and stay in compliance. But given the age of the building, and the need to excavate 2+ feet, you’d want/need to replace the foundation walls, too, so, ‘lift’ the house and repour. And I know you were using $500k as a baseline, but I’m still curious what you think the end result would be ‘worth’ if you spent ‘only’ $500k on reno. I think you have a *maybe* $1.5m house, if you do it perfectly.”
You could spend quite a bit just on the basement alone when you dig down. I think you could get to a $1.6M place easily if the basement is done really well and there is a very nice kitchen and everything is updated nicely throughout. I’m sure there are some things that need to be updated that are not easily visible from the walls. I would wonder about the plumbing and electrical, lighting, roof, floors, ventilation, etc.
“Can you please ‘splain, Ze?
I offered more than the cash buyers in every instance.”
If I understood correctly… Gary stated that this type of single-bid closed auction would not result in bids as high as if the auction were a typical Sotheby’s style English auction. I stated that this is incorrect. You went ahead and confirmed that you bid way over ask, which confirms that people bid over ask. To what extent, and to what relation to an English auction, this provides no information but it does prove people will bid pretty damn well in a closed auction. I can not say one form over the other (as that would be impossible to do anyway), but it does illustrate the fact that the psychology of the bidding process, in a closed bid auction, does force people to make significant (or in your words “WAY over”) bids.
The quality, or type of bid (cash) is irrelevant to the argument of what the bid is as Garys statement was simply that a single bid closed auction process would not provide one with as high a bid as a “typical” auction process.
In reality the “typical” auction process is probably much more rarely used in the real world THAN the closed single bid process.
Personally, I have always found it much more difficult to bid into a single bid closed auction process because it leaves you bereft of information. For me being able to see quantity of bidders and their movements as price moves provides invaluable information which I am not privileged to in the single bid closed auction. The later forces my emotions, and forces my best bid up front, a bid that may be higher than we would ever have gotten near in an English auction. the former I have never had control issues with. The Dutch style auction, which is actually identical to the closed bid in it’s theory, actually makes me nuttier than all of them. Although that’s just me. Once again, no one can say one form is better than the other. It is impossible to do that, and if it were, there would only be that type of auction as it is clearly better.
In summation.. in a subject matter that has been very intensely scrutinized, whether you like him or not, Gary is talking out his ass.
“I’m sure there are some things that need to be updated that are not easily visible from the walls. I would wonder about the plumbing and electrical, lighting, roof, floors, ventilation, etc.”
I’m assuming all plumbing and all electric (including at least re-wiring of any fixtures) need to be replaced, and that for a $1.5m home, all hvac as well. And complete rebuilds of the windows (replacement possible on non-street sides), full-strip and re-shingle of roof (with probable partial to full replacement of underlayment), probable sistering (possible replacement) of at least some floor joists.
All done in the context of a preservation-oriented renovation.
“The Dutch … actually make me nuttier than all of them.”
Ho Le Fuk … you’re Sir Nigel Powers!
“Once again, no one can say one form is better than the other.”
I thought you kinda did: ” Sealed bid auctions are one of the most common, if not THE most common, forms of auctions for a reason.”
I guess I was thinking more along the lines of one of Gary’s previous comments that listing agents are pricing homes too low in order to incite bidding wars and that they should just price them in line with comps to begin with. Also, it’s so frustrating to constantly lose out to the all cash offers. If the sellers could be just a little bit patient, they’d make out better in the end.
“I guess I was thinking more along the lines of one of Gary’s previous comments that listing agents are pricing homes too low in order to incite bidding wars and that they should just price them in line with comps to begin with. Also, it’s so frustrating to constantly lose out to the all cash offers. If the sellers could be just a little bit patient, they’d make out better in the end.”
I totally agree on the all-cash offers – it makes little sense unless the seller thinks the property won’t appraise or there are significant problems with the property that a bank won’t lend on it. You can close on an all cash offer quicker, but a mortage can be closed within 30 days. We lost out on one place , and it ended up being lower than our offer, but our realtor found out the other potential buyer actually got a mortgage and didn’t go all cash. No idea how that was allowed, but we are happy in the end we didn’t get that property because it needed a lot of work. Milkster, how much earnest money were you offering? I’ve heard if you do 10% earnest money in your offer, it will look quite a bit stronger to the seller and it will be compared more favorably to an all cash offer.
I don’t know that any amount of permitted renovations would result in a $1.5mm home. Its basically 2 stories above grade with a sloped attic area. You could dormer half of the attic (the back half so its not visible from the street). A completely renovated place (2 stories + large usable attic – BR+play room) w/ a coach house and a nice yard at Sedgwick and Menom sold last year for $1.7mm. It had only 1 parking spot and no basement but was completely done and on a corner lot.
“I guess I was thinking more along the lines of one of Gary’s previous comments that listing agents are pricing homes too low in order to incite bidding wars and that they should just price them in line with comps to begin with.”
They price them low for viral marketing purposes. Everyone has a search going and when you see a SFH in Old Town for $500 you do a double take, investigate, research, talk about it etc….
“I don’t know that any amount of permitted renovations would result in a $1.5mm home. … You could dormer half of the attic”
You can add on the back, too, with a full-length, full-depth basement. Zoning is RM-5 allowing a far of 2, so you could max out lot coverage. Don’t think you can get that done, on this lot, with OTT restrictions, at a fit & finish level appropriate for a $1.5m home for $500k, tho.
Yoss’s comp:
http://www.redfin.com/IL/Chicago/1801-N-Sedgwick-St-60614/home/13345764
“Once again, no one can say one form is better than the other.”
I thought you kinda did: ” Sealed bid auctions are one of the most common, if not THE most common, forms of auctions for a reason.””
Nope.. I think it is most common because of convenience and professionalism. Think you are going to have an auction for building a road held by English auction.. Says it all.. If one were best, there would be no others. You can determine optimal biding strategies under each, but can never concretely determine what the outcome of any might be.
and for the record.. Ze loves those potsmoking perverted Dutch!!
” I’ve heard if you do 10% earnest money in your offer, it will look quite a bit stronger to the seller and it will be compared more favorably to an all cash offer.”
Nah. Dave, her problem is she keeps handing in her bids while wearing her hoodie..
I clearly should have come back to this thread before now 🙂
I have two issues. First and foremost I have an issue with only allowing 3 days for people to react. I’ll bet a lot of potential buyers never had a shot at it because of work or travel schedules. I’ve seen this happen to my buyers.
As for sealed bid vs. live auction…no, I can’t say for certain that the live auction is better. On the one hand a sealed bid definitely forces the rational individual to pay their highest price as opposed to just enough above the next highest bidder to win the auction. On the other hand I’ve seen a lot of buyers lose these things and then lament that they didn’t offer more – i.e. if it had been a live auction they would have raised their assessment of what it’s worth. One of the biggest fears that a home buyer, who doesn’t engage in sealed bids every day, has is that they will overpay. That fear diminishes as you see yourself getting outbid.
Could this have gone for more? I think so. If you go back to the prior chatter you see that people had a higher expectation of what this would sell for. Sure, the fact that it can’t be torn down significantly diminishes the lot’s value but if it could be torn down the lot would go for at least $850K. That definitely serves as a high upper limit. Check out 331 W Concord Pl which was on a 24 x 98 lot and fire damaged. That sold for $555K. I would have expected this one to go in the low 700s.
So I just did a few minutes of Google searching. Not claiming to have done an exhaustive study of this. But I find it interesting that a lot of the research on the two auction types that comes up has to do with timber auctions – i.e. sophisticated bidders. And of course those bidders can analyze the value of a property based upon cold, hard economics. I wonder if anyone has done research on unsophisticated, emotional bidders.
” I’ve heard if you do 10% earnest money in your offer, it will look quite a bit stronger to the seller and it will be compared more favorably to an all cash offer.”
This would defineately appear to the seller that you were a very serious buyer, but how often does anyone lose their earnest money? Most buyers, even the most loaded investors, have some sort of contingency, at the very least on the inspection&can always get their earnest money back. I know a realtor who said she has never had anyone lose their earnest $. That being said, what difference does it make if a buyer puts down $1 or 10K if they can always get it back?
“Milkster, how much earnest money were you offering? I’ve heard if you do 10% earnest money in your offer, it will look quite a bit stronger to the seller and it will be compared more favorably to an all cash offer.”
Yes, I’m offering 10% earnest money and even offering to increase that amount upon attorney review.
I’m checking the closed sales of everything I bid on and they’re all rolling in lower than my offers, but they are all cash, cash, cash…
“I wonder if anyone has done research on unsophisticated, emotional bidders.”
The more definable value is, the more beneficial to the seller to go sealed bid (major construction projects, large debt financing,etc) .. The less definable, the better to go English auction. (rare comic books, rare cars, art). Of course floors need to be set and a minimum amount of bids is required.
Again sometimes English auction is just not practical.. Couldn’t imagine 5 construction companies sitting in a room bidding for a railroad construction contract.. would be funny though..
That place on Sedgwick
It’s brick or frame?
“That place on Sedgwick
It’s brick or frame?”
Frame. Link upthread.
1.7m for frame?!?
Sheesh
Wonder how big they can make this one, right now it’s listed at what 2200
“1.7m for frame?!?
Sheesh ”
Has a livable (/rentable?) coach house, and a curbcut for the parking spot. No basement, so all 3 levels are above grade. On corner, so lotsa light. Seems about ‘right’, given the whole market.
Do wonder when they did the addition, which is totally visible from the Menominee side (ie, the long side) of the lot.
“Yes, I’m offering 10% earnest money and even offering to increase that amount upon attorney review.
I’m checking the closed sales of everything I bid on and they’re all rolling in lower than my offers, but they are all cash, cash, cash…”
So the sellers are banks, I’m assuming. They just want to get their cash and get out ASAP. If not, the sellers are not thinking rationally. Are we talking $5,000, $20,000, $50,000 difference in the offers?
http://www.redfin.com/IL/Chicago/1722-N-North-Park-Ave-60614/home/13345480
One of my favorite frame houses. No parking though. Buyer got a good deal back in 2010.
“One of my favorite frame houses. No parking though. Buyer got a good deal back in 2010.”
It has no parking. No thanks.
A “Dutch style” auction is not at all identical to a closed bid auction, neither in theory nor in practice.
Old posting sorry – just was looking around at OTT
so this house most recently sold for 830k in 2019.
830k for 1800 sq. 3 bedroom all above grade.
Fantasy world questions. Not the I would do it for this place.
For picture 17/18. Is there restrictions for me just extending the house further back? You wouldn’t be able to tell from the front of the house.
Are there restrictions on building basements in Chicago? So I could add a basement?
am I seeing this right?
a one bedroom – but its three levels?
https://www.redfin.com/IL/Chicago/200-W-Menomonee-St-60614/unit-12/home/13344918
” Is there restrictions for me just extending the house further back?”
Floor area ratio, rear yard, etc, do restrict what you can do, to some extent. Given the mid-block location, you *should* be able to add on the back w/o running afoul of OTT regs.
“Are there restrictions on building basements in Chicago? So I could add a basement?”
Water table issues, and ground quality issues, especially this close to the lake, and you most likely wouldn’t be able to raise the first floor level in OTT, but yes, you can totally build a basement–with only having about 18″ of above-grade space for windows, couldn’t have a legal sleeping area, but could have theater room, storage, etc. But you would “have to” jack up the house and pour a 100% new foundation–which (at best) isn’t practical for a masonry structure.
“For picture 17/18. Is there restrictions for me just extending the house further back? You wouldn’t be able to tell from the front of the house.”
This house is in the Old Town landmark district so there is a whole other can of beans involved in making any changes to those structures than just your run of the mill house in some regular neighborhood.
From what I understand, landmarked properties can be added onto in the back (where you can’t see it from the street). But that’s just what they do down in Pullman. You would have to check with the Old Town association to see if you could do it.
Same with the basement.
My advice is: if you’re thinking about doing major alterations in a landmark district, just buy somewhere else. Lol. There’s a reason those homes are landmarked.
“a one bedroom – but its three levels?”
I’d call it 2.5 levels, but yeah.
I forget how awful that building is, not going by it as often recently. Out of place is basically all ways, under dense, ugly.
“Williamsburg Gardens” condo–like it’s Old Town Arlington, but where it would still be ugly, as it was so poorly done.
“a one bedroom – but its three levels?”
Yes. The kitchen is stepped down. So not totally a triplex. But kind of.
“Water table issues, and ground quality issues, especially this close to the lake”
Although I’m far from a sea-sized lake like Michigan, I’m about a block from a creek that caries snow melt pretty much directly from the mountains, and have an approx seven-foot “basement” (it was a crawlspace dug out by the previous owner – himself – about 25 years ago), so I have a newfound appreciation of water table considerations (for example, I now know that having proper functioning gutters and downspouts when it dumps two feet of heavy spring snow are sort of essential).
““Williamsburg Gardens” condo–like it’s Old Town Arlington, but where it would still be ugly, as it was so poorly done.”
yeah my thought in it was that even though it’s Old Town Triangle, there is undesirable architecture everywhere just like the townhouse on Pine Groove.
http://cribchatter.com/?p=26864#comment-1040124
same same: great location. insane walkability scores. But the building itself is just hampered for being what it was – is: a 70’s little light single ingress