Update on “Deal of a Lifetime”: 1101 S. State
We just chattered about this “deal of a lifetime” on a two bedroom at 1101 S. State in the South Loop.
Remember the stats?
Unit #1302: 2 bedrooms, 2 baths, 1100 square feet
- Sold in July 2007 for $415,000
- Currently listed as a short sale for $249,900 (includes the parking)
- Assessments of $550 a month
- 4 Sale Realty, Inc. has the listing
Thanks to the tipster who sent me info about what happened to the unit.
There were at least a dozen offers with the highest at $329,000. The bank told the buyers that they would take the top four offers. For those offers, they’ll get back to them in 60 to 90 days.
That could mean that the bank will counter at that time or maybe not.
How many buyers are willing to wait a few months and then not even get the unit?
Stay tuned.
Remember, Unit #1002, with the same layout and square footage but NOT in short sale, is currently listed on the market at $364,900 (parking included.)
So the bank tenatively accepted four offers. Is the success rate on short sales that bad, or is the bank planning on doing something sufficiently distasteful that they expect to drive away most of these buyers?
If the $329K closes, that is $300/sqft. That is a bit low for Gold Coast (30th percentile among 2+BR condos under $800K on the MLS on June 6th), but that means that it is probably about right for the current South Loop market. *Assuming* that the unit is in good shape and isn’t trashed by the deadbeat.
I still expect that the buyer will overpay relative to the true bottom, but if they stay several years they should break even (in nominal terms).
Definitely a painful comp for that building, however.
Deadbeat was a bit strong — we don’t know whether the seller is actually behind on their mortgage. They could have to sell for other reasons.
If they are behind on the mortgage, however, the buyer should be worried about deferred maintenance (if not deliberate damage) to the unit.
Short sales are nearly always a waste of time, especially in a declining market. The slow response is typical and better deals will come along in that time as prices continue to drop.
Keep in mind that short sale offerings in the market are a sign of coming foreclosures. The banks are much more eager to unload REOs than take a chance on a short sale.
This has already been shown in the bursting bubbles that are preceding our own.
Short sales suck for sellers and the sooner they realize it the quicker this bust will come. The bank WILL make you execute a contract agreeing to be personally liable for any deficiency from the short sale. I have one on my desk right now.
For example, say you owe $300,000 on the mortgage but short sale for $250,000, then you still owe the bank $50,000 cold hard cash. Why the hell would any seller do that if they can just give the keys to the bank in foreclosure and not owe a dime? I can’t quite figure it out. Some sellers have the mistaken belief that a foreclosure judgment on their credit report harms their credit score too much. I hate to break the news to these goofballs but your credit score fell into the 400’s when you stoped paying your credit cards and your mortgage 6 months ago – a foreclosure judgment is just icing on the cake. I don’t know why these short sellers are busting their butt on the bank’s behalf. But whatever it is, it’s the same thought pattern that got them into their predicament in the first place.
Kevin, This is not even near the Gold Coast. $300/PSF in the South Loop seems high to me, especially given the mediocre nature of this building.
We’ve been looking in this immediate area. 1-2 blocks from the red, green and orange lines, 1 block from the Jewel, 1 block from Grant Park, walking distance to the 12th street beach/Northerly Island park. This is a great location. Of course, it’s no Gold Coast but $300/sf is a great price for a relatively new building in this area.
That said, this building and the layouts are kind of weak.
“$300/sf is a great price for a relatively new building in this area.”
Maybe compared to the FB’s who bought in the bubble, but these are going lower. $300/sf is just a falling knife.
$300/sqft will sell in this market. The buyer will then lose 30% (on paper) as the South Loop falls through $200/sqft in the next year or so. They should be back above water by 2015-2020…