Competing Against the Developer: 1720 S. Michigan in the South Loop
Sellers continue to struggle to make any profit in 1720 S. Michigan, the 498-unit building in the South Loop that started closings in the summer of 2007.
See pictures of the interior of the units in the building in our old chatter here.
Not only do sellers have to contend with other flippers, but the developer has yet to sell out the building.
Such is the case with Unit #2011, back on the market a little over a year after first closing. It is listed for only $9,400 more than it sold for in Oct 2007.
The developer is trying to sell a similar unit only 2 floors below for $8,100 cheaper.
Here’s the history of #2011:
Unit #2011: 2 bedrooms, 1 bath
- Sold in October 2007 for $285,500
- Currently listed for $259,000 plus $35,000 for parking (=$294,900)
- Taxes are “new”
- Assessments are $329 a month
- Domus Central Real Estate LLC has the listing. See the listing here (no interior pictures available.)
Unit #1811: 2 bedrooms, 1 bath, 829 square feet
- Currently listed for $249,000 plus $36,900 for parking
- Taxes are “new”
- Assessments are $293 a month
- CMK Realty has the listing. See the listing here (also no pictures of the interior.)
Stats for the building (out of 498 units):
- 27 for sale
- 8 for rent
Some units may be both for sale AND for rent.
$344 a sq. ft to purchase a place in a 50% rented out building.
Awesome!
Did you guys see the November figures?
November figures for what
Pending home sales
http://www.google.com/hostednews/ap/article/ALeqM5jYhsxaJOLCURko2JR8R6NUDHRW2wD95HN7M80
Pending home sales plunge to record low in Nov.
By ALAN ZIBEL – 1 hour ago
WASHINGTON (AP) — The National Association of Realtors says pending home sales fell to the lowest level on record in November, as the plummeting stock market and faltering economy caused buyers to put their purchases on hold.
The trade group said Tuesday its seasonally adjusted index of pending sales for existing homes fell 4 percent to 82.3 from a downwardly revised October reading of 85.7 in October.
That’s worse than the reading of 88 that economists expected, according to a survey by Thomson Reuters.
The reading, which was down 5.3 percent from November 2007, was the lowest since in the eight-year history of the index, beating the previous record low of 83 set in March 2008.
Ouch!
“Sellers continue to struggle to make any profit”
They shouldnt be making ANY PROFIT. Sellers gouged us the last 5-8 years, and we’re going to return the favor. Also this building is a joke, 1069 sqft for 300k? Sorry but my ONE BEDROOM is 1000 sqft. I wouldnt pay a dime over 190k for these.
Yeah thanks to the NAR, homeowners expect to make a profit, instead of paying for shelter, which is what purchasing real estate is actually all about.
heh heh, competing against the developer. Guess who will win?
My mistake, the unit on 18 is 829 sqft, I have no idea how they get 2 bedrooms out of that. Insane.
I have a 2/2 in about 900 sq ft. The whole unit is 30 by 30.
I’ve seen six flats that managed to fit 2 bedrooms into 700 sqft. Never seen any interior pics though.
Since the title was “competing with the developers” I thought Id stay on topic.Having worked with many developers, this topic is all too familiar. As a broker, I opt to show my clients the developers units as well as the existing units.. Developers are as eager to complete the sell off of their units as are individual sellers. The selection of custom options is usually available for the remainder of the devlpt. units. in a fairly competitive timeframe..
Ron,
Seriously, this is why real estate agents get a bad rep. You “opt” to show your clients developers’ units in addition to existing units? Good for you, I suppose, but why is this at the option of real estate agents? Real estate agents are supposed to have professional standards, in that they are working in the best interests of their clients. Clients should be shown *all* units that meet their specification, regardless of who the seller is.
I always work in the best interest of my clients and show them all of the units that meet their parameters. My point was that developers are offering some great incentives(pricepoints and custom options)that sometimes are even nicer than the existing units on the market..Im competing currently at 8 E. Randolph with the developer units while representing a motivated seller w/a great corner unit…
Kenworthey,
If they aren’t getting compensated from showing potential buyers developers units but are for reseller’s units then I don’t think the onus is on them to show their clients the developer’s units.
typically the brokers are equally compensated regardless of whether their clients choose a resale or a developer’s unit. in fact, developers often offer a higher co-op commission in an effort to make their units more ‘attractive’…
And in all honesty, a good agent who is truly out to find the best property at the lowest price for their client wont care who is selling it and what the cooperation commission is set at. Unfortunately, we know agents like us are far and few between.
1720 is FALLING APART not 2 years old and has everything wrong with it………………………..75%rental
everyone wants out..even he renters want out
floors are buckling, windows leak, appliances are breaking down
the bld went up too fast – no staff.
no amenities – NOTHING
and the new bld that is going up on Van Buren is another disaster
heard 250 people backed out of contracts
units too small and cheap
My RE steered me away
I found this latest MLS price cut antic quite amusing.
MLS 07176330 is a 1/1 in this building that just had a price cut down to 200k but get this.
In the MLS: “Must be sold with parking spot for a total of $248,900. Obviously motivated seller. ”
So potential buyer might get a steal of a price of 200k for the unit, but they have to pay 48.9k for the parking spot!
They get to pick the amount they want to pay for the unit and parking spot so long as they’re both sold together, LMAO. I wonder if they would allow a $1 sale of the unit and $248,899 sale of the parking spot as a tax strategy.
They should clearly cut the MLS price down to $1 to get more hits and just price the parking at $248,899 and must be sold with. lol
Good news everybody, the unit mentioned above had its list price cut to $189,900. But the text in the MLS remains the same “Must be sold with parking spot for a total of $248,900.”. So unfortunately, the price of the parking spot has risen to $59,000. LMAO!
well the developer is headlining 1BR starting from $199,900 on the website
had to do something to generate interest…
Where’d you guys get 75% rental? Last time I heard it was around 50%, which it always had been. I know someone who lives there and his window doesn’t leak, no floor buckling, and his fridge/stove are fine. CMK buildings are known to have no amenities (no gym, party room, etc.) which they purposely do to lower monthly assessments. Most buyers who are familiar with CMK projects should know this by now. Walk by any high rise condo in the Sloop and you hardly see anyone using the building’s gym. It’s a waste of money to have these “amenities” since there are many more gyms in the city with better equipments and way more places to host a “party”.
As for 1BR starting from $199,900… I find it funny that even after 1-2 years of bad economy/housing market, that price hasn’t budged yet. They actually used to advertise 1BR for $179K during pre-construction (before the economy went bad). I know another person who lives in 1720 that refinance his mortgage and the bank appraised his property a couple thousands more than what he original paid for. What happened? At this rate we’ll need 25+ years of bad economy to get $100K pretty-new 1BR condos downtown that’s NOT in foreclosure.
Jim: Don’t know if you’re aware but no new buyers will be able to get a loan in the building under the new mortgage guidelines (if it really is 50% or more rented.)
I too thought that a building needed to be 70% owners to have a loan approved. So, I’m not sure how people are able to refinance or buy. I even found this: “Existing projects where borrowers will either occupy the unit or use it as a second home are not subject to owner-occupancy ratios.” from this site:
http://archives.chicagotribune.com/2009/may/03/realestate/chi-0503-condo-advisermay03
People are able to refinance and close in 1720…I know this because I’m on the board.
I can actually refi my mortgage too but its like $4000 and I don’t want to spend that when I have a 5.5% rate