Discussion About the Vetro Auction: Post Here
The auction of the 40 units at The Vetro is this weekend in the Loop.
If you attend, please post your observations. And please- fill us in on the selling prices.
Any guesses on how many people will show up and how high the bidding will go?
Date: Saturday March 7
Location: W Chicago Hotel- City Center
Time: Auction begins at 1 PM
If I were a buyer I would wait till after the auction when corus bank the lender will be forced to liquidate the remaining units later this year. Probably will see lower prices.
If I were a buyer I would post comments like above so as to get the best deal at the auction.
Every time i’ve been to the building, the place has been swarming with prospective buyers, so I think there will be plenty of competition for the available units. I’m guessing they’ll go for about a 15% discount to the list price.
Every time i’ve been to the building, the place has been swarming with prospective buyers,”
I call BS. Seriously, you should have gone with a little more subtlety.
First of all, what are you doing hanging out at the building, you’re not that guy walking around Congress with that ridiculous “AUCTION” sign, are you? Sure there are people checking it out, but I have not seen any swarms and I work across the street.
Secondly…
“I’m guessing they’ll go for about a 15% discount to the list price.”
Oh brother. They would kill to sell for only 15% off the list price. Just read the previous chats, you don’t need to go to an auction to get 15% off, just walk in and ask and watch them fall over themselves to get you a contract and pen.
Hey, I’m not saying the auction will be a complete bust. I’m sure it will be well attended, and I wish you good luck with it.
John
At this point, it really doesn’t matter. By now, all the people that have decided to go have gone, and all the people that have decided to pass have passed.
I’ve been to the building three times: once out of curiousity, once to take pictures, notes, and seriously inspect the units I was interested in, and once to drop off the registration card. My guesses pretty much come from the fact that the closing deadline is just soon enough so that buyers can file for the tax credit on their 2008 returns. Also, I stopped by 235 Van Buren before the practice auction today to check out the competition. That place seemed even more overpriced than Vetro’s list prices, but the sales office claimed to have made three sales recently, and don’t seem willing to budge on price.
As for the practice auction today, I’d say there were about 120 people there. 10 rows of 12 seats, about 85% filled, but there were also people that chose to stand instead of sit.
There might be some bargains tomorrow. I am incredibly interested in this auction for many reasons although not attending . I think its a beautiful building, it will be price discovery, it will be huge financial decisions for people decided on the fly, and it will certainly be exciting. As I’m not an investor I don’t know if I could buy a property at auction if competing against other bidders.
Yes the minimum bid prices are great, but I can’t wait to see what people pay for them. This is the first appealing condo building to hold an auction in Chicago.
I’ll start the bidding at $0
There won’t be many bargains tomorrow, except maybe for the units with the white pvc pipes running along the ceilings. The auction instructor kept telling the audience in the practice auction that they would set the market price. And that the remaining units would be sold probably at higher prices than the auction due to the reduction in supply. Whoever wins each auction is the person who overestimated it’s value relative to the room full of people.
Solaire in Orlando (same auction marketing company) had an original list for @215K and up. Bloggers said there was no way anyone would pay the minimum bid (assuming they were around $160K). The $215K unit went for $179K at auction. Now you can buy a unit for %149K on craigslist.
good luck to everyone who bids tomorrow.
i’m going to pass this one up. not because i don’t like the building, but because i honestly feel the real estate market in this town is going to crash harder in the summer and fall. i’m going to hold off on buying altogether until after the summer…and i also think we may see better deals after the developers loan extension expires. he expects this auction to create a lot of buzz and help him sell the remaining units through the spring, but i don’t think it will pan out that way.
Though 15% off list seems ridiculous to us now, lets not forget the hype an auction can create for buyers. a lot of people attending that auction can probably afford to pay list for these condos but are just looking for a “deal”. If they get swept away in the moment ( and i’m sure some will ) , we might see some pretty solid prices for these units…
in any case, i’m excited to see where the numbers end up at, the auction will be a good indicator of what other buyers are willing to pay in this market.
Auctions are not held to benefit buyers. The intent is to create excitement in order to deter rational thought.
There will be two types of bidders: shills and marks.
The remaining units will be sold for less than the auction prices.
G:
Not to say that won’t happen, but using shills to effect prices in an auction is quite illegal. You are spot on with the purposes of auctions though: don’t get swept up in the group-think excitement or you won’t be getting a deal!
I went and stayed for the 1st 3 units the largest PH sold for 556k the other one 486k and the 2br +den went for 429k after that I had seen enough…the place was crowded..standing room only..people bought into the frenzy…
Just got back from the auction. Never been to an auction that wasn’t for charity. It sure gets your heart racing, and now I understand the cause of the winner’s curse. That said, seems like people got some very good deals, but nobody got a steal.
They actually sold 45 units, not 40 because they added a few when they went if that tier was bidding strong.
Here is a link to the results. Apologies if I made any transcription errors, but this should be pretty accurate.
http://spreadsheets.google.com/ccc?key=pE0Qmy0B1etQTJtNz5PLyEA
http://spreadsheets.google.com/ccc?key=pE0Qmy0B1etQTJtNz5PLyEA
I’d like to be reading about the actual auction results
Just got back from the auction. Most ALL of the places including the penthouses went for just 30 to 60k above the minimum bid price. So all in all, the discount varied between 20 and 35% off. The discounts were larger for the larger places.
Well I went to the auction today. Extremely well attended and professionally run. Tons of staff working it. Gorgeous hotel, they had gourmet appetizers galore and beverages – quite the spread. Auction company was very impressive and professional. And now what you all want to know – the winning bids!
They ranged from just over 10% over minimum list price to 35% over min. Many in the 15-20% over range. A penthouse with 1,189 sq feet regularly $800,000 went for 485,000 (min. price was 400,000). A hot seller, 1 bedrms with den and great north and east views went for almost 30% over list, just under 270,000 (reg. 360,000).
They added 3 units to the original list of 40 since these were hot sellars. Also added were 2 more studios that went for 30% over list, sold at 160,000. Seemed like better deals were on the 2 brs since they had numerous models; heavier demand drove 1 brs and studios up to 20-30% over list. If your curious, I did not win. I wanted a 1 BR but my cap was 15-20% over min and they went over that. So about 1 in 12 bidders bought a condo today.
I am concerned about the glut of condos on the market and the financial uncertainty. Don’t know if you can expect much or any appreciation on these “deals” in the short term 3-5 years so no hurry to buy. Feel more opportunities will present themselves.
Actually, the penthouse that sold for $485,000 is 1869sf at least. BTW the developer is repricing the remaining units at the average price per sq foot sold at the auction for each tier. Their sales center will be re-opening on Sunday at Noon to preview those units.
Dave: Thanks for the spreadsheet with all the info! That is awesome.
These didn’t sell for as high as I thought they might go. I’m surprised (given the apparent frenzy over this “deal.”)
An 1100 square foot 2/2 for “only” $275,000? (with the parking included?)
That’s a lot lower than nearly everything listed in the south loop right now (unless it’s a foreclosure.) Same with the bigger 2/2s. 1300 square feet for $325,000 or so.
If these are the prices that are going to move units- than developers and sellers in the south loop are truly facing a new reality.
Thanks for the info Dave!
So it looks like we have a range of $238-312/sf, with an average of $261. Keep in mind this is for new construction in the north part (walk to work easily) of the South Loop that includes garaged, heated parking. So I’d expect some sort of premium for location, garaged heated parking and new construction.
Places further south, without garaged, heated parking and (potentially) non new construction I’d expect to see at reduced ppsf numbers relative to this. I think its going to be a cold reality for much of the South Loop.
Bob this location does not demand any premium. It is on the expressway and Congress. Yes you can walk to work but that is it. It is not a convenient place to live and there is zero neighborhood. On weekends, Wells south of Congress feels like a ghost town.
As for new construction, many buyers and realtors were scared away because of the uncertainty of the building. No condo association, investors and so many unsold units does not demand a premium. It is a risky purchase and that comes with a discount.
I agree Bob. The Vetro units have a nice feel and the building wasn’t done cheaply. While it’s not in the heart of Printers Row- it is on the north side of the south loop and you COULD walk to work from there.
Being near Congress Parkway never stopped sellers from pricing their units much higher before.
If this building is selling at this square footage range- then what are buildings at 1400, 1500, and 1600 south going to sell for? Much, much less.
This puts a new price point on the whole area.
There are also half a dozen other high rises (maybe more) in the South Loop that are in the same “predicament” as the Vetro (few sales, building is done, “risk” to buying there.) Prices are going to fall sharply in all of those buildings.
Nice to hear they sold out!
Will this be the first of many auctions to come?
I now hold the record for lowest purchase price in the Vetro.
A studio that just barely looks over the building next door for $145K. Still I was quite surprised that the unit one floor above with several exposed white PVC pipes actually sold for $4K more.
I was as skeptical as anyone about the auction frenzy and resulting winner’s curse. While there was a larger turnout of eligible bidders, the timing was right in that most of the bidders were looking for a great deal and were afraid of overpaying as the market continues to find it’s bottom.
The auction was entertaining to watch. The 5 units added to the auction were briefly described, but sold without even seeing them. In some cases the additional units on a lower floor sold for more than the scheduled units in the same floorplan.
“Will this be the first of many auctions to come?”
This one was such a success- I don’t see why other developers won’t try the same thing.
Thanks to everyone who reported. I am a contracted buyer in R+d. My price will be renegotiated or I am WALKING. The only thing that kept me from VERTO (which I toured in 2006) was the lack of a pool and a location just a little farther south than I’d like. Congrats to all who got deals..
The location of Vetro isn’t at all appealing except for being able to walk to the loop. It’s near River City that big prison (METROPOLITAN CORRECTIONAL CENTER) and there’s nothing over there. It feels like the industrial parts of Elk Grove Village. Actually, the whole northern/west part of the South Loop feels that way. I certainly hope those who purchased actually walked around the neighborhood and got a feel of the area before deciding to pluck down some dough.
If these prices were at Central Station (which to me is the nicest/cleanest parts of South Loop), then I’d call it a good deal. Construction on One Museum Park West is actually progressing… and I hope their prices lower as much as Vetro’s, but I doubt it.
Congratulations to those who went and got in on a good deal! I did go for a viewing of available units since I now have 4 months to purchase a condo. While I was impressed with the professionalism of the knowledgable staff and the overall building itself, I was left wondering about the future of the appreciation/depreciation of the units a few years from now. Also, I wondered how those who bought at the asking prices felt about these units that sold for way below the set prices? I am currently looking at vb235 and have been speaking with them on a top floor unit. As much as I love the building (other than the 10′ wide living rooms) I am left wondering if they too will be auctioning the unsold units after opening. I have to buy in the next four months regardless. Not to go off topic, but if anyone would like to offer advice on where I should be looking (I have so far seen a dozen places) please feel free to let me know. Price/location are not issues as each area has something different to offer. Thanks for any suggestions!
westlooplo — why do you have to buy? why not get a 6 or 12 month lease? It might be inconvenient, but if it ends up saving you 50-100K, it might be worth it. i was planning to buy this fall, but whether or not I renew my lease depends on how much the market is still in free-fall.
Like G said, “If you think there are good deals today, there will be even better deals tomorrow.” The market will continue to be in free fall in the fall. Personally I think the days of the $300k or $400k 2/2 will become the $200k or $250k 2/2. My best estimate is the summer of 2011 for best pricing that could be extended further depending on how much longer the recession persists. If we enter into a depression (not a great depression) we’ll be looking at optimum pricing in 2012 or 2013.
It’s been awhile since I’ve heard that someone HAS to buy.
As for 235VB- that developer also did 1720 and 1620 South Michigan and hasn’t yet tried to auction off the remaining units in those two buildings (of which there are quite a few in 1720 South Michigan.)
Dear Westlooplo, I represent 565 W. Quincy and Belgravia Group. Have you visited our community? I would be pleased to speak with you about our loft homes delivering at the end of this month. I may be reached @ 312.207.0007. I look forward to hearing from you. Best, Erin
Thank you all for your input…much appreciated! Stephen, I am now in a rental loft that I love/hate depending on the day, LOL. As much as I like it for the design and location, I have always owned and want to get back in that setup….it kills me to have to pay this hyper inflated amount for someone else’s mortgage. Re my HAVING to buy, it all involves a clause in a contract. Should I not buy, I end up with a penalty and tax, which of course I want to avoid. As much as I fear the way the market is headed, I know (fingers crossed) that it will rebound in time, of which I have plenty of. If I am not occupying it myself, I will rent it. I have visited both 1720 and 1620 and liked both buildings and the developer. The agents at both were great and they are who got me interested in vb235, which I do like a lot. Thank you Erin, I will look into your property and will be in touch with you! Any other suggestions are welcomed and Thanks again to those who responded!!
So it looks like the ’05 units yesterday sold for an average of $283k. Whats this flipper gonna do?
http://chicago.craigslist.org/chc/reb/1063127424.html
But it comes with a terrace! Haha toast. Thats what they get for taking a nice unit and applying a Frank Lloyd Wright bad acid trip rehab to it.
The michael jordan jersey on display in the bedroom is tacky. Other than that it’s not too bad; its just the price that is out of whack with what people want to pay.
westloopelo:
The Astoria in the South Loop is also about to start closings. You might want to check out that one (it’s more traditional architecture, however.)
There have been foreclosures in 1620 s. michigan so you might be able to get something a lot cheaper there now. I recently saw at least one short sale in the building.
Great! Look forward to hearing from you, Westloopelo! Are you available to come in and meet with me this week? Thanks again, Erin
Annon., you’re going to walk? Unless you have an out clause in your contract, my guess is that you’re going to lose your earnest money when you do so.
annon….you made a bet and lost…quit bitching and pay what you owe…this is what is wrong with America – no one believes they should be allowed to lose.
Annon is perfectly within his rights to walk away if he’s willing to give up whatever money he’s put down.
what is R+d?
homedelete, jerseys framed are cheesey, but MJ’s gets an exemption from ridicule.
JimmyJ,
Can I get some coupons or gift certificates to your restaurant?
Thanks to everyone that posted info that attended the auction. I am surprised they all went.
Dear Jimmy/Dave/HC/CH: R+D659 is a development located at 659 W. Randolph offered for sale starting in summer 2006 and currently under 50% sold being developed by a subsidiary of mesirow financial. I contracted very early on and I was told the building was 30% sold already as represented by all of those “sold” dots (which it was not, as I have later learned). I was also told I could purchase with 10% down if I used their preferred lender, and at a discounted rate of 1.5% less than prime, which is the big come-on with this project. Its like a car salesman negotiating with you on the basis of your desired payment, not the cost of the car.
In mid-2007, when I asked how sold the building was and if it would be delivered on time, (which was summer 08 at the time of my contract)I was told in writing that it was 50% sold and units would be delivered in June, 2008.
Now it is 2009, its delivered way later than promised, and R+D is 47% sold, which means that you come to the closing table with 20% down or you don’t get a loan, because you can’t get mortgage insurance (PMI). I’ll be finding out how and when these sold/unsold numbers moved back and forth from summer 2006 to winter 2008.
As of last week between 30 and 40 units have closed, and the lender who has closed all but a handful of these contracts is the preferred lender, or so indicates the preferred lender. Very recently, my unit (with parking) which is slightly smaller than a unit offered by VERTO, appraised for 70K more than VERTO’s slightly bigger unit (with parking) even before VERTO’s auction. I reviewed my unit’s appraisal (done by an out of state appraiser) and found certain irregularities, in that the appraiser reported that the developer told her the building was more than 50% sold.
So now I ask all of you, particularly you, Jimmy, because you clearly are a genius: do you want to live in a building where the loan you were steered to is not available anymore at 90/10, because even the preferred lender knows the unit you are buying is not worth the purchase price and isn’t lending 90/10 to anyone anymore? Or, would you try to find a way to get your earnest money back from these misleading miscreants who want to induce you into helping them commit a fraud on a bank? Perhaps that’s too hard a question for Jimmy.
Jimmy clearly hasn’t thought beyond his little pithy “bitching” comment, to the fact that buyers will be on the hook for a lot more than thier assessments and mortgage payments. Early buyers face being responsible for increased costs (eg. insurance premiums,) and may face their units being further devalued by an an auction at some upcoming time.
I’m looking for ways to get my escrow back, espeically in light of all the shennanigans associated with this process from the beginning, and I will be fighting to do so as would every one of you if your money was hard earned. Id rather sue, lose the escrow and move on, than move in. They can’t force me to close because I can’t get a loan and they can’t get out of me what I don’t have. I don’t have 20% total to put down now, nor would I if I did. Good luck gettign the 10%, too.
BTW: If everyone associated with R+D were were pragmatic thinking businesss people, they would look at their balance sheets, call all contracted buyers that haven’t closed, and trim 10-15% off contracted prices and then reduce unsold units by that same amount because of what the VERTO auction means to every devloper in the W and S loop. I’m sure Mesirow wants these units off thier balance sheets. They’re just to greedy to do what is necessary to get that done and STILL make a profit, no doubt, even if it was a slim one. They’d stand a better chance by developing the good will of the contracted buyers instead of threating them, which is what they’re up to now. Close or else…etc.. Instead, buyers face paying too much to get in, a lot more to stay than they bargained for, seeing their unit further devalued by an auction, and the pleasure of looking forward to not getting their investment back for 4 or more years.
Jimmy: the units are being marketed by @ properties. They’re looking for imbiciles: give them a call. Thankfully we won’t be neighbors.
I attended the Vetro Auction and it went very smoothly.
*The 2 PH units sold for 556 and 485
*2.5 BR/ 2.5 BAs sold from 412-429
*2 BR/2 BA sold from 275-325
* 1 BR/ 1 BA sold from 175-200
* Studios from 145-168
Needless to say, there were Incredible deals taken advantage of, and people moved into a really great building. And contrary to some rumors, there werent 10,000 at the auction, or even close. More like 500 or so
Thank you to everyone who posted their experience with the auction, especially Dave with the spreadsheets.
annon, congratulations on your catharsis.
“seeing their unit further devalued by an auction”
Sorry to nitpick but it isn’t the auction that has devalued the units. The units were never worth what they were sold for. They simply appeared to be due to real estate being priced at the margins. It only takes one imbecile, as you have noted, to pay too high a price to cause the appraised value of all comparable units to go up. Curtains are being peulled back on developments all around the world. True values are being revealed and many developers aren’t solvent at these price points. Good luck with your renegotiation, I would not expect them to give in so easily to an ex-mark.
John
annon if your contract does not have a mortgage contingency then you are probably 95% screwed. Many new construction contracts don’t. I have a file on my shelf with a guy in your same situation for a building in the south loop. There are isolated stories of people getting their earnest money back here and there but as a general rule they don’t. Remember, if the developer gives you your money back then he has to give everyone else’s back too and they’re more than willing to litigate.
BTW, annon, I don’t know if it matters to you but R+D is, in my opinion, in a much better location than vetro. You have a brand-new Jewel and a recently-renovated Dominick’s within walking distance of R+D. And based on all the coupons I’m getting in the mail, they look to be starting a price war between them. Can’t complain about that! You have a ton of restaurants and bars, etc.
Only you can decide how much that is worth to you personally, but you should definitely consider the differences between the neighborhoods. I think the area around R+D is great for renting.
Dayum a 1800sqft penthouse sold for 485! Now that’s a good deal!
Annon, I am just curious – suppose the condo you signed up for went up 50%. How would you react if the developer were crying foul and wanted you to pay 50% more at the closing as a result of that?
westloopelo:
Did you check out the Emerald? I believe they still have a few units available. As a resident/owner there, I have to tell you the building is great and the developer is definitely dealing on price. We negotiated our contract last winter and they were coming down in price even back then. My wife and I have been here since the summer and we couldn’t be happier. Great maintenence staff and mgmt. company is so-so. Things will improve with the mgmt. co. as soon as the residents take over the assn. Otherwise this building is awesome. I hope this helps and best of luck to you!
Crazy frog,
“How would you react if the developer were crying foul and wanted you to pay 50% more at the closing as a result of that?”
Trump canceled contracts because he thought that his condos went up in price…Now he has 25% of the building empty with overpriced units.
Annon’s situation does not warrant for any pity from the developer. But, I understand his position. The current economic situation is unprecedented. Some companies are being bailed out, some are left to fall. Some homeowners will be helped, some will lose their homes. If the developer of RD 659 is desperate for cash to pay off the construction loan, yes, they will be interested in having the borrower close even they have to lower the purchase price, etc. But if the developer does not need cash at the moment…There are 650 units scheduled to deliver in 2010, and 0 units in 2011, 2012, etc. You can talk about the crisis all you want, but people DO NEED TO LIVE somewhere, whether renting or owning. Last time I checked population was growing. So the developer might just try to get rid of the condos in the next 2 years. As far as I remember, Vetro was not able to get an extension on the construction loan, they had to get some cash immediately.
Annon.. do you believe your own BS
“as would every one of you if your money was hard earned”
No I would recognize that as an adult I made a bet which no one put a gun in my mouth to make and decide from there what is financially in my best interest to do.
Start with this sentence annon “I am an adult, I can cross the street now on my own, this is my fault and my responsibility and I will move forward from there.”
Congrats BriBri.. now we don’t have to get that Mojito near me at 4400 W Devon 🙂
I was at the auction, although I did not purchase anything I was there for observation. Overall it went better than expected, there were some pretty good deals. The best deal without a doubt was the penthouse that went for $485k. Thats 1869 sq/ft, so around $258 sq/ft. I believe that gentleman was also bidding on the first penthouse but capped it at $550, the buyer of that penthouse paid almost $290 sq/ft one of the more higher price ranges.
I have seen both penthouses 3105 + 3101, and the latter is a much better place and a steal. Kudos to the buyer.
WOW what the flying **** was that craigslist idiot thinking by pricing his unit at $869 (for a one bedroom whose terrace is as large as the condo) when comparable units were sold for $175-200?!?!
There is no way in hell he/she will ever come close to recouping ANY of that investment or cashing in on ripoff of an uneducated buyer. I have done a dozen+ rehabs and never would I attempt to pull off a trick like this even in a stable market. At most I estimate no more than $100-150k went into bringing that unit to it’s current state. Craziness! Re: R+D, I have been seeing many ads telling of their 1.5% discount and lower mortgage payments lately. I do wonder though, is it too heading towards the auction block? In visiting them a few weeks ago, I do have to say I was very impressed with the construction and layout, esp the 2/2 corner unit. Certainly it offers more in way of space, amenities and the location is great for the nightlife choices.
annon, how do you like your unit? any info offered would be appreciated as these units are strongly drawing my interest.
Back to vb235, I just received word that they will consider my request for a few minor interior changes and the possibility of combining two units if I buy now. I am determined to get that 10′ living room enlarged in some way.
Aleks, there are plenty of places to live and quite a few vacant ones too; in fact, the US has the highest number of vacant homes ever recorded by the census bureau. Probably damn near every developer and bank that has RE construction loans needs month right now; every bank/developer is approaching the problem differently.
annon, your situation totally blows, there are plenty of people out there just like you. you will need to shop around for lawyers; any lawyer who tells you that there is an easy answer is overestimating their ability to get the money back. The best offer I’ve received with the case on my shelf is 10% of the earnest money as kind of an ‘F’ you’ to go away. You’ll need a better case than ‘developer shenanigans’; the cases that come to mine that worked were where the developer accidentally sold the buyer’s parking spot and because all real estate is unique it was grounds to rescind the contract; another time the developer promised a balcony but then decided not to build one at the last minute so that was grounds to terminate…a lot lawyers are stretching like that case a few weeks ago where the immigrants were claiming fraud against the developer because they were selling units to people who didn’t qualify.. but that’s a stretch….but in the end you bought into the RE mania like so many others during the boom and you will pay your money. In retrospect there was no real reason to sign a contract be development. At least you’re only out your earnest money; plenty of people will take 40% or 50% hits on the value of their condo in the upcoming years. YOu should be happy that’s all you lost. for the rest of your life you’ll remember this loss and hopefully never make the same mistake again; you and society, collectively, will swear off real estate and never make the same mistake again.
“You can talk about the crisis all you want, but people DO NEED TO LIVE somewhere, whether renting or owning. Last time I checked population was growing. So the developer might just try to get rid of the condos in the next 2 years.”
“that need MONEY (not month) right now”
typo
“BTW the developer is repricing the remaining units at the average price per sq foot sold at the auction for each tier.”
Is that confirmed? I would assume those prices will be at least somewhat negotiable, making those who purchase now, after the auction, more likely to get an even better price? Also – are the remaining units on higher or lower floors, or both?
Sabrina said: “The Astoria in the South Loop is also about to start closings. You might want to check out that one (it’s more traditional architecture, however.)”
Isn’t the developer behind this project the same guy who dissolved his LLC after several of his south loop projects had major problems (water infiltration, balconies falling apart, etc.) that cost the owners tens of thousands in special assessments per unit? I think this is the same guy who did the Chess Lofts and was supposed to build 9 w. erie. A friend of mine is stuck in a building on Prairie with a unit she can’t sell because of the current legal battle.
That 1869 Penthouse was a nice floorplan with a great view. Someone got a good deal for $468k, at least for this current point in the market.
I think many of you are missing annon’s main (or perhaps, simply more meaningful) point…that the sellers at R&D may have intentionally mislead him AND the bank in regards to the units sold:
“I was told in writing that it was 50% sold and units would be delivered in June, 2008. Now it is 2009, its delivered way later than promised, and R+D is 47% sold…the appraiser reported that the developer told her the building was more than 50% sold”
But if they are indeed willfully lying to prospective buyers and lenders, that is a whole other ballgame and they deserve a smack down for it. Proving it is another matter though.
Homedelete: ” you and society, collectively, will swear off real estate and never make the same mistake again.”
“swear off real estate.” What exactly does that mean? Should we nationalize all of our real estate and divide it up among the people?
Please, enlighten us.
paulj,
He probably means swearing it off as an investment and short-term places to live. And comparing the cash flows of owning vs. renting or at least doing some sort of analysis regarding the benefits of owning vs. renting.
Clearly this analysis was not done during the bubble, which is why you can’t find SFHs or condos in the city that are CF+ to own unless they are REOs.
exactly bob, thank you.
http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=33243
Content:
South Loop condos auctioned at big price cuts
(Crain’s) — A weekend auction of 45 units in the Vetro condominium project in the South Loop resulted in sales of more than $12 million, at sharply discounted prices.
After an aggressive marketing campaign, the 45 units in the 232-unit building sold at an average price of $258 a square foot, or 73% of the average pre-auction asking price of $353 a foot, according to Accelerated Marketing Partners LLC, which conducted the auction, and Chicago-based residential marketing firm Garrison Partners Inc. The sales totaled more than $12.1 million.
The Vetro auction gave a jump-start to the 31-story tower at 601 S. Wabash St., completed in late 2007, where sales had been stalled like in the rest of the market.
Lenders on other slow-moving downtown condo projects also are considering forcing developers to hold auctions, said Garry Benson, president and CEO of Garrison, which has formed an alliance with Boston-based Accelerated for future Midwest sales efforts.
“The question will be, what is the real depth of the marketplace, and will the next auction produce the same results?” Mr. Benson said.
The Vetro prices were better than expected despite the steep discounts, he added.
Typically, auction prices on similar projects are somewhere in the mid-60% range of the pre-auction prices, Mr. Benson said. For Vetro, the minimum auction prices were 61% of the asking prices, according to a price list.
Some prospective condo buyers have been sitting on the sidelines, waiting to see how far prices have fallen. The Vetro auction sets a floor for future sales at the project, which was completed by Evanston developer Roszak/ADC LLC. About 60 units remain unsold.
Both Roszak and Chicago-based construction lender Corus Bank approved the sales prices, Mr. Benson said.
During the fourth quarter, more prospective buyers walked away from contracts than signed new contracts, according to a report by Chicago-based Appraisal Research Counselors.
END.
Thank you all for your comments. Clearly I will follow my attorney’s advice. Mesirow will do what is right for it, and I will do what is right for me. This is a financial transaction. I have a right to exhaust my legal remedies. If I win I will be delighted but if I lose the interest money, so be it. However, what I won’t do is ignore what my attorney tells me are good defenses and give up tens of thousands of dollars becauase the big corporation tells me I should be frightened. As for living somewhere else, you are all correct: Lincoln park, for example, has many financially secure buildings with competitvely priced square footage. I can probably get a good deal somewhere and consult my accontant about writing off my losses, if they occur. There is something for everyone.
For those with the viceral response: If you actually read what I posted in an unemotional way, you’d see that I’m simply trying to warn prospective purchasers that if they buy at R+D, they need to be prepared to put 20% down on units the developer wont negotiate on based on price, and be prepared for the possibility that their units won’t properly appraise out. They also need to know that they move into an empty buidling where there are people currently recinding their contracts for a variety of reasons (I’m not the only one) which subjects a new contracted purchaser to unforseen costs in a building less than 50% sold. I thought I’d share what is happening in that building to help people make clear headed decisions. Good luck to those continung to hunt for a home.
I hope all of you get good deals and I sympathize with persons who purchased in VERTO before the VERTO acutions. They got nice homes and will have to wait several years in this economy to recoup their investment. I hope none of them need equity due to illness or job loss anytime soon. I just won’t be making the same mistake at R+D. Thanks, goodbye and good luck!
I would argue that the auction sets a ceiling – not a floor – for future sales at the project…
“The Vetro auction sets a floor for future sales at the project”
ROTFLMAO. Keep dreaming.
“Some prospective condo buyers have been sitting on the sidelines, waiting to see how far prices have fallen.”
“Some” have, indeed. However, many, many more prospective condo sellers have done the same.
Guess who wins?
“The Vetro auction sets a floor for future sales at the project”
LOL it appears the author is definitely stretching here. I would say it sets a new baseline or starting point for negotiations. But towards the end developers typically offer even steeper discounts to wrap up the project. Also the author could’ve got the address of the building right, too. Last I checked it was 611 S Wells.
Anyone who believes that the price floor is automatically set by an auction must be one of those people who thought the Circuit City closeout sales were a good deal because everything was “30% off”, nevermind how marked up it was to begin with. A deal is only a deal if it is priced low compared to similar items, not just because it’s a “sale” or an auction, etc.
Wouldn’t the price ceiling be set by an auction, not the floor? If they were setting price floors, why would they have the auction in the first place? Oh that’s right…
I’m with Bob…the auction sets a starting point, not a floor. If anything, an educated buyer will negotiate down from these figures, especially as the market continues to slide.
Whoever the author got this info from seems to assume we’re operating in a floored market, which is laughable.
It looks like Annon is not the only one who wants a do-over.
March 8, 2009
What Contract?
By Michael M. Grynbaum, NYTimes
COULD the days of the iron-clad contract be numbered?
It used to be that once a buyer went to contract on an apartment, the terms of the deal were all but set in stone. Sales prices never budged, and if the buyer balked, the down payment went bye-bye.
But double-digit price declines and the lending drought have started to threaten this once near-inviolable pillar of New York real estate. Buyers are demanding concessions from developers on apartments that they say have lost up to 30 percent in value. Others are hoping to back out of their contracts entirely, while keeping their down payments in the process.
“I would argue that the auction sets a ceiling – not a floor – for future sales at the project…”
Yes indeed. My only question is what will come first, the auction of the remaining 60 condos or Corus Bank in receivership? My money is on Corus going under soon…
http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/02-18-2009/0004974981&EDATE=
Stock price seems to be holding in strong at 10¢ 🙂
John
with regard to a buyer being under contract pre-construction or early construction and, in the interim, the market tanking, and buyer wanting the price to be reduced to match the market without losing e money (if no drop dead clause). . . .
one very effective angle in the current market is using the mortgage appraisal. . . .
depending on a buyer’s contractual financing terms (how much cash buyer is putting down – and assuming buyer is not planning to pay in full-on 100% cash – and assuming buyer DOES have a mortgage contingency in the purchase contract . . . ), if values have truly dropped significantly, the unit is NOT going to *appraise out* when it comes to mortgage commitment time (i.e., when the property is nearly finished and heading to close and buyer’s mortgage co. appraises the unit to make sure it is not lending too much on a property, the appraiser will find that the property is NOT worth the price to which the parties agreed – and mortgage co. will refuse to lend). so, the seller will have to drop pants on price and renegotiate down to appraised market value so that buyer can get a loan, or let buyer out.
if there is no mortgage contingency in a buyer’s contract (and many developer contracts do NOT include these as they are buyer protection clauses – a diligent buyer agent will add one to the contract in such a case), it is not as clear cut, but still a possibly viable angle . . . the conversation goes something like this . . . “i mean, really, . . . u are going to hold my buyer to a contract to purchase a 250k property in CASH since he can’t get the loan? really? and you are going to file suit for specific performance? really? and you think my buyer has 200k sitting around right now? really? give us the earnest money back. don’t waste your time.” it’s not a clean option, but it might work.
🙂
good luck!
does anyone know if the auction prices included a deeded parking spot?
“does anyone know if the auction prices included a deeded parking spot?”
Yes, they did.
1 parking space included.
Forrealestate:
Isn’t that the problem they’re having though? The developer brought in an appraiser who DID appraise the property for the higher price (even though nearby buildings have seen declines).
Additionally- the developer HAS threatened specific performance on numerous people in the building (from what they’re saying here.)
It sounds like a game of chicken to me.
I see the final sales spreadsheet, did the buyers at the auction get a fair price?
Just more data points along the big decline.
Question to all knowledgeable individuals:
I’d like to know what happens if the condo appraises lower than the purchase price. What do developers do in these situations? Do they ever lower the purchase price down to the appraised amount?
How do they deal with people not being able to close b/c they cannot get a mortgage? You can email me at aleks1981@hotmail.com if the answer is too long.
Thanks!
anonn…looks like you bought right at the cliff…..sucks.
http://video.google.com/videoplay?docid=-2757699799528285056
Anyone out there visit Vetro since the auction to check the new prices and possibly buy? Are the prices same as the auction/higher or/lower? Were they willing to negotiate lower prices? Please report.
I’m curious to see how many people actually close. Some banks do not lend to autioned properties.
i’m not sure about the whole developer bringing in an appraiser thing – but i haven’t worked with any lender who doesn’t insist on doing their own appraisal. why they keep building and building in the south loop, i do not know!
“the developer HAS threatened specific performance on numerous people in the building”
Has any *seller* ever gotten specific performance in a residential real estate transaction? HD? You can determine the damages to a seller–it’s the difference b/t the contract price and the price that the property can sell for–and when you can determine damages, specific performance is an unusual remedy. But even a determination of actual damages is fairly rare when there is a deposit, especially with a developer who used their own custom contract–it will be construed against the developer, as the drafter of the contract.
If the developer is involving its lawyer(s) in making suggestions (I won’t call them threats) regarding specific performance, that’s a very questionable practice by the lawyers, imo.
One bank said that if the appraisal doesn’t meet the unit’s sales price, the buyer brings cash to closing when the unit is upside down. How can a developer make you close if you don’t have the cash? They can’t. They wont waste their time. They will hold the unsold unit, rent it if they have to, reprice it if they’re forced to and sell it. Trying to sue the old buyer for the difference is throwing money down a well. Who are all these people who think buyers are sued for specific performace? That’s an urban legend. What buyers can come to the table with cash in this economy. LOL. No one can do that now. Lots of lawyers fees to spend just suing everyone who won’t close who probably don’t have the cash to do so anyway. Move on. Anon will buy another unit somewhere else and write off the loss. Who cares; good for him. Good info, though.
The units have been repriced. I called and asked the price for the highest floor 1667sf unit and he said that was 2803, at $455k. These units were supposed to be priced at the auction $/sf level, but they want an extra $20k+ for the 2803 unit over the 2603 unit (which IIRC went for $42Xk). :-/
The 20k is probably negotiating room. Remember their list price is just their ask price.
The 20k is probably the realtor fee… lol
I just posted a rundown of the new prices for all the remaining tiers over on Yo: http://yochicago.com/today/high-rises/vetro-rolls-out-post-auction-prices_8529/
I know list price is just their ask price, but I was hpoing they’d start at the auction prices and I could ream them further. =P
Thanks for the update Joseph. That’s some great information.
Anyone interested in the Vetro’s reduced pricing should check out YoChicago for more information.
Thanks to Dave for posting the auction results. I combined them with my data for a closer look at the source of the moaning heard in the SW Loop (and not coming from the MCC.)
For example, here are the sold units in tier 1:
Unit Status Date Sale $ Pkg Mortgage $
701 CLSD 8/5/2008 $235,000 p124 $211,500
801 CLSD 11/7/2007 $246,500 p109 $176,500
901 CLSD 11/9/2007 $257,500 p118 $107,000
1001 CLSD 11/27/2007 $257,500 p128 $200,000
1101 CLSD 12/8/2008 $181,000 no pkg $144,720
1401 AUCTION 3/7/2009 $160,000 w/pkg
1501 AUCTION 3/7/2009 $162,000 w/pkg
1601 AUCTION 3/7/2009 $162,000 w/pkg
1701 CLSD 10/15/2008 $176,500 p27 $176,500
1801 CLSD 12/3/2008 $204,000 p46 $193,330
1901 CLSD 6/5/2008 $227,000 no pkg NONE
2001 CLSD 11/20/2008 $206,000 p65 $195,605
2101 CLSD 1/31/2008 $272,500 p224 $220,104
2201 CLSD 2/25/2008 $286,400 no pkg $186,675
2301 AUCTION 3/7/2009 $188,000 w/pkg
2401 CLSD 11/19/2008 $210,000 p167 $168,000
2501 CLSD 3/4/2008 $255,900 no pkg $186,000
2701 CLSD 3/31/2008 $324,000 p168 NONE
2801 CLSD 12/22/2008 $201,000 p159 $155,000
2901 CLSD 10/24/2008 $205,000 p18 $153,750
Looks like the folks who closed in Q4-08 are ~10% over auction prices and everyone who bought before that is really unhappy.
Tiers of Tears, 02:
702 CLSD 12/7/2008 $232,000 p212 $173,925
802 CLSD 11/7/2007 $231,000 no pkg $221,445
902 CLSD 5/21/2008 $291,500 p119 $224,000
1002 CLSD 11/19/2007 $273,500 p129 $188,720
1202 AUCTION 3/7/2009 $177,000 w/pkg
1302 AUCTION 3/7/2009 $171,000 w/pkg
1402 AUCTION 3/7/2009 $171,000 w/pkg
1502 CLSD 12/10/2007 $283,500 p73 $280,600
1602 CLSD 12/12/2007 $252,000 no pkg $240,600
1702 CLSD 1/17/2008 $0 p53 $175,000
1802 CLSD 12/27/2007 $256,000 no pkg $227,400
1902 CLSD 1/25/2008 $293,500 p32 $255,900
2002 CLSD 1/25/2008 $298,500 p180 $261,600
2102 CLSD 4/22/2008 $291,500 p209 $276,700
2202 CLSD 2/20/2008 $298,500 p144 $274,550
2302 CLSD 4/16/2008 $298,500 p154 $236,545
2402 CLSD 7/9/2008 $303,500 p169 NONE
2602 CLSD 8/26/2008 $259,000 no pkg $204,800
2702 CLSD 3/31/2008 $307,500 p191 NONE
2802 CLSD 6/5/2008 $301,500 p127 $183,000
2902 CLSD 5/1/2008 $306,500 p17 NONE
Are those all identical floor plans? If so… OUCH!
And here, the only post-9/1/08 closing before the auction was almost 25% over auction price. Based on the higher percentage sold, the developer prob didn’t discount the 02 tier as much pre-auction, right?
That appears to be the case, anon.
I should add that any omitted units in these tier results remain unsold.
Here’s another tier:
Unit Status Date Sale $ Pkg Mortgage $
1803 CLSD 9/29/2008 $480,000 p205 $432,000
2203 AUCTION 3/7/2009 $412,000 w/pkg
2303 AUCTION 3/7/2009 $419,000 w/pkg
2403 AUCTION 3/7/2009 $420,000 w/pkg
2503 AUCTION 3/7/2009 $421,000 w/pkg
2603 AUCTION 3/7/2009 $429,000 w/pkg
2703 CLSD 9/11/2008 $513,000 p217 $410,400
And another:
Unit Status Date Sale $ Pkg Mortgage $
704 CLSD 4/22/2008 $464,500 p15 NONE
904 CLSD 6/24/2008 $436,000 p121 $348,700
1104 CLSD 5/1/2008 $416,500 p105 $342,400
1204 CLSD 9/17/2008 $310,000 p96
1704 CLSD 4/16/2008 $449,500 p171 $355,300
2004 CLSD 4/25/2008 $502,500 p31/p233 NONE
2104 AUCTION 3/7/2009 $259,000 w/pkg
2204 AUCTION 3/7/2009 $265,000 w/pkg
2304 AUCTION 3/7/2009 $270,000 w/pkg
2404 CLSD 10/20/2008 $330,000 p201 $264,000
2504 AUCTION 3/7/2009 $266,000 w/pkg
2604 AUCTION 3/7/2009 $257,000 w/pkg
2704 AUCTION 3/7/2009 $269,000 w/pkg
2804 CLSD 8/1/2008 $345,000 p155 $275,000
2904 CLSD 12/15/2008 $331,000 p11 $297,900
Looks like the investors keep coming out in droves.
Already the new proud new owner of 2503 is pitching it as a $3,500 rental:
http://chicago.craigslist.org/chc/apa/1079280124.html
Talk about over eager…has this guy even had time to close yet?
That 04 tier–wow. Resorted for closing dates:
1704 CLSD 4/16/2008 $449,500 p171
704 CLSD 4/22/2008 $464,500 p15
2004 CLSD 4/25/2008 $502,500 p31/p233
1104 CLSD 5/1/2008 $416,500 p105
904 CLSD 6/24/2008 $436,000 p121
2804 CLSD 8/1/2008 $345,000 p155
1204 CLSD 9/17/2008 $310,000 p96
2404 CLSD 10/20/2008 $330,000 p201
2904 CLSD 12/15/2008 $331,000 p11
They were already dumping them *before* the auction. How burned does 904 feel that 6 weeks later a comp was $90k less (and 19 floors up)? Another tier 20% off at auction, along with 03 (btw, what’s the matter w/ 03?)
How about
904 CLSD 6/24/2008 $436,000 p121 $348,700
$87,300 down
2604 AUCTION 3/7/2009 $257,000 w/pkg
-179000 price difference
If he were to try to sell today he’d have to come up with $91,700!!!! More than he put down on the place! OUCH!
“the new proud new owner of 2503”
Again with the $10 closet racks (like in 340 TOP). What’s the deal with such absurd cheapness?
And it’s entirely possible that they closed, the seller was certainly ready and it was an as-is auction, no?
Yeah, Sonies, but 904 had **barely moved in** and already lost more than his DP, and was on 9 instead of 28. And both happened before the bottom fell out in September.
If it had been 8/24–>10/1, it even would have been more understandable. There wasn’t **any** meaningful change in circumstances b/t 6/24 and 8/1.
“If he were to try to sell today he’d have to come up with $91,700!!!!”
No the owner of 904 would certainly have to come up with more than $91,700. Remember there is presumably some premium to the higher floors (terrace level aside) for better views and being further away from street noise. Plus the owner of 2604 definitely isn’t only 2 stores above that fugly half-finished kitchen on the terrace the the owner of 704 put up.
The owner of 904 was doubly scr_wed: not only financially but now he has to look out on his terrace at the idiot two stories below him who basically destroyed a clean concrete space with an attempt of his artistic vision before he ran out of money.
That auctioned unit for rent on Craigslist is pretty wild. Is that anywhere near cash flow positive?
Those buyers from last year had better hope they got a fixed, otherwise, they’ll have pretty much no chance of refinancing when their rates reset.
“Is [2503 at $3500/month] anywhere near cash flow positive?”
What are taxes + assessments? $1000/month? Then it’s cost a ~7% cap rate, which is respectable and should cover costs.
The developer, although he screwed a lot of his previous purchasers over, was obviously smart enough to see the writing on the wall for the real estate market, and is trying to get out as quickly as possible. Good for him, good for him.
“Is that anywhere near cash flow positive?”
All calculations require the input of what it actually rents for. If you think $3,500 I’ve got a bridge to sell you..
Dave, I believe that #2503 assessments w/pkg are approx $700/mo and taxes with no exemptions will be approx $450/mo. Auction price of $421,000, 20% down, 6%, is $1684/mo interest. That’s $2834/mo without vacancy, upkeep, other expenses and depreciation.
They won’t get the $3500 rent. I don’t have a lot of data on the higher units, but I am seeing some ~1340 sf 2/2 rents at $2200. We’ll see.
$2,200 still seems like a high price to me but apparently there is some demand at that price point; however, as more and more of these units enter into the shadow rental market I’d suspect that a 2/2 new construction ‘downtown’ (and I use that word loosely) will rent b/w $1,400 and $2,000 depending on location and building w/in the next few years. This is just a hunch but I’m thinking that’s what I would pay; and that’s what I’ll be looking to pay in a couple of years when I move if SFH prices haven’t yet reached a reasonable pre-bubble price point. GO ahead, flame me all you want, I don’t care, of course there’s a market for executives and transplants and subleasers who are rich and have lots of money and can afford to spend $3,500 a month yada yada yada , i’m crazy to suggest that a 2/2 could ever be less than $2,000…
Interesting Craigslist post Bob. Thanks for linking to it.
I’ve been watching the rental market for many months. I would be shocked if they could get even $3000 a month for this unit given the sheer number of upper end rentals out there.
We’ll soon see.
Unit 2104 was also purchased by an investor at the auction:
http://chicago.craigslist.org/chc/apa/1089959504.html
They’re gonna try to get 1,650/month. Doesn’t seem like too bad of a deal considering it comes with 2 full bathrooms, a north facing city view and parking. Does make one wonder exactly how many units at auction were purchased by people planning to live there vs investors.
re: 2104:
So, unless taxes + assess are quite low, that’s a max 5% cap rate. Pretty skinny, if you ask me.
I dont see $3500 being far fetched. I have rented out $4000 2bed/2bath units in the downtown area. An 1800 sq/ft penthouse with parking at $3500 is not impossible but its not for an ordinary agent who rents out $1500 units. You have to cater to a specific class of clients who has this kind of cash flow and be able to sell.
In other words, you need a sucker?
Unit 3105 came onto the MLS on 8/5/2011. This specuvestor got the unit for 556k at auction and is asking 625k for it.
All calculations require the input of what it actually rents for. If you think $3,500 I’ve got a bridge to sell you..
So, since you accuse people so randomly and often Bob, with your unwarrented conspiracy theories about how they are making a comment because have a vested interest, you, after all seem to have a vested interest as well.
Spinoza is a big ol’ brokerage whore, aren’t cha?
Too bad they can’t shirk nor skirt what they did to move those last units. Chiefly keeping all but one of each tier that they owned off the MLS to give the appearance of lower supply than was actually the case. It was obvious to anyone who knew where to look.
Unit 2705 which sold at auction with parking for 300k came on the MLS yesterday with an ask price of 325k but an extra 25k for parking for a total of 350k.
Looks like specuvestors were ALL OVER the Vetro auction.
what investor would make such a stupid purchase/sale? Even if he/she got his full asking price, his net gain cannot be more than 10-20k MAX. For that huge risk, it isn’t worth it.
clio I strongly suspect from the canned pics that aren’t from the unit itself but rather of common areas perhaps the owner isn’t even local. some investor from elsewhere is my suspicion for that one.
Unit 3105 is also still listed for sale for 600k now which they got for 556k at auction.
These speculators are going to lose money.