On Sunday, the Chicago Tribune looked into the recent buying frenzy over foreclosures in the Chicago area that is clearing out some of the excess inventory.
From the Tribune:
Orlando and Aminah Burns became first-time homeowners last December when they bought a foreclosed two-flat in Bronzeville that they are now turning into a single-family home for themselves.
Now they are in the market again, looking for another bargain-priced foreclosure to rehab into apartments or condos. And while the first two floors of a Grand Boulevard building two-flat gave them hope, the steep descent into the illegal basement apartment revealed dark, dank, mold-stained walls and water-damaged floors.
“That mildew will ward off someone else that is brand new into it, but I’ve seen so much worse. I’m like, that’s nothing,” said Orlando Burns, who after thinking about it for a few days decided to offer $50,000 for the $39,900 property.
Taking those few days to think cost him the building. Less than a week later, the lender accepted a $59,000 offer from another couple of first-time buyers who plan to convert the foreclosed building into their own single-family home.
“It’s a very good first step,” said Lance Ramella, a principal at RW Real Estate Advisors in Oakbrook Terrace. “The first step is selling the most value-conscious units and those are the foreclosures. We’re not going to see any real sustainable price appreciation until we move the foreclosures off the inventory list.”
If you’re buying a foreclosure, it helps to have a big downpayment to compete with the cash buyers.
After saving money for years, Lincoln Park renter Bill Samuel started looking at foreclosures as a way to stretch his budget. The day that he walked through a Logan Square condo that was basically intact, he wrote up an offer on the spot. The condo, which last sold for $360,000 in 2007, was listed for $199,900 and already had two offers above the list price. Samuel offered the list price, but a 30 percent down payment is what got his offer accepted.
Remember our recent discussion of 350 W. Belden in Lincoln Park? This was the bank-owned 2/2 that was priced nearly $150,000 under its 2006 purchase price.
See our May 4 chatter here.
It sounds like it has already sold (if this is the same unit referenced in the article).
Attractive pricing is causing a noticeable increase in multiple offers. In just the past two weeks, a two-bedroom, two-bath Lincoln Park condo listed at $289,000 garnered 60 showings in two days and 20 offers; it sold for just over $330,000. A vandalized East Village penthouse that needed at least $80,000 in repairs was listed at $159,000 and sold for $245,000. In Northbrook, a foreclosed home listed at $719,000 received multiple offers and sold for $730,000.
A bidding battle on a foreclosure with potential “is not the exception,” said Henry Torn, a buyer’s agent at Chicago Realty Partners.
Is the result of this “bidding war” on the Lincoln Park condo the fair market value of this 2-bedroom unit?
Unit #607: 2 bedrooms, 2 baths, no square footage listed
- Sold in May 2005 for $438,000
- Bank owned as of January 2009
- Was listed in early May 2009 for $289,900 (parking included)
- Sold for $330,000???
- Assessments of $436 a month
- Taxes of $5478
- Central Air
- The listing doesn’t say anything about an in-unit washer/dryer
- Bedroom #1: 11×13
- Bedroom #2: 13×18
Foreclosures fuel sales to first-time buyers, may lead to real estate recovery [Chicago Tribune, Mary Ellen Podmolik, May 17, 2009]
