The $23,000 2-Bedroom Condo in West Town: 2606 W. Le Moyne
This 2-bedroom bank owned unit at 2606 W. Le Moyne in West Town (specifically- East Humboldt Park) just came on the market.
It is listed for $22,770.
No- that is not a typo.
It originally sold in December 2007 for $276,500 so that is quite the discount.
There are a few things a buyer should know, however.
First, there is no HOA with the building.
And second, there are no pictures of the kitchen or bath with the listing. Is it missing? It’s unclear.
The listing simply states that there are hardwood floors throughout.
It looks like there is no parking and I’m not sure about central air or washer/dryer in the unit.
But for the price of a car- is this a deal?
Ayoub Rabah at Great Street Properties has the listing. See the pictures here.
Unit #1: 2 bedrooms, 1 bath, no square footage listed
- Sold in December 2007 for $276,500
- Lis pendens filed in July 2008
- Bank owned in October 2009
- Currently listed for $22,770
- No HOA
- No tax information listed
- Bedroom #1: 14×10
- Bedroom #2: 10×9
- Living room: 14×10
- Kitchen: 14×10
Ghetto + small + probably some huge tax lein + no HOA (wtf) + cash only = priced to sell!!
No A/C, sure, but “No Heating”??
Also, how did this ever sell for $276K (presumably with heating)?
2608 #1 (same building, maybe a diff front door) apparently sold last month for $24,900. There are more pix of that unit, showing no kitchen and broken windows. Probably could get ti habitable for around $10k. Get two of them, you’re on your way to owning a cheap rental building. Yes, with lots of problems, but I know a few people who managed to retire comfortably on the income produced from benig “slumlords” with props like this.
“I know a few people who managed to retire comfortably on the income produced from benig “slumlords” with props like this.”
DO you really want to be 65 years old and attempting to collect rent from the piece of crap idiots that are probably going to be living in this place/hood?
“DO you really want to be 65 years old and attempting to collect rent from the piece of crap idiots that are probably going to be living in this place/hood?”
No, I don’t. And the people who I know who did that successfully where selling their slum properties in their 60s and sitting on the cash.
Or sonies you pay someone else to collect the money for you.
I think “muscle for hire” companies went out of business in the 50s 🙂
“Also, how did this ever sell for $276K (presumably with heating)?”
maybe a funny mortgage?
Is this a good unit to purchase as a buy and hold strategy? Will this property return to the 2008 price by 2020? That’s 10 years….
I’ve lived a block from here since 2003. I’m single and make over $200,000 a year. It’s a beautiful, old neighborhood with lots of amazing houses. There’s far, FAR less stranger crime than in wicker park and bucktown. Yes, there’s definitely some drug dealing activity, but it’s generally on the down-low, and they certainly don’t bother neighborhood residents. It’s a great community, and it really borders on racism to call it “the ghetto.”
signed,
just another “piece of crap idiot”
“Is this a good unit to purchase as a buy and hold strategy? Will this property return to the 2008 price by 2020? That’s 10 years….”
It’s should easily kick off well over 10% return on cash, including reno, net of taxes and assessments, but ignoring vacancy, in real 2010 dollars for that whole period, so, yeah, it is a good buy and hold property, even if it’s only worth $25k in 10 years. And, if it somehow returns to it’s 2008 value–even in 25 years–then it’s pretty much a home run, no?
Blah… another knife catcher. Prices are going to keep going down! No way median incomes can support this type of pricing.
man I wish my mortgage was $90 a month… LOL
Russ: nice channelling of some of our other posters here on CC
$23,000 for a place to live? Shoot, a Starbucks barista can afford this.
“No way median incomes can support this type of pricing.”
Although I will say this paints a disturbing picture:
http://www.susandosemagen.com/chicago/
Scroll over the map and you can compare low, middle and upper income areas by decade going back to 1970.
No, no, no. With comps renting at $60 a month, now is NOT the time to buy. Unless you MUST buy in the next few months, you should wait until the spring, when this place will be $18,000 tops. It ain’t over yet folks. Your parents might have gotten rich when their place in West Town appreciated 500%, but those days are over. Unless you are CERTAIN you’ll be in this 2 bed for at least the next decade, you should rent it.
but who is renting an apartment for $60 a month? that’s not worth the hassle of collecting the check/dealing with a tenant, you’d be better off panhandling.
“Blah… another knife catcher. Prices are going to keep going down! No way median incomes can support this type of pricing.”
And with no heat so is the temp inside this place!
“but who is renting an apartment for $60 a month? that’s not worth the hassle of collecting the check/dealing with a tenant, you’d be better off panhandling.”
Not to mention that it won’t cover the taxes.
I bet I could buy this place with Amex points. I wonder if that would be considered subprime lending.
Skeptic…what are you talking about? No one in Chicago makes $25k a year. Those jobs are disappearing. I had a buddy who worked at Starbucks after graduating with a Asian Lit degree making $30k a year. He got laid off and had to settle for third tier Caribou Coffee at $22k. He couldn’t even get a second round interview at Peets.
Of course, when his wife craps out Junior this place will be back on the market. No way they are going to leverage this place for a down payment in Naperville.
If it such a great deal why don’t you buy it?
“If it such a great deal why don’t you buy it?”
Because from Russ’ perspective RE transactions are good as that is how he gets paid. But even he knows very few people actually make money owning real estate in Chicago.
“Scroll over the map and you can compare low, middle and upper income areas by decade going back to 1970.”
scary shyte, and now my day is ruined.
“If it such a great deal why don’t you buy it?”
For someone already into the Section 8 landlord scam, it’s a great property. If that person already bought the unit next door, it’s even better.
I’m already overallocated to RE and not interested in the hassle, as I work too much already. But, for the right person, it’s a screaming deal, as it would cashflow from the start, after the fix-up, even w/ market, instead of Section 8, rents.
Bob… more of a commentary on how no matter how cheap a property is on this site, many of you still are going to complain. Of course, the jab is in good fun, but you guys can be a depressing bunch sometimes. Even though I am in RE, you know that I am not a rah rah booster. Just no where near as apocalyptic about the market as some of you guys.
off topic, but this listing reminds me of that series npr did a year and a half ago about the bubble burst and they interviewed those wretches in rogers park who had bought into a rehabbed courtyard in 2007 only to find the the developer had cut corners on everything (there was literally dirt under the wood floors in the garden unit and the sewage line hadn’t been properly hooked up – ew). It was sooooo depressing. If this listing was the same kind of deal, nothing short of buying the whole building and starting from scratch would be worth it.
“Bob… more of a commentary on how no matter how cheap a property is on this site, many of you still are going to complain. ”
Well compared to renting, even with today’s reduced valuations from peak, it just doesn’t seem to make financial sense except in rare exceptions.
As an example I was telling a friend about 1/1’s in LP than can now be had for under 120k. He was amazed and said well they’re probably cash-flow positive. I ran the numbers including taxes and assessments and it still didn’t make sense (not to mention the additional risk from buying in a foreclosure-riddled bldg).
All “owning” seems to do in today’s market is make you a target for the taxman.
“All “owning” seems to do in today’s market is make you a target for the taxman.”
How depressing to think this way. There are non-financial benefits (such as happiness, pride of ownership, ability to make design decisions) that accompany home ownership. It’s also cheaper to make sandwiches and sit home alone and eat them rather than go out to dinner with friends/family…
“As an example I was telling a friend about 1/1’s in LP than can now be had for under 120k.”
2625 is a dump, and it was a dumpy apartment building before it went condo. Check out 1708, listed for $99,500, with a 2005 sale for $325,000.
With over $900/mo in taxes and assessments, and 1/1s in the building being offered on CL for $1050/mo, there’s no way that’s a smart buy.
and on a lighter note…judging from google maps streetview,just a ways down lemoyne,it looks like it wouldn’t be to difficult to score a mid-afternoon crack rock around that particular corner.
Where’s 2625?
Where’s 2625?
2635 Clark. The only building in (Redfin) LP to have 1/1s listed at $125k or below.
Got it. You’re right anon, that building was and is a dump.
“All “owning” seems to do in today’s market is make you a target for the taxman.”
thats a dumb way of looking at it because if taxes go up you can sure as hell bet that rents are going up as well to compensate… at least property taxes are tax deductable
“thats a dumb way of looking at it because if taxes go up you can sure as hell bet that rents are going up as well to compensate… at least property taxes are tax deductable”
Bob won’t pay more, he’ll just move!
“With over $900/mo in taxes and assessments, and 1/1s in the building being offered on CL for $1050/mo, there’s no way that’s a smart buy.”
No doubt. But even other 1/1s below 200k (which admittedly are also few, but at least more buildings), you’ll find crazy taxes & assessments. Maybe two out of the 24 are cash-flow neutral compared to renting.
Obviously a lot of dumb money is still out there are too many people big on debt but small on equity or income believe in paying for the home ownership “intangibles” that Jon was pitching.
OK – I know this is off topic, but you have to see the quote from an email I got from a real estate agent (who is representing the buyer on a contract sale I am doing with my farm). The whole deal is falling apart b/c I am refusing to pay the full commission right now (I am willing to pay in installments as the buyer pays me – otherwise, the buyer could walk and I would be out the commission). OK – ready, here it is verbatim: “It is not our job to make sure that any buyer does not default.” – this is the exact attitude that got us into this real estate mess. This realtor should be fired and banned from the industry for life!!! (OK – I know that is a little extreme, but I am upset that the deal is falling apart over commissions).
Jon: “There are non-financial benefits (such as happiness, pride of ownership, ability to make design decisions) that accompany home ownership.”
I know 5 friends who have purchased condos in the 00s, and every single one of them regrets it. I don’t see much “happiness” or “pride” from their home ownership. Does anyone’s peers or coworkers really cares if you own or rent?
And the “ability to make design decisions” is just having the choice of what condiments to put on your poop sandwich.
Clio pay your damn realtors. You are wrong on this issue, just plain wrong. Realtors get paid at closing. They found you a buyer. You take the risk on seller financing, not the realtor. Stop being such a cheap a$$hole.
I agree with Danny – everyone I know who bought condos has dealt with a significant paper loss and tons of headaches – here are some examples. All of them are completely stuck, make decent income, and are incredibly envious of the ability of renters to be able to move. Owners like these are primarily stuck and will paralyze the market for at least 5 years.
Friend #1: bought a 2/2 in 2007 in Wicker Park. Now value is 20-25% below what they paid. Recently had a child and will be unable to move to a better school district for quite a while.
Friend #2: bought a 1/1 in West Loop in 2006. Value is way down, and also had issues with the developer who ditched the country and had some defects in the common areas that required a significant special assessment. Got married and moved into spouse’s 2/2, and are renting the 1/1. Had a child in 2009 and will probably want to move to the near north burbs in 2011 or 2012, but really can’t because they would have to sell at such a significant loss on either of the condos they own.
Friend #3: bought a 2/2 in Lakeview in 2006 with 0% down. Value today is most likely 25% below what they paid. Is considering moving out of state for their job, but doesn’t want a huge hit to their credit due to their job/industry.
“Clio pay your damn realtors. You are wrong on this issue, just plain wrong. Realtors get paid at closing. They found you a buyer. You take the risk on seller financing, not the realtor. Stop being such a cheap a$$hole.”
But… but… this would stand directly in the way of his seller financing Nirvana he’s been espousing on this site. Have that cake and eat it too!
This is for Friends #1 and all the others I’ve seen mentioned in this “chatter” over the past few months:
OK, so you’re “stuck” in a home that’s in what you perceive, rightly or not, to be in a sub-standard school district. Guess what – there are probably a LOT of families around you that share your concerns! Both “newbies” like you and settled residents who may already have their kids in the school in question.
So maybe this is a Sign From Above that you should get off your…Stairmasters and start getting pro-active about local school reform? For the benefit of not only your own little Ashley/Jake but your neighbors’ kids as well?
You wanted to live in the city and “take” all the good stuff it has to offer you – well, maybe it’s time to do some “giving” as well.
It can be done; there are stories of successful parent-initiated “turnarounds” – get going and get active!
As talk-show host Tom Hartmann (WCPT) says: “Tag! You’re It!”
“I agree with Danny – everyone I know who bought condos has dealt with a significant paper loss and tons of headaches – here are some examples. All of them are completely stuck, make decent income, and are incredibly envious of the ability of renters to be able to move. ”
One of my coworkers likely falls into this group. An underwater person (I suspect) who the other day was telling me “but now has never been a better time to buy”. Its almost like people with kids talking to others about how great they are, even if they know they aren’t they still need to pitch it to validate their own life decisions.
I was like “uhh no I don’t even have kids why do I want to pay for others kids schooling”. And she even used the lameO logic that but you can’t make $$$ on real estate if you don’t buy when its low. Like I’m going to take her advice on making $$$ on real estate. Well actually I kind of did–I took the other side!
Misery loves company and be very aware of people in a bad situation who seek to add more to their ranks.
“Clio pay your damn realtors. You are wrong on this issue, just plain wrong. Realtors get paid at closing. They found you a buyer. You take the risk on seller financing, not the realtor. Stop being such a cheap a$$hole.”
clio is wrong in what sense? Legally, ethically, morally? And what is definition of closing? Or buyer? Etc.
This may be unusual but surely it’s not unprecedented.
“Clio pay your damn realtors. You are wrong on this issue, just plain wrong. Realtors get paid at closing. They found you a buyer. You take the risk on seller financing, not the realtor. Stop being such a cheap a$$hole.”
1. You’re seriously defending realtors?
2. In a commercial transactions, they’d have to suck up the earn out. Find a true, today buyer, get paid today.
3. Clio should have modified the listing agreement, that is true.
4. Sign a lease for 12 months. Let them sue you, if they like.
How can you find out what kind of tax lien this property has?
Clio should pay the realtor. I don’t like paying realtors, but my last property never even hit MLS and realtor got the buyer.
Its lessons learned. You wanna do your owner financing? then modify your listing agreement.
or burn the bridge or go to litigation
“Skeptic…what are you talking about? No one in Chicago makes $25k a year. Those jobs are disappearing. I had a buddy who worked at Starbucks after graduating with a Asian Lit degree making $30k a year. He got laid off and had to settle for third tier Caribou Coffee at $22k. He couldn’t even get a second round interview at Peets.”
I can’t tell if you’re joking or not here, but this is ludicrous no matter how you cut it, unless you’re talking about the deadbeat-borderline-unemployable demographic.
I think you should stay far away from this property. I am looking at listings under 75K and Humboldt Park is one of my target areas, however going forward, I won’t look at anything which does not have a fully operational HOA. Stable healthy buildings require constant maintenance, assessment fees, money in reserves and interested, vested residents.
There are a number of red flags with 2606 W Le Moyne:
– Property is on the ground floor. I have noticed the majority of foreclosures and short sales are garden apartments or on the ground floor.
– You can see a boarded up window in the photo showing the outside of the building. This window may even belong to the unit in question. Then in the third photo it appears there are electrical wires hanging in a jumble in one of the closets. As A-moo pointed out, these issues are just scratching the surface of some serious structural problems which could be lurking.
When I did an extensive tour of distressed buildings around the city a couple of weeks ago, ALL of them had broken windows. All of them had broken-in glass on the front door. Some of them had rat droppings, uncut grass, dirty common areas and bad smells. These buildings didn’t seem to have ANY owner occupiers. Some buildings were totally deserted. Others appeared to have been rented to sketchy tenants.
There are apartments out there even cheaper than this one. The cheapest listing I saw popped up a few months back for a 1BR in Rogers Park for 9K. There are plenty still available in that area for around 15K. I think if you really look, you can find that one distressed condo unit in an otherwise well-maintained, safe building, but probably not this cheap.
Most things in this price range are terrible and even if you had the money to fix your unit up, the rest of the building is going to suck, and do you really want to live in a scary building like that? Or, if you are buying as an investor, what quality tenant are you going to attract? And realistically, it’s a nice thought, but how could you possibly buy up the whole building when the whole thing’s been sliced and diced with various mortgages in various states of distress?
You’d be better off looking at multi-family buildings. I’m running an active search all over the Northwest Side for multi-family buildings as well, but most things at the lower end of the price scale are either frame which doesn’t weather as well as brick, or slab construction with no basement which I also won’t touch.
I agree that most stuff out there is overpriced and languishing on the MLS. If you like something, just make a lowball offer. The worst they can say is “no”.
you know, sometime in the boom there were a host of stories about how some of the more organized street gangs (Gangster Disciples, etc) had moved into mortgage/housing fraud. I wonder if this building could be a casualty?
Yes anon(tfo) I’ve never been one to defame realtors on this site. I’ve got nothing against realtors.
“1. You’re seriously defending realtors?”
Remember “cheap can end up costing you”…
“I agree that most stuff out there is overpriced and languishing on the MLS. If you like something, just make a lowball offer. The worst they can say is ‘no’.”
Milster–you’re 100% correct. The apparent “deals” get a ton of bidders and don’t end up being deals once they’re bid substantially above list price. The best deals end up being the properties that are generally well maintained and being listed by true motivated sellers. I think a lot of buyers shy away from the low ball approach because you need to write up a lot of offers before one ends up working and most agents/brokers won’t have the patience to work with that type of client. However, I’m a broker and took this very approach…and there are a lot of sellers that aren’t willing to play ball. Eventually, you find someone that will.
Oh…and the potential deal properties can’t have a ton of debt attached to the property…
“Yes anon(tfo) I’ve never been one to defame realtors on this site. I’ve got nothing against realtors.”
It’s not defamation to point out that in clio’s situation they haven’t (yet) really earned they’re 6%. If they deal turned into a long-term lease, should the realtors get pad as if it were a real sale?
And, yes, clio f’d up if he used an unmodified standard listing agreement. This may just be a live-and-learn experience that costs him thousands of dollars. If he’s intending to do more seller-financed deals, he should get a modified listing agreement, or a rider or something, drafted by someone who knows what they’re doing and require it be signed. He may need to be prepared to pay the buyer’s agent upfront, but his listing agent should be willing to abide by his terms.
“I think a lot of buyers shy away from the low ball approach because you need to write up a lot of offers before one ends up working ”
Yes, Chris M, this is actually what happened to me! My advice to everyone out there is do not be shy. Have no shame and do not give up! Do not be pressured into offering more than you want to pay. And hold out for a good building.
I’ve written a ton of offers through my agent. A couple of them, the sellers rejected. Others, they countered, so I countered again and they would not come down more. Others, the condos had okay financials, but the units required significant repairs (including a lovely 2BR in Albany Park with the worst water damage I had ever seen. Too much for me to ultimately tackle). Others, the sellers accepted but they were short sales and the bank dragged their feet or wanted me to cover the unpaid assessments and mainentance which I will not do, or they totally pulled the properties from the market. On another, the listing agents strung me along and then asked for additional $$$ to pad their commission.
I finally do have a short sale studio in Uptown in contract. I am happy with the price and the building. However it’s been 3 months now with NO word from the bank either way, so I’m keeping my options open and looking at other things.
“the listing agents strung me along and then asked for additional $$$ to pad their commission”
If in a short sale, I’d want to (but maybe would not) rat them out to the Lender. You want to be treated as an agent of the seller, then you need to accept the duties of an agent.
Clio is selling the unit – someone is buying. However, he is providing the financing. How is this not a sale?
There is a different listing agreement and fee schedules when realtors find tenants. This is not the case.
Financing is between the seller/buyer. The realtor just brings the parties to the tables. They put together the deal. They should be paid at closing in my opinion.
If clio wants to find a realtor who will get paid differently, good luck. but he’ll have less buyers agents showing the property because the commission has a ‘catch’ to it. which means he may not find a buyer as quickly or at all.
“#anon (tfo) on October 13th, 2010 at 11:32 am
“Yes anon(tfo) I’ve never been one to defame realtors on this site. I’ve got nothing against realtors.”
It’s not defamation to point out that in clio’s situation they haven’t (yet) really earned they’re 6%. If they deal turned into a long-term lease, should the realtors get pad as if it were a real sale?
And, yes, clio f’d up if he used an unmodified standard listing agreement. This may just be a live-and-learn experience that costs him thousands of dollars. If he’s intending to do more seller-financed deals, he should get a modified listing agreement, or a rider or something, drafted by someone who knows what they’re doing and require it be signed. He may need to be prepared to pay the buyer’s agent upfront, but his listing agent should be willing to abide by his terms.”
Hi anon (tfo) –
Yes, I was so angry about that one, but I didn’t want to subject my agent to the fallout from the time-suck of reporting the listing agents because he has been so good to me and has always cheerfully provided his time for showings and written offers, even with my low price range 🙂 The lender was Bank of America, btw.
I was curious, so I just checked on that property. It is still listed in MLS as “active” however Redfin lists it as “off-market”. Odd.
In addition to asking me for mo’ money, the listing agents also informed me that since I live in NY and did not need to move in straight away that the seller was going to stay in the apartment indefinitely and pay me some rent! I said “no way” and also that there was no way BofA would allow that anyway. Her response was that “They don’t care who’s in the unit and they’re not going to check.”
Milkster–glad to hear the approach has worked for you (it’s worked for me as well). I’ve typically bid anywhere from 20-35% below asking price. Most of the time the counteroffer is a pathetic gesture of a couple thousand dollars, which is a clear indication that the seller is not serious about negotiating…and that it’s time to move on.
“Clio is selling the unit – someone is buying. However, he is providing the financing. How is this not a sale?”
Unless I’m misunderstanding the transaction, it’s much more like he’s selling them an option to purchase and leasing the property for five years, with the “buyer” have the right to terminate (at any time? with some notice period?).
Sure, he’s “financing” the option price and charging “interest”, but he’s not giving a deed, and the buyer can walk away any time they want. Doesn’t look like a sale to me.
On the “leasing has a different listing agreement”–of course it does. I’m asking “what happens if the place is listed for sale, but the realtors find someone who wants to rent?” How should the commission work then? The buyer/renter’s agent brought someone to the table–shouldn’t they get 3% of–at least–the capitalized value of the rent?
Milkster…one more thing you should be aware of (if you’re agent hasn’t already discussed this with you). You may have found that “low ball” offers are more readily accepted on short sale properties. And the reason is simple…the seller of a short sale typically is having a hard time getting people to view the property, let alone submit an offer, that they jump at offers. Besides, what do they care what the contract price is? They really don’t…the only thing they care about is whether the bank will accept the contract price and let them move on with their life. If they think the offer is too low for the bank to accept they might say “no” or counteroffer, but maybe not. The listing agent might not be well-versed in the process and might not give much thought to whether the bank would accept it…or they might just assume the bank will counteroffer. Just be careful with the short sales because there’s at least 3 parties to the transaction (or 4 parties if there are 2 mortgages on the property) and ALL of them have to agree to the terms of the contract. So a low ball offer isn’t accepted until the lien holders accept them.
Super Low ball offers i.e. more than 10% off the listing prices on short sales are generally considered a waste of time because the bank will deny it. They’re not wheelers and dealers – they follow flow charts that half a dozen bank officers need to sign off on before it gets approved and a low ball offer won’t fly. Then you waste everybody’s time when it most likely won’t be approved. Earlier this year I considered submitting a low ball offer on a short sale listed at $315,000; I wanted to go $180k or so. However, we decided against it and two weeks later it went under contract and then sold 60 days later for $290k (around the time of the tax credit). So I’m glad I didn’t waste anyone’s time and I sort of felt stupid thinking I could get a short sale for that cheap.
Who are you and what have you done with homedelete?!!! LOLOLOLOL.
HD is 100% correct. You could end up waiting months for a response just to get denied. Banks may or may not counteroffer…I personally wouldn’t want to tie myself up in a short sale transaction with an offer that might not be taken seriously. However, after a couple of sour experiences with short sales, I personally won’t touch them again. The entire short sale process is flawed and until banks are required to respond within a reasonable amount of time (i.e., within a couple weeks at most) or until all short sales are priced at competitive “bank approved” prices, they will continue to be extremely unpopular listings.
HD–what was the address of that property? Was it in OIP?
Yes it was in OIP 432X N kostner. Near the el, 3 beds, nice kitchen. but it was landlocked with no room for a garage and refinished woodwork was crappy, no central air, boiler heating….I didn’t mind it so much but the SO didn’t like it. I know better than to brow-beat a significant other into a home they don’t like. If a house doesn’t get the SO’s approval then its time to move onto the next house. I’ve got a lot of stuff going on and being in my current situation is getting a bit tiresome but because everything on the market is so stale and languishing, with little or no meaningful price reductions, I’m just going to hold off and continue to rent for a while. All it means is that my savings account will continue growing. I’m not the type of guy who decides to buy and just jumps in no matter what the pricing is. that’s how so many people got burned 2005-2007 and I’m not going to make that mistake. Time is on my side; I didn’t make the real estate bubble, I’m just trying to live through it. I told you all I got pre-approved for a mortgage and I got credit scores in the 800’s and savings for a down payment. When the right place comes up, I’ll buy. The right place will eventually pop up and I”ll be ready, although at the pace things are going….it’s like digging for dinosaur bones in the badlands. YOu know the big full set of bones is out there somewhere but it takes so long to sift through the tediousness of it all to find it. New listings are so slow; they’ve practically fallen off a cliff in the last two weeks even props going under K are picking up a bit during the same time period. Winter is going to be brutal for everyone involved.
Just looked at the listing for that Kostner property. I thought it was actually a decent deal until I looked at the location on a map…1/2 block from the Kennedy. Plus, it looks like Kostner is a somewhat busy street… Reminds me of the 2 foreclosure that were listed this summer just north of the Kennedy on Keeler for around $100k or so. Is the expressway audible from the backyard of the Kostner property? In general, I wouldn’t want to live that close to an expressway due to the pollution issues and studies linking proximity of expresway to asthma and other respiratory problems in children.
BTW…I think Old Irving Park is quite charming, but I don’t quite understand how it commands such high prices (despite the fact that it is in the city). It was a suburb that got annexed to the city and in many ways it evokes Oak Park and Evanston, suburbs that were developed around the same time. Belding, the attendance area school, doesn’t seem spectacular and it’s nowhere as well performing as Evanston and Oak Park schools, yet the prices of the OIP homes are higher. If you’re into gracious turn-of-the-century homes on large lots, you have or plan to have children, and don’t have a city residency requirement, seems like Evanston and Oak Park in particular offer far better value.
The expressway seemed to be a non-issue during rush hour. It’s the properties on the highway that scare me. The studies show that there is increased asthma in children up to a half-mile within a major highway but that the effects of pollution drop off precipitously after 500 feet away. This property is more than 500 feet IIRC. But on the other hand it was a short walk from the Montrose Metra.
Those other two properties were actually on the on the ramp. The blue house sold for $120k a few days ago and the other is under contract listed at $132k. It’ll be interesting to see what happens to them.
$290k for the kostner might be a deal but needs money for AC and the no garage was a deal killer. and the neighbor parked his car pretty much on your lot line in front of the house. Koster is a busy street but nothing that I would find objectionable, it’s still a side street. Regardless, you get the idea of what I’m looking for and these types of deals are far and few between.
Here’s a more expensive house practically on the highway. They have the audacity to say in the listing “Price is non-negotiable.” Well then show me another property! Hahhaha
http://www.redfin.com/IL/Chicago/4159-N-Kenneth-Ave-60641/home/13482198
“OIP 432X N kostner”
I know it’s kinda your thing, but are you really willing to live that close to the Kennedy? Do you plan on having kids? I know everything involves tradeoffs but that not one I would make.
“Old Irving Park is quite charming, but I don’t quite understand how it commands such high prices….nowhere as well performing as Evanston and Oak Park schools, yet the prices of the OIP homes are higher…seems like Evanston and Oak Park in particular offer far better value.”
Is this clearly right? I never look in OIP but I would have guessed the prices were lower than Oak Park if anything.
The SO and I live near the el to get downtown (Actually the SO works just north of downtown); and the highway for local travel for work (different courthouses). I’d actually prefer bucktown or wicker park or river west but those are out of my price range; and farther NW you get less professional minded people like myself. Evanston is too far for my suburban commuting days and too far to take the el to work; oak park pretty much the same. OIP is right in the center for my family’s commuting needs. and it’s got nice old homes on big lots. Maybe someday if my needs change I’ll look elsewhere but they way things stand today this fits my needs.
Living on the kennedy is not good; living near the kennedy doesn’t bother me so much. LSD is the equiv of living near the kennedy pollution wise and hundreds of thousands of people live within a half-mile of it and they’re doing OK. However I wouldn’t want to live next to it or on it. A block away is no big deal to me.
Yes and yes. Again, living near the highway is a good thing, living on the highway is a bad thing. The effects of the highway pollution drop off precipitously around 500 feet from the highway. Think of all the people who chose to live on LSD and breathe in pollution all day long.
“DZ on October 13th, 2010 at 2:14 pm
“OIP 432X N kostner”
I know it’s kinda your thing, but are you really willing to live that close to the Kennedy? Do you plan on having kids? I know everything involves tradeoffs but that not one I would make.”
I had great luck with a short sale.
The property had been on the market for over a year. One deal at a higher price fell through months ago due to slow bank response. I came in right as the bank lowered the price by 60k or so.
I offered ‘full price’ and was not allowed ANY contingencies-which meant that I had to inspect before going under contract.
Got a great deal and a relatively quick close…
Other similar short sale properties I looked at are still on the market. One was under contract for 6 months or so and is now active again.
dahliachi–Wow…gutsy move on the no contingencies. I don’t think I would take that risk unless I had no earnest money on the line.
“Again, living near the highway is a good thing, living on the highway is a bad thing. The effects of the highway pollution drop off precipitously around 500 feet from the highway. Think of all the people who chose to live on LSD and breathe in pollution all day long.”
I’m exactly in your camp commute wise. And I don’t disagree in principle with what you say, but the question is how near is too near. I’d have to look at the studies but I’d be surprised if they were that clear. Also, even if effects drop off “precipitously” at 500 feet, the more relevant question is how much higher are they at e.g. 750 feet versus 1500 or 2000 feet. I think our comfort level, without any research, is 3-4 blocks.
It’s also an easier decision at Logan/Bucktown b/c the El doesn’t run along the highway.
LSD isnt it non commercial traffic=less diesel emissions=less pollution
also less beater car traffic on LSD=less pollution
plus less traffic all together on LSD=less pollution
Interesting commments regarding my situation – it is kind of nice to hear all sides of the issue. True, I messed up by not using a modified agreement. However, there is ABSOLUTELY no excuse for a realtor to block a sale because of commission issues. I thought I was being smart and told the buyers realtor that I was going to do a 5 year lease/option with the buyer and if they opted to buy in 5 years, she would get her commission. The realtor freaked out and then started saying that the deal was getting too complicated and now she thinks the buyers want to back out (yeah right). The unethical behavior of real estate people is ridiculous – and there are few disciplinary actions ever taken. True, I work in a field where trust, respect and honesty are the norm, but real estate agents have to be down there with used car salesmen (and not from just this experience – from dozens of properties I have bought and sold – almost every single time the realtor/agent were more of a hindrence than a help – only exception was Katherine Chez- great person).
“LSD isnt it non commercial traffic=less diesel emissions=less pollution
also less beater car traffic on LSD=less pollution
plus less traffic all together on LSD=less pollution”
You’re going to mess up HD’s rationalization, man.
Logan is too crunchy of a neighborhood for me. 3 to 4 blocks is ideal but nothing in my price ranges.
“You’re going to mess up HD’s rationalization, man.”
Also, it’s not like anyone has shown AFAIK that living within e.g. 750 feet of LSD is fine. Certainly lots of people do, but lots of people live within 500 feet of the expressway too.
“Logan is too crunchy of a neighborhood for me.”
Not really that crunchy. Although I am amused by how everyone is up in arms about the non compete that new wave coffee is enforcing against la bounlangerie.
“The realtor freaked out and then started saying that the deal was getting too complicated and now she thinks the buyers want to back out (yeah right).”
That shi … stuff is awfully close to actionable. (Yeah, I know it’s not, but it’s close). Does make it clear that the Agent’s fidelity is to the commission, not their “client”.
“However, there is ABSOLUTELY no excuse for a realtor to block a sale because of commission issues. I thought I was being smart and told the buyers realtor that I was going to do a 5 year lease/option with the buyer and if they opted to buy in 5 years, she would get her commission. The realtor freaked out and then started saying that the deal was getting too complicated and now she thinks the buyers want to back out (yeah right).”
Dunno–they brought you a tenant and prospective buyer and it sounds like you don’t want to compensate them for that.
IF they opted to buy in 5 years she would get her commission?
Do you not have any understanding that many people are liquidity constrained?
Even if the buyer doesn’t want to back out the realtor is contractually obligated to their commission at this point if the deal goes through. Its really not a hard concept to wrap one’s head around.
“The unethical behavior of real estate people is ridiculous ”
Yeah you’re trying to eff her out of her livelihood and she’s the unethical one? What planet are you on dude?
clio,
good luck with the “farm” sale, i personally would like you to just give hell to the agent and tell him to FO.
but brother you got a gung ho family willing to OVERPAY for your headache the will take off your hands.
just think cut of nose to spite face thingy. it might be time to cut your earnings (not losses) pay the jerk/jerkette and call it a day.
DZ–I think the non-compete clause that New Wave is pushing is a ridiculous. I’m hoping the bad press that they’re getting over this will force them to drop it so I can order 1 croissant at a time at La Boulangerie rather than a dozen.
Not gonna happen. Standard practice for a commercial building. The Boulangerie guy is an idiot, you can’t walk 50 feet up and down Milwaukee without seeing vacancies. He’s making money off of the clientele/foot traffic New Wave is responsible for.
“I think the non-compete clause that New Wave is pushing is a ridiculous.”
“The Boulangerie guy is an idiot, you can’t walk 50 feet up and down Milwaukee without seeing vacancies. He’s making money off of the clientele/foot traffic New Wave is responsible for.”
I really don’t understand why he set up there. Nice location on the corner but there are lots of locations as you say. I think they’d get lots of business anyway even w/o being next to New Wave, they have a good reputation from the farmers market.
I feel bad for New Wave, but Boulangerie really does make a freakin good croissant. I think it’s in the running for best croissant in the city.
“Dunno–they brought you a tenant and prospective buyer and it sounds like you don’t want to compensate them for that.”
I absolutely am agreeing to compensate them for bringing me a client – 6k/year for 5 years (they get paid as I get paid). If they brought me a client that could get a mortgage and pay the full amount at closing, I would give them their 30k right away.
“Do you not have any understanding that many people are liquidity constrained?”
then they shouldn’t be trying to buy houses.
“Yeah you’re trying to eff her out of her livelihood and she’s the unethical one? What planet are you on dude?”
You are an idiot bobby – plain and simple. Usually I would think this type of comment was posted to bait me, but I just don’t think you “get it”.
groove,
thanks for the words of encouragement – I’m already sick of the deal and, at this point, don’t really care if it goes through or not. If this doesn’t go through, I am seriously thinking of starting an animal shelter on the property. It would be a really worthwhile endeavor and would bring me much happiness and joy than any amount of money!!
“I absolutely am agreeing to compensate them for bringing me a client – 6k/year for 5 years (they get paid as I get paid). If they brought me a client that could get a mortgage and pay the full amount at closing, I would give them their 30k right away.”
Which seems eminently fair to me.
“then they shouldn’t be trying to buy houses.”
And you shouldn’t be trying to sell to them. But with regard to liquidity constrained I was talking about the buyer’s agent on the deal.
” I was talking about the buyer’s agent on the deal”
bob, the buyers cannot qualify for a traditional mortgage and can, at best, bring 5 thousand to the table. The “buyer’s agent” should realize that this is the ONLY deal that this particular buyer can get and should agree to my terms of the commission – it’s really that simple. The agent/broker is either too stupid or manipulative to realize/admit this.
thanks anon – I thought it was fair as well..
clio,
Personally I think the realtor’s stupidity is saving you from a lot of financial pain down the road. But that’s just my opinion.
bob – you’re probably right.
Clio:
Just to play devil’s advocate… Realtor compensation is totally separate from how the “buyer” is able to finance your property. They are contracted to bring a buyer and seller together. How the buyer and seller are able to finance the transaction has no bearing on their compensation.
With that said, I think your deal is fair because technically there is no sale of the property yet, correct? The “buyers” are essentially just leasing to own at some point in the future and can walk away at anytime? If that is the case, then yes, I don’t think you really owe a commission because technically there was no real sale as title isn’t transferred and you still hold the debt on the property. Paying the Realtor 6k/year as a residual is fair imho. Or maybe pay one month’s commission now like a leasing agent might get and then agree to pay the full commission five years from now on sale.
Thanks Russ – you are absolutely correct about the sales agreement and commission payment being completely separate entities. This is the first contract sale I have done that involved agents/brokers and I clearly was not prepared for the red tape/complications.
Thanks to everyone for their opinions/advice on this matter. I know that the site is about general real estate and not about any individual, but everyone’s input is greatly appreciated.
One general question I have to everyone is: What role does everyone think that realtors/brokers will have in the real estate market in the future. In the past, (20 years ago) these guys were absolutely necessary as there was no other way to find out about properties. Now, with information so readily available, why is there still a need for them? Also, why haven’t “FSBO”s taken off? Is there a boy’s club attitude? I think this is an interesting topic if anyone has any input/opinion.
There’s definitely a real estate boys/girls club. Its called the MLS. FSBOs will never be listed there, plus Realtors will NEVER willingly show their clients an FSBO.
If you have a great home in a great market you can probably FSBO it, but otherwise you’ll alienate 90% of your audience.
At some point, Google or some other entity will make the Realtor controlled MLS obsolete. Control over the MLS is basically all that has kept the vast majority of agents from being disintermediated.
However, buying a home is a very complicated transaction and there will be a need for good buyer agents and listing agents. All one has to do is look at a typical FSBO listing and it is patently obvious that 80% of the public has no clue how to sell or buy a home.
There are a lot on industry structure problems too that have to be overcome before you will see meaningful change as well – barriers to entry, how agents are compensated, etc.
I often get e-mails from buyers looking to buy without an agent who are told by the listing agents “we won’t show you a property without an agent.” So they go out and get a buyers agent just so they can see properties.
Until this type of thing goes away- the system will stay in place.
“At some point, Google or some other entity will make the Realtor controlled MLS obsolete. ”
Yeah Russ but you’re just a mortgage broker with really little to no control over the market so while this may be your and my personal opinion it has little bearing on the actual timing and acceptance of it (if ever).
Real estate agents/brokers aren’t helpful, insightful or necessary at all. I have been buying and selling property for 17 years and have over 70 transactions under my belt and, with the exception of one transaction, the agent and real estate broker was completely useless – and in many cases they just added a layer of confusion to the process. I really would like to know what people think that the agent/broker contributes: taking good pictures and writing good copy? unlocking the front door? having open houses? or is it that they control the clients – which is why I suggested that if you take the control of the clients away, the agent/broker has no real necessary purpose.
In my opinion, the MOST important people absolutely positively are the real estate attorney and mortgage broker. I don’t know how much a mortgage broker gets paid per transaction, but my poor real estate attorney who does MUCH MUCH MUCH MUCH more work and is a hell of a lot smarter than any agent/broker only gets paid 300-1000/transaction (MUCH MUCH MUCH MUCH less than the real esate agents).
“I often get e-mails from buyers looking to buy without an agent who are told by the listing agents “we won’t show you a property without an agent.” So they go out and get a buyers agent just so they can see properties”
Does anyone else see somthing unethical and ridiculous about this practice? Why hasn’t anyone done anything about it? oh – and if these listing agents were smart, they would just do a dual agency/agent for these type of buyers.
Honestly, as I’m currently in the process of making my first purchase, I’m for the first time seeing that there could be some value to having a buyer’s agent. Not necessarily one getting half of the commission (for that matter, I’m still baffled that listing brokers get 6%), but I do see some benefit to having one (especially relative too what the mortgage broker and attorney get, as Clio notes).
I was a broker for a couple years (but not in Chicago, and it was ten years ago). In my current purchase, I don’t have a buyer’s broker. Were I not an attorney, former real estate broker and real estate junkie, I’d be completely lost. And I’m still finding myself asking the mortgage broker and my real estate attorney what I imagine are stupid questions, and I’m spending a good amount of time herding cats and worrying about details that I’d bet a (really good) broker would handle for me.
Granted, I recognize that, because I don’t have a broker, the seller’s broker was able to cut her take, thereby allowing for an even lower purchase price. But as someone who once not only foretold the demise of the Realtor racket (along the lines of Russ’s point re: Google and the MLS, etc.), but also envisioned aiding in that demise (after being a broker and returning to school ten years ago, I figured that if I didn’t get the law job I wanted, I’d start an online real estate biz that did away with the need for traditional brokers), I’ll now concede that I really don’t see much of the general public getting by without a buyer’s broker.
“I often get e-mails from buyers looking to buy without an agent who are told by the listing agents “we won’t show you a property without an agent.” So they go out and get a buyers agent just so they can see properties.”
What? I’m shocked (seriously)! Listing agents are turning away buyers without agents? That’s insane…the listing agents gets the entire ~5% commission on the property if a buyer comes unrepresented, whereas they split the commission if the buyer has an agent. The only reason I could see this being the case is if the listing agent wants to avoid the risks of dual agency, which is legal in Illinois but tricky to pull off successfully.
anonny, I still don’t understand what exactly a buyer’s broker could contribute to your situation. You are a broker, attorney, and “real estate junkie” and I assume an intelligent person – seriously what could a buyer’s agent contribute that you can’t do yourself. Please please tell me because I really can’t imagine what it could be!!!! (oh, and I totally understand needing th mortgate broker and attorney – that stuff is too complicated for normal people – but not the crap the real estate agents/brokers claim to do)
Agents/brokers make appointments, unlock the front door and try to manipulate/steer you into a home that they can see you in. These are all things that you can do yourself, online in the comfort of your own home. They claim to offer good advice about purchase price, and clain to negotiate on your behalf – well, guess what – if you are a buyer, lowball the listing and negotiate directly with the buyer and you will have better luck. Also, the “negotiations” the agents claim to perform on your behalf is a bunch of B.S. – just to calm your fears and make it look like they are doing something. This is a big congame and the consumers are the suckers. Honestly, take the frickin agents/brokers out of the picture, grow a pair to deal with the minor inconveniences of buying a place, and you will see how useless these “professionals” are.
It’s very important to work with a buyer’s agent who has your own interests at heart, particularly when you are looking at short sales or foreclosures. You can’t even get listing agents to return your calls if you’re trying to do it yourself. If I may be so bold as to make a referral, my agent is Chuck Ginsberg of Solfire Realty: chuck@solfirerealty.com
He specializes in short sales, foreclosures and property on the Northwest Side, although he covers the whole city and suburbs too. He is a very ethical guy. I’ve known him personally for 10 years. He has spent a lot of time working with me even though his commission will be small.
Milkster – I totally agree that with short sales/foreclosures, it is VERY important to have a buyer’s agent – however, with straightforward sales, I don’t find that they contribute much to my buying experience.
Clio—it sounds like you’ve had some pretty sour experiences with agents/brokers, which doesn’t surprise me since there’s a wide range in quality from one agent/broker to the next. However, I respectfully disagree with your assertion that mortgage brokers and attorneys add far more value. I have a background in economics/finance and have thoroughly researched the real estate financing process…I basically do mortgage broker’s job of explaining the different options and the various underwriting guidelines in place that might make a purchase challenging. By the time they speak to a mortgage broker, all they have to do is discuss the current rates and furnish all of the requested documents. As for real estate attorneys, I’ve typically done their work as well, negotiating credits and identifying potential issues that they missed during the attorney review. IMO the person that offers the biggest bang for your buck during the transaction is the home inspector!
It’s like any market, right? The need for, and value provided by, brokers depends on homogeneity/heterogeneity of product traded, difficulty of matchmaking, thickness of market, etc. And can change as technology changes. And the need for (if not nec economic value) can be affected by institutional details such as the MLS and existing system of commissions. I can see value of realtors mostly in situations where they have better knowledge of comps (if they’ve personally been inside past sales and if they have other scuttlebutt).
Separate from the broker issue, there’s a bunch of legal/clerical details that are complicated/mysterious, especially to a first time buyer. Experienced buyers can probably do themselves but economies of scale suggest may best be performed by specialists for a fixed fee at least for most consumers. These services seem to me to be really separate from the broker function, but some of them happen to be performed by realtors.
The compensation incentives of “buyer’s agents” make them seem much more like agents of sellers or sellers’ agents.
I agree that real estate agents/brokers DO add some value – but definitely not worth 5% of the sales price. This is price gouging. They should be required to have a set fee schedule. I think a couple of thousand dollars should be more than adequate. If a client desires more publicity, etc. then they can add that service on a la carte.
The real estate agent/broker fees ARE unethical and I am really surprised the state/govt hasn’t stepped in to regulate these prices.
“The compensation incentives of “buyer’s agents” make them seem much more like agents of sellers or sellers’ agents.”
Good point…however, source of compensation does not determine agency. This is a core premise of the buyer agency relationship.
My goodness clio, something never change. I took complex litigation in law school and we discussed class actions and anti-trust. One of the very first cases we read was some lawyers sued realtors and the NAR as a class action because they thought the 6% was too high and that it was price collusion. The case got thrown out of court. They said if you don’t like the 6% then don’t hire a realtor and do it yourself.
You sound like such a goof when you complain about the 5%. Sell your own damn house. Go FSBO. You take the time off work to show your units on a moment’s notice. You carry all the costs of marketing. You carry all the overhead to operate a brokerage office. You really sound like such a cheap a$$$ goof when you complain. You supposedly have so much money but you won’t pay a measly 5%. Go get a life, seriously, get a life.
“#clio on October 14th, 2010 at 8:07 am
I agree that real estate agents/brokers DO add some value – but definitely not worth 5% of the sales price. This is price gouging. They should be required to have a set fee schedule. I think a couple of thousand dollars should be more than adequate. If a client desires more publicity, etc. then they can add that service on a la carte.
The real estate agent/broker fees ARE unethical and I am really surprised the state/govt hasn’t stepped in to regulate these prices.”
Clio–just pay a flat fee broker $300 to list your next property on the MLS. You’ll still want to offer some type of commission to an agent that brings a buyer. Or just do a FSBO and see how that works for you. However, if you’re trying to sell a unique or expensive property on your own without MLS exposure, it will probably be a challenge.
“They said if you don’t like the 6% then don’t hire a realtor and do it yourself.”
I don’t know the case but that surely was not the issue. The lack of an antitrust issue wasn’t that you could always not hire a realtor (that’s true of any consumer buying any good), it must have been that there is no formal agreement on price among realtors. There are also surely informal mechanisms but but are much harder to pursue.
The bigger issue re MLS is their rules on membership and access to, pricing of (if any), and display of or other use of information. Was a case on this a few years ago that opened things up a bit.
“source of compensation does not determine agency. This is a core premise of the buyer agency relationship.”
I just mean that incentives don’t obviously make sense. Not sure they make sense that much for sellers’ agents either. Their incentive is also more to close deal than get a really good price for seller. Why compensate agents from a percentage of the first dollar? Anyone can sell a house for $1. Don’t need to compensate someone for that. Of course, it’s not that straightforward to specify alternatives that work in an easy way, without their own incentive issues.
“(that’s true of any consumer buying any good)”
Nope under our current government they just MANDATED that you purchase health insurance or else they will fine you an equivalent cost of a plan. This is why at least once a week I pray Kathleen Sebelius gets ovarian cancer.
“Clio–just pay a flat fee broker $300 to list your next property on the MLS”
That’s a great idea for anyone who wants more control of the situation. Pay a photographer a couple of hundred dollars and you will see that you will save a LOT of money. I just don’t think many people realize this.
In terms of my own personal situation, I actually own my own real estate company (very small one with only one broker and one agent) and therefore benefit from these fees – but the closer I got to the process, I realized how much price gouging there was. I make money by basically doing nothing at all!!! That is not right.
” I make money by basically doing nothing at all!!! That is not right.”
That’s the American way!!!
Many people seem to focus on the 6% commission. First, that 6% (or 5% or whatever is negotiated by the listing agent) is split between both listing agent and buyer’s agent so it is really 2.5-3%. Then that 3% is then split again between the agent and their employer so we are at 1.25-1.5%. Out of each half of the commission the agent pays all insurance, bonding, MLS fees, marketing costs (those fancy pictures and floor plans everyone wants, staging), etc.
In short, if you have a $400k place and assume a 6% listing agreement. That is only $24k. That $24k is then split between both agents, so each brings home $12k. That $12k is then split again between agent and employer, so that $12k could be just $6k net to the agent. Out of that $6k the agent pays all expenses associated with the transaction and general business expenses (agents are 1099 independent contractors). Keep in mind any cost associated with the deal are non refundable to the agent so if the property fails to sell, then the agent is out of those marketing costs.
I don’t see agent commissions going down anytime soon because the cost associated with marketing and selling a place are real and aren’t going away anytime soon. The only way you are going to get real pressure on agent pricing is if agent commissions are completely divorced from the transaction altogether and must be paid by consumers outside of closing. This will never happen since many consumers are already pretty cash strapped.
6k to cheauffeur people, flip light switches, and take bad pictures and do the minimal amount of effort possible and never call anyone back that actually wants to do business?
man, i’m in the wrong business…
“I don’t see agent commissions going down anytime soon because the cost associated with marketing and selling a place are real and aren’t going away anytime soon”
Russ,
how about chris’ solution about having a broker put it on the mls for $300. You could hire a photographer for $200. True, you would have to take the calls yourself, but I would rather do this to weed out looky-lous and try to promote the place even moreso to potential buyers. The only downside would be that buyers agents would never show the place. Hopefully, homebuyers are (or will become) savvy enough to look everyday on the MLS themselves to see what is out there.
The flat fee MLS brokers generally recommend that you offer a competitive cooperative compensation so that you get buyers with agents. I guess buyers can search the MLS now without an agent but the MLS is owned and primarily used by the Realtor community.
“Out of each half of the commission the agent pays all insurance, bonding, MLS fees, marketing costs (those fancy pictures and floor plans everyone wants, staging), etc. ”
The cost of insurance, bonding, MLS fees are less than 3k/year.
Marketing is variable – but we all know that those newspaper ads and open houses rarely work. Minimal marketing is necessary to sell a well priced house – No marketing is necessary for a bargain house (in the same sense, no AMOUNT of marketing is going to sell an overpriced house). People (like the ones on this site) have become WAY TOO SMART to fall for these tricks. There is just too much information out there to fool anyone. VERITAS (see the Harvard education came in handy for something!!).
Sabrina said
“I often get e-mails from buyers looking to buy without an agent who are told by the listing agents “we won’t show you a property without an agent.” So they go out and get a buyers agent just so they can see properties.”
That’s interesting. In my recent thoughts about buying a place in LP or Old Town, I decided not to waste the time of a buyer’s agent because I wasn’t sure if I really wanted to buy. I’ve now seen several places, and never been turned away because I didn’t have a buyer’s agent. On the flip side, it seems like the owner’s agent sends out the most junior, least informed person they have to show me around (which probably makes sense from their perspective, of course). My plan was, and still is, to go through Redfin if I found a place I liked enough to want to offer on.
“That’s interesting. In my recent thoughts about buying a place in LP or Old Town, I decided not to waste the time of a buyer’s agent because I wasn’t sure if I really wanted to buy. I’ve now seen several places, and never been turned away because I didn’t have a buyer’s agent. On the flip side, it seems like the owner’s agent sends out the most junior, least informed person they have to show me around (which probably makes sense from their perspective, of course). My plan was, and still is, to go through Redfin if I found a place I liked enough to want to offer on.”
Aren’t their rules/conventions about whether an agent has to be with you on your first visit to qualify for commission? Gary Lucido who posts on here also rebates and seems good at what he does.
“I guess buyers can search the MLS now without an agent but the MLS is owned and primarily used by the Realtor community.”
What can a realtor do in terms of finding you a place that you can’t do on Redfin?
oh, for those who didn’t get my harvard reference:
//upload.wikimedia.org/wikipedia/en/3/3a/Harvard_Wreath_Logo_1.svg
“What can a realtor do in terms of finding you a place that you can’t do on Redfin?”
Several things:
1. take 5 % of the purchase price of the house
2. tell you what a great place and great buy each house is
3. unlock the door
4. turn on lights
5. tell you where to sign the contract
Calderon,
don’t get a buyer’s agent – you know more than anyone what you want and where you want to live. Do what you are doing and if you see a house you like, contact the agent, and offer to sign up for dual agency if they will kick back some of their commission (as they will be getting dual commission). Usually they will kick back 1-1.5% back to you (as they should since they did nothing to bring you the listing).
I found that job recruiters and realtors are very similar. They both employ tactics that will enable them to close deals – it doesn’t matter at what price as long as they keep closing deals and keep the volume up, they will make lots of money. I guess it surprises me that home prices haven’t dropped further in response to these incentives for realtors to close deals to get their commissions faster. The extra $10,000 in price isn’t worth several months of additional work. Really it doesn’t make sense to me.
DZ is right…it’s called “procuring cause”. Redfin is going to have a hard time collecting a commission on a sale (and rebating you any part of the commission) if you already saw the property without an agent.
The people posting on this forum are clearly sophisticated and do their homework and, because of that, I would happily rebate anyone on this forum 50% of my commission on a purchase transaction.
Sonies, if it were that easy, you would see more successful real estate agents. For every mega agent like Mario Greco, you have several thousand working part time because they can’t figure out how to generate business to sustain themselves full time. Remember, no one is giving agents clients. They have to get out and generate clients and referrals on their own. It isn’t as easy as it looks.
What I didn’t point out is that $6k in a way subsidizes the cost/time sink of dealing with large numbers of transactions that don’t close or drag on for months as well. Most transactions also aren’t $400k. Would you defer your paycheck for two or three months while waiting on a transaction to close or spend months working with buyers who decide not to buy and you get nothing? There is a risk/reward factor built into the compensation model that most regular employees who work a 9-5 job don’t have to deal with.
If agents were paid purely on a time clock like an attorney regardless if the transaction closes, then you might see some pressure on compensation. However, most buyers/sellers aren’t in a position to compensate the agents without a closed transaction.
I hope that people take Chris up on his offer – it really would be a win-win situation. People who do their own scouting and research should be compensated for their work – and thank God there is an honest realtor who acknowledges this and is willing to make an adjustment!!!
oh yeah we looked for places without an agent and every place we went to we got the hard sell from some putz about how important it is to have a realtor… so we finally got tired of the shtick and hired one and well, we did all the work (even in negotations) and he got paid about 8k… so, where’s the value there again?
I enjoy a discussion about real estate commissions. As a licensed Realtor since 1995, I have had this discussion many times.
The question really centers around someones worth. What makes someone worth millions of dollars a year vs. a few thousand? And the second question, is it fair? The truth is, there is no right or wrong answer.
In every job or profession there are people who are better at their job than others. When someone has a really bad experience, they tell everyone and their brother, when they have a good experience not so many people. To label all Realtors as bad is naive. If someone does not see my value as a Realtor, they do not have to use my services. But if you look scratch beneath the surface, you will understand a little bit more.
People hire me, as a Realtor, to save them time and money. If I did not accomplish these savings I would be out of business. Here is a true story to illustrate this point:
I have a friend who will put your property on the MLS for a flat fee. If you want your property shown he will charge you per showing, if you want a lock box he will rent it to you, if you want a For Sale Sign he will rent it to you, etc… He thought people selling very expensive properties would use his service the most because they would save the most amount of money. What he discovered: people who had expensive homes almost never used his service, because they valued their time way more than the extra money they would save, plus they recognized that there is no way they could do as good a job selling their home as a professional Realtor. His biggest customers are the people who will save between $1,000 – $2,000 on the transaction. For those people that amount of money, is more important than their time.
An overlooked value Realtors provide is the MLS, which can be accessed for free. If you look below the surface, someone pays for the MLS in time and money. All Realtors pay fees for the MLS, which provides many jobs (Crib Chatter would not be here if not for the MLS!) and all of the Realtors input their listings in the MLS. When I input my listings in the MLS it costs me time and money, while the Real Estate Market benefits as a whole. Plus I only get paid, if I am successful at selling. So the question really is personal, what value do I place on my time and the risk I am taking? Each and everyone of us answers this question by what they do. Thanks for reading.
To DZ and Chris M — thanks, and I guess that’s a d’oh on my part. Does “procuring cause” apply to open houses?
Clio — I hear you, but my understanding is that with Redfin you get a 1.5% commission rebate, any have someone there to guide you to the appropriate housing inspectors and real estate attorneys. (Of course, in your high volume situation, you already know these professionals and so an agent wouldn’t benefit you)
and in my line of business, if I take commissions for doing nothing I get thrown in jail… maybe we should start doing that in the real estate industry
Nobody is going to throw Suzanne the Researcher in jail Sonies.
Calderon–Yes, procuring cause applies to open houses…it’s one of the main reasons you’ll be asked to “sign-in” at an open house or asked if you are working with an agent.
Also, Redfin offers a 50% rebate on the commission they receive. A 1.5% commission rebate to the buyer only applies if the cooperative compensation is 3%. That’s not typical in Chicago…you typically see 2.25-2.50% around here, so the rebate is half of that. They also have limitations on the types of property that they will rebate a commission on (cheaper properties and more complex purchase transactions might not qualify for the rebate).
“Nobody is going to throw Suzanne the Researcher in jail Sonies.”
🙁 Well we can dream can’t we
@ Sonies:
The biggest issue I see is that most consumers don’t complete any real due diligence on the folks they hire for their transaction. very few really interview their agents (or mortgage lenders) regarding their qualifications, experience, sales volume, etc. They just assume all agents and service levels are the same. With the barriers to entry being so low, it is imperative that they really get to know their agents.
I don’t think anyone is saying there aren’t a lot of worthless agents. The agent I used on my first home purchase did zilch. Completely clueless and worthless. Same with the lender (which is one of the reasons I get into the lending side).
However, there are some very very good agents out there who earn every penny of their commission. These are usually the ones doing a decent amount of business full time and it doesn’t take much to really see the difference in how their business is conducted.
Unfortunately, with home transactions being one of those things that don’t take place often, most consumers don’t know what to look for. There is also A LOT of misinformation out there as well which steers people in the wrong direction.
Chris M — got it, thanks for your help.
“Yes, procuring cause applies to open houses…it’s one of the main reasons you’ll be asked to “sign-in” at an open house or asked if you are working with an agent.”
But if you say/write that you’re working with an agent, not interested in assistance in buying a house from anyone else, you’re probably ok? Even if you ask some questions about the house, as long as you don’t go too far down the road of discussing making an offer?
I can say that when it comes time for my next transaction I’d definitely look to meet with the brokers that post on this site before going the ‘I know a guy’ route.
Sure…you could say you have an agent. They usually won’t push beyond that (though they might ask you to write down the agent’s name on the sign-in or something like that). Asking questions about the property constitutes “ministerial acts”, which doesn’t step into the realm of agency. It’s just good to be aware of why open houses are structured the way they are. Also, FYI…they rarely benefit the seller…they are more geared towards marketing the agent and generating new leads/clients. Most serious buyers schedule private showings rather than shop open houses.
DON’T EVER SIGN IN FOR AN OPEN HOUSE – PERIOD
It is a simple rule – when I used to go to open houses I was surprised that nobody questioned signing in – to me it was very much like giving your house key to a potential burgler- the information you disclose WILL DO NOTHING WHATSOEVER TO HELP YOU AND CAN ONLY BE USED TO HURT YOU – why the f@#k would you ever disclose this?!!
“But if you say/write that you’re working with an agent, not interested in assistance in buying a house from anyone else, you’re probably ok? Even if you ask some questions about the house, as long as you don’t go too far down the road of discussing making an offer?”
The easiest way to avoid a problem–if your intent is to use Redfin or Gary or Chris M or whoever, after you identify a property–is contact the buyer agent first, let them know what you’re doing and then go about your business telling all seller’s agents–truthfully–that you are working with an agent.
Especially if it’s someone with the same general attitude as Gary or Chris M, I’m sure that, if you ended up *not* using their services for *anything* (and I mean at all, except as a non-participating bulwark against the “I can rep you” from someone else), and negotiated your own contract and got your own direct kickback and etc, you wouldn’t have him coming after you looking for a commission split–b/c he wouldn’t have heard anything from you since your first email/call about “retaining” him as your agent.
“The easiest way to avoid a problem–if your intent is to use Redfin or Gary or Chris M or whoever, after you identify a property–is contact the buyer agent first, let them know what you’re doing and then go about your business telling all seller’s agents–truthfully–that you are working with an agent.”
I’m sure that makes sense.
“got your own direct kickback”
1. Are there any realtor rules (or whatever) against this?
2. This seems to me complicated to pull off. If I start negotiating this, or even make the initial call to the seller’s agent, don’t I undercut the position that I have an agent if I then want to fall back to that? If it’s not FSBO or agent owned, I’ve been assuming I would use an agent.
3. Leads me to wondering, if it is agent owned, and there is no buyer’s agent, will the agent need to split some of what would be the cooperating commission with his/her agency?
“Are there any realtor rules (or whatever) against this?”
I’m sure there are, and I was being intentionally pejorative to draw out any problems with the suggestions from our realtor friends.
DZ, in response to your questions:
The Real Estate License Act of 2000 permits commission rebates. Per the IDFPR’s Real Estate FAQ page:
Q. May compensation be paid to a principal to a transaction, even if the principal does not have a real estate license?
A. Yes. Section 10-15(c) of the Act authorizes the offer or payment of compensation (“prizes, merchandise, services, rebates, discounts or other consideration”) to an unlicensed person who is a party to a contract or lease. Of course, such compensation is not required. The payment of such compensation should be pursuant to the negotiations on the transactions. The payment of such compensation is not limited to payment by a licensee to the licensee’s client – in other words, a seller’s agent may pay compensation to an unlicensed buyer.
http://www.idfpr.com/FAQ/BRE/toggleBRERealEstateFaq.asp
As anon (tfo) suggested, it is easier to just identify an agent and then go shopping on your own (if that’s what you prefer to do) rather than shop around and then find an agent.
If the property for sale is agent owned, the offered CC can be paid to an unrepresented buyer (per the FAQ above), though a lender may view that as a interested party contribution (in other words, a seller “credit”, which may be subject to limits…for example 3% of purchase price is a common limit on seller credits to buyer with conventional financing). Or, they could just drop the CC and reduce the price by an equal amount. Remember…the seller sets the CC offered to the buyer’s agent and it is paid to another party, so if the seller is an agent and the buyer doesn’t have an agent then there is lot of flexibility on how the CC is handled.
Cribchatter pluses: lots of wonderful discussion about real estate.
Cribchatter minuses: lots of unoriginal realtors without real skill except MLS browsing sending me the same cribchatter posts trying to get me to sell me. THERE ARE DEALS NOT ON THE MLS. Investors are not retail buyers – don’t give us deals on the MLS, especially not those listed on cribchatter. Please be more original. Just because a condo costs 25K doesn’t mean an investor is interested. If its on the MLS its geared towards tricking retail buyers to incite a bidding war. STOP SENDING INVESTORS CRIBCHATTER posts!!!
“If its on the MLS its geared towards tricking retail buyers to incite a bidding war.”
Really? There are hundreds (thousands?) of properties on the MLS for $25,000 or less all over the city. Are there bidding wars on all of them? Doubtful.
As Milkster, who posts here, can attest- virtually no one is looking at a lot of these properties. They’re on the market for months.
Does that make it a deal? Not necessarily. There are too many other factors.
But I doubt the banks are listing properties on the MLS to incite a “bidding war” from “retail” investors.