Wicker Park Bank Owned Mansion Sells for More than List: 1220 N. Damen
Remember this new construction single family home at 1220 N. Damen in Wicker Park that was bank owned and missing its bathrooms?
See our prior chatter and pictures here.
It quickly found a buyer and closed for $100,100 over the list price.
Was this a steal?
1220 N. Damen: 5 bedrooms, 4.5 baths, 2 car garage, no square footage listed
- Sold in November 2004 for $415,000
- Originally listed for around $1.8 million in 2007-2008?
- Lis pendens in December 2007
- Bank owned as of February 2009
- Was listed in March 2009 for $899,900
- Sold in May 2009 for $1 million
- Taxes of $7526
- Jim Murrin at Jameson had the listing.
I was in this house last year right after the developer went AWOL. We actually offered significantly more than this price and never got a response from the bank. Great deal, well below cost. Only downside is a bit of a wierd design and busy street.
Hello Cribchatterers!
I’m in an interesting situation and would appreciate your honest input. Here’s the place:
http://www.trulia.com/property/1073441919-2333-N-Bosworth-Ave-3-Chicago-IL-60614
Here’s the situation:
I’m 27,married (a year), no kids….yet. My time line is short, 5-7 years in Chicago, then lake home (hopefully) in MN. Not actively looking for a place, being a bear for the last 3 yrs, but willing to listen if something “falls into my lap”.
Walked in here after church on Sunday (open house), liked the place, left my contact info, as I have with other places. Realtor called and said developer will consider anything “reasonable”.
I tried to be as honest as possible. Stating i appreciate the call, but have a strong cash position and may be better off biding my time and putting in a bid for a foreclosere or short sale in the next year or 2, and although i think the developer did a great job, I would only be interested with a number starting with a 4 not a 5 (let alone a 6!).
Not expecting to here back I received an realtor e-mail stating she spoke with the developer again (stating my situation) and as long as I put something on paper he would consider all offers as he’s motivated to move the property. (Knowing full well any bid by me would be in the 400’s).
This place is very affordable for me even at current ask.
What price does this make sense? What are the pros/cons of the area?
Please leave the good, the bad and the ugly.
Kind Regards.
What’s up with $7500 taxes for a >$1MM property?
The taxes are most likely from the assessment of the prior teardown property.
“We actually offered significantly more than this price and never got a response from the bank.”
Probably one of the bank RE portfolio manager’s buddies picked this up. You gotta know people in Chicago!
kinghippo– If you plan on owning for only 5-7 years, even a foreclosure property is likely to be a money-losing proposition. The Chicago market has not yet bottomed so appreciation is going to be slim to nil for the next 5-10 years, and carrying costs (taxes etc) are bound to increase significantly over the same period.
you are better off renting….put your cash in a nice a interest bearing account and minimize your headaches…
kinghippo — you need to look at cost to own vs. renting (1 or 2 BR now, 3 BR only needed when you have a kid). Have you looked at condo rentals lately? Rents are falling like a stone. If you get a “steal” on a condo purchase it’s because market values have dropped. They aren’t going to rebound to a level that makes you money in the 5-7 year timeframe.
“kinghippo– If you plan on owning for only 5-7 years, even a foreclosure property is likely to be a money-losing proposition. The Chicago market has not yet bottomed so appreciation is going to be slim to nil for the next 5-10 years, and carrying costs (taxes etc) are bound to increase significantly over the same period.”
Wow aren’t you so sure of yourself? Glad at least someone on the interwebs has a working crystal ball.
“We actually offered significantly more than this price and never got a response from the bank.”
Our taxpayer dollars at work propping up banks that really don’t deserve to continue to exist.
kinghippo,
If you have browsed this site with any regularity you have seen the majority of posters here favor renting vs owning ANY property in the city. I don’t think you will receive too much in way of positive comments regarding actually buying this place.
I am agreeing with Sonie comments concering JPS…no one can predict exactly where the market is going especially in a 5-7 year period. But because of recent props listed here, it seems we are slightly on an upswing, but who am I to say?
In looking at the listing (can’t access any additional info for some reason…do you have another link?) it seems that although it is a decent property, you might not be able to score it at a even further reduced price. Coming from $680k down to your price, I am not sure if the $400’s would be acceptable. Are you maybe in the very high $4’s? There depending on the developer’s position, you just might have a chance.
As far as the location, I picked up a place to renovate in the area and in looking at it further, I was not too impressed with the particular neighborhood. I do say this as a Chicago resident for only a year now, so I am sure the regulars here would be able to advise you further on that topic.
Thanks for the respones so far. Please, keep them coming.
Here is another link to the property.
http://coldwellbanker.com/servlet/PropertyListing?action=detail&ComColdwellbankerDataProperty_id=19301868&page=property&brand=CB
I am probably in the minority of persons on this website, but I believe that purchasing a home does not always need to be about “making” money. There are intangibles to owning your home and while these factors should not override common sense, they are worth taking into account in the process. I learned long ago that buying solely based on price and whether a place was a “good investment” has its downside just as much as buying with your heart and ignoring your head. Also, in my opinion, 5-7 years is too far out for anyone to make predictions with any real certainly.
“I am probably in the minority of persons on this website, but I believe that purchasing a home does not always need to be about “making” money. ”
If you are only looking to make money from purchasing homes, you will probably never buy a place to live. Which most of these armchair real estate gurus (who rent btw) probably don’t have the means to do so anyway.
But wasn’t that the problem a few years ago? People were buying or else they’d be priced out forever, and people were buying and making an instant $50k… what makes you think that you can buy a place in 5 years and still “make money” from it?
My parents who have a lot more real estate experience than I do have made money on exactly 50% of their purchases and lost money on 50% of their purchases. Coincidence? I think not.
You buy a place to live, to live there for a while. If you make money, great, if not it really isn’t the end of the world as you can always make more money!
“I am probably in the minority of persons on this website, but I believe that purchasing a home does not always need to be about “making” money. There are intangibles to owning your home and while these factors should not override common sense, they are worth taking into account in the process.”
A-men. For some folks, the freedom to do whatever the hell you want with your house and property (ie, landscaping, gardens, etc) is a huge factor.
The “making money” aspect becomes even more moot when you have a long time-frame, as real estate does go up, just like the stock market, due to inflation if nothing else. This current mess was 1) predictable and 2) largely avoidable, but nevertheless, in 25 years it will be just be a temporary dip.
argh, meant to close with “in 25 years it will still just be a temporary dip.”
For some folks, the freedom to move whenever the hell you want with from your house with your property is a huge factor.
“in 25 years it will still just be a temporary dip.”
I’m not sure if we can accurately predict 25 years into the future. There have been long periods where RE has depreciated in real terms.
Also in 100 years we’ll all be dead anyway so whats your point?
“I am probably in the minority of persons on this website”
“the majority of posters here favor renting vs owning ANY property in the city”
Why do people think this? I see HD and Bob as the only regulars who are “anti” ownership, and even they talk about buying at lower prices. John from Miami is anti, too, but he’s of dubious reality. Hell, G admitted owning.
Most of the posters here own, have owned and/or are looking to own. Saying some particular unit sux for the ask price is not the same as saying that buying is a bad idea. Even Stevo has bad things to say about many of the untis posted, and he’s invested in creating and maintaining transaction volume.
“so whats your point?”
the point is that the longer you hold the property the more (generally speaking) you insulate yourself from market dips – not to mention you don’t put yourself in a bad spot like many are in now, *needing* to sell when the market is struggling.
“Which most of these armchair real estate gurus (who rent btw) probably don’t have the means to do so anyway.”
this is funny. Of course! when people make a certain choice different than yours it must be because they aren’t as rich as you. the only thing funnier than this sort of comment is when somebody brags about what kind of car they drive.
The wildcard is inflation. The government is doing everything in its power to avoid Japanese style defaltion, even if it means hyperinflation. They print money, artificially prop up asset values, refuse to let insolvent banks fail, etc.
I am still bearish on housing, but one could argue that it would be prudent to buy a place with 96.5% financing and put the cash they were going to use for their down payment into hard commodities. Then when hyper-inflation takes hold, rents increase, values increase, etc…If it works out, they look brilliant. If it doesn’t work out, no big deal because they have very little capital at risk.
I feel like I must be the only stooge on here who pays taxes.
With a marginal income rate (state and federal) of over 30%, the tax savings from owning vs renting for me are huge.
I don’t need whatever I buy (hopefully soon) to appreciate at 5%. As long as it doesn’t decrease over the next 5-7 years I can come out ahead thanks to the tax code.
But maybe I run the math differently than everyone else.
“the only thing funnier than this sort of comment is when somebody brags about what kind of car they drive.”
I drive an 87 Yugo, because cars are terrible investments. I got $50 from the prior owner to push it out of his driveway. Top that, suckas!
MJ,
Here is a WSJ article today from Albert Laffer (of the Laffer curve) supporting your concerns:
http://online.wsj.com/article/SB124458888993599879.html
Hrmm…if this is a potential, nay, probable outcome, your strategy deserves some thought.
kinghippo – don’t do it; just focus on buying that lakefront property in MN. Rent cheap, save cushion AND down payment, then buy. By the time you buy, it’ll still be in the dumper so you won’t miss out any any potential equity.
Sonds like MJ is thinking of using my plan of action 8)
“Have you looked at condo rentals lately? Rents are falling like a stone.”
Where do you find these condo rentals? I checked out craigslist and its flooded with apartment finder crap listings. Are there other sites to search for them?
Again, I appreciate the feedback. Most reponses urge caution due to my time horizan, which is a correct observation. However, there is some price point where this property is attractive despite.
I also understand the point of buying not as an investment, which is also, in my case, a correct statement. Renting andother 5-7 years may be prudent, but seems tedious. I dont need to make a ton of $ off this, but am not a knife catcher either, which is why i’d only offer if the developer is willing to take substancially less than ask in order to have me assume the risk.
I already declined to make any offer on the place being it would be so far from the ask, but was contacted again by the developers realtor stating at this time he’s willing to look at all offers.
In your opinions what price point, given my time horizan, does this make sense? (True, who knows what the future holds but many of your professions deal with real estate where mine does not. And I respect your thoughts.)
Also, westloop owns a unit near here and wasnt overly impressed with the neighborhood. Is there anyone else who has input on this area?
Kind Regards.
“Wow aren’t you so sure of yourself? Glad at least someone on the interwebs has a working crystal ball.”
Yeah Sonies like you never express a firm opinion or make predictions on this site…
kinghippo asked for opinions, I gave mine. Buying any property in Chicago right now with the intent to sell in 5-7 years is LIKELY to be a financial loser. Notice I didn’t say “definitely will be,” I said “likely to be.”
The slight market uptick right now is temporary, in my opinion. Wait til the next round of foreclosures starts to hit. This thing is not bottoming out until 2011, at least.
Again, just my opinion.
I would agree that financial issues are not the only consideration when deciding whether to buy or rent. However for most people buying a house will be their largest financial transaction and will have a significant impact (good or bad) on their overall financial position, therefore I think it is important to be as informed as possible on the financial aspects of the decision.
The best way I have found to look at the financial side is to compare the total cost of renting over a fixed period (say 5 years) with the cost of owning for the same period, with the assumption that you would sell (or at least want to have the option to) at the end of that time period. This assumes renting or buying equivalent places (same unit, or neighboring identical units, one for sale one for rent). Unfortunately there are some major unknown variables in this analysis – the total amount of price appreciation of the unit over that period being the biggest.
One way of handling this is not to assume anything about the amount of appreciation (at least at the outset) – and see how much appreciation is required at each rent/purchase price pair to make renting vs buying break even. As an example consider a place that would rent for $2000 a month – in order to break even over 5 years with 0% appreciation over that time the place would need to cost ~$290k. The purchase price for different amount of appreciation to break even on this property would be:
Total 5 year Apprec. Purchase Price
-5% $260,000
0% $290,000
5% $330,000
10% $385,000
15% $460,000
20% $565,000
As you can see the amount of appreciation dramatically changes the picture. At 0% appreciation over 5 years if you paid more then $290k it would cost more to buy, but at 15% (~3%/year) you could pay up to $460k and still not have it cost more than renting. So the million dollar (or at least $100k) question for anyone making a purchase is – what amount of appreciation do you expect to see over the period that you would own? You can see part of what drove the bubble – assuming a larger amount of appreciation can justify a larger purchase price. From the Chicago Case-Schiller index Chicago appreciated at ~3.4%/year from 1989-1999. After 1999 the rate of appreciation increased significantly and some people seemed assume that would last forever.
For anyone interested – the numbers above came from a present value calculation of rent and purchase cash flows assuming: 3% inflation, 5% mortgage rate, 20% downpayment, 1.5% property tax rate, 30% marginal tax rate, 6% realtor commission on sale, risk free rate 4.5%, max after tax savings return rate 7%, $350 assessment + monthly repairs, $2.5k closing costs, 0.5% insurance cost rate. Changing any of these assumptions will change the numbers above.
“anon (tfo) on June 10th, 2009 at 10:25 am
I drive an 87 Yugo, because cars are terrible investments. I got $50 from the prior owner to push it out of his driveway. Top that, suckas!”
Hey! Are you one of those north center hillbillys you like to badmouth?
“Hey! Are you one of those north center hillbillys you like to badmouth?”
Please. It’s a foreign car. That makes me wordly in a way you clearly don’t comprehend.
Plus, my boss told me I’m getting a raise on July 1. Extra $.50/hour should make it easier to buy up foreclsoures.
Whoever bought this got a deal. I will never understand why banks are so stingy on short sales and then are so reckless on foreclosures.
I’m no lawyer but it might have something to do with:
1) The fact that the bank doesn’t (yet) have title of the place in a short-sale, so the loan is still technically on their books at par value or near it. No writedowns may be necessary on the loan yet. At the foreclosure stage there’s no more pretending the mortgage loan is worth whatever the bank wants.
2) The bank is liable for the carrying costs of a foreclosed unit, including upkeep and taxes, giving extra incentive to get a deal done.
“The bank is liable for the carrying costs of a foreclosed unit, including upkeep and taxes, giving extra incentive to get a deal done.”
I think this is the primary motivation.
Also, in general, aren’t the decision makers different people, with different incentives which likely encourage the seemingly wrongheaded behavior?
I own two houses, one here and a vacation house out-of-state, no mortgage on either, plan to hold both. I think houses tend to be better investments (and happier living arrangements) than condos. I’ve owned and gut-rehabbed a 3-flat, and believe that experience is only for the brave-hearted.
So I’m “pro home ownership”.
But in this market, I add sharp caveat that purchasers’ selected home should be well-priced, have strong appeal to future prospective purchasers, not most expensive home in neighborhood (or condo building), not on a busy street, in excellent structural condition but cosmetic flaws ok, all that buyer can easily afford and can easily qualify for mortgage, etc. You need to choose very carefully.
Many current listings are still overpriced, and bad choices. Many listings are neither in “excellent condition” (I’m not concerned by bad decorating) nor unique enough of a home to stand-out and strongly appeal to future prospective purchasers for eventual resale.
I dislike “cookie-cutter” units, because design quality is lacking and because “many of the same” means hard to resell. Most newer infill 3-flat/6-flat developments should be avoided altogether because of common problems with cheap construction/materials, owner association “wars”, and poorly selected locations. I’d also avoid buying a new vinyl-sided subdivision house for similar reasons.
I like older houses with charm and solid construction. Best period for home construction was during Depression. Construction workers put their best efforts into these 30s houses, and it usually shows. Go look at houses from that era in Evanston, Oak Park, West Rogers Park, etc.
There are deals in all markets that can limit your potential risk but it requires doing your homework and being willing to walk away
Lakeshore property in MN is starting to regain some sanity (other than places like Deephaven) faster than Chicago if this site is representative of the market.
I agree that there’s not much going on at Webster/Bosworth. It’s officially Lincoln Park, but a bit west of anything convenient (restaurants, shopping). I think if you are considering something in the 400’s in Lincoln Park, the location should be prime in case you do ever need to rent it. If you push for a top floor condo in a 3 unit building, I would only consider it if there is a private rooftop deck that is yours alone.
At the higher end of your price point, you can also consider a 2 flat where you and your family live in 1 unit and rent the other unit. That rental income helps subsidize your cost of living.
As for the people who don’t believe that real estate prices will rebound in the next 5-7 years… if that’s the case, we’ll be in a full blown depression and I think the scenario is unlikely. I do not think you’ll see any apprececiation this year or next, followed by moderate appreciate (~3%). With that assumption, your 5 year outlook would provide you with 9% appreciation and 16% for 7 years.
Foreclosures and short sales are not all they are cracked up to be. Although they frequently offer “deal” prices, they are difficult to negotiate, stressful for the buyer and the neglected and vacant properties often have condition issues that are not apparent to the buyer until after closing, when they have no recourse.
The best thing you can do is arm yourself with information and put yourself in touch with a qualified realtor who can advise you of some of these issues. Beware of realtors who tell you that the market is “back” and not to worry about future appreciation. Such promises are irresponsible and not in the client’s best interests, especially for someone like you who has specific family plans and future changes in mind. If you have questions, don’t hestiate to contact me at sschatz@readyrealestate.com.
“I do not think you’ll see any apprececiation this year or next, followed by moderate appreciate (~3%)”
I think we will see depreciation this year and next year with no guarantee of 3% appreciation for some time.
“I think we will see depreciation this year and next year with no guarantee of 3% appreciation for some time.”
You wouldn’t make a very good realtor, Bob. 8)
1) Banks are understaffed to handle short sales and are too busy putting out other fires;
2) Sometimes mortgage holders would rather see defaults to get paid in full on their credit default swaps rather than short sale;
3) Fundamentals don’t support appreciation for quite some time, minimum 5 to 7 years;
4) If you think we’re going to get hyperinflation then try asking your boss for a raise. The market has a long way to drop but at a slower pace for many years to come.
Oh HD –
“4) If you think we’re going to get hyperinflation then try asking your boss for a raise. The market has a long way to drop but at a slower pace for many years to come.”
Incomes are the last to participate and the “hyper” part comes when the economy recovers and the money flow is already flowing. Inflation does not announce itself before taking over. It just takes over.
“mortgage holders would rather see defaults to get paid in full on their credit default swaps rather than short sale”
NOT how it works, man.
“Fundamentals don’t support appreciation for quite some time, minimum 5 to 7 years”
Fundamentals for the “market” as a whole, for CS Index or for $400k 2/2s in LP? These are not at all the same question.
“try asking your boss for a raise”
I’d just ask “why? you thinking of leaving?”. If you don’t have another offer in hand, you have NO leverage right now.
If you have another offer in hand, and are actually underpaid w/r/t your value to your company, the answer is not an automatic no anywhere. But you have to be able to make a case that you are more important to the bottom line than your current comp and that you can take that revenue-generating ability across the street and make more money. That’s the hard part right now.