Mid-last year I wrote a post describing how FHA spot loan procedures can significantly expand your home search.
As of today, the rules have changed and obtaining a spot approval is no longer an option. From now on, condo projects/buildings as a whole need to meet FHA guidelines and need to be on the FHA approved list. This of course means that if not approved, the Homeowner Association will need to go through the approval process. Rest assured, the FHA promises to “streamline the approval process making it easier, cheaper, and faster” to obtain approval.
Associations should carefully weigh the pros and cons of becoming FHA approved.
Wrightwood Crossing Rendering
Crews Out Early at Wrightwood Crossing Construction Site
Despite some early controversy, it is very promising to see a new construction project succeeding in this challenging Chicago real estate market. Green development, Wrightwood Crossing, located at 1307 W. Wrightwood in Chicago’s Lincoln Park Wrightwood Neighbors neighborhood, appears to be succeeding.
Now in early construction, of the 19 units, 4 are currently for sale and 8 are showing under contract on the MLS. The 2 bedroom units start in the upper $400k range, 3 bedrooms in the low to mid $600k to upper $900k range, and 4 bedrooms are priced at just over $1MM.
Just goes to show that new construction can succeed in this market given quality location / site selection, manageable project size, innovative design, and of course pricing. Get specific information on the units listed for sale here.
Completing a successful Chicago short sale transaction requires communication and proper expectation setting across all parties. An article crossed my desk this morning that I thought would make the perfect outline to set short sale expectations for both the seller and buyer side.
To entice you to read the entire article, the top 10 points (typos and all) are highlighted below.
1) Price is usually set by the agent & seller, not bank
2) Loans owned by 1 bank usually better than 2
3) Lowball offers get slow or no response
4) Agent must check comparables before submitting offer
5) Don’t hang your hat on the property
6) Sellers with other properties or too strong of financials may not qualify for short sale and/or may be asked to pay the difference
7) ”Approved” prices are quickest
8) Some banks want strongest buyers, some want strongest offers
9) Repairs are seldom done, credit is more frequent
10) When you get approval, must close on time
Having completed a number of short sale transctions on both the buy and sell sides, I can attest that all points are on target. The full article can be found here.
Searching Chicago properties by price cut seems to be all the rage these days. As pointed out by YoChicago, a new website, CondoShark, has emerged to capitalize.
Interesting and catchy way to focus on a declining market. That said, our Chicago property search has allowed you to search by Price Drop for some time now. Don’t wait to receive a generic list of properties with highest price cuts. Set up a custom search tailored to your search criteria, across any Chicago neighborhood, and have an alert sent with the latest updates via email or RSS feed daily or weekly.
Check out the latest Lincoln Park price drops of 10% or more over the past 7 days.
Make Lemonade out of Lemons When Searching for a Chicago Home
Working with a value/investor buyer, it became apparent that the meaning of “As Is” in a property listing may need some explanation.
Reviewing aggressively priced, foreclosure, and short sale listings with my client, it became apparent that she was avoiding certain listings that I felt had potential. Delving a bit deeper she explained…
This property says “As Is” in the description. I don’t want to be stuck with a lemon.
To that I explained that “As Is” in our market does not mean that if an offer on a property is submited and accepted, the purchaser has waived their attorney review and inspection contingencies (A/I). It simply means that the seller (or the bank) are not willing or able to address any inspection issues that arise with the property. All standard contingencies remain in play.
With that, our home search possibilities opened up significantly. We will undoubtedly look at a number of lemons over the coming months but have no chance of being stuck with one. In fact, we may even be able to make lemonade.
Jonquil Park Water Feature
If your family is like mine, hitting one of Chicago’s many city parks in the spring and summer is a great activity.
The Chicago Park District, along with extensive community involvement, has been doing a great job of renovating and improving parks across the city.
As an example, Jonquil Park just re-opened for business after extensive renovations. The park now sports a new matted play surface, climbing equipment, and to top it all off, a self-service water feature. Kids can’t wait to press the fountain button to turn on the multiple showers of water which turn off after a pre-determined time. I’m bringing an umbrella next time which will come in handy when fishing my daughter out of the downpour when it is time to leave.
Supera Park in the same Lincoln Park neighborhood is currently undergoing a complete re-design and will be re-opened sometime this summer.
See you at the park!
I am updating my blog theme. Main post content is available now and fine tuning will occur over the next few days…weeks.
Revised plans for the former Peerless Confection Company site are up for further neighborhood discussion and review. Looking at the Hostess site and Peerless site plans side-by-side as they face one another across Lakewood Avenue, they seem to complement one another nicely.
The Hostess site’s very symmetrical, uniform lines seem softened by the Peerless site’s softer, almost organic plan due to the varied building types, shapes, and sizes. Large setbacks along Lakewood used in both plans and even a park run by NeighborSpace at the southwest corner of the Hostess plan allow for ample green space.
Absorption rate is a fancy term for sales rate or how long it will take to sell unsold inventory. These days as condo lending pre-sale requirements to close a unit are extremely restrictive (51% sold for FHA, Near 70% sold for Conventional) sales rate is more important than ever in assessing whether a new construction purchase is feasable or a wise investment.
Working with a recent buyer, we uncovered the perfect new construction condo. My client loved the floor plans and finishes. At first look sales looked OK as the project had 100 units total and at our viewing there were 25 under contract. Construction crews were working feverishly while we were there.
Digging deeper however, the picture was not so rosy. A bit of research revealed that at this very time last year, the project had 23 units under contract. So 2 units had been sold in the last 12 months. Running the numbers, this yields a sales rate of .16 units/month, in other words, holding all factors constant it would take 37 years to sell the remaining inventory. Just reaching pre-sales guidelines, let alone, selling out the project would be difficult. Of course many factors could change to influence sales velocity such an improved economic outlook, loosened lending guidelines, price, and incentives, etc.
Finishes and floor plans are important but only if the units will be delivered in a reasonable time frame if ever.
I recently had a buyer client ask me whether he really needed a pre-purchase inspection of his new Lincoln Park condo. He said…
“It’s a condo, what could possibly be wrong with the place?”
A lot, and yes, condo inspections are worth every penny. That said, an individual condo unit inspection alone is not sufficient. Most major issues will arise with the building limited-common and common systems such as windows, tuckpointing, roof, elevator, parking garage, deck, etc. So how do you uncover these issues?
In my post Trust, But Verify When Making a Condo Purchase I touched on this issue. To uncover issues with building common elements, a thorough review of meeting minutes and budget can yield a wealth of information.
So while the unit home inspection may reveal that a GFCI near the kitchen sink needs replacement, a review of the association meeting minutes may reveal that the building roof needs to be replaced.
Inspections are important but don’t miss the forest through the trees.
