Robert Darrow, @properties

Archive for the ‘Commentary’ Category

Followers of Your Guide on the Facebook saw the Dark Side on Monday when my cell phone started ringing at 7:45 in the morning.  The Facebook rant started some fun discussions, and most of my friends knew I was letting off some steam.

I’m interested, however, in whether you think our instant access to information is fueling a change in the way business in transacted.

Just a moment ago, I received a telephone call from a Real Estate Appraiser who wanted information about my Home Owner’s Association.  He wanted to know the number of units, the number that are rented, and the number of parking spaces.  This is normal information that an Appraiser might ask during the course of business.  What struck me about the phone call was the Appraiser’s statement:

I left you a message an hour ago and I haven’t heard back.  I need this information quickly as I’m under a lot of pressure from the bank.”

I’m curious about when the timeframe for returning routine business calls of a non-urgent matter transformed from “Same Day” or “First Thing Next Day” to “59 Minutes Or Less?”

Mind you, I always want to be available to my clients whenever they need me.  Most of the time I have all my clients’ numbers programmed into my cell phone, so when they call, I know who’s calling, and if I can help them, I’ll answer.  About the only time I don’t answer is when my hands are full (this includes food, ice cream, beer or ropes on a sailboat) or I’m in a movie theater.

But the Appraiser who called isn’t working on something for one of my clients.  He’s working on a financing deal for someone who happens to be in the association where I’m on the Board.  Work done for the association is Voluntary.  No pay.  But there’s still an expectation that I’m available in “59 Minutes Or Less.” 

If you’re reading this on the blog, please leave your comments here and if you see this on The Facebook, comment over there.  I’d love to hear what you think?

While checking the news feeds on the Holiday, Your Guide found himself quoted over at YoChicago (www.yochicago.com) last week:

The North Side market may look stable compared to other areas of the city, but Bob Darrow says he’s continually surprised by the number of quality homes that have been closing for well below their expected prices. The @properties agent and Your Windy City Guide blogger told me yesterday that it’s becoming more and more common to see homes sell for 10 percent below list prices, even in cases where those list prices are well below a seller’s desired value.

Yo!’s writer then dug deeper into sales data for Lakeview, Lincoln Park and North Center and found that more than a quarter of sales are for discounts of 10% or better.  Check out the post here.

Your Guide has been updating readers on his experience riding the CTA around the Lakeview neighborhood and back and forth between home, the office, and the Loop.  For a solid year, it seemed the CTA had gotten its act together.  From fixing all the slow zones that plagued the Blue Line to O’Hare, adding Cell Phone service to the Subways, and eliminating stoppages and slowdowns along the Red Line, I had grown comfortable depending on Public Transportation to get downtown. 

Because the State of Illinois can’t properly fund the CTA, I don’t blame the CTA for the latest round of Doomsday Service Cuts (read about them at the Trib here) but the fact remains:  I can’t depend on the darn thing to get me to my appointments on time. 

I could do as the CTA recommends: leave extra time.  But at its best, the train can get me to my destination in about the same time it takes me to drive, park and walk.  As service cuts add a half hour, or more, to the trip, the train starts to waste time.  Unfortunately, time is money.  Dang.  Because I have really liked the convenience of grabbing the Red and Brown lines and riding hassle free into the Loop.  It’s worked quite well as all the Title Companies are conveniently located near a Brown Line stop, or within 3 blocks of the State Street Red Line.

At least with the ridiculous parking meter rate hikes, there is a lot more street parking available.  My round trip costs on the CTA are $5.50 round trip.  I started riding the Red Line when parking rates at downtown parking garages hit $38 for a few hours in the middle of the day.  But street parking is still a bargain at around $10 per hour.  And the extra $4.50 on top of my $5.50 fixed cost for riding the train is a small price to pay to guarantee on-time arrival, or to have the extra hour to use as I need to rather than shivering outside waiting on the slow-lane.

You nearly had a committed customer, but you’ve broken my heart for the last time.  (Until next year, perhaps.)

Your Guide performs BPO’s.  Also known as Broker Price Opinions – these are like mini-appraisals that are ordered by big mortgage servicing companies on behalf of banks.  Banks order BPO’s on properties in various stages of pre-foreclosure or foreclosure.  The volume of requests has been slow, but steady over the last 3 months.

Until Yesterday.

I have received 9 orders for BPO’s in the last 24 hours.  And the system that doles out these BPO’s has a large stable of other providers that automatically receive their assignments.  I only receive the requests after the automated system runs out of options with the other agents with more seniority.

Keeping in the Holiday Spirit, the firm is also demanding that these BPO’s be completed by December 26th.

That’s not gonna happen…

Internet savvy consumers are always looking for the Next Best Thing that’s supposed to revolutionize the way they do business.  One such Game Changer that hit the stage a few years ago was Craigslist.  This great bulletin-board style trading post offered a way to sell anything from concert tickets, junk from your attic, all the way to real estate.

Up until Craigslist made its debut in Chicago, the most popular “Alternative Media” outlet for renting out your apartment or posting your By-Owner real estate ad was an ad in the Chicago Reader. 

And for the following years, Craigslist was, indeed, a great tool for advertising real estate, especially apartments for rent. 

Real estate agents were terrified that the Internet, and Craigslist in particular, with its free and easy platform for reaching masses of Internet Empowered Consumers, would end the world as we know it.

As any poster of ads on Craigslist has noticed, lately, the relevance of the site as an outlet for useful real estate information has plummeted.

Joe at YoChicago notes:

Craigslist has become … almost totally dysfunctional as a way to find an apartment in Chicago.

Nearly 2,800 apartments ads were posted [on a typical day in August, 2009] on Craigslist. 650 of those (round numbers) came from Homescout and another 450 (round numbers) from the scammers in this post. The great majority of the rest also came from a small number of rental “services.”

As long as I’ve been around this industry the maggots have systematically set out to destroy the utility of any site or publication that draws an audience of rental prospects. They’ve succeeded, in my take, at destroying Craigslist.

Your Guide has found it infuriatingly difficult to post property information in the past few weeks as the Craigslist interface grinds to a halt during the input process.  The site inexplicably hangs for minutes at a time, often timing out causing me to have to start the process all over again.  Most of the time, I simply give up.

This week, the bulk upload interface that Craigslist offers to heavy advertisers stopped working, halting the upload for our company listing information in its tracks.  We haven’t heard whether a fix will be offered, or if the system has finally collapsed under the weight of all the junk postings being submitted.

In Real Estate Advertising, as in Life, it seems you get what you pay for.

And another New Paradigm seems to bite the dust.

In a press release on September 8, and detailed in the Sun Times today, local developer William Senne (also the Broker/Owner at Property Consultants Realty) slams other developers for their price reductions, and how “panicky” discounts hurt the marketplace.

Mr. Senne seems to be reacting to recent sales promotions like these and names Smithfield Properties by name in his press release:

Your Guide thinks this sounds like someone crying over spilled milk, and offers several reasons why price adjustments are sound business decisions.

In example after example, it is demonstrated quite clearly that you can inspire sales by playing with price.  Think of pricing as a throttle:  if you want to go faster, drop the hammer on pricing and more sales immediately follow.  This of these examples and try to argue that these are poor decisions:

• Cash for Clunkers: 700,000 car sales in less than 2 months.
• Groupon – the website where businesses pitch crazy discounts to large quantities of self selected consumers. Success stories include 1,269 pairs of blue jeans sold on June 8, and 4,913 Annual Memberships to the Art Institute of Chicago!
• If you need a Real Estate Example, you need only look as far as @properties development R+D 659, where over 115 condos have been sold since the announcement of dramatic price incentives.

Sounds awful, doesn’t it?

Your Guide also takes exception to another assertion by Mr. Senne that buyers will find themselves in substandard units in a building that lacks a viable condo association.

To the contrary:  I find that selling units to actual home buyers is the more desirable alternative to developers facing tough decisions in this marketplace.  Too often developers choose one of two other options leaving condo buyers frustrated to financially ruined.  Those choices include:

• The developer retains control of the un-sold condos and rents the units.  With a building half-full of renters, and the developer in control of a sizable percentage of ownership, owners face financial uncertainty when the time comes to sell their homes.  Strict lending guidelines make it virtually impossible for a new buyer to get financing on a condo in a building where one person owns more than 10% of the association.  Add to that the transient quality that the new development acquires as a rental property rather than as a stable condominium building.
• The developer stubbornly refuses to react to the market; steadfastly holding on to pricing that is clearly out of touch, and eventually loses the remaining units in foreclosure.  Worst case:  you need only drive by the Lincoln Park Lofts, formerly The Ashton Lofts located at the corner of Ashland, Fullerton and Clybourn.  Two poor home buyers purchased and moved in two years ago, and after the developer’s remaining units were foreclosed upon, were stuck living in an empty building with no other neighbors to help pay or care for the crumbling building.

The only validity to Mr. Senne’s argument is that previous buyers are hurt by the price reductions.  We can’t argue there.  It’s not fair for the prior buyers to bear the burden of the lower prices.  But those lower prices are not the fault of the developer, they are a function of the marketplace. To ignore the reality is to simply kick the can down the road.

On Tuesday, the Sun Times profiled a homeowner who is suing the local Historical Society over lost income from their interference with a sale of her property to a local developer.

6018 N. Kenmore is a large Victorian on an oversized lot near Loyola University.  The neighborhood has evolved into an area with more condominium development, rather than the stately elegant mansion that this home once was.  Renovation costs would probably have run into the hundreds-of-thousands. 

When the owner put the home up for sale, the most lucrative offer was from a developer who wanted to demolish the house and build new construction condominiums.

The Edgewater Historical Society intervened, maintaining that the house on North Kenmore was unique in the neighborhood and was listed on the city landmark map as “orange-rated” – eligible for city landmark status.  Reportedly, they pushed Alderman Mary Ann Smith to oppose demolishing the house and delay zoning changes “if the developer does not drop his plans for demolition.”

After some long delays in the approval process for the condominium development, the developer cancelled his contract to buy the property.

Property owner Brigitta Riedel says she lost out on more than $1 million when the sale went south and is suing to the historical society and four of its board members, accusing them of carrying off a "calculated, sophisticated attack" to kill the sale.

The board members say the suit could hurt community activism — and, if they’re ordered to pay damages, perhaps cost them their own homes.

"It could happen, and it certainly impacts how you plan the rest of your life," said LeRoy Blommaert, who’s being sued along with fellow historical society board members Elizabeth Mayian, Thom Greene and Kathy Gemperle. "You worry what that life would be like if you had to sell your condo or give up a number of your assets."

In the “Letters to the Editor” section of the paper today, a reader from Edgewater commented:

Owners continue to feel that they can do anything they like with their property, at whatever cost to the community.  While many houses or older apartments may not be architectural masterpieces, the community and the city have a clear interest in maintaining properties on a block at similar scale or of a certain historical quality.

So often, we see rampant development obliterating neighborhoods and disrupting social patterns, all for the sake of profit.  That Riedel, who made $550,000 on the property, should think of suing members of a small nonprofit board for the remaining $600,000 that she “lost” is outrageous.

Developers serve profit, not public good.  For this reason, we need citizens, organizations and politicians to help balance the equation so that the public good is also served.

Are you kidding me?

• How many times do I have to say this?  Hey – Preservationists!  If you want to save a piece of property, BUY IT!  When you impose your standards on someone else forcing them to lose value because they can’t sell or have to preserve an antiquated property, you are stealing from them.
• Just because a property looks beautiful, doesn’t mean it’s not a piece of junk.  Sure, it’s gorgeous.  But who wants to live in it?  The house has small bedrooms, no closet space, no air conditioning, a kitchen far removed from the living space,   Great if you want to re-create a Victorian diorama, but pretty awful if you’re a modern family that wants a nice place to live.

Can I answer the letter-writing response line-by-line?

“Owners continue to feel that they can do anything they want with their property…”  HELLO?!  Where do we live?  This is a capitalist society, last time I checked.  The whole IDEA of owning property is so that you can do whatever you want with it!

“…the community and the city have a clear interest in maintaining properties on a block at  similar scale…”  Buddy, they already do.  It’s called ZONING.  There are laws in place to maintain the character of a neighborhood.  This is why you don’t see truck loading facilities next door to schools.  But building new condo’s where old houses used to stand is perfectly reasonable.  And your notion of “Community” really reads to me like a bunch of meddling neighbors.

“So often, we see rampant development obliterating…”  Obliterating?  That’s what we’re going to call an entrepreneur who is willing to take a risk on the market, shell out over a million dollars on acquisition and construction, and then wait to sell a product that there is no guarantee will sell? 

What about these “rampant developments”: 

• Sandburg Village that bridged the gap between the Gold Coast and Cabrini Green to the west; thereby making Old Town a viable neighborhood where people actually want to live.
• Dearborn Park in the near south loop that practically created a new desirable neighborhood from scratch in a desolate wasteland of railroad yards and abandoned printing factories.
• And more recently the development along the Chicago River encompassing the old Montgomery Ward headquarters and warehouses. 

“Developers serve profit…”  Just because developers are in it for the money, doesn’t make it BAD.  In fact, it’s the America Way.  I would suggest that allowing community groups to hold properties hostage and begging local government to take over property that is rightfully owned by private citizens is the start of the slippery slope to “Socialism.” 

And as far as the neighborhood is concerned, here is a street view of the properties directly south and north of the house in question.  Oh yes, condominiums would really be out of place on this block…

I wish Ms. Riedel all the best in her efforts to recoup her losses.  And I hope that the lawsuit causes other “Community” groups to pause before meddling with the rights of property owners.

Your guide has a whole bunch of feeds to news sources, blog writers, and a few less savory subscriptions for some enjoyment.  While catching up on my lighter reading today, I stumbled across an amazing post written by The Real Estalker – Your Mama.

I love reading about the real estate of the rich and famous – and treated the reading like cotton candy:  fine in limited doses, and not much to report on. 

But in a surprisingly in-depth article on the very best of the very best upper-crust co-op’s, the author (Your Mama) details the nearly fifty year history of the residents who live in 820 Fifth Avenue on the Upper East Side.

Your Mama’s research through the interweb indicates that the solemn and sedate Starrett and Van Fleck designed apartment house was erected in 1916 and when built included ten full floor 18-room co-operative apartments plus two maisonette style units. Each of the full floor units spans approximately 7,500 square feet and was originally designed with 5 bedrooms, 6.5 bathrooms, 9 windows overlooking Central Park, 6 fireplaces, a private elevator landing opening to a 44-foot long entrance gallery, and 7 staff rooms. That’s right children, seven cell-like staff rooms for all the silver polishers, rug fluffers, food cookers and booty wipers required to run a residence of this magnitude back in the day when obscenely wealthy folks regularly lived up in the same crib as their hired help.

Because there are so few apartments in the building and because the Richie Riches who move in rarely move out, seldom does one of the splendiferous spreads at 820 become available for purchase. So when the New York Observer’s real estate gossip Max Abelson recently reported in his Manhattan Transfers column that home building baron Ara Hovnnian and his abstract artist wifey Rachel Lee Hovnanian are rumored to have quietly floated their fourth floor apartment at 820 on the market with a blistering asking price of $36,000,000, all us other real estate gossips sat up and took notice. Well, at least Your Mama did. Like a dog with a bone, we started digging and searching for information about the rumored to be for sale Hovnanian residence as well as whatever 411 we could root out about the identities of the other insanely wealthy residents who occupy what is considered by those who care about such things to be one of the five best (and most expensive) buildings in all of New York City.

The post goes on for several pages and includes links to reference materials, magazine articles, old real estate listings, photographs, socialite news-clippings and more.  Truly amazing.

In case you are curious about the machinations of the other notoriously finnicky co-op boards, a commenter left this link to a New York Post article on whose who in control of these buildings.

These two articles offer a spectacular insight into who has old money in the new world.  The level of details uncovered, and shared, is truly spellbinding.

Your guide will endeavor to offer a pale facsimile of this regarding some of Chicago’s more famous real estate locales.  But don’t hold your breath for something quite as juicy.  Chicago is such a new city that we simply don’t have the history, and as Chicago is not hemmed in on all four sides, some of our captains of industry have escaped to more leafy retreats in the suburbs.

Your guide hears that the Sudler Sotheby’s office at 1650 North Wells in Old Town closed and relocated most of their real estate agents to their big office at 919 North Michigan Avenue and a few other agents to space that was acquired from Century 21 Sussex & Reilly at 912 West Armitage in Lincoln Park.

Also, over the weekend, Baird and Warner announced that they will be closing the office at 1510 North Wells (formerly the office of The Habitat Company’s Brokerage Division) in Old Town.  Those agents will move to the larger space near Diversey on Lincoln, or to their Michigan Avenue address.

Holy Smokes!  Two big brokerages that have had 20 year (or longer) histories in Old Town are closing up shop. 

This may seem redundant after last week’s post noting the consolidation of Koenig & Strey offices, but it bears mentioning that @properties is posting revenue growth, and increased market share in this down market.

And of course, what leads to increasing market share and revenue growth are sales.  If you’re thinking of selling in today’s market, it might be worth giving me a call to see what innovative ideas we are implementing to achieve this kind of success in our market.

During their session on Wednesday, May 13, the Chicago City Council passed a watered down version of the commercial trash container tax.  It seems that after some investigation, the City Council learned that there are more commercial trash bins than originally thought.

Your guide thinks “No ***, Sherlock.”

Swept up in the new tax are the thousands of individual row homes throughout Chicago where each household has its own container.  But any building that contains more than four homes – and row homes are considered all part of one building – must have its own commercial waste hauling service.

The minimum fee has been lowered from $80 to $51.  That’s an annual fee.  And to quote Alderman (Vi Daley, Lincoln Park) the new tax is designed to pay for the inspections that ensure that private alleys and private trash bins are kept to the high standards set by the City of Chicago’s alleys.

Yes, you read that right!

And of course, this still impacts our fairly typical townhome community with 100 homes with an unexpected, un-budgeted tax of $5,100.  Each year.

Remarkably, previous posts here as well as mass emails to my neighbors hardly registered a blip.  Well the bills are already in the mail for the fees.  I’ll be sure to report back after all my residents get their $51 whack on their June 1 assessment invoice.

The Chicago Tribune reports all the details here.

Mayor Daley has not signed the legislation yet.  It’s a million to one long-shot, but it might be worth a call to the Mayor’s office if you feel strongly that this isn’t a fair tax on home owners.