Robert Darrow, @properties

Posts Tagged ‘Commentary’

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.