List Price: $825,000
Sale Price: $781,000
The Property: Although buying, fixing, and reselling foreclosures has become a hot investment prospect, this Naperville home may stand as a cautionary tale. The investment group that bought the 13-room house out of foreclosure last August sold it on June 1st for $781,000—a discount of more than 15 percent from what the firm initially wanted for it. “They sold at a profit, but not as high as they had anticipated,” said John Racich the agent who sold the property. He declined to identify the investment group, and DuPage County records don’t name it.
The 4,000-square-foot Victorian-style house was built in 2003 by Brittany Homes and bought by Brittany’s owner, for an amount that is not shown by the DuPage County Recorder. The buyers took out a $700,000 mortgage; if they made a down payment of 10 percent, this suggests that they paid a total of about $777,000. (Their down payment could have been larger or smaller than10 percent.) In March 2009, those owners put the house on the market at exactly $1 million, according to Midwest Real Estate Data, but by August 2010, the home was still unsold. It was sold by JP Morgan Chase Bank at a foreclosure auction for $664,802.
The investment group that bought the house put it immediately back on the market at $925,000 while doing what Racich describes as “minor rehab.” The price dropped six times before the house was sold this spring.
The house has five bedrooms, a second-floor den, a third-floor loft, and extensive interior detailing that includes dining room wainscoting, tall windows, and a well-outfitted kitchen. It has a lot of about one seventh of an acre, small for Naperville, where the median lot size is a little more than a quarter of an acre.
Price Points: Because I couldn’t determine what the investors spent to fix the house, it’s not possible to say what their total investment in the property was. That it ultimately resold for something very close to its original 2003 price, Racich said, was “not a failure. It was a smaller profit than we expected.” To some degree, the home’s location worked against it, he said. His listing noted that it was “in the heart of downtown!”—but he told me it was “a little too close to downtown.” New condo and rental buildings are immediately across the street.