Housing Bulletin

Housing Bulletin: Giving Up the Ghosts

Together, the many empty, unsold builder houses sprinkled around Chicago and the suburbs constitute a kind of scattered-site ghost town. But in the past few weeks, there have been signs of life—in the form of short sales and huge preforeclosure price cuts that have put living families into some of those homes, and that may do the same for many more in the near future.

On Friday, two builder houses sold as short sales, which means that the sellers received less than they had invested in the homes. In Palos Park, a 27-room house whose asking price had once been $3.499 million sold for $2.5 million. In Glenview, a 15-room house, formerly priced at $1.89 million, went for $900,000. Earlier in February, another Glenview builder house, with 13 rooms and an original price of $1.369 million, was sold for $910,000.

In Chicago, a builder home in the northwest part of the Bucktown neighborhood that once had a $1.8-million price tag was listed as a short sale in mid-February, with an asking price of $790,000. Within a week, says the listing agent, Lisa Kay of Coldwell Banker, there were five bidders and the house went under contract. (Because the sale has not yet closed, Kay would not disclose the final price; it’s a good bet that bidding took it above the asking price.)

Another Coldwell Banker agent, Eric Hochstadter, now has a builder house at 1822 West Barry Avenue listed at $899,000; its original price had been $1.389 million. “That’s reality,” Hochstadter says. “It started out priced too high, missed the good times in the market, and now somebody’s going to get it for a much better price.”

Hochstadter has some advice for a buyer looking to get the five-bedroom house at a rock-bottom price. “Be patient and accept that the bank’s going to be slow about [finishing] the deal,” he says. “You can’t be somebody who has to rush to move in.” Banks take weeks, sometimes months, to examine and approve—or reject—offers on short-sale properties. Hochstadter notes that it’s also best not to put any contingencies—including a need to sell your current home—in the contract; banks want their deals as clean as possible.

Many builders and their real-estate agents are still hesitant to advertise that their houses are now available for much less than the listing price. “A developer is not going to go public with this information, because if they do, they’re dead,” says Marc Shudnow, a Skokie Re/Max agent who specializes in short sales and foreclosure sales. “If the market recovers in two years but they have these failures attached to their name, they’re not going to recover.”

That is part of the reason that many builders are now telegraphing through their agents that they will accept very low prices, Shudnow says. (I’ve had three agents do so in the past two weeks.) “Their bank doesn’t want to take back three, four, five houses from them,” he says. “So the bank has said: ‘Negotiate that price. Get it sold for something instead of giving it back to us.’”
 

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