Many people hope that real-estate prices have hit bottom, but Richard Ross is willing to wager that home values will turn around within the year—at least in his neighborhood. Ross, who is selling his residence in a 136-year-old structure at 919 West Wisconsin Street, is betting that, whatever a buyer pays for the home, the place will still be worth at least that much a year after the deal closes. To back up that wager, Ross will put $50,000 in escrow; after one year passes, he will reimburse the buyer for any drop in the home’s value up to $50,000.
“It’s an indemnification of the price,” says Ross, who with his wife, Siggi, has been trying to sell this home for more than a year. “Buyers come to look and they love the place. But they say, ‘Well, what if prices go lower? I should wait.’ My strategy is to guarantee that there’s value here—and if it goes lower, I’ll take that loss.”
It’s a gamble, but one Ross feels confident he will win. He says that his asking price of $999,975—marked down from the original asking price of $1.3 million—is 15 percent below the home’s appraised value (about $1.176 million). And the neighborhood—known as the RANCH Triangle because it is bounded by Racine, Armitage, North, and Clybourn avenues and Halsted Street—has improved steadily since Ross bought the home in 1980, when the area was still kind of rough.
Ross’s agent, Ron Goldstein of Rubloff, also believes in the value of the neighborhood; among its many attributes, he points out that the city-maintained trees along Wisconsin Street are fruit-bearing orchard varieties. He also sees value in the property itself, which off the master bedroom has a greenhouse that opens onto a catwalk to a huge garage-top terrace. In addition there is a ground-level courtyard, and inside, none of the aboveground interior walls are structural, so the entire three-bedroom floor plan can be reconfigured. (The walls in the basement cannot be moved.)
As for estimating the home’s value on the one-year anniversary of its sale, Goldstein explains that that information will be calculated based on data Rubloff keeps on sold prices in individual neighborhoods.
On the Other Hand
In the April issue of Chicago I reported that the S&P/Case-Shiller Index showed that December 2008 home prices in the Chicago area had fallen to December 2003 levels. On Tuesday, the latest round of data revealed that home prices here for January 2009 had dropped to May 2003 levels—a loss of seven months of value in just one month. Keep in mind that the numerous sales of foreclosed properties are pulling down the average; your own localized area or price range might not have rolled back as far.