Chicago Lot Price - Northcenter a block from Coonley

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Chicago Lot Price - Northcenter a block from Coonley

Frank S.
Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes

Hi there, 

I am working with a friend on a FSBO, I may buy that house. Imagine a frame house on a 4,500 lot. The house is a full gut or even a demo job.

This is located about a block from Coonley, it's a prime location, but the house needs tons of work: roofs, decks, dated baths and kitchens, HVAC heating issues, floors, paint, etc.  It's a smaller foot print house, 3 levels.  That's why I am looking at it as a borderline demo job rather than a gut job. We will probably fix it. 

I am seeing 3,100 SF lots going for $510,000 minus realtor fees ($30,600), total $480,000.  What's the upcharge for the wider lot above (4,100)?  I am estimating about $620,000 sell price "as is" minus realtor fees ($37,000), so this will land in about $580,000.  

Again, it's a friend, so I'm looking at a fair deal.  They had a realtor acquaintance that told them $660,000, that will land my price at $620,000 which will not cut it according to my calcs. I think they are off by $40K. Their friend hasn't seen the interior.

Thanks, 

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  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    Your analysis seems pretty accurate. The surrounding houses will also make a big difference in price. If it's multi units or ugly older homes on block it can be worth significantly less then if other high end spec builds are on the same block. When it's a gut and the building is wider it's worth significantly more but if it's a teardown and the lot is just a little bigger I wouldn't pay too much more for it. Good luck with the project.

    Also keep in mind that as an investor/developer you want the lots below market. For example one of my old clients would build a lot in Roscoe and would get the lots only 10% or so below what retail buyers bought them for. The carry costs on these projects get so expensive need solid margins. 

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  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    5y

    Thanks for the input.  We will likely fix it instead of demolishing it,  a new spec build may be outside of our budget (dear kids are expensive).  We plan on moving there permanently or living there while we rehab our home. We live near by.

    I'll see if their acquaintance is willing to meet me at the house,  that's key for them to understand the expense required to hit a $660 vs $620 market price.

    Thanks,

    Frank

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  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    5y
    Originally posted by @Henry Lazerow:

    Your analysis seems pretty accurate. The surrounding houses will also make a big difference in price. If it's multi units or ugly older homes on block it can be worth significantly less then if other high end spec builds are on the same block. When it's a gut and the building is wider it's worth significantly more but if it's a teardown and the lot is just a little bigger I wouldn't pay too much more for it. Good luck with the project.

    Also keep in mind that as an investor/developer you want the lots below market. For example one of my old clients would build a lot in Roscoe and would get the lots only 10% or so below what retail buyers bought them for. The carry costs on these projects get so expensive need solid margins. 

    Well,  they want $680K for the lot.  They may get it if a 2M home goes there,  but I still think $620 /$630 is the actual price. I think their realtor gave them false expectations to get the listing,  but so it goes.  We'll find out in a few months. 

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Frank S. - I am agreeing with @Henry Lazerow numbers seem to look pretty accurate for that area.

    What is your rehab budget and projects

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  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    5y
    Originally posted by @Jonathan Klemm:

    @Frank S. - I am agreeing with @Henry Lazerow numbers seem to look pretty accurate for that area.

    What is your rehab budget and projects

    Good. I was starting to believe their fantasy valuation.  Thanks @Jonathan Klemm

    Well, this is not going anywhere. They were very dry during our chat. The comps given were absurd, borderline dishonest. Their "friend" used mostly brick two flats as comps at $690,000 to $725,000.  They have no idea.  Of course, they thought I was nuts when valued their house at -$100,000 less than the brick two flats on the pictures. 

    There may be a chance someone picks it up at a slightly higher price, but that block is not that special.

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Frank S. - All about the follow up right?  We put out a lot of offers and some stick and some don't there is certainly a motivated seller out there in Chicago that is looking for the help we all provide.  

    Yea, those numbers they provided seem way high, but everyone thinks their house is worth more than it is....especially now in this seller's market.

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  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    5y
    Originally posted by @Jonathan Klemm:

    @Frank S. - All about the follow up right?  We put out a lot of offers and some stick and some don't there is certainly a motivated seller out there in Chicago that is looking for the help we all provide.  

    Yea, those numbers they provided seem way high, but everyone thinks their house is worth more than it is....especially now in this seller's market.

    "I  rather lose a dozen bids than buy the wrong nightmare."

    Last year we picked up our home from a Craigslist ad in Northcenter.  It took the seller 4 months to realize our offer, at $200K below asking price, was fair.   That was very good luck and tons of hard work, but you never know what sticks.   The main difference is that seller was  a very kind, respectful, and honest man.  That was as important as the transaction. He lives a few blocks from my house, too. 

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Frank S. you just hit the nail on the head why buying off market can be tricky. So many sellers focus on saving money by selling directly, but they don't have anyone in their corner explaining the process and showing how comparable sales work. Those of us in the industry who do this day in and day out get it. Good for you taking down a deal off market though. It is harder than it sounds like. 

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