Doubling the sales price in 30 days - Really ???
800 S. Wells #501 Price Hike After Short Sale
It’s not unusual for a downtown Chicago condo that just came onto the real estate market to catch my eye or grab my attention in some way. Usually, it’s either an upscale residence in the prominent Gold Coast neighborhood or a terrific deal in the neighborhood I happen to live in, which is Streeterville. Today was a little different, however. As I was scanning through the MLS, I noticed 800 S. Wells #501 was just put back on the market with a list price of $250,000. If you’re not familiar with the listing or the location, this particular condo is in the River City building in Chicago’s South Loop neighborhood. I’ll be the first to admit that the finishes in unit #501, which include granite countertops, beautiful cherry cabinets, stainless steel kitchen appliances, and fabulous Brazilian hardwood floors, are very tastefully done and at first glance, the $250,000 asking price seems like a reasonable deal. But what the current listing for 800 S. Wells #501 fails to tell potential buyers is that this condo was actually on the market roughly 6 months ago with many of the same features and listed at only $140,000. In fact, 800 S. Wells #501 was not only on the market recently, but closed at a price of $130,000 right around November 4th.
Now of course the space and square footage in this South Loop Condominium is the same as before, the number of bedrooms and bathrooms certainly hasn’t changed, and even the upgraded cherry cabinets were already installed at this time. Granted, I’m not the smartest guy in the world, but if my calculations are correct, there’s now a $110,000 difference in price for some hardwood floors and nice looking appliances? That must be some high quality wood they’re using over there at River City. And I could be mistaken, but I’m almost sure even the hardwood floors and appliances were also installed prior to the closing in November! However, to be fair, when this condo sold for only $130,000, it did close as a short sale and the buyer likely paid cash. But given the history at River City, the condition of the building, and so on, most lenders will not provide traditional financing for condos in River City.
So in other words, the flipper trying to profit $120,000 off 800 S. Wells #501 will also have to find another cash buyer who’s willing to pay a quarter of a million dollars at River City, when dozens of other units can be bought $100,000 cheaper and provide the opportunity for personalized customization. Although it may be hard for me to pass on an already rehabbed condo, and the inconvenience of having new appliances delivered and installed while I’m relaxing comfortably on my couch might be a hassle, I think I’d rather opt for the $100,000 savings if I’m a homebuyer looking in Chicago.
Moral of the story: Trying to profit $100,000 on nothing more than a short sale really isn’t the best idea when the real estate market has yet to recover from an on-going collapse. In addition, I also think River City is a great building and has tremendous value for most of the units on the Chicago real estate market-but not when listed in this manner.
Check out the 2 bedroom/ 2 bathroom condos listed at 800 S. Wells Street below. You'll see that the average sales price really isn't near $250,000 and is actually driven up considerablly by unit #1301.