Why walk away from a downtown Chicago condo?

Another article which caught my attention is one from the Chicago Sun-Times about the rising number of potential buyers walking away from downtown Chicago condos just before the delivery date. The story does go on to cite examples, and also to anticipate how this trend might go as some important openings (including Chicago’s Trump Tower) come up before the end of this year.

http://www.suntimes.com/business/roeder/1689945,CST-NWS-roeder29.article

The article quotes one developer about how they have been very successful with overall sales and how that includes significantly fewer “walk aways” for a specific building. One of the major points of this column is to tie the concern about diminishing downtown condo sales to the current real estate marketplace.

Naturally, the story goes on to associate the downturn it reports on to the current conditions in the real estate market. That could be taking the easy way out. I, for one, question that.

We don’t know exactly how many condo developers or sales offices were contacted in total for the story. Yet, of the few that are mentioned, one reports successful sales to the tune of millions of dollars. A success story within a couple of miles of the area covered in this story.

I’m not here to pick on the reporter from this story. It seems to be the same mindset as when realty associations keep pumping out the “latest decline in sales from a year ago” statistics and blame the market instead of only reporting how many hundreds or thousands of homes have sold during the previous month. Yet, if that were “my” story to write, it would have come out completely different. I would be investigating what made the one development quoted in there so successful, whether or not compared with other condo buildings and developments in the same area. But since I am not an agent or developer, I’ll leave that research for someone else.

Some will counter this point because the article refers to people “walking away”, which could refer to their ability to secure or close on a mortgage. I can appreciate that viewpoint. However, the point is that a nearby development is not experiencing anywhere near as much of this same occurrence.

Instead, I’ll offer up my theory, and that is that I would closely examine the pricing of condos in downtown Chicago Within that 3 to 5 square mile area there is plenty of public transportation, retailers, restaurants, and services. . If one development is doing well, the reason for the others to be struggling is not location location location. This leaves price and value.

In other words, the “struggling” developers in the same area either do not have their units priced right for the buyers it hopes to attract, or are not offering enough in value. By “value” I refer to amenities which apply based on the location and the type of property. A major downtown condo best serves when it has parking, proximity to bus and train, grocery store, and plenty of businesses. Other factors such as the size of the units, views, number of stories, and exercise facilities. Is it possible that the “walk away” people did more research and the results told them to back off due to future resale concerns?

While I can’t answer that, I think that is a question that should be addressed with regard to pricing a listing or a development. But for now, we should be looking for reasons why these “walk aways” are happening at some locations but not at others nearby.

Thoughts?

If they are the builder - how is it not their fault?

Earlier today I saw a story from Florida about a major builder which identified defective drywall used in hundreds of homes (thus far).

http://www.justnews.com/news/20039942/detail.html

The builder seems to be responding both financially and in terms of the investigation. To me, their response raises more questions than it answers. I would like to know how this builder decided upon the "contractors and sub-contractors" it is now investigating. NOW investigating?

If they were not carefully investigated before, I would like to know how and why these firms were hired. Is Lennar a "builder" or are they really just a marketing agency?

All of a sudden it is not their company and is organizations they hire? This could then be a reason that the wrong materials were used in some instances. Shouldn't the "builder" have a handle on materials used throughout "their" built homes?

How dare they wait until AFTER lawsuits have been filed? Did they not check out every contractor and sub-contractor hired to build "their" homes?

We don't know yet to what extent this could impact the buyers (or tenants) in these homes that have been found in violation. Not to mention the loans on these properties, those that were purchased with the help of a Realtor, and countless others who could be impacted as this continues on.

This could be still another problem for banks and industry professionals. We don't know yet if owners or tenants are being forced to move or relocate over saftey issues, and how it could impact loans and credit. Yet, this is not related to the current economy, even though it could very possibly throw another wrench into a challenging and diffcult real estate and financial market.

Yet, this was not caused by banks, greedy lenders, or consumers with credit issues. It seems to be caused by a "builder" acting like a marketing company and hiring companies which were able to use the wrong material since nobody investigated when they should have.

It is tough enough for industry professionals to assist in the purchase or sale of a home. The safety of the home itself should never have become an issue. We should all be asking a ton of questions about new builder homes from this point forward. Worry about the credit of the potential buyer later.

And while we are at it, who inspected these homes????

How the local ATM could eventually increase your sales..........

Realty agents and lenders should take note of a story that broke in the Chicago area earlier this week when it comes time to contact or send a newsletter or reminder e-mail to current and potential clients. The story gives them and all of us a reason to check our nearest ATM machine, but it could eventually help you to get a sale or commission as well.

The story is about a woman in suburban Oak Forest IL who started a class action lawsuit against a local bank after she was charged $3 for using an ATM which failed to disclose that she would be charged a fee. It seems that if there is no sign on the ATM or electronic message on the screen warning of a service fee that it is then a violation of the Electronic Funds Transfer Act.

As a result, the Chicago Sun-Times reported that Marquette Bank preferred to offer a cash settlement rather than be subjected to additional legal fees to fight the suit, with a judge expected to rule in September. The reported settlement amount for this woman (and other users of that specific ATM) is supposedly $90,000. While I have a big problem with the law firm supposedly getting $27,000 of this money for its legal fees (I’d love to see documentation on the actual cost of filing this lawsuit!), that is for another discussion.

So now you are asking, “What does this have to do with me as a realty agent / lender?”. My answer is, nothing directly. My point here is that here was a woman consumer using her local ATM that figures to wind up with many times over the $3 she was charged, perhaps over $1,000, because she stepped up and complained.

I searched and did not find this story in other parts of the country, which I find surprising. But I was a realty agent or mortgage lender, I would be all over this story in communications with my current and potential clients in my database. It’s time they start checking the ATM machines they use to make certain there is a notice of fees involved. If not, there is now legal precedent which could bring them potentially $1,000 or more.

Even if they don’t find any ATM’s in violation, they will tell their friends about this. As a result, this gives these consumers at least one chance to mention and recall YOUR name and affiliation when they do. And doing this costs you nothing, while you get a group of people telling others that “my Prudential agent told me about this……”.

You might also suggest that if they can find a violation and collect a few thousand dollars they can put it into a home improvement to increase the value of their property for when the time comes to sell.

Trust me when I tell you this is better information for potential customers than negative statistics about last month’s local real estate market.

Now back to watching for stories that actually can help us all generate business in this real estate market………

Let's make them true "news" letters

I continue to subscribe to newsletters done by realty agents and mortgage lenders who are not (advertising / marketing) clients of mine from around the country. These can be an interesting resource for ideas (and columns). At least, they should be.

This morning, the morning of July 2, I received "my July newsletter" from a realty agent in Chicago. I have found his previous newsletters to be well presented even if the content has been inconsistent over recent months.

Thinking I'm going to truly see a "July" newsletter, I open it, and note that the first story is about home sales in April. Yes, April. I didn't check to see if it was April 2009. It didn't have to be. Geeez. This is July. I should have been reading about April during April or at the very latest within the first 10 days of May. Two months ago.

I take it this guy has nothing current and topical to write about for his "July" newsletter. He might have been better off not to send it out. The "lead story" was already outdated, no matter what the information it contained.

If I was a client of his, I would not be pleased that "my" agent is providing me with information that is no longer timely. I also find that a lot of the sales statistics we are bombarded with as it pertains to real estate is not pertinent either. I would let him know that I am interested in what is happening in the local market "today" and that I will start looking for someone who can tell me that on a regular basis. As it is, I preach about how realty agents do not provide enough information which is specific to local home owners, and examples like this only add fuel to the fire.

Why am I reacting so heavily to one newsletter from one agent that I don't even know?

There is an answer for that. In this marketplace, everyone associated with the real estate community needs to work harder in order to survive and hopefully thrive. Even one agent sending information from more than 2 months ago as their "current" newsletter gets a few people to think that there is no progress and little hope for the real estate market to rebound.

In all likelihood, based on its overall appearance, this agent is using one of those services that composes and sends the newsletter out for different agents around the region or around the country. My hunch is that this newsletter isn't just going out in the Chicago area today. But if I were a realty agent that was considered responsible for having sent this out, I would have already canceled this service and be putting out my own retraction.

My point of contention is that if this agent "doesn't have time" to compose his own newsletter, it would mean he is making a ton of sales. If he is making sales, THAT should be what his newsletter is all about. He should be describing elements of his successful sales (which can be done without naming names, etc.) and showing what a good month June was and what he hopes to accomplish during July. This would make an appropriate July newsletter.

If this agent did not generate any sales during June, he should not be going back to April for content. Frankly, this sort of newsletter could very well be a reason he did not generate sales, since he offers not one compelling reason to contact him today.

You see, I have no idea if he even got a sale during June, or if he made several and raked in thousands of dollars. Yet, I still don't know this minutes after reading HIS newsletter.

Earlier today, I took steps to bring two realty agents together from different parts of the country to try and bring a couple of properties to auction before the listings expire. My hope is that this story will result in another property being sold as a result of the listing agent's effort prior to the expiration date and from a winning bid solid enough that the seller didn't refuse it and move on.

Hopefully my client could use that success story in her newsletter within a matter of days. It could help the real estate market one property at a time.