Tuesday, June 19, 2012

House Hunting via the Open House route

So another Sunday spent enjoying the great weather and realtor spins on the market. Because we are house hunting, a regular feature on Mysteries of Life will be our experiences viewing Open Houses (OH) or Listings viewed with an agent. I may change up some details to mask the date of the visit and/or protect the identity of the agent.

Also, because agents use all kind of tricks to make a house appear new on the market even though it's been re-listed and de-listed to death, I'm going to include address, price and links to the properties. The links may disappear or the price might change so this is just a snapshot of what they were when we looked at them.

House No 1: Irving Park
4253 N St Louis Ave,
4 bd/3.1 ba $409,000.

While we're not likely to stay in our current area, every now and again I like to look at what is on sale in our neighborhood. The first agent was a lovely lady who took me for a tour of the house. At most of the Open Houses I’ve attended the format falls into one of two buckets. Either the agent lets you wander through the place unsupervised and will answer any questions when you are finished or they follow you around without being on top of you. This was a rare guided tour where she took the time to point out some features and try and explain what the builders were thinking.

Alas the house has some External and Functional Obsolescence working against it. For one thing, it was across the street from a school. This can be a minor problem if you have people visiting you during the day and they have to park a street away because you cannot park in front of a school during school hours. It can be more of a problem if your street is the side that is optimal for parents to drop their germy, projectile-barfing poopsacks off at school.

The house did not have a basement but it did have three floors of living space. The master suite on the top had a bathroom door that would prevent having a king or perhaps even a queen sized bed in the room. This can be resolved, as the agent pointed out, by re-working the door hinge so that the door swings open into the bathroom …odd that they did it this way in the first place.

The agent probably doesn’t realize that I do my homework. For instance, I know that the builders bought the house for $80K and while they deserve to make a profit on their work, they probably didn’t put $300K into this house. Yeah they might have put higher end finishes and more expensive cabinetry and the spa showers and lighting looked impressive.

Drywall costs the same whether you buy it for a house in Irving Park or Lincoln Park and with a contractors discount plus a good efficient crew; your costs should be relatively the same from house to house. The two big variables are how cheap you can acquire the initial property and how much you want to spend on items like bathroom vanities, lighting fixtures, cabinets and appliances. Also, I’m guessing most builders have more than one rehab going at a time so they might be able to get a slight bulk discount on items so that coincidentally that new construction in LP looks a lot like the rehab in Irving park.

Rehabbers tried to do the same thing to another house up the street. They also initially priced it at $409K and have been chasing the market ever since. This is a $325K house.


House No 2:  OIP
3902 N Central Park Ave,
3 Bd/3.1 ba  $600,000.

This is a home I would like to live in and have my grandchildren visit. In fact, when I first started looking at Real Estate Porn researching the market, this was the type of home in the exact neighborhood I wanted.  Unfortunately, it is $200K over our price range.

The agent was an older lady who was trying to sell a charming old jewel of a home that is located in the worse part of Old Irving Park. She was polite and friendly enough. I still got the feeling that she could tell this wasn’t in my price point and she was going to have enough trouble unloading this house as it is, she didn’t need to waste time on dead end OH stalkers.

This is another house that has External and Functional Obsolescence working against it. Externally, it’s barely on the Geographic Edge of Old Irving Park. The room configuration has two bedrooms and bathrooms upstairs with the third bedroom in the basement. Not a great family configuration unless you only have one child.
In spite of the large lot, it’s really a $475 - $500K house.

House No 3:  Logan Square
2557 N Washtenaw Ave,
3 bd/2.5 ba $450,000.

The last house was in Logan Square. This house was a two flat that was converted into a SFH. It is a nice looking home in the good part of LS, just off Logan Blvd. It would be a short walk to the California Blue Line Station. The yard is nice and the alley is relatively clean, which is usually a good sign. If I'm going to live with a mile of my mom's house, this is the part of Logan Square I would choose.

It is a good property at a fair price for the neighborhood. At this time, I cannot find anything else for $450K in that part of LS in that good of condition. That said, the house still needs some work.
  • The bathrooms need upgrading though they are functional so that could wait. Since my current pipe dream is to have some sort of spa like bathroom, the upstairs bathroom here is an excellent candidate for installing a better shower and radiant heated floors, though this house’s infrastructure might not support that.
  • The carpeting would need to be replaced and apparently there is not hardwood floor underneath them, so that’s a concern.
  • The basement is small and really wouldn’t be worth finishing off. Maybe just storage and a functional laundry room, workout room and perhaps a shop.

IMHO it needs a new, better designed deck. Which is ironic because the realtor told us that the owner just sunk $5K into the back porch/deck to bring it up to code, which loosely translates into he spent money he doesn’t’ really have to do the minimum necessary.

The agent also told us that he cannot really come down from his $450K price tag. He paid $525k for it and apparently doesn’t have much room to move, even with the realtor kicking in some money via dual representation.

To buy this house, I’d want some concessions, which the seller apparently isn’t in a position to provide. That the realtor didn’t take my contact information tells me that there isn’t any wiggle room. He told us the place was under contract but fell out because of the buyer’s financing, which again means the owner has no wiggle room and will not or cannot bring money to the table.

This is one of those situations where you’re better off not having realtors involved but unfortunately the real estate industry has pretty much rigged the system to function better if you work with an agent. The seller would have to de-list his home, wait an appropriate amount of time and then do a FSBO and find a buyer who doesn’t have an agent to maximize the amount he could drop his price.

As much as I wanted to want this house, I just cannot get past the price tag and having to buy it as-is. Someone looking to spend $500K or more in Logan Square will see this as a deal and scope it up.

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