ChicagoSouth Side

From Yo’s archives – free plasma TVs and agents drinking their own Kool-Aid

by Joe Zekas on 2/17/12

Remember plasma TVs as sales incentives? Remember buying a Bronzeville condo for its appreciation potential?

Five years ago today we were writing about “free” plasma TVs and most real estate agents were still seeing limited downside in the market. In some neighborhoods they were still talking about appreciation.

When I visited Sutherland Pearsall‘s Jerry Houlihan at Drexel Parc Lofts, 4537 S Drexel Blvd in North Kenwood he showed me around a 3-bedroom, 2-bath penthouse unit priced in the $340s, and we chatted a bit about why he’d bought in the building.

Jerry bought his 2-bedroom, 2-bath 6th-floor unit at Drexel Parc Lofts, for $219,000 in December of 2005 after renting in Wicker Park for 6 years. He’d looked on the North Side, but felt he was getting twice as much space, plus parking, in his South Side neighborhood. At the time, Jerry saw little risk of downside in his purchase. He resold his unit for $145,000 in July of last year.

A penthouse similar to the one we viewed is now for sale as the developer’s final close-out unit, priced at $179,900. Unit 109, which was purchased for $208,000 in March of 2006 resold for $103,000 in September of 2010 following a foreclosure.

Many real estate agents eagerly bought into the deals they were selling in the middle of the last decade. Jerry at least escaped the fate of the agents whose names I recognize while scanning foreclosure filings.

Share:
  • Facebook
  • Google Buzz
  • Digg
  • LinkedIn
  • StumbleUpon
  • del.icio.us
  • Google Bookmarks
  • Live
  • Posterous
  • Reddit
  • Technorati
  • Tumblr
  • email

No related posts.

{ 2 comments… read them below or add one }

Jerry November 23, 2014 at 10:34 PM

Wow, I’m famous. I missed this when you originally wrote it Joe.
I must say that I was thrilled (and still am) that I bought on the south side. Too bad those other agents didn’t buy one of our condos.

Had I bought a unit on the North side I very well might have paid even more and ended up like many of your clients…dead broke. As it turned out, I lived in the condo for 3 years then rented it for 3 more with the rental income more than paying my expenses and leaving me with positive cash flow each month. The tax write offs were nothing to sneeze at. Factor in the fact that whether you rent or buy, you still have to pay for housing (I calculate that I saved $300/mo. by owning or $3600/year not including the mortgage interest write-off and equity contribution).

I think I did pretty well despite a $75K paper loss (although that is high too since I think I took some cash out at some point if I’m not mistaken).

I sold only because I had an opportunity to purchase a distressed single family in Kenwood and needed to qualify for financing (I’m still on the south side). I would probably have kept the condo for years otherwise. Great deal in my opinion.

Most of the other buyers who didn’t lose their jobs or freak out are doing fine too. That is one of the best buildings in the neighborhood. Well run, well funded….the inspector that the association hired to keep the developer honest called it a “Cadillac” of buildings. It’s a tribute to Sutherland Pearsall Development.

I think this story turned out pretty well considering that many many other people lost much more by buying in the bubble neighborhoods where things were truly crazy. Not many people saw the downturn coming. The south side had never really seen crazy appreciation and that was one of the attractions. It’s still a compelling investment opportunity.

The unit you mentioned, 109 that sold after a foreclosure for $103K, was an example of the banks again screwing everyone. Rather than working with their borrower and keeping them in their home, they foreclosed, the tenant apparently stripped the place which caused water damage and then the bank dumped it on the market and gave everyone else a nice parting gift of further reduced values because of their negligence.

I’m sure they got paid back in full by the FDIC with interest.

Don’t be so quick to blame agents and developers for people’s losses. Maybe you should remember to include the real crooks. You cannot tell me that my mortgage payment of $1200 for a 2 bedroom condo was a rip off. It was and is still a great deal and the only people who lost are those who had to sell. Our clients who are still living there are quite pleased, I’m sure, with the fact that they are paying $1200/mo instead of $1400 or $1600 for a similar rental.

And my free plasma TV worked out GREAT as well. It broke after 2 years and I returned it to Costco for a full cash refund (yes, 2 years later) With that money I then bought a 65″ AND a 40″ flat screen for the same money as the 50″ freebie cost. :)

Jerry Houlihan

Reply

Joe Zekas November 23, 2014 at 11:14 PM

Great hearing from you, Jerry, and many thanks for the detailed, informative update.

I don’t think you have ever or will ever see me blaming agents and developers – with the exception of the minority of fraud artists – for real estate losses.

Reply

Leave a Comment

Previous Post:

Next Post: