A group of investors recently bought up all of the unsold units at the failed Pearson on the Park conversion at 222 E Pearson St in Streeterville and will soon relist them at 25 to 40 percent below their original prices, according to Crain’s.
The group purchased the 30 condos for about $173,000 apiece and should be able to turn a profit even with the discounts, the story says.
Details of the discounts actually came from Ted Guarnero of Baird & Warner, who has listed a short sale in the building. The nine condos currently listed in the building (none of which are the developer-owned units) include one-bedrooms priced from the $220s to $320s, two-bedrooms from the $240s to $420s, and three-bedrooms from the $470s to $1.3 million.
I believe if you read the article it shows PrivateBank gave a loan of $6MM to the investor group, therefore making it $200K per unit on the loan. Let’s see if they could sell it before the Interest Carry and assessments hurt them
The people that bought when this was first marketed are completely screwed when these new comps close.
The new owners are paying past due HOA’s on the units and renovating the common areas. Not a bad deal for the current owners I would say. Nice to see that the new developers are showing some goodwill to the building and other owners.
I am sure the current owner’s may appreciate their initial goodwill, but when they dump the units at a 40% discount….the love will be lost quickly.
I am going to throw some real blame at the realtors that brokered deals for buyers in this place. The developer (Dr. Vish), had issues with previous buildings (910 S. Michigan comes to mind). If a realtor is worth a damn, they would research history of a developer and inform their clients that there may be issues. Instead, most realtors (at least the ones who worked for the buyers here) are either stupid OR did not give their clients the information… I hope they are just stupid.
There’s a third, and equally likely scenario, Papu: Realtors gave good advice and their buyers either ignored it or weighted it as just one factor in the purchase decision.
Dr Vish’s track record, tracing back to the Commodore and GreenBrier on Surf in the 80s, is well known. It includes, more recently, 525 Hawthorne and a number of suburban conversions. A lot of Realtors felt burned by repeated unkept promises over a number of years at 910 S. Michigan and by undisclosed investor sales at 525.
And, most buyers are nowhere near as naive or ill-informed as many seem to assume they are.
Disclosure: Dr. Vish is a former client and an off-and-on friendly acquaintance.
Joe,
I agree that some people were forewarned, but I think the Real Estate boom created a lot of Realtors that do not possess the knowledge that one would expect from a “licensed professional”.
If a licensed insurance agent sells a policy that does not fit their clients’ needs, they would have exposure on their Professional Liability perspective. A Realtor, is not held up to the same standards from a due diligence perspective, leaving the onus on the buyer and their attorney. Which leads to my point, what good are they?
Thanks new technology, people have the ability to obtain information that was previously only available to Realtors. That’s why my advice is if you work with a Realtor, make sure they really know the business and work hard to ensure you make a good purchase. They make a good deal of money, and should do more than give you the comps and facilitate the bidding process.
My 2 cents Joe,
Thank you for reporting the news and a lively discussion.
Papu,
I consistently recommend that people find a Realtor with a lot of experience – and especially experience in the area / type of home the buyer is looking for. I don’t disagree that there are many bad and / or inexperienced agents out there – and bad insurance agents and attorneys. None of that cuts against the real value that a good one adds to the process.
Buyers have great sources of information out there and, in my experience, use them diligently and to much better effect than most agents do. A lot of what’s out there, however, is merely data – not information.
The great agents who’ve been in the business a while recognize and respect their buyer’s wishes. Even with the best advice buyers can make bad decisions. I believe that happens more often than not because of the very real contempt in which many buyers hold real estate agents. They assume too easily that they’re all the same, that making the effort to find a good one isn’t worth it, and that the agent’s wise experience doesn’t have the value it does.
Buyers often overestimate the value of the scraps of info they pick up on the Internet. Almost all of the truly important knowledge that good agents have isn’t available online – e.g. which buildings have dysfunctional boards, which aspects of a home make for more enjoyable living and better resale value, etc. etc. etc.
At the end of the day the buyer, not the agent, makes the purchase decision, and often makes it in disregard of very solid advice.
Here’s a video with some suggestions on selecting an agent.
What will really be interesting to watch is the 09 tier, a two bedroom with no real view facing northwest. This is what the developer has the most of and needs to move this tier to make this a successful conversion. My guess is this will be a great choice for the med students looking for an affordable place to live with a roommate for four years. Note that there are 65 rentals in the building and 28 vacant homes ; this gives the building a 60% owner occupancy which means financing will be difficult for most buyers unless they have 20 percent or more to put down. However I like the positive buzz in the building and a noticeable increase in traffic to view the units for sale.