Last month, I read an article about two Evanston condominium developments that have slashed prices in an attempt to sell some of their vacant units. This is a common event in residential real estate sales in Chicago and the North Shore. Potential buyers generally like these units because they are new and have never been lived in. There is also a small the chance for appreciation in these units. However, the risks seem to outweigh the rewards. When I show condos in buildings that have not sold all existing units, I make sure that the buyer(s) understand the risks that are associated with purchasing these types of properties.
Most common risks:
1. May not get funding: Procuring a mortgage committment is difficult because lenders have many new rules that they must adhere to.
2. Market Decline: There is still evidence of price depreciation in many local markets. You might buy at $150,000 and 1 month later someone else might purchase a similar unit for$140,000.
3. Short-sales and Foreclosures: The original owners who paid far more than the current market prices might fall into short-sale or foreclosure status. This would decrease the value of your condo.
4. The entire development might go into foreclosure.
5. Leasing vacant units: The developer/owner might lease all vacant units as a means to generate income. This would negatively affect the owner occupied level and the image of the development.
If you are considering purchasing a condo in Chicago or the North Shore suburbs, please contact me and I will help guide you through the process.
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