Condo Conundrum

Lateefah (00:06):

On this episode, we're in Bronzeville, a traditionally black and famously thriving Chicago community. This building is new construction built in 2022. I'm Realtor Latifah Neal, a member of the National Association of Realtors. Another unit in the same building sold for significantly less. My client grew up here and she envisions buying into the Bronzeville boom.

Alicia (00:27):

We don't have to walk in here unless we got my rooftop.

Lateefah (00:30):

It has a rooftop deck. But when a low appraisal threatens her high rise aspirations, the appraisal came at $28,000 below our contract price.

Alicia (00:41):

What does that mean?

Lateefah (00:42):

I hope I can turn her real estate dreams into reality. Let's do it. Alright, let's do it. Let's do it. Good morning. I'm Latifa Neal. I've been in real estate for 21 years. I personally am a managing broker. I own my company and I sponsor agents. What I love is the opportunity to serve my clients when they need me most as they're making likely the largest purchase they've ever made in their lives while still having time to spend with my daughter. I have an open house on Saturday morning. Can I help? Sure. I absolutely love my neighborhood.

L3: “Bronzeville is a center for black life and culture in Chicago, historically known as the city’s “black metropolis”

Bronzeville used to be known as the Black Belt or the Black Metropolis. It was a hub for business, industry and culture for the black community. Black History Month was invented here. There are many famous people that lived in this community like Wendolyn Brooks and Nat King Cole, Dr. Daniel Hale Williams, who invented the open heart surgery procedure. And what I love most about Bronzeville is that the community members today help uphold that rich history. My first time buyer, Alicia, is very spiritual in spirited. I met Alicia through an online referral about a new construction condo that she was interested in. That particular property turned out not to be the one. It was more of a catalyst to help us continue our search.

Alicia (02:11):

I am Alicia. I am the director of talent for a major media outlet, and I am a first time buyer. I am a single mom of an amazing 10-year-old son. His name is Christoph. I'd want to weed for dinner, I want

Cristoph (02:22):

Pizza, fries…

Alicia (02:24):

Can I get a vegetable? So I've been working in this manifestation journal and one of the questions that they asked was, is the life that you're currently living, the life that you want to be living? The answer was no. I have been renting the same condo for 10 years. We moved in when my son was six months old, and we just need more space in general. So what I am manifesting for myself and my son would be a larger condo with a rooftop patio and three bedrooms, two bathrooms. Those bathrooms have to be gorgeous.

Lateefah (02:54):

When we started this journey, Alicia didn't really have a budget. However, I was to bring her back to the reality of things like interest rates, HOA fees and what her monthly payment would look

Alicia (03:05):

Like. Latifa is the yin to my yang. She introduced me to a few of her lenders, and now I am pre-approved for 600,000. However, I really want to stay under five.

Lateefah (03:18):

So we're on the northern end of Bronzeville.

L3: “Bronzeville is a little over a mile wide.”

Alicia (03:21):

Well you know I grew up here, right at home.

Lateefah (03:23):

Right at home.

Lateefah (03:24):

The traditional condominium that I'm showing. Alicia has a coveted rooftop deck that she really wants. So here's the building. This is a five unit condo building built in 2006, not new construction, but definitely considered newer construction for this market.

Alicia (03:42):

Looks like it's got some good bones.

L3: “$369,900”  “3 bedroom, 2 bathroom”

Lateefah (03:43):

It’s top floor unit that has three bedrooms, two baths, and is priced at 369,900.

Alicia (03:49):

It would've been better if it was a dollar,

Lateefah (03:53):

But definitely till in your price range for sure. I do need to warn you. Traditional lenders like a Fannie Mae or Freddie Mac, they're very concerned about the overall health of the HOA. They want to make sure their financials are in good condition. One homeowner is behind in their HOA fees. The lending standard is that if 15% of the occupants are late on their HOAs, the building is considered more of a higher risk and therefore non warrantable. This building only has five units and one person is behind. So that's 20% of the HOA is behind.

L3: “An HOA or homeowners association governs a housing community and sets rules for residents”

L3: “HOA Fees are monthly dues residents pay for amenities, property maintenance and repairs”

L3: “A condo is non warrantable when it doesn’t meet criteria set by traditional lenders like Fannie Mae and Freddie Mac”

Alicia (04:27):

So break down what that means for me.

Lateefah (04:29):

The lender may require a higher down payment for you. Okay. I know you got a pre-approval with 5% down, but the bank may say that you need 10% down in order to do the deal.

Alicia (04:40):

Got it. Well, let me ask you this question because we don't have to walk in here unless we got, my rooftop

Lateefah (04:47):

It has as a rooftop deck.

Alicia (04:48):

Okay, Latifa,

Lateefah (04:49):

Let's go on in and take a look and here we are.

Alicia (04:56):

Oh, the stairs.

Lateefah (04:58):

Believe me, it's going to be worth it.

Alicia (05:01):

Okay.

Lateefah (05:04):

Okay. We made it

Alicia (05:06):

Did we?

Lateefah (05:10):

Let's take a look at the main living area first.

Alicia (05:13):

Look at all this space.

Lateefah (05:13):

Yeah, and look at this very modern kitchen. Can you see you and Christophe enjoying your time in the kitchen here?

Alicia (05:22):

Absolutely. It's super spacious in my current unit. We're fighting in the kitchen. I can see me sitting here helping with his homework. This is super ideal.

Lateefah (05:31):

You have this lovely gas fireplace to keep you guys nice and cozy in the winter, and then the floor to ceiling windows allowing so much light you can enjoy this year round.

Alicia (05:40):

Absolutely stunning. I absolutely love how open it is, but I could be a privacy issue if I'm entertaining and Christoph needs to be someplace.

Lateefah (05:49):

Sure. I certainly understand. Well, let's go and take a look and see what the bedrooms and bathrooms have to offer.

Alicia (05:55):

Okay.

Lateefah (05:56):

Alright, so this is your guest bathroom.

Alicia (06:00):

I'm looking for gorgeous bathrooms.

Lateefah (06:02):

The bathroom may be slightly less than gorgeous, however, it will be used by your son, right?

Alicia (06:08):

Generally. Yeah, this would be his.

Lateefah (06:09):

This is something that you can fix over time and it's not the primary bathroom.

Alicia (06:13):

It's not.

Lateefah (06:15):

All right, we'll keep taking a look around. So here's the first bedroom.

Alicia (06:19):

Amazing lighting in here. This would be christophe's room, and it's not much larger than the room that he's in now.

Lateefah (06:27):

This room is pretty average size for newer construction. Second or third bedrooms are going to be about this square footage.

Alicia (06:32):

I do understand where you're coming from.

Lateefah (06:35):

Okay. You ready to take a look at the primary bedroom?

Alicia (06:37):

Am I?

Lateefah (06:38):

Come on, let's go check it out.

Alicia (06:39):

Okay.

Lateefah (06:43):

How are you feeling about this primary suite?

Alicia (06:45):

This is the space that I'm looking for. It's already modern. This accent wall is amazing.

Lateefah (06:53):

Let's take a look at the en suite bathroom. This is the one feature in this unit that's brand new.

Alicia (07:00):

Yes, it is. Floating vanity, the floor to ceiling tile. This bathtub. I feel like I am at the most exclusive spot

Lateefah (07:08):

Is this what you were envisioning?

Alicia (07:11):

Latifa? This is beyond what I was envisioning.

Lateefah (07:14):

We have one last vision to check out the roof deck.

Alicia (07:16):

I am excited.

Lateefah (07:18):

All right, let's go this way.

Alicia (07:19):

Okay, let's do it. Lots to love, but it's an older property that's going to take a little bit of an investment to really truly make it my own, and I don't know if I'm there right now.

Lateefah (07:30):

Alright, here we have it. Your rooftop deck.

Alicia (07:34):

I love it

Lateefah (07:34):

The million dollar view. This is it.

Alicia (07:36):

Everyone knows the Chicago skyline is unmatched. Hello. I can look at this view for ever.

Lateefah (07:42):

So let me tell you the best part of this particular roof deck. You actually have roof rights. Do you have the right to build an additional structure up on your portion of the roof.

Alicia (07:53):

Wow. So this would be all mine?

Lateefah (07:55):

Yes. All yours.

Alicia (07:56):

I'm digging that. The thing is, I don't want to get too wrapped up in this roof, right? Because I know that there were some things downstairs that weren't quite to my liking. The smaller bedroom, the second bath, that wasn't quite gorgeous. I do realize it would be a major investment to make it 100% mine.

Lateefah (08:15):

Well, it's not at the top of your pre-approval price, so there's definitely room for that. I'm not sure. You don't have to make a decision right now. We have one more property to take a look at. Come on, let's go take a look. This next condo has everything. Alicia wants new construction and it has a rooftop deck, but it's also at the very top of her budget. Okay, so this block is located on the southern end of Bronzeville Lake is still super close by.

Alicia (08:47):

It looks like a super quiet block.

Lateefah (08:49):

It is a quiet block. This building is new construction built in 2022. 3 Bedrooms, two baths, and it also has a rooftop deck.

              L3: 3 bedrooms, 2 bathrooms    1,950 square feet

Alicia (09:00):

Yes. Okay, so now we're feeling it

              L3: $495,000

Lateefah (09:02):

Now this unit is priced at $495,000, so that's going to be at the top of your budget. However, there's no issues regarding the unit being non warrantable and it's brand new. You'll be the very first person who's lived in the unit.

Alicia (09:15):

So I'd be paying for less stress.

Lateefah (09:17):

Yes, exactly.

Alicia (09:18):

Let's see what less stress looks like.

Lateefah (09:20):

Alright, let's check it out. Okay, cool. Alright, so here we are.

Alicia (09:24):

This is a $500,000 kitchen. Can you even get to these cabinets up here? Does it come with like a step stool?

Lateefah (09:30):

I can get you one for a closing gift.

Alicia (09:33):

It's given me the same vibe as the other unit, but just super modern, which I absolutely positively love.

Lateefah (09:40):

Let's take a look. In the living space.

Alicia (09:42):

I am digging this whole uber modern vibe, but the spacing, it just really lacks the ability to be creative. Like table here, couch here, tv. There I am a color outside the lines type of girl. Okay, this would limit my ability to do that.

Lateefah (09:57):

Do you like the built an electric fireplace? Changes color. It's exciting. Let's take a look at the rest of the house. The rest of the house. So here's the first bedroom. This one you could probably use is christophe's room.

Alicia (10:10):

Okay. It's very comparable to the one that we saw previously. Not feeling the view the other unit had a gorgeous view, like there's a brick wall.

Lateefah (10:20):

It does have these nice high ceilings that make it feel a little more spacious

Alicia (10:23):

It does.

Alicia (10:25):

Yes. What about the closet space? So uber modern

Lateefah (10:31):

All right, well, let's go take a look at the guest bathroom.

Alicia (10:33):

This is the guest bath that was on my vision board. I am loving the floating vanity. This is amazing. This is a guest bath

Lateefah (10:41):

Onto the primary suite.

Alicia (10:43):

This is the primary?

Lateefah (10:45):

How are you feeling about this space?

Alicia (10:47):

I think you know how I'm feeling about this space. It's a little small. You would think that with 1,950 square feet, I was looking for where it was. Is this the closet?

Lateefah (10:58):

This is the walk-in closet.

Alicia (10:59):

It is very super spacious in here.

Lateefah (11:01):

It's about 60 square feet.

Alicia (11:04):

Are we counting that?

Lateefah (11:05):

Let's check out the en suite bathroom, double hole vanity

Alicia (11:08):

Digging. The tile.

Lateefah (11:10):

The heated floor unit

Alicia (11:11):

Heated floor unit? No, I've never seen that.

Lateefah (11:13):

Beautiful built-in bench.

Alicia (11:15):

The interior designer was amazing.

Lateefah (11:17):

We’re feeling this bathroom. Let's go check out the rooftop.

Alicia (11:19):

Maybe that is where this square footage is.

Lateefah (11:25):

This is about another a hundred square feet.

Alicia (11:27):

I think this is super cute.

Lateefah (11:28):

Probably use for your office.

Alicia (11:30):

Who wouldn't want an office with a wet bar? I like it.

Lateefah (11:33):

Me too. Let's get out to the roof deck.

Alicia (11:37):

All right.

Lateefah (11:38):

This is nice.

Alicia (11:39):

There's my downtown.

Lateefah (11:40):

View. Little obstructed, but it’s still there

Alicia (11:42):

And unlike the rest of the house, this is a space that I can really make my own and recreate over and over again.

Lateefah (11:51):

So Alicia, you know how hard been finding condos with rooftops?

Alicia (11:55):

Yes.

Lateefah (11:56):

We could continue our search.

Alicia (11:58):

I think it's either going to be this one or the 2006 unit.

Lateefah (12:01):

So between the two that we've seen, which one are you thinking?

Alicia (12:05):

Yeah, so the sleekness of this one, the kitchen here, absolutely gorge. I can live in it forever, but as it relates to living space, the primary bedroom was a lot smaller, but this one already has the built out wet bar that I can make my office into. But I really love the layout of the 2006 unit. It works for us. I got character. I love the space. I mean, the view from that 2006 property was amazing and unmatched. There's just so much I love about both the units. This is the unit that I want that one to look like in the future, but with that a hundred thousand dollars difference, this one has the gorgeous kitchen. But hey, for 50,000, I can make that kitchen gorgeous. I want with the 2006 units.

Lateefah (12:47):

Great.

Alicia (12:48):

That's the one.

Lateefah (12:48):

Yeah. Okay. When I ran comps on the building, I did notice that another unit in the same building sold for significantly less last year. So maybe we can start our offer a little under asking.

L3: “Comps are used to determine the value of the home by comparing it to similar properties that sold in the same neighborhood”

Alicia (12:59):

So they're asking 369.

Lateefah (13:01):

369, 900. Yes.

Alicia (13:03):

I say let's go with three 30. Is that too low?

Lateefah (13:05):

My gut feeling is that the sellers are not going to respond favorably to Alicia's offer. I was thinking more in the three 50 to $355,000 range. But I support my client and I'll submit the offer and we'll see what they say. Three 30 is a little low, but I think it's high enough to get the seller talking. Let's do it. Alright, let's do it.

Alicia (13:24):

Let's do it. I'm feeling great about my decision. It's like they knew that I was going to be looking for a gorgeous bathroom, and that one really set the tone. I feel like we could be there for a while.

L3: “3 days later..”

Lateefah (13:39):

As I suspected the sellers did not accept Alicia's initial offer. We went back and forth for three long days and finally settled on $361,000 with the sellers paying 3% towards closing costs, which I thought was fear for both parties.

              L3: $361,000

Alicia (13:53):

I am so excited we're getting our gorgeous bathroom and our roof patio.

              L3: “A few weeks later”

Lateefah (14:04):

The home inspection went pretty well overall, but some things come up. I really need to talk to Alicia

Alicia (14:10):

Okay, so this must be good news.

Lateefah (14:12):

Well, the lender sent in their condo questionnaire and we are definitely going to have to put down 10% due to that non warrantable issue that we discussed. Okay. Now her lender is requiring 10% instead of the 5% that she prepared for. Are you going to be okay with

Alicia (14:27):

This? It definitely takes more of my liquid cash away. However, I remember we had a conversation about how maybe different lenders have different criteria. Sure. What do you think about credit union? I was thinking it would be a better option.

Lateefah (14:41):

I think that's a great idea. Oftentimes credit unions are more lenient with their lending practices than larger banking institutions that have to follow Fannie Mae or Freddie Mac guidelines. We'll just submit your documents to the credit union and we'll wait and see.

L3: “Credit unions can be ideal for a low-interest loan, lower mortgage closing costs or reduced fees, but you’ll need to qualify for membership”

Alicia (14:54):

I'm loving the plan. Throwing up good mojo.

Lateefah (15:01):

She decided to go with her credit union because not only did they have better terms for her, but they were able to waive the 10% down and still allow her to do the loan with only 5% down. Now that we resolve the issue surrounding the non-war condo and the home inspection, we have a third issue.

Alicia (15:23):

Hello?

Lateefah (15:23):

Hi Alicia. It's Latifah. I have some not so awesome news that I needed to share with you.

Alicia (15:29):

Okay.

Lateefah (15:30):

The appraisal came back at 333,000. Whoa. $28,000 below our contract

Alicia (15:38):

Price. What does that mean?

Lateefah (15:40):

The Lender will only lend you whatever the appraised value of the property is. So you would be responsible for coming up with a $28,000 difference.

L3: If an appraisal is lower than the sales price, the buyer must pay the difference, renegotiate or cancel the deal

Alicia (15:50):

To say that I'm freaking out is an understatement. I'm not paying $28,000 extra for this property.

Lateefah (15:56):

Because he sellers have already moved into their new home. I hope they don't want to be stuck with two mortgage payments and that the sellers will be willing to negotiate down to the appraised price. Needless to say, the sellers are not happy. At the end of the day, they finally agreed to reduce the contract price to 333,000. We added a new addendum. Alicia is no longer getting 3% towards closing costs. She agreed to give a little and except one and a half percent towards closing costs, and it all ended up working in Alicia's favor. Alicia is finally a homeowner. She ended up manifesting her dream home for far less money than she planned to spend.

              L3: “Appraised for $333,000”

Alicia (16:35):

Let's get it. I am so excited. We finally got our dream condo and Latifah totally came through. We've got a new home.

Lateefah (16:47):

It was touch and go there for a minute. I believed in her and she believed in me, and together we were able to make her dreams come true. Okay,

Alicia (16:53):

Let's toast to our new home. Cheers.