There's news in the business world this morning.
The Federal Reserve Bank of Chicago has a new president – Charles Evans, who's worked for the bank for 16 years.
When he takes over in September from current president Michael Moskow, he'll become part of the committee that sets interest rates…
Interest rate policy could be key to a recovery in the housing market.
That's something home sellers are anxiously awaiting as they've watched their houses sit longer on the market.
The Multiple Listing Service of Northern Illinois says Chicago-area single-family homes are taking an average of four months to sell versus less than three months a year ago.
But some lucky people are managing to sell their homes in a matter of days.
Eight Forty-Eight's Ashley Gross visited one such man to find out how he did it.
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Even before you get to this open house in the western suburb of Addison, you can tell it's going to be different. From blocks away, signs lead up to the house like Hansel and Gretel's bread crumbs. They read “Selling our home, Sunday night, highest bidder.” Outside the house – a split-level ranch – are even more signs that show this seller means business. A steady stream of curious people appears at the doorway.
DAN NOLAN: You are more than welcome to come on in. How you doing?
MAN: Good.
Realtor Dan Nolan leads groups of people through the house. But everyone here has more questions than just how old the water heater is. Luis Rodriguez – for one - wants to find out more about this two-day auction.
RODRIGUEZ: Can you explain why it's up for auction?
NOLAN: It's just a different way of selling a home. You know how real estate starts with a high price and comes down?
RODRIGUEZ: Um hm.
NOLAN: We're starting low and going high, and we're going to let you decide the price.
Owner Jim Fleck is a real estate investor who bought the house in May in a pre-foreclosure for just over 260-thousand dollars. He did some work to it – like retiling the bathroom and polishing the wood floors. But he says that in this market, he'd rather just sell it quickly than hold onto it. So he's decided to auction it. He says by setting a deadline he jumpstarts the process.
FLECK: It's not ‘I'll keep looking at houses, I'll keep looking at houses, I'll wait till my agent goes back and talks to them and then comes back to me,' so there's a sense of urgency. It gets people's juices flowing, gets them to act.
But there's no auctioneer here. Instead, people write down bids on a sheet that everyone can see. Then after the two-day open house ends Sunday night, Fleck starts calling them back to see if they'll top each other. Fleck hopes to get 300-thousand for the house, but to grab attention, he opens bidding at 149-thousand. He does have an undisclosed minimum. The stream of people includes more than just potential buyers. John Micek and Ella Rosipal are here to scope out the method. They've been paying two mortgages since last year because they bought one house and weren't able to sell the old one.
ROSIPAL: It's been the worst year and a half of my life. Having it for sale, yeah, it's been horrible.
MICEK: Financially the stress, arguing with each other. It takes a toll on everybody. It really does.
Rosipal says she even considered a kind of off-the-wall idea.
ROSIPAL: My brother mentioned that we should have a raffle. And sell $100 tickets to everyone and whoever they draw, that's the folks that will get our house, and I was like, yeah but if only I knew 5000 people to sell it to, which it was just such a great creative idea but no, it just wasn't going to work.
Now Rosipal says she's going to look into doing an auction. It's something more and more home owners are turning to – especially with a softer market. Auctions for foreclosures and commercial real estate have long been common, but now the National Auctioneers Association says residential homes are the fastest growing auction segment, totaling 16 billion dollars last year. Rick Levin runs a real estate auction business in Chicago and auctioned about 300 residential homes last year.
LEVIN: Web sites like Ebay have helped raise the consciousness of auctions in the consumer's mind and because of the varied assets they sell, people are slowly migrating to the thought of hey, I think I could do that with my home.
And Chicago magazine real estate columnist Dennis Rodkin says auctions are especially useful at times like now, when the market's in flux.
RODKIN: Nobody really knows what a house is worth right now, so if you put it on the market at auction, you find out what a house is worth, because an auction gives you the real value of anything – whether it's an old piece of an estate, stuff out of a barn, or whether it's a house.
Jim Fleck is about to find out what his Addison home is worth. The open house is over and he picks up the phone. The top bid is 260 thousand 500.
FLECK: montage of calling people, hello it's Jim from the house on Wrightwood, etc…
Over the next three hours, the bidding inches up till it reaches 280-thousand dollars. One of the couples, Victoria and Alex Ledesma, come over to sign a preliminary contract with Fleck just minutes after the bidding's over.
FLECK: It was an interesting way to buy and sell a home.
LEDESMA: Yeah it was like a spur of the moment thing – I just drove by. I'm like there's a house, hey let's bid.
GEORGE CAPPONY: How did you know about the sale originally?
LEDESMA: Just saw your signs, that's it.
VICTORIA LEDESMA: I didn't see any of the signs and he just called me and said, “Don't be mad at me.” I said, “What'd you do?” “Okay promise me you're not going to be mad.”
FLECK: Usually it's like, “I just bought a motorcycle.” Or something.
LEDESMA: I put a bid on a house. I'm like, okay.
After this, the house goes through a traditional closing process. 280-thousand dollars was Fleck's minimum – a lot less than he had hoped to get. He says he'll make a couple thousand dollars off of it. But he's not too disappointed. He says he treats it like playing the stock market.
FLECK: You don't win on all your stocks, some you lose, if you break even, it's like going to Vegas, many people say if I break even I won.
But Fleck says he's confident he got just as much through this auction as he would have selling it the conventional way. And one thing's for sure - it's a lot faster. I'm Ashley Gross, Chicago Public Radio.