Rollback with a view in DP

This Dana Point condo sold for more than $1 million in 2006, but now it's a rollback with lots of debt and a notice of default to its credit. As usual, there's even more to the story than meets the eye...

26042 Vista Dr, 92624
Asking price: $989,000
Asking price/ sq ft: $574
Income requirement: $247,250
Purchase price: $1,038,000
Purchase date: 3/17/06
Size: 3 beds, 3 baths, 1,723 sq ft (built in 1974)
MLS: C102235 (177 days on Redfin)
Zillow Zestimate: $679,000
HOA dues: $299
Type: Condominium
Style: Contemporary
Stories: 2 Levels
From listing: Perched on one of the most beautiful and desirable bluffs in Southern California, this Capistrano Beach residence offers stunning ocean views, magical sunsets and a bright, open and airy floor plan. Extra large terrace off living room, amazing views from the huge master suite with walk-in closet. 2-car attached SxS garage with direct entry. Complex includes Pool, Tennis, Courts & Gym. Priced to sell! First showing:

The current (out-of-town) owner bought at the peak using 90% financing from Countrywide. He then pulled out all his downpayment plus $96,200 more only three months later when he took out an additional $200,000 loan against the property in June 2006. A notice of default was filed against the property for $21,119 in April.

This isn't the only piece of the owner's crumbling mini real estate empire.

He also is massively over leveraged on another of his "investments" - 9774 San Circle in Beverly Hills - by millions of dollars. That property received its most recent notice of default on a $1.5 million loan in May. There also have been two other notices of default filed against the property: one in January against a $200,000 loan and a second in February on a $1.8 million loan. Yes, those are all different loans.

Assuming the subject Dana Point property can actually be sold for the full asking price - which seems unlikely considering how long it has stayed on the market with no price reductions - the lenders/bagholders would lose about $200,000, including 6% sales costs. Thanks to equity extraction, the owner would be out the door sans his credit rating but $96,200 richer.

Want to see this condo in person? The CLAW listing says there is an open house scheduled Sunday from 2-5 p.m.

The fun stops in Dana Point

There is money in Dana Point. Some people made theirs from the stock market, or perhaps through a successful business venture. Maybe they're in health care and are running a popular and well-respected practice.

Others, as you will see, have gotten a boost from real estate. Not buying and then selling it, mind you. All they had to do was hold on.

7 Wightman Court, 92629
Asking price: $729,900
Asking price/ sq ft: $515
Income requirement: $182,475
Purchase price: $935,000
Purchase date: 5/4/06
Size: 2 beds, 2 baths, 1,418 sq ft (built in 1987)
MLS: S525922 (80 days on Redfin)
ZipRealty price tracker: Price Reduced: 3/31/08 -- $799,000 to $779,000
Price Reduced: 4/07/08 -- $779,000 to $749,000
Price Reduced: 5/14/08 -- $749,000 to $729,900
HOA dues: $252
Type: Condominium
Style: Mediterranean
Stories: 1 Level
From listing: Simply gorgeous Ocean and Catalina views from the highly desireable tennis Villa's Home. Upstairs condo with all living space on one level. Live like a one story with a fabulous floorplan. Giant Open Bright Living room with colums and a set back formal dining room. Most every room offers Panoramic Ocean views. Large kitchen with built in frig and large pantry/Laundry room and a big space for a casual kitchen table. The two bedrooms are on opposite sides of the home for privacy and the Masterbath is great! Off the livingroom is a large veranda for entertaining and taking in the views and off the front kitchen is a balcony for relaxing. I wish we had more pictures for you to view!

"I wish we had more pictures for you to view!" Why wish - just go out and take more and then post them with the listing. Problem solved.

Unbelievable that someone actually paid $659 per square foot for this two-bedroom, 20-year-old condo in 2006. It does have an ocean view and is near the St. Regis, but let's get real: This is not a $900,000+ property, and never really was except in world ruled by irrational exuberance.

Want to guess how this place was paid for? No, not 100% financing this time. The owner did pitch in $46,750 of her own money, but Global Mortgage Funding provided the other 95%.

Hold on there a minute, though. Why tie up more than $40 grand in your home (pesky downpayments!), when you can put it to work for you elsewhere? Less than a year later - in January 2007 - the owner pulled out all her equity (and then some) with the help of two loans from Washington Mutual: an $880,000 first, and a stand-alone second for $109,890 more. That equals a total debtload of $989,890.

It is likely more now considering it appears the delinquent loan balance on the first loan is more than $950,000. The notice of default was filed in February for $17,877, and the NTS came in May.

If the property is able to sell for the current asking price - and the lender agrees to take the big hit - it would mean a depreciation of $205,100, or 22%.

But don't forget: This is one of the many properties that face even more significant losses and larger, more crushing amounts of debt than then first appear.

Ritz Pointe REO

Ritz Pointe in Dana Point is, quite simply, one of the most prestigious areas of South Orange County. It's close to the Ritz-Carlton and St. Regis resorts as well as the ocean. The sky is just about the limit for prices here, depending on the size of the home, its view and distance to the water.

But, as we've seen again and again, no neighborhood is perfect nor completely immune from the current real estate struggles. This is a bank-owned property that has recently come up for sale:

30 Vista Sole Street, 92629

Asking price: $1,600,000

Asking price/ sq ft: $400
Income requirement: $400,000
Bank purchase price: $1,506,246
Bank purchase date: 2/22/08
Size: 4 beds, 4 baths, 4,000 sq ft (built in 2000)

MLS: P632216 (9 days on Redfin)

Zillow Zestimate: $2,336,500
2007 property tax: $13,542
HOA dues: $95 + $75
Type: Single Family Residence

Style: Tuscan

Stories: Two Levels
Lot size: 5,500 sq ft
From listing: Beautiful Ritz Pointe home with exceptional quality. Plantation shutters, bay window in living room, French doors in dining room and family room. Kitchen has Viking appliances including built-in refrigerator, center island and granite counters. Fireplaces in LR, FR and MBR. Tumbled tile floors throughout downstairs. Dramatic dark wood staircase and upstairs bonus room + exercise or office area. Recessed lighting, wide baseboards. Huge family room with built-in desk area, fireplace and media niche. Dramatic master bath features Roman tub, triple head shower, dressing table and huge closet. Master bedroom features fireplace, bar area and sliding door to balcony. Exclusive guard-gated complex has pathway directly to beach.

The property went back to the bank in February. The loan that proved to be the killer was for $1,303,250 in 2004 by First Federal. Three additional lines of credit tied to this property also popped up in 2005 and 2007, but we're not sure if those were fully tapped or not. The fact that there were three lines is certainly a hint, though.

The closest recent sale is probably 4 Los Monteros - a property in Monarch Beach that is a bit closer to the ocean, but is smaller and not as new. That home sold for $1.595 million back in October.

If our subject property were to sell for the full asking price, it would mean the property still would have appreciated 9.2% every year since it was built in 2000. What housing bust?

Exclamation point abuse, TMI in Dana Point

A hat tip is again due to a reader - this time BC - for showing us this interesting listing in Dana Point. Pay particular attention to the description.

24065 Atun, 92629

Asking price: $895,000

Asking price/ sq ft: $373
Income requirement: $223,750
Purchase price: $660,000
Purchase date: 3/5/03
Size: 4 beds, 3 baths, 2,400 sq ft (built in 1996)

MLS: S521960 (61 days on Redfin) Craigslist ad

ZipRealty price tracker: Price Reduced: 3/09/08 -- $999,900 to $949,000
Price Reduced: 4/03/08 -- $949,000 to $929,000
Price Reduced: 4/11/08 -- $929,000 to $919,000
Price Reduced: 4/15/08 -- $919,000 to $895,000
Zillow Zestimate: $1,098,000
2007 property tax: $4,772
HOA dues: $190
Type: Single Family Residence

Stories: Two Levels
From listing: !!This is better than a short sale!!! Don t hassle with a REO or a short sale when this Turnkey home in the Guard Gated Monarch Beach track of Montego is the best deal in Dana Point!! This is an Incredible Opportunity to own this home where no expenses have been spared. Brazilian Walnut hardwood floors, 20' Italian Ceramic Tile, and Custom Plantation Shutters, huge private backyard with a breathtaking city lights and mountain views from your Kitchen, Family Room, or the huge Master Bedroom Suite. Inside and out this home has it all!!! Priced Under $400 per square foot in MONARCH BEACH!!!!!!!!! Steal this home and you will be Walking to the Sand in style!!!!Owners have recently become Very Motivated and have priced this home to sell!!!!!!!They had Multiple Offers in the past few months up to $1,070,000.. .. .. .. .. .NOW IS THE TIME TO GET YOUR DEAL IN MONARCH BEACH!!!!!! Massive discount now AT $895,000 for IMMEDIATE Sale. This home in this location cannot be replaced!!!!!HURRY!!!!!

As you can see from the description, this is not a short sale nor an REO, as the homeowner bought in 2003 for $660,000. That could give the property an advantage, because theoretically it would be easier (and faster) to deal with an individual - particularly one who is motivated to sell - than a bank.

This house would prove to be a good investment if they could pull off $895,000, considering it would mean a profit of $181,300 after 6% sales costs but before any upgrades.

Let's look a bit deeper into the description:
"Steal this home and you will be Walking to the Sand in style!!!!" - How much of a steal is this really considering a sale for the full asking price would mean appreciation of 6.25% each year for five years since the purchase - even though the median has fallen to 2004 levels? It's a little blurry about who would be taking advantage of whom.

"Owners have recently become Very Motivated and have priced this home to sell!!!!!!!" - Way to imply that they were unmotivated and unreasonably priced before this point. Was the house previously priced just for looks?

"They had Multiple Offers in the past few months up to $1,070,000" - Hmm, this is odd, irrelevant, and too much information (TMI). They received multiple offers well above the original asking price, and yet have not sold and have needed to lower the price by $104,900. What prevented them from accepting one of these multiple offers, including at least one that was above asking price? Did they think they could get more money and said no? Did the property not appraise and the buyers' lenders balked?

Either way, we don't care what offers you have received. Whatever the market was like back then, it's only gotten worse since and we're more interested what a buyer is willing to pay and you're willing to accept now.

This home in this location cannot be replaced!!!!!HURRY!!!!! - Oh really? Well, technically, you could not rebuild the house and plant it on the same lot unless you bought it in the first place, which would then make a replication of the house utterly ridiculous. You could, however, buy one of these houses:

• 23945 Wanigan Way in Laguna Niguel is bigger and is asking $859,900. Not exactly a big step down going from Dana Point to Laguna Niguel.
  
• 5 Saint Michael just came on the market for a wishing price of $995,000. It's smaller than our subject property.
• 30 Vista Sole Street is a legitimate million-dollar home that is much bigger and closer to the ocean. Asking price: $1.6 million.
  

"Huh?" photo of the week

There is a limited amount of pictures that may be posted on the MLS along with any property listing. So, why wouldn't you want to put the following photo up with this Dana Point condo:
That's right: It's a picture of some dude who just landed a huge fish. Photo number 17 on Redfin. I'm sure he's got a great story to tell, but it doesn't exactly fit right in with the whole real estate theme the MLS usually holds to.

Oh, and this wasn't a totally isolated incident. Here's the photo preceding it:

Too bad considering the photo montage started out relatively well, with this professional-looking image:
Of course, there are no exterior photos of the property. In case you're keeping score at home, here is the count: 8 interior shots; 1 of the deck; 1 of a hill; 4 of the association/pool; 3 of the harbor/beach; 1 of a whale; 1 of a guy fishing; and 1 that's actually three photos in one of the harbor, some people whale watching and some more people kayaking.

On a similar but unrelated note, the property has been active on the market for 166 days without a sale.

Possible buyer found in Capo Beach

It didn't take very long. This Capistrano Beach (Dana Point) luxury home is already in the "backup offers accepted" stage after only 20 days on Redfin. The secret? Great location, great view and a great house in general combined with a large discount from the peak price paid almost three years ago.

26855 Calle Real, Dana Point, 92624

Asking price: $1,699,999-$1,799,000 (Redfin range)

Asking price/ sq ft: $378
Income requirement: $449,750
Purchase price: $2,050,000
Purchase date: 5/20/2005
Size: 4 beds, 5 baths, 4,500 built in 2004

MLS: S517985 (backup offers accepted)

2006 property tax: $22,206
Type: Single Family Residence

Style: Contemporary

Stories: Three or More Levels
Lot size: 6,050 sq ft
From listing: THIS IS THE BEST BUY IN CAPO BEACH. .. .BAR NONE! THIS IS A TRUE CAPO BEACH OCEANVIEW CUSTOM HOME WITH ATTENTION TO DETAIL AMD EXQUISITE FININSHING THROUGHOUT THIS 4 BEDROOM 5 BATH AND YES 5 CAR GARAGE PLUS ROOM FOR BIKES, MOTOCYCLES AND SEA DOOS. GOURMET KITCHEN W/ VIKING APPLIANCES, CENTER ISLAND W/ WINE FRIDGE. CUSTOM CROWN MOULDING, TRAVERTINE, LIMESTONE THROUGHOUT ENTIRE HOME INCLUDING FULL BATH IN GARAGE. OVERSIZED OCEANVIEW MASTER SUITE W/ RETREAT/NURSERY/OFFICE OR GYM, FIREPLACE W/ A MASTER BATH FIT FOR A KING OR QUEEN WITH VANITY AND A WALKIN LARGER THAN MOST BEDROOMS WITH YEAS ANOTHER OF 4 OCEANVIEW DECKS. THE ROOFTOP DECK HAS OCEANVIEWS AND SPECTACULAR SUNSETS. OCEANVIEW BONUS ROOM W/ COFFERED CEILINGS & ANOTHER OCEANVIEW. SELLER PAID OVER 2 MILLION FOR THIS MASTERPIECE. COULDN'T BE DUPLICATED FOR UNDER 2.2.. .PLEASE HURRY !!! UNDER $400 PER SQ FT. .. BRING YOUR EXPERT AND SEE IF THEY AGREE. VIEW AT WWW. 26855CALLEREAL. COM

Straight Digs told us recently the MLS has begun to allow for longer listings. Some are clearly taking advantage of the new-found space.

Obviously, there's nothing bad you can say about an incredible place like this. For the right person (with the dough to back it up) this is certainly a dream home. The surprising part is that even a high-end house like this could fall victim to the down market.

Assuming the buyer was willing to pay the top asking price of $1,799,000, the transaction would represent a decline of $358,940 from the previous sale in 2005, including 6% sales costs. If they drove a tough deal and instead were able to pick up the property for the low asking price of $1,699,000, then the loss would amount to $452,940.

Finding a buyer in...Dana Point

There are currently 15 homes that are pending for sale in Dana Point through the MLS, according to my search. There's a chance that not all of these sales will close (for unexpected reasons, like a sudden lack of financing or a bad inspection), but since a buyer and seller have connected, these can be interesting indicators of what it took for the sellers to successfully locate buyers in this market.

Here is more than you probably ever wanted to know about these Dana Point properties:
*11 of the 15 properties (condos and single family homes) that are pending lowered their asking price at least once. One property actually increased its asking price by $100,000 (initially lowered it by $100,000 and then raised by $200,000 - it's pictured at the left). Remember, though, that this does not mean much - the agreed sales price could be higher or lower than the asking price in all these situations.

*The average (mean) price cut among the properties that lowered their price was a whopping $214,408. The median price cut was $109,988. Average price cut of all properties was $146,000. Median price cut of all properties was $77,500. This tells you there were a few extremely large price cuts.

*The most expensive pending property had an asking price of $4,588,000 (its view is pictured at the top of the entry- it's in Ritz Cove). It was listed on Nov. 28 and went pending on Dec. 2. There was no price reduction. The cheapest property had an asking price of $289,900 (pictured right). It underwent $109,976, or 27.5% in price cuts from its initial listing price in August.

*Largest nominal price reduction: $624,000 (property pictured left). This same property also underwent the largest price cut percentage wise at 31.22%. Second-largest price reduction: $590,000.

*The average (mean) asking price of all the pending single family properties is $1,748,292. The median is $1,595,000. The median of all properties (including condos) is $1,390,000, and the mean is $1,557,173. The average of the two condos alone is $314,900.

Dana Point doubleheader

It would be hard to argue that the Dana Point market is by any means rosy right now - we're seeing 60% and 31% year-over-year declines in sales volume in its two ZIP codes - but it's not completely falling apart (yet?). Not, at least, compared to places like Lake Forest.

Still, no area is really immune to the current housing situation. Here are two completely decent-looking properties in Dana Point that are really feeling the pain of the downturn:

24661 East Cordova Dr, 92629 (REO)
Asking price: $550,000
Asking price/sq ft: $388
Income requirement: $137,500
Peak price: $700,000
Peak purchase date: 4/14/2006
% decline (if sale at asking price): 21.4%
From listing: 2 Bedroom (w/ large sunroom attchd to bedroom 1) & 2 full bathrooms. High vaulted ceilings in Great Room (Kitchen, Dining, Living). Kitchen includes double oven, trash compactor & large island. Hardwood floors throughout living area & sunroom. Shutters and window coverings. Great buy for area. Just a few short blocks to harbor/beach. Patio outside w/ built in bbq & private walkway. Long driveway w/ 2 car attached garage. Hurry, this wont last!

5 Tawny Port, 92629
Asking price: $599,000
Asking price/sq ft: $499
Income requirement: $149,750
Purchase price: $739,000
Purchase date: 4/26/2004
% decline (if sale at asking price):18.9%
Potential loss (incl. 6% costs): $175,940
From listing: The view is outstanding and so is this highly upgraded 1 bedroom with a loft that has it's own private bath and closet. (2nd) bedroom. Beautiful upgraded open kitchen with stainless steel and granite counter tops. An interior designer lives here. There is nothing as lovely with such a spectacular view to compete with this beauty! This is the perfect place for a 2nd home get away. Have a client who needs a short term fully furnished rental it is available. Comm. paid to MLS members only.

Disaster week continues

This property is perhaps in even worse financial shape than the past two we profiled. Take a look...

26246 Via Canon, Dana Point, CA 92624

Asking price: $727,500

Asking price/ sq ft: $364
Income requirement: $181,875
Purchase price: $1,100,000
Purchase date: 3/29/2006
Size: 3 beds, 2.75 baths, 2,000 sq ft (built in 1963)

MLS: S509959 (5 days on Redfin)

2006 property tax: $8,336
Type: Single Family Residence

Stories: Three or More Levels
Lot size: 5,560 sq ft
From listing: Capistrano Beach, unique 4 level home with 4 private decks and plenty of room for entertaining. Legal use us SFR but home was previously as 3 units; studio on main, 1/1 on next floor and studio with loft on top floor. Great oppertunity, motivated seller.

Being highway close can be considered a positive in some instances, but this is excessive. The road you are seeing is PCH, near where it meets up with the 5 freeway. If the "legal use us" a SFR, would we then describe the previous setup as a "not-so-legal use?"

Maybe the listing agent also hasn't had the "oppertunity" yet to use spell check.

The loss on this property would be $416,150, assuming 6% sales costs, which would equate to a decline of $21,902 per month for the current owner. A sale at this price would also represent a 34% drop from peak pricing in 2006 (not including sales costs).

Off a cliff in Dana Point

Yet another example of a beautiful house caught in the middle of unfortunate market timing. The high end is still not and never was immune...

34572 Camino Capistrano #D, Dana Point, 92624

Asking price: $1,550,000

Asking price/ sq ft: $419
Income requirement: $387,500
Purchase price: $1,700,000
Purchase date: 5/31/2005
Size: 5 beds, 4 baths, 3,700 sq ft (built in 2001)

MLS: S499655 (69 days on Redfin)

ZipRealty price tracker: Price Reduced: 9/26/07 - $1,899,900 to $1,550,000
2006 property tax: $18,585
Type: Single Family Residence

Style: Traditional

Stories: Two Levels
Lot size: 6,420 sq ft
From listing: Experience your senses being fully engaged as you enjoy beach living at its finest from this beautifully one of a kind 'estate property' located on a rare double wide corner lot in capo beach. This exquisite custom home is finished with the finest craftsmanship throughout. Gourmet kitchen with granite counters and commercial grade stainless steel appliances. Red kempas hardwood floors, large master bedroom with fireplace and two floors of ocean views and a private ocean rooftop viewing deck.

Glad to see some serious effort made in the pictures to market the property well. Wish we could say the same for the listing description. I'm lost about halfway through the awkwardly worded first sentence. In other words, guess my senses aren't being fully engaged enough to appreciate the exquisiteness of it all.

The owner who purchased in 2003 and then sold to the current owner in 2005 made an absolute killing - $550,000 in profit, not including selling costs, which represents an appreciation of 25.1% per year.

The current owner dangled out a wishing price of $1,899,900 for a while, and then got more realistic and slashed the price by an attention-getting $349,900 near the end of September. Assuming the current owner can get this place sold for their current asking price, the loss would be $243,000, assuming 6 percent selling costs.

A flippin' good time in Dana Point

New paint and appliances coupled with a three-and-a-half month turnaround time from the previous sale in June leads me to believe we're looking at a flipper trying to cash in on South OC real estate. Will they succeed?

7 Saint John, Dana Point, 92629
Asking price: $779,000
Purchase price: $630,532
Purchase date: 6/15/2007
Size: 3 beds, 2.5 baths, 1,967 sq ft (built in 1989)
MLS: S507287 (6 days on Redfin)
From listing: Great Value! New neutral paint, carpet, tall baseboards, travertine, granite and steel appliances. Shows really well! Priced to sell!! Guard gated community in Monach Beach near St. Regis. Close to beautiful beaches, shopping and resorts.

"Great value!"? If you consider the current seller paid $148,468 less for this property in June, I'd tend to think they were the one who got the great value.

And, is this property really "priced to sell" as its listing claims? The closest comp (7 Antigua - same size) is listed for $839k, so the flipper is looking good there. Wonder if they're worried that the Antigua property has been on Redfin for 73 days without any action...

Checking recent sales, 41 Saint John (are you catching on to the Caribbean theme yet?) sold for $800k back on July 11. And, 34 Saint John sold for $817k in April (at the least, these owners are looking at a $38k decline in value assuming this flip is sold for its asking price). It's hard to tell if a buyer is going to step in to snatch up this property. I personally wouldn't be surprised if there's none to be found (estimated required income is about $195k per year, plus a sizable downpayment should be necessary), but hey...you never know.

Assuming a sale at this asking price, the flipper stands to make a profit of $101,728, assuming 6 percent selling costs.

Flipper alert: Dana Point

We've made the point a few times, but here it goes again: Yes, homebuilders may be hitting the panic button and are trying (hoping) to unload as much of their inventory as possible by slashing prices and adding incentives for buyers right now, but there remains an intrepid few who are looking to turn a quick profit by flipping OC real estate.

This week's flip in the making takes us to Dana Point. Here are the details:
34038 Selva Road #116, Dana Point, Calif., 92629
Size: 2 beds, 2 baths, 1,000 sq ft (built in 1982)
MLS: S491891 (97 days on Redfin)
Asking price: $629,000
Asking price/ sq ft: $629
Purchase price: $555,000
Purchase date: 1/12/2007
2006 property taxes paid: $1,251
HOA dues: $370
Type: Condominium
Style: Cape Cod
From listing: What a Beautiful Remodel on OCEAN SIDE of PCH across from Salt Creek Beach, close to the Ritz Carlton and St. Regis! Kitchen has new appliances, new counter tops, garden window. Italian tile floors in kitchen, LR, D/R, and both patios. All new doors to patios. Walk along the beach or enjoy the community pool and spa. Private lower level. Near new Headlands Development.
Despite the initial red flag of not actually having a photo of the exterior of this property with the listing, this place doesn't look too bad. It's possible our flipper is banking on this unit's prime location to bring in the dough. And believe us, this is a prime location - beach close and near the Ritz Carlton and St. Regis hotels. Not surprisingly, they're not the only listing in this complex to tout those facts.

If this property sells at the current price, the current owner stands to make $36,260 - assuming 6 percent selling costs.

Four problems with this scenario:

1. The potential profit does not take into account money spent fixing up the property. Who knows how much this "beautiful remodel" cost. Well, guess the flipper does. We know from the listing that, not surprisingly, one focus area of the remodel was the kitchen. Classic flipper MO to throw in new kitchen appliances and counters.
   
2. Neither does it take into account holding costs. Usually, a successful flip will involve holding the property for as little time as possible, therefore cutting down on the amount of interest owed to the bank. The longer the owners cannot sell, the more of their profit is eaten up. Guess there's a chance the current owner paid all cash for this and doesn't need to be in a rush to unload it, but doubtful.
   
3. This property was purchased in January. We know the market has fallen since then. Therefore, the property's intrinsic value is less than it was when the flipper purchased it.
   
4. The property is nearing the 100 days on Redfin mark without a sale or price reduction. Therefore, it is reasonable to believe that this property is not priced correctly. Too high you say? Let's confirm by glancing at the comps...
   

Here are three other properties showing up in the same complex on Redfin. Note: This listing says the square footage is 1,000, but I could not locate any other 2 bed/2 bath properties in the same neighborhood of that exact size, so this number is suspect. All the other properties for sale and recently sold in the complex are listed at 873 sq ft, so I am making the assumption that this is the correct size. If anyone can confirm or correct this, it would be appreciated in the interest of accuracy.

*34040 Selva Rd #122 is also 2 beds/2 baths, 873 sq ft. It's listed for $685,000. Why so high you wonder? Glad you asked. This is no ordinary condo! It's a "luxurious top of the line ' Safari / Plantation Style' remodel by prominent Scottsdale, AZ. designer." Talk about a mouthful. Time on Redfin: 15 days.
*34036 Selva Rd #108 is 2 beds/2 baths, 873 sq ft. Its asking price is $569,900, which is $59,100 less than our flipper. Time on Redfin: 137 days. Original asking price: $609,999. Not very good news for our flipper, since this property has already been dangled on the market without success.
*34022 Selva Rd #52 is the same size as the others. The current owner is asking $549,000, making this property the lowest-priced of the bunch. If a buyer decided to choose this property over our flippers' (and they would, according to the principle of substitution, which says someone is going to pick the cheaper of two properties that suit their needs equally as well), they would save a cool $80,000. Nothing significantly different than our flipper's property - this one was "remodeled just a couple years ago." Days on Redfin: 70.

Bottom line here: Flipping properties is a risky game - even more risky when there is a dearth of buyers looking to enter the market. The philosophy behind this type of project is usually that you make your money when you buy the property at a discount, because you've got a cushion to do some fixes in key areas, list it at a fair retail price, and realize a profit (calculated ahead of time) when it sells.

But these days, when real estate is concerned, all bets are off.

Dana Point meltdown

33042 Daniel Drive, Dana Point, Calif., 92629

Size: 4 beds, 2.5 baths, 2,280 sq ft (built in 1979)

MLS: L24023 (15 days on Redfin)

Asking price: $839,000

Asking price/ sq ft: $368

Purchase price: $940,000
Purchase date: 10/20/2005

Other sales history: 09/20/2001 : $549,000
09/09/1998 : $350,000

ZipRealty price tracker: No price reductions

Type: Single Family Residence

Style: Contemporary

Stories: Two Levels
From listing: priced for quick sale. $130,000 below the loan balance!!!owner will SHORT SALE. this totally remodeled home is a 10+!the ultimate POOL PARTY HOUSE, palapa bar, firepit, built in bbq, outdoor surround system, covered patio, waterfalls, pool, and spa. lots of upgrades including stainless steel appliances, granite countertops, travertine flooring. this hme is virtually brand new. to show call...
This is a very interesting situation. The listing description claims the home is priced "$130,000 below the loan balance!!!" but even if the current owner did not make any downpayment, the price of the last sale would suggest the shortfall between a sale at the current asking price and the loan balance would be "only" $101,000. We'll assume the real estate agent's math isn't flat wrong, so if you instead include 6 percent selling costs when assuming the property sells at this price, the shortfall would balloon to $151,340. Also not a match to the $130,000 difference mentioned in the listing description.

Under these circumstances, it seems likely that some sort of HELOCing might have taken place or a very toxic mortgage is messing things up, since the loan balance is more than the last sales price says it should be. So, that means the current owner not only bought this property virtually at the peak of the bubble, but they've made the situation worse by adding to the principle of the loan.

By the way, this "hme" is NOT "virtually brand new." It is a 28-year-old house with some necessary updating and some other possible over improving.