Check out the listing description of this Laguna Hills home on Clarington Drive and let us know what you think of the agent's "personals ad" approach...
Description: LONELY SINGLE, LOOKING FOR LOVE. I am a single family, single level home dreaming of a full time committed relationship with a loving, dedicated, generous owner! Yes, I'm a bit older, but I have great bones and a lot of upgrades: all my floors are high quality laminate, my kitchen has been completely redone and the master bathroom tub/shower is gorgeous. I have a lovely, flowing floor plan and a beautiful pool& spa & gazebo in my back yard. I'm located across the street from a wonderful neighborhood park and am an easy walk to all sorts of shops, transportation and medical offices. I do have a few problems, (don't we all have a few problems as we age?) but will be a faithful adoring companion, sheltering and comforting you for a long time. Just a bit of an investment in some cosmetic surgery and I can be a trophy home.
Hey, apparently it did the trick (or, more likely, the price was right), because this home has now moved into the "backup offers accepted" phase. Will this spark a new trend? Hope not.
Monday, June 09, 2008
Does this get your heart racing?
Thursday, June 05, 2008
$234/sq ft in Lake Forest
We've appreciated the updates from one of our readers about Lake Forest, which continues to experience price declines even though sales volume has recently picked up.
(By the way, everyone is always welcome to send tips, thoughts or local market observations either to the comments section beneath each post or to our e-mail)
Today's property is one of those that continue to apply downward pressure on prices in the area. At first we noticed this phenomenon primarily in small condos, but now it appears to be spreading into larger single family homes as well.
24256 Larkwood Ln, 92630
Asking price: $390,000
Asking price/ sq ft: $234
Income requirement: $97,500
Purchase price: $630,000
Purchase date: 5/2/05
Size: 3 beds, 2 baths, 1,670 sq ft (built in 1964)
MLS: S534907 (3 days on Redfin)
Zillow Zestimate: $463,500
Property tax: $6,746
Type: Single Family Residence
Style: Contemporary
Stories: 1 Level
Lot size: 7,363 sq ft
From listing: (No description)
View Larger Map
Assuming this one can rent for $2,300 per month, the target break-even price for an owner-occupant would be around $368,000, using a GRM of 160. Not quite there, but, like yesterday's property it is at least in the ballpark.
We mentioned downward pressure on prices, so here is an indicator of what is going on in the immediate area around this property - on the same street:
- 24276 Larkwood received its notice of trustee sale in late April. That owner bought with $0-down financing in 2005 and paid $575,000. This property is a bit smaller than our subject. It's for sale for $449,000.
- 24191 Larkwood is for sale and is asking $470,000. It's even smaller than the other two properties we just mentioned. The owner paid $593,000 in 2005 but only had to put $400 down. If the property sells for the asking price, the loss would be $151,200, including 6% sales costs. We should probably also mention that the property has begun the foreclosure process.
Our featured property is asking $234 per sq ft. The other two are asking $372 and $410. Sorry, but this is far from 2005, so they might need to re-adjust their expectations. However, considering how much debt is on those properties the wiggle room likely is nothing or next to nothing.
If our subject property is able to sell for the full asking price (we would guess the lender(s) involved would play a big part in this), it would be $240,000 off the 2005 price and $145,000 off the 2004 price. It would also mean a depreciation of 38% off the 2005 sale and 27% off the 2004 price - leading us to believe this would likely be a 2003 rollback. None of these calculations include sales costs.
Tuesday, June 03, 2008
Portola Hills REO
We haven't been spending nearly enough time following what is going on in some of the more inland areas of South Orange County...so here we go with today's subject property in Lake Forest (Portola Hills).
As you can see, we have yet another property purchased during the bubble with virtually no risk to the borrower. Not a happy ending, and now after the foreclosure process this home is bank owned and looking for a new owner to step in.
28651 Pendleton Rd, 92679
Asking price: $469,900
Asking price/ sq ft: $301
Income requirement: $117,475
Peak purchase price: $600,000
Peak purchase date: 8/18/05
Size: 3 beds, 3 baths, 1,561 sq ft (built in 1994)
MLS: S534628 ( 3 days on Redfin)
Zillow Zestimate: $788,500
2007 property tax: $7,534
HOA dues: $117
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 7,087 sq ft
From listing: Honey Stop The Car!!! Great location and ready for a new owner. Secondary bedrooms have a jack and jill bath and did I mention that the rooms are a nice size? Master is on the other side of the hall. Master bath is just waiting for your decorative touches to make it your very own relaxing bath. It has serious potential. The high ceilings add to the already nice floor plan. Needs a little TLC but bring your creative eye and save!!
No kidding the place is ready for a new owner. Let's look at how things went with the previous one:
- 8/18/05: Purchased for $600,000 in August 2005. Financing was in the form of a $479,900 first loan and a $119,950 second. Buyer put down a whopping $150; First Franklin financed the rest.
- 11/1/07: Notice of default in the amount of $14,157.
- 2/6/08: Notice of trustee sale posted, $508,829.
- 3/13/08: Property goes back to the bank (Deutsche Bank) at auction for $417,084 (discount off NTS amount did not attract any action).
- 5/31/08: Listed on Redfin as an REO.
Judging by nearby rentals, this one could probably rent for around $2,500-$2,600 per month considering larger, 2,100-sq ft models seem to be going for about $2,800 per month. So, if we aim low and assume this rents for "only" $2,500, our target breakeven price for an owner-occupant would be about $400,000, using a GRM of 160 (160 x rental rate of $2,500/month).
If we assumed a rental rate of $2,600, then we as an owner-occupant would want to aim to stay at or below $416,000. This one is still priced high by this logic, but is at least in the rental parity ballpark.
Assuming this property can be sold for the full asking price, it would represent a depreciation of $130,100, or 22% off the peak purchase price in 2005.
Sunday, May 18, 2008
Below $400k in Lake Forest
A reader gave us a heads up that a fixer-upper, single family home in Lake Forest is leading the pricing curve and has now fallen below the $400,000 asking price mark. "Sheesh, seems like just a few months ago we broke $450k," she wrote.
There is some optimism to be had, though, since Lake Forest (along with another of its areas, Foothill Ranch) were the only two South County ZIPs to post positive year-over-year sales totals in the latest DataQuick report.
24032 Sutton Dr, 92630
Asking price: $399,900
Asking price/ sq ft: $262
Income requirement: $99,975
Purchase price: $540,000
Purchase date: 10/9/07
Size: 3 beds, 2 baths, 1,527 sq ft (built in 1974)
MLS: U8000457 (113 days on Redfin)
ZipRealty price tracker: Price Reduced: 2/08/08 -- $459,900 to $449,900
Price Reduced: 2/19/08 -- $449,900 to $439,900
Price Reduced: 4/03/08 -- $439,900 to $414,900
Price Reduced: 5/08/08 -- $414,900 to $399,900
Zillow Zestimate: $608,500
2007 property tax: $3,547
Type: Single Family Residence
Style: Ranch
Stories: 2 Levels
From listing: OUTSTANDING VALUE IN THE CITY OF LAKE FOREST. THIS IS A THREE BEDROOM TWO BATHROOM HOME IN ONE OF THE SOUGHT AFTER AREAS OF THIS CITY. THE HOME FEATURES A PRIVATE POOL, SPA, AND A BACKYARD JUST MADE FOR THE 'POOL PARTY' OF YOUR DREAMS. LOCATED CLOSE TO ALL THE GOOD THINGS IN ORANGE COUNTY, PARKS, SCHOOLS, SHOPPING AND ENTERTAINMENT. COME HOME TO SUTTON DRIVE,AND START ENJOYING THE ORANGE COUNTY LIFE STYLE TODAY...
View Larger Map
As Irvine Renter of the Irvine Housing Blog has pointed out, this isn't the first time we've been told we can "start enjoying the Orange County life style (sic) today." What do you know: Same RE agent! Perhaps this is their calling card.
This property could probably rent for around $2,300 per month, so that means this property could roughly be valued at about $368,000 for an owner-occupant, assuming a target GRM of 160. Close to our goal, but, since this home needs some work we're not quite sure how much money would be needed to bring this property up to par.
Another interesting note: Based on the 2001 sales price of $310,500, if the property were to be sold for full asking price, it would mean appreciation of only a little more than 3% per year since then. But our caveat remains: We don't know how much work this property needs.
Assuming a buyer is found who will pay full asking price and put this market-chaser out of its misery, the loss would be $164,094, including 6% sales costs, or a value drop of 26%, not including sales costs, in a little more than 7 months.
Saturday, May 03, 2008
Pair 'o REOs in Lake Forest
These two properties in Lake Forest have essentially the same story to tell, so we're going to feature them together. Both were purchased during the bubble years with...let's call it a "limited" amount of downpayment money needed.
Now, they've gone through foreclosure and are back up for sale as bank-owned properties.
22981 Ditz Lane, 92630
Asking price: $239,900
Asking price/ sq ft: $202
Bank purchase price: $256,500
Bank purchase date: 4/4/08
Size: 2 beds, 2 baths, 1,189 sq ft (built in 1972)
MLS: S517362 (114 days on Redfin)
ZipRealty price tracker: Price Reduced: 2/01/08 -- $324,900 to $299,900
Price Reduced: 2/14/08 -- $299,900 to $289,900
Price Reduced: 3/02/08 -- $289,900 to $279,900
Price Reduced: 3/06/08 -- $279,900 to $269,900
Price Reduced: 3/07/08 -- $269,900 to $259,900
Price Reduced: 3/15/08 -- $259,900 to $258,800
Price Reduced: 4/19/08 -- $258,800 to $239,900
From listing: Large 2 story townhome!!!! Great area, quiet and secluded street!!! Large bedrooms!!! Lots of storage!!! Large family kitchen!! Nice yard!!!! This property comes with 2 car garage!!! Great school system!! Wonderful area! Community assoc. Offers great entertaining and recreation!!! Must see!!!
Exclamation point abuse is alive and well here. The former owner "paid" $439,000 in July 2006 (essentially the peak of the market) with $0-down financing - a $351,200 first loan and a $87,800 second (80/20) from Peoples Choice Home Loan in Irvine. Surprise, surprise: This company was a lender for people "with credit problems." It also is no more as it filed for bankruptcy in 2007.
This condo went back to the bank (HSBC) for $256,500 - well below the notice of trustee sale amount of $371,548. Assuming a sale for the full asking price, it would be a decline of 45% off the peak price, not including any sales costs.
23004 Ditz Lane, 92630
Asking price: $269,900
Asking price/ sq ft: $296
Bank purchase price: $248,940
Bank purchase date: 3/6/08
Size: 2 beds, 1 bath, 912 sq ft (built in 1972)
MLS: U8001820 (15 days on Redfin)
From listing: Single-story ground level end unit in nice neighborhood. Enclosed patio, two-car garage and lots of windows --- shows light and bright.
Notice the "vintage" kitchen on the right. The image at the top of this post is the exterior shot of this property.
Not to sound like a broken record, but here we go: This property was purchased by the doomed borrower for $430,000 in December 2006 (again, either right at the peak of the market or just after) using 100% financing from JPMorgan Chase. There was a $344,000 first loan and an $86,000 second (80/20).
The NTS (notice of trustee sale) amount was $365,964, but it went back to the bank in March for $248,940. Assuming a sale for the full asking price, the depreciation then would be 37%, not including any sales costs.
This is what the street looks like:
View Larger Map
There is also a preforeclosure on the same street - 23011 Ditz Lane. This condo is the same size as 23004 Ditz Lane.
The loan in default was made in May 2007 and is for $345,000 from WaMu. Do you think it would be wise for the borrower to struggle to keep the property with this much debt, considering banks can't unload homes here when they are asking in the low to mid $200,000s?
And, just for kicks: 23008 Ditz Lane has a "make me move" price on Zillow of $425,000. LOL.
Saturday, February 09, 2008
"Super" reduction not cutting it in Lake Forest
This Lake Forest REO has been sitting on the market for a few months now, and has not found its next owner.
25872 Wicklow Lane, 92630
Income requirement: $129,975
Peak purchase price: $693,000
Peak purchase date: 12/9/2005
Size: 3 beds, 2.5 baths, 1,609 sq ft (built in 1987)
Price Reduced: 12/4/07 -- $597,000 to $555,000
Price Reduced: 12/11/07 -- $555,000 to $550,000
Price Reduced: 1/30/08 -- $550,000 to $519,900
2006 property tax: $7,309
HOA dues: $60
Type: Single Family Residence
Lot size: 5,000 sq ft
From listing: SUPER PRICE REDUCTION! 3 bedroom 2.5 bath home in excellent area of Sterling Heights. French Doors in formal dining room lead out to patio with views of the city and mountains. Walk to parks and schools. Large rear yard great for entertaining and very private. Brand New Fence installed on side of home.
It appears the lender is motivated to get this one sold judging by the frequency of the price reductions alone...but if it was significantly overpriced to begin with, doesn't that change everything?Nice to see how many photos there are of this place, considering more than a few REOs tend to have one grainy photo of the exterior. I chose the image on the left because it appears to show the "brand new fence installed on side of home."
This property went back to the bank for $601,111 in mid-July, and has been for sale since early August. The six-month anniversary was a few days ago.
Garage appears to need a bit of cleanup work. Is the ceiling on the left side of this photo supposed to be exposed like that?
The location might also be an issue. It essentially backs up to Lake Forest Drive, though there is a bit of green space separating the house from the street. That may or may not provide adequate insulation from traffic noise.
School wise, it's very close to an elementary school and El Toro High.
Assuming a sale at the current asking price, the decline from the peak in late 2005 would be $173,100 or 25%, not including any sales costs.
Saturday, February 02, 2008
Lake Forest comp killer
A reader alerted us to this Lake Forest home that is threatening to help re-write the comps in the immediate area. It still seems a bit pricey at $371 per square foot, but it's certainly lower than the competition, which we will also review.
24242 Palmek Circle, 92630 (easy address number to remember)
Income requirement: $106,125
Size: 3 beds, 2 baths, 1,144 sq ft (built in 1965)
Type: Single Family Residence
Lot size: 7,434 sq ft
From listing: Single story home in a safe and quiet neighborhood features 3-bedroom, 2-bath, spacious backyard with raised patio area, trees and flowers that provide a cozy space to make the perfect place to end your day. Property is sold in 'AS IS' condition with no warranties. Bring your best offer.
We don't have any sales history for the property, but from the description it's a pretty safe bet that this is either a short sale or a full-blown foreclosure situation. It's also apparent from the price slash on Jan. 24 that the seller/bank is anxious to get out of this place.
How does this compare to what the neighboring properties are asking? Glad you asked. While we obviously can't compare the exact condition of the properties (in fact, we guess our subject property is likely the worst of the bunch), it gives us a general indication of the direction of the market, with our property as the low-priced leader.
All of these comps have the same number of bedrooms and bathrooms, and are roughly the same size as the subject property.
24221 Ankerton is slightly smaller. Asking price: $589,900. Days on Redfin: 29. Zillow says the owners paid $648,000 in 2006, so it looks like they're desperately trying to cling to as high a price as possible.
24276 Larkwood is a bit larger. High asking price: $550,000. Days on Redfin: 26. Sellers paid $575,000 in 2005.
24191 Larkwood is virtually the same size as the subject and is a fixer. This is probably the closest match to our original property. Asking price: $470,000. Days on Redfin: 17. Last sale was for $593,000 in 2005.
23911 Landisview is somewhat larger than the subject and has a nicely remodeled kitchen. It's being marketed as a move-in-ready property, so we can expect a small premium on this over the project that is our original property. Asking price: $549,900. Days on Redfin: 30. Last sale was back in 2001 for $269,500. The question is how much money was spent remodeling. Theoretically, the sellers will realize a good profit when they find a buyer.
It's clear that, compared to our subject property, all of these competitors now look very overpriced. We can also conservatively estimate that property values in this immediate area have probably fallen anywhere from about 20-30% from the peak, based on past sales and current asking prices.
The race to the bottom has begun.
Thursday, January 03, 2008
Lake Forest 2003 rollback
This Lake Forest condo is on the market for $160,000 less than it sold for in 2006, according to Zillow. The asking price also happens to be the same amount the property fetched in 2003.
Income requirement: $70,000
Purchase price: $440,000
Purchase date: 4/21/2006
Size: 3 beds, 1.5 baths, 1,085 sq ft (built in 1974)
HOA dues: $215
Type: Condominium
From listing: GREAT OPPORTUNITY FOR THIS 3 BEDROOM, 1.5 BATHROOM, TWO LEVELS, WITH COUNTERTOP GRANITE, TRAVERTINE FLOORS.
How would you like to have to share one full bathroom among three bedrooms? Whomever took the photos also forgot to throw in a pic of the granite counters. Shame.As we mentioned above, this property is asking significantly less than the 2006 price. Assuming a sale, the total loss would be $176,800, including 6% sales costs. The nominal depreciation would be 36% (not including transaction costs).
But it's also interesting to note that coincidentally (or not) the price being offered is the same one the property sold for in June 2003 - erasing four and a half years worth of phantom equity.
Friday, December 21, 2007
Turning back the clock in Lake Forest
This REO is one of a handful of foreclosure properties in Lake Forest. It's also been sitting on the market for a little more than five months despite a discount of $123,000. If you were to factor in sales costs, the money received would be less than the property's price in 2003.
23238 Orange Ave #5, Lake Forest, 92630
Income requirement: $60,475
FB purchase price: $350,000
FB purchase date: 4/28/2006
Size: 2 beds, 2 baths, 883 sq ft (built in 1980)
MLS: S498266 (149 days on Redfin)
Price Reduced: 9/07/07 -- $306,900 to $291,500
Price Reduced: 9/22/07 -- $291,500 to $264,900
Price Reduced: 10/20/07 -- $264,900 to $251,600
Price Reduced: 11/28/07 -- $251,600 to $241,900
HOA dues: $245
Type: Condominium
Check out the sales history: 0.7% yearly appreciation between 1989 and 1999. Then, 20.2% yearly appreciation between 1999 and 2003. Then, 18.7% yearly appreciation between 2003 and 2006.Is there really any surprise that this property has already fallen significantly in value, considering its value more than tripled between 1999 and 2006 after it only appreciated by $8,000 total in the previous decade?
If we assume that the property somehow finds a buyer at the current asking price, the decline from the peak would be 31%, or $108,100. With 6% in sales costs, the property would net $227,386 - just below the property's 2003 sales price.
Tuesday, December 04, 2007
This "great deal" has lasted
This Lake Forest house is up for sale. It looks like a pretty good bargain compared to the previous sale price and its competition:
Income requirement: $112,500
Purchase price: $658,000
Purchase date: 9/29/2005
Size: 3 beds, 2 baths, 1,322 sq ft (built in 1969)
From listing: GREAT DEAL! WON'T LAST. Nice and spacious house. Come & see this lovely home, 3BD/2BD. It features a beatiful kitchen. New paint, tile throughout.
This property has been on Redfin for 62 days and is still active. Typically, a seller is encouraged to de-personalize the inside of their property and adopt neutral colors. I don't believe that strategy was put into practice judging by the picture on the left.There is no address on the Redfin listing, but it does come with one on ZipRealty, so look there. Also try Zillow.
It's the lowest-priced three-bedroom, two-bath house within a 1/2 mile radius, according to ZipRealty -by $100 grand. 22971 Cavanaugh is a little less than 100 square feet bigger, but that owner is asking $550,000.
If Redfin is correct about the transaction history, the Cavanaugh property is asking less than what it sold for in 2005 as well - the last sale was for $600,000.
Assuming a buyer for the first property is found at this price, the Zillow sales history shows the loss on our subject property would be $235,000, including 6% sales costs. If this is a short sale, it seems questionable that the lender would hastily agree to what is likely a very large shortfall.
Even without transaction costs, a sale at the current asking price would equal a decline of 36% from the previous sale two years ago.
Tuesday, November 27, 2007
Make an offer they (the bank) can't refuse
Some positive news (we think) from South County broker Vince Bindi, who told the OCR's Jon Lansner: "The number of homes Pending In Escrow increased again this past week … this time by 5% for the week of Thanksgiving and the number of Homes Active for Sale dropped by 1.5%, resulting in the overall months of Inventory dropping to its lowest level (13.5 months) since August of this year. Of even more interest, the low end of the market (Prices less then $450,000) is leading the way and now has the lowest months of inventory at 10.7 months."
I'd prefer to hold off judgment until we see the actual closed sales stats. Particularly since even some in the media (the mainstream variety, not extremists) are saying there could easily be another credit crunch unfolding sooner rather than later.
And, one week alone doesn't reverse a downward pattern. Check out a visual of the foreclosure numbers now versus 1992, from OC Register reporter Matt Padilla.
Now, on to an REO trainwreck that could be on to something in terms of cutting-edge of bank pricing strategies: "Can't find a buyer? Steadily cut the price every week or so until you can"...
This 3-bedroom, 2-bath Lake Forest property was purchased for $636,000 in January 2006, and Redfin shows it as being purchased again for $750,000 in September 2006 (is this merely a mistake, or something else?). Looks like it eventually went back to the bank in August and is now on the market as an REO.
Here is the listing description: ONE OF THE LOWEST PRICE DETACHED SINGLE FAMILY RESIDENCES IN LAKE FOREST. .. . 1500 PLUS SQUARE FEET. Situated on private cul-de-sac. .. .Make this your own home. .. Large second story master with bath and walk in closet. Two bedrooms down plus one bath. Private front courtyard. Familyroom with fireplace. This is not a short sale. .. .make an offer the bank cant refuse. ..
Pricing history via ZipRealty:
Price Reduced: 09/20/07 -- $609,900 to $588,900
Price Reduced: 10/13/07 -- $588,900 to $574,900
Price Reduced: 10/24/07 -- $574,900 to $569,900
Price Reduced: 11/15/07 -- $569,900 to $559,900
Price Reduced: 11/17/07 -- $559,900 to $474,900
Pure speculation, but I wouldn't be too surprised if the bank would not have considered an offer of $474,900 one it "cant (sic) refuse" when the price tag was $609,900 back in September. But now, the asking price has come down by $135,000 in almost three months. Who's to say the bank won't keep lowering it until someone bites?
Assuming a sale at this price, the property would have been marked down 37% from the peak price of $750,000 in late '06 (not factoring in any sales costs). One sale does not make a trend, nor does it solely set new comps for the neighborhood. But something like this can't be completely ignored, particularly when nearby properties with the same amount of bedrooms are asking at least about $50,000 more.
Tuesday, November 20, 2007
Pop grammar and spelling quiz
This Lake Forest townhouse is being offered as a short sale. It's bad enough the sellers stand to lose $135,894 assuming a sale at this price with 6% sales costs. It's not helping that the listing description is plain awful in terms of basic spelling and grammar.
Here's the listing description, with grammar and spelling issues in bold: High Volted ceilings with lots of windows!Very light and bright!This is the biggest model with 2 car garage. This home is in excellent shape. It has beaitiful stone floors and wood floors. This is a Short Sale. Be the first to get the bank to accept your offer. .. .this is a steal!!! Lots of parking on this side of Boulder. Close to park, pool and school. Seller's paid $530,000 2 years ago and put upgrades in throughout! Nice wrap around yard with new fence, Lot's of nice Cabnets in Garage.
I don't agree with fluffy, extraneous statements that say nothing about the house (e.g. "light and bright"), but I'll keep everything generally as it was before, correcting mostly for grammar and spelling. Here is one way to revise the listing:
Portola Hills townhome features high-vaulted ceilings and lots of windows. Very light and bright! This two-car garage home is the largest model in the tract and is in excellent shape. It has beautiful stone and wood floors. This is a short sale. Be the first to get the bank to accept your offer ... this is a steal! Lots of street parking. The home is also close to the park, pool and school. Sellers paid $540,000 two years ago and upgraded it throughout. Great wrap-around yard with a new fence. Lots of nice cabinets in the garage.
I also changed (corrected?) the mention of what the sellers paid to reflect the past sale that's showing up in Redfin.
The point is not that people who write the descriptions need to have perfect grammar and spelling (who does). A basic spell check and proofreading would be a good first start, though. With more and more potential buyers doing at least part of their house shopping online, and with a possible flood of new listings coming soon if the so-called "wave of foreclosures" materializes, it seems like copywriters and grammar coaches could soon be in very high demand. Hmm...
Friday, November 16, 2007
Flip or not?
It's becoming more and more difficult to find attempted property flips in Orange County. Then again, TLC did just recently re-air an episode of the increasingly irrelevant "Flip That House" that featured a local RE agent and a $1-million+ Aliso Viejo property.
Flips-in-the-making used to be easy to spot. They were the ones that had changed hands in the past few months, and were listed for way more than the previous sales price. They also had some predictable keywords in the listing, like "completely remodeled," "upgraded" and "WOW!!!!!" OK, the third one not as much.
Now, the vast majority of properties that have "changed hands" recently are foreclosures that went back to the bank and are now REOs. The attempted flips are few and far between.
Is the following property an attempted flip? See what you think. Many factors point to "yes," but if that were the case, a few important things about it just don' t make any sense.
24132 Ankerton Drive, Lake ForestAsking price: $618,888
Purchase price: $585,000
Purchase date: 6/20/2007
Original asking price: $619,000
Days on Redfin: 21
From listing: Great home recently upgraded. Kitchen has all new appliances. 3 bedrooms and 2 bathrooms. Living room with marble fireplace. Large backyard with patio great for entertaining. 2 car attached garage. Close to near by parks, schools and shopping
On the surface, one might think it would have to be a flip. The price is above the last sales price; the use of "recently upgraded" in the listing; improvements include new kitchen appliances; good maintenance of outdoor space (check out the lawn in the backyard). I also could not find it in any recent foreclosure reports, though I may have missed it.
Then again...One of the bedrooms pictured is painted dark blue. Normally, rooms are painted neutral colors. One huge factor that argues against this property being flip is the price. Even if the seller got full asking price, they'd lose $3,245.28, assuming 6% sales costs. In fact, they were never in a position to profit, considering the original asking price was only a bit higher.
And, if you factor in holding fees and renovation costs (assuming they were the ones who did the upgrades), things would be even worse. Even if the owner were an agent or broker (assume only a 3% commission to buyers agent), their profit margin would still not be good, particularly because of the holding and renovation costs.As a flip, this property is not worth the effort because the profit margin is too small and the risk is too high.
Is this instead a very unfortunate person who was planning to stay in the property long term, but their plans have since changed? That could explain why there were upgrades - they might have happened when the owner thought they were going to stay. Now, they're only adding to the costs of getting out.
One more wrinkle: Some more digging on Google turned up that the property is (was?) listed on an agent's Web site, for a different price ($599,000) and under an MLS number that no longer exists. The listing description is also completely different and conveys a completely different tone that is more likely to be found on an REO: "Located on a large lot in the interior of the tract. Newer driveway. The house has been enlarged to offer a master suite and larger secondary bedrooms as well as a den. This is one of the lowest priced single family homes in the area and offers ample opportunity for a new owner to create "sweat equity" by improving the property."
In conclusion: I have no idea what's going on. Thankfully, the weekend is upon us. No more thinking required until Monday...
Friday, October 19, 2007
Add one more to the 2003 club
UPDATE: A bit too good to be true? Yep. A commentor pointed out that the price on this property has already been bumped up to $365k.
Here's another '03 rollback condo, this time in Lake Forest, that ns2524 found and posted on over at the Irvine Housing Forums. Since 2003 rollbacks are a rarity out here (will that soon change?), I wanted to take a look at this one too:
19525 Arezzo St., Lake Forest, 92679
Asking price: $299,000
Asking price/ sq ft: $248
Income requirement: $74,750 (roughly equal to the OC household median)
Purchase price: $334,000
Purchase date: 11/26/2003
Size: 2 beds, 2.5 baths, 1,205 sq ft (built in 1994)
MLS: S509370 (2 days on Redfin)
2006 property tax: $4,480
HOA dues: $149
Type: Condominium
Style: Other
Stories: Two Levels
Lot size: 6,696 sq ft
From listing: * * * * * * * * * * Two Master Suites * * * * * * 2 Car Garage * * * * * * * * *
That is perhaps the longest short description I've read. Are asterisks becoming the new exclamation points? By looking at the one small photo and extremely brief description, it would not be surprising if this were an REO. If that's the case, is this an example of banks finally getting serious about lowering prices?
Hard to beat the $248/sq ft price tag...the loud screams you might have heard a couple days ago could have been coming from neighbors who are also trying to sell and saw this listing go up. This property undercuts a smaller 2-bedroom unit by $80k as well as similar 2-bedroom condos by as much as $200k. It's also $176k less than the cheapest 3-bedroom nearby.
Assuming a sale at this price (which is actually relatively reasonable), the loss would be $52,940 assuming 6% selling costs, after nearly four years of ownership. This listing's mega-aggressive pricing strategy instantly makes the property the best bet to attract a buyer, assuming one is out there who wants it. Guess all's fair in love, war and declining real estate markets.
Wednesday, September 12, 2007
Every house has a story
And what an amazing tale this Lake Forest property could tell. This two-bedroom, 1,222 sq ft property, located at 21521 Kenmare Drive, was purchased in January for a whopping $650,000. Now, just eight months later, the property is already headed towards foreclosure.
The owner is hoping to eject before the bank takes it, and has this property listed for sale at $469,000. If it sold for this price, and we subtract 6 percent for selling costs, the loss will be $209,140. That's not even the interesting part.
We're going to break down the listing description, because frankly, it's entertaining. The text from the listing is in italics. My analysis/translations of the realtorspeak follow, in bold. Note: I've broken the listing description into a few paragraphs. Otherwise, it would have been a huge glob of text.
In foreclosure and bargain priced for the ""sweat equity"" investor or smart future homeowner! (The latest owners tried to rehab this place and failed miserably. You want to take a shot? I'm not even going to touch the "smart future homeowner" part considering where the RE market is right now)
Not trashed but some of the rehab was not completed. (Yes, it may look like the remnants of an AC/DC concert, but we swear, this place didn't turn into a dump on purpose)
Finish the job and build equity wealth! (Some assembly required...again no comment on the "equity wealth") Call agent for details. Private backyard with patio, 2 car attached garage. 2 bedrooms, 2 baths + loft. (Only thing missing is some front-yard grass that's still alive)
Living room w/fireplace. New floor tile in living areas. (The one thing that did get finished before the carnage took hold) Carpet looks newer. (Windows ME looked pretty good from a distance as well - how did that one turn out? Appearances can be deceiving, so the carpet will, in reality, need to be replaced ASAP) Cabinets need trim work. Baths need mirrors. (The old mirrors are gone. They may or may not have been removed and sold to coke dealer Tony Montana from Scarface)
Mstr br has walk-in closet. 2nd bedroom has access to 2nd bath - could be 2nd master bedroom on 1st floor. Eating area in kitchen. Fully fenced backyard has own patio for alfresco dining. (Fancy word for eating outdoors. Probably a bad idea to try and introduce sophistication to this listing, only a few sentences after using the word "trashed") Ok for investors to purchase. (See first comment)
Hoa fee approx $50/month. Park close by. Great area with curved streets, rolling hills and close to everything. Pride of ownership in this area! (Not including this property) Property has been cleaned up (Can you imagine how awful this place probably looked before we ran a vacuum through it?)***subject to lien holders approval of price, terms, conditions*** (Good luck getting them to agree to anything. Have a nice day)