Weirdness in Marina Hills

This Laguna Niguel luxury home has been discounted in the hopes it will sell quickly. Perhaps the sales team is so motivated they didn't even have a chance to go out and take any pictures yet (the photo is from the 2005 listing).

Or maybe they just aren't motivated enough to do what's necessary to sell a house in a real estate market like this.

If that's the case, the owner only has one person to blame...

13 Tramonti, 92677
Asking price: $900,000
Asking price/ sq ft: $344
Income requirement: $225,000
Purchase price: $1,289,000
Purchase date: 12/18/06
Size: 4 beds, 3 baths, 2,620 sq ft (built in 1989)
MLS: S539759 (12 days on Redfin)
ZipRealty price tracker: Price Reduced: 7/21/08 -- $1,100,000 to $900,000
Zillow Zestimate: $989,500
HOA dues: $107
Type: Single Family Residence
Style: Mediterranean
Stories: 2 levels
Lot size: 5,000 sq ft
From listing: This amazing Marina Hills home has it all. Panoromic city view from both levels. Upgraded kitchen w/ built-in Refrigerator. Walking distance to community pool, tennis courts and park.

The current owner purchased the property - not their primary residence - in 2006 for $1,289,000 using about 90% financing. The Redfin sales history says this property had previously sold for $1,078,000 in 2005, so theoretically that seller made a tidy little profit in a short amount of time.

A little flip like that is a bit suspicious considering the types of mortgage fraud that have gone on in Orange County, but you would think the 2006 buyer would know what they're doing. After all, they're not just the owner - they're a real estate agent who also just listed the house for sale.

In case you're wondering, ForeclosureRadar does not show any foreclosure activity on this property. So, we assume that the owner is up-to-date on their mortgage obligations. The property taxes also have been paid.

If we play the optimistic game of assuming a sale can and does go through for the current asking price, it would mean a loss of $443,000, including 6% sales costs, or a depreciation of $389,000 or 30% off the 2006 price, not including any transaction costs.

Missing the market in Laguna Niguel

Today's property, located in Laguna Niguel, is a bit of an artifact. See, it's been for sale for well over a year.

And it's been chasing the market down all the way...

30442 La Vue, 92677
Asking price: $1,299,000
Asking price/ sq ft: $329
Income requirement: $324,750
Purchase price: $1,570,000
Purchase date: 8/17/05
Size: 4 beds, 4 baths, 3,954 sq ft (built in 1989)
MLS: S470041 (546 days on Redfin)
Zillow Zestimate: $1,598,500
HOA dues: $75
Type: Single Family Residence
Stories: 2 Levels
Lot size: 5,900 sq ft
From listing: Remodeled & Expanded, Nearly 4,000 sqft! Versatile Open floor plan. Tons of natural light. Two story Vaulted Ceiling entry. Huge Bonus room, Travertine floors, Granite counters, Stainless Steel Appliances, 3 Fire places. Salt Water Pool & Spa. Quiet neighborhood close to Beaches and World Class Resorts. Turnkey.


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Here's the asking price history, via Redfin:

Feb 03, 2007 $1,725,000
Feb 05, 2007 $1,675,000
May 23, 2007 $1,599,000
Aug 03, 2007 $1,559,000
Aug 15, 2007 $1,499,000
Sep 20, 2007 $1,449,000
Oct 06, 2007 $1,399,000
Feb 13, 2008 $1,349,000
Apr 03, 2008 $1,299,000

That's a decline of $426,000 over the course of more than a year. You can almost see the thinking in action: The property was first listed at a wishing price that would not only bail the owner out, but provide a little bit of profit too. Luxury real estate doesn't go down, right?

Then somewhere around the $1,559,000 mark we hit breakeven - this might have been the lowest amount the owner could take for the property and not have to either try for a short sale or pay the difference out of his own pocket.

But the market had already passed him by, and he kept chasing for many more months - always a step behind.

As of this writing, the property is showing up as active in Redfin but as inactive in other online brokerages like ZipRealty. This could simply mean the property is back on the market and hasn't been updated yet on other sites, or it could be that Redfin is simply incorrect. Either way, this property makes for an interesting subject.

It was purchased in 2005 using 90% financing - a $1 million first from Bank of America, and $411,500 from Grand Capital & Associates. In March of 2006 what appears to be a $55,000 standalone second was added to the property.

We should also mention the property is a preforeclosure. A notice of default was recorded on the first loan in December for $26,145. The notice of trustee sale amount of $1,046,958 was posted in April. If you'd like to pick this one up at auction, it's scheduled for the block July 25. Its original auction date was last Wednesday, but was postponed due to bankruptcy.

It appears unlikely, but if the property could somehow be sold for the current asking price on the open market, and we deduct 6% for sales costs, the loss would be $348,940.

An OC castle's dark side

This extremely high-end property in Laguna Hills' Nellie Gail is a multi-million dollar home with just about every imaginable upgrade and luxury. There's a game room and underground wine cellar. The 360-degree views are pretty nice as well.

We also should probably mention it's in preforeclosure.

26192 Oroville Pl, 92653
Asking price: $6,599,000
Asking price/ sq ft: $574
Income requirement: You can't afford it
Purchase price: $5,325,000
Purchase date: 5/25/05
Size: 7 beds, 10 baths, 11,500 sq ft (built in 1986)
MLS: S510018 (242 days on Redfin)
Zillow Zestimate: $3,671,500
2007 property tax: $56,791
HOA dues: $80
Type: Single Family Residence
Stories: 3+ Levels
Lot size: 2.11 acres
From listing: Orange County Castle designed for grand scale living. This magnificent residence offers stunning views from nearly every room. A sweeping staircase on the 2nd level balcony leads to the turret with 360 degree views. Main residence encompasses a 12 seat theater, game room & subterranean wine celler. Guest quarters offers 2BR/2BA & full kitchen. The grounds include a tranquil stream with bridge, waterfalls & lush landscaping while showcasing the panoramic hillside & mountain views.


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They're asking $6.6 million and they can't spell wine "cellar" correctly? We're not even going to get into the grammatical errors.

The current owner bought the home in 2005 using 70% ($3,727,500) financing from Bank of America. Less than two weeks later, they got a loan for $1.8 million. That means they now had $5,527,500 worth of debt on a property they had just paid $5,325,000 for. Instant equity!

In February 2008 there was another lien added against the property for $1 million. That means, then, the asking price probably puts them close to, if not at, the break-even point for being able to get out with all their debts paid off.

The original loan received a notice of default in January for $149,508. The notice of trustee sale came in April, for $3,762,325. The second, $1.8 million loan received its notice of default in April for $123,193.

Before you get your hopes up of taking this one at a foreclosure auction, ForeclosureRadar.com shows three previous defaults on this property and three notice of trustee sales that were all eventually cured, so there is certainly a chance it will be redeemed.

If not, OC would have one heck of an REO on its hands.

Million-dollar REO in San Clemente

Today we go back to Forster Ranch in San Clemente to show you a bank-owned property that, if sold for its asking price, would demonstrate more than a half-million dollar decline in value from its previous sales price during the bubble.

2525 Costero Magestuoso, 92673
Asking price: $1,149,000
Asking price/ sq ft: $280
Income requirement: $287,250
Bank purchase price: $1,439,287
Purchase date: 4/1/08
Size: 4 beds, 5 baths, 4,100 sq ft (built in 2003)
MLS: S533569 (25 days on Redfin)
Zillow Zestimate: $1,986,500
2007 property tax: $11,458
HOA dues: $248
Type: Single Family Residence
Style: Tuscan
Stories: 2 Levels
Lot size: 7,500 sq ft
From listing: Stunning home in a gated community. MOVE-IN CONDITION. Upgraded Travertine throughout downstairs. Bedroom and full bathroom + powder room downstairs. Master bedroom with retreat and romantic fireplace. Family room with built-in entertainment niche, cozy fireplace. Breakfast nook, breakfast counter. Gourmet kitchen with granite stainless steel appliances. Plantation shutters throughout. Huge bonus room with built-in entertainment center w/ 62'HDTV and queen size Murphy bed. Upgraded back yard with salt water dipping pool/spa, waterfall, fire ring and sitting area. Covered patio with ceiling fans, BBQ with fridge. Hurry on this one, this will not last.

It's not too often you see an REO listing mentioning what good shape the house is in (move-in condition, no less), but then again this is a luxury property. Nice of the previous owners to leave the huge HDTV.

Speaking of the previous owners, they paid $1.7 million in 2006, using 100% financing from Bear Stearns. Can you imagine being handed the keys to a property like that without having to chip in a dime of your own money?

It was indeed too good to be true. The notice of default on the first loan came in August 2007, and the notice of trustee sale was filed in November for $1,353,839 - which is above the original loan amount of $1,275,000.

Assuming the bank can sell the property for the current asking price, it would mean a depreciation of $551,000, or 32% off the 2006 price, not including any sales costs.

We'll leave you with a snapshot of the foreclosure activity in the 92673 ZIP code, courtesy of ForeclosureRadar.com. The green markers signify notice of defaults, the blues are notice of trustee sales, and the red ones are bank owned. For an explanation of the California foreclosure process, click here.

Time's running out

If you'd like to get your hands on this San Clemente (Talega) luxury property, then you'd better hurry. It's in foreclosure and is scheduled for auction Wednesday (though it could very well be postponed) and is in "hold do not show" mode - meaning RE agents are advised not to bring prospective buyers through at this time.

But, even if you miss out on the opportunity now, and you're looking for an even better price, you have another shot: Bring a cashier's check down to the Santa Ana courthouse at 2 p.m. to stake your claim on this home. Opening bid is "only" $877,500!

36 Corte El Brazo, 92673
Asking price: $995,000
Asking price/ sq ft: $267
Income requirement: $248,750
Purchase price: $1,300,000
Purchase date: 6/9/06
Size: 5 beds, 5 baths, 3,725 sq ft (built in 2006)
MLS: U7004167 (249 days on Redfin)
ZipRealty price tracker: Price Reduced: 10/25/07 -- $1,450,000 to $1,400,000
Price Reduced: 11/07/07 -- $1,400,000 to $1,190,000
Price Reduced: 2/05/08 -- $1,190,000 to $1,090,000
Price Reduced: 2/28/08 -- $1,090,000 to $1,039,000
Price Reduced: 3/12/08 -- $1,039,000 to $995,000
Zillow Zestimate: $1,002,000
Property tax: $13,582
HOA dues: $149
Type: Single Family Residence
Style: Mediterranean
Stories: 2 Levels
Lot size: 6,100 sq ft
From listing: 'HOLD - DO NOT SHOW'. CAZADERO AT TALEGA...An Impressive Home with a Quiet Cul-de-Sac Location and Panoramic Views overlooking Talega. The Gourmet Kitchen includes Granite Counters, Rich Wood Cabinets & Stainless Steel Appliances. Elegant Dining Room, Spacious Great Room with Fireplace, Incredible Master Suite with Fireplace and Panoramic Views.

The listing fails to mention that this "impressive" home appears - at least from the photos - to be without landscaping. That's no small expense.

The owners (soon-to-be previous owners?) purchased this property at the peak of the market from Shea Homes in 2006 for $1.3 million.

They put $130,176 down and financed the remaining $1,169,824 from WaMu, divided up into two loans.

In January 2007, the owners opened another loan/line of credit (we're not sure exactly what type) from National City for $350,000. Whatever it was, it apparently was not used for landscaping, and if it was earmarked for interior decorating and furnishing, all that stuff is out of the house now.

Notice how the owners put the property up for sale last fall at a wishing price of $1.45 million - which would have likely cured the debt and bailed them out. Then, as no suitable buyer came along, they progressively chased the market down with a total of five price reductions for a total discount of $455,000.

Does it really make any sense to try and buy this home now (OK, so this is an extreme example where the window is closing fast) when you could either a) buy it at auction at a discount off the NTS amount if you happened to have that much cash; or b) wait for the property to come back on the market as an REO in (perhaps) a couple months?

Speaking of the auction, the NTS amount is $1,066,717.82 (the balance of the delinquent loan, plus additional fees/interest), yet the opening bid for Wednesday has been established at about 17% lower to attract possible bidder(s). If none step up and this property is auctioned as scheduled, it will go back to the bank and become REO.

By the way, even if this property could be sold for the current full asking price and thus avert the auction block, it would still represent a $305,000 or 23% discount from the original sale - not including any sales/transaction costs or other fees.

It will be interesting to see what price this property comes back to the market at, if it is indeed destined to go REO.

29% discount in Ladera Ranch

Merrill Lynch, which owns this REO in Ladera Ranch, has priced this property at 29% off the 2006 peak purchase price. Who will step in and purchase this home that sold for almost $950,000 just two and a half years ago?

25 Sachem Way, 92694
Asking price: $664,950
Asking price/ sq ft: $260
Income requirement: $166,237.50
Bank purchase price: $680,000
Purchase date: 1/9/08
Size: 5 beds, 4 baths, 2,560 sq ft (built in 2003)
MLS: U8001199 (61 days on Redfin)
ZipRealty price tracker: Price Reduced: 4/19/08 -- $699,900 to $664,950
Zillow Zestimate: $822,000
2007 property tax: $14,017.78 - 2006 taxes also unpaid
HOA dues: $165
Type: Single Family Residence
Stories: 3+ Levels
Lot size: 2,600 sq ft
From listing: WOW, THIS IS ONE OF THE VERY BEST VALUES IN ORANGE COUNTY. THIS IS THE COMMUNITY OF LADERA RANCH. LADERA RANCH HAS IT ALL, PARKS, RECREATION, SHOPPING, ENTERTAINMENT AND SO MUCH MORE YOU AND THE FAMILY WILL LOVE THE ARE. THE HOME FEATURES FIVE BEDROOMS AND FOUR BATHROOMS, A GREAT VIEW, AND A REAR YARD THAT IS JUST RIGHT FOR ENTERTAINING, YOU EVEN HAVE A FIRE PIT AND A SPLASH POOL... COME HOME TO LADERA RANCH AND START LIVING THE SOUTHERN CALIFORNIA LIFESTYLE TODAY!!

A fixer that's five years old and last sold for nearly $1 million. Go figure. Considering there are no interior photos, we wonder if this one might have been trashed on the way out.

The previous owner paid $940,000 in 2006, but didn't have to pay a dime of his own money. He received 100% financing from People's Choice Home Loan - another (now defunct) subprime lender. The funding came in the form of an 80% first loan ($752,000) and a 20% second ($188,000).

Wait a minute: Someone went to a subprime lender and was granted loans totaling
$940,000 to buy a luxury property? Something seem wrong with that picture? Is it any surprise the property ended up as a foreclosure?


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The owner made very few (if any) payments on the first loan, as the notice of default came in the first week of April 2007 - less than six months after the purchase. The notice of trustee sale was filed in July in the amount of $794,822 - $42,822 more than the original loan - and the bank ended up taking the property back for $72,000 less than the original loan, though unpaid interest and fees had accrued.

Assuming a sale for the current full asking price, it would represent a decline of $275,050 or about 29% off the 2006 purchase price, not including any sales costs.

Now an REO in Laguna Beach

Back in December, we profiled this property in Laguna Beach - a short sale that would have been a 21% loss had it sold.

Now, the property has completed the foreclosure process and is back on the market as an REO. Here are the basic details:

1601 Louise Street, 92651
Asking price: $1,300,000
Bank purchase price: $1,300,000
Bank purchase date: 4/9/08
ZipRealty price tracker: Price Reduced: 4/10/08 -- $1,499,000 to $1,399,900
Price Reduced: 4/24/08 -- $1,399,900 to $1,351,000
Size: 2 beds, 1.5 baths, 1,466 sq ft (built in 1953)
MLS: U8001487 (41 days on Redfin)
Type: Single Family Residence

Style: Spanish

Stories: One Level
Lot size: 6,500 sq ft
Description: If you like quaint, look no further. This is a two bedroom, with an office and one and one half bathroom single family home located in one of the most sought after cities along the california coast. The home features wonderlull outside entertainment space, nice views of the coastline, city lights, and the ocean. You are located close to all the good things in laguna, cresent bay, shopping, entertainment and dining. Come home to laguna beach, and start living the southern california coastal lifestyle today.

You couldn't make this kind of stuff up if you tried: The previous owner purchased the home at the peak in 2006 for $1.775 million with 100% financing from...No Red Tape Mortgage (we're not joking!). The funding came in the form of two loans, one for 75% ($1,331,250) and the other for the remaining 25% ($443,750).

Her notice of default came in October 2007, and the notice of trustee sale was filed in January 2008 for $1,404,721. Despite this amount, the opening bid at auction was set $1.3 million, and even that wasn't enough to attract a buyer as the property went back to the bank.

Assuming a buyer can be found who is still willing to drop $1.3 million for this property even though they could have already bought it for the same price at auction, the sale would represent a decline of $475,000, or about 27% off the previous price, not including any sales costs.

$0 down backfires in Talega

Today's property is another example of how a bubble-era buyer could get into a pretty darn nice million-dollar property like this one in Talega - without using any of their own money. What ever could go wrong?

Now, since the market has cooled, the house is predictably headed for foreclosure. Will a last-minute buyer step in, or will this one go all the way to auction?

219 Via Marfino, 92673
Asking price: $1,030,000
Asking price/ sq ft: $287
Income requirement: $257,500
Purchase price: $1,425,000
Purchase date: 8/26/05
Size: 5 beds, 5 baths, 3,586 sq ft (built in 2000)
MLS: S503912 (242 days on Redfin)
ZipRealty price tracker: Price Reduced: 11/30/07 -- $973,143 to $945,342
Price Increased: 11/30/07 -- $945,342 to $985,032
(Price increased 3/20/08 -- $985,032 to $1,030,000)
Zillow Zestimate: $991,500
2007 property tax: $18,242
HOA dues: $149
Type: Single Family Residence
Style: Spanish
Stories: 2 Levels
Lot size: 10,600 sq ft
From listing: Best value in talega and maybe orange county!!!! This pool home is ready to move in. Backs to the golf course, custom kitchen, lots of tile. Show and sell today!!! See you in escrow. Short sale is approved, no waiting, no waiting, no waiting for this great property!!!!Sold as is!!!!!!Short sale is approved by the lender!!!!!

The buyer paid $1.425 million in mid 2005. She was able to obtain 100% financing through First Franklin in the form of a $1.14 million first loan and a $285,000 second (80/20). A notice of default on the first loan in the amount of $31,494 was posted in December, and a notice of trustee sale in the amount of $1,198,356 came in mid March.

We would be curious to know if this property saw much action when it was priced at $945,342. Was the only thing holding up a sale the lender's approval? Or, was there not sufficient interest back then and this is really a last-ditch wishing effort with no substance?

One thing is certain, though: The property hasn't appreciated any since last fall, so if buyers weren't all over the place then it seems hard to believe they would be interested now with an increased price tag - unless, of course, the allure of an approved short sale is worth the higher price.

The property is scheduled to be auctioned May 5 at 10 a.m. - that is, unless a buyer can be found before then. As you can see from the listing, the lender has approved a price of $1.03 million. Is it worth that much to a buyer, or would they prefer to wait, let the property go back to the bank and later reappear as an REO before deciding whether to go through with the purchase?

By setting an approved short sale amount, the bank has agreed to a price that would equal a loss of $456,800, including 6% sales costs. Bye bye second loan, and ouch to the first one, too - in fact, the notice of trustee sale amount is actually higher than the original loan itself, thanks to unpaid interest and fees adding up.

A sale at that price would also mean a depreciation of about 28% in less than three years, not including transaction costs.

$12.8 million preforeclosure in Laguna Beach

This property is simply amazing - it's a luxury beachfront home in Laguna Beach that is right off Coast Highway. But, as we know, it works the same no matter where the address is: Stop paying the mortgage, and the lender gets unhappy and begins the foreclosure process.

This property became a preforeclosure in March and also is up for sale on the MLS. Got all your pennies saved for the downpayment on this one?

31091 S Coast Hwy, 92651
Asking price: $12,800,000
Asking price/ sq ft: $2,977
Income requirement: You can't afford it
Purchase price: $4,800,000
Purchase date: 6/24/04
Size: 3 beds, 5 baths, 4,300 sq ft (built in 1992)
MLS: L25935 (31 days on Redfin)
Zillow Zestimate: $2,487,040
2007 property tax: $54,497.34
Type: Single Family Residence
Style: Contemporary
Stories: 2 levels
Lot size: 6,251 sq ft
From listing: Breath taking beach front contemporary home. Recently completed a $2 million remodel in 2007. Rare luxury property with every amenity imaginable. Enjoy short walks on the sand to the montage resort & spa with private beach access. Bang & olufsen tv and sound system, security cameras, automatic window coverings, custom temperture controlled wine room, partner's office, gym and entertainment room complete with pool table and professional bar. Hotel inpired master retreat with ocean views from every angle. Kitchen boasts his and hers sub-zeros, beverage center, convection range & gaggenau hood. Custom sie-matic cabinetry and zodiac stone counter tops designed by euro-kitchens. Home is elegantly completed with honed marble and limestone floors. Enjoy the magical sunsets nightly from the comfort of your living room or from one of your beautiful decks.


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(Google street view maps are a wonderful thing. We will now be including these with our featured properties whenever available. Don't forget to use your mouse and poke around the street if you feel so inclined)

Here's the recent financial history on this property:
10/23/03: Sold for $4.5 million.
6/24/04: Sold again for $4.8 million. Buyer put $960,000 down and financed $3.84 million through Loan Link in Aliso Viejo. Funding came in the way of a $3.36 million first loan and a $480,000 second (70/10 financing).
3/14/08: Notice of default filed - $12,714.
3/31/08: Appeared for sale on Redfin.

If you were compelled to read the long listing description (which sure as heck is warranted with a house of this price), you would have seen that this property underwent a $2 million remodel just a couple years ago. But does this alone warrant an appreciation of $8 million - a 167% total increase, or roughly a 28% gain per year - from the previous sales price in 2004? What is it really worth today?

Only a very small group of people can answer those questions - they make up the very tiny pool of potential buyers who would be interested in a property like this and have the financial wherewithal to pull the trigger (for all cash, we would presume). Consequently, they would be bailing out the current owner at the same time.

Will the "location, location, location" rule win out here and provide the current owner with enough appreciation to spring them from the foreclosure trap? We will certainly be watching to find out.

And, guess what: This isn't the only distressed property in Laguna Beach...

High-end loss in Aliso (update)

This property in Aliso Viejo, which we first posted on back in September, is of the million-dollar variety. As you will see, the amount of debt coupled with a declining market is making it very hard for the current owners to get out cleanly. It's still on the market and is now a preforeclosure.

36 Endless Vis, 92656
Asking price: $1,099,000
Asking price/ sq ft: $306
Income requirement: $274,750
Purchase price: $1,350,000
Purchase date: 1/31/06
Size: 5 beds, 5 baths, 3,600 sq ft (built in 2000)
MLS: S501452 (257 days on Redfin)
ZipRealty price tracker: Price Reduced: 9/29/07 -- $1,349,900 to $1,274,900
Price Reduced: 10/11/07 -- $1,274,900 to $1,100,000
Price Reduced: 1/10/08 -- $1,279,000 to $1,199,000
Price Reduced: 2/16/08 -- $1,199,000 to $1,099,900
Zillow Zestimate: $1,109,000
2007 property tax: $11,779
HOA dues: $96 + $41
Type: Single Family Residence
Stories: Two Levels
Lot size: 6,600 sq ft
From listing: Huge Price Reduction!! Best Value in Aliso! Fabulous Estate Home in the Exclusive Gated Oak View Enclave. Luxurious Interiors * Elegant Long Driveway * Large Living Room with Soaring Ceilings + Fireplace * Elegant Dining Room with French Doors * Gourmet Kitchen with Island + Stainless Steel Appliances * Family Room with Fireplace * Pool Sized Yard with Built-In BBQ with Tons of Privacy * 5 Bedrooms + Large Loft(could be converted to 6th Bedroom) * Mainfloor Bedroom with Private Bath * Master Suite with Dual Walk-In Closets with Custom Built-Ins. Truly a Must See!

The current owners bought at the peak in early 2006 for $1.35 million, using 90% financing (80/10) from Washington Mutual. The couple who sold them the property truly struck real estate gold, as they made $520,000 in profit, before sales costs and other expenditures, simply by holding the home for less than three years.

A little less than a year later, our new owners re-fied into a $1 million first loan and a $235,000 2nd. A month after that, a $276,500 line of credit was added from National City Bank.

Six months later, the owners decided to place their home on the market. They listed for $1,349,900 - essentially the same price they had paid. But the market had already begun to turn, and there were no takers.

The $1 million loan from WaMu went delinquent, and a notice of default was filed in early March in the amount of $24,916. The property is still on the market, though the price has been lowered four times to $1,099,000. - that's a total reduction of $250,000.

Assuming the property is (somehow) sold for the current asking price, the loss would now be $316,940, including 6% sales costs. It also would mean a depreciation of about 19%, not including any transaction costs.

(Another) Ladera Ranch foreclosure

Ladera Ranch came up in the LA Times' new foreclosure widget as being the area in Orange County with the worst rate of households per foreclosure (15.58 - but, the number is likely off since the number of homes in the area seems to be understated). So, today we're featuring a foreclosure property in Ladera's Covenant Hills that is selling for a huge markdown off the 2006 price.

14 Drackert Lane, 92694

Asking price: $879,900

Asking price/ sq ft: $251
Income requirement: $219,975
Buyer purchase price: $1,500,000
Buyer purchase date: 8/28/06
Size: 4 beds, 4 baths, 3,500 sq ft (built in 2005)

MLS: S529187 (8 days on Redfin)

Zillow Zestimate: $1,235,000
2007 property tax: $23,920.54 (2006 taxes of $22,129.58 unpaid)
HOA dues: $404
Type: Single Family Residence

Style: Mediterranean

Stories: Two Levels
Lot size: 6,500 sq ft
From listing: Beautiful home in desired gated community of Covenant Hills. Cul-de-Sac location with landscaped front. Backyard landscaped needs completed. Main floor Master bedroom and bath/spa including jacuzzi tub. His and her closets with double sinks. Custom paint, crown moulding, through out home. Travertine floors downstairs. Kitchen with island and granite counter tops.

The original owner walked away with a cool $455k in sales proceeds after holding the property for about a year and selling it to our greater fool in 2006 for $1.5 million. The progression from there is not hard to predict:

8/28/06: GF puts $75,950 down and finances $1,424,050 via a $1,199,200 1st mortgage and a $224,850 2nd from First Franklin.
9/24/07: Notice of default filed in the amount of $32,236.
2/1/08: Notice of trustee sale filed, amount is $1,271,924.
3/18/08: Home scheduled to be auctioned. Opening bid of $1,202,574.95.

Now, the vacant property is on the market. Assuming a sale at the full asking price, the loss would be $672,894 off the previous sales price, including 6% sales costs. Not including transaction costs, that would also be a depreciation of 41% off the previous sales price.

Think about that: 41% off in less than two years. In a luxury neighborhood. Of course, there is always the possibility that the price is artificially low to attract multiple bids. We will know for sure when this property sells.

The latest home stats came out Friday, and there's still not really much of an improvement on the South OC numbers - if anything, the retreat continues. Here are the DataQuick stats for the 22 business days ending April 8, as reported by the OC Register:

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?

Psst..."secret" Nellie Gail REO

As Irvine Renter of the IHB pointed out recently, there are bank-owned properties all across Orange County that have not yet been placed back on the market - perhaps because the banks do not have the staff to handle all these types of properties in a timely enough fashion. Here is one of these "secret" REOs, 25171 Stageline Drive in Laguna Hills. It also happens to be in Nellie Gail.

This property has 5 bedrooms, 4.5 baths, and is 4,028 sq ft. And, it's on a 29,255 square-foot lot. The photo above is from one of the handful of times the property appeared on the market in late 2005 into 2006. It even was posted for rent once, with an asking monthly price of $5,400.

The listing that finally did the trick began in April 2006 with an asking price of $2.35 million (sort of odd considering they asked $1.999 million in December 2005 and did not sell). But, almost like magic, a buyer was found who was willing and able to pay $2.2 million.

This buyer put $220,000 down and took out two loans - a $1.5 million first, and a $480,000 second.

Things apparently went downhill from there, as a notice of default was filed in May 2007, and later the notice of sale amount was established at $1,597,284. The bank ended up taking back the property on Feb. 19 for $1.35 million.

It will be interesting to see what the home is priced at when it finally is placed on the open market. It's hard to compare comps with any real certainty considering the custom-home nature of Nellie Gail. The only thing we can say for certain about these homes as a collective group is that they're very nice and appropriately expensive.

The closest home for sale, 27065 Hidden Trail Road, appears to be (relatively) similar to our subject property. That property is a bit larger but has one fewer bedroom. The owner is asking $1.595 million.

Today's post is yet more evidence that there are no guarantees in real estate, even with a luxury home in one of the county's most desirable neighborhoods.

Distress in San Clemente

This is what we're looking at right now in San Clemente in terms of properties that are in some stage of foreclosure:

And, believe it or not, it's actually worse than we're seeing here, since the view was limited to 200 of the 239 properties listed by foreclosureradar.com in this city. Green means the property is in preforeclosure; blue means scheduled for auction; red means the property is bank owned (REO).

Today's property is a luxury home that has become one of those green dots, meaning it is in preforeclosure...

13 Via Soria, San Clemente, 92673

Asking price: $1,049,000

Asking price/ sq ft: $304
Income requirement: $262,250
Purchase price: $1,321,000
Purchase date: 7/28/05
Size: 4 beds, 4 baths, 3,450 sq ft (built in 2005)

MLS: S524267 (43 days on Redfin)

Zillow Zestimate: $1,111,000
2007 property tax: $19,417
HOA dues: $181
Type: Single Family Residence

Style: Mediterranean

Stories: Two Levels
Lot size: 6,000 sq ft
From listing: Beautiful ocean view Catania home totally upgraded thru-out with granite counters, crown moulding, Travertine flooring, recessed lighting. Huge kitchen includes large island with granite counter top and boasts loads of cabinet space thru-out. Dramatic curved staircase leads to upstairs bedrooms and additional family room and computer nook. Master suite has huge balcony and awesome view all the way to the ocean.

There are plenty of 100% financing deals in South OC to talk about, but this is not one of them. The owners bought the home new in 2005 from Standard Pacific with $281,000 (21%) down. About a year later, though, an additional loan of $242,640 was added to the property. The notice of default was filed in late March on the first loan in the amount of $17,808.

Assuming the property can be sold for the full asking price, it would mean a loss of $334,940 off the new-home price in 2005, including 6% transaction costs. Considering they bought the home new, we also assume plenty of money was spent furnishing and personalizing the interior, as well as landscaping. It's anybody's guess how much cash actually went into turning this house into a home.

A sale at full asking price would also signal a rather large depreciation of 26% in less than three years, not including sales costs. It would also signal a sad end to this real estate story.