Today's seller is one of the unfortunates who bought at the peak of the real estate market and are now fruitlessly trying to get out from under their investment as the market continues to sputter along.
The property they are trying to unload is in San Clemente...
1305 Avenida De La Estrella, 92672
Asking price: $789,235
Asking price/ sq ft: $316
Income requirement: $197,308.75
Purchase price: $1,080,000
Purchase date: 9/20/05
Size: 4 beds, 3 baths, 2,500 sq ft (built in 2005)
MLS: S511324 (255 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/02/08 -- $1,250,000 to $979,000
Price Reduced: 5/18/08 -- $979,000 to $879,000
Price Reduced: 6/10/08 -- $879,000 to $829,000
Price Reduced: 7/11/08 -- $829,000 to $789,235
Zillow Zestimate: $1,291,000
Type: Single Family Residence
Style: Mediterranean
Stories: 3+ Levels
Lot size: 3,700 sq ft
From listing: Tuscan style custom home.
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Our seller has been chasing the market since October. She paid $1,080,000 in 2005 using 90% ($972,000) financing. When the property first came up for sale, it was at a wishing price of $1,250,000 that would have magically made all the problems go away. It did not work, and now here we are eight months and $460,765 worth of price reductions later.
Assuming a sale for the current asking price, the seller would lose their $108,000 down payment and the bank would lose the rest - unless she was already able to liberate her downpayment, in which case the lender(s) would lose even more.
A sale for the current asking price would also mean a depreciation of $290,765 or 27% off the peak purchase price.
Monday, July 14, 2008
Chasing the market in San Clemente
Wednesday, July 09, 2008
Market chaser redux in Mission Viejo
We're out for the day and won't be able to do a complete blog post today, but we wanted to show you another example of a market-chasing listing. This one is in Mission Viejo, and it has been on the market for 79 days:
26482 Via Lara, 92691
Current asking price: $599,693
Description: 4 Bedroom Excellence / Value in Mission Viejo! Owners are motivated and it's priced to sell NOW! Brand NEW carpet 6/13/08. Chef's dream kitchen - Custom made cherry cabinets with granite countertops and all JennAir stainless steel appliances. Perfect family home with great floor plan and ALL bedrooms upstairs. True PRIDE of ownership! Upgrades galore. Huge hardscaped backyard with custom firepit, built in BBQ and tropical landscape. Neat, well maintained front yard. Formal dining & living room and upgraded family room. All bedrooms have custom closet organizers. Fresh paint, new tile, base and crown molding and ceiling fans. This home has been maintained by Mr. and Mrs. Clean! Great neighborhood! Near school, park & lake. Member of Lake Mission Viejo. NO HOA and NO MELLO ROOS. Jump on this opportunity before it's too late!
Price Reduced: 04/30/08 -- $599,999 to $599,998
Price Reduced: 05/02/08 -- $599,998 to $599,997
Price Reduced: 05/18/08 -- $599,995 to $599,899
Price Reduced: 05/24/08 -- $599,899 to $599,777
Price Reduced: 06/01/08 -- $599,777 to $599,697
Price Reduced: 06/13/08 -- $599,697 to $599,696
Price Reduced: 06/16/08 -- $599,696 to $599,695
Price Reduced: 07/07/08 -- $599,695 to $599,693
That's eight price reductions in a little more than two months for a total of $306 off the original asking price of $599,999. Or, if you prefer, an average price cut of $38.25 each time.
We also see they "celebrated" the installation of the new carpet on June 13 by lowering the price by a whole $1.
Redfin shows the previous sales price was $287,500 in 2000, so the owners should come out plenty ahead once they sell, assuming they haven't squandered their equity. Mr. and Mrs. Clean - as the listing calls you- how long will you keep chasing the market down?
Tuesday, July 08, 2008
Slow bleed in Ladera Ranch
The real estate market continues to sour in Ladera Ranch - almost 40% of the 301 properties for sale there are either foreclosures or short sales, according to the latest Steve Thomas report.
Here is one of those distressed properties that's logged a lot of time on the MLS. Will it finally sell, or is it destined to end up a full-fledged foreclosure?
10 Garrison Loop, 92694
Asking price: $365,000
Asking price/ sq ft: $243
Income requirement: $91,250
Purchase price: $555,000
Purchase date: 2/22/06
Size: 3 beds, 2.5 baths, 1,500 sq ft (built in 2001)
MLS: S508210 (276 days on Redfin)
Zillow Zestimate: $402,000
HOA dues: $160 + $190
Type: Condominium
Style: Craftsman
Stories: 2 Levels
From listing: Fantastic price for a light and bright end unit. 3 Bedrooms, 2.5 baths, attached 2 car garage. Family room with mirrored media niche and granite faced gas fireplace. Granite counters,crown molding and baseboards, inside laundry. Internet included in HOA. Master suite w/dual vanities and walk in closet, ceiling fan. Short walk to restaurants, shopping, walking trails.
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We purposely left off the ZipRealty price history so we could show it to you here:
Price Reduced: 10/15/07 -- $445,000 to $425,000
Price Reduced: 10/26/07 -- $425,000 to $418,000
Price Reduced: 11/02/07 -- $418,000 to $405,000
Price Reduced: 2/16/08 -- $423,000 to $415,000
Price Reduced: 3/11/08 -- $415,000 to $399,000
Price Reduced: 3/21/08 -- $399,000 to $389,000
Price Reduced: 6/12/08 -- $389,000 to $379,000
Price Reduced: 6/20/08 -- $379,000 to $375,000
Price Reduced: 6/24/08 -- $375,000 to $370,000
Price Reduced: 7/02/08 -- $370,000 to $365,000
The owner used 100% financing from New Century when he purchased the property at the peak in 2006. The jig was painfully up as they decided to list the property in October for $445,000 - more than $100,000 less than they had paid about a year and a half earlier.
Then the mortgage went delinquent. A notice of default in the amount of $24,592 was filed against the $444,000 first loan on the property in April. This is one of five properties on the street that ForeclosureRadar.com lists as being in some stage of foreclosure: One REO, two that have received their NTS and two (including our subject property) that have had a notice of default.
There have now been 10 price reductions for a total of $80,000 off the original asking price, and the property is still up for sale and approaching the 300-day mark.
Assuming the property can be sold for the full asking price, it would mean a loss of $211,900, including 6% sales costs. Not including sales costs, it would signal a depreciation of 34%.
Monday, June 30, 2008
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.
Monday, June 23, 2008
More $0-down problems in San Clemente
A reader tipped us off to this San Clemente million-dollar, ocean view property that's been slowly chasing the market - and losing - for some time now.
Perhaps the recent preforeclosure notice will speed things up a bit?
4105 Calle Juno, 92673
Asking price: $1,195,000
Asking price/ sq ft: $730
Income requirement: $298,750
Purchase price: $1,165,000
Purchase date: 10/27/06
Size: 3 beds, 2 baths, 1,636 sq ft (built in 1963)
MLS: S529324 (66 days on Redfin)
ZipRealty price tracker: Price Reduced: 6/16/08 -- $1,250,000 to $1,195,000
Zillow Zestimate: $826,500
2007 property tax: $12,459.68
Type: Single Family Residence
Style: Contemporary
Stories: 1 Level
Lot size: 7,808 sq ft
From listing: Sit Down 180* Catalina & Panoramic Ocean View Tropical Pool Home. Completely Upgraded Executive Style Home w/ 16'Tile, Granite, Maple Cabinetry, Glass Block, Built-ins, Cat5, High End Appliances, Tankless Water Heater, Stone Fireplace, A/C, Wood Shutters, Disappearing Screens, Ceiling Fans & Incredible Full-on Ocean Views from LR, DR, K, MBR. Home features a Salt Water Pool % Spa, Brick Backyard, Palm Trees, Hammock, Plumeria, more. Feels very Spacious & Open. Huge Ocean View Windows. Come Discover 'North' San Clemente's Unobstructed Ocean View Hillside.
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It may have been on Redfin for only 64 days, but it's been up for sale by owner for more than a year.
The property appears to be nice with a sizable yard, but we've heard one big downside is some bad freeway noise. Does that kind of situation still warrant $730 per square foot? Most likely not.
This property was purchased right around the peak of the bubble for $1.165 million. JP Morgan Chase funded the entire purchase price with two loans - a $932,000 first and a $233,000 second.
Then, about eight months later, the owner placed it on the market as a FSBO. The asking price
of $1.265 million would give them $100,000 appreciation during a major real estate downturn - unlikely. More likely, it would probably help bail her out of her mortgages.
Speaking of debt, the property is now a preforeclosure. A notice of default was filed in May on the first loan for $22,295. Assuming the property can successfully be sold for the full asking price and avoid foreclosure, it would mean a relatively small loss for the lender of $41,700 (assuming 6% sales costs - the Redfin listing is from a Tarbell agent, so we assume she will be paid a "regular" commission for her efforts).
There is also one more teency problem...late property taxes.
This property may only turn into a relatively small loss for the lender, or it could even become a foreclosure. We don't know what will become of this place, but we do know it's another piece of evidence that a sizable portion of the bubble years' $0-down financing boom is proving to be poison for everyone involved - even on a million-dollar home with a killer view.
Wednesday, June 04, 2008
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.
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...
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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.
Thursday, April 17, 2008
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
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)
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
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.
Wednesday, April 16, 2008
Serious price cutting in San Clemente
A reader pointed out this San Clemente short sale property to us. It's a story that has played out countless times already all over Orange County: The owner purchased at the peak, then can't or doesn't want to keep the house for whatever reason and gets the home listed for a wishing price that either a) would be just enough to cover the mountain of outstanding debt, or b) would result in a magical windfall of cash if a greater fool can be hooked in. Either way, it's completely out of touch with the market, so no dice.
The asking price is consequently altered again and again to try and keep up with the sliding market. Has the price been cut enough now so a buyer would be interested, and has it been enough time so the lender would accept a sale at this price?
2237 Avenida Salvador, 92672
Income requirement: $168,750
Purchase price: $975,000
Purchase date: 1/17/06
Size: 2 beds, 2 baths, 1,885 sq ft (built in 1973)
Price Reduced: 9/30/07 -- $1,205,000 to $1,199,000
Price Reduced: 10/15/07 -- $1,199,000 to $1,149,000
Price Reduced: 2/07/08 -- $1,149,000 to $800,000
Price Reduced: 4/10/08 -- $800,000 to $650,000
Price Increased: 4/14/08 -- $650,000 to $675,000
Zillow Zestimate: $792,500
2007 property tax: $3,442
Type: Single Family Residence
Lot size: 7,371 sq ft
From listing: Great opportunity to own a single level ocean view custom home on the street of dreams--this incredible home offers newly remodeled and enlarged kitchen perfect for entertaining family and friends-great room with oceanviews and fireplace-two very large master suites opening to your own private tropical backyard-lush landscape,private oceanviewing spa-plans for second story-this incredible home is in turnkey move-in condition with potential if extra square footage is desired--short sale-reduced to sell this week end open sun 2-4
As you can see from the listing, this property has been on the market for more than six months without a sale. The price was inexplicably raised very recently by $25,000 (or is it a calculated increase to a price the lender would accept?) but a successful sale has not yet been achieved.Can you see this property going for $676 per square feet? That's what would have happened if it sold at the original asking price.
"The street of dreams." What a sad thought knowing that by buying this property the owner ironically ended up stepping right into their own real estate nightmare.
The home has been reduced $600,000 since its original listing - that's a 47% discount. Assuming a sale is made for the full asking price, the loss would be $340,500, including 6% sales costs. Or, it would mean a decline of 31% off the peak, not including sales costs.
The sale before the one in 2006 was in 1995 - at the bottom of the previous real estate downturn - for $250,000. If a $675,000 sale does go through now, it would still mean the property appreciated a hefty 8% every year from 1995 to 2008. Not bad.
