Wednesday, May 21, 2008

The New Floor in Pricing: UPDATE

Yeah, I thought as much.

Remember the $199,000 condo in the Lafayette that seemed too good to be true?




It was a total scam.

I assumed it was a ruse to start a frenzied bidding war (I mean, it was a good enough deal to get ME, the resident housing bear, out from hibernation and ready to tour it!) and I was right. Now that the place presumably garnered a great deal of interest, the price has magically been changed to Greed-Head status.

Pretty clever...if it weren't so pathetically transparent. We now have an asking price of $319,000--a full 60% more than yesterday's asking price!

S



C



A



M



Remember, the original listing description went like so:

GIGANTIC PRICE DROP!! Nearly $300,000k off original list price!! No question this is the best price per sq. foot in downtown Long Beach. This is NOT a SHORT or REO - although it's priced like one! This amazing one-of-a-kind unit in the historic Lafayette Building is loaded with history and a classic vintage feel. The property includes a rooftop garden w/ fountain and city views, inside laundry hook-ups, and NO COMMON WALLS. New kitchen & Brazillian Cherry Floor in 2nd bedroom. A state-of-the-are gym is included in low HOA. The rooftop solarium has spectacular views of the entire L.A. basin and the Long Beach harbor / Catalina. BEST VALUE in the historic East Village landmark once owned by the Hiltons! Walk to everything! Pet friendly. Parking is available. Get the VALUE of a short sale without the hassle. This owner is motivated beyond belief! Get your offer in now before the deadline - call for details. Showings are appt. only. Investors this is your chance for a spectacular deal.

But now they pulled a bait-and-switch and the new greed-tastic description differs considerably:

BEST AND FINAL (BAFU) [Yep, they just tried to F U] offers now being accepted! Bid / offer date extended to close of business Tuesday June 2 [Whatever that's supposed to mean. Notice there is no mention of the big price reduction, which is what got people interested in the first place]. Priced way under market - February appraisal was $450k!!! [Well then why in the name of Buddha would they not price it closer to that number? Furthermore, this wasn't mentioned in the first listing--they're trying to justify the pricing head-fake]This is NOT a SHORT or REO - run your comps, and make reasonable offer. [Now this just sounds bitter. Have you noticed how the tone has changed? Earlier they were almost HAPPY to unload this thing for such a great price, now they seem indignant that anyone actually submitted offers for the price that THEY reduced it to--which they now consider "unreasonable"] This amazing one-of-a-kind unit in the historic Lafayette Building is loaded with history [No mention of the "classic vintage feel"?]. The property includes a rooftop garden, inside laundry hook-ups, and NO COMMON WALLS. New kitchen & Brazillian Cherry Floor in 2nd bedroom. A state-of-the-are [still didn't bother to fix this typo] gym is included in low HOA. The rooftop solarium has spectacular views of the entire L.A. basin & the Long Beach harbor / Catalina. BEST VALUE [Not as good of a value as it was 24 hours ago] in the historic East Village landmark once owned by the Hiltons! Walk to everything! Pet friendly. Parking is available, 3 options! [Wow! 3 options! Street parking, paying through the nose at the Hyatt, or riding a bike]. Unless one of those options is two parking spots underneath the actual building, they can kick rocks for $319,000] Get the VALUE of a short sale without the hassle. [Notice how they removed the "seller is motivated beyond belief" bullshit. Yeah, now that dollar signs have appeared in his eyes, the seller is mysteriously not so motivated anymore] Showings are appt. only. Investors this is your chance for a spectacular deal [Can you believe these idiots kept this part in the listing? I mean, with parking and HOA fees, it BARELY penciled out as a rental property at $199K. Now, an incredible $120,000 later, they are still claiming it's spectacular for investors. Unbelievable]. Multiple offers are expected: call agent for details [Well, they WERE expected at the old price, but not anymore. It's back to avarice-fueled pricing and another 200 days on market].


The nerve.

And look, they even brought in stagers this time!




You know what's sad? They are going to end up selling it for around $199,000 anyway. That is the price an investor will come in at. Think about it: How much rent could an owner charge knowing that the parking situation is an absolute mess? I can't imagine too many people are willing to pay $2,000 a month to deal with that horsecrap. That needs to be factored into the price from an investment standpoint.

It's just that now, thanks to their JUST KIDDING! shenanigans, they're not going to get their $199k until years from now. And after carrying costs, maintenance costs, parking and HOA fees have eaten them alive during that time, they will realize that they should have just priced the thing to sell from the beginning and not played games in the name of greed.

5 comments:

  1. How sad, just as i was feeling a TEENY glimmer of hope, it's good to be brought back to my senses, hahahaha!!

    All of this is quite entertaining, albeit slightly depressing at the same. . . but just waiting it out. . .

    -L

    ReplyDelete
  2. EL BEE,

    Such a relief to find your blog. Been closely watching LB RE for about 6 months now and was beginning to feel like the only bear in the market. Your posts regarding certain SFR properties that I too have been watching took the words right out of my mouth. This blog is like a breath of fresh air blowing away all the BS I've been forced to whiff up from the LB RE "experts," our sunshine blowing representatives in the purchase process, for so long.

    I'm in the top 5% of wage earners nationwide (the lower part) and I find it staggering the P'sOS that such an income will barely afford in LB. Don't get me wrong, I like a lot of things about LB--mainly the fact that it's not OC--or I wouldn't be looking there, but it's far from Mayberry, USA.

    I know you're interested in Bel Shores. Check out 210 E. Park Ave. next time you're in the neighborhood. 2bd SFR listed at $490K about two weeks ago (bought for $789K one year ago?!). It was only listed for a few days, so I'm assuming either an offer was accepted or the seller was just sending up a balloon, because it wasn't listed long enough to pull the old bait and switch (why is that illegal in every other industry except RE?) and start a bidding war. It's an older home, needing paint and god only knows what else, but a comp for a 2bd SFR over 1,200 sq ft for under $500K in Bel Shores would be a clear sign for LB RE that the emperor is buck!

    Anyway, keep doing what you're doing. You're in my bookmarks now, so I'll be checking back often. Looking forward to calling you neighbor someday, once sanity returns.

    ReplyDelete
  3. JR,

    Thanks very much for the kind words.

    I'm at the point where I'm financially and emotionally ready to buy property, but it's frustrating to observe this market standoff. No matter how bad it gets, it just seems that sellers don't understand that it's going to get much worse. Just accept that you're going to lose a lot of money or take it off the market.

    Denial is driving the market right now. The facts are out there (everywhere, really) but it is going to take more time for them to sink in.

    And the buyers, even if they're not as educated about this topic as say you or me, now generally view real estate as a terrible investment.

    I mean, could you imagine plunking down your hard-earned money for a down payment tomorrow, only to watch your house depreciate to the point where your down payment essentially disappears? That's enough to scare off a lot of buyers (unless it's a smoking deal)--hence the incredibly low sales numbers.

    I don't know if you've gone back through the old posts, but when I first started this blog I got a lot of negative feedback from realtors and homeowners-in-denial.

    I wonder how they feel now, checking my blog every day, and seeing that everything I've predicted has come true. That's a big ol' plate of crow to eat, and it's the most likely explanation for why they stopped their personal attacks (no critic, at any point in the existence of this blog has ever attempted to refute the soundness of my economic understanding or calculations).

    It's not a matter of I-told-you-so as much as it is about looking forward to a time when this denial-fueled anger just goes away and we can get back to business.

    END RANT.

    Thanks for reading. Remember, the goal of this blog is to eventually shut it down. It will be a great day when prices return to historical normalcy, there will barely be any greed or delusion to expose, and we can pick up awesome places to live in for prices that makes sense. A great day, indeed.

    ReplyDelete
  4. Bee,

    I'm right there with you. When no properties move this Spring/Summer, the Realtors who haven't left the business by then will start pressuring for more realistic prices from their sellers, if only so they can have some sort of income to show for this year. This will create downward pricing pressure in 3rd and 4th quarter. Add foreclosure movement on Mar - May ARM resets to the mix and we're looking at a perfect storm brewing.

    I'm not surprised by the response from Realtors to your posts. It's insane to me how they can always find a reason to say that "right now is a good time to buy." If you listen to them, there's never NOT a good time to buy. I saw a NAR commercial on TV last night, in the beginning phases of the worst housing crisis since the Great Depression, saying "rates are low, now is a great time to buy!" The first Realtor I meet who tells me "you gotta be crazy to buy right now" will not only earn my respect, but my business when the right property at the right price comes along eventually.

    Buckle up, we're in for more turbulence ahead.

    ReplyDelete
  5. A friend, who owns a lot of property and is still buying (out of state, naturally) told me yesterday, "There will never be a better time to buy. With interest rates this low and the good deals out there, the buying environment will never be this good again."

    My response: "If I took your advice four weeks ago, half my down payment would be gone by now. What makes you think it won't get even better for buyers?"

    The conversation was pretty much over at that point, but it just goes to show you how far we have to go re: perception of the marketplace realities.

    ReplyDelete