Tuesday, May 13, 2008

Shorn in The Shore: UPDATE

In my crystal ball I see...yes...desperation...distress...and...it's getting foggy...ah, yes...I see a short sale in the future.

Hopefully you'll recall this hideously-decorated Belmont Shore condo with the Smurf-tastic kitchen:

Well, this seller just lopped a cool 15k off the asking price. But, I guess that's a mere drop in the bucket when your asking price is $415,000. Kind of like putting a carbon fiber gas cap on a lifted Hummer.

This latest reduction provides a grand total of $90,000 in price reductions since it went on the market. It's still not moving. This means he'll have to do a lot better than 4%.

This price slash smells like the reluctant, well-okay-I'll-do-it-because-my-realtor-said-it-would-start-a-bidding-war-but-I'm-not-going-any-lower-because-my-condo-is-special variety, and the tarot cards predict very bad things for this seller.

But there's a reason the discounts have slowed to a trickle after a very aggressive cut in March: He's severely underwater and every price cut puts him further into financial hell and closer to foreclosure.

Remember, he purchased in 2005 for $440,000, meaning if this overpriced, overdecorated, overrated snuff box sold for current asking price, the total loss would be nearly $65,000.

Damn. That's just ugly.

Speaking of ugly...

I don't know about you, but I don't have $65,000 just layin' around to cover financial catastrophes. Plus, when it sells for $350,000, the loss will be more than $100,000. Which means this thing will end up being a short sale or will go back to the bank.

And remember, installing SnapOn toolboxes in place of kitchen cabinets ain't free. There have been considerable upgrades to this condo (floors, bathroom, kitchen *horf!*), I would guess around 40 to 50k, and that too will disappear like panties at a Tom Jones concert.

Why not just keep the place, rent it out and ride out the storm for the next 5 to 10 years? Oh, that's right, because the payment is almost $3,000 a month and local rents aren't anywhere close to making this anything but a cash-negative nightmare. Obviously they can't afford the place, otherwise why would they be selling in the midst of one of the worst housing/credit crises in U.S. history?

I wish they'd just stop delaying the inevitable and default on the thing.

Soon enough, friends.


  1. wow, i loved the original write-up too!

    what happened to 301? is it still for sale?


  2. FreedomCM,

    Yep, #301 is still rotting on the vine--ERRR, for sale. It's actually $900.00 more than Tasteless McGillicuddy at #202.

    The higher-quality materials (whether it's my cup or tea or not, it's tough to dispute) puts serious downward pressure on #301.

    I think that works both ways though because as I mentioned in the original post #301 has wiggle room, whereas #202 is already WAY past his financial pain threshold.

  3. Great...love the follow ups. While I truly do feel for people in these situations, I sure think It would be wise to cut and run. Dump the thing while the getting is 'good'. Seems as though there is a world of hurt coming according to the Foreclosure Radar report. 1000 auctions/day in April? I'm assuming there will be a scorched Earth policy when it comes to the lenders dumping these things.

  4. I read the "1,000 foreclosures per day" figure somewhere on the interwebs and it didn't really hit me until right now HOW FREAKING INCREDIBLE that statistic is.

    The idea that anyone is even uttering the word "bottom" in the face of that overwhelming foreclosure number is nuttier than squirrel shit.

    That figure alone made me push back my Buy date by at least 6 months.

  5. Agree El Bee. Saw a house (reo) in the Bellflower/Lakewood area that has been given a 300k+/- 'trim' right off the top of what it last sold for.
    It's still a POS at this price.
    Maybe this lender is trying to beat the coming onslaught?

    The best phrase I've heard relative to the 1000/day auction rate is that these will carpet-bomb the market in the next 4 months or so. No place to hide.

    Thanks again for all the work you're putting in here.