Days on Market: 509
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!
New Description: Priced to Sell! Live in the Heart of Prestigious Belmont Shore! 2nd Street's Unique Shops, Restaurants and Coffee Shops are Steps Away! Enjoy a Short Stroll to the Beach to Watch the Sunset. This is a Beautiful Craftsman Home w/Hardwood Floors and has been Completely Updated. Best of all you Benefit from the Extra Income the One Bedroom Rental Unit brings in every Month. This Home is Georgous and a Must See!! Seller recieved job transfer and moving out of area. Seller is VERY motivated to sell!
"recieved"?
“Georgous”?
Really, you didn't have enough time to fix those egregious typos?
Obviously this place isn’t “Priced to Sell!” because IT’S STILL ROTTING ON THE MARKET AFTER 509 EXCRUCIATING DAYS! Please see the original post, where I marveled at a then-insane 328 days.
And I see the new pricing strategy is to disingenuously pour a little blood in the water by claiming there was a job transfer, hoping a seller will bail this dumbass out because they sense a little desperation.
Hey, idiot, EVERY SELLER who bought in the last few years desperate! The important difference is that it is those who price desperately who have any shot at actually selling.
Let’s take a look at the price changes during that frankly INCREDIBLE 509 days on market:
Feb 20, 2007 - $899,000
Mar 10, 2007 - $898,000
Mar 14, 2007 - $889,000
Apr 05, 2007 - $889,500
May 02, 2007 - $889,000
Jun 06, 2007 - $889,500
Jul 13, 2007 - $889,000
Jul 17, 2007 - $889,500
Aug 18, 2007 - $874,000
Aug 29, 2007 - $859,000
Oct 04, 2007 - $849,000
Nov 24, 2007 - $834,000
Dec 20, 2007 - $833,500
Jan 04, 2008 - $834,000
Jan 06, 2008 - $829,000
Jan 21, 2008 - $824,000
Apr 15, 2008 - $814,000
Jun 09, 2008 - $799,000
It’s worth noting that this idiot bought in 12/05 for an astounding $879,000 and attempted to flip it just 14 months later for a small profit. And then the chase to the bottom began in earnest. Well, I should define "earnest."
A month later there was a whopping $1,000 lopped off the astronomical asking price (those pathetic $500 and $1000 reductions during 2007 were likely an attempt to register “Price Reduction” updates via e-mail on the listing services). Reductions continued practically every month since it went on the market but the stark reality is that this place is nowhere near a luxury property and has no business being listed at luxury property prices. Obviously I'm not the only one who thought so.
Take a gander at those pictures and tell me one unique, impressive, or otherwise appreciable upgrade worthy of an asking price over $700,000.
This financial wizard has been slowly chasing the market down, likely turning down “offensive” offers along the way, desperately hanging on to the whimpering belief that “My house is special! B-b-b-b-but Belmont Shore is IMMUNE!” and is about to pay the price for his folly.
Why?
Because this idiota suprema insisted on renting money to overpay for a mediocre house during the peak of the housing bubble without even running the most rudimentary calculations.
Some may be asking why he doesn’t just give up (I mean, two years is an awfully long time), take it off the market, and rent it out.
The answer is, quite simply, because he can’t.
Based on his purchase price of $879,000, the monthly carrying costs on this beaut are approximately $6,000 per month (assuming 10% down, which in 2005 would have been pretty rare). Factor in the rental income from the 1 bedroom back house and we’re looking at roughly $4,900. A quick look at local rents and it appears the main house couldn’t rent for more than $2,200-$2,300. Let’s be extremely charitable and say this tiny 1,500 square footer could rent for $2,500. With a tax-benefit offset (some of which will be eaten by inevitable maintenance on such an old house, not to mention vacancy costs on your rental) that’s a negative cashflow of $1,900 per month. Based on my estimates, that’s a bleed of nearly $23,000 per year!! OUCH!!!
Even if you play with the numbers to get a smaller negative cashflow figure, there is no way local rents will save this loanowner (notice I avoided using the term “Homeowner”) from taking a monthly financial beating, so some may ask why he doesn’t just price it within the realm of reality and take the hit--just to be rid of it.
The answer is, rather obviously, because he can’t.
As it stands, if this property sold today for asking (let’s face it, the odds of that are about as good as me becoming a drunk-driving instructor) the loss would be a balance sheet-pounding $150,000. Holy sh*t folks, that’s a big loss for an area supposedly “immune” from the housing crash.
Because there is no mention of a short sale, I’m assuming this genius is wealthy and planning on taking these huge losses on the chin instead of walking away and sticking it to the lender (I mean, he sure doled out price reductions like it was HIS money).
Kids, this is why it’s extremely important to abide by rent vs. own calculations—especially during a declining market--otherwise you will face financial annihilation when hit with a divorce or job transfer (aka, Real Life). Sadly, this seller was too slow on the draw in chasing the bottom and, much like his occupation, this property is going to be “transferred”…back to the bank. I just don’t see how this individual can look at the potential losses combined with the lack of buyer interest and not be tempted to put it on the bank instead of his bank account.
I appreciate his commitment to his commitments, but it defies common sense at this point.
Rest assured, a knife-catcher will swoop in at $750,000. He’d be an idiot, but hey, that’s why they call them “knife catchers.” Not exactly a term that comes to mind when discussing smart, shrewd individuals.
The more I look at the pictures, the more offended I become at the asking price. I mean, really? After 509 days on the market you still can’t produce a picture of this “updated” kitchen? Well, this IS the same realtor who can’t be bothered to correct spelling errors after 20 months, so I guess that’s my answer.
On a final note: This house was purchased for $165,500 in 5/2001. I’m sure it wasn't in great shape but how bad could it have been if they didn't tear it down? The point is, that purchase price just FOUR years before this dolt pounced tells you an awful lot about the current seller. They actually believed this place was a solid investment despite the absolutely insane 43% annual appreciation since 2001. More red flags than a military base in communist China, but hey, real estate never goes down, right?
Man, this a motivated seller?
ReplyDeleteYou mentioned a knife catcher possibly swooping in and grabbing this thing at 750k.
A question (bit off topic)...
How are these catchers getting loans funded? I'm following a few homes that are suddenly showing in Redfin as "backup offers accepted". unless the seller accepted an offer 100's of thousands less than asking, these would all be jumbo loans. I keep hearing that the markets are locked tight and that some banks are not funding loan commitments (Wachovia), Rates rising etc so WTF?
I suppose these could be REALLY serious kamikaze buyers throwing a good chunk of their OWN money into the mix, yeah?
We're adding to our down payment cash every month and could actually buy now, but as you so eloquently point out day after day...we have a long way to go.
Thoughts, anyone?
That's a very good point.
ReplyDeleteGiven, I don't work in the mortgage industry, but from what I understand if an individual has a great credit score, 20% down, low debt-to-income, and don't mind a higher interest rate, there are loans available. Keep in mind, comforming limits in california were raised to $729,750 (Fannie Mae, RIP).
I know those requirements sound crazy but in Belmont Shore it's not THAT unheard of. Plus, there is some serious demand to live there. The real question is, assuming that person can get funded is this the dream house they imagined buying when they locked in their 200K per year job?
Not a chance. I was trying to inject some optimism with my 750K knife-catcher price, but the reality is the window for a price like that is closing fast. We all know this fool won't lower that far, and lending is only going to get more difficult from here on out.
Keep socking away your down payment money and enjoy the carnage from afar.
P.S. I think that "backup offers" stuff is often just a ruse. I've seen that on numerous properties that continue to rot on the market.
BTW... I know this house and walk past it often.... What they fail to tell you is that to the right across that alley you see in the pic is a bar, then a cigar lounge, then a restaurant I believe and then second street... Not the most primo location in the shore... but it is a cute house, I'd pay 300-350k :) maybe
ReplyDeleteHi Skakalene,
ReplyDeleteWelcome to the blog!
You know, you're right about the location. All this time I thought it was on the beach side of 2nd street.
DAMN! One look at the bird's eye map and you can clearly see it's right up on the alley. No buffer from the drunken 2nd Street tomfoolery (an Irish pub just a puke puddle away) or the endless cars passing through.
The current asking price, even if cut in HALF, will be a punchline in 4 years.
"Nieto" is one of those anecdotes that makes the whole housing bubble seem so insanely, eerily charming.
ReplyDeleteThe whole era has been a giant object lesson in human depravity and mass psychosis in....
retrospect.
Absolutely amazing.