Sunday, September 14, 2008

See no Evil, Hear no Evil, Speak no Evil

A reader suggested I feature today's property and I am glad he/she did. In case you were starting to believe sanity was creeping back into Long Beach real estate, this specimen of delusion will change all of that.

You see, greed still rules the day. And this delusual "seller" (I use quotation marks because judging by the avarice-induced asking price, it's abundantly clear this flipper has no intention of ever selling) wants to party like it's 2005.

I mean, who doesn't want to relive those days?

You know, the days when $500 in new bathroom tile translated to $4,300 in added value. Those glory days when installing $5,000 worth of stainless steel appliances earned you $10,000 in equity. Those days in the sun when you could buy a property, hold it for less than a year, and pocket hundreds of thousands of dollars for doing absolutely nothing.

But, unfortunately, our f**ked flipper decided to kick off that '05-themed celebration in fall of 2007, when the housing market was already tanking. And he carried on the 2005 theme party with the bubble-era asking price, asking 20 to 40% more than nearby homes. Oops.

Address: 655 Ultimo Ave, 90814
Asking Price: $999,500
Size: 3 beds, 3.5 baths, 2,100 sq. ft.
Year Built: 1959
$/Sq. Ft.: $476
Purchase price: $575,000
Purchase date: 10/2007
MLS#: P626435
On Redfin: 188 days
Down Payment: $199,900
Monthly Payment (Principle, Interest, Insurance, Taxes): $6,000Income Requirement: $250,000
Description: A MUST SEE, RARE TO FIND THIS NEW A HOME, WITH THE HIGHEST QUALITY OF WORKMANSHIP AND STYLE WITH INTEGRITY. PRICED TO SELL... This MidCentury Ranch offers LARGE YARD, and a seamless interface of indoor-outdoor lifestyle with unmatched elegance and open-space of modern architecture perfect for the casual entertainer. It is newly finished with 3 bd (EACH WITH A BATHROOM), 3.5 bath, and enhanced by a complete restoration using the highest qualities of: custom cabinetry, exotic wood floors, appliances and fixtures, stylishly appointments, plus new services and utilities, pl, el, heat/air, windows, etc.. It is situated on a large Lot in Alamitos Hts. perfect for access to commuting highways 605,22,405.. and conveniently locating for just a short walk to schools, parks, golf crse, shopping, restaurants and Long Beach State. LIKE NEW with MidCentury authenticity

I mean, is this place a converted bomb shelter? The exterior is so 1950s Cuba!

This is an interesting area of Long Beach that I have not featured on RE in the LBC before. Property values in this neighborhood have remained sticky and it appears there have been very few foreclosures (so far). I don't know much about the area other than it's pretty expensive for what you get (square footage, and location-wise). In fact, there is no real consensus on what neighborhood this is officially called. This listing agent refers to it as Alamitos Heights, but it's on the other side of the lagoon and actually closer to the Marina. Anyone know if this area has a particular nickname?

ANYHOW, this is a prime example of someone who genuinely believes their neighborhood is special. Totally immune from market forces and the bloodletting all around them. So, they slap an offensive price on a so-so property and spend their days being appalled that "bottom feeders" fail to appreciate how unique this particular neighborhood, out of every nice Long Beach neighborhood, truly is (Note: A vast majority of homes for sale in this area are well over 120 days on market--this moron isn't the only one drinking the Kool Aid).

To give you an idea of the level of idiocy (and possibly brain damage) we are dealing with here, please turn your attention to the pricing action during the last excruciating, sweat-inducing, gut-wrenching 188 days:

Mar 10, 2008 - $1,199,000
Apr 17, 2008 - $1,095,000
Jun 30, 2008 - $999,000
Aug 09, 2008 - $999,500

So, as you can see, they started out in March '08 asking a cool 1.2 mil, and lopped off almost 10% after only five weeks on the market.

Then, when the alleged Spring Bounce(tm) failed to materialize, in June they lopped off another $96,000.

As the Supposed Summer Selling Season(tm), led by those droves of wealthy Hong Kong residents we kept hearing about, passed them by with no activity, they decided to get serious about attracting a buyer by increasing the price by $500.

Sure, why not?

It appears this house went back to the bank for $721,885 in August 2007, and the flipper scooped it up two months later for $575,000. This flipper, like many knife-catching fools jumping into the market right now, believed he was getting a smoking deal at the bottom of the market. And you know what? On the face of it, 575k actually is a pretty good deal considering the nearby comps (however, given the laundry list of upgrades and renovations, I suspect this place was a wreck--calling into question just how good this deal was).

But this dumb-dumb had watched too many episodes of Flip This House, Designed to Sell, and other assorted real estate porn, and let dollar signs convince him his "smoking deal" could magically transform into a SuperLotto jackpot.

Yes, folks, for holding this property 10 months, slapping some flooring down, replacing the windows, repainting, and carting in some new appliances, this idiot expects you to believe he deserves $425,000 for his efforts.

You sir, have some massive brass balls.

And to be fair, the craftsmanship and quality of materials is top notch. I love the bathroom cabinetry, I like the patio tile, the hardwood floors look good, and I'm into the unique architectural elements.

However, the kitchen is awful, the staging decorations are weird, pretentious and off-putting, and what the holy hell is going on with that living room?

The main problem with this horrendously overpriced flip is that it's late 2008, and top-of-the-line upgrades fetch only a fraction of their initial cost. If this seller bought in 2004 and sold in 2005, it's likely any money put into the flip could have been doubled. But, as the late, great Biggie Smalls once said, "Things done changed."

Now that lending has dried up and money finally means something again, NOBODY is looking for this level of "unmatched elegance." How do I know this? Let's just say I have 188 little birdies whispering in my ear.

And while I can appreciate the "seamless interface of indoor-outdoor lifestyle," the fact is that tightening lending standards and significantly increased down payment requirements will further alienate potential buyers from a place like this.

My favorite photo of the entire listing is the Denial Monkeys on prominent display. This pretty much sums it all up for this flopped flip:

See no Reality.
Hear no Reality.
Speak no Reality.


  1. What's with that kitchen? Can you even open the coffin sized refrigerator doors with that center island right on top of it?

    Fugly is how I describe it. Will sell at mid 700s

  2. Anon,

    The thing that gets me is, they did all that staging--right down to the yoga mat and 5-lb free-weights-- yet they couldn't muster up a shower curtain?

  3. hey EB...thanks for posting on the house I sent you. This is the area where I'm looking to buy, but now that I have started reading your blog, I WILL NOT F*CKING BUY!!!! (I'm yelling that because it's my new mantra). I thought you might like to see another property that I'm watching:

    Let me tell you what I find funny about this one. I make over 100k a year, excellent credit score, and this is still WAY out of my price range. Note the advisory: "Advise buyer of animal smell"
    Holy crapola batman! Are you kidding me??? This stinky eyesore is selling for over half a mil? I would sooner take out a lease on a wood-paneled coffin! Keep up the good work are keeping us all in well-priced rentals until the market comes to us. (Must let the mountain come to Mohammed)

  4. Its in escrow!

    I've got to wonder whether/how they will ever get financing, though, with the comps so much lower. I hope for their sake it is a cash buyer.

    Actually, it is a lovely house and the photos are really great. The staging is even ok.

    I'll buy that house (or something similar) when the price drops to the $250k it sold for in 1999.


  5. Freedom,

    Holy crap, you're right! As far as I can recall, it wasn't in Backups yesterday morning so it looks like someone had a good weekend!

    I highly doubt the financing will come through. In fact, for the knife-catcher's sake I really hope it doesn't. Just skimming the nearby properties (and those much closer to the marina water) and you can see how overpriced this is.

    We'll see I guess. If it goes through that's great news for the fellow Delusual in the neighborhood.

  6. Wow, I can't believe it's in escrow either! I know this neighborhood well as I live nearby. In fact I've gone running by this place often.
    You should have seen what it looked like before they fixed it up. Perhaps the buyer thought that too. Still...beforehand the garage was a crappy carport. Now it's been worked over beautifully with cinder block to look like Chino mens prison from the outside.
    They did spend a few bucks remodeling and rebuilding but could they have hired a better contractor then Cheech and Chong? They totally blew it with curb appeal.
    The house is only two buildings over from 7th St. so I'm sure you can hear the traffic to lull you to sleep at night.
    As to what they call this area I'm not sure. As the crow flies it's only a half mile to Park Estates but since it's on this side of 7th and PCH it could be the Marina area or even the heights since it's not far from Colorado lagoon through side streets.
    The neighborhood is a decent safe area. The price is ridiculous still though. If it goes through I'll be anxious to see the comps. I'd be more anxious to ask the new buyer what in the hell were you thinking?

  7. Adding to what I just's another one on the same street much closer to the water as it's on the bottom of the hill. (trust me the one that guy bought has no view on the top of the hill)
    Not that this isn't overpriced too but it's a lot better than the one he bought and he could have probably bid the same and got that one. Oh well...dude..there's still time to back out!!!

  8. "Now it's been worked over beautifully with cinder block to look like Chino mens prison..."