Wednesday, August 12, 2009

The House of Fraud

1071 Newport Ave, 90804
Price: $378,000
Beds: 3
Baths: 1
Sq. Ft.: 753
$/Sq. Ft.: $502
Year Built: 1905
MLS#: S584658
On Redfin: 6 days
Down Payment: $76,000
Monthly Payment: $2,100
Income Requirement: $108,000


And speaking of huh?, the property is listed as a 3-bedroom, 1-bath. But in the listing description the realtard says it's been "REMODALED" into a large 1-bed/1-bath.

Who the fuck would remodale into a smaller, less desirable configuration?!

"Honey, I just customized our 3-series BMW. Yeah, I took out all of the passenger seats. Wanna drive to Big Bear?"

What an idiot.

And that useless 1-bed/1-bath layout makes the asking price of $378,000 that much more deliciously imbecilic.

But I think the pièce de résistance is this gloriously remodaled bathroom.

It looks like they couldn't be bothered to replace the 50s aqua tiles behind the shower knobs (that would require cutting new white tiles to fit around the hardware) so they just tiled around them and painted the wall blue to make it look intentional. How retro!

Overall, though, the inside looks pretty tidy. The fake wood floors are standard flipper fare, but the plantation shutters sure are a nice touch.

Although, what's up with this one?

Doesn't it look like it's sticking out from the wall a good three inches?

Anyhow, the sales history tells a sordid, slimy tale of straw buyers, flipping frenzies, and outright fraud:

Aug 06, 2009 - Listed $378,000
Feb 14, 2009 - Delisted
Feb 14, 2009 - Relisted
Jan 31, 2009 - Delisted
Oct 27, 2008 - Listed
May 18, 2004 - Sold $450,000 (561.4%/yr)
Mar 10, 2004 - Sold $315,000 (21.0%/yr)
Jun 21, 2001 - Sold $187,500 (48.1%/yr)
Apr 20, 2000 - Sold $118,500 (-21.6%/yr)
Apr 15, 1999 - Sold $151,689 (7.1%/yr)
Feb 12, 1998 - Sold $140,000 (531.0%/yr)
Jul 02, 1997 - Sold $45,000

Come on, a $95,000 gain in seven months? A $135,000 gain in 68 days? This thing changed hands seven times in seven years, and you're out of your mind if you think those transactions were all on the up-and-up.

I wouldn't be surprised if this place just changed hands among family members, each transaction showering them with ill-gotten bubble profits.

Anyhow, it's the lender's problem now. And their main problem is that they are going to have a helluva time trying to find a buyer for the current asking price of $378,000. That's a lot of money!

Think about it: Now that the extra bedrooms have been removed, this place has essentially been rendered worthless but to a very narrow demographic of potential buyers: Rich singles or (very compact) couples willing to shoehorn themselves into 753 square feet. Either way, the household income required to realistically keep up with the payments is $108,000 per year!

That's nearly THREE TIMES the median income for 90804! I somehow doubt someone pulling down that kind of coin will appriciate shelling out $2,100 per month to live in this shaky neighborhood.

Hopefully the lender realizes that very soon and gives up on this $502 per square foot asking price.

If not, I wish them luck. They're going to need it.


  1. Appriciate THIS:

  2. um.. I am still trying wrap my head around THREE bedrooms in 753 sq. ft. 3 bedrooms, 1 bath, living room, kitchen and dining room all in 753 sq. ft?????

    Yeah, I bet that was quaint and cozy. I am working on my realtor license and I have to figure out when to use those cute words. :)

    25 feet wide lot? My god.

  3. I'm sure a lot of people went to jail for the obvious ongoing heist that was conducted on this gardening shed for 7 years. Yeah, right- a bunch of people made out like bandits, stripping some $500,000 from banksters who should have to write off the loss and get a friggin clue. Then, fast forward to crisis in 2008- same banksters get beaucoup $ shoveled towards them from Henry Paulson (in collusion with his Goldman Sachs golfing buddies). End result: fraudster perps walk away with $ scot free, banksters get a pile of money for being crybabies, and we get the bill. Welcome to the new America!

  4. I am totally lost on what you guys are talking about, with the fraud, and the exchanging of owners over the last 10 years. Don't know if anyone would care to explain it, but I'm lost on what is being talked about.

    As for the property itself, it's ridiculously small for a house, and even though it has a nice backyard, you have an apartment building right next door with people looking right over it. Talk about ZERO privacy?!?!?!

    And they're trying to get 378K for this???

    I wouldn't spend 250K for this.

  5. Mike,

    Basically, if a buyer has a "friendly" appraiser (which were everywhere during the bubble--they had to be "friendly" if they wanted to get work), the house value can be greatly exaggerated.

    Then a bank lends out money with $0 down on that inflated price. The straw (fake) buyer, which could be a family member or friend, agrees to buy the POS house for that outrageous price (a real buyer might have a problem with paying $700 per square foot).

    The seller pockets tons of cash, then the new buyer finds another family member to buy from him after the house has appreciated some more. New inflated appraisal, new $0 down loan, new set of bubble profits. At the end of the line someone is holding the bag, but they just walk away with dinged credit and a sack full of Ben Franklins.

    Wash, rinse, repeat.

    I'm not saying that happened here, but it wouldn't surprise me. Some RE in the LBC readers with access to public records have sent me information about families and "investment groups" doing this during the bubble.

    In hindsight the sheer amount of fraud--committed in broad daylight--is so obvious. But when appraisers, banks, loan brokers, and crooks keep seeing the money rolling in, why shut down the open bar and DJ booth?

  6. WOW....

    I had no clue.

    My education continues.

    When/if we have a meet and greet, I shall buy you a drink.

    Also was going to make a suggestion, that you might consider hiring yourself out, to people as a consultant.

    I'd certainly hire you.

    Now, when I look at listings, I'm always thinking "what would El Bee think of this".