Wednesday, September 14, 2011

A New Low

Given some of the ridiculous bullshit I've encountered in my house search, I might have to come out of blogging retirement.

14 5TH Pl, Long Beach, CA 90802

ASKING PRICE: $469,900
ADDRESS: 14 5TH Pl, Long Beach, CA 90802
BEDS: 2
BATHS: 2
SQ. FT.: 1,214
$/SQ. FT.: $387
YEAR BUILT: 1953
MLS#: P786112
ON REDFIN: 86 days
HOA: $260
DOWN PAYMENT (20%): $94,000
INCOME REQUIREMENT (3.5 x Income): $107,000
MONTHLY NUT: $2,500
DESCRIPTION: Amazing sweeping ocean views from the main living space of this two bedroom, two bath condo. This secure unit is just steps from the sand and a large communal patio area, perfect for entertaining or watching the 4th of July fireworks. Condo features hardwood floors, updated kitchen, upgraded bathrooms and plantation style shutters. This could be your perfect ocean home.


I looked at this bank-owned condo a few months back and walked away unimpressed. Between the termite damage, filth, poor condition of the kitchen cabinets, darkness of the bathrooms, lack of street parking, community laundry, creaky floors and incredibly wonky layout, I quickly determined there was no way I was plunking down nearly half a million clams for this place.

Apparently I wasn't the only one.

Because after nearly 90 days on market and two price cuts, this thing is still rotting on the MLS. However, while checking out the listing photos I noticed the bank had finally staged the place to make it look more appealing to buyers. My first thought was, Maybe they're finally getting serious about selling!

14 5TH Pl, Long Beach, CA 90802

Hey, not too shabby!

But then I took a closer look:


Something's off about the lines of the sofa and coffee table in relation to the walls...and the light sources aren't matching up with the rest of the -- wait, what the??

That's right, friends: PHOTOSHOPPED FURNITURE.

I mean, if it wasn't so pathetic it'd be hilarious.

Here is the real photo, with the "enhanced" one right below it for comparison:

14 5TH Pl, Long Beach, CA 90802
14 5TH Pl, Long Beach, CA 90802

Man, I have so many questions!

First, how long did it take to draw those shadows from the bar stools? That is some painstaking detail work. Second, where did the furniture and decorations come from? Another listing? A Crate & Barrel ad? Third, did the bank actually pay an outside firm for this cut-and-paste bullshit, or does an in-house Loss Mitigation employee just happen to have a passion for it?

I mean, why waste time with all this silliness? If you really want to sell, just lower the fucking price.

I'm sure the listing agent would say, "It's to show the potential of the space." And I would retort, "This has the potential to make you look like a low-rent, gold-bricking idiot."

The bank, which has already lost at least $200,000, is thinking the killer view will stop the bleeding. But that awesome white-water view is not nearly enough to overcome the dilapidated condition and layout disadvantages of this property.

But hey, instead of investing a few grand into actually repainting, cleaning, and staging the property, why not just waste time, money and effort digitally inserting fake paint, artwork and furniture into a listing photo? TOTALLY MAKES SENSE.

And hell, why stop at just one photo? Might as well go all the way. Here, I'll even supply a few freebies...

This original listing photo makes the bathroom look dark, dank and unwelcoming (um, because it is dark, dank and unwelcoming):

But the new version adds a much needed dose of mold-killing sunlight:

And yuck, look at those beater cars and stinky Port-o-Potty in this photo:


A little digital magic and we've really classed up the neighborhood!

I mean, is this where sellers are now in their quest to deny reality? Do they actually think this is going to have a positive effect on how people perceive a property?

I remember when the housing bubble first popped and people were giving away the brand-new Toyota Highlander in the driveway if you bought their overpriced McMansion. NOBODY FUCKING CARES ABOUT SOME SHITBOX YOU JUST BOUGHT WITH YOUR HELOC -- JUST LOWER THE GODDAMN PRICE!

For the record, if in real life this condo actually resembled the fraudulently altered listing photo, $387 per square foot, given the proximity to the sand, might be approaching a decent deal. But as it stands, I think this place requires entirely too much work to command such a premium price.

But hey, instead of putting in a little work to recoup more money at sales time, I fully support banks and listing agents lazily sprucing up listings with photo editing software. Sure, buyers are going to be bummed out that they were misled, but we will at least get a good laugh.


UPDATE: AN EAGLE-EYED READER SPOTTED THE SAME PHOTOSHOPPED FURNITURE IN ANOTHER LISTING. AMAZING CATCH, ANON!

Please please please let this trend catch on.

Friday, September 9, 2011

The Magically Expanding House: FINAL UPDATE

4512 East VERMONT St, Long Beach, CA 90814

Sold on 09/02/11 - $605,000

Well, that only took 400 days.

Look at this long, sad saga:

Sep 02, 2011 - Sold $605,000
Jul 15, 2011 - Pending (Backup Offers Accepted)
Jul 08, 2011 - Price Changed $609,000
Jun 17, 2011 - Price Changed $639,000
May 27, 2011 - Listed (Active) $649,000
May 27, 2011 - Delisted (Cancelled)
May 17, 2011 - Price Changed
May 09, 2011 - Price Changed
Apr 25, 2011 - Price Changed
Mar 30, 2011 - Price Changed
Mar 04, 2011 - Relisted (Active) $699,900
Mar 04, 2011 - Delisted (Hold)
Mar 04, 2011 - Relisted (Active)
Mar 03, 2011 - Delisted
Mar 02, 2011 - Listed
Nov 14, 2010 - Delisted (Expired)
Oct 05, 2010 - Price Changed
Sep 27, 2010 - Price Changed
Aug 27, 2010 - Price Changed
Jul 15, 2010 - Listed (Active)
Apr 14, 2010 - Sold $405,000

Hey, a $200,000 profit! This flipper must really know what he's doing!

Not so fast, punchy.

Setting aside the fact that flippers who know what they're doing actually, you know, flip houses instead of chasing the market down for 13 months, you need to delve a little deeper into his "profit" to determine how well he really did.

First, consider the carrying costs of roughly $28,000 while this thing languished on the market for more than a year. Second, he had to shell out $36,300 in sales commissions. Finally, I estimated the upgrades and repairs at about $120,000.

So he cleared roughly $420,000, for a true profit of a measly 15 grand. Sure, my renovation cost estimate could be too high, but when the list of upgrades includes landscaping, new bathrooms, windows, doors, roof, custom deck, granite counters, appliances, floors, tankless water heater, a new two-car garage and copper plumbing...I'm pretty confident in that price tag.

Remember, this is how the place used to look:
4512 East VERMONT St, Long Beach, CA 90814

Anyhow, the point is that it looks like the flipper -- who nearly became a flopper -- didn't walk away with much profit for all that work, stress and risk.

So, things didn't work out as planned for the seller. But what about the buyers?

Well, they paid $405 per square foot, which is pretty good for the Heights. And considering the aforementioned upgrades, they won't have to put a dime into the place for a long, long time (other than replacing those cheap-ass laminate floors). Plus, they locked in an insanely low interest rate, putting the total monthly nut at about $3,000. It's doubtful that this place rents for that much, but if you include tax write-offs, they have a very manageable payment likely lower than local rents.

Plus, even if they overpaid, what choice did they have? There ain't shit out there. Believe me, I've been looking like crazy and the inventory situation is downright pathetic.

Go ahead and do a Redfin search for Long Beach houses between $550,000 and $650,000. I count 12 houses in the Heights. Five are pending and two are short sales (one just clocked 343 days, the other is 205 -- obviously not for sale). So, basically this buyer had just five houses in the Heights to choose from.

FIVE.

It's ridiculous.

And now that the Super Summer Selling Season(tm) is over, I'm expecting inventory to decline even further. This is just how it's going to be for the next few years. It sucks, but artificially restricting supply is the only way to increase demand.

I got really close to buying a condo a few months back, but to get it I had to overpay -- and the seller and I knew it. The reason was because this unit was the only game in town. Other nearby condos were either inferior, short sales not really for sale, or dreamers with equity trying to get wishing prices (some of which are now pulling their listings until next spring).

Anyhow, because this condo had very little competition, the seller was in the power position and wouldn't come down far enough to get a deal done. The attitude was, "Where else you gonna go, pal?"

And they were right. I needed to put some mustard on the deal to make it happen.

But I just couldn't bring myself to knowingly overpay in such a soft economy. Values certainly aren't going up any time soon, but my concern was that they would continue to go down -- and I wanted my offer to reflect that and build in some cushion against further deflation.

So, the deal fell apart.

Worse yet, it's under contract now. I'm dying to find out how much it sells for. If it's close to my last offer, I'll be really bummed out. I'll kick myself for not throwing in a few more bucks just to get in there. If the sales price is way more than my offer, I won't have any regrets.

But hey, life goes on. Unless something crazy happens this winter with banks unloading inventory, I'll have to put homeownership on the back burner until next spring. Not the end of the world. The weather is great, the future is bright, and there are more important things in life.

UPDATE: Jim the Realtor had a related post today, Buyer Frustrations.

++++++++++++++++++++++++++++++++++

Price changed from $639,000 to $609,000

Ouch. This is getting uglier by the day. They've knocked off $90,000 from the list price and still no action. I mean, psychologically how do you think that feels?

This flipper is still ahead of the game considering he paid only $405,000 in April 2010, but that seemingly fat $204,000 profit cushion isn't as comforting when you consider the 15 months of carrying costs, the substantial money he sunk into the flip ($80,000? $100,000?), and of course paying out commissions ($36,000).

It's not like he'll lose money on the deal -- I think even in the worst-case scenario he'll break even. But I'm sure he'd like to gain some profit for his trouble, so with the fall and winter months (and his one-year MLS anniversary) approaching it would be wise to keep cutting.

But with a listing history like this, would you characterize this flipper as "wise"?

Jul 08, 2011 - Price Changed $609,000
Jun 17, 2011 - Price Changed $639,000
May 27, 2011 - Listed (Active) $649,000
May 27, 2011 - Delisted (Cancelled)
May 17, 2011 - Price Changed
May 09, 2011 - Price Changed
Apr 25, 2011 - Price Changed
Mar 30, 2011 - Price Changed
Mar 04, 2011 - Relisted (Active)
Mar 04, 2011 - Delisted (Hold)
Mar 04, 2011 - Relisted (Active)
Mar 03, 2011 - Delisted
Mar 02, 2011 - Listed
Nov 14, 2010 - Delisted (Expired)
Oct 05, 2010 - Price Changed
Sep 27, 2010 - Price Changed
Aug 27, 2010 - Price Changed
Jul 15, 2010 - Listed (Active)



+++++++++++++++++++++++++++++++

Price changed from $659,000 to $649,000

How's that market chasing workin' out for ya?

+++++++++++++++++++++++++++++++

Price changed from $675,000 to $669,500


This is actually the second price reduction in the last four weeks ($30,000 lopped off so far). Will it be enough to for this flipper to make money on his lipstick-on-a-pig makeover?

Well, considering the census bureau reported that homes for sale are currently the lowest they've been since 1967 (yes, you read that correctly), they might find an impatient, frustrated buyer willing to overpay.

For this kind of scratch I think a buyer can do way better, but in this inventory-free environment nothing really surprises me anymore.

++++++++++++++++++++++++++++++++++

4512 East VERMONT St, Long Beach, CA 90814


ADDRESS: 4512 East VERMONT St, Long Beach, CA 90814
ASKING PRICE: $699,900
BEDS: 3
BATHS: 2.75
SQ. FT.: 1,500
$/SQ. FT.: $467
LOT SIZE: 4,735 Sq. Ft.
YEAR BUILT: 1948
COMMUNITY: Belmont Heights/Alamitos Heights
MLS#: P772185
ON REDFIN: 4 days
DOWN PAYMENT: $140,000
INCOME REQUIREMENT (3.5x): $160,000
MONTHLY NUT: $3,700
DESCRIPTION: Remodeled 3 bedroom 2 3/4 bath Home with Contemporary Open Floor Plan and New Laminate Floors throughout. Light & Bright Living Room w/ Venetian Plaster Fireplace opens to Formal Dining Room. New Kitchen w/ Granite Counters, Pantry, & Stainless Steel Appliances including Gas Cooktop, Oven, Dishwasher, & Breakfast Bar opens to Dining Area and to spacious Family room which overlooks NEW Wooden deck with view of the Private Peaceful Backyard. Spacious Master Suite with a New Bathroom with custom flooring, Skylight tube, Vanity & oversized shower w/ seamless shower doors. 2 other custom remodeled bathrooms. There are many other NEW features such as Roof, Copper Plumbing, Tankless Water Heater, Ceiling Insulation, 2 Separate Heating systems, Doors, Paint, Top of the line Designer Sinks & Fixtures, Sod, Sprinklers, Drip System, and some Windows. Opportunity Knocks, Don't miss this Gorgeous Belmont Heights Home!!

Hooray For Intermittent Title Case!

Our featured property was purchased last April for $405,000, and now this flipper is trying to get his mitts on the $294,900 in profits he so richly deserves.

Now, to be fair, in 2010 this place was a certified turd pile:
4512 East VERMONT St, Long Beach, CA 90814
Woof.

But, as with all flippers, the important question is whether this kitchen is worth the nearly $300,000 premium over the probate sale price:
4512 East VERMONT St, Long Beach, CA 90814

4512 East VERMONT St, Long Beach, CA 90814

4512 East VERMONT St, Long Beach, CA 90814
"But El Bee, clearly they did more work than just the kitchen."

Really? Prove it.

Because although the listing description mentions a laundry list of desirable amenities and upgrades, these are the only other photos:
That's right, friends. A $300,000 markup and only four photos in the whole fucking listing.

I mean, how incompetent do you have to be to dump a bunch of money into flipping a property, jack up the price by hundreds of thousands of dollars, boisterously crow about all the upgrades and renovations, and then fail to, you know, actually include pictures of what you're trying to sell?

And please note that for $700,000 you don't even get a goddamn refrigerator. The balls on this guy.

I'm also curious about something I saw in the description from the 2010 probate listing: "Detached garage. Two rooms off garage that were previously used as additional bedroom and study."

So, since the garage is detached, and these two rooms are off the detached garage, does that mean these rooms are detached from the main house?

The reason I ask is because the public records (and the 2010 listing) clearly indicate this house is a 1-bedroom/1-bath spanning only 888 square feet, but the flipper's new listing is a 3/2.75 clocking in at 1,500. How did this house magically sprout an extra 612 squares?

It appears this dude is trying to include the two rooms off the garage in the total square footage. It's worth noting that if you calculated the price per square foot according to legally confirmed figures in the county assessor's records, the current (and relatively palatable) $467 per square foot would jump to a whopping $788! Motive, anyone?

That seems really fishy. If you're thinking of plunking down nearly three-quarters of a million dollars for this place (HAHAHAHAHA), definitely do your homework and ask the right questions.

Assuming the 1,500 square feet is somehow legitimate, I think a minor price reduction will garner a sale. It's on a relatively big lot in a prime area, has a wealth of upgrades (allegedly), and I think a working couple, forced to wait five years for this massive housing bubble to deflate and return prices to reasonable levels, will look around at the dearth of quality Long Beach inventory and simply bite the bullet and overpay for this flip job.

I myself would feel nauseous paying nearly $300,000 for upgrades that cost, at most, $120,000, but that's just me.

UPDATE: Listing photos finally added.

Friday, September 2, 2011

The Grenade on Granada: FINAL UPDATE (FINALLY)



Sold on 08/31/11 - $450,000

What a long, strange trip it's been. This art-deco disaster has been on and off the MLS since June 2009. 2009!

If you recall, at one point the dipshit owner was trying to get $775,000 for this mess. Hell, as recently as seven months ago he was trying to get $600k! Ah, how the mighty have fallen.

In October of 2010, I said:

"I have to give credit to owners expressing themselves and building something unique in Long Beach but as I've said before, one person's quirky (and pricey) personal taste means fuckall to potential buyers."

and:

"You know what I think to myself when I see houses like this? 'Yeah, if it was dirt cheap I might buy it as a goof.' In other words, this kind of look-at-me 'uniqueness' is actually a detriment to selling because this level of customization and personal flair can easily put houses in the Only-At-A-Discount category."

Well, I'd say selling in 2011 for a mere $40,000 above the 1989 price certainly qualifies as a discount.

While we're recalling the past, I also said:

"Given current sales in this neighborhood, asking $424 per square foot isn't that far off. But, again, the key question is: Will this house require an Idiosyncrasy Discount to sell?"

I guess we found our answer...$273 per square foot (I realize the listing says $222, but it appears as if this property has grown by 400 squares since we last checked in. I went by the 1,650 square feet from the original listing).

Best to all.

++++++++++++++++++++++++++++++++



Holy crap. Do you remember this dummy?

This design disaster was listed in June 2009 for $699,000 and pulled off the market after five fruitless months. No biggie, just another delusional nutjob who couldn't get his wishing price, tucked his tail between his legs, and delisted the house never to be seen again.

Well, not so fast.

Because he's back.

And he's armed with a $76,000 price increase.

WTF?

He must be snorting massive rails of Hopecaine, because I simply can't figure out how he justifies that massive premium over the last failed listing.

It's also worth noting that the home has now been abandoned:



This pig-faced property is a Notice of Default waiting to happen.

++++++++++++++++++++++++++++++++


Address: 341 Granada, 90814
Asking Price: $699,000
Year Built: 1923
Size: 3 bed, 3 bath, 1,650 sq. ft.
$/Sq. Ft.: $424
Purchase Price: $415,000
Purchase Date: 4/2002
MLS#: P692837
On Redfin: 4 days
Down Payment: $140,000
Monthly Payment: $4,000
Income Requirement: $200,000
Description: A Long Beach Landmark! This stunning Collision design home features 3 levels of living space with spectacular Lagoon views from almost every window. 1st level features a large kitchen, laundry room, formal dining room, large bedroom and a 3/4 bathroom. 2nd level features large open living room area with tons of windows and light, optional 3rd bedroom and a bath. 3rd level features a huge master suite retreat with vaulted beamed ceilings, a balcony deck, large bathroom, and tons of light. The outside has been recently repainted to show the true uniqueness of this amazing home. The entire home features tons of natural light, wonderful open spaces, front courtyard area, and a 2-car garage.

Weird. I was just in this neighborhood yesterday (happy birthday, D!) and I don't remember seeing this house. You would think this Picasso-esque oddity--ERRR..."landmark" would stand out.

After looking at this exterior photo:

...I was expecting a lot more than 1,650 square feet.

But then I saw this one:

...and it became abundantly clear why the interior dimensions appear so cramped.
Plus, when you click on Aerial View you can really see how the tiny triangular lot affects the interior layout.

The most disappointing thing about this house is that the level of creativity that went into the exterior evidently did not make it to the interior.



Glass blocks? A gray tub? Given the gross 80s cues, it's clear that the current owner, who purchased in '02, was not the one who built this house--he purchased this place as-is from the 1989 buyer.

I have to give credit to owners expressing themselves and building something unique in Long Beach but as I've said before, one person's quirky (and pricey) personal taste means fuckall to potential buyers.

The greatest example of that is this idiot on Park. After a tortuous 684 days on the MLS, documented here, it's clear that there is virtually no market for these custom-built oddities (especially overpriced ones).

If you're planning on living in it forever, shit, build whatever the hell you want. Custom build a place too look like Winnie the Pooh's house if that's your thing.

But don't hold your breath in anticipation of finding a cash-flush buyer who shares your particular love of that honey-chugging charmer willing to hand you a handsome profit for what your particular peculiarities hath wrought.

You know what I think to myself when I see houses like this? "Yeah, if it was dirt cheap I might buy it as a goof." In other words, this kind of look-at-me "uniqueness" is actually a detriment to selling because this level of customization and personal flair can easily put houses in the Only-At-A-Discount category.

Heck, just ask the 1989 buyer. He bought this property for $410,000 in October '89 and (presumably) built it to its current condition. After 13 years of ownership and hundreds of thousands in construction costs, he sold in April 2002 for $415,000--just five grand more than he paid. But the NAR told me home values double every 10 years!

Sure, he successfully found a buyer who shared his quirky tastes, but in order to make the deal happen he had to slash the price to the extent that he lost massive amounts of cash. Will our current seller have to do the same?

Given current sales in this neighborhood, asking $424 per square foot isn't that far off. But, again, the key question is: Will this house require an Idiosyncrasy Discount to sell?

Sunday, July 24, 2011

Argonne, Baby, Gone: UPDATE IV

Anonymous writes:

This house has been in default - NOD filed 1/27/2010 (apx. 14K delinquent). [Trustee Sale] filed 4/29/10. Sale postponed, then I'm sure was eventually cancelled with no new NOD filed. Currently off the market, probably trying to modify $400K 1st TD. Problem is there's still some equity in it so likely will be denied.

Thanks for the inside information, Anon. I actually tried to get in to see this house when it was still on the MLS. They wouldn't even take appointments. Like the vast majority of short sales, it wasn't actually for sale.

From what I've been told, you are correct that they are in the process of modifying the loan. As I predicted in May, they'll play the short sale game and sign up for every government program (HAMP, HARP, HAFA, etc.) to buy some more time and enjoy the free/discounted rent. But what definitely WON'T happen is the bank foreclosing.

It's going to be a long time before we see this place back on the market.

++++++++++++++++++++++++++++

This rock-biting mongoloid is back on the market yet again. Jesus, bro...give it up already.
Despite the fresh "New Listing" classification, astute Long Beach Housing Blog readers will note that this joint has been around for more than 15 months, begging and pleading for some sucker to pay his ridiculous asking price.

In case you were thinking this refreshed listing would be, well, refreshed, we're treated to the same two useless photos (one of which features the shittiest MS Paint job you've ever seen).
309 ARGONNE Ave, Long Beach, CA 90814
The current listing price of $539,000, while certainly more realistic than the original $610,000 2010 ask, is still clocking in at $610 per square. Yo, I didn't know they relocated the Shore all the way up to 3rd Street!

I'll remind you that this is yet another in the growing contingent of buyers who got in "at the bottom" in Fall 2008 and refuse to believe that they are about to take it right in the devil's onion ring. Assuming he could somehow get this dreamscape of an asking price, his total losses would be roughly$92,000. Yep, 2.5 years of ownership and nothing but a smoldering pile of dust where his bank account once was.

Don't be surprised to see this thing start playing the short sale game in a few months.
Anyhow, good luck dummy! I feel like this time it's really gonna happen for you!

++++++++++++++++++++++++++++++++

Ugh.

This dummy is still around?

The listing says "77 days" but don't be fooled -- this thing has been begging for nearly a year with absolutely no interest. Tiny square footage aside, it's obvious that the rabidly delusional pricing is the primary cause of its long, sad tenure on the MLS.

The current wishing price is $595,000, a whopping $5,000 discount since we last checked in last March. Aggressive!

Anyhow, it appears the last realtor didn't work out (probably suggested lowering the price to, you know, actually get it sold...which is exactly what sellers afflicted with My Place Is Special Syndrome -- MYPISS -- don't want to hear) so the new listing agent, instead of doing some actual work, decided he'd just fire up MS Paint and fuzz out the Century 21 sign from the old listing photo:

309 ARGONNE Ave, Long Beach, CA 90814
HAHAHAHAHAHAHAHA!
Can you believe this lazy turd?!
Gee, with a consummate pro like that on your team, I'm positive you'll find that full-price buyer during the 2011 Super Spring Selling Season(tm). This year is your year, bro!

+++++++++++++++++++++++++++++++++++++

Happy St. Patrick's Day!

The price was "$610,000" and changed to "$599,999"

We're officially below what he paid in September 2008 -- just a scant year and a half ago. After commissions, this will represent a $37,000 loss. And that's assuming this piss-ant price reduction garners a sale.

The bottom was in 2008? HORSESHIT.

+++++++++++++++++++++++++++++++++++++

Welcome Patrick.net readers!

And thanks Anon for sending this property in.
Wishing Price: $610,000
Beds: 2
Baths: 1
Sq. Ft.: 883
$/Sq. Ft.: $691
Lot Size: 2,520 Sq. Ft.
Year Built: 1923
MLS#: P720288
On Redfin: 26 days
Down Payment: $122,000 (20% down)/ $24,000 (FHA, although the loan amount would justexceed the jumbo limit, let's assume you could get a gov't loan)
Income Requirement: $174,000
Monthly Nut: $3,300 (conventional)/$3,800 (FHA)
Description: Beautiful 'Turn Key'home [SIC] in Belmont Heights. Do not waste your time with Short Sales! Standard Sale here. Home boasts hardwood floors throughout home, NEW kitchen with granite countertops, wood cabinetry, stainless steel appliances, ceramic floor, bay window, recessed lighting, designer paint throughout and french doors to rear patio. An updated bathroom w/ ceramic tile and new plumbing. The garage has been completely finished with drywall, insulated, lighting, electrical & laminate flooring and offers you approximately 190 Sq. Ft of additional space for your office/gym with a french door entrance from the patio. New double paned windows throughout, new washer & dryer, new electrical/plumbing, new air unit & energy efficient water heater. Private patio offers you outdoor living room to entertain or enjoy secluded mornings/afternoons. .. Customized closets in bedrooms. Landscaped to be drought resistant. Award winning school district. Walk to the beach, Belmont Shore, Colorado Lagoon, golf course's [SIC] & parks.

Yet another 2008 loser!

Seriously, what were people thinking buying in late 2008? Don't they read this blog? I wonder if we'll be saying the same thing about 2009 buyers?

It only took this guy 18 payments before he figured out he couldn't possibly afford this place. And now he's looking for an out and is optimistically asking $9,000 more than he paid a year and a half ago, hoping to somewhat mitigate the pain of a -$28,000 loss (all in commissions).

This asking price seems based on the assumption that he perfectly timed the bottom in '08 and the housing market has been steadily recovering ever since.

I guess he doesn't read the news:




Yes, massive government intervention, artificially low interest rates, manipulated REO supply, extend-and-pretend HAMP tomfoolery, and free ponies in the form of first-time homebuyer tax credits have helped to stem the housing free-fall, but a slowdown in price declines is very different than an increase in values.

If you go from losing two quarts of blood per hour to half a quart, you're still losing a half a quart of blood! Slowing down the blood loss is very different from stopping the bleeding, mounting a full recovery, and being discharged from the hospital.

Unless he gets aggressive with his pricing very soon, our misguided seller could easily end up without a chair once the game of Government-Manipulated Musical Chairs comes to a grinding halt. I'd do whatever I could to sell now instead of taking my chances with higher interest rates, the elimination of homebuyer incentives, and more foreclosures on the market (and in the pipeline).

Once government attempts to keep home prices inflated (and, ultimately, unaffordable) run out of steam (or political support, or funding) and home values are allowed to return to some semblance of normalcy, sellers like this will regret not taking a big hit earlier. Because that "big hit" will look like what you find in the bottom of a clothes dryer compared to the massive loss incurred as a result of sticking to your guns and demanding a batshit-crazy wishing price in an worsening selling environment.

Peep the listing history:

Feb 03, 2010 - Listed $610,000
Sep 02, 2008 - Sold $601,000 (7.7%/yr)
May 23, 2008 - Price Changed $660,000
Apr 08, 2008 - Listed $695,000
May 26, 1993 - Sold $192,500

This dude probably thought he was getting a smoking deal in September '08 when he negotiated a 15% "discount" from the original $695,000 asking price. I bet he was quite proud of himself for "stealing it" for only $601,000 ($680 per square foot).

Hey, dummy, 15% off of something overvalued by 50% is still overpaying by 35%.

It's the Men's Half-Yearly Sale analogy: Nordstrom gives you a 20% off coupon and you go suit shopping. You find a tough-looking pinstriped Hugo Boss with a $1,000 price tag. After running the numbers you're thrilled to pay only $800. Wow, a $200 savings! I'd be stupid not to buy!

But you didn't do your homework. And you failed to notice the suit was $700 last week. You see, the night before the sale, the price was jacked up by 30%, meaning a suit that used to be $700 with zero discounts just cost you an extra $100 with a coupon. But, that doesn't matter because buying it on sale "felt" like a better deal. After all, the initial asking price of $1,000 was such a big number, $800 by comparison seemed like a more drastic "savings."

Realtors and home sellers similarly rely on Americans' complete inability to do math.

I know plenty of people who use peak pricing as the yardstick, and compare today's prices to that insanely lofty, easy-money-bullshit-fueled number to feel better about overpaying. What they should be doing is starting at pre-bubble pricing and comparing today's asking prices tothat number. If more people did so, they would realize prices have a long way to go before they are in line with traditional home value appreciation.

Back to the property at hand: the lot is tiny but the location is great. The interior, although cramped, looks pretty nice too and the listing description mentions a decent amount of upgrades and goodies.
The solo bathroom is straight out of Scarface, but it's nothing a basic remodel couldn't fix. You know, because you'll have so much spare cash after making that $3,300 monthly payment.
HORF!

However, the backyard patio looks pretty cool:
And with only 883 square feet of living space, I'm sure you'll be spending quite a bit of time out there to offset the terminal claustrophobia.

I particularly like this photo of the junk accumulating the driveway:
For some reason, the first thing that came to mind was this:
What, you don't see it?
From what I can tell, little bungalows like this rent for around $2,000 a month. Let's be generous and say this could rent for $2,200 given the location and interior quality. So now you're paying $1,100 more per month (or $1,600 more if you go FHA) for "pride of ownership." Does that make any kind of sense?

Knowing that the bottom will arrive when the monthly rent approaches the Principal, Interest, Taxes and Insurance (there is debate about how to calculate this. Some say not to consider the tax refund because that money will largely be eaten up by maintenance and ancillary ownership costs. Others, mostly commission-based, suggest factoring in what you'll get back in tax refunds, which lowers the "buy" aspect of the rent vs. buy calculation and just happens to make buying more easily pencil out. I personally think the latter approach is dangerous because of the likelihood taxes, fees, insurance, and ownership costs will increase in the future given the impending state and federal fiscal issues), this asking price is way out of line with reality.

How far out of line? By (roughly) calculating pre- and post-tax monthly payments, in order for this to make sense as a purchase the price needs to be between $450,000 at the low end and$510,000 at the high end.

As you can clearly see, $610,000 for this snuff box is waaaaaaaaaaaaaaaay overpriced.

However, I am confident a knifecatcher will step in long before the asking price drops below $510,000, but I'm just pointing out what it would take to make any kind of financial sense and ensure you're not overpaying.

Monday, July 11, 2011

The Magically Expanding House: UPDATE III

Price changed from $639,000 to $609,000

Ouch. This is getting uglier by the day. They've knocked off $90,000 from the list price and still no action. I mean, psychologically how do you think that feels?

This flipper is still ahead of the game considering he paid only $405,000 in April 2010, but that seemingly fat $204,000 profit cushion isn't as comforting when you consider the 15 months of carrying costs, the substantial money he sunk into the flip ($80,000? $100,000?), and of course paying out commissions ($36,000).

It's not like he'll lose money on the deal -- I think even in the worst-case scenario he'll break even. But I'm sure he'd like to gain some profit for his trouble, so with the fall and winter months (and his one-year MLS anniversary) approaching it would be wise to keep cutting.

But with a listing history like this, would you characterize this flipper as "wise"?

Jul 08, 2011 - Price Changed $609,000
Jun 17, 2011 - Price Changed $639,000
May 27, 2011 - Listed (Active) $649,000
May 27, 2011 - Delisted (Cancelled)
May 17, 2011 - Price Changed
May 09, 2011 - Price Changed
Apr 25, 2011 - Price Changed
Mar 30, 2011 - Price Changed
Mar 04, 2011 - Relisted (Active)
Mar 04, 2011 - Delisted (Hold)
Mar 04, 2011 - Relisted (Active)
Mar 03, 2011 - Delisted
Mar 02, 2011 - Listed
Nov 14, 2010 - Delisted (Expired)
Oct 05, 2010 - Price Changed
Sep 27, 2010 - Price Changed
Aug 27, 2010 - Price Changed
Jul 15, 2010 - Listed (Active)



+++++++++++++++++++++++++++++++

Price changed from $659,000 to $649,000

How's that market chasing workin' out for ya?

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Price changed from $675,000 to $669,500


This is actually the second price reduction in the last four weeks ($30,000 lopped off so far). Will it be enough to for this flipper to make money on his lipstick-on-a-pig makeover?

Well, considering the census bureau reported that homes for sale are currently the lowest they've been since 1967 (yes, you read that correctly), they might find an impatient, frustrated buyer willing to overpay.

For this kind of scratch I think a buyer can do way better, but in this inventory-free environment nothing really surprises me anymore.

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4512 East VERMONT St, Long Beach, CA 90814


ADDRESS: 4512 East VERMONT St, Long Beach, CA 90814
ASKING PRICE: $699,900
BEDS: 3
BATHS: 2.75
SQ. FT.: 1,500
$/SQ. FT.: $467
LOT SIZE: 4,735 Sq. Ft.
YEAR BUILT: 1948
COMMUNITY: Belmont Heights/Alamitos Heights
MLS#: P772185
ON REDFIN: 4 days
DOWN PAYMENT: $140,000
INCOME REQUIREMENT (3.5x): $160,000
MONTHLY NUT: $3,700
DESCRIPTION: Remodeled 3 bedroom 2 3/4 bath Home with Contemporary Open Floor Plan and New Laminate Floors throughout. Light & Bright Living Room w/ Venetian Plaster Fireplace opens to Formal Dining Room. New Kitchen w/ Granite Counters, Pantry, & Stainless Steel Appliances including Gas Cooktop, Oven, Dishwasher, & Breakfast Bar opens to Dining Area and to spacious Family room which overlooks NEW Wooden deck with view of the Private Peaceful Backyard. Spacious Master Suite with a New Bathroom with custom flooring, Skylight tube, Vanity & oversized shower w/ seamless shower doors. 2 other custom remodeled bathrooms. There are many other NEW features such as Roof, Copper Plumbing, Tankless Water Heater, Ceiling Insulation, 2 Separate Heating systems, Doors, Paint, Top of the line Designer Sinks & Fixtures, Sod, Sprinklers, Drip System, and some Windows. Opportunity Knocks, Don't miss this Gorgeous Belmont Heights Home!!

Hooray For Intermittent Title Case!

Our featured property was purchased last April for $405,000, and now this flipper is trying to get his mitts on the $294,900 in profits he so richly deserves.

Now, to be fair, in 2010 this place was a certified turd pile:
4512 East VERMONT St, Long Beach, CA 90814
Woof.

But, as with all flippers, the important question is whether this kitchen is worth the nearly $300,000 premium over the probate sale price:
4512 East VERMONT St, Long Beach, CA 90814

4512 East VERMONT St, Long Beach, CA 90814

4512 East VERMONT St, Long Beach, CA 90814
"But El Bee, clearly they did more work than just the kitchen."

Really? Prove it.

Because although the listing description mentions a laundry list of desirable amenities and upgrades, these are the only other photos:
That's right, friends. A $300,000 markup and only four photos in the whole fucking listing.

I mean, how incompetent do you have to be to dump a bunch of money into flipping a property, jack up the price by hundreds of thousands of dollars, boisterously crow about all the upgrades and renovations, and then fail to, you know, actually include pictures of what you're trying to sell?

And please note that for $700,000 you don't even get a goddamn refrigerator. The balls on this guy.

I'm also curious about something I saw in the description from the 2010 probate listing: "Detached garage. Two rooms off garage that were previously used as additional bedroom and study."

So, since the garage is detached, and these two rooms are off the detached garage, does that mean these rooms are detached from the main house?

The reason I ask is because the public records (and the 2010 listing) clearly indicate this house is a 1-bedroom/1-bath spanning only 888 square feet, but the flipper's new listing is a 3/2.75 clocking in at 1,500. How did this house magically sprout an extra 612 squares?

It appears this dude is trying to include the two rooms off the garage in the total square footage. It's worth noting that if you calculated the price per square foot according to legally confirmed figures in the county assessor's records, the current (and relatively palatable) $467 per square foot would jump to a whopping $788! Motive, anyone?

That seems really fishy. If you're thinking of plunking down nearly three-quarters of a million dollars for this place (HAHAHAHAHA), definitely do your homework and ask the right questions.

Assuming the 1,500 square feet is somehow legitimate, I think a minor price reduction will garner a sale. It's on a relatively big lot in a prime area, has a wealth of upgrades (allegedly), and I think a working couple, forced to wait five years for this massive housing bubble to deflate and return prices to reasonable levels, will look around at the dearth of quality Long Beach inventory and simply bite the bullet and overpay for this flip job.

I myself would feel nauseous paying nearly $300,000 for upgrades that cost, at most, $120,000, but that's just me.

UPDATE: Listing photos finally added.