He'll Flip Ya For Real

Today's property is a throwback to the old days when you could buy an apartment for a good price, put a little elbow grease into it, quickly put it back on the market, and walk away with an easy, pocket-bulging profit.

Unfortunately for this dolt, those old days of easy flipping are long gone and buyers know better than to fall prey to the greed-infused motivations of gold-bricking shysters.

ADDRESS: 4301 East 2ND St Unit 3b, Long Beach, CA 90803
WISHING PRICE: $535,000
PURCHASE PRICE: $360,000
OVERLY OPTIMISTIC PROFIT TARGET: $140,000
BEDS: 2
BATHS: 2
SQ. FT.: 1,218
$/SQ. FT.: $439
YEAR BUILT: 1965
COMMUNITY: Belmont Shore/Park/Naples/Marina Pacific/Bay Harbor
MLS#: P757318
DOWN PAYMENT: $107,000
INCOME REQUIREMENT: $122,000/year
MONTHLY NUT (AT 5.05%): $2,900
HOA: $195
DESCRIPTION: Standard sale. Amazing ocean and Cataline views. Stunning end unit. Complete remodel, Kitchen has custom limestone floors, granite countertops, all new Bosch built-in appliances. Beautiful bathrooms with new vanities, counters, tile and fixtures. New carpet throughout. Huge balcony. Low HOA dues. Underground garage. First time on market since new.

Who is Cataline? That chick across the street who watches TV in the nude? Yeah, I guess that is a great selling point.

In addition to a front-row seat to Cataline's exhibitionism, this apartment has some other nice features too -- not the least of which is a killer view of the ocean and Catalina (do you suppose that's what he meant?):

Admit it. That's freaking awesome.

And it looks like a decent amount of effort went into the bathrooms (although it's strange that he would take photos of both Westin-like vanities but none of the showers -- typically the focal point of any renovated bathroom):

But what the hell happened in the kitchen? The appliances and countertops are nice, but those cabinets are cheap-ass builder-grade bullshit.

And the cost-cutting apparently made its way into the bedrooms as well. Check the original closet doors and old-ass aluminum sliding glass doors:

Remember, the asking price is $535,000, making it one of the most expensive listings in a one-mile radius (the most expensive sold comp during the last six months was $499,950). For that kind of loot, you'd better knock buyers' socks off. Instead, we get a half-assed flip.

...and a balcony full of hos:

Er, I mean hose.

What were you expecting?

I guess just like with a flipper's listing description, one little letter can make quite a difference.

And let's talk about the flipper's math for a second. He paid $360,000 in August 2010, spent three months trying to gussy it up, then tacked on a $175,000 premium before dumping it on the MLS.

In Flipperville I'm sure that kind of gouging seems perfectly reasonable, but in the real world the buyers have spoken.

Days on Market: 165

Yeah. Shocker.

I realize he took a risk and should get some profit for his efforts, but it's obvious he didn't put anywhere near $175,000 into improvements. Hell, I'd be surprised if he spent $30k (he didn't even put in the crown molding required in condos demanding premium prices). So this is nothing more than bald-faced greed.

And the worst part? All evidence suggests it has community laundry!

$535,000 and I need to keep a jar full of quarters and be subject to neighbors' passive-aggressive notes about my skivvies being in the dryer too long after they're dry?

Smell ya later, holmes.

So given all the negatives and the mounting evidence that this place is in serious need of a price cut, how can we explain the stubborn insistence on sticking to this wishing price?

"Seller/Owner/Principal Real Estate Licensed"

Oh.

Well then I'm sure he knows what he's doing. After all, he's an "expert."

Overdone, But Hasn't Done Enough

Thanks to LBCee for sending in today's property.

Address: 242 PROSPECT Ave, Long Beach, CA 90803

Wishing Price: $1,350,000
BEDS: 2
BATHS: 0.75
SQ. FT.: 1,476
$/SQ. FT.: $915
LOT SIZE: 6,347 Sq. Ft.
YEAR BUILT: 1923
COMMUNITY: Belmont Heights/Alamitos Heights
MLS#: P769097
ON REDFIN: 10 days
DESCRIPTION: This lovely bungalow will captivate you from the moment you step inside with its warm character and special attention to detail. Enter the garden dolloped with colorful flowers and bushes. Don't miss the exterior walls which were painted with what looks like whipped cream. Walk up the Spanish tiled steps to the veranda and enter your dream home through the gorgeous custom wrought iron double doors. Step inside to see a large main living space with lots of sunlight. Don't miss the custom hand-cut 12' wood plank flooring. A separate dining area leads you to a beautifully remodeled chef's kitchen with granite countertops and backsplash and top of the line appliances. Crown molding and recessed lighting. Bathroom is covered with Carrera marble tiles from floor to ceiling. Lovely back garden with 2 patios. Main house 1000 sq ft, rental studio 476 sq ft is over garage, currently rented for $1000/mo.

HI PUPPIES!

This greed-faced dreamer plunked down $545,000 13 months ago, slapped on some paint and bullshit bling from the bygone bubble days like "custom hand-cut 12' wood plank flooring" (12-foot planks? Wow!) and "Carrera marble tiles" and now believes he is entitled to an $805,000 profit.

YOU.

MUST.

BE.

JOKING.

The only explanation for this brazen level of greed and stupidity is that when inventory looks like this:


...your typical delusional, greedy Long Beach seller undergoes a violent transformation and becomes the Incredible Hulk of unbridled, greedtarded fury.

"ME PLAYCE SPESHALLLLL!"

Look, this house is certainly nice (if a bit overdone) and nobody can deny that a decent amount of effort and money went into this flip:

But do you see anything in here -- anything -- that would justify the asking price of $1,350,000?

Or even half the asking price?

To me this tiny, 1,000-square-foot bungalow seems like a pretty standard Belmont Heights restoration (despite how obviously impressed the seller is with himself -- get a load of that flowery description: "Don't miss the exterior walls which were painted with what looks like whipped cream." Ugh, I'm gonna paint the walls with vomit). Peep:

Mehhhhhhhhh.

Does that look like a $1.35 million house to you? Really?

And sorry, but I fucking hate those "12-foot" (never trust a realtor who doesn't know the difference between 12' and 12") plank floors. What, you going for that "hog barn" look?

And check out the stunning amount of effort spent on the back yard:

Again, the asking price is $1,350,000.

The upgrades are decent, but he hasn't done nearly enough to approach the rare air of this price range.

How far off is this delusional fool? Let's look at the sold comps:

$540,000
4725 East SHAW St
Sold on Nov 30, 20100.21 miles
3 bd / 1 ba
1,440 Sq. Ft.

$660,000
285 ROSWELL Ave
Sold on Nov 25, 20100.26 miles
3 bd / 2 ba
1,484 Sq. Ft.

$610,000
308 SAINT JOSEPH Ave
Sold on Aug 30, 20100.3 miles
3 bd / 1.75 ba
1,300 Sq. Ft.

$839,500
222 SAINT JOSEPH Ave
Sold on Sep 30, 20100.32 miles
2 bd / 2 ba
1,600 Sq. Ft.

$560,000
305 ARGONNE Ave
Sold on Sep 03, 20100.33 miles
2 bd / 1.5 ba
1,388 Sq. Ft.

$585,000
370 XIMENO Ave
Sold on Feb 11, 20110.34 miles
3 bd / 1.5 ba
1,706 Sq. Ft.

$414,000
242 Mira Mar Ave
Sold on Sep 10, 20100 miles
2 bd / 1 ba
1,533 Sq. Ft.

$360,000
4324 East 4TH St
Sold on Sep 30, 20100.4 miles
3 bd / 2 ba
1,352 Sq. Ft.

$595,000
362 GRAND Ave
Sold on Dec 15, 20100.54 miles
3 bd / 1.75 ba
1,272 Sq. Ft.

$714,000
281 COVINA Ave
Sold on Dec 15, 20100.57 miles
3 bd / 2 ba
1,472 Sq. Ft.

A transaction at this fantasyland price would instantly raise the value of comps by nearly 50%!

For a bit of perspective, the current price-per-square-foot of $915 can only be exceeded by properties ON THE SAND OR WATER IN NAPLES.

Really, dummy? You think you're in that league? Dude, you don't even have a full bath!

One of those sold comps stood out in particular. 285 Roswell sold in November sold for $660,000 -- less than half the price of this over-improved shrine to irrational exuberance. Sure, Roswell's upgrades aren't on par with our featured property's, but it's still pretty freaking nice:

I mean, fuck. At least he's got grass!

(Instead of just sitting around smoking it all day. ZING!)

And for those of you who think Roswell's not a good comp because the upgrades aren't up to snuff, I'd bet the keys to my car that for under $115,000, you could get it to look as good or better than the featured house. And you would have saved yourself nearly $600,000 in the process.

"But El Bee, that isn't a fair comparison. Not everybody wants the hassle of buying a place then fixing it up -- some prefer to pay a premium for a completely turn-key house."

Fair enough. So now I'll pick a fully upgraded, currently listed competitor and to make things interesting I'll highlight one in The Shore (which commands a premium and will make Prospect's ask seem more reasonable). 115 Covina is much bigger, fully upgraded, has 2.5 baths, and sits on the ocean-side of 2nd Street.

For all of those features in such a prime area he's gotta be asking somewhat close to 242 Prospect's price, right?

WRONG.

Covina's asking $950,000, or $544 per square.

So if you bought 115 Covina, which, like 242 Prospect, does not require one dime of upgrades, you would save yourself $400,000.

With that kind of math, do you suppose anyone will line up to pay $1.35 million for our featured property?

I just don't see it. But what I do see is a big, fat price reduction in this greedhead's future.

YNGFL: FINAL UPDATE

Sold on 12/17/2010 - $200,900

Wow. What a ride for this welted chunk of excrement.

More than 1,000 days on the market and the bank finally approved a short sale at the price it should have been at all along.

Just look at this lesson in incompetence:

Dec 17, 2010	Sold (MLS) (Closed)		$200,900	--	Inactive CARETS #P701097
Jul 31, 2010	Pending (Backup Offers Accepted)		--	--	Inactive CARETS #P701097
Jul 19, 2010	Price Changed		$199,900	--	Inactive CARETS #P701097
Jun 23, 2010	Price Changed		$219,900	--	Inactive CARETS #P701097
May 19, 2010	Price Changed		$225,000	--	Inactive CARETS #P701097
Mar 03, 2010	Price Changed		$250,000	--	Inactive CARETS #P701097
Dec 30, 2009	Price Changed		$289,000	--	Inactive CARETS #P701097
Dec 30, 2009	Relisted (Active)		--	--	Inactive CARETS #P701097
Dec 03, 2009	Pending		--	--	Inactive CARETS #P701097
Nov 12, 2009	Price Changed		$239,000	--	Inactive CARETS #P701097
Oct 30, 2009	Relisted (Active)		--	--	Inactive CARETS #P701097
Sep 23, 2009	Pending (Pending Sale)		--	--	Inactive CARETS #P701097
Sep 18, 2009	Price Changed		$249,000	--	Inactive CARETS #P701097
Sep 14, 2009	Price Changed		$270,000	--	Inactive CARETS #P701097
Aug 28, 2009	Listed (Active)		$319,900	--	Inactive CARETS #P701097
Aug 01, 2008	Delisted		*	--	Inactive CARETS #3
May 06, 2008	Listed		*	--	Inactive CARETS #3
May 06, 2008	Delisted		*	--	Inactive CARETS #2
Mar 30, 2008	Listed		*	--	Inactive CARETS #2
Mar 29, 2008	Delisted		*	--	Inactive CARETS #1
Feb 29, 2008	Listed		*	--	Inactive CARETS #1
May 25, 2004	Sold (Public Records)		$329,000	--	Public Records

Unbelievable.

In Saturday's post I mentioned that most Long Beach properties are selling for 2003 prices or lower, but that's in prime areas. In less desirable areas, like this one, the pricing is much closer to 2001.

Congratulations to the new owner for sticking it out for so long. Friends of mine just closed on a condo in Huntington Beach after TEN MONTHS spent wrangling with the bank. Because the bank was so slow to get off its ass, they missed out on the homebuyer tax credit and the record-low rates from the last few months.

But they, like this buyer, are paying less to own than it would cost to rent -- and that's cause for celebration.

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

The price was "$219,900" and changed to "$199,900"

$220 per square foot for an apartment just 1,000 feet from the sand. This is officially cheaper to own than rent -- even before the tax write-off.

But the bank has no intention of letting the property go for this bargain basement price. Because that would mean recognizing a horrific loss on the books.

So I expect this charade to go on and on and on...with a few price increases thrown in along the way to restart the process. It's been two-and-a-half years so far...I wouldn't be surprised to see this go on until 2012. As long as there are acronym-filled horseshit government programs left to exploit, this could go on indefinitely.

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

The price was "$250,000" and changed to "$225,000"

In case anyone is operating under the misguided belief that the banking system has stabilized and housing is poised for a big comeback, I want you to consider that this shitty apartment is still booked at full value on the lender's books -- despite the current asking price being$114,000 less than the 2004 appraised value.

As long as that bullshit is allowed by the government (and in fact actively encouraged by way of mark-to-fantasy FASB policies and various extend-and-pretend programs like HAMP, HAFA, etc.), it will take YEARS for this inventory to actually hit the market. Meaning, returning to true values (based on actual incomes and sizable down payments) will take ages.

I'm tired of waiting -- exhausted, really -- but I'm also no fool. If I could use Other People's Money, this would be a no-brainer. Buy now and walk away if things go south. But I have my own cold, hard cash on the line and as long as countless properties like this are still rotting on the MLS, the buy signal is a long way off.

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

The price was "$289,000" and changed to "$250,000"

Well that's one way to get buyers' attention! I guess now the question is whether the bank will actually let it go for nearly $100,000 shy of the original loan amount. I somehow doubt it. But maybe in light of the first-time homebuyer tax credit expiring, they're getting out while there's still some demand left. We'll see.

Sorry for the sporadic posts...I've been on the road all week.

Every time I travel I can't help but observe the local real estate situation. The last time I was in Miami was the summer of 2006, and as I drove around I remember marveling at the incredible number of construction cranes piercing the horizon. At the time I said to myself, "Who are these being built for? Is there that much demand for new housing or even rentals? How does all of this construction make sense?" From what I could tell, the completed towers seemed empty--why build more?

Anyhow, today the cranes are pretty much extinct but at night many of these new buildings were dark, reminiscent of the North Korea Towers in Irvine. Pretty crazy.

South Beach was still fun--it hasn't lost any of its swagger in this downturn.

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

Address: 1318 East 2ND St #9, 90802
Asking Price: $289,000
Purchase Price (2004): $329,000
Beds: 2
Baths: 1.75
Sq. Ft.: 909
$/Sq. Ft.: $318
Year Built: 1964
MLS#: P701097
On Redfin: 131 days
HOA: $156
Down Payment: $10,000 (FHA)
Income Requirement (4x income): $72,000
Monthly Nut: $1,700 (FHA)
Description: Sunny & bright, this lovely condo has tons of storage space, a spacious dining room and living room, a separate master bathroom AND A PRIVATE GARAGE with storage that is big enough for an SUV! The home has large rooms that make the entire condo bright and roomy. Located just 2 blocks from the beach, this is perfect as a second home, vacation property or a retreat to enjoy every day!

"perfect as a second home, vacation property or a retreat to enjoy every day"? Looks like this bathroom took a vacation to the 1960s:

HORF!

And when was the last time you saw a white refrigerator?

Maybe I've just become accustomed to stainless fridges, but for some reason that outdated clunker is really jarring!

Pssst! Wanna see the secret to selling a tiny, dumpy apartment with original bathrooms in a shaky economy? Here you go:

December 30: The price was "$239,000" and changed to "$289,000"

Genius!

This short selling grifter has been priced below $270,000 for the last 75 days (50 of which were spent begging for $239,000) with no luck, but for some insane reason decided what this listing really needed was a price jack to $289,000. Because there's nothing buyers love more than a good ol' fashioned cornholing.

Dec 30, 2009 - Price INCREASED $289,000
Dec 30, 2009 - Relisted
Dec 03, 2009 - Delisted
Nov 12, 2009 - Price Reduced
Oct 30, 2009 - Relisted
Sep 23, 2009 - Delisted
Sep 18, 2009 - Price Reduced $249,000
Sep 14, 2009 - Price Reduced $270,000
Aug 28, 2009 - Listed $319,900
Aug 01, 2008 - Delisted
May 06, 2008 - Listed
May 06, 2008 - Delisted
Mar 30, 2008 - Listed
Mar 29, 2008 - Delisted
Feb 29, 2008 - Listed
May 25, 2004 - Sold $329,000 ($270,000 puts it firmly in 2002 pricing--the true market value, judging by the failure to sell for $249,000 is likely 2000/2001)

What kind of sales strategy is that? To paraphrase a line from Tropic Thunder, When trying to sell a house, "everyone knows you never go full retard."

Because that's the only explanation for the current price. All the loanowner has to do is click on their own Redfin link to see that nearby properties are selling for nowhere near this amount:

Downtown: $243,000; $271 psft
Alamitos Beach: $225,000; $262 psft
90802: $249,000; $276 psft
Long Beach: $229,900; $256 psft

And here she is, demanding $311 per square! Based on what, honey?

Anyhow, the point of this post isn't about greed or stupidity, or the living hell of two shared walls, or the difficulties involved with short sales, or the insanity of sellers having negative equity after FIVE FUCKING YEARS OF OWNERSHIP yet simultaneously driving $45,000 luxury SUVs...

No. Although all are at play here, this post is really about pent-up foreclosures.

You see, this property is just two months shy of its two year (!) anniversary on the MLS. It's technically not "shadow inventory" because its been out in the open on the MLS, right? But given the lender's failure to approve a sale in 22 months, it has never actually been "for sale." Meaning it's a bank-owned property in denial.

A monster loss is guaranteed, it just hasn't been booked yet.

And after it inevitably goes back to the bank, it will come back on the market at a greatly reduced price (it seems that most times, once the loss has been realized banks just try to unload). However, REOs dumped on the market crush values, putting everyone else in the area (further) underwater and perpetuating the cycle. It makes perfect sense why lenders are intent on keeping these phantoms in real estate limbo for as long as they can.

And without a mechanism to force lenders to actually approve short sales and process foreclosures (read: recognize losses) instead of extending and pretending for eternity, the market will be absolutely surrounded by these phantom properties for years and years, with no opportunity to actually buy them.

If this seller were smart (ha!) she would have stopped paying ages ago and lived rent-free this entire time. If her lender isn't interested in selling short after two years, they certainly aren't keen on foreclosing.

A Question of Taste: FINAL UPDATE

Sold on 09/01/10 - $440,000

After 15 months on the market (so long they finally gave up and returned the staging furniture -- check out the new listing photos) and 12% in price cuts, they finally found a buyer.

Look, this is a beautifully restored house in a decent neighborhood (I'm being generous...this lower-income, rental-filled 'hood is marginal at best), but this buyer still overpaid. Straight up.

He could have waited a bit longer and saved himself a substantial chunk of loot.

$383 per square foot, although an okay deal on the surface, is at least $120 more per square foot than the going rate in this area. Yes, you have to factor in how the plethora of condos in this rental-inundated area affects the ppsft, but the overall point is that's a rich premium to pay. And it goes back to the aforementioned golden rule of real estate: Buy the crappiest house in the nicest neighborhood.

And look, I get that some people would rather let another jackass spend all of his loot painstakingly restoring their house for them instead of dealing with years of work and contractor headaches themselves (ever heard of Divorce Dust?), but it still doesn't make sense to buy the most expensive property (by a long shot) in a so-so area. Especially when the market is so soft.

And they didn't even get free government cheese!

Looks like the Greater Fool theory is alive and well.

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



Address: 1514 E Appleton St, 90802
Asking Price: $499,900
Year Built: 1907
Size: 3 beds, 2 baths, 1,148 sq. ft.
$/Sq. Ft.: $435
Purchase price: $245,000
Purchase date: 7/2001
MLS#: P688269
On Redfin: 9 days
Down Payment: $100,000
Monthly Payment: $2,600
Income Requirement: $143,000
Description: ***A TRULY EXQUISITE 1907 REMODELED VICTORIAN PERIOD HOME **** WITH LOTS OF CHARACTER THIS HOME FEATURES, BEAUTIFUL HARDWOOD FLOORS, CUSTOM PAINTING THROUGHOUT, ABSOLUTELY GORGEOUS REMODELED KITCHEN, NEWER REMODELED BATHROOMS, INSIDE LAUNDRY, TANKLESS WATER HEATER, REMODELED BATHROOMS....WITH A GREAT LOCATION...CLOSE TO BEACH,PARKS,ART MUSEUM,SHOPS & RESTAURANTS. DRIVEWAY FOR 2 CARS, STORAGE UNIT IN REAR YARD.....A TRUE GEM*** A MUST SEE ****

****THESE PEOPLE ARE OUT OF THEIR MINDS IF THEY THINK THEY CAN GET HALF A MILLION FOR THIS THING****

****IT’S SO CLOSE TO “BEACH,PARKS,ART MUSEUM,SHOPS” THAT THERE WAS NO ROOM FOR A SPACE AFTER EACH COMMA****

****WHY PERFORM ALL THAT REMODELING WORK ONLY TO INSTALL GROSS TWO-TONE KITCHEN TILES?....I THINK THEY WOULD HAVE BEEN MUCH BETTER OFF WITH SIMPLE WHITE QUARTZ COUNTERS****
****"NEWER" REMODELED BATHROOMS? IT'S EITHER NEW OR IT'S NOT. WOULD YOU SERVE "FRESH-ISH" SALMON TO YOUR FAMILY? JUST SAY "REMODELED BATHROOMS " AND YOU WON'T HAVE TO ANNOY PEOPLE WITH THAT KIND OF IDIOCY!****

****OH WAIT, YOU DID JUST SAY "REMODELED BATHROOMS" WHEN YOU MENTIONED THE BATHROOMS ONCE AGAIN IN YOUR LISTING DESCRIPTION. YOU PROBABLY MISSED IT BECAUSE YOU WERE TYPING IN ALL CAPS LIKE A 13-YEAR OLD TWITTERING ABOUT MILEY CYRUS' PONYTAILS****

Ugh, I gave myself a headache just writing like that for a few minutes. How do realtors do that all day?

Man, this place is small for the money. And on a matchbook lot.

But the description was correct about one thing: This place has lots of character.

And it has a neat little patio, but why dump all that money into remodeling the house if you're just going to leave that moldy, rotting storage shed as-is? Ugh, what an eyesore.

But kitchen and shit shed notwithstanding, they did an excellent job on the renovations. The mix of original cues and modern updates work pretty well together. I mean, check the original windows mixed in with some recessed lighting:

A faithful restoration like that must make the Long Beach’s Historical Society happy.

Overall, I think this little house looks great and the details are phenomenal.

But, as they (I) say: “One man’s top-notch upgrades and personal style choices mean fuckall to a new buyer.”

The balance between restoration to its original build condition and sensible modernization is great, but most of the details and expense will go unappreciated--or ignored completely--depending on the personal tastes and needs of buyers.

For an example, let's look at classic cars. One of my favorite cars is the 1963 Lincoln Continental convertible. Ideally I’m looking for one with red interior and black (or white) exterior.
And even though this car was built more than a decade before I was born, I want something as original as possible. We’re talking whitewall tires, original hubcaps, original seats, matching motor (anything unseen by the naked eye, such as new, more efficient engine internals are just fine), original radio, etc.

I’m old school like that.

So, while perusing Auto Trader, I find a sweet black Continental with custom wheels, an incredible Pioneer DVD stereo with custom speakers installed throughout. The beautiful leather seats have custom suede inserts, and the black paint--which is the original color--has a subtle ghost flame job. The seller says he bought it for $15,000 and put another $20,000 into customizing it.

Plus, he expects to be reimbursed for the blood sweat and tears he put into the car, so he's asking $40,000.

But he fails to realize that not everyone has his particular (or peculiar) taste or ideas about what a classic car should look like. And some people, like me, would have to spend money tearing out those custom speakers and replacing the interior panels--which have been carved up--with the original pieces.

And the leather and suede upholstery, which he absolutely adores and cost him a pretty penny, isn’t really my thing. I’d have to install the original red vinyl.

The black paint, although faithful to the original factory specs, has a flame job ghosted into it, which obviously isn’t original. I’d have to repaint the entire car to get it back to original shape.

Now, given that he needs to sell his custom Contie to fund his retirement, he wants to get the maximum amount of money out of his “investment.” I, on the other hand, could not possibly care less about how much he spent building a dream car to his liking because we don’t even remotely share similar tastes and, as he's finding out, neither do most buyers.

So I lowball him at $20,000, partially because I smell blood, and partially because it will cost me a decent amount of money to get the car to where I will feel proud to sling it around Long Beach for the next 40 or so years.

Unfortunately for the seller, while the paint was drying on his dream ride, the economy went into the crapper. Suddenly, the classic car market is showing signs of weakness. His fellow Baby Boomers have lost 30-40% of their 401(k)s, and they’re ALL trying to unload their dream cars at the same time. But his fellow soon-to-be-retirees are a lot more desperate than he is, and they’re no longer worried about making a profit on their cars. In fact, they’ve given up the ghost on breaking even on what they’ve put into their rides. Now they’ll take whatever they can get just to get rid of it.

But because the potential buyers of these expensive (and maintenance-hungry) vintage luxury items are starting to lose jobs, there are fewer and fewer people coming around to kick the tires. Furthermore, without the ability to take out HELOC loans against their equity to fund big purchases (like our seller did during the Easy Money Borrowing Bonanza), the prospective buyers can only buy what their income will support. And because the economy is so bad, it’s getting tougher and tougher to get an auto loan for a third car.

So the seller has two choices: He can either capitulate and give it to me for what I offered, or he can accuse me of being a “vulture” and being "unappreciative" of his attention to detail and reject my bid. In his mind, his Continental is “special” and is surely worthy of a premium over the other Lincolns on eBayMotors.

And even if he turns me down now, capitulation will eventually come. As he spends another year or two languishing in the AutoTrader with no bites because he’s still asking a WTF price, he’ll see the market (and financing) for classics like his has tanked even further, and in his desperation he’ll be glad to get $15,000 for his “special” whip.

Finally, once I've taken ownership of this car and restored it back to its original condition, I might find that trends have changed and very few people care about the time and effort I spent making it as original as possible. Maybe the new thing will be whipple charging these things and installing airbags in the suspension. And a buyer with those tastes won't give a rat's rump about my efforts to keep it original.

The similarities to housing are pretty clear: Most buyers don't give a fuck how much that bathtub you love so much cost you. This is their house now, and they hate that tub because they prefer showers.

This seller on Appleton, although he did an excellent and painstaking restoration to his tastes and style, may find that the prospective buyers are interested in customizing it to their own individual tastes--and therefore couldn’t give a steaming shit about how much work and money went into customizing (yes, restoring something to its original condition is “customizing,” just like my Lincoln) it. They’re going to make the house their home and it’s going to cost them money to do so. And that is factored into what their willing to pay.

I'm getting long-winded, I know, but here's another example: One Halloween I went to a house party in LB where the owner had fully customized his garage into a badass man-cave. It had poker and roulette tables, a hand-built bar with kegerator, flat screen TVs, custom lighting and carpeting--it was impressive and probably cost him at least $10,000 in materials plus countless hours designing, painting, and building.

Cool for a visitor, but what about a buyer?

Personally I would much rather be able to protect my cars than play a few hands of Texas Hold ‘Em every other month. That’s just how I roll.

So just how likely do you think it is that I would pay an extra $10,000 (plus money for “time invested”) for his idea of the “perfect” garage?

That's right...ZIPPO.

Anyhow, this is a great house, and if it were in a better area (Belmont Heights) it might have a shot at selling for this asking price.

But a good rule of thumb is to buy the least expensive house in the best neighborhood, not the other way around. And asking $435 per square foot when the average Sold price per square is $200 (hell, the average List price, which is fueled by ferocious delusion and greed, is only just above $300!) makes this the most expensive house in the area by a long shot.

Not to mention a prospective buyer would need to make 4.2 times the median income to reasonably afford this place. I have a feeling those well-heeled buyers would be shopping in more desirable neighborhoods.

And especially when you consider this house sold for $245,000 in 2001, I find it hard to believe they put in $205,000 in upgrades. Because we all know it sure as hell didn’t appreciate that much. Either way, regardless of how much they parted with to renovate this place, they would be lucky to get fifty cents on the dollar in return.

Hat tip to Anonymous for the find!

Naples Nightmare: FINAL UPDATE

Sold on 09/09/10 - $1,200,000

To recap, after purchasing this property right after the peak of The Great Housing Bubble for $950,000, the former owner demolished the existing home and built this overwrought monstrosity with what I imagine was a hefty construction loan. Unfortunately, the minute ground was broken on this eyesore of a McCastle, the real estate market began its horrific, Great Depression-esque decline.

Stuck with an asset that was losing money before it was even completed, he spent the next eleven months sweating .50-caliber bullets, wishing that the housing market would somehow stop its rampant, freight-train powered return back to normalcy before he got his masterpiece on the market.

Wish in one hand, and crap in the other...and see which one fills up first. We all know how that worked out.

And so, in January of this year, after dicking around with extend-and-pretend short sale tactics, the bank finally foreclosed on his ass and took back the property for $1,260,000. And as is the case with quality properties in prime areas, the bank didn't take long to get it back on the market...with a wishing price of $1,325,000. There it sat for nearly seven months, until it apparently sold just a few days ago for $1,200,000 -- a mere 5% less than the bank paid.

Interestingly, $1,200,000 is HALF of what the deadbeat former owner asked when he initially tried to flip it.

HAHAHAHAHAHAHAHA!

My Place Is Special Syndrome (MYPISS), anyone?

Anyhow, the more I look at this thing, the more I hate it. Sure, the location is great, but who wants to live in the shadows of that monolithic apartment complex? Plus, there is no yard to speak of. Which, now that I think about it, you probably wouldn't even want a yard given the innumerable peering eyes in that apartment complex (ew, renters. We all know what perverts and degenerates they are).

But I mostly hate it because of what it represents: waste, misplaced priorities, bubble excess, poor lending standards, unchecked greed, bank bailouts, moral hazard...all of it.

The good news is that the new owners can start a life there and enjoy having an, um, interesting house in a great neighborhood. And regardless of how mud-fence ugly I think this thing is, you can't deny that $354 per square in this area for brand-new construction is a smoking deal.

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

215 South THE TOLEDO, 90803
Approved Short Sale Price: $1,450,000
Beds: 4
Baths: 4.25
Sq. Ft.: 3,345
$/Sq. Ft.: $433
Lot Size: 3,390 Sq. Ft.
Year Built: 2008
MLS#: P616675
Down Payment: $290,000 (assuming a bank would let you get away with "only" 20%)
Income Requirement: $363,000
Monthly Nut: $8,800
On Redfin: 718 days
Description: Short sale approved at list price. Can close qickly. Brand New Custom Home. This New Home has Big Walkin Closets In every bedroom on the second floor! Downstairs bedroom and bath can also be a maids Bedroom or office. Double door Formal entryway that leads into a huge Kitchen with upgrades and a great room with its own half Bathroom. Oversized Attached Garage. Curved Stairway that Leads you to Laundry room and second floor with Master bedroom that has two walkin closets, Fireplace, Master bathroom and private balcony. Second Floor hall way leads to two more Bedrooms, each with walkin closets and private baths. Private Door leads to the third story deck that has water, electricity for all your entertainment needs. Advanced Electrical for Entertainment systems, speakers, Lighting, Vacuum System, Security, Internet, Dual Air . Plenty of Storage through-out Home. Too many upgrades to list all.

"Qickly"?

"Walkin" closets? Where they walkin' to?

And Nice (Ab)use of Title Case, Dickhead.

It's been a rough few years for this fliptard. His simple plan was to tear down the old property, build a McMansion in its place, and flip it for a sizeable profit.

Unfortunately, his timing was absolutely horrendous.

You see, he paid $950,000 in January 2007, juuuuuuust past the peak of the housing bubble. The year he spent constructing this 3,345 square foot behemoth (on a freaking 3,390 square foot lot! What?!) saw the beginnings of one of the worst economic catastrophes in world history.

As quickly as he could, and before the economy got any worse, he put it on the market. Unfortunately, 2008 was the year of the credit crisis. His initial asking price of $2,700,000 might have seemed high even during the height of the bubble, but in the context of a full-blown economic disaster 2.7 mil was laughed off dismissively by market participants. And it's been a race against the clock ever since:

Dec 03, 2009 - Price Changed $1,450,000
Nov 27, 2009 - Price Changed $1,799,000
Oct 08, 2009 - Price Changed $1,900,000
Aug 06, 2008 - Price Changed $2,199,000
Apr 09, 2008 - Price Changed $2,399,000
Jan 09, 2008 - Listed $2,700,000
Jan 02, 2007 - Sold $950,000

Considering it's a short sale at $1,450,000, I'd say the clock won.

You have to appreciate his complete ignorance to market realities during the ensuing 718 days. Specifically, the 14 months between August 2008 and October 2009 that saw no price reductions. Smart! You're really good at this!

Given that insane amount of time spent being totally uncompetitive, I have a feeling 1.9 mil was the breaking point at which a short sale could be avoided. And it's been a sad race to the bottom ever since.

Honestly, I think the approved price of $1,450,000 is about right. This is BRAND NEW construction and has never been lived in. The upgrades look great and the Naples location is fantastic (although it appears to be right next to a massive apartment complex). Plus, most people buying these properties don't really expect to have a yard anyway.

Given all of that, along with a quick glance at the listed and sold comps (typical for Naples is between $541 and $671 per square foot), $443 per square for a brand spanking new build actually seems like a good deal.

So what gives?

Who knows. Fear of further drops in the high-end? Jumbo financing snags? Pain in the ass short sale process? Fear Of Unnecessary Title Case?

Or maybe Santa brought someone escrow paperwork for Christmas and it will go pending within days.

Regardless, I can't believe the "owner" has stuck around this long to find out. After three years of carrying costs on that $950,000 purchase loan plus AT LEAST $500,000 in construction loans, I figured he would have tapped out by now and moonwalked away.

But he didn't. Because we all know debtors walking away from their obligations is "immoral."