That Haircut Looks Great on You!
IT’S PRICE REDUCTION TIME!
Address: 282 Redondo #302, 90803
New Asking Price: $380,000
Size: 2 beds, 2 baths, 1,026 sq. ft. (built in 1986)
$/Sq. Ft.: $370
Purchase price: $445,000 (Yikes!)
Purchase date: 1/2006
MLS#: R800119
On Redfin: 29 days
Description: Awesome 90803 Condo at a great price! Laminate floors, designer paint, stainless steel appliances (included!), stackable washer/dryer (included!), scraped ceilings, romantic fire place in the living room, balcony, separate dining area off of kitchen. Central air and heat, pool, spa and rooftop sun deck! Walk to shops, dining and the beach, or enjoy the beautiful sunset from your private balcony - it doesn't get better than this! Come see and fall in love.
By the way, can we knock it off with the “designer paint” crap already? It’s up there with “gourmet kitchen” in the pantheon of Most Completely Useless Descriptors.
When this place first came on the market, the original listing price was $420,000. The newly reduced asking price of $380,000 represents a $40,000 haircut from just a month ago. Brutal!
But that’s not the most interesting part. Upon further inspection, it turns out this seller played his hand at property poker exactly one year ago, and purchased this place for an eye-popping $445,000. That means within 12 months the market had deteriorated so badly that they didn’t bother attempting to set a break-even price. They knew this was a money-losing transaction from the outset.
How much money? If this seller gets asking price, they stand to lose a staggering $87,000 including commissions. Wow.
Any equity in the place will vanish instantaneously, and if they didn’t put 20% down (which is virtually guaranteed since the loan was issued near the peak of dubious lending practices) they will have to cut a check for 10 to 20 grand just to walk away from it.
And it pains me to point out that those calculations are assuming this actually sells at its current asking price. This poor sap is in a world of hurt.
Down Payment: A 10% down payment would run $38,000.
Monthly Payment: Financing the remaining $342,000 at 6% would leave you with an approximate monthly payment (including property taxes, homeowners insurance, and a hefty $250 monthly HOA fee) of $2,700.
Income Requirement: Assuming a 4x income calculation, the annual household income required to buy this albatross would be $95,000. How many people do you know pulling in that kind of income that would consider this their dream home? You could argue that a couple working full time can put together that kind of money to live in a glorified apartment, but the wife is going to have to park her Civic on the street—this place only comes with one garage space!
Add to that the two common walls, the lack of upgraded countertops, the incredibly unimpressive kitchen, the original toilets, it’s overall odd shape and janky layout…and this place quickly runs out of selling points.
I mean, what were these people thinking? Almost half a mil for this place? Other than the ease with which the seller thinks you’ll “fall in love” with this loser, I can’t fathom why they would pay that much for this mediocre, incredibly unimpressive place.
The lone parking spot is pretty much a deal killer for me, but I’d be interested in this property as an investment because it’s in a great area and it’s a decent size. However, in order for this to make sense as an investment property, it would require a haircut more closely resembling a scalping. When you run the rent vs. buy calculation (which this ignorant fool clearly decided against), this apartment would have to come down nearly $100,000 to make financial sense.
Now you see why people are simply walking away from properties. This is only the beginning.
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