Going Down(town) in Flames: UPDATE
Reader Rebecca kindly provided an update on this incredibly overpriced loft:
In July I said:
Well, I guess we got our answer. After almost a year rotting on the market at unrealistic prices the bank has, as I predicted, taken it back. Instead of learning a lesson from how sticking to wishing prices only causes pain, the lender insists on "staying the course" with this idiotic pricing strategy.
Let's crunch some numbers!
Address: 1100 E. 3rd Street #201, 90802
Asking Price: $464,900
Year Refurbished: 2005
Size: 1 beds, 2 baths, 1,530 sq. ft. (Weird. It was originally listed as 1818 squares and 3 baths)
$/Sq. Ft.: $304
HOA Fine: $350/month
Purchase price: $599,300
Purchase date: 10/2008 (back to bank)
MLS#: R809148
On Redfin: 35 days
Down Payment: $92,980 @ 20%
Monthly Payment: $3,200
Income Requirement: $132,828 @ 3.5X
Asking $464,900 in this economic environment takes brass balls. If the previous owner couldn't garner any buying interest at $499,000--IN JULY!--then what exactly makes the bank believe a mere 7% reduction will earn a sale? Especially now that the credit crisis is in full swing and it's incredibly difficult to get loans. WTF? Greed prevails once again.
And if you thought $464,900 for this place was ridiculous, the updated listing description tries to slip this little tidbit in:
HAHAHAHAHA! I mean, what? "$464,900" and "repairs" should never be in the same sentence.
By all appearances, this is a Trash-Out foreclosure. For those who aren't aware of this growing trend, some bitter owners facing imminent foreclosure are gutting their properties, ostensibly to "get back at the bank." This sometimes results in appliances being removed, fixtures being stripped, and in some cases, severe damage to the floors and walls.
How else do you explain this:
BEFORE:
AFTER:
It takes a special kind of asshole to strip the outlet covers:
Yeah, you really showed them, buddy! The weird thing is the lender has had more than a month to replace the 39-cent covers and hasn't bothered to do so. Are they just waiting the clock out on a government bailout? WHAT ARE THEY THINKING?!
And notice there are no pictures of the kitchen. That's not a good sign.
It's worth noting the bank took this property back for $599,300. That means two things:
1) The previous owner put down $200,000...and lost it all (along with his credit).
2) The lender, if the property sells for today's asking price, will lose $161,994.
Anyone think this place is going to sell at current asking? Especially given the repairs needed (there bathroom sink is not functional either), $350 HOA fee, distance from the ocean, and the guaranteed depreciation in coming years...I stand by my prediction that this stripped-down dump will sell for no more than $299,000 when we hit bottom.
[UPDATE: Eagle-eyed reader FreedomCM noted that it's not just the outlet covers, the actual electrical sockets and light switches have been removed! Incredible! The trash-out repairs have now gone from PITA (Pain In The Ass) to major contracting work and unless the bank decides to make these repairs, I'm having serious doubts regarding my "under 299k" prediction. Plus, my -299k prediction was based on an 1818 square foot, 3-bathroom place. Given that the square footage and number of bathrooms has shrunk since the original listing, while $299,000 would certainly garner buying interest, it may not get the job done.]
I just read this entry, in November, and was curious to see what happened: http://www.redfin.com/CA/Long-Beach/1100-E-3rd-St-90802/unit-201/home/8181476.
Maybe you've updated elsewhere, but if not, you'll be happy to know that your prediction came true-it's now bank-owned. Unfortunately, they didn't get the memo about pricing...
In July I said:
I'll say it again: The ONLY way to determine the value of any investment is to run calculations based on fundamentals. That's it.
And what do those rent vs. buy fundamentals tell us?
Based on nearby rents of similarly sized lofts, this gloomy gus would not even begin to make financial sense until the price reached $299,000.
Which do you think will happen first? That 60%-plus total price reduction or this flipper walking away?
Well, I guess we got our answer. After almost a year rotting on the market at unrealistic prices the bank has, as I predicted, taken it back. Instead of learning a lesson from how sticking to wishing prices only causes pain, the lender insists on "staying the course" with this idiotic pricing strategy.
Let's crunch some numbers!
Address: 1100 E. 3rd Street #201, 90802
Asking Price: $464,900
Year Refurbished: 2005
Size: 1 beds, 2 baths, 1,530 sq. ft. (Weird. It was originally listed as 1818 squares and 3 baths)
$/Sq. Ft.: $304
HOA Fine: $350/month
Purchase price: $599,300
Purchase date: 10/2008 (back to bank)
MLS#: R809148
On Redfin: 35 days
Down Payment: $92,980 @ 20%
Monthly Payment: $3,200
Income Requirement: $132,828 @ 3.5X
Asking $464,900 in this economic environment takes brass balls. If the previous owner couldn't garner any buying interest at $499,000--IN JULY!--then what exactly makes the bank believe a mere 7% reduction will earn a sale? Especially now that the credit crisis is in full swing and it's incredibly difficult to get loans. WTF? Greed prevails once again.
And if you thought $464,900 for this place was ridiculous, the updated listing description tries to slip this little tidbit in:
Needs some repairs performed however perfect for customizing to your personal taste.
HAHAHAHAHA! I mean, what? "$464,900" and "repairs" should never be in the same sentence.
By all appearances, this is a Trash-Out foreclosure. For those who aren't aware of this growing trend, some bitter owners facing imminent foreclosure are gutting their properties, ostensibly to "get back at the bank." This sometimes results in appliances being removed, fixtures being stripped, and in some cases, severe damage to the floors and walls.
How else do you explain this:
BEFORE:
AFTER:
It takes a special kind of asshole to strip the outlet covers:
Yeah, you really showed them, buddy! The weird thing is the lender has had more than a month to replace the 39-cent covers and hasn't bothered to do so. Are they just waiting the clock out on a government bailout? WHAT ARE THEY THINKING?!
And notice there are no pictures of the kitchen. That's not a good sign.
It's worth noting the bank took this property back for $599,300. That means two things:
1) The previous owner put down $200,000...and lost it all (along with his credit).
2) The lender, if the property sells for today's asking price, will lose $161,994.
Anyone think this place is going to sell at current asking? Especially given the repairs needed (there bathroom sink is not functional either), $350 HOA fee, distance from the ocean, and the guaranteed depreciation in coming years...I stand by my prediction that this stripped-down dump will sell for no more than $299,000 when we hit bottom.
[UPDATE: Eagle-eyed reader FreedomCM noted that it's not just the outlet covers, the actual electrical sockets and light switches have been removed! Incredible! The trash-out repairs have now gone from PITA (Pain In The Ass) to major contracting work and unless the bank decides to make these repairs, I'm having serious doubts regarding my "under 299k" prediction. Plus, my -299k prediction was based on an 1818 square foot, 3-bathroom place. Given that the square footage and number of bathrooms has shrunk since the original listing, while $299,000 would certainly garner buying interest, it may not get the job done.]
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