Details: 3 bed/1.75 bath 1,162 sq ft house, 5,080 sq ft lot, REO
Description: Bank-Owned Agents Please read the private remarks it will save you time a great starter home at a great value in desirable City of Santa Monica it is simply a gorgeous house with a huge separate guest room in the back Property is Tenant occupied and will be delivered occupied, due to the new ordinance Bank can not force the tenant out however the new purchaser can.. especially owner occupied.Information is not guaranteed buyer to investigate, verify& rely on their own findings including but not limited to permits if so choose. All offers must be presented w 3% copy deposit check, Proof of Funds, Pre Approval letter or there will be no response from the Seller.Please call my assistant Phone # in private remarks she will give you the info as to what the current rent is that is being collected as well as anything else you may need Please drive by with the buyer first no sign on the property the occupants are uncooperative please submit offers subject to viewing the inside at acceptance.
Previous Purchase: 4/28/06 - $1,270,000
Notice of Default: 4/9/08
Lender "Buyback": 11/2/09 - $1,250,786
REO Listing History: 6/23/10 - $889,900
Reduced down to - $739,900
SOLD: 11/29/10 - $735,000
This loss of $535,000 represents a rollback of 42%. This is abnormally high and is NOT representative of the market. With that said, we should ask ourselves why this huge rollback is taking place. The first place to look is the sale that just went through. I see absolutely no indication that there was any funny business considering the fact that this was listed on the MLS for quite some time (125 days before going into escrow). So this wasn't some insider kickback that went pending after zero days on market or anything. I think the price it sold for is a fair, market price.
So we are left to investigate the original purchase back in 2006 to try and decide what type of potential foul play there could be here. I did a quick search on the blog for the address and found the following comment left back in October 2007 from one of our esteemed readers, dwr:
1741 Maple and 1320 Pearl (both of which are currently being offered for sale by Klondike Investments' web "sight") were both purchased in 4/06 with zero down, financing by First Franklin. The owner of 1320 Pearl recently (on 10/10) had seven properties transferred to him from someone whose last name is the same as the owner of 1741 Maple, but with different first names. Probably just another extended family of wannabe Trumps who put none of their own money down and somehow "own" 15-20 properties, thanks to First Franklin et al.
So easy financing was abused and someone got a hold of a bunch of properties that they shouldn't have. Now is where you have to speculate because I don't have answers. Did they knowingly overpay and receive some type of kickbacks at the time of purchase? Or were they just stupid with no skin in the game and didn't care what price they paid because they had some type of neg-am loan where they would win by renting out the properties and making little to no mortgage payments?
I'm too lazy to do any more digging on the lowlife that owned this place and all the others, but I think the moral of the story is that examples like this show we are just now getting through all the (potential) fraud and market distortions brought on by the credit/housing bubble. The old sale looks way too high to be called "market", even by 2006 standards. The current sale looks fair. It is good news when we work through these situations. I think it will still take a few years to clear out all the rot.
I agree with your analysis. I also think the uncooperative tenant could have affected the sale price a great deal. Especially in SM a tenant can cause a lot of trouble for the new owner.
ReplyDeleteThis particular stretch of Pearl is quite fine, very wide and on the crest up above Lincoln, but the financial shenanigans you describe are disgusting -- thanks for bringing them to light.
ReplyDeleteFurther up the street, better-looking 1525 Pearl, 2/1 with pool, 1,080 sqft/6,090 sqft lot, recently sold for $750K or was it $800K? Who knows anymore? (Redfin posts two amounts for the same 11-29-10 closing date). But it does look like the mid-$700Ks are finally arriving to this area of Sunset Park.
Will the high $600Ks soon appear? The new Case-Shiller numbers to be announced later this morning may provide some clue.
Correction to above: 1525 Pearl closed on 11-19-10 (not the 29th).
ReplyDeleteGoing way east into Sunset Park, there's 2224 Navy, 2/1, 970 sqft home/large-for-the-area 8,614 sqft lot, short sale listed for $575K on 11-8-10 and already pending sale. Let's see how long the process takes here.
ReplyDeleteThe Navy home looks OK from the outside, unlike teardown 1328 Hill (6,440 sqft lot) which sold for $575K in what's been previously described as an "outlier."
If Navy goes for $575K-- and, yes, it's right across from the airport --that nice $575K price may become the new standard for quirky properties in the 90405's Sunset Park.
The Hill property was the deal of the decade....was that an inside deal or what?
ReplyDeleteNavy is crap. That location is dreadful. Truly the worst in Santa Monica. It should be free to any blind/deaf squatter that can stand it.
Not a good comparison to Hill St. lot at all. Between the airport noise and the Walgrove/23rd street traffic....its like living on the 405...the city should buy it up and expand the flight path....
I think ggm is right on. The Hill transaction was fishy and you can't really use it. Navy really sucks. Who cares what it looks like from the outside? It is under the airport. Location, location, location...remember?!
ReplyDeleteI think people should resist the urge to get their hopes up too much. I don't know if I am going to be correct, but I don't think we are going to see big drops in prices in the future. Slow grind with some bumps along the way, but we aren't all going to be snatching up "affordable" 90405 properties.
I like seeing this back and forth again, and I certainly understand the cardinal location rule. But when stone's-throw-away 2201 Marine sells for $1,650K and 2202 Marine for $2,200K, it looks like acquiring a luxury property trumps the location rule...and some planes overhead? So what?
ReplyDeleteStill waiting for an "affordable" area home and still appreciating your blog for all its insights.
"I think the price it sold for is a fair, market price."
ReplyDeleteIt's a dinky house on a tiny lot, it's on Pearl close to the college (which is a negative no matter what others say), and there's an "uncooperate tenant" in it, and it still sold for $735K.
Thanks for the laugh about the Navy place, as the other poster said you very well may have found the worst location in all of SP.
And for those who like "quirky properties", check out 1510 Sunset, it sold for $440K! Now, for affordable properties that someone might actually want to live in, yer outta luck. But hey, we've been assured that "2011 will be a BLOOD BATH"!
These are truly the 'dregs' of the Santa Monica real estate market.....1510 Sunset was like a rundown trailer (not even a double wide at that!)
ReplyDeleteI wonder what the new owner of 1510 Sunset can do with that property- I would guess the current footprint does not comply with current setback requirements, so they likely can't tear the thing down and start over without losing some of the (already tiny) footprint.
ReplyDeleteThe blood bath is considerably less likely if the stimulus/tax cut bill passes. Never thought there'd be anything less than complete political paralysis the next two years after the November elections.
ReplyDeleteThat said, the California fiscal situation is terrible. We're still years---maybe even a decade---from seeing anything other than continued declines. These awful properties are the canary in the coal mine.