Another Stinky Short Sale On 25th?

Address: 522 25th - 90402

Details: 5 bed/7 bath 6,397 sq ft house, 8,700 sq ft lot, 2006 construction, "landscaping and other areas still need to be completed"

Description:  SHORT SALE SUBJECT TO LENDER APPROVAL. HOME FEATURES 5 BED/7 BATH. LANDSCAPING AND OTHER AREAS STILL NEED TO BE COMPLETED. HOME IS BEING SOLD AS IS. BUYER IS RESPONSIBLE FOR DOING ALL INSPECTIONS AND DUE DILLIGENCE. PLEASE SEE PRIVATE REMARKS.


Previous Purchase: 4/22/02 - $1,625,000


Listing History: 1/19/11 - $2,995,000


The last suspicious looking short sale on 25th that I featured was south of Montana. This one is north of Montana. Both are (in my opinion) pretty ugly spec palaces. The one south of Montana is still listed as "pending" as I write and it went into escrow at 0 days on market. This listing here was apparently on the market for 8 days before going into escrow and it is now listed as "looking for backup". But the odd thing is that if you go to the MLS and search for properties that are in escrow, you won't find this one. I was able to pull the listing page off of another link on the internet. But why, if you are trying to get top dollar and trying to get the widest audience, would you list a property in a way that limits the ability of people to see it?


From the description, we see that this property still isn't fully finished. They listed landscaping and "other areas" as incomplete. This thing is listed as being 2006 construction. So after 4 or 5 years they still couldn't get it together and finish the landscaping? Huh? Have people ever heard of the terms "holding cost", "time value of money", "cash burn"? How long have they not been paying the loans on this thing? Hard to know, but RealtyTrac shows that the property is in pre-foreclosure so I'm guessing at least one notice of default has been filed.

As to valuation, this is a very prime lot and the land itself is worth not too much less than $2mm. Probably $1.8mm -$1.95mm. Even with the fact that you need to spend some money on landscaping, I think the $3mm asking price for this short sale is low. Of course, I could be unaware of some major construction flaws or maybe it needs a ton of work inside (I don't get that impression though). I just get really suspicious when I see short sales like this where they aren't widely marketed for at least a few weeks. If anyone has any info on this situation, please feel free to share or anonymously e-mail me.

Examples like this show that despite my more optimistic outlook for Santa Monica real estate, there are still a bunch of buried bodies that need to get cleaned up. It should still take some time, but these types of situations are not common enough to pull down the entire market by a large degree in my opinion. I just don't like seeing suspicious activity in the market so I use this blog to highlight things like this. Thanks to the reader for the heads up on this property.

Sorry, No Free Lunches Here *UPDATE 1*

I have continuously warned that if you are expecting to buy a high quality property (or piece of land in this case), you won't be doing it at some huge, 50% discount...even at the very bottom.

I featured 848 23rd back in late December. The seller and agent employed what I believe to be a brilliant listing strategy considering that this property was put on the market right around Christmas (and in the rain...the horror!). Instead of listing at some bloated price and have the property turn into a zombie, they listed at a very cheap price. A price that had several readers e-mailing me. I had a friend e-mail me because his co-worker saw it and wondered what was going on. Get it? High quality at a very cheap price elicited a giant amount of attention.

Next came the throngs of people willing to deal with a rainy open house during prime holiday gift shopping time. And of course, next came the bidding war.

My own sources and some astute observes guesstimated $1.35mm...

Listing History: 12/14/10 - $989,000

SOLD: 1/18/11 - $1,385,000

I'm a little surprised by this sale amount as it seems to indicate a very full price to me, but it is in line with the guesses of a few people. Some of you may want to compare this to 838 25th which sold in March 2010 for the exact same price but was actually rehabbed a bit so you could actually live in it. I would caution that it is not a complete apples to apples comparison in terms of location because the house on 25th backed up to the school whereas the house on 23rd is more of a super prime location (for south of Montana). So I don't think you can look at this and say that prices are rising much, but it sure shows they are pretty firm and not declining by a noticeable amount.

The 2011 Selling Season Has Arrived - Now Show Me Some Rollbacks

Address: 1025 25th - 90403

Details: 3 bed/2.75 bath 1,900 sq ft house, 6,072 sq ft lot, 1930 construction with some upgrades

Description: Welcome to this charming one story Spanish home located on a tree-lined street. This location is close to the parks, shops and Franklin school. The house has hardwood floors throughout and coved ceilings in the living room with a fireplace. The inviting formal dining room, with high ceilings and big windows is adjacent to an outdoor eating area which creates a desirable entertainment flow. There are three bedrooms and 2 3/4 baths. The yard has a serene sitting area and a place for a swing set.


Previous Purchase: 9/13/05 - $1,720,000


Old Listing History: 2/27/09 - $1,895,000
expired after 182 days on market and no price cuts


Current Listing History: 1/14/11 - $1,650,000


The old listing history from back in early 2009 shows that this seller has been very delusional in the past. However, the current asking price appears to be much more in line with the market (although I think it still looks a little high).


The current asking price represents a 4% rollback from the September 2005 price...so call it a mid-2005 rollback asking price. I think they may need to reduce the price into early 2005 territory or a bit lower to get this to move. One of the problems with this house is that the smaller lot and interior improvements makes it so a buyer isn't going to buy this and tear it down to build, but at the same time, it isn't small enough and cheap enough to cater to the more entry level young family demographic. This thing is a touch above the entry level area but not really into the next tier...


I have noticed a nice little bunch of properties hit the market in the past week or so. Hopefully we can keep a close eye on new listings as well as listings coming back out from the shadow inventory pool (like this one).

90403 Boomerang

I last featured 1030 Chelsea back in late 2008 when it sold. I went to the open house back then and this thing had not been improved in quite some time. Looked like a fairly old owner.

It was listed for $1.4mm and ended up selling in November 2008 for $1.2mm.

Now it appears to have been upgraded and is back for sale. Too long of a hold to be called a flip, but not the longest holding period here...

Details: 3 bed/2 bath 1,319 sq ft house, 6,118 sq ft lot, "recent upgrades"

Description: A charming Santa Monica home on a quiet tree-lined street just south of Montana. Move-in condition with lots of recent upgrades including new windows throughout the house, tank-less water heater, and newly refinished hardwood floors in every room. Remodeled kitchen features granite countertops, new sink and appliances, refinished cabinets, and very hip cork floor. Third bedroom has it’s own fireplace and direct access to a tranquil backyard. Spacious backyard is great for entertaining and features a new fence and room for a pool. Detached garage with alley access and lots of parking for your toys. A great location that is walking distance to Franklin Elementary, Douglas Park, and shops on Montana. Agents please read and follow instructions in the private remarks for showing instructions.

Listing History: 1/11/11 - $1,425,000

I think prices are not very different now than they were in late 2008. So I would have to try and figure out how much value I wanted to ascribe to the upgrades. Are they worth $225,000? I don't think this listing looks like a screaming bargain but I also think that with rates still pretty low and the economy doing OK, some young couple might want to avoid the headache of redoing an old, entry level house and just pay up a touch and buy something like this for a price like this. What do you think?

Challenging Location Created Deeper Rollback

Address: 716 11th - 90402

Details: 3 bed/3 bath 1,668 sq ft house, 7,500 sq ft lot, "pristinely remodeled"

Description: This pristinely remodeled 1-story home is located close to popular Montana Avenue, offering posh boutiques and restaurants, within the excellent Roosevelt School district, and a short distance to the beach and Boardwalk. The home offers 3 bedrooms + 3 baths and bonus room on a lovely and privately landscaped +/- 7,500 sq ft lot. The Kitchen is completely re-done with granite counters, breakfast area and top-of-the-line appliances. Hardwood floors, crown moldings and recessed lighting are found throughout. There is a large living room with views towards front landscaped yard. The nice sized dining room and French doors lead to the backyard with grassy area, bamboo landscaping, water fountain sculpture and outdoor deck for entertaining - all providing a Zen-like atmosphere.

Purchase History:
11/4/04 - $1,460,000
9/14/06 - $2,112,000
5/8/07 - $2,300,000

Listing History: 6/10/10 - $2,195,000
Reduced down to - $1,899,000


SOLD: 12/29/10 - $1,780,000


This is a loss of $520,000 which works out to 22.6% off of the mid 2007 price. This looks bigger than other rollbacks for single family houses in 90402 and I think much of this can be attributed to the fact that this property is on the first half of the first block north of Montana on 11th (which has a light). So, you've got the too close to Montana problem as well as the 11th street problem.

I think this is likely an apples to apples rollback as it looks like the upgrades to the house were likely done sometime after the 2004 purchase. Pretty crazy how many times this property changed hands though. Something of an Old Maid situation.

18.4% Decline To Start 2011 Off = Stable Values

Address: 453 14th - 90402

Details: 5 bed/5.5 bath 4,665 sq ft house on a 7,810 sq ft lot, year 2000 construction

Description: Elegant Newer Mediterranean North of Montana. Soaring ceilings, gorgeous wood floors, custom moldings and quality built-ins. Large gourmet cook’s kitchen with stainless appliances, center island, butler’s pantry and granite counters. Four bedrooms and upstairs family room/library, guest bedroom downstairs. Palatial master with 16 foot ceilings, spa bath, fireplace and two balconies. Backyard features a dark bottomed swimmers pool, entertaining area, a built in BBQ and large covered patio. Bonus room above the two car detached garage. Enjoy all the benefits of Santa Monica’s schools, shopping and restaurants – all just around the corner.

Purchase History:
8/7/00 - $2,425,000
4/16/04 - $3,100,000
4/24/06 - $4,350,000

Listing History: 10/29/10 - $3,600,000

SOLD: 12/30/10 - $3,550,000


This $800,000 loss is large in dollar terms but it is a decline of just 18.4% which I would call roughly in line with other peak to current declines. Note also that this is 14th street which carries a bit of a discount and which is not as resilient as other streets which are less busy.

Happy new year and welcome to 2011. We are now in year 2 of my 3 year period in which I said buying a house would likely make sense (2010-2012). As shown by this example, I think prices are still remaining pretty stable. I don't see a compelling reason for values to go up and I still think they might creep down a bit (at least in real terms), but I don't see any major, looming gap-down upcoming. The economy is looking stable to better. Check it out, Calculated Risk even did another somewhat positive post titled "The Brighter Outlook".