Woodbridge Knife-Catchers

Apparently there are still people in Woodbridge who didn’t read Monday’s post Houses Should Not Be a Commodity. There are four knife-catchers I found while looking through the MLS listings on Redfin. There may be more.

One thing that puzzles me is the lack of pictures. You would think people trying to make a quick $100K would at least take some pictures of the properties they are peddling.

Cedar Glen FrontCedarglen Kitchen

IrvineRenterAsking Price: $535,500

Purchase Price: $500,000

Purchase Date: 12/14/2006

Address: 1 Cedarglen #29, Irvine, CA 92604

Beds: 3

Baths: 1.5

Sq. Ft.: 1,123

Year Built: 1976

Stories: 2

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $477

MLS#: S470156

Status: Active on market

On Redfin: 173 days

Unsold in 90+ days

From Redfin, “EXTREME HOME MAKEOVER. End unit townhome with extra windows and easy access to parking in the heart of Woodbridge. Private corner with nice size rear yard. Laminate wood flooring throughout. Near shopping, restaurants, theaters and North Lake with it’s pools, tennis and much more. Rehab includes new heat and a/c”

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{adsense-ir}

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I call BS on the “EXTREME HOME MAKEOVER;” unless, of course, you like the color pink…

Cedarglen Pink Room

At 173 days on the market, I don’t think the renovation was as successful as this knife-catcher had hoped.

Knife Catcher #2:

No Photo

Asking Price: $740,000

Purchase Price: $629,000

Purchase Date: 3/29/2007

Address: 52 Shearwater, Irvine, CA 92604

Beds: 3

Baths: 2

Sq. Ft.: 1,448

Lot Sq. Ft.: 3,994

Year Built: 1979

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $511

MLS#: S489742

Status: Active on market

On Redfin: 25 days

From Redfin, “Beautifully remodeled single story detached home located at the end of a cul-de-sac that features scraped ceilings, new sliding glass door leading to a patio area with a relaxing fountain and newly fenced private yard. New recessed lighting, new neutral paint, carpet, tile flooring, custom closet organizers, remodeled granite countertop kitchen with new appliances, updated bathrooms. Newer roof, new garage door, all new double pane tinted windows!! Lots and lots of new.”

I didn’t realize “new” was an object one could have lots of…

Here is another would-be commodity trader who just signed up to be a bagholder. I have to give all these knife-catchers respect for having courage; of course, I imagine that respect won’t mean much to them in bankruptcy court.

Knife Catcher #3:

No Photo

IrvineRenterAsking Price: $599,900

Purchase Price: $490,100

Purchase Date: 4/30/2007

Address: 17 Seawind, Irvine, CA 92604

Beds: 2

Baths: 2

Sq. Ft.: 1,058

Year Built: 1984

Stories: 1

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $567

MLS#: P579402

Status: Active on market

On Redfin: 30 days

From Redfin, “Beautifully upgraded home in Woodbridge near the lake. Highly upgraded with hardwood floor thru entire house, tile floor in the bathroom, granite counter top, crown & base moulding, just painted, private spa in the backyard. Walk to lake, park, and lots lots more!!”

WTFIMO, this is also a WTF award candidate. This buyer overpaid for what they have, and now they think they can turn around and sell it for $100,000 more. This unit does not see the lake, it isn’t on a park, it is a nondescript, tiny tract home in the middle of Woodbridge — for sale in a declining market. WTF is this seller thinking? This is a perfect example of the “buy and hope” strategy of the truly foolish speculator. This knife-catcher will really bleed.

If you don’t think this seller overpaid, compare it to the listing below.

And finally, a knife catcher of a different sort — bank real estate owned (REO):

No Photo

IrvineRenterAsking Price: $394,500

Purchase Price: $423,597

Purchase Date: 4/30/2007

Address: 87 Firwood #42, Irvine, CA 92604

Beds: 3

Baths: 2

Sq. Ft.: 1,150

Year Built: 1978

Stories: 1

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $343

MLS#: U7002379

Status: Active on market

On Redfin: 19 days

From Redfin, “OUTSTANDING LOCATION IN THE CITY OF IRVINE. THIS IS WOODBRIDGE! THE UN IT FEATURES THREE BEDROOMS AND TWO BATHROOMS. ASSOCIATION POOL AND SPA. OUTSTANDING SCHOOLS. CLOSE TO SHOPPING, TRANSPORTATION, ENTERTAINENT AND EMPLOYMENT. DO NOT MIS THIS ONE, THIS IS ONE OF THE BEST VALUES IN THE CITY! SUBJECT IS SOLD ‘AS-IS’ AND ‘WHERE-IS’ WITHOUT WARRANTY.”

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{adsense-ir}

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This looks like a bank property as they tend to put the “as-is” statement in their listings. Did you notice the price? A 3/2 under $400,000 in Woodbridge. Now that is a comp killer.

It is easy to get angry over the behavior of the commodity-trading knife-catchers. If they were not a fixture of the real estate market, some family might have been able to buy one of these homes at a better price. The time to be angry at these flippers is past, for the next several years we can simply enjoy the schadenfreude as these Donald Trumps are going to get their comeuppance. I don’t think any of us will be sad to see it happen.

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33 thoughts on “Woodbridge Knife-Catchers”

  1. People will try to ignore them, but they are sales in the market, and they represent market prices. At some point, there is enough of these that they cannot be ignored.

  2. Any sale, be it for profit, short sale, or REO sale, is a RECORDED SALE.

    When comping out a house for appraisal OR to list for sale on the market, you look at the most recent comparable recorded sales transactions, in addtion to the prices of homes currently listed on the market (in some cases where not much has sold recently).

    Granted, one REO is easy to pass over (you’d just use other comps that existed and drop the low REO comp in favor of the other ‘mid-range’ comps you find). However, when you start getting 3-4 REO sales, then they become the average. So they will set your price from an appraisal standpoint, which is going to DIRECTLY affect what the bank will lend a buyer/refinacer. That means no one will be able to buy that house above that price unless they want to bring a LOT of cash to the table… yah right! :/

    REO sales are just starting to trickle into the OC market and comp pool. in the next few months, it will be much, much worse.

  3. I have never understood owning an apartment-like unit except as a cashflow investment, and these don’t cashflow, so they make no sense at all.

    These properties are a classic example of how neg-am loans with teaser rates were used to bid up prices. This property probably does cashflow if you use a neg-am loan. Obviously, sustainable financing wasn’t a concern to buyers a few years ago, so prices like this happen.

    If the HOA fee is that high, if you put a 30-year fixed on this place and rent it for $2000 a month, it might be worth $200,000 as a rental, maybe $275,000 to an occupant-owner.

    This is progress. At the peak, this would have been $250,000 overvalued. To see it be only $120,000 overvalued is a great sign this early in the market crash.

  4. One thing that puzzles me is the lack of pictures. You would think people trying to make a quick $100K would at least take some pictures of the properties they are peddling.

    That is because there is not much to take pictures of…

    BTW, that one with the fuscia wall and dark floor…. that gets a WTF award not only for the price, but the lack of taste in color choice. That kitchen too…ugh.

    $535K or $477/sq ft is totally insane. This isn’t Malibu.

  5. I would imagine given what is going on on Wall Street regarding mortgages that REO sales are definitely the new comps. If we were still in the era of make a loan at any cost, I would say REO could be overlooked, but I do think we are in a shift back to more prudent underwriting. If this is the case, wouldn’t REO prices be a key price for any future lender to examine — after all it sets the price that the bank who became bag holder got.

  6. SoCalwatcher, you hit that one right on the head. If they had wanted to try and flip this place, you would think they would have painted the walls neutral and done at least something to that vintage kitchen. Nope! And I swear, that looks like AstroTurf in the backyard…no authentic grass is that color green, is it?

  7. That first condo is messed up.

    They should have torn out the kitchen cabinets and appliances before putting in the new floors. Its obvious that the 1970s cabinets need to be replaced and now any new floor-cabinets have to macth the dimensions unless you patch the floors with more laminate flooring.

    If you look at the refin listing, there is a pic of the patio. WTF is with the trees planted on top of the cement patio?

    This place needs another 30 grand or so in work.

    To say the words “EXTREME MAKEOVER” in the description for this place is a complete lie and there should be laws against this type of misleading advertising.

  8. The REO is definitely a comp. And, BTW, it hasn’t sold. So, the market is saying, “Hmmm, this is interesting at sub-$400,000″ but after almost three weeks on the market it’s still there. Not that three weeks is a long time, but clearly the market doesn’t see it as a bargain that might fade away lest someone jump quickly on it. If people aren’t jumping on $343 per sf, the $567 per sf is toast. Just for fun, take the $343 psf (that hasn’t sold) mulitplied 1,058 sf = $362,900 less 6% overall sales costs (commissions, escrow, etc) and the WTF might net $341,100. So the WTF paid $490,000, nets $341,00 and gets hammered for $149,000 on a $490,000 investment. 30% loss in two months.

  9. That is a good point. It doesn’t matter whether or not sellers, realtors or even some appraisers ignore a comp like this, if the bank doesn’t ignore it, a buyer will not get financing.

  10. Building on the other two comments…

    Just because the appraiser ignores the comps for the bank doesn’t mean the buyer’s agent can’t use the recorded sale as a means of bidding lower. This is not in the best interest of buyer’s agent, but of course we know that agents and Realtors(tm) are the most ethical people e.g. David Lereah =

  11. IrvineRenter, keep in mind the median 3 bd rent you see in Irvine of $2400 is driven by two primary factors:

    1. They’re 3/2 SFRs that are being rented. This is an apartment with 3/1.5.

    2. The newer apartment complexes that have been driving rents up, have townhouse style apartment with garages and all new accoutrements.

    Because of the age, lack of garage, lack of size and lack of 2nd full bathroom, this would be a very undesirable rental. A landlord may get $2000 for it, however, they’ll sit empty and have heavy turnover, two things a private landlord typically can’t stand.

  12. I used to feel sorry for the real estate agents that advise the sellers on price……not any more. After looking at these rediculous prices, I think the real estate agents should go broke. Advising a client to list a condo in Irvine above $350 sq ft. is the same as saying…..go ahead list this property and wait 5 years, maybe it will sell.

    It seems that there is the possibility that the only people purchasing properties in Irvine are retarded flippers.

  13. “If people aren’t jumping on $343 per sf, the $567 per sf is toast. ”

    I thinke people will jump on it at 170 per sf, that sounds about right for these old appartments.

    Sq. Ft.: 1,150, 1978, Stories: 1, at 170 per sf, that would make it a 200k purchase ( agree with Irvinerenter), which could be justified for a young starting family or maybe an investment. so we have about 50% to go.

    Another thing, in this downhill market, I’m seeing alot of desperate realtors stating that sellers will accept lower offers., so slowly I have come to ignore comps. just because some GF paid too much is not my probem. I know thats how it works in realestate, but my strategy is to estimate how much a home is worth after inflation from 1999 and then start bidding, its still too early to do that kind of lowballing, but prices are starting to improve significantly in some of the south OC neighborhoods that I watch. Irvine will follow.

    JMO what do you guys think?

  14. What?! Didn’t you know that Irvine is immune? =) j/k

    Seriously, yes, I’d say 200K is a good ballpark for starter home, but like another commenter said, not a great investment.

    MMG, I think that you already get what I’m saying below, but I think it’s important for everyone to keep in mind:

    One of the things that IR is doing is contrasting within a community because even with Irvine there are wide ranges by zipcode, by community, and even by street. The reason I point this out is that a $170/sf cost is just a number without more context. Is there a big ass castle on the street? Are the trees mature, consistent, and well maintained? Are there 3 REOs on the street that haven’t been maintained? etc.

    Put another way, we buy 1 or a few houses, ***we don’t buy enough homes to justify the use of a median for individual purchase***. An individual home (purchase) does not justify a median. A median of homes across Irvine does not make a single home a good or bad price.

  15. Please keep in mind that a majority of homeowners do not believe that housing is in trouble. They are overconfident in the real estate market and they believe that even if prices depress that they will quickly rebound.

  16. Darin, I agree with you. I came up with the 170 number for my own personal use, researching over the internet, trying to find out what homes sold for in 1999 and trying to GUESS where they should be right now.

    the price per sf will vary, depending on location, age of home, floor plan..etc.

    but I still think that comps wont be of great value since I want to be setting the new comp(very very low comp) by a nasty low ball offer …….LOL.

  17. “To say the words “EXTREME MAKEOVER” in the description for this place is a complete lie and there should be laws against this type of misleading advertising.”

    The just forgot to add the word “NEEDED” after “EXTREME MAKEOVER.”

  18. If I had a bit more ambition, I could go hunt on Zip Realty or another source, but since Zip requires a logon, I can’t link to it in posts; hence, I always use Redfin.

  19. I think by the time these units sell, the former owners will feel very “emmaculated”!

  20. “Irvine, you WILL atone!”

    Your market is almost EXACTLY tracking the market here up in Reno, with a 2 year time delay. We hit our maximum median in July 2005, and were a serious investment and flip market. Here is what you can expect:

    – Inventories will rise, since the sellers won’t get that things have changed and get out.

    – The pain of carrying the loan will start to hurt, and a owners will decide to get out at a minimal loss. Prices start to dip. (this seems to be where Irvine is now)

    – The pain starts to REALLY hurt. The investors start bailing out.
    Foreclosures creep up, and not just on the Voodoo properties. Prices fall to about 15% under the peak. Listings will still show up looking for a 20% per year appreciation! Go figure.

    – Foreclosures rise. The banks start selling off at 25% below the peak pricing (some look to MAKE a lot of green on the deal – they buy the loan back at foreclosure for the amount of the first mortgage. The New Century or Countrywide HELOC is vaporized. Ouch.).

    – The market chases the REO pricing down. Builders finally give up on the incentives scam, and drop priced 25%.

    That is where we are right now in the High Sierra. Don’t flay me for comparing the rarified OC market to the former divorce capital of the world. We were”special” here not too long ago.

  21. I don’t know the stats, but I wouldn’t be surprised if OC has a noteworthy divorce rate as well :)

  22. number one reason for marital conflict isn’t communication, sex, romance, raising the kids, and you won’t be suprised to find out that it is…

    money.

    I hadn’t had enough statistics and maturity to ask “so how many divorces are caused by money?”. Suffice to say, conflict is required for a divorce.

  23. There is a show called Exterme Makeover, maybe that is what they meant.

    Many of the home decorating shows have really unusual design ideas (including wall colors and treatments), I could see that bright pink for a kids room easily on one of those shows.

  24. The divorce comments remind me of this:
    http://youtube.com/watch?v=Ubsd-tWYmZw
    YouTube – Suzanne Researched This Commercial

    According to a recent poll, 36% of FB’s don’t even KNOW what kind of mortgage they have. The biggest amount of debt they will ever take on…and they don’t KNOW what the terms are. Where’s the reset money supposed to come from? Reset??? HUH!? Think about that. Over 1 in 3, ladies and gentlemen.

    Societal-social pressure (e.g. ‘keeping up with the Jones'”) is a pretty lousy way for married people to plan for a long future together.

    I’ve seen a lot of boom and bust markets…but I’m almost 50. There are two generations below me that have never seen a bear market. Add to that the constant media propaganda of the REIC, the low/no interest liquidity flood, the condescending “Oh, you’re STILL renting” snipes and snarks and PRESTO a made in hell bubble set to split these people up from the beginning. If you want materialism and social climbing to be the mainstay of your relationship, you’d better be either rich to start with or a very good market timer.

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