Address: 15361 Seine Cir., Irvine, CA 92604 (El Camino Real)
Plan: 2982 sq ft - 5/3.25
MLS: S457284 DOM: 41
Sale History: 7/5/2006: $897,000
Price Reduced: 10/06/06 -- $1,100,000 to $999,000
Current Price: $999,000
This home in The Ranch tract in El Camino Real was sold by a real estate agent/homeowner and sold to a real estate agent/flipper. The real estate agent/flipper put the home back on the market exactly 2 months after they bought it AND they expected to find a GF (as in Greater Fool) to pick it up so they could make the $203,000 profit they worked so hard for. A month went by with absolutely no interest and they lowered the price by 100k, deciding that they would be okay with a measely $102,000 profit.
If they do find a GF to pay the $1 million asking price for this home, they'll actually make considerably less than $102,000. The seller is offering a 4% commission for someone to bring a GF so I'll assume a total of 6% in selling costs (4% plus a little in closing costs plus a little to their broker). That reduces the potential profit to $42,000. The home is also listed as vacant and is also available for rent for $3600/month. Being the nice guy that I am, I'll assume carrying costs of only $4000/month (10% down, 6% IO on the other 90%). It'll be at least 5 months of carrying costs by the time this home is sold. That reduces the potential profit to $22,000. In all likelihood, the home will sell for less than $1 million and the flipper agent may be in the hole.
It's pretty surprising for me to see someone leg into a flip right now. When the summer started, things had obviously slowed down. How could anyone, especially someone in the business, decide they were going to buy a home this summer with the intention of flipping it?!?
Address: 804 Maplewood, Irvine, CA 92618 (Oak Creek)
Plan: 1200 sq ft - 2/2.5
MLS: S458207 DOM: 25
Sale History: 8/10/2005: $549,000
12/21/1998: $185,500
Current Price: $569,000
Here’s a Plan 3 in the Oak Park tract built by Presley Homes in 1998 in the village of Oak Creek. This condo was purchased on 8/10/2005 with 10% down. This means the owner has a little room to lower the price if they really want to sell. They listed the property for sale a year after they bought it. The Realtor.com link shows a range pricing of $529,000-$569,000 although I don't see that in the local MLS. There's also a different plan (also 2/2.5 and 1200 sq ft) in the same tract at 904 Maplewood listed for $524,900.
Assuming 6% in selling costs, the seller will lose about $14,000 if sold at the high end of the range and will lose over $51,000 if sold at the low end of the range.
Address: 1 Buellton, Irvine, CA 92602 (Northpark)
Plan: 4133 sq ft - 5/5
MLS: S438082 DOM: 158
Sale History: 11/14/2005: $1,550,000
2/21/2002: $786,500
Price Reduced: 06/11/06 -- $1,769,000 to $1,739,000
Price Reduced: 06/25/06 -- $1,739,000 to $1,709,000
Price Reduced: 07/24/06 -- $1,709,000 to $1,699,000
Price Reduced: 09/10/06 -- $1,699,000 to $1,675,000
Current Price: $1,675,000
We found out about this flip from an anonymous tipster (Thank You!). This huge Plan 3 in the Huntington tract built by Richmond American in 2002 sold for about 100% more in 2005 and came back on the market 5 months later in April 2006 for even more. The original owner made some great money on this property in those 3 1/2 years from 2002-2005. The original owner was able to move this property from listing to escrow in 9 days (see MLS S413640)! That's FAST considering it was late 2005 at the time. Great timing huh? The original owner also sold for $45,000 less than the original listing price of $1,595,000. Motivated seller huh? Perhaps.. but accepting a price $45k below asking after only 9 days on the market just doesn't make sense.
That is... until you find out the original owner is a RE broker and represented the new buyer. This broker was more than glad to reduce the price by 3% since he wouldn't have to pay a commission to another agent.
Let's look at the new buyer. From what I can gather, the new buyer has loans totaling $1,469,500 - which INCLUDES a $307,000 loan from the original owner/RE broker! The original owner/RE broker really had to put in some effort and $$ to make this deal come together. A $1,469,500 loan on a $1,550,000 property is just absurd! That's a 95% financed purchase! Any idea what would happen if the new buyer can't make the payments?
Now the new buyer listed the home 5 months after they bought it hoping for a quick 200k profit. That's definitely not happening. You can tell they realized this and started reducing the price. The first two price cuts were 30k each but after that you can see the hesitation in reducing the price further. IF sold at the current asking price of $1,675,000 they will make a profit of $24,500. We'll have to just wait and see what happens here.
There's a lot to talk about when it comes to the Marquee Park Place: the first residential high rise in Irvine if not all of Orange County, the ridiculous amount of investors, the exorbitantly high HOA dues, not to mention the tons of units available on the market for sale or rent. I'd love to see an in-depth article on the Marquee and perhaps we may do one if we can gather the data and present it clearly. But for now, I'd like to point out a Marquee flip that went terribly wrong.
Welcome to 3141 Michelson Drive #402. This property's sale closed last week. That's a little different from the rest of the properties on this blog which are actually available for sale. In some ways it's better since we don't need to guess what the final selling price will be.
Address: 3141 Michelson Drive #402, Irvine, CA 92612 (Park Place)
Plan: Plan D - 1492 sq ft - 3 (2bd+den)/2
MLS: P522216 DOM: 57
Original List Price: $829,000
Final Sale Price: $709,000
Date Sold: 9/29/2006
In order to obtain the initial purchase price of the property, I actually looked up the property tax information from the Orange County Tax Collector. From that I discovered:
Purchase Price: $690,800
Purchase Date: 2/13/2006
If anyone can corroborate that or find evidence contrary to it, please let me know because having accurate information is of the utmost importance.
A quick look at the purchase and sales prices will tell you that the buyer lost money on this deal after paying commissions and closing costs. However, the extent of the loss is far more severe. On the MLS listing, the description says "Seller will credit buyer 2 year HOA dues based upon the current one at COE which is worth more than $28,000." And the private remarks say "4% COMMISSION !! 4% COMMISSION !! Yes, it is 4% !! Please take off shoes." Another piece of the pain puzzle is that the property was vacant so we should account for the carrying costs for the mortgage and HOA dues for 7 months (let's be conservative and assume they put 20% down and took out a 6% IO). Here goes:
$709,000 - 7% in commissions and closing costs = $659,370
$659,370 - $28,000 in HOA concession = $631,370
$631,370 - $27,500 in 7 months of carrying costs = $603,870
$603,870 - $690,800 purchase price = $86,930 LOSS
This seller may have lost more than $87,000!! Unbelievable! Makes me wonder how much pain some of the other flippers at the Marquee are feeling. What do you think?
Address: 193 Lockford, Irvine, CA 92602 (Northpark)
Plan: Plan D - 1550 sq ft - 3/2
MLS: F100045 DOM: 263
Sale History: 1/14/2005: $589,000
Price Reduced: 09/26/06 -- $679,950 to $619,000
Current Price: $619,000
This condo was purchased in early 2005 and was then listed for sale a year later on 1/12/2006 for the sky high price of $679,950! After around 250 days on the market, the sellers dropped the price by $60,000! It sure seems like they are motivated. What's strange is that I couldn't find any pictures of this property in MLS so I grabbed one from the prior listing. They might get a little more interest if they had some pics of their property on MLS. As it stands right now, they will lose about $7,000 if they get the current asking price and pay about 6% in commissions. However, it could get real ugly real quick.
Address: 109 Lattice, Irvine, CA 92603 (Quail Hill)
Plan: 2500 sq ft - 4/2.5
MLS: L20940 DOM: 70
Sale History: 06/20/2006: $1,425,000
06/14/2005: $1,249,000
Current Price: $1,499,000
Here we've got a SFR in the Olivos tract in the village of Quail Hill. The Olivos tract had some pretty nice floor plans that made good use of the space. Back in 2003 (maybe) when they started building these, I believe they were in the $800s. It looks like this particular home was built in 2005. The first buyer flipped it in about a year and made some easy money. The new buyer listed the home only 1 month after being purchased this summer. You know EXACTLY what this person was thinking. 'I'll by this home, relist it, and make a ZILLION dollars!' Pure Genius, Pure Greed, or Pure Stupidity?
Unfortunately for the new flipper, it doesn't look like they will be making any money. They can only hope their losses will be limited. With 6% in commissions, this flipper will be out at least $16,000! The description in the listing ("SELLER OUT OF AREA AND WANTS PROPERTY SOLD NOW!!!") screams desperation. When this property finally sells, the total loss this flipper will face will be huge given the carrying costs of having a $1M+ mortgage on a vacant home for several months. Anyone care to do the math?
Date of Purchase: 7/1/2005
Purchase Price: $1,466,810
First Tax Installment Due 12/11/06: $10,561.49
First Supplemental Tax Due 12/11/06: $2,603.74
(Above information from OC Tax Assesor site)
Days on Market: 108
Price Reduced: 07/02/06 -- $2,195,000 to $2,095,000
Price Reduced: 08/17/06 -- $2,095,000 to $1,999,999
Price Reduced: 09/11/06 -- $1,999,999 to $1,939,900
List Price 10/1/06: $1,939,000
So I finally took a look inside this house today. Not that I haven't had lots of opportunity - it has been open practically every single weekend, all summer long. For several weeks, there were about 6-8 signs plus several large flags parked on the lawn. Today's open house was a bit more toned down, with only a couple of signs. Guess they finally realized how transparent that made their desperation (as if having an open house every single weekend doesn't smack of desperation all by itself).
The house is absolutely beautiful. Other than its lousy location (on a very busy corner right near one of Woodbury's main entrances), I just love this house. I always try not to let myself be distracted by nice interior decorating but this house is staged so fantastically that it's hard to do so. Yeah, that's right, it's staged. As in, ain't nobody livin' in this house!
Notice the $13,000+ tax bill coming due in a couple months...the Realtor was very friendly but seemed a bit, oh I don't know, stressed? Gee, I wonder why?
Serves the owner right. They expected to post a >$700,000 gain on a house they had owned for one year? Listen up, folks - your house is gorgeous. Cut the price down to a more realistic, non-gouging profit level and I'll bet it'll finally move. Keep it at 2 mil, and that's fine by me since I'll be happy to check back in on your open houses throughout the winter and spring to enjoy seeing what kind of house I plan on owning one day (using a fixed rate 30-year mortgage of course).
Address: 129 Islington, Irvine, CA 92620 (Northwood)
Plan: 1250 sq ft - 2/2
MLS: P513933 DOM: 131
Sale History: 07/11/2005: $555,000
Current Price: $575,000
This property in the Greystone Villas tract sold in only 4 DAYS last year. Now the same property has been on the market for over 4 MONTHS!! Perhaps a reduction in price would help make the sale? It appears the property is tenant occupied. So could it be that the owner isn't bleeding money every month and is just hoping to get out of the market without any serious damage?
*IF* the property sells for the asking price, the owner is still looking at a loss of $14,500 (assuming 6% in commissions). OUCH! That's serious enough for me!
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