Irvine Housing Blog

When plan-A is so attractive, and you had seen the gains of the past 4-5 years (in 2004/5), why do you even think of plan-B?  It was so easy, and there was so much money.  When thinking about why people don’t think about plan-B, you have to really think about the attractiveness of plan-A.  There has to be a heloc-fueled empire story somewhere to capture the psyche of the bubble.

How many bubble-era investors are still holding on to negative cashflow properties?  They were the first to bail, or they rented it and pocketed the rent w/o paying the mortgage.  The family with the condo were accidental landlords and didn’t completely view their home as an investment.

The perceived investment value of homes greatly skewed what people were willing to pay.  There is no reason to pay appreciable more than rent apart that.

History of the listing agents on Bower Tree

Seller’s cancelled their listings on

1) 41 Bamboo, Original $690,000 dropped to $400,000, then raised to $580,000, The seller cancelled the listing after 9 days

2) 1 Fortuna originally listed for $850,000, lowered to $495,000, raised to $900,000 before the seller cancelled the listing after 5 days.

3) 53 Arborside, Original list $1,099,000, lowered to $900,000, raised to $1,200,000 before the seller cancelled the listing after 6 days.

4) 26 Iron Bark, Original list price $500,000, lowered to $250,000, raised to $500,000 before the seller cancelled the listing after 6 days.

Sold

1) 40 Meadograss oringal asking price $650,000, this is the price that the comps normally indicate and that the seller really wants for the property, they then dropped it to $345,000 before selling it for $560,000. Using this strategy is telegraphing that a seller is desperate to sell, what’s frustrating for buyers on these deals is that I would estimate that 50% of those that list with this group can’t sell their property for market value because they are underwater and less than 50% of their listing in Irvine sell. Moreover, many buyers that are new to the market looking at price points much less than what the seller would even consider get drawn to spending/wasting time on these. That said, if one is already looking in the neighborhoods these listings come up in this strategy plays in a buyers favor given the property is only shown for 1 day and they should know within a week if the seller is going to sell it to them or not.

2) 9 Laurelwood, Original $1,100,000 dropped to $495,000 sold for $935,000

3) 32 Vienne, Original $950,000, dropped to $495,000, sold for $965,000

Active
43 Bower Tree
26 Iron Bark

Hold
55 Valley Terrace

“AUCTION SALE . .. NOT A SHORT SALE, REO OR DISTRESSED PROPERTY.”

I wonder if they have an auctioneer’s license…I wonder what OCNar would do if these clowns were cited for conducting an illegal auction?

My bad, apparently CA does not require an auctioneer’s license, even for real estate…

Hi Chrissy;
    I’ve done some research on them because every time they list I get dozens of calls. For first time buyers or those new to the market buying a home is emotional enough, these listings waste a lot of people’s time.

  Their listings get attention; however, I don’t think that the attention this strategy draws helps the seller to sell for more money. Imagine that your budget is $600,000 and you see a $1,000,000 Turtle Ridge home come up. Of course you will be interested, but desire is not demand. Crazy that OCAR can go after Larry (and me) regarding “ethics” yet these guys are allowed to waste hundreds of hours of people’s times and turn the MLS into a joke.

  We’ve submitted offers on their listings, in one case they had it listed at circa 500k, the market value was circa $1,000,000 we offered somewhere in the low 900’s and they told us that unless we were going to submit at over $1,000,000, the seller would not consider the offer, they sold it for less than $1,000,000. However, it’s a huge turn off to buyers when these games are played and I’m confident in most instances their sellers get less as a result of well qualified buyers not wanting to participate in the charade or not being available to see the property during their one day open. It seems wrong to list a property at 500k and if you are not willing consider offers at $900k+ and only furthers agents poor reputations.

      I had a recent experience that they told me that they had offers over 100k above ours only to call us back the next day when we said we were not budging and ask us if we were still interested at our original offer price.

    They may be able to get hundreds of people to show up, particularly before people knew that their listing prices aren’t for real and more often than not the property won’t even sell. However, as Larry has said many times, desire is not demand. If I had a million dollar property I don’t think I would want hundreds of people walking through my house if their budget is $600,000, which is what this strategy does. Moreover, the chances of the best buyer for the property wanting to play this game or being available the one day that they show it is less than if they did not play this game.

    It’s a gimmick to get listings and as long as people list with them they will continue.

CMA- Woodbridge, outside the loop

search ran

3 bedrooms, 2-3 baths,

square footage 1400- 1700

sales from 2/1/2010- 1/1/2011
A glitch in the MLS sometimes causes older comps to populate and I just caught it, please ignore 9 Pebblepath which sold 5/13/2009, I did not have a chance to remove it.

40 Madowgrass is the first sale on this list,

This should be easier to read

Thanks for the data Shevy.

It’s hard to tell how well these comp up just by the listing photos (17 Caraway only has one external picture). I only looked at the 1-story comps but it seems like 40 Meadowood was the most “classic” (AKA not that updated).

Of the two that I followed (32 Vienne and 9 Laurelwood), those seemed to be within comps so uh… 2 out of 3 isn’t bad right?

Maybe this “auction” process doesn’t work too well on older less desireable homes.

IHO, I know you are familiar with Woodbridge so that’s why I picked this one. There is no perfect comp, however, in my opinion; the seller would have got more money if they would not have sold it in this manner, however, it’s by no means an investor that is looking to flip or trustee sale price either. Regardless, $30,000+ is a lot of money and I believe that most would wait in extra 60 days or so for the chance at an extra $30,000+.
      I have not had time to analyze any other of their listings in detail recently, however, based upon the ones I’ve seen and the ones that I’ve had buyers offer on, the buyer psychology that this creates, the lack of showing availability, and the good buyers that choose to pass as a result of the way they run the process, I believe that it works against most sellers that do not have a minimum walk away and relist price set and if the real goal is to sell for market value (or close to) with less hassle I do not believe that it accomplishes this for most. Based upon their Irvine listings 3/8 sold and one of those was likely for below the market value at the time.

    Regarding 32 Vienne and 9 Laurelwood, I agree that this works better when it’s a seller’s market and in high demand areas. I would want to do a more thorough analysis to determine what those sellers should have gotten based upon the market comps. 

    That said; there is value to getting as much exposure as possible, pricing a property properly, when leverage is created by multiple offer situations, and when there is true demand. I just don’t think that this accomplishes most of these well, to the detriment of the sellers.

When is the auction?

Would love to see this farce in person!

“One by one, each market participant moves from denial to acceptance and capitulates by selling at a loss.”

I came across a prime example on a discussion board just this morning:

“I am going through this <short sale> right now. My husband got laid off, and we moved to another state for a job for him. I found renters, and altho they paid the rent, they did some damage that had to be fixed before we could show the house.

We have the house priced at what we owe on it, plus the realtors fee. We have had 26 showings, and not one offer, not even a low ball offer.

In the meantime, we paid people to mow the lawn and clean the house. My daughter stopped by the house the other day and those people were in the house partying and smoking. I’m terrified someone will have a party there, and I will be liable for the damage.

I’m now in the process of doing a short sale. I cant help it that the market has changed the value of my house, and I don’t want the house to get destroyed sitting there vacant.

I could have stopped paying the house when my renters left, rented it to someone else, and made money on the deal. It would take 2 years to foreclose in my state.

I didnt do that- I tried to do the right thing. Now I want the bank to agree to lower the price so I can sell it to somebody who will appreciate it and love it the way that I did.

I will never buy a home again.”

Attitudes are changing, although I definitely think that’s dependant on location. I believe the above poster is in Florida.

Most people I’ve talked to in California, especially in OC, are still waiting for the magical market turn around to save them… and they know will be coming any day now.

There are 3 forms of cash flow in real estate investing, each with its own risk profile:

1) Operating cash flow
2) Tax benefits
3) Capital gains on sale

Operating cash flow is great! What could be better than cash in hand to meet expenses and line your bank account as an investor? But there is risk! Unexpected maintenance, tenants destroying your property or not paying, and general vacancy.

Tax benefits only work if you have other income sources to reduce with the tax advantages that real estate affords. And with governments running the deficits they are, you can count on tax laws change…not in your favor as an investor!

And finally, the magical capital gain…this is the realm of the novice, the gambler, and the REALLY astute investor! Banking on value appreciation, alone, is a little different than rolling the dice in Vegas. It can certainly pay off, feels like you’re on drugs when you’re right, but the time will come for 99% of us out there where we will be burned!