Old Asking Price: $513,000 or $507,000

New Asking Price: $479,000

Purchase Price: $486,000

Purchase Date: 6/9/2006

Address: 39 Spanish Lace, Irvine, CA 92620

Beds: 1
Baths: 1.5
Sq. Ft.*: 1,135
Year Built: 2006
Stories: 1
Type: Condominium
View: Mountain
Neighborhood: Woodbury
$/Sq. Ft.*: $452
MLS: S477287
Status: Active on market
On Redfin: 56 days

Redfin, Zillow, FirstTeam

From the listing:

“Truly better than any Model Home, owner spared no expense was planning to stay forever! Upgraded everything, Carpets, Tile, Paint. Kitchen has Stainless Steel appliances and custom backsplash. Recessed lights throughout, Ceiling Fan in Master Bedroom, Living Room is Prewired for Fan. Additional Cabinets added in Laundry Room, Closet Organizers in Master Bedroom Walk-In Closet. Desirable Street Front Location, Great Mountain Views from Private Front Balcony”

Notice there are no granite tops in this truly-better-than-any-model condo. Maybe the 80’s style white tile is the new black? Granite tops was so 2005. Who wouldn’t want the high-end white tile? After all, this flipper / home debtor / owner was planning to stay forever! Yeah, right…

{adsense}

I must admit, I have a particular prejudice against 1 bedroom apartments / condos selling for more than their rental value. The only reason any rational person would buy this unit is to make positive rental cashflow, or to save versus the cost of renting. Nobody wants to live in these units for more than a couple of years. This isn’t a house that you buy to live in for a long time. It’s transitory housing, and it always will be.

First Team’s website tells me my payment would be $2,564 a month (based on a $507,000 purchase price), the HOA is $150 a month, and the taxes are $464 a month, plus another $100 for insurance. The total cost of ownership is running $3,642 a month. Does anyone think they can get $4,000 a month rental on this place?

Let’s be real for just a moment. Buying a unit like this isn’t about being rational, it is about greed. There is no justification for the pricing of these units other than the buyer believes these units will rise in price forever. This is the “greater fool” theory on full display.

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The painting is No. 1 (Spanish Lace), 2006, Mixed Media, by Charles Dwyer

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**** UPDATE 1 ****

The deterioration at the bottom of the market continues. Assuming a 6% commission, this flipper / long-term homeowner stands to lose $26,340.

**** UPDATE 2 ****

Now the loss would be $35,740. Thank you Mk9 for the heads-up.

Asking Price: $1,395,000

Purchase Price: $635,000

Purchase Date: 2/19/2004

Address: 3751 Hendrix St., Irvine, CA 92614

Beds: 5

Baths: 4

Sq. Ft.: 3,450

Lot Sq. Ft.: 8,216

Year Built: 1971

Stories: 2

Type: Single Family Residence

View: Park or Green Belt

County: Orange

Neighborhood: Westpark

$/Sq. Ft.: $404

MLS#: S430193

Status: Active on market

On Redfin: 437 days

Unsold in 90+ days

From Redfin “Elegent remodeled home with new landscape situated on a cul-de-sac in the Paseo West Park. Designed for intimate living. Approximately 3,450-sq-ft. The residence inclusive of 5 bedrooms, and 4 bath. Gourmet center island ktchen with top-of-the-line appliences opens to family room. This home features beutiful travertine flooring throughout the first floor, granite countertops, entertainer’s delight custom built-in bar. Outside, entertain poolside on the patio area as well as built-in BBQ center.”

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Lets call this seller “unmotivated.” You would think the message would get through that the property is overpriced when it doesn’t sell for over a year. There are comparable properties in this neighborhood asking less than $900,000:

3831 Cosley St., Irvine, CA 92614-6670 – $859,000 – Redfin

17551 Friends CT, Irvine, CA 92614-6625 – $889,000 – Redfin

3931 Claremont ST, Irvine, CA 92614-6662 – $864,900 – Redfin

It appears our seller has lost touch with reality. Perhaps they are channeling Jimmy Hendrix, or perhaps they dropped some acid and never came down. Either way, for asking 80% more than their house is worth even in Irvine’s inflated market, these sellers win our “WTF Price Award!”

When I am looking for flips to profile, I look at many properties. Most of what I find is priced near to what the current market will bear. In short, the seller and the realtor are at least trying to sell the home. However, sometimes I will come across properties where the pricing is so ridiculous that I laugh to myself at the stupid greed of my fellow man.

Shadenfreude, or joy in the misery of others, is why we feature failed flips, and it is part of the fun of this blog; however, as I have noticed myself laughing at the embarrassingly foolish asking prices of amazingly greedy sellers, I wanted to share that experience with the rest of you.

With the series the Knife Catcher Award, we are featuring flippers who put a property for sale within 6 months of purchase. The people foolish enough to knowingly attempt a flip in this market deserve a special honor. In this post, we are introducing a new honor: the “WTF Price Award.” To be awarded this honor, a seller’s asking price needs to be higher than a “wishing price.” It needs to be so high that I laugh to myself when I see it (plus it helps if there are comps to prove it.) From now on when you see the “WTF” symbol in the post, you know this is a special property which has earned this unique award.

Asking Price: $905,000

Purchase Price: $159,500

Purchase Date: 3/1/1979

Address: 17 Rustling Wind, Irvine, CA 92612

Beds: 3

Baths: 2

Sq. Ft.: 1,860

Year Built: 1978

Type: Condominium

View: City Lights, Park or Green Belt, Trees/Woods

County: Orange

Neighborhood: Turtle Rock

$/Sq. Ft.: $487

MLS#: S488161

Status: Active on market

On Redfin: 8 days

From Redfin “One of a kind! Absolutely spectacular! Rebuilt from top to bottom. Overlooks Nature Preserve and city light view. Top of the line everything! You have never seen anything like it! Professional gourmet kitchen w/ hand selected cherrywood cabinets, stainless steel appliances, Crema Bordeaux granite counters, extended self-closing drawers, 900 lb. pantry, recessed lighting, crown molding, Pella & Anderson windows and doors. Designer baths. When only the best will do!”

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This is not a flip. Below is this units competition:

Price: $869,000

4 RUSTLING WIND

IRVINE, CA 92612-3210

Beds: 4

Baths: 2.5

Sq. Ft.: 2,855

Year Built: 1978

Stories: 2

Type: Condominium

View: City Lights, Hills, Park or Green Belt, Trees/Woods, Other

County: Orange

Neighborhood: Turtle Rock

$/Sq. Ft.: $304

MLS#: S471024

Status: Active on market

On Redfin: 125 days

Unsold in 90+ days

So here we have two condos in the same community. One is a 4 bedroom 2.5 bath home upgraded with granite tops etc., and it has been on the market, unsold, for 125 days at a price $45,000 lower.

WTF, are this seller and realtor thinking? If the bigger, better house is not selling at $304 / SF, how is this house going to sell for $487 / SF?

There are “wishing prices,” and there are “WTF-were-you-thinking prices.” This is one of the latter. I am tempted to go see this unit just to ask the seller, “Are you joking?”