Category Archives: House Flips

Brookside Comp Killer

Asking Price: $699,000

Purchase Price: $830,000

Purchase Date: 11/17/2006

Address: 4342 Brookside St., Irvine, CA 92604-2237

Beds: 4

Baths: 2

Sq. Ft.: 2,200

Lot Sq. Ft.: 5,623

Year Built: 1971

Stories: 2

Type: Single Family Residence

Neighborhood: West Irvine

$/Sq. Ft.: $318

MLS#: P575245

Status: Active on market

On Redfin: 5 days

From Redfin ” THIS IS A SHORT SALE. ALL TERMS, SALE PRICE, AND COMMISSION ARE SUBJECT TO LENDERS’S APPROVAL.”

This is how prices come down.

When short sales and REO’s are more the rule than the exception, prices will fall. Zillow thinks this property is worth $853,413. A sale for less than $700,000 will certainly lower the comps in this neighborhood. How many does it take before a new, lower value is established?

This knife-catcher gave up after only 6 months. Redfin shows the purchase price as $820,000, but property records show it as $830,000. Since this is probably a first payment default, I suspect fraud. The sale prior to the 11/17/2006 was on 3/15/2005 for $735,000, so it is possible the 11/17/2006 buyer was a straw buyer saving our previous flipper. As you can see, even without any commissions, the bank is going to lose $131,000. Factor in even a 3% commission, and the bank is going to lose $151,970.

PMC Bancorp “A leader in Prime and Alt-A mortgage banking” is the bagholder on this one. They have a $622,500 first mortgage and a $200,000 second. With the second mortgage being a total loss, you can see why lenders have stopped issuing them. The days of the 80/20 loan package are numbered.

I wonder who owns the Mercedes Benz in the driveway, or is my identification in error? 1. Starving Realtor? 2. Bagholding Banker? 3. Failed Straw-man Flipper? 4. Rescued Flipper?

The City of Lights

Asking Price: $899,000

Purchase Price: $897,000

Purchase Date: 7/5/2006

Address: 15361 Siene Circle, Irvine, CA 92604

Beds: 5

Baths: 3

Sq. Ft.: 2,982

Lot Sq. Ft.: 7,995

Year Built: 1969

Stories: 2

Type: Single Family Residence

View: Park or Green Belt

Neighborhood: El Camino Real

$/Sq. Ft.: $301

MLS#: S484070

Status: Active on market

On Redfin: 11 days

Redfin, Zillow

From Redfin, “Almost 8000 square feet lot in the center of Irvine. Prized end of cul -de-sac location backs up to greenbelt-lots of privacy!Park-like yard that includes a large patio with fire pit. Family room with fireplace, . No mello-roos, no HOA. Surroounded by greenbelt, park, & tennis courts. With nearby college & golf course. Newly remodeled with granite counter tops, new light fixtures, new carpet, travertine, and hardwood floor. New paint, sinks & faucets, new vinyle windows, scraped texture ceiling.”

El Camino Real is one of the most “tractlike” neighborhoods in Irvine. There is a lack of parks, play areas and pools. It is probably the best value on a dollars-per-square-foot basis as there is little else to bring people to the neighborhood. As the description mentions, there are a few beltway greenspaces where they preserved the old windrows from the agricultural operation. Those neighborhood criticisms aside, this property is nice and updated albeit a bit old.

Eiffel Tower at Sunset – Seine River, Paris

This property appears to be owned by a local realtor; either that or the owner coincidentally has the same name. This property is shown as one of her “featured listings” for $949,000. The property is empty, so it appears to be a flip that is bleeding cash. The seller has a first mortgage for $717,600 and a second for $89,700 through Countrywide. With a combined debt of $807,300 (and likely a 3% commission), the seller has some room to negotiate how much she is going to lose before this becomes a short sale. It doesn’t look like this flip will be financing any trips to Paris. Seine Circle is as close to the Siene as this seller will get.

The Siene at Courbevoie – 1885, Georges Pierre Seurat

Glen Garden Homes in Turtle Rock

Address: 25 Rainbow Falls, Irvine, CA 92603 (Turtle Rock)

Plan: 1572 sq ft – 3/2

MLS: S472630 DOM: 101

Sale History: 5/20/2005: $725,000

1/8/2003: $490,000

Price Reduced: 03/13/07 — $798,000 to $789,000

Price Reduced: 03/14/07 — $789,000 to $778,000

Price Reduced: 03/22/07 — $778,000 to $760,000

Current Price: $760,000

It looks like this is the first property in the village of Turtle Rock to be featured on our blog. Turtle Rock is the original hilly village of Irvine and in the future, we may do a Community Profile on it. This Plan E in the Glen Garden Homes tract was purchased in May of 2005 and then listed on the market early this year for $798k. After a month and a half, the seller started reducing the price. 3 reductions later brings us to the current asking price of $760,000.

If sold at the current asking price and assuming 6% in selling costs, the owner will lose about $10,000. When this home was listed on 1/22/07, there were about 900 properties for sale in Irvine; now there are close to 1200!

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There is only one other property that I see for sale in this tract:

12 Cool Brook (MLS #P572667) – 3bd/2ba 1628 sq ft – $629,000

Here’s the description for 12 Cool Brook: “Want a ‘Hot Deal’? This is it! This is a Turtle Rock estate sale that has been a rental. Seller priced it $120,000 below our competition for a fast sale. Most buyers will want to update paint, carpet, and flooring. The low price and unbeatable location far outweighs the need for TLC. Cul-de-sac location, backing to a greenbelt hillside. Move fast, going going gone.”

And the private remarks for 12 Cool Brook: “Seller will provide a termite clearance, otherwise the home is being sold as-is. Seller has not lived in the property and acquired the property by inheritance.”

Sure enough, it was priced well and the status in MLS is now ‘Accepting Backup Offers’. 12 Cool Brook has been on the market for 15 days (compare that to the 101 DOM for 25 Rainbow Falls).

As some of you may know, I’m a big fan of the Turtle Rock area. Did anyone have a chance to check out 12 Cool Brook? Once this property closes escrow, I imagine it’ll be harder for 25 Rainbow Falls to sell at the $760k price.

Whiner, Whiner, Whiner

Selling Price: $1,050,000

Selling Date: 4/18/2007

Purchase Price: $1,188,000

Purchase Date: 1/25/2006

Address: 25 Lakeview, Irvine, CA 92604

Beds: 4

Baths: 3

Sq. Ft.: 2,500

Year Built: 1977

Stories: 2

Type: Condominium

View: Lake Front, Lake, Mountain, Panoramic

Neighborhood: Woodbridge

$/Sq. Ft.: $420

MLS#: S475949

Status: Active on market

On Redfin: 71 days

Premiere property in the heart of Irvine: This flip should have been a no-brainer…

Perhaps you saw the following letter written by a local realtor published in the OC Register [italicized comments in brackets are mine]:

Late breaking letters: Media experts and the ‘coming’ real estate market crash

Posted, Wednesday afternoon, April 11

It was with great disappointment that I read the latest Jonathan Lansner diatribe on how the sky is falling as it pertains to the Orange County real estate market [“Both Lansner and Schiff, as well as UCLA and Chapman College representatives have all been predicting the bursting of the real estate “bubble” year after year. They have all been consistently wrong and have probably cost the would-be homeowners, who held off due to these dire and inaccurate predictions, untold thousands of dollars in returns on a sensible real estate investment [so sensible the writer lost his a$$], and the subsequent appreciation (not to mention the significant tax deductions.)

For those foolish enough to listen to them, and who held off purchasing a home, it may be too late. Many will probably never be able to afford a home in Orange County [priced out forever, LOL] now thanks to the doom and gloomers. Particularly offensive was Schiff’s advice: “When everyone in real estate is waiting tables (or in jail) [ROFLOL] and your neighbors think you are crazy for even considering real estate, then it will be time to buy. [Peter Schiff is my new hero]” I have spent much of my life in Southern California real estate. I do my best to provide accurate advice and handle my clients with professionalism and courtesy. Schiff’s broad-brush stereotyping of thousands of hard-working real estate professionals reflects much more on his reputation than ours [Realtors are considered by the general public to be on a par with used car salesmen]. I still consider O.C. real estate an outstanding long-term investment [liar], and history unerringly proves me correct [except in the 90’s when it didn’t].

The primary cause of the recent (and temporary) slow down in this market, in my opinion, is due to the piling on of media and pundits that must feed the fears of their readers on a daily basis in order to stay in business [I feel so powerful. I and a few other bloggers ruined the market. LOL]. Schiff’s prediction of a 50 percent decrease in O.C. home values is beyond ridiculous [he is probably right on]. Despite what Schiff and other fear mongers predict, the law of supply and demand hasn’t stopped working and the whole world still wants to live in Orange County [The whole world wants to live here, LOL. This guy should do stand-up comedy. He managed to make every ridiculous kool-aid-drinkin’ bullish statement in one writing. Great stuff.].

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Boo Hoo, somebody call the whambulance; perhaps our crybaby realtor friend wants some cheese with that whine. When you read a diarrhetic thought stream like that you can’t help wondering if there is more to the story. There is.

(Chuck Ponzi at Southern California Real Estate Bubble Crash wrote a great post concerning this letter.)

This letter to the editor was published one week before our ~~realtor /~~ failed flipper lost $138,000 plus commissions on the property above. He bought a great property in a great neighborhood (waterfront in Woodbridge) and still lost a bundle. Does it make you question the sincerity of his feeble assessment of the “recent (and temporary) slow down in this market?” If it was only temporary why is he dumping this property at a $138,000 loss? Did he write the letter above to generate business while his real opinion about the market shows in his actions? Do his actions speak louder than his words?

Besides being a whiner, what would you call him (I’ll give you a hint)?

Ain’t that what you said?

Liar, Liar, Liar

Liar, Three Dog Night – 1971

***** Note — Thanks to Zovall, we now have threaded comments. You can reply directly to a previous comment. Enjoy *****

Knife Catcher Award

I am introducing an new honor at the Irvine Housing Blog: the Knife Catcher Award. This dubious distinction goes out to all the knife-catchers stupid enough to attempt to flip a property in this declining market.

As you can see the knife-catcher is poised to eviscerate any greedy flipper with a death by a thousand cuts: a slow bleed of monthly cashflow and depreciation. To be eligible for the knife catcher award, the property must be put for sale within 6 months of purchase, and it must look like it has little or no chance of success (admittedly, the last hurdle is not very high).

One would think properties put for sale immediately after purchase would be difficult to find. Some may be bank repossessions, but some are simply delusional kool-aid drinkin’ fools who really believe this “softness” in the market is temporary and they are betting on the speedy return of double-digit appreciation. There is a special measure of schadenfreude for these fools worthy of unique honor on this blog. So without further delay, our first knife catcher award goes to…

Asking Price: $567,900

Purchase Price: $505,750

Purchase Date: 2/13/2007

Address: 162 Hayward, Irvine, CA 92602

Beds: 2

Baths: 2

Sq. Ft.*: 1,550

Year Built: 2002

Stories: 2

Type: Condominium

Neighborhood: Northpark

$/Sq. Ft.*: $366

MLS: P570133

Status: Active on market

On Redfin: 20 days

From Redfin: “Beautiful townhome in Northpark with cathedral ceilings. Turn key condition with fireplace in living room. Balcony and windows provide great view of area. Large kitchen. Separate laundry room. Huge two car garage with direct access. Separate formal dining room next to kitchen. Private large master bedroom. Lots of storage throughout. Floor plan is excellent. All the rooms are large. Northpark has many amenities for all ages. Quick access to freeways and shopping.”

This flipper couldn’t even be bothered to replace the tile counters with granite. The unit appears to be empty, so the bleeding has already begun. I have to wonder if this isn’t a realtor or a bank. If this seller pays a full 6% commission, they only stand to make about $28,000. IMO, it doesn’t seem worth the risk. However, if it is an agent paying only half a commission, this could net them $50,000 in just a few months making it at least worth dreaming about.

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Today’s knife catcher award is a double feature as a neighboring property is also a 2007 flip…

Asking Price: $590,000

Purchase Price: $545,000

Purchase Date: 1/31/2007

Address: 259 Lockford, Irvine, CA 92602

Beds: 2

Baths: 2

Sq. Ft.*: 1,496

Year Built: 2002

Stories: 3

Type: Condominium

View: Mountain

Neighborhood: Northpark

$/Sq. Ft.*: $394

MLS: U7001632

Status: Active on market

On Redfin: 7 days

From Redfin, “Auburn at Northpark community. Great end unit location directly across from the pool and park. Dramatic 20 ft. ceilings, and decorator touches. Upgraded sile stone counters in kitchen which is open to a great room, great condition, ceiling fans, windows in 2 car tandem garage. Office area outside master bedroom. Home shows well and has easy access for viewing. Washer, Dryer and Refrigerator included. Wonderful gated community with basketball courts, parks and nature trails. For lease also @$2500”

Another treasure trove of interesting information. My first observation is the price to rent ratio of 218 — assuming this floplord could actually get $2,500 a month. I doubt they will get that much rent as there are many better properties in better neighborhoods for less. My guess is a rent ratio of 250 leaving a $2,180 rent is more realistic. Since this flipper has fantasies, let ’em dream. Also, because it is being offered for lease, this isn’t a bank REO.

Another item I found interesting was the photographs. Notice the 2006/10/31 date? It is possible the buyer took these photos and later used them in the MLS listing, but is is also possible these photos came from the previous listing and the same realtor is involved in both transactions. These photos were taken 3 months before the closing, so it was either a very patient buyer, or these were realtor photos.

So there you have our first knife catcher award. In the future, you will know these special flips by the knife catcher image next to the property breakdown as it was displayed above. If anyone notices when these sell or rent, please email me at irvinerenter@irvinehousingblog.com and I will be sure to update everyone on the carnage.

BTW, Redfin updated its look last night. Check it out.