Address: 22 Taquitz, Irvine, CA 92602 (Northpark)

Plan: 1400 sq ft – 2/2

MLS: S460930 DOM: 24

Sale History: 9/28/2005: $540,000

Current Price: $559,000

This (Plan 2 or 3?) condo is in the Monticello tract in Northpark Square. It was purchased last year and it looks like they had put 20% down! What a rarity if that’s true! If someone has better access, please let us know if you can confirm this. These flippers stayed in the home for less than a year before deciding to list the property.

Sorry, not much to say about this one. If they have really put 20% down, they have a lot of room to bring the price down if they are motivated to sell. At the current asking price, they will lose about $15,000 after 6% in selling costs.

Address: 61 Edgewood, Irvine, CA 92618 (Oak Creek)

Plan: 1910 sq ft – 3/2.5

MLS: S462503 DOM: 6

Sale History: 2/15/2006: $819,000

8/02/2000: $347,000

Current Price: $849,000

This Plan 2 in the Kelsey Lane tract built by California Pacific Homes was purchased with 5% down earlier this year for $819k. 8 months later and it’s back on the market for only $30k more. Apparently, these guys think prices have increased in the last 8 months (even though the same plan at 30 Pembroke sold for $825k on 6/16/2006). Or maybe they are just trying to recoup some of the commissions they’ll have to pay. They obviously missed the peak summer period for listing their home. We’ll have to wait and see how motivated these sellers are. Assuming selling costs of 5% (since the agent is related to the seller), our flipper will be in the hole at least $12,000.

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.