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 buy 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?

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!