What sort of opportunity needs to be there for the investors or ou to make a move? 8648 18th Hole Trail closed a couple of weeks ago for $355,350. It originally sold for $627,166 in March 2006, and was picked up on the courthouse steps for $236,000 in September by a "Club" member. It was originally listed at $399, and quickly dropped to $369. Diane toured the house and said it was "beautiful". The gross upside for the investor was 50%. Was the bank lazy or asleep at the wheel or just in need of the cash? Or did they just give up?
7655 Corso was picked by investors today. This Lennar(Everything Included!) home sold for $341,910 in May 2006. The bank (Ownit, partially owned by Merrill Lynch and went defunct in December 2006) let it go for $152,000 with an outstanding debt of $276,000 and change. It will be interesting to see what this house will list for when it hits the MLS in a couple weeks. There is another identical model on this street at 7682 that originally sold in June 2006 for $281,477 listed as a short sale for $190,000. Even at a 55% discount from the original sales price less than 2 years ago, this one is getting into shaky territory.
I don’t think the Pro’s would even consider a property without at least a 30% quick upside. I know I wouldn’t. There are way too many things that can go wrong – trashed houses, forced evictions, seasonal slowdowns, not to mention the lack of qualified buyers out there today.
Contrast these with 12040 Ocean View, currently listed on CL for $499,999 by a dilettante’ land baron. This property was purchase in May 2006 for $727,810, went back to the bank in May 2007 for $629,889, and was purchased last month for $435,750. The gross upside is a maximum is 15% . I’m sure the drop in value from the original purchase price numbers made it look like a steal. But what is the average DOM in this price range, like 3 years? Carrying costs, commissions, give backs, transfer taxes and closing costs are going to cream this guy. He risked a lot for what looked like a deal too good to pass up. Keep your day job.
This post was put together on 4 different days, so forgive me if it doesn’t flow easily. What I am trying to demonstrate is the HUGE hits the lenders are taking (willing or not), and that they may be pretty smart to get out now at whatever cost. And buyer beware to any investor who thinks that just having the cash right now will lead to windfalls. You’ve got to be smart and rich today, and even that may not be enough.