Asking pricing on REOs and short sales have seemed "sticky" recently at 20% under peak pricing. No surprise – the banks are loath to write down the values of the first 80% loans. And yeah, the higher end sellers seem not to have gotten that memo, and continue to ask dream prices. I can’t believe how many 7% Solution listings are out there – mortgage balance plus commissions and transfer tax! But here are a few new listings from the trenches:
729 S. Arlington, listed at $249,000 short, sold 7/14/06 at $425,000. Down 42%.
1444 O’Brian, listed at $159,900 REO, sold 8/25/05 at $257,000. Down 40%.
533 Abbay, listed at $199,900 short, sold 6/16/05 at $319,000. Down 37%.
315 Quail, listed at $204,900 REO, sold 3/15/06 at $305,000. Down 33%.
1845 Graysburg, listed at $799,900 REO, sold 8/15/06 at $1,125,750. Down 29%.
Tons more I could cite. Although I generally don’t trust short sales asking prices (Arlington looks like a sweet deal if it is real), the listing prices of some of the bank owned properties piqued my interest. Are the banks starting to get serious about unloading their holdings? I took a look at some of the (very few) former REOs that have closed this year:
6796 Magical sold for $299,900, down 37% from its 12/23/05 $474,744 sale.
6070 Quail Meadows sold for $367,000, down 34% from its 9/8/04 $560,000 sale.
1450 Loma Vista sold for $260,000, down 31% from its 10/5/05 $377,000 sale.
Is 40% off peak pricing going to be the new benchmark? It sort of looks like that’s where we are heading to me, based on the REOs that are actually selling and a lot of the product coming to market.
(Cartago Café courtesy of www.lostamerica.com. Check out the full sized image at http://bighugelabs.com/flickr/onblack.php?id=1955143216&size=large It is a stunner)
Reno Ignoramus
Thanks again for the fine work Mike.
At what point in the meltdown will it be the case where the only thing that matters will be what the banks are selling their REO for? When do we get to the point when there is so much REO on the market that it really doesn’t matter what non-foreclosure sellers are asking? If the banks are going to start shedding their REO at 35-40% off peak bubble prices, do we really care what the non-seller sellers are asking for their houses? I think that within the next 6-9 months we shall arrive at the point that the banks will be setting the comps with their REO prices. When we arrive at that point, the non-foreclosure sellers will have no choice but to price competitively with the banks. Or they can own their houses forever.
There is really nothing very remarkable about this. It is all so predictable. But I do have to say that those predictions we had around here from last Fall that the bottom would arrive in Q3 of this year are looking pretty comical.
SkrapGuy
Comical indeed.
We have 6% of inventory selling.
We have years and years of inventory in the market, stretching to infinite inventory in the higher priced segments.
We have the lowest number of monthly sales since the 1980s.
Diane describes every deal that closes as a minor miracle.
And I hear there is a fairly ugly recession that may be upon us.
And now Mike the Super Sleuth suggests that the banks, desiring not to own more inventory than the builders, may be getting real and dumping REO at 40% off peak prices.
For those who suggest that the bottom may be near based upon nothing more than the “how much worse can it get” theory, I suggest you think again.
BanteringBear
42% off on Arlington? Not bad! Equity? What equity? Oh, the humanity!
P.S. Mike:
Silly me, I was thinking you were going to post about that $100 million in developer defaults you alluded to a few days ago. Not trying to hijack your thread, but throw me a bone, eh?
smarten
Interesting.
We’ve talked about this subject before on this blog – how REO resales on former 80/20 first mortgages appear to be selling for 20% below what was owed to the beneficiary at the time of trustee’s sale.
Yet there are a number on this blog who feel we’ve only begun to scratch the surface on what they perceive will be further price drops of 20% or more.
I disagree. It seems to me that a drop in prices of 40% from the height of the bubble is substantial. Is another 20% drop, on average, likely? Maybe. But I would guess 5%-10% is more realistic.
So that’s the benchmark to me. If you can pick-up a quality property at 45%-50% off its bubble high, then maybe it’s time to pull the trigger. Or let me put it in Montreux terms – a $2.495M Stonehaven model for $1.25M.
The fact we’re no where even close to this type of price drop [at least at Montreux] tells me we have a long way to go. Not because a drop of 45%-50% isn’t enough but rather, because it’s going to take that much time for sellers to overcome denial and get in line with what has been happening in the sea around them.
GratefulD_420
Thanks Mike for the Info.
Here are the REO’s that I was referring to that follow the trend. However note that these homes are receiving multiple offer well above the asking price. The market sets the price.
14155 Saddlebow Dr., REO, Asking: $549,000, sold $778,000 in 2005.
2855 Sagittarius Dr., REO, Asking $389k, sold $295k in 2002.
This latter home was significantly upgraded with 3,000 sq ft of well done work. I offered $400k intiially. Bank rejected all offers including a supposed $500’s and asked we sharpen are pencil in 48 hours. I offered $425k. They accepted an offer for $485k.
BanteringBear
Smarten:
When you mention $2.495 million for a Stonehaven model, are you referring to the asking price? Because, as you know, asking prices mean nothing, and I’m still seeing many which are so delusional that they are above and beyond even the highest sold prices of 2005. In fact, these properties asking prices need to come down 60-70% from where they are today. Perhaps you show Stonehaven models selling for that amount?
As far as 40-50% off the bubble high, that’s not necessarily a good deal. It depends upon the property. There are many homes which tripled during the bubble (fraud?), in which case 50% off isn’t anything to get excited about. The current 40% reductions on the aforementioned REO’s are a sign of where we’re going, and should light a fire under the resellers collective a$$e$ if they have half a brain.
On an aside, I think people are underestimating the severity of the recession in store for this country. There isn’t much, if any, good news coming out these days. The job losses are much more prolific than is being reported. Donations to thrift stores etc. are way down, as well as sales, while sky high gas and grocery prices are really cutting into budgets, in turn, hurting sales for non essentials. The standard of living is eroding at an alarming rate. Rough times ahead.
smarten
GratefulD_420 said, The Bank was offering “this latter home” [on Sagittarius Dr.] for $389K. “I offered $400k intiially. [The] Bank rejected all offers including a supposed $500’s and asked we sharpen are pencil in 48 hours.”
I don’t understand this garbage and I’ve seen it played out before.
When a seller places a property for sale in the public domain [whether on the MLS or otherwise] at a specified price and terms, once a prospective buyer meets that price and terms, an agreement has been perfected. If the seller balks at that point [for whatever the reason(s)], it is in breach because its offer can be unilaterally accepted.
So no, I don’t understand how after offering more than the Bank’s asking price it could legitimately demand you go back and sharpen your pencil.
Of course I don’t know all the details of the Bank’s or your offers but if it were me; and I had complied with all requisites of the Bank’s offer; and it asked me to go back and sharpen my pencil; I’d be sharpening my pencil on a suit for specific performance [which would in essence nix any sale of the property until court resolution]. And maybe one or two of these actions need to make their rounds around the court house so REO sellers understand the rules of the game?
Next time you find one of these, as long as you can literally comply with all of the Bank’s terms, I’d be interested in participating.
Allen Murray
Smarten, most offers are written with some sort of contingency that allows most sellers to reject a full price offer. Such contingencies include language such as; subject to financing, appraisal, or inspections. I suspect that unless your are offering all cash, close in 3 days, it would be really hard to sue for specific performance. During the peak of our market in 2005, I received a full price offer on a spec house I built in Gardnerville 2 days after I listed it for sale. My realtor said I couldn’t reject it because it was full price, and I informed her that I could since it was subject to financing. She checked with her broker, and determined that I was correct. I then raised the price $40K and sold it a month later…..oh the good old days……
smarten
I agree with you Allen. That’s why I said it depends upon the seller’s and buyer’s offers.
For instance, the seller might have a provision in its listing/offer that any buyer’s offer is subject to subsequent approval [however of course, not to be unreasonably withheld]; just like the garbage in Guy’s home auction terms and conditions. Or the seller might reserve the right to independently market the property to other sources and if it weren’t “available” when you made your offer, the seller could legitimately reject your offer because the property’s “not available.”
However if you know a property is listed under market; and the seller is motivated to play games to artificially boost its listing price; you don’t fall into the trap by NOT including unnecessary contingencies.
So let’s assume you as the buyer really require financing to pay for a property but don’t want to lose a good deal. Put a low deposit down with your offer; make it payable to an escrowholder or licensee; and if your offer is accepted and you ultimately can’t come up with the financing, you really won’t lose your deposit. Why?
Because the measure of damage [as long as you haven’t checked the liquidated damages box] is the difference between your offer and what the property subsequently can be sold for [because the seller has the duty to mitigate potential damages], plus out of pocket costs reasonably incurred by the seller in reliance upon your offer. Assuming the property is sold for more to someone else [because it’s worth more], there likely isn’t any damage.
Now if the seller is going to reject your offer [without contingencies] anyway, then you really haven’t had to put up any deposit by setting up [so to speak] the seller, have you?
Reno Ignoramus
I believe that there is substantial case law for the proposition that a listing price is not considered an offer, but rather than invitation for an offer. In other words, it is the buyer who makes the offer, not the seller. So even a “full price offer” need not be accepted by the seller. It constitues the orginal offer, and the seller is free to accpet, reject, or counter.
Reno Ignoramus
Smarten,
The remedy of specific performance is available, in fairly limited circumstances, to require the performance of a contract that already exists. A contract does not come into existence until there has been an offer and an acceptance. Since it is the buyer who makes the offer, (and not the seller with his listing price), if the seller does not accept, there is no legally enforcebale contract in existence to specifically enforce.
That is why so many sellers were quite legally able to reject full price offers during the heyday of the bubble. That is why some sellers were able to effectively create a bidding war for their house. A buyer’s offer is just that….an offer. No contract exists until the seller accepts.
inept1
Doesn’t money also have to change hands to have a binding contract?
Allen Murray
I think we’re all on the same page here in saying that a full price offer generally does not have to be accepted by the seller if there are any contingencies at all, which there always is. If I offer my property for sale and someone comes along and offers me full price cash with no contingencies, I do believe I have to sell it for that price. However, if they ask for anything else even as insignificant as a long escrow to gather their cash, I can reject.
I have another good story for you guys about how I ended up keeping a developers “non refundable” $15K deposit on some property I was selling him.
Basically he made me a 15 page offer that his lawyer had prepared which I modified a bit and accepted. He put up a $25K deposit which was refundable and had a 60 day escrow. Refundable deposits mean absolutely noting to a buyer as they can walk at any time, but do tie up the buyer. At the end of the 60 days, I told him I wouldn’t extend the escrow and he threatened to sue me for specific performance. We both knew he didn’t have a case since he passed his deadline. So I agreed to rewrite the terms of the sale (it was 2 paragraphs in total) and included a $15K non refundable deposit. 30 days later, I had his $15k and kept the property. My point is that the buyer can use a deposit to tie up a seller if seller accepts offer, but unless the deposit is non refundable, it doesn’t mean much to the buyer and they can walk for almost any reason.
smarten
No, we’re not all on the same page RI and Allen.
If I go to a no reserve auction; I am the high bidder; and the seller doesn’t like the high bid; he has entered into a contract to sell to me even though he hasn’t formally “accepted” my offer. Why? Because he/she/it publicized ahead of time his offer which once unilaterally accepted by me the buyer, becomes a contract.
If I’m a car dealer; I advertise a particular vehicle for $X.00; and someone offers me $X.00; I’ve entered into a contract to sell this vehicle even though I haven’t formally “accepted” the someone’s offer. Why? Because I’ve publicized ahead of time my offer which once unilaterally accepted by me the buyer, becomes a contract.
The reason in both instances is because these are NOT bilateral contracts [ones that require consent from both the buyer and seller]. The seller offers the item for sale on specified terms and conditions and once a buyer communicates his consent to those terms and conditions, the contract has been created.
Nor need cash actually pass in order for the contract to be in existence. If the seller doesn’t specify a particular down payment and I as the buyer offer to tender a reasonable down payment, that’s adequate consideration. Even if the seller does specify a particular down payment yet refuses to accept my tender of that amount, that’s adequate too because a tender of an offer extinguishes the obligation to actually pay!
Now correct me if I’m wrong Diane and Guy, but I’m certain that MLS forms incorporate certain terms and conditions which specifies all the “p’s” and “q’s” of listings. Therefore once an agent takes advantage of a MLS listing, he/she has agreed ahead of time to all those terms and conditions. Furthermore, there are places on the MLS form for agents to fill in those terms, to the extent they’re not already incorporated by reference.
So what I’m getting at is if an agent lists a property on the MLS for $X.00; I write an offer agreeing to pay the seller his/her $X.00; and my only conditions are things like specifying an escrowholder, inspecting, etc., the seller is bound to go through with the transaction. And if he/she/it balks, my remedy becomes a suit for specific performance.
What many agents were doing at the height of the bubble [which is why I referred to the practice as “garbage”], was intentionally listing a property at something less than fmv with the intent ahead of time of creating a bidding war. A buyer’s agent would come in with an offer at full listing price and would be told by the listing agent that the seller wasn’t available to field presentations until a week from next Friday. By then, the listing agent hoped there would be multiple offers and at that point in time he/she would be free to accept the highest offer.
Let me give another example. When does a buyer’s agent earn a selling commission? All he need do is present a ready, willing and able purchaser who agrees to purchase a property at the advertised listing price and terms. If the seller doesn’t go through with the transaction or recognize the buyer’s offer, that DOESN’T change the fact the buyer’s agent’s commission has been earned. Why, because the seller publicized, through his/her/its agent and the terms and conditions of the MLS, an offer to pay a commission upon the buyer’s agent presenting a ready, willing and able purchaser.
Allen is correct that if an offer adds any material conditions not specified in the listing, it does not represent acceptance on the buyer’s part but rather, a counter offer which can be accepted or rejected by the seller. That’s why I said that if you the buyer know a property is priced under market, communicate literal acceptance of the seller’s offer before the seller has an opportunity to wiggle out of his/her/its offer.
Now am I wrong Tom?
Allen Murray
Smarten, I can tell you for a fact that you are wrong. If you give me a full price offer contingent on using your title company or passing your or your agent’s inspection, that is enough reason for me to reject your full price offer. Now of course if I am a real seller, I wouldn’t do that, but I could. So I guess we aren’t on the same page, you’re just wrong in my opinion. If what you are saying is correct, how to you explain the bidding wars that were happening in all the hot markets? Do you think you were the only one that has thought about suing for specific performance? The only way you are correct if there are no contingencies whatsoever.
smarten
I again disagree with you Allen.
“how [do I] explain the bidding wars that were happening in all the hot markets?”
As I explained to you before. Agents manipulated the presentation process to ensure there would be multiple offers presented at the same time [my seller is considering all offers on such and such a date]. Since the seller had an obligation to consider all offers and if one were better than another, he/she had the option to pick and choose.
This is a different situation than being presented with a single offer that satisfies the terms and conditions of your initial offer. According to you, the seller can simply say thanks but no thanks. Or more pointedly, counter offer at 120% of his/her/its listing price. I don’t think so!
You ask if I “think [I] w[as] the only one that has thought about suing for specific performance?” My answer is yes and no. Have others thought? Possibly. Would others sue? Probably not. In fact more than probably, because if it meant enough to them, they would have sued.
I guarantee you that if a Bank pulled a stunt like this on a homebuilder on a 1,000 acre parcel that had subdvision approval and had reverted after trustee’s sale; the rejection being so the Bank could extract even more than its listing price; it would be sued and a lis pendens would be thrown on the property to prevent the Bank from selling to anyone else.
You state “the only way [I] a[m] correct [is] if there are no contingencies whatsoever.”
Again I disagree. Think about it Allen. The seller MUST deliver title in a condition that satisfies marketable title. This can only take place through the condition of title VERIFICATION – typically through a preliminary title report. If the seller designates a title company in his/her/its listing, then I as the buyer don’t need to designate another. But I still have the right to examine and approve the title the seller purports conveying [especially where there has been a non-judicial foreclosure (trustee’s) sale]. And if the seller hasn’t designated a title company in his/her/its listing, I can and the seller can’t reject my offer simply because it represents a counter-offer.
Don’t believe me Allen? Go ask your bankruptcy-attorney friend. And as I suggested beforehand, find one of these under market offerings and I’ll go in with you on the purchase just to prove the point!
GreenNV
smarten, I pretty much have to agree with Allen Murray on this one with one additional caveat: most listings clearly state that the seller reserves the right to accept or reject all offers. A real estate listing is pretty much just a notification that a seller is considering selling, but does not itemize the conditions of sale. Those are contained in the buyer’s offer to purchase, which must be ratified by both parties.
When I sold my SF house in July 2005, I literally didn’t know what the asking price was until it showed up on the MLS on a Thursday night (actually, I truly don’t remember what the listing price was!). My agent priced it based on what was showing up as comparable listings at the deadline to make the MSL for weekend showings. Actually a bit lower, knowing that I was under no obligation to accept any offer. Only 2 offers, both over asking, in what everyone thought was a bidding war. The high offer backed out, the back-up was accepted at something like 10% over asking. Suckers!
GratefulD, thanks for the heads-up on bank tactics. I never would have guessed they were trying for bidding wars in this market.
Reno Ignoramus
Folks, this is not something subject to reasonable argument. There sre probably hundreds of reported decisions throughout the many jurisdictions that say, clearly, that a seller’s asking price in a MLS listing is NOT BINDING. And, I can assure that there is at least one District Judge here in Washoe County that has so ruled.
As I said above, an MLS lisitng is regarded as a solicitation of an offer from a purchaser. But it is the BUYER who is the offeror, not the seller. The seller is absolutely free to reject even a full price offer. Even one with no contingencies.
Now, in such a case the seller may become contractually liable to his realtor for the amount of the commission. But that is a separate issue.
GratefulD_420
Yeah, I don’t see how I would sue. Anyways, I’m not certain who’s offer was officially given in writing first. I wish I had a way to make them obligate the offer. Wich for clarification of the above was 20% Down, 80% 30 yr fixed, close in 2 weeks, only contingent upon inspection & rate change above 6.5% which at the time was alot of room.
I think the bank had received multiple offers within one week, obviously the whole thing worked for them they got a bidding war and interest to buy.
Suprised nobody commented on the Saddlebow listing, I imagine it’s only a matter of time before these start slipping through. Only a few high bidders, finance falls through and goes to the next bidder. I’ll keep offering right around the asking price to see what happens.
Reno Ignoramus
The bank, as is any seller, is not legally obliged to accept any offer, full price or not. The bank can say “we want more money”, just as can any seller. The bank can say “we changed our mind, but thanks for your offer.” The bank can say whatever the hell it wants. It owns the property and it can accept or reject ANY offer as it desires.
But it is true that a strategy is developing, it appears, wherein banks are lowballing the listing price. The strategy seems to be to attract several interested potential buyers with the low asking price, and then attempt to engender something of a bidding war. There is nothing new about this strategy. In fact, it is the same strategy that was employed by the RTC many years ago after the savings and loan blowup.
It would, therefore, seem to be rather obvious that the bank is under no legal obligation to accept ANY offer, even full price. If a buyer could tie up the property with a full price offer, then it would be stupid, and legally fatal, for the bank to announce a low listing price. But because the listing price is not an offer to sell, the bank can effectively employ this strategy.
Allen Murray
RI, we finally agree…….hahaha
Sundevil
Grateful_D –
I’ve been through the Saddlebow listing with a friend who was interested in it. The inside of the house is destroyed. The previous owner ripped out drywall from parts of the ceiling, let his pets piss on everything, destroyed most of the finish carpentry (base board have been removed, and then strangely put back on – other finish trim is just missing), the appliances are all gone (including the oven), there is significant pet chewing damage, the wood floors are all stained and warped, the landscaping sprinkler system looks like someone took a hammer and crowbar to it, the walls in which there we home theater speakers have big holes where the speakers were just ripped out, etc., etc., etc.
Saddlebow will sell, and someone will probably get a deal. But, you can’t use it for a comp for the neighborhood and the condition is why it hasn’t sold.
Reno Ignoramus
Actually, Allen, I think the only thing we disagree about is how long the downturn will go on. No problem. Reasonable people can disagree about that.
If we can return to the original topic of this thread, for which I again thank Mike/Green, I find it quite interesting that the banks are selling their REO for prices 40% off peak 2004/05 prices. If we adjust for inflation over the past 3-4 years, that means they are selling for even more than 40% off peak.
40% off is a fairly major haircut, and the overall market is certainly nowhere near that yet. But if in the next 6-9 months we see hundreds and hundreds and hundreds (how many Mike?) of REO on the market, how can non-foreclosure sellers not be impacted?
I have to admit that even I wonder if we will see prices much lower than 40% off peak, or what would be 50% off peak adjusted for inflation. Bantering Bear, whose forecasts from last year seem to be coming true with regularity, suggests we may see prices even more than 40% lower. But I wonder.
BanteringBear
Well, I’ll be darned. I mentioned many properties tripling in price during the run-up, and here’s one right in front of our face. It’s 729 S. Arlington!
Prior to the $425k sale, on 6/01, the property sold for $141k, which is right before the rapid price ascent. The $425k price is a little more than 3x that 2001 price. While the current $249k is a lot more realistic, I’d say $179k is much more fitting. For this particular house, the $179k represents the 2001 price in inflation adjusted dollars (that’s a little more than 4% per year). Considering there has been little wage inflation since that time, that’s quite a generous price, IMO. That would be a nearly 60% haircut in nominal dollars. It sounds perfectly plausible, if not probable, to me. If an overcorrection occurs, we could see something more frightening. I don’t want to go there.
Steve
Me thinks the banks are getting desparate for more CASH.
Poor banks, sniff, they are over-leveraged, reserves getting sucked up quickly and mister margin is knocking on their doors.
poor banks!
Tom
Very interesting comments above by some people obviously with knowledge and experience.
Our office has litigated this `offer’ and `acceptance’ issue on real estate listings, and if you’re interested, here are such contract litigation results in a nutshell:
There are TWO contractual potentialities with which to be concerned. One is When does seller’s obligation to pay his listing agent arise; the other is Has seller entered into a contract with buyer capable of enforcement by specific performance by buyer, when buyer says I Accept or submits an offer on substantially similar terms.
1. Once the listing agent has produced a willing buyer on terms that FULLY MEET the conditions of the listing, the agent has earned his right to his compensation by Seller. But that would typically mean full list price, all cash, no contingencies, nothing other than a pure match with the provisions of the listing agreement, not even a walk through condition. If Seller then elects to decline, seller has exposure to his listing agent for the compensation under the listing agreement… but beware of inevitable cross complaints, alleging lack of market exposure which might have produced an overprice offer, side agreement allegations, and loss of community goodwill– usually not worth the agent suing the seller. Liquidated damages clauses also limit seller’s exposure.
2. As to exposure to buyer, even if the “acceptance” substantially matches the listing’s terms, the devil is in the details. For example, a part credit offer even if in response to a listing calling for “cash to buyer’s new loan” leaves discretion in the seller to accept the buyer’s credit worthiness or not. Even a walk-through inspection, contractor’s home inspection, termite clearance, length of escrow etc, change or add to the terms of the contract.
Also, most listing agreements characterize the listing and marketing as a willingness to entertain offers, thus disclosing that the acceptance is by the Seller.
Generally the buyer will not be able to obtain specific performance. This is the proverbial first year law school Socratic problem created when buyer sends off that email, “I Accept.” The result is less clear in For Sale By Owner situations as the Seller generally does not have the acumen to phrase the exposure as a solicitation of offers, nor to properly word the terms of the availability of the property for sale.
At least, the above is the outcome in Los Angeles County.
smarten
Thanks Tom –
Since I’m not close to a law library, might you be able to provide a legal citation or two [at least in California] which address the issue of a MLS listing itself representing an offer to sell which if unilaterally and literally accepted and communicated to the seller by a buyer, represents a contract? According to RI, there is substantial case law for the proposition that a listing is not considered an offer, but rather, nothing more than an invitation to offer.
I’d be surprised if there are even a handful of such cases. But let’s see.
Thanks in advance.
Tom
Smarten,
The cases I have had experience with are at the trial court level and turn on (a) the language in the listing agreement which makes the listing an exposure of the property for sale, in the nature of an invitation to submit offers, thus for contract law purposes, it becomes a statement of owner’s willingness to entertain purchase offers; and (b) differences in the terms of the listing and the terms of the offer, almost impossible to make them exactly the same as most offers will contain the safeguards of inspection, termite clearance, approval of preliminary title report, etc, escrow length provisions.
But the enforcement by a listing agent against seller for compensation earned is different, since a written contract already exists between those two parties, and the issue to be proven is agent’s performance under the contract. In the case of buyer vs. recalcitrant seller, buyer must first prove a meeting of the minds to create a contract, then seller’s breach–and seller generally will say I am not repudiating my terms, just the buyer’s, which are different. Also, seeking specific performance is viewed by our courts as a more draconian remedy than a suit for money damages measured by a lost commission, so the courts want a better showing in a specific performance case. The preponderance of evidence is still the standard of proof but it is harder to meet that bar when seeking specific performance than money damages and especially so when you also have to prove the existence of a contract in the same suit.
I have spent more time than planned on this, and cannot pull cases to cite. But there are ALR annotations on specific performance in contract cases, and Cal Jur has some hornbook type discussion on this. Again, the devil is in the details– mainly the fine print of most listing agreements making the listing owner the final “accepting” party.
SkrapGuy
A house that sold for $450K at the end of 2004 would now sell for $270K at 40% off.
A house that sold for $800K at the end of 2004 would now sell for $480K at 40% off.
A house that sold for $1 million would now sell for $600K.
That’s a pretty significant haircut. And it is closer to 50% off if we attribute 4% annual inflation.
What percentage of the market would bank REO properties have to be before the comps were effectively being established by the banks? Any thoughts?
Allen Murray
BB, be careful when analyzing previous sales prices, 729 S. Arlington may be an anomaly. If similar houses in that area sold for similar prices, then I would say you have a valid point, but sometimes when you see a previous sales price, it could be a refinance or a sale to a relative that doesn’t reflect true market value at that time. I’m not saying that this is the case here, but I haven’t heard of any properties tripling in value since 2001. I have some property that I purchased for a great price in 1996 that has almost tripled, but that’s pretty rare.
San Diego Foreclosures
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