We have results now from a sale on a home that was the subject of a prior MBC pricing poll.
At the time we featured 742 27th (see our story from late January), it was already pushing 4 months on market and had been marked down $300k (-12%) from its start at $2.4m.
The listing lingered for another month or so after that, dropped to $1.999m, and then went into escrow twice (one apparently failed).
The final price, closing last Friday: $2.075m, actually higher than the list at the time. (Someone pulled a rabbit out of their hat.) That closed price was only $25k below the price at the time of our poll.
Most of our poll respondents were much more downbeat about the home's pricing prospects – just 16% guessed right, that the home would sell within 5% of its adjusted $2.1m list price. (Click for the story on the poll results.) The bulk of voters thought it would wind up between $1.75m-$2.0m.
We'll remind you that MBC liked 742 27th quite a bit. It's a spacious and classy home in a quiet Tree Section location with a nicely integrated Great Room/Back Yard combo and terrific upstairs bedrooms. The sellers had upgraded the home inside so completely that it befitted comparisons to new construction in the area, in our view, though several readers disagreed, citing low ceilings and the exterior as the main beefs.
In comments on the first story, we also saw a baffling controversy emerge over whether the back yard fence was somehow violating the property line. (It wasn't.) At the sellers' request we addressed the issue directly after a survey confirmed there was no problem, and now thankfully (for all) we see that the confusion did not, apparently, cause much harm.
This is the first home that was the sole subject of a pricing poll to close. (Click the "label" of "pricing polls" in the left-side column for all of the stories to date.) The others still on the market are:
Sunday, April 13, 2008
Close the Books on 742 27th
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44 comments:
The bulls are going to have a field day with this one. Perhaps I should buy now.
Give the bulls their due on this one. We bears were way too pessimistic.
I'm puzzled by the closing price being above the ask. Why would that happen in this market with a house that's been sitting for so long? If anyone can shed some light I'd appreciate it. Thanks.
5:46- Well I think it's just what I've been saying that good homes will still sell and the bad ones will linger. Some homes have price appreciation from the peak and some are flat to negative. It seems that type of thinking on this site is that I am a bull, but I say I am neither, then I get chastised for being a Democrat for the Day by a bear, so maybe this supports my anecdotal thinking.
It did sell for $678k in 1992 which was the beginning to middle of a down market back then. Not sure if that means anything to anybody.
It's funny, that the very first comment is from a bear with a feciscious tone with all the negativity.
Excellent home in excellent location on south side of street that attracted multiple bids once the price was lowered below the 'magic' $2 million level.
Buyers will pay a premium for good Tree section homes on 26th, 27th, 29th and especially 31st (3 new ones sold last year on 31st, all over $3 mil). Recent sales - 609 26th for $1,950,000 (actually sold for more when it first came out but mold remediation issue was a setback for the sellers), 652 26th, new construction pending for $2.7 million and 738 26th, a Mrs MBC pick listed for $1,799,000 (originally sold right out of the gate for over list, fell out, don't know what current sale price is).
I am glad that house sold for that much. It looked like a nice house and that is a nice part of the tree section.
After that controversy over the back wall, this blog was lambasted the enemy of commerce. If only the local real estate industry were held to such a high standard of accuracy.
5:46PM said "I'm puzzled by the closing price being above the ask. Why would that happen in this market with a house that's been sitting for so long? If anyone can shed some light I'd appreciate it. Thanks."
I can has cash back at closing? Seriously, realtors have been running this scam for a while. They convince the buyer it's a good idea -- "yeah, just offer a few thousand more, I'll give you cash back at closing." That way, the realtor gets their fee based on the higher buying price, and they sell it to the buyer and seller as "raising the comps." Meanwhile, the buyer doesn't realize that they are paying extra interest on this extra money they didn't even want to pay.
6:31 PM:
Thanks for your post but I'm not sure I follow. You're saying that the realtor convinces the buyer to offer more money and then gets it back from the seller to return to the buyer. This is agreed upon by all ahead of time to "up the comps". Yet, the seller agrees to pay the fee based on the artificially inflated sale price (not to mention the tax consequences to the seller as higher capital gains and the buyer for increased property taxes)?
Not sure I buy it. The buyers and sellers would have to be pretty gullible. I'm not saying it CAN'T happen, I'm just saying I find it hard to believe.
13.5% down from original asking price, and maybe even 16.7% or more if what 6:31 says is correct.
6:40, 6:31 here. This is more common than you might expect. Check out an account of it on this blog where the blogger didn't fall for it:
http://thefifthofmay.blogspot.com/2007/06/year-2month-2day-22.html
I too think this is stupid from a buyer's standpoint. a) you're probably committing some form of mortgage fraud; b) you're paying fees to the realtor based on a higher amount; c) you're putting your tax base at a higher amount (which you mentioned).
Thanks for the link! She writes well -- I'm sure there was a bit of embellishment but still, I didn't realize this stuff went on (yes, I'm a renter and have never made an offer on a home or worked with a broker).
Have others had direct experience with this or any other games being played? Any light you could shed would help a future homeowner.
Thanks again 6:31/6:40 (how about a handle?)
6:40- It happens all the time especially in investment properties where the buyer can get cash to fix up a place rather than try to take out an additional line of credit after close of escrow. Was easy to do in the heydey af free for all appraisals, but much tougher if not impossible now. Just goes to show that people on this website know nothing about real estate investment.
6:42- Why be so cynical? It doesn't appear it is getting you anywhere. Over $2M for that house is still showing some price strength in the good locations, but feel free to focus on the 13.5% price reduction which was obviously high to begin with when the house is not new construction.
But thanks for that truly valuable insight.
Justme - cheap shot. Typical anti-realtor cult sentiment on this blog.
6:31 - another cult loon espousing another conspiracy theory (conspiracies are the last refuge of the intellectually bankrupt). Even goes on to cite another loon's piece of fiction from another blog to support his conspiracy. Oh, brother.
6:42 - if 6:31 is correct?? You're kidding, right? Try reading 7:07's reasoned comment for insight, unless you're immune to that sort of thing.
WHOA!!!! Hey, hold on a minute here. You idiots are accusing some very repulatble agnets of taking part in loan fraud. Not one of you has one f**king bit of proof. I know these agents well, and I know that none of them is stupid enough to go down that road.
MBC, I suggest deleting those libelous posts. This is ridiculous.
It's not loan fraud. Buyer is paying on the borrowed amount.
It's all there in black and white at escrow. Yes, it does happen. You pay "x" and seller or agent pays back difference at closing as closing costs from seller, etc.
In the end it costs all parties more money.
I don't see the need to delete this; as the discussion evolves it's clear there could be lots of explanations.
Cash back would not be fraud – it can be part of a routine deal, as others have said. If the lender will go for it... It only really makes sense if you're going to use that money for renovations.
You people don't even know for certain that the buyer received any cash back and yet you are ASSUMING it to be true because some anonymous moron put forth his theory as supposed fact.
Didn't you do enough damage to the marketability of this proeprty with the rant about a misplaced fence? I guess this explains why you don't have a job as a reporter. You would have been fired a long time ago for lack of fact checking. And I don't care if you didn't write it. It's on your blog and you are the only one with editorial priviledge.
Cashback is most likely fraud if not dealt with properly in the loan paperwork.
Particuliarly if an estimate is being "delivered" to support the higher value. Think about it. The bank is using the property as equity. If you can get 40-K back and not damage the bank's equity, why not 12-M back? That is exactly what happened in Beverly Hills with some of the top performing agents in beverly hills fully colluding. And now fighting to keep out of jail. Reported in LA times a few months ago.
So for the MORON saying that it is libel, it does happen every day. I guess you don't want the gravy train derailed?
My wifes hair dresser, trying to sell her extra 1.7-M house in Venice was complaining that the only two offers that she managed to get wanted to jack up the price by 250-K so they would have "walking around money" for the next couple of years. They took the offers to their lawyer who said not to touch it with a 10-foot pole.
Don't fool yourself, it is most likely fraud.
This is SO IRONIC! This is exactly how the whole wall issue started! Someone posted about hearing something, and suddenly, it is gospel to a bunch of losers here! Classic.
So looking forward to the day Manhattan Beach Confidential takes on an opponent with resources, but then again, you don't own a house, so you don't have anything to lose.
Well, since I started this I'll state my opinion for the record.
I think 6:26's scenario is the most likely -- that once the price got low enough, the home solicited multiple bids. I have no reason to believe that anyone did anything untoward, whether or not paying a higher sale price with a guaranteed "payback" is, in fact, untoward.
I never suggested that the agents on both sides of this transaction did anything unethical, and never intended for that to be a topic of discussion.
Dial down the fire-breathing a moment, 8:26, and try to state what was discussed here that libeled anyone. The answer is nothing.
For one, no names are mentioned. No one claims knowledge of this specific sale. The discussion is about things that allegedly happen out there in the world. There's a specific example cited (albeit an example derided as "fiction" later) to back up the idea.
The person was obviously offering just a theory about what explains the $76k boost, and not a very strong theory either. (I see Waiting to Buy trying to reel this back, too.)
Later comments – clearly by others – point out that it's not uncommon for people to suffer the downsides of a higher sale price (commissions & taxes) in order to draw some cash at COE for repairs, etc.
To me that appears the likelier scenario here, but who knows.
I still think you can deal with these things without deleting. Bad ideas don't survive a debate.
When the discussion is on topic I'm going to try to preserve it, whatever the noise level.
MBW said: "For one, no names are mentioned. No one claims knowledge of this specific sale. The discussion is about things that allegedly happen out there in the world."
Are you really that naive? Look at this comment:
"Seriously, realtors have been running this scam for a while. They convince the buyer it's a good idea -- "yeah, just offer a few thousand more, I'll give you cash back at closing." "
Some person reads the price, then they read that paragraph and automatically assume that the agents (who are great people) are involved in something sinister.
Grow up, MBW. The commenter above was correct. You might as well have written the Tupak story for the LA Times. If you are trying to be a journalist, you should go back to junior college.
PS, I thought newspapers didn't publish anything from "staff writers" as anonymous. Isn't that right? Or no?
9:51, I'll try to cut you some slack here since you obviously don't have any real familiarity with journalism or the law. Suffice it to say that, in a comparable case, a newspaper would not be held responsible for unreasonable inferences drawn by hypothetical readers.
And with that I'll now take a heavier hand in shutting down further discussion on this distracting and confused point. Sorry I couldn't please you more.
738 26th ended up selling for $1,770,000.
Regarding cash back to the buyer, here's a brief synopsis of credits for nonrecurring closing costs from Dian Hymer of Inman News Service:
Lenders have restrictions on how much sellers can credit to buyers at closing. The amount varies with the lender, but it's usually in the range of 3 to 6 percent of the purchase price (Note: Our local rule-of-thumb in MB is 3%)....
Most lenders will only allow a credit for the buyers' nonrecurring closing costs. Nonrecurring closing costs are paid on a one-time-only basis at closing, like payments for title insurance and loan origination fees. Lenders usually won't permit credits for the buyers' recurring costs, like mortgage interest and hazard insurance. There are some lenders, however, that will allow credits for all closing costs.
A credit from the seller to pay for the buyers' nonrecurring closing costs can't exceed the actual amount of those costs. The lender might allow a credit of up to $6,000, but if the buyers' costs only total $5,000, the maximum the sellers can credit is $5,000.
So there you have it - neither illegal, immoral nor fattening. However, I should point out that my experience with credits for NRCC has been almost solely as a compromise on repair items after the property is in escrow (instead of fixing a plumbing issue, the seller offers a $1000 credit for nonrecurring closing costs, for example). Not saying that the parties can't agree on a higher price with cash back to the buyer for renovations or whatever (so long as the property appraises and the cash back falls within lender guidelines); however, as noted, the buyer now has higher property taxes in addition to higher mortgage payments.
Again, no evidence of a credit for NRCC in the case of 742 27th's purchase over the final, reduced list price but would be perfectly permissible if it did occur.
You are right, MBW. I don't have any experience with journalism. That is why I was asking you. You see that question mark (?) after my "question"? That means I am asking something. Thanks for cutting me some slack! My question had nothing to do with inferences. I thought (again, this is MY recollection, right or wrong, and I was asking you to confirm or deny), that papers do not publish anything by staff writers (not editorials) as "anonymous".
The story here is simple. Bigger house, bigger lot, real yard, enough space where you actually have greater privacy relative to other homes in the Trees, relatively nice street. Lots of upgrades offset the age of the home when compared to new construction. My guess is the owners probably believed the significant amount of upgrades justified setting the initial asking price for the home at a premium.
Take all of the above into account and it is a bit easier to understand why once the owners cut the price 742 27th received multiple bids and sold above the last asking price (even with the erroneous "wall issue" posts, which MBWatcher's "Fence is Alright" blog entry made a non-issue, correct?).
Wow mb... I'm sorry you have to deal with some really thin skins on here.
"If only the local real estate industry were held to such a high standard of accuracy."
Leads to "cheap shot. Typical anti-realtor cult sentiment on this blog."
Cash back at closing, "realtors have been running this scam for a while," becomes a full-on flame war with threats of libel suits...
Wow. Just wow.
Don't worry, epsilon. I know you're new to real estate and blogging but you'll get the rhythm of this site after a while.
Basically, it's an us-versus-them situation - homeowners/homesellers and their agents versus renters/sideline sitters/homeowner wannabes and a few disgruntled hovel owners who can't stand their wealthier neighbors. The first group defends MB generally and home ownership here, the second tries to tear it all down.
Which side do you align yourself with (I'm guessing the latter)? Just don't kid yourself that this is the go-to site for everything you need to know about the local RE market. The level of misinformation and dissembling, particularly in the comments, is staggering - the prevailing motto seems to be "credo quia absurdum est."
Epsilon:
Clearly you do not own a home here. Imagine being a relatively anonymous homeowner in this neighborhood and being forced into the limelight by an internet blog (an anonymous one, no less) spilling out rumors, half-truths, and to be fair, truths. How do you think those homeowners feel? How would you like 100-200 people (who knows how many read this site...just guessing on the number based on the poll response activity) wonder if your wall is misplaced or speculate whether the buyer of a home committed fraud?
In my humble opinion, thrusting homeowners out of their anonymous world...again, by an anonymous blog maintainer... is ridiculous. MBW should at least have the guts to stand behind his/her comments.
Before you go and say, "well, you are posting anonymously...why don't you use your real name?", remember, I am not the one writing about homes on a blog. If I were, I would certainly use my real name.
It's a fair point... if an anonymous poster claimed my property was smaller than it was, I would be a little upset. But, by the same token, I could post information disproving that.
More importantly, I would hope that potential buyers of a $2 million + home would look at more than an anonymous blog post before making what may be the most significant investment of their life. I am a renter, hoping to be a buyer (something I could afford to do now, but I am very worried about the downside price risk). I suppose that aligns me with the bears on this blog, but I still put very little faith in the random musings of blog posts (even my own). I really, really hope that there aren't buyers or sellers out there taking anything on this site as gospel...
Right, Epsilon. They absolutely could post a retort IF they wanted to be under the spotlight even more! Furthermore, what if the homeowner were one of the 2-year and out storylines? What if that person lost his job and had to sell, but wanted to do so with a bit of dignity? Why force that person's situation into the public eye?
I agree with you about research. I don't think anyone would base a complete decision on what is written here. Much like your fear of a price decline. I would imagine you are not going to base a bearish view 100% on what you read here.
for those residents concerned about their privacy.
don't have a for sale sign in foront of your house
don't sell your house through a realtor
don't have your house posted on the mls
don't advertise your open house in the beach reporter
don't move into a house where your neighbors live less than 10 feet next to you
the expectation that any resident of any community has any right to privacy from real estate discussions is laughable.
this blog is no more than a manifestation of the old town gossip...the only difference is that discussions about your neighbors' perceived property values, quality of houses and motivations for selling were once resigned to local RE offices,cocktail parties, and the hometown fair...what this blog has done is democratize the gossip and the public information so everyone can now get in on all the juicy details.
if you can't handle it as a resident then go live in the boonies.
12:43pm - I think his point had more to do with anonymity of the blogger. Tit or tat, so to speak. At the cocktail parties, everyone knows everyone else and is accountable for their gossip.
"Tit FOR tat"
thank god for Anon 11:01
Please people, read the (Anon 11:01) post before you speak, many times cash back at close of escrow is just how biz gets done.
have a nice day
Let's tone this down.
This is the way it works. Someone says something stupid or inaccurate. Someone else corrects the mistake. The truth comes out in the end.
If someone feels put upon or wounded, so be it. This is called free speech.
I would much rather have the whole debate from start to finish, than have someone cowered by bogus threats of defamation lawsuits, from bringing useful information to light.
I have had very favorable experiences with the local real estate community (although I think that the middle aged women are the best of the bunch), but reading some of these comments I am starting to wonder about what sometimes lies behind the amiable demeanor.
My favorite comment in this thread:
"you don't own a house, so you don't have anything to lose."
Wow. I didn't realize my life was so empty since I don't own a home. I see the light. I will now go kill myself.
Cash back at closing is almost always a RESPA violation, and if any realtor is party to this action, they are breaking the law. Plain and simple. You cannot get more than a 100% CLTV loan today. Period. Anyone who offers you such is running a scam and should be referred to your local FBI office.
OK, 2:51, but just a reminder, no one has any information about any cash back on this sale.
I looked back at older comments and saw someone saying (anon) there were 2 offers when the home was priced at $1.999m. Seeing 2 separate escrows open (after one failed) appeared to confirm that. In which case the higher price may simply be a reflection of a late-stage bidding war, nothing else untoward or magical.
That's ok 2:26. Just make sure you clean up the mess.
You know people seem to make a big deal out of the wall controversy and what role this blog played in it, but they're forgetting that the listing agent played the biggest role, if you look at the quote:
"According to the realtor, the cement wall at the end of the backyard will have to be moved in by 2 ft because it was built on property belonging to the house directly behind. Knocking down the wall could be a bit of a headache."
So is an anonymous commenter to blame or a listing agent who was blabbing at an open house? If you're going to take the substance of the quote at face value, why wouldn't you take the attribution of the information at face value?
Some of these comments keep getting more and more inane -- I just don't understand the vitriol. I think I'm going to stick to just the posts from now on.
4:31pm - the point was, the agent never said that. if you couldn't figure that out, i feel sorry for you. did you really think you "had something there"? what a fool.
7:17-How do you know the agent didn't say that?
Were you there? Why should anyone believe what you say over what an Anon said when feedback was requested about the open house? You sound like a very defensive, let me guess, realtor, you have no facts to back up your pointless comment and you resort to childish name calling in a feeble effort to conceal!
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