Throw a dog a bone, I’ll take it if I have to
Go real fast like there’s somewhere we can get to
What’s the use of standing right there on the edge if there ain’t nowhere to fall
What’s the use in hangin’ on tight to the phone if nobody might call
Desperation
There’s anger in frustration
Complicated words slippin’ off of your tongue and ain’t one of them the truth
I’m still desperate for you
Desperation — Miranda Lambert
Today’s listing is the most desperate seller I have seen to date. They are actually giving away a car to their buyer. Next they will be offering a year of free massages with happy endings…
Price: $1,999,000
37 Crimson Rose
Irvine, CA 92603
Beds: 3
Baths: 3.5
Sq. Ft.: 2,900
$/Sq. Ft.: $689
Lot Size: 6,500 sq. ft.
Type: Single Family Residence
Style: Mediterranean, Spanish
Year Built: 2004
Stories: Two Levels
View(s): City Lights, Ocean, Panoramic
Area: Turtle Ridge
County: Orange
MLS#: S495046
Status: Active
On Redfin: 138 days
Unsold in 90+ days
From Redfin, “SPECIAL OFFER TO BUYER: BRAND NEW 2008 MERCEDES BENZ ‘GL’ SUV OR ‘CLK’ CONVERTIBLE WITH PURCHASE AT ‘LISTING ASKING PRICE’. FORMER MODEL HOME with PANORAMIC CITY LIGHTS/OCEAN VIEWS!One of the BEST and highest view lots in The Summit at Turtle Ridge; Over $500K in designer upgrades; Provencial Style Home; Casita with Bath, custom hardwood flooring/wainscoating walls, faux paint, stone walls and stone flooring, spa-like master bath; covered loggia with outdoor fireplace.”
.
.
From the land of WTF listings and denial we have the first signs of desperation: high-end style. What do you think about that?
Look at the price per square foot! What’s a casita? A mother-in-law suite?
—–
I remember looking at these models when they first became available. I was impressed.
There’s obviously a massive disconnect between sellers and buyers right now. Sellers seem to believe that there are still lots of available buyers just waiting for the right deal, and throwing a brand new Benz in the mix, might be the bait necessary to solve their problems.
Gosh, are they ever wrong.
The problems are very clear here. The (very few) people that can truly facilitate a purchase at this price (2m), in these present, tight credit conditions, are looking at homes on the other side of the hill, and they’re generally facing the ocean.
I’ve always thought that the homes that would really get hammered would be one’s just like this. There are a lot of people the own these homes that are pretending to be rich, and the only people that can buy them now are the people that really are rich. And this ultimately restricts the buyers pool to very few. This home has almost zero chance of selling at this price, even with a new $55,000 Mercedes in the deal.
This reminds me of when the condo boom on Wilshire Boulevard in West LA was slowing way way down in the late 80’s. They were actually offering a new Rolls Royce to anyone who would buy a penthouse unit in one of these high rise condo buildings. I don’t think anyone took them up on the deal.
The fact that the seller is willing to offer a Mercedes shows that even they know their home is outrageously overprices. Just remember that if you take them up on that offer of a new Mercedes (rather than discounting the price of the house by an amount equal to the car’s cost) you will be paying property taxes on the cost of that car every year for as long as you own the house.
If they discounted the price of the house by $55,000 and threw in, say, a new Time or Look bike then I would make an offer…not.
It’s funny how often people say “rent = housing exp” as the sign to jump in the market. I have to admit that as a multiple property owner/investor, I did not believe I’ll see that day during my life time again. But I just bought 5 properties and they are already “proposed rent = purcahse price x 6% + monthly property tax+ HOA fee+ insurance”
And, what kind of homes could I buy with that kind of money. Those homes are newer homes built in 1996, 2000, 2005 in Inland Empire cities no more than 50 miles from OC. (where my home is)
The homes range from around 1550sf to 3100sf. And the per sqft price is from $65/sf (built in 2000) to $130 (built in 2000, 1570sf) None of those are run down, actually one was brand new (2005 but never lived in) in gated community with a ton of upgrades.
Life is no fairytale, and it can be a horror story if nothing is done. One of the home has 1999 price roll back. But in 1999, people are making 40% less in pay. Take that into consideration, and you have a 20 year roll back. And one was bought for $565K in ’05, sold this time for $269K.
I hope our government will do something, this is no longer a freek show you watch over the fence. Banks will fail one after another, our society will be unstable and life will be harsh. For people not walking away from their homes, inflation will have to double the price of everything. Then your fixed 30 year mortgage will look like a God sent.
28 some years ago, I read a Reader’s Digest Artile about Inflation in German after World War I. How a guy read the newspaper in the morning realized in the afternoon how his life savings won’t buy a newspaper in the afternoon. Life was miserable beyond words.
Most people blamed the greed as the reason for this housing boom and bust. I disagree. After 911, rate was lowered to encouraging spending, and the fear for inflation drove housing through the roof. Builders rushed to build fearing the pot of gold will disappear before the homes are ready. Banks had to lower their lending standard to attract buyers who otherwise can’t afford to buy. Things were put to an abrupt stop when Fed started to raise interest rate. I think Fed wanted to do that to avoid further escalating of the home price, which really is a concern, but they did not realize the effect.
Investment is all about confidence. Now the confidence is totally gone, I don’t know what will motivate poeple to buy.
Once again, the completely clueless nature of the average Realtor comes to the forefront. What $2M potential customer is going to see a car as a legitimate inducement to buy an overpriced property in a declining market? The Realtor and the seller aren’t selling lottery tickets to great unwashed masses here (buy one, get one free!), they’re selling a house. Doesn’t the difference in potential customer mean anything to them? I just don’t get it. How detached from your market can you possibly be?
This is stupidity and greed squared.
When I see this kind of stuff, the phrase ‘fin de siecle,’ comes to mind: from Wiki
….In a broader sense the expression ‘fin de siècle’ is used to characterise anything that has an ominous mixture of opulence and/or decadence, combined with a shared prospect of unavoidable radical change or some approaching “end.”
And to the ultimate buyer of this place: I hope you enjoy that Benz because you massively overpaid for it.
I also recall the free car for purchasing a house from around 1990. There was a developer in Ventura who threw in a Mercedes and a golf club membership. It was a sign not only of housing troubles, but that luxury car sales golf club memberships had slowed way down.
There is a promotion which I haven’t yet seen. Set your stopwatches, you heard it here first. Prepaid COLLEGE TUITION, free with the purchase of a house!
I suspect this will happen first in Florida. You can prepay tuition for a newborn for the low, low price of $13,516. http://www.florida529plans.com/prepaid/cost/Newborn.htm
Developers would jump at the chance to get rid of those empty Florida houses and condos for a mere $13k.
The government caused this mess in the first place. You don’t put out a fire by throwing gasoline onto it.
Excellent idea Malibu renter!!
We had to actually pay for our son’s Fla prepaid tuition.
But then, you’d have to throw in prepaid HOA fees (also being done),
an interest rate buy down–say 1,2,3,4.5.6% (no neg am, of course),
pay all closing costs, including impounds.
Oh, and then you’d have to reduce the price.
This is not desperation – desperation will be when it’s down 50% from there. And that won’t be long.
Was there ever a house in Irvine worth 2 Million?
that’s why I vote for 600k at the most for this one, using IR downpayment and income method, a family making around 200k with lots of downpayment (which I belief are not that many who dont already own or like lee in Irvine may have different criteria for what they want). but in real life, a knifecatcher will step in and there will be some blood.
This summer I went to an “open house” at this property. I put “open house” in quotes because the seller literally opened the doors, asked visiting realtors to leave their cards on the kitchen island, left a few black and white copies of color flyers, and then he went off to show another property he was trying to sell. If I remember correctly, the seller is both a chiropractor and a realtor. Not sure which one is his day job. Perhaps he’s a car dealer on the side as well.
At the time, there were 4 other overpriced houses for sale on Crimson Rose within 50 yards, including #35 Crimson Rose next door. Also, 30 Crimson Rose was about to be sold for $1.4m at a trustee’s sale. Shortly after, Irvine Renter profiled 30 Crimson Rose.
37 Crimson Rose is also for rent for $7,000/month. Next door, 39 Crimson Rose is for rent for $6,800.
Has anyone been up there lately? I’m sure nothing has sold, but it would be interesting to see if 30 Crimson Rose is back on the market, driving down the comps.
What are the tax consequences of the car? If the house sells for full asking price, is the car a “gift” which is taxable to the recipient, this giving the unlucky knife catcher a nasty tax bill on top of this albatross of a house? Or is part of the purchase price allocated to the car, thus the knife catcher’s basis in the house is actually $55k lower? Either way, it sounds like a terrible deal.
Any tax experts out there?
Did anyone notice they bought at the peak of the market on 12/12/2005 for 1,860,500?
Clueless.
Just walk away.
The odds are that BOTH cars were purchased off a HELOC or second mortgage.
Hence if you buy at the listing price you’re paying off BOTH cars so you should get BOTH of them.
This is a very nice property but, as I noted a few days ago, there are very similar properties in nearby in TR with as good or better views, equally upgraded nice kitchens and interiors, larger lots and better locations that have been selling for less. Indeed, at this price point in TR you can get 4b/3ba and a three car garage.
TRidge has a lot of falling to do my friends. It outstripped TR on the way up and now it will feel the pain of the speculation on the way down.
Now, if they included a Bentley Continental R AND AND a Ferrari SWB n the deal I might bite. Those Benzes are notoriously unreliable. And, really, a CLK?
A type “C”? Hell that entry level cheap!!!
And the G is a idiotic thing, just as the Porsche SUV is too…. At 4.00 per gallon, if I’m gonna waste gas I wanna do it in a big engined CLS sedan or the aforementioned Bentley. 😉
Indeed, nouveau rich idiots with no class. Just status. A Benz CLK and a Benz SUV. Just like the house.
The purchase price would be alllocated between the house and the car. The fair market vaule of the car is easily determined by either dealer qoutes or websites such as Edmunds.
I agree. I was at a tourist mall in Nevada last weekend, and it was interesting to see what stores had people in them. The high end luxury goods stores were empty. The only busy stores I saw were selling food (ie. lunch on the go) and books. Just the necessities thanks …
What’s a bank’s position when dealing with buyer incentives? When the purchaser gets his new mortgage, does the bank even care if there are incentives? (ex. if I were a bank, and say a property cost $1000 and the buyer only put $100 down and got a $200 cash incentive back – I’d worry about walk & default in that case). Does it matter if the incentives are attached to the house or not and can be removed before sale? (ex. builder throwing in new granite counters, or a plasma TV)
It would not be a gift. The basis would be distributed between the real property and the car.
That is a great looking place, but isn’t it depressing to look at smog all of the time?
I think that the owners think that they can jettison both the house payment and one car payment.
I will vote for a potential loss of at least one million dollars. What the heck.
The government already did something in anticipation of all this: they tightened up the personal bk laws back in 2002 (or 03).
See, they know what’s going on. And you thought they were dumb?!
What if I already have a car like the one being offered, but I still don’t want to pay that much for that house? Reduce the price, is the only answer for someone not stupid who has a lot of cash for the purchase.
People with this kind of money don’t want to pay this for a tract home in Irvine. They can buy in Laguna Beach for that money. And renting in Laguna is a lot cheaper than $7,000/month, too.
Question for the group:
Over the next 5 years, which asset will depreciate faster, the house or the car?
Over the next 5 years, which asset will depreciate more on a percentage basis, the house or the car?
IMO, they will both depreciate at nearly the same rate, and both will be worth 50% less 5 years from now.
“…both will be worth 50% less 5 years from now.”
Possible, but the car will continue to lose value until it’s worthless, while the home will minimally hold steady, if not begin to appreciate.
So the next question is, if the people buying for the long term today are so “stupid,” has anyone here financed a car? If so, then you’re really no different than today’s knife catchers. They’re doing it on a grander scale, but at least they’re financing an asset that will hold some value over time.
It’s interesting that the purveyors’ of these durable goods (furniture, appliances, cars, etc.) margins are so slim that they’re making their profit almost entirely from the financing. e.g. GM’s profit from the recent past has been almost entirely from financing the cars it sells at a loss.
A lot of builders have had a twofold golden goose for the last few years earning profit on the sale of homes AND on the origination of loans to finance the homes.
If the government decides to “do something”, it will be on the backs of people like myself.
As it is, the government caused this mess to begin with, by the actions of the Fed in creating this bubble, and recent attempts by the Fed to inflate us out of this are destroying our currency and what remains of the credibility of our financial system.
So which will it be? Will we let the whole bubble implode as it has to do, and struggle through the inevitable fallout, or will we make matters still worse by “doing something,” which would mean keeping the bubble inflating. prolonging the misery, and extending the damage further?
“So the next question is, if the people buying for the long term today are so “stupid,” has anyone here financed a car? If so, then you’re really no different than today’s knife catchers. They’re doing it on a grander scale, but at least they’re financing an asset that will hold some value over time.”
There is a huge difference between financing something that will result in financial ruin versus something that won’t (or shouldn’t).
I qualified my statement by writing “buying for the long term” which I intended to suggest that the buyers are qualifying based on today’s lending standards (which are much closer to historical standards of affordability).
I’m not at all suggesting now’s a good time to buy. I’m suggesting that the majority of commenters here are extremely opinionated about how foolish and stupid knife catchers are.
Long story short – A person buying a home today 20% off its peak price and financing at historically affordable terms is making a better financial decision than a person renting and buying a $30K+ car and financing it.
LOL, that will be the most costly “free” car anyone has ever received!
I can’t believe I just saw this as the first sentence in a listing (MLS # S502600):
Mission impossible to sell this now…
Am I misreading this?
“Next they will be offering a year of free massages with happy endings…”
Now, there’s a gimmick I’d like to see advertised on the MLS …
You hope the government will do something!? With my tax dollars? Keep in mind that our tax dollars put them to work. Your statement lights a fire within me. Think about this: a Target clerk earning just a shade over minimum wage takes on a ridiculous loan with 100k in stated income (with the help of unethical loan officers, broker, whatever you want to call them), how much help do you think they should get from the government or us? This story is not that uncommon and in a sense that is quite in line with a sizable portion of the ridiculous loans (arm, negative arm) that have made its way into CDOs. Certainly, it is people like that will have to give up their homes 1st.
“Banks will fail one after another”, I don’t care as my money in banks are FDIC insured – I make sure I don’t go over the limit and if FDIC fails it is time to buy gold and head south. “Our society will be unstable and life will be harsh”, so be it. Again, buy gold and head south. As a side benefit, this could translate into less energy use and help fight global warming. Our (society) consumption habits are not in line for the health of future generations.
As a side note, my wife is a nurse. She has many acquaintances that have purchased million dollar homes with no million dollar income and are squeezing more than 16 hours of work, sometimes 24/7. (Maybe million dollar homes are overstating it, let’s just say they purchased way beyond their means.) Now, to cover the increase in payments, how would you like to be taken care of in the hospital with one of those nurses. I hope no one ends up with one of those nurses – too many things can go wrong.
Actually this was an FSBO for a while, after a stint with another realtor.
The car idea is most definitely the seller’s. The realtor may very well know better but this seller will have none of it, hence the FSBO. He really is the poster child for the specuvestor/knife catcher in desperation. I wish I could say how I know this, but I’d rather remain anonymous. (I’m not a realtor, I just worked for one of them.)
He and a partner built a house in Pelican Crest (19 Skyridge,) and sold it in ’05. I assume he put his proceeds into this place. This may explain why he refuses to lower his price and became a realtor. The day job is some kind of doctor, (don’t know what kind.)
This house has been on the market since at least January 2006, originally listed with John McMonigle.
“I hope our government will do something,”
inlandbuyer, you are the PERFECT EXAMPLE of what
the dumbing down of America has become.
Unfortunantly, MOST people think just like YOU do.
Its very sad…
“The degree to which everything can be ‘financed’ – furniture, cars, even a drum kit from the local music megastore – is disturbing.”
Financing anything is slowly comming to a screeching HALT.
There’s a CREDIT CONTRACTION that’s going on. The next shoe to drop or implode will be credit cards.
Imaging have your $10k credit line on your card contracting to just
$3k or perhaps $2k ?
Peter Schiff rules.
“Long story short – A person buying a home today 20% off its peak price and financing at historically affordable terms is making a better financial decision than a person renting and buying a $30K+ car and financing it.
”
Mark, doing either at the point is being financially STUPID.
Lenders usually do not allow personnal property to be included in the purchase. Lenders want their collateral to be the property, not things like furniture, cars, etc. They usually will make the purchase contract state that personnal property is not included in the purchase price. So this deal with the car would probably have to be done outside of the purchase contract.
Next they will be offering a year of free massages with happy endings…
My calculations show that while cars (do) and houses (can) depreciate, happy endings, are, shall we say, priceless.
A human emotion that I can’t get a “handle” on.
I hope realtors don’t take you up on your promotional advise and start advertising as such. We’re Irvine after all.
Do you know if the “custom hardwood flooring” they’re offering includes options like the Brazilian Walnut from here:
http://www.gatewoodfloors.com/
?