Marble House — The Knife
Are the high-end homes in Irvine plated with marble? The asking prices would make you think so. Today’s featured property was purchased by a knife catcher at auction. No improvements have been done to the property — no marble — and now they want $260,000 for their efforts. Oh wait, they made no effort. They just want $260,000 just because. This is the kind of behavior that makes house prices unaffordable, and it is exactly the kind of behavior this market is going to crush out of existence.
Asking Price: $1,149,900
Income Requirement: $287,475
Downpayment Needed: $229,980 or $437,863
Monthly Equity Burn: $9,582
Purchase Price: $890,064
Purchase Date: 5/19/2008
Address: 15 Bayview, Irvine, CA 92614
| Beds: | 5 |
| Baths: | 3 |
| Sq. Ft.: | 2,967 |
| $/Sq. Ft.: | $388 |
| Lot Size: | 5,166
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Mediterranean |
| Year Built: | 1986 |
| Stories: | 2 Levels |
| Area: | Woodbridge |
| County: | Orange |
| MLS#: | S538594 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
 New Listing (24 hours)
|
|
largest and best floor plan in this much sought after tract is the
epitome of Standard Pacific form and function: spacious rooms, high
ceilings, and maximum use of interior spaces. This home features a
remodeled kitchen with a counter-height breakfast island and granite
surfaces; all new sliding doors and windows; and a private,
professionally hardscaped/landscaped backyard. Live and work in Irvine:
the top of the list of the safest towns in the U.S. and headquarters or
home to branch offices of many Fortune 500 companies. Play in Irvine:
the award-winning Village of Woodbridge is the center of life in Irvine
featuring 2 lakes and beaches, 31 parks, 23 pools, 2 tennis clubs,
bicycle and walking paths, and a bustling Recreation Center. Learn in
Irvine: among the highest rated elementary, middle, and high schools in
California and home to University of California Irvine.
There hasn’t been a home available in Bayside for over 2 years! Then why did it go so low at auction?
Does that description read like it was purchased by an out-of-towner? My sources tell me it is owned by First Pacific Properties, LLC, whoever that is. Perhaps it is a new vulture fund catching its first knife. They obviously have not been watching the prices of nearby comparable properties. Many people have commented on 4 Rainstar. It is arguably a superior property, and they are asking $999,000 after a long series of price drops:
| Date | Price |
| Mar 02, 2008 | $1,299,000 |
| Mar 25, 2008 | $1,275,000 |
| Apr 06, 2008 | $1,250,000 |
| Apr 13, 2008 | $1,225,000 |
| Apr 20, 2008 | $1,199,000 |
| Apr 24, 2008 | $1,149,000 |
| May 02, 2008 | $1,124,000 |
| May 16, 2008 | $1,099,000 |
| Jun 06, 2008 | $1,049,000 |
| Jun 14, 2008 | $1,039,000 |
| Jun 20, 2008 | $1,029,000 |
| Jun 27, 2008 | $999,000 |
On the other side of South Lake, there is 7 Bayporte. It is a very similar property, and it is listed at $1,025,000.
So the comps are around $1,000,000 and dropping fast, but somehow this property has gained $260,000 in value. WTF? I cannot get my mind around what these guys are thinking. Plus, since their own auction purchase is going to set the ceiling of financing value, lenders will likely only loan 80% of the
$890,046 purchase price. In other words, the purchaser of this property will need to ignore the neighborhood comps and put up $437,863 of their own money to close the deal. I don’t think that is going to happen.
If these guys recognize their error quickly, they might be able to sell this and still make a small profit. If they priced it at $950,000 today, some other knife catcher might pay it and bail them out of this deal. With the rate prices are dropping, they probably have a three to six month window before they go underwater, less if they are paying a full commission. I will watch this one. I suspect we can all get a major schadenfreude fix out of it.
BTW, there is an interesting subplot to this property. How did a property that was purchased for $720,000 go into foreclosure and get auctioned at $890,046? You guessed it, mortgage equity withdrawal. Over the course of 5 years or ownership, the previous owners took out $377,000. Option One Mortgage ate the loss.
.
And comb your hair
I carry you
Down the stairs
I wanted to see right through
From the other side
I wanted to walk a trip
With no end in sight
The moment we believe that we have never met
Another kind of love, it’s easy to forget
When we are all alone and waiting for some treat
We have a thing in common, this was meant to be
You close my eyes
And soothe my ears
You heal my wounds
And dry my tears
On the inside of this marble house
I grow
And the seeds I slow
Grow persistant too
Marble House — The Knife
In the good old days (pre-2002), you COULD make money in this fashion. Foreclosures are basically ignored in the comps, and if this is truly seen as an exclusive area, this one may be also. The reason this used to happen is because it was acknowledged that a foreclosure at the courthouse was a distress sale, and the requirement that the price be paid in cash greatly limited the pool of buyers.
Please give us an update on this one when it sells – I would not be surprised to see them come out ahead. Not saying it is a sure thing, just that they might do well.
I did read the post, but keep in mind I am an out-of-towner too! 😉 I understand that in this new environment, banks may well limit the appraisal to the newest comp. I am just saying that if this is seen as an exclusive sub with one superior attribute (a great view, a special park or play area, extreme convenience to shopping or schools, or even if it is guard-gated 😉 ), it could actually find a buyer who just HAS to have it.
http://www.crackthecode.us/images/DealOrNoDealLoL.jpg
No way. I live in Huntington Beach next to several homes nicer than this one and within a block from the beach and they have been just sitting empty for months. There just aren’t that many people that have the financial means to purchase a property in this range. I would doubt that they would get too many offers if the asking price was set at their auction price. These houses are just not worth it. It may take another 12 to 18 months but they will drop and drop and drop!
Reading over the comment from Agent#777, it seems the argument distills down to “there can always be a price-is-no-object buyer.”
That is true, so far as it goes, but it is also irrelevant to any issue of fundamental values or buying decisions made by us mere mortals.
All three are awful. I just don’t like them. Something about the mid-80’s early 90’s maybe? But the first one has a WTF layout, that’s just plain awkward (I suppose it was supposed to look “new” and “modern”). The second has such distracting decorating that I can’t even tell what it looks like. I wouldn’t want to pay for all that neo-classical wallpaper to get taken down and with what damage to the underlying walls? The third house is just sort of blah, lackluster and has horrible sun-oranged pine in the kitchen. For this? For this? people paid a million dollars? Okay, I know they paid that for the land. But they have to live in these crappy 80’s houses, because they’d be way too expensive to tear down, and not worth doing extreme renovations to. I know I’m not doing a proper comparison to rents or for the school district but I wouldn’t be willing to pay more than $300k for these and that’s less than the downpayment amount(based on the second calculation). Actually the truth is I would simply choose to buy something else, because no one is putting a gun to my head to buy these.
Totally agree. These garage dominated tract homes are fugly. Where’s the front door? It’s a glorified car barn with gratuitous living space. I’d rather live in a tiny bungalow then throw a million dollars at this pig’s ear.
The listing agent has been sent an invitation to join our discusions:
http://www.stevemorton.com/
Kool-Aid alert.
From Steve’s “About Steve Morton”
A little bit about me
My family and I have been living in Orange County for over 20 years which seems hard for me to believe. The area has changed considerably over this time, but one thing remains the same–it is a great place to live, work, and play. I am very enthusiastic about the real estate market here and firmly believe that owning property in Orange County is the key to financial freedom.
Knife-catchers better run as fast as you can before Steve infects you with his disease.
The only financial freedom that will come from buying this house is Steve’s!
Financial freedom is now about “owning property”. Education and hard work alone are not going to cut it anymore.
Oh and of course to achieve Steve’s financial freedom, you are going to need someone like Steve to “help” you out along the way.
Sounds like the key to financial freedom is selling people into financial freedom. Right, Steve?
“..and firmly believe that owning property in Orange County is the key to financial freedom. ”
OR it could be the KEY to financial DISASTER. (Just ask the suckers who bought in 2004-2006.)
Steve will be flipping burgers and pimping his wife out soon to pay the mortgage.
… and firmly believe that owning property which you bought in the 80s or early 90s in Orange County is the key to financial freedom.
Fixed!
Or which you will buy in a few years at late 90’s prices…
With one once of truth you could have won credibility and maybe even new clients as there are folks on this site who need to buy/sell. Instead, you throw out the financial freedom BS that got us in trouble to begin with. In three years, the whole realtor model will be different, with 1/2 of you gone and the remaining brokers/agents taking 1 and 2% and competing fiercely against on-line brokers. Can’t think of a lesser value added job than real estate agent.
Sign here…that will be 6 percent, please!
The commission model is ridiculous. Let them get paid based upon the hours they work for you.
10 minutes to place an MLS ad, a few hours to show you some houses, an hour to sign papers, etc.
Add it all up and it probably comes out to a few hundred dollars – NOT 6% the sales price.
I talked one realtor last week that said that the market is so bad that they actually have to work an open house every Saturday or Sunday. Imagine the horror of having to commit to something so taxing as sitting around a house for 6 hours for 6% of a million bucks!
Blah blah blah blah …..boy are these real estate agents trained and brainwashed into saying stupid things -I wonder if he practicesreal estate and eternal freedom pitch standing before a mirror everyday.
No interior pics on this one. The other two properties have interior/exterior pictures.
Is it going to show as abandoned/possibly neglected, while the other two (which have yet to sell) look like they are lived in/inhabitable?
I agree that this one will be interesting to follow.
“I suspect we can all get a major schadenfreude fix out of it.”
-Irvine Renter
Man it’s like Christmas in July around here : )
Schadendude,
Remember my Christmas present last year? The Register should look even better in 6 months!
(FYI – I’m Schadendude’s sister)
Time is not as good as it used to be. Therefore the mark up is only $260k.
http://www.crackthecode.us/images/ComePlay.jpg
LOL! Great one.
Haha, I agree. Very appropriate.
Holy shitburgers that pic is scary as hell. I even want to pick my feet up off the ground.
Hey, at least this knifecatcher will (hopefully) keep paying the property tax, keep paying the association dues, keep paying interest on his debt, keep paying the insurance, keep paying for upkeep and maintenance all whilst the property sits empty waiting for the next Greater Fool.
Thanks Mr. Knifecatcher for keeping the money flowing and the economy stuttering along. I guess he forgot that “fair market value” is what someone is willing to pay. And his price at auction is the maximum someone was willing to pay. Take that, subtract a 10% price drop over the next few months, then subtract the commission and closing costs, and you get a nice $130,000 loss (plus what they burn in holding costs). Yes, real genius here.
My wife and I tried to get a look at this house when we saw it listed on foreclosure.com earlier this year. We thought it might be a distressed sale and we might be able to get a decent deal. We live in Woodbridge now and are looking to move to a larger home for the long term. But I could never actually view the house since I could not find any contact information for the seller. All I could gather from my research was the owner had lost the house due do a bankruptcy and it was going to be sold at auction. After speaking with several real estate friends about how this works, they said that if I wanted to try to buy this house all I could do was show up at the courthouse steps on the day of the auction with a cashier’s check (several checks if the price got bid up). They said that “companies” rather than individuals are generally the only ones participating in these types of auctions. Does anyone know anything about how this could work for an individual?
The house is on a decent street in Irvine (although it is a little close to Alton), and it is a larger home for the area, but I imagine that it does not show “pride of ownership” due to the circumstances. From the outside I can see that the wood shake roof needs to be replaced. This will be an interesting one to follow…..
If you are talking about the courthouse steps, Chuck, it likely works the same way. You may have to have certified funds or cash to pay right then and there. This is what people miss about the courthouse steps…it is really more of a wholesale market price, because someone taking the trouble and risk to buy there is figuring on making a profit.
I know in Seminole County Florida the auction is held at 11 AM, and a winning bidder puts down 5 or 10% in cash immediately, and have to return by 2 PM the same day with the rest of the money.
I like the video today, Irvine Renter. The mice are so cute!
It is funny how much more appealing my modest 1 bedroom apartment appears to me in the midst of all this carnage.
I’m glad I didn’t drink the kool aid, because schadenfreude is way more satisfying… 🙂
“Schadenfreude, the other white meat.”
People with the required income to buy this house don’t do stairs. Where is the elevator? Where is the weight room. Where is the home theater? Where where where?
I have never owned a home before. I built myself a spreadsheet so I can compare cost of ownership compared to rentals as I keep my eyes peeled for buying a house one of these days. Is there anything I am missing or assuming incorrectly?
Here’s what I am considering so far:
Mortgage Interest Rate
PMI (0.5% for mortgage amount > 80% of value)
Federal Tax Deduction (roughly 10% of annual interest expense)
Property Tax (1% of purchase price with about 2% increase per year)
Realtor fee (3% of purchase price)
Closing Costs (?????)
Homeowners insurance (?????)
There are better experts than me that regularly comment, but I see Property Taxes as more like 1.5% after the usual extra assessments are ladled in. Make sure there aren’t Mello-Roos fees (taxes) to consider, and yes, insurance on the property will be required.
The deduction value on your taxes might be closer to 15% or so – obviously tied to tax brackets and the amount of interest you can deduct on a primary residence.
The 3% for the Realtor is hard to get under 4% and is paid by the seller.
Good luck.
IR has it covered in the analysis post rent versus own
He hits all the biggees with estimates for cost on each. Don’t forget to add vacation days spent waiting for the plumber, and rainy-day savings for roof repair and other house maintenance.
If someone is this big of a douchebag that they bought a home post credit crisis as a flip, I have no sympathy.
Is there name Neo, and are they living in the Matrix?
Ya know what? This has perplexed me for quite some time now and this is seemingly an appropriate time to ask … how in the hell did “Shady Canyon” get it’s name when A) it ain’t exactly shady and B) there ain’t no canyon???
What are there like two houses built in the actual “canyon” and it’s a BYOS (bring your own shade) kind of deal? Just wondering.
Hey, it looks like they just dropped 4 Rainstar tonight to $975,000!
4 Rainstar just got reduced down to $975,000. The page was “last modified” about 45 minutes ago at 8:48 PM on July 3rd.
It’s now $975,000 instead of $999,000.
I’ve always wondered if there is a counter for all of these Redfin pages. When a property becomes the focus of discussion on a popular blog like this, and all of us start clicking on poor old 4 Rainstar, does Redfin track that traffic and would the realtor for 4 Rainstar be able to see a big surge in looky-loos at their property?
I’ve wondered about that. Although the new reduction in price on 4 Rainstar would seem to disprove that, as folks have been clicking on it all day from the link here and yet the realtor still went in tonight and lowered the price again.
Perhaps it was the “owners” themselves who read all the comments here. 😉 snicker.
Oh yeah! I remember 4 Rainstar, with all the overdone decor that has to be removed and the freaky double fireplace! Hahaha!
Oh wait, they made no effort. They just want $260,000 just because.
“Cash Cow” by Steve Taylor:
It was a morning just like any other morning
…in the Sinai Desert
…1200 B.C.
It glistened, it glowed, it rose from the gold of the children of Israel
(and most of the adults)
The Cash Cow!
The golden Cash Cow had a body like the great cows of ancient Egypt
And a face like the face of Robert Tilton (without the horns)
And through the centuries it has roamed the earth like a ravenous bovine seeking whom it may lick!
Cash Cow…
Cash Cow…
From the Valley of the Shadow of the Outlet Mall
To the customized pet-wear boutique!
From the trailer of the fry chef
To the palace of the sheik!
The Cash Cow lurks!
The Cash Cow lurks!
The Cash Cow lurks!
Who loves you, baby?
Who’ll give you good credit?
Who says you’ll regret it?
Who loves you, baby?
Who’ll give you good credit?
Who says you’ll regret it?
“I was young and I needed the money”
“I had money, and I needed more money”
“I was filthy rich–all I wanted was love. And a little more money…”
Woe to you, proud mortal!
Secure in your modest digs
You think you’re immune?
You, who couldn’t finger said cow in a police line-up with the three little pigs?
Cash Cow–Master of Disguises!
Who’s gonna change shape at will?
Who’s the eye in the pyramid on the back of the dollar bill?
Who loves power lunching from Spago to the Sizzler?
Guess who’s coming to dinner?
Who loves you, baby?
Who’ll give you good credit?
Who says you’ll regret it?
Who loves you, baby?
Who’ll give you good credit?
Who says you’ll regret it?
One yank on that udder
Will land your butter
In a sling
First one’s free!
Cow junkies take heed
Cash Cow, coming to getcha!
Why?
Because you think this is stupid, don’t you?
The Cash Cow will not be mocked!
The Cash Cow’s planning a coup!
The Cash Cow chews cud bigger than you!
Woe, woe, woe to you who blow off this warning
Perhaps you’ve already been licked…
I, too, was hypnotized
By those big cow eyes
The last time I uttered
Those three little words
“I deserve better!”
That sounds to be the normal thing that sellers are trying to be doing lately. They make no improvements and not only raise the house price a little, they raise it by 100’s of thousands of dollars.
This has happened in St. George Utah as people have thought they could make a quick buck.