We have a first today: a property that is a flip, a knife-catcher and a WTF award winner — the kind of property that really makes this hobby fun.
Asking Price: $1,890,000
Purchase Price: $1,485,000
Purchase Date: 2/27/2007
Address: 18991 Edington Terrace, Irvine, CA 92603
Bedrooms: 4
Full Baths: 2
Partial Baths: 1
Square Feet: 2,831
Lot Size: 9,000 Sq. Ft.
Year Built: 1970
Listing Date: 06/09/07
On Market: 2 days
Type: SFR
Status: ACTIVE
MLS #: P582554
1st Loan $1,000,000.00
2nd Mtg. $250,000
Lender — Americas Wholesale Lender
From ZipRealty, “‘spectacular view of city lights and mountains’. This hard to find turtle rock terrace home has 4 bedrooms, 2.5 baths all on one level. This is the model 70 presidential home. Enjoy the city lighs view from the master bedroom, living room & family room. This house is at the end of a single loaded street with only 6 houses. As an additional bonus, take the pull down ladder to the attic and view all the storage space. This house is ready for you to put your own creative touch on it.”
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Lets take a look at the rest of this home:
So here we have a house built in 1970, and it hasn’t been updated since then — unless perhaps the white tile kitchen was an 80’s update. How about the exposed white brick living room, or the paneling and yellow carpet upstairs. This property is a joke.
I will give these sellers credit for having enough sense to recognize this when they said in the description, “This house is ready for you to put your own creative touch on it.” In other words, you have to do the renovation. So what have these people done to warrant the $405,000 price increase? Are they such savvy buyers that they purchased this property that far under market? These people paid $524 per square foot, and they are asking $667/SF for the property. This is insane!
I have to admire the delusional thinking. They put $235,000 of their own money into this transaction, and they plan to walk away with $640,000 after six months. That is a great internal rate of return (near 600%). It certainly would be better than 5% at the bank. Of course, I think they will be lucky to get out before this becomes a short sale, but only time will tell.
So what about the comps? We happen to have a great comparable property:
Price: $1,498,000
19041 GLENMONT TER
Irvine, CA 92603
Beds: 4
Baths: 2.5
Sq. Ft.: 2,605
Lot Sq. Ft.: 8,670
Year Built: 1971
Stories: 1
Type: Single Family Residence
View: City Lights, Peek-A-Boo, Trees/Woods, Other
County: Orange
Neighborhood: Turtle Rock
$/Sq. Ft.: $575
MLS#: S483106
Status: Active on market
On Redfin: 61 days
From Redfin, “Elegant & Sophisticated Style! Det. Single Level on Oversized Corner L ot, Popular Plan 60 w/ a Gourmet’s Dream Kitchen, All new Stainless Appliances, Custom Cabinets & Granite Counters. Extensive Upgrades incl. new Tile flooring, new Dual-Paned Vinyl Windows & Doors, new Roof-Furnace-AC, Upgraded Electrical systems, Custom Fireplace Mantle, Remodeled Powder Room, All new Shower-Tubs w/ Intricate Tile Inlays & More! Pool sized yard w/ view offers total privacy. Quiet, single loaded cul-de-sac street.”
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Does the front elevation look familiar? These houses are nearly identical, and they are so close together than the Edington Terrace house actually looks over the roof of the Glenmont Terrace house. Is the view worth $400,000 extra (plus renovation costs)? In my opinion, the Glenmont Terrace house is overpriced as well (it is priced $200,000 over its 2005 purchase price), but as a comparable, it clearly establishes Edington Terrace is in WTF territory.
Turtle Rock appears to be the last bastion of kool-aid drinkin’ maniacs. When I look around at listings, most are priced in the $500/SF range. There are a few over $600/SF, and they have been on the market for a long time. There is nothing I can see to justify the price this flipper paid much less the $405,000 extra they want for the property. I am dumbfounded, and being so means they have truly earned today’s WTF award.
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I would like to express a special thanks to JoonB for alerting me to this property.
To see that they paid a premium for this home that needed so much work, with the intent to flip it is just laughable. To top it off, they bought this home right before the credit standards changed. WTF are they thinking? Don’t they read the newspaper? They’re obviously in denial … and this is very likely going to be a very expensive lesson.
FOR THE RECORD: This is about the dumbest thing I’ve ever seen. Why didn’t they try this in Corona or Norco … but oh no, “Let’s do Turtle Rock”. LoL
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Hubris !!!!!
Irvine is immune to price drops, you know. 😉
Wow, maybe it is time to leave. The first is completely insane. The second which shows how insane the first is would be correctly priced if you dropped the leading 1 off of the number.
I’ll accept that this 1970s tract home with some okay updates inside is in the top 20% of homes in Irvine, $498,000 will still put it at about 3X-4X the income of the top 20% of Irvine households. For the top 20%, at the low price of $498,000 with 10%, this home would still consume over 25% of their income for housing.
Okay, maybe you think it deserves a premium, say $598,000. That top earning $150K+ couple will now be forking just over 30% of the their income for this tract home.
Maybe I’m wrong, maybe they’ll never drop below a Million. But keep in mind, 19041 GLENMONT TER sold for $440,000 in 1993 well before the bottom of the last cycle.
That first house asking price is completely insane!! They did not even bother to renovate???????
That’s a greedy flipper for ya…
The house doesn’t need updating! It’s “RETRO”!!!
It is interesting that they put in $235,000 of their own money, but they didn’t have enough to put down 10% and avoid the second and the interest rate the second requires. It smacks of desperation or extreme greed. I am guessing the new owner/mortgage slave lives in the neighborhood and thinks they know this neighborhood and the prices well. I wonder if $235,000 was the max they could borrow from their primary residence? Or maybe they actually borrowed $295,000, but bought an Escalade with the other $60,000?
Six-sixty-seven.
I’m still trying to comprehend that number, even without looking at the ratty interior.
Just when you think this market doesn’t have any more silly tricks up its sleeve…
Great find, IR!
SCHB
There is another comp on Beckwith Terrace asking about the same price as the Glenmont Terrace home. Seems they are head to head in terms of trying to see the place. Beckwith Terrace lowered their price recently and then Glenmont reduced by the same amount. I have seen the Beckwith Terrace home- it is very nice and in move-in condition. When I saw this new home asking such an exorbitant amount I was amazed. I mean, really- for $1.890 million, one’s options are huge- new homes in Turtle Ridge, homes in Newport Coast, etc.
JoonB,
Thanks again for finding this one 🙂
I have to wonder if the new owner/flipper was aware of the race to the bottom going on between his comps? I suspect this guy will be looking at a short sale by the end of the year.
what is more amazing is that even if there is a GF out there, the house would never appraised for that amount. So unless the GF has a lot of cash the bank would never approve the loan in this market.
nice find JoonB, we had the stamped out houses, jungle house, then 70s McMansion. Love the original sunflower wallpaper in the kitchen shot.
There needs to be a bit of a correction though. It says, “This house is ready for you to put your own creative touch on it.” That should read ‘torch’ not ‘touch’.
I have to agree with you, this house should not cost more than 450k tops. I dont care if it is in irvine or inside the ocean. what’s funny is you can get a brand new house, bigger, nicer view in san juan capistrano for half that price.
If you insist on Irvine, you can buy same size house in Quail hill, much newer for less than that.
so I have to say not WTF but WTFFFFFFFFFFFFFFFFFFFFFFFFFFFF.
I’d be interested in one square foot, please.
For kicks I suggest going on Realtor.com to find million dollar listings, and then cross checking them for rentals. I’ve found that many homes are also for rent.
This is an easy calculation on why it’s assanine to buy that home at that high of a price. Say you had 1.5 mil in cash. You could either buy the home for cash or rent. If you invested the 1.5Mil @ 5.25% you earn interest at the rate of 6562 a month. You can rent a bitchin pad for less than that. AND you don’t have to worry about taxes, HOA, and insurance.
Slightly off-topic…but bear with me…
Interest rates shot up last week and I think that will pound the market MORE. People in the commercial loan business are reaching for their teddy bears…or hard liquor.
I love these WTF stories. It would be interesting to do followups and see what this POS finally sells for.
I could do a lot for that house with about $150,000. The lot is a good size, big enough for about a 25 thousand gallon pebble tech pool & spa, as well as a new tile roof, new garage doors, new front doors, new tropical landscaping, new kitchen, new bathrooms, new closets, paint, etc …
Turtle Rock is without a doubt, my favorite part of Irvine. And I could do a lot with this house, primarily, live in it.
I do hope these flippers lose everything on this deal. Homes are meant to be lived in, mainly by families, not traded as commodities.
I don’t think so. The lot may be 9000 sf, but only 6000 is useable and 3500 or so is house, garage and driveway. Look at zillow. You’ll see the lot measures back down the hill to the street.
A new kitchen, pretty much a gut and rebuild.
Two new baths, suspect ditto.
The roof looks manageable, but you never know. It may have enough termite damage that when you go to do the tile, major work is needed.
$150,000. Yeah, probably, without the pool…
I think some are missing the point. They don’t make yellow carpet like that anymore and if you could find it it would sell for $100 a sqft. I think these buyers realized that it is rare find especially with the wood panels. These are major selling points for a vintage home in this condition.
(sarcasm off)
OMG! WTF? They are drinking crack infused kool aid.
P.S. Americas Wholesale Lender is Countrywide. At least when they take it back the carpet will match Mozillo’s orange skin.
Redfin shows it as SOLD now!!!
You’re looking at the outdated information from the February sale.
There are very few places in CA where that wouldn’t be the case, unfortuneately.
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Too funny, especially about Mozillo.
Aaahhh… while I think the flipper is nuts, you can not compare these two homes with anything in Quail Hill. Heck, as a matter of fact Quail Hill is completely insane.
Look, these two homes are large lots, are reasonably large with a garage on a single level and have some views.
The homes on Quail Hill are two story boxes with tiny yards.
As they say… location. These two TR homes are worth more than anything in Quail Hill.
Is the first one worth that much? I don’t think so.
Long term I figure the low end for these homes is 950K to 1MIL.
Anyone who’s think TR home like these will drop to 400K is dreaming or smoking something. The median income in TR is higher than in Northwood. Always has been.
A view in this neighborhood is very easily worth $400k!!! You have to see for yourself. Some (not all) lots are just breathtaking. This is an unbelievable area – I lived in both Turtle Rock and Turtle Ridge for 6 years and know it very, very well. I considered that exact area several times, but it was always just out of my reach when factoring in the mandatory remodel. My gripe with some of what you folks say is that you don’t seem to factor in lifestyle/tastes. That’s why they make both Hyundais and Mercedes!
It still confounds me that there are still people out there like this. Are they ignorant, greedy, out of touch with reality, or a combination of all? I think I could justify selling a lock of my hair for 10K rather than this place for 1.89mil. Seriously… unless they found that this place is sitting on thousands of gallons of oil, or there is a money tree growning in the backyard, how does this happen?
I’m sorry, but I just cannot wrap my mind around this one…
Janet, every ridge down through Mission and Aliso Viejo have similar “city light” views. The entire coast has an ocean view.
I wish you folks would think a bit when you make some comments.
You’re quite wrong about the view. The views from this tract are nonstop up to Mount Wilson and Big Bear.
My own home doesn’t have quite that view but I get a glimpse of it from my second floor windows. You ought to see what it looks in those clear winter mornings when there’s snow in Big Bear!
Truly spectacular.
If you keep going southeast, as TR drive bends to the east, the views on the Terrace tract shift Fashion Island and the ocean.
You don’t get views like that ANYWHERE south of the El Toro Y. Nor anywhere in what I call the “Great Irvine Flat Lands”. The views from this part of TR is quite unique because this is the only views straight up north at the point where the coastal hills join the Pacific some 60 miles south of downtown LA.
You don’t get a view like that south of TR and besides, the drive from TR to the Performing Arts Center is like 10 minutes even during rush hour. You have to take some of these things into account when you factor TR’s and Corona del Mar prices… TR is very well situated in regards to weather and high end entertainment. Corona del Mar is nicer but much pricier and foggier.
Again, I’m not defending the flipper. Personally I’m locked into my home in TR because I don’t want to pay the big jump in Real State Tax that “moving up” would entail… particulalry as I have rebuilt my home in the Broadmoor…. If the market were sane, I would be able to move up without the huge bump up in taxes.
But the views are spectacular…. make no mistake about it. These are true city lights views. On a very clear winter morning, with binoculars you can see downtown LA.
All of huntington beach can see Big Bear. I’ve seen the view. I’ve seen similar views through much of OC especially going south.
Sorry, the view from the hill is far better than anything from HB. From HB you are on the plain, from the hill on TR you do see above their roofs.
There ARE NO SIMILAR VIEWS in OC. You may have pretty great views from Tustin, Anaheim Hills and up in Yorba Linda but those views are from inland areas and have different qualities.
BTW, the views from some of those homes in Turtle Ridge are indeed spectacular, and I mean that. Drive north on the toll road on a cold, clear winter night and just as you come down from the toll plaza the view is out of this world.
Now, of course, I’m not discussing prices here nor what they may be worth.
I’m just discussing views and from the plains you simply can not get the views you get up on the hills. In HB you may see the top of Big Bear but from TR and Turtle Ridge you see the entire mountain. That’s a huge difference.
Dude I’d love to build me a three story house just to see those views. From the top of my roof I can see it above the trees, but I also see the cranky old lady across the street, Now that’s a view you DON’T want to have. ;-P
I noticed the the listing agent for 19041 GlenMont Terrace ($1,498,000) is Vince diProfio.
I’ve known Vince for years and he works TR a lot. His prices are pretty much spot on and he prices to house to sell.
Now regardless of whether Vince’s home is priced to the liking of most people in this board, the fact is that anyone who prices a similar home for a price WAY UP from Vince’s price is simply and absolutely not interested in selling. Vince tends to sell homes, he’s was doing this back in the early 90s too.
So, you can well figure that the anyone pricing a home on the Terrace above $575 per square foot is nuts.
Based upon Vince’s price, I figure this house is worth no more than $1,350,000 because of the work that it needs. ANd if you put the time to do that work you get about $1.300.000.
Now, lets say the market is soft, OK… then this house goes for $1.200,000.
Let’s see what those two homes finally sell for.
Dear Person-who-knows-the realtor of this home,
I had a terrible experience with the realtor for another TR house. I called him to ask for an open house and he said he would show it to me and my family since he was going to be there anyway. He never asked me any other questions except to call him if we decide not to see the home. Anyway, he showed us the home and we were discussing it outside in front of the home when we told him we were using an internet website as our agent. He began yelling at us over and over about how we should have told him sooner. He actually lied and said we indicated we wanted to use him and continued to yell at us- me, my husband, my mother-in-law, my father-in-law, and my 4-yr-old son. We kept apologizing for the misunderstanding but he wouldn’t hear us. He stomped off in a angry huff and quickly drove away. As inexperienced buyers we are usually prompted by agents who ask us if we have an agent. This guy was weird. He never asked us and when it came up he began screaming at us at the top of his lungs. Anyway, I just needed to get that off my chest because it was such a terrible experience. Thanks for listening!
The good news is most realtors “working” today will be back to waiting tables or selling plasma to make rent in the next twelve months.