Address: 35 Hidden Trail, Irvine, CA 92603 (Turtle Ridge)
Plan: 3675 sq ft – 4/4.5
MLS: S446750 DOM: 241
Sale History: 7/13/2006: $2,250,000
Price Reduced: 07/19/06 — $2,499,000 to $2,350,000
Price Reduced: 09/19/06 — $2,350,000 to $2,225,000
Price Reduced: 01/04/07 — $2,225,000 to $2,150,000
Current Price: $2,150,000
Thanks to waitingtill08, we’ve found our first flip inside The Summit at Turtle Ridge! This is a Plan 3 in the Cirtus tract built by Brookfield Homes. It was first listed on the market on June 26, 2006. That is BEFORE they even closed escrow on the purchase on July 13, 2006! Doesn’t that smell like a flip to you?
The description reads “Corporate relocation. Outstanding panoramic view – city lights, ocean. Highly upgraded with hardwood floors, crown molding, plantation shutters, custom built-ins. Main floor master bedroom. Extra large bonus room.” This makes you think that the seller is relocating. When I looked into the title, it says that the owner is Prudential Relocation Inc. Hmm, sounds like it’s actually a company that specializes in Corporate Relocation. The property is listed by Prudential California Realty so I suppose this all makes sense now.
{adsense}
Each of the price reductions on this property have been pretty substantial. I couldn’t find any mortgage information for the home and it wouldn’t surprise me if a behemoth like Prudential actually owned it outright. Anyone know how these Corporate Relocation companies work?
Instead of wishing for a $250k profit on the home like they did in July 2006, they are now wishing for no more than a $100k loss! Assuming 3% in selling costs, this flop will be a loss of around $164,500! Oh, and don’t forget the carrying costs on this beast. The MLS listing says that it is Vacant.
So what else is available in the Citrus tract right now?
- 27 Summer House – Citrus Plan 2 – $2,495,000 – 150 DOM – Originally asking $2,680,000 – Vacant
- 31 Summer House – Citrus Plan 3 – $2,199,000 – 18 DOM
{adsense}
Maybe I’m just jaded by the prices of the last couple years.. but $2.15 mil for a NEW 3675 sq. ft. house in Turtle Ridge Summit with an OCEAN view? It doesn’t sound that bad. Has anyone seen this property? Is there really an ocean view? You would think they would have tons of pictures of the view huh? Unfortunately, the only one of the yard on MLS is the one at the top of this post.
You asked how corp relocation companies work. Here is how:
They list your house for sale (usually require that your list price is within 10% of their appraisal). You can choose the real estate agent from a list they provide you (of agents who have been trained in working with them). When a buyer is found (i.e. an offer is made), then first you sell your house to them for the offer price (no agent involved, so no real estate commision, no transaction costs for you – buyer pays for everything). so you get a 100% of the offer (the corporate ‘benefit’ is paying for your transaction costs, and if the transaction is structured in this way, it is tax free to you).
The relo company then sells the home to the buyer, pays the real estate agent and their share of costs on the second escrow. the escrow with the buyer usually closes a day or two after you close escrow with the relo company.
my guess would be the owners still ‘own’ the property, unless they sold to the relo company, and then escrow with the buyer fell through. in that case, the relo company paid them, and is stuck with the property. this is a rare occurence, though.
hope this helps
—–
clarification:”I said: ‘When a buyer is found (i.e. an offer is made), then first you sell your house to them for the offer price ‘.
I meant ‘When a buyer is found (i.e. an offer is made), then first you sell your house to the relo company for the offer price ‘
I’ve done a move where Prudential relocation was the transaction agent and here is how it worked:
1. The company gives you a list of Prudential agents to choose from.
2. They appraise your home. You can list above appraisal, but oh… do you need a little paper to go more than 5% above…
3. They market/sell the home. If an offer is made, you might be given no choice but to accpet (or else you forfit the company paying the Realtor fees, the loss protection, etc.)
4. If the home cannot sell in 90 days (usually, varies by contract), the Relocation company, subsidized by the company that hired them, will “buy” the property from you.
5. They will eventually sell the property where the relocating company pays the upkeep. Prudential makes a profit the whole time, but the profit “errodes” with time.
Eventually, the property sells. If the loss is greater than the company quaranteed… you owe the relocation the difference. (But not anything for commission, taxes, insurance, upkeep, etc. those costs are borne by the company that hired Prudential.)
For most, the loss provision is capped at $50k. For a house of this caliber… its most likely an executive, so they’ll be protected to $250k (or even more).
Prudential will make their money.
The company that moved the worker out of irvine takes a hit.
But otherwise, life moes on.
The issue for Prudential is if they are the bagholder too long. Eventually their contract requires them to buy the house and take all of the risk. It doesn’t sound like its been long enough.
And yes, if a buyer is found… Prudential buys the property to transfer to the new buyer. That is the only way Prudential would own the home with liability at this point. (They might have bought the home for the transfering company… but that doesn’t mean Prudential has any risk… yet.)
Got popcorn?
Neil
Thanks for putting this one up.
I’ve seen houses that have been purchased and then resold by relocation companies and wondered how this worked. Interesting.
How do you get the financing information on these properties? Do you have to have special access or can anyone find it?
Can you get information on properties outside of CA? If so, would it be alright for me to e-mail you about a property back east we may be interested in. Although we love the weather and activities here, the prices have been falling much faster back east and we are getting tired of renting.
Well, well, well, WTF is this! Another flipper living in the past. However, this flip will likely end very ugly. MY GOD, WTF were they thinking.
Don’t feel so bad for the Citrus owners…most bought at 1.7 or under and should make a fairly good profit. Not the profit they are dreaming of but they’ll do okay. And with La Cima in the next tract with homes selling at 5.0 million recently–they will lift themselves up–once (and if) the rest of the market moves up!
Although I did a relo deal in TR and the owners made a cool 200k while the corporation is still hanging on to the house–with no takers in a year. The company will likely lose a few hundred k!
yikes
oh also there are lots of flippers IN TR The Summit….and lots of flippers with LOTS of money. Some own 3 or more and for some strange reason they don’t seem too worried about losing money every month.
Wierd I know.
Did anyone notice the lawn on the drive way for the model home? 🙂
The driveway is stones with grass surrounding it, a lot of the homes have it inside The Summit @ Turtle Ridge