Originally posted October 13, 2006

Address: 14 Posada, Irvine, CA 92614 (Westpark)
Plan: 2000 sq ft – 4/3
MLS: S446011 DOM: 115
Sale History: 1/6/2006: $865,000
1/29/1998: $345,000
Price Reduced: 07/25/06 — $979,000 to $949,000
Price Reduced: 09/08/06 — $949,000 to $929,000
Price Reduced: 10/03/06 — $929,000 to $899,000
Current Price: $899,000

This Plan D in the Promenade tract in Westpark was purchased by our flipper early this year and then put back on the market 6 months later on 6/20/2006. When the flipper bought the property he probably thought he received a great deal on the purchase. Why? Because the prior seller had originally listed it for $968,800 and our flipper picked it for over $100k less at $865,000. What’s funny is that our flipper thought he could sell it for even more than what the prior seller failed to. He put it back on the market hoping to make over $100,000!

After reducing the price a few times, our flipper has hopefully learned the risks of trying to catch a falling knife! He can only hope that he won’t have to bleed too much money to get out of this. If the house sells for the asking price of $899,000 and we assume 6% in selling costs, our flipper will lose about $20,000.

UPDATE #1 – May 18, 2007

After being on the market for 271 days, 14 Posada was relisted (MLS#S480142) on 3/19/2007 for $899,000.

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On May 3, 2007 the price was reduced to $869,000. After a total of 344 DOM, the price has dropped by $110,000 since it was first listed in June of 2006. It also seems like the house has been vacant the whole time.

If sold at the price of $869,000 and assuming 6% in selling costs, the seller is facing a loss of about $48,000.

Originally posted October 3, 2006

Address: 9 Stonegate, Irvine, CA 92602 (Northpark)
Plan: Plan 1 – 1980 sq ft – 3/2.5
MLS: S457264 DOM: 28
Sale History: 7/22/2005: $954,000
Current Price: $969,900

This SFR built by Shea Homes in the Rutherford tract in Northpark Square looks like a nice, cute starter home. Too bad the pricy Irvine RE market means you have to pony up almost $1 million for a starter home. Question for Northpark experts: What is Bella Rosa? Is it a part of Northpark Square?

The seller purchased this property in July 2005 for $954k. From what I can gather, there were two loans taken out: one for $763,000 and a second for $190,800. Add those up and what do you get?? One FB with a classic 100% financed purchase (okay, okay, they DID put $200 down)! Fast forward one year and it seems the flipper may have to sell because of a possible job relocation (for those with MLS access, see the Private Remarks). If sold at the asking price and taking into consideration 6% in selling costs, they will have to SPEND at least $42,000 to sell this home!

UPDATE #1 – May 18, 2007

Here’s the first of many updates to some of our older posts. After 163 DOM, 9 Stonegate sold for $939,000 on 3/2/2007. Assuming 6% in selling costs gives us a loss of $71,340!

Originally posted October 28, 2006

Address: 17 Georgetown #24, Irvine, CA 92612 (University Town Center)
Plan: 1100 sq ft – 2/2
MLS: S446969 DOM: 124
Sale History: 5/23/2005: $550,000
Current Price: $549,000 (Accepting Backup Offers)

University Town Center is a ‘village’ in Irvine that includes all the condos near the University of California: Irvine (UCI). There are many apartments in this area as well (owned by the Irvine Company of course). The proximity to UCI ensures that there is a large student population here.

I’m sure there are quite a few investors who purchased condos here to be used as rental properties. Those who bought years ago are probably doing real well if they have kept their properties – huge appreciation and positive cash flow make a nice cash cow! 🙂

But since prices for 2 bedroom units like this one are now in the mid 500s, it’s hard to make the numbers work as a rental even though rents are strong. This Plan 1 condo in Cambridge Court was purchased in May 2005 with 20% down for $550k. They put it back on the market a year later. The status in MLS is ‘Backup’ meaning that a sale is pending but the sellers are accepting backup offers. They originally had listed it at $599k and have reduced it $49k since then. If it sells for $549k, they will have lost about $34,000 (after 6% in selling costs).

UPDATE: I just found this blog post by the OC Realty Group that shows how to make the numbers work in University Town Center: http://www.ocrealestateblog.com/blog/_archives/2006/1/30/1718817.html

UPDATE #2 – May 18, 2007

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17 Georgetown sold on 11/21/2006 for $535,000. Assuming 6% in selling costs, the sellers lost about $47,100 or about 42% of their down payment!

The new buyers purchased the place using 100% financing. Who knows.. Maybe this unit will come back on the market.

Originally posted October 18, 2006

Avenue One is a condo development built in 2006 by K. Hovnanian Homes located off Jamboree and DuPont. It is/will be surrounded by the Toscana apartments, the Watermarke condos, The Plaza, and 3000 The Plaza. The location is very convenient if you’re single and have a job nearby. But it’ll definitely be a while before Jamboree can be compared to the Wilshire corridor.

In MLS, there are currently 5 Avenue One homes listed for sale by flippers:

• 2119 Scholarship – Plan 1B – 1/1 – 602 sq ft – 57 DOM – $429,999
• 2310 Scholarship – Plan 1A – 1/1 – 725 sq ft – 54 DOM (+180) – $437,000
• 2406 Scholarship – Plan 1CL – 1/1 – 923 sq ft – 13 DOM – $615,000
• 2302 Scholarship – Plan 2A – 2/2 – 1037 sq ft – 30 DOM – $568,000
• 2402 Scholarship – Plan 2AL – 2/2 – 1213 sq ft – 118 DOM – $654,900

The Plans that end in ‘L’ have a loft and are on the 4th floor. Unfortunately, I haven’t been able to find the purchase prices for any of these condos. But I’m sure some of these flippers will lose money. Click on the address to see the actual MLS listing. You’ll be suprised at what some of the original asking prices were. You know the flippers were thinking ‘I’ll buy in the first phase and then make a ton of money as the builder raises prices in subsequent phases’. Well the builder isn’t on their side and has actually listed several properties on MLS (yup, the builder is offering agents 3% to bring in a buyer):

• 1231 Scholarship – Plan 1B – 1/1 – 602 sq ft – 119 DOM – $389,990
• 1150 Scholarship – Plan 1A – 1/1 – 725 sq ft – 51 DOM – $396,990
• 1334 Scholarship (pend) – Plan 2A – 2/2 – 1037 sq ft – 40DOM – $545,990
• 1418 Scholarship – Plan 3AL – 3/2 – 1538 sq ft – 23 DOM – $740,990

Why would anyone buy from the flippers if they can get a BRAND NEW home from the builder for LESS??? If you look at the actual MLS listings for the builder listed homes, you’ll see that the builder has been reducing their asking prices as well. They need to sell these homes and will lower the prices until they are all sold. What’s a flipper to do?

UPDATE #1 – November 16, 2006

It’s been about a month since the original post and I thought it would be interesting to see how the pricing at Avenue One has changed. Here’s a look at what’s currently available for sale by flippers:

• 2119 Scholarship – Plan 1B – 1/1 – 602 sq ft – 86 DOM – $429,999
• 2310 Scholarship – Plan 1A – 1/1 – 725 sq ft – 83 DOM (+180) – $437,000
• 2406 Scholarship – Plan 1CL – 1/1 – 923 sq ft – 42 DOM – $615,000
• 2302 Scholarship – Plan 2A – 2/2 – 1037 sq ft – 15 DOM (+43) – $568,000
• 2402 Scholarship – Plan 2AL – 2/2 – 1213 sq ft – 147 DOM – $654,900
• 2172 Scholarship – Plan 2? – 2/2 – 1100 sq ft – 0 DOM – $569,000
• 2418 Scholarship – Plan 2AL – 2/2 – 1213 sq ft – 2 DOM – $714,900

You’ll notice that NONE of the flippers lowered their prices from a month ago. Also, there is more competition as another 2 properties were just listed by flippers in the last couple days. Now let’s take a look at the properties available directly from the builder:

• 1231 Scholarship – Plan 1B – 1/1 – 602 sq ft – 148 DOM – $369,990
• 1150 Scholarship – Plan 1A – 1/1 – 725 sq ft – 80 DOM – $376,990
• 1418 Scholarship – Plan 3AL – 3/2 – 1538 sq ft – 52 DOM – $725,990
• 1334 Scholarship (SOLD on 10/23 for $545,990)

The builder lowered prices on ALL their properties: the 1 bedroom models were lowered by $20,000 and the 3 bedroom model was reduced by $15,000. Not much right? But think about what that’s doing to the flippers who are trying to sell. Wouldn’t you rather buy a Brand New home from the builder and save $60k-$70k versus buying the same plan from a flipper?

Oh and guess what? The builder is now offering **5%** (that’s an increase from the 3% they offered only a month ago) to agents to bring in a buyer. So if anyone reading this is interested in buying a unit from the builder, make sure you negotiate AT LEAST 5% off their asking price. (For those that don’t want to do the calc.. that means, right now, you can get 1231 Scholarship for $351,490, 1150 Scholarship for $358,140, and 1418 Scholarship for $689,690.)

UPDATE #2 – May 11, 2007

It’s been almost 7 months since this was originally posted. Here’s an update in the tract:

Out of the 7 properties listed by flippers in the November update, none have yet sold. 4 are no longer on the market:

• 2119 Scholarship – Plan 1B – 1/1 – 602 sq ft – $429,999, $399,900
• 2310 Scholarship – Plan 1A – 1/1 – 725 sq ft – $437,000, $434,500
• 2406 Scholarship – Plan 1CL – 1/1 – 923 sq ft – $615,000
• 2418 Scholarship – Plan 2AL – 2/2 – 1213 sq ft – $714,900

3 are still on the market (2 with reduced prices):

• 2302 Scholarship – Plan 2A – 2/2 – 1037 sq ft – 187 DOM (+43) – $568,000, $554,000
  
• 2402 Scholarship – Plan 2AL – 2/2 – 1213 sq ft – 319 DOM – $654,900
• 2172 Scholarship – Plan 2? – 2/2 – 1100 sq ft – 172 DOM – $569,000, $539,000

Joining them are 4 more units put up by flippers:

• 1276 Scholarship – Plan 1B – 1/1 – 602 sq ft – 28 DOM – $365,000
• 2382 Scholarship – Plan 1A – 1/1 – 725 sq ft – 69 DOM – $414,900
• 2118 Scholarship – Plan 2A – 2/2 – 1037 sq ft – 125 DOM – $549,000
• 2168 Scholarship – Plan 2A – 2/2 – 1037 sq ft – 49 DOM – $559,000

Now, let’s see what happened with the 3 units that the builder had available as of the November update:

• 1231 Scholarship – Plan 1B – 1/1 – 602 sq ft – 223 DOM – Sold for $369,990 on 2/26/2007
• 1150 Scholarship – Plan 1A – 1/1 – 725 sq ft – 138 DOM – Sold for $376,990 on 1/29/2007
• 1418 Scholarship – Plan 3AL – 3/2 – 1538 sq ft – 181 DOM – Sold for $695,000 on 4/19/2007

All 3 of the builder’s units eventually sold. There is one more available from the builder currently:

• 1428 Scholarship – Plan 2AL – 2/2 – 1213 sq ft – 113 DOM – $594,990

In total, there are 8 units currently on the market (7 by flippers, 1 by the builder). Any guesses on which sells first?