Address: 804 Maplewood, Irvine, CA 92618 (Oak Creek)

Plan: 1200 sq ft – 2/2.5

MLS: S458207 DOM: 25

Sale History: 8/10/2005: $549,000

12/21/1998: $185,500

Current Price: $569,000

Here’s a Plan 3 in the Oak Park tract built by Presley Homes in 1998 in the village of Oak Creek. This condo was purchased on 8/10/2005 with 10% down. This means the owner has a little room to lower the price if they really want to sell. They listed the property for sale a year after they bought it. The Realtor.com link shows a range pricing of $529,000-$569,000 although I don’t see that in the local MLS. There’s also a different plan (also 2/2.5 and 1200 sq ft) in the same tract at 904 Maplewood listed for $524,900.

Assuming 6% in selling costs, the seller will lose about $14,000 if sold at the high end of the range and will lose over $51,000 if sold at the low end of the range.

Address: 1 Buellton, Irvine, CA 92602 (Northpark)

Plan: 4133 sq ft – 5/5

MLS: S438082 DOM: 158

Sale History: 11/14/2005: $1,550,000

2/21/2002: $786,500

Price Reduced: 06/11/06 — $1,769,000 to $1,739,000

Price Reduced: 06/25/06 — $1,739,000 to $1,709,000

Price Reduced: 07/24/06 — $1,709,000 to $1,699,000

Price Reduced: 09/10/06 — $1,699,000 to $1,675,000

Current Price: $1,675,000

We found out about this flip from an anonymous tipster (Thank You!). This huge Plan 3 in the Huntington tract built by Richmond American in 2002 sold for about 100% more in 2005 and came back on the market 5 months later in April 2006 for even more. The original owner made some great money on this property in those 3 1/2 years from 2002-2005. The original owner was able to move this property from listing to escrow in 9 days (see MLS S413640)! That’s FAST considering it was late 2005 at the time. Great timing huh? The original owner also sold for $45,000 less than the original listing price of $1,595,000. Motivated seller huh? Perhaps.. but accepting a price $45k below asking after only 9 days on the market just doesn’t make sense.

That is… until you find out the original owner is a RE broker and represented the new buyer. This broker was more than glad to reduce the price by 3% since he wouldn’t have to pay a commission to another agent.

Let’s look at the new buyer. From what I can gather, the new buyer has loans totaling $1,469,500 – which INCLUDES a $307,000 loan from the original owner/RE broker! The original owner/RE broker really had to put in some effort and $$ to make this deal come together. A $1,469,500 loan on a $1,550,000 property is just absurd! That’s a 95% financed purchase! Any idea what would happen if the new buyer can’t make the payments?

Now the new buyer listed the home 5 months after they bought it hoping for a quick 200k profit. That’s definitely not happening. You can tell they realized this and started reducing the price. The first two price cuts were 30k each but after that you can see the hesitation in reducing the price further. IF sold at the current asking price of $1,675,000 they will make a profit of $24,500. We’ll have to just wait and see what happens here.

There’s a lot to talk about when it comes to the Marquee Park Place: the first residential high rise in Irvine if not all of Orange County, the ridiculous amount of investors, the exorbitantly high HOA dues, not to mention the tons of units available on the market for sale or rent. I’d love to see an in-depth article on the Marquee and perhaps we may do one if we can gather the data and present it clearly. But for now, I’d like to point out a Marquee flip that went terribly wrong.

Welcome to 3141 Michelson Drive #402. This property’s sale closed last week. That’s a little different from the rest of the properties on this blog which are actually available for sale. In some ways it’s better since we don’t need to guess what the final selling price will be.

Address: 3141 Michelson Drive #402, Irvine, CA 92612 (Park Place)

Plan: Plan D – 1492 sq ft – 3 (2bd+den)/2

MLS: P522216 DOM: 57

Original List Price: $829,000

Final Sale Price: $709,000

Date Sold: 9/29/2006

In order to obtain the initial purchase price of the property, I actually looked up the property tax information from the Orange County Tax Collector. From that I discovered:

Purchase Price: $690,800

Purchase Date: 2/13/2006

If anyone can corroborate that or find evidence contrary to it, please let me know because having accurate information is of the utmost importance.

A quick look at the purchase and sales prices will tell you that the buyer lost money on this deal after paying commissions and closing costs. However, the extent of the loss is far more severe. On the MLS listing, the description says “Seller will credit buyer 2 year HOA dues based upon the current one at COE which is worth more than $28,000.” And the private remarks say “4% COMMISSION !! 4% COMMISSION !! Yes, it is 4% !! Please take off shoes.” Another piece of the pain puzzle is that the property was vacant so we should account for the carrying costs for the mortgage and HOA dues for 7 months (let’s be conservative and assume they put 20% down and took out a 6% IO). Here goes:

$709,000 – 7% in commissions and closing costs = $659,370

$659,370 – $28,000 in HOA concession = $631,370

$631,370 – $27,500 in 7 months of carrying costs = $603,870

$603,870 – $690,800 purchase price = $86,930 LOSS

This seller may have lost more than $87,000!! Unbelievable! Makes me wonder how much pain some of the other flippers at the Marquee are feeling. What do you think?