| Asking Price | $898,000 | ::: | Sq-ft | 2,300 |
| Purchased Price | $850,000 | ::: | Lot Size | 14,460 |
| Purchased Date | 02/28/2007 | ::: | Beds | 3 |
| Days on Redfin | 86 | ::: | Baths | 3 |
| $/Sq-ft | $390 | ::: | Year Built | 1947 |
| 20% Downpayment | $179,600 | ::: | Area | Baldwin |
| Income Required | $224,500/yr | ::: | Type | SFR |
| Est. Payment* | $4,540/month | ::: | MLS# | W07176926 |
*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%
This property looks like a flip that never happened and now the sellers are desperately trying to get out unscathed. In the description it says “seller have plans for approx. 800 sqft master 4th bedroom” so I assume the plan was to buy, put in addition and turn around to sell for profit. However, it must have took them a while to get the building permits because the credit crunch rocked the market soon after they bought it.
Purchase Price $850,000
Purchase Date 02/28/2007
1st Loan $680,000
2nd Loan $84,150
Downpayment $85,850
Mortgage $764,150
Listing History
12/15/07 $988,800
01/28/08 $948,000 (-$40,800, -4%)
02/15/08 $928,000 (-$20,000, -2%)
02/29/08 $898,000 (-$30,000, -3%)
So far there’s been almost $100,000 in price reduction yet that’s still less than 10% off the original listing price. These sellers, like so many we have seen, are reluctant to face the reality of the current market conditions and lower the price to move the property before it’s too late. The Redfin description ends with “Priced to sell” but that’s not a true statement. The property has been on the market for almost 3 months with 3 price reductions and still sitting there. That’s not pricing it to sell. That’s hanging on for dear life.
This property is also up for rent at Craigslist as well. At this point, the sellers have been making mortgage payments for a full year without any cash flow and it’s hurting. For sale or for rent, they’ll take either one. At $2600/month, this property’s gross-rent-multiplier GRM is 345. Rent savers typically jump in as buyers when GRMs are between 160-200. Using a GRM of 180, this property is approximately worth $2600 x 180 = $468,000 or about half of the current listing price.
You can either rent this for $2,600/month or buy it for $4,540/month plus any maintenance costs, insurance etc. Doesn’t seem like a tough decision for me. During the bubble I’ve heard of buyers insulting the seller when the offer was below the asking price. Oh have things have changed in just one year. At $898k, it’s roughly double what its worth so can this situation qualify as insulting the buyer? I would think so.
Great find! Both the listing for sell and the listing for rent. Even the $2600 per month rent is high for this old house.
I love it when I find properties that are both for sale and for rent because it gives you a direct comparison of rent vs buy. As the market continues it’s downturn, I expect to see more houses up for rent/sale.
I’ve just found your blog a few days ago and have been quite entertained by it. It’s past midnight and my workday starts in exactly 6.5 hours and I’m still compelled to write a commentary, so there you go.
Part of what I find interesting is, like you, I know your muse very well – just about every curve of her. I grew up in Arcadia and now that I’ve reached the age where my parents wish I’d own a property just like their friends’ children, I can read their wishes as they’re written so clearly on their faces especially during the many housewarming parties held by these home-owning children of my parents’ circle of friends. They’ve been, thus far, sensible enough to have voiced their concerns rarely and always outside of my hearing range. Now before anyone credits them for being such considerate parents (which they can be, sometimes), I know it’s because they’re aware of the truth. The truth being that their friends have processed private transactions (the best kind of loan since repayment may be optional and a spawn or two will reduce the outstanding balance to zero) enabling these grown children to become a full-fledged homeowners. This is not to say all of them have received the benefit of a private transaction, but I’m drowning in my bitter renting self so allow me to continue. Some of these grown children purchased their home from their Grandparents at a family discount. Some others have become house poor and deep in debt, the legal kind of debt, to up keep their homes. A few, and I wouldn’t be fair to exclude them as they’re the most heroic of all, were legitimately successful and owned within their own rights. I mean, we graduated from the excellent, albeit run down, Arcadia High School after all. I don’t know most of them but one former HS friend dropped out of law school and spent over 2 years flipping houses and is/was residing in a brand new Arcadia McMansion. His housewarming party was festively gauche and last I heard he’s looking to move into San Marino so his 3 year old can get into the SM school system – take that law school!
I’m rambling so suffice to say I find your blog amusing and childishly, for me, a measure of comfort as I resist the urge to smack my upstair neighbor, also a renter, for having elephant feet as walking device.
Welcome SW!
We must run in a different circle of friends because I barely know any lucky twenty/thirty-somethings born with a golden spoon. Renters like us don’t have to be bitter. If I were a parent able to help my children off to a better & easier start, I would too. My parents weren’t able to give me one of these “optional repayment loans” but they did give me a wonderful home to grow up in and for that, I will forever be grateful.
It sounds like you have your head on straight and I’m sure your parents are proud of you regardless if you rent or own. Your patience will reward you soon enough. Thanks for sharing your story with us.