Back to the Bank

Posted by Dave Fratello on Tuesday, January 20th, 2009 at 9:46pm.

One of the failed auction homes – the only one in MB west of Sepulveda – has now gone back to the bank that financed construction.

2509 Palm (5br/5ba, 3200 sq. ft.) has a long history, but the most recent entry was a thud.

After the failed public auction in late November, a trustee's-sale auction was slated for the courthouse steps in mid-December. But the listing remained active several days later, before it quit.

Now a sale has recorded, dated Jan. 2, 2009, with the "buyer" being a bank that was behind much spec construction in MB over the past decade. (Think grapes, lots of them.)

The price has posted as $1.504m, just a few dimes above the total of $1.487m in loans that had gone bad. Next stop, we presume, is an REO sale. Banks don't tend to like to hold onto properties like this.

Some points of comparison...
  • $1.122m – lot acquisition price, Dec. 2005
  • $2.449m – start price on completed home, April 2007
  • $2.025m – sold price on 2509 Walnut, this home's identical twin, in July 2008
  • $1.949m – last asking price before auctions were announced (see "Name Your Price?")
  • $1.499m – auction start price (buyers would have had to add a 7.5% "buyer's premium," so the effective start price was $1.558m)
  • $1.679m – last price on the active, post-auction listing, late 2008
  • $1.504m – posted sale price as the bank acquired the property, Jan. 2009
We want to thank our friends over at PropertyShark.com, who notified MBC shortly after the sale posted.

For those who may fear that this sets an abominably low price for new construction in the Trees, it's significant that Palm went to the bank, not a buyer. This is not exactly a new low for newbies, not just yet.

Of course, the open market rejected Palm in the $1.5-$1.7m range, so if the bank tries much of a markup, the process could take a while. We recorded 606 DOM for the property before it went off the radar. Fortunately, no REO lasts that long.

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UPDATE: Since posting this story, we've heard from multiple sources that buyers were waiting to pounce as soon as the bank took title to 2509 Palm. There were several bidders. It's smart to assume a price near $1.6m, but we'll see. This one won't be hitting the open market.
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