Bargain Month

Posted by Dave Fratello on Wednesday, July 30th, 2008 at 4:36am.

Several of the SFR sales that have closed in July have reflected double-digit discounts off their start prices.

With a couple of days left in the month, MBC has seen 14 sales close west of Sepulveda, 6 in the Sand Section and 8 in the Trees. Of those 14, 8 saw chops of at least 10% from their initial public-offer prices. They're listed here by home condition, with highest prices first:
  • 473 31st (new), start: $3.250m, close: $2.8m (-$450k/-14%)
  • 3500 Blanche (new), start: $2.549m, close: $2.125m (-$424k/-17%)
  • 2509 Walnut (new), start: $2.449m, close: $2.025m (-$424k/-17%)
  • 534 14th (remod), start: $3.350m, close: $2.7m (-$650k/-19%)
  • 737 36th (remod), start: $1.785m, close: $1.435m (-$350k/-20%)
  • 125 El Porto (remod), start: $1.699m, close: $1.395m (-$304k/-18%)
  • 2904 Laurel (remod), start: $1.449m, close: $1.299m (-$150k/-10%)
  • 3612 Poinsettia (dated), start: $957k, close: $849k (-$108k/-11%)
Of course, in the same month, there were exceptions. Like the huge overbid situation at 117 7th that saw a smallish 2br home near The Strand go from its $3.995 asking price up to $4.325m. Less spectacularly, one of Mrs. MBC's favorite new homes at 516 24th simply held its own, despite 200+ DOM, suffering only a 7% discount off its start at $2.495m to close at $2.312m.

And we should note that it is possible to sell new construction in the Trees quickly and pretty much for asking – that happened for the new "coastal plantation" home at 664 33rd, which garnered $2.605m against a $2.689m asking price, with just 9 DOM.

We've wondered aloud about how best to interpret ask-close spreads (see this chatty article from Feb. this year) in light of the fact that delusional sellers can make very big mistakes to start.

But we continue to believe it's relevant that folks who are making deals were quite far off in pricing their homes to begin. Three brand-new homes above all began at least 14% above their ultimate sale prices, and there should have been less emotion attached to those start prices.
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