Close the Books on 601 Larsson

Posted by Dave Fratello on Wednesday, January 9th, 2008 at 4:59am.

Someone's Christmas present this year was a new home (well, a used home) that has been the subject of MBC's coverage for several months – 601 Larsson.

When our old friend canceled off the MLS in mid-November, we surmised that it might be a sign that one of those threatened foreclosure auctions was finally going to happen. Nope – turns out the home sold as a short sale, at a loss of about $300k, records suggest.

(An aside: This practice of canceling homes that actually have been sold is getting annoying, with 4 examples on our radar now just from the final weeks of 2007.)

601 Larsson (4br/4ba, 3850 sq. ft.) was purchased in Sept. 2005 for $2.0m, and closed for $1.710m on Dec. 27, 2007, down $290k/14.5% from its previous price.

The fall was rather spectacular. The seller was in trouble when the home came on the market March 20, 2007, at $2.695m, looking for a rescue sale that would also fatten the wallet a bit. But that scenario didn't play out.

The home took all kinds of price cuts, and at one point the owner tried to get someone to take over the payments with a goofy ad on Craigslist. The listing came back and finally exited the MLS in mid-November at $1.849m. The final sale price was -$985k/-37% from that very first, hopeful rescue/windfall price.

Who lost on this? It seems the owner had virtually no skin in the game at that $2m price, with concurrently issued first and second TDs adding up to almost $2m. Recall that, at $1.999m, the home was listed as a shortie. That meant the holder of the second was going to take less.

Again, who lost? It's a certain bank whose rumored bankruptcy jangled Wall Street on Tuesday (symbol: CFC). Same bank held the first, too. Ever wonder how they got in so much trouble?

Bonus take-home lesson: Folks have told MBC that there are two truisms to distressed properties – short sales never work and always foreclose, and foreclosures always go back to the bank and become REOs. So here's Larsson bucking that conventional wisdom. For the seller (as for the lender), it must be better to sell short than to go all the way off the cliff, so we're guessing that's the little silver lining.

Also, it must be pretty nice to get the bargain of the year in the Hill Section. At $444/PSF, the new owners paid a fraction of the going rate these days. A nice reward for the fortitude it must have taken to dive into this complicated sale. Bravo.
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