Deals Gone Awry

Posted by Dave Fratello on Wednesday, September 5th, 2012 at 3:53pm.

Buyers get flaky, sellers get obstinate, inspections are a problem, and appraisers and lenders... don't even get us started.

So much can go wrong after a deal is struck.

People agree to buy or sell a house, and then reality kicks in. Will it happen?

So many obstacles. So many points of stress. There's weirdness from neighbors, heirs, city rules, contractor estimates, investor input, someone's contingent sale here or there... few real estate deals are straightforward.

Maybe too little is written about the complexities and conflicts that emerge after escrow opens.

But most of it can't be written. It's confidential.

Still, as a seller, you hate to go into escrow and come back to market. That can hit your value. Listing agents are very quick to point out if it was the buyers' issues, not a problem with the property, that led to a broken deal. But you'll only get that story from the inside.

Here's a partial list of active listings that have had a fish get away recently:

The Dirt at 117 Meadows
117 Meadows is a 100 x 200 lot (that's 20k sq. ft. of dirt) that had been listed since July 2008 before posting a deal just 2 weeks ago. (See MBC's "Long Time, No Deal... Oh, a Deal!")

With a recent return to market, 117 Meadows continues to challenge the MLS database, racking up 1497 combined days on market (CDOM). Time to put some more beads on the abacus. It's about to hit 1500.

The lot sale launched way-back-when at $3.250m, and is now at $2.499m.

121 25th
121 25th (4br/4ba, 3000 sq. ft.) has been listed twice this year, once in Spring with tenants, more recently with updates but no tenants. We've called it "a smallish, 2-story, largely original 1960s beach cottage" but, "more compelling now than a few months ago" thanks to some work they've done.

More compelling? That's what someone else thought, too, writing an offer and getting it accepted just 2 days after the newest listing hit in mid-August. 

Alas, it was a case of easy come, easy go. The status changed back to "active" within 36 hours. 121 25th is still offered at $3.5m.

609 Valley
609 Valley (2br/3ba, 1670 sq. ft.) is a custom re-do of a much older house (1958), which we've called "city living at the beach."

It's a cool, if quirky, custom place with a "loft" style master and an overall Zen/modern feel. But it's been twice bitten this year.

Two times, a few weeks apart in July, the property was posted in escrow. Both times, things just didn't pan out. 

Regular readers will recognize this as one that failed to sell in 2008, 2009 and 2010, when it was offered for as much as $1.449m and down to $1.127m. It's now up at $1.174m and entering its 5th month on market here in 2012.

1507 23rd
1507 23rd (3br/2ba, 2050 sq. ft.) is recognizable as a 60s original, but greatly remodeled, particularly the surprisingly large master suite. Only the kitchen seemed uneven, but in general this one is a modern-feeling house.

The property listed last Thursday at $1.2m and had posted a deal by Sunday, before most agents had even seen it and before any public opens. Alas, the listing agent had to spend a part of Labor Day switching this one back to "active" status.

At least more people will get the chance to see it now.

1030 1st (5br/5ba, 4300 sq. ft.), a view home in the Hill Section, and 2600 Oak (5br/4ba, 3200 sq. ft.), the eighth of the Speedy Speckies, have also gone in and out of escrow recently.

Had a deal go awry? There's hope.

1812 John
1812 John may have been one of the toughest cases in recent months, a bagful of inspection issues derailing initial deals.

But sweet, sweet John street, a must-have location, kept the buyers coming. After returning to market in late June, 1812 John had a new buyer within 10 days, and a deal closed 3 weeks ago at $1.330m.

Sure, that was a lower price than the frenzied initial bidding had generated, but it was still a compelling number for this little remodel that wants more help.

And it was proof that there's life after a broken deal.
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