Flip, Flop, REO

Posted by Dave Fratello on Tuesday, June 15th, 2010 at 4:07am.

Here and there we come across the stories of listings whose owners look to have been late to the party.

And by party, of course, we mean the local real estate bubble. 

The classic example is 4419 Highland, the "Gateway to Manhattan Beach" at 45th/Highland, a spec home so profoundly poor in conception, let alone location, it will be hard to beat. (See "Gateway Creeps Under $1m.") There, at least, you can argue that the spec builder bought while the market was still rising, in Aug. 2005, but it took too long to get the building up.

We also recently mentioned 521 MBB, a duplex near Ardmore, offered recently at $980k, a drastic drop of -$515k/-34% from the Aug. 2006 acquisition price of $1.495m. (See "Forget the $300k, Forget It All.") On a bright note, this one's under contract at this writing.

So now we move up the Hill quite a bit to 234 Larsson for another check-in on a late-bubble flip that flopped.

The home (3br/3ba, 2300 sq. ft.) is technically a stand-alone TH, but it's often been marketed as an SFR (as it is now).

MBC noted in May 2009 that the home had stuck around for 9 months way back in 2007, before selling in its tired, desperate condition for $1.075m. (See "Flippin', Floppin'.")

After an unquestionably beautiful remodel, the home came back on public offer, but was punished over a full year on market (June 2008-June 2009) for location and for being overpriced.

It began at $1.5m, and only gradually cut to $1.199m. The listing quit last Summer.

234 Larsson is back now at $1.250m, after a long period of default and a trip to the courthouse steps. The new listing's held by someone with "REO" in the company name, so it's either a bank or a foreclosure shark behind the offering this round. (We'll clarify as we get details.)

MBC said more than a year ago:

We might guess that Larsson is worth $1.150m or so in light of the [509] Dianthus sale (whatever price it closes at) and Larsson's poor location. But a $75k markup wouldn't be much reward for the Larsson remodel or a year's holding costs. Quite the opposite.
You may have noted that the new start is a smidge above the same home's last list price, and $100k higher than MBC gently suggested for its value last year.

Well, it's been an OK Spring so far. Maybe this is the year that 234 Larsson doesn't beat its previous records for days on market.
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