Flipping a marginal listingPosted on Saturday, April 14th, 2007 at 5:37am.
A beaten-up house, a location with issues, "potential" that is difficult even for a sunny optimist to imagine... all make for a local real estate puzzle you just want to solve.
Today's puzzle is 2500 Pacific, newly listed this week. It's got all the issues.
2500 Pacific is at the corner of Valley and Pacific. It's one of two houses at this four-way stop. This is as close as you get to a major intersection in the Tree Section. Stop signs on all sides mean screeching brakes and revved-up engines all day long.
The home has been forgotten. It's large (2000 sq. ft.) but built in 1959, and only slightly updated since.
There are two things to do with this house: Rent it out or scrape it. You don't want to buy it and live there, not for anything near the $1,249,000 the sellers are asking.
The current owners chose to rent it out. 2500 Pacific was listed in May 2005 under a "value range marketing" price of $1.2m-$1.4m. (We don't see much VRM pricing in MB, and thank heavens for that.) These folks bought it in Aug. 2005 for $1.005m. (Nice discount – in Aug. 2005 nobody got 20-40% price breaks!) They promptly put it up for rent and got tenants shortly thereafter.
One assumes this purchase was meant to be a longer-term investment. Perhaps the rental income doesn't cover expenses, though. With home values in flux in the area, the owners are thinking this wasn't so good for the long term, after all – someone else take it, please!
Price is a huge issue for this listing. Where else are people getting $250k (25%) more than they paid in Aug. '05? Is any seller who is unloading a property bought at the peak making money today?
Developers are buying lots in the area, but further up Pacific (off of Valley), the lot values are in the 900s, not at $1.2+. Will these owners sell for a loss?
When the same house was on the market in our last hot summer, 2005, it hung around for 90 days or so. Today's average is probably closer to 90-120 days for listings that have nice attributes.
A marginal listing is not a good market barometer. But same-property sales are an indicator. You can bet MBC will watch the action on 2500 Pacific. Our bet: They're fishing and they go back to renting it out.
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