Get Shorty

Posted by Dave Fratello on Thursday, November 8th, 2007 at 6:13am.

It turns out things are worse than we knew over at 1313 Oak (click for home details via Redfin).

This is a very stylized custom home built in 2004, and outfitted – currently – with high-end furnishings made possible by the "Queer Eye for the Straight Guy" team. (Don't get too excited; those aren't going with the home anymore.)

Turns out this is a short sale now. That is, more is owed on the home than will be netted from the sale – and the lender stands to take the loss.

Oak is the fourth foreclosure or short sale to hit our radar since Spring (among SFRs west of Sepulveda). The others:
  • 2507 N. Valley (click address for MBC's last story) sold back in June, with a loss of $370k or so to the lender, we're told (no closed price ever posted);
  • 601 Larsson, still active, covered most recently here on MBC, priced now at $1.899m, $100k below the Sept. 2005 sale price (advertised as a short sale and also listed for auction several times); and
  • 402 Larsson (what's with Larsson?!?), a small house with an intractable location problem and way too much work necessary at $1.1m (in foreclosure).
In the case of 1313 Oak, the listing became a short sale subject to bank approval after the recent price reduction to $2.199m. (They began last year much higher, at $2.799m.) That this would now be a short sale is strange, because the owners paid $1.525m not quite 3 years ago (Dec. 2004).

Let's get this straight, then: If the sellers get $675k more than they paid, a lender somewhere is going to take a loss.

Try this at home: Open one hand flat, turn your palm toward your face, and now gently slap your forehead. This is a completely natural way to ask: What did these people do with $700,000 in "home equity?!?"

Also: "Who gave them $700k in funny money against a house on Oak?!?"

Based purely on items once offered to buyers to go along with the house, we can imagine where $400k went. That "Queer Eye" furniture was said to be worth $300k. (Ready the palm again: How do you spend $300k on furniture?) Then there was the $90,000 Mercedes offered as a "gift" to the buyer with a full price offer (full price then was $2.490m).

Those items are kind of splurgy, so we're filling in our own blanks on where the other $300k went. We must allow, however, for the possibility of family illness, a failed business, litigation – who knows.

We haven't said much about what you get for $2.2m. This home has 4br, 3ba, and 3550 sq. ft. That's what the current listing says. The county assessor thinks the home is 5br/4ba and 3229 sq. ft. (-330 sq. ft.), but what does he know?

The shame is that this home is still overpriced.

A certifiable beauty down the block at 1725 Oak (pictured), built at about the same time (2004), sold quickly last month for $2.050m (but it was listed at $1.979m). It was about the same size as the assessor thinks 1313 Oak is.

The sellers offered no gimmicks, and no hassles, either – just a great home for $200k less. And that means the prospects for 1313 are, well...


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UPDATE: The rumored sale price for 1725 Oak was added to the original version of this story.
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