Probate Auction Home is Back

Posted by Dave Fratello on Monday, October 4th, 2010 at 9:47pm.

Weird homes, weird situations – they have a way of staying weird.

When the "grim, destroyed" house at 1801 Elm came up for sale 11 months ago, it created a buzz because it hit the MLS at $399k. Was it a typo? A listing agent who'd slipped through some kind of wormhole into another time?

No, it was an auction, and that come-hither price was doing its job, generating weeks' worth of interest before a minor drama at the auction site in early December last year. The house sold in 90 seconds.

Four months later, the deal closed – in April this year. It was a probate case. The $805k price offered by the auction winner could have been overbid at the courthouse, with a minimum bid of $847,750 (winning bid +5%). But that didn't happen.

So the auction winners paid their $805k about 6 months ago. But now anyone can take it off their hands for $850k, because 1801 Elm is back – with a little markup. (The 5% bump would presumably leave the current owners nearly whole after costs of sale.)

The buyers appear to have changed their minds. Or maybe they just got sticker shock when they priced out the remodel they were contemplating. (Potential buyers can view their contractor's estimate.)

Now, it's strange to ask for a markup on a home that seems to have been so thoroughly exposed to the market just a short time ago. People had the chance – several chances – to pay more than $805k, and didn't.

Partly that's because this has to be viewed as a lot sale. The previous owner died in the property, a point of import that was disclosed readily by the auction listing agent and obviously affects buyers' opinions of its value. The home itself is virtually hopeless. As we said in our review last year:

Ceilings are peeling, pockmarked and outright collapsed. Walls are cracked. Trees and vines grew through windows. Termites appear to have had their way. Carpets were remarkably soiled, deep black in places, but the most shocking dirt may have been the rusty, caked-on filth covering the walls and floor of the shower tub and the sinks in the bathrooms and kitchen. Doesn't water clean things?

If you marched into the open [house] thinking: "With a little vision and patience, anyplace can be transformed," then your faith was challenged. It's a teardown.
We recap all of that simply because it's hard to grasp, from the new listing's chirpy phrases "FIXER UPPER!!!" and "Great Opportunity with Huge Potential to Remodel," what it is you're walking into here. Once you remove all the ruined stuff, it's not clear how much house there is left to remodel. If the math didn't work for the most recent buyers, who will it work for?

If it's a lot sale, maybe $800k or so doesn't seem such a bad lot price for MB west of Sepulveda, but any buyer thinking about jumping on such an opportunity will look at some numbers. Do you build your own custom house here for $1.0-$1.3m? Or why not look elsewhere – say, across the street, even, to 1812 Elm, a smart, newer Mediterranean ready for move-in at $1.890m (or maybe less, given its 50 DOM)?

It's a tough situation, and a tough time of year to launch a listing. Then again, last time they sold this one in a minute and a half.
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