Closing Out the Saga of 1426 Marine

By Dave Fratello | April 9th, 2019

If you buy a home and need to immediately turn it back around to the public market, it's probably not going to work out profitably.

There's a unique way to make a tough situation worse: Have your broker go out there and tell the world that you overpaid - overpaid badly - in the first place.

Like, thanks.

1426 Marine Avenue Manhattan Beach CAOddly, this overview faithfully summarizes what happened to the buyer-then-seller of 1426 Marine in Manhattan Beach.

The story starts when the 2br/1ba, 838 sqft. remodeled cottage was purchased in March 2017 for $1.279M.

Though we won't normally make hay out of who the agent/broker was on a given sale, in this case it is relevant that upstart/IPO'd Redfin represented the buyer at the time.

Redfin is relevant because they maintain a popular website with property valuations displayed on it, and also because of what happened later after Redfin's client bought the house.

Just about a year after acquiring the home for that $1.279M, the new owner decided to re-sell it, went back to the agents who helped buy the house and asked them to list it.

Asking price in April 2018: $1.499M.

Did Redfin really believe the home had appreciated by $220K (+17%) in a year? 

Apparently not. Redfin's website suppressed its own estimate of the value at the time - for good reason, we later learned. But they went ahead and stuck the big new sticker price on the property all the same.

The Redfin Estimate for the value in April 2018, not disclosed until November 2018, was $1,371,020, or about $120K and 9% less than the asking price when Redfin launched the listing. 

What do we normally say about what happens with an overpriced listing? Oh, yeah: It sells for less in the end than it "should" have.

Redfin didn't sell the house at all; they lost the listing to a local agent. After Redfin lost the listing, things got weird.

The Redfin Estimate for 1426 Marine changed radically in late December 2018, while the property was still on the market. History changed: Suddenly, the April 2018 estimate was showing just $1,178,580. That's right, Redfin's bots changed their minds, and retroactively recast the home's historical value, dropping it by almost $200K.

That wasn't the worst part. For the first time, Redfin's value trendline for the property showed their clients had overpaid in March 2017 by as much as $180K.

You can see the little $ sign mark on the trend line indicating times when a property has sold. It's unusual for the $ sign to be askew from the value trend line, but there was quite a gap.

Even today, as shown in this current image, the Redfin Estimate history suggests that Redfin's buyers paid $146K too much way-back-when, suggesting that the property was only worth $1,133,129 at the time when they paid $1,279,000.

And yet, Redfin's fickle bots are being somewhat nicer to the new owners.

1426 Marine sold on March 29 for $1,219,750. Initially, Redfin said that the new owners had also overpaid, but only slightly, by about $4,000.

The buyers are going to be thrilled to learn that the supercomputers have revisited the topic.

If the Redfin Estimate is to be believed - should it be? - the new owners have gained $133K in equity in just about 10 days, about 11%, with a new value at $1,348,963.

Word to the wise, though: Don't make any plans to sell too soon based on numbers like these. Whatever phantom equity Redfin giveth, it may also take away.

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BACKGROUND: If you're interested in our prior posts on this property, see our April 2018 story about the suppressed valuation in "Redfin Can Hide Inconvenient Estimates," our November follow-up revelation of the Redfin Estimate in "Now Redfin Reveals Its Estimate, After Losing Listing" and our December post about the radical revision to the estimate for this property in "When Bots Change Their Minds."

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