Closing an REO Loop

By Dave Fratello July 1st, 2009.

Last week we got the closed price at 958 Rosecrans ($650k), the first of "Two New REOs" mentioned here in early May. (See "Tree Section Closings.")

Now the companion (from that story) has closed.

543 24th (3br/2ba, 1225 sq. ft.) (pictured) was offered as-is, and that meant a cottage that was pretty original (early 1950s) and pretty dark. The lot size (3640 sq. ft.) was decent for the gaslight area.

The bank put this one up at $891k, accidentally under-pricing the property.

Closed price, after several offers: $1.080m (+$189k/+21% over the start).

That still seems low, as we write. So bravo to the buyers.

The most immediate reference point has to be a home around the corner, 539 23rd – a little bit spiffier and larger (4br/3ba, 1900 sq. ft.) home of similar vintage – which went for $1.330m in late February.

Sure, 24th is smaller and less livable, but what does this sale say about lot values?

Worth noting: The bank took back 543 24th for $978k in February. Though they priced it low when offering it for sale, they got $100k more.

However, the original suggested minimum bid at auction in December was $1.256m. That's a reflection of the debts owed, not necessarily the market price.

Bottom line: This REO was resolved quickly by means of a low-priced, multiple-offer sale. This is characteristic of REOs, and also a fantastic method of price discovery. All the better if the buyers come out thinking they have scored, and we tend to agree.

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