Major Fixers Seem Rare in Manhattan Beach

We're going to boost up a topic that we touched on in the weekend's new listings post.

There are a couple of new full-sized homes that just came to market, where each one frankly needs just about everything. 

Also, incredibly, they're both priced identically at an unusual number ($3.585M) – despite being listed by completely different agents.

It's actually quite rare to see homes where a head-to-toe remodel is in order.

Let's first look at the two listings:

563 36th (4br/3ba, 4314 sqft.) is 1991 custom build in a Tree Section location that some would object to, but which is objectively closer to the beach than almost any other Tree Section location. 

563 36th is listed by Robb Stroyke, Bayside.

 1643 10th (5br/3ba, 3257 sqft.) dates back slightly further, to 1985. 

Location-wise, the home is reasonably central within the Mira Costa neighborhood, not stuck on the busy final block of 10th near Aviation. 

1643 10th is listed by Duke Dulgarian, Score Properties.

In terms of presentation, both homes have something more than price in common:

• A lot of carpet,
• Big, chunky tile kitchen counters matched with medium-dark wood cabinets, and
• Quite a number of personal items and old furniture still in the house. 

(We're going to mix in photos from these two listings randomly here.)

The 36th St. house is overall cleaner, and has at least some partial staging to present the home aspirationally.

Still, both homes are unavoidably going to become "projects" for the eventual buyers. 

The buyer in such a case is trying to do the math: 

Remodeled value ≥ acquisition price + cost of remodel 

That equation means that you will want to know that after you buy the house and invest in upgrades, at the end of the day, its market value is greater than or equal to all the money you've spent.

This requires a great deal more math, patience and guesswork than a typically presented listing.

A move-in-ready home with some recent remodeling comes to you in a tidy package: This is how much it costs to get this size of a house in this kind of location. 

A fixer challenges you to figure out which elements of the home require immediate, pre-move-in attention, to either estimate out the remodeling costs or get bids, and then to jump ahead and make a reasonable estimate of the value of the home when shiny and like-new. This helps you solve for the most important x in the equation: How much you should pay. 

Who's got the attention span, let alone the expertise, needed to run all those numbers?

Not many buyers want to do any work at all. Indeed, while it's not a universal truth, most buyers are using up all their available cash on a down payment, so they can't seriously consider undertaking a major remodel. Even those with the ability to pay for the work still probably don't prefer to do much. 

This reality is why most sellers will go through some degree of listing prep, rather than try to sell a house as it stands. Even if a house needs work, you will usually see quite a bit of effort put into prettying up the property so that it's easier on the eyes, making a better first impression. 

This is not purely an idle contemplation. 

Just a few weeks ago, we were running numbers on a similar property that will be coming to market. We were struck then by how rare it is for big-time fixers to hit the public market. It makes valuation tricky if you do have one to price out.

There had recently been one case, 3609 Walnut (5br/4ba, 3780 sqft.), in a Tree Section location near Rosecrans. 

That oversized home was dated and showed considerable deferred maintenance, but had fresh paint and was clean. No one would miss the fact that it wants updates. 

That one, they presented nicely and with an ultra-low price (for the Trees): $3.299M, ultimately getting $3.238M.

Whatever these two new fixers might sell for, Walnut stood out for how price found a buyer who was able to say: I'd rather move in someplace right away, but if I can get that much house for that little (!) money, that's worth it for me.

A big house in the Trees for $3.2 or so? Doesn't happen!

Until it did. 

We'll be interested in tracking these two, and another other similar fixers that might come up soon.

It'll be interesting to try to infer the math that buyers use to decide what the right price is, ultimately. Stay tuned.

----------------------------

UPDATE: Soon after this post went live, 1643 10th was under contract. The next day, so was 563 36th. Guess people want fixers!