short sale in encinitas ranch - good value?

User Forum Topic
Submitted by lu on December 12, 2007 - 8:40pm

What do folks think about this listing?

645 Brae Mar Court, Encinitas, CA

It's shown as for sale on zillow for $995K but it's actually now a short sale owned by WaMu -- going for $800K. The last sale was for $1.2M in Jan of '07 (0% down of course).

That's a 33% haircut -- any thoughts on whether that brings the property back down to "fair value"? It looks like the 2003 price point was hovering around $750K or so.

The comps on zillow all show upwards of $1M, even up to $1.5M.

Any thoughts from the realtors out there?

- Lu

Submitted by Colombo on December 12, 2007 - 11:24pm.

If it's owned by WaMu it is not a short sale.

It's an REO.

You know, you can tune a piano, but you can't tune a fish.

Submitted by SD Realtor on December 12, 2007 - 11:40pm.

Colombo I can honestly say I have never heard that quote before!

I was cracking up.

D Realtor

Submitted by PadreBrian on December 13, 2007 - 12:05am.

2003 price point was hovering around $750K

If 2001 Prices are where the market should be (before the free money was being handed out by the reserve), then 650-700k is where you should aim for.

Submitted by Chris Scoreboar... on December 13, 2007 - 7:31am.

SDR,

That quote is stolen from REO Speedwagon, it is not original

Submitted by RatherOpinionated on December 13, 2007 - 8:35am.

"If 2001 Prices are where the market should be (before the free money was being handed out by the reserve), then 650-700k is where you should aim for."

If you wait for it to get to 650-700, then someone else will own it instead of you. If you like it at this price, get it. Chances are it won't drop down to those levels.

Your contrarian troll,

Submitted by Ex-SD on December 13, 2007 - 8:59am.

RatherOpinionated: I beg to differ. I say that prices will fall back to a minimum of 2000 levels and most likely to 1998 (or lower). If the liars can't get loans and a decent credit score, proof of income and a reasonable down payment will now be required, just who do you think is going to line up and buy all of this inventory that is already on the market, much less, what's going to hit the market over the next three years?

BTW: You write exactly like another troll who's been posting on this forum for the last couple of weeks under various names.
You would be trying to rent out a crap hole of a home near SDSU, would you? :)

Submitted by RatherOpinionated on December 13, 2007 - 9:02am.

Ex-Sd - you are so far behind the times. I think that has been made clear for some time now.

Submitted by Ex-SD on December 13, 2007 - 9:21am.

Well, EXCUSSSSSSSSSSSSSSSSSSSSSEEEEE ME!
:)

I thought so. Troll away till your heart's content.

Submitted by sdrealtor on December 13, 2007 - 9:48am.

EX-SD,
If homes in my neighborhood (which rent very very quickly) dropped to 1998 prices they would be cash positive by more than $1000 per month based upon current rents. At 2000 prices they would be cash flow positive by more than $500 per month.

Do you honestly believe prices will reach those levels? There are a lot of my neighbors (Drs. lawyers, execs, business owners, wealthy retirees etc. ) that would buy every one of them well before they approached those levels as investments.

Submitted by RatherOpinionated on December 13, 2007 - 9:51am.

Thank you sdrealtor. Ex-SD himself believes prices will reach those levels, but by no means does that mean they will. As you just stated, you and all your neighbors will snap them up well before they get anywhere near those levels.

Even at 2003 prices where they are now (right), they are not overpriced for the quality of homeowner in the area.

Submitted by sdrealtor on December 13, 2007 - 9:53am.

If they reached 2001 prices I know that I would be "all in". I'd buy 3 in my hood and have the assets to easily do so.

Submitted by RatherOpinionated on December 13, 2007 - 10:10am.

BTW, here's an additional scoop on the Brae Mar listing in this post:

"Offer must be made sight unseen. There is an uncooperative occupant who refuses to give access, and any sale will be subject to the rights of the current occupants(s) until lease ends in April, 2008."

As of september, loan is in default $23,896

BTW, where do you show that WAMU owns it? Looks like short sale to me.

Submitted by SD Realtor on December 13, 2007 - 11:51am.

If it is lender owned the tax roll on Realist does not indicate that.

To echo what RO said, the tax roll only indicates a NOD has been filed on it. Not only is it not lender owned there has not been a NOT filed yet.

Guys please can we at least say things like, "I think it is lender owned" or something to that effect if you are just making a guess or speculating on something.

Is it that hard to do?

*******

According to the listing agent currently there are 5 offers in on this home and they are all in the price range. New offers will only be sent to the lender that are in the upper end of the price range. Nothing has been sent to the lender, nor has the seller generated the documentation needed for the short sale package. So in essence they are simply collecting offers. Prospective buyers will get to look at the home after the lender has accepted any offer.

********

The NOD amount is 23896 but it was filed in September so it has most likely grown since then. The purchase price was 1.2M back in January of 07 and it was 100% financed. The NOD was filed on the 960k first. I would imagine there is or will be a NOD on the second but the second is out of luck.

I would say there is a bit of fishiness with regards to the original purchase. Okay the listing was listed with Keller Williams last year at 1.2M. Then on 1/9/07 the listing was cancelled. Then the home was sold (not through Sandicor so it was most likely a FSBO) at 1.2M on 1/18/07. Looks like the Keller Williams agent got screwed. Looks like the buyer got screwed (unless this was a fraud scam... and no I am not saying it was... it could be your standard back door deal) but again, there are not really any comps back at that time that support 1.2M for that home. At least not any that I can see. sdrealtor perhaps you can correlate it.

There is another sale at 610 Brae Mar on 1/16/07 of a home with a larger sf (not much but a little) at 1.050M.

**********

Now I think there is still an overtone of denial with regards to just how much money is on the sidelines here in town. I don't mean just lots of kabillioniare types... Just people who have money... maybe they are engineers or attorneys or doctors or whatever... The point is that they have money and it is on the sidelines and when they see good deals like this or others they will pounce. They may not by a great deal (with the same ratio loss) in say San Marcos or the college area, but stuff like this? Absolutely. Do I wish properties like this would hit 98 levels? Of course. Do I believe they will? Not at all.

Another point to make is that first off, since 1998 astounding amounts of money have been made. Second, the wealth concentration is still highly uneven. The small majority owns alot of cash. Those people are smart and they will be the ones that buy these properties. They may not even wait for them to cash flow because they may purchase the property for an appreciation play. I am just trying to be realistic. Yes my statements are speculative and no I am not one of them sitting on the sidelines with 7 figures worth of cash laying around. Do I know many like that though? Yes I do.

I could very much be proven wrong and maybe there will be enough housing in highly desired areas like this to exhaust all those pockets... Under conditions like we have now I just don't see it. What we would need to see would be substantial employment reduction in the engineering, biotech and medical sectors.

SD Realtor

Submitted by sdrealtor on December 13, 2007 - 11:55am.

FYI, this is the property that was sold by the sleezy mortgage broker we talked about a couple weeks ago.

Submitted by Ex-SD on December 13, 2007 - 12:14pm.

SD Realtor: So, you think that people who are sitting on a wad of cash are going to throw it at the housing market? I am sitting on a large amount of liquid assets and I wouldn't throw one nickel at the SoCal housing market until prices came into line with income. I have friends who have much more than myself and they also would not consider putting any money in the SoCal housing market until prices are in alignment with income. Call me stupid if you wish but there is a large house of cards that is steadily falling as I type and throwing money at that house of cards until it reaches a level that is monetarily sane just doesn't make any sense to me.
If the average Joe Blow can't afford a home in SoCal because he can't qualify for an average home because they're priced ridiculously high, who's going to purchase all of these homes..........and how will they purchase them...................and why will they purchase them if they're over-priced? Doesn't make any sense to me. When they were giving loans to people with marginal credit and the only qualification was that they could fog up a mirror, sign their X on the dotted line and lie about their income, it was a different matter. But that ain't the case any more, is it?

Submitted by sdrealtor on December 13, 2007 - 12:15pm.

" I am sitting on a large amount of liquid assets and I wouldn't throw one nickel at the SoCal housing market until prices came into line with income. I have friends who have much more than myself and they also would not consider putting any money in the SoCal housing market until prices are in alignment with income."

Birds of a feather......

Submitted by RatherOpinionated on December 13, 2007 - 12:21pm.

Birds of a feather rent forever.

Submitted by Ex-SD on December 13, 2007 - 12:31pm.

RatherOpinionated: You're new to the forum so you're not aware that I lived in SD for over 30 years. I saw the "perfect storm" forming in the real estate market in SoCal and sold my home and left the state in the spring of 2005. I bought a home in Greenville, South Carolina which has the lowest percentage of foreclosures of any market in the entire country. This area (along with many, many other areas of the country) did not get caught up in the frenzy of idiocy that took place in CA with housing prices and you can buy one hell of a nice home for $225-$250k and if you jump to the $325-$350 range, you can live exceptionally well. If prices fall enough, I'll probably move back to San Diego but if they don't, it's no skin off my ass since I'm retired and set for life. However, my youngest son insists on staying in San Diego and makes $75k a year and can't afford a decent SFR. To me, this is ludicrous because he can easily get employed here, make approximately the same amount of money and afford a nice home.
Thus, my interest in the housing market in SoCal.

Submitted by SD Realtor on December 13, 2007 - 12:41pm.

Ex-SD -

Look... this house is a perfect case study isn't it? 5 offers on a site unseen home. That is not cash flowing...

Now would you touch it? No. Would your friends touch it? I guess not.

However 5 people have and the seller has not even submitted his paperwork yet!

I am or would not call you stupid at all. I am just saying that it is a speculative argument that is in the eye of the beholder. That your opinion and your friends opinions do not cover or speak for many many others. You see what I am saying?

This argument has nothing at all to do with Joe Blow. He can wait for the prices in Clairemont or San Marcos or Eastlake to fall to 350 or 400k. Not a problem there. I don't believe the average Joe Blow lives in Encinitas. I think that is why my point is being widely missed.

It is actually my belief that depreciation cycles provide much more ample opportunity for the rich to get richer, then to level the playing field. Opportunities like this abound for people who have money parked. Again, I do not think it will prop up the market but I do think there will be an effect. Again, not all people use the same metric as you or others do. The home may not need to cash flow for them, the home may not need to have carrying costs that equal rent. Do you see what I am saying?

I think a general fault is that everyone measures opportunity by the same metric.

Look your argument about loans given out to anyone is THE EXACT reason for the bubble. Bubbles are not caused by well to do people buying nicer properties. They are caused more by people buying things the CANNOT afford. By fervent purchases and such. Bright people who are wealthy, who have money now parked most likely were long gone by 03 or 04. Sure some of them purchased in the bubble but that was not to flip or invest, that was most likely to live in or to act as a shelter or to give to kids or family members.

I guess my point is not being well made.

Look I understand your point and your thought process... Perhaps it will happen in that manner for all neighborhoods alike, same price drop, same window of opportunity for everyone. I don't see that. I see narrower windows of opportunity that will vary by neighborhoods and different depreciations as well.

SD Realtor

ps - EX-SD I am not saying your opinion does not make sense about not purchasing until the median/income ratio falls in line because it does.... I would just be more refined... For instance you cannot use the median income of San Diego County for the purchase of a home in this particular subdivision. A more accurate measure would be to find the median income of the homeowners in the subdivision and do it that way.

sdr - That sheister totally gaffed the keller williams agent. Did you see the cancellation was made after only I think 31 days...

Submitted by Ex-SD on December 13, 2007 - 12:37pm.

BTW: One of the people that I referred to who has a wad of money and would not invest at this time in the SoCal housing market used to own a luxury condo in the Meridian, a 5000 sq. ft. home in Palm Springs and a 4000 sq. ft home in La Jolla. (all fully paid for) He sold all three around the same time that I did and he also moved to another state. If you think I'm a bear when it comes to housing, you ain't seen nothing yet. :)

Submitted by Ex-SD on December 13, 2007 - 12:43pm.

SD Realtor: I also get your point and see your rationale. The only thing that I would point out to you is that during the last crash in CA, the operative word was that it would never hit the beach communities or the high end areas. Well, you and I both know what happened to LaJolla, Beverly Hills, Brentwood, North County, SD, etc, etc etc............so although at this time, those areas are not getting wacked too hard at all.........time will tell if it's also going to also rain on their parades.

peace :)

Submitted by SD Realtor on December 13, 2007 - 12:54pm.

peace to you as well EX-SD. Understand and acknowledge your points as well... As a prospective buyer I hope you are more correct then I am, believe me.

Here is to us getting our properties.

SD Realtor

Submitted by RatherOpinionated on December 13, 2007 - 12:56pm.

"It is actually my belief that depreciation cycles provide much more ample opportunity for the rich to get richer, then to level the playing field."

Perfectly said.

Your "birds of a feather rent forever" troll,

Submitted by zk on December 13, 2007 - 1:39pm.

deleted

Submitted by Eugene on December 13, 2007 - 2:27pm.

If homes in my neighborhood (which rent very very quickly) dropped to 1998 prices they would be cash positive by more than $1000 per month based upon current rents. At 2000 prices they would be cash flow positive by more than $500 per month.

The thing is, by the time they drop to 2000 prices, rents will drop as well. They will be dragged down by local recession and massive oversupply of housing. Your lawyer/exec buddies will contribute to that by buying properties and putting them on the market.

If you wait for it to get to 650-700, then someone else will own it instead of you. If you like it at this price, get it. Chances are it won't drop down to those levels.

Let's put it very simply.
The only reason to get it now for 800 is if you believe that
1) Encinitas as a whole is not going to drop to 800
2) this is the last good deal before the rebound

Submitted by Eugene on December 13, 2007 - 2:51pm.

This argument has nothing at all to do with Joe Blow. He can wait for the prices in Clairemont or San Marcos or Eastlake to fall to 350 or 400k. Not a problem there. I don't believe the average Joe Blow lives in Encinitas. I think that is why my point is being widely missed.

Brae Mar Ct is not exactly the playground for the super-rich. It is 2 miles from the beach and relatively far from areas with well-paying jobs. 4br houses in this neighborhood are only going to sell for a million if 4br houses in Eastlake and San Marcos go for 800K. And those will only sell for 800K if 4br houses in Temecula go for 500K.

And, by the way, the average Joe Blow can very well afford to buy a million dollar house in Encinitas, that's what negative amortization option ARMs are for. You could get a 1M neg-am loan with monthly payments of less than $4000 for a few years (until it resets to fully amortizing).

Submitted by SD Realtor on December 13, 2007 - 3:35pm.

esmith -

I don't think what you said is true at all. I do not believe that an average joe blow can afford to buy the home in Encinitas. I also believe that if you took the median income for homeowners in this particular subdivision you will find it is much higher then the median in the country, in the state, and even in the county.

I never said Brae Mar was a playground for the super rich. Yet how many homeowners there in that subdivision that have a salary of 65k a year? My SPECULATIVE statement would be none. In fact, if you went and took a look at the 5 offers that the agent currently has on it, I would speculate none of those offers are from Joe Blows who earn what you are supposing they earn.

Brae Mar is no farther away from Sorrento Valley then 4S Ranch is. It is not as far away as La Costa Valley either.

Hey if you want, go ahead and presuppose that Brae Mar is going to fall to 440 or 500k. You think it is, I do not. I am not stopping you or calling names or anything like that.

So far there are 5 other offers on it and there is no speculation in that statement esmith. So yeah perhaps you are right. Go ahead and pull up a loan program in todays environment that will enable a median income wage earner to make the purchase like you said in todays world.

Personally I don't see alot of that happening anymore.

I am not trying to say we are at a bottom now or anything like that. Please don't confuse my posts to be cheerleading for the industry. I am just trying to point out what are facts in the here and now as well as my speculative opinion in the longer run. Perhaps I am way off. I guess we will see.

SD Realtor

Submitted by Eugene on December 13, 2007 - 4:18pm.

Encinitas has above average incomes in this county. No argument about it. It's just not so wealthy as to support seven-figure valuations east of 5 without exotic financing.

This particular street was built and sold off in 2003 at a median price of $682,000. You didn't have to be a lawyer or a surgeon to "afford" that. Monthly payment on an interest-only mortgage of $682,000 is less than 3K/month.

You are a realtor, I believe you have the capability to look up existing mortgages on homes. Could you please check these houses.

621 Brae Mar Ct (sold in 2003 for 681k)
642 Brae Mar Ct (sold in 2003 for 682k)
655 Brae Mar Ct (sold in 2003 for 687k)
622 Brae Mar Ct (sold in 2005 for 840k)
610 Brae Mar Ct (sold in 2007 for 1050k)

I'll venture a guess. All five were financed using interest-only mortgages. Furthermore, the latter two are negative amortization loans.

Submitted by SD Realtor on December 13, 2007 - 4:51pm.

Actually in order to find the terms of the loans I would need to look at the notes which, while they are recorded documents, are not available for me on Realist. County recorder has them so I have no inclination to dig them up, you can if you like.

Also I know of many people who are very well off who USE I/O loans because they make a better return then the note. So why wouldn't they do that? No they are not negaming but we have had very lengthy discourse about earning a better return then a mortgage so why tie up funds.

Also you are talking to someone who is way conservative and always errs on the side of a standard fully amortized fixed rate loan. However that is my taste.

610 has a single mortgage for 840k.
622 has one for 749k.
655 has one for 477k.
622 has an original for 551k and two others for a total of 400 since the original.
621 has one for 555.

Also most all interest only loans are a 30 yr amortized loan with a 10 yr I/O period. At 6% this payment is 3410 not 3000. Second this would be a jumbo loan so that 6% rate would not happen, it would be more along the lines of 6.5% so now we are at 3694. Adding on another 600 a month for property tax and now we are at 4294 for simply Interest and taxes.

Not so sure how livable this is for Joe Blow as we have not even purchased his homeowners insurance yet. By the way, the Mello Roos here is 3105 a year and another 119 a month for HOA. So now where you quoted 3k a month my figures are more along the lines of about 4700 a month.

So hmmm... we seem to have a discrepancy there.

*****************

Again, you can speculate all you want about how these people have financed the homes and whether they are Joe Blow median income types or not. Or whether this neighborhood is populated by those types. Personally I would envision this neighborhood to profile alot like some of the similarly priced neighborhoods in CV or 4S. Lots of engineers, or similarly salaried professionals, perhaps even a few dual income types, pulling in a minimum of 100k per household. That is just a guess.

My argument is not that it is not going to go down to 2003 levels esmith. It should... but will there be alot of opportunities and will it go well below the 03 levels? mmmmm... there will be some... I just am not as optimistic as some bears that there will be lots and lots of them. I think they will be scooped up by people who are not as stringent in thier criteria to buy. I am not saying those people are correct in buying... just that they are out there.

SD Realtor

Submitted by Eugene on December 13, 2007 - 6:36pm.

Also most all interest only loans are a 30 yr amortized loan with a 10 yr I/O period. At 6% this payment is 3410 not 3000. Second this would be a jumbo loan so that 6% rate would not happen, it would be more along the lines of 6.5% so now we are at 3694.

You're using current rates, but 2003 was a bit different. National average rates for 5/1 IO ARMs were around 4.5%, jumbo or not. 682000 * 0.045 / 12 = $2557. Less if you have a down payment. Total housing payments (mortgage/insurance/etc.) on the order of $3600/month.

Lots of engineers, or similarly salaried professionals, perhaps even a few dual income types, pulling in a minimum of 100k per household.

In 2005, median household income of 92024 was around $77k.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.