2990 Clay Street
It’s a “lender owned” condominium “in need of renovation” two blocks off of Alta Plaza park in Pacific Heights. And while it appears that 2990 Clay Street #1 last changed hands for $1,061,444 on 6/6/2007 (in the sale to the lender) and prior to that for $1,490,000 on 5/31/2006, it’s now on the market for $699,900.
2990 Clay #1
Granted “[t]he prior owner removed many items” (as those who have been foreclosed upon are prone to do), but unless those items included solid gold fixtures and outlet coverings, something doesn’t quite add up. Perhaps a plugged-in reader can help us out with the math (and the inside scoop).
UPDATE: And a reader comes through: “Okay, I got the scoop – looks like the unit is actually closer to 1k sq feet, even though the tax records show 1500. The additional sq ft and the fact that it “sold” for close to 1.5M is all most likely fraud…Sounds like this place is VERY rough, and 699k isn’t a price they’re hoping to get bidding wars over, but rather is the generous starting price they think they’ll have to come down from….”
∙ Listing: 2990 Clay #1 (2/1) – $699,900 [MLS] [Redfin]

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Comments from “Plugged-In” Readers

  1. Posted by garrett

    you’re looking at and using an inaccurate tax record. this unit did not sell for $1.490mm. though i don’t know what it sold for as the MLS record and the tax record are a bit disorganized, i can tell you that this unit did not sell for anything near that amount. in fact, that same tax record shows an assessed value of $202,128. there is a transfer recorded on 5/31/06 for $1.490mm, but that could be anything–including a shiesty borrower inflating the value of the unit and borrowing against it. hard to tell for sure, but the facts are hazy at best and this unit was NEVER worth $1.49mm, even with solid gold fixutres

  2. Posted by Dude

    Mortgage fraud?

  3. Posted by badlydrawnbear

    Isn’t the assessed value pretty meaningless due to prop 13?
    I am only guessing here, but wouldn’t the ‘transfer’ in ’06 be a one of those change of ownerships between family members that does not cause a reassessment.
    Then there is a $1 mill sale in 06 and that got foreclosed on and the bank is going for $699k?
    Regardless, the bank is asking for 362k less then it last sold for just a year ago.
    If someone used this as a comp for a purchase or HELOC in ’06 aren’t they gonna be screwed?

  4. Posted by Michael L.

    Depends on the weight of the solid gold fixtures…

  5. Posted by Uncle Charlie

    Hmmm…must be an early April Fool’s joke. There can’t be a price reduction in District 1, the realtors keep saying the market’s so strong.

  6. Posted by Spencer

    From the pics, this looks like about a 700sq ft. basement unit.

  7. Posted by phatty

    this looks way too good to be true. i just called and left a message w/ the listed realtor… i’ll let u know what’s wrong with it when i hear back.

  8. Posted by Miles

    Sometimes with condo and especially with TIC buildings the transfer price of the units within the building gets mixed up on public records, so that’s probably what happened here as a 50% haircut is not the norm now. As for the assessed value, the assessor can only re-assess a property at market value upon a sale or transfer of 50% or more of the property’s ownership. Usually they look at the full value transfer stamps and assess it at the purchase price, but there is also a year+ lag until it shows up on public records, so the most recent sale probably hasn’t shown up yet. They send out supplemental tax bills to make up the difference until the assessed value is updated.

  9. Posted by jaybee

    i think this building was the morrocan consulate at one point.

  10. Posted by fluj

    the tax records hyperlink on the MLS shows 1500 feet or so, but that can’t be right. Four rooms and 1500 feet? If it is 1500+ feet it’s a heck of a deal even without a garage.

  11. Posted by anon

    No worries. Your heck of a deal is going to get a heck of a lot cheaper. LOL

  12. Posted by fluj

    How about you don’t respond to me any more? OK? You bring nothing to the table.

  13. Posted by andy

    This is a tactic that is used for many homes when they don’t sell.
    They listed 1.5 million and it didn’t sell, maybe they checked their Supra key records and notice only 10 agents and clients have came through in the past two months.
    So they ridiculously lower the price to get people’s attention and cause more traffic through the house now that it’s dirt cheap. People will put in offers and be outbidding each other. So the bank will make as much as the market dictates, but in some cases the selling price will be even more than the original list price.
    The traffic will generate more traffic. More traffic = more people viewing and if they like it, they’ll become attached to the home and be willing to pay what they can afford. People often forget that real estate isn’t JUST about price, and it’s a really emotionally charged process. If you are a real buyer, and you find the house you love, then you’ll do any means necessary (hopefully a smart one).

  14. Posted by anon

    I agree that it looks like an attempt to generate a bidding war. If Countrywide is in for $1.061M, then it will take some very aggressive over-bidding to make them whole. Note the 3.5% commission to the buyer’s agent. This listing should give a good indication as to whether good deals can be had in areas like Pac Heights.

  15. Posted by phatty

    I don’t get this strategy… I’d think that most people that go see the place because it is listed at 699k couldn’t afford to pay 1.061M. And the people that could afford that much would be looking at places in that price range?

  16. Posted by tipster

    This is probably what it felt like when the first case of bubonic plague was diagnosed in a town. Before then, you told yourself, don’t worry, our kids will wash their hands after playing with that flea-ridden dog and everything will be fine. It will never happen here.
    But then it did and you had that sinking feeling that the problem wasn’t going to pass your town like “everybody” said it would. That it was here and it was starting. And there was nothing about the cleaner air or bright sunshine of YOUR town that made your town immune. The problems weren’t going to pass you, they had just started later than other towns.

  17. Posted by rg

    Oh, I see a “heck of a deal” too!
    Every time I washed my dishes in that dismal kitchen, staring at that adjacent beige stucco wall, I’d think, “I got a heck of a deal!”
    As I walked around my Pac. Heights condo, stooped over because my ceiling height appears to be around 7′-6″, I’d think, “I got a heck of a deal!”
    And while I was laying in my hospital room, being treated for mold inhalation, I’d think, “I got a heck of a deal!”

  18. Posted by spencer

    RG
    Mold builds character

  19. Posted by fluj

    Did you even see the property? I haven’t. I remarked that if it’s actually 1500 feet then it is very cheap for the area. Most people on here seem to agree with that … 1500 feet for 699K in that area is quite under the median $psqft.
    My other “heck of a deal” comment was on the nicest home in Noe for under $1.5M.
    Sorry for not dipping into my thesaurus as I type constantly. Or fleshing out my arguments with factoids about the Japanese Tulip Scare Market for Beanie Babies circa 1967.

  20. Posted by Lori

    Actually, now that I look at that kitchen pic again I see some discoloration where the dishwasher probably was — it’s either grime or mold. Interesting.

  21. Posted by Dude

    Was thinking about what Miles posted. If this was a TIC, wouldn’t the whole building be in default? Or if it was originally TIC then converted, wouldn’t the loan need to get refi’ed upon conversion? But I agree that there’s something fishy here (perhaps fraud, as I mentioned above). The numbers don’t really add up.
    Also, not to nitpick, but the plague was spread by rats, not dogs. Regardless, seems the foreclosures are finally seeping into more “prime” San Francisco areas.

  22. Posted by phatty

    Okay, I got the scoop – looks like the unit is actually closer to 1k sq feet, even though the tax records show 1500. The additional sq ft and the fact that it “sold” for close to 1.5M is all most likely fraud…
    Sounds like this place is VERY rough, and 699k isn’t a price they’re hoping to get bidding wars over, but rather is the generous starting price they think they’ll have to come down from….

  23. Posted by Craig

    700K for a dump in the basement with no parking. Yipee. Location is not going to save this one.
    Dude, I think you sort of contradicted yourself, ie saying it is probably fraud here, but then concluding that foreclosures are creeping into the prime areas based on the same property. Pretty shaky reasoning if you ask me.

  24. Posted by holmes

    Fluj,
    Any way you could cut down on the vitriol? You’re giving this forum a thoroughly unpleasant vibe and taking things a liiiiiiitttle too personally…

  25. Posted by Dude

    “Dude, I think you sort of contradicted yourself, ie saying it is probably fraud here, but then concluding that foreclosures are creeping into the prime areas based on the same property.”
    Don’t most cases of mortgage fraud end up in foreclosure?

  26. Posted by fluj

    holmes, if you read the whole thread you’ll see that I merely responded accordingly. As usual.

  27. Posted by Irrational Exuberance

    My guess is that the price is lower because of one of these three reasons:
    1) those deteriorating plutonium finishes on the kitchen counter tops
    2) ghosts
    3) maybe, just maybe, real estate also goes down!

  28. Posted by Craig

    Dude,
    Likely, yes. But your conclusion makes no sense in view of this.
    “Regardless, seems the foreclosures are finally seeping into more “prime” San Francisco areas.”
    Seepage? Based on this one (absolutely terrible) example? As I said, shaky at best. Try as you may, doom and gloom in “prime” SF cannot be had based on this. Keep looking please and let me know if you find anything.

  29. Posted by Dude

    “Keep looking please and let me know if you find anything.”
    Well, a quick scan of Property Shark revealed the following:
    20 Germania St. near Duboce Park
    710 Powell St., which is near the Fairmont Hotel
    876 Castro
    600 Missouri, in Potrero
    Short sales are tougher to spot but there are a few of those as well:
    http://sfbay.craigslist.org/sfc/rfs/470091682.html
    http://sfbay.craigslist.org/sfc/rfs/465629300.html
    Not a lot, I admit, but keep in mind I looked only in the northern half of the city (lots more in Sunset, Parkside, Excelsior, Portola, etc.) and spent about 10 minutes on this, so it’s not an exhaustive list. And this is definitely more than you would have seen a year or so ago. Which is why I used seepage instead of “deluge” or “typhoon.”

  30. Posted by rg

    fluj – nah, you’re just being unpleasant. I didn’t even read your “heck of a deal” remark under Noe nor was my comment directed at some lack of originality on your part. I just happened to want to use that phrase because I thought it was funny. Your immediate and personal response to anon @ 10:53 did strike me as rude, though.
    My comments on here OFTEN are directed to this communities’ (meaning SF as a whole) total lack of rational thought when it comes to real estate. I mean, Irrational Exuberance starts his/her comment with- “My guess is that the price is lower because…”??? I stopped reading immediately. The price is “lower”? We’re suppose to spend our day “guessing” what is wrong with this measly $699k price tag? I don’t care if this place is 4000 s.f., the price is plain, outright, no-holds-barred, outrageously, immorally WRONG! $699k for a basement, torn up, moldy piece of s**t that I wouldn’t wish upon my worst enemy! Are we San Franciscians SO desensitized by the last few years of speculative prices that some of you look at the MLS listing and are focused on the fact that there isn’t a PARKING SPACE?! What level of Hell would living in this place be?! Sorry, maybe I’m just bitter that I work hard and can’t even afford half of this place. Or maybe I’m just smart and well-traveled and know that in any other city, it would sell for 1/20th this price. In fact, in any other city, no one would even have the guts to put this crap on the market. This is a rental. This is the rental in the basement that the building owner rents to a student or two for $500/month. Sad, just plain ole sad.

  31. Posted by fluj

    Now that we find it’s really only 1000 feet, I agree. Earlier when I looked it up and saw 1500 feet, I said hmmm. I’ve seen dozens of lower spaces turned into something pretty good by the right amount of know-how.
    I qualified my initial response too, you know? Didn’t stop two or three people from dissing me with comments directed not at my points, but my verbiage.

  32. Posted by r

    Whomever buys this place will likely have to put about $150k – $200k into improvemnts, not to mention a ton of time and frustration. This is the type of project that leads to divorce.
    Personally, I would rather pay $850k – $899k for something that is liveable today, and forgoe a learning experience.
    The SF real estate market tends to be fairly eficient, and bargains are few and far between.

  33. Posted by rg

    Btw, anyone read today’s msn.com article about the most affordable places to live? Quote struck me – “Based on the NAHB/Wells Fargo affordability index, only 5.7 percent of San Francisco homes are available to the median income earner” Last year’s data was about 12%. This is really despicable. We should all be outraged, we should be stomping down

  34. Posted by rg

    Btw, anyone read today’s msn.com article about the most affordable places to live? Quote struck me – “Based on the NAHB/Wells Fargo affordability index, only 5.7 percent of San Francisco homes are available to the median income earner” Last year’s data was about 12%. This is really despicable. We should all be outraged, we should be stomping down

  35. Posted by rg

    sorry, got cut off:
    stomping down the doors of those shady appraisers, r.e. agents and mortgage brokers who “value” this sort of crap at $699k – $1 million. They’ve screwed this city and it’s residents, all to put $$$ in their pockets. SF will never recover and never again be a place that people can just live and enjoy life.

  36. Posted by diemos

    And they changed that index a couple of years ago to use funny munny loans. If you use the traditional 20% down 30year fixed loans to do the calculation the number is 1%.

  37. Posted by fluj

    There needed to be a whole lot of collusion all up and down the line to pull off the type of mortgage fraud that you’re talking about, rg. I just can’t see it happening all that often. Yes, some appraisers inflated values under pressure from all and sundry (do not give property owners a pass here). However, even the crookedest appraiser couldn’t work black magic. A basement flat is suddenly worth not 699K, but 1.2M? Not likely. Most lenders would have flagged it in underwriting.

  38. Posted by diemos

    yup fluj, underwriting standards collapsed after 2003 because the bad loans were being securitized and passed off to clueless bond investors. The people making the loan no longer had any reason to care if the borrower could pay the loan back or if the property was really worth the amount of the loan because they wouldn’t take the loss if it went bad. That’s why prices doubled in california in the last several years. The bond holders have recently figured this out and have stopped buying these loans. That’s what the recent credit tightening is all about. Without these funny munny loans to prop up prices home prices will revert to reasonable levels based on local incomes. Just as is currently happening in the central valley, inland empire, florida, northern virginia, maryland, nevada, arizona. Our correction will get started in earnest beginning in 2009 when those 1% neg-am loans (of which you are very familiar) reach their negative amortization limits and recast into fully amortizing loans.

  39. Posted by fluj

    I understand your model thoroughly and I agree that availability of money has been one of the underlying causes for price gains. Bundling and peddling them off without scrutiny, etc.
    However, I know from firsthand experience that even if you literally bought something really run down on a great block in a terrific neighborhood and put A TON of capital and sweat equity into it, increasing its value tremendously in a legitimate manner, you would have a really tough time getting a loan at a figure at which an 80% LTV loan cash out would allow you to pay yourself back. This is during the heyday of what a lot of people on here think of as a corrupt era.
    I’m speaking of legitimate refinance and cashing out to pay one’s self back for liquid capital already spent. Not a fly by night b.s. appraisal with a crooked lender. The reason? Audits did exist durint this last era. Underwriting did question grossly larger price valuations. The mortgages needed to be purchased and then bundled but the lender couldn’t know they were faulty to begin with. Too much risk. A Paul Financial, for example, or a Greenpoint, didn’t want to get sued! They didn’t anticipate the model’s failure.
    Also, prices really haven’t doubled in San Francisco during the last six or seven years, have they? For the most part it has been 40 percent runups. Don’t get me wrong. That’s huge. Prices have doubled since ’96. Not since ’02-’03.

  40. Posted by diemos

    http://themessthatgreenspanmade.blogspot.com/2007/07/all-in-one-case-shiller-hpi.html
    Case-schiller says double.
    http://appraiserspetition.com/
    Honest appraisers have been begging for years for the government to do something. Any honest appraiser who did not “hit the numbers” was blackballed and driven out of business. One dishonest deal then becomes a “comp” to justify other deals.
    http://ml-implode.com/
    What risk? Make the loan, collect your fee. If a couple of years down the road they start going bad then just declare bankruptcy. Oops. “Who could have forseen that?” Hang head in shame, gather up your millions in bonuses, head off to the bahamas.

  41. Posted by Unowho

    I would say this represents a flight to quality.

  42. Posted by DavidQ

    If you want to get picky about it, bubonic plague is caused by bacteria that infect rats and fleas. The rats carry the fleas, and the fleas do the actual human-biting.

  43. Posted by John

    “Based on the NAHB/Wells Fargo affordability index, only 5.7 percent of San Francisco homes are available to the median income earner”
    First, that 5.7% is the SF-San Mateo-Redwood City. I did not see the SF city number seperated.
    http://www.nahb.org/fileUpload_details.aspx?contentID=535
    However, if you are interested, take a look at the historical data. SF was the least affordable area since the index started in 92 until 02! Then Salinas took over. Now it is the LA area.
    http://www.nahb.org/fileUpload_details.aspx?contentID=34323
    So, actually, we have been improving ;)
    By the way, if you do a search for NAHB affordability index, you will find a link for 2000 data (way before the bubble formed):
    http://www.demographia.com/db-nahb0001.htm
    And SF city is seperated from SJ/Oakland. Guess what the number is.
    So, I did some additional research….guess what, the affordability index went into the 6 range in 2000! Then crawed back to 16 in 03. Went below 10 since 2005.
    That 12% must have been some different index. It has been in the 6 to 7 range since late 05.
    http://www.nahb.org/fileUpload_details.aspx?contentID=34325
    What does it mean? Study the numbers and share your opinions.

  44. Posted by fluj

    What risk? The risk that has somewhat come to pass. The risk of lawsuit. The risk of the paper, the lifeblood of the company, being devalued because it’s bogus. There WAS AND IS risk management. Lenders did have underwriting departments. They didn’t just sign off on any appraiser they never heard of and his or her bloated valuation. In fact, I know that certain appraisers actually got flagged as no-go by various lenders.
    I could recount dozens of real life situations where loans simply couldn’t be obtained for numerous reasons, all stemming from underwriter’s concerns. I could also tell you of properties that I personally bought and sold in central neighborhoods that are now worth 35 to 40 percent more than they were in 2001-2002. (I know this because I sometimes like to cry over spilled milk for fun.) Only areas 7 and 8 have doubled … and in those areas it’s more like everything costs $1M more than it did six years ago. Not necessarily double.

  45. Posted by James

    They dropped the price from 699,000 to 639,000. What is going on? Any inside scoop?

  46. Posted by MaryAnn

    It is still in the market even at 639K, too fishy!

  47. Posted by diemos

    “They dropped the price from 699,000 to 639,000. What is going on?”
    Apparently SF has officially run out of greater fools and now buyers will only pay what it’s actually worth. (which ain’t anywhere near $639K)

  48. Posted by Any Insider?

    Any Inside Scoop On this? any one?

  49. Posted by Sleepiguy

    I forgot about this place… was it pulled from the market??

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