456 Los Palmos Drive
We don’t know what the previous buyer had paid, or perhaps how much cash they had withdrawn, but we do know the bank appears to have bought this Miraloma Park home back for $656,000 four months ago. It’s now on the market for just – as in roughly five cents – under four hundred a square foot ($799,900).
∙ Listing: 456 Los Palmos Drive (4/2.5) – $799,900 [MLS]

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Comments from “Plugged-In” Readers

  1. Posted by Trip

    From the sales and tax records I see, it looks like this was bought a long time ago for a song (maybe $50,000). Owner apparently refinanced big time and drew all the “equity” out of the home before actually selling it. This is the other side of the cheap money coin — it wasn’t only dumb buyers who overpaid in the bubble but an awful lot of long-time owners refinanced and turned an affordable home into an unaffordable one. It looks like the bank may actually recover its money on this one (mystery to me why the owner did not sell and perhaps come out with a little cash). Looks pretty decent at first glance, but with no photos the inside could be anything from wonderful to complete trash.

  2. Posted by San FronziScheme

    In foreclosure-ridden areas, places are put out by the bank with a loss priced in. Here, they are trying to make a buck.
    If it sells close to that price, that’s a pity for the foreclosed guy. He definitely could have gotten out with some extra cash.

  3. Posted by lookingtobuy

    The garage is boarded up… I wonder if it is still usable or if it has been ‘converted’ into something else.

  4. Posted by I Need I Want

    Two questions come to mind:
    1. It looks like bank-owned properties are marketed less effectively on the internet than are “owner-owned” properties — fewer photos, less textual and MLS field information, etc. available online. It seems like more work to get to know bank-owned properties before shlepping out to an open house. From a practical standpoint, doesn’t this push prospective buyers into the arms/tentacles (depending on your view) of your friendly neighborhood Realtor(tm) (who is more likely to have done the non-internet legwork)?
    2. Prices are down, but with higher lending standards and interest rates, is a meaningful proportion of available properties actually more affordable than they were, say, a couple of years ago? Does anyone watch and meaningfully analyze those statistics?

  5. Posted by tipster

    mystery to me why the owner did not sell and perhaps come out with a little cash
    Two words: Second Mortgage.
    Which got wiped out when the first foreclosed. The holder of the second should have bought it at the foreclosure sale but probably the expense of marketing it made it not worth the trouble.

  6. Posted by Satchel

    I wouldn’t be too sure that the bank recovers its loan value here, especially after selling expense, holding cost, back taxes, etc. $400/sf is not extraordinarily cheap for around there, and the whole area of Miraloma Park/Sunnyside (north of Monterey) appears to be sliding down.
    The foreclosure of 414 Foerster (Sunnyside, just below MP) was originally marketed at $717K, with a take-back loan balance of around $600K (bank was looking to get out for at least even). It ultimately went for around $525K, or approximately $250-300/sq ft (the square footge info is wrong).
    A really nice, fully renovated MP SFH is short sale at $513/sq ft, and should be falling into foreclosure soon:
    http://www.redfin.com/CA/San-Francisco/835-Foerster-St-94127/home/2024489
    (last sold for almost $1MM, and then renovated/updated)
    Close nearby, in Sunnyside on Monterey, here is another (actually pretty nice) fully DETACHED house, which has been languising at $404 psf, and is NOT a distressed situation yet (although the owner will be taking a nice loss, having bought it for $1M a year ago):
    http://www.redfin.com/CA/San-Francisco-County/845-Monterey-Blvd-94127/home/692492
    You could go slightly further afield to a MUCH nicer neighborhood, Forest Hill Extension, and pick this one up for $420 psf, but no need to rush – they’ve been trying to sell for at least 6 months (the DOM on the listing is a fraud – what a surprise!), down now from an initial listing price of $1.1M+:
    http://www.redfin.com/CA/San-Francisco/409-Ulloa-St-94127/home/688035/sfarmls-334863
    Anyway, there are plenty of others. Below $500 psf is more the norm out here, even in the nicest parts, although of course there are exceptions, and smaller houses do generally have higher psf selling prices, etc.

  7. Posted by sf

    Does it come with the Obama sticker?? Yes we can !

  8. Posted by anon

    “It looks like bank-owned properties are marketed less effectively on the internet than are “owner-owned” properties”
    Yeah, I do miss that heated towel rack photo and the dog on the sofa………

  9. Posted by sf

    This is a rare instance where stucco actually works for the architecture.

  10. Posted by Anonymous

    If the bank really did buy it for $656,000 four months ago, then why are they asking $799,900 now? Has there been a boom in real estate prices since March?

  11. Posted by San FronziScheme

    What’s most probable is that the property went through all the stages of foreclosure and ended up on the bank’s lap after a failed foreclosure auction. Plus, as tipster said earlier, there could have been a second mortgage, or liens the bank had to pay or plans to pay.
    What is owned on a mortgage is not necessarily more than the property value. Say you have a place worth 1M and 600K in total mortgage. You default on the property and put it up for sale. If there are no buyers at your pricepoint (sometimes, there are just no buyers period, whatever the price, think Detroit or a property with many issues or liens) and you still default when the mortgage due doesn’t reflect the true value of your place.
    For SF and this property, I doubt this is the case. The market appears to be still decently liquid. I’d vote for the “2nd mortgage” option.

  12. Posted by r

    The $656k referenced above would be the note amount that was offered on the courthouse steps. Banks will typically market the unit through a broker for 60 – 120 days. The broker contracts are negotiated at the parent level (i.e. Coldwell-Banker Corporate), and then units are parceled out to the local offices. If the broker is unable to sell for the banks desired price, then the property will be turned over to an auction company for liquidation. In the event that the bank recovers more than the mortgage+fees+other expenses, the excess proceeds will be turned over to the other lien holders, or if none, the original homeowner. There are very few cases in which the bank realizes any excess funds, because 1) there is no incentive & 2) excess funds would imply some degree of equity remaining in the property. There are investors who target imbedded equity situations and they almost never go to foreclosure.

  13. Posted by wonkster

    Actually, following a foreclosure at which the lender credit-bids and purchases the property, the lender becomes the fee owner, with junior liens eliminated and the borrower/owner wiped out as well. If the lender then sells the property, the lender has no obligation to pay any “profit” to the junior liens or the prior owner/borrower. So the lender has lots of incentive to try to get the highest price, even an amount over the original amount of the foreclosed debt.

  14. Posted by r

    wonkster:
    You are correct in that the bank becomes a fee title holder; however, due to consumer finance laws, banks are not able to profit beyond the collection of principal + interest + taxes + fees + expenses on residential real estate. The bank’s incentive to garner the highest value at a sale is due to the fact that 99.9% of the time, the value of the property does not cover the sum of the items listed above.

  15. Posted by 1st time buyer

    Here’s an update from Redfin:
    Listing Price History
    Date Price
    Jul 29, 2008 $799,900
    Aug 08, 2008 $793,000
    Aug 21, 2008 $790,000
    Aug 29, 2008 $785,500
    Sep 17, 2008 $780,000
    Oct 03, 2008 $775,500
    Oct 15, 2008 $771,000
    Oct 29, 2008 $725,500

  16. Posted by spencer

    It took 7 price drops to lower 9%. Wow, talk about delusional..

  17. Posted by LMRiM

    456 Los Palmos closed for $630K, or about $315 psf.

  18. Posted by unearthly

    Well that should be an interesting comp for the neighborhood…

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