2243 Greenwich: Pricing History
Once again, a challenging Cow Hollow location (although no more so now than when purchased for $1,800,000 in October of 2005); briefly in contract earlier this year after being reduced from $2,195,000 to $1,745,000 (damn those wily buyers, or perhaps banks); and after nine reductions, now asking $1,595,000 (11.4% below its previous sale).
∙ Listing: 2243 Greenwich (6/5) – $1,595,000 [MLS]
A Little Extra Perspective On The Listing Market? (2243 Greenwich) [SocketSite]

33 thoughts on “Never Mind The Nine Reductions, Focus On The Previous Sale (Comp)”
  1. Yes, this house has incredible location issues. But the listing is also agent challenged as well. What the heck is he or she doing? — Inputting the wrong listing price twice which led to two small price increases, convincing the buyer to decrease the price in small increments NINE times over the course of SEVEN months rather than one or two significant price decreases, or maybe better — they should have delisted the property for 30 days then brought it back on with a significant price decrease to make the property seem fresh and attract the kind of attention it needs (rather than the kind it is receiving today).

  2. they should have delisted the property for 30 days then brought it back on with a significant price decrease to make the property seem fresh and attract the kind of attention it needs
    I doubt delisting and putting back on the market would make this listing seem fresh.
    if the goal is simply to reset the DOM, my understanding is that many properties do this all the time anyway without the 30 days off the market. hard to have your property off the market during the selling season.
    the real problem is that this property is behind the curve. They are dropping their asking price more slowly than the market value of their unit falls. as they say, “chasing the market down”.
    in the end, this unit has inferior location. That could be powdered over in a bull market, but it’s a death blow in a bad market.
    if they need to sell they should drop by $100k per week until it’s sold. it’ll be sold in a maximum of 16 more weeks. drops like that WILL get the attention of buyers and it will be sold far earlier than 16 weeks.
    of course, the big elephant in the room is affordability. In the end not many San Franciscans can really afford $1.6M homes without loose lending practices.

  3. I’d let this one slide into foreclosure, before even thinking about making an offer.
    According to property shark, this sold in 2/01 for $1.05M, and so that is the number that probably makes sense in 2009.
    It was lost to foreclosure in 3/05, with the lender taking it back for $2.18M (sounds like some smart previous housegambler had a good HELOC time!).
    The current housegambler bought it in 10/05, using $1.71M in loans (including a second from the bank that ate the loss on the first foreclosure). So, looks like a $90K down payment (5%).
    The $90K is of course gone to heaven. This would have to be a short sale, or else the “owner” (even if it sells here) would have to write a check for $210K+ to cover the loans and commissions and transfer taxes. In addition, there are delinquent property taxes (according to the assessor’s office) of more than $30K, so it looks like the current owner has wised up.
    After imploding $90K in a downpayment, who would write a check for almost $250K to pay off a realtor and a bank? And that is assuming the mortgage is current. Otherwise, the check would be more.
    Roll the real estate dice one more time is my advice. A bet that the next administration will “wipe the slate clean” about credit hits from real estate is a MUCH better bet than SF real estate at these prices.

  4. Love the graphic, socketsite! May I suggest using a little red in there 🙂 For no other motive than to make it easy on the eyes 🙂
    Graet comments anon, ex-sfer and satchel! Exactly why I wander on over to SS first thing in the morning. And feel amply rewarded this morning.
    Is Lehman Brothers the next domino to tumble?

  5. That said:
    $90k divided by 35 months is $2571 per month.
    not a bad rent payment if the owner is still living there.
    Is Lehman Brothers the next domino to tumble?
    in my opinion, yes, and soon. Although there are different ways it might tumble. I’m not sure what will happen (Bankruptcy, sale to larger bank, breakup?), but it will probably happen over the weekend at latest.
    Lehman is not too big to fail, and the Govt needs to have at least one sacrificial lamb to show that it believes in the free market.
    also, there simply isn’t the money for Lehman, even for the Govt. it has bigger worries like Merrill Lynch, Washington Mutual, BofA/Countrywide in the financial sphere; American Airlines in the airline industry; Ford/GM/Chrysler in the auto industry.

  6. “I’d let this one slide into foreclosure, before even thinking about making an offer.”
    Is that when you would swoop in and get a great deal on a house next door a fire station?

  7. “That said:
    $90k divided by 35 months is $2571 per month.
    not a bad rent payment if the owner is still living there.”
    No argument from me. Although it does look like the current housegambler wasted about $20K in previous tax payments (the last three have been missed, however).
    I also hope they didn’t make any mortgage payments over the last three years, or if they did they were minimal (due to neg am, no doubt).
    All said, done “correctly”, the housegambler may have been able to spend as little as $4000 per month, fully amortized over the holding period, and will only have to suffer a credit ding as a result. So, throwing the dice – WITH (1) the smarts to avoid paying most of the property taxes, (2) the sense to obtain a bubble-enabling financing scheme AND make minmum payments and (3) the finance sophistication to understand that once a down payment is made, it is “sunk money” and therefore shouldn’t be considered when deciding whether to continue paying – the original shooter may just have avoided “crapping out” on the first roll.
    Too bad those days are gone….

  8. It may be tough living next to a fire station, and the Friday and Saturday night patrons of the Balboa may lack sobriety — but Sunday brunch draws a very good crowd indeed, politically and socially. But walking to the Balboa on Sunday may be the only benefit of this house, however.

  9. “Is that when you would swoop in and get a great deal on a house next door a fire station?”
    You know, at $1MM or so, I think I would take the chance. At 100% financing, it would be a no brainer (heads I win, tails you lose), but even at 30% down I’d take the chance I think.
    No chance that it would “cash flow” even at that price, but I would look at the down payment as “dead hedge” money, sort of the way I look at my physical gold (in fact, I’d just liquidate some gold for the downpayment). Financing rates would be very low for me with 30% down, too.
    The ULTIMATE windup of this mess will be mass inflation, and much higher rates. And, much higher rents. The START of this is probably 5+ years off from now. Smart real estate investors will make their money off the rising rents after having locked up financing, because appreciation will be basically nothing for a MUCH longer time than people think (because the higher rates will crush leveraged assets).
    And even the worst case scenario for us would not be that bad. We could just live in it. I’m not a fool like most in SF – my happiness is pretty invariant with regard to my “house” surroundings. After all, almost ALL of us live like “mini-Croesuses” compared with just 100 years ago!

  10. It may be tough living next to a fire station, and the Friday and Saturday night patrons of the Balboa may lack sobriety — but Sunday brunch draws a very good crowd indeed, politically and socially. But walking to the Balboa on Sunday may be the only benefit of this house, however.

  11. “After all, almost ALL of us live like “mini-Croesuses” compared with just 100 years ago!”
    I had the experience of living in Zaire Africa for a year when I was 17. One of the lasting effects from that time is the knowledge that as long as you have food on the table and a roof over your head your are blessed beyond the dreams of most of mankind.

  12. i used to live in ft. knox and i had more gold than satchel. i used to eat gold plated corn flakes instead of cheerios. in fact i wish i had a box of those gold flake cheerios now. i would totally trade them in and buy a real san francisco firehouse. heck with buying a next door neighbor.

  13. “i used to live in ft. knox and i had more gold than satchel.”
    LOL!
    The rumor among the gold bugs is that there is no gold in Ft Knox. It hasn’t been independently verified since the Eisenhower years, and supposedly Nixon burned through it all prior to cutting the dollar loose in 1971.
    Can you report what you saw when you were living there?
    [Editor’s Note: And now back to 2243 Greenwich…]

  14. “housegambler” — I like it; is that new? it’s the first I’ve heard it . . .
    . . . and according to post above, this listing suffers an inept “used house salesman”
    I wonder how much it costs to get really, really good sound proofing. Some posts awhile back talked about foam in the ceiling (fluj?) being pretty cheap. A collegue told me about sound deadening a shared wall by installing a sound barrier wall made of concrete, lead, and more concrete. I suppose triple-pane windows, lead walls, and enuff sound insulation can muffle just about anything couldn’t it?

  15. Satchel,
    Are you being sarcastic with your “I hope you did not make any payments” comments? I have to say that they are getting annoying. At the end of the day, we are all going to pay for the ones that do not pay their obligations (even renters will get to chip in). I would rather have you lecture on economics than snidely advocate not paying your taxes, mortgage, credit card bills…It will all get added to the tab for the US. Anyway, if I am misreading your comments I apologize, but I have a feeling I am not. I am also surprised by ex-sfer’s similar comments on this thread about getting a deal…
    Guys, we (US tax payers) just guaranteed the mortgage backed securities for Freddie and Fannie. We will make the investors whole should there be a loss on their paper. Am I missing something? Why would anyone think this is a good thing to overpay for a house and then try to live in it for free? Pretty crazy. I would say un-American. Certainly not honorable.
    Ok, off my soap box.

  16. peanut gallery,
    I am being a little sarcastic of course, but there’s a kernel of economic truth there.
    This was a massive fraud. The faster prices fall, the faster we get out of it and the less innocent people get stiffed. IMO there is no way to stop the fraud, only ways to reallocate losses from those responsible to those not responsible.
    I hope – by highlighting the foolish nature of the gambles, and just how far people got from rational thinking – that people will begin to trust the historical prices less. It’s starting to happen (unrelated to anything I write of course, but perhaps I’ve helped a few people from doing something stupid?).
    The person who bought this house for $1.8M following foreclosure (at previous $2.18M) no doubt thought he was getting a “deal” because for the first time in a long time the price had dipped. If he would have talked to someone like me (many did back then because of my finance background) I would have droned on about economics and he would have tuned out (most did). Perhaps sarcasm and ridicule will work a little better for current potential buyers.
    Visible failure and ridicule play an important role in making people aware of just how foolish the situation was IMHO. People still laugh about how someone as smart as Newton imploded his wealth in the South Seas Bubble (well, at least the people *I* tend to talk with!).

  17. peanut gallery, when it’s a socialist system, the smart people play by socialist rules.
    I wish I’d bought zero-down in 2002, HELOC’d 800K into a brokerage account and then defaulted. I didn’t figure out what was going on until 2005, and by then it was too late. *sigh* That’s why I’m an engineer not an analyst.
    Is taking advantage of suicidal banks morally wrong? Is it un-American? I don’t know, but Greenspan, Bernake and Paulson, the FBI, and just about everyone in congress all seem to think it’s just peachy.

  18. I am also surprised by ex-sfer’s similar comments on this thread about getting a deal…
    sorry. it reads different than I intended. I did no analysis on this deal. I just took the $90k figure Satchel used and divided by 36 months, showing that in this case cost of owning would not necessarily be outrageous.
    it clearly reads out in a different tone than intended
    The eventual cost of ownership of course changes depending on what the final sale minus commission is.
    but if the owner sells this for anywhere near the loan balance then I still contend that it’s not a bad rental payment over the last 3 years.
    FWIW: I didn’t use the rest of Satchel’s math on this particular property because I don’t have any of the data (what was the true loan value, at what percentage, how many monthly payments did they make, what will the eventual sales price be, and so on)
    I think Satchel uses those examples more as hyperbole to make a point than anything else.
    the problem with these assumptions and hyperbole is that it can blur the real point of the exercise. first: the assumptions can be false causing huge error of analysis (such as the assumptions the lenders made in 2006 that RE cannot depreciate). second: the hyperbole and assumptions can weaken a truth so I try not to use hyperbole.
    for instance, when people compare paulson/bush/dodd/pelosi to a certain famous German fascist of the 1930’s. sure, our economic leaders aren’t leading, but comparing them to that certain fascist weakens the true criticism they deserve.
    Satchel’s hyperbolic assumptions may be true, but they mask the real pain that this borrower is likely feeling. Ruthless defaulter or not, nobody likes to be underwater on a mortgage facing default and credit loss.
    ===
    I do not advocate people signing their name to documents and then “ruthlessly defaulting”.
    Legally it is clearly the borrower’s right to default, it is the essence of a secured loan. In our country it is clear that neither borrowers or lenders accurately calculated the full fundamentals of the economic landscape when they signed the agreement. thus now somebody is going to take a huge loss (buyer or lender or taxpayer).
    however ethically and morally I have personal issues with the ruthless defaulters. but I try not to post about my morals/ethics. instead I try to rationally digest the data I see.
    at times I write too hastily and my point is mistaken, such as what happened here.

  19. Are HELOC’s truly non-recourse? I thought one had to pay back equity loans even after foreclosure. Or, are we recommending bankruptcy as well?

  20. “Guys, we (US tax payers) just guaranteed the mortgage backed securities for Freddie and Fannie.”
    Freddie and Fannie rarely made loans of this size and their market share in the 2003-2006 time period was relatively small.
    Highly unlikely this is going to fall into the Government pool.
    Even if it did, we elected Chris Dodd and the others and they signed us up to take this risk while pocketing hundreds of thousands of $$ in campaign donations from the bankers. If signing us up for that much risk was a mistake, then those guys should be run out of town on a rail. I hope that’s what happens to the lot of them because the others might think twice before cozying up to the $$ at the expense of the voters.
    If I signed up for a bad deal, I’m willing to take my lumps. It *was* a bad deal for the taxpayers, but the homeowners should absolutely bail on me. That’s the system we all signed up to play in and I’m expecting every one will do what’s in their self interests.

  21. “Are HELOC’s truly non-recourse?”
    Here is how I understand it, which i think is pretty acurate. Another commenter who often posts, Publius, may be able to fill in the blanks because he is a California lawyer.
    Money that is used to purchase a home (including HELOCs) are always “purchase money” loans, and so are always nonrecourse. There is no clear authority either way (for reasons that will become clear below) but the belief is that refinances of original loans up to and including the original loan amount would also qualify as “purchase money” and therfore are nonrecourse. Whether cash taken out enjoys this protection is an open quesion.
    However, in ANY foreclosure situation, the lender faces what is known as the “one action” rule. the lender can either (1) foreclose, or (2) sue in court for performance under the loan (this is a contract claim). They CANNOT do both. Only ONE action.
    Lenders typically choose #1, because a contract claim lawsuit (#2) takes potentially years (it just gets thrown into the civil calendar), and in the meantime the borrower is living in the house, potentially degrading the property, and the lender is facing the market risk of the collateral on a nonperforming loan. Because of this economic reality, cases do not get far enough in the system, and that IMO is why there are no real case law decisions on these questions since the early 1960s.
    This is not the end of the story. If the lender chooses foreclosure (which it always does), it has TWO choices: (1) trustee’s sale, or (2) judicial foreclosure.
    In the case of jusdicial foreclosure, just as in the contract claim above as regards the one action rule, the case could take years. Additionally, even if the lender wins in court, the borrower could declare bankruptcy, avoiding the liability. So, lenders are reluctant to do this. They will only do it when they KNOW that the borrower has a lot of assets, and in the no doc world we just came from, no one knows anything. Safer not to waste the time on the off chance that your borrower has any assets.
    This leaves the lender with the trutee’s sale option, which is the “quicker” and cleaner form of foreclosure that does not require the court (generally). This choice ELIMINATES the chance of going after the borrower personally (under the no action rule), and so eliminates any liability over and above the foreclosure proceeds.
    This one action scheme applis to all mortgages, including seconds. If a second mortgage holder forecloses on the property for nonpayment of a HELOC, the second may get the property, BUT it will take it subject to the first lien. There is no value in these situations (because the house prices have crashed and/or there never was any equity anyway from day 1), so the second mortgage holders just sit there hoping for a miracle until they are wiped out in the foreclosure brought by the first lien holder.
    My opinion is that people should know their rights. Please do not let anyone “guilt” you into believing there is any moral question here. If the fraudsters who enabled this fiasco had any morality, they would never have tried to saddle ordinary people with extraordinary debts for a basic necessity like housing.
    I hope that helps, and that Publius (if he is reading this) can chime in with any additional information/corrections, etc.
    None of this constitutes legal advice, and any person wanting more information on these topics should seek the advice of a licensed attorney who is familiar with his or her particular circumstances.

  22. Thanks, Satchel. If I borrow $100 k in home equity and spend it on vacation, remodeling, etc., (or just deposit it in a brokerage account, per poster above), I am going to owe the lender that money even if the original mortgage holder forecloses. Granted, there may be ambiguities where it can be argued that the HELOC was ‘purchase money’ (e.g., buying another home?) or in the unlikely scenario where the HELOC lender brings foreclosure proceedings to collect the loan. In the typical scenario (and certainly the one alluded to above), however, I think it is safe to say that the foreclosure will not expunge the debt. Check out http://www.heloc.com for more detail.

  23. Keep up the good work SS. I am an owner in Cow Hollow of a SFH and am very ecstatic to have purchased over the past 5 years. I will be using this comp to actually LOWER my property taxes by 35%. I’ve used other properties to lower my prop tax as well by 10% so far.
    Pls continue to highlight properties that look cheap b/c they are next to a fire station or whatever. I plan to live in my house for a long time, and love paying below market rate property taxes 🙂
    District 7 doesn’t have enough bad examples to lower prop tax, so I rely on you.

  24. Haha, Owner. Taking advantage of suicidal banks to wriggle your way out of paying your taxes. Way to chase the American Dream.
    If you haven’t realized by now, our system somehow encourages immorality. Paulson and Bernake tell lies (like “Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies” six weeks ago), and somehow expect regular citizens to tell the truth? Yeah, good luck with that.
    sanfrantim: that’s good link. I didn’t realize most HELOCs were recourse loans. I’d have to launder the 800K a bit before going into foreclosure. Er, that’s a bit more complex. Still, I say do it and call it an off-balance-sheet asset. 🙂

  25. By “you” above, I meant “you, the person reading this.” Owner clearly already understands how to take advantage of the system and needs no advice from an amateur sideline sitter like myself.

  26. I will be using this comp to actually LOWER my property taxes by 35%.
    good luck with that. I would like to know if it works.
    this place, if it sold today, would only be 12% below it’s price in 2005. you’ve been in your place for 5 years so presumably your cost basis is based on the purchace price from 2003.
    I see no way this unit would give you 35% off of your 2003 purchase price because
    -it’s only down 12% from 2005
    -presumably its 2003 price was LOWER than its 2005 price (most SF RE sold for more in 2005 than it did in 2003)
    -thus this place is likely down even LESS than 12% from 2003.
    where do you get the 35% from? to get 35% you would have to have this condo sell for $1.6M today, and it would have had to sell for $2.5M in 2003. I doubt that happened.

  27. or is it because you so wildly overpayed in 2003 that the math works out?
    are these not really “comps”.
    actually, I’d be interested to know how you do this. the more I think about it, it’s an intriguing exercise! (no sarcasm) I’d love it if you could share basic numbers so I can see how this works.
    nothing is impossible when you’re talking math, finance, or taxes.

  28. It’s pretty easy. The average p/sqft in D7 for a SFH is 800-1,200. Let’s call it $900. So if you live in a house you purchased last year for the avcerage $900/sqft on a normal st., you then use this comp at $600/sqft to claim that property prices have fallen 30% since you purchased it last year.
    Even though this is not a pure comp, b/c it is next to a firestation, you can claim it as a comp to your local assessor and get the tax lowered with this and perhaps another example. This is how you work the system. The assesor has a lot of requests, and isn’t going to go and physically check each prop out.
    Many have done this to save a lot of money, even if prices have not fallen.
    Prime

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