Purchased for $858,000 in July 2007, 1310 Fillmore #403 returned to the market this past March listed as a short sale for “$675,000.” Three weeks later its list price was reduced to “$599,000.” The Heritage Fillmore two-bedroom has been in contract for a month.
Yesterday 1310 Fillmore #801 hit the MLS with a listed short sale “price” of $599,000 (but no mention of any pre-approval). Purchased for $859,705 in October 2007, the current listing notes: “Heritage Fillmore winner!” Unfortunately it’s a zero-sum game.
And as best we can tell, the proposed short sale of 1310 Fillmore #802 at $599,000 never materialized.
∙ Listing: 1310 Fillmore #403 (2/2) 1,407 sqft – “$599,000” [MLS]
∙ Listing: 1310 Fillmore #801 (3/2) 1,353 sqft – “$599,000” [MLS]
∙ Going Short Heritage On Fillmore (1310 Fillmore) Having Bought Long [SocketSite]
unit 403 has “custom paint”. special.
So, I was wondering who the listing agent is that proclaimed “Heritage Fillmore winner”. Turns out it’s Paul Hwang. Truly a shocker.
huh?
Can you elaborate?
We have custom paint too. 🙂
What does “zero-sum” game mean?
Paul – Zero-sum is a game theory term that means that the total available to be won in the game is fixed. Any win is offset by an equal sized loss somewhere else.
Thank you for the explanation Milshake. I may not be as clever as the editor, but I still don’t follow the editor’s logic. Would this not offer any prospective buyer an excellent opportunity to enter at a reasonable price point given the substantial discount to the 2007 purchase price?
If you’re buying a $70 shirt because it used to be sold at $100 last year, should you buy that shirt because of the price? I prefer asking myself what benefit this shirt will give me and how much am I ready to pay for it.
A 30% haircut looks pretty good on paper, but what this story tells us is that the irrational market movements from a few years back brought a top at whatever number that is irrelevant today.
1 – How much will it cost to own
2 – How much can you rent it for
If you can match the 2, even by 10 or 20%, then it’s a buy. Otherwise it’s just an overpriced property. And SF is packed full of them.
“Discount” is a reduction in current market or list price. It is meaningless and misleading to discuss a discount to a price from three years ago. As absurd as pimping “instant equity.” It would be accurate to say the previous owners had a loss and the current buyer paid market price.
lol,
So your hypothesis is that the shirt will return to $12?
The beautiful thing about markets is that they are efficient. Maybe your shirt will go to $12.
As far as Short Sales go, in most cases the seller unfortunately ends up with very little. In many cases that is a benefit to prospective buyers, in the form of seller motivation.
More on the rent-vs-own point. SFGATE.com has an article about a study on where renting makes more sense. Sources are rent.com and cbsmarketwatch.com.
Guess who comes up first?
Paul, the real estate market is anything but efficient. Too much government interference right now propping up the buy side. Also, the realtors and tax collectors prevent efficiency on the sell side.
Paul, I know the shirt will be at Ross in one year for $12. I do not put a premium on “winning” the right to overpay.
scurvy,
MortgageMaker’s definition of discount and argument that the price is the market price is evidence of efficiency by definition.
lol,
You have every right to offer $12 for the shirt. Why wait unitl next year to do it?
If Ross is not getting any money from the sale of the shirt, they may be motivated to accept your offer.
If you don’t ask, the answer is always: “No.”
The efficient market hypothesis is so, like, two years ago. In the post financial crisis world, it’s all about behavioral economics.
MortgageMaker,
My repsonse seems to have been edited out.
If your argument is that the purchase price is the market price, I would agree with you. If I have misused the word “discount” by your definition, I apoligize.
Let me rephrase: “$250K+, below 2007 purchase price!”
[Editor’s Note: Sorry Paul, but the only comment of yours that we removed from this thread was nothing more than “Hoorah!” (and came before MortgageMaker’s comment).]
What’s behavioral economics?
The RE market is about the least efficient market I’ve participated in. 6+% transaction costs alone indicate a large amount of friction. Then there’s the churn added to the market in the last decade induced by buyers led to believe that they could be priced out forever and/or earn outsized profits. These people were convinced that they were taking the right move and their financial obligations were affordable. Now many are engaging in yet another round of premature inefficient transactions.
The only sure winners here are those who’s income is directly related to the volume of transactions.
Paul: the short version is that people are irrational, and so are markets.
I think the death-knell of the old way of thinking was when Alan Greenspan admitted that his ideology had a flaw. He was talking about the classical economic theory, and idea that markets are efficient — so they should self-correct, and so the kind of financial disaster we’ve recently witnessed shouldn’t happen. Oops!
mine got deleted too
[Editor’s Note: Really? A comment concerning 3271 Baker on a piece about 1310 Fillmore was removed from this thread? Damn us to hell for trying to keep a discussion on topic…]
“The only sure winners here are those who’s income is directly related to the volume of transactions.”
Indeed. Buying and selling real estate results in a net decrease in value to our economy because of transaction costs. Buying and selling real estate produces nothing.
Building, renovating, etc. that’s different.
Yet another reason why all this BS about regulation on banksters being harmful to our economy is particularly annoying. Risky financial transactions do nothing for building our economy.
It looks like the owner of Unit 803 passed away (affidavit of death filed on April 7). A NOTS was filed on March 23, 2010. Plenty of Countrywide mortgages in this building; I have a feeling there is more ugliness to come…
Paul:
I disagree with some of the responses you’ve gotten about “efficient markets”
The efficient market hypothesis (EMH) basically states that all information that needs to be known about a transaction is known by all parties. Thus, the transaction price is indicative of all theoretical known knowledge about that transaction.
There are “weak” and “strong” versions of this, but it doesn’t matter.
So according to EMH, both the buyer and a seller know everything needed to know about the purchase. the price therefore reflects EVERYTHING about that purcase. In aggregate (lots of buyers and sellers around the world) this means that the market price of something encapsulates ALL knowledge about that product.
it is baloney, and is obviously baloney, because it is clear that in many transactions one or both parties DON’T know “everything” about the transaction.
RE is decidedly not “efficient” but not because of the examples elucidated above. A market can be wrong, but still “efficient”.
the reason that the markets aren’t efficient is because there are many informational assymetries in the market.
For instance, when Goldman Sachs sold it’s crap ABACUS to IKB with ACA approval, IKB and ACA didn’t know that Paulson was short selling the deal. that is informational assymetry. it breaks EMH.
In RE: it is HIGHLY inefficient, because the RE information is closely held by Realtors, who may or may not give buyers the info.
for instance, we often see how the DOM statistic is falsified. A buyer may not know the DOM statistic was falsified. If not, they make their purchase without “full” knowledge. which breaks the EMH.
part of EMH is also that ALL people will act “rationally”. but this is clearly hogwash. People often times act very irrationally and instead act based on emotions/behavior.
this is especially strong in RE. How many times do people buy based on “Pride of Ownership”?(which does exist of course).
If markets were efficient people wouldn’t do this. They would only buy based on the mathematical utility of the purchased product.
in other words, if RE markets were efficient, everybody (seller, buyer, RE agent, etc) would have FULL knowledge of the housing market, and all buyers and sellers would buy/sell based only on the mathematical utility of housing as shelter or investment. nothing else.
this is clearly a stupid theory.
Behavioral finance attempts to encorporate human and mass psychology into economic theory.
hope that helps.
As far as Short Sales go, in most cases the seller unfortunately ends up with very little. In many cases that is a benefit to prospective buyers, in the form of seller motivation.
Now I’m confused. In Short Sales sellers end up with nothing – not “very little”. They get out from under their property, but they don’t get a cent out of it. And if they aren’t insolvent the lender may even require them to bring cash to close.
As for buyer benefits – in Short Sales lenders are looking for market value offers. The only way you get a true “deal” in a Short Sale vs. a non-short sale is if the BPO’s somehow come in under market thus erroneously convincing the lender that the property is worth less than market value.
What “seller motivation” you are talking about is confusing too since the lender also must agree to the sale and they are very rarely motivated hence average time lines on short sales of 90 days or more vs. the standard 30 day Close in SF. You can tell them a short sale will net them more money than a foreclosure, but most don’t seem to care – often due to PMI or getting a 2nd wiped out or just because they are lazy or over worked.
Either way – Short Sales only benefit the Seller who just wants to get the hell out without a foreclosure on their record.
exSFer I disagree with the DOM argument – it’s a marketing trick, yes, but if you’re using an agent to buy you’ll get the entire history of the property including past sales, attempts to sell, etc. Once in the MLS it’s there for good. I suppose there are bad or unscrupulous agents out there who don’t look up the info, or withhold the info, but it would be shockingly stupid to be that stupid if you plan to stay in the profession very long. So while many on SS hate the practice, is it really fooling anyone? It “tricks” a few new to the market buyers to show up where they might otherwise pass on a “stale” listing – but I don’t see how it tricks them into over paying.
hangemhi:
Your point may be valid. I only used that example to show that there is informational assymetry in RE transactions.
I’ll give you another example that you may like better.
when a buyer puts in an offer, the buyer ONLY knows about his/her offer. He knows nothing about other prospective buyer offers.
according to EMH, the seller and all buyers would know all the info. Thus, the seller AND buyers would know all of the details of all offers on the property. This is clearly not the case. Instead, the buyer is only told “there are other offers” and then the buyer must blindly bid on the property.
In my life, I’ve been misled about other offers by seller’s agents. But even if the seller’s agent is truthful there still is informational assymetry because they don’t tell the buyer/buyer’s agent the full details of the other offers. this is clear informational assymetry. Hence, RE does not adhere to EMH.
If I follow hangemhi’s logic, you should hire a Realtor to be sure to have access data purposefully hidden by Realtors.
Be paid to dig a hole, then be paid again to fill it back up. Typical used house salesmen tactics.
I’ve disagreed with hangemi in the past before, but in general s/he is pretty upstanding.
the thrust of their argument is not a bad one because most buyers do use a Realtor, and presumably the Realtor would have access to “real” MLS data.
the failure in the argument only comes when a buyer doesn’t use a Realtor for their transaction. it also comes when a buyer uses a seller’s realtor and not a buyer’s realtor, as the seller’s realtor has no fiduciary responsbility to the buyer but they do to the seller, and thus the seller’s agent may withold true DOM data in that case.
lol, your point is valid only to the extent that Realtors try to leverage their informational assymetries. That is fairly human nature IMO. If I were a Realtor I too would guard “real” MLS data fiercely. without it I would be less needed.
exSFer – i do agree with your larger point – i was just pointing out something that the editor likes to harp on that is getting old mostly because it’s largely meaningless – ie little to no impact on anything.
lol – no need to follow logic i wasn’t using – you can find old MLS data elsewhere too – google for about 30 seconds and you’ll be in the know – hence my point that the editor’s pointing out the DOM thing is silly. But i’m glad i gave you a reason to vent against Realtors. now why not let us know what you do for a living so we can bash it?
[Editor’s Note: Not quite. Our issue is the impact on reported aggregate DOM statistics which are oft quoted as a measure of the market’s strength (See: Sorry NAR, But No).]
hangemhi,
If you read your own post, you yourself state that the seller is getting something out of the sale. Not all benefits are financial. You may consider getting out of a property “very little” benefit, but it’s not zero.
“the seller is getting something out of the [short] sale.”
No they aren’t! They are just trying to minimize the damage. And in many cases, it doesn’t even help them in that respect if the loan is non-recourse. They still take a huge credit hit, and potentially lose out on more months of free rent – aka squatter stimulus.
hangemhi, MLS data is proprietary and protected. Sites like redfin lost the right to use it at will a year or so ago. The “web search” you are talking about will bring some chain of prices. Nothing prevents a Realtor from pulling the listing and relisting under a new MLS#. Then the reset is done and few data aggregators will follow through correctly (or will be forbidden to do so).
This is an asymetric battle. One monopoly makes the rules because they started it more than a 100 years ago and have never let go, unlike Standard Oil. Today, monopolies and too-big-to-fails have bankrupted the country after making their fees, all with no accountability. They behave like pigs one day and beggars the other, shamelessly accusing the whining masses of unjust bashing.
I will slam your profession for as long as it will be plagued with rampant dishonesty at every level. When that goes away I will look at a Realtor without any hint of a suspicion. I am not holding my breath though, the scam is most definitely built into the business model.
lol: I’m in awe of your charity. You say “I will slam your profession…”
“Profession”? You’re a kinder person than I.
lol and Embarcadero,
You both really make me sick. I honestly cannot stand people like you. I am not a realtor, nor do I have any friends that are realtors. I do, however, respect everyone else’s profession, because they perform a job. I don’t care if you are a street sweeper, garbage man, doctor, or realtor. These are all professions, which are needed in life. Even if you had 100% transparency with the MLS, you would still need realtors to sell your home for the majority of the time.
What do you do for a living, which is so important and better than everyone else? Give realtors a break. They are doing their job-trying to sell more real-estate! That’s it. Money motivates everyone. As a consumer, you just need to know how people are paid, so you know what motivates them.
“As a consumer, you just need to know how people are paid…”
Agreed, as a consumer I always try to follow the money to understand the motivations of the actors involved in a transaction.
I need more than that. I would like better transparency into the crucial bits of information that might affect the current and future value of a property. This is a complex set of information including stuff like the highly subjective predictive analysis of how a neighborhood supports or opposes future development. For that information I’d be glad to have the help of a professional who understands the dynamics of the personalities involved. But there is plenty of boring old quantitative transactional information contained within the MLS DB for which I need no intermediary to help me interpret.
RE agents who have the knowledge and skills to provide the former subjective information have nothing to fear by opening up MLS access. Those without such talents and who are just collecting a toll as gatekeeper will jealously guard the MLS DB because that’s the only “value” they can offer.
I really don’t see what the fuss is about. If Paul proclaims you are a “Heritage Fillmore winner” (and who doesn’t want to be a winner) we should all take his word for it, and all immediately submit bids for the amazing 2/2 ‘prize’. It’s not like the entire industry is rampant with exploiting the asymmetry of information. Oh wait …
So disappointed, over twenty posts and no one has come on to bash the neighborhood yet.
marinarenter,
Realtors offer some value, but are grossly overpaid for it. Usually markets tend to correct this but monopolies are preventing the correction.
Anytime you have a captive cash cow, you have abuse, like the unionized 90K/Y Bart janitors who do such a poor job in the end (not enough of them? Go figure why). Heck I am paid more than that but I almost dream of becoming a Bart janitor: still able to pay my SF bills but with fewer stress and deadlines.
They say you build a house once but you can sell it many times. Realtors have to be permanent cheerleaders to make people buy more house than they need and do it often. No more 30-year scope, they want you to buy every 5 years. Always move up! It’s in their genes. It’s a bit like the permanent need to mend and multiply in our cells. The natural process prevents it from going out of hand. In the post-tech bubble crash, all rules went out of the window. No more checks, balances, safeguards. For the cell analogy, this is similar to a cancer. Cells multiply without limit because they can and they create their own supply line. They end up overwhelming their host, just like the RE actors crippled our economy. Now we’re barely in remission, but cheerleaders are at it again. A second dip will put them back into check hopefully for a long time.
It’s also not clear why realtors get paid a percentage of the transaction. It’s not clear that a realtor necessarily ads more value on a $700K house vs. a $1M house (even if you argue that value-added on a $10M transaction is different from $1M for structural reasons).
“It’s also not clear why realtors get paid a percentage of the transaction. It’s not clear that a realtor necessarily ads more value on a $700K house vs. a $1M house (even if you argue that value-added on a $10M transaction is different from $1M for structural reasons).”
I wholeheartedly agree with this sentiment. If realtors were paid according to value, somewhere between $5000-$7000 per sale or buy, then the market would certainly find a quicker equilibrium.
spencer,
That would be a good idea. Then volume would be the way to make money, and volume is almost directly connected to affordability.
The entire industry’s income depends on high prices. Mortgage brokers, Realtors (both seller and buyer), even contractors. Buyers are the only ones to wish for a low enough price. Then again, they are the key element, being the only ones who can make the wheels go’round with their credit and savings.
huh,
It’s amazing how many people on Socketsite can assign a value to an asset without even doing the most rudementary of investigations, such as looking at it one time.
Unless I am mistaken, I do not believe you have ever been inside the unit before.
lol and embarc – this may surprise you but i have no problem with most of your suggestions for improvement to the system. your disdain for Realtors is the idotic part. we work within the system and so again i ask what your profession is because i’ve yet to run across a perfect one. i’m also curious when the last time you walked into your boss’ office and asked to be paid less?
but here’s the catch – SELLERS set the commission – they are the “boss” choosing my salary. and they have lots of options – they can go FSBO and pay a couple hundred dollar fee to get into the MLS. or they can hire a discount broker. or they can interview 10’s or 100’s of full service agents until one agrees to significant discounts. and they can choose to split up the list side and buy side commissions and save if the buyer doesn’t have an agent.
but do they do that? no they mostly don’t. and those that do make lots of mistakes – one of which is over pricing in an attempt to keep the “savings” rather than pass it onto the buyer for a quick sale and then wonder why they don’t sell with poor marketing on an over priced home.
but blame it on the monopoly when true control is in the consumers hands.
“but here’s the catch – SELLERS set the commission – they are the “boss” choosing my salary. ”
That’s a bit disingenuous. If a seller unilaterally set the commission lower, other agents would avoid showing their clients that house, EVEN IF those clients would want to see it. This has been done before, and this is similar to how many realtors won’t show Redfin listings.
In addition, if a buyer has no agent, the selling agent gets both cuts. This is a scam. The selling agent does not do more work here.
Monopoly power means there’s no control. If you want to list on MLS, you have to play by the realtors’ rules.
Paul – no interior photos so you make it hard to value it. But I disagree anyway. Terrible location. But worse is the trend. Sold at peak for crazy prices, and sure enough short sales and foreclosures are now starting to take hold. Reality is probably only now hitting the majority of owners in the building that they are completely under water and have to decide – short sell or strategic default or hold and pray. As the trend continues prices keep declining. Just look at the Palms and Beacon for 1310 Fillmore’s future.
So i’ll mimic socketsite bears on this one – you may get a knife catcher at this price – and next year you’ll get to do a short sale for that buyer too.
sfrenegade – what agents won’t show a redfin listing? if my client wants to see a home i show it to them. if a home fits my clients criteria i show it to them. in SF we don’t have the luxury of having 10 matching model homes to choose from so we can’t choose to only show them some of the potential homes for them. my buyers often look for months (sometimes years) and see everything in their price range. most of us also don’t even notice the offered commission until we’re in contract or writing a contract.
the seller can also negotiate a variable commission where the commission isn’t the full amount if the buyer doesn’t have an agent.
trust me, the seller is in control – they just don’t seem to know it. and the travesty of it all (at least from your and lol’s vantage point) is that at the height of the market they could have raked all agents over the coals since anything and everything sold. but they didn’t negotiate at all because they were making so much money.
hangemhi – Are you implying that the magnitude of the buyer’s agent commission does not influence that agent’s motivation to present a property ? If so then how do you explain the higher than normal 4% commissions that some condo buildings have offered to buyer’s agents ?
hangemhi,
You’ve never been in the unit before, have not even seen interior pictures of the unit, yet you feel comfortable enough to not only comment on the current fair market price, but also confident enough to predict it’s future value one year from now! Amazing!
Do you have some stock picks and Super Bowl predictions for me also? Never mind if you haven’t looked at the annual reports or don’t know what an extra point is. I admire your piety.
I’m just curious if anyone on this thread has actually ever been to the Heritage Fillmore before?
now i know why i usually comment and leave – all this ridiculous defending
Milkshape – yes, i’m more or less implying that. the attempt to sway a buyer’s agent with high commissions doesn’t mean it works.
Paul – yeah I’ve got some super bowl picks for you too. a football team from north america will win. that pick is as likely as 1310 Fillmore being in worse shape next year.
Very pretty unit, Paul. I think it’s priced right for the market and the tough hood. Someone who is unconcerned with the hood and with the direction of the economy and housing prices in general who wants to buy now and has decided not to wait isn’t going to find a big unit with a nice interior like that at the same price anywhere. Sure they should wait, but not everyone feels they can.
Homes are an emotional purchase: people will make irrational decisions. Any rational buyer who fails to see this will not buy because they will always be outbid.
Note Paul’s photos: not a stretched photo in the bunch: what you see is what you get. Sure he’s a salesperson with all the bias inherent in that, but he’s a straight shooting salesperson.
I think you guys need to lighten up on someone with integrity in this business. He has a job to do and that’s to sell the place and he’s doing what he is being paid to do. The price is not unreasonable for the market today.
Thank you for the kind words Tipster.
The listing for 1310 Fillmore #801 has been withdrawn from the MLS.
The listing for 1310 Fillmore #801 has been added to craigslist as a rental, seeking $3400 per month.
No custom paint in sight, but it doesn’t look like it was ever lived in.
http://sfbay.craigslist.org/sfc/apa/1796966337.html
Having fallen out of contract, the short sale list price for 1310 Fillmore #403 has been reduced $1,000 to $598,000. Once again, the 1,407 square foot two-bedroom was purchased for $858,000 in July 2007.
So #803, four floors above #403, gets listed for $25K less than #403, goes contingent, and, surprise, #403 falls out of contract.
Darn those neighbors!
The short sale list price for 1310 Fillmore #403 has just been reduced a “look at me” $3,000 (0.5%), now asking $595,000. And once again, purchased for $858,000 in July 2007.
As commented above, 1310 Fillmore #803 is currently in contract having been listed for $572,900 this past July.
After 437 days on the MLS, and having been listed for $595,000 for the past eight months, the listing for 1310 Fillmore #403 has been withdrawn from the MLS without a reported sale. Once again, purchased for $858,000 in July 2007.