June 17, 2010

Interesting Indeed As One Rincon Hill #4308 Falls Out Of Escrow

As we wrote ten days ago:

Hours after our noting the bank-owned listing for 425 1st Street #3908 at $695,000, the sales office at One Rincon Hill reduced the list price for 425 1st Street #4308 from $780,000 to $749,000 ($992 per square foot).
Today, the sale of 425 1st Street #4408 closed escrow with a reported contract price of $690,000 ($914 per square foot), the 755 square foot view one-bedroom had most recently been listed by the sales office for $785,000.
Considering the sale office sold #3908 for $855,000 in June 2008 ($1,132 per square), and taking into account a five floor higher premium, we’ll call it a 20-25 percent drop in value for #4408 over the past two years.
And the argument that $695,000 for #3908 is "cheap" simply because #4308 is listed for $780,000 $749,000? Not so strong.

As we noted a few hours later:

UPDATE: 425 1st Street #4308 is now listed as in escrow and with contingencies waived. This ought to be interesting. Hopefully the buyers had the inside scoop with respect to the contract price for #4408.

Yesterday the listing for 425 1st Street #4308 was changed from "In Escrow – Firm" to "Available." Interesting indeed.

Additional '08 Stack (And Year) Perspective From One Rincon Hill [SocketSite]
The First Listed Foreclosure At 425 First (One Rincon Hill) [SocketSite]

First Published: June 17, 2010 9:00 AM

Comments from "Plugged In" Readers

Or maybe the buyer read this article in the NY Times today:

"Housing Market Slows as Buyers Get Picky"
http://www.nytimes.com/2010/06/17/business/economy/17slump.html?ref=todayspaper

"We see buyers who must have learned their moves from the World Wrestling Federation,” said Glenn Kelman, chief executive of the online broker Redfin. “They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods."

Posted by: A.T. at June 17, 2010 9:25 AM

Wow, that article is really informative!

Posted by: tipster at June 17, 2010 11:52 AM

You're being sarcastic, right?

Posted by: R at June 17, 2010 12:06 PM

We've got a sale at under $400/sf in SOMA (plus the price of a refrigerator, it appears). Do I hear 300 anybody? 300?

http://www.redfin.com/CA/San-Francisco/250-King-St-94107/unit-516/home/11282449

Posted by: A.T. at June 17, 2010 2:06 PM

I'd welcome some Realtor/legal input here.

what can cause an offer with no contingencies to fall out of escrow? In my mind an offer without contingencies is a done deal, no?

does a seller not have some form of legal recourse when the buyer backs out on a deal like this? or is it one of those "nothing is final until the money changes hands" sort of thing?

when I bought my last house 1000 years ago (ok, 2003), we bought with no contingencies before the house even went on the market. closing was 6 weeks away (determined by the sellers). One of the reasons the sellers took our offer was precisely because our offer was a 100% sure deal.

obviously 2003 and 2010 are very different (major bull vs major bear market).

Posted by: ex SF-er at June 17, 2010 2:53 PM

ex SF-er: I think the only catch is you walk away from your down payment, which generally would have been 3%, so theoretically the potential buyer walked away from ~20k?

Am I wrong?

Posted by: R at June 17, 2010 3:05 PM

Just got this email from the sales office: "RESIDENCE 4608 WAS $795,000, NOW $765,000, SAVE $30,000!"

@ex SF-er: R is right, seller could keep any earnest/good-faith deposit - not downpayment! - but I don't think there is any other recourse.

http://www.redfin.com/definition/earnest-money

Posted by: Michael at June 17, 2010 3:17 PM

Sorry, wrong terminology.. Down payment comes at closing. Earnest money comes when you make an offer...

Posted by: R at June 17, 2010 3:20 PM

I have a law degree but don't practice, so this is all with that huge caveat. I believe that the spurned seller could go to court (or arbitration, more likely, is specified) to collect the difference between the eventual selling price and the dropped offer. But the seller first has to "cure" by trying to sell the place for as much as they can get in the market.

Even a "done deal" is never done until the money is in hand -- just gives the aggrieved party the right to sue.

Posted by: A.T. at June 17, 2010 3:21 PM

on the standard real estate form, when you make the offer, isn't there a page near the end that says you agree to go to arbitration if any issues arise, and that liquidated damages shall be capped at 3% of the sales price or $10,000, whichever is less.
that's from memory but it has been some time.

Posted by: condoshopper at June 17, 2010 4:48 PM

I don't know if there is anything requiring a liquidated damages provision in a sales contract -- and they may be standard even if not required -- but curmudgeon, I think you are correct that if there is such a clause the amount is capped at 3%.

Posted by: A.T. at June 17, 2010 5:38 PM

maybe because 3% happened to be about 10k for the offer i was making, which made the idea of a 10k cap stuck in my head.

Posted by: condoshopper at June 18, 2010 8:31 AM

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