June 3, 2010
Over Asking (But Still 24 to 33 Percent Under Purchase) At The Palms
The sale of 555 4th Street #309 closed escrow on 6/1 with a reported contract price of $640,000. The sale will be reported as an official "8% over" its last list price ($595,000) according to industry stats although it was listed for $670,000 last June.
And while over asking at $575 per square for the 1,113 square foot Palms two-bedroom, it’s also 24% under its purchase price of $842,500 ($757 per square) in September 2006.
The sale of 555 4th Street #930 also closed escrow on 6/1 with a reported contract price of $425,000 ($644 per square). That’s "10% over asking" for the top floor one-bedroom with city views, but 33% under its tax assessed value of $630,000 (purchased June 2007).
∙ Are The "Exceptions" (And Big Losses) Becoming A Palms Rule? [SocketSite]
First Published: June 3, 2010 1:15 PM
Comments from "Plugged In" Readers
still plenty of suckers catching falling knives
Posted by: Spencer at June 3, 2010 3:20 PM
maybe i just wasnt paying attention...but I, for one, have been happy to not see the tiresome posts about % over asking price, industry stats will show blah blah f-ing blah...but alas, here we are again.
nobody is going to look at % of asking price when deciding how much to pay for a unit. they will look at the sales price and look at the price per foot, etc. the only people that look at % of sales price right now are the editor of this site and its readers.
Posted by: anon$random at June 3, 2010 3:43 PM
"nobody is going to look at % of asking price when deciding how much to pay for a unit."
Odd then that during the boom selling agents hosting open houses not so subtly advised me that "everything is going for over asking these days in this area".
They were right during the "bait with a low asking price" strategy of the boom times. Now they are still right though this time the asking price seems to dive beneath the offer instead.
Posted by: The Milkshake of Despair at June 3, 2010 4:00 PM
Don't worry, we'll make more. RealtyTrac is showing a couple more auctions scheduled for June...
Posted by: EBGuy at June 3, 2010 4:07 PM
"the only people that look at % of sales price right now are the editor of this site and its readers."
That's really not true though. These types of stats get quoted in the media all the time by people like NAR, CAR, or Redfin (http://blog.redfin.com/sfbay/2010/05/may_newsletter_bay_area_bucks_the_trend_with_rising_prices.html).
For people who aren't "plugged in," I would argue that these BS stats matter more than they do to people on SocketSite, because those who don't pay attention to real estate market carefully take their cues on the market from these types of articles. I get a very different perception of the market from people those who do pay attention and those who don't, and I think these statistics are a big reason why.
And as Milkshake said, let's be honest here -- realtors constantly harangued people that prices were coming in above asking during the boom. Let's not pretend that they did it just for kicks. They did it because word of mouth is important with people who don't read statistics and because people who got emotionally attached to a house could easily be suckered into a bidding war.
Posted by: sfrenegade at June 3, 2010 5:00 PM
Re "I, for one, have been happy to not see the tiresome posts about % over asking price, industry stats will show blah blah f-ing blah...but alas, here we are again."
I, for one, like these "tiresome posts" and the implicit reminder that industry-generated real estate statistics in San Franciso are manipulated to give the impression of a healthier market than exists in reality.
Posted by: Mark D. at June 3, 2010 5:45 PM
I for one, would be happy not to receive the tiresome postcards I get from Realtors (not necessarily the listing Realtor) stating "Sold over asking with multiple offers!" as if that meant anything other than it was priced lower than the market.
Funny how you guys fine this aspect of it so "tiresome", yet you repeat it at every opportunity.
Posted by: tipster at June 3, 2010 6:51 PM
U know there are condos is Pac Heights going for much less per sq ft than these. So given the rep this place has gotten, I'm surprised that the Palms is even getting ~600/Sq ft.
Posted by: mac at June 3, 2010 8:25 PM
> Funny how you guys fine this aspect of
> it so "tiresome", yet you repeat it at
> every opportunity.
Anything that may get people to wait before buying real estate (that can only go up in value since "they are not making any more land") is "tiresom" (and Realtors will do what they can to stop people from making these "tiresom" statements)...
Posted by: FormerAptBroker at June 4, 2010 6:21 AM
First of all, we (my partner and I) live in the building and we I love it. Our home is close to everything and the palms is a great community to live in, one of the best in our opinion.
Secondly, I spoke to the listing agent when unit # 930 hit the market, he explained his pricing strategy and the short sale process, why short sale is better than foreclosure and what he thought the unit would sell for as well as how long the process may take and I have to say he was right on the money. Great job!
Although t the unit sold for less than what the sellers purchased it for and they did not profit, they did the right thing short selling the property. We do not need another foreclosure in our building or in San Francisco for that matter. Again Great Job.
Posted by: Palo at June 4, 2010 3:05 PM
The main advantage of a short sale is that it generates revenue for the realtor. It doesn't do much to save your credit.
It is better to have a foreclosure go through sooner, than have a property that doesn't pay their HOA fees for a year, unless you are a flipper...
Posted by: J at June 4, 2010 5:10 PM
I'd love to hear this brilliant explanation for why short sales are so much better than foreclosures. As far as I'm concerned, in both cases you have someone irresponsible who can't pay for their property any more. I'm not sure either says anything good about your building. The chief difference is as J mentioned, which is that the realtor gets a cut in a short sale. But the realtor also gets a cut from the bank for selling an REO after foreclosure, so I'm not sure if that should be the determining factor.
I think whatever moves properties faster is better so that the housing market is more liquid and price discovery is more efficient. I'm not sure that we have stats on which is faster, and HAMP and other foreclosure moratoria are screwing up the calculation.
Is Palo the realtor? A little too much patting on the back for something not back-patworthy.
Posted by: sfrenegade at June 4, 2010 5:24 PM
Whatever happened to "grrr"? Seems like it's time for him to stand up and tell us why his purchase in 2007 has stood the test of time...
Posted by: Po Hill Jeff at June 4, 2010 6:04 PM
I know. I keep expecting him to pop up and challenge anyone bad-mouthing the palms to meet him by the flagpole after school.
Posted by: diemos at June 4, 2010 11:09 PM
Short Sales "can" be better for everyone - it does get the property turned over faster as you can price a $650k place at $599k and get immediate offers for the bank to consider. Faster gets sfrenegade his "liquid... price discovery" and it can actually help the owners credit situation. Miss a couple of payments, but not all and get out of it faster. With foreclosure you could have months and months of miss payments on your record and a more damaging "foreclosure" on your credit report.
Lenders also won't pay HOA dues in short sale situations - but someone has to.
"It's what you learn after you know it all that really counts" should be a maxim some of you who seem to think you know everything ought to think about.
As for Palms values - I'm shocked. I thought they would be lower. In the past 6 months four 2BR's have sold btwn $635k and $660k and three are in contract in a month of less when last asking $619k, $625k and $689k.
These same units seemed to be selling for $600k even last year.
So expect a little crowing from Palm's owners and agents until the new foreclosures come.
Posted by: hangemhi at June 7, 2010 9:14 AM
I don't think you have a realistic view of the short sale process. They take a LONG time. And the banks do not have any reason to approve them if you are current on your payments. Especially if you can't prove any type of NEW financial hardship. So "a couple missed payments" is a pipe dream. Look how long these short sales sit in contract(must more than a couple months).
If the bank were to just foreclose after 90 days, the properties would have new owners, that would pay the HOA fees much sooner.
Posted by: J at June 7, 2010 9:19 AM
J the reason most short sales fail is because the agent taking them on has no idea what their doing. Either they don't vett the Seller properly, or they don't collect the proper paper work, or they simply take "no" for an answer from the banks. Some banks are also impossible to work with, some are extremely easy. So what you get is a bunch of whining agents who have no idea what they are doing telling everyone how short sales suck - and you see a bunch of failed short sales - and you assume they all suck.
My point is that they "can" be better - they can't be done by everyone.
as for your comment - "if" is the key word. but banks are not foreclosing in 90 days. but many are accepting short sales in 90 days despite the failures of others.
if i were doing a short sale i'd miss one payment and then get it listed and start the process. and i'd spend a lot of time on proving i had a hardship. lastly - some lenders are starting to see the light. if an owner shows they are going to take the foreclosure hit - some banks are allowing almost any excuse to be the "hardship" IF the lender pencils it out and sees that a short sale will make them more money than a foreclosure.
Posted by: hangemhi at June 7, 2010 9:42 AM
i meant to say "as for your LAST comment" - as recently reported on SS it's taking banks well over a year to foreclose on properties. even crappy short sale agents who at least take on realistic short sale situations/clients can get a short sale done in far less time than a year.
Posted by: hangemhi at June 7, 2010 9:46 AM
You have to understand that the banks have a strategy in dragging out short sales, and ultimately not allowing them for many people. And due to the nature of mortgage backed securities, there is no telling how well equipped the lender is to process these requests.
Posted by: J at June 7, 2010 10:10 AM