On Friday we noted the “very short sale” listing for 2225 23rd Street #316 at $150,000 versus the $395,000 which was paid in 2005. On Monday a plugged-in reader wrote:
It should be illegal to post a “very short sale” of $150,000 on MLS. This pretty much kills sales in the complex and everyones’ values who own there. That is not anywhere near the actual price as the buyer will have to pay a tax lien, back HOA dues unpaid and a significant assessment for the exterior upgrade/new window project. The “real” price is closer to $250,000+.
Shortly thereafter the short sale list price for 2225 23rd Street #316 was increased to $225,000 and “very” was removed from the listing. It’s now listed for just 43 percent below its year 2005 sale.
UPDATE: It appears that the HOA is moving to foreclose on #316 with a claim for $19,848.
∙ From 100 Percent Financing To Two Short Sales And An Auction [SocketSite]
I didn’t see much of a problem with the original listing. The seller disclosed that there were liens–obviously any buyer would have done his research and figured out the true cost of buying the condo included HOA and tax liens.
Plus, the realtor is wrong when she claimed that this type of listing hurts all parties involved. It only hurts realtors and their clients. Sure, people that want to use the property as a comp have to do a bit more research to find out the “true” price, but this goes both ways. Realtors don’t complain when the official sales price is higher than the real value of the home. For instance, when a bank takes back a property for the value of the mortgage but the home is worth less. A buyer has to research that sales price to know that it was higher than fair market value.
And btw, running the cost of ownership numbers, buying at $250,000 will give one a monthly cost of ownership just over $1,600. Assuming the realtors’ stated rental comp is accurate these places become cheaper to own at about that price (but one would take the risk of further declines, which makes $225,000 a much more fair price, imho).
I have to wonder how this played out. Did the complaining real estate agent actually call the listing agent on the unit listed for $150K and say, “look, you’re hurting everyone involved here, you better raise that asking price or I’m going to call my friends in the Sureños to come and pay you a visit” or did the listing agent see the complaining agent’s comment on socketsite and decide to revise the MLS entry? Inquiring minds want to know.
I agree with SFHawkguy that it doesn’t “hurt everyone involved” and listing was sufficiently supported by disclosures.
I don’t think it was hurting anyone at $150K either, given all the disclosure. I agree with SFHawkguy that it was just hurting the realtor and perhaps her client at most.
Even then, I’m not fully convinced it hurt her client. Would you rather buy the complaining realtor’s listing for $299K, or would you rather buy a “very short sale” for $150K, deal with all the liens and lawsuits THAT HAVE ALREADY BEEN DISCLOSED and are a matter of public record, and deal with the banksters who won’t approve the short sale for several months. Given all that, I don’t think it hurts her client at all.
All it did was make her look petty. Nothing illegal or even unethical that I can see.
Agree with all of the above. Honestly, cry me a river…
The seller can list at whatever price they want. The market ultimately determines what it’s worth.
help me out here.
will the buyer (at 150K)be paying his property taxes on the 150k purchase price or some other value?
This is not tax advice and there may be other ruling affecting the situation, but this ruling may be relevant:
”
“When applied to real property, the words “full value”, “full cash value”, cash value”, “actual value” and “fair market value” mean the price at which the unencumbered or unrestricted fee simple interest in the real property (subject to any legally enforceable governmental restrictions) would transfer for cash or its equivalent under the conditions set forth in the preceding sentence.
(b) When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to overcome the presumption.”
”
http://www.boe.ca.gov/proptaxes/pdf/r2.pdf
“will the buyer (at 150K)be paying his property taxes on the 150k purchase price or some other value?”
No, my guess would be that the tax value should be, as tc_sf pointed to in a ruling, the full value to receive clear title to the property.
An outdated concept is buying property subject to a mortgage. Back in the day, you could take over someone’s mortgage by taking a property subject to the mortgage. So if the property was worth $300K, and the seller owed $250K to the bank, you could take it for $50K while subject to the mortgage. You still would have bought the property for $300K.
Similarly here, all the liens, etc. should count in the sales price for tax purposes because they’re required for clear title.
Much in RE depends on perception. If your listing shows as cheapest in a category in an MLS or refin search, you’ll get a lot of attention. But if a search pull is polluted by short sales and other fishing expeditions, the perception is definitely impacted.
Of course, we’d all like to think we do see a property for what it’s actually worth in the greater context of the market, but we’re not built that way and salesmanship greatly depends on that. If a property sold for 1M in 2008 and is for sale for 800K today, you’re bound to think of it as a good deal, whatever flaws and negative comps there could be.
This is why there’s information control, staging, limited showing times that lead to a Sunday afternoon rush (there’s nothing like 100 people roaming around the place to create a collective hysteria). It’s the job of the buyer to make a rational decision. It’s the job of the salesman to extract more than fair value by selling what cannot be captured in facts.