1376 Florida
As we wrote in January:

In April 2007 the Inner Mission fixer at 1376 Florida sold for $700,000. Since then “fully approved plans” have been secured and “permits are ready to be issued” for rebuilding the property as two “low energy condominiums” totaling 3,000 square feet.

Returned to the market professionally priced at $850,000 early last year, reduced to $799,000, then to $749,000, and then to $649,000 before being withdrawn last October, the property has just returned to the market as a short-sale listed for “$300,000.”

The sale of 1376 Florida closed escrow today with a reported contract price of $320,000. Yes, another “hot” over asking sale at a cool 54 percent ($380,000) under its 2007 price.
Plans For The Inner Mission Fixer At 1376 Florida Come Up Short [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by surprised

    Wish I’d know about this one in time — I would have paid $321,000 (or whatever it took).
    I’m sure the it is a mess, and there doesn’t seem to be a driveway or garage, but great bones!!
    [Editor’s Note: It pays to be plugged-in…]

  2. Posted by R

    Something smells strange.

  3. Posted by [anon.ed]

    Pays to be plugged in? How would reading this blog have possibly helped anybody buy this house at its last iteration? It was a total intrabrokerage deal and nobody got a chance at it. And “hot” this, percent “under” that? Like you knew something?
    The problem with it before was that the plans called for a really expensive build. Then you would have had 2 1500 foot units on 26th and Florida that cost you 900K to build. And the last list price was 650. Even if you could have sold the new condos for 1M each, and you couldn’t have, you still wouldn’t have projected a viable return.
    So yeah. When it dropped down to 300 as a short sale tease it got snapped up in a day or so. By an agent from the same Coldwell Banker brokerage.
    [Editor’s Note: Don’t blame us if you couldn’t get a deal done on the day it was dropped and we first pointed it out.]

  4. Posted by The Milkshake of Despair

    Huh? if it got “snapped up” on an intra-brokerage deal and at least one other candidate buyer (surprised) would have bid higher, didn’t the seller get cheated out of some revenue?

  5. Posted by [anon.ed]

    Some random person on a blog says they would have bid higher and that’s what you say? That’s neither here nor there. It went pending instantly and it was the same brokerage.

  6. Posted by surprised

    MOD: Yes, of course the seller(s) got cheated. Happens every day in this town. Just ask Mr and Mrs T about their purchase of a fine home in Pac Heights for about $1 million below market. (It was all on SS a while back.) Mrs T is, I believe, a Pac Union agent at this point and if I remember correctly, it was an “in house” deal. Lots of people commented on that one that they would have paid more. I would have paid $2.5 million in a second for that property, sight unseen practically.

  7. Posted by tc_sf

    “It was a total intrabrokerage deal and nobody got a chance at it.”
    This is why banks hate short sales and depending on what the bank was told could possibly constitute fraud.

  8. Posted by surprised

    @anon.ed. Look, I’ve been around this business long enough to know what happens. I’ve been offered many “first looks” at properties over the years, and I’m not even that well connected. I’ve been offered deals by brokers who want both sides of the commission more times than I can remember. I’ve been offered extra time, first chances to sign, etc etc etc.
    Was some of it fraud? I don’t know — maybe. Is it just agents hustling for business? Maybe. Maybe some of each — very, very grey areas here.

  9. Posted by The Milkshake of Despair

    I don’t think it is gray at all if the seller’s agent has a fiduciary duty to look out for their client’s best interests.

  10. Posted by [anon.ed]

    “[Editor’s Note: Don’t blame us if you couldn’t get a deal done on the day it was dropped and we first pointed it out.]”
    Right. I still don’t even like those permits + that location at 320K. It projects like a MAYBE a 350K return on a ton of cash out. Better they keep the existing house.
    [Editor’s Note: We didn’t say we necessarily liked the deal as it was being marketed, only that a plugged-in reader would have at least known about it on the day the price was dropped.]

  11. Posted by tc_sf

    Another not very grey area is that It’s also a crime to defraud a bank.
    http://www.businessweek.com/news/2010-06-10/banks-face-short-sale-fraud-as-home-flopping-rises-update2-.html
    Assuming that anon.ed is correct about the facts it’s possible that the bank was informed that “It was a total intrabrokerage deal and nobody got a chance at it.” and was bought “By an agent from the same Coldwell Banker brokerage.”
    But I can’t possibly imagine why a bank would approve a short sale in 1 day when informed that the selling agent gave no one other then a fellow agent a shot at the property.

  12. Posted by [anon.ed]

    @ Surprised,
    OK. Just didn’t recognize your pseudonym. I’ll take your word for it.
    Would you have gone forward with these permits + plans? Because they were calling for a green build that would have cost a really pretty penny for the area. I just didn’t see it penciling out.
    @MOD, The “seller,” the “client,” wasn’t ever going to see a penny. They put 140K down and leveraged 560K when they bought it. Somebody at the bank, Wells Fargo, probably had marching orders to get X %amount of money back on 300 properties that month, and the 300K or so on this 560K loan worked at that time. That’s probably what happened here. Bang bang, bang.

  13. Posted by The Milkshake of Despair

    OK, I thought that the bank in a short sale position was the de facto seller since they’re the only party impacted by the final sale price (unless the short sale becomes “long” then the underwater owner breaks the surface for a gasp of air). Sounds odd though that banks don’t care about maximizing return. I thought that was pretty much all they did.

  14. Posted by [anon.ed]

    Does it sound odd to you? Well it is odd. But the people making decisions at big banks are looking at spreadsheets made up of many properties, and certain quotas to meet. But please feel free not to riff on things when you don’t know what you’re talking about, again.

  15. Posted by 7days

    @anon.ed: Do you anyone who actually submitted an offer that was rejected? 7 days from cut to pending per redfin.

  16. Posted by [anon.ed]

    What Redfin shows is “7 days lapse before somebody changed the status in the MLS.”

  17. Posted by jw2200

    Purchased for $700k in 2007 with a mortgage of $560k. On the market for $649k from April thru October last year. Back on the market as a short sale 1/19/2011 listed at $300k and with confidential marketing remarks “Short Sale please don’t call anymore, come see it on the brokers tour for more info.” In contract one week later — same day as the only brokers tour. The MLS status was changed to “pending” which is generally assumed to mean there are no remaining contingencies. It also means the listing will no longer show up in a standard MLS search for available properties.
    It looks like the bank took two+ months to agree to the short sale but apparently didn’t complain about the minimal marketing effort. Most banks considering short sales are willing to look at any subsequent, competitive offers that come in and since the acceptance of the original buyer’s offer is contingent on the short-sale bank’s approval, the original offer can be rejected and the better offer accepted. Of course, if the property is no longer being shown, it’s hard to attract additional offers.
    So the seller lost their original down payment of $140k and acquired a major black mark on their credit history. The bank lost approx $250k. The dual agency broker grossed $16k (both sides of the deal, assuming a total commission of 5%).
    Were any rules broken? Possibly — don’t have enough info to be sure. Did it breach ethical standards? It certainly looks like it.
    The person at the bank reviewing the short sale request has scores if not hundreds of files on their desk. They don’t have the time to make sure the listing agent is “playing fair”. That’s usually the seller’s job but in a short sale situation holding out for a higher offer when you’re that far underwater isn’t going to change the outcome for you. The bank may lose a little less but your loss is the same so you don’t care as long as the bank accepts the offer.
    Anon.ed is right — for the banks it’s all about the numbers. If they look ok on that particular day the deal will be approved.

  18. Posted by The Milkshake of Despair

    So I guess fiduciary duty goes out the window when your client is a short selling bank. What other cases would a selling agent turn a blind eye towards maximizing their client’s return? Or maybe it would be easier to enumerate the opposite.

  19. Posted by [anon.ed]

    You didn’t even know where the fiduciary duty was a second ago yet you feel like you can be expansive in a snide diss. So weird. Again, awesome wire shots in the photo, huh MOD?

  20. Posted by The Milkshake of Despair

    I don’t understand your logic. If someone sees people hastily hauling stuff down the main steps of an apartment building and says “hey, apartment A just got burglarized!” and you know instead it was apartment B that got ransacked you don’t declare that no burglary occurred just because the first person got the apartment number wrong. It still sounds like something not quite ethical occurred here regardless of who might have been ripped off.

  21. Posted by [anon.ed]

    whatever

  22. Posted by Rillion

    Except for the intraagency part of this transaction, this seems in line with what I have seen happening with stale ‘fixer upper’ foreclosures in other markets.
    Starts at unrealistically high short sale, then overpriced asking from the bank, series of small price cuts, then big price drop and quickly pending at a slightly over “asking” price.
    I think at a certain point the bank has written off the property to such a point that it just wants to be done paying for the ongoing expenses of the property.

  23. Posted by EH

    What a strange thing to say:
    “Look, I’ve been around this business long enough to know what happens…Was some of it fraud? I don’t know — maybe.”
    I’d think that being in the business so long would give you a better read on “grey areas.”

  24. Posted by tc_sf

    The bank may not be the only other party involved if the loan was sold to Fannie Mae or securitized. Even if the loan was completely held by Wells, large banks have compliance/fraud departments that look over the shoulder of individual loan officers.
    A sale to a co-worker after one day with MLS notes stating not to call is not an open market arms length transaction. Possibly the selling broker filed an affidavit stating the sale was “a total intrabrokerage deal and nobody got a chance at it.”
    But if you are a loan officer with piles of short sale apps which have lingered for months, why take the one that requires a waiver from compliance/fannie/securitization admin?
    “Starts at unrealistically high short sale”
    According to the post, the original sale attempts were not being done as short sales.
    ” bank has written off the property to such a point that it just wants to be done paying for the ongoing expenses of the property.”
    Unlike a REO, with a short sale, the original mortgagee has title and is responsible for expenses throughout the process.

  25. Posted by [anon.ed]

    @ TC, there you are drawing a conclusion after going, if, if, if, if — > then.
    Why do you guys feel the need to weigh in on things when you don’t know what your’e talking about? Plenty of people on this site actually have the experience and knowledge base to share good insight and information.
    The original marketing iterations were with a different brokerage.
    In my opinion, the new broker could have marketed the property, sans plans + permits, as a single family fixer, for $499K or so and probably gotten it.

  26. Posted by tc_sf

    Note that this:
    “In my opinion, the new broker could have marketed the property, sans plans + permits, as a single family fixer, for $499K or so and probably gotten it.”
    would not appear to bolster the contention that the bank was not harmed by the actions described above.

  27. Posted by [anon.ed]

    Who should note that, and why? You noted it? then lose the silly command form while typing, it’s childish. Say “OK, I note that … ” like a normal human being would, while communicating.
    No “bolster”ing was intended. It cannot be determined that this was black and white issue. Why is that so difficult to comprehend? You and I do not know that a certain direct dollar amount was not communicated between the person making the decision at the bank, and the listing agent. And from the outside, that’s how it appears. Whether or not something else could have transpired is irrelevant. That was merely my not unstudied opinion of what might have happened, otherwise.

  28. Posted by fgh

    10 out of 27 comments by anon. Is this an all-time high?
    On a completely unrelated note, has the editor given any thought to a “block” feature?

  29. Posted by anon.ed

    Well you just added nothing except snide stupidity, so your comment would be one to block certainly. I love it. Out come the boo birds with the “don’t tell us how things actually work, we just want to boo” chorus.

  30. Posted by tc_sf

    While entries in a blog post may not be complete or correct in the case mentioned above. There is hard information available about the case mentioned in the buisnessweek article which may provide real information about “how things actually work” and specifically illustrate what dollar amounts might be considered significant enough for criminal prosecution.
    “According to court documents and statements made in court, NATERA worked with another real estate agent to defraud Regions Bank, which held two mortgages on a residential property in Bridgeport. On December 5, 2007, the other real estate agent, who was a listing agent for the property, received an offer to purchase the property for a price of $132,500. However, NATERA subsequently communicated to Regions Bank that the highest offer to purchase the property was for $102,375 by BOS Asset Management, LLC, an entity that NATERA controlled. The bank agreed to a short sale of the property for the lower price, and released its mortgages on the property.
    On June 9, 2008, NATERA, through BOS Asset Management, sold the property for $132,500 to the original bidder on the property.
    NATERA is scheduled to be sentenced by United States District Judge Janet C. Hall on April 30, 2010, at which time he faces a maximum term of imprisonment of 30 years, a fine of up to $1 million, and an order of restitution.
    This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Ann M. Nevins.

    http://newhaven.fbi.gov/dojpressrel/pressrel10/nh021110a.htm

  31. Posted by A.T.

    “10 out of 27 comments by anon.”
    And every one of them some variation of, “so what, you’re an idiot.”
    I wonder if the grouchiness has something to do with the subject of this thread, an inner mission fixer going at a greater than 50% discount from four years ago . . .

  32. Posted by [anon.ed]

    No, not “so what.” More like, “here’s how it really is.” The barbs are aimed back at tone, in kind. And again, why keep shifting arguments, expanding, saying things like “banks should be set up for this” when they’re not, etc. The amount of things I corrected in this thread is hefty. Ten comments only? Wow, and here I thought I was getting rusty.

  33. Posted by tc_sf

    @anon.ed — If you are curious as to how banks are set up you may gain insight by reading the following
    ” It is the Brokers’ fiduciary responsibility to present the highest and best offer to the servicer.

    “The Seller cannot sell to anyone that the Seller is related to or have a close personal or business relationship with, ”
    “The Short Sale must be between two unrelated parties and be characterized by a selling price and other conditions that would prevail in a typical real estate sales transaction.”
    WF Short Sale Addendum
    http://www.nash-law.com/storage/New%20Documents%20Required%20by%20Wells%20Fargo%20-%20Clean%20Doc's.pdf

  34. Posted by sfrenegade

    “Why do you guys feel the need to weigh in on things when you don’t know what your’e talking about? Plenty of people on this site actually have the experience and knowledge base to share good insight and information.”
    What insight have you given, fluj? Nothing I can see. You’re just insisting without knowing anything that there was no fraud here.
    Do realtors actually have formal fiduciary duties like several other professionals? I didn’t think anything was actually enforceable against them.
    Looks like fraud, smells like fraud, quacks like fraud…

  35. Posted by [anon.ed]

    Now I’m curious as to how banks are set up. Now I’m defending “fraud.” Now I’m crusading for the imperiled Inner Mission SFR market. Now I shed no light upon how this was framed and what actually transpired. oooooohhhkaaaaay.

  36. Posted by sfrenegade

    I wonder if the plans were far along enough to be worth something. 47yohipster pegged this at a number starting with a 4. I also wonder why they even bothered listing this place. Easier to get away with it too if wasn’t for those darn kids watching the listing.

  37. Posted by [anon.ed]

    “I wonder if the plans were far along enough to be worth something”
    The permits were ready to be picked up, amd that was not the issue with them. We’ve been over that.
    “47yohipster pegged this at a number starting with a 4″
    I concur and said so above, as a single family home.
    “I also wonder why they even bothered listing this place. Easier to get away with it too if wasn’t for those darn kids watching the listing”
    Uh huh. I was the Velma, there. Mr. “what insight” himself. Before you pile on next time read the thread, Shag.

  38. Posted by sf dbi

    looks like someone started the construction

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