May 3, 2012

Apples-To-Apples (And The Cost Of Not Paying By Cashier's Check)

865 Duncan

As we wrote with respect to 865 Duncan this past August:

Purchased for $1,329,000 in March 2008 with $140,800 (11%) down and currently listed as "Active" on the MLS with a list price of $1,385,000, last week the Noe Valley home at 865 Duncan was taken back by the bank with no bidders willing to pay $1,152,387 in cash on the courthouse steps. Someone might want to alert the Realtors.

And as we added this past November:

Two weeks later the listing for 865 Duncan was finally withdrawn from the San Francisco Multiple Listing Service (MLS). And yesterday, the "lovely and large home" at 865 Duncan returned to the MLS as bank-owned and listed for $1,295,000.

Having been reduced to $1,275,000 in January, the sale of 865 Duncan has closed escrow with a reported contract price of $1,280,000. Call it 4 percent under early 2008 on an apples-to-apples basis (and officially "over asking") for the single-family Noe home.

Psst! It’s Now Bank-Owned (And The Other Is In Default) [SocketSite]
Psst! 865 Duncan Is Active Once Again (And Actually Available) [SocketSite]

First Published: May 3, 2012 12:00 AM

Comments from "Plugged In" Readers

Surprising. This place looked like it needed a lot of work when I looked at it. It was also full of unpermitted work. And although it says Noe Valley, it's basically Diamond Heights.

Posted by: RobBob at May 3, 2012 7:15 AM

In fairness, the cashier's check at trustee auction is only one part of the cost. Uncertainty about the condition of the home, the time and money it takes to remove an occupant, etc..

There is a price for everything....

Posted by: soccermom at May 3, 2012 9:16 AM

Interesting perspective. One persons cost is another persons benefit.

Posted by: eddy at May 3, 2012 10:18 AM

You also don't necessarily get a clean title at an auction.

You can even buy a second mortgage at an auction, subject to a first.

Or you can get a first mortgage that foreclosed with defects, clouding the title, and making title insurance impossible to get without clearing the title.

It's tough to invest the energy into researching all that stuff when someone else could outbid you who doesn't realize it might be lurking, or the bank could start the price at a high price.

Posted by: tipster at May 3, 2012 10:52 AM

Tipster

Based on your argument, no sane person would ever buy off the steps. I can assure you people have done so successfully in the past. It takes time, resources, effort and liquidity but it can be done, even in SF! The free market may not be truly free but it can be profitable for the right type of investor.

Posted by: Bart at May 3, 2012 1:52 PM

@Bart,

I don't think Tipster was saying that "no sane person" would ever do it. Just that it is difficult and time consuming - with the implication, in my opinion, that it is to be done by professionals, not just your average Joe looking for a deal.

Posted by: Bernie Hill at May 3, 2012 2:47 PM

It seems like we can all agree that trustee sale transactions and traditional market deal prices cannot be compared on a (wait for it...)

APPLES TO APPLES BASIS!!!!!!!

Posted by: soccermom at May 3, 2012 4:35 PM

For $127K, you got a clear title, opportunity to inspect, and opportunity to finance. If the plumbing and kitchen were ripped out, the place was full of termites, or the foreclosure details or chain of title were improperly handled, I could see this costing more than $127K.

Checking all that stuff that can be checked for ten of these, to land one of them, also has a cost.

This isn't like foreclosures from 1986. 1:The banks are letting people live in them for years. Years of termites and dry rot and water leaks and whetever else can get expensive. Someone not making payments has no incentive to maintain. 2:banks weren't as careful. Some title companies won't touch foreclosures of certain banks because they don't have proper documentation. I've seen foreclosures with no NOD recorded. Good luck selling that one!

Is there a price at which the risk is worth it? Sure. Can you pay more than that price and get lucky? Sure. Time and time again. Can you get burned on the first one? Yes.

Posted by: tipster at May 3, 2012 4:47 PM

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