The Fallbrook property is in the MLS. According to the listing it was listed in 12/2006 at $654,900 and later reduced to $474,900. It took 134 days exposure before it did sell. I’d call the final sales price well tested in the market. It’s not like there was a line of buyers for it at $475k.
The photos in the MLS listing and the description from the article depict a home of very average quality and below average condition. On the plat map the lot looks almost square and it may have a little topography, but it possibly 100% usable (if so, that’s good). I’ve seen tons of properties like this throughout Fallbrook over the years – I don’t see anything noteworthy about it.
I ran an MLS search for homes in a comparable age range (1960 – 1986) based on it’s design, comparable size (1,700 – 2,600), and lot area 0.80 – 2.00 acres), in a 2-mile radius and came up with a total of 12 sales (including the subject) since 01/2007; Of these, 6 went down in 06/2007 or 07/2007.
Of the 12, our property was the lowest sale. The next one up was also a foreclosure sale, at $480k – larger house but the usable lot area may be less.
The next 6 sales include the properties that on paper would appear to reflect generally similar design and features; they range from $525k – $585k, and include at least two homes with refurbish/remodel at that upper end. The last 4 sales range from $640k – $725k and include remodeled homes and MUCH nicer homes that most people would probably consider as being superior to our property. I don’t see where an $800k value could come from in this area for a 1974 property of this type design on a 1 acre lot.
I’d question how “conservative” the $580,000 appraisal is and/or whether that appraisal may have been based on the “as repaired” condition. The property that looks most indicative of our property after a minor remodel/refurbish on that list is the following property:
25** Havencrest Dr
2,000 SqFt 3/2 on 1.12 acres;
Very similar construction with workshop and room for a horse (stalls and corrals do not convey). Remodeled kitchen and Travertine floors, dual pane windows, spa tubs, etc. This is the property I think might be most similar to our property after he gets done spending $80k on it. It sold for $585,000 in 06/2007.
There is another property I like quite a bit:
*** Park Ridge
2258 SqFt 4/2 on 1.07 acres “relaxing pool”, but nothing special beyond that. It sold in 06/2007 for $580,000 and is the closest sale to out property, being just north off of Live Oak. I’d rate this as a little inferior to the Havencrest property overall because of condition but it is larger and it does have the pool, so that pretty much demonstrates how the market reacts to the different features between these two properties. I’d rate it a lot superior to the what is being described for our property’s “as is” condition.
The break even point for this flip would probably be somewhere around $585k ($470,000 purchase + $80k refurbish + 5% cost of sales). That would net zero profits for the seller and indeed it would represent a net loss when considering the labor. He might end up with a house that’s a bit better than Havencrest by virtue of it being a little newer, but I can see no way how it would be better than the fully remodeled home on Morro Hills Rd (1977yb 2157 SqFt on 1.17 ac) that sold in 07/2007 for $640,000.
Of course, a lot would depend on what he’s doing with that $80k. The article includes a photo of him digging for a pad for a propane tank – that’s not the type of improvement that buyers would normally pay for. Ditto for the yard cleanup. I doubt that flooring, paint, baseboards and door casings would make this house competitive with either of the properties I listed above. I assume he’s going to include a reasonable kitchen/bath remodel, but I wouldn’t assume that dual paned windows, A/C or other upgrades would be included. Maybe so, though – you never know.
