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.

I hope this seller has a day job.

These clowns that are trying to "convince" themselves that they bought a house at a good deal are in fact trying to catch falling knives……The are foolish enough to believe that the market bottomed out….were a looong way from that happening…

todays buyers, will be tomorrows foreclosure victims….. as the prices continue to fall….one of the problems of shooting your wad too soon

Hey Drew,

I just read that UT article and I also zeroed in on that same statement you mention:

“So far I’ve spent $30,000, I’ll spend another $50,000, and it will be worth $850,000 when I’m done.”

I was thinking to myself as I read it, “So you add $80,000 of retail improvements (means $30,000 of REAL value) and you do all the work yourself (not very much, I’m sure) and then you think your house is now suddenly worth $300,000 more? In THIS market? Riiiight!”

This is precisely why I will ONLY be shopping for homes with NO “improvements” or “remodels.” When I see a listing that says “Totally remodeled” I tend to just throw it away because I know they will be ripping me off.

On a positive note, I was very happy to see the housing bust story grace the front page of our UT today. This is a very good sign. Although they are still trying to emphasize how there are no significant price declines, and “There are no firesales out there.” This mentality will also change very, very soon.

I live in Fallbrook. We have a 3,250sf custom on 1.19ac that we purchased in 2003 for $425k. During the height of the boom, it went as high as $810k (I had it appraised just for the heck of it), before settling back down into the low $600s recently.

If this guy thinks he is going to get $850k for a 1,900sf house in this market, he is clearly out of his tree.

BTW, Bugs, Morro Hills is a very tony neighborhood (it abuts Bonsall and Rolling Hills Estates), so you should factor that in when comparing homes in the Fallbrook area. “In town” carries less cachet than the outlying areas (like Morro Hills), or Bonsall. Just my $.02.

Buyer,
This is a very good sign. Although they are still trying to emphasize how there are no significant price declines, and “There are no firesales out there.”

I saw that differently. I thought the “foreclosure specialist” was being honest and saying,look these foreclosure deals are nothing to get excited about if you want to get in on the action. If she did mean that it would be true, as you well know.

AfF,

re: Morro Hills, I completely agree. I think that area’s better proximity to 76 makes a lot of difference. I didn’t mention it before ’cause – sight unseen – I didn’t want to come across as dogpiling on to what appears to be a marginal situation. Everything else I mentioned is bad enough.

BTW, if your house was at $810k before you’re probably a fair bit better off now than the low $600s. It’s tough out in 92028, but 3,250/1.19 is still pretty marketable.

Bugs: I don’t know how to put this, since it amounts to pure speculation on my part, but I have the sense that things here (Fallbrook, Bonsall, etc) are more desperate than the numbers would indicate.

I coach football here, and I think that kids are always a good barometer of what is going on at home. More and more, I have been hearing about vacations put off, purchases not made and “toys” (RVs, boats, etc) for sale. In the grocery store, I watch more and more people buying groceries with credit cards. Like I said, this is probably nothing more than idle speculation, but I get the definite sense that the buoyant mood of a few years past is gone.

You see a lot more short sales, a lot more “Reduced Price” sign toppers and a lot more “For Sale” signs sitting on the market for a lot longer.

While things are definitely worse in Temecula/Murrieta/Menifee, it looks like the pain is spreading here too. I don’t think the problem is “contained” solely to sub-prime or even Alt-A borrowers. I think it is pointing to an appetite for debt across all income classes and I think the party is about to come to an end.