$545k for 2800 sq ft Menifee Home

[mydogsarelazy]

Hi Everyone,

So, there are still wacked-out prices here and there.

A relative of mine was the seller of a home that closed escrow last week in Menifee. The house, a 2800 sq ft. two story, 15 year old home on a cul-de-sac sold for $545k. The house has RV parking and a nice lot, but was not fully landscaped and showed some wear and tear.

What makes this interesting, besides the freakily high price is that the buyer got over 100 percent financing using a first and second, and actually got some cash in his pocket at closing.

Hmmmmm…..

JS

[mydogsarelazy]

I think I may have already found my own answer about what was going on here…

From today’s Californian:

http://www.nctimes.com/articles/2007/06/03/news/top_stories/22_42_166_2_07.txt

[mydogsarelazy]

I think I may have already found my own answer about what was going on here…

From today’s Californian:

http://www.nctimes.com/articles/2007/06/03/news/top_stories/22_42_166_2_07.txt

[FormerOwner]

It sounds like the cash back at closing was probabably substantial since that house can’t be worth anywhere near that much – unless it’s a custom home on acreage.

As far as I know, there are legit ways for a buyer to borrow more than the purchase price of a house at closing but it’s pretty rare. If the buyer wants to put in a pool, he can build that extra $$ into the purchase price as long as the escrow documents clearly spell that out in writing. The bank will hold that $$ in escrow and release it to the pool contractor in a few payments – as the work is completed and invoices are submitted. I’ve heard of this being done but it’s pretty rare I think. The key to making it legal is that the lender has to be informed of it in writing as part of the escrow papers. In no case that I can think of would it be legit for cash to go back to the buyer at closing.

Whether legal or not, these types of transactions skew the comps and mislead homeowners into thinking their homes are worth more than they really are. Prices are actually dropping but it doesn’t look that way because of all the cash back that’s built in to a lot of the sales. The sellers received substantially less than what the comps are showing.

[FormerOwner]

It sounds like the cash back at closing was probabably substantial since that house can’t be worth anywhere near that much – unless it’s a custom home on acreage.

As far as I know, there are legit ways for a buyer to borrow more than the purchase price of a house at closing but it’s pretty rare. If the buyer wants to put in a pool, he can build that extra $$ into the purchase price as long as the escrow documents clearly spell that out in writing. The bank will hold that $$ in escrow and release it to the pool contractor in a few payments – as the work is completed and invoices are submitted. I’ve heard of this being done but it’s pretty rare I think. The key to making it legal is that the lender has to be informed of it in writing as part of the escrow papers. In no case that I can think of would it be legit for cash to go back to the buyer at closing.

Whether legal or not, these types of transactions skew the comps and mislead homeowners into thinking their homes are worth more than they really are. Prices are actually dropping but it doesn’t look that way because of all the cash back that’s built in to a lot of the sales. The sellers received substantially less than what the comps are showing.

[hipmatt]

Wow, thats really bad/high for that home in Menifee. Good for the seller I guess.

[hipmatt]

Wow, thats really bad/high for that home in Menifee. Good for the seller I guess.

[FormerOwner]

One of the comments at the bottom of that newspaper article says it all as far as what the fallout will be:

P.D. Asilomar wrote on Jun 2, 2007 11:40 PM:
” When the full magnitude of the REAL problem becomes evident, the air is going to rush out of this inflated real estate market like gas out of the Hindenberg, with similar results. Southern California is the only place where you can pay five times what a house is worth, and then watch it burn down five times or collapse in an earthquake twice before it’s paid for.”

[FormerOwner]

One of the comments at the bottom of that newspaper article says it all as far as what the fallout will be:

P.D. Asilomar wrote on Jun 2, 2007 11:40 PM:
” When the full magnitude of the REAL problem becomes evident, the air is going to rush out of this inflated real estate market like gas out of the Hindenberg, with similar results. Southern California is the only place where you can pay five times what a house is worth, and then watch it burn down five times or collapse in an earthquake twice before it’s paid for.”

[temeculaguy]

Thanks for that link mydogs, I clicked on that story and couldn’t believe the picture and the guy in the story was my old fraternity brother. Todd, aka Lack*%&# ended up being one of the good guys and still looks the same and still has his hair, good for him. I wonder if Bugs knows him.

[temeculaguy]

Thanks for that link mydogs, I clicked on that story and couldn’t believe the picture and the guy in the story was my old fraternity brother. Todd, aka Lack*%&# ended up being one of the good guys and still looks the same and still has his hair, good for him. I wonder if Bugs knows him.

[Author]

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