Cardiff Flip in trouble?

[CardiffBaseball]

Here is a home (MLS # 066060737).

Bought for $749,000 on 2/28/06. After 3 reductions it is currently listed at $769,000. If you take carrying costs, and selling costs, this can’t turn out well.

I might go take a look at this house and see what’s up.

[Critter]

Yeah, and if the owners did any improvements, you can put the cost of those in the “negative” pile as well. Let us know what you find out, CB!

[JJGittes]

Eh, east of 5. Perhaps technically Cardiff, but not what comes to my mind when the advertisement says ‘Cardiff beach community.’ Also, whenever the write up goes out of its way to say “sold as is”, you gotta wonder…

[Bugs]

I wouldn’t necessarily call this one a flip. It could be someone whose situation has changed, like if they were involved in an RE-related occupation. Or, it could be someone who changed their mind afterwards. I’d bet on the former over the latter or the flip.

The MLS listing indicates “recent” improvements, which probably means they were improvements made before the prior sale. If they can sell within the listing range they might break even or come close after selling costs. It could be worse.

[PerryChase]

What is a flip anyway? I have a friend who bought, lived in, and sold 2 houses in the last 3 years. Now he’s stuck in his current house with no prospects of making money. He is listing it $110k over his purchase price but cannot really lower the price because of all the improvements he’s made. And he doesn’t to “give it away.” He never planned to live long term in that house and wants to get out. I consider him a flipper.

I would out on a limb and suggest that 50% of all the buyers in the last 3 years are in his situation — people who gambled on appreciation.

[CardiffBaseball]

Bugs I understand what you are saying but they just reduced for the 3rd time down to $769. Why would anyone then turn around pay one dime above that amount? So let’s say someone pays the bottom of the range, $769.

Since it was purchased 2/28, I don’t see how they get out of this without a loss. Now I don’t have access to the type of loan the buyer took out, but even at 4% selling costs, the seller is under-water. This doesn’t include any carrying costs, taxes, improvements, etc. Even at a Negative-Am Teaser, that adds to the total, though one could throw some of that out to say it was cheap rent.

Also are there not other seller expenses? Just asking, but it seems 4% is very conservative.

[Bugs]

CB,

What can I say – I turn 50 this next year. On the one hand I was thinking it was possible the property could sell for more than the bottom of it’s listing range. On the other hand I’ve become so inured to seeing big losses that a $15,000 loss registers as a carrying cost even though it’s a loss. Sorry.

[CardiffBaseball]

I understand, and properties in this area have gone above the bottom range, but lately it seems that isn’t happening. I only say that from watching this community, and even at that not as closely as would an appraiser.

I also understand that this might not be a flipper, but someone who legitimately had to get out from under the house. I see a house on Playa Riviera in Cardiff, bought for flip, and the owner seems to all but have given up on his renovations. With the house I am talking about using the term “as is” in the listing, I can’t help but wonder if there isn’t some unfinished improvement. Hopefully I can get down there this week.

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