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Gold Regular Contributor
Andiamo53
Posts: 2,084
Registered: ‎07-12-2010
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Can Someone Explain This Listing?

Okay, here's a weird one in Atwater: It's a triplex that goes into foreclosure and reverts back to bank (presumably because no one wanted it) a year ago . Eleven months later it sells for almost double the auction price with no apparent  work having been done. One month after that, the buyers list it for the same price as they bought it (again, no work having been done)  but have had to lower the price because again there are no takers.

 

What I don't understand is why the buyers bought it in the first place at such an inflated price only to re-list again after one month. They knew there was rent control (it said so in the listing) and knew the rents were way lower than FMV. What's going on here?

 

http://www.redfin.com/CA/Los-Angeles/3421-Hollydale-Dr-90039/home/7066172

Contributor
agl25
Posts: 20
Registered: ‎07-12-2012
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Re: Can Someone Explain This Listing?

Very strange...

Trusted Contributor
Mortmain
Posts: 198
Registered: ‎10-29-2012
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Re: Can Someone Explain This Listing?

There could be something else going on here, but on the surface it looks like someone bit off more than they could chew, overpaid and then regretted it. It lost 40% of its value from 2005 to 2011 (normal), and you have to assume that it got a face lift after then, but even if it did, the current last two listed prices should have raised big question marks. It screams "victim!" this one.

Gold Regular Contributor
Andiamo53
Posts: 2,084
Registered: ‎07-12-2010
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Re: Can Someone Explain This Listing?


Mortmain wrote:

There could be something else going on here, but on the surface it looks like someone bit off more than they could chew, overpaid and then regretted it. It lost 40% of its value from 2005 to 2011 (normal), and you have to assume that it got a face lift after then, but even if it did, the current last two listed prices should have raised big question marks. It screams "victim!" this one.


No, you CAN"T assume a face lift--that's what's so strange. Firstly, this was an REO property and banks never do extensive facelifts. Secondly, the listing said that there were long term tenants so facelifting would be incredibly improbable under those circumstances.

 

You say you smell victim. I say I smell fraud scheme gone horribly wrong. I bet this forecloses sometime soon.

 

 

 

Redfin Partner Agent
Adam-la
Posts: 1,906
Registered: ‎03-15-2011
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Re: Can Someone Explain This Listing?

What in any of the data about this house makes you think there is a fraud?

 

The only gotcha in here is that the value of the property is severely impacted by the rent restrictions in place due to Los Angeles Rent Stabilization Ordinance rules.

 

People buy and sell real estate all the time and in this case it just appears that someone bought an investment property and now wants to sell.    The price they paid appears to be on the high end of the market value but nothing there looks like a fraud is being perpetuated. 

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agl25
Posts: 20
Registered: ‎07-12-2012
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Re: Can Someone Explain This Listing?

I agree with Adam. The October purchase price doesn't seem totally unreasonable and would certainly be supported if it weren't for the low rents currently being paid along with the rent control law. The current asking price is more reasonable when taking these factors into account. Maybe someone just made a bad investment?

Platinum Super Contributor
buyinghouse
Posts: 5,879
Registered: ‎04-23-2011
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Re: Can Someone Explain This Listing?

   Maybe the owner is one of those entrepreneur guys who thinks he's going to make a killing because the market is hot but he's going to realize sooner than later he was played a hangman hand.

 

  I think that rental stabilization program is killing the rental market. Come to the Silicon Valley guys and you will see the rental being good for investors.

Gold Regular Contributor
Andiamo53
Posts: 2,084
Registered: ‎07-12-2010
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Re: Can Someone Explain This Listing?

[ Edited ]

agl25 wrote:

I agree with Adam. The October purchase price doesn't seem totally unreasonable and would certainly be supported if it weren't for the low rents currently being paid along with the rent control law. The current asking price is more reasonable when taking these factors into account. Maybe someone just made a bad investment?


A BAD INVESTMENT??? Come on you guys, for you to be correct, the investor would have had to be brain dead! It just doesn't add up. The "investor" is perfectly willing to pay a 70% mark-up on an  REO that has long term tenants paying incredibly low rents governed by incredibly restrictive rent control ordinance? And they only figured out the problem AFTER they bought the place ? How stupid does this buyer have to be? And don't forget this is investment property and thus reasonable to assume that the "investor" is a bit more savvy than a first time home buyer.

 

Assumptions aside, you don't think it's also a little weird that  they listed the place  EXACTLY one month later and for EXACTLY the same price as they bought it, completely ignoring the loss on transfer taxes, fees, closing/carrying costs, agent commissions? Finally, is it only mere coincidence that the purchase price and initial re-list asking price are identical to the price this property sold for back in 2005?  Considering the totality of the circumstances, none of you think this smells a little fishy?

 

Redfin Partner Agent
Adam-la
Posts: 1,906
Registered: ‎03-15-2011
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Re: Can Someone Explain This Listing?

Honestly, no.  

 

There are a bunch of odd things there with pricing and it being listed and sold but looking at the property sales records there are different realtors, different owners and what appear to be arms length transactions.   None of the names from the current ownership are similar to the previous ones and overall it just looks like someone is about to take a loss on the sale of this property. 

 

We can't possibly know the reasons for why someone bought the property and if they understood (or not) the restrictions on multi-family homes in Los Angeles.   Believe it or not, I tell anyone looking at 2-4 unit houses to avoid Los Angeles now because the rules have become more and more difficult to comply with and there is no market discount to reflect those issues.   

Redfin Partner Agent
Adam-la
Posts: 1,906
Registered: ‎03-15-2011
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Re: Can Someone Explain This Listing?

Actually, the one red flag I see there is that the current owner appears to have been 'represented' by the same agent as the seller in the last transaction. This is commonly called Dual Agency and many agents choose to not do this to avoid conflicts of interest.   Perhaps the current owners (who are receiving tax bills in another city) might not have realized the level of restrictions in Los Angeles where property rights are tilted in favor of tenants. 

 

 

 

Listing provided courtesy of
  • Irene Pinchassi,
  • Pristine Properties

DRE #01322006

Buyer's Agent

  • Irene Pinchassi,
  • Pristine Properties

DRE #01322006