Gasping For Breath In the Salt Air

Under water, and feeling scared.

This whole home search has become bogged down.  I’ve got a life-savings-sized pile of loot ready to go, a wife and daughter who have taken to declaring that they’ll do this or that, “once we get into our new house,” and even I have just about had it with the indignities of our current rental situation, lovely, and even enviable, as it may be.

Why the bogginess, you ask?  It’s the sellers.  The over-leveraged, overambitious (circa 2006) home “owners” who went for the brass ring, and realize now that the free ride they were looking for was merely a mirage.

As an example, let me tell you about the perfect house we found.  It’s really nearly perfect for us.  It’s in Brentwood.  It has 5 bedrooms.  It is traditional, but beautifully remodeled.  The surfaces are great.  The kitchen is great.  The layout is great.  The backyard is a fair size, with some grass to play on, and a patio to relax on.  There is no overwhelming pool.  It is a 7 minute walk from the intersection of Sunset and Barrington, which ticks off my “caffeine adjacency” requirement.  The front yard is gated.  The driveway is circular and pretty gently sloped.  I would probably be happy to live there more or less forever.

It is for sale.  “So, why don’t you just buy it,” you ask?  Well, they are asking $3 million.  I’m not afraid of an out-of-reach asking price.  I take Santa Monica Distress Monitor’s mantra to heart – “if you’re not embarrassed by your offer, it’s not low enough.”  But here’s the problem.  My $2.5 will NEVER buy this house.  Why not?  Because it has a troubled history, and the current owners are so far under water that even the adults are wearing Finding Nemo underwear.  They listed it earlier this year for $3.6 million.  In 2006, before the badness, that is about what it was worth.  Unfortunately for them, time flies when you’re overextended.

You see, they bought this perfect home in 2006.  For $3.6 million.  They have cut,  and cut and cut their asking price as time has marched on.  Now, it’s the end of the year – the winter doldrums of home buying.  They  were probably looking to spend one last Thanksgiving in their home, after which they slashed their price to $3 million, figuring they’d get the house sold.  I  would be 1000% happy to call their home my home.  But I don’t have the full $3 million to pay for it.  I can probably come up with about 20% shy of that number – $2.4.  A lot of money, to be sure.  But if you bought something for $3.6 two years ago, could you stomach showing up to the close with a check for $1.2 million?  That means that not only did you pay your mortgage for two years,  but you are shelling out an extra $50K/month for the privilege of having lived there.

Remember,  $50k/month will rent you one of the 50 nicest homes in Los Angeles, whether it’s  Malibu Colony beachfront manse, a compound in the hills of Bel Air, or something stately in the flats of Beverly Hills or Brentwood Park.

So, all that aside.  If you are the owner or broker on 201 N. Saltair, the Shadowbuyer family would like to make a deal.  If you can afford to take  $2.4, drop me an email.  We’ll close in 30 days.


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4 Responses to “Gasping For Breath In the Salt Air”

  1. Jay Says:

    Mr Shadow – I’m feeling you. I’m not in quite the price range you are, but am looking in the 800-1mm range, or roughly what a family that takes home 300k should be able to afford. Problem is that homes in that price range are unfit for my income class. My apologies for the crass articulation of the problem, but we all know it’s true, and it’s not entitlement-it’s an objective observation. Prices are still set not according to what they’re worth, but according to what the seller needs to get out with his shirt. This is why buyers aint buying and sellers aint (can’t be) selling.

  2. Francine Says:

    Hi Mr. Shadow – just wondering, have you checked into PropertyShark to see how much their existing mortgage is for? It’s possible they put a lot down, and would be in a position to sell, even at a great loss, without bringing money to the table. Sure, it’s a long shot, and if I had that much money down I’d probably just hold on to it, but clearly they’re willing to accept at least a 600K loss.

    Jay – I agree, we’re in the same income class as you, and the crap that’s available in our price range is not worth moving into. We have a much nicer rental (that the owners paid 1.5mil for) and it’s costing us the same as a mortgage/prop tax combo for something in the 800K range. Why would I move into something so much smaller, so much older, in a worse neighborhood? Just to say ‘I own it’? Or, more appropriately, “I owe on it”?

    • shadowsm Says:

      I discovered yesterday that the 201 N. Saltair house is a short sale. By how much, I do not know. But as I understand it, that means that their equity is wiped out, and they’re already chipping away at the value of their lender’s account receivable.

      Interestingly enough, in a bit of unintentional commentary on how broken the system is, I learned of the short sale status through a warning on “THIS IS A SHORT SALE. REDFIN does not facilitate offers on short sale properties due to the extremely slim chance that the offer will be approved by the bank, and the transaction will close.”

  3. Cassiopeia Says:

    Look at it this way, shadowbuyer. You finally found a lovely house in the area you want with the features you want whose owners are swimming in debt and cannot afford it any more. There will be many others like it coming down the pipeline. If it isn’t this one, it will be another one. This situation cannot hold much longer. Even if this house goes by their asking price of 3 million, it will be a lower comp for the neighborhood. Stick to your guns. For once, time is on your side. You are in the very best of situations. You have the money to shop in the market that’s taking the greatest hit because the tax credit and the FHA loans are not enough to sweeten the huge loans involved. Your problem is that the sellers in this market can afford to hold on to their money sucking homes for longer than someone who bought in Riverside. But not forever. Good luck!!!!

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