Today we go back to Forster Ranch in San Clemente to show you a bank-owned property that, if sold for its asking price, would demonstrate more than a half-million dollar decline in value from its previous sales price during the bubble.
2525 Costero Magestuoso, 92673
Asking price: $1,149,000
Asking price/ sq ft: $280
Income requirement: $287,250
Bank purchase price: $1,439,287
Purchase date: 4/1/08
Size: 4 beds, 5 baths, 4,100 sq ft (built in 2003)
MLS: S533569 (25 days on Redfin)
Zillow Zestimate: $1,986,500
2007 property tax: $11,458
HOA dues: $248
Type: Single Family Residence
Style: Tuscan
Stories: 2 Levels
Lot size: 7,500 sq ft
From listing: Stunning home in a gated community. MOVE-IN CONDITION. Upgraded Travertine throughout downstairs. Bedroom and full bathroom + powder room downstairs. Master bedroom with retreat and romantic fireplace. Family room with built-in entertainment niche, cozy fireplace. Breakfast nook, breakfast counter. Gourmet kitchen with granite stainless steel appliances. Plantation shutters throughout. Huge bonus room with built-in entertainment center w/ 62'HDTV and queen size Murphy bed. Upgraded back yard with salt water dipping pool/spa, waterfall, fire ring and sitting area. Covered patio with ceiling fans, BBQ with fridge. Hurry on this one, this will not last.
It's not too often you see an REO listing mentioning what good shape the house is in (move-in condition, no less), but then again this is a luxury property. Nice of the previous owners to leave the huge HDTV.
Speaking of the previous owners, they paid $1.7 million in 2006, using 100% financing from Bear Stearns. Can you imagine being handed the keys to a property like that without having to chip in a dime of your own money?
It was indeed too good to be true. The notice of default on the first loan came in August 2007, and the notice of trustee sale was filed in November for $1,353,839 - which is above the original loan amount of $1,275,000.
Assuming the bank can sell the property for the current asking price, it would mean a depreciation of $551,000, or 32% off the 2006 price, not including any sales costs.
We'll leave you with a snapshot of the foreclosure activity in the 92673 ZIP code, courtesy of ForeclosureRadar.com. The green markers signify notice of defaults, the blues are notice of trustee sales, and the red ones are bank owned. For an explanation of the California foreclosure process, click here.
Monday, June 16, 2008
Million-dollar REO in San Clemente
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11 comments:
We tried to look at this house, but the seller's broker said they had too many offers already - some cash and some above the asking price. We did not want to join the bidding frenzy so we passed. Am curious what this property ends up being sold at.
If true, that could be very good news for the market, as it would mean the bottom is somewhere around 35% below peak for home in the category and in this condition.
I have to qualify with "if true" because I have heard that these real estate professionals are getting funny with REOs. A reoccurring story I've heard is that the pros are actually taking the keys from the lock box so the homes can't be shown if they already have an offer.
Anon 7:11
True that it could be "the bottom" for now...
Of course, we have a hyperliquid environment with low interest rates and climbing CPI inflation.
Chances are very high that one of 2 things is going to happen based on the 2 above factors:
1. The economy worsens (as CPI inflation takes a toll against consumers' decreased purchasing power.
2. Higher interest rates needed to combat inflation, and purchasing power of homes decreases.
I wouldn't want to buy in that kind of environment. 2001 was the first recession where housing prices went up... and that was a mania that won't likely be repeated.
BTW, I remember the optimism when the NASDAQ hit it's false bottom at 40% off peak pricing at 3000 before it plummeted to 1200. Beware calling bottoms too early. OF course, you're just an anonymous poster, so who gives a crap what you think.
Chuck Ponzi
Offer above price for this property? Are they kidding? It's a nice place, no doubt, but the property tax shows that in 2003, which prices in general are fastly approaching, the sales price was probably sub $1 million. This house has no view on a smallish lot, if you have $1.1 million there are a lot better options for you in the South County.
Oh and the large HDTV? Sadly Old Tech. They've built it in and it's not worth taking out now.
I agree with the previous posters - false bottom here.
There are SO MANY distressed properties in the different Reserve communities right now. Several of the pre-foreclosure properties of this "luxury level" have ocean views and are comparably priced (most are in the Reserve neighborhood that is west of this location, but some are in this neighborhood).
Many of the current owners of these properties purchased their homes for far less than 1MM back in '03. True, the vast majority over-improved these homes (they are cookie cutter tract homes, after all) but I would say that most owners did not exceed 300 to 350K in improvements (with a few notable exceptions that are on the market at the moment - one with a WTF price of 2MM in the neighboring Reserve property 2922 Canto De Los Ciervos. I don't care if it's at the end of a cul de sac with a view and a pool - it's a TRACT home in a highly distressed community. 2MM is laughable!)
I predict homes in the Reserve to bottom at 50% of peak. I saw several of these homes in January, February and March and realized at that time that these will suffer the same fate as the distressed Talega properties. The prices just keep dropping, there is nothing that sellers can do except hope that someone will identify a cookie cutter home as something that they "must have" during the housing crisis. Not very damn likely! You can slap down hardwood and granite, toss in the stainless appliances and even add some peekaboo views - but most "luxury" buyers aren't biting.
Are buyers buying? I guess it depends on your perspective. Bulls seem to be excited that May stats show the most sold homes since last August.
They choose to ignore the fact that May was 46% off the 20-year average for that month. That's historically terrible. There are a lot of bank-owned properties sitting vacant that aren't on the market yet.
What kind of broker says, "We have too many offers" especially in this market! I wonder if the buyers agent said this because they simiply don't want to get involved in REOs since it takes so much time and rarely results in money in their pocket. I don't believe there are any bidding wars going on - just more lies to try to convince people that the worst is over when in fact it is far from the bottom.
I know of a home that went back to the bank and was sold to an all cash investor last year in the reserve south for $807K for around 3000 sq. ft. and it had a large lot and nice upgrades. These people are in denial and were living way beyond their means. I can't wait for the final corrections in price to be made so that realistic buyers will have a chance to enjoy longterm ownership in beautiful San Clemente.
If what Anonymous says is right then that's an incredible sign for the market. For a while you could count monthly offers on one hand for all of So Cal. But it's still abuyers market so it should be relatively simple to find a great home at a discounted price. There's a mls mapping service that has been incredible by PropertyMaps.
We actually tried to buy this house and were told there was one other offer on it. We put in an offer for it on a Monday and on the Wednesday were told by the agent that the bank had accepted our offer and the house was ours. We set about getting the paperwork done, like signing the bank's addendum and writing the down payment check. We also began measuring the home and figuring out what furnishings would go where. The next Monday the agent informed us there was another offer on the house and since it had not gone into escrow, she was "required" to let the bank know there was a better offer. We were then told that the bank never accepted our offer and there was some "mis-communication". Then we were asked to make our best offer, which we did and 2 days later were told the other offer was higher and the bank was going with that offer. So we moved on and put an offer in on a non foreclosure, non short sale (don't even get me started on those!) home. Before we received an answer to that offer, the foreclosure agent called and said the other buyers didn't qualify and the house was ours if we wanted it. We said we did, but at the original price we offered. She said she called the bank and that was "ok". The next day we got a call from the agent letting us know there was yet another offer on the house, better then ours and we would need to offer more. At the same time, the regular sale home let us know that they had accepted our offer. Seeing as we had wised up to the whole foreclosure agent/bank/home sale game, we said we were only interested in the foreclosure at the original price we offered. Needless to say, we bought the other home and are happily already in escrow.
Anon - Thanks for sharing the story about the property. Good luck with your new home!
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