Little chance in Laguna Hills

Here we have another case of a short sale where the property is hiding more debt than meets the eye. This one is in Laguna Hills...

26131 Buena Vista Ct, 92653
Asking price: $689,000
Asking price/ sq ft: $251
Purchase price: $846,000
Purchase date: 5/25/05
Size: 4 beds, 3.75 baths, 2,741 sq ft (built in 1979)
MLS: S573884 (18 days on Redfin)
Zillow Zestimate: $696,000
Type: Single Family Residence
Style: Traditional
Stories: 2
Lot size: 7,000 Sq. Ft.
From listing: Beautiful Stratford Ridge in Laguna Hills...located prime inside corner lot with great curb appeal. Vaulted Ceilings, open kitchen with large family room and separate dining room. One bedroom down with full bath and huge master suite. Great back yard with patio cover and inviting pool/spa - lots of privacy...

This property nearly doubled in value between 2001 and 2005 - from a $463,000 sales price in 2001 to $846,000 almost four years exactly to the day. The new owners in 2005 used 80% financing and a $169,200 downpayment. Only a couple months later, an $84,000 second loan was added from JP Morgan Chase.

Less than two years after that, there was a third loan of $155,700 from Countrywide. The total amount of mortgage equity withdrawal could have been as high as about $240,000, and total combined debt on this property could easily have been more than $900,000. The owners, who presumably could have taken all their downpayment plus a bunch extra out of this house, listed it for sale at a huge discount off the previous sales price.

How much? If the property can be sold for the current asking price, it would mean a depreciation of 19% off the 2005 price. But as you know, the lenders involved would be taking even more of a hit than that.