Way short in LN

Escrow dreams really do come true - even in crazy short sale situations like this one in Laguna Niguel...
7 Pacific Crest, 92677
Asking price: $1,499,000
Previous sales price: $2,065,000
Previous sales date: 5/19/06

Beds:	4
Baths:	4
Sq. Ft.:	3,300
$/Sq. Ft.:	$454
Lot Size:	8,000 Sq. Ft.
Property Type:	Single Family Residence
Style:	Contemporary
Stories:	2
View:	Ocean, Treetop, Trees/Woods, Has View
Year Built:	1994
Community:	Laguna Niguel South, South of Crown Valley, West of Niguel
County:	Orange
MLS#:	S576702
Source:	SoCalMLS
Status:	Backup Offers Accepted
On Redfin:	118 days

From listing: Highly upgraded custom home in Bear Brand Ridge. Gorgeous 24'' polished Travertine carries you throughout the first level of this designer home. Incredible attention to detail creates interest at every turn. Customized AV system wired throughout the home for almost any electronic configuration. Bathrooms finished with tumbled travertine. Spacious bonus room features hardwood floors, detailed built-ins, an arched picturesque window and connects to the massage room (4th bedroom). Sensational master suite complete with vaulted ceiling, spa-like master bath, oversized travertine shower with Hansgrohe showerheads & jet tub. Master balcony showcases ocean views. Backyard designed and maintained by Roger's Gardens. An array of backyard amenities includes a built-in Viking barbeque, 3 tranquility fountains, fire pit, covered patio with speakers and recessed lighting. Meandering path connects the front and backyard. Seller would like to sell furnishings.

The Redfin property history shows this place changing hands every year between 2001 and 2006, except for 2005. We're not sure those are actually sales, but it would make sense if we were looking at a rash of refinances - up until $2 million worth in 2006.

If that's the case, and the debt against this property is hovering somewhere around the $2 million mark today, it means the lender is going to take a $500,000 bath if and when this property makes it all the way to closing.

Holiday time in Dana Point

We're on the precipice of a Labor Day weekend holiday! How are you going to celebrate? Today's property is an example of an REO in Dana Point that we like a lot. Only one problem...

38 San Raphael, 92629
Asking price: $737,900

Beds:	3
Baths:	3
Sq. Ft.:	2,050
$/Sq. Ft.:	$360
Lot Size:	6,924 Sq. Ft.
Property Type:	Single Family Residence
Style:	Mediterranean
Stories:	2
Year Built:	1991
Community:	Monarch Beach
County:	Orange
MLS#:	S582130
Source:	SoCalMLS
Status:	Active
On Redfin:	49 days

From description: Located in private, gate guarded community of Ritz Pointe! Down stairs master bedroom. Two bedrooms upstairs. Cathedral ceilings! Travertine flooring,cherry wood floors, Marble counter tops, dual oven. Epoxy flooring in garage. Relax in your lush landscaped backyard with private spa and rock waterfall! Walk to the beach or St. Regis next to the Beaufitul Monarch Beach Golf course!

As we said, we like this property. We like the location (though it might be a little far from the freeway, you're ocean close), the look of the property and, of course, the yard. We like the pool, though we suspect we'd soon think it would be more trouble than it's worth. In fact, we also think it's a nice property for hosting that all-American holiday BBQ.

Our problem? The asking price. From what we can see, we'd like to estimate the property to be worth somewhere in the $600,000 range, based on comparable properties for rent. But when you consider the previous sales price was $1,075,000 in 2007, you have to appreciate how far this property has come down in value. In fact, if it sells for the current asking price, it would represent a 32% decline in value in about two and a half years.

Luxury REO in LN 1/4 off

We're interested to see if this REO in Laguna Niguel continues to sit on the market. It's indicative of the type of property some are expecting will become far more common later this year - an expensive property in a nice area that sold at an inflated price during the bubble and has now worked its way through the foreclosure system.

The question is: How many buyers out there who can afford this type of property are ready to jump on one?

27802 Homestead Rd, 92677
Asking price: $819,900
Asking price/ sq ft: $262
Bank purchase price: $802,544
Purchase date: 2/20/09
Size: 4 beds, 4 baths, 3,128 sq ft (built in 1998)
MLS: S571761 (36 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/22/09 -- $859,900 to $819,900
Zillow Zestimate: $842,500
HOA dues: $165
Type: Single Family Residence
Style: Spanish
Stories: 2
Lot size: 4,199 Sq. Ft.
From listing: Beautiful Home in the prestigious Guard Gated Community of San Joaquin Hills. This 4 Bedroom Home has a Bonus Room on the main floor, Family Room with fireplace, extra Eating Room off Kitchen, and Living / Dining Room Combo. Laundry Room, 3 Car Garage with plenty of built-in cabinets.

This house previously sold for $1.1 million in mid-2005. That was essentially a doubling in value from 1999, when it went for $560,000. The previous owners used 90% financing in the form of two loans from Indymac Bank to buy the house.

Three months later, a $236,500 lien showed up on the property from Citibank. The property went into default in late 2008, and eventually found its way back to the bank earlier this year.

Assuming the house can be sold at the current asking price, it would mean a decline of or $280,100 or 25% off the previous purchase price, not including sales costs.

Back to '02 in Laguna Niguel

There are five properties in some stage of the foreclosure process on this Laguna Niguel street, but we're going to focus on one that caught our attention because (shock) the current owner actually used a decent downpayment and is still in trouble.

We wonder whether this will continue to be more common. If so, it's a sad commentary on the local market, since these were the people who bought real estate the "right way" - by using some of their own money. What a novel concept.

28121 Mariposa #211, 92677
Asking price: $225,000
Asking price/ sq ft: $199
Purchase price: $420,000
Purchase date: 3/30/06
Size: 3 beds, 2 baths, 1,131 sq ft (built in 1985)
MLS: S570970 (21 days on Redfin)
ZipRealty price tracker: Price Reduced: 5/05/09 -- $239,900 to $225,000
Zillow Zestimate: $253,000
HOA dues: $373
Type: Condominium
Style: Mediterranean
Stories: 1
From listing: Ground level 3 Bedroom 2 Bath bargain priced for first-time buyer or investor. Sunny Southeast exposure with patio area. Excellent across from pool and with plenty of guest parking + garage. Great floor plan has living room with fireplace, dining area, modern kitchen and 3 full bedrooms. Inside laundry. Convenient to shopping, schools & freeway.

This is what happens when you take a photo of a mirror straight on using flash: You're in the picture. Three beds and two full baths in 1,131 square feet? We doubt some of the rooms are very big.

It's your choice: Buy this for the asking price of $225,000 (assuming the lender lets it go for that much), or rent the same model for $1,695 per month. At least, that's the asking rate of 28121 Mariposa #214. Assuming a target 160 GRM for an owner-occupant, this condo currently would be worth $271,200 to them. Again, that assumes $1,695 is actually how much this property should rent for each month, and the potential owner is looking for a general breakeven point for owning as opposed to renting. We think this property is not worth renting for $1,695 per month.

The problem is the HOA dues are very high, and this is not the type of property most people would want to live in long-term. As the listing says, this could be a first-time buyer-type place.

The current owner used 85% financing from what was Countrywide in 2006 and a downpayment of $63,000. The property went into default in early March. Assuming the property can be sold for the current asking price, the owner's investment would be wiped out and the remaining hit would be felt by the lender.

All told, the total loss would be more than $200,000, assuming 6% sales costs. Not including sales costs, the sales price would be 32% below the 2004 price of $330,000 and just $10,000 above the March 2002 price of $215,000.

Big $ loss in Bear Brand

The percentage decline may not be so significant on this Laguna Niguel property, but the dollar amounts are certainly huge. Check it out...

8 Morning Dove, 92677
Asking price: $4,495,000
Asking price/ sq ft: $562
Purchase price: $5,150,000
Purchase date: 3/14/06
Size: 6 beds, 5.5 baths, 8,000 sq ft (built in 1989)
MLS: S559992 (95 days on Redfin)
ZipRealty price tracker: Price Reduced: 02/20/09 -- $4,695,000 to $4,495,000
Zillow Zestimate: $3,661,500
HOA dues: $445
Type: Single Family Residence
Style: French Provincial
Stories: 2
Lot size: 0.67 Acres
From listing: BREATHTAKING OCEAN, ROLLING HILLS & CITY LIGHTS VIEWS!! ONE OF THE NICEST CUSTOM ESTATES IN BEAR BRAND RANCH. AT THIS PRICE THE HOME WILL NOT LAST LONG!! OWNER HAS GONE ABOVE AND BEYOND WITH UPGRADES TO THIS PROPERTY. INTERIOR UPGRADES INCLUDE: PERUVIAN STONE FLOORING, NEW ZEALAND HARDWOOD CABINETRY, NANA MERANTI DOORS IMPORTED FROM GERMANY, HAND CARVED FIREPLACE, WOOD SHUTTERS & SO MUCH MORE. HOME FEATURES A TEPPANYAKI ROOM, WINE ROOM W/BAR, LIBRARY, OFFICE, CRAFTS ROOM, INCREDIBLE MASTER SUITE W/EUROPEAN SPA STYLE BATHROOM & INCREDIBLE CLOSET W/CENTER ISLAND & BEAUTIFUL WOOD BUILT-INS, OLD WORLD KITCHEN, TWO CUSTOM REFRIGERATORS & MORE. FLOOR TO CEILING WINDOWS IN KITCHEN & FAMILY ROOM THAT RETRACT BRINGING THE OUTSIDE IN. THE BACKYARD IS AN ENTERTAINER'S DREAM WITH AN INFINITY POOL & SPA, LOGGIA, BUILT-IN BBQ. BBR HAS NO MELLO ROOS! DON'T MISS THIS OPPORTUNITY TO OWN AN INCREDIBLE OCEAN VIEW ESTATE!!

This property came onto the market back in May 2005 for $5,400,876. A new MLS listing and additional photos graced another listing in November 2005. Less than three months later, the sale was closed for $5,150,000.

This property was back on the market in mid 2008 for $5,395,000, then $5,100,000. No sale on either account. Now, the property is up for sale for $655,000 less than the previous sales price.

Good luck with reading the all-caps on this listing. Do you really think someone who has $4.4 million lying around somewhere to purchase this property is hinging the decision on whether there are mello roos or not?

If the property can be sold for the current asking price, it would be a 13% decline in value.

If we are to assume it's the current owner who went "above and beyond" with upgrades, then the hit is likely significantly more. Do you think, when sales costs are taken into consideration, that this might even be a $1 million mistake? It's possible.

Not exactly immune in Laguna Niguel

Here is a property 99.9% of us can only dream about. It's an amazing home in a great location - Laguna Niguel's Monarch Point. Custom house; expansive ocean view...the whole package. So why is it being offered for sale at a huge loss?

31951 Monarch Crst, 92677
Asking price: $6,199,000
Asking price/ sq ft: $886
Purchase price: $6,740,000
Purchase date: 12/12/05
Size: 4 beds, 5 baths, 7,000 sq ft (built in 2002)
MLS: U8005331 (103 days on Redfin)
ZipRealty price tracker: Price Reduced: 01/14/09 -- $6,699,000 to $6,199,000
Zillow Zestimate: $4,422,000
HOA dues: $459
Type: Single Family Residence
Style: French
Stories: 3+
Lot size: 10,427 Sq. Ft.
From listing: Stunning and luxurious ocean view custom estate in Monarch Point. Perched high above Laguna Beach with panoramic ocean views from Dana Point to Los Angeles. Unique amenities in this approx. 7,000 square foot home include 6 fireplaces, 3000 bottle wine cellar, 9-car garage, elevator, sparkling pool & spa and outdoor loggia with fireplace.

As one might expect, there are very few people out there with the capacity to buy this property, so we would expect it could easily take many months to a year or more to find a buyer. For comparison, this property sold in less than two months from the time it came onto the market in August 2005.

This time, the estate (it just doesn't feel right calling it a "house") has been on the market for more than three months, and the asking price has been reduced by $500,000 or 7%.

We say the wine cellar is reason alone to save the $100 dollar bills to buy this place:
Oh, and the view does not suck either:
Assuming an eventual sale for the full asking price, it would be $541,000 or 8% below the 2005 price. Considering the dollar amounts involved, it is extremely likely that the owner is going to absorb the entire loss. If we were to deduct 6% for sales costs, the loss would be closer to $912,000.

Take three in Laguna Niguel

The previous owners tried to sell this property twice since early 2007. Now that the bank is in control, we expect things to move a bit faster.

29652 Coral Cv, 92677
Asking price: $299,900
Asking price/ sq ft: $234
Bank purchase price: $399,419
Purchase date: 11/26/08
Size: 3 beds, 2.5 baths, 1,280 sq ft (built in 1973)
MLS: S557318 (1 day on Redfin)
Zillow Zestimate: $389,000
HOA dues: $350
Type: Condominium
Style: Ranch
Stories: 2
From listing: WHAT A VALUE! Three bedrooms! Living room with fireplace, dining area or family room attached to the kitchen, front and back patios. Bedrooms upstairs with two baths. Half bath downstairs. You will like this one! Neat and clean too.

The previous owners used 100% financing to purchase the property in 2004 for $400,000. Then, $450,000 worth of loans were made in 2005. In July 2007 - after they unsuccessfully put the home on the market for $585,000, WaMu gave them a loan for $468,250. You can guess what would happen with that loan.

This property then came on the market for $479,900 in February 2008 - $79,900 above the 2004 price but probably not enough to cover the debt plus sales expenses. Eventually, the asking price came down all the way to $329,900 in November. We also know WaMu approved a sale for $340,000 at one point.

It may be sad to say, but why would a buyer put extra effort into trying to make the short sale work, when the property will be re-listed by the bank for less money as an REO a month later?

It's also interesting to see what has happened with prices in this neighborhood. Consider:

• A 1,319 sq ft model sold for $325,000 in October 2008.
• An 1,820 sq ft model sold for $445,000 this August.
  
• A smaller 2-bedroom, 1,019 sq ft model went for $340,000 in early October 2008.
  
• A 1,358-sq ft model sold for $495,000 in mid 2004.
• A 1,763 sq ft fixer allegedly "priced $100,000 below market" sold for $535,000 in March 2007.
• The high price on nearby Pelican Way was $550,000 for a 1,200 sq ft model in March 2006.

The asking price of our subject property is around 40% below peak values.

Behind the foreclosures: LN

The OC Register has another story out today on foreclosures . This time, it details some properties in Laguna Niguel. Here is a sample of some of the homes featured in the article:

REOs for sale:
25111 Adelanto (pictured above)
OCR comment: "This is a 3 bedroom, 3 bath home with remodeled kitchen, granite counters, recently replaced roof and living room with brick fireplace."
Original asking price: $594,000
Current asking price: $534,600
Our comment: The previous owners paid $720,000 in 2006. They used a 10% downpayment. The first loan went into default in May.

31216 Flying Cloud
OCR comment: "This bungalow has 2 bedrooms and 2 baths on one level, with views of city lights and the coastline. Detached garage with guest parking. Remodeled in 2006. Granite countertops, vinyl windows and a deep Jacuzzi-jetted tub in master bath."
Original asking price: $949,000
Current asking price: $840,000
Our comment: Unfortunately, ForeclosureRadar doesn't have info on this property, and Redfin says it's a short sale and not a foreclosure with a $995,000 previous sales price. Here's some info on the rest of the street: 31486 Flying Cloud is an REO (100% financing on a $922,000 sale in March 2007!) and 31324 Flying Cloud is in preforeclosure.

Pending
17 Westgate
OCR comment: "This Mediterranean-style single family residence has 3 bedrooms, 3 baths, in a gated community. Near to the ocean and Bear Brand Ranch. Plantation shutters throughout. Three-car tandem garage."
Original/latest asking price: $825,500
Our comment: It appears the previous owner bought a flipped property for $1.2 million in 2007. They used 90% financing, and then added an additional $200,000 from Indymac two months after purchase. The property was in default about a year later.

Recently sold
27636 Blossom Hill, 92677
OCR comment: "This contemporary 4 bedroom, 3 bath home is on 2 levels, within a gated community. Wood shutters throughout, and the entire house has been wired for surround sound. Oversized walk-in closet, with separate family and dining rooms, wood and marble flooring downstairs and carpet in bedrooms. Pool, spa and built-inn BBQ in back."
Original asking price: $719,578
Sales price: $704,000
Our comment: This sales price is 27% below the 2005 price of $960,000.

Headed for sale in LN

We recently talked to a consultant with excellent knowledge of the job market. In his opinion, if you've got a job - even if it's not your dream role- hold on. There are currently too few jobs for too many potential employees, and it's a serious buyers' market out there. That is, if the company you're targeting is even hiring.

So, it's bad news if you're looking for a job right now unless it's an absolute necessity. Perhaps you're one of the many in between jobs. If you're in that position, we wish you all the best.

The housing market is similar right now. If you're an owner, and you don't have to sell (read: you're actually paying your mortgage on time, or you don't have one), would you want to put the property on the market now and compete with a significant amount of distressed properties and falling prices?

Not likely. It's still too much of a buyers' market. The buyers are hungry for perceived foreclosure/distressed "steals" in the lower-price ranges.

Today's property in Laguna Niguel is in the "accepting backup offers" stage. It's also a preforeclosure and a 2003 rollback in a nice neighborhood. Thanks to reader Stephanie for pointing this one out.

27795 Homestead Rd, 92677
Asking price: $890,000
Asking price/ sq ft: $285
Purchase price: $1,200,000
Purchase date: 5/11/04
Size: 5 beds, 4 baths, 3,128 sq ft (built in 1998)
MLS: P656357 (51 days on Redfin)
ZipRealty price tracker: Price Reduced: 09/28/08 -- $978,000 to $958,000
Price Reduced: 10/09/08 -- $958,000 to $910,000
Zillow Zestimate: $1.127 million
HOA dues: $159
Type: Single Family Residence
Style: Mediterranean
From listing: San Joaquin Hills (south) 5 bedroom 4 bath gated community. Home offers PANORAMIC MOUNTAIN/CITYLIGHT VIEWS, Featuring an office with custom built-ins, Family room with fireplace,carpet & hardwood flooring, kitchen with breakfast area,formal living & dining rooms,master suite with serene hillside views,walk in closets, shower & soaking tub,backyard with patio, built-in BBQ and a great view. A spectacular residence in a great location. PANORAMIC VIEWS....

The photos make the home appear vacant. Guess that means the owner has given up and moved on. They purchased the property for $1.2 million using a 20% downpayment ($240,000).

Then, in September, a notice of default was filed for $18,936.

If we are to assume that the fact that the property is headed to escrow means it will be sold, then we're looking at a $363,400 loss. The owner's downpayment would be gone and the lender would be out $123,400. If we take out sales costs, it would be a depreciation of 26% off the 2004 price.

The sales price also would be $30,000 below the July 2003 price. All these calculations assume the property sells for the full asking price.

Here we have some scary anecdotal evidence: A high-end property in distress that will be sold for less than its 2003 price. The owner did not use crazy financing - quite the contrary, they put a solid 20% down. And yet, after holding the property for four years, they still ended up significantly upside down.

This does not bode well. At all.

Laguna Niguel calamity

What could be nicer than a million-dollar, luxury home in Laguna Niguel's Hillcrest Estates? Well, a million-dollar, luxury home with an ocean view, but that's besides the point. This property is a severe rollback - and preforeclosure - that is asking way way below the previous bubble price.

Probably too low for the lenders' taste as well. Perhaps you'd like to ask the lender...Countrywide...what it thinks.

28582 Sea Pt, 92677
Asking price: $1,000,000
Asking price/ sq ft: $317
Purchase price: $1,850,000
Purchase date: 11/7/06
Size: 4 beds, 4 baths, 3,150 sq ft (built in 2003)
MLS: S545859 (53 days on Redfin)
Zillow Zestimate: $1,276,500
HOA dues: $190
Type: Single Family Residence
Style: Contemporary/Modern
Stories: 2 Levels
Lot size: 8,080 Sq. Ft.
From listing: Entertainment home in Hillcrest Estates. Premium lot with panoramic view. Private rear yard. Professionally landscaped with Boulderscape, salt water pool and spa. Master Bedroom downstairs. Travertine floors and Brazilian cherry hardwood in living room / game room. This home has the view and privacy. Built-in BBQ in rear yard with counter.This is a short sale. All offers must have DU Approval, with verifications of funds and credit scores. LOWEST PRICED TWO STORY IN HILLCREST ESTATES!!!!!!

The current owner paid $1.85 million in late 2006, using 90% financing. He used a downpayment of $185,000 and financed the rest. Not bad, huh?

If - and this is a big if - a short sale is approved for the current asking price, it would mean a loss of $910,000, including 6% sales costs. What a historically huge bust. The owner would be out his $185,000 downpayment, and the C'wide black hole will lose $725,000. It could even be us, the taxpayers, who would be taking the hit.

What once was in LN

We're hearing about some interesting credit market activity, thanks to our friends over at The Great Loan.com.

Jumbo loans (those for more than $729,000) for properties in LA and OC are now up into the mid-7 percent range in most scenarios. This in turn is causing listing prices in some high-end homes to fall.

Here is one example of a Laguna Niguel property with an already restricted buyer pool, since the asking price is in the $800k+ range. This REO sold for $1.2 million in 2007.

17 Westgate, 92677
Asking price: $825,500
Asking price/ sq ft: $316
Bank purchase price: $777,400
Purchase date: 8/29/08
Size: 3 beds, 3 baths, 2,610 sq ft (built in 1990)
MLS: S550604 (7 days on Redfin)
Zillow Zestimate: $900,000
HOA dues: $125
Type: Single Family Residence
Style: Mediterranean
Stories: 2 Levels
From listing: GATED COMMUNITY NEXT TO OCEAN & BEAR BRAND RANCH.'BANK OWNED', OPEN FLOORPLAN/W CATHEDRAL CEILINGS. WONDERFUL KITCHEN W/GRANITE COUNTER TOPS AND BREAKFAST AREA. PLANTATION SHUTTERS THROUGHOUT. GARAGE IS A TANDDEM 3-CAR. CLOSE TO OCEAN,SHOPPING, THEATER, CHURCHES,SCHOOLS AND FREEWAYS.

Customized financial info:
Minimum Income Requirement (using 30Y Fixed): $159,000, assumes no other debt/obligations.
Downpayment needed: $95,875
Monthly Payment on 30Y Fixed at 6.25% with property taxes and insurance estimated: $5,651.72
Minimum Income Requirement (using 5Y fixed): $150,000, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 5.80% with property taxes and mortgage insurance estimated: $5,440.53
Disclosure: All rates offered to the client with 1 point cost. Rate quotes assume a purchase transaction with the required minimum down payment, 720 credit score, full income qualification and required reserves. Rates are subject to fluctuation. Custom rate quotes and rate lock advice are available by visiting www.thegreatloan.com.

The previous owner's timing probably couldn't have been much worse - but it's hard to feel too bad when you see the financing. They bought at the peak for $1.2 million. That's $460 per square foot. They put $120,900 down and financed the rest. Less than a month later they took out an additional loan from Indymac for $200,000.

That effectively withdrew their downpayment plus an additional $79,100. The property went into default in April and went back to the bank for $777,400. The notice of trustee sale amount had been $965,203.a

Assuming the property sells for the full asking price, it would mean a decline of 31%, or $374,500 off the peak 2006 price.

New today: Laguna Niguel 28% off

This Laguna Niguel REO just came onto the market today. Since we know pending home sales had been on the rise recently, it will be interesting to see what kind of response this property gets. At $308 per square foot it's not too bad for this area, though it appears at least some painting is in order for the next owners.

24586 Via Carlos, 92677
Asking price: $574,900
Asking price/ sq ft: $308
Bank purchase price: $594,000
Purchase date: 8/18/08
Size: 4 beds, 3 baths, 1,865 sq ft (built in 1989)
MLS: S550396 (1 day on Redfin)
Zillow Zestimate: $625,000
HOA dues: $109
Type: Single Family Residence
Style: Traditional
Stories: 2 Levels
Lot size: 3,860 sq ft
From listing: !!!Attention Buyers and Agents!!! This is the one that you have been waiting for. This is a 4 bedroom, 2.5 bathroom, over 1,700 sq ft detached home with a 2 car attached garage, with a view in Laguna Niguel.. I know that you have heard this before, but trust me on this one, it will not last long. Don't waste time, bring your best buyers for the best deal in all of Orange County

The last owner ended up bailing out a couple who purchased in 1990 but were in default on a $642,394 mortgage taken out in 2005. He paid $795,000 but used essentially 99% financing and a $9,000 downpayment. This was in early 2007.

About a year later, he was in default on his $636,000 first loan. The property ended up going to auction in August and went straight back to the bank.

Assuming a sale for the full (original) asking price, it would mean a nominal decline of about 28% from the 2007 price - not including any sales costs.

Whacked out listing: LN

This Laguna Niguel listing is a bit shocking for at least two reasons: 1) from the photos and description, we can tell the property is a total mess; 2) this property - a foreclosure - had more than $925,000 worth of loans made against it over the course of only a few months in 2005.

Do you want to roll the dice on 24002 Estacia Avenue after reading this description?

This 5 bedroom fixer home sits on a large lot. Needs alot of work. Property has geological history. Mold in laundry room. Buyer to check with the city regarding permits on the pool and add on family room. Buyer should not enter pool area. Covered to keep everyone out Please. Property is sold as is, including termite estimated at $15,000.

Points for honesty and up-frontedness. The asking price of $399,900 equates to $187 per square foot, but go ahead and tack on a significant amount of extra cash to deal with the geological history, mold, dangerous pool area, termites and possibly unpermitted additions. Is there anything not wrong with this property?

Don't think think a bank would feel comfortable loaning someone a lot of money to buy this property. Especially not in today's uncertain climate.

30% off in LN...will it happen?

This Laguna Niguel property (preforeclosure) is being offered at as much as 30% off its 2006 price. Will this sale go through? The lender likely has a lot to say about that...

31672 Isle Royal Dr, 92677
Asking price: $779,000-$819,000
Asking price/ sq ft: $316-$332
Purchase price: $1,120,000
Purchase date: 3/10/06
Size: 4 beds, 3 baths, 2,468 sq ft (built in 1981)
MLS: S544311 (31 days on Redfin)
ZipRealty price tracker: Price Increased: 08/16/08 -- $888,000 to $889,000
Price Reduced: 08/22/08 -- $889,000 to $819,000
Zillow Zestimate: $1,087,500
HOA dues: $110
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 0.28 acres
From listing: HURRY! What a fabulous opportunity. LOCATION! LOCATION!...great condition and a large private yard! The neighborhood is as close to the beach as it gets for Laguna Niguel; you can walk to the beach! Huge yard, open views, fresh ocean breezes. A Beautiful and comfortable home which has been upgraded; kitchen with granite counters, top line appliances, all 3 baths have been beautifully upgraded. Large family room w/gorgeous hard wood flooring and a cozy fireplace, large livingroom has vaulted ceilings and an inviting fireplace. Extra large garage w/ office setup, large driveway, wonderful neighborhood. Exceptional opportunity come bring your offer today!


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The current owners purchased in 2006 using a $112,000 downpayment and and 90% financing from Countrywide. About nine months later they pulled out their downpayment and refinanced into $1,169,950 worth of loans from WaMu.

A notice of default was filed on the first loan - a $1 million loan - in mid August. Assuming a sale can go through for $819,000, and we factor in 6% sales costs, it would mean a loss of $350,140 off the previous sales price. Because of the cash-out re-fi, WaMu would be the big loser.

Nearly 1 year on the market in LN

This Laguna Niguel home is only a few weeks away from celebrating its one-year anniversary for sale on the MLS. We think you would agree that a lot has happened since this house was listed back in September 2007.

24364 Cielo, 92677
Asking price: $500,000-$525,000
Asking price/ sq ft: $346
Purchase price: $690,000
Purchase date: 2/16/07
Size: 3 beds, 3 baths, 1,446 sq ft (built in 1986)
MLS: S505906 (344 days on Redfin)
ZipRealty price tracker: Price Reduced: 10/13/07 -- $729,000 to $705,000
Price Reduced: 11/30/07 -- $705,000 to $625,00
Price Reduced: 01/12/08 -- $625,000 to $575,000
Price Reduced: 06/26/08 -- $575,000 to $500,000
Price Increased: 07/03/08 -- $500,000 to $585,000
Price Reduced: 08/12/08 -- $585,000 to $525,000
Price Reduced: 08/14/08 -- $525,000 to $520,000
Price Increased: 08/25/08 -- $520,000 to $525,000
Zillow Zestimate: $1,131,500 (LOL)
HOA dues: $146 + $30
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 3,150 sq ft
From listing: AWESOME 3 BEDROOM 2.5 BATH...PERFECT HOME WITH GREAT BACKYARD AND PATIO..3RD BEDROOM USED AS A LOFT...ASSOCIATION TENNIS AND BASKETBALL COURTS...TILE FLOORING AND CUSTOM CARPETING.......CLEAN AND PERFECT WITH LOTS OF SUNSHINE MAKES THIS THE ONE TO OWN IN BEAUTIFUL LAGUNA NIGUEL..............

Customized financial info, assumes $500,000 price:
Minimum Income Requirement (using 30Y Fixed): $116,400, assumes no other debt/obligations.
Downpayment needed: $15,600
Monthly Payment on 30Y Fixed at 6.375% with property taxes and mortgage insurance estimated: $3,889.80
Minimum Income Requirement (using 5Y fixed): $116,400, assumes no other debt/obligations.
Monthly Payment on 5Y fixed at 5.75% with property taxes and mortgage insurance estimated: $3,686.54
Disclosure: All rates offered to the client with 1 point cost. Rate quotes assume a purchase transaction with the required minimum down payment, 720 credit score, full income qualification and required reserves. Rates are subject to fluctuation. Custom rate quotes and rate lock advice are available by visiting www.thegreatloan.com.

What do you know...another property last purchased in 2007 is already feeling the burn. What do you think we will be saying about properties purchased in 2008 a year from now?

The current owner/occupant purchased the property for $690,000 using 100% financing from our friends at Countrywide. Way to go, C'Wide.

About seven months later, he listed it for sale asking $729,000 - not surprising considering that probably would have allowed him to get out from the property scab free. The price has been progressively falling since then.

Complicating things somewhat are the notice of default on the property - filed in March - and the notice of trustee sale in the amount of $591,719 that came in June. This home is scheduled to be auctioned off Sept. 10 at the Santa Ana Courthouse, but since this is the original auction date there's a chance it could be pushed back.

Assuming a buyer can be found who is willing to pay $520,000 - the quasi-middle of the asking range - and the lender accepts, it would mean a loss of $201,200 for whomever owns the cruddy loans now. The homedebtor would suffer a ding to his credit.

A sale at that amount would also mean a depreciation of 25% - not including sales costs - in about a year and a half.

2-time distress in Laguna Niguel

Countrywide served up the Kool-Aid-laden bucket 'o cash. The buyer provided the optimism.

The current owner took control of this Laguna Niguel condo in early 2007 - not long after it had gone through foreclosure the year before.

Perhaps they thought they were getting a steal and were betting that the real estate market would make a quick turnaround so they could move up. After all, this isn't the type of property you usually associate with long-term ownership.

You will see how both sides (including what used to be Countrywide) are now paying the price. Though, we would argue the lender is getting the worse end of it...

33 Dover Pl #33, 92677
Asking price: $219,000
Asking price/ sq ft: $293
Income requirement: $54,750
Purchase price: $325,000
Purchase date: 2/13/07
Size: 1 bed, 1 bath, 747 sq ft (built in 1985)
MLS: S531255 (92 days on Redfin)
ZipRealty price tracker: Price Reduced: 7/12/08 -- $249,000 to $219,000
Zillow Zestimate: $311,500
HOA dues: $349
Type: Condominium
Style: Cape Cod
Stories: 1 Level
From listing: What an opportunity for an investor or first-time buyer to own a unit in prime Beacon Hill! This spacious one bedroom with vaulted cathedral ceilings is on a secluded and private greenbelt and features full-size inside laundry and beautiful tiled cozy fireplace! So close to many attractions including movies, restaurants, award winning schools, Dana Point Harbor, world class resorts and beaches. All this and complete access to all Beacon Hill amenities, including tennis, pools, spas, greenbelts, playgrounds, parks, and walking trails to beach. What an opportunity to be in this wonderful community at such a fantastic price. HURRY!

The current owner purchased in 2007 using 100% financing from Countrywide. The first loan on the property received its notice of default in May.

It would appear the potential buyer pool for this property is fairly limited. A target owner-occupant would probably be a single professional, since there does not seem to be enough space for two people, let alone a family. A smart buyer also would realize they would have to be committed to the property for a fairly long time (most likely five plus years), in case property values continue falling or are stagnant.

A quick scan shows values could very easily continue to decline. ForeclosureRadar says there are three other properties in distress on the same street - two REOs and a third that has received its notice of trustee sale.

Would you want to be priced into this property for half a decade or more?

An investor would be interested if the price were low enough and they could achieve positive cash flow. We don't think the price is low enough yet.

The owner doesn't have too much more to lose except a credit score at this point - if they won't be able to keep the condo. Assuming a sale is allowed to close for the current asking price, the lender will be out $119,140. On a 1-bedroom, 23-year-old condo.

It would also mean a depreciation of about 33% - not including sales costs - in about a year and a half.

Weirdness in Marina Hills

This Laguna Niguel luxury home has been discounted in the hopes it will sell quickly. Perhaps the sales team is so motivated they didn't even have a chance to go out and take any pictures yet (the photo is from the 2005 listing).

Or maybe they just aren't motivated enough to do what's necessary to sell a house in a real estate market like this.

If that's the case, the owner only has one person to blame...

13 Tramonti, 92677
Asking price: $900,000
Asking price/ sq ft: $344
Income requirement: $225,000
Purchase price: $1,289,000
Purchase date: 12/18/06
Size: 4 beds, 3 baths, 2,620 sq ft (built in 1989)
MLS: S539759 (12 days on Redfin)
ZipRealty price tracker: Price Reduced: 7/21/08 -- $1,100,000 to $900,000
Zillow Zestimate: $989,500
HOA dues: $107
Type: Single Family Residence
Style: Mediterranean
Stories: 2 levels
Lot size: 5,000 sq ft
From listing: This amazing Marina Hills home has it all. Panoromic city view from both levels. Upgraded kitchen w/ built-in Refrigerator. Walking distance to community pool, tennis courts and park.

The current owner purchased the property - not their primary residence - in 2006 for $1,289,000 using about 90% financing. The Redfin sales history says this property had previously sold for $1,078,000 in 2005, so theoretically that seller made a tidy little profit in a short amount of time.

A little flip like that is a bit suspicious considering the types of mortgage fraud that have gone on in Orange County, but you would think the 2006 buyer would know what they're doing. After all, they're not just the owner - they're a real estate agent who also just listed the house for sale.

In case you're wondering, ForeclosureRadar does not show any foreclosure activity on this property. So, we assume that the owner is up-to-date on their mortgage obligations. The property taxes also have been paid.

If we play the optimistic game of assuming a sale can and does go through for the current asking price, it would mean a loss of $443,000, including 6% sales costs, or a depreciation of $389,000 or 30% off the 2006 price, not including any transaction costs.

'03 condo rollback in LN

The trickle of 2003 rollbacks in South County continues despite some observations that prices and sales numbers for OC as a whole appear to be leveling off for the time being.

Here is another of those discounted properties, located in Laguna Niguel.

28223 La Gallina, 92677
Asking price: $260,000
Asking price/ sq ft: $306
Income requirement: $65,000
Purchase price: $405,000
Purchase date: 5/17/06
Size: 2 beds, 2 baths, 850 sq ft (built in 1995)
MLS: S526912 (104 days on Redfin)
ZipRealty price tracker: Price Reduced: 6/24/08 -- $355,000 to $299,000
Price Reduced: 7/01/08 -- $299,000 to $260,000
Zillow Zestimate: $337,000
HOA dues: $230 + $22
Type: Condominium
Style: Townhouse
Stories: 1 Level
From listing: BEAUTIFUL UPPER LEVEL CONDO. LIGHT & BRIGHT, WARM MODERN PAINT TONES. SUNNY KITCHEN WITH OVERSIZED COUNTER SPACE AND LOTS OF CABINETS! INDOOR LAUNDRY,SPACIOUS PATIO WITH STORAGE CLOSET AND A GATED ENTRANCE.INVITING TIERED FIREPLACE IN LIVING ROOM WITH VAULTED CIELINGS. ASSOCIATION POOL AND AMENITIES. CARPORT WITH EXTRA STORAGE.


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Can you believe this property - a decent starter condo - was legitimately only affordable for people making more than $100,000 per year based on its peak price (if they wanted to be careful and use conservative financing)? Most likely you would answer "yes" if you've been following the local real estate market.

Laguna Niguel - a fairly affluent city as a whole - had an average adjusted gross income of $102,247 in 2005, according to IRS records. Interestingly, when adjusted for inflation, incomes there actually were still lower than they were at the high mark of 2000.

The current owner bought at the peak and used 100% financing. If the property can be sold for the current asking price, the loss would be $160,600, including 6% sales costs. All for the lender.

It also would mean a depreciation of $145,000 or 36% off the peak, not including any sales costs, as well as a depreciation of 13% off the mid-2003 price of $300,000.

Missing the market in Laguna Niguel

Today's property, located in Laguna Niguel, is a bit of an artifact. See, it's been for sale for well over a year.

And it's been chasing the market down all the way...

30442 La Vue, 92677
Asking price: $1,299,000
Asking price/ sq ft: $329
Income requirement: $324,750
Purchase price: $1,570,000
Purchase date: 8/17/05
Size: 4 beds, 4 baths, 3,954 sq ft (built in 1989)
MLS: S470041 (546 days on Redfin)
Zillow Zestimate: $1,598,500
HOA dues: $75
Type: Single Family Residence
Stories: 2 Levels
Lot size: 5,900 sq ft
From listing: Remodeled & Expanded, Nearly 4,000 sqft! Versatile Open floor plan. Tons of natural light. Two story Vaulted Ceiling entry. Huge Bonus room, Travertine floors, Granite counters, Stainless Steel Appliances, 3 Fire places. Salt Water Pool & Spa. Quiet neighborhood close to Beaches and World Class Resorts. Turnkey.


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Here's the asking price history, via Redfin:

Feb 03, 2007 $1,725,000
Feb 05, 2007 $1,675,000
May 23, 2007 $1,599,000
Aug 03, 2007 $1,559,000
Aug 15, 2007 $1,499,000
Sep 20, 2007 $1,449,000
Oct 06, 2007 $1,399,000
Feb 13, 2008 $1,349,000
Apr 03, 2008 $1,299,000

That's a decline of $426,000 over the course of more than a year. You can almost see the thinking in action: The property was first listed at a wishing price that would not only bail the owner out, but provide a little bit of profit too. Luxury real estate doesn't go down, right?

Then somewhere around the $1,559,000 mark we hit breakeven - this might have been the lowest amount the owner could take for the property and not have to either try for a short sale or pay the difference out of his own pocket.

But the market had already passed him by, and he kept chasing for many more months - always a step behind.

As of this writing, the property is showing up as active in Redfin but as inactive in other online brokerages like ZipRealty. This could simply mean the property is back on the market and hasn't been updated yet on other sites, or it could be that Redfin is simply incorrect. Either way, this property makes for an interesting subject.

It was purchased in 2005 using 90% financing - a $1 million first from Bank of America, and $411,500 from Grand Capital & Associates. In March of 2006 what appears to be a $55,000 standalone second was added to the property.

We should also mention the property is a preforeclosure. A notice of default was recorded on the first loan in December for $26,145. The notice of trustee sale amount of $1,046,958 was posted in April. If you'd like to pick this one up at auction, it's scheduled for the block July 25. Its original auction date was last Wednesday, but was postponed due to bankruptcy.

It appears unlikely, but if the property could somehow be sold for the current asking price on the open market, and we deduct 6% for sales costs, the loss would be $348,940.

3-time failure in Laguna Niguel

The Redfin listing for this Laguna Niguel preforeclosure home does not designate it as a short sale, but how can it not be one? The owner put $0 down when he bought it during the bubble, and he is now trying to sell it for more than $150,000 less than he paid about two years ago.

As you will see, there is much more to this story than meets the eye.

28281 Via Alfonse, 92677
Asking price: $649,900
Asking price/ sq ft: $375
Income requirement: $162,475
Purchase price: $830,000
Purchase date: 5/19/06
Size: 3 beds, 3 baths, 1,731 sq ft (built in 1989)
MLS: S532406 (3 days on Redfin)
Zillow Zestimate: $645,500
2006 property tax: $7,207
HOA dues: $142
Type: Single Family Residence
Stories: 2 Levels
Lot size: 4,040 sq ft
From listing: Wonderful two story home in Laguna Niguel. This home features 3 bedrooms, 2.5 bathrooms, a family room with a fireplace, a formal dining room, mirrored closet doors, and a great view of the surrounding city. Home has access to association amenities, which include a pool, spa, tennis court, and work-out center. Come and enjoy all the wonderful things this home has to offer.

Considering how the photos look, it appears the property is already vacant, so it seems unlikely the owner will be trying too hard to keep the house. Does the bottle of alcohol in this picture come with the house, or does that have to be negotiated separately?

As we mentioned, the owner obtained 100% financing (78/22) from JPMorgan Chase. The notice of default was filed on New Year's Eve.

Assuming it is possible to successfully sell the property for the full asking price, the loss would be $219,094, including 6% sales costs. Not a good day for the lender. And it's not the only one who will be out a lot of money.

Think this is an isolated incident in this neighborhood? On this street? Wouldn't you believe it: 28272 Via Alfonse is also headed towards foreclosure. And, 28371 Via Alfonse is an REO that is not yet listed for sale.

All $0 down deals using virtually identical means of financing. All purchased in mid-May through early June of 2006. All by the same investor.

That's right: In a span of less than a month, our real estate investor "bought" three properties on the same street - for a total of $2,390,000 - using none of his own money. Carleton Sheets would be proud!

But the fantasy of real estate riches soon ended, and each of the three homes began the foreclosure process by early January. Fortunately for the investor, he didn't have to sacrifice his home. In fact, his primary residence is in another, very wealthy South OC city.

All told, the loss on these properties will be significant, and the lenders will be left holding the collective bags. Who do you get angry at here? The investor for walking away and potentially not disclosing on their loan applications that they were buying so many properties and leveraging themselves to the hilt? Or do you cry foul on the lenders who enabled this behavior by funding the loans?

No matter what your personal opinion, there is no denying it is the lenders that will be taking the brunt of it in the shorts. And the neighbors can't be too happy to have three homes possibly sitting vacant on the street, either.