'03 luxury rollback short sale in Aliso

This is exactly what happens when the market goes nuts - huge boom, then huge bust, and we're left with an extreme short sale in Aliso Viejo that also happens to be a preforeclosure. Can they save the house?

18 Prescott, 92656
Asking price: $999,900
Previous sales price: $1,645,000
Previous sales date: 12/28/05

Beds:	5
Baths:	5
Sq. Ft.:	4,100
$/Sq. Ft.:	$244
Lot Size:	5,353 Sq. Ft.
Property Type:	Residential, Single Family
Style:	Two Level, Other
View:	Canyon, Hills
Year Built:	2002
Community:	Aliso Viejo
County:	Orange
MLS#:	S603092
Source:	SoCalMLS
Status:	Active This listing is for sale and the sellers are accepting offers.
On Redfin:	2 days

From listing: Stunning Upgraded Estate offers Peaceful Views * Great Floorplan on a Cul-de-Sac Boasts 4 Bedrooms + Loft + Main Floor Office + Play/Hobby Room * Formal Living & Dining Rooms * Gourmet Kitchen w/ Island + Bar Seating, Large Morning Room, Walk-In Pantry, Butlers Pantry, Wine Cellar, & Upgrades including Granite Counters, Rich Mocha Cabinetry, & Stainless Steel Appl. * Spacious Family Room w/ Custom Brick Fireplace & Built-In Media Center * Great Backyard w/ Covered Patio & Awesome Views * Luxurious Master Suite w/ Retreat Features Slate Fireplace & Viewing Balcony + Walk-In Closet * Master Bath Features Slate Accents, Dual Vanities +Oversized Tub +Separate Shower Stall * 2 Secondary Upstairs Bdrm + Spacious Loft w/ Built-Ins (Could be converted to 5th Bdrm) * Main Flr Bedroom Suite w/ Private Bthrm * Main Flr Office w/ Private Bthrm (Could be converted to 6th Bdrm) * Exquisite Upgrades Include Rich Hardwood Flring, Upgraded Carpet, Designer Paint, Crown Molding, Shutters & Rich Designer Touches Thru-out

Whew ... that is one heck of a run-on sentence up there.

What does Redfin have to say about this situation? Here's what it says on the right side of the listing: "This home is flagged as a short sale. We're sorry, we don't tour or write offers on short sales because of the slim chance that you'll get the home."

Public records say this property sold for $992,000 in mid-2003 and then for $1.645 million in 2005 ... an increase in value of 66% in about two and a half years. Sound reasonable to you?

Now, assuming the property can sell for the current short sale price, it would mean a decline of about 40%.

What's a million between friends?

Here's a $1.6 million short sale in Talega (San Clemente). It's even overlooking the 5th hole of the Talega Golf Course. Sweet! Not if you're the lender and the asking price is $1 million below the previous sales price.

24 Corte Vizcaya, 92673
Asking price: $1,600,000
Asking price/ sq ft: $284
Purchase price: $2,600,000
Purchase date: 5/15/06
Size: 5 beds, 5.5 baths, 5,633 sq ft (built in 2001)
MLS: S521360 (531 days on Redfin)
ZipRealty price tracker: Price Reduced: 03/03/08 -- $2,495,000 to $2,299,000
Price Reduced: 03/26/08 -- $2,299,000 to $2,100,000
Price Reduced: 04/01/08 -- $2,100,000 to $1,995,000
Price Reduced: 05/24/08 -- $1,995,000 to $1,800,000
Price Increased: 06/06/08 -- $1,800,000 to $1,850,000
Price Reduced: 03/25/09 -- $1,750,000 to $1,650,000
HOA dues: $158
Type: Single Family Residence
Style: Mediterranean
Stories: 3+
Lot size: 0.51 Acres
From listing: Overlooking the 5th hole of the Talega Golf Course on one of the most coveted lots in Talega, this exceptional Vizcaya property is rich in luxury. Amenities include plank-wood & Travertine flooring, custom window treatments, billiards and media rooms, and a gourmet kitchen with Viking S/S appliances and Sub-Zero fridge. Outside, discover an entertainer's dream yard, complete with private pool, spa, cabana, built-in outdoor kitchen and personal tot-lot. Enjoy resort living at its best - while in the privacy and comfort of your own home.

Here's another of your increasingly common high-end short sales. Think this property is going to move any time soon considering the asking price? That probably helps explain why the house has been on the market for more than 500 days!

And, judging by the pictures, it's also empty. There's a notice of default and it's a short sale. Double whammy.

Assuming the property is sold for the current asking price...well there's not really much use in going through that exercise because we know the inevitable result: this will likely become a foreclosure, go back to the bank and then get resold.

Surprise! Laguna preforeclosure

This Laguna Beach mansion in Emerald Bay shows virtually no signs of being a "typical" danger property for foreclosure, if there is such a thing: Last sale well before the bubble (though it appears the previous sale was only for the land); a level of debt that's nowhere close to some of the biggest abusers out there; and the asking price is way, way enough to cover the loans we see on the property plus plenty more.

Yet, here we are. ForeclosureRadar tells us this one is in default.

541 Emerald Bay, 92651
Asking price: $6,250,000
Asking price/ sq ft: $1,250
Purchase price: $1,200,000
Purchase date: 9/29/98
Size: 4 beds, 4.5 baths, 4,999 sq ft (built in 2000)
MLS: L28980 (93 days on Redfin)
Zillow Zestimate: $3,582,500
HOA dues: $650
Type: Single Family Residence
Style: Cape Cod
Stories: 3+
Lot size: 5,300 Sq. Ft.
From listing: EMERALD BAY - 4 Bedroom - 4.5 Bath. Beautifully appointed Eastern Seaboard influenced custom residence with Fantastic White Water & Panoramic Ocean Views. Built New in 2000, street to street corner lot location with Separate Master Suite with View Terrace. Family Room plus separate Bonus Room. Not a better way to live the Emerald Bay lifestyle!

This begs the question - how much cash did the owners go through to build this property considering they can't pay off the $1.85 million first loan from Union Bank of California? According to our sources, a notice of default was filed in March for $40,946.

For the record, Foreclosureradar.com also shows a $750,000 second as well, for a total of $2.6 million.

Of course, a quick sale for a hefty amount will probably alleviate all the issues. But we'd be hard-pressed to think there are that many buyers around who are in the market to pony up $6 million plus for some coastal real estate. So far, it's been three months on the market and counting.

Debt-loaded in RSM "won't last long!!!!"

Sure...this short sale preforeclosure in RSM won't last long, as the agent claims. Either it will quickly move through the short sale process or it will become a full-fledged foreclosure.

You be the judge when you take into account some additional background on this property...

8 Via Corbina, 92688
Asking price: $530,000
Asking price/ sq ft: $214
Purchase price: $498,000
Purchase date: 4/30/03
Size: 5 beds, 2.5 baths, 2,473 sq ft (built in 1999)
MLS: S574992 (13 days on Redfin)
Zillow Zestimate: $562,000
HOA dues: $94
Type: Single Family Residence
Style: Spanish
Stories: 2
Lot size: 4,713 Sq. Ft.
From listing: Fantastic Deal!!!Won't last long!!!! Beautiful 5 bedrooms 2.5 baths home. Warm and welcoming curb appeal with mature trees and cozy porch. Designer paint through out the family and formal living areas. Upgraded ceramic tile as well as carpeting through out. Enjoy the low maintanance back yard featuring custom built-in BBQ with an L-shaped bar,perfect for entertaining and covered by an oversized patio. Huge master suite with light and bright bath. Custom Plantation shutters through out and much more.

Our auto spell checker saw two spelling errors, plus we quickly saw a spacing error and an obvious grammar error. We didn't feel like looking closer for more.

Theoretically, the owners should have some equity in the property considering the asking price. After all, they bought in 2003 and paid $32,000 less than they are hoping to get. They also supposedly would be paying down the debt on their mortgage(s) for six years. We won't even go into whether the property should even be worth the asking price.

The problem is the additional debt. When they current owners took possession of the property, they used 99.9% financing and only had to put $250 of their own money into the transaction. A refinance in 2007 yielded two loans from Homecomings Financial totaling $747,000. Assuming the property sells for the current asking price, and we take into account sales costs, that's a blow to the lender of more than $200,000. The owners never really put any of their own money into the property to begin with, and they ended up extracting a significant amount of equity.

Given what you know now - owners with absolutely no skin in the game; loans well in excess of the asking price; short sale; preforeclosure (notice of trustee sale, scheduled sale date June 5 at the Santa Ana courthouse with an opening bid of $650,396) - what do you think is going to happen?

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.

Leveraged to the hilt in Foothill Ranch

Foothill Ranch is OC's worst housing market, and South OC is home to four of the bottom 10 ZIP code-ranked markets in the county, according to Jon Lansner of the OC Register's "Zippy" ratings. Today's property is one reason why Foothill Ranch isn't doing so great right now...

11 Monserrat Pl, 92610
Asking price: $695,000
Asking price/ sq ft: $272
Purchase price: $536,000
Purchase date: 10/16/02
Size: 4 beds, 3 baths, 2,553 sq ft (built in 1991)
MLS: S562025 (106 days on Redfin)
ZipRealty price tracker: Price Reduced: 03/13/09 -- $775,000 to $695,000
Zillow Zestimate: $671,500
HOA dues: $70
Type: Single Family Residence
Style: Traditional
Stories: 2
Lot size: 5,029 Sq. Ft.
From listing: SPECTACULA VIEWS OF OCEAN, CITY LIGHTS & HILLS FROM PRIVATE REAR YARD & MASTER SUITE!!Custom upgrades throughout this private home at end of cul-de-sac. Main floor bdrm w/mirrored closet & separate entrance to full bath. Oversize family rm w/granite fireplace, lg wood mantle, inlay travertine flors & wet bar w/sink & granite top.Custom french slider. Lg light & bright gourmet kitchen w/custom granite counters, island,walk-in pantry,w/new Kitchen Aid appliances (brush silver double oven, stove top, diswasher, microwave & double sink w/new fixtures).Separate breakfast nook. IMPORTED CUSTOM GOLD PLATED CHANDELIERS FROM SPAIN!!Hardwood floor. Nuetral carpet. Travertine (family rm and bathrooms).Plantation shutters in Formal living rm w/vaulted ceiling & formal dining rm w/double french doors. Lg master suite, ceiling fan, new custom windows & PANORAMIC VIEWS! Oversize 2nd & 3rd bdrms w/ mirrored closets & ceiling fans.3 car garage w/storage & epoxy floor. Brick hardscape & lush landscape.

Sounds like some major overimrovements took place in this property. Why there is no photo featuring the "IMPORTED CUSTOM GOLD PLATED CHANDELIERS FROM SPAIN!!" is beyond us.

This is another of those properties that probably shouldn't be going through foreclosure, but the truth is the owner spent away the property a while ago.

He paid $536,000 in 2002 using 99% financing and a $5,400 downpayment. Even if he just stopped there, he probably would have come out OK. But, two years later, he refinanced into $607,500 worth of loans. Then, in April 2005, he refinanced into a $697,500 mortgage from Option One.

In February 2007, there was another new loan - a $706,000 first loan. A few months later, a second loan showed up for $149,000. Those two loans total $855,000. Total mortgage equity withdrawl was more than $300,000. The first loan for $706,000 went into default in April.

Assuming the property sells for the current asking price, it would be $159,000 or 30% above the 2002 price. But, as you now know, in reality this is another huge kick in the pants for the lender.

Selling short in Laguna Hills

A commenter pointed out to us that this Laguna Hills property has been sitting for some time, so we thought we'd take a look...

25222 Pike Road, 92653
Asking price: $485,000-$496,000
Asking price/ sq ft: $235-$240
Purchase price: $680,000
Purchase date: 4/7/05
Size: 4 beds, 2 baths, 2,066 sq ft (built in 1969)
MLS: S531040 (378 days on Redfin)
ZipRealty price tracker: Price Reduced: 08/04/08 -- $649,900 to $524,900
Price Reduced: 02/04/09 -- $524,900 to $496,000
Zillow Zestimate: $554,187
HOA dues: $235 Type: Single Family Residence
Style: Mediterranean
Stories: 2
Lot size: 5,406 Sq. Ft.
From listing: REDUCED TO SELL NOW!!!Spectacular Former Model Home-desirable Floor plan 4 BEDROOMS/2 BATHS/2 CARGARAGE,Upgraded some areas,great-large Master bedroom at main level plus another bedroom with wood floors & remodeled full bath with marble floors, newer fixtures, glass block walls & more.Cathedral ceilings plus a huge Bonus Room/Family room overlooks to living room with wetbar, pergo floors, custom window coverings, tract lightings, ceiling fan,french doors & windows through out. Redone kitchen with travertine counter top, newer cabinets, range, dishwasher,sink, fixtures & sound proofed bevelled windows & sliding doors. Separate formal living room with newer plush carpet, fireplace, scraped textured ceilings. Custom front, side hardscaped & landscaped, backyard have waterfalls, streams, ponds, patio cover & trees-great Japanese style garden, re-roofed approx 2005.Still need some finishing touches!!! NO HOA & LOW TAX RATE-NO MELLO-ROOS

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This property has been for sale for almost a year, so we have no idea what it actually looks like inside these days. The fact that the commentor said "it basically looks like a foreclosure with the yard unkept" isn't a good sign, either.

Here is what we do know about this house: The current owners paid $680,000 in 2005, using 80% financing and a $136,000 downpayment. In 2007 they added a second loan to the property for $80,000 that liberated some (not all) of their stake in the property.

The first loan (of $544,000) went into default in August 2008, and a notice of trustee sale was filed in December in the amount of $550,710. As you can see, this means that after interest and fees, the amount owed is above the original loan balance from 2005. According to ForeclosureRadar.com, the property is scheduled for auction on June 8.

With an asking price of $496,000, it would represent a 27% decline off the 2005 price, not including sales costs. We're still not sure the bank will even let the house go for that price, though it wouldn't be surprising if it would be cheaper than going through the foreclosure process and dealing with this property afterward when it becomes an REO.

'01 rollback in Mission

The bank is ready to deal on this apartment-like condo in Mission Viejo. Think there will be a taker or two for this short sale property considering it's priced below the 2001 sales price?

26398 Via Roble #12, 92691
Asking price: $160,000
Asking price/ sq ft: $170
Purchase price: $168,500
Purchase date: 9/25/01
Size: 2 beds, 1 bath, 943 sq ft (built in 1973)
MLS: S527418 (404 days on Redfin)
ZipRealty price tracker: Price Reduced: 06/10/08 -- $350,000 to $180,000
Price Increased: 03/26/09 -- $180,000 to $200,000
Price Reduced: 04/07/09 -- $200,000 to $180,000
Price Reduced: 04/30/09 -- $180,000 to $160,000
Zillow Zestimate: $201,500
HOA dues: $328
Type: Condominium
Stories: 1
From listing: FINALLY.... BANK IS READY FOR OFFERS! Spacious living room has lots of sunny windows, master bedroom is oversized with walk-in closet, inside laundry. Large Patio area, internal tract location.

Can you believe properties in this complex were selling for more than $350,000 in 2005?

Sorry folks, no second photo. So, it seems, after more than a year on the market, the bank is ready to deal. We're not sure what the original financing was on this property, but we do know there is a $294,000 loan outstanding against it that was taken out in 2006. It's delinquent, and the notice of default was filed in March.

The property originally came onto the market asking $350,000 in 2008. Again, very predictable - that was likely the entire loan balance, plus perhaps just a bit extra. The condo came on and off the market more times than we feel like counting, and total discount off the original asking price stands at $190,000, or 54%.

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.

Ladera luxury, almost 30% off

First off, if you haven't had a chance to check out this post on the Irvine Housing Blog, be sure to give it a look. It's an in-depth examination of some examples of how abuse has been alive and well in Laguna Beach.

Today, we're looking at a home in Ladera Ranch that was once worth above the million-dollar mark.

87 Zinnia St, 92694
Asking price: $850,000
Asking price/ sq ft: $250
Purchase price: $1,190,000
Purchase date: 4/5/07
Size: 4 beds, 3.5 baths, 3,400 sq ft (built in 2003)
MLS: S572674 (5 days on Redfin)
HOA dues: $205
Type: Single Family Residence
Style: Cape Cod
Stories: 2
Lot size: 5,000 Sq. Ft.
From listing: A UNIQUE property and a once in a lifetime opportunity to own/operate a business from a much sought after Front Street Business District where you can both work and live in luxury. Private and separate entrance to approx. 480 sq ft front office for business activities and a dramatic two story entry to home with a convenient open floor plan including a giant bonus room, large kitchen with granite counters, gated courtyard plus three large balconies and much much more.

How would you like a live/work property with no driveway that sold for more than $1.1 million two years ago? The current owners only had to use a downpayment of $88,000 - they were able to finance the remaining $1,102,000.

The first loan of $952,000 is in trouble. A notice of default in the amount of $28,978 was file in March. As you can see, the current asking price is significantly less than the amount owed to the bank.

Assuming the property can actually be sold for the current asking price, it would mean a depreciation of $340,000, or 29% in about two years, not including any sales costs. The owners would lose their meager downpayment, and the lender would be stuck with the rest of the loss.

Custom built, cookie-cutter problem

Sure, this Nellie Gail mansion has all the touches you'd expect from a custom house. But it's also a short sale and in preforeclosure just like so so many others...

27462 Hidden Trail Rd, 92653
Asking price: $2,299,000
Asking price/ sq ft: $329
Purchase price: $2,600,000
Purchase date: 1/6/06
Size: 5 beds, 4.5 baths, 6,995 sq ft (built in 1988)
MLS: S571123 (11 days on Redfin)
Zillow Zestimate: $2,297,500
HOA dues: $80
Type: Single Family Residence
Style: French
Stories: 2
Lot size: 0.92 Acres
From listing: THIS BEAUTIFUL CUSTOM BUILT HOME IS SITUATED IN A PREMIER LOCATION IN THE SOUGHT AFTER NEIGHBORHOOD OF NELLIE GAIL RANCH ON ALMOST 40,000 SQFT LOT. THIS ESTATE HOME HAS A GATED ENTRY AND AN OPEN AND FLOWING FLOOR PLAN & A GRAND ENTRANCE WITH SPIRAL STAIR CASE. OVERSIZED FAMILY ROOM W/FULL BAR AREA. LARGE GOURMET KITCHEN, HUGE MASTER BEDROOM W/RETREAT & FIREPLACE. OFFICE/LIBRARY WITH BUILT-INS ON THE MAIN FLOOR. ENTERTAINER'S GROUNDS FEATURE POOL, SPA, LAWN AREA WITH MATURE TREES AND AMAZING CITY LIGHTS, SUNSET AND MOUNTAIN VIEWS. LOW HOA DUES, LOW 1.1% TAX RATE AND NO MELLO ROOS. THIS IS A SHORT SALE.

Check out the photo of the kitchen in the listing. Needs some serious updating for a $2 million+ house. Where's the granite!? Stainless steel? Shoot us now...

The current owner paid $2.6 million at the peak of the bubble. As you can see by the asking price today, they don't expect it's worth as much these days.

We're not sure what the financing was at the time of purchase (if any) but we do know there was a $1.84 million loan from Downey Savings in April 2007. That's what is now in default.

There also was a $650,000 second loan from Wells Fargo in April 2007, for a total of $2.49 million in debt. If the property can be sold for the current asking price, it would mean a loss of $438,940, including 6% sales costs.

For sale since March '07 in Capo

If you were trying to sell a property but couldn't close the deal, at what point would you finally throw in the towel? Six months? Nine months? A year? How about two? That's actually still understating how long this Capo Beach duplex has been on the market.

27072 Calle Dolores, 92624
Asking price: $665,000
Asking price/sq ft: $242
Purchase price: $900,000
Purchase date: 6/25/04
Size: 2,748 sq ft (built in 1988)
MLS: S479639 (762 days on Redfin)
ZipRealty price tracker: Price Reduced: 05/03/07 -- $1,200,000 to $1,150,000
Price Reduced: 06/08/07 -- $1,150,000 to $1,149,000
Price Increased: 06/14/07 -- $1,149,000 to $1,149,050
Price Reduced: 06/09/08 -- $1,149,050 to $999,999
Price Reduced: 06/11/08 -- $999,999 to $999,998
Price Reduced: 09/05/08 -- $999,998 to $750,000
Price Reduced: 01/21/09 -- $750,000 to $675,000
Price Reduced: 02/13/09 -- $675,000 to $670,000
Price Reduced: 02/23/09 -- $670,000 to $665,000
Style: Contemporary
Stories: 2
Lot size: 4,707 Sq. Ft.
From listing: Awesome Custom Duplex built like Townhouse Style Condos! Completely Remodeled! Everything new including appliances, wood floors, granite, tile, kitchen and baths. 2 Bedrooms + Loft for 3rd bedroom or Office. Fireplace, skylights & Whirlpool tub. Each unit has own private deck and patio. New garage doors and openers for large double garages. Walking distance to shopping, dining, theatres and park. Short distance to Sand and Surf!



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This is one interesting listing. As you can see, the asking price has been reduced 45% off the original asking price of $1.2 million. That $1.2 million was obviously a wishing price considering our current non-owner-occupant owners paid $900,000 in mid-2004 using 100% financing. We are guessing the original asking price bailed them out for their purchase, plus whatever they spent on remodels along with some profit.

The current asking price is now just $38,000 above the September 2002 sales price of $627,000. Of course, it took 762 days on Redfin to get there. This property originally went on the market in March 2007 - more than two years ago.

Since the property is considered a multi-family investment property, we also have some rental information, including:

• Actual Gross Annual Income: $41,280
• Monthly Gross Scheduled Income: $3,440
• Capitalization Rate (%): 6.21
• Gross rent multiplier: 16.11
  

This means the current rent is $3,440 per month, for a total of $41,280 collected per year. The gross rent multiplier is the asking price ($665,000) divided by the annual income ($41,280) - the number of years in rent equals a potential purchase price. The cap rate is found by dividing net operating income by the property value (in this case, the asking price).

Assuming the property can actually be sold for the latest asking price, it would mean a loss of about $275,000, including 6% sales costs.

Is this really happening in Laguna?

Props to the OC Register's South Coast Homes blog for coming across this Laguna Beach property. Here's the summary: the house is a $9.5 million short sale. It's also a preforeclosure, as we'll show you today...

24 Lagunita Drive, 92651
Asking price: $9,495,000
Asking price/ sq ft: $1,315
Purchase price: $5,500,000
Purchase date: 8/31/00
Size: 5 beds, 5.5 baths, 7,220 sq ft (built in 1983)
MLS: S564400 (52 days on Redfin)
ZipRealty price tracker: Price Reduced: 03/10/09 -- $11,990,000 to $9,900,000
Price Reduced: 04/06/09 -- $9,900,000 to $9,495,000
Zillow Zestimate: $4,895,500
HOA dues: $140
Type: Single Family Residence
Style: Contemporary
Stories: 3+
Lot size: 8,580 Sq. Ft.
From listing: AN INCREDIBLE OPPORTUNITY FOR A LAGUNA BEACH, 'OCEAN FRONT' RESIDENCE! ON THE SAND, LOCATED IN PRESTIGIOUS LAGUNITA! CUSTOM HOME WITH 5 BEDROOMS AND 5.5 BATHS! PANORAMIC OCEAN VIEWS FROM NEARLY EVERY ROOM! ELEGANT MASTER SUITE ON TOP LEVEL WITH FIREPLACE, RETREAT & LUXURIOUS BATH! ENTERTAINMENT ROOM WITH WAT BAR! GOURMET KITCHEN WITH CUSTOM CABINETS, GRANITE COUNTERS AND CENTER ISLAND! LIGHT AND BRIGHT WITH VAULTED CEILINGS AND LARGE VIEWING WINDOWS! ADDITIONAL AMENITIES AND UPGRADES INCLUDE...CUSTOM LIGHTING, 2000 SQ FT MASTER SUITE, INFINITY EDGED SPA, BEACH FRONT TERRACES, 4 QUEST SUITES WITH LIMESTONE BATHROOMS, WALKING DISTANCE TO THE MONTAGE RESORT AND SPA, 24 HR GATED COMMUNITY, AND MORE!! TROPICAL LANDSCAPING AND CUSTOM HARDSCAPE! MUST SEE!

There were a total of $11 million worth of loans made against this property in 2007 - one for $10 million in August, and another for $1 million in September. The $10 million loan is currently in default and also is the reason this property is a short sale.

The notice of default - which came in March - is for more than $240,000. Yikes. Who said the rich are all truly rich?

There's not much to be learned here, except that $10-million loans can come back to get you if you're not careful. We don't know who made the loan, but we can guess they're seriously regretting the decision right about now.

More of the same in Mission

We've said it before, and we're going to say it again: the 100% crazy financing deals from 2004, 2005 and 2006 are old news since many have already exploded. Now, we're starting to see a trickle of later (2007) purchases start to go wrong. The difference is many of these actually used downpayments, so borrowers are feeling pain along with the lenders.

Here is one example in Mission Viejo.

27397 Via Primero, 92692
Asking price: $549,900
Asking price/ sq ft: $250
Purchase price: $860,000
Purchase date: 11/28/07
Size: 4 beds, 2.75 baths, 2,200 sq ft (built in 1973)
MLS: S560020 (83 days on Redfin)
Zillow Zestimate: $663,000
Type: Single Family Residence
Style: Mediterranean
Stories: 2
Lot size: 9,514 Sq. Ft.
From listing: Madrid home is priced to sell! Gourmet Kitchen w Center Island. Formal Living & Dining Rooms, Large family room w/built-ins & wet bar, patio area with pool. Newer Air Conditioner, double entry fron doors, Great family neighborhood. Walk to shopping, parks, YMCA, the Mission Viejo Natadores Aquatics Swim Complex featuring a 50 meter competition swimming pool. Property only has Lake Mission Viejo's Master Association on it which gives homeowner all Mission Viejo Lake Priveledges including boating, fishing, swimming, concerts on the lake etc.

The current owner used 90% financing from B F Saul Mortgage company. A notice of default was filed in December 2008, and the notice of trustee sale came in mid-March.

Comparable houses in Mission are asking $2,500 a month to rent. If we use a GRM of 160 to estimate value, this property would be worth about $400,000 to an owner-occupant. You can see the asking price is essentially $150,000 above that. Remember too that this is a short sale and we're not even sure the lender would let it go for this price.

Assuming a sale for the current asking price, the loss would be $343,094, including 6% sales costs. The owner would be out her downpayment of $86,100 and the bank would be on the hook for the rest. Not including sales costs, it would be a depreciation of 36% in about a year and a half.

More Ladera pricing pressure

We're going back to the 92694 - Ladera Ranch - today for a deeper look into some of the distressed properties there.

We eyeballed the list of properties either in or in danger of becoming foreclosures from Foreclosureradar.com, and we found three streets that each have five properties in some stage of foreclosure, and a handful of others with four. Not surprisingly, these tend to contain less expensive properties.

Here is one of those streets: La Salle. Two of the five distressed properties are currently for sale. The first, we profiled yesterday. Here is the second, which has been for sale for a year.

36 La Salle Ln, 92694
Asking price: $599,950
Asking price/ sq ft: $261
Purchase price: $825,000
Purchase date: 6/6/05
Size: 4 beds, 2.5 baths, 2,300 sq ft (built in 2003)
MLS: P630403 (364 days on Redfin)
ZipRealty price tracker: Price Reduced: 05/14/08 -- $679,950 to $649,950
Price Reduced: 09/05/08 -- $649,950 to $639,950
Price Reduced: 01/08/09 -- $639,950 to $599,950
Zillow Zestimate: $639,500
HOA dues: $192
Type: Single Family Residence
Style: Colonial
Stories: 2
Lot size: 5,000 Sq. Ft.
From listing: Great Location in Ladera Ranch! Walking distance to Award Winning Schools, Parks, Library, Club House, Tennis and Hiking trials. With a view of the Mountains and great shopping and restaurants near by. Bery beautiful Colonial Style single family residence on the Corner w/Fully fenced (Brick/Block) yard for privacy. Landscaping, Brick patios, Front Porch/Entrance set this home apart! Huge walk-in closet & master bath in master bedroom, Plantation shutters throughout, Very large Kitchen w/Granite counters, lots of cabinetry, and a square island with storage in center of work space area - inlcuding tile flooring. Save on utility cost with Ceiling fans throughout! Won't last long!!


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"Won't last long!!" Belated April Fools? From 2008? The previous owner bought the property new from the builder in 2003, and turned around and likely reaped a huge profit by selling it to the current owner in 2005 for $825,000.

To purchase the property, the current owner used an 80% first loan and a 10% second (90% total financing) from Metrocities Mortgage - now Prospect Mortgage. Less than two months later, they opened what appears to be a HELOC for $60,250.

A notice of default was filed in May 2008 against the first loan, and the notice of trustees sale for $689,196 was filed in August. That was for more than $20,000 above the original balance of the first loan.

Assuming the property (finally) sells for the current asking price, it would mean a loss of $261,047, including 6% sales costs. Not including transaction costs, it would mean a depreciation of 27% off the peak price.

50% off train wreck in Trabuco

Have you ever thought to yourself while scouring real estate listings: "Man, they couldn't pay me to take this property." That is exactly what came to mind when we saw this one. The unusual thing about this property is it sold for almost $1.7 million about four years ago.

30461 Hamilton Trl, 92679
Asking price: $799,999
Asking price/ sq ft: $291
Purchase price: $1,670,000
Purchase date: 4/8/05
Size: 4 beds, 3 baths, 2,750 sq ft (built in 1999)
MLS: S564210 (33 days on Redfin)
Original asking price: $980,000
HOA dues: $70
Type: Single Family Residence
Style: Contemporary
Stories: 2
Lot size: 4.11 Acres
From listing: ***Short Sale FIXER***Custom Home on 4.11 acres of flat land backing Santiago Moutians. Located in the gated community of Hamilton Trail, this home brings country living with in minutes from the city! Property Includes a tack room,large custom barn with 5 stables and apartment/ workshop. The views of the lands surrounding the home are majestic. Plenty of room for horse trailers, RVS and extra vehicles. Home is modern style, less than 10 years old. This property is one of a kind...but needs some work!!! Home has been affected by the recent floods and fires, causing mud rock and debris in the yards, may have city violations on land. There is a natural run off on the property.Dogs on property

Is this property worth the hassle of fixing and possibly clearing up the city violations? We can't see any interior photos of the house, so it's hard to say.

The current owner bought the house using 89% financing from WaMu and a $180,440 downpayment. The property's first loan went into default in April 2008, and the notice of trustee sale amount is about $100,000 more than the original loan amount.

Assuming the property can be sold for the current asking price, and we subtract 6% for sales costs, the loss would be more than $900,000. The owner will lose his downpayment and WaMu (Chase) is on the hook for the rest. Not including sales costs, it would mean this less-than-10-year-old property, in its current condition, could have lost half its value.

Flipper 1, bagholder 0

Now this isn't going to end well. Here is a preforeclosure in Foothill Ranch with an interesting recent history. It went REO in 2007 and Deutsche Bank sold it to a flipper, who in turn sold it for a profit to the current owner. Now, said current owner appears to be unable to afford the house.

How would you like to be in this situation right now?

64 Tessera Ave, 92610
Asking price: $699,900
Asking price/ sq ft: $241
Purchase price: $1,000,000
Purchase date: 10/18/07
Size: 5 beds, 3 baths, 2,900 sq ft (built in 1997)
MLS: S560990 (55 days on Redfin)
Zillow Zestimate: $756,500
HOA dues: $70
Type: Single Family Residence
Style: Traditional
Stories: 2
Lot size: 4,762 Sq. Ft.
From listing: Large Home at the end of cul de sac street in Beautiful Foothill Ranch.. Fabulous Neighborhood, Very Open Floor Plan, Dramatic Circular Staircase, Newer Custom Paint inside and out, Main Floor Bedroom & Bath, Spacious Gourmet Kitchen with Island and Granite, Large Family Room with Fireplace, Cathedral Ceilings and Lots of light. granite installed in all bathrooms and laundry room, 6' baseboards thru-out entire home, newer plush carpet and extensive use of Travertine in all bathrooms, kitchen, entry and laundry room. Newer range, dishwasher, water heater, recessed lighting. Landscaped front and rear.*** Panoramic Views of Hills, Canyon and City Lights, Association Pool and Spa. Minutes to Schools,library, Shopping, Restaurants, Parks, Whiting Ranch Trails and the 241/133 Tollroad.

Here are some more details on what happened: The property changed hands in 2004 for $675,000, and that buyer used 100% financing. The house went into foreclosure a couple years later, and we believe it went back to the bank for $723,000 in December 2006.

In May 2007, the lender sold the property for $820,000. About five months later, our flipper sold the property to the current owner for $1 million. That's a profit of $180,000 before expenses.

The current owner used 90% financing and put $100,100 down. The loan went into default in December.

In a situation like this, the thought that this could be fraud also crossed our mind. However, we don't think it's that likely for a few reasons. The last names of the previous two owners are different (though they could still be related or in collusion). It took about 14 months for the notice of default to be filed, so it's not like the current owner stopped paying on the mortgage right away. And, the current owner put more than $100,000 of his own money into the deal.

Assuming the property - a big short sale - can be sold for the current asking price, the loss would be $342,094, including 6% sales costs. The owner would lose his entire downpayment, and the lender would take the hit for the rest.

Well below '04 in Coto

Today's property is a short sale and preforeclosure behind the gates of Coto de Caza. As you'll see, it's also priced 16% below the 2004 price.

9 Creek View Rd, 92679
Asking price: $675,000
Asking price/ sq ft: $293
Purchase price: $805,000
Purchase date: 4/12/04
Size: 3 beds, 2.5 baths, 2,303 sq ft (built in 1996)
MLS: S560550 (41 days on Redfin)
Zillow Zestimate: $808,000
HOA dues: $210
Type: Single Family Residence
Style: Traditional
Stories: 2
Lot size: 3,920 Sq. Ft.
From listing: Beautiful highly upgraded 3 bedrooms plus a loft in a Cul De Sac.Adorable and private cusomized yard. Formal living and dining rooms with volume ceiling. Light and bright gourmet kitchen with center island and granite counter tops. Base boards and crown moldings throughout the house. Customized fireplace, window coverings, window and doorway casings. Two tone paint every where, cedar closet in master. This is a model perfect home and will not disappoint.

This property was built at the bottom of the previous housing downturn, and originally sold for $247,000. In the middle stages of the previous housing boom (2004), this property went for $805,000. That's an increase of 226% in eight years.

The current owners used 95% financing from National City Mortgage. Then, in mid-2007, they refinanced into $832,500 worth of loans from Sea Breeze Financial to liberate their downpayment plus $27,500.

Now that the house is offered for sale for $675,000, the bank stands to lose about $200,000, assuming a successful sale is accomplished and we include 6% sales costs. The owners gained some spending money but would take a hit on their credit score. Fair trade?

40% off a luxury home in SJC

Redfin tells us this luxury San Juan home has now been on the market for 402 days. But wait! It is now in the "backup offers accepted stage." Will it finally come off the market?

Good timing too, considering it's a preforeclosure...

31441 Paseo Campeon, 92675
Asking price: $985,000
Asking price/ sq ft: $224
Purchase price: $1,632,500
Purchase date: 2/7/06
Size: 4 beds, 4.25 baths, 4,400 sq ft
MLS: S518468 (402 days on Redfin)
Original asking price: $1,575,000
Zillow Zestimate: $1,230,000
HOA dues: $273
Type: Single Family Residence
Style: Contemporary/Mediterranean
Stories: 2
Lot size: 7,000 Sq. Ft.
From listing: Tastefully decorated and upgraded from head to toe. Little expense was spared during and after the construction of this home. It's truly a must see for any tempted buyer. Exclusive gated community of Rancho Madrina. Just a short walk to downtown San Juan Capistrano where you can dine, shop, frequent the local farmers market, be entertained at the local movie theater and live theater, visit the historic San Juan Mission or even catch the Amtrak to work or for a weekend getaway and avoid sitting in traffic.

The current owner purchased the property for $1.632 million at the peak of the bubble from William Lyon Homes. She used 80% financing and put $326,700 down. In four months, she refinanced with WaMu - not to pull cash out, since the loan amounts were exactly the same: a $1 million first loan, and a $305,800 second.

What we have, then, is someone who went about things the right way but simply had awful timing. Things got worse in 2008, when a notice of default was filed in May. The notice of trustee sale came in September. The owner had already put the property up for sale in early 2008 asking $1.575 million, which was $57,500 less than she paid.

More than a year later, the asking price was down to $985,000 - an incredible 40% off the previous sales price. Since the property is in the backup offers stage, we are going to assume that WaMu (Chase) might actually let this short sale happen.

If it does, the bank stands to lose $379,900, including 6% sales costs. The owner will lose her $326,700 downpayment, plus anything else she spent upgrading the house after moving in. This real estate investment has proven to be a horrific situation for everyone.

Model to example in Foothill Ranch

Today's property is a nice-looking, former model home in Foothill Ranch. It's now a preforeclosure and a short sale.

But, it's not a story of 100% financing, nor is it an over-the-top debt debacle. Those were so 2008. Is this the breed of foreclosure that will become more common this year?

34 Mallorca, 92610
Asking price: $649,900
Asking price/ sq ft: $270
Purchase price: $835,000
Purchase date: 9/15/05
Size: 4 beds, 2.5 baths, 2,409 sq ft (built in 1990)
MLS: S552854 (82 days on Redfin)
Zillow Zestimate: $609,500
HOA dues: $70
Type: Single Family Residence
Stories: 2
Lot size: 4,812 Sq. Ft.
From listing: THIS HOME WAS A FORMER MODEL FOR THE TRACT, GREAT LOCATION WITH VIEW OF THE PARK AND GREENBELT AREA. BEAUTIFUL LNDSCAPING WITH PALM TREES. ABOVE GROUND JACUZZI, DRAMATIC OPEN FLOOR PLAN WITH HIGH CEILINGS, SPIRAL STAIRCASE, CIRCULAR SKYLIGHT. TRAVETINE FLOORS, AND CUSTOMIZED KITCHEN COUNTERS, DINING AND FAMILY ROOM RIGHT OFF THE KITCHEN, LARGE MASTER SUITE WITH A VIEW OF THE CITY, ALSO FEATURING: A WALK-IN CLOSET, SEPERATE TUB AND SHOWER, AND DUAL SINKS. 4TH BEDROOM IS A BONUS ROOM WITH WOOD FLOORS AND BUILT-INS EASY TO CONVERT IF NEEDED AS A BEDROOM.


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The current owner paid $835,000 during the bubble. They used a 20% ($167,000) downpayment and financed the rest from WaMu. In late 2006, he added a $50,000 second from E-Loan. A notice of default was filed in December 2008 - a little more than a month after the property went on the market.

Assuming a sucessfull sale for the current price, it would mean a loss of $224,094, including 6% sales costs. The owner's downpayment would be gone, and the banks would take the hit for the rest.

Not including sales costs, the current asking price is 22% below the previous sales price.