Sunday, July 22, 2007

Hostile tenant short sale

This 3 bed / 2 bath house at 4250 Beethoven St. (south of Washington, east of the Marina), asking $839K, tells quite a story in its description: "Soon to be in Foreclosure! This price is based on short sale approval. The house was built new from the foundation up in 2005. Travertine flooring throughout living room and kitchen. Mahogany hardwood floors in the bedrooms. Excellent opportunity. Hostile tenant, DO NOT DISTURB. SHOWINGS WITH ACCEPTED OFFER ONLY."

Short sales are hitting the MLS, eh? I doubt it's "built new from the foundation up"; maybe gutted, but that can't be new framing. Love the "hostile tenant", not to mention the rusted car in the driveway (in front of the covered one). Got any loan info on it, War Chest?

19 comments:

Kaz said...

2461 BUTLER AVE
LOS ANGELES, CA 90064

Sorry a bit off topic and I don't know if anyone has seen this listing. It is up for sale @ $785K and last sale was $825K in 10/05. That's around 5% down and been on the market for 70 days. It's West L.A. not SM. War Chest or anyone have info on this?

Mikey said...

How stupid to be "hostile." The greater the bank's loss, the higher the "cancellation of debt" income tax ramifications.

dlp said...

It isn't the only westside short sale I've seen in recent days. Another one came up about a month ago, just east of centinela and south of washington, I believe. Also, a huge remodel.

Seen several in Westchester.

Mikey said...

Hey dip,

Yeah, I think the disease is spreading. There certainly has been a lot of cash out refi nonsense to fuel the fire.

I heard that 12236 Sunset Parkway (90064) is a short sale, and I heard there were 5 notes outstanding on the property. That's gotta be a record.

bubblewatcher said...

Of the 190 West Hollywood condos listed for sale on the Westside MLS (higher than I've ever seen it, and I've been checking it regularly for the past couple of years), I could four foreclosures and this short sale:

http://guests.themls.com/profile_page.cfm?mls=07-184615

One of the foreclosures is a one bedroom in a building on Sierra Bonita (nice block), and unfortunately is for sale at about 20 grand more than a studio in the same building. So you can really see the cascading, downward effect on prices created by these REOs and short sales.

lurker said...

4520 Beethoven
Last sale was Sept 30, 2004 for $567k. Nothing down, financed with an 80/20 at Shearson. The 80% first is variable, the 2nd is fixed.

2461 Butler has some skin in the game. Last sale was $825k in October 2005. They had 20% down and a $650k variable rate with Secured Bankers Mortgage Co.

Westside Bubble said...

Thanks, Lurker, but that leaves me confused. Bought for $567K, 100% financed, now attempting a short sale for $839K? If more debt was added since the purchase wouldn't it have shown up?

I also wonder if the "hostile tenant" is the soon-to-be-foreclosed-on owner or an unrelated renter?

Anonymous said...

"I also wonder if the "hostile tenant" is the soon-to-be-foreclosed-on owner or an unrelated renter?"

Doesn't a short sale by definition imply the current owner is on board!?!? I think this is a pretty clear case of a flipper who rented the place out and the tenant is now going to get tossed out in the street, regardless of the term of the lease.

Don said...

Just because the current owner is on board doesn't mean that they're not still hostile.

But I'm guessing that it was an attempted flip and it's a renter living there. And the renter might be hostile because the owner isn't spending money on basic maintenance, like making sure that plumbing etc. is in working order.

Yeah, something's not adding up on the money here... it's a short sale 48% higher than the purchase price? Why no cash out refi showing up on the property?

Mikey said...

Sold in 2004.

"The house was built new from the foundation up in 2005."

Improvements? There's gotta be another note.

Anonymous said...

"Just because the current owner is on board doesn't mean that they're not still hostile."

If the tenant is the owner and won't let people in, that would mean foreclosure, not a short sale.

Anonymous said...

Recording Date: 7/26/2005

Mortgage Type: NON-PURCHASE MONEY

Lender: OPTION ONE MORTGAGE CORP

Lender Type: SUBPRIME LENDER

Loan Amount: $ 250,000

Loan Type: STAND ALONE SECOND



Recording Date: 9/29/2005

Mortgage Type: NON-PURCHASE MONEY

Lender: OPTION ONE MORTGAGE CORP

Lender Type: SUBPRIME LENDER

Loan Amount: $ 825,000

Loan Type: FANNIE MAE/FREDDIE MAC

Westside Bubble said...

Thanks, Anon, that answers it. So they re-fied almost exactly two years ago, after remodeling, $1,075K in loans.

The proposed $839K short sale would leave nothing for the second and 3-4% short after broker's commission for the first.

marco said...

sorry for the ignorance but can someone explain to me the definition of a short sale?

Westside Bubble said...

Sure, Marco. If more is owed on a property than it's worth (values have fallen or loans were made for more than 100% of its value), a short sale would sell it for less than the outstanding loan amount, with the lender's consent to take the loss.

The lender's alternative is the time and expense of foreclosure, and risk of at least as great a loss.

Don said...

Wow, that's going to be some serious tax hit, there. Assuming that they've paid off enough of the refi that they're $250K short, we're looking at a tax bill of around $75K for the feds alone. Plus probably $20-25K for the state of California.

At least they're coming in under the capital gains exclusion cap.

Don said...

And just to clarify for those who don't know: If you are foreclosed or have a short sale on a home you own, you will owe taxes on the difference between what the bank gets for the property and the loan amount as regular income. And, of course, tax debts cannot be discharged through bankruptcy, even before the bankruptcy laws were tightened.

Long-time homeowners who did cash out refis on homes that they had owned for a while might even face capital gains tax if they house sells for over $250K ($500K for married couples) more than they paid for it. Soon-to-be-former-homeowners are in for a lot of pain.

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