Throwing Cold Water on a Hot Listing in Coldwater Canyon
Thanks go to keen-eyed Kate of the indispensable south Valley real estate blog May 5th and Everything After (so named because she launched it on Cinco de Mayo in 2006 and just celebrated her second anniversary blogging there – Congratulations, Kate!) for this “price discovery” she posted little more than a week ago:
3540 Coldwater Canyon Ave.
Studio City, CA 91604
$699,000
Kate notes that this gated 3 + 3 Coldwater Canyon home with good bones was reduced within a span of 50 days from $1.3 million to $699K. In a word: Wow!
But wait … hold that offer … what’s this?? Rub your eyes and look at the listing price again – suddenly, as of today, it’s $1,199,000!
Huh?
A call to listing agent Burt Bakman of Re/Max On the Boulevard Estates hasn’t been returned.
We don’t think the market has made a turnaround in the last 10 days. So, absent an explanation from listing agent Bakman, we’ll venture a scenario as to what may have happened.
We’re guessing the truly remarkable price point of $699K (in relation to the listing prices of comparable housing stock) generated a tsunami of interest and offers. One or two offers, from especially savvy buyers - possibly investors - were marginally above the asking price. This flood of attention triggered flashbacks of bidding wars from the golden days of real estate yore – circa 2005 or so.
Flush with the excitement and heat of the moment, it’s easy to imagine our sellers and their agent leaping to drop the I-bomb – a price increase. And not just a modest one. One with conviction and courage.
Oops!! Seems I may have overtaxed my imagination. I made contact with Burt Bakman and when asked to comment, his explanation was simple, easy and credible: the property was headed toward a short sale, thus the very aggressive asking price (although it likely was never approved by the lender). Bakman said it then “made a U-turn and went the traditional way,” suggesting to me that the lender has given the seller some breathing room to market the home conventionally and thus maximize the price to the benefit of all parties. That way, Bakman says, “the bank could be paid off, commissions could be paid.”
And, I would add, the market could maintain some semblance, some appearance of normalcy.
Dillon said:
I think that Redfin should clearly flag all short sale listings, and add the ability to exclude them from searches. I don’t know what the true market value of this house is, but it’s unlikely a lender will accept 700k if the comps are 1200k. These “low-ball listings” are nothing more than bait-and-switch scams that waste a buyer’s time. The place is listed at 700k, you outbid a bunch of other buyers at 800k, only to be told, 2 months later, that the bank will sell for $300k more at $1100k. In the mean time, the buyer may have already spent the money on an inspection, gave vacancy notice to their landlord, and mentally and emotionally “moved in.” Besides, the buyer’s told, 1100k is still a discount from a three-month-old comp of 1200k, and you can just get an interest-only loan instead of a fixed.
One gets better treatment buying used cars.
May 13, 2008 1:33 PM
Phyllis said:
I so agree with you BUT the issue is not Redfin, it is once again the MLS – I have been petitioning my MLS (Glendale/Pasadena) to require the listing agent to tag the property short sale in the Terms section, so that these listings can be pulled from MLS searches, because unless we are living in Fantasyland, we know the lender wants/expects/needs market value, short sale or not.
May 13, 2008 1:59 PM
Tim said:
I wanted to get into this in the original post, but thought it was getting too long. Thanks to both Dillon and Phyllis for making these points for me. As Phyllis noted, Redfin always passes along the information if a listing is a short sale, but is normally dependent on the provider MLS for it.
Pursuing short sales is a colossal waste of time more often than not, and every MLS should require selling brokers to tag their listings as such. It is deceitful and unethical not to, in my opinion, because much of the time the price is a fantasy of the seller’s that the lender has not approved and will never accept.
Good luck in training your local MLS to take the high road, Phyllis. Please let us know if, when and how you’re able to make progress.
May 13, 2008 4:46 PM