Kate confused by price hike

Note: Guest Blogger Kate in the Valley is back, still house-hunting and still trying to figure out the real estate game. Her personal blog is "May 5 & Everything After", and here's her latest for us:

I am kind of taking this new listing personally.  Yeah, I feel personally offended that it is listed at $899k (not to be confused with $900k).  That's $676 a sq. ft. for those of you keeping score at home.  This seems like an extraordinary price for a 1,329 sq. ft. house on a 5,900 sq. ft. lot located north of the 101.  But the agents in the area tell me "Hey! This is Sherman Oaks!"  Fine.  It's Sherman Oaks.  So where exactly was the house located when it sold six weeks ago for $630k?

Let's turn our attention to the MLS description:

"Located in a prime area, close to shops & eateries, this remodeled traditional home offers newer ktch w/ stainless steel appliances…"

"Newer" kitchen?  So it's not "new" it's just "newer"?  As in, the kitchen was in place when you bought it for $630k?  It's certainly a nicely upgraded kitchen, but it's not like that's a Viking range with a commercial grade hood and wall-mounted ovens.  In fact, I'm pretty sure that's a slide-in range from Sears that retails around $1,200 (but it does look like it's brand new).  What else does the description say?

Read below to see the listing.

"... new electrical & plumbing, roof, wood & carpet floors thru out."

Okay, "new electrical" that's nice, I'd pay a little more for that (assuming they switched out the whole panel, and not just some new wiring).  The wording is vague so I can't tell if the "plumbing, roof, wood & carpet floors" are also new.  But assuming they are all completely new, do they represent $270k of value?  C'mon! Do you really think that I am that bad at math?  Do you think I am going to walk into this little house and go: "Ooooo… shiny oven! I must have this house! I will pay literally anything!"  Seriously?

I guess you didn't realize that I could buy a bigger house on a bigger lot, south of Ventura for only $854K.
(and get more than $17k toward my closing costs)?  Seriously.

Comments

[Tex]

I suspect that the house was in some state of foreclosure and was purchased on the courthouse steps by some sort of investment company. This has happened with several houses I have been eyeing in Leimert Park. There was one house which Zillow and RealyTrac say sold 6 months ago for $5600 -- that's right $5600. Whoever bought it painted it, put in some new carpet (they were apparently too cheap to refinish the hardwood floors) and have it listed for $660K. Another house was purchased a few months ago for $470K and is now listed for $649K, following the installation of new carpet and a paint job.

The flippers are alive and well!

[Kate]

Well, the flippers are alive, I'll give you that. But are they well?

I suppose that as long as people are willing to pay exorbitant mark-ups and high transaction costs to have somebody fix up a house for them, flippers are very well. But when will people realize it's a lot cheaper to hire your own trusty contractor to do the work? Not soon enough, apparently.

It'll certainly be interesting to see how long this listing sits on the market.

[AnnS]

"C'mon! Do you really think that I am that bad at math? Do you think I am going to walk into this little house and go: "Ooooo… shiny oven! I must have this house! I will pay literally anything!" Seriously?"

Well, among those whom the line ""There's a sucker born every minute...and two to take 'em" is attributed to is 19th century con-man Joseph ("Paper Collar Joe") Bessimer.

As for the suggestion that maybe it was a foreclsoure, call the county records office or go down there an pull the most recent deed. it wil tell you who the seller/buyer were in May 2007. And just because it may have been a foreclosure sale where the lender bought it back, does not make it worth more than the market will bear. What that does show is that if it were a foreclosure sale, no one thought it was worth more than that bid. (And if it was the lender, they went to the amount of the mortgage.)

[Alan]

"Trusty" Contractor? Hahahahahaha! I'm sure there's NEVER been a problem between a homeowner and a contractor. Nope, you always get what you want, on time and on budget....

Here's a suggestion for you: If you think the price of this house is too high...don't buy it. Shocking, I know. It's much more fun to be "offended" and sit on the sidelines and complain. By the way, where were you when the house sold for $630K?

[erin]

Alan, there's no call to be nasty. Obviously she isn't going to buy it, nor is any other sensible person, and she is providing information not merely complaining or "having fun" -- and so what if she was. The house probably wasn't worth $630k six weeks ago, and short of filling it with gold I doubt there's anything you can do with it in six weeks that will increase its value $269k. Preying on suckers IS offensive as a business practice.

[kate]

AnnS:

Thanks for the tip, I think I might just go down there. It could be an enlightening experience.

Alan:

My use of the adjective "trusty" was intentional, I am aware that not every contractor is the best ever... but I know of at least two that are exceptional.

As to where I was when the house sold for $630k -- that's an outstanding question! I would really like to know the answer myself. I don't remember seeing this house listed on the MLS, however, this particular neighborhood is one that I have only recently begun tracking so it might have moved before I was looking.

Thanks for reading and posting!

[Mr Income Stream]

630k to 899k in 6 weeks hmmm strike another one up for the Carlton Sheet groupies. With that being said some misinformed L.A. looney tune will probably buy it.

Duuude Duhhh!!! it's the valley Dude the price is going to go up and up. Dude! bong hits for everyone duuude!!! Party On!.

[Cal]

If you want to look up records for a house in LA County, you can sign up for propertyshark.com and get 6 free lookups a day. You get a pretty good accounting of county records that way (you can see if it is a trustee sale for example).

[travelingman]

$630K only 6 weeks ago and now $899K - wow, that's just looney.

But the truism still holds, always a sucker and in LA, even more so.

Be curious to see how long this is on market.

[Inland Empire]

For a comparison, research the markup on furniture and jewelry. Real estate is not the only item that follows "what the market will bear".
Because people tend to select homes emotionally instead of logically, what a house will sell can always be a surprise.

[Pat]

Offended? I think you are getting too emotionally involved in your house search. It's good information, but certainly not worth getting offended over.

[Jonah1979]

That price is just crazy...here's my 2 cents.

If the national average for a home is, give or take a few, $219k. Then an average house here in california 3/2 1300 - 1,500 sqft should be priced around $380k. Not $400k not $500k...which is why most agree now that our market is over valued some 60%. There's going to be a big correction and anyone paying 800k for a small house like that is nuts. :)