May 31, 2011

Shenanigans with Short Sale in Old Palo Alto

Here’s a find from comments, from Burbed reader San Matean,  San Matean wants to know what kind of games the bank is playing with this short sale in Palo Alto.  We know that a short sale means “selling shortly,” but going pending the same day it’s listed sounds more like an inside job.

1520 Middlefield Rd, Palo Alto, CA  94301
$829,000

image

BEDS: 3
BATHS: 2
SQ. FT.: 1,500
$/SQ. FT.: $553
LOT SIZE: 5,600 Sq. Ft.
PROPERTY TYPE: Detached Single Family
STYLE: Spanish
STORIES: 1
VIEW: Neighborhood
YEAR BUILT: 1930
COMMUNITY: Professorville
COUNTY: Santa Clara
MLS#: 81123457
SOURCE: MLSListings
STATUS: Pending With Release
ON REDFIN: 1 day
NEW LISTING (24 HOURS)

Location! Location! Location! The following was remodeled in 1997 Kitchen; Master Bathroom; 2nd Bath; Hardwood Floors underneath carpeting. Newly Landscaped rear yard. Large Kitchen great for gathering. Enclosed front with beautiful park like setting.

Wow, they were in such a hurry to “list” this property they didn’t even bother including any photos.  It isn’t any different on the agent’s own site, so let’s take a peek at the Googlecam.

image

Not bad, although this is an 80 year old house.  It may need new light bulbs and Drano.

image

It also looks like some other building has preempted the back yard.  The property lines suggest that this house and its next-door-neighbor have gone halvesies on their own meth lab:

image

image

Back to San Matean’s concern: this property was listed and went pending the same day.  That’s not the real puzzler, though. This house is in 94301, a Really Special Place, yet not only didn’t it double in ten years, it actually may have lost value.  Unless, of course, the bank decided that the overbidding would take this house right where it needed to be.

imageAnd the reason this house is now essentially owned by the bank, instead of the couple who bought it with a $706.5K conventional variable mortgage, is they refinanced it in 2005 for $962.5K (also variable). They must have liked the extra cash so much that they did it again a year later.  In 2006, the purported owners became FBs when they refinanced with a variable first mortgage of $990K, and a variable second mortgage of $198K, or $1,188,000 total.  That is, coincidentally, just $17,500 more than this place’s current Zestimate.

So, our question for you, Burbed readers: How much do you think this house sold for? We have so many fun factors in the mix: Busy street, around the corner from an even busier street (Embarcadero), bank owned property, mystery structure eating up a couple back yards, asking price a whopping 30% below the Zestimate, and a transaction that not only doesn’t look arms’ length, it suggests someone has a banker by the balls.

Comments (52) -- Posted by: madhaus @ 1:36 am

52 Responses to “Shenanigans with Short Sale in Old Palo Alto”

  1. nomadic Says:

    Au contraire mon ami – not bank owned, so let’s see if the bank holds out for a better offer and potentially hopes to go to foreclosure for a better return.

  2. sfbubblebuyer Says:

    I’m just betting the realtor called up his buddy and had him write up an offer while they were still getting the paperwork for the short sale together. Either that or the ‘sellers’ have a family member who has the offer written up and the realtor is getting the commission to help the buyers/sellers defraud the bank.

  3. madhaus Says:

    Okay, so the bank isn’t listed as the owner with the county, but with the FBs owing more than the house should sell for, can you really say that they own it either? And note, tagged as short sale, not bank owned.

    I still can’t get my head around the meth lab in the back, and I was wondering if it’s an illegal inlaw unit or something, since the property lines don’t indicate a flag lot. And I checked out the neighboring properties, all are 5600 sf, which seems like the standard lot size for this block. If the lot had been subdivided 3 for 2, that would explain why the list price was below the sale price 10 years ago.

  4. Wendi Says:

    I think what is happening here is that people are so desperate to be in this area, that there are a ton of pre-emptive offers going on. I think, in fact, my friend, was going to make an offer on this house — and she was already competing with another pre-emptive offer. Clearly, this house is way below market price – not sure why they would place a 1500 square foot house in Old Palo Alto — at such a price….makes no sense considering there have been a ton of other Middlefield homes being sold recently for much more.

  5. nomadic Says:

    #3, bank pwned?

  6. The Gilroy Alex Says:

    It looks like the owner and neighbor at one time decided to build sheds that butt against each other. Makes for that much less fence each has to maintain.

  7. no estater Says:

    Housing is cheap, cheap, cheap!!!

    http://www.marketwatch.com/story/why-housing-is-in-a-depression-2011-06-01?link=MW_latest_news

  8. madhaus Says:

    #7, great find!

    “With mortgages rates on the floor, and inflation surely brewing down the road, housing in many parts of the country looks like a good deal. But you’ll have to be patient to see the biggest rewards. Capital Economics says, back in the Depression, it took 19 years for house prices to recover to their previous peaks.”

  9. Real Estater Says:

    Real estate 101: Listing price in a short sale means nothing.

    Real estate 102: Asking price in Palo Alto means nothing

    Real estate 103: This house is obviously not in Old Palo Alto. Even the listing says so.

  10. Real Estater Says:

    Regarding #7, the national market has absolutely no bearing on the local Bay Area market, particularly pertaining to the prestigious markets on the peninsula. Consider the following:

    1. Stanford hospital is launching the largest construction project in its history
    2. Google is undertaking massive expansion spreading to west of 101
    3. VMWare is planning massive expansion in Palo Alto
    4. Facebook plans to employ more than 9000 people
    5. New hotel to be built in Palo Alto
    6. Another 5 story hotel proposed near downtown Palo Alto
    7. Newly minted millionaires from LinkedIn IPO

    Do you see the big picture? If not, you need to go see an eye doctor!

  11. SEA Says:

    You know it’s true when, “Even the listing says so.”

  12. A. Lewis Says:

    #9 – your statements are hypocritical. When the listing price/asking prices are high on a PA listing, you claim they mean something; when the prices are low, you claim they mean nothing. Which is it?

  13. SEA Says:

    “Facebook plans to employ more than 9000 people”

    Oh, yea, I’m sure that’s 9,000 more people in the Bay Area, and they ain’t making more land. It could not possibly be that the 9,000 are simply shifting from a bankrupt Bay Area operation. Nothing fails in the Bay Area!

  14. SEA Says:

    #12- “When the listing price/asking prices are high on a PA listing”

    Clearly you’ve forgotten that it’s not possible to price a PA listing too high, and one should still expect “overbidding.”

  15. A. Lewis Says:

    High-end market collapse alert!

    http://www.firstrepublic.com/lend/residential/prestigeindex/sanfrancisco.html

    First republic is kind enough to do a Case-Shiller style analysis of the high-end market, which they call “prestige”. The Q1 2011 point is a sudden drop to 2004 prices!

    I think their “prestige” tier is a better measure of the RBA market than the Case-Shiller SF “high” tier, which just isn’t exclusive enough.

  16. SEA Says:

    “The First Republic Prestige Home Index for San Francisco is based on a portfolio representing a cross-section of homes valued at $1 million or more in eight Bay Area counties.”

    Probably the reason the index is falling is because of all the new million dollar homes. You know, all those homes valued at $500k 10 years ago are now included in the ‘homes valued at $1 million or more.’ All those newly included crap boxes are bringing the index down, and we all know there is a large quantity of those entering. Once included, homes never leave the index, since prestige values keep going up, up, up.

    The index should automatically increase the lower bound of the included homes–I’m sure this would make sure the index is increasing, as we know it should.

    What this index says is that a million dollar home is just not as prestigious as it once was.

  17. Estater With Big Picture Says:

    Real estate 102: Asking price in Palo Alto means nothing
    —-

    I agree. Want proof?
    In 2009 Real Estater said about 1212 Parkinson Ave:
    Check this out, home in Palo Alto 94301 originally listed at $1.95M, just relisted at $2.45M:
    ….
    ….
    Must be due to overwhelming response.
    Listed for $2.45M. Sold for $1.76M.
    A solid proof that asking price means nothing in Palo Alto.

  18. madEstater Says:

    #17, that’s nonsense. You can’t use that example because that is not an RBA house. Any house on a street named for a disease is by definition not a Prestige House.

    Please confine your examples to actual Prestige Houses in the RBA when you attempt to make Palo Alto look bad.

  19. Real Estater Says:

    >>It could not possibly be that the 9,000 are simply shifting from a bankrupt Bay Area operation.

    If you have any connection with Facebookers, you’d know that many of the new hires are indeed from out of the area, including from other parts of the Bay Area. For example, if you live near where A lives, you can’t really commute to work at FB. Even if 50% of the employees are local, the other 50% will still add strain to an already sold out housing market.

  20. Real Estater Says:

    >>#17, that’s nonsense.

    Has Pralay ever made any sense?

  21. Perfect Sense Says:

    Can’t you see
    It all makes perfect sense
    Expressed in dollars and cents

  22. Estater With Big Picture Says:

    Facebook plans to employ more than 9000 people
    —-

    That’s such a bad news. So many worker bee types will be hired. So many dead wood will be hired. We want the good old “competitive” time back, when dead wood used to get cleared in regular basis. It was such a healthy period.

  23. Estater With Big Picture Says:

    We don’t want Vmware to expand. We don’t want Facebook to hire. Let’s ship all the worker bee jobs to India and China so that we can remain at the “top of the food chain” and be “focused on innovation and management”.

  24. Real Estater Says:

    >>your statements are hypocritical. When the listing price/asking prices are high on a PA listing, you claim they mean something; when the prices are low, you claim they mean nothing. Which is it?

    The proof is in the pudding. The house is already sold, and I’d be willing to bet it’s way over asking. Which is it? Whichever is higher, of course.

  25. Hotel Estater Says:

    New hotel to be built in Palo Alto
    —-

    The news article says:

    The project spells good news for the cash-strapped city, which is facing an $8.3 million budget gap in fiscal year 2011. Hotel taxes, which are one of the city’s few revenue streams, plummeted by more than 10 percent between fiscal years 2008 and 2009.

    Thanks for the laugh for painting such a rosy picture of Palo Alto. It seems Palo Alto needs lot of hotels – probably one at Real Esatater’s frontyard too.

  26. Proven Estater Says:

    The proof is in the pudding.
    —-

    Just like 1212 Parkinson.

  27. Real Estater Says:

    Spectacular overbidding in Palo Alto:

    http://www.redfin.com/CA/Palo-Alto/4130-Donald-Dr-94306/home/1494016

    List price: $1.3M
    Sold price: $1.61M

    Great zip to own an investment property!

  28. Real Estater Says:

    >>High-end market collapse alert!

    Useless aggregate data. The high end is where the strength is. Take a city like Sunnyvale. You see overbidding and solid prices in the southern part of the city, while the cheap area to the north is getting slammed:

    http://www.julianalee.com/reinfo/sold-SU.htm

  29. Proven Estater Says:

    Useless aggregate data.

    http://www.julianalee.com/reinfo/sold-SU.htm
    ——

    Totally useless aggregate data. More than 50% of the transactions don’t have sale price in average tech gal’s chart.

  30. Real Estater Says:

    >>he project spells good news for the cash-strapped city, which is facing an $8.3 million budget gap in fiscal year 2011

    Sounds like the city is a couple of houses away from balancing the budget. With all those confirmed and proposed projects on the horizon, the future is indeed rosy.

  31. Real Estater Says:

    >>Totally useless aggregate data. More than 50% of the transactions don’t have sale price in average tech gal’s chart.

    You mean as opposed to this one, showing overbidding is common?

    http://www.julianalee.com/reinfo/sold-PA.htm

  32. Proven Estater Says:

    You mean as opposed to this one, showing overbidding is common?
    —–

    Great chart with all the missing sale prices!

  33. Mayor Estater Says:

    Sounds like the city is a couple of houses away from balancing the budget.
    —-

    :) Palo Alto should make Real Estater as the mayor of Palo Alto. He will balance the budget – with couple of hotels, couple of cell-towers at NIMBY-folks’s backyards and little bit of foolish optimism.

  34. SEA Says:

    Once again, let’s remind everyone:

    The property is worth some amount of money to a buyer at a given time. The asking price does not change what a willing and able buyer is both willing and able to pay. Thus there is no such thing as “overbidding” or “underbidding,” only crafty Real Estate agents, who are often paid $60,000 to tell you to price the property low so it will sell right away–you know, they don’t want to risk a place not selling for the asking price, and it’s much easier to sell a place when the listing price is low, low, low.

    Besides, if you list for $100k under market, the children get to go to a better school.

  35. SEA Says:

    “You mean as opposed to this one, showing overbidding is common?”

    Let me fix it for you:

    You mean as opposed to this one, showing underpricing is common?

    Maybe I should price a C note for $50 bucks–sure it’d sell right away, and if there was some competition, the end price would be nearly double my asking price, even if I’m losing money.

  36. Real Estater Says:

    >>Great chart with all the missing sale prices!

    Imagine how much more overbidding is missing from the chart. Actual stat should be more like 10% over list on average.

  37. Real Estater Says:

    >>You mean as opposed to this one, showing underpricing is common?

    Your hypothesis is wrong. Here’s what actually happens. A house is priced at $1M, sells for $1.1M. A neighbor puts a similar house on the market at $1.1M. It is perceived as fairly priced, and sells for $1.2M. It goes up from there, and price doubles on average every 10 years.

  38. Real Estater Says:

    You guys gone to bed already?? I haven’t even started my India call yet.

  39. SEA Says:

    If you know it will sell for $1.2M, why not price it at $1.2M?

    Beyond that, go back and read #14.

  40. nomadic Says:

    SEA (#34), did you look at #27? That POS was listed for $1.3M, which looked a bit optimistic, in my opinion. Some dolt paid $1.6M for it. I don’t know whether to laugh or just be amazed.

    There aren’t many comps, but the nearest one sold in December for $1.2M.
    http://www.redfin.com/homes-for-sale#!lat=37.40409487250571&long=-122.13034096560668&market=sanfrancisco&max_listing_approx_size=1750&min_listing_approx_size=1500&num_baths=2.0&sf=&sold_within_days=365&uipt=1&v=6&zoomLevel=16

  41. Imaginative Estater Says:

    Imagine how much more overbidding is missing from the chart. Actual stat should be more like 10% over list on average.
    —–

    Your statements are based on the assumption that the world revolves around your imagination.

  42. Imaginative Estater Says:

    . Some dolt paid $1.6M for it.
    —-

    Must be some foreigner with lots of testosterone in stock.

  43. SEA Says:

    #40- Maybe the buyer spent less than 1% of his net worth?

  44. madhaus Says:

    43 comments and not one of you made a guess on the selling price. My guess is the bank rejects a few offers and it doesn’t sell for another year. It then sells for $1.1M, due to neglect of the property. If it sells now, $1.2M.

  45. Imaginative Estater Says:

    Real estate 104: Sale price does not matter in Palo Alto. Imagination matters.

  46. SEA Says:

    $1.6M in ’21.

  47. SEA Says:

    “Imagine how much more overbidding is missing from the chart. Actual stat should be more like 10% over list on average.”

    Translation:

    ‘Imagine how much more underpricing is missing from the chart. Actual stat should be more like 9% under actual selling price on average.’

    As long as we are imagining things, knowing what we know, wonder what would happen if all sellers in PA suddenly increased their listing prices by 10%?

  48. Real Estater Says:

    My goodness. Groupon is going to create even more millionaires in Palo Alto. Apply for your tech job now!

  49. corntrollio Says:

    “7. Newly minted millionaires from LinkedIn IPO”

    Nice try, but mostly the insiders — officers/directors and key employees — became millionaires. The rank and file didn’t have that many shares, very few of their shares are vested, and we’re still not out of the 180 day lockup.

  50. corntrollio Says:

    “http://www.julianalee.com/reinfo/sold-SU.htm
    ——

    Totally useless aggregate data. More than 50% of the transactions don’t have sale price in average tech gal’s chart. ”

    Towards the end of the month, there will be more sales prices listed there. Like everyone else, she waits for reporting. When I checked the data at the end of May for the April data, it was actually of quite good quality and was helpful to dispel some myths (e.g. “way over asking,” “all cash and sold in less than a week” — very few houses met these criteria, even though people claim it’s every single house).

  51. Real Estater Says:

    corntrollio,

    The site has always been a source of good data. The idiot here doesn’t know how to use it. You didn’t see those “myths” because you were looking at Sunnyvale.

  52. madhaus Says:

    Relisted June 13th, price raised to $900K one day later. Now with photos!!!


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