Here's another house with an interesting history. 4340 SE Madison.
The house sold for $305k in February 2006. It then sold again for $541 in June 2006 (with 100% financing!), a gain of 77% in just 4 months. It went into foreclosure and was bought back by the bank for $355k in October. Last month it sold to the proud new owner's for $295k. That's 45% off it's high!
Unfortunately the property taxes adjusted upwards to reflect the new $541k price, jumping from $2858 to $4373 in 2007. Ouch.
I don't have insights into what happened along the way, but judging by the state of the pool it was likely vacant for a period of time. Any Realtors out there know the details of any of the recent sales?
I also start to question Zillow's methodology with cases like this. If you look at their home value chart (you'll need to click on the 5 year view for the best picture) it was quick to reset upwards with the sale in June 06, but hasn't come back down to reflect the recent sale price. And after all the best indicator of what something is worth is what someone else will pay for it, in this case $295k, not $496k.
What's that smell you ask? Something between fishy and fraud methinks.
Friday, March 28, 2008
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5 comments:
looks like a fixer that was fixed without permits
I just checked out the aerial photo. My god, what a waste of space that pool is. How did they ever get that approved? Wouldn't the insurance for that monstrosity be enough to kill you?
Wonder if a bunch of skate boarders went in on it?!?! There goes the neighborhood! oh, wait, it is the hip cool Hawthorne neighborhood!
From the RMLS it looks like whoever bought this house on 2/21/06 did some cosmetic rehabbing and then listed it at 625K on 4/3/06. They cancelled the listing in 4/4/06. The 541K sale in June 06 you cite must have been a private sale (and at the top of the market). It then listed on 6/11/07 at 449K, in foreclosure/short sale status. Obviously that buyer got in over his head. Whoever got it at 295K got a deal, probably due to its condition and the pool (usually a negative in our area), and the fact that the bank needed to cut its losses and unload this property.
Zillow doesn't allow for these factors in its Zestimates (unless the owner enters specific information about the property) and creates a general ballpark valuation. If this house were in PRIME condition it could potentially command a price in the 400K range in this neighborhood. You need a Realtor or an appraiser to determine current market value - Zillow (and the others) only provide estimates (and rarely accurate ones).
Also, you can't go by the last sale of any property to determine current market value. For example, if my mother sells me her house for 200K because I'm family and she wants to give me a break, that has nothing to do with its actual current market value, and I certainly would have the right to turn around and sell it for whatever the market would bear. You can't presume that this particular house is only worth $295K just because it sold for that price. Although everyone can access data on the Internet these days, you can't make assumptions about value (or fraud) without knowing allot more background information that isn't universally available!
Anon 2:28, thanks for the additional insights, they are definitely interesting. (and seriously, go to bed!)
While I agree that a sale between family members or other special circumstances is not a true market value,Ii did see the house on the market recently, so the latest sale price is what I would consider to be the true market price.
I believe the $541k price was overvalued, and was likely the result of speculation during the peak of the bubble as you mentioned. But while $295k seems like a bargain compared to $541k, as you mentioned in peak condition it's probably only worth $400k. That's a pretty big change in 2 years, and gives me hope that the bubble pricing is starting to unwind.
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