733 Front #407 Kitchen

The list price for the short sale of 733 Front Street #407 has been reduced to $499,000.

Once again, the one-bedroom was purchased for $730,000 in September 2007, listed for $760,000 this past January, reduced to $730,000 in February, reduced to $629,000 in April, and for the past three months it had been listed as a short sale at $549,000.

The listing still lacks any mention of bank pre-approval, however, but a sale at the new list price would represent a 32 percent drop in value for the Jackson Square condo over the past three years.

∙ Listing: 733 Front Street #407 (1/1) – “$499,000” (Short Sale) [MLS]
In The Red At 733 Front Street Down In Jackson Square [SocketSite]

Comments from Plugged-In Readers

  1. Posted by lol

    The big red flag: no square footage.
    #508 did advertise its square footage. #407 can’t blame technicality or any other BS.
    What are we? Stupid?

  2. Posted by diemos

    “What are we? Stupid?”
    “Once again, the one-bedroom was purchased for $730,000 in September 2007”
    Does that answer your question?

  3. Posted by A.T.

    “Does that answer your question?”
    Probably, but I need to see the loan and repayment history. If the owner got a 110% loan with nothing down then made no payments and lived free for a few years, maybe not so stupid (except for the lender and taxpayers)!
    It does appear that SF is approaching — or has reached — the point where distressed sales are numerous enough that they are defining the market.

  4. Posted by ex SF-er

    The listing still lacks any mention of bank pre-approval
    this is key. it is nearly useless to try to buy a short sale unless it is preapproved by the lender. a prospective buyer who tries to do so will likely go through weeks if not months of agony.
    I have countless friends who put in an offer on a short sale, and the bank twiddled its thumbs for weeks or months and then denied the sale. most recent friend went though 6+ months of documentation, re-documentation, appraisals, reappraisals etc only to be told that in the end the bank would NOT accept the offer.
    Thus IMO foreclosure sales are more representative of the market than these short sales, at least for now until the market figures out how to clear them.

  5. Posted by jason

    the last broker I worked for forbid us from mentioning the square footage on ANY of our listing unless we could personally verify it to be accurate…i.e. – measure it ourselves or hire an appraiser. He wouldn’t even let us state “per tax records.” There was too much litigation against brokers for misrepresentation.

  6. Posted by tipster

    AH, this place was really the epitome of typical socketsite 2006-2007. You can read comments in the thread I posted below.
    In that thread, we have a number of potential purchasers *agonizing* over the prices, and a helpful realtor who specialized in the area describing how many of this and that are within walking distance, and indicating that he got himself on some sort of commission that counts homeless in the area, so that he could reject nearly everyone he saw as homeless and indicate that there was only one homeless in the downtown area.
    http://socketsite.com/archives/2007/05/733_front_street_preopening_this_weekend_51207.html
    As for distressed sales – um, not yet. A friend of mine stopped making payments after the meltdown of 2008. No foreclosure yet. That’s right, he hasn’t made a single payment since November of 2008. If his experience is typical, every strategic defaulter is still holding ownership. I have to believe there are a lot of those people. He finally got an NOD.

  7. Posted by lol

    Well, 2 years ago it was “SF sellers will delist and come back 2 years later when they can get their price”. Today they still cannot get their price.
    The 2007-2009 mid-and-lower US segments collapsed faster mainly because many bubble buyers were living month-to-month with little or no savings. One bad financial event and you’re done. Plus, with negative equity, why starve your kids for an overpaid house?
    SF owners were thought to be more financially savvy and cash rich. Only the latter was true. Now that prices haven’t gone back to 2006-2008 levels, the slow bleeding is starting to affect all the layers of the market. Sure you have some pockets that still do well, often due to local shifts (like Bernal gentrification or the oversold bottom segment), must most established markets are still under a lot of pressure. Prices were too high. 1000/sf everywhere was a dream. Fundamental imbalances are still there in plain sight for everyone to see.

  8. Posted by lol

    the last broker I worked for forbid us from mentioning the square footage on ANY of our listing unless we could personally verify it to be accurate…i.e. – measure it ourselves or hire an appraiser. He wouldn’t even let us state “per tax records.” There was too much litigation against brokers for misrepresentation.
    That’s total BS. Why would #508 have square footage and not #407? Did they hire lawyers at #508? The other day I exposed the same ploy at a TIC in Varennes Street where bigger units had square footage and smaller had not. And they are presented by the same agent.
    What I suspect: #407 would probably show a $/sf 20+% higher than #508. With no parking, that’s a no-no in internet searches.

  9. Posted by jason

    That’s total BS.
    I’m just repeating what my broker instructed his agents to do…

  10. Posted by suspicious

    Almost no point to talk about it. Bank won’t approve it anyway.

  11. Posted by Me-Again

    A short sale without bank approval is… not a real listing. Flat out. Shouldn’t even be presented as any sort of comp or indication of the market.
    It’s an underwater borrower’s delusional hope, and nothing more. They just want some offer, any offer, so they price it obscenely low and hope the bank will take an offer worth 65% of the outstaning loan.
    They won’t. Ever. They’d rather foreclose on the place the take that haircut.

  12. Posted by Mole Man

    fog brightens and clears
    the nice condo is still nice
    it is a new day

  13. Posted by Union SF Rez

    You could classify me in the stupid category then. My wife and I bought a 1 BR/1 BA at The Montgomery in Oct 2007 (move-in March 2008) as a 2nd home – our main home at the time was in Sac but I worked near Moscone and was here 5 days/week.
    We put $239,000 down on a $589,000 price (received $35K in prepaid HOA & upgrades as part of the deal) with the intention of keeping it indefinitely. It was recently re-assessed at under $500,000 – at least the taxes are going down 🙂
    I lived in the unit for 2 years commuting on weekends back to Sac. But my family moved in with me last summer when my son was old enough to start school here.
    In any case we bought a bigger place at Union SF (2 BR/2 BA/2 pkg spaces for about $600/sf, put $500,000 down) in the Inner Mission and put an ad on Craig’s List offering the Monty unit for $2400/mo.
    We ended up getting 14 responses to the ad in 2 days and just a couple weeks later rented the place out furnished for $2825/mo on a 1 year lease. We also lease out our parking space in the Paramount garage (which goes away in April 2011) separately to someone else for $275/mo.
    Long story short our income from the prop is $3,100 a month (but as noted will go down next April when no longer have a pkg spot to offer) and our mortgage/HOA cost is $2,474.
    From an investment standpoint it’s not the best move ever but you might wonder where we got the $739,000 for the downpayments on our two SF condos? Mostly from tax-free appreciation from Bay Area homes we had previously owned, lived in and sold.

  14. Posted by sfrenegade

    “I have countless friends who put in an offer on a short sale, and the bank twiddled its thumbs for weeks or months and then denied the sale. most recent friend went though 6+ months of documentation, re-documentation, appraisals, reappraisals etc only to be told that in the end the bank would NOT accept the offer.”
    The other shady thing some banksters have been doing is requiring short sell bidders to pay a substantial (several thousand dollars) non-refundable fee to a “short sale analyst” who just happens to work for a subsidiary of the bank holding the loan. You have to pay this substantial fee in order to get the bank to negotiate in the first place.

  15. Posted by A.T.

    Union Sf Rez, not bad! As you’ve experienced, it was far easier to do well with CA real estate before the mid ’00s. Party is over.
    You need to take into account the lost income (opportunity costs) on that $239,000 down and also the real estate taxes before determining the P&L on the rental unit (and I’m not even counting the substantial drop in value, which you should also include if you want a true mark-to-market). Sounds like your tenant is getting a decent deal, and you did well getting someone to pay that much in this market.

  16. Posted by lol

    Union SF Rez,
    You’re very typical of what I see in places I have looked at these past 3 months: the owner can afford to wait and will do so as long as he can for the unrealized loss to become a profit again. In the mean time you’re an “accidental landlord”. Not that painful and you’re probably getting by:
    Your mortgage is 2474 and the total income will be 2825 starting in April. With the ~500+/month in Property taxes you are already in the red not counting special assessments, cost of maintaining a rental between renters. Plus you’re renting it furnished: wear and tear. You might have to pay taxes on that income as well but you get most of it back with interest deductions and amortization. Of course, you’ve got 239K in “house arrest”. The opportunity cost would be roughly ~600/month. You can find a 5-Y CD today at close to 3%.
    I will guesstimate your monthly loss over the long term at ~1500 a month. If prices increase again you’ll be OK.
    And when you’ll sell, the salesmen will take their 5% or 25K at current asking.

  17. Posted by Union SF Rez

    AT & LOL – like I said, my wife and I had the $239K for the Monty and the $500K for Union (and a little on top of that is still in the bank) from buying and selling two homes(both of which we lived in). Would have never had that money in the first place if we had only rented property in the late ’90s and early 2000s – it’s literally and figuratively “house money.”
    I think the $1500K/mo loss is a little bit of a stretch even w/ the opportunity cost $. And the value of the furnishings is really not that much (I think we spent $3500 total at West Elm).
    In any case the long-term plan for us w/ the Monty is to keep at as a second home. We both felt the market hadn’t bottomed when we bought but we wanted that location, that building, and the specific unit that we ended up buying (the stack we bought in was the first to sell out). If for some reason values ever spike again we might sell it. But I’ve never invested in property for investment sake, only bought to live in it, and we made a heck of a lot $ doing that in a relatively short period.
    Bottom line for us is we’re in much better financial shape today because we bought Bay Area homes rather than renting. These days that’s not often the case but everyone’s situation is different. The people/person selling #407 might just be losing part of gains made from previous home ownership, who knows.

  18. Posted by Union SF Rez

    AT & LOL – like I said, my wife and I had the $239K for the Monty and the $500K for Union (and a little on top of that is still in the bank) from buying and selling two homes(both of which we lived in). Would have never had that money in the first place if we had only rented property in the late ’90s and early 2000s – it’s literally and figuratively “house money.”
    I think the $1500K/mo loss is a little bit of a stretch even w/ the opportunity cost $. And the value of the furnishings is really not that much (I think we spent $3500 total at West Elm).
    In any case the long-term plan for us w/ the Monty is to keep at as a second home. We both felt the market hadn’t bottomed when we bought but we wanted that location, that building, and the specific unit that we ended up buying (the stack we bought in was the first to sell out). If for some reason values ever spike again we might sell it. But I’ve never invested in property for investment sake, only bought to live in it, and we made a heck of a lot $ doing that in a relatively short period.
    Bottom line for us is we’re in much better financial shape today because we bought Bay Area homes rather than renting. These days that’s not often the case but everyone’s situation is different. The people/person selling #407 might just be losing part of gains made from previous home ownership, who knows.

  19. Posted by lol

    No question buying in the 90s was a good idea. 2002 was the limit for me. After 2006, I became a seller and am still sitting on my “house money”. You can bet I thank myself every day for that.
    1500 is not too much of a stretch.
    Right off the bat, you’re 200/m in the red without parking and including property taxes.
    600 in opportunity costs. A bit more if you’re including compound interest over 5 or 10 years.
    400 to 600 in maintenance, repairs, both in the HOA special assessments and inside the unit (paint, repairs). I have owned for 20 years and always provision these costs at roughly the cost of property taxes +/- 20%.
    Income taxes. Depending on your tax bracket and what amortization and deductions you can apply. That’s a couple of 100s a month, right? 200? 300? 400?
    Conclusion: it adds up.
    Last, but not least: you have to pay to sell (my online discount broker charges $7, your Realtor will charge 25-30K). Over a 10-year holding period, that’s 200/month, not including staging and loss of rent when the place will be for sale.
    Good thing this was “found” money.

  20. Posted by Union SF Rez

    We don’t plan to sell and if we did it would be because the market compelled us to … at some point or another it’s a 2nd home for us to enjoy the city as I suspect our primary home will always be Sacramento where we have most of our extended family.
    As for being a landlord, my parents owned many rental props and the costs associated depended primarily on the newness/quality of the props. And right now the tax write-offs look good for us.

  21. Posted by anon

    Yeah, I remember: Frederick and the microcosm…
    LOL

  22. Posted by tipster

    Reduced to 480K. This was 52% more expensive in 2007, and is 35% off now.

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