Two months ago we noted the “Newest Comp For A Two-Bedroom Condo At 246 2nd Street” when the bank owned #1302 closed escrow with a reported contract price of $775,000 (roughly $125K below what #902 sold for late last year and exactly $220K below what the seller of #502 was asking at the time).
As we wrote at the time: Damn those unemotional sellers to hell. And once again, that’s not likely to be a neighbor(hood) pleaser.
And as a plugged-in reader notes today: 246 2nd Street #502 has returned to the market with a list price of $739,900. That’s a reduction of $255,100. And more noteworthy, that’s $210,100 less than what was paid for the condo over three years prior (12/9/05).
Now about whether or not those bank owned sales in San Francisco (however few and far between) are irrelevant or meaningless…
UPDATE: An excerpt from a plugged-in reader’s comment that shouldn’t be missed: “According to mls records that agents have records to. It sold for $950,000 in 12/05 but with a $110,000 credit to buyer at closing. I am quite sure this was never disclosed to the actual lending bank. NEVER would have flown.”
It has no parking space and the HOA dues are over $800 a month?! A two bedroom at less than 1000 square feet (or $752.70 a square foot), I think this could sell for even less (much less, perhaps in the upper 600k range).
I agree. This is still WAY overpriced.
$800+ / mo for HOA? yikes…
I’m pretty sure that HOA amount is a typo (I looked at the building recently and the HOAs were in the $550 range for 2 bed)
The listing mentions a parking spot. I think the agent may have filled the form out incorrectly. If memory serves, this building has assigned spaces leased from the HOA. The listed dues probably include the price of the leased parking. The monthly burn on the HOA is pretty high, but I like the location. Best of luck to the new agent.
Let’s lay down the numbers for a minute:
10% down, 680K mortgage over 30 years at 6.7%: 4400/month in mortgage.
Tax savings on mortgage: around 1000
HOA: 800
Property taxes: 800
That’s 5000 for the pride of homeownership for a place that would rent for 3000-3500. Assuming you build 800 of equity on your mortgage, you’re losing a bit compared to renting.
And then there are the assessments, insurance…
The only way this can be interesting is if prices do appreciate.
750/sf for this nabe is a decent enough price today. But I’d bet you can get it for less in 2 years time, though.
My guess is the HOA is supposed to be $510 and they agent typed $810, because the 8 is right above the 5 on the numeric pad. Also i am pretty sure it comes with a parking space, since unit #1008 is for sale and comes with a parking space with HOA of $400+.
Woah, enter THIS one into the hall of fame:
Loss: 5K per month (uh oh, not a good start at all. But I digress…)
Commission/Points: 1K/mo
Mortgage after 50% taxes (4% I/O on 950K – a very conservative amount): 1.6K
Property taxes after 50% taxes: 0.5K (I doubt both the mortgage and the property taxes were deductible at that full rate, but we’ll give it to them)
HOA: 0.5K (assuming SFS is correct – again, most favorable to the owner)
PG&E: 0.1K
Best possible total monthly: $8700 per month after taxes, every month for over three years. For a 2/2 condo?
As E.T. would say: “Ouch”.
And this sort of hits past the the “if your hold period is under 3 years you’ll likely lose money” target, too. That target will soon be moved to 5 years, then 7, etc.
One Rincon buyers might want to take some notes here.
I smell fish…
According to mls records that agents have records to. It sold for $950,000 in 12/05 but with a $110,000 credit to buyer at closing. I am quite sure this was never disclosed to the actual lending bank. NEVER would have flown.
And it gets better. The owner according to tax records is Melvin Mendaros. The selling agent was Michelle Mandaros from Trans-Pacific Realty in Pleasanton. And she is the broker/owner, only agent of that company.
For all of you immediately thinking 100% financing. Well me too. But it looks like they did “only” get loans totalling $937,500. So their 3% initial deposit was real money. But they cheated the bank out of $110,000 right off the bat.
I am not privy to information that is not public, but it smells bad. So don’t know enough to make conclusions, but??
And there are severe punishments including jail time and fines for people and real estate brokers knowingly involved in loan fraud.
Thanks for making loans more expensive for all the honest people in the world. Much appreciated!
joerealtor, thanks for the precious insight.
According to mls records that agents have records to. It sold for $950,000 in 12/05 but with a $110,000 credit to buyer at closing.
I’m sure people who bought taking this property as a comp are really happy to know that today. It shows how this market is messed up and that we will see much better when the dust has settled.
I am curious if any of the appraisers who may be reading can comment on how such cash-back deals affect appraisals. Do appraisers even have timely access to this sort of information on cash-backs ? If so does such a huge cash-back deal decrease this property’s value into the comp equation ? Or is such an odd deal just thrown out as a comp ?
This is really interesting info. Thanks joerealtor !
There are many forms of lender fraud. Technically borrowers who stretch the truth on ALT-A no income verification loans are involved in lender fraud.
However, there was lots of blatent and creative fraud across the contry that people are going to jail for and paying pretty hefty fines as well. Lots in Florida, SOCAL, and Nevada. Not aware of much here in the city, but some of the values in Bayview got really up there.
Buyer presents contract for $1,000,000 on property. In SF, 7 page purchase contract. Buyer also submits an addendum with the contract stipulating a seller credit to buyer or some shell entity $100,000. This addendum is not referred to in contract and lender does not see.
Lender does not know about it. Appraiser does not know either. As long as the market is on the up and up and there are somewhat reasonable comps to go off of – say another similar $1,000,000 home in this hypothetical case, the deal closes.
The buyer is defrauding the lender. The seller is actually being less than honest as well and is getting more than market value. They are indirectly participating in the fraud since they are benefiting from an artifically high price. There could be some culpability here too! The realtors are also being very unethical…even the one representing the seller.
Once you have a few high comps, it becomes a stack of cards with people moving every higher based on some bad data. Now of course most of the crazy high sale prices did not involve fraud. So the comps are not totally accurate. That is why any buyer should have an ethical agent review comps in detail to appropriately estimate an offer price.
I don’t think most appraisers have access to the agent-only comments section of the mls where this was disclosed after the sale.
I know there are quite a few realtors who regularly read this and I invite comment.
And lots of the buying and selling public who do not trust real estate agents.
I honestly believe that a vast majority of real estate professionals who regularly work in San Francisco are ethical and smart. They do provide a valuable service for their clients. However like in all industries, (especially where large sums of money can be made) there will be bad apples and the fly by night who may not be unethical, but are not in it for long-term relationships with the clients they represent.
regarding HOAs: r said:
“I think the agent may have filled out the form incorrectly.”
:::cough, cough, cough:::::
110K Credit? There are NRCC limits, anyone who would enter into a deal like that, shouldn’t be suprised if they are investigated for fraud.
.
What’s amazing is that if you look at the $3700 per month they were out of pocket, they essentially burned through the $110K in 30 months. It meant they didn’t actually make any payments themselves until last year. Until then, it was the bank essentially loaning money to make the payments. If they could have refid for another $100K cash out, they could have gone 5 years with no payments, other than what the bank was making to itself.
This is exactly what I mean when I say that homes’ primary value were the admission ticket to a scam. These people played it well, and they probably haven’t walked away only because they don’t want the bank to look too closely.
But now that portion of the value of a home is gone, and so you are seeing real price declines that correspond to a real reduction in value.
246 2nd Street #502 closed escrow on 8/04/08 with a reported contract price of $700,000.
If you think getting a $100k credit back outside of escrow is fishy and illegal it is. What is even more interesting (especially for the fed’s if they ever get their heads out of their a–) is the fact that Melvin, Mark and Michelle Mendaros have done this all over SF: 570 16th Ave; 246 2nd St #502 AND 1003; 1401 Diamond; 61 Fair Ave; 32 Heron St; 4500 Lucerne; 384 Madison; 30 Miller; 175 and 460 Vermont (and that’s just in SF, what about the east bay?). Why aren’t they behind bars? Probably because they’re sitting on a beach in Aruba drinking margarita’s under the sun.
Oh, one more interesting note: They never made more than a few payments on their properties in order to cash in on a quick refi and rented them out to unsuspecting tenants until each property was foreclosed by the bank and tenants evicted. Nice little double/triple dipping scam. I’m sure we’ll see these names in the headlines one day soon.
I’d really like to think this doesn’t happen in Noe Valley, but it appears that 1401 Diamond St. (a Mark Mendaros property, as noted above by R. Reffner) hits the auction block on August 17. Purchased for $1.3 million in Oct. 2006, it shows an unpaid balance of $1.265 million.
Mendaros’s Klan company’s – Trans Pacific Mortgage aka Mendaros & Co. Pleasanton, Ca currently have Complaints Filed by The California Corporations Commissioner – Accusation & Order Revoking Residential Mortgage Lender License Pursuant to California Financial Code Section 50327 File No. 415-0044
http://www.corp.ca.gov/ENF/list/m/MendarosFamily.asp
http://www.corp.ca.gov/ENF/pdf/m/MendarosFamily_Order-Revoke.pdf
http://www.corp.ca.gov/ENF/pdf/m/MendarosFamily_Accusation.pdf
Johnny Mendaros, father, in the 1990’s, Johnny Mendaros had his Real Estate License taken away due to scamming his investors. Since then, Johnny had his daughter Michelle Mendaros, son’s Mark & Melvin Mendaros to act as fronts of his family schemes for many years.
The Melvin Mendaros owned 751 Commercial Street property went back to the bank for $1million on January 19.
***Public Notice ***
Mark A. Mendaros
Re: LA Superiour Court Case No: BC 405965
Mark A. Mendaros is a FRAUDSTER. I was awarded a $11.7 Million judgement against Mark A. Mendaros (interest accrues daily at more than $3,000.00) in the above entitled case. He is personally liable as well as his sham business Motion Media Network. The judgment includes a finding of fraud and intentional Tort – so he can NEVER get rid of me – not even going bankrupt.
For the record, I gave him multiple opportunities to right his wrongs. He’s a fool and two bit con. I feel a bit sorry for his wife, Leah Mendaros. Unfortunately she’s half liable for her husband’s ill deeds.
Beware of the Mendaros Klan….
Speaking of lawsuits and Motion Media Network, you’ve gotta love this one. Motion Media allegedly leased a warehouse and fell behind on payments. Subsequently subleased to a marijuana grow operation that got raided by the police.
BTW, looks like they’ve managed to, thus far, hang onto 1401 Diamond. Impressive as the last NOTS was over 1 year ago.
We delt with Mark and is “company”. He initially came up with a large cash deposit to rent our commercial building but right away started falling behind on the monthly rent. We sensed something was wrong and asked him to leave. We we took possession of the space back we noticed large diameter holes drilled in several locations. If I had to guess this was going to be ventilation for whatever type of “business” he was going to be doing. They guys is a crook, you can read that above and other places on the web. Thats why I am posting. If I had to guess he bailed out of our space and moved into the Howard location. The timing is about right. Anyways, avoid he is not legit.