Purchased for $1,725,000 in July of 2005, returned to the bank stripped of its “appliances, many fixtures and hardware,” and listed for $1,499,000 in October, the sale of 4105 21st Street closed escrow on 12/10 with a reported contract price of $1,370,000.
As a plugged-in reader added to the backstory:
The previous owner (before the bank) bought this from a flipper (dual agent allegedly said: Its practically brand new, no inspections needed.) She did $300k more of remodeling. Then the roof leaked and the sewer backed up, and as you can guess, it kinda went downhill from there. More fallout from the bubble. Here’s the link to the lawsuit for the sordid details.
And it appears as though the plaintiff has prevailed with respect to a settlement.
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Did anyone actually see this to see how bad it was? And did anyone fix the purported problems with leaking/sewer?
And did anyone fix the purported problems with leaking/sewer?
A quick visit to the DBI website shows that no permits have been pulled since 2005. I certainly hope that the disclosure packet was complete…
Based on the number of shoddy flips that I toured, expect that we will see more of this type of lawsuit in the coming years. It is pretty amazing that the plaintiff has prevailed considering that the sales contract was most likely “as-is”.
Another class of water intrusion problem I’d expect to start cropping up is water seeping in via retaining walls and from under slab floors (nicely “improved” with rattan mat carpeting glued to the cracked slab).
When you convert a damp, moldy storage space into living space, it is best to address and fix the source of dampness first. But it is far cheaper to just affix studs and sheetrock the space. Few buyers will know the difference between a well done job and a shoddy job since they are superficially identical. In 2005 an inspection contingency could kill your bid.
2005 was also the era when every other open house featured the smell of paint drying.
The standard California purchase agreement is by definition an “as is” contract. The “as is” addendum that agents add to the contract don’t really do anything legally. They certainly don’t remove the requirement for the owner to disclose anything they know about that may materially affect the value of the property. They also don’t remove the requirement for contractors to remedy defects.
Excellent points Milkshake:
Those are things I keep saying to all my clients: Do it right in the first place..I tell a client up front that the right method will be more costly, but it is well worth it in the long run. Those who won’t take my advice I refuse to work with.
Whenever I remodel a lower level, we remove the old slab completely, usually upgrade the footings at the same time, add a waterproof membrane system, gravel and sand, BEFORE pouring the new slab.. In some cases we add a complete perimeter french drain system if extensive water penetration is evident.
It irritates the hell out of me when a realtor has no clue as to what REALLY has been done to the lower level.. and you’re right, adding some sheetrock and studs does not make for a liveable space.. When are realtors and homeowners going to get the message?
thanks for your great comments.
You don’t know what was or was not disclosed previously, noearch.
and your point is?
I’m not accusing anyone specifically of doing or not doing anything. I am saying, as I have many times, that many, but not all, realtors simply don’t define CLEARLY to a buyer what really has been done to a “remodel”… It’s an overused word fraught with danger..
I’m sticking with what I said.
Whether or not the work was done with permits would necessarily have been included. What the realtor was told was done, and what was actually done, aren’t the same thing either. I get your point. You’re of course correct in saying that people should find out what was done previously. But I’m not certain this was the spot to make that call. The buyer spent another 300K we’re told. They likely knew that more work was necessary. And that was the nuttiest thing here.
[Editor’s Note: According to the lawsuit the $300,000 was for upgrades and improvements in 2005 (custom cabinets, lighting, appliances, etc.). The defects allegedly surfaced in 2006 and would have cost an estimated $200,000 to remedy.]
I agree with Milkshake. From reading the complaint, I think it’s a shame from the point of view of buyers everywhere that this thing didn’t go to trial, it would have been incredibly interesting and perhaps useful.
It reads like a classic “pump and dump”. From the complaint (link above):
Now, of course you could say that all of these are allegations and that none of this was true, but the defendants didn’t bother to file an answer to the complaint. Not even to say that, “well, what may or may not have been said or discussed is irrelevant because all required disclosures were made in writing” at blah, blah, blah point in time.
According to the lawsuit the $300,000 was for upgrades and improvements in 2005 (custom cabinets, lighting, appliances, etc.)
Man. 300K for cabinets, lighting, and appliances? After it was already remodelled? Usually for that amount of money they’re getting into something that required a carpentry crew. Like Brahma says tho. This is all unverifiable now.
Sheeeet, for $300k you can normally legalize a basement with permits, and put in a nice kitchen and bath to boot!
Sheeeet…
I love Clay Davis.
For $300K you can normally build a quite nice 2000 sq. ft. house.
But this is SF where nothing is normal.
$300K for upgrades to an already “almost brand new house” seems foolish to me, especially since the “owner” apparently was relying on appreciation.
And it still sold for $1.37 M?? I thought only problem-free homes were moving in this market.
ANYTHING moves in ANY market, for the right price.
so what was the outcome of this suit? A dual agency was mentioned by the editor, but there really was no dual agency, unless the plaintiffs charges of collusion and secret profits by her buyer’s agent were proven. i tried to get through it all but couldnt find the answer.
were the allegations against her buyer’s agent with regards to lying to her and colluding with the seller/seller’s agent proven?
This sounds like a triple play of real estate gone wrong: 1- naive buyer waives all inspection contingencies. 2- incompetence on dual agent’s side (home is perfect! Trust me!!). 3- foolish outlay of $300k in unproductive renovation. It’s tragi-comedies like this that create opportunities for smart RE investors.
more like a double play of most sales in 2005/2006: 1 – buyer advised to waive all inspection contingencies to be competitive (you want the house don’t you?). 2 – incompetence of agent to understand market economics (trust me, the market in sf can only go up!)…
to the point of dual agency…there was no dual agency.
the developer/broker listed the house, a zephyr agent represented the buyer in the sale.
no dual agency. there was an alleged “dual agency” in the plaintiff’s lawsuit. but nothing that was ever proved, as far as i can tell.
John Houston (realtor/developer) certainly used to work for Zephyr, though I don’t know who he was working for at the time of sale, so I’m not sure if that played into the alleged “dual agency”.
Nothing was ever “proven.” The case settled. The amount of the settlement would tend to indicate the validity of the claims of the plaintiff.
I am also amazed that someone would buy a completely renovated home and then spend $300K on new renovations.
Interesting that per the developer’s web site, he left town after selling this property, moving to Los Angeles. Pretty gutsy of him to feature his renovation of this property on his website as an example of his work.
I am also amazed that someone would buy a completely renovated home and then spend $300K on new renovations.
Without permits (unless the DBI website is wrong…)