As we wrote this past January:
Purchased for $1,075,000 in January 2007, the single-family 435 Vermont returned to the market last July seeking $1,165,000. In October the asking price was reduced to $1,095,000. And in December the listing was withdrawn from the MLS without a sale.
The remodeled Potrero home is back on the market today at $1,010,000 noting, “Refreshed, restaged & priced to sell!” Refreshing the list price on the million dollar home’s namesake website might be a nice touch as well.
In early March the list price was was reduced to $998,000 (on both the MLS and namesake website). And yesterday the sale of the single-family Potrero home closed escrow with a reported contract price of $980,000 (9 percent under its 2007 value).
UPDATE:. Apparently we missed a bit of work between sales, so into our orange (and comp) crate this sale goes.
∙ 435 Vermont Now “Priced To Sell!” (Previously Priced To Sit?) [SocketSite]
This home’s layout is hideous. No wonder it cannot sell.
Only 9% under its 2007 value is not bad, but it is a lot of coin once you add in realtors fees.
Also add the owning costs compared to rent. Interest + opportunity cost = 150K+
Property taxes = 40K
With the ticket price loss (95K) and 5% commission (55K), these 3 years in Potrero have cost more than 340K or around $300/day.
At least they didn’t throw their money away in rent.
Selling after 3 years is a bad idea most times.
If you’re going to preempt the arguments against yourself, you might as well include interest deductions.
Sure, interest deductions make all the difference!
If we’re going down that way, we have to add other holding/selling costs like paint jobs, regular maintenance and other small things renters don’t have to care about. In general 1/2% to 1% of the property price in maintenance and who knows how much in staging.
But interest deductions are the selling point of course.
I saw this place. The layout and finishes were questionable, and they probably should have kept some of the original look. I checked the permit history, and it didn’t seem to make sense given what they did to the house.
I don’t understand why they removed that big tree you can see in the mapjack link someone sent in the other thread. Removing it makes the street look even uglier than it already is right next to 101, and it would have provided a buffer from the freeway.
Think of it like a rental. Except not only did they get to paint the walls, they got to rip out the kitchen and baths, add in the entire downstairs and redo the foundation and electrical. What fun that must have been! I’m guessing $100,000 worth of fun at least.
Kitchen and baths were remodeled in 2008, foundation was redone, electrical upgraded and the entire downstairs was added, and THEN, for all their trouble, they paid the bank a $95,000 move out fee and the realtor a $55,000 move out fee. See just like a rental!
Except they probably paid $1000-$1500 over what a rental would cost per month (though they paid a m much higher premium while all that work was being done, if they got to live there at all for 6 months! Another $50K at least.
So they lost $300K, but they get to tell their friends they “only” lost $95K.
C-A-T-A-S-T-R-O-P-H-E. But remember, real estate only goes up!
^ ok dog, so these people got hosed. But it doesn’t, like, happen to everyone 🙂
@lol: How do you calculate $150k lost in interest + opportunity cost? And you are forgetting to deduct the costs of renting to make the math work out.
“I don’t understand why they removed that big tree you can see in the mapjack link someone [um, like tipster?] sent in the other thread.”
I’m guessing it went something like this:
Realtor, just before they bought, “Sure it has foundation problems but that’s an easy $30,000 fix”
[6 months later]
Contractor: “Well, the foundation problems are being cause by the tree. We’ll need to remove that too. While you are redoing the foundation, we may as well add in a lower floor. It will just cost another $50K. Of course, to do that, we’ll need to upgrade the electrical for another $50K. You’ll need to move out, so while you are away, we may as well upgrade the kitchens and baths for another $100K. So the $30K cost your realtor told you about will now run $230K.
Homeowner: “I just bought 6 months ago with nothing down, so I should have built up $230K in “home equity” by now. Can you take a home equity line of credit check?
Contractor: “No problem. I’ll start in a week. I should be done by, oh, 2010. Just in time for your divorce”.
So clearly people want to argue about renting versus buying and yet on the other side of the bubble im sure people were on the other side of the argument. Fact of the matter is that everything got confused when buying stopped becoming about the long term and the decision to buy was made with the short term (
tipster wrote:
Heh. Someone in one of the other threads yesterday described how stressful it was to try and live in a house while it was undergoing a remodel.
Back in the day, when I took the Owner Contracting course from the Berkeley Building Education Center, the most vocal and frequently-question-asking participant in the course was a woman who was an instructor at a local community college and whose husband was an engineer at a silicon valley startup. They started out trying to fix their foundation on a bungalow in the south bay and “while they were at it”, decided to finish their basement, adding a basement bathroom. Of course, since it was costing so much more than they planned for the foundation fix, they decided to forgo hiring a general contractor and manage the project themselves, “to save money”. The instructor in the building education center course actually encouraged her, telling her all kinds of stories about former students of his who managed to save tens of thousands of dollars on their remodels.
By the last week of the course the couple were separated. My takeaway was that general contractors are probably cheaper than hiring two divorce attorneys.
As far as anything I’ve ever said on here, the selling point was “short term holds without improvements usually don’t do well.” Seems like I sold you on it too!
Naaah. Just thought it funny that you were preemptively submitting the obvious rejoinders, yet you skipped that one.
This whole thing is a broken record tho. (See “short term holds without improvements usually don’t do well.”) Same thing, every time. Up up up. Let’s assume they did a paint job! Then in comes Tipster with some hypothetical taken to its extreme. Whatever. Tipster, stick to the cocked shotgun noise that you routinely use to scare off all the would be burglars. It’s funnier, and slightly more belieavable considering your paranoid persona, than when you weigh in on real estate or construction cost and scenario.
Yes, anonn, and in between your boring, contentless, ad hominem attacks, you can tell us that you did the exact same job last year for a nickel.
[sarcasm] Imagine that! A lowball estimate from a realtor! [/sarcasm] LOL!
Hopefully some views out the back windows- otherwise it seems like a nice enough home on what is essentially an exit ramp under a freeway.
Rob: “The Giants rotation?”
If Zito keeps pitching like he did last night it will be a very good year for the Giants. I wonder if a good year for the Giants will have any effect on condo prices around the ballpark?
SFRE
The 150K interest and opportunity cost is a rough estimate.
Borrow 80% at 5.25% = 3762/month in interests
Multiply by 33 months: 124K. We’re in jumbo territory though. The rate could be higher.
The 20% down (215K) at 3.5% (roughly what you could get in 3-Y CDs in 2007) will give you 23K.
147K. Low estimate.
Of course rent is not included there. It’s better add all the costs in the same column before doing the comparison.
We’re still in the $300/day range, not including the redos previously explained on this thread.
I am sure there’s a rent controlled 83 Y/old somewhere in the city who’s paying that much in MONTHLY RENT, lol!
Aw cmon tipster. Foundations don’t cost $30K if you’re handy. This is an easy DIY job which will only cost about $3000 in concrete, wood for forms, rebar, rented screw jacks, and a trunkload of Simpson hardware.
Just be careful not to get ‘Mangeled’.
Why do you give Tipster a pass by cracking wise, MOD? His intention is to mislead people. You think he knows what he’s talking about at all? Big tree + foundation + might as well do the downstairs + three years + divorce? Come on.
Though tipster might be hyperbolic, his point is that a seemingly “small” job like foundation work can bloom into a much bigger project. He didn’t even mention cost escalation during the project which almost always happens with large jobs. And it is not too much of a stretch that remodel+unexpected financial burden == marital stress.
What tipster did sidestep though is that the owners did receive increased value (new kitchen, etc.) from their increased expenses. The worst is when the expenses increase but the scope of work remains the same due to unforseen complications.
By the way, check out the permit cost estimate of the infamous Mangels house foundation job, $15,000 : https://socketsite.com/archives/2007/05/the_sudden_collapse_of_149_mangels_and_a_dream_1.html
Even if you apply the 2X rule of thumb to convert permit estimates to real costs, $30K seems quite low for a complete foundation replacement. That $15K estimate should have raised a big flag with the building permits office as it either indicates a DIY job (in which case engineering docs should have been demanded) or fraud.
How did he not mention cost escalation when he said, “tree –> foundation — > develop downstairs — > three years later” first of all? That’s very much cost escalation. Secondly, anybody would have made it about the downstairs in the first place. And anybody who knows anything would have known that. Third, I was in the Mangels house. I’ve told this board about it. It was scary. You keep wanting to talk about it for some reason. Nobody with a clew would have glanced at that and thought they could go it alone, or that it wouldn’t cost 50K minimum. 2X rule of thumb is something you made up. The 15K is from a guy who obviously didn’t know what he was doing or saying.
“Even if you apply the 2X rule of thumb to convert permit estimates to real costs, $30K seems quite low for a complete foundation replacement. That $15K estimate should have raised a big flag with the building permits office as it either indicates a DIY job (in which case engineering docs should have been demanded) or fraud.”
It’s not clear to me they replaced the whole foundation.. And DBI has set values for things, so you can’t completely lie on things.. I did my own bathroom remodel, and spend ~3k, but they required me to pay for a permit based on a ~8k remodel. I could have fought it, but it would have taken hours and hours and only saved me like $100, so I said fine, call it ~8k.
Anyone comtemplating a home remodel needs to understand project scope escalation through “small changes”. Often in competitive bidding situations, the contractor’s profit is often entirely in the Change Orders.
A fun home movie night way to see how this happens is to rent the 1948 comedy “Mr. Blandings Builds His Dream House” staring Cary Grant and Myrna Loy.
Myrna plays Gary’s wife as they remodel an old colonial house in Connecticut. One day Myrna sees a workman boxing up slate tiles left over from doing the kitchen floor and suggests there might be enough left over to “do the mudroom too”. Sure he says….
Fast forward to the weekly meeting with the Architect and they discover a huge (for the time) change order billing authorized by Mrs. Blandings.
Why is this so much says Mr. Blandings?
“Well”, says the Architect, “we had to demo out the mud room floor so that the slate would line up with the slate in the kitchen. Then we reframed the joists a couple inches lower and replaced the subflooring. The thick-set slate is a lot heavier than the wood floor that was there, so we had to add a column in the basement, and to support the column we had to add a concrete footing. Then we had to do put in the mud bed, slate tiles, mortar it up and we were done”.
WHY must people take homes such as this and change the interior so that it does not in any way reflect the age or exterior architecture? Cannot you have “modern living” while still having some of the wood trim and original ceilings? What I love about visiting European apartments in older cities such as Rome or Paris is that they do not try to DWELL the interior, but yet are still able to create a calm clean living space. The glass partition staircase is such an old gimmick at this point. I really think there is a large group of buyers out there who are searching for Victorian/Edwardian homes that still have some remaining integrity.
i am embarrassed to admit this but when i bought my home in 1998 i was not even thinking about year over year appreciation .i was just trying to buy a house with nice architectural details, well located to downtown sf ,nice looking neighborhood ( well kept homes ,manicured lawns and good neighbors), decent schools,a safe place for my kids to grow up. yeah i have a lot of equity and instead of having porsches the new neighbors drive aston martins and maserati quattroportes but i did not purchase my home as an “investment” and still don’t see it that way..i guess when people started seeing their homes like Webvan or Pets.com stock we were in the bubble and in trouble.
redseca is correct about how contractors will try to get profit on the back end in a competetive bid. in this market if the contractor tries that just go find a subcontractor yourself to do the work.as long as the general contractor pulled the permits you can just get someone else to do the parts he wants to charge an arm and a leg for because they are “not in the contract”
anonn – I said escalation during the project, tipster only mentions escalation before the project starts.
When costs escalate before the project you’ve only invested the time to contact builders and review bids. You can simply say “no” at that point in time and not waste much effort.
But when presented with a cost escalation after you’re 1/3 into the project with everything demoed then you’re already deeply engaged and you cannot simply change your mind and start fresh.
During. I stand corrected. Tipster’s bloated hypothetical derived without a knowledge base ever displayed on this, his hobby site, actually came from somewhere else on the hypothetical timeline.
That said, how do you feel about his shotgun cocking scare tactics from the other day? I thought they were funny. So many worthwhile things to say. Just one person. How does he do it?
How did this discussion get to the usual “he said, I said, but I told you he said, no I didn’t” dead end? If I didn’t know better I’d say this is high school and all of you have push up bras.
So wait, tipster pretended that some work had been done on the place and that was enough to move it out of the “apples” category? Strange.
Was any actual real work done on the place? I tried to check DBI but their website is broken.
So wait, tipster pretended that some work had been done on the place and that was enough to move it out of the “apples” category?
No. But it did raise a flag.
The final inspection for the kitchen and bathroom remodeling didn’t happen until 2008, but the original permit was pulled in 2006 and the work appears to have been done prior to its sale in 2007.
That being said, permits indicate a bit of work with respect to legalizing the garage (including a new driveway and curb cut) and some foundation reinforcing in 2008. And that “bit” kicked it into our orange crate.
Um yeah, I thought that shotgun cocking method of personal protection was a little funny too. tipster claims that anyone will recognize that sound. I used to live in urban Louisiana and rural Mississippi around a high density of shotgun owners yet I don’t think I can recall what a shotgun cock sounds like.
big mistake, look at this awful location. this is the type of property that will take years and years to see any appreciation.