104 Funston
It’s been a wild ride for the single-family home at 104 Funston over the past four years having been purchased for $2,750,000 in May 2007, improved to the tune of $400,000, and then relisted a year ago asking $3,150,000.
Reduced to $2,750,000 last May, the listing then touted “move in with equity” with the property having been “appraised at $2,850,000.” But as we wrote at the time versus simply after the fact: “Who are we to suggest that its three weeks on the market at $2,875,000 without a sale would suggest otherwise.”
Reduced and relisted a few more times over the past eleven months, most recently for $2,395,000 in March, on Friday the sale of 104 Funston closed escrow with a reported contract price of $2,200,000 and after just “53” days on the market according to industry statistics and reports, a number that would appear to be “hot,” at least on the surface.
Not including the reported $400,000 worth of improvements, call it a 20 percent ($550,000) drop in value for the single-family Lake District home since 2007, a 30 percent ($950,000) drop if you account for the improvements which median price reports will not.
And yes, that’s $650,000 under that agent touted “move in with equity” value in 2010.
Instant (Appraiser’s) Equity At 104 Funston [SocketSite]
Will 104 Funston Return With Even More “Move In Equity?” [SocketSite]
No More Mention Of (Even More) “Move In Equity” For 104 Funston [SocketSite]
A Quick Reminder Not To Bank On An “Appraisal” (Or Instant Equity) [SocketSite]
A “Fresh Perspective” On A Rather Familiar 104 Funston [SocketSite]
Medians Are Up, But Don’t Confuse That With Increasing “Prices” [SocketSite]

24 thoughts on “Luckily You Didn’t Buy The “Bullish” Instant Equity Claim (Or In 2007)”
  1. I think the horse has been sufficiently beaten on this home. $2.2 is still a fair bit of money for this place. The 53DOM is actually not a totally unfair statistic. There is a whole other stratosphere of buyers in the $1.8 to 2.2M market versus the $2.2 to 3.0M market and a big enough drop warrants a reset in my opinion. It is interesting to me that a buyer emerged at the “auction rate price” of $2.2M, which is the price they marked it at in Oct of last year when the were expecting a bidding way. Anyway, congrats to all for finally being done with this one. At least for now.

  2. how is 53DOM not an unfair (or decpetive) statistic? It was first listed over a year ago. Suggesting statistics should be reset due to a change in price doesn’t make much sense to me. How do you come to the conclusion that $2.2M is the cutoff point?

  3. Capital loss on sale of house = ($550,000)
    Renovation costs = ($400,000)
    Commission and misc sale cost = ($110,000)
    Transfer tax paid = ($17,000)
    ————————– ———-
    Total nondeductible loss ($1,077,000)
    This one worked out exactly as it was supposed to.

  4. Somewhere on SS, long ago when I used to care more about this subject I posted what I felt were my basis for DOM resets. I do think there are some legitimate reasons. One would be time off market. This home was off market for 4 months. Another reason would be a material change in price based on a percentage. I lost track of the changes on this place but $3.1 to $2.2 or $2.3 is a material change. The last reason would be a change of agent, or change of Broker. I see no reason why Agent #2 needs to be saddled with Agent #1’s DOM baggage.
    Ultimately, I contend that DOMs are useless as a ‘stat’ and there are no real industry stats using DOM; maybe a realtor using it for marketing but you never hear anyone saying they got screwed over by the misleading DOM. It is the final selling price (i.e., comp price) that matters. Short DOM with high overbids are the only thing I find interesting since it tends to show a lot of interest with a lot of market rate bidders. It also signals to me a winners curse situation. 135 Locust is a classic example of the winners curse based on the overbid.
    My perspective on the market has and always will be about what people are willing to pay today for a property and using that real time trend to predict what people will pay in the short term future. I find that I’m pretty accurate most times.

  5. Let’s see how buying a straight-up S&P 500 fund at the same time – the peak of the market before an historic crash – with that $2.75mm in May 2007 would have worked out in comparison with this “investment.”
    Capital loss = ($330,000)
    Renovation costs = $0
    Commission and misc sale cost = ($500) (max.)
    Transfer tax paid = $0
    ————————– ———-
    Total loss = ($330,500). And it’s a deductible capital loss (unlike housing) – can offset other capital gains and carry the loss forward until you’re even (and can even deduct $3000/yr off regular taxable income until then).
    But at least they got to lose that non-deductible $1mm using leverage and they got a write-off on a small portion of the interest . . .

  6. ^ Don’t forget that a straight-up 2.75m investment in the SP500 would alos have generated about $150k of tax-favored dividends over those four years (5-15% max tax rates on qualified dividends).

  7. @CH, thanks for posting that link. You really don’t see too many DOM stats. I would absolutely agree that that is not a stat to be trusted, but my guess is that the level of manipulation on these things are also insignificant in the grand scheme. Maybe a 10% swing at best which would skew the numbers in that report from anywhere from 5-10 days depending on the month and level of manipulation. Again, what the heck is anyone using that stat for anyway?

  8. it’s not the agent’s fault. this things sits on the corner of funston and lake with about zero distance between the side walk and your windows. but, hey,it’s perfect for a pair of deaf exhibitionists.

  9. “You really don’t see too many DOM stats. I would absolutely agree that that is not a stat to be trusted, but my guess is that the level of manipulation on these things are also insignificant in the grand scheme. Maybe a 10% swing at best which would skew the numbers in that report from anywhere from 5-10 days depending on the month and level of manipulation.”
    Sure, nobody uses DOM. Certainly not agents in order to market themselves and tell us how great the market is:
    What’s reality for DOM in Cupertino as computed by the raw data? 61 days:
    That’s a 126% difference. I ran across this example a couple days ago.

  10. You’ve got to add in a few extras to the loss equation:
    Property tax since 2007
    Insurance since 2007
    Mortgage interest since 2007
    If this was leveraged, the losses were even bigger that posted above…

  11. Nobody said don’t feature it, or that there was nothing to see. Or anything about DOM. Or that you should feel free to throw your stale crumbs in my direction, ever.

  12. Nobody said anything about DOM? Seriously?
    And you’re right that you did not literally say “don’t feature it”; you just mocked the editor for doing so. Flujie, you are, at least, consistent!

  13. The only people who care about DOM are people like you, and you like it very, very much it seems. What would you do without it? (I mean, the six things you constantly say are stretched over about four topics. Without DOM that would go down to three.) And I didn’t mock the editor for “featuring” it. I chided the editor for running with it a whole heck of a lot.

  14. Fluj, next time just say “A.T., you were absolutely right, as usual” – I know it’s hard for you but man up when you get something completely wrong.

  15. In the future, feel free to read “I” for “nobody” when you go the route you went at 8:22, which was first talking to me about something I’ve said and then in the same post going to another point that I hadn’t even addressed. Yes. I should have said I. People had indeed been talking about DOM previously. Excellent language parsing gotcha moment by you.

  16. Countdown to fluj throwing a fit and promising to leave (to return 2 months later under a new name),
    which has happended more often than the DOm resets on this prop.

  17. Everyone, please stop picking on fluj’s name changes–fluj, anon, annon, anon.ed, realtormom, the list goes on and on….
    He’s just mildly schizo, but we’re working on it in session.

  18. OK “3,2,1…” Never saw “3,2,1…” around before.
    Funny how that will probably stay posted. Hmmmm.

  19. I’m assuming this is a dead thread by now, but I’m just scrolling through. As a casual r/e observer and someone not in the r/e industry, I think you can’t dismiss DoM and how it is misused. It’s one of many things(like “OVER ASKING!) used by brokers to mislead consumers about the state of the market. I have walked into open houses many times knowing the history of a place when the broker will tell me “it’s brand new on the market, just 12 days, and there’s a lot of interest in it already. The market has really heated up.” I’ve had some version of that directly spewed to me many times. Brokers get offended by this kind of comment (and there are honest brokers obviously), but to understand why people have this impression of r/e brokers, the NAR and the industry,. . . try sending in a friend to open houses who is unknown to the broker (someone not in the industry) — out of ten places, see what kind of “information” you get. Have them ask serious questions and act as serious buyers– over half of the open houses, I bet someone will tell them that a house that has been on and off the market for over a year– is new on the market and they will likely have competing bids quickly . . .There is no downside for brokers to lie and mislead . . . and the NAR institutionally is doing their best to make sure that lack of regulation remains.
    R/E is fundamentally an inefficient market. It can get bid up quickly, but without foreclosures/forced selling, it is a much more protracted pace to go lower. It takes a long time for the truth of fundamentals to be told. In the meantime, it is in the r/e industry’s interest to control perception to get that incremental bidder off the fence by whatever means necessary.

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