2581 ANNAPOLIS St East Palo Alto, CA 94303

Last sale: Jun 16, 2009 Sold $573,732 (This is a bank take back)
Last REAL sale: Nov 10, 1999 Sold $270,000

I found the mortgage history of this home on PropertyShark, and it is quite interesting.  First the homedebtor bought the house in 1999 with two loans from Bank of America:

Notice that the two loans add up to the purchase price. So great, this guy is buying the home for 0 down, but at least it is a fixed loan. Now he lived in it for  a bit over 3 years before doing another refi.  This time it is a cash out refinance because the amount borrowed is $300k.  This time it is from Indymac:

Notice that now it is an adjustable loan. A year and a half later there was another cash out  refi in June 2004:

So basically he took another $30k out, but wait, it’s not over! Another 16 months later, he did another HUGE cash out refinance:

Yup, in this final refinance he took out another $242k.  Then finally the home was foreclosed this year.  So at least he enjoyed the house atm for almost 10 years and took out over $300k.  Here is the funny part, all the banks he dealt with are dead except for Bank of America.  I guess  it sort of makes sense, too.  I don’t think this guy lost much since the money he took out was tax free and he didn’t really have any equity in the house anyway.  The last bank definitely lost the most on this series of refinances, but I guess they have ” imploded”.

2330 University Ave #110 East Palo Alto, CA 94303

Last sale: Feb 22, 2006 Sold $445,000
Loss if sold for asking: $246,000 or 55%

I don’t know about you but these listing photos just make me somewhat dizzy.  You can sort of make out some chairs in the first one, but the second one seems like the realtor took it while he/she was drunk and fumbled around. Anyway, I suspect the cut down price is to elicit more bids, or the realtor was really drunk?

Last sale: Feb 14, 2006 Sold $708,000

This one makes me have a sinking feeling. It’s about $24k below the latest median, but it’s reduced quite a bit from its last sale price.

This house seems to have a good facade, and it’s the same size of the condo I rent, but to buy it would cost twice as much as renting. Awesome huh?

Last sale: May 26, 2005 Sold $780,000

This one is more than $200k below its last sale price and it’s a short sale, which means the deal probably won’t complete.  It’s priced right at the county median now.  It’s an okay neighborhood, but it’s on a busy street.

The general pattern to the median priced home seems to be the following:

1) The house is less than 1200 square feet

2) The house is more than 50 years old

3) The house isn’t exactly affordable to those with a median income.

Oh well, maybe one day this madness will end.

12 ATHLONE Ct Menlo Park, CA 94025

Last sale: Nov 23, 2005 Sold $960,000
Loss if sold for asking: $161,000

It looks like the current owners bought this home back in 2005 with a $720k adjustable loan.  Their listing price will help them just break even.  Open house this weekend on September 12th and 13th from 1pm to 4pm.

1040 Patricia SAN MATEO, CA 94401

Last sale: Jul 06, 2007 Sold $818,000

Loss if sold for asking: $319,000 or 39%

I actually know several families that live in this neighborhood.  It’s not the most ritzy part of San Mateo, but it’s not bad either.  It’s close to shopping and the general neighbors are good.  I know at least one family that  paid over $700k for a smaller house than this one here a couple years ago.  So is this a good deal?  It really depends.  A house like this would rent for $2000 to $2300 a month, though.

“Let’s face it – most of us would like to buy more home than we can afford.”

This is how the article opens up.  Really?  Is that really true for most of us?  Or is it just true for those who can’t really do math?

Next it goes on:

Suppose you see a house that you really like that is listed for sale for $800,000. You are going to make a 20% down payment. You want to offer $775,000.

….

You are worried that the seller is not going to accept this reduced price offer, and you certainly don’t want to insult them, because you truly want the house. So you decide to use the seller paid buydown strategy.

Lets do the math here. 775k on a 800k home is 96.9% of the listing price.  In San Mateo/Burlingame/Belmont the average sale to list ratio is about 96% to 98% so I would say that 775k is a VERY reasonable offer, and I highly doubt that it would insult a seller.   Seriously, some of the troubled sellers would be ecstatic to get such an offer.

Next this broker reveals the strategy he is proposing.

Instead of offering $775,000, you make a full price offer of $800,000, and you ask the seller to credit $25,000 toward your closing costs.

What do you do with this $25,000 credit? You buy the interest rate down to 4.25% by paying almost 4 points, for example.

By buying the rate down to 4.25%, your monthly payment has been reduced to $3149 per month. The property taxes are slightly higher, $733 per month. The down payment is $5000 more. But look at the impact this strategy has – a monthly savings of $397 per month!

Now, here is the icing on the cake – although the seller made a contribution to buy your rate down, you get the tax deduction for the $25,000 in points paid all in the year that you purchase (check with your tax preparer to verify)!

Wow!  A savings of $397 per month!!!  Guess how much money you just let the bank  earn here.  $25,000 on the 4 points upfront, and 30 years of interest on an extra $20000 of principal.  Of course, a bigger loan is better for the mortgage broker if they are taking a fee from this.  So this is very good for the broker, but not necessary great for the consumer.  Seriously, who in their right mind  does a 4 point buy down?  It is much cheaper to offer the lower price, and then pay 1 point or less to do a refinance later if  interest rates come down.

The bottom line is that I don’t think buyers should be worried that they will be insulting a seller with an offer lower than the listing price. I think everyone should always offer what you are comfortable with and what you can afford.  If your offer isn’t accepted then just move on.  In the example given by this broker, if an offer of $678,500 were accepted then that would also lower monthly mortgage by more than $400, and the buyer would save around 25k in downpayment.   It is not like we haven’t seen homes drop more than $120k from their original listing prices here.

Could this mean that many more apartments will come up for sale soon?

It was the listing for a wooden shell for  1.3 million dollars owned and listed by a realtor based in Redwood City.  It seems that the home actually got foreclosed on in June by JP Morgan Chase  for the amount of $1,168,813 and went back on the market in late July for only $693,000.  It is an REO and now it is pending without release so if it actually sold for asking the bank is taking a hit of almost $500k.  I guess the lot is quite large, but the new pictures look like some people have been stealing wood from the place:

I hope the new owner finishes the home and enjoys it.

This is definitely a nice picture of someone having fun, but does it really pump up the price of the small beach home to nearly a million dollars?  Am I buying the ocean with that person in it?  Granted, there are photos of the actual home on the listing, but it’s pretty confusing to put that picture up as the first thing.