I am the first to admit sales history and chain of title may not tell the full story. Granted its records transaction prices as reported to the Clerk and Recorder office as we are a Deed of Trust state. Thus the following has always caught my curiosity as I drive by it daily.
The home, a small bungalow in Congress Park has as mentioned always attracted my attention. The main level per city records has 877 SF and the basement 432 SF of which 380 SF is finished. In addition the lot is small i.e. 2,970 SF. In addition no garage, a postage stamp sized yard and abuts a major thoroughfare thus no on-street parking and faces the major one-way thoroughfare.
I watched as the residence sold in 12/13 or 5 years ago for $210,000.
The buyers were fix and flippers and after a cosmetic renovation and some mechanical updates placed on the market for $409,000 3 months later. After a price decrease to $399,000 the home sold for $393,500 in April 2014, 5 months after the initial purchase. Again a fix and flip (and I am the first to admit a well-done cosmetic flip and the addition of egress from the basement). I was always curious as location abutting a major thoroughfare, no true yard or buffer from traffic, a curious home indeed.
The home was re-listed for sale in January 2017 for $549,000.
After a slight price reduction the home sold for $535,000 in March 2017. This seller probably hit the market just at the right time as in the 3 years of ownership enjoyed a gross gain of 30% before closing costs including commissions.
9 months later the house reappears on the market asking $575,000. Granted I would love to profit $40,000 however when one considers commissions and closing costs (let’s assume 6%, the net profit would be $40,000-$34,500 or $5,500. While not a great profit basically was able to live for free for the prior 9 months.
However this seller was not so fortunate! 4 months later a price reduction to $549,900 and subsequently the home sold for $540,000 in May 2018.
Of note the house sold to that seller for $535,000 14 months prior. Thus again assuming commissions and closing costs of 6% of $540,000 or $32,400 actually a loss of close to $30,000 during the 14 months or approximately $2,100/month not factoring in taxes, insurance and other homeowner associated costs.
The house again has come in the market 7 months after the last resale asking $585,000 or desiring to profit $45,000. Again assuming 6% closing costs at asking ($35,000) will net seller $550,000 or $10,000 profit in 7 months assuming it sells at asking price.
The reality is doubtful the home will sell at full asking and thus most likely this seller will also take a loss on the home when it sells.
As a broker on behalf of my clients I always do a look back concerning the sales history. On this particular home I would actually steer my client away due to size, inferior location i.e. on a busy street, no garage and so forth. Granted I believe it would make a great rental property however at asking even if cash the return would be minimal AND the potential equity upside I believe is limited as we are on the downside of the market.
Here is the history in an east to review table:
- 12/13: Sold for $210,000
- 4/14: Sold for $393,500
- 3/17: Sold for $535,000
- 5/18: Sold for $540,000 – Also known as the year of NO PROFIT
- 12/18: Asking $585,000
I wish these sellers the best of success. Yet any home that has gone through 5 owners in 5 years would make me question “what is going on with this home?”