Normal Price Reductions

35 W. Norman Ave.

35norman.jpg

Asking Price $1,180,000 ::: Sq-ft 2,854
Purchased Price $1,269,000 ::: Lot Size 0.42 acres
Purchased Date 07/27/2006 ::: Beds 4
Days on Redfin 92 ::: Baths 3.5
$/Sq-ft $413 ::: Year Built 1926
20% Downpayment $236,000 ::: Area Santa Anita
Income Required $295,000/yr ::: Type SFR
Est. Payment* $5,966/month ::: MLS# H07166852

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

This is listed as a single family residence, but from the description it’s really a triplex with an office and guest house in the back. From the view on Google maps, the layout seems broken up and poorly designed. The house is also fairly old and there’s no mention of renovations or pictures of the inside so I suspect that it’s probably not in good condition.

After 3 months on the market, the seller seems to have gotten the point about where the market is headed with multiple price reductions. Unfortunately, they bought during the peak of the bubble so it will probably see additional, even steeper reductions before a knife-catcher is lured into buying.

Purchased Price in 7/2006: $1,269,000
Downpayment: $270,000
1st Loan: $999,000

Listing History

Nov 19, 2007 $1,338,000
Nov 21, 2007 $1,298,000
Dec 28, 2007 $1,250,000
Jan 11, 2008 $1,230,000
Feb 13, 2008 $1,180,000

It started out as a hopeful listing at $1.338MM which may get them out without loses after fees and commission. However, it only took 2 days for them to realize that the market wasn’t going to take that and the price was dropped down $40,000 (just $2000 above their original purchase price). The holiday season must have been really slow so the 2nd price drop was a bit steeper at $48,000. The 3rd reduction came a couple weeks after that with a drop of $20,000. Finally, after a whole month of waiting, the 4th price drop is currently also the biggest at $50,000.

In total, the seller has reduced the asking price $158,000 in 3 months. How many more price reductions will it take to sell this house? How long will the sale drag out before a transaction occurs?

If the seller gets the current asking price of $1,180,000, he will lose $159,800 or 59% of his $270,000 downpayment after 6% commission. That’s a lot of money to lose in just two years time. It will only take another $117,000 in reductions for the owner to lose their entire downpayment after fees. Will he cut his loses now and reduce the price drastically in hopes of finding a buyer? Or will he hold on to the current price until it’s too late?

This is a sign that some sellers understand what’s going on and have continued to reduce prices to move a property off the market. This will become more of normal as things get tougher in 2008 and 2009. It takes a lot of umph to face reality and accept that you will lose money on a house. I commend this seller for lowering the price, but those reductions will have to be much steeper. Who is willing to buy a 82 year old house for $1.18MM?

6 thoughts on “Normal Price Reductions”

  1. I believe a lot of Asians bought into this area thinking that this school district will provide their kids the best school. They probably don’t realize that the mortgage cost would definitely exceed the private school cost otherwise.

    Wow, unbelievable. 1.2 M for a dump.

  2. The schools is one reason. The other reason would be proximity to the restaurants, business and friends/family in the area. Those same folks are banging their heads now as their house price slips by the day.

  3. My Brother-in-law bought a place in Arcadia but I don’t have the exact address. As soon as I find out, I would like you to look up some info for me.

    Anyhow, I hope those head banging continues for a long time to come.

    It’s just insane.

  4. Can you check out this area for me. Last time, he claimed his place was worth over $1. Not sure how much he paid.

    on W. Leroy between Lowell and Holly

  5. Leroy is just one block south of Duarte so it’s an okay location at best. It’s close to Holly/Duarte which means school traffic is bad during peak hours. It seems to have a good number of condos/townhomes in the area as well.

    Is his place a SFR? Condo? Townhome? How many beds/baths? Sqft? It’s hard to gauge how much his place is worth.

    I don’t see any recent sales activity on Leroy, but I found a sale from Jan 2008 on Lovell for 2bed/2bath SFR, about 1800sqft for $665k.

    Here’s a listing on the other side of El Monte Ave. Unsold in over 4 months, $1.08MM for 2500sqft of a 50 yr old house. http://redfin.com/stingray/do/printable-listing?listing-id=1216742

  6. it’s a SFR for sure. Never been to his place. He bought it about 2 yrs ago. I will get back to you when I get an actual address.

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