State your intentions

411 Iliaina St.
MLS: 2706902



This is a perfectly nice house, in a decent neighborhood. But it's just not selling. When you look into the story, things get interesting. The house sold in July, 2005 for $620k. The owner tore it down and built the new 2 story home in the photo. Nine months later, they put it back on the market at $1.2M. The house is quite nice, it has a beautiful kitchen, granite all over the place, and nice decks. Many of the rooms are rather small though.

Here's the history:

MLS: 2511621, July 10, 2005 SOLD $620,000

MLS: 2607306 (on market for 61 days, no price changes, withdrawn)
April 14, 2006 Active $1,200,000
June 13, 2006 Withdrawn

MLS: 2611222 (on market for 120 days, expired)
June 12, 2006 Active $1,199,000
July 3, 2006 Price $1,199,000 $1,139,000
July 20, 2006 Price $1,139,000 $1,099,000
August 9, 2006 Price $1,099,000 $1,049,000
September 5, 2006 Price $1,049,000 $999,000
October 11, 2006 Status Expired

MLS: 2706902 (current listing, on market for 157 days, no price change)
April 9, 2007 Active $998,000

Now this house has been on the market for a total of 330+ days, not counting the 6 month break in between the most recent listing and the prior one. Given the flipper has been holding fast to $998k for almost a year, I'm guessing he's at the break-even point. To go any lower likely means taking a loss.

If the assumption is correct, the flipper is likely facing a hefty monthly payment. At purchase time, interest rates were ~5.5%. To make the math easy, we'll assume one loan at 5.5% instead of factoring in a possible construction loan or 2nd mortgage. Even if they put down 20% of the final $1M (unlikely), they're looking at a monthly outlay of $4542/mo + 315/mo in taxes = $4857.

If they financed it all back in the day of easy credit, they're looking at $5,678/month + taxes = $5993. The house is currently rented at $4100, so they're looking at a ~$1900 loss per month at full financing or $757 a month assuming a $200k downpayment. So the owner is probably taking a double whammy in terms of holding fast in a declining market along with losing money each month. If I had any sympathy for flippers, I might actually feel bad for this guy.

Update: This as relisted on October 10th, for $998k (no surprise there). It went into escrow five days later. If the potential buyer offered anything near full asking price, I wonder what their reaction will be to getting the history on this place? I'm looking forward to seeing how this one plays out.