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Revisiting South Bay Home Resales to Watch Closely

In January, I wrote a blog post titled “South Bay Home Resales to Watch Closely,” which broke down the fastest and most accurate ways to analyze the real estate market.

This blog post took homes that had sold just a short while ago and that were put back on the market with no improvements made. Below, I have shared the results of these sales, but for a full understanding, be sure to read the past blog here.

Home Results

This sale is a big win for the Sellers and shows the market going higher.

With only some light paint work and ownership under two years before putting the house on the market, a $115,000 premium covers selling costs and leaves the home owners with a small profit. I am shocked that after 45 days on the market, the Buyers did not negotiate the asking price down by even a penny.

The listing description says this home “…has been extensively remodeled to perfection.” However, all I see are new floors and an updated bathroom.

Those upgrades do cost money but with those investments and selling costs, this Seller will come out with a loss whether it sells for $1.599 million or lower. Also, this is not the best data to help the market go higher.

Although this sale may look like a profit of $80,000, after selling costs, the Seller merely just broke even after two and a half years of ownership.

After 102 days on market, the Seller was smart to take a $49,000 reduction and move on with their next chapter.

I would say this sale is not a positive or negative for the market. Rather, the price growth moved slowly with inflation at 2%, so the Seller did not lose money after such a short stay. And, the Buyer got a newly-built home without having to pay crazy inflated prices just a couple of years later.

Flipper Results

This was an “iBuyer” flip that turned out very poorly. The amount of money invested into this unit was probably around $50,000. After selling costs, this Seller will lose big.

As mentioned in the January blog post, these investing “professionals” have big executive salaries to pay and a ROI to deliver. These investors will have to hit a couple of home runs on other deals to make up for the loss on this 13 month investment.

Commercial Results

  • 1401 Hermosa Avenue in Hermosa Beach
    • Original Sales Price: $4,400,000 in January 2016
    • New Sales Price: Not Available

This Hermosa Avenue property ended up not selling and expired on the MLS.

I looked at our title/assessor information through the MLS (which is sometimes reliable, but sometimes not reliable) and it is listing an off-market sale for $878,500 in June of 2019.

Now, the owner purchased this property for $4,400,000 back in January of 2016 so a sale of $878,500 would not make any sense.

Either there was a trade or partial interest sold. My gut tells me it was the latter as the $878,500 sale would grant about a 25% interest in the property at a $3.5 million valuation, a price near the owner’s asking price of $3,999,000.

That said, one can only speculate. No question, the owner took a big hit on this property purchase.

Conclusion

Looking back on these properties, it is looking like a mixed bag for the South Bay.

One thing is for certain, gone are the days of crazy appreciation where a home owner can sell for huge profits after only a few years of ownership.

That being said, I wrote a list of bonus resale properties in order to continue watching the results of selling after only a few years of ownership with little to no improvements made on the home.

**Bonus: Other Resales to Watch

I am finding that there are a lot of short term resales in the South Bay that I need to keep track of.

Off the top of my head, I went to some pricier listings that I knew were resales that will be interesting to watch. Take a look…

  • 429 24th Street in Hermosa Beach
    • Original Sales Price: $3,899,000 in March of 2015 (off-market)
    • New Asking Price: $3,695,000 (after two failed listings in the high $3 million’s, low $4 million’s)

This property above is going to be an automatic loss for the Seller even after owning it for over four years. Wow!

As you can see, this Manhattan Beach duplex Seller is trying to get a premium price for remodeling the 2-bedroom unit. Will the owner be able to get $600,000 more just eight months later? We will see if this remodel pays off.

Above is another off-market listing that was bought from a spec developer who wants a premium.

Lastly, this one made a huge splash when it was the highest Strand sale ever back in 2017. It is a pretty bold move for the Seller to think they can sell it for almost $5 million more without doing a thing just two years later.

Next time around, I will try to bring some results throughout the South Bay at different price points. But for now, enjoy watching these expensive listings and how they perform.

DRE: 01779425

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