Dear <a href="http://www.redfin.com/CA/Irvine/21-Ridgeview-92603/home/5928065 ">Mr. 21 Ridgeview in Irvine</A>, , your home is listed at $5,400,000.? Your home is NOT worth that? and here?s why?
For starters, don't get me wrong. We all love Irvine, and Turtle Ridge is probably the 2nd most desirable tract in Irvine (only to Shady Canyon). It has large homes (with yours being one of the largest), has great freeway access, some nice views, and has probably the best schools in Irvine. I'm not going to argue those points with you, because truly? how do you place a price on your child's education or a short commute? You can't? so I'll focus my letter to you on comps in Turtle Ridge and Shady Canyon, much like your realtor should have when they discussed price with you.
The first place anyone will look for comps is the same street. In this case, you've got a prime candidate 2 homes down from you in<a href="http://www.redfin.com/CA/Irvine/25-Ridgeview-92603/home/5928060 "> 25 Ridgeview</A>. He's listed at $4,249,000, or roughly 20% less than yours. I don't know a lot about your area? his home is listed as an "Old Hollywood" model and yours is listed as "Plan 3"? looking from above, they appear to be the same model? this would be supported by the square footage being 15 sqft different. He's got one less bedroom than you? might be a bedroom converted to an office or theater room or something?? Either way, even if they aren't the same model, their specs are close enough that I'm going to have a problem with a 20% price difference. Now, you've finished off your back yard, whereas his appears to be unfinished. I've never landscaped a lot like this, but I'm guessing its no where near $1.2mil worth of hardscaping going on. Additionally, looking at the spec, you've got a 0.3acre lot and he's got 0.5acres. Of course, his lot is not a "premium pie shape lot" like yours is? maybe at an open house I can stop by and you can explain to my why this is a premium? I've always preferred square or rectangular lots, where you have equally nice front, side and back yards. A pie would appear to mean a small front/side yard. Maybe your lot is really 0.314 acres and you meant it?s a premium pi lot? something which the engineers of Irvine might truly consider a premium.
The other interesting thing about your buddy over at 25 Ridgeview, as you probably know, is he is bank owned, going back to the bank for $3.2mil in January. I'm going to admit I don't know a lot about the foreclosure process? but I believe that means at auction nobody was willing to pay $3.2mil for that home in January? maybe the house was trashed and they fixed it up. I'm gonna guess they didn't put $1.2mil into it, because if they did I would expect some grass in the back yard.
OK, next place on a comp would be to look at your own previous sale. You purchased the home in late 2006 for roughly $4.3mil (new). If we assume real estate has been flat since 2006, you've made a nice 20% equity (minus anything you spent on upgrades)? not bad.
So lets look at the rest of your street, since there are only 6 other homes there. The first thing that sticks out is for a street with 8 homes, we've got 2 bank owned homes and 1 with a notice of default on it. Only 1 (25 Ridgeview) is on the market? one can assume the other 2 will be on the market quickly. The other home went back to the bank at $2.635 mil? maybe they'll clean it up and market it up to $3mil, who knows.
Here's where it gets troubling? of the 4 homes (besides your own) which aren't bank owned or have a NOD on them, 2 appear to be interest only loans of some fashion. Those are typically red flags. Maybe they don't all become destressed, lets assume one does. That means we are looking at potentially 5 homes on the market of 8 (yours, the 2 REOs, the NOD, and one of the two IO's) If you are serious about selling, you would probably want to price it to move because competition is most likely coming. (I'll give a few people on your street credit, there are some people who appear to be in good shape and deserve a thumbs up)
Next, let's look at average selling price of homes. Since the tract is so new, there does not appear to be any natural sale since it opened, as expected. When the homes came out in late 2006, they were sold in the high 3's and low 4's. The highest I can find for a home sale on your street is your home, at $4.3mil. That's the height of the bubble? you probably would want to consider that potentially as a ceiling for your home.
So, what about other areas? I figured for fun, I'd see what $5.4mil buys me in Shady Canyon, since most likely anyone looking at your home for $5.4mil would probably check Shady out as well. What can $5mil get me in Shady Canyon?
<A href="http://www.redfin.com/CA/Irvine/65-Canyon-Crk-92603/home/5929756">65 Canyon Creek </A>(6700 square feet, 1/2 acre, $4.488 mil)
<a href="http://www.redfin.com/CA/Irvine/67-Canyon-Crk-92603/home/5929758 ">67 Canyon Creek</A> (6362 square feet, 1/2 acre, $3.795 mil)
<a href="http://www.redfin.com/CA/Irvine/46-Echo-Gln-92603/home/5958013 ">46 Echo Glen</A> (6055 square feet, 1/2 acre, $3.95mil)
<a href="http://www.redfin.com/CA/Irvine/41-Golden-Eagle-92603/home/5856053 ">41 Golden Eagle</A> (7000 square feet, 0.77acres, $3.9mil)
<a href="http://www.redfin.com/CA/Irvine/54-Copper-Crk-92603/home/5855941 ">54 Copper Creek</A> (5800 square feet, 0.6 acres, $4.3mil)
Now, I haven't seen any of those homes. Maybe some have some issues? odds are some don't. I've been to Shady Canyon and seen many homes there, and I'm guessing of those 5 at least 2 or 3 are at minimum on par with your home (I'll actually guess numerous are nicer), and all are priced $1mil less than yours. There are some other comps in Shady I could throw up, but they are in the tract area? now while that might make sense because I believe your home is also a tract home, I figured I'd focus on the best of the bunch, because your home is obviously one of the best in Turtle Ridge, so to be fair, I wanted to compare to the nicest homes in your price range in Shady.
So what does your home have going for it? well, your listing has 28 asterisks in it, so that is worth something. You've got imported drapes. Now, my home has them imported as well, but they were imported from China? I'm guessing yours are probably someplace fancier. (Who knows, in Irvine maybe being imported from China is worth something?) You got a lot of the other upgrades I would expect in homes in your area? marble floors, hardwood floors, fireplace, pool, crown molding, epoxy floor garage, etc? listing those as selling points is probably like listing "leather interior" or "good sound system" on a Rolls Royce, so I'm going to say its not worth that much. Your pictures look nice. But you live in a nice area, and it looks as I would expect many homes in your street to look.
Enough of my dry humor and boring analysis? as I said, I don't believe your home is worth $5.4mil. I'm assuming since you have it on the market you want to sell it. If I'm your agent (and note, I am not an agent or in the business), I'm worried about the potential influx of inventory and would recommend you price to sell in the next 3-6 months. I would notice those homes over in Shady Canyon as troubling for you? most people would agree Shady Canyon is a nicer tract? they are custom homes with larger lots and in most cases larger floorplans. You'll want to price below all of them in order to sell. That caps you at $3.8mil. The other thing I would point out to you is that those homes have been on the market several months and haven't sold. Above $3mil, redfin shows only 3 sales in the past 3 months and 5 within the past 6 months. That's troubling because there are 28 homes on Redfin in Shady/TR priced $3-$6mil. Lets say we focus on the $3mil-$4mil range? I see 8 homes listed above 5k square feet? no homes in that range have sold in the past year? so I'm going to guess its going to be rough to try to sell at that price point. You've got a nice home though, so I'd say maybe for starters we give it a try listing at $3.3mil. At that price I think you will compare favorably to 23 Starview and 59 Grandview in your neighborhood. My gut says the home is still a bit high at $3.3mil, but we'll put it there for 3 months, and maybe consider lowering it to $3mil after that (we'll list it at $2.995mil just to say its under $3mil, but I'll kick back $5k to you on close to make it up). I'd probably prep you to potentially consider an offer in the high 2's. I need to win your business to list, so I'm not gonna get it by telling you to list it at $2.9 or something like that. But I'm just saying, there's really alot of homes that compare very favorably, not much moving, and some potential for distressed sales coming on the market. Unfortunately, we've also missed the summer sales period at this point...
Again, this is nothing personal. This is an admitted amateurs attempt to price a home. Take my analysis with a grain of salt.
What says IHB... at $3.3mil do we have any offers/interest?
Delroy
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