I keep trying to warn obstinate sellers: If you sit around waiting for a miracle rather than fixing your price, that gives long-time, equity-rich neighbors the opportunity to undercut you and inflict even more financial pain.
Exhibit A:
https://www.redfin.com/CA/Big-Bear-Lake/41764-Brownie-Ln-92315/home/4112140
Because the seller of Unit 4 refused to budge on price, Unit 6 was able to swoop in with an aggressive price of $349,000 – 50 grand less than Unit 4. Since Unit 6 was purchased in 2008 for just $185,000, they had plenty of room to discount and still guarantee a profit.
That’s a dangerous person to live next to.
To be fair, Unit 4 seems a little nicer with the updated flooring, but it’s not that much different than the much-cheaper Unit 6. And $50,000 can buy a helluva lot of LVT flooring and paint.
Assuming Unit 6 sells for the current asking price of $349,000, that will set a devastating new comp for the entire building. And if that price becomes the going rate for these condos then Unit 4 will suddenly be looking at a loss of $109,500.
So in their stubborn effort to avoid a $70,000 loss, Unit 4 just opened themselves up to a six-figure hit.
****************ORIGINAL POST BELOW****************
Address: 41764 Brownie Ln #4, Big Bear Lake, CA 92315
Zillow: https://www.zillow.com/homedetails/41764-Brownie-Ln-APT-4-Big-Bear-Lake-CA-92315/17618262_zpid/
Beds/baths: 2 bed, 2 bath, 1,200 squares
Purchase Price (5/2022): $449,000
Asking Price: $399,000
Difference: -$50,000
Commission (5%): -$19,950
Total Gain/Loss: -$69,950
In May 2022, our seller paid $449,000 and just two years later is willing to flush $70,000 down the toilet just to get out from under their bad investment.
Seventy.
Thousand.
Dollars.
That is a pretty crappy loss for just two years of ownership.
The sales history is pretty compelling. According to public records, right around the peak of the last housing cycle (September 2007) Seller A paid $200,000 for this place. The Great Recession crashed the party soon after, but Seller A managed to make his tiny $1,500 payment for five years before finally deciding to cut bait.
Unfortunately, Seller A picked the exact bottom of the market and let it go for just $120,000 in October 2012 – an $80,000+ loss.
What’s the investing mantra? Buy high and sell low?
Wait, that doesn’t sound right.
I assume their five years of equity helped to somewhat cushion the blow, but that is still a massive financial hit. I don’t understand why Seller A wouldn’t just keep it rather than eating 80 grand.
Anyhow, in 2012 Seller B got a smoking deal at $120,000 (the 1999 value!) and was living on easy street. However, after eight years the temptation to double his money was too much and in 2020 he offloaded it to Seller C for $255,000.
Although that seems like a decent return for Seller B, if he had just waited 24 months to sell he could have nearly QUADRUPLED his investment. You see, Seller C paid $255,000 in 2020 and thanks to the gains from the pandemic frenzy he was able to sell two years later to Seller D for $449,000 – yielding a profit of nearly $170,000.
Unfortunately, Seller D severely overpaid and is about to go through some shit.
In March of this year Seller D, deep in the bowels of denial, listed for a Washing Price of $489,000 which would have allowed him to cover his sales commissions and walk away with a bit of profit. Delusional and wildly unrealistic.
But he quickly snapped out of it and started cutting the price.
And cutting.
And cutting.
And at 110 days on market, his surefire $70,000 loss seems highly likely to grow. And there are clues that the seller is resistant to losing a penny more than that. Peep this from the listing description:
“Seller related to listing agent.”
Sounds like someone is getting a bro deal on the commissions to help ease the financial pain.
I will say the place looks tidy, albeit pretty drab. The gray vinyl floors were trendy for like 38 seconds but in my opinion they look clinical and lifeless. It’s a ski condo! Don’t be afraid of wood tones!
The two-car garage is undoubtedly a massive win.
Here are what the numbers look like for an interested buyer:
Purchase price: $399,000
Down Payment (20%): $80,000
Monthly Payment: $2,844/mo (@7.4%)
Some might argue that’s a reasonable monthly nut for a two-bedroom condo since the HOA fee typically includes insurance.
But is $399,000 a good value?
Let’s check the Zestimate!
Before we do that, we should note that Zillow likes to claim its Zestimates are based on some highly complex, proprietary algorithm. However, from what I can see they just take whatever listing price the seller comes up with and add or subtract a few percent to make the estimate seem more legit. For better or worse, a lot of sellers and buyers rely on Zestimates to determine a property’s true market value.
Side note: Jim the Realtor at bubbleinfo.com covers the Zestimate nonsense really well. He is one of the best in the business and was one of the inspirations for this blog.
My point is that although the vast majority of Zestimates are wildly optimistic, even Zillow isn’t hopeful about this place:
$385,000?! OUCH!
If that estimate is anywhere close to market value our seller is guaranteed to incur an $83,000 loss. That’s pretty much their entire 20% down payment, meaning this property is at serious risk of becoming a short sale if they can’t find a buyer soon.
And look at this graph line:
Do you think that’s going to suddenly stop plummeting in the next six months? I sure don’t.
And yet our seller is sitting idly by wishing for a miracle.
You know what they say: “Wish in one hand and shit in the other, and see which one fills up first.”
Look, I will always root for people who are willing to admit they made a mistake rather than insisting on living in fantasyland. So the multiple price cuts should be commended. But is $399,000 enough to snag a buyer?
Maybe, just as long as that buyer doesn’t have access to Zillow.
Please let me know in the comments what you think.
Big Bear Bummers 
What do you think?