Sunday, June 17, 2012

Smells Fishy: 1310 Pacific Street

On Platinum Member radar for months before it came out, this pre-foreclosure in Crown Heights hit the market this week already in contract.  Now how exactly does that work?  1310 Pacific Street is a huge 20' x 60' 3-Family limestone on a deep 114' lot.  In need of work, but with lots of original details, it would make a great pick up for an end-user, investor, or even a condo conversion.  The property's been headed to foreclosure with an outstanding lien around $600K, then suddenly, "Listed in StreetEasy, already in contract, by Douglas Elliman at $710,000."  Hmmm... something's not adding up.

We were practically begging listing agent Barbara Brown-Allen (who brought other Crown Heights gems such as 931 St. Marks Ave to the market) repeatedly for weeks for a peak inside 1310 Pacific Street before she brought it to market, but we were told they were cleaning, then inspecting, and then suddenly it's in contract before anyone gets to see it?  Unless there's a ton of default interest going on, this list price (if you can even call it that) leaves pretty much nothing leftover for the seller but fees and the agent's commission.  Billed as a "SHORT SALE WITH TREMENDOUS POTENTIAL", we don't doubt the tremendous potential, but it's only really a "short sale" if the sales price is lower than the seller owes the bank.  Which in this market, it shouldn't be.  We've already seen 4 places in Crown Heights - some right around the corner from here - go for well above ask price in the past few weeks, and none of them for less than $710K.  What could the seller of 1310 Pacific Street possibly stand to gain by accepting an offer before the property ever even hits the open market?  This same brokerage is currently listing a shell for $750K more than the pre-market bids were coming in at.  How much more could 1310 Pacific Street fetch if anyone had a real chance to bid on it?

From where we're sitting, this is simply a case of a listing agent going with the first buyer who'll ensure she gets as much of her commission as possible, and totally breaches her fiduciary responsibility to look out for the seller's best interest.  If the seller were someone who owned for decades, sitting on all equity, who wanted to sell to the first buyer who caught their fancy - that's one thing.  But this is a pre-foreclosure where every penny of possible equity counts, and where avoiding a short sale (and the resulting hit to the seller's credit) should be a top priority for both listing agent and seller.  With Platinum Members who would easily bid well over this ask price waiting in the wings, what other possible explanation could there be than the listing agent is simply looking out for #1?

This shouldn't be a short sale because the true market value surpasses the amount owed.  This shouldn't be in contract before actually being on the market.  And no seller should accept a broker doing them such a disservice.  The seller could have fetched this price without paying the broker a penny.  Why she'd pay ~$45K to not even list on the open market and not fetch the most money for her property is beyond us.

The only silver lining is... if this truly is a short sale, any offer has to be accepted by the bank anyways.  So interested buyers should go straight to the bank with your offer, sans listing agent commission, and let's see who wins...

Pro's:  curb appeal, size, location, price, original detail, potential

Con's:  came to market "in contract" already, is it actually a "short sale"?, buyers are getting cheated out of a true chance at this property AND the seller's getting cheated out of tons of potential upside

Ideally:  don't trust a broker as far as you can throw them

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