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The Golden State Killer’s house, selling lower, & price changes

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I have three things on my mind today. Let’s look at the accused Golden State Killer’s house, a new visual I’m testing out, and some fresh stats.

Huge thanks: First off, thank you for reading my blog this year. This will be my last post of 2019, so I wanted to say I’m truly honored to have you here and I hope you’ll continue to journey with me into the new year. As always, I’m open to your ideas too, so hit me up if you have topics in mind.

GOLDEN STATE KILLER: There’s no holiday cheer with this topic, but we’ve been wondering what would happen if the accused Golden State Killer’s house came to the market. Well, now we know. Sort of. This property sold as a private sale to an FHA buyer a few weeks ago. The SacBee did a piece on it here.

What do you notice about the final price?

Unfortunately the home wasn’t sold on MLS, so we don’t really know the details of how the price was established, but it clearly sold at the lower end of the market. Was the low price due to stigma? Could it be due to condition or lack of upgrades? Or maybe it was the owner selling at a discount? We may never know the details, but it’s interesting nonetheless to see.

House History: It’s sobering to think Joseph James DeAngelo, the accused killer (aka East Area Rapist), was pursuing the “American dream” of home ownership while destroying people’s lives. Here’s a history of the house:

  • 1980: Bought the house for $77,000
  • 1993: Refinance
  • 2003: Refinance
  • 2012: Refinance
  • 2019: Private transfer to family member
  • 2019: Private sale for $320,000

SELLING LOWER (NEW GRAPH): I’m testing out a new graph and I wanted to see what you think. Here’s a look at Roseville and East Sacramento. Would you like to see other neighborhoods? The goal is to see how close a property sells to the original list price vs how long it’s on the market. Thanks Braden Gustafson, MAI for the graph inspiration on Twitter.

The takeaway? The longer a property sits on the market, the further it sells from its list price. I know this is what we’d expect to see, but it’s still cool to visualize. By the way, I used the original list price instead of the most recent list price because it’s a more complete picture of the market.

PRICE CHANGE IN NEIGHBORHOODS: Last week I pulled some stats to prepare for an interview with Channel 10 about price dynamics in Oak Park. So I crunched numbers in about a dozen neighborhoods to help get a wide view of both higher and lower-priced areas.

The Sacramento Bee actually did a piece on my stats too.

I looked at both the dollar change and percentage change on purpose as this helps give a well-rounded view of the market. I also looked at huge chunks of data too as this compared almost an entire year in 2012 vs the same time in 2019. The problem with neighborhood data is if we look at one month only, the numbers can end up being all over the place. 

NOTE: If you want this data in a PDF, just send me an email.

Again, thank you for being here. From my family to yours, Merry Christmas and Happy Holidays. In coming weeks I hope you get a little time off to connect and reflect. Blessings to you.

Questions: Would you feel comfortable buying this house? Would you expect a discount? Any thoughts on the new graphs or price stats? Anything to add?

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That place where shiplap & murder meet

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There’s going to be a new home renovation show that focuses on murder houses. How crazy is that? It’ll be called Murder House Flip and it’s going to air in 2020. I can already imagine adding shiplap to the walls to erase a heinous history… Anyway, here are some things on my mind.

1) Not the home’s fault: Often when talking about notorious homes we hear things like, “It’s not the home’s fault” or “It’s unfair to penalize the house.” I get that, but let’s remember buyers aren’t just purchasing the home. They’re inheriting all the stories and history too. Anyone who has ever owned a home knows this is true because neighbors will definitely tell you about the previous owners and especially anything big that happened at the property. While a home is technically innocent, it doesn’t mean buyers aren’t discerning or making judgement calls about value.

2) Stigma fades: A property with a crime in its past can certainly have a diminished value, but the loss in value may not last forever. What I mean is right after a gnarly situation buyers might react quite negatively, but over time the tendency is to care less, forget, move on, or not even know what happened decades ago. It would be like saying, “A man was murdered here yesterday” compared to “A man was murdered here in 1917.” Would there be a difference in your mind? Maybe so. But for something really notorious the question becomes how long stigma can last. This is why I’m watching the John Wayne Gacy property. The original home was actually demolished, but can stigma remain with the site despite the new home?

3) No one-size-fits-all adjustment: How much does a murder affect value? There’s no one answer to satisfy all situations. It likely depends on when the murder occurred, the nature of what happened, and whether it took place inside or outside. It could also depend on the price range or location as some sub-markets are more sensitive than others. My experience locally is buyers at lower price points tend to be more forgiving about certain issues compared to higher price points (generally speaking).

4) One buyer vs the market: It’s possible a particular buyer might not care about a property’s history, but market value isn’t just about one buyer. What would most buyers pay? Last year I ran a poll about the alleged Golden State Killer’s house and asked people to consider if there would be any price impact if this home came to the market. It was a fascinating conversation with many layers, but one thing that kept coming up was the idea that one buyer might not even care. That’s true. But again, market value isn’t just about what one buyer would do. It’s like this. Imagine lining up 100 qualified and interested buyers. What would be reasonable for them to pay? That’s sort of what market value looks like.

5) Crunching numbers: I appraised a murder house recently and interviewed about ten local real estate agents who sold a murder property in the past. Here’s a blurred view of my data collection. Some agents said there wasn’t any impact to price and others would say stuff like, “It probably sold $25,000 lower.” In short, the answer wasn’t always the same, which meant I had to consider which data points were relevant for my situation. This is huge because it’s easy to find one murder house and call it a day because now we have data. But what happened with one home under $200,000 may not mean anything at the $800,000 price point. Thus some data toward the lower end of the market ended up being less relevant during my appraisal.

An episode of Murder House Flip in Sacramento: There’s going to be an episode set in Sacramento to focus on the Dorothea Puente property. If you didn’t know, she was an older woman who ran a “boarding” house in the early 80s, but instead of giving clients respite she drugged them, buried them in the backyard, and collected their social security checks. This property has sold four times in the past twenty years as seen below.

By the way, there was a documentary made about this house and the owner has even given tours. This goes to show another aspect of a famous home is monetization. In this case though the owner donated tour proceeds toward organizations working with the homeless.

Keep in mind entire books are written about this stuff and I’m only scraping the surface here. I hope it was interesting or helpful though. 

Questions: Are you going to watch this new show? What stands out to you above? Any other thoughts?

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Photoshopping & price per sq ft in real estate

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I have a new way to explain how price per sq ft works in real estate. It’s helpful but maybe a little creepy too. No matter what, we need word pictures in real estate to explain concepts, so let’s chat.

The big idea: Using a price per sq ft figure from a different house is sort of like photoshopping someone else’s body on your own. It just might not fit.

Instagram model vs dad bod: Think about it this way. When we use a price per sq ft figure to price a home it can be like taking an Instagram model’s body and putting it on a dad bod. It just doesn’t belong or fit. The problem is we’ve imposed something entirely different on another thing, and it looks awkward. The same holds true in residential real estate when we hijack a price per sq ft figure from a dissimilar house down the street and use it to price a property. Thus if we’re not careful we can end up pricing a “dad bod” home like it was an Instagram model simply because we priced according to model metrics instead of other dad bod sales… Okay, let’s not take this analogy any further. Do you catch my drift though?

Pick your poison: This example isn’t intended to tackle all aspects of price per sq ft, but only help stir conversation. I actually use Starbucks cups and Lamborghinis too, but that’s just me. My advice? Use what works for you.

One more thing. I’m writing as a guy who is currently on a diet, so I’m definitely not poking fun at the reality of dad bods.  🙂

I hope this was helpful (and not too creepy).

Is Blackstone selling? I see Invitation Homes (Blackstone) has a handful of properties listed on the market right now. These could be non-performing assets of course, but we have to ask if they are starting to sell off some inventory too. Stay tuned.

Sign giveaway: Last week I wrote about people who are leaving the market, and I’m giving away the shabby chic signs I made on this Facebook post.

Video: Here’s a video I made to talk through the danger of abusing price per sq ft. Enjoy if you wish. It’s about six minutes.

Question: Does this example work? How do you explain how price per sq ft works in real estate? I’d love to hear your take.

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That place where fame & real estate meet

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How does fame impact a home? Does it matter for value if a famous person lived there? What if something notorious happened at the property? Let’s talk about this and consider a few examples. Please note there are entire books written on this subject, so don’t expect an exhaustive dissertation here. Any thoughts? I’d love to hear your take in the comments.

Here are a few examples:

Breaking Bad: The house where the TV series Breaking Bad was filmed was all over the news last month because the owner is building a 6′ front yard fence to keep people out of her yard. According to Albuquerque KOB4 there is a constant stream of visitors and fans have even thrown pizzas on the roof to reenact the main character Walter White doing so in an episode. The owner is clearly not thrilled, and I can’t imagine neighbors are either unless they can somehow monetize the situation.

Kurt Cobain’s Baby House: Brandon Turner at Bigger Pockets is an investor and he accidentally bought a home where Kurt Cobain lived as a baby. The duplex was purchased as an investment without any knowledge of the lead singer of Nirvana’s connection to the property. But tenants began complaining about photos being taken of the front of the house, and that’s how the connection was discovered.

The Almost Governor’s Mansion in California: The State of California built a Governor’s mansion in the 1970s in Carmichael, which is about 10 miles from Downtown Sacramento. This mansion began construction under Governor Ronald Reagan’s leadership, but it was not completed until Jerry Brown took office. Brown actually refused to live in this house, which he dubbed “The Taj Mahal”. This home sold for 4.1M in 2004 and has 8 bedrooms, 8 bathrooms and is 11,984 sq ft. The mansion is still there today, but some of the site has been subdivided for a few custom homes. This is literally one of a few residential homes EVER in Sacramento County that sold above $4M.

Reagan House in the Fab 40s Neighborhood: Governor Ronald Reagan and his family chose not to live in the old Governor’s mansion in Downtown Sacramento back in the 70s, so they moved to East Sacramento on 45th Street to lease a home in the “Fabulous 40s” neighborhood. The home boasted over 6,000 square feet with six bedrooms and four bathrooms (according to Tax Records). The home last recorded for $1,765,000 in May 2000. Not everyone can say, “The future President used to live here when he was Governor”. Do you think that matters for value?

Here’s a look at the price point of the Reagan house. What do you see?

Homicidal Handyman House: There is a property in Oak Park where a serial killer dubbed “The Homicidal Handyman” murdered someone in the later 80s. This property was purchased last year by an investor and I’m waiting to see if it comes on the market (it has a choice location). This murder occurred about 30 years ago though, and the reality is that stigma associated with gruesome crimes fades over time. In other words, it might be a big deal for value to buy a property right after a murder, but much less of an issue if the crime occurred 30 years ago. I observed a recent murder property in the Sacramento market and in this case there was a 5-10% hit on value, though it might not have been an issue at all had the murder taken place 30 years ago instead of recently. Architectural Digest actually did a great piece on stigma recently and I was pleased to see they interviewed Jonathan Miller.

Dorothea Puente Murder House: Seven bodies were discovered at a duplex on F St in Sacramento in the late 80s compliments of Dorothea Puente. She lured victims to her “boarding” home, drugged and buried them, and then cashed their social security checks. This Victorian duplex has some charm as you can see, but it definitely has a dark history too. There was a documentary made about this house in 2015 and the owner has even given tours through the years too. This just goes to show it may be possible to monetize a famous house. Though in this case the owner has donated tour proceeds toward organizations working to alleviate homelessness (way to go).

Here’s a sales history of the Puente duplex. What do you see?

Lady Bird House: A recent movie called Lady Bird is set in Sacramento and had some filming done in the city too. Here is the front of one of the home’s shown in the movie (located in Fab 40s). This was not the main character’s dwelling, so it may not attract much of a following, though it’ll be interesting to see if people snap selfies here. For reference, the San Francisco Chronicle shared Lady Bird filming locations so fans can visit. In this case the owner probably has some bragging rights to say, “My home was in Lady Bird”, and I’d imagine any future listing would mention this fact. But will the market as a whole pay more for a house like this because it had a minor role in a movie? I’ll give you my opinion in the comments if you give me yours.
 
And here’s my Lady Bird selfie.  🙂
 
Closing thoughts: It seems like fame can either be good or bad when it comes to real estate values. If a house is famous for something gruesome, it could easily harm value (duh). But part of it depends on how long ago a crime occurred. On the other hand if a home is historically important, it could be a huge bonus for value (duh again). Yet fame can come at a cost too by increasing foot traffic and looky-loos. Would an owner have to disclose the stream of unwanted visitors to potential buyers? Could this potentially limit marketability? Could it impact rental value if there were camera flashes happening at night? Would tenants get fed up over time? These are important questions to ask. Lastly, we would be wise to not overthink a property’s value that had “15 minutes of fame” so to speak. Thus just because a home had a cameo in a movie or was previously owned by someone famous does not mean at the end of the day the market is going to pay anything more for the property. It’s true certain fans might offer more for a particular home owned by a celebrity or athlete, but what would the market as a whole pay? That’s always the bigger question. 
 

Think Like an Appraiser Class (I’m teaching): By the way, I’m doing my favorite class on Dec 7 from 9am-12pm called How to Think Like an Appraiser. We’ll talk through comp selection, making adjustments, tips for talking about value, and what to do in various scenarios. Details here.

Questions: Would you buy a house that was famous in a movie or owned by someone famous? Why or why not? Have you seen any measurable impact to value for a celebrity property? I’d love to hear your take.

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