Avondale Albatross Finally Unloaded at 52% of ’07 Price

It’s time for what will most likely be our final update on the Avondale Albatross, the storied spec home first spotted on these pages in June 2006, and most recently foreclosed by Bank of America, who had been attempting to unload it since last November.

According to the MLS, yesterday Bank of America was finally successful in their quest, finding a buyer at $663,087—just 52% of what it sold for in February 2007.

The Avondale Albatross: 13425 Avondale NE Woodinville, WA 98072

Here’s the history of this 4,900 sq. ft. spec home on 3 acres a bit north of Redmond:

Nearly a million dollars under the price that I originally called out as “ridiculous” back in 2006.

Asking price: $1,625,000. Most recently sold in: October 2004 (as an empty lot). Most recently sold for: $350,000. Days on the market: 23. I don’t know how much it costs to build a 5,000 sqft home and do all that fancy landscaping, but my gut check tells me that this asking price is a tad on the greedy side. I mean, just a few years ago I remember walking through nearby neighborhoods with comparable homes listed in the $600k-$800k range.

It took a few years, but it looks like my value prediction for this home was pretty spot-on.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

32 comments:

  1. 1
    redmondjp says:

    What a deal – It sold for 21% less than its 2011 assessed value ($842K)!

    Now the new owners will ‘get’ to rent it from King County for the paltry sum of $908/month, not including the mortgage payment and insurance.

  2. 2
    ARDELL says:

    I helped someone do an inspection and cancel an escrow just before it sold in 2007. A few things worth noting:

    1) The house is on well water vs public water
    2) The front of the house is turned to the back, which puts the kitchen family room on the Avondale View side.
    3) The home was built in two stages by two different developers. The original foundation was poured for a home half the size and then sold off prior to completion to someone else who decided to double the size. This created some issues in connecting the foundations, systems and two portions of the home.
    4) To get from the master bedroom to the children’s bedrooms if the child needs a parent in the night, you have to go down a flight of stairs…across the main floor of the house…and up another flight of stairs to get to your child.

    These things may have been modified since I saw it in 2007, but I doubt it. The driveway is also steep and leading straight down into Avondale Road which is pretty tough if you have a small child on a runaway Big Wheel.

    When a home sells for that much less than appraised value, there’s usually a reason beyond the obvious “Avondale Road”. I would not be using this home as “a comp” at price per square foot.

    Still…a much better deal for the current owner for sure. Even considering all the pluses and minuses, that appears to be FMV to me vs a screaming deal. The Tax Assessed value is not looking at all of the factors regarding function vs # of bedrooms and bathrooms and total square footage.

    I don’t think this is the “last” story…the last story will be the Assessed Value appeal.

  3. 3
    The Tim says:

    Off-topic comments moved to their appropriate thread.

  4. 4
    Pegasus says:

    Yo The Timster. Proclaiming yourself a genius when it appears everyone else in the Pacific Northwest had also figured it out that the house was way overpriced is the type of distortion I would have expected out of Kary. Unfortunately you now appear to be also as desperate in the self admiration category. Stop patting yourself on the back for obvious facts…..”my value prediction for this home was pretty spot-on”. Perhaps that is why no one paid the asking price for years? Duh! Try doing something meaningful like stopping the false promotion of short selling by the real estate industry. Maybe you will get lucky and RedFin will fire you over it…..

  5. 5
    whatsmyname says:

    RE: ARDELL @ 2
    Yes, yes. But what about the schools?

  6. 6
    The Tim says:

    By Pegasus @ 4:

    Proclaiming yourself a genius when it appears everyone else in the Pacific Northwest had also figured it out that the house was way overpriced…

    Everyone except the guy who built it and thought he could sell it for $1,625,000. And the buyer who paid $1,275,000 half a year after I first posted about it. And the bank that was willing to lend 100% of the purchase price to said buyer.

    And everyone else who was paying comparably ridiculous prices for pretty much everything that sold in 2006 and 2007.

    Yeah, everyone else had figured it out. Give me a break.

  7. 7

    RE: The Tim @ 6 – I would tend to agree with you, primarily because of what Ardell said about the house above and it’s location relative to the road, but I would point out that what it sold for in 2012 as a bank owned property is hardly evidence of what it was worth in 2006.

  8. 8
    David Losh says:

    RE: The Tim @ 6

    The real issue is that a couple of banks lent over a million dollars a pop on that property.

    Someone made money there.

    The point is, if you knew the price was way too high, how could a couple of banks missed that? How could banks have been so blinded when they have entire departments dedicated to property valuations?

  9. 9
    m-s says:

    RE: David Losh @ 8
    They weren’t blinded; in a blink of said “blind” eyes, the the bank bundled the mortgage and sold it to somebody else. They were the “somebody” who made money there.

  10. 10
    ChrisM says:

    RE: David Losh @ 8 – “How could banks have been so blinded when they have entire departments dedicated to property valuations? ”

    What makes anyone think the banks didn’t know the valuation was ludicrous? All they wanted to do was get the fees, bundle the mortgage and pass the hot potato on to the next set of suckers.

  11. 11
    David B. says:

    RE: redmondjp @ 1 – I believe that if a property sells for a price under the assessed value, the new owner has pretty much a slam-dunk case for it getting revalued downward to the actual sales price.

    The first thing that came to mind for me when reading this was: What fraction of the time, since this house was built, has it probably stood empty and unused? My guess would be significantly over 50%. Such a waste!

  12. 12
    No Name Guy says:

    RE: David Losh @ 8

    More like someone made some money, and someone else lost a bundle. BoA (or whoever kept the origination fees) made the money. The fool that got left holding the bag when it was foreclosed lost a bundle.

    This is what happens when folks play with other peoples money. If the banks don’t hold the mortgages they originate, there is only a limited incentive for them to be prudent, doubly so when they can get a bail out. Were that an investor that was considering lending their own money back in 06 – 07, you can sure bet they would have looked at that pig, laughed at the spec builder and walked away.

  13. 13
    ARDELL says:

    This home is a good example of using X lot value as one of the indicators of value for new construction spec houses. Lesser locations tend to sell at 2 X lot value (which would but this house at $700,000). Max top peak prices were at 4 X Lot Value as best hope. Fair Market Value generally runs at 3 X Lot Value, the price at which there is not excessive profit or loss.

    Regardless of what the home sells for along the way, a house with issues will gravitate to the 2 x lot value while it is newer and have an accelerated depreciation level along the entire life of the structure.

    A house without issues will eventually gravitate to 2 x lot value with the equation flipping at that point to the land becoming worth considerably more than the structure.

    The average tract home in that area runs at $200,000 for the land and $600,000 as the new home sold price. 1/3 to 2/3 ratio and becomes 1/2 and 1/2 with the lot value going up and the home value going down unless the home is extensively remodeled around year 20 give or take.

    The issue for this house started in late summer of 2004 when the lot sold for $350,000. Had the banks used the rule of thumb of no more than $1,050,000 at best and then downgraded because the home started out as 2,500 sf and modified to double that too late in the process for the systems design to be accurate, it likely would have been $850,000 at peak.

    Which begs the question why don’t appraisers add a home inspection component to the process so they can see the negatives beyond a quick 15 to 20 minute visual appraisal inspection? It takes a good 4 to 5 hours to inspect a home of that size. Why wouldn’t someone lending over a million dollars do a home inspection as part of the appraisal process?

    For the tax assessor it doesn’t matter as over valuing is generally a good thing for them. But at some point the lending process should include a home inspection…and you have to ask yourself why they don’t ask for a copy of the home inspection even when one was paid for by the home buyer. The only answer can be that they don’t really want to know, because the information was available at the time they lent $1,275,000 on the home.

  14. 14
    ChrisM says:

    RE: David B. @ 11 – “I believe that if a property sells for a price under the assessed value, the new owner has pretty much a slam-dunk case for it getting revalued downward to the actual sales price.”

    You & I might believe that, but Clark County (WA) Dept of Assessments does not agree with you. Their position (as of 2010) was foreclosed & other “distressed” property was not indicative of true market value. Don’t know if they’ve since changed their minds.

    Does King county also not take foreclosure/bank owned sales price into account?

  15. 15
    ARDELL says:

    RE: ChrisM @ 14

    King County is the same position, and usually it is true that short sale and bank owned sold prices are not indicative of FMV. Also the tax appeal process is never a slam dunk at sold price of the subject property and usually requires comp proofs the same as the appraisal process.

    http://www.kingcounty.gov/property/PropertyTaxAppeals.aspx

    If the buyer of the property had financing and it appraised at not more than sold price, then the best bet is to get a copy of your appraisal from the lender and use that as the Tax Appeal…I would think, as that would show 3 to 5 comps used to derive the value of the subject property and the math of the substitution method.

  16. 16

    RE: ChrisM @ 14 – When I bought my place they didn’t take a non-distressed sale into account when it came to the assessment for the next year. It was well above what I paid. I didn’t bother to contest it, however.

  17. 17
    Lo Ball Jones says:

    Yikes.

    I’m not sure if everyone understands what this means.

    $600,000 is not that far from some of the 3-bedrooms on tiny plots in and around Seattle proper.

    Right now anyone paying $200,000 for a 2-bedroom townhouse should theoretically be paying more like $40,000 !

  18. 18
    ARDELL says:

    I have a question because I don’t run into too many houses that are on well water, especially 5,000 sf new ones. I’ve had some with a well component used for washing cars and irrigation only. But why would someone build a 5,000 square foot house on well water, and why would someone pay $1,275,000 for a house on well water?

    I’m seriously asking as it could be a shortcoming of mine, never having lived in a country home on well water. Maybe if it was a fishing cabin in North Bend. But a brand new 5,000 sf home in Redmond? Why well water?

    Is that not a negative for most people?

  19. 19
    Pegasus says:

    RE: ARDELL @ 18 – It is a plus normally because there is no water bill to pay! Unfortunately if something goes wrong you have to fix the well or the pump but normally not a really high cost when spread over the years of not paying water bills. Another plus is for those that are concerned about the forced municipal contamination of the water with fluoride and other added contaminants. Good clean uncontaminated natural water is a plus and you might be able to sell it to neighbors or the county. Only a city girl would think otherwise. You probably think buying your meat in plastic packages at QFC is saving animals, too! :^)

  20. 20

    RE: ARDELL @ 18 – Depending on the neighborhood, and possibility for contamination, I wouldn’t have a problem with it at all. Have you checked to see if the surrounding lots have public water? It would be odd if there was water at the street to drill a well, but if not there’s little other choice.

    My biggest concern would be having a generator powerful enough to run the pump during extended power outages.

  21. 21
    Peter Witting says:

    RE: ARDELL @ 18 – I live on well water, and have no problems. You need a water softener, sometimes another filter, and a generator (which you should have anyway, living in the country). I don’t have a problem with a septic system versus a sewer hookup, either. Both need to be maintained, of course, but other than that, I rather like the self-sufficiency approach over the muni services.

  22. 22
    chuck c says:

    My parents vacation home (and where I spent a large part of my childhood) is on well water and the house was built in 1975. To date, they have not had a single problem with any of the systems – no pump failures, plumbing problems, etc. To my knowledge, they haven’t had to invest a single penny in the system since 1975. Also, it’s some of the best tasting water I’ve ever had the pleasure of drinking. It does have a high iron content however, being located in northern Michigan, which will stain the toilet bowl, shower pan, etc if not kept after. The quality of the water is helped by having a fairly deep well (for the locale) at 175 feet.

    They have a generator now, but I remeber years ago before the generator was installed when power was lost that there was plenty of residual water pressure from the tank to last for at least 24 hours (and likely more) with no impact to our lifestyle.

    My house in Gig Harbor is served by a well also. It’s a bit different though, as it’s a community well which serves our neighborhood of about 200 homes. Up until a few years ago, the well was privately owned by one of our neighborhood residents. He sold it to Wash Water Co about 6-8 years ago I think. I’ve never had a water problem in the 12 years I’ve lived here (electrical outage or not). I’m on septic here too, but I’m not as excited about that….

  23. 23
    Jonness says:

    RE: ARDELL @ 18 – My current home is on well water. I have an endless supply of pure water without all the crap chemicals in the city water. I also don’t have the big bill associated with heavy use of city water. A friend of mine has a garden WAY smaller than mine and spends about $250/mo. watering it. What a waste.

    I would hate to be on city water. That stuff smells and tastes like a test tube. I would never even dream of drinking it or cooking with it without massive filtration, and I certainly wouldn’t want it polluting my organic garden.

    If I leave a hose running full blast for a week or so, it’s no big deal. I’m tapped into a big underground lake 110′ beneath the surface. I know, because I drilled this well myself. I know, that’s crazy. For some reason, I went off the deep end about water and studied all about it and then got a wild hair and drilled my own water well.

  24. 24
    Howard says:

    RE: ARDELL @ 18

    As someone who lived on well water for 40 years from childhood till two years ago… Other than the monthly bill, I prefer city water. Consistent pressure, no lightning strikes to the pump, can flush the toilet when the power goes out, no sediment filters, no worrying about drought and no water softener salts to deal with.

    Clothes, dishwashers and washing machines didn’t do well with the high iron content in our well water.

    I am SHOCKED at how much water costs though. I pay about $100 a month to Redmond for 3 adults and two toddlers in the house and I don’t water the lawn ever.

  25. 25
    Jonness says:

    I use a stainless steel Grundfos pump. These things are built like a Sherman tank and will virtually last forever without any maintenance unless you subject them to abuses (run dry, etc). My generator has no problems running the pump during power outages. I can fill the holding tank in a few minutes and have enough water for about a day.

    http://www.wwpp.com/products/grundfos-pumps/4-inch-submersible-stainless-steel-2-wire-pump-assemblies.htm

  26. 26
    ARDELL says:

    For those mentioning septic, one of my favorite lines is “I never want to be the Septic Queen” and refuse to know TOO much about them. I have sold a fair amount of homes on Septic, but usually because they are on very large lots. When I see a regular house on a small City lot on Septic…I draw the line. Big Lot Septic = OK. Small Lot Septic (usually in Kirkland) = not OK.

    I loved everyone’s stories and perspective on Well Water. Surprised so many use well water, but as I said it is my “shortcoming” as I have always lived and worked in areas that have Public Water available.

    To Kary…I can’t imagine there is no public water available on Avondale Road in Redmond, but I don’t deal who homes on busy roads much, so I guess it’s possible.

    When we did the inspection on the home in this post the house had been vacant…never lived in…and when the inspector turned the water on it was brown. I was grossed out. :)

  27. 27

    By chuck c @ 22:

    They have a generator now, but I remeber years ago before the generator was installed when power was lost that there was plenty of residual water pressure from the tank to last for at least 24 hours (and likely more) with no impact to our lifestyle. .

    With PSE power outages are more often measured in days, not hours. ;-)

    That’s true even here in Fairwood, where the electrical is all underground.

  28. 28

    By Howard @ 24:

    I am SHOCKED at how much water costs though. I pay about $100 a month to Redmond for 3 adults and two toddlers in the house and I don’t water the lawn ever.

    Usually the sewer bill is more than the water portion. Some places (e.g. parts of Covington) now have separate water meters for the house and the yard.

  29. 29

    RE: ARDELL @ 26 – For me septic is more of an issue based on what the owner wants to do. If they want to rent the property out, then septic is not a good option. If the property was REO or otherwise unoccupied, septic is a great concern.

  30. 30
    Howard says:

    By Kary L. Krismer @ 29:

    RE: ARDELL @ 26 – For me septic is more of an issue based on what the owner wants to do. If they want to rent the property out, then septic is not a good option. If the property was REO or otherwise unoccupied, septic is a great concern.

    40 years of well and 40 years of septic and the only thing we ever did with the septic was add rid-ex. We SHOULD have had the septic tank pumped every so often (4-6 years?) but never did. Septics work without electricity, but can be a huge nightmare if things go wrong.

    On the in side, I have a coworker that spent $30,000 redrilling a well in Monroe to never find water…

    On the processed side, I have had coworkers not come in to work a few times because the septic was not flowing downhill shall we say..

    As long as the sewer line isn’t crushed/or blocked by tree roots and the water lines coming into the house are not leaking… I would always prefer city water & sewer, even though it is an ongoing expense.

  31. 31

    […] interesting topic came up in the comments on the Avondale Albatross update: If a home is on well water do most buyers consider that to be a desireable feature or something […]

  32. 32
    ARDELL says:

    RE: Kary L. Krismer @ 29

    I agree with you on that. Ran into that last week where my client was interested in a Duplex on a smallish lot with septic. REO AND multi-family rental property AND small lot. A rare and odd combination of factors. The Duplex was a side by side two 2 story townhomes. The septic was in front of the structure…the same place where cars would pull in off the main drag.

    If the main road has public sewer so it could be converted, not as bad as if there is no access to public sewer if needed down the road.

    You can’t control what tenants put in their toilets…I will not list the worst offending things that they could put there. :) Again…any parcel over an acre I expect to be on septic. But a 7,000 sf lot should not be on septic…and multifamily rental property to boot…not a good scenario.

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