San Francisco Real Estate Properties

One’s perception of the San Francisco market is a bit deceiving without looking “behind the numbers” today.  No one has had to really look “behind the numbers” when there is high demand and low inventory.   One can gauge the market by how quickly properties sell (looking at the DOM - days on market). 

 

As in any market, if two comparable properties come on the market in a particular neighborhood at the same time and one sells and the other one doesn’t….it is pretty easy to determine that either the marketing, the price, the terms, and/or the condition attracted the buyer(s) to one property vs. the other. 

Without looking beyond the graphs, the averages, and the medians, one is unaware the number of properties that are selling quickly from those that are taking their sweet old time.

To understand which market a seller is in and/or buyer is looking in, one needs to separate the days on the market, not by price range but by speed. 

You can imagine “How’s the roof?” would be a common question I would receive during a rainy Sunday Open House. 

 

Unlike other parts of the world, San Francisco’s rainy season is considered from October through April with an average annual rainfall of 20.4 inches per year. During the rest of the year, our San Francisco streets may be wet in the early morning, although we just call that “fog dew”

 So selling homes in San Francisco during the winter may be considered as the perfect time of year to test if the roof is currently leaking or not by looking for the tell tale signs of discoloration on the ceiling, around skylights and windows.  Inherently a “good” roof can leak if the gutters, scuppers, and downspouts are clogged and water finds its way in.   I like to remind Sellers that prudent Buyers will locate those areas on the exterior before walking into an Open House.   As the agent holding the Open House (and especially if it is raining), I customarily have the San Francisco Sellers’ Disclosures out in plain view for Buyers to review.   

I highlight the six questions in the disclosures asking the Seller to disclose his knowledge of any present or past water inclusion; even leaks have been repaired and/or stopped.  Below are two of the six questions about water inclusion:       

As in any time of the year, I recommend to Sellers to have their homes staged and rooms freshly painted before the property goes on the market.  Areas of past leaks will most likely be concealed, so it is extremely important for Buyers to not just look for leaks and read the Seller’s disclosures. 

Of course, for Sellers and Buyers to really understand what they are selling and/or buying, it is always prudent to have an expert do a written physical inspection of the property. If the report states the roof is near the end of its useful life or shows signs of present or past leakage, I always recommend to get a further inspection from the best roofer in town whether I am the Seller’s agent or the Buyer’s agent to really know, “How’s the roof?” 

As we begin January 2008, the numbers of homes on the market in San Francisco are far greater than there were this time last year.  Now don’t read too much into this statistic just yet. 

  

During the last half of the 4^th Quarter, San Francisco Sellers are notorious for taking their properties off the market just before Thanksgiving if their property had not sold.  Many of these Sellers would rather wait until the New Year to put their property back on the market than to become stale on the market during the holidays.  Between November 1^st and December 31^st in 2006 152 homes and 284 condos/co-ops/lofts/TICs were withdrawn from the market and during this same time in 2007, 175 homes and 353 condos/co-ops/lofts/TICs were withdrawn from the market in hopes of re-surfacing in 2008 as fresh new listings.

During this same time, every year there is another group of San Francisco Sellers that dare to put their property on the market in November and December to find their properties snatched up by “holiday” Buyers eager to own a property before the end of the year.  In 2006, 69 single family homes and 79 condos/co-ops/lofts/TICs come on the market and closed between Halloween and New Year’s Eve.  This past year in 2007, 39 single family homes and 55 condos/co-ops/lofts/TICs came on the market and closed in less than 60 days. 

Both years, the Buyers that stayed in the market may have had less competition than those Buyers that took some time off during the holidays, yet  not surprisingly the single family dwellings and the condos/co-ops/lofts/TICs  sold 103% and 102% respectively above their asking prices (with three having undisclosed selling prices).

With all that said, generally speaking, the 4th Quarter 2007 was a bit different than in 2006 as more Sellers were unwilling to play that game of withdrawing their property from the market during the holiday season and losing their property’s exposure. 

The “New Year” Buyer will come back from the holidays (after getting in some snow-time on the slopes) to see some familiar homes still on the market and I suspect, a few more will slowly be coming back on the market as well.

Guess what…I just heard that many MLS’s across the country and in the Bay Area are now allowing Buyers to search for sold properties through the MLS.  I have not checked if that is in the works with my own San Francisco MLS, although I have been told that Realtor.com will now allow the public to search by sold properties.

 My opinion: I think it is about time….what’s good for the goose is good for the gander. 

The public needs to get more accurate information and if the MLS can provide it all the better than checking www.zillow.com using the most recent tax information and less conclusive information by checking www.trulia.com from sales information provided by larger brokerage firms recent sold information.

It is my experience that Buyers will purchase almost anything, if issues, defects, and/or problems are disclosed up front.  What no one likes, however, is learning about problems after the property is under contract.   

I knew the deal was in trouble when the Homeowner’s Association (HOA) “Common Interest Development Disclosure Statement” in the Seller’s ”Pre-Sale Disclosure Package” (provided to my Buyer prior to writing his offer) stated that the HOA was not anticipating an increase in HOA dues and/or any special assessments, when in fact my Buyer’s lender request for the HOA to complete their ”HOA Condominium Certification” (after acceptance of my Buyer’s offer) stated the contrary. 

This can happen several ways and in most cases, be avoided with an observant, inquisitive, and experienced fiduciary for the Seller’s agent. 

(1).  Neither the Seller nor the Seller’s agent were monitoring the current (closed door) HOA Board of Directors’ meetings or discussions regarding budget concerns and/or possible special assessment activities.

(2).   Neither the Seller nor the Seller’s agent had provided the Buyer the most recent HOA disclosures, HOA minutes, and/or updated/current “Common Interest Development Disclosure Statement” that reflected the “anticipated” change in HOA dues.

(3).   Neither the Seller nor the Seller’s Agent had disclosed to the Buyer any potential unresolved or contemplated HOA budgetary increases, as they became known or available.

My question to the Seller’s agent:  Why weren’t these issues either disclosed and investigated  prior to putting this property on the market and at the very least, made known to a Buyer first rather than by a 3rd party?

Now, my Buyer, with this newly discovered information, will either re-negotiate the terms of the sale (in his favor) or walk away from the property.  

Sellers are able to sell almost anything (without giving away their money), if they understand their duty to disclose and their task is to chose their agent wisely.

After finding your dream home on the internet in your price range - the one with lots of pretty pictures, you are ready to take that “Grand Tour” of the neighborhood.  

After all, you need to check out the curb appeal and whether or not you could really live on that side of the street and/or that end of the street on that block in that neighborhood.   Without checking out the neighborhood, how else are you going to find out how far is it to the nearest bus stop when you are running late in the morning and how far a walk to the neighborhood commercial area to get a latte in the morning or where you would walk the dog?.  

In a recent post “One Way to Buy Real Estate in San Francisco”, I suggested driving a neighborhood has its advantages of spotting properties that may be coming on the market and probably have not yet hit the internet.

Case in point - I took this picture in the Marina originally on September 25, 2007 with the moving truck and workers in front of the house where the arrow points for my October 4^th post.

On Friday, October 5^th, this 4 bedroom with 4.5 baths home came on the MLS for $3,495,000.

By Friday, October 19^th, 14 days later, the MLS showed an accepted offer and opened escrow as “Active Continue to Show” which usually means there are some contingencies that need to be met before closing.

By Monday, October 29^th, 10 days into the escrow, the MLS showed the property as “Pending” which usually means that there are no contingencies and the property and the parties are preparing to close escrow.

On Thursday, November 8^th, 20 days into the escrow and a total on 34 days on the market, the property closes for $3,495,000*  - noting there is an asterisk after the sales price.

So, “Who’s Market Is It Anyway?” and “Why An Asterisk After Some Sales Prices in the MLS?” 

To start at the beginning, the asterisk became a term of the sale either as apart of the accepted offer or sometime during the transaction.  Both the Buyer and the Seller agreed that the sales price would not be disclosed to the MLS and would be hidden on the public records at the close of escrow. 

Perhaps the real question is from whom would both parties want to hide the sales price? 

The answer might be to protect one’s privacy from someone  - i.e. nosy family, friends, and/or neighbors, disgruntled ex-spouses or creditors, employers’/employees’ chit chat, the media, etc. etc. (?)

In the real estate world, the reason may have been that the Seller sold the property so high over the asking price that it was a bizarre one time event, or the Buyer bought the property so low under the asking price that it was embarrassing to the Seller and/or so awkward to disclose the real sales price to the unsuccessful bidders (?) 

In any case, without disclosing the real sales price the MLS, Zillow.com and Trulia.com and other’s sales comparable data bases become eschewed and it makes for juicy cocktail “real estate” talk.  After all so far in 2007, there have been 51 MLS sales with undisclosed sales prices.

To hide from curious eyes, one’s sales price from the San Francisco MLS and the public records is actually quite easy to do prior to the close of escrow.

Both the San Francisco MLS and the escrow holder will need mutual instructions from both the Buyer and the Seller:

(1).   The San Francisco MLS needs a letter from the listing agent signed by the Buyer and the Seller stating the sales price is not to be disclosed by the MLS at the close of escrow and naming the sales date and the Buyer’s agent.  The MLS will then enter into their San Francisco MLS database the asterisk to the current asking price as the sale price on the closing date.

(2).   Buyer and Seller will instruct their escrow holder to prepare the Grant Deed for recording at the close of escrow by adding the notation “See tax on separate sheet” to “The undersigned grantor(s) declare(s) the Documentary Transfer Tax is … “.  The City and County of San Francisco’s Recorder’s Office will accept the notation as long as the documentary transfer tax paid on the actual sales price stated on that separate sheet at the time of recording. 

By the way, it may take those curious eyes several years to be able to approximate the actual sales price at time of sale.   When the time comes that the San Francisco Tax Assessor has finally computed the Supplemental Taxes, several tax years have passed.  By that time, the current tax bill will show only the current total assessed value of the property for public to see. 

Question: Would this be a term of sale you would consider or agree to do?

If the steady stream of visitors at my Open House on Sunday on Telegraph Hill in North Beach 

was any indication of how the real estate market is in San Francisco, maybe Buyers are finally realizing that it may be a really good time to get back in .

The old adage “Location, Location, Location” has now been replaced by “Price, Condition, Location”.  And the Buyers out on that warm sunny afternoon checking out the inventory knew the new mantra. 

 

Maybe these potential Buyers all came up the Hill to see me on Sunday at my Open House because of reading the Ben Stein article Gloom Sayers Should Look Up in the Sunday New York Times while slipping a café latte out in front of Caffé Greco  before strolling up to  Caffé Trieste  to chat with the die hard locals over an espresso.     Maybe it was then that these potential Buyers on that Sunday morning thought to themselves, “Let’s give it one more try.”  If they were really going to be a part of this neighborhood, they wanted to own apart of it too.   

So I imagined, out in front of Caffe Trieste, they got down to business circling the open houses in the Sunday Chronicle’s Open Home Guide.  Having done this drill before, these Buyers knew to look under both North

Beach and Telegraph Hill in the Guide before heading out by foot to find their dream home in paradise on another wonderful sunny afternoon. 

In the North Beach section of the Guide, there were 8 properties that were open for viewing that ranged in prices from $539,000 for a one bedroom condo to $1,799,000 for 2 units on  Washington Square.  

And in Telegraph Hill section of the Guide, there were 7 properties open that ranged from $419,000 for one bedroom Tenants-In-Common (also known as a TIC, I’ll explain this type of ownership in another article) to one of those “ essence of San Francisco” view homes that I was holding open for $3,695,000 (4+ bedrooms and 4.5 baths with a rare 2 car garage on Telegraph Hill) with fabulous views of Nob Hill, Russian Hill, and the Golden Gate Bridge (similar to the view I have in one of my sanfranciscorealestateproperties.com website’s rotating header pictures). 

Continue on to “Part Two- Wait & See or Get In Now?” to determine what is right for you. 

The San Francisco real estate market changes every day, as in any market, with each and every property coming on and off the market, along with each and every price reduction and pending sale.  Yet one of the quickest indicators of how our market is doing is through: how many buyers came through the open house last Sunday, how many offers are expected vs. how many were written, and lastly, how much over and under did the property sell for in the end. 

Perception is everything and reality takes a distant second when it comes to the uninformed. 

Time and again our local media plays on “factual” national, state, and/or regional economic news with big moan and groan headlines.  With a leading headline and the classic one long sentence first paragraph, these articles lead one to believe the bad news is happening on their block, on their street, or in their neighborhood or in our city.   

Case in point, based on sub-prime mortgages being reset to unaffordable rates for many in the Bay Area, a recent misleading headline entitled “Bay Area Foreclosures Skyrocket”  gives one a false impression that the sky is falling in San Francisco and prices must be dipping.

Many times these media stories are not reporting on the actual and accurate happenings in our San Francisco and yet they appear that they are.  As any market, a prudent consumer, potential buyer and/or potential seller should not buy into the media’s hype of “facts” at face value and first glance.   

For San Franciscans to get the pulse of the San Francisco Market, our local media will report median prices as news “facts”.  I find that a bit amusing that they look at our own market so generally.  Typically the media will lump the median home & condos sales prices together for the city.  What good is that? 

I saved a characteristic example of local media hype from the San Francisco Chronicle in the Business Section dated April 25, 2007 entitled “State Market Cools” . The article mentioned the Bay Area as cooling.  There are nine counties in the Bay Area (i.e. Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma).  While the article did mention several of the nine Bay Area counties were cooling, there was no mention of our San Francisco.   What is one to think …is the San Francisco Market cooling or not? 

But wait, I saved this article for another reason, read on…

 

Don’t get me wrong, I love to look at median prices.  At the very least, median prices need to be broken down into a chart showing each quartile (i.e. Most expensive 25% homes, upper-middle 25% of homes, lower-middle 25% of homes, and least expensive 25% of homes). 

Now, look at the same information from the chart above and see how median prices are now more meaningful and no longer “a bunch of hogwash”. 

You are able to see and understand the San Francisco Market in a whole new perspective.  The “facts” are actual and accurate; the consumer’s perception is, at a minimum, a truer reality.

It takes a seasoned real estate agent to distinguish between “facts” and actual and to be able to analyze the (sometimes hidden) market trends and spot windows of opportunity in order to be able to interpret these findings to one’s clients so that these clients are able to make informed, intelligent decisions when it comes to their buying and selling in San Francisco…in any market.   

Do you have such an agent?

 

Drive down the street in one of your favorite neighborhoods and look for curb appeal of a different sort.

Look for double parked trucks and moving vans, they are easy to spot. Or look for any construction activity in front of a property that is worth pursuing. Write down the address and call your Realtor to check it out.

That’s what happened in Pacific Heights recently. Potential Buyers drove by and recognized a stager moving furniture into an attractive house on one of prettiest blocks in the city. They stopped the car and inquired within.

They found that the property was listed, although the Seller was waiting for these final preparations to be completed before the Seller’s agent would place the property on the MLS. The next morning an offer was on the Seller’s agent’s desk that (by law) had to be immediately presented to the Seller. In turn, the Seller accepted the pre-emptive offer that exceeded the Seller’s expectations from a very observant tenacious Buyer.

The property did hit MLS as “Active” and then immediately changed status to “Active Continue to Show” with an asking price of $6,895,000 with numerous pictures of a 6 bedroom - 4.5 bathroom fully staged pristine home with a partial view.

The bad news is that with the 2007 pent up demand in the high-end market in San Francisco, before my Buyer could even view the property, my buyer through an MLS automatic responder emails me, “Does this mean the house was sold and ….they just have it on for comp [comparable sales] purposes? Sounds like Clay St.” Sad to say, my answer was “yes”.

Now that was twelve days ago. To check the MLS today to see if the “Active Continue to Show” status has changed to either “Pending” or “Sold”, the search results show “0 listing(s) found”. That’s a new one on me. Was the Seller’s agent really able to have the MLS erase the property from the MLS(?)

In the San Francisco high-end market, it is not uncommon for property in move-in condition to get multiple offers within one or two weeks of marketing, have an accepted offer, and close escrow very quickly. And it is also not uncommon that the Seller and Buyer authorizes that the sales price be undisclosed in MLS at the close of escrow. This is done in the MLS by having an asterisk placed next to the sales price showing the original asking price.

Also the sales price and/or the transfer taxes may be hidden from the public records at the San Francisco County Recorder’s Office. Years later, one may be able to decipher the original assessed value in the public records, yet by that time it is history.

In the end, using high-end comparable sales (or word of mouth) to determine what other buyers paid for a property in writing an offer is sometimes fruitless. A better approach is to ask yourself, what are you willing to spend to get your San Francisco trophy home in either a pre-emptive offer or a multiple offer and exceed the Seller’s expectations?