Zillow complaint sent to FTC

As this article says "... it is almost an open joke, the information on this website." Whether this non-profit group's complaint to the FTC about the obvious inaccuracies of the Zillow service goes anywhere or not, it should be easy enough for any consumer (potential home buyer or seller) to easily discover that Zillow is nothing more than a "toy" as one blogger called it, or a "research tool" as Zillow calls it. The bottom line, never trust any home valuation unless it's been done by an expert, who has visited the home, and thoroughly evaluated all possible comparable properties. And for a superior San Francisco home valuation service, check out www.Evaluate-My-Home.com

San Francisco's Luxury market

The luxury market is unique from the rest of the market, but it's sure fun to watch. So if you'd like to spy on the luxury market, here's the blog for you:


Days on Market - not always what it seems

A client of mine let me know how excited he was about a TIC (Tenancy-in-Common) he saw at 1551 Filbert Street. Priced at $729,000 the apartment had apparently been on the market for 34 days. This is about the time that San Francisco listings become "stale" and ripe for negotiation. What's more, the person hosting the Open House claimed that he was the owner, and if the Buyer worked without an agent he'd save on both ends of the commission and would drop the price to $685,000.

My client shyly shared this story with me because he didn't want to upset me, nor miss out on the opportunity. But this is just where the story begins, and the reason why I say over and over again "be careful of listing agents who say you don't need your own agent."

The reality of this listing is that it's been on the market for over 10 months. It's been taken off the MLS (Multiple Listing Service) twice, only to be re-listed soon after. The effect of the re-listing is that it appears to be a NEW listing, and the Days on Market (DOM) starts all over again. The first time it went on was January 26th 2006 priced at $749,000. 5 months later they dropped the price to $729,000, and 5 weeks after that they took it off the market for the first time - this was July 27th, 2006. On July 31st it was re-listed at $729,000 and after 25 days was removed once again. On Sept 11th 2006 it went right back on, priced once again at $729,000. My client visited it for the first time on Sunday October 15th. Per the MLS, they never went into contract, so they either never got an offer in 10 months, or never one they accepted for which the Buyer cancelled. Either way, this is RIPE for negotiation, and my initial reaction in seeing the 10 months of no offers was that it isn't even worth $685,000.

The next step for me - after discovering that with 10 months of marketing, a price change, and 3 listing periods, they STILL can't sell it - is to find out why. The obvious answer is that it must be priced too high, so I'll need to run a "CMA" (Comparable Market Analysis) to find the sales prices of similar properties that have sold recently. To do that I need to know the property's features. One is it's size, and here's another VERY UNUSUAL item in the listing that ALL buyers would miss. The Square Feet is listed as 980, but the "source" is "measured by Agent". That's the first time I noticed that, and since the person hosting the open house also seemed to indicate that he was the agent as well as the owner, it all started to sound a little too fishy... enough so that I'd suggest not trusting his measuring ability.

But here is a rough CMA - a report of all TIC sales in the past 6 months with 1 to 2 bedrooms, and 1 bathroom, within a 1/2 mile radius of 1551 Filbert (reports expire after 30 days - email if you'd like it recreated and emailed back). The "average" sales price is $645,850 which is often the most likely fair market value for the subject home. So his offer of $685,000 doesn't sound like much of an offer. On the other hand, two other apartments in the same building sold for $769,000 and $708,500. Frankly, I think both over-paid since the $769,000 took 94 days to sell, and the $708,5000 104 days to sell. I'd never advise my buyers to pay "asking" price on anything that's been on the market more than 60 days, but that's negotiation for you. But since the more recent sale was $708,500, this is the MOST the remaining apartment is worth in my mind. But since it's been another 4 months without a sale, I'd definitely go lower than that.

Secondly, in 6 months only 10 other comparable TIC's have sold, or an average of less than 2 per month. Yet 11 are on the market right now, which is 6 months worth of inventory. So it could be 6 more months before 1551 Filbert #4 sells (if it ever sells the way it's going). Thirdly, while the average of those that sold is $645k, the majority sold for $675,000 or less with 4 in the mid to low $500's. Additionally, while this apartment has parking, it is a shared "tandem" spot, which certainly reduced convenience and reduces the property's value.

Finally, I ran a CMA for Condos which are known to be worth more than TIC's for several reasons (see my previous post), usually running 10% to 30% more than TIC's. So this Condo CMA shows the average sales price of similar size and location Condos is $728,000. In other words, at the current 10 month long listing price they have it priced like it was a Condo, and not a less valuable TIC. Knock off 10% (the least I'd suggest) and you've got a $655,000 fair market value which roughly matches the TIC CMA.

My client is debating making an offer because, after hearing all of the above details, he is turned off to the property. But if he still likes the place, I'm encouraging him to make an offer matching the "average" of $645,850, or maybe even less and seeing how the other side responds.

For similar due dilligence on any property you are interested in, feel free to contact me.


Contingencies: What they are, how to use them

When making an offer to purchase a home, you must decide whether or not to make the offer "contingent". A contingency gives you the right to cancel the contract if you can't satisfy the request made in the Contingency. Please note, this column in NOT intended to be legal advice, and I am not an attorney. For important contractural decisions please consult your own attorney.

The two most common examples are:

1. Loan contingency - you specify the loan you expect to get, and if you discover that you can't get the terms you need or want, you have the right to cancel the contract. You can state the interest rate you want, and other loan terms, in your contract, and if rates shoot up, or lenders later determine you're not credit worthy, you have the right to cancel since you can't get the specified loan.

2. Inspection Contingency - in San Francisco this can either be a "Pest Inspection" contingency, and/or a "Property Inspection" contingency which is commonly referred to as a "Contractor's Inspection". In either case, you hire a professonal to inspect the house, and if you don't "approve of the report" you have the right to cancel the contract. Some agents and Buyers mistakenly think you must provide the reason for your non-approval. You don't - you just say "Buyer does not approve the Property Inspection report and hereby cancels the contract."

Other contingencies may include reviewing and approving of Condo documents for Condo buildings, Sale of the Buyer's property before Closing on the new home, the property appraising at or above the offer price, and virtually anything else you want to "inspect" or "approval" on.

Use of Contingencies make your offer "weaker" in the Seller's eyes because you are giving yourself legal means of cancelling the contract. Often "weaker" offers are only accepted when the offer price is a lot higher than other offers - and you don't want to over-pay do you?!?!?!

It can be a terrible experience for a Seller to believe their house is sold, only to have the contract cancelled, requiring them to go through the entire marketing period all over again. Of course NOT using ANY contingencies means you have virtually no legal grounds for getting out of the contract if you discover something very bad about the house after getting your offer accepted. So the trick is to find a middle ground, as such:

Limit the number of contingencies, and shorten the time period for which you will remove the contingency. Making your contract Contingent on BOTH a "Pest" AND a "Contractor's" inspection, AND giving yourself 21 days in a 30 day escrow period can be VERY disconcerting to a Seller. They won't have peace of mind for 3 weeks.

My suggestion is to choose ONLY the "Contractor's" inspection, while setting up the appointment to inspect immediately so you only need to give yourself 3 to 7 days to approve. One contingency within 1 week feels GREAT to the Seller.

While this will appear to be VERY strong to the Seller, you can do many things with this one contingency. You can cancel the contract if you find something you don't like. Or, you can waive the contingency "subject to" almost anything you want thus re-writing the contract. The Seller can always say "no", but since this is a "new" offer AFTER the home is already under contract, you are more likely to get this "weaker" offer accepted now vs. the initial Offer phase.

An example might be: waive property inspection contingency "subject to reduction in offer price by $50,000". Or "subject to roof inspection, foundation inspection, mold inspection to be performed and removed in 21 days". Ouch, that hurts the Seller, but it's more likely to be agreed to now that you're in contract.

Now I personally don't recommend any of the above unless you really do find problems with the house that you were unaware of, but I do favor limiting the contingencies while essentially keeping yourself entirely protected.

Please note, I am not a lawyer, and this is not legal advice. Any contractual decision you have should be made with the advice of an attorney.


Be wary of "Discount" Brokers

Reading real estate industry news you'd think there was a conspiracy by "full service" agents against "discount" agents and brokerages. What the press fails to realize is there are very real reasons why Buyers and Sellers alike should avoid these companies like the plaque. (see my previous post for how you can get your own discount with a full-service brokerage or agent).

I don't want to name names, but let's look at some of the models:

1. The agent gets paid a salary, not the commission. The company keeps a majority of the money, and gets away with this because they give their agents an office, health insurance, maybe a car, leads, marketing material and so on. It's like working at any regular 9 to 5 job, except they are Realtors. This company is a "discount" company because they "give back" or "rebate" 20% to 30% of the commission to the Buyer or Seller.

Great for you - right? Not so fast. Who does this company attract as agents? Successful established agents have their own offices, stationary, car, and plenty of clients. So they don't come to this company. Only brand new agents, or agents that have failed on their own come here. So if you Buy or Sell through them, you work with a rookie or "unsuccessful" agent. Now let's take a step further. Good Rookies eventually become experienced and successful, but at this point they realize they could double or triple their income if the company wasn't giving 25% away, and taking most of the remaining 75% for themselves. So they leave, thus leaving behind only the worst and newest agents.

2. Low flat fee, or very low commission - say 1% per side instead of 2.5% to 3%. Again, who benefits here? If the company can attract a large volume of clients, the company benefits, but the agents work three times as hard to match the results of full-service agents. So the good ones, you guessed it, they leave.

3. A new version tells Buyers to find the home on their own, and then call in to a "virtual" agent who will advise them and help them write up the contract. This company kicks back a majority of the commission to the Buyer. Again, the "virtual" agents are not well paid, and probably have no idea just how difficult it is to navigate the San Francisco real estate market. I'm guessing Buyers using these companies house hunt for months or years on end with unsuccessful bid, after unsuccessful bid, until finally they severly over pay, and their "savings" ends up being a financial loss.

To sum up, let me share one story:
I got a Listing after the Seller fired his "discount" firm because after 45 days there were hardly any private showings, and only about 10 people at the Open Houses. PLUS, and this is bizarre, the Open House agent showed up with his wife who was not in the business, and who just sat in the Condo all day. Meanwhile the agent put out his Bible in addition to property information. Now I don't care if this was in the Bible Belt of our country, homes are de-personalized so that ALL Buyers can see themselves living there including those with other religious beliefs. Either way, it was strange because the agent was strange, and probably could not get a desk in a full-service brokerage if he tried.

When I got the listing, my full-service marketing machine quadrupled the Open House and private showing traffic, and we sold it in 2 weeks for 8% over the asking price.

The last reason why we full-service agents don't like discount agents is that there are a myriad of ways of killing a transaction, or inviting law suits. If you WANT that home, and the discount agent messes it up, what then? You can't get it back when someone else buys it. And since California is the most litigious State in the country, the last thing I want is an unprofessional rookie putting me and my client's in harms way.

I didn't even touch on negotiation skills, the ability to accurately research a home's true market value, and so many other things earned through experience, dedication and skill that we (well, some of us :) bring to the table. The bottom line, there are real reason why I and you should avoid or be VERY wary of these companies.


San Francisco up, Bay Area down

According to Dataquick the Bay Area's median sales price dropped 0.8% in Sept '06 over Sept '05. Read the general press and you miss the fact that they also break out individual areas like San Francisco so you can see how the city alone did. The news verifies what I've been seeing.... the Median sales price is up 3.5% in the city during the same time. The next closest increases were Santa Clara at 1.7% and Marin at 1.4%. Contra Costa County wasn't so lucky dropping 5.5%. So San Francisco did twice as well as the next best areas in terms of price appreciation.

The bottom line is that San Francisco is an unusual area that is world renowned, and essentially land locked. Not all neighborhoods are up in San Francisco, but when you can get views of the Golden Gate Bridge, play volley ball next to the Bay, and get great dining, culture and night life, real estate stays in demand no matter what's happening in the suburban neighborhoods outside of the city, or the rest of the country.

So if you're looking to buy or sell, it is a pretty solid market for both.


Value of a "Pre-Approval"

Unless you are paying all cash for your home, you MUST have a Pre-Approval letter from a Lender. Pre-Approval means you went through an entire application process. Pre-Qualification means you spoke with a lender, and based on what you told them (rather than showed them) about your income and assets, they estimated what you could afford.

The reason you must go the extra step is that Seller's and their Listing Agents will not take your offer seriously if they are not 100% sure that you can follow through on your offer. The Pre-approval letter lets them know that you presented tax records, bank statements, and other financial information, and a Lender committed to providing you with a loan (subject to the property and appraisal).

A Seller may actually accept a lower offer and skip over yours if they are not confident you can "perform". See my previous post "Getting Low Offers Accepted" for why this works.

Send me an email to Rob@SFisHOME.com and I'll send you the contact information for two lenders I work with on a regular basis who will do the Pre-Approval for free. Just imagine finding the perfect home, and NOT being able to buy it when and how you wanted. A pre-approval, and some smart negotiating will make sure you do get it.


Aerial Property Photos - see before you buy

Google Earth is all the rage, but Microsoft is trying to one up them with superior photos taken from helicopter's rather than Google Earth's satellite images. The Microsoft service is called Live Local although the link is local.live.com

You can either see an actual photo of the home or condo building you're interested in, or have fun and just type in a landmark like "golden gate bridge, san francisco, ca". You can switch between the crystal clear helicopter photos which are called "Bird's eye" view by clicking on "Aerial" which will take you to satellite images similar to Google Earth. Or while still in "Bird's eye" you can click on anyone of the 8 thumbnail photos to move in any of those 8 directions. Or click on the N, S, W, or E buttons to see different angles of the same property.

Finally, Live Local also lets you get driving directions, and switch to a regular map interface.

Unlike Google Earth you do not need to download anything, but you miss the fun of feeling like you are traveling from one destination to another. For all of the options, ease of use, and crystal clear photos, I'm a bigger fan of live.local.com. Use it in conjunction with my MLS Map search site SF-MLS-Search.com and you never have to leave your home to search for a new one. Add PropertyShark.com and Zillow.com and you'll find out just about everything else you want about any home. As a Realtor with MLS access I'll still have much more information to share with you, but you'll be able to do 80+% of the homework (or snooping around) with these free and fun internet tools.


Too many homes to remember? Try this...

Common real estate advice is NOT to see too many homes in one day. Afterall, they all blend together after the 5th or 6th one, so seeing any more than that should be out of the question - right? You mix up one home's kitchem with another's deck, with another's garage, and so on. The entire day is practically a waste, and you are no closer to finding a great home. But with trial and error I discovered a simple tip that, despite it's simplicity, has worked enormously well for my Buyers....

After seeing the 2nd home on your tour (which are often Sunday Open Homes) rank your favorite, and discuss with whoever you are with why it's your favorite. After the 3rd or 4th home, rank your top 1 and 2 homes, and completely rule out those not in your top 2. After your 5th and 6th homes, rank the top 3... BUT only if a 3rd home warrants consideration with the top 2. Don't bother to remember homes that you really aren't interested in.

If you rank, and re-rank the top homes EACH TIME you see a new home, and discuss what you liked, you'll actively recall only your top homes over and over again, and never bother to recall the ones you don't like. Not only do you recall your favorite homes, but you'll very quickly rule in, or rule out the home you just saw very quickly. And my, how exciting to see a new home that trumps your previous favorite. And while not exciting, you can just run in and out of homes you don't care for.

My Buyers have ended up wanting to go back and revisit their favorite home before calling it a day to re-compare it. If they decide to make an offer they feel confident because they had truly compared it in every imaginable way to all of the other homes they saw.

Of course there are times when 1 or 2 stood out a bit, but hardly anything they really wanted to write an offer on. Knowing the market myself, I could advise them that we had a bad day and there really are better homes so it would just be a matter of time if we kept coming out to see the newly listed homes. Or other times I could advise that we did see an excellent selection of homes, and that clearly what they were looking for would probably never be found in either that area, or that price range, no matter how long we looked, so we needed to go back to the drawing board.

The bottom line is that the ranking (and don't forget the re-ranking) gets you to your goal faster, and helps you get out of the aweful experience of hunting for something that doesn't exist when you're not on the mark. Do it yourself, or do it with me or one of my "Showing Agents" and I guarantee a better house hunting experience.


Secrets to getting low Purchase Offers accepted

I've been in many competitive bid situations and have learned that it is NOT always the highest price offer that gets accepted. I've saved client's money by getting lower offers accepted, when together we've navigated the offer and negotiation process better than our rivals (other buyers and their agents). In this post I'll share some of my "secrets".

Secret #1 is sales 101. It's figuring out what else is important to the Seller, and to the Seller's Agent, besides price. If price is all they care about, then the highest price would get accepted every time, and surprisingly, that is OFTEN not the case. So what could be more important than price? Here are a few:

1. Time - maybe they need extra time, or are in a hurry. Standard Close of Escrow in San Francisco is 30 days, but any number of VERY important reasons to the Seller might require a 2 week, or a 2 to 3 month Close. Hint - ask! Ask why they are selling, when they need to move, and when they need to Close Escrow.

2. Their move - related to time is whether or not it would be best for them if they could stay in the home after Close of Escrow to coordinate their move. I've won in many competitive bid situations simply by offering to allow the Seller to stay for 30 days rent free. "Oh no" you say, "that means I'll be paying two mortgages, or rent and a mortgage." Yes you will, so reduce your purchase price the equivalent amount - it's a monetary wash, and surprisingly the "free" rent feels better to Seller's then the slightly lower offer price even though it's the same monetary result.

3. Trust - this is the ultimate secret in ANY sales situation. You must develop trust, credibility and rapport, especially when you don't know each other. "Why" you might be asking. Well, what if you have the highest offer, but the Sellers and their agent do not believe you'll follow through on the Offer. If you cancel the contract later on, their home goes back on the market, and now it has a stigma of "something must be wrong with it". This will cost the Seller both time AND money.

Let's stop here because this is the one secret that has benefited my clients the most, and where other buyers and their agents are probably making their biggest mistakes.

The Ultimate Secret:
I tell my clients to introduce themselves to the Open House agent (who is hopefully the Listing Agent) whenever they find a home they really like. They need to impress upon him or her that they really love the home, and get themselves remembered. If I'm not with them, they MUST call me immediately so that I can do the same thing. With thousands of Real Estate Agents in town it's impossible to know all of them, so if it's an agent I don't know, I've got to introduce myself early on too.

The mistake other agent's make is in telling their Buyers to refraim from looking too interested, or from giving out their names or contact information. They think either they'll "give away their interest" thereby costing them money (the opposite is true, and I'll explain why and how) or that an unscrupulous Listing Agent will try to "steal" their Buyer. Whatever the reason, it's a bad mistake. I'd rather have my clients spend an hour there chatting away, expressing enormous interest in the home, introducing their child or dog, or finding something in common with the listing agent. This gets my Buyers "known" and is the first part of developing Trust. I then do the same thing by visiting the home at the Broker's Tour, calling the Listing Agent with "smart quetions", establising interest and trust. My clients and I will then set up a private showing appointment to go back again, and continue expressing our interest up to the time we write the offer.

What happens is that the Listing Agent begins to root for us. He/she tells the Seller all about our interest and the Seller starts hoping and rooting that we'll write an offer. We'll write a "strong" offer (not necessarily strong in price, but in other things that are important to the Seller - because I asked what else was important), and I'll present the offer in person rather than fax it, and so on. There are many little things I do to develop trust and credibility, but you get the gist. And in so many cases, our competition will be un-known because the Listing Agent doesn't remember them ever seeing the home, and the offer will be sent via fax with terms that simply don't work for the Sellers. In some cases the price will be $10,000 or $20,000 or even higher, but everything else about the offer feels bad.

So how on earth can the Seller accept this higher offer from an "unknown"? It's tough, if not impossible. Yes they might counter us higher, but we've earned the right to say "no" and get away with it because we've done everything else right. The other buyers haven't, so they can ONLY win on price. We can win on so many other levels.... so there it is... the secret to getting lower offers accepted... it is not only possible, I've done it a bunch of times.


Negotiating Commissions: What Agents won't tell you

Everything is negotiable. When an Agent tells you "I can't" or "I won't" he/she is either telling you their personal policy, or their company's policy. There is no State, Local or Federal law that mandates commissions. It is ALL negotiable. If you can dream it up, it can be done (one such story is below). Whether or not it's the smart thing to do for you is more than one blog post can handle, but I'll try to share what most Agents either don't know, or aren't willing to tell you.

Commissions 101:
Seller's generally negotiate commissions with their agent, the "Listing" Agent. San Francisco's most common commission is 5%. Most of the time 50% of this commission is offered to "Buyer's Agents", and most times a Buyer's Agent is involved. So most agents earn 2.5% of the sales price in every transaction they're involved in. 2.5% of a $1 million property is $25,000, but then most Realty firms take 30% to 50% of that commission. So the Agent's "gross" commission is $12,500 to $17,500, and from this we pay for nearly everything a typical office worker takes for granted; health insurance, office supplies, office space, marketing, taxes, etc, etc. Taxes alone mean we probably net no more than $9,000 to $12,000 on a $1 million sale. But since you're probably not crying for us agents, let's move beyond Commissions 101.

Dual Agency:
This is when an agent represents both the Seller and Buyer. This most often happens when the Buyer is searching for homes without their own agent (not wise, but many Buyers start out this way before they consider themselves "serious"). The Listing Agent offers to help them write up an offer, or have a colleague write up the offer (often for a very small cut). Thus the Listing Agent earns close to or the full 5%. In this instance the Buyer can try to reduce the purchase price by 1% or 2%. Sounds easy, but it can be very difficult since most unrepresented Buyers don't know what's possible, or how to do it. Again, this is a long subject on negotiating in general, and is often property and situation specific. One strong piece of advice - ask a LOT of questions. You want to know the Seller's motivation for selling, how long it's been on the market, what comparable properties have sold for, and more. You might over-pay for a "stale" property by $50,000 and save yourself $20,000 in commissions which is still a $30,000 loss to you by trusting the Listing Agent to represent you. Be very careful with agents who say you don't need your own agent.

Don't negotiate with the person with all the power and leverage. As a Buyer, a Listing agent in a Seller's market has no reason to give you a commission break. There are 10 buyers behind you trying to buy the house for full price with full commission. Additionally, in a Seller's market, Buyers are a dime a dozen. A Buyer's Agent has too many Buyers and can't get them into homes given all of the competition to "win" the bid. So if you ask for a piece of their commission, they'll just move on to another Buyer. And without a Buyer's Agent in a Seller's market, you stand little chance of "winning" a bid against buyers with knowledgable representation unless you severly over pay.

However, as a Seller in a Seller's market, you are in total control. You can negotiate an extremely low commission because nearly any decent agent will sell your home quickly for top dollar (but be wary of branded "discount" brokers - that's another blog for another day), and the Buyer's Agents won't have much choice but to accept what you give them since it's so hard to find homes for their clients. Similarly, in a cold Buyer's market, the Buyer is in total control. I had one Buyer who made an offer that excluded the commission from his offer, and made his own Commission offer. In this particular case the Seller had agreed to pay 6% total with 3% to each side (it was a tough property to sell in a slow market, so he paid top dollar in commissions hoping the job would get done - ie Seller had no leverage). The Buyer deducted 6% from his offer, and wrote up a "Commission Offer" paid by the Buyer of 5% split evenly between the two agents. The Seller's net was still the same, and both the Buyer and Seller got tax advantages (although relatively small) while the Buyer effectively paid 1% less than he had to. The reason this worked was that the property had been on the market for 3 months and the Listing Agent really had no choice but to agree since no one else was making offers. I represented the Buyer and just did what he wanted, and what was in his best interest. My Buyer actually saved more than 1% because our offer was very low as well. The Seller very reluctanly sold at this price because my Buyer made it clear he was willing to walk away if his price and terms were not met. Again, this was a very stale, unwanted property.

Today's Market:
In today's more balanced market (albeit still a Seller's market in most of San Francisco, just not over-heated) I personally find it far easier to attract Buyer clients. Therefore, it is fruitless for a Buyer to try to negotiate a commission with me up front. However, if they find a stale listing, the above strategy could work. In the above case I was paid a fair commission, and we just needed the other side to agree. Since the market still favors Sellers (Sellers with realistic expectations that is) they are the ones with the most leverage to negotiate. I personally have some unique "Win-Win" commission programs for Sellers that I would not offer in a Buyer's market, but am offering now.

An entire book could be written on this subject, so I suggest you interview several agents, and ask a lot of questions until you find the agent you like, with the "deal" you want. Hopefully I'll be one of those agents!


Greenspan: "the worse may be over"

Alan Greenspan apparently agrees with me (see my previous posts "Van Eck", "Bubble", "Market Update")

The Washington Post, among others, reported that former Federal Reserve Chairman Alan Greenspan's said that prices may be lower in 2006 vs. 2005, but that "the worst of this may well be over."

The bottom line is you should listen to market stats from people with access to the best and NEWEST information. The worst sources are general news sources like the local paper, national weekly magazines, and TV news. Your mother-in-law who attends Bingo for her information isn't the person to listen to either, nor are your well intentioned friends. The newspapers get old information (new to them is 3 months old) and report on it as if it's happening now. NO IT'S NOT, it is OLD NEWS.

As a Realtor with access to the latest Sales data in the Association's MLS system, I can tell you how quickly (or not) homes are selling, how much they are selling for compared to any time period you are interested in, etc. Plus, as an active Listing and Selling Agent of homes in San Francisco, I can report on foot traffic at Open Houses, and how many Buyers and Sellers are contacting me. From January to March of 2006 it was bad, really bad in some areas. To me, that was the Bubble. Certain areas in San Francisco got hammered dropping at least 20%. More popular areas were only down slightly or flat, but certainly not active. However, activity seemed to pick up in the ensuing months, and immediately after Labor Day my phone started ringing off the hook by Buyers & Sellers alike. Throughout the city other Realtors are reporting similar activity. It seems to be a pretty darn hot market right now. Watch out, we could take off again.


How to Buy below-market in San Francisco

With the over-crazed Seller's market gone, but still more of a Seller's market than a Buyer's market, how do you find bargains, or buy below-market in San Francisco?

1. Ask your agent for properties that have been on the market for more than 60 days (even more than 30 or 45 days might be enough). "DOM" stands for Days on Market, and after about 21 days on the market the listing is "stale" meaning it's nearly forgotten by Buyers and Agents alike. The #1 reason for a stale listing is a price that is too high. #2 is a home that shows poorly - ie bad smells, extremely cluttered with older, mis matched furniture, etc.

2. Look in neighborhoods that are slower than others. Your agent can run reports to show you the average DOM by area, zip code or neighborhood. The higher the average, and slower the market, and therefore the more desparate the Sellers should be. Secondly, ask for a report that shows the past 6 months of activity. You want the area where there are many more For-Sale "active" homes than there are homes sold per month. So if only 18 homes sold in the past 6 months, but 12 are For Sale now, you have an average of 3 homes selling per month, and therefore 4 months of supply before the For-Sale homes sell. The longer the supply, the more desparate the Sellers will be.

3. Be prepared to negotiate and walk away when you don't get your price. This is VERY unusual in San Francisco the last 5+ years. So many Buyer's Agents either don't know how to negotiate, or don't realize they can. They are used to Sellers and Listing Agents pushing them around, so they are only too happy to get a home into contract at any price, vs. realizing that they are often the ones in control now, and can push back on behalf of their Buyer clients.

4. Not all Sellers are realistic, so keep track of homes you offer on and get turned down. If they are still listed for sale 30 days later, there is no harm in trying again. The Seller may have finally seen the light.

There are still many HOT neighborhoods in San Francisco where bargains are nearly impossible, but there are many other neighborhoods that are quite slow right now, and the saavy Buyer can find bargain homes.