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.