San Francisco prices up

According to DataQuest home prices were up 8.4% over this time last year in San Francisco. The Bay Area as a whole was up 3.4%. Solano and Sonoma Counties continue to suffer... if you're looking for "deals" those are the counties to visit. In San Francisco these statistics are "old news" to those of us with feet on the street. In fact, we're now in the summer slow down. In April & May the market was very hot with a lot of multiple offers and fast sales.

If you read my older posts you'll see I had been predicting this market for the past year or so. With interest rates remaining low, and still many all-cash or high-cash offers here, and virtually no such thing as a San Francisco foreclosure, the San Francisco market is strong and steady.

Buyers have come to discover that there are few places as beautiful as San Francisco, and within the city, there are some neighborhoods that are more desirable than others. And in those areas, you pay a premium if you want to own your home. If you'd like to know more about what makes one area more desirable over another, give me a call or drop me and email. I can explain fog lines, which neighborhoods have the best restaurants and shopping, the best views, and so on.


How much can you save with a Discount broker?

I just got an Evite to a charity event from an acquaintance who recently bought a San Francisco condo through a new discount brokerage. One of her co-hosts Sold his Loft using the same discount brokerage. They mention in the Evite that the discount firm will donate $1,000 to the charity for any business they drum up at their event.

So obviously the two hosts are happy - right? After all, the Buyer got a 20% refund on her Buying commission - at a $1,650,000 purchase price that's an $8,250 rebate. Not too bad - right?

The co-host Seller was able to list his Loft for 1.5% instead of 2.5% and is happy because he got his $589,000 Asking Price so he "saved" almost $6,000.

However, I know better. San Francisco is a complex and difficult real estate market to navigate. You have to be careful in analysing each property, and the market, before figuring out your offer price or your Listing price. So choosing the right agent and brokerage can end up saving or costing you a lot of money. Knowing this, I did some research to see how these two "really" did.

As it turns out, my quick "CMA" (Comparative Market Analysis) which indicates "fair market value" seems to indicate that the $1,650,000 was probably at least $50,000 too high - if not $100,000. So her $8,250 rebate may have cost her at least $40,000.... $40,000 that went directly into the pocket of the Seller of that condo who used a well known and respected Brokerage... the Seller is probably still laughing all the way to the bank since they bought the property for $150,000 less just 9 months earlier. Ouch! That's 10% in appreciation. According to the DataQuick numbers I've used in previous posts appreciation was less than 2% during that time frame. That's why I say they over paid by "at least" $40,000. It may be as much as $100,000 even after factoring in the so-called "savings" or rebate.

Then I looked at the Loft Seller's situation. Six weeks before his Loft sold, another Loft in his building on the floor below that was 141 SqFt smaller sold for $599,000. In fact, within a 1/2 mile radius of these 2 Lofts, 19 Lofts sold in the previous 7 months and only two sold for cheaper than the co-host "saver" of commissions. So what does the math work out to be? The 1.5% commission cost him $8,835 to net $580,165 before other costs. The $599,000 seller paid $14,975 netting $584,025 before other costs. So... the Seller with the smaller condo netted about $4,000 more. And that doesn't take into account the other 15 Lofts that sold for a lot more... his "savings" looks to me to be about negative $15,000 to $30,000.

Another discount broker was the subject of a 60 Minutes piece a few weeks ago. The NAR is up in arms because they felt their voice wasn't heard. One full service agent was interviewed, and didn't know how to answer the "savings" question. Unfortunately for the TV segment she's probably just too busy making her clients "real" money or savings, not phantom ones. This is a pet-peave of mine.... general media pieces written or produced by people who have no expertise and don't even bother to scratch the surface, let alone sniff out the reality of complex issues.

The truth is that if these were "real" savings, then Discount Brokers would rule the day. Buyers are smart - they determined they didn't need Travel Agents years ago... but they still rely on experienced professionals when it comes to the largest financial decision in their lives.

And why - with these kinds of "savings" that non-real estate professionals think they are getting - haven't discount brokers gained much of a foot hold after years and years of trying?

My personal opinion is simple.... why would a Realtor who was an expert, who had a lot of happy customers, decide to earn less and move to a Discount Brokerage? The answer is that they don't. The only types of real estate agents that these firms can attract are either those who failed elsewhere, or just got their licenses. So they don't know what they don't know. They don't know how to Sell a Loft for over $600,000 and not $589,000. And they don't look at a $1.65 million property, and realize it's a simple check of past sales to discover only 9 months earlier it was only worth $1.5 million to a buyer represented by an experience agent.

The analysis I did, and do every day, looking at "fair market" values takes some time and expertise. Then it requires Sales & Negotiation skills to get my Seller's the highest possible price, and my Buyers the home of their dreams for the lowest possible price. Unfortunately for the two people who are so nobly contributing their time to a charity, ended up contributing a lot more to the people on the other side of their transactions.

If you are considering Buyer or Selling, please call an agent like myself, and interview at least 3 Realtors before making a final decision. Hopefully we can help you see the difference during the interview process... not after you've lost thousands and thousands of dollars thanks to un-skilled or inexperienced advisers.

Property Search service

If you've yet to try the service that allows you to search by Map - it's got a new and improved look. This screen shot is of San Francisco, and the mouse is hovering over one property so that you see it's basic details. If you then click it takes you to the Full Detail page.

You can use the criteria selectors on the bottom of the page to choose property types and price ranges. And then select portions of the map for area specific searches. Finally, you can Save Searches and set up auto-email alerts for those searches, and you can save specific properties to return to see what's happened with them. Try is out at www.SF-MLS-Search.com/welcome.html