There's more to HOA dues than most Buyers realize. Many Buyers see low dues as a great thing, afterall every $70 in dues is another $10,000 in mortgage (at 7%) you could have used to buy a bigger place. So a condo with $200 HOA dues should be worth $40,000 more than a condo with $480 dues. But there's more behind the curtain, especially in low HOA buildings, and especially in older Condo buildings. For one, low dues usually means low reserves. Reserves are there for a rainy day, or in San Francisco to take care of the effects of too many rainy and foggy days. When the roof needs to be repaired, the exterior painted, original windows replaced, or any other numerous things that need repair over time. With low dues and low reserves, if it's discovered or decided that the exterior needs to be replaced, it can cost each homeowner $10,000 and higher. A recent owner I know had to pay over $30,000 for one special assessment to replace the rotting exterior of the building. Some buildings being run by HOA Boards that are trying to be cheap for too many years end up with lists of needed repairs that are endless, so the "special assessments" to all owners to pay for the repairs ends up being endless.
If you're lucky enough to time your stay there before such repairs are discovered, you'll have the benefit of having paid less to live in a home. But if those repairs are discovered before you sell, you MUST disclose the problems. I recently heard of a women who bought her condo without the use of a Buyer's Agent who could have advised her about the necessity of getting an inspection and of carefully reading through the Seller provided disclosures. Instead she just contracted through the Listing Agent and ignored that agent's not so strongly pushed recommedations to do the same. Immediately after moving in she discovered a mold smell coming from the closets, and that she could put her finger through the wall near her sliding glass doors. Now she's blaming the Listing Agent, the HOA, and anyone else she can think of. Don't make the same mistake (or other mistakes) yourself by not considering the age of the building, the maintenance (or lack of in her case) of the condo you're buying, the Seller disclosures including the HOA Minutes and the annual budget including reserves.
Obviously this a lot for Buyers to do, which is why Buyer Specialist Agents are so important. This particular buyer also paid the Listing price on a condo that had been on the market for months. I assume she thought she was saving money by not using a "free" agent to represent her, but my guess is she could have bought the condo for a lot less than asking, AND be forewarned about all of the repairs and problems with the unit. For more on my Buyer Specialties visit http://sanfranciscohomes.yourkwagent.com/home
I live in a Condo myself, so I don't mean to discourage anyone from buying one. They tend to be much more affordable than Single Family Homes in San Francisco, and often the only option in the below $700,000 price range. But full awareness of potential problems is a good idea, and reading a few posts over at this site will give you an idea of problems you might find: http://forum.freeadvice.com/archive/index.php/f-106.html
A more favorable write up of the Pros of Condo living can be found here: http://www.realtytimes.com/rtcpages/20051115_hoaliving.htm
5/13/06
Condo or not to Condo: the NOISE issue
When considering condos there are several important items to research and consider. One is noise. If you're not on the top floor, can you hear your upstairs neighbor, and if so, how much? Some buildings are built so poorly that normal walking upstairs actually shakes the lower apartment. Other buildings you can't hear anything when the person upstairs is jumping up and down. You might think you're in the clear if you purchase a top floor unit, but if you buy into a building that actually shakes, your downstairs neighbor will be knocking on your door within the first 2 weeks of your purchase suggesting that you buy slippers, extra rugs, and in some cases will be downright beligerent or ignorant of the fact that it's not your fault simple walking is so noisy.
So what do you do when buying a condo? Check the CC&R's for rules about floor coverage. Some require 100% carpeting, usually with the exception of closets and the bathroom(s). Others have high percentage floor coverage like 70% so you must have a large area rug in the all living spaces. Still others have no rules at all. In 100% or high coverage condos you can buy a bottom floor condo and get hardwood floors if that's your preference and feel fairly confident that noise levels will be low. But I strongly suggest you do a test for noise. Ask to get access to the upstairs apartment to do a test. If they say you can't, press for it. Chances are the person above you would rather have any issues arise before you move in vs. you knocking on their door and complaining all of the time. And the Listing Agent and Seller would rather avoid a troubling law suit after you're in. So they may all comply - a quick tip - request this after you are in contract, but make sure you've got an Inspection Contingency from which you can make this request.
You can also do your own tests without getting into the upstairs condo. Walk around the condo with heavy steps. See if you can tell if it's causing shaking or seems like it's making loud noises. And one final tip, buildings built in the 60's, 70's and early 80's seem to be most prone to louder noises and shaking. Ask your real estate agent what he or she thinks about each building you visit if noise is an issue for you. And if noise isn't an issue, you'll get to buy more affordable places.
Ahh - one last tip. Bottom floor units that are actually the second floor because the ground floor is the lobby and garage.... if your condo is above the garage, make sure you do a test of the garage door opening and closing to see if the noise and/or shaking effects your condo. Usually this can be fixed or at least reduced, but it can still be an issue.
So what do you do when buying a condo? Check the CC&R's for rules about floor coverage. Some require 100% carpeting, usually with the exception of closets and the bathroom(s). Others have high percentage floor coverage like 70% so you must have a large area rug in the all living spaces. Still others have no rules at all. In 100% or high coverage condos you can buy a bottom floor condo and get hardwood floors if that's your preference and feel fairly confident that noise levels will be low. But I strongly suggest you do a test for noise. Ask to get access to the upstairs apartment to do a test. If they say you can't, press for it. Chances are the person above you would rather have any issues arise before you move in vs. you knocking on their door and complaining all of the time. And the Listing Agent and Seller would rather avoid a troubling law suit after you're in. So they may all comply - a quick tip - request this after you are in contract, but make sure you've got an Inspection Contingency from which you can make this request.
You can also do your own tests without getting into the upstairs condo. Walk around the condo with heavy steps. See if you can tell if it's causing shaking or seems like it's making loud noises. And one final tip, buildings built in the 60's, 70's and early 80's seem to be most prone to louder noises and shaking. Ask your real estate agent what he or she thinks about each building you visit if noise is an issue for you. And if noise isn't an issue, you'll get to buy more affordable places.
Ahh - one last tip. Bottom floor units that are actually the second floor because the ground floor is the lobby and garage.... if your condo is above the garage, make sure you do a test of the garage door opening and closing to see if the noise and/or shaking effects your condo. Usually this can be fixed or at least reduced, but it can still be an issue.
Why Read this Blog - helping Buyers & Sellers one San Francisco home at a time
Today I'm changing my blog to dedicate it to all San Franciscans thinking about buying or selling a home within the city. The goal - to give lots of information, whether it's market stats, tricks to buying for less, and tips for selling for more, and so on.
Given the high expense of San Francisco real estate, every decision is that much more difficult and important, and it's my belief that the more information Buyers & Sellers have, the better. As an agent I deliver a huge amount of information to my clients. I also give them access to the best tools I can find. For example, CleanOffer.com is the best search tool for home buyers, but it requires a $500+ annual subscription by an Agent for a Buyer to get access to it. I was not only one of the first to subscribe, I was also one of their beta testers. In another year or so my guess is that most agents in the city will be subscribers, but by that time I'll be on to the next best thing for my clients... always trying to give my clients an edge.... the same kind of edge I'll be trying to blog over to you for free just for showing up to this site. Enjoy, and let me know what you'd like to hear about at any time.
Sincerely,
Rob Regan
415-652-3780
www.RobRegan.com
Given the high expense of San Francisco real estate, every decision is that much more difficult and important, and it's my belief that the more information Buyers & Sellers have, the better. As an agent I deliver a huge amount of information to my clients. I also give them access to the best tools I can find. For example, CleanOffer.com is the best search tool for home buyers, but it requires a $500+ annual subscription by an Agent for a Buyer to get access to it. I was not only one of the first to subscribe, I was also one of their beta testers. In another year or so my guess is that most agents in the city will be subscribers, but by that time I'll be on to the next best thing for my clients... always trying to give my clients an edge.... the same kind of edge I'll be trying to blog over to you for free just for showing up to this site. Enjoy, and let me know what you'd like to hear about at any time.
Sincerely,
Rob Regan
415-652-3780
www.RobRegan.com
4/4/06
Bubble Update
Here's one link on one important point:
http://www.russwhitneyblog.com/2006/03/is_the_real_estate_bubble_goin_1.html
That Real Estate markets are local, so you can hardly compare the dot-com bubble bursting to real estate. I'd like to take this one step further to point out the importance of location and what "local" means. In my previous post I was refering to 4 very different listings in 4 parts of San Francisco. Well, one of those 4 got four offers, all over asking, with the highest offer setting a record for that particular condo building. The listing was in the "Marina District" of San Francisco which is always highly sought after. So prices have continued to climb. Another of my listings we reduced the price twice, and it has finally sold. Some one elses Blog picked up my Craigslist ad that I posted for the Twin Peaks condo that had "price reduction" written into it, and used the ad to "prove" that there's a bubble. Well first off, this Blogger didn't pick up the listing that got 4 offers. Secondly, they had no idea that my Seller on the "price reduced" listing over priced in the first place.
But, my true point is that the "price reduced" listing was on Twin Peaks 1 mile from the nearest Starbucks or restaurant. Buyers loved the place, but continually passed over the listing saying "but it's too far away from the action for me". This truly was a "location" issue. The Marina District listing was only 5 miles away from the Twin Peaks listing, yet those 5 miles made a world of difference. Both are in San Francisco, both were one bedroom condos, both had lots of people coming through to view the properties. But one was 1 block from a shopping area, and 5 blocks from restaurants and night life and got a $702,000 offer. The other only got a $535,000 offer because it was away from the "action". The $535,000 offer on Twin Peaks was a definite drop in appreciation from last year in that neighborhood and that building. The $702,000 was a definite INCREASE in appreciation from last year in both the neighborhood and in the building.
So who is right in their Bubble opinion? Well, everyone is probably a little right, but I say anyone who is generalizing is mostly wrong. Real Estate markets are local, and the difference of 5 miles can be as dramatic as the difference in States 3,000 miles away from each other.
And in both cases, I think there is ENORMOUS opportunity for savvy buyers. Another way at looking at this is that there is no such thing as a "savvy renter" unless they are investing in rental properties elsewhere.
http://www.russwhitneyblog.com/2006/03/is_the_real_estate_bubble_goin_1.html
That Real Estate markets are local, so you can hardly compare the dot-com bubble bursting to real estate. I'd like to take this one step further to point out the importance of location and what "local" means. In my previous post I was refering to 4 very different listings in 4 parts of San Francisco. Well, one of those 4 got four offers, all over asking, with the highest offer setting a record for that particular condo building. The listing was in the "Marina District" of San Francisco which is always highly sought after. So prices have continued to climb. Another of my listings we reduced the price twice, and it has finally sold. Some one elses Blog picked up my Craigslist ad that I posted for the Twin Peaks condo that had "price reduction" written into it, and used the ad to "prove" that there's a bubble. Well first off, this Blogger didn't pick up the listing that got 4 offers. Secondly, they had no idea that my Seller on the "price reduced" listing over priced in the first place.
But, my true point is that the "price reduced" listing was on Twin Peaks 1 mile from the nearest Starbucks or restaurant. Buyers loved the place, but continually passed over the listing saying "but it's too far away from the action for me". This truly was a "location" issue. The Marina District listing was only 5 miles away from the Twin Peaks listing, yet those 5 miles made a world of difference. Both are in San Francisco, both were one bedroom condos, both had lots of people coming through to view the properties. But one was 1 block from a shopping area, and 5 blocks from restaurants and night life and got a $702,000 offer. The other only got a $535,000 offer because it was away from the "action". The $535,000 offer on Twin Peaks was a definite drop in appreciation from last year in that neighborhood and that building. The $702,000 was a definite INCREASE in appreciation from last year in both the neighborhood and in the building.
So who is right in their Bubble opinion? Well, everyone is probably a little right, but I say anyone who is generalizing is mostly wrong. Real Estate markets are local, and the difference of 5 miles can be as dramatic as the difference in States 3,000 miles away from each other.
And in both cases, I think there is ENORMOUS opportunity for savvy buyers. Another way at looking at this is that there is no such thing as a "savvy renter" unless they are investing in rental properties elsewhere.
2/15/06
State of the market
I wrote this in early February, and never finished for published it - I was about to write an update on the market - but much of what I wrote two months ago is still true - so here is the old post:
Everyone wants to know the state of the San Francisco real estate market. Of course, everyone ALSO has their own opinion. Usually the opinions I hear are based on limited anecdotal information like "I heard there were 5 offers on this one property, so the market is picking up." Of course someone else will say, "this seemingly attractive property is just sitting on the market with no activity, so it's clear that the market is slow."
I have 4 listings right now, in 4 very different parts of the city, which gives me signifcantly more anecdotal information than the average real estate agent. The first thing I can say is that each listing is very different from each other. So I've realized that I simply have 4 times as much anecdotal information, and not necessarily hard-core facts, and a difinitive answer. But after much analysis of Active (for-sale) properties, and of recently Sold properties, I think I've come to some conclusions that will make some sense of the very wide variety of opinions I'm hearing. And here they are:
1. Fewer properties are selling right now, in fact, my research shows that there were 20% fewer sales in San Francisco this January vs. last January, and the last time it was this slow was 2001.
2. Prices are up 13% this January over last January
3. But, prices are down over the top of the market just a few months earlier by roughly 10%
4. Homes are taking nearly twice as long as normal to sell
5. Two mortgage brokers have told me they've got tons of new applications, but not a lot of actual mortgages - which means lots of prospective buyers who are not buying. On the same hand, I've had very active Open Houses, that aren't translating into offers.
So fewer homes are selling, and taking longer to sell, but there are lots of buyers out looking. Since some homes are selling, you start to ask why some are, and some aren't, and I think the answer is two-fold.
1. Since buyers have more time to make decisions, and aren't facing multiple offers, they can be very picky. If a home doesn't match 90% to 100% of their criteria, they're just passing over it.
Everyone wants to know the state of the San Francisco real estate market. Of course, everyone ALSO has their own opinion. Usually the opinions I hear are based on limited anecdotal information like "I heard there were 5 offers on this one property, so the market is picking up." Of course someone else will say, "this seemingly attractive property is just sitting on the market with no activity, so it's clear that the market is slow."
I have 4 listings right now, in 4 very different parts of the city, which gives me signifcantly more anecdotal information than the average real estate agent. The first thing I can say is that each listing is very different from each other. So I've realized that I simply have 4 times as much anecdotal information, and not necessarily hard-core facts, and a difinitive answer. But after much analysis of Active (for-sale) properties, and of recently Sold properties, I think I've come to some conclusions that will make some sense of the very wide variety of opinions I'm hearing. And here they are:
1. Fewer properties are selling right now, in fact, my research shows that there were 20% fewer sales in San Francisco this January vs. last January, and the last time it was this slow was 2001.
2. Prices are up 13% this January over last January
3. But, prices are down over the top of the market just a few months earlier by roughly 10%
4. Homes are taking nearly twice as long as normal to sell
5. Two mortgage brokers have told me they've got tons of new applications, but not a lot of actual mortgages - which means lots of prospective buyers who are not buying. On the same hand, I've had very active Open Houses, that aren't translating into offers.
So fewer homes are selling, and taking longer to sell, but there are lots of buyers out looking. Since some homes are selling, you start to ask why some are, and some aren't, and I think the answer is two-fold.
1. Since buyers have more time to make decisions, and aren't facing multiple offers, they can be very picky. If a home doesn't match 90% to 100% of their criteria, they're just passing over it.
1/25/06
Prices of Homes
San Francisco homes are priced BELOW market when they are listed for sale. Yes, that's right. If you're going to fight it, you can't buy here. It's pretty normal for first time home buyers to rail against this pricing tactic. And that's what it is, a tactic, or a strategy. We (SF real estate agents) under-price homes in hopes of generating lots of traffic and multiple offers.
First time home buyers often get mad when they discover that $599,000 really means $660,000 or sometimes $730,000. To discover the real value of a home you're interested in you need an expert to run a comparable report. Called "CMA" for Comparative Market Analysis, these look at nearby, similar homes that have sold very recently. If 5 similar homes sold between $625,000 and $675,000 in the last 3 months, then the home is worth between $625,000 and $675,000. Sorry, you can't have it for $599,000 because 10 other buyers will out-bid you. An "expert" can be an appraiser, but is usually a local real estate agent who has access to complete sales and listing data, and is good at crunching numbers and determining which homes really are comparable.
The reason I'm writing this post isn't for you, the first time San Francisco home buyer. It's for the out of town agent who is advising their client. You can't, and you shouldn't. Our market isn't like yours, and your access to home sales data is probably pretty poor. On one home I've had two problems. First is the Sacramento agent who helped my client buy a home up there before putting her home here on the market. That agent led her to believe her $800,000 to $850,000 home was worth at least $900,000. Now I've got a much closer East Bay agent advising his Buyer clients to make a $750,000 offer when I've priced the home at $795,000. When I called the agent to let him know that my Seller was actually offended by the offer, he was dumbfounded saying he had run comparables. Yes, there were nearby sort of similar homes that sold for an average of $750,000, but they were actually quite different. Just a few blocks away is "the other side of the tracks" according to neighbors. That's probably a $50,000 or more difference. My client's home also has views probably worth $50,000, etc, etc.
So we'll see what happens with these Buyers. They'll probably pass on a great house all because they can't recover from the shock of the "real" price. So, you out of town (including across the Bay) real estate agents. Please refer your SF buyer to an SF agent.
First time home buyers often get mad when they discover that $599,000 really means $660,000 or sometimes $730,000. To discover the real value of a home you're interested in you need an expert to run a comparable report. Called "CMA" for Comparative Market Analysis, these look at nearby, similar homes that have sold very recently. If 5 similar homes sold between $625,000 and $675,000 in the last 3 months, then the home is worth between $625,000 and $675,000. Sorry, you can't have it for $599,000 because 10 other buyers will out-bid you. An "expert" can be an appraiser, but is usually a local real estate agent who has access to complete sales and listing data, and is good at crunching numbers and determining which homes really are comparable.
The reason I'm writing this post isn't for you, the first time San Francisco home buyer. It's for the out of town agent who is advising their client. You can't, and you shouldn't. Our market isn't like yours, and your access to home sales data is probably pretty poor. On one home I've had two problems. First is the Sacramento agent who helped my client buy a home up there before putting her home here on the market. That agent led her to believe her $800,000 to $850,000 home was worth at least $900,000. Now I've got a much closer East Bay agent advising his Buyer clients to make a $750,000 offer when I've priced the home at $795,000. When I called the agent to let him know that my Seller was actually offended by the offer, he was dumbfounded saying he had run comparables. Yes, there were nearby sort of similar homes that sold for an average of $750,000, but they were actually quite different. Just a few blocks away is "the other side of the tracks" according to neighbors. That's probably a $50,000 or more difference. My client's home also has views probably worth $50,000, etc, etc.
So we'll see what happens with these Buyers. They'll probably pass on a great house all because they can't recover from the shock of the "real" price. So, you out of town (including across the Bay) real estate agents. Please refer your SF buyer to an SF agent.
1/24/06
Buyers Use of the Internet to find Homes
The National Association of Realtors released a results from a study of Home Buyer and Sellers showing increasing reliance on the internet as a source for searching for homes. A summary of this this study can be found at the NAR site here:
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/HmBuyerSellerSurvey06?OpenDocument
In 2005 77% of Home Buyers used the Internet to search for homes. That's up from a mere 2% in 1995. 90% used Agents and 71% said they used Yard Signs. This is mere conjecture, but it is my belief that reliance on the Internet would be even higher in San Francisco, and the use of Yard Signs much lower. The reasons are obvious - most of us don't have yards, and don't spend Sunday's driving around browsing lawn's and house fronts for homes and areas we might want to live in. That's a suburban phenomonon. Plus, San Franciscan's are probably some of the most web and tech savvy on the planet, so it's likely we skew much higher for internet use in general, and real estate specifically.
I personally didn't need the NAR to convince me that more and more Buyers were using the internet since I use the Internet for just about everything. Need a definition for a word - I have no idea where my dictionary is, so I just Google it. Need a new piece of furniture, a rug, to find the nearest Post Office... the internet, the internet, the internet. So as a Real Estate Agent I've gone out of my way to find the best house hunting tools on the web, and then bring them directly to my Buyers and Sellers.
Buyers have told me that CleanOffer.com is by far the best home search tool, so I've pre-paid for an unlimited-client subscription. Register at www.SF.CleanOffer.com and select me as your agent and you get unlimited use of this service.
Sellers - instead of the nationally advertised site HouseValues.com, try my local San Francisco site www.Evaluate-My-Home.com
Buyers - want email alerts on properties of interest? Try www.Automated-Homefinder.com
Want access to the MLS try www.SF-MLS-Search.com
I can make recommendations for the best internet Mortgage Calculators (BankRate.com), and know exactly where to find various San Francisco departments for Variances, Property Tax info, Building Permits, and much more - all on the internet. Email me with any of your San Francisco real estate questions, and I'll most likely email you back with a site that does the best job of giving you the information clearly and concisely. Try me :)
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/HmBuyerSellerSurvey06?OpenDocument
In 2005 77% of Home Buyers used the Internet to search for homes. That's up from a mere 2% in 1995. 90% used Agents and 71% said they used Yard Signs. This is mere conjecture, but it is my belief that reliance on the Internet would be even higher in San Francisco, and the use of Yard Signs much lower. The reasons are obvious - most of us don't have yards, and don't spend Sunday's driving around browsing lawn's and house fronts for homes and areas we might want to live in. That's a suburban phenomonon. Plus, San Franciscan's are probably some of the most web and tech savvy on the planet, so it's likely we skew much higher for internet use in general, and real estate specifically.
I personally didn't need the NAR to convince me that more and more Buyers were using the internet since I use the Internet for just about everything. Need a definition for a word - I have no idea where my dictionary is, so I just Google it. Need a new piece of furniture, a rug, to find the nearest Post Office... the internet, the internet, the internet. So as a Real Estate Agent I've gone out of my way to find the best house hunting tools on the web, and then bring them directly to my Buyers and Sellers.
Buyers have told me that CleanOffer.com is by far the best home search tool, so I've pre-paid for an unlimited-client subscription. Register at www.SF.CleanOffer.com and select me as your agent and you get unlimited use of this service.
Sellers - instead of the nationally advertised site HouseValues.com, try my local San Francisco site www.Evaluate-My-Home.com
Buyers - want email alerts on properties of interest? Try www.Automated-Homefinder.com
Want access to the MLS try www.SF-MLS-Search.com
I can make recommendations for the best internet Mortgage Calculators (BankRate.com), and know exactly where to find various San Francisco departments for Variances, Property Tax info, Building Permits, and much more - all on the internet. Email me with any of your San Francisco real estate questions, and I'll most likely email you back with a site that does the best job of giving you the information clearly and concisely. Try me :)
1/20/06
Best time to sell?
Here's Forbes Magazine's opinion on the best time to sell:
http://www.forbes.com/realestate/2006/01/19/time-sell-realestate-cx_sc_0120home_ls.html
You've got to open an additional link to get to the San Francisco opinion, but it's just one agent's opinion which is kind of generic and can be summarized as "sell when the broker tells you to". But one valid point that most of us realize is that weather/season's isn't much of a factor in San Francisco compared to most other parts of the country. Additionally, our city tends NOT to be influenced as heavily by families who'd rather buy when they're kids are out of school - making the the summer season just another season. The best time to sell in San Francisco? Probably mid-January through June. The summer is OK, the early Fall is OK, just don't do it during the holidays.
Is right now a good time to sell? Well, buyers are afraid of the bubble, and seller's still think they can demand any price they want. So if you're a realistic seller, who listens to the comparable property report your agent prepares for you, as well as his/her pricing strategy, then YES, it is a good time to sell. If you want 30 offers, and $100,000 more than your place is really worth, then you'll need a time machine back to 2004 or mid-2005. That's old news, and any agent who promises you anything remotely like that is "buying" your listing - see my last Blog for more on that.
http://www.forbes.com/realestate/2006/01/19/time-sell-realestate-cx_sc_0120home_ls.html
You've got to open an additional link to get to the San Francisco opinion, but it's just one agent's opinion which is kind of generic and can be summarized as "sell when the broker tells you to". But one valid point that most of us realize is that weather/season's isn't much of a factor in San Francisco compared to most other parts of the country. Additionally, our city tends NOT to be influenced as heavily by families who'd rather buy when they're kids are out of school - making the the summer season just another season. The best time to sell in San Francisco? Probably mid-January through June. The summer is OK, the early Fall is OK, just don't do it during the holidays.
Is right now a good time to sell? Well, buyers are afraid of the bubble, and seller's still think they can demand any price they want. So if you're a realistic seller, who listens to the comparable property report your agent prepares for you, as well as his/her pricing strategy, then YES, it is a good time to sell. If you want 30 offers, and $100,000 more than your place is really worth, then you'll need a time machine back to 2004 or mid-2005. That's old news, and any agent who promises you anything remotely like that is "buying" your listing - see my last Blog for more on that.
1/13/06
Buying Listings
San Francisco real estate has finally seen an uptick in homes for sale (called inventory by real estate agents). It seems sellers are finally ready to sell after hanging onto their homes waiting to eke out every last cent of appreciation before "cashing in".
But more homes and slowing buyer demand means seller's can't expect multiple offers and crazy over-bidding.... yet they do expect that anyway. And one ugly trend, (if a trend can be 3 instances I've personally been involved in) is agent's who "buy the listing". "Buy the listing" is real estate speak for an agent who tells the seller he can get 10% to 20% more than any other agent said. For example, I think a condo will sell for about $1 million, but another agent says he can get the seller $1.2 million. When you look at the comparable properties that have sold in the last 6 months, not one property went for more than $1.1 million, and that one had several nicer features, and was a tad larger. So how will the other agent get $1.2 million for them? The answer is that he won't. But seller's often get swayed by his assurances, and when only one offer of $1 million comes in, they accept it because they can't afford to go through another re-listing period and waste another couple of months.
To me this is unethical and I would never "buy" a listing. But after losing 3 listings to this tactic, it's clear sellers must be warned against this sleazy behavior. Every seller should interview at least 3 agents, and probably more. If one agent quotes a price well above everyone else, the seller should be prepared to ask for proof. You will really WANT to believe him because it means a lot more money in your pocket. But you must try to look at the information objectively. If only one other home sold for as much as this agent is quoting you, ask yourself if your home really is as nice, or as large, or has as many features. Drive around and look at the other homes too. Try to be honest with yourself, would you really pay the higher price for your current home when you could have all of those extra features for the same price? Of course not! Only a dumb - or - desparate buyer would. But buyers have more options now, so they are not desparate, and since such an expensive purchase is almost always the most important financial decision of their lives, you can bet that there is no such thing as a dumb buyer. So don't be a dumb seller - kick this unscrupulous agent out of your house.
Instead of letting an agent "buy" your listing, hire the agent with the best marketing plan, who you have the best rapport with, and you instinctively trust.
But more homes and slowing buyer demand means seller's can't expect multiple offers and crazy over-bidding.... yet they do expect that anyway. And one ugly trend, (if a trend can be 3 instances I've personally been involved in) is agent's who "buy the listing". "Buy the listing" is real estate speak for an agent who tells the seller he can get 10% to 20% more than any other agent said. For example, I think a condo will sell for about $1 million, but another agent says he can get the seller $1.2 million. When you look at the comparable properties that have sold in the last 6 months, not one property went for more than $1.1 million, and that one had several nicer features, and was a tad larger. So how will the other agent get $1.2 million for them? The answer is that he won't. But seller's often get swayed by his assurances, and when only one offer of $1 million comes in, they accept it because they can't afford to go through another re-listing period and waste another couple of months.
To me this is unethical and I would never "buy" a listing. But after losing 3 listings to this tactic, it's clear sellers must be warned against this sleazy behavior. Every seller should interview at least 3 agents, and probably more. If one agent quotes a price well above everyone else, the seller should be prepared to ask for proof. You will really WANT to believe him because it means a lot more money in your pocket. But you must try to look at the information objectively. If only one other home sold for as much as this agent is quoting you, ask yourself if your home really is as nice, or as large, or has as many features. Drive around and look at the other homes too. Try to be honest with yourself, would you really pay the higher price for your current home when you could have all of those extra features for the same price? Of course not! Only a dumb - or - desparate buyer would. But buyers have more options now, so they are not desparate, and since such an expensive purchase is almost always the most important financial decision of their lives, you can bet that there is no such thing as a dumb buyer. So don't be a dumb seller - kick this unscrupulous agent out of your house.
Instead of letting an agent "buy" your listing, hire the agent with the best marketing plan, who you have the best rapport with, and you instinctively trust.
8/31/05
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2/14/05
2005 home-buying battle
OK, enough from me about battling for homes. Check out this article from well respected Inman News.
http://www.inman.com/InmanNews.aspx?ID=44801
I've just noticed another up-tick in Buyer demand, and heard of a home getting 40 offers. Based on reports, my guess is that home sold for 45% over asking. So the battle rages on, and until you're on the home-owners side of the fence, you're at a disadvantage.
Call or email me if you want to stop making multiple failed offers and finally be the winning bidder so you can profit from what is expected to be continued appreciation so long as Demand far out-strips Supply. Read the above article for more on that too.
http://www.inman.com/InmanNews.aspx?ID=44801
I've just noticed another up-tick in Buyer demand, and heard of a home getting 40 offers. Based on reports, my guess is that home sold for 45% over asking. So the battle rages on, and until you're on the home-owners side of the fence, you're at a disadvantage.
Call or email me if you want to stop making multiple failed offers and finally be the winning bidder so you can profit from what is expected to be continued appreciation so long as Demand far out-strips Supply. Read the above article for more on that too.
2/7/05
San Francisco Real Estate Bubble?
It seems 50% think there is a real estate bubble, and 50% don't. So who is right? First off, my background includes a dot-com stint, and I lived through that bursting bubble. I've been in Real Estate roughly two years and I was oringally on the side that believed our Real Estate market might burst thanks to my dot-com experience. My reasons for believing there might be a bubble was largely based on the number of buyers getting low down payment interest-only loans. If in 5 years, when many of those loans become variable, interest rates are significantly higher, those home owners may be in deep trouble if the market is flat or down. Rising interest rates also reduce home affordability and could therefore slow or stop appreciation.
So why have I changed my mind? Because of the laws of Supply & Demand.
There is enormous demand, aka Buyers. And there is very little supply, aka Sellers or homes for sale. And many of those buyers have an amazing amount of money. Parents and Grandparents are helping out younger buyers, others are getting inheritance money, Google just created a bunch of millionaires, many of whom are buying in San Francisco, and weathy people around the world love San Francisco. And that demand simply will not abate. Why? Well think about how many people you know who make good money, have money saved up, and still rent. Every one of them is hoping there's a bubble and should the market drop they will jump in and push the market right back up.
Think about it. Demand is and will far outstrip supply in San Francisco for as far into the future as I can see. And those sitting on the side line are losing money every day they wait. They're losing their rent money, they're losing the profits from price appreciation of any home they would have bought, and they're losing the tax write offs that home ownership provides. The only way this market will drop is if all the wealthy people in this town (and those planning to move here) pick up and leave. An earthquake could cause this to happen temporarily, but just as in 1989, that won't last long. The Marina, one of the hardest hit areas in the '89 quake, is one of the most expensive neighborhoods in the city.
If you'd like to find out how much you can afford, drop me a line and I'll send you some lenders you can contact.
So why have I changed my mind? Because of the laws of Supply & Demand.
There is enormous demand, aka Buyers. And there is very little supply, aka Sellers or homes for sale. And many of those buyers have an amazing amount of money. Parents and Grandparents are helping out younger buyers, others are getting inheritance money, Google just created a bunch of millionaires, many of whom are buying in San Francisco, and weathy people around the world love San Francisco. And that demand simply will not abate. Why? Well think about how many people you know who make good money, have money saved up, and still rent. Every one of them is hoping there's a bubble and should the market drop they will jump in and push the market right back up.
Think about it. Demand is and will far outstrip supply in San Francisco for as far into the future as I can see. And those sitting on the side line are losing money every day they wait. They're losing their rent money, they're losing the profits from price appreciation of any home they would have bought, and they're losing the tax write offs that home ownership provides. The only way this market will drop is if all the wealthy people in this town (and those planning to move here) pick up and leave. An earthquake could cause this to happen temporarily, but just as in 1989, that won't last long. The Marina, one of the hardest hit areas in the '89 quake, is one of the most expensive neighborhoods in the city.
If you'd like to find out how much you can afford, drop me a line and I'll send you some lenders you can contact.
2/3/05
Winning the Bidding War
You've made 10 offers and lost every one. You refuse to give up like so many others, but you refuse to pay too much too. So how do you get a home? Well, first off, if you want to buy a home without competing against other home buyers, move to Indiana. Don't try to buy in San Francisco.
You think I'm wrong? Maybe a fixer-upper can be had for below market without competition? Think again, 20 other buyers think the same thing about the same property, and they end up driving the price up. How about that place that's sat on the market for two months? Well, probably the Seller refuses to take anything under a certain amount, and that amount is $100,000 over what even the craziest buyers are willing to offer.
OK, maybe you believe me, but you still want a home. So how do you do it?
Here are a few strategies for the savvy Buyer:
1. Pre-emptive offers:
In hot Seller's markets, nearly every home for sale has an "offer deadline". This is designed to take full advantage of the competitive market and create an all out bidding war. Your strategy should be to get out there, and look at homes that you think you'll like within the first day or two of them coming on the market. And you make an immediate offer ignoring the offer deadline. Some agents and sellers will refuse your offer (keep in mind only the Seller has the right to refuse an offer, whereas the agent is legally bound to present it unless the Seller has given him written permission not to present offers). Let's say the agent does present it. How and when will a Seller accept a pre-emptive offer, and not wait another 10 days for the offer deadline and the bidding war they're confident will produce multiple over-asking price offers? You guessed it, your offer must be over-asking. OH NO you say, why bid over-asking? Isn't the point of a pre-emptive offer to save me money? Yes and No. You may save money because a bidding war may produce even higher bids, but if the Seller KNOWS he/she is going to get a higher bid, why on earth would they accept your pre-emptive offer. So your offer must be for about the amount the Seller wants or thinks they can get in a bidding war.
2. Building Trust with the Seller and Listing Agent:
Bad, but true story. You submit an offer at the deadline and you're the highest of any offer by $10,000 and the Seller chooses to accept the offer just below yours. WHAT? But I was the highest offer! Well, if they don't know you, and they don't know your agent, and your offer is sloppy, and is full of contingencies, then you very well may get passed over without a second thought. How do you build trust? You visit every Open House they have and introduce yourself each time. Your agent does the same thing. You or your agent call frequently with intelligent questions continuing to show a sincere interest in being the winning bidder. Your offer is presented in person, it's in a crisp, professional looking format, and includes the provisions the Listing Agent told you were most important to the Seller when you called him/her on one of your intelligent-question phone calls. They know you, they trust you, they know you are going to follow through and complete the purchase come hell or high water.
3. Making a Competitive Offer:
The Asking price is $599,000 or $699,000 or $799,000 or some other $x99 or $x95 or $x65 or whatever. FORGET about the asking price. In only rare instances is the Asking price what the Seller and Listing Agent want and expect - and that's almost always in New Construction buildings. You must look at recent sales of similar homes and what they sold for to determine what a "reasonable buyer" will pay for the home you want. That price is your minimum bid, and if you really want the property, you MUST go slightly higher. And if you really, really, really want the property, you MUST go more than slightly higher. You really need a Buyer's Agent to have luck buying something in San Francisco, and this in one of the areas where they earn their keep. A good CMA (comparative market analysis) is essential if you want to know what it will take to even have a chance at being the winning bidder, without going ridiculously over asking.
The above three are just the highlights. 3 ways to avoiding house hunting for months while you continue to throw away rent money and lose tax deductions. Not getting prefessional, competent, help from a top quality Buyer's Aent will cost you time and money. And get this, Buyer's Agents work for you for free. Drop me a line if you want to know more about Buyer Agent services, or more tips and strategies for getting your offers accepted.
You think I'm wrong? Maybe a fixer-upper can be had for below market without competition? Think again, 20 other buyers think the same thing about the same property, and they end up driving the price up. How about that place that's sat on the market for two months? Well, probably the Seller refuses to take anything under a certain amount, and that amount is $100,000 over what even the craziest buyers are willing to offer.
OK, maybe you believe me, but you still want a home. So how do you do it?
Here are a few strategies for the savvy Buyer:
1. Pre-emptive offers:
In hot Seller's markets, nearly every home for sale has an "offer deadline". This is designed to take full advantage of the competitive market and create an all out bidding war. Your strategy should be to get out there, and look at homes that you think you'll like within the first day or two of them coming on the market. And you make an immediate offer ignoring the offer deadline. Some agents and sellers will refuse your offer (keep in mind only the Seller has the right to refuse an offer, whereas the agent is legally bound to present it unless the Seller has given him written permission not to present offers). Let's say the agent does present it. How and when will a Seller accept a pre-emptive offer, and not wait another 10 days for the offer deadline and the bidding war they're confident will produce multiple over-asking price offers? You guessed it, your offer must be over-asking. OH NO you say, why bid over-asking? Isn't the point of a pre-emptive offer to save me money? Yes and No. You may save money because a bidding war may produce even higher bids, but if the Seller KNOWS he/she is going to get a higher bid, why on earth would they accept your pre-emptive offer. So your offer must be for about the amount the Seller wants or thinks they can get in a bidding war.
2. Building Trust with the Seller and Listing Agent:
Bad, but true story. You submit an offer at the deadline and you're the highest of any offer by $10,000 and the Seller chooses to accept the offer just below yours. WHAT? But I was the highest offer! Well, if they don't know you, and they don't know your agent, and your offer is sloppy, and is full of contingencies, then you very well may get passed over without a second thought. How do you build trust? You visit every Open House they have and introduce yourself each time. Your agent does the same thing. You or your agent call frequently with intelligent questions continuing to show a sincere interest in being the winning bidder. Your offer is presented in person, it's in a crisp, professional looking format, and includes the provisions the Listing Agent told you were most important to the Seller when you called him/her on one of your intelligent-question phone calls. They know you, they trust you, they know you are going to follow through and complete the purchase come hell or high water.
3. Making a Competitive Offer:
The Asking price is $599,000 or $699,000 or $799,000 or some other $x99 or $x95 or $x65 or whatever. FORGET about the asking price. In only rare instances is the Asking price what the Seller and Listing Agent want and expect - and that's almost always in New Construction buildings. You must look at recent sales of similar homes and what they sold for to determine what a "reasonable buyer" will pay for the home you want. That price is your minimum bid, and if you really want the property, you MUST go slightly higher. And if you really, really, really want the property, you MUST go more than slightly higher. You really need a Buyer's Agent to have luck buying something in San Francisco, and this in one of the areas where they earn their keep. A good CMA (comparative market analysis) is essential if you want to know what it will take to even have a chance at being the winning bidder, without going ridiculously over asking.
The above three are just the highlights. 3 ways to avoiding house hunting for months while you continue to throw away rent money and lose tax deductions. Not getting prefessional, competent, help from a top quality Buyer's Aent will cost you time and money. And get this, Buyer's Agents work for you for free. Drop me a line if you want to know more about Buyer Agent services, or more tips and strategies for getting your offers accepted.
2/1/05
House Hunting in San Francisco
Every couple of Sunday's you visit a couple of Open Houses, get hounded by a few of the Agents hosting them, and go back home thinking "someday". Maybe you're a www.Craigslist.org fanatic and don't realize you're only seeing 5% or less of the homes on the market. Or maybe you still rely on black&white and browse the Chronicle's Open House pages - there you're probably seeing 20%. In other words, not only are you not very serious about your home search, what little you do gets you no where. AND OH, those hounding agents! They are just SOOO annoying. Who needs an agent anyway?
When asked how long you've been looking, you say "oh, on and off for about 18 years now", frustrated that you didn't buy that over priced $400,000 miniature 2-bedroom on Russian Hill 5 years ago. What a shame because you saw it last week on "sale" for "only" $799,000.
Maybe you're an advanced searcher, and have found an MLS site like
www.SF-MLS-Search.com. Here you get 95% of all homes. Even more convenient is www.Automated-Homefinder.com where homes that fit your entered criteria get emailed to you the day they hit the market. You've got the pulse of the market, well at least of the listings. But you're still just a searcher, and not a buyer. You almost put an offer in on that amazing one-bedroom a few weeks back. But the agent scared the hell out of you with all the "TIC" talk. What in the world was that about?
Ahh well, this bubble will burst someday, and me and my 98 friends all making $100,000+ who still rent will finally have an opportunity to buy. Oh wait, that's another $10 million that will just re-prop up the market. Dang, will I ever be able to buy?
When asked how long you've been looking, you say "oh, on and off for about 18 years now", frustrated that you didn't buy that over priced $400,000 miniature 2-bedroom on Russian Hill 5 years ago. What a shame because you saw it last week on "sale" for "only" $799,000.
Maybe you're an advanced searcher, and have found an MLS site like
www.SF-MLS-Search.com. Here you get 95% of all homes. Even more convenient is www.Automated-Homefinder.com where homes that fit your entered criteria get emailed to you the day they hit the market. You've got the pulse of the market, well at least of the listings. But you're still just a searcher, and not a buyer. You almost put an offer in on that amazing one-bedroom a few weeks back. But the agent scared the hell out of you with all the "TIC" talk. What in the world was that about?
Ahh well, this bubble will burst someday, and me and my 98 friends all making $100,000+ who still rent will finally have an opportunity to buy. Oh wait, that's another $10 million that will just re-prop up the market. Dang, will I ever be able to buy?
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