the SF Real Estate WAR metaphor
I had a client say to me recently “We don’t want to get involved in any bidding wars.”
I understood. We’ve all heard the stories about buyers getting caught up in “Bidding wars”. As the story goes, during the height of the Real Estate “bubble”, buyers who overbid on homes have since seen values fall. Why would anyone enter a bidding war in today’s market?
With all that being said, the practice of multiple offers, even if it is no longer the norm, still happens all the time in San Francisco. The reason
why? The difference between winners and losers of war come down to
strategy. “Bidding wars”, even in a depressed market, unleash the power
of underpricing. (My next blog will be about the power of pricing.)
The most important part of any strategy: it’s yours to choose
Sellers have their own process of how they become prepared to take action
so you shouldn’t be rushed or pressured into any approach if it makes you
uncomfortable.
Be Aware of the Terrain
Yet those who engage in the San Francisco Real Estate market need to be
aware of the terrain. If your agent is exceptional, they will challenge your assumptions in a non-threatening way that help you draw your own conclusions with confidence when quick decisions will make the difference between getting a property that fits your needs or starting your search all over. This is what differentiates an agent who is partnering with you instead of selling to you. They prepare you to fight a more intelligent battle; to save you both time and money.
The element of surprise is essential to victory for buyers.
When you prepare ahead of time with your agent, they can help you focus on what matters in order to act in the face of distraction. Prepared buyers can seize an opportunity quickly while others are grappling with uncertainty.
Mostly, your agent should be willing to listen so they can remind you of:
- your needs that you’ve identified
- comparable recent sales to ground your concept of value
- of strategies common in the San Francisco real estate market
After all, the objective is for you to find your home that fits your needs so that you can move-on to your next mission: enjoying your new home in San Francisco.
It’s Politics as Usual at City Hall
San Francisco has a lottery system that selects 200 units annually for conversion into condominiums. With 1,799 units having lost the lottery this year and a multimillion-dollar deficit to close, Mayor Gavin Newsom proposed legislation that would allow these units to bypass the lottery system by paying a $20,000 fee per unit. The cost would’ve been reduced depending on the number of years one had participated in the lottery.
But, the proposal was slammed by Budget and Finance Committee Chairman Supervisor John Avalos, who said it threatens San Francisco’s rental stock and encourages evictions. The condo conversion is “a program to disincentivize the turning over of rental property,” Avalos said.
So with the city in a desperate situation and San Francisco with one of the lowest Home-Ownership rates in the state the call is we’ll lose precious rental stock. Um … Ok!
Good News Regarding TIC Lottery Bypass [SFHomeBlog]
Supervisors Kill Condo Proposal [SF Examiner]
Quick Facts San Francisco [US Census Bureau]
Stern Grove Summertime Free Concert Series Kicks Off!
Poster for the 2010 festival
Stern Grove’s 73rd season of free Sunday concerts kicked off today!
If you’ve never been to the concerts at Stern Grove, you are missing out. All summer see great music and events free of charge at Sigmund Stern Grove, 19th Avenue & Sloat. This year, as always the festival features a diverse line-up.
* June 20, 2010
ANGÉLIQUE KIDJO / Sarazino
* June 27, 2010
HAPA / Academy of Hawaiian Arts
* July 4, 2010
SAN FRANCISCO OPERA
* July 11, 2010
SAN FRANCISCO SYMPHONY
* July 18, 2010
CARAVAN PALACE / DePedro
* July 25, 2010
JOVANOTTI / Bomba Estéreo
* August 1, 2010
RICKIE LEE JONES / Meklit Hadero
* August 8, 2010
SAN FRANCISCO BALLET
* August 15, 2010
MACEO PARKER / Darondo
* August 22, 2010
THEY MIGHT BE GIANTS / Rogue Wave
While the show starts at 2 pm, you need to be early, as when the concert meadow is filled you will be sent to the West Meadow which is nearby but with visibility of the stage.
There is a bike valet for those who ride to the Grove.
There’s also some wonderful picnic benches, which you can reserve 6 seats at through a lottery system. They are close to the stage and a real treat to experience.
Need more information? There’s a handy guide to the Grove experience! Just remember both your sunscreen and your layers, as the weather can be highly changeable at the Grove!
Go Green with City financing!
First, I was thinking yes, let’s install solar panels with the new Green Finance program from the city… but no, I found out, I’ve got to do some other work first.
The new program allows you to pull a loan (currently at 7% interest rate) from the city and have the principle, interest and fees that is repayable as a line item on your property tax bill. The duration of the loan period depends on the life expectancy of the improvements (up to 20 years). The line item remains on the property tax bill as a lien on the property even when sold, so you don’t have to worry about paying it off if you need to sell. It is simply passed on to the new owner on their property tax bill, as they will also reap the benefits of the improvements.
How does it work? Rich Chen, the coordinator for the SF Environment program explained it to a small group at the recent Neighborhood Empowerment Network Summit :
Set up an energy audit.
Or, there’s an option if you don’t want to do the energy audit – just include the “Basic Energy Efficiency Package” as one of the projects included in your improvements. The package will include attic insulation, duct repair and sealing, hot water system insulation, combustion appliance safety testing and water conservation measures.
Choose which projects make the most sense for your property and get a bid for each project from an approved contractor.
You can finance new insulating windows as well as a new heater and ducts, solar installations plus other projects.
Naturally there is paperwork involved, and you’ll need to be organized to make this program work for you. The application form is on line as is the project list form and the checklist. There is a $300 application fee as well as requirements for the property. The city will need to verify that there is equity in the property prior to granting the loan. You will need to notify your lender if you carry a loan on the property.
Then, when you have approval, you have 180 days to complete your project and request funding. The job data form looks like you may ask for some help from your contractors for some of those answers! There’s even a checklist for closing.
Naturally, you’ll have to provide the documentation and signed consent form for the special property tax levy and filing of the special tax lien on the property as well. The lien is placed on your property for the exact amount necessary to repay the cost of the project. You’ll be issued a check or can have the funds wired to your account. At this point, you’ll pay your contractors.
You will be making semi annual payments on this lien when you pay your property taxes every year until the lien is paid off.
One of my question is whether this would trigger a reassessment or increase to property taxes, and answer was no. I even called the 1-800-803-6930 number to double check and the answer is no, that Renewable projects and energy efficiency upgrades are not included for reassessment.
The city website also includes a link to a variety of other programs such as SF Solar Map, Go Solar California, Go Solar SF and more!
So I can’t go direct to solar without reducing my energy usage 20% via the program as well, but I think it will be worth it! Overall, this is a great opportunity to finance some home improvements to enjoy now and add value to your property in a time of very limited financing options.
Let’s Make a Deal San Francisco!
Do you remember this TV game show called “Let’s Make A Deal?” Monty Hall, the host of the show, always asks the contestant the following question: “Will you choose what is behind door number 1 or door number 2?”
Nobody wants to get the goat.
It reminds me of what buyers and sellers face regarding the timing of their offers. Specifically, the strategy for writing offers when either buying or selling a home. They have to make a choice between two unknowns.
Like Lets Make A Deal, there’s potential for either pleasure or pain behind each door. As your Realtor, (call me Monty), it’s always your choice. I’ve watched this game play out in this market and here is my perspective
Sellers: “Act now or wait?”
(door number 1)Accept the offer in hand, or (door number 2), increased exposure and potential buyers through more showings, hoping to receive a better offer?
Accepting an offer before your first open house might mean losing potential buyers with stronger offers (if you’re priced strategically). On the other hand, an early offer can be the best offer if it provides peace of mind and turns a potentially stressful time into an exciting transition.
Buyers, “Act now or wait?
(door number 1) aggressively view properties with the goal of writing an early offer before anyone else, or, (door number 2) wait and only look at properties after they’ve sat on the market, hoping to get a better deal (if the property is still available).
Importance of a good working relationship with your Realtor
When you have a good working relationship with you agent, your agent will bring you these opportunities along with demonstrable data and information to help you make fully informed, timely decisions. You can confidently choose “door number 1” once you’ve clearly defined what you value and what is within the realm of possibilities; when you see the prices of similar recent sales. If you believe an offer is too high or low, you can wait in hopes market conditions improve in your favor but this cannot always be proven. Sometimes the advantage of decisive action can only be understood in retrospect after being unable to reach a decision and stick with your own conclusions.
Timing as Your Advantage
Timing creates opportunities for buyers and sellers alike. To do this, there are expectations to understand, the right questions to ask and advantages that go to those who not only have access to the most information but to those who can uncover your real needs and get an early sense what is the most relevant information to know in each situation.
Real choices
With Real Estate choices, unlike the game show, reason determines the best outcome rather than luck, so take the time to evaluate the alternate scenarios with your agent who can help provide you with prospective next time you’re asked the Monty Hall question: “Will you choose what’s behind door number one, or door number 2?”
Contributors
Matt Lanning
DRE#01269994
Meredith MartinDRE#01224570
Rita RotiDRE#01430699
Alan MorcosDRE#1401445
Bill WilliamsDRE#01343131