If you are a routine grocery shopper, then you already know that comparing ‘per-unit’ pricing is a smart way to shop. If something costs .48 cents per ounce then you can easily compare different brands and sizes and quickly determine that .51 cents per ounce is likely more than you need to spend. It is logical then that the same process would apply to home prices.
Continuing with the grocery analogy, the concept works well when comparing apples to apples. Price per square foot is a good barometer to consider when looking at houses and condos that are almost identical or at least very similar to each other. This works well on a new construction cul de sac in the suburbs and in high rise buildings in the city. The challenge in SF however is that the housing inventory is very old and uniquely diverse. This means that one home is usually very different than the one next door, including the details of the interior, the exterior, the parking, the view, you get the picture.
The other challenge with price per square foot in the city is that we are often relying on inaccurate square footage figures from tax records. This means that the fundamentals are not accurate, so any comparison based on square footage would be incorrect. So while price per sq foot might seem perfectly logical, it may not really be as solid a data point as you think. Each situation is different, so let me know what you are looking for and we will take a closer look.
It’s been so rainy lately! This is obviously good news since California is in a major drought. We simply need the rain. If you are in the market to buy a new home or condo though, there’s another benefit to the wet stuff falling from the sky. Touring your dream home on a rainy day can tell you a lot about your prospective home before you submit an offer.
Probably one of the last things you want to do is go out and look at homes in the rain. If you’re like most people, you want to see houses on a sunny spring day, where flowers are in bloom and birds are singing. Visiting a house on a rainy day however can sometimes be much more informative, here’s why:
Ideally when rain falls, it runs off the roof in to the gutters and eventually flows away from the house through a drain or pipe to the street or sewer. Given the hilly terrain in San Francisco, older housing stock, and densely packed neighborhoods, heavy rain in San Francisco sometimes leads to “ponding” or standing water with no place to go. Standing water tends to seep in to places it should not be (like walls, foundations, garages, or basements). Keeping water away from your home is important to help prevent issues like dry rot, wood boring beetles, foundation deterioration, termites, and mold. So while checking out your new prospective house, always keep your eyes open for standing water around the outside of the home or in the garage or basement.
Another benefit of touring a home in the rain: if a roof or skylight needs repair, there might be some visible signs of a leak. Be sure to look up at the ceiling occasionally as you are walking around. If you see signs of a ceiling repair or even differences in paint texture, it may be worth at least asking about.
I’m not a home inspector, but I’ve been at hundreds of home inspections with clients and have picked up a few tips along the way. I have many more home buying tips to share. Feel free to get in touch!
I am often asked about the seasonality of real estate in San Francisco. As it has been for a long time, we are in a seller’s market in SF however there are definitely some fluctuations throughout the year.
Sellers: The majority of the year is still very good for sellers, especially for single family homes, however the best time for sellers is in September/October when the weather is usually sunny and dry and fog is nowhere to be seen. This time of year is known as “San Francisco’s summer” even though it is really autumn everywhere else. Throngs of buyers are visiting lots of open houses on these sunny weekends, multiple offers are the norm, and sale prices that far exceed list prices are very common.
Buyers: If you are buying and want to have a shot at getting a (relative) bargain, you’ll want to do that in July/August or wait until November/December (but the number of available listings will be limited). The number of buyers that you’ll compete with are usually relatively low at this time, and the resulting number of offers and sale prices will also likely be in your favor. Of course, as with most things in San Francisco, each neighborhood and price range has it’s own unique nuances, so please let me know if you need advice on your particular situation.
In a very competitive real estate market like San Francisco, it is not uncommon for eager buyers to do whatever they can to make their offer stand out from the pack. Along with a healthy offer price and few contingencies, many buyers opt to take an extra step by including a “love letter” to the seller. Much like an online dating profile, the letter is intended to connect on an emotional level with the seller and hopefully elicit a positive response to the offer. Letters from buyers might include things like where they’re from, information about their family, what they do for work, and why they love the home. They also frequently include photos of their family, pets, kids, etc. The goal of course is to pull the heartstrings of the seller. Depending on the seller, the strategy does occasionally work. While many sellers ignore the letters without even reading them, I have seen more than one situation where an offer was accepted because the seller liked the buyer’s letter despite the fact that the offer price was lower than others.
The Problem with Love Letters in Real Estate
The problem with love letters is that they’ve recently led to significant legal issues. Apparently, some buyers who were unsuccessful in getting their offers accepted later claimed that it was because the seller based the decision on the contents of the letter. Since the letter may have contained photos or other personal information, this rejection could be interpreted as discrimination. To avoid the risk, some sellers have been instructing their agent to not show them any offers which are accompanied by a love letter.
If you are buying and interested in adding a love letter, be sure that your agent inquires with the listing agent to see if it will be considered by the seller. If the answer is “no” then definitely do not submit a letter since the offer may not even be reviewed as a result.
If you are selling your home, my recommendation is for you to avoid the risk and decline to review any offers that include a love letter. Your agent should instruct buyer’s agents accordingly so they are aware in advance.
As always, there are nuances with every situation. Your agent should be your guide. If you are not already working with an agent, feel free to email me at [email protected] or call 415-971-5651.
Did you know that there is a site that allows you to view permits and complaints for all properties in the city? This comes in very handy if you are thinking of purchasing a home (or if you are a nosy neighbor).
Just head to Department of Building Inspection’s website and enter the property address. There you’ll see all permits relating to electrical, plumbing and building as well as the complaints that may be on file for that location.
By any measure, the heat of the San Francisco market in the first half of 2018 has been among the most blistering ever. Probably only 3 or 4 other periods over the past 50 years have seen a comparable intensity of buyer demand with regard to the supply of listing inventory available to purchase. Though all segments performed strongly, the market was particularly ferocious in the lower and middle-price segments of single family homes.
Here are the median price changes for San Francisco houses and condos sold from 1994 to 2018.
Single family homes:
If you’ve been looking for real estate in San Francisco, you have probably heard the term “contingency”; it means “dependence on the fulfillment of a condition”. In the world of SF real estate, a contingency is simply a period of time in which the buyer can investigate a property or mortgage loan while still protecting their deposit.
Contingencies are sometimes used for property inspections like a termite inspection. Other contingencies are for mortgage loan approval, appraisal, or the sale of another property. Sellers can have have contingencies too, like finding a replacement property, but buyer contingencies are more common.
In this very frenzied seller’s market, any buyer contingency can give the seller some pause when they are considering whether to accept an offer.
It can be challenging for buyers to protect their interests while still getting their offer accepted. As I’ve written about before, disclosures are important. Seller disclosure packages (complete with inspection reports) allow the buyer to be reasonably informed about the property at the outset before submitting an offer.
Regardless of disclosures, some buyers opt to roll the dice and waive all contingencies as a strategy to make their offer more attractive to the seller. Buyers should be aware that waiving contingencies is risky. As usual, it boils down to risk tolerance and of course every buyer (and every property) is unique. If you are considering buying or selling, let’s talk about how contingencies might impact you.
If you are considering a move to the U.S. from another country, you will quickly learn that the process of buying a home here is unique and probably even a little baffling at first. Here is what you need to know:
- Step one is to find the right real estate broker to guide you. In San Francisco, like much of the U.S., buyers and sellers each have their own dedicated broker to help them. Your broker is your primary advocate throughout the real estate purchase process and can help you to buy any available home on the market regardless of which broker is representing the seller. He or she has a fiduciary duty to represent your best interests. Sellers pay the commission which is the compensation for both brokers. Buyers rarely pay any commission at all.
- Get pre-approved for a loan. Without a U.S. credit report and social security number it can sometimes be challenging to get a mortgage loan. Here is how the system typically works: after a potential home buyer applies for a loan, the mortgage lender uses their social security number to check credit history which is pulled from three credit bureaus: Trans Union, Equifax, and Experian. Each of these bureaus collects data from various creditors like banks and credit card companies regarding an individual’s payment history, amounts owed, etc. That data is used to formulate a score called FICO which gauges an individual’s perceived credit-worthiness. The score can range from 300-850. Anything over 700 is generally considered very good. The credit bureaus and resulting FICO score only considers credit history earned in the U.S., not overseas. If you are new to the U.S., this is clearly a bit problematic. There are some alternatives for expats who are new to the U.S., so finding the right mortgage lender is key. Your real estate broker can refer you to a few lenders that can help.
- Start looking at neighborhoods and homes with your broker. This step may take a while as you learn the areas and nuances of the city along with the various property types that fit into your budget. San Francisco is geographically small but it has 89 distinct neighborhoods, so there is a lot to learn. Your broker can give you access to MLS, the database of all available homes in the city.
- Once you find the right home for you, then it’s time to make an offer. Offers are comprised of price and various terms that your broker will discuss in detail with you. Offers can be contingent upon certain events like a professional home inspection or even full mortgage loan approval. Your broker will discuss the pros and cons of various offer terms to make it attractive to the seller while still protecting your interests. The timeframe of offering on a home to actually getting keys in your hand is generally about 35 days or less.
I have represented many buyers from other countries. I’d be glad to sit down and talk with you about the process to see if buying a home in San Francisco is the right move for you. Just let me know when you’d like to meet. I can be reached at (415) 971-5651.
There are plenty of big decisions that need to be made during the process of buying a home or condo. One decision that buyers often don’t consider in advance is how they’d like to hold title to the property. The method of holding title, often referred to as “vesting”, can have significant legal and tax implications so it should always be discussed with an attorney or tax pro. Before the sale can be completed, the title insurance company will need to know how the property is to be vested. Thinking about the options in advance may help to make the process smoother for you. The chart below from Fidelity National Title summarizes the more common methods of holding title. Click on the chart to enlarge it. If you are considering buying a home in SF (or anywhere else for that matter) just let me know, I’ll be happy to help.
The most recent median price numbers are here for condos and homes in San Francisco: