| Land Rush on New Condos in San Francisco | May 25th, 2009 |
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In many cases current listing prices at projects like Infinity, SFBlu and Arterra are over 30 percent below original pricing. Our New Homes Sales Division, which represents many buyers in these projects, has aggressively negotiated selling prices still lower, by as much as 20-30% off current asking prices. The downward pressure began in late 2008 when the Infinity began dropping their prices. To stay competitive other luxury developments like Blu and One Rincon had to follow suit. Lower end products like Arterra and SOMA Grand began reducing prices at the beginning of this year. The Arterra has been particularly aggressive with price drops and offers more still more concessions when buyers come to the table. Now the sales office at the 665-unit Infinity, is writing contracts at a rate of at least one a day. The SOMA Grand has also had a run on their one-bedrooms. I was there last weekend and there were eight or nine to choose from. When I called on Thursday, they had only three left. And the Arterra no longer shows homes by appointment on weekends because the traffic is so heavy. Sales at SFBlu have also picked up since they aggressively reduced their prices by about 20% across the board. Sales are even picking up at th Homes on Esprit Park and at Candlestick Point. If you’re a developer, there’s an upside and a downside to this new spike in sales: you love moving product, but it sucks to sell at such low prices. Prices at buildings like the Infinity, One Rincon Hill and Blu — under $700 a square foot for some units — are well below development costs. The one exception to the price drops is the Millennium– this high end lifestyle condo development deems itself a market unto itself, and has persisted in holding on their prices since their across the board 20% reduction for all their buyers in contract early this year. |
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Last week the San Francisco Business Times reported what we’ve been seeing for awhile– a spike in activity for new condo purchases. The sharp increase in sales comes form a convergence of low interest rates, a sweet new homes tax incentive and developers who are ready to do some serious dealing.| A really “Goode” job | May 24th, 2009 |
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Interested candidates need to hustle up and get their job application in by June 5– along with a video of you explaining why you’re the best person to deliver the Murphy-Goode message. |
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This topic of a job offer in the Wine Country only remotely relates to real estate and life in San Francisco– but I’ll make the reach and include it because My Favorite People (i.e., clients) need jobs before they can buy homes and this one pays almost enough for you to afford to buy one here. San Franciscans love their food and wine.| if it’s Tuesday, we must be out driving around. . . | May 22nd, 2009 |
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The atmosphere inside a home is different on a Brokers Tour than it is during a Sunday open house. Unlike buyers at a Sunday open, an agent on tour is not so much soaking up a home’s atmosphere as simply assessing it, as they memorize the floor plan, bedroom/bathroom count, and amenities such as a walk-out deck, hardwood floors, or remodeled kitchens and baths. |
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If you’ve ever been out driving in the neighborhood on a Tuesday, odds are you’ve seen the San Francisco real estate broker community out on Brokers’ Tour. You can tell it’s us by the way we double-park up and down the block in front of a home that has a “For Sale” sign on it. Jumping in and out of our cars at a frantic pace, we’re anxious to see as many homes as we can before they close. You’ll also see us chatting up other agents out in front, as we get the latest scoop on which properties have sold or had price reductions.| When Compulsive Disclosure is a Good Thing. . . | May 20th, 2009 |
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Seller Disclosure Forms for a real estate transaction take serious time and energy to complete. And the the number of questions can seem absurd, along with the questions themselves. Because of their length and tedium, some uneducated Sellers are inclined to cut corners on the answers. For instance it doesn’t seem necessary to mention the leaky roof they repaired four years ago, since it hasn’t given them a day of trouble since. To a question about criminal activity in the neighborhood, they might skip the part about the time the bicycles got stolen out of the garage. And in the section that asks about permits, they might omit the fact that they never got the final approval on the permit they pulled for the kitchen remodel. I always recommend that my Sellers go into as much detail as possible when disclosing about their property to a potential buyer. Going into excessive details about disclosures can be a good thing for many buyers, who feel reassured by the knowledge that they most likely know everything they need to about the property they’re buying. Buyers like this are far less likey to back out of the deal, especially if the disclosure is passed on to them in advance of their even writing an offer. |
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California law requires disclosure of material facts that affect the value or desireability of the property. A big chunk of what gets disclosed is covered in the Seller’s “Real Estate Transfer Disclosure Statement” (RETDS) and the “Supplement to the RETDS.” These Seller questionnaires are provided to a buyer to help them make a decision on whether they want to buy the property.| Before You Decide to Rent Your Home– Tax Consequences and Capital Gains | May 16th, 2009 |
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If you own a home you probably know that when you sell you get to exclude up to $250,000 (or up to $500,000 for married couples filing jointly) of capital gains from income tax. However, a little-noticed provision in the Housing Assistance Tax Act of 2008 changes some of the rules: Now, the amount of profits from the sale of a house that can be excluded will now be based on the percentage of time when the house was used as a primary residence by the taxpayer. Under these new rules which took effect January 1, 2009, the amount of gain that will qualify for the exclusion is limited based on the amount of time that the house is actually used as a primary residence. If the house is used other than as a primary residence (such as rental property, or a vacation or second home), capital gains must be allocated between qualifying and non-qualifying use. To qualify for any portion of the $250,000/$500,000 exclusion, you need to own and live in your property as your primary residence for at least two years out of the five years ending on the date of sale. Under the new rules, the time that the taxpayer owns the home will be divided into “Qualifying use” and Non-qualifying use.” To figure out how much gain will taxable, you need to use the following ratio: Here’s an example of the allocation under the new law: Suppose you and your spouse buy a house on January 1, 2009 for $800,000. You rent it out for two years and then move in on January 1, 2011. At the end of 2013 you put the home on the market and complete the sale of your home on January 2014 for $1,200,000. Under the old rules, you would have enjoyed the $400,000 profit tax-free. The new rules, however, allow you only two years of use as a principal residence to qualify your for some portion of tax-free exclusion on the $400,000 gain. To figure it out using the ratio above, you divide the two years you rented the property by the by the total period of ownership (five years) and multiply that fraction (two-fifths or 40%) against your gain of $400,000. The resulting number is the amount that’s subject to capital gains taxation — $160,000 in this case. The remaining $240,000 is tax-free. If you find these calculations head-spinning, you are not alone. But a good CPA can help you figure out what the consequences are if you decide to rent your home out. |
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| Shrink and Simplify - The Small House Movement | May 14th, 2009 |
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My sushi-mate probably doesn’t know it, but he belongs to the Small House Movement– an idea that’s been growing steam with the convergence of our lousy economy, concerns about the environment and natural inclination to simplify right now. Some people belong to the Small House Movement out of necessity. In San Francisco, itty-bitty homes are often all one can afford. If you’re willing to go small, there are a lot of options, especially in the condo/tic market. The smallest home on the MLS right now is also the cheapest– a 330 square foot TIC charmer on Russian hill listed for $279,000. The best known builder of tiny houses is Jay Shafer, owner of the Tumbleweed Tiny House Company in Sebastopol. His own house is a grand 65 square feet, complete with an itty-bitty front porch and peaked roof. The cost to build this “XS” model is $37,000. This summer Shafer will be driving an “Epu” model (89 square feet; $43,000) from coast-to-coast on the back of his truck so people can see what one of his tiny houses looks like. Alas, no stops are planned for the Bay Area, but people can see Jay’s own house by appointment on the first Sunday of each month. More Tiny House Links |
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I met a guy at a sushi bar last night who divested himself of his four-bedroom house last year, along with all his worldly possessions and moved into a small apartment on the beach in Alameda. His next move is to buy a boat and live in an even smaller space. He says this simplification off his life is the best decision he ever made.| Loan Modification Companies - Saviors or Scam Artists? | May 12th, 2009 |
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Recently one of my clients called me up to ask about a company that approached him for a loan modification. They said they did the modification for free, but charged a “forensic audit” fee of approximately $2,000. If the “audit” showed my client that he could be eligible for a loan modification, then they do the modification at no charge. The California Department of Real Estate’s has taken the position that these types of schemes do not pass muster just because there is purportedly no charge for the loan modification itself. The DRE position is that the “forensic audit” is merely an attempt to get around the prohibitions from taking advance fees on these transactions. You can tell the loan modification offer is illegal or a scam if there is: 1. Demand for payment up front (advance fee payment). While not unlawful if paid to licensed persons in the certain limited situations discussed above, the demand or request for advance payment should alert you to the possibility of fraud. 2. Promises or guarantees of success, such as “We Can Save Your Home. We Have Saved Thousands. Free Consultation. Money Back Guarantee”. No such guarantees are possible, and there are no assurances of a successful loan modification. 3. Too good to be true testimonials– such as “We Modified Terri G’s Adjustable Rate Loan, Which Had Spiked to 8 Percent, to a 3.5 Percent Fixed Rate Loan”. 4. Claims that a loan modification company is attorney-backed, attorney-affiliated, or attorney-based — especially where no lawyer or law firm is identified or mentioned. Many of these entities are simply using the name of an attorney (the name might be for show only, and/or there might not even be a lawyer involved) and scams skirting the law. |
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| 2009 Decorator Showcase | May 9th, 2009 |
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Launched in 1977, the annual San Francisco Decorator Showcase is the upscale University High School’s main fundraising event. This year the showcase is happening a 2830 Pacific between Divisadero and Broderick. Built in 1910, this home is a classic example of Georgian architecture and boasts more than 37 living spaces, each decorated by one of the West Coast’s premiere interior designers. This Year’s Decorator Showcase runs through May 25, and costs $30.00 to tour ($25.00 for seniors). Of course, if you’d rather have the home all to yourself and avoid the crowds, you can just buy it. It’s on the market for a cool $12,900,000. |
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I was just thinking about the annual San Francisco Decorator Showcase today and wondering when it was when lo and behold! I learned it’s already well under way:| I’ll Never let you Know it, but my Little Legs are Churning Away. . . | May 5th, 2009 |
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Other agents prefer to fill their clients in on all these dirty details. My goal however, is to make the buying or selling clients process as easy and stress-free as I can. Why cause anxiety when at the end of the deal, they wind up delighted because I made it all seem like it went off without a hitch? I do make a point, however, of setting expectations for all parties involved from the outset. Lately many of these expectations revolve around the lending process. Loans simply take longer to approve and fund these days. So when I write an offer, I usually put in a 21-day loan contingency (most agents do 14 days). Listing agents often push back on this, but roughly half my deals need the extra week, and I prefer to exceed expectations than fall short of them. To get the loan approved and funded easily, I strongly encourage all buyers to begin the pre-approval process before they even start to look. I also warn them that the lender will need a mind-boggling amount of documentation both on them and sometimes even the property. I’ve heard that one lender asked a doctor for a copy of his medical school diploma, and another out-of-state bank required buyers of a home way up in Ashbury Heights to obtain flood certification prior to close. Even after approval of the buyer and the appraisal, banks are not as reliable as they used to be about funding. Loans can be pulled right before closing because the lender decides the property is in a declining market, or the bank hits their threshold for the number of loans they can make in a single condo building. To avoid these scenarios, I try hard to make sure a back-up lender is in place to step in and save the day at the last minute. |
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Sometimes this real estate business makes me feel like I’m one of those synchronized swimmers you see on television – my legs are pumping away furiously underwater, while above the surface I strive to make everything run as smoothly as possible. So I usually don’t report that the stager’s plants all died, the agent on the other side is an ego-maniac and it’s a 50-50 proposition whether the drug-addicted seller will show up at the escrow signing on time.| The Smallest, Coolest Home in San Francisco | May 3rd, 2009 |
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Tight budgets make for tight quarters. Fortunately San Francisco’s creative talent knows no bounds when it comes to making small spaces livable. One of the best online resources for ideas on designing and managing small spaces is apartmenttherapy.com– a website dedicated to those of us who live in small spaces. It’s a nationwide site, but there is a local San Francisco Apartment Therapy with links to some great home tours (look on the left hand side)and more fun links to ideas for your kitchen, kids rooms and outdoor spaces (look at the bottom). The best thing about Apartment Therapy right now is their annual Smallest, Coolest Home Contest. I got turned onto this competition by an associate in my office whose client, Lucas Rockwell, has a stylish studio at the Hamilton entered in the “Tiny” division. “Tiny” is one step up from the “Teeny-Tiny” category. The remaining categories are “Little,” “Small” and “International.” Some of these places are as small as 175 square feet, and every category has at least a handful of San Francisco homes featured. |
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San Francisco is full of charming yet dysfunctional homes. Bathrooms are off kitchens, closet space is limited, and it’s not uncommon to find living and dining rooms at opposite ends of the home. But our biggest challenge is that the most affordable homes and condos are often the smallest. We remain one of the most expensive real estate markets in the country and our price per square foot for entry level housing in most neighborhoods easily tops $500.00.
