SF Real Estate Blog Reader Asks: How Much Should I Offer On A Home?

Occasionally I get a question from a reader of the blog that’s worthy of sharing with the world – I thought this one was worth sharing. Hope you think so too…

You probably need a little background on this question since it picks up in the middle of a conversation… I was going back and forth with a contact that emailed me through the blog about a property he was very interested in.  He knew that the property was very desirable and realized that there would be competition (and, yes – there is still competition in San Francisco for good homes that are priced well).  So – here’s his question…… 

Q.  …..I have done a bit of analysis on the house sales data you sent me.  Since Oct. 1, 2007, houses that listed above $1.1m and sold above listing, the average sale price was 7% over asking.  There were some outliers that broke 15% and less that broke 20%.  In March the average in this category was 5% over asking.  We are thinking of coming in at 9% over asking ($1,280,750) with about 30% down. We really love the place and want to make sure we are in the range to solicit counters if there is a “round two”, but yet not over pay.  Any thoughts?

T.S.

A. That is an incredible analysis!  I know people love statistics, but that analysis is incredibly thorought.  I think 9% over asking puts you in the right ballpark for getting your offer accepted. But the reality is that there’s no real formula for asking vs. selling price.

What I usually tell my clients is that a second round might not come. Some sellers choose to take the best offer in a multiple offer situation (for fear of losing it if a buyer doesn’t want a counteroffer) or they accept the best offer with some minor changes in terms, so I usually suggest putting your best foot forward the first time so that if they DO take the best offer – you have no regrets about not paying more when you were willing to do so. (Now – when they’re not expecting multiple offers, you have more flexibility and have the luxury of leaving room to go up if need be by starting with a lower offer.)

So how do you get to that magic number?

My suggestion is to decide at what price you are willing to let someone else have it. I call it the “I won’t have any regrets if someone wants to pay more” price. This is just my 2 cents, so please, do take it with a grain of salt.  But I’ve seen a lot of people regret passing up the home of their dreams because they let someone else beat them by a few thousand dollars. 

One other thing to keep in mind is that the sellers want more than money in this case – they also have some terms that are imporant to them. They want a short escrow and a rent back as well.  If there are two similar offers that come in, the one with the most favorable terms is much more likely to be accepted.

Let me know if you have any questions. I know this is a lot to digest! It’s exciting and scary all at the same time! So shoot any questions, concerns, etc. my way!!!

San Francisco Real Estate Fast Facts: 2-4 Unit Building Sales March 2007 vs. March 2008

Here’s the latest Fast Facts update from the SFAR. Updates are provided almost weekly and each week is a different sector of the market (ie. Condos, Single Family Homes, 2-4 unit dwellings, etc.).

Check back next week for more statistics.
 

 

How Can Buying a Home Save You Money?

Homeownership can provide some amazing tax benefits! The IRS enables you to deduct the interest on a first-time home purchase or home equity loan in the year the loan is made. Another way to save is to consolidate debt via a home equity loan because interest from a home equity loan is tax deductible, but interest paid on credit card debt is not. You can also deduct the interest on any purchase or improvement for your first or second home from your tax return. The IRS allows you to deduct the interest paid on mortgage debt up to $1 million, provided that your home is the collateral used to secure the loan.

Property taxes are offer yet another upside at tax time – you can deduct state and local property taxes from your federal return in the year that they were paid. If you bought a home in California in 2006 at the-then median price of $556,650, your property taxes would be approximately $5,570 for the year, and are fully deductible. Property taxes are increased on an annual basis, and as your property tax goes up, so does the amount you can deduct each year.

The return on yOur investment when you sell is also protected. You are able to keep up to $250,000 for an individual or up to $500,000 for a couple in profit tax free when you sell your home. No other investment allows you that kind of tax shelter.

And keep in mind, one more bonus that isn’t tax related is that you are no longer paying rent to someone else! Instead, you are paying yourself! A home can allow you to build yourself up financially, and in San Francisco, your investment is safe from the fluctuations that have occurred as housing bubbles “burst” all over the country.

To learn more about how purchasing San Francisco Real Estate can provide you with great tax advantages, consult a tax professional. If you don’t have one you trust, call or email me, and I can refer you to a tax professional that can help.

Hell Yeah! – I’m a Native San Franciscan!

So – I was browsing the blog-o-sphere like I often do, looking for fun stuff about San Francisco and about SF Real Estate when I ran across FriscoVista’s “Top Ten Classic Frisco tunes”. 

And as one thing often leads to another, I found one of FriscoVista’s older posts where he (the blog author) took a SF Bay Area Native Test at okcupid.com – and he (the blog author) did a hell of a job by scoring a whopping 17 out of 18! 

Partially because I’m competitive as hell, and partially because I claim to be an “almost native” San Franciscan (I was born in the former Soviet Union, a.k.a. today’s Ukraine, but came to San Francisco when I was just two and a half years old), I decided to take the test and….

I scored a 16 out of 18 which puts me at:

16-18 correct – You’re a true Bay Area native – and you even got some of the EXTRA CREDIT questions! Impressive. Feel free to look down on Los Angeles with pride. (You probably already do.)

Yes – I admit, FriscoVista beat my score, but I’m human.  And I took the test late at night (um, or is it early morning?) and I didn’t eat my Wheaties today (that whole low carb thing doesn’t allow for Wheaties).  But it still called me a “True Bay Area Native” – I done good! 

I often tell people that I’m as close to being native as I can get without actually being born here.  I’ll spare you the full story (you can check out the about me page if you like) – but I have to say that I’m ridiculously lucky to not only live in the only City I’ve called home (or ever wanted to, for that matter), but to also be able to do what I love for a living (sell real estate) in the best City in the world!

If you have questions about the City or about SF Real Estate, contact me - I love the City and am happy to help you call it “home” too – even if you’re not a native. 

How to Get “Fresh” in San Francisco

When I’m not thinking about San Francisco Real Estate, I’m probably thinking about food… and where to get the good stuff. These days, as I’m getting older, and my body is reminding me to eat healthy, the good stuff tends to include lots of good produce, preferably straight from the farm. But since I don’t get out of the City that often to drive some some of the Bay Area’s farm rich towns filled with roadside produce stands, I need to find my produce a little closer to home.

You might be surprised to find farm fresh produce within San Francisco city limits. Remarkably, for a rather urban city, San Francisco has a wide array of farmers markets where you can experience food at its finest. While some of the markets feel more like a small, mom-and-pop stand, others are large, organized markets with multiple vendors and extensive selections. When it comes to fresh fruits and vegetables, your local farmers market is the perfect place to locate some fabulous food finds whether you’re a gourmet chef, or just looking for some fresh greens to add to tonight’s dinner salad!

The fruits and vegetables are grown locally and picked when perfectly ripened. This enhances the taste, texture, and aroma of the produce. Often, market prices are lower than at grocery stores. The way transportation and distribution of food occurs today wastes huge amount of resources and energy.

Our existing system of food transportation and distribution requires enormous amounts of energy and resources. The Going Green Painlessly Blog points out that:

When you buy locally, you prevent food from travelling long distances, and therefore reduce the use of fuel. I’ve recently read, “before reaching your table, the average food item in the United States will travel 1,300 miles! In fact, only about 10% of the fossil fuel energy used in the world’s food system is used for production. The other 90% goes into packaging, transportation, and marketing of the food. All this inefficiency creates many environmental problems.”
Shopping at the Farmers’ Market benefits the local farmer.

Not to mention, when food is picked at the peak of the season, nutrients, and phytochemicals will be more abundant. And it just TASTES better too!

Below you’ll find a link to a list of some of San Francisco’s finest farmers markets. If you go, bring your own bags and lots of small bills and loose change since vendors don’t always have a large amount of cash on them. And don’t be afraid to ask the vendors questions about their products… you might even leave with a recipe or two!

San Francisco Farmers Market Guide

Weekend Blog Linkage

Here’s the weekly collection of the internet’s greatest hits (so to speak) from the past week. Some have something to do with San Francisco Real Estate, and some don’t even come close to being SF Real Estate related. Expect these to pop up sometime during the weekend – as my time permits. Enjoy!

Los Angelian Talks Smack About SF – Could She Be Right? [Curbed SF]

Coconuts in the Sunset District [SF Metblogs]

Golden Gate Park Rocks (As if You Didn’t Already Know!) [ABC News]

Happy Alive Day [Bad Rap]

San Francisco, Marin and San Mateo Counties Just Won’t Give Up (& the Chronicle is Full of Crap) [Daily Pundit] Untalented Realtors Suck [thefrontsteps]

Might the Tenderloin be the Next “It” Nabe? [Curbed SF] 

The Bay Area is the Fountain of Youth [ Burbed]

MUNI vs The Great White [SF Metblogs]

I’ve Only Fed Them Peanuts [The SF Citizen] 

Open Shutter to the Past: San Francisco in Pictures – Cabrillo Elementary School (1926)

Welcome back to Photo Friday – my little way of taking a break from San Francisco Real Estate and instead blogging about our great City’s past instead. All photos are published with permission from the San Francisco History Center and San Francisco Public Library.

This week’s post was inspired by the upcoming Navigating Public Schools Seminar sponored by Zephyr Real Estate and yours truly.  

The free seminar will be held at the Contract Design Center (600 Townsend Street ) on Saturday, May 3rd from 10am-12noon.

The two-hour session will offer information about the recent improvements and advancements in the San Francisco Unified School District.  The speakers of the day will be SFUSD spokes woman, Gentle Blythe and Hydra Mendoza, founding member and former ED of SF Parents for Public Schools and Education Advisor to Mayor Gavin Newsom.

You will need to RSVP to attend the event.

So why did I pick Cabrillo Elementary School for this week’s Photo Friday?  A few reasons:

1. The school is closed now – which is a good enough reason all on its own (that makes it a part of SF History.)
2. I lived a block away in the Richmond District until I started high school.
3. I attended Kindergarten and First Grade there (that means I learned my ABC’s, how to add and subtract and that Tater Tot day at lunch was the best day ever!) 
4. I used to play hopscotch and “Chinese Jumprope” during recess and lunchtime. 
5. I loved my First Grade teacher Ms. Grist (and I found a picture I drew in First Grade to prove it.)
6. I just found an old class photo.  I’m in the top row in the purple and white shirt and showing off my missing front tooth.  (Coincidentally, there’s another Zephyr Real Estate Agent that happened to be in my class with me and is in the photo too – not sure if it’s coincidence or fate!?)

Anyhow – while this week’s Photo Friday post was short and I let the Western Neighborhoods Project do all the talking about Cabrillo Elementary School’s history, I’m hoping you enjoyed it nonetheless (along with the bonus footage of your San Francisco Realtor when I was 6 years old!)

I hope you have a great weekend!  And get out there and enjoy the sunshine – I hear the weather’s gonna be NICE!

San Francisco Real Estate Fast Facts: Condo Sales March 2007 vs. March 2008

Updates are provided almost weekly and each week is a different sector of the market (ie. Condos, Single Family Homes, 2-4 unit dwellings, etc.).

Here’s the latest Fast Facts update from the SFAR.

Check back next week for more statistics.

San Francisco Home Sellers – It’s Time to Get Serious!

So I was just surfing the San Francisco real estate blog-o-sphere after a long hard day of looking at properties that are currently on the market – and I noticed an interesting trend. I noticed that there are properties on the market right now that have had offer dates come and go – and they haven’t received offers.

Now – you’ve heard me say that I think now is a great time to buy San Francisco real estate. If you check out my last few posts about mortgage rates or the rising cost of SF Rents, you’ll get my drift.  And I’m sticking to that point of view.

And I just read a post that further solidified my belief that NOW is a great time to buy!  I read on the Daily Pundit that not only are buyers out there making low-ball offers on properties, but when sellers try to counter those low-ball offers, buyers just walk the hell away.  I’m hearing the same things from agents that I work with also.  I’m also seeing that with some of my own clients.

Why?  Because smart buyers know that RIGHT NOW – they will be able to find a decent property at a decent price and they don’t need to get into a bidding war to get it!

Don’t get me wrong – there are still rockstar properties out there that will get a ton of offers and go way over asking.  But (and I am surprised about this) I am seeing properties that a year ago would have commanded at least 5 offers not getting a single one come offer date. 

In fact, I recently told a client of mine that I was convinced that a San Francisco condo she was interested in would sell for at or a little over asking, and it ended up selling for below asking  – $16K under asking to be exact.  OK – so we’re not talking $100K, but shoot – $16K can get you most of the furniture you need for a 2BR condo if you know where to shop!  Oh – and yes – I just admitted in public that I was wrong.  It doesn’t happen often though folks – so don’t get used to it!

So what’s my point?  The title of this post has something to do with sellers and I haven’t mentioned them yet.  So here it goes…

Sellers – it’s time to get realistic about selling your home in San Francisco. 

You might have a great place, but unless you have a rockstar property, you likely will not get 10 offers.  Right now – you just need to get one good solid offer that doesn’t have shaky financing or some other quirk.  One good offer is all it takes to get your place sold.

I’ve mentioned many times that I don’t take listings that I don’t think will sell, and I’ve had to turn down many sellers in the past because their expectations of what the market was going to bring them just weren’t realistic. 

Some have delusions that their property appreciated $100K or more from a year ago for no reason.  Others are convinced that the improvements they made added hundreds of thousands of dollars in value, when the improvements they made actually took away from the value.  Others still think they are living in 2004 or 2005 when you stuck a for sale sign in your yard and your property sold before it even hit the MLS.  I’m not saying that’s every seller – but I’ve met a lot of those, turned them down and their properties are STILL on the market to this very day. 

A personal note to the San Francisco Home Seller -  if you want to sell your home, you need to get realistic about what someone will be willing to pay for it.  And if you get a good strong offer, don’t look a gifthorse in the mouth, be happy with the bird in the hand, and know when to hold them and when to fold them – If the cliches didn’t get my point across, let me put it another way - take the strong offer, because even though it might not be what YOU thought your home was worth, but it is what the market thinks it’s worth.

Is it a good time to buy?  Yes – if you’re a serious buyer looking for a property at a fair price.

Is it a good time to sell?  Yes – if you’re realistic about the market and don’t expect a miracle.

People are buying and selling properties all over San Francisco.  If you are trying to buy or sell and you can’t seem to make it happen, it’s time to re-examine your expectations.  Feel free to contact me and I’ll be happy to help you set some realistic goals. 

Where Are Mortgage Rates Headed in 2008?

The beginning of the year brought us some declines on the mortgage scene – along with the addition of the strange new agency jumbo loan which covers the area between the traditional conforming loan of up to $417K but below a “real” jumbo loan which starts at $729K. 

Interest rates are historically low and while they’re expected to stay that way through 2008, they are expected to creep upward as the year progresses.

From The Real Esate Daily News:

Mortgage Rates Hit Low Point

The 30-year fixed rate mortgage currently sits at 5.88 percent, and analysts say they are unlikely to fall any further for the rest of the year.

The rate on the fixed loans is only down a quarter of a point this year, as the credit markets have cut the link between it and yields on 10-year Treasuries; and while skittish investors have moved to Treasuries to trim the yields, mortgage lenders have not eased lending standards.

Mortgage rates are likely to close 2008 at about 6 percent as investors in bonds focus on rising inflation, driving interest rates higher.

Long-term rates will also increase due to the additional supply of Treasuries as Congress borrows to raise money for the growing federal budget deficit.

That’s great news for people that are ready to buy San Francisco real estate right now – the rates are slowly creeping up, and if you don’t wait too long to buy, you can still take advantage of the great rates out there.

That’s also not horrible news for people waiting a bit – yes, interest rates will be higher by the end of the year, but not drastically.  If you can’t afford to buy just now, or aren’t able to for another reason – you will still likely be able to take advantage of historically low interest rates, they just won’t be as low as they are today.

If you need advice about whether the interest rates make “now” a good time for you to buy, contact me.  I’m always happy to talk about SF real estate!