I’m not a Realtor, so I’ll tell something I’m more qualified to comment on: buyers’ perspectives. For instance, I can tell you how buyers looks at a property that’s been reduced more than twice. We feel sorry for them. They’re like awkward teenage boys at their first dance, pretending to be terribly busy with their shoe laces to avoid eye contact. We all know these boys can’t really be too picky; they have to take what they can get.
This analogy might not totally work for reduced priced properties. I’m just saying that as a buyer, we tend to feel a lot more powerful when we notice a home’s asking has come down not once, but twice– a feeling that multiplies with each subsequent reduction. That’s why, as a seller, I’d really hope my agent were savvy enough to price my home right. Of course, we can’t, unless we are Dione Warwick, know what the future holds, and some of the current meltdown has caught us by surprise. Still, the writing’s been on the wall awhile. Most literate people, I’d think, would have read it.
Case in point the next three properties, whose reduction history goes from bad to worse.
1. Studio TIC at 1059 Leavenworth St #5 San Francisco, CA 94109. Current price: $325,000. In over 120 days on the market, the list price has come down thrice:
Jul 02, 2008 $399,000
Jul 03, 2008 $329,000
Sep 09, 2008 $325,000
2. 532 Clipper St #B San Francisco, CA 94114, currently at $539,000 is a 2 bed/1 bath TIC flat. In over 170 days on the market, it’s suffered 5 reductions, each one not very big, but the conglomeration of so many price cuts is pretty damning:
May 14, 2008 $679,000
Jun 11, 2008 $659,000
Aug 13, 2008 $639,000
Aug 28, 2008 $599,000
Sep 25, 2008 $570,000
Oct 28, 2008 $539,000
3. 3630 22nd St., San Francisco, CA. A 2bed/1bath detached cottage TIC, this one I’ve saved for “worst” because though it has not been cut as often as the above property, the overall slash down is quite dramatic. In over 100 days on the market:
Jul 18, 2008 $749,000
Sep 05, 2008 $649,000
Oct 06, 2008 $589,000
Oct 29, 2008 $499,000
In this last case, the current price seems a lot more fair. I went to the open house yesterday and the listing agent informed me the place needed about $250K in repair and pest control. I have to wonder who would have ever, ever, ever paid the original list price.
I also wonder what other SF real estate agents or buyers or sellers think of these reductions overall, so I’m serving this blog up on the Front Steps for commentary. Take it easy on those awkward teen age boys though. Everyone, and everything, is fragile right now.
I’ve been reading along for a while now. I just wanted to drop you a comment to say keep up the good work.
I had an interesting conversation with a realtor the other day who said the worst offenders when it comes to pricing homes is realtors themselves when they price their own homes for the MLS. She also suggested that if you have overpriced your home, you better be darn sure to reduce it quickly — within 10 days — because, as you say, no-one wants to dance with the wimpy pimply boy in the corner.
But I also think there are realtors out there who still think we live in 2005 — or who will inflate asking prices shamelessly just to snag the listing.
Interesting observations but I wouldn’t put too much stock in them. First, you picked all TICs. TICs were always more of a speculative area of the market–get financing as a group, hold everything together via legal contract, hope for condo lottery, refinance. Everything about it is more speculative, hence the standard discount of TICs to condos… In this market, that discount should be steeper due to higher risk.
In addition to the more speculative aspect of the TIC market, I’ve always believed that it’s very difficult to accurately price a TIC. It’s not just the property that’s for sale. It’s the property, the actual contract, and the partnership with other owners. Those other two intangibles (from an economic standpoint) make the market less transparent, less liquid, and more difficult to price.
The evidence you’ve sited above clearly makes this case, but keep it in context and look outside of TICs if you want a clearer picture…
Yeah, reductions are de rigeur these days. It has become very difficult to gauge the market. One of the main problems is that although property in general is not moving, every neighborhood or almost even block will have a property or two that sells. And they’re selling at 2005 prices, or I’m thinking more like 2006 for the ones that are still moving.
So for sellers it has become frustrating. People generally tend to think their own property is better than it is. But these days we see stuff like this. “Hey. Wait a minute. That house down the street had no garage, a tiny backyard, and no views. Yet it went for 900K inside of two weeks? Meanwhile my house is 500 feet larger, just as nice if not nicer, with views, a garage, and a huge backyard, and I can’t get 1.175?” — Thes are strange times, particularly in the $1M to $2M market.
So it’s frustrating for sellers. Yet despite many price reductions it still is not wholescale capitulation. That in turn makes it frustrating for the buyers. To them it’s like, “Where are the freaking GOOD DEALS already????”
I wouldn’t call individually financed TICs particularly speculative. Certain banks such as Sterling are doing pretty well with them, I’m told. The requirements were stringent, and risk priced in, right from the start. However, this might be the area where the “GOOD DEALS” I mentioned above will be had. Seemingly now only SOMA condos, some multi units, and TICs are relatively less expensive than before.
I’m finding this market equally as entertaining to observe as the run up over the past few years. SF truly is proving to be a unique (and entertaining) market.
Hey all, nice to hear/read from you!
Okay…
Noe Guy: I wasn’t actually trying to make an observation. I was simply wondering what others thought explained so many, and so drastic, price cuts.
Fluj: well said; this is a rough market. We don’t know how rough yet, I imagine. I also agree that TIC loans, though they may be harder to get, aren’t riskier. If you do a little research you will find they have done very well, even with the market crash, as they were always harder to get, especially fractional loans, so the buyers were always well qualified– something we can’t say about some of the creative individual loans that got passed out like Halloween candy these last few years.
Tracey: awesome to see your name here and looks like we are on same wavelength as buyers/sellers. Thanks for the comment!
Stacey, coming from you, that’s high praise. Thanks!
I know how this is going to sound, but that ‘detached cottage’ on 22nd is totally creepy badly haunted. I don’t think they’ll sell it until they address that problem! I spent 10 minutes in there and couldn’t shake the creepy feeling all day.
Eden– I did notice something odd. I thought maybe the owners died in the place, but couldn’t say why I thought so. How funny that you noticed a strange feeling too.
Anna. Death on property disclosure is mandatory. So if there was a death (recent) it should be mentioned.
I visited such a house, and the flyer mentioned a “previous owner died peacefully of old age” and the medical report was available in the disclosure.
Now it can be something much older, or it can be creepy activities from (pre-)previous tenants which didnt include death, so wouldnt be reported. It can be anything.
BTW, many religions bless the new house in some way. There are reasons to do so, and I guess many people feel better doing this. And I believe it goes both ways: erasing the past, and asking for a blessed future in the house.
——
on the ghost topic. Remember that MANY “ghosts” have a perfect explanation. We had mice using our heating ducts as rollercoasters – and believe me, it would drive anybody crazy listening to them “laughing”. (a few cubic yards of concrete locked them out). There is also underground water. Example: on xxxx street, you can have some water creeking your fundations and ghosting your basement. There is also plain wind whistling like people. Example: the xxxx units with the wind tunnel. There is also any PEST in the wood, thus in the floor, in the walls, in the attic. PEST like coakroaches, termites, raccoon, squirrels moving around nuts etc.
The property above requires some pest repairs. Anybody would have more details. Could this add to the noises?
((( I’m the first one to run the other way if I dont feel good. However, I’m sure that there is a market for hanted properties in SF – people who’d LOVE to “buy” a ghost )))
one of my favorite page : http://www.ourvictorianhouse.com/GhostStories.htm
thanks, Sophie. So true. You’re right the pest report is pretty scary on that cottage. Over 100K.
I can’t wait to look at the ghost stories. Would have been awesome for Halloween, but I’m always down for stuff like that.