Possible Shift In San Francisco Real Estate Market? Should You Sell Your Home Now?

February 2014 San Francisco Market Report

It is far too early in the year to reach definitive conclusions regarding substantive changes in the market, but there are indications of a number of shifts. From the hurly burly on the street, the word is that the quantity of offers coming in on new listings is declining. Where a new listing might have attracted 10 or 12 offers last spring, 3 or 4 are coming in now; where 3 or 4 offers would have arrived, the seller is getting 1. And, according to Broker Metrics, for every 2 listings that offers in December and January, another listing expired or was withdrawn without selling.

The amount of competition deeply affects home price increases.

There are still a very large number of buyers looking at listings online and at open houses. But more of them appear to be first-time buyers and they are proceeding more cautiously. Some buyers are burned out on the multiple-offer bidding frenzies of last year and are reluctant to participate in them. Though the market remains hot by any reasonable standard, by some statistical measures it is cooling. This may reflect a transition or only a lull before the spring sales season begins.

Recently, the investment-property analysis firm Reis speculated that SF apartment-rent growth — which has been extraordinary by any measure, especially in a period of low inflation — will slow despite intense demand and very low vacancy rates, simply because people can’t pay any more. It’s an idea which may or may not be correct or apply to other types of housing costs. Rent rates do play a role in purchase prices as buyers often compare the net housing costs of the two options.

Median Sales Price Appreciation by Neighborhood

In San Francisco, some of the most affluent neighborhoods — such as the Pacific Heights-Marina district and the Noe, Eureka and Cole Valleys district — started their recoveries in the second half of 2011, well before virtually every place else in the city or country. When 2012 began, prices in these districts soared, while other areas played catch up. In 2013, that dynamic flipped: Appreciation rates in comparatively less expensive neighborhoods surged, while slowing in the most affluent areas.

A big part of this is simple affordability: Priced out in one neighborhood (or city), buyers focused on others, similar in ambiance but less costly. Home prices there looked so good in comparison that buyers were willing to bid them up. The huge decline of distressed sales in areas severely affected, such as in Bayview, has had an outsized effect on median sales prices there. Continuing gentrification, as in the Mission, and increasing “luxury” condo construction in less affluent areas have also played parts in this trend. It’s not as if demand plunged in the Pacific Heights-Marina district (or Noe Valley, for that matter). Quite the contrary: its 9% appreciation rate in 2013 translated into the city’s largest median price increase in dollar terms ($300,000). However, in the previous year, this district saw year over year median price appreciation of 25%.

Note that median price appreciation does not perfectly correlate to changes in home values, as it can be affected by a variety of market factors. It does give an approximate sense of market trends.
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North Bay Real Estate: The Marin, Napa & Sonoma Markets

January 2014 Market Report

The real estate market recovery started in earnest in 2012 and then went red hot in spring 2013, which resulted in an additional, big, fast jump – approximately 20% – in home prices. After the spring peak, the market calmed somewhat in the second half of the year and prices stabilized, but buyer demand remained very strong by historical standards. Economic conditions have continued to improve, household net worth has increased dramatically with rising stock and housing markets, foreclosure rates and distressed property sales have plunged, the second-home market has picked up, and interest rates, after jumping in 2013, are still relatively low. Though it is impossible to predict the future, these factors typically form the foundation of a healthy, active housing market.

In the next few weeks, new listings will start coming on market in quantity, buyers will get back in home-search mode and the market will begin to wake up after the holiday hibernation. Then we’ll start to get an inkling of what the new year has in store.

Median Sales Price Appreciation, 2011-2013

This first chart above gives an idea of the scale of the rebound in home values since the recovery began about two years ago. Median prices are affected by other factors besides changes in value, and different areas experienced bubbles and crashes (and now recoveries) of different magnitudes. Median sales prices are generalizations and changes in them should be considered very approximate indicators of appreciation, but by any measure there has been a huge recovery in North Bay real estate values.

Comparative Dollar per Square Foot Values

Continue reading

“We Were On The Market For 1 Day Before Receiving 3 Offers (2 All Cash!)”

From my clients who just sold 1676 Hayes St.

My husband Jon and I wanted to take a minute to share our great experience working with Alex. He knows the SF market so well and was able to help us get staged and ready to sell very quickly. We were on the market for 1 day before receiving 3 offers (2 all cash!). All were well over asking and we closed 10 days later! We’d be very happy to work with Alex again and highly recommend him.- Elizabeth & Jon

Glad to be of service, and glad it turned out so well. Enjoy your skis!

Putting Together A Winning Bid “Takes A Lot More Than Just Choosing The Right Number”

wallerkit

When my wife and I decided to move up to San Francisco, we knew the real estate market would be incredibly challenging. From our first conversation with Alex, we recognized that he understood what it took to find the right property and make a compelling bid. It was an arduous five-month process, but Alex never tired in his search for our perfect home. He maintained the right balance of enthusiasm and realism when it came to choosing our bids. I consider it a mark of his good instincts that we came within a hair’s breadth of winning several earlier bids that we ultimately lost, since it meant that we were making offers that were competitive without being foolishly high. Once we found the amazing home we’re now in, Alex worked tirelessly to help us put together a winning bid—it takes a lot more than just choosing the right number, by the way—and close on time, despite a string of unexpected complications and swerves along the way. We can’t recommend Alex highly enough!- Peter and Erin

Thanks guys. Hope you enjoy your casa, and can’t wait to see how the downstairs evolves!

San Francisco “Luxury” Real Estate Market Report

It’s funny, for the sake of talking market dynamics and data, we often refer to anything over $1,000,000 as “Luxury Home Sales”…at least most of the nation does, and so we’re kinda forced to as well. Even though we’re sharing these charts with you, and we’re clearly calling this a Luxury Market update, we’re starting to wonder at which point the über competitive price range of $1-2M stops becoming “Luxury”. I mean, really! A million bucks is still A LOT of money, isn’t it? So then, is a 1000 square foot condo that sells for $1,000,000 (Austin Powers voice), and doesn’t come with parking, a view, linen service, or a pool…luxury? (Yes, said condos already exist here.) Something to ponder on this Monday morning. Either way, have a look:

LuxHomes_Unit_Sales_by_QuarterV2

LuxHome_House-Sales_1500-1999_by-DistrictV2

LuxHome_House-Sales_2000-4999_by_DistrictV2

LuxHome_House-Sales_5m_by_DistrictV2

LuxHome_Condo-Sales_1500-Above_by_DistrictV2

Overheated Real Estate Market? Yes. Bubble? We’re Saying No…

Many adjectives are used to describe San Francisco, but normal isn’t a common one – and the same can be said about our real estate market. Even taking into account its tendency to be different in one way or another, this past spring’s market was overheated by virtually any definition. Surging consumer confidence and huge buyer demand chased a deeply inadequate supply of homes for sale, abetted by interest rates so low that loans – factoring in inflation and mortgage interest deduction – were almost like free money. All this led to an extreme seller’s market, a feeding frenzy and dramatic price appreciation.

But not, in our opinion, a bubble. The Economist, one of the first to sound the alarm for the last bubble, sees no sign of a U.S. housing bubble, basing its conclusion upon historical comparisons of home prices with rents and incomes. Also, it is not unusual for the market to go somewhat crazy following a 4-5 year down cycle after all the repressed demand bursts forth – this happened in 1996-1997 too. Besides which, we are only about 18 months into the current recovery. Though real estate is susceptible to sudden economic and political shocks, in past cycles, recoveries have typically lasted at least 6-8 years before peaking. That doesn’t mean there won’t be any short-term market adjustments, up or down, for one reason or another, along the way.

There are some signs of a normalizing market. After a year of declines, the number of new listings in the 2nd quarter was a little higher than the 2nd quarter of 2012. Though this inventory was quickly gobbled up and overall supply remains very low, it’s a good sign more sellers are entering the market. Median prices may be leveling off after spring’s big pop – it’s still too soon to be sure, but summer often sees a cooling down. It’s not welcome news to buyers, but interest rates have increased from extreme lows – though remaining very low by any historical scale. (See below: The Sky is Not Falling.) The distressed home segment, which distorts markets, is disappearing in the city and declining everywhere. And new-home construction continues to increase: even though we won’t see much of this new inventory until 2014 and later, it’s a very positive sign.

San Francisco Median Home Prices

For both houses and condos, the second quarter saw jumps well above previous peak values. Median sales prices are affected by other factors besides changes in value – seasonality, inventory, buyer profile, big changes in the distressed and luxury home segments – but the dramatic increases do reflect rapidly climbing home values in the city. Though all SF neighborhoods have been experiencing striking appreciation, this does not mean that all of them have now exceeded previous peak values.

Sales Over & Under List Price

This chart illustrates the enormous percentage of listings that sold for over – and sometimes far over – asking price. One in four houses sold for 20% or more above asking, which in San Francisco often equals hundreds of thousands of dollars.

San Francisco Luxury Home Sales

No market segment has been affected more dramatically by the recovery than luxury homes. In an inventory constrained environment, it has far out-performed the general market in unit sales – general unit sales were actually down, second quarter, year over year. Our new report also delineates the neighborhoods which dominate high-end house and condo sales: SF Luxury Home Report

Interest Rates: The Sky is Not Falling

Not to diminish legitimate concerns regarding rising mortgage rates and their effects on housing costs, but this graph puts recent increases in context. At any time 2011 and before, the current interest rates, even after their recent big percentage jump, would be reason for conga lines of celebration in the streets. Rates had to rise from their historic and artificial lows – how far and fast this may continue is unknown to us, but we don’t presently expect big shocks to the real estate market in the immediate future.

Very Few Price Reductions

89% of second quarter sales sold quickly without price reductions, at an average of 8% over list price – a clear indication of overheating. Still, not every listing sold without a price reduction and some didn’t sell at all, but ended up withdrawn from the market – in the last quarter, over 300 listings. (Many of these will eventually be re-listed, often at lower prices, and then sold.)

What Sells Where

What district of San Francisco has more house sales than any other? Which area has far more condo sales? You may be surprised at the answers.

Distressed Home Sales

The distressed home market in San Francisco is dwindling into insignificance. In most neighborhoods, the effect of these sales has disappeared altogether.

New Listings Coming on Market

The second quarter saw an increase in new listings not only against the first quarter of the year, which is normal, but against the second quarter of 2012. This is a hopeful sign if it continues.

Months Supply of Inventory (MSI)

Even with the increase in new listings in the second quarter, inventory remains drastically low by this measurement of demand versus supply.

Listings for Sale

Average Days on Market (DOM)

Time on market before acceptance of offer has also hit historic lows for virtually every property type in the city.

Percentage of Listings Accepting Offers

This is another clear statistic measuring demand against supply, and it is at historic highs.

All data from sources deemed reliable, but may contain errors and is subject to revision. Statistics are generalities and how they apply to any specific property is unknown. All numbers should be considered approximate.

 

San Francisco’s Real Estate Market Surge Is A Doozy

For further evidence of San Francisco’s housing recovery and new peak (for Condos and Single Family Homes), have a look at these numbers as they pertain to short-term appreciation trends.

This chart breaks down the rise in values occurring over the past 2 ½ years. Though it appears 2013 prices surged after the first quarter, the surge actually started in March, which is when the market really started to reflect offers negotiated in 2013. January and February sales mostly reflect the holiday season market, when the higher-end home market typically checks out. We prefer quarterly or longer time periods because they make for more reliable statistics: monthly statistics often fluctuate without great meaning. The high overall median prices achieved in March-May may drop somewhat during the summer due to seasonal and other factors.
[Click Images to Enlarge.]
Median_SFD-Condo_by-Qtr_Short-term

Still more graphs and data to come, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Data Source: Paragon Real Estate

Thinking Of Selling Your Property? Read This First

Sellers, it’s time. We need your inventory, and look how happy you could be!

Alex thanks for selling my home as quickly and painless as possible at a price way beyond my expectation! I especially liked that you provided expert advice/service from staging, lighting and photography to make this a success. Using [electronic signature solutions] for all document signing made my life so much easier, and not to mention saving wasted paper from going into the environment. You keep up with the latest trends, you have access to new and potential audience/followers via social networking sites, and you’re just damn good at what you do so, THANKS!!!!

Cheers,
Judy

Brings a tear to one’s eye, doesn’t it. You’re welcome Judy! Thanks for the great testimonial. Call us when you’re ready to buy.

And to all of you other sellers, did you notice how good to the environment we can be? I’ll even come meet you on my bike. Just give a shout, and we’ll get the ball rolling to getting you top dollar on your property too.

-More Testimonials [theFrontSteps]
-Maximum Overbid Of The Week: 235 28th St, Noe Valley [theFrontSteps]

Hey Buyers! Turns Out There’s More Inventory Than You Thought

Have a look at what hit our email in the past couple months, and the companies heavily marketing “pocket listings”, “off market” property, or “not on MLS” opportunities.

You, the buyer, would probably like to know about these opportunities, wouldn’t you? Well…you can’t. Not until these brokerages wake up and join the year 2013, move beyond “private” or internal email as the method of choice for delivering these opportunities, look to social networks for some guidance as to where the buying (and selling) public lives, and get with the program!

Pacific Union, McGuire, Zephyr, Paragon, TRI Coldwell Banker, Vanguard, Sotheby’s, the list goes on and on…you ALL have pocket listings, and you’re all marketing them “privately”, so let’s make an effort to encourage each other to participate in an alternative marketplace to bring these opportunities to your fellow agents and the public, rather than continuing to shove this growing marketplace under the massive bureaucratic rug that is our National, State, and Local Association of Realtors. And for heaven’s sake, quit throwing your colleagues (Climb Real Estate) under the bus for taking a step in the right direction! (You know who you are.) It’s high time an alternative to the MLS takes shape, and the opportunity is right here and now.

[The same properties shown above, with links to the site:]
-Dominican Estate [Decker Bullock/Sothebys]
-53 Clifford Terrace [Vanguard]
-1299 Bush Street [Vanguard]
-219 Brannan [Vanguard]
-524 Roosevelt [Vanguard]
-2876 25th Ave [Vanguard]
-466 Hill [Vanguard]
-2509 Polk [McGuire]
-855 Folsom [McGuire]
-2094 Bush [McGuire]
-66 Parker [McGuire]
-2200 Pacific [McGuire]
-171 Caznea [McGuire]
-615 Buena Vista West [Sotheby's]
-2245 Francisco [Sotheby's]
-29 Oak Springs [Sotheby's]
-26 Sanford Lane [Pacific Union]
-1200 Laguna [Zephyr]
-1278 Stanyan [Zephyr]
-50 Lansing [Zephyr]
-Nob Hill Secret address [TRI Coldwell Banker]
-2325 Divisadero [TRI Coldwell Banker]
-2220 Sacramento [TRI Coldwell Banker]
-465 10th St [TRI Coldwell Banker]
-6 Emlin, Kentfield [TRI Coldwell Banker]
-595 12th Ave [TRI Coldwell Banker]
-850 Powell [TRI Coldwell Banker]
-287 Mangels [Barbegelata]

[Editor's Note: Some of these properties were placed on PocketListings.net, and others have since hit MLS and are now sold, but they did land in our email a very short time ago. You can expect some of these links to be killed by day's end, due to panicking brokerages.
Finally, if you'd like to be alerted when these opportunities hit our inbox, drop us a line, and we'll figure out a way to get them to you.]

-PocketListings.net: How To Tutorial [blog.pocketlistings.net]
-Climb Real Estate, PocketListings.net Join To Bring You More Buying And Selling Opportunity [theFrontSteps]
-It’s not listed, but it’s definitely for sale [New York Times]
-Remaking Real Estate, Again [SF Gate]

Buying A Home In San Francisco – Step 5 And Beyond: Depends On How Step 4 Goes

question

There is one guarantee after writing an offer on a property in San Francisco, and that is there is no guarantee you’ll get the property. With multiple offers all too common, sellers holding the upper hand, extremely low inventory, and thousands of buyers in the market, writing an offer is only part of the property winning (yes, we use the term winning) equation.

So what is the next step, then? The only certainty is if your offer was rejected, you can shuffle back up to Step 3 and start the touring again. There is a learning curve in San Francisco real estate, and you likely won’t get the first place you go for. Patience is paramount, and communication is key. Stay in touch with your Realtor (because now you have one), and keep hope alive. You will get there in the end. It may just take more time than you had expected.

If your offer was not rejected, and you’re the lucky winner, there are so many different steps that could happen next, we need not mention them in detail here. Things like: did you receive a counter offer; was the counter offer a multiple counter offer; have you been offered what is called “backup”; did your offer include inspections; how much time do you have to remove contingencies; do you need to sell your own home; is the seller asking for a “rent back”; so on and so forth. It is here that you will see value in a Realtor, and why we are so very comfortable giving you all of the tools you need to find your property on your own, online.

In the end, there will be about 10-20 more steps (at least) before getting keys to your home, and you’re going to need someone to guide you, because the process is so very not cut and dry, and we hope to earn your business. Feel free to learn more about us here, and read some testimonials here. Or better yet, drop us a line so we can chat about what you need.

If all you do is read these steps, set out on your own, find your own Realtor, and never contact us…we truly wish you the best of luck!

-Buying a Home In San Francisco – Step 1: Get Pre-Approved / Provide Proof Of Funds [theFrontSteps]
-Buying a Home In San Francisco – Step 2: Get New Listings Fed To You Automatically [theFrontSteps]
-Buying A Home In San Francisco – Step 3: Go See Some Property [theFrontSteps]
-Buying A Home In San Francisco – Step 4: Make An Offer (Choose A Realtor) [theFrontSteps]

Buying A Home In San Francisco – Step 2: Get New Listings Fed To You Automatically

Yesterday, we educated you on the first and most important step in the San Francisco home buying process, so today we’re moving on…

Step 2 – Get New Listings Fed To You Automatically (via Email or Text)

stuffing-his-face

Our market moves fast, and so must you. You might have thought the next step would be to contact a Realtor. You can certainly do this now, but it’s not necessary. You can preview all the property you want yourself, right here online, and very soon we’ll show you just how easy it is to get dialed in to seeing these homes on your own.

So how do you get these new listings “fed” to you?
a. Get dialed into MLS. Contact us with your criteria (desired # of beds, baths, parking spaces, size, price, location, and your email) and we can set you up with behind the scenes access to what we call our “Client Portal”. You’ll receive new listings to your inbox the second they hit MLS, you can save, reject, and track what properties are selling for (very important), and you can request showings from within the application. This way, you’ll also be on our radar for potential off market matches should any pop up.
b. A different variation of the same theme, but without the need to contact anyone. It’s called MyZephyr, and you can get alerts, save, search, and track property from the comfort of your own home. The only downfall to this, is that we have so many people in this system using this tool, we simply do not have time to track your activity (some might consider this a plus), and therefore we probably won’t know who you are should something great pop up “not on MLS”.
c. Browse MLS: Even less intrusive, and way more stealth, MLS is actually there and available to you 24/7. No really…it is.
d. Redfin. Hands down the best way to search property if you’re not searching with one of the tools provided above. It’s a great site, with a ton of great info, and incredibly accurate data. If you don’t choose a. or b. above, use this over option c. It’s better.
e. Trulia, Zillow, or Realtor.com. These three are crap, inaccurate, and not worth your time. The only saving grace is Trulia’s community or “Voices” area. There is some good info to be found there. Zillow Zestimates are awful, and when we’re sipping a Cerveza after we hand you the keys to your house, we’ll make sure the beers are on you if you mention one word about “but the Zestimate said it’s worth this.”

What about all of the “off market” listings that are becoming so popular, and how do you get clued in to them?
a. PocketListings.net: It’s growing, more agents are using it, and you (the buyer) can certainly browse it for “off market” opportunities. You can follow PocketListings on Twitter for instant notification of new listings, and you can even have your “buyer need” added to it…but for that you’ll need a Realtor.
b. A Realtor: At this stage, there is no way around it, and it’s the very reason Pocket Listings are growing in popularity…Realtors are taking back the control of their listings, and they’re doing this to keep themselves relevant. Listing aggregators like Zillow, Trulia, Redfin, and Realtor.com don’t always portray the most accurate data, agent contact info, pictures, and local information. The system needs to change, and Realtors are taking it back. And guess what? A human is actually a really useful tool in the home searching process and if you find the right one, said human can provide a wealth of accurate and opinionated information. If you want off market opportunities, and want to truly feel like you’re getting in the loop of what most people aren’t, you need a Realtor. If you want to just browse MLS, PocketListings.net, and go at your own pace, you can still get by without contacting one.

So now you’ve proven to all involved you have the money, you’re getting listings fed to you from all angles, and you’re ready to take the next step…Check back tomorrow, and we’ll let you know what to do.

San Francisco Real Estate Most Recent Sales And New Listings

We all know where to go to find new listings, and we all love to check them out, but what all of you homeowners (and buyers) REALLY love is knowing what the home down the street sold for. Right? For that, I bring you the same thing I have for the past 10 years…sfnewsletter and Market Tracker.

The newsletter itself is loaded with good San Francisco market and new happenings information, and the data is top notch. This concept of giving you actual sold data via email was thought of by yours truly, and now every Tom, Dick, and Harry real estate agent across the land is doing the same thing. Just remember…it all started with me, and I will continue to give you the real estate information you need. Just ask.

Have a great weekend, and don’t hesitate to put yourself, your friends, and your family in touch with me for all of your San Francisco real estate selling and buying needs. My recent listings have flown off the shelf, and my strong buyer representation tactics are paying off for the multiple buyers I currently helped get in contract. Fingers crossed it all continues to go well for all of them.

Happy Aloha Friday! No work (for many of you) ’til Monday.

-San Francisco Sold Property
-San Francisco New Listings
-sfnewsletter/MarketTracker

The Facebook IPO And San Francisco Real Estate…Birds Of A Feather

Our friends over at Movoto recently published a blog article about how the Facebook IPO will create at least $1 Billion in Bay Area property value, and they asked me to share it with you, so I am.

There is certainly a TON of hype surrounding Facebook’s IPO, and with good reason. Everybody likes to speculate, and everybody wishes they were a part of Facebook (either as investor or employee) so, they too, could cash in on its success.

Since we’re on the subject of the Facebook IPO and San Francisco real estate, and how every real estate agent in the Bay Area wants a piece of Facebook’s success, you might as well read the other articles I’ve read too:

-Movoto: Facebook IPO Creates at least $1 Billion in Bay Area Property Value
-L.A. Times: Facebook IPO Fuels Bay Area Spending Boom
-Redfin Forums: Facebook IPO will make the housing market go crazy?
-SF Gate: Facebook IPO is Sizzling Up Silicon Valley Real Estate
-CNN Money: The Facebook Effect On San Francisco Real Estate
-Jackson/Fuller: The Facebook Hype Machine
-ABC News: Facebook IPO expected to boost Silicon Valley Economy
-The Basis Point: Facebook Effect on San Francisco Real Estate: It’s Very Real

As I read (learn of) more, I’ll add them here. Feel free to share with us.

Sorry Smith, Nguyen Wins. Lee A Close Second. Garcia In Third.

Top 10 California Home Buyer Surnames:

Excellent and relevant data C.A.R! I’m gonna go get me a mailing list of Nguyens, Lees, and Chens, and sell me some houses!

The complete report is below (in PowerPoint). Have a ball with the data. I did.

Buyers be warned. Instead of being asked for proof of funds, agents are going to start asking you for your “first and surname” LOL!

-California Home Buyer and Seller Profile Report (PowerPoint)

Real Estate Commissions…

(Editor’s Note: The following is reprinted from the Real Estate Bulletin, spring 2012 issue, published by the California Department of Real Estate.)

“The California Real Estate Law (Business and Professions Code §10000, et seq.) does not prohibit the sharing of commissions. Before going further, it must be understood that this section and its analysis only covers the California Real Estate Law. Other laws, such as the Federal Real Estate Settlement Procedures Act (known as RESPA) must also be considered by licensees.

From a technical point-of-view, the agent/client relationship, and the right to commissions therefrom, belong to the broker. Nevertheless, it is recognized that real estate agents may work together and decide to share or split a commission.

A licensee may share or split his or her commission with another person or entity provided that person or entity has not performed any acts for which a real estate license is required. The Real Estate Law prohibits the payment of compensation to unlicensed persons who are performing acts requiring a license on behalf of another or others.

For example, a licensee may give a share of the licensee’s commission to a buyer, as an incentive to a prospective buyer, assuming the incentive payment is not a violation of some other provision of law. Where an unlicensed person is acting as a principal in a transaction (i.e., seller or buyer), that person is not “acting on behalf of another or others” (licensed activity) and the prohibition described above would not apply.

If licensed acts were performed, a commission can be shared only if the person was a licensed real estate broker or salesperson acting within the scope of his or her license.

Even though a licensed salesperson may share his or her commission, as discussed above, the salesperson’s employing broker must actually direct and control the manner and payment of a salesperson’s share of the earned commission to ensure compliance with B&P §10137.

Pre-supposing that the broker has authorized escrow to directly pay a commission to the salesperson, the commission can be paid to the salesperson out of escrow.

Depending on the circumstances, there may be a disclosure requirement if such payment is a material fact to a party to the transaction.

Lastly, B&P §10137 allows “a licensed real estate broker to pay a commission to a broker of another State”. This refers to another State in the United States of America. It does not refer to a foreign country. However, there is no prohibition in the Real Estate Law against a real estate broker, licensed in the State of California, paying money to a foreign individual or company (which may or may not be a licensed real estate broker in their respective countries), as long as the payment of money is not for acts which require a real estate license in the State of California.”

Got it?

Ask: I Want To Rent A Home Built On “Those Stilt Kind Of Things”…

This is one for the community:

I love your blog. I just moved here from NYC a week ago and it’s been an invaluable resource.

I just found a rental that I love, [removed]. Gorgeous views, built in 1939 or so. Problem is, a friend from SF pointed out that it’s a “downhill home.” (I’d never heard the term before.) It’s cut into the face of the hill, but it’s partly on those stilt kind of things. The landlord says the hill is safe and the place was “thoroughly inspected” when he bought it…but he owns the place and needs a tenant, after all. :)

I’d love to rent it but want some reassurance that the thing won’t fall down the hill at some point. Like, if there’s a quake. Do renters ever do seismic checks here? How can I find out if this place really is safe? I don’t mind paying myself if the inspector fee is reasonable.

Thanks a lot

Thanks for your email, and I’m glad you like theFrontSteps! Please tell your friends.

I don’t handle rentals, so I’m not one to speak with 100% certainty. I would imagine that you could do any kind of inspection you wanted as long as it doesn’t cost the owner anything.

The fact is, if a big quake hits SF, who the heck knows what will happen. A big rain might be more likely, and more of a concern….landslide.

My advice would be to go ahead and inspect if it will make you comfortable, the owner is okay with it, and you have the time to do so. But, don’t expect any person to tell you without a shadow of doubt that the home is 100% safe. You can thank the litigious society we live in for that.

When you’re ready to buy, let me know! If you have any money for down payment at all, I would HIGHLY recommend buying. Prices and interest rates are crazy low, and your payments would likely be less than rent.

Thanks for reading theFrontSteps!

A Fixer Of Epic Proportions “Not On MLS”: 30-32 Prescott, Telegraph Hill

[Update: Property is now on MLS. Keep your eyes on PocketListings.net for your chance at many other off market opportunities, as this one was first posted there several weeks ago.]

This is one of those properties where every step you take inside the building you wonder if you’ll end up one floor below, like in a Looney Tunes Cartoon. To say the property is in utter disrepair (and recently vacated) is an understatement.
The exterior photos actually don’t do this property justice. The floors are rotted, the windows are molded and cracked, the roof is…well….it’s still there, the bathrooms are disgusting, and the potential is tremendous!
This is, after all, a “fully entitled development project with approved plans and permits in hand to build TWO, 2 story units with 2 car parking, yard, roof deck, with sweeping views of San Francisco Bay, Bay Bridge, Downtown San Francisco, and Telegraph Hill.” It’s opportunity knocking.
Full disclosure, there is a school right smack dab next door, and that could quite possibly be the only downside. However, the buyers of the finished product are likely not going to be people that are home Monday through Friday from 9am to 5pm anyway, so it is almost a non-issue.
This is a chance for a developer to pick up an extraordinary project off market, develop it, and unload it. Or it is a chance for a person that wants a brand new property, to come in, take over, hire your crew, and build your Telegraph Hill dream residence.
Make no mistake, this is a “fixer” of epic proportions, but a lot of the “work” has been done for you. The hardest part of most battles to build in San Francisco is usually getting permission from the city, and that’s all been done for you. You can show up, make an offer with hammer in hand and get to work. Okay, maybe you’ll need more than a hammer and nails…like maybe a wrecking ball?

I’ll be out at the property today showing some clients, and I’ll attempt to get a couple interior pictures, but no promises. The inside is a total and complete wreck and that is what makes it so damn attractive.

Don’t go looking for this on MLS, because it ain’t there. It’s currently “off market” or “not on MLS”, but definitely very much for sale.

However, before you get to enjoy what we see in those renderings above, you gotta get through what exists in the photos below. And since so many homes are judged by the quality of their kitchens and baths…ask and thou shalt receive:


P.S. Keep in mind it was apparently recently inhabited.

-Prescott Fixer Details, San Francisco, $850,000 [PocketListings.net]
-“It’s Not Listed. But It’s Definitely For Sale.” [New York Times]
-Not on MLS Real Estate Network [PocketListings.net]

Spring Break!

Hello all,

My children are on Spring Break this week, and although I thought I’d have time to post, I really don’t. I’ll be back next week. In the meantime, I am still answering emails and phone calls should you have any questions about San Francisco real estate, or should you need to write an offer or list your home.

If you’re looking for something to browse while I’m away, you can always check out PocketListings.net.

President Barack Obama’s Deficit Reduction Commission Looks at Homeownership and the Mortgage Interest Deduction

We just had this come across our email, so we thought we’d share:

President Barack Obama’s Deficit Reduction Commission Looks at Homeownership and the Mortgage Interest Deduction

The New York Times reported last week that President Barack Obama’s Deficit Reduction Commission—a bipartisan commission on reducing the federal debt—is likely to recommend a plan to repeal or modify a number of popular tax breaks, including the deductibility of mortgage interest payments.

The National Association of REALTORS® (NAR) cautions, however, that the plan is only in draft form and will not be released in final form until December 1, at the earliest. It stated emphatically in a press release that the New York Times article, and others that have followed, are only reporting on possibilities, NOT certainties.

To assist REALTORS® who receive inquires from clients regarding reports that the Deficit Reduction Commission will be recommending changes to the current mortgage interest deduction to respond to those inquiries, the National Association has prepared the following talking points:

1. Media reports that suggest that the Deficit Reduction Commission has recommended reducing or eliminating the mortgage interest deduction are FALSE.

2. The Deficit Reduction Commission has not yet released its plan—the commission is scheduled to submit its report on December 1, at the earliest. Any suggestions related to the recommendations at this point are premature and only conjecture.

3. What the media is currently reporting on is an early DRAFT of the report that could change many times before the report is actually released. And 14 of the commission’s 18 members must agree on the recommendations before they can be released.

4. NAR is actively engaged on behalf of REALTORS® and the nation’s home owners to ensure that the current MID is not changed—the tax deductibility of interest paid on mortgages is both a powerful incentive for home ownership and one of the simplest provisions in the tax code.

5. NAR opposes any tax reform plan that does not retain the deductibility of mortgage interest. NAR also opposes any effort to convert the MID from a deduction to a tax credit.

6. Specific government incentives for home ownership in this country have existed for more than 150 years. That’s because home ownership helps foster communities, creates social stability, builds wealth over the long term, and contributes significantly to the U.S. economy.

Zillow’s Zestimates Rubbing You Wrong Too? Vent!

From a reader:

Average condos in SF are up 4.9% in the past year. I am happy for everyone who owns one, but I have a problem with the means of estimating a condo’s value and that is via Zillow.
I won’t waste your time telling me to ignore Zillow, as I would like to do. But many people go to the Zillow site to see their Zestimates and I have a huge issue with Zillow on their Zestimate of my condo.

I am in a classy South Beach building and have an incredible, unobstructed view of the Bay along the Embarcadero. My neighbor, with the same footprint of a little over 1,000 sq ft 1 bed, 1 bath, has his place “Zestimated at over $1.2mil. My place used to be about that, but in the past 18 months my Zestimate has gone down to under $650,000. I think my neighbor’s place is accurately figured and it is a lovely place. But mine has a better view, by far and has no privacy issues as far as large office blocks looking right into his bedroom and dining room. So, to summarize: two identical units in the same building with a difference in Zestimates of about $600,000. Just seems impossible.

I would like to protest with Zillow but there is no opportunity to do so other than writing letters to their Seattle HQ. No responses. One real estate guy saw me complaining in a forum on Zillow and he said it is all algorhythms and there is no human input. He said to just ignore Zillow. If no one went to Zillow I would find that easy to do.

If anyone doubts me, just check out 75 Folsom #1105 and #1106. You tell me.

Any ideas?

I know our site has been asleep for a while, but anybody have any suggestions?

San Francisco… You So Bad Ass!

From the San Francisco Association of Realtors:

Scarcity of Defaults Demonstrates Enduring Value of San Francisco Real Estate

Of all U.S. mortgage holders, about one quarter, or 11.3 million households, is underwater, meaning they owe more than their homes are worth. In California, the percentage is even greater—35 percent.

According to First American CoreLogic, the tipping point appears to come when a home owner has a negative equity of 25 percent or more. At that point, many owners choose to cut their losses and voluntarily walk away from their homes. To prevent this result and to avoid a costly and time-consuming foreclosure, banks typically encourage owners to market their property as a short sale.

So, how does San Francisco and the northern peninsula stack up against the rest of the country, and the State as a whole? These areas are doing much better. The percentage of home owners underwater in the San Francisco-San Mateo-Redwood City area is only 10.4 percent. And the percentage of home owners underwater by 25 percent or more is only 2.6 percent.

Real estate sales in San Francisco and the northern peninsula may be lagging previous years but real estate values have remained strong through one of the worst economic downturns since the Great Depression—a fact of which homeowners and prospective buyers should be reminded from time to time.