Sunday, December 30, 2007

Look Back; Look Ahead

As the curtain gets ready to close on 2007, it is a good time to take one last look at what we have seen throughout the year. The year started out like any other, slow but steady. Only the naysayers were talking about the bubble bursting, but then again they had been predicting that for years. The typical housing market cycle was present as things picked up in the spring and summer. The end of the summer marks the most dramatic event; the fall of the sub prime market. We will continue to see these effects well into 2008, but in San Francisco the effects are much harder to see than in much of the rest of the country. Our number of sales is down, but in most neighborhoods prices are holding steady. Interest rates for a thirty year fixed jumbo mortgage have managed to stay under seven percent.

Over the course of the year many homes were bought and sold, and with each transaction comes a lesson learned. Buyers and sellers learn the ropes, and the agents come away with a new pearl of wisdom each time.

Right now the majority of the people we meet are waiting. Many of them have been waiting for some time now. What are they waiting for? They say they are "waiting to see what the market is doing". As you saw in the District Study, in San Francisco the market is simply plugging along. The wait will continue into January, and once people see that the bottom has not dropped out from under them, the wait will end.

Activity will start to pick up again mid January, and as people's confidence in the market is restored, that activity will continue to grow into the spring and summer. The moral of the story is, the sky is not falling. As San Francisco is a strong market, it will be the last to be affected by the national woes and the first to recover.

It has been a great year for us. The VanFenton team was born and is thriving. Our families are healthy, happy, and growing! Anja was fortunate enough to visit all of her sons and most of her grandchildren this year, and my family was blessed with a new addition.

Have a safe and happy new year. We are looking forward to working with all of you in 2008.

Friday, December 21, 2007

San Francisco District Study

As mentioned in the yesterday's post, we will be getting back to our district series. Before we dive in neighborhood by neighborhood, we thought we would give you an overview. With all of the news stories lately regarding the plunging home sale prices, we thought we would pass along these statistics specific to each San Francisco District. This is a year over year study comparing the sales for single family homes from November 2006 to November 2007.

District 1 November 2006/ November 2007
Number of Sales 13/ 22
Median Selling Price 899,000/ 1,260,000
Days on Market 30/ 35

District 2 November 2006/ November 2007
Number of Sales 39/ 23
Median Selling Price 775,000/ 839,300
Days on Market 33/ 28

District 3 November 2006/ November 2007
Number of Sales 23/ 15
Median Selling Price 690,000/ 680,000
Days on Market 51/ 43

District 4 November 2006/ November 2007
Number of Sales 38/ 18
Median Selling Price 1,002,500/ 858,000
Days on Market 36/ 41

District 5 November 2006/ November 2007
Number of Sales 31/ 33
Median Selling Price 1,335,000/ 1,390,000
Days on Market 37/ 30

District 6 November 2006/ November 2007
Number of Sales 2/ 7
Median Selling Price 1,113,750/ 1,825,000
Days on Market 43/ 32

District 7 November 2006/ November 2007
Number of Sales 9/ 10
Median Selling Price 2,100,000/ 2,762,500
Days on Market 48/ 33

District 8 November 2006/ November 2007
Number of Sales 1/ 0
Median Selling Price 12,000,000/
Days on Market 178/

District 9 November 2006/ November 2007
Number of Sales 20/ 23
Median Selling Price 845,000/ 850,000
Days on Market 36/ 35

District 10 November 2006/ November 2007
Number of Sales 57/ 24
Median Selling Price 690,000/ 608,600
Days on Market 47/ 63

In some cases, the number of sales is too small to come to any conclusions, but overall you can see that San Francisco is holding steady. Feel free to contact us if you have more specific questions about any one of the districts or neighborhoods. Also, let us know if you are interested in taking a Grand Tour of the city and getting to know more neighborhoods before you choose where you want to live.

Wednesday, December 19, 2007

Weekly Sales Report

Welcome to the final sales report of the year. As expected, activity this week was quite low. Not many escrows were opened, and those that were for the most part were single offer situations. Many buyers are hanging up their hunting caps for the remainder of the year and hoping that 2008 will bring more options. There have been almost no new listings for the past few weeks. There are buyers out there; many are casually looking and gearing up to get serious in the new year. I feel as if the engines are revving up and the crowds are just waiting for the flag to drop.

Even this past weekend open houses were well attended for mid December. We had fifteen to twenty parties come through both Saturday and Sunday, and this on a property that has been on the market for over a month. Normally many people wait until Spring to bring their house onto the market. We may see the buying season start early this year if sellers start taking advantage of the lack of inventory.

Of the properties that sold this past week, 67% sold under the asking price. As Joe Zilioli, one of our preferred housing inspectors, said, "It is the best time to buy in ten years!" The largest underbid went a whopping 28% under the asking price. It is shocking, we know, but much of that difference can be explained by overpricing and unreasonably high expectations. This home, a five bedroom fifty six hundred square foot fully detached corner home on Lake Street was priced at $3,600,000. Interestingly enough, the same home was on the market in 2003 for $4,200,000 with the same agent. They withdrew that listing after one hundred and eleven days with a little note on the listing that said, "withdrawn for now". It seems the agent figured she just needed to withdraw the listing long enough to talk the sellers down to a more reasonable price. It took her three years. The home finally sold at $2,580,000. It was marketed as having been "on the market for the first time in over 35 years" which is a nice way of saying that everything needed to be updated.

The other 33% of the properties that sold this past week did go over the asking price. The largest overbid was 739 12th Avenue in the inner Richmond which sold at $1,160,000, fourteen percent over the asking price.

Interest rates are still holding steady. At the end of 2006 people were predicting that interest rates might hit the eight mark by the end of 2007. A thirty year fixed jumbo loan is still only at 7.000% with no points. Paying three points will bring that down to 6.125%. It is time for buyers to negotiate and have the sellers help buy down their rate, thus lowering their monthly payments.

The next weekly sales report will be on January 9th. Stick with us, though, because in the meantime we will have lots of other things to share with you. We will be starting our neighborhood series back up, and there will be announcements of things to come in 2008 including our first time home buyer workshops. Just passing it along; 2008 is going to be great!

Tuesday, December 18, 2007

Agency Relationships

Real estate is a service oriented industry. It is also an industry that is based on relationships. The types of relationships are very clearly defined by our contracts, but it is not always clear to the average consumer. Making things clear to everyone is a part of our job that we take very seriously, and one of the reasons we enjoy working with first time home buyers and sellers. Anybody who does something on a daily basis becomes an expert in their field. It becomes so natural that it is easy to forget not everyone shares your expertise. That is something we have to remind ourselves of daily as we work with new clients. What has become obvious and routine to us is not obvious to everyone.

There are, in every real estate transaction, a buyer's agent and a seller's agent. It is also possible to have the same agent represent both the buyer and the seller in the same transaction. We will get back to that later.

As a seller, you will hire an agent and agree on their commission. The listing agent will market your home in hopes of finding a buyer. They will agree to share their commission with the agent who brings the buyer and an acceptable to offer to the property. In short, all commissions are paid by the seller and then split between the buyer's and seller's agents and their respective companies.

This means that if you are a buyer, you receive all of the services provided by your agent at no cost. You will pay escrow fees and lender fees at the close of escrow, but no agent commissions. Remember that when you are trying to decide if you want the help of an agent as you search for property.

Earlier it was mentioned that the same agent can represent both parties in one transaction. This can mean two things. The first is that an "Agency" can represent both sides. For example, Coldwell Banker is a huge company and has many agents. Chances are very high that they end up on both sides of a transaction. It is also possible for one agent, or salesperson, to "double end" a deal which means that they represent both the buyer and the seller of a transaction.

There are times representing both parties makes sense, but for the most part it is something that we prefer not to do. Our goal as a listing agent is to get the highest possible price for our seller. Our goal as a buyer's agent is to get the best deal possible for our clients. Is there a conflict here? We find it hard to do both simultaneously. Therefore if we meet an eligible and interested buyer for a property we are listing, we would refer them to a trusted colleague and hope for the best!

Other than walking into a real estate office, the place you are mostly likely to run into a Realtor is an open house. The host of that open house may or may not be the listing agent. If they are not the listing agent, don't assume they are "just babysitting" the house. They are there to represent buyers, possibly you, on the sale of that or any other house.

Friday, December 14, 2007

Escrow...what is it?

The actual definition of escrow as found in the glossary of terms in the Cornerstone Title Company website is: An independent third party, such as First American Title, who acts as the agent for buyer and seller, or for borrower and lender, carrying out instructions of both and disbursing documents and funds. Escrow closes and the transfer of property or document is completed upon fulfillment of certain conditions specified in the written instructions, whereupon the necessary deeds and other instruments are recorded.


To explain it step by step might clear it up a bit.

Step 1: Open Escrow

Once an offer has been accepted on a property, the buyers agent will open an account at the escrow company of the buyer's choice. It differs from county to county, but in San Francisco the buyer pays the escrow fees and is therefore entitled to choose the company. The buyer then places their initial deposit for the property into the escrow account at which time a preliminary title report is ordered.

Step 2: Contingency Period

Once the buyer's loan has been processed and they have satisfied themselves with inspections and appraisal of the property, the buyers will remove their contingencies and wait for the final loan documents to arrive at the escrow company.

Step 3: Signing

When the loan documents are ready, they are sent to the escrow company where they are prepared to be signed by the buyer. After preparing the documents, your escrow officer will send you a final closing statement which itemizes the closing costs and gives you an estimated total of funds due before closing. This total will include the remainder of your down payment along with your lender's fees, escrow fees, and title insurance.

Step 4: Recording

The seller will have a separate set of documents to sign such as authorizing their loan to be paid off and the seller's net sheet which itemizes their costs and profits from the sale. Once everyone has signed their documents and the remainder of the buyer's funds including closing costs and down payment have been deposited, the lender can fund the loan and the escrow company can record the new deed with the city marking the actual close of escrow. Escrow is closed once the deed has been recorded.

A typical escrow period in San Francisco is thirty days. This length of time needs to be agreed upon between the buyer and seller, as do all other terms involved in the transaction. It is our job as Realtors to walk you through this process; finding the right property is only the beginning. Then the real fun begins!

Wednesday, December 12, 2007

Weekly Sales Report

Another week goes by, the holidays are closer yet, and activity is slowing down almost to a halt. We are still fortunate in San Francisco to not be suffering the same way the surrounding areas seem to be. One of our clients signed his loan documents yesterday for a condominium he is purchasing in Pacific Heights. His loan consultant was from his credit union located on the peninsula, and she does loans for properties all around the bay area. She mentioned having trouble getting the appraisals approved by the lenders. The banks are wanting the appraisers to factor in the recent decline in price. They look at the comparables and then subtract whatever the drop has been in the area. Luckily in San Francisco we have not had that problem; most neighborhoods have not suffered in value.

Seventy percent of the properties that received offers last week in our office only received one offer. The other thirty percent received multiple offers; it still can happen! The most offers received on a property was five on a single family home in the outer Parkside neighborhood. It was priced at $698,000 and was on the market for about forty five days. It is quite rare to see five offers after a month and a half of being on the market with no price reduction. Times are changing, and we need to change with them! Things do not move as fast as they used to. Don't assume that because a property has been on the market for over a month that other people are not interested. It is just that nobody seems to be in a hurry. If you love the house, make an offer.

This week 100% of the properties sold were sold under the asking price. They all sold at four, five, and six percent below the asking price. The list of properties sold this week did not include any from the hot spots such as Noe Valley or Pacific Heights.

Another point that came out in the meeting is that sellers are not inclined to counter the offers they receive. When a buyer submits an offer, there are three possible responses. The first is acceptance, which all buyers hope for. The second is a counter offer, where the seller accepts the offer subject to a proposed change in the contract which could be either the price or terms. The third possible outcome is rejection. If you receive a counter offer and do not accept it, the seller has just lost you as a buyer, and in this market there may not be another one waiting in the wings. Sellers are realizing that, and are more inclined to just accept the offer they receive provided it is in the right ballpark.

Monday, December 10, 2007

The VanFenton Team

Whether you are thinking of buying, selling, or both, one of your first steps should be surrounding yourself with a group of professionals who can guide you through the process. Your team should include a Realtor, loan consultant, tax advisor, escrow and title representative, insurance agent, and property inspector just to name a few. Realtor is the first on the list not only because that is what we are, but also because your Realtor can help you build the team. You will always be in the drivers seat; we are here to help you navigate.

The VanFenton Team is a partnership between Anja van Ditmarsch and myself, Mary Fenton. We are both Realtors in the San Francisco Coldwell Banker Lakeside office. Coldwell Banker has a 20.5% market share in the bay area, and the Lakeside office is the top selling office in the city with over one hundred agents. The VanFenton Team comes to you with a powerful support system behind us.

Anja and I work well together because we share a value system. Integrity is at the top of our list, as is the interest of our clients. These come above closing a sale. We are hardworking and detail oriented; we will look over every aspect of your transaction and keep you comfortable and informed as you go.

We come from very different backgrounds, and each bring our own set of skills to the table; together we don't miss a beat! Anja is a retired Veterinarian; she also had a flower and events business here in San Francisco before she became a Realtor. She brings her wonderful business sense, her strong work ethic, her keen aesthetic eye, and her fighting spirit to the negotiating table. She has four sons, one foster daughter, and fourteen grandchildren spread all around the globe. She speaks Dutch, English, French, German, and conversational Spanish.

Before becoming a Realtor, I was a dancer and a dance teacher. Most recently I had been teaching partner dancing at the Metronome Ballroom in Potrero Hill. My teaching background gives me patience and the ability to explain each step of the transaction clearly. My knowledge of San Francisco and its real estate market is strong, and I love sharing it with people. I am dedicated and sensitive to the needs of our clients. My husband and I have two young sons; four years and six months old. I speak English (obviously) and Spanish.

As a team, we will go above and beyond for you. We especially like working with first time home buyers as we can really take the reins and guide them through. We enjoy working together and look forward to working with you.

Sunday, December 9, 2007

Seller Credits

As you all know, December is a slow month for real estate. It is especially slow this year due to fall of the sub prime market and a general uncertainty about the future health of the economy. There are very few homes on the market this time of year. The new listing count each week is very disappointing, and even some listings that have been on the market are temporarily withdrawn until the new year when they come back on in hopes of finding a new audience.

Those who do put their homes on the market in December do so for only one reason. They need to sell! They know it is not the ideal time to market or sell their home, but sometime life's timing does not coincide with the ups and downs of the real estate market.

The pickings are slim, but if the right house for you should surface this time of year, your chance at negotiating a good deal are much higher now than they would be in the spring when you may have a handful of other buyers eyeing the same house.

There are many ways to negotiate as a buyer. The first point of negotiation is the purchase price. As we always say, the asking price is only a starting point. Take a close look at the comparables and the interest in the property. If it seems to be priced correctly and is in line with other solds in the neighborhood, you may want to offer the asking price. If the asking prices seems to be a bit inflated, definitely come in with a low bid. If it is a wonderful property in a popular neighborhood, you just may have to come in above asking as you read in Surprising Statistics.

Once you and the seller have come to an agreement on price and your offer has been accepted or "ratified", you will now have a contingency period in which you will have all of your inspections done to satisfy yourself as to the condition of the house. In the peak of the real estate market, people were waiving these inspections for fear of losing the house to the next bidder, but now that things have slowed down, people are able to make more rational decisions.

Once the inspections are completed, the second opportunity for negotiating has arrived. If the inspectors have found something in the house that concerns you or that will cost more money than you anticipated to fix, you can ask that the seller addresses the problem or leaves a credit in escrow. Again, a credit from the seller is something that you wouldn't dare to have asked for in years past, but we are starting to see it happen more and more.

Some clients of ours recently submitted an offer with a request for the seller to cover their closing costs. The seller agreed to pay closing costs equalling one half percent of the purchase price, which in their case would basically cover their costs. During the inspections, they also found that the old clay sewer would need to be replaced sometime in the next five years, and one of the retaining walls would also need to be replaced sometime in the near future. These were going to be unexpected costs, and the buyers were starting to be concerned with stretching beyond their financial limit. They asked for an additional credit of $16,000 to help them pay for the future repairs. The seller found their claims to be legitimate, and did not want to bring his home back on the market in the middle of December. He agreed to the additional credit, the buyers are happy, and they will be moving in to their new home first thing next year. Success!

In the end, they have a wonderful home in a very desirable neighborhood in San Francisco. There is only one other currently on the market, way above theirs in price. We believe they only got this deal because of the time of year.

Thursday, December 6, 2007

Surprising Statistics

Last night Anja and I had a meeting with a new buyer client. We like to sit down with our buyers before we start taking them on tour. This way we can get to know each other and get a clear understanding for what they are looking for. Also, we get a chance to walk them through the buying process. There is a lot of information to cover, especially for a first time buyer.

This family in particular will be searching primarily in Bernal Heights, Glen Park, and Potrero Hill. They have been out and about on their own quite a bit, so they have seen most of what is currently on the market.

When you are thinking of buying and have narrowed it down to a specific type of property in a few neighborhoods, it is a good idea to look at the sold properties in those areas. You can get a feel for what the trend is in that neighborhood. Many people these days are assuming that prices are dropping, or that properties are selling for under the asking price.

We prepared a comparative property analysis for each of the three neighborhoods, and used three bedroom two bathroom homes as the subject of the study. I have to say that we were all quite surprised by the result.

Glen Park: 39 single family homes sold in the past six months
10 of those were 3 bed/2 bath homes
Average list price = $950,090
Average sold price = $1,004,600.
On average, these properties sold 5% over the asking price

Bernal Heights: 84 single family homes sold in the past six months
26 of those were 3 bed/2 bath homes
Average list price = $938,615
Average sold price = $1,039,462
The average overbid for these properties is 10%

Potrero Hill: 27 single family homes sold in the past six months
3 of those were 3 bed/2 bath
Average list price = $1,004,333
Average sale price = $1,163,000
The average overbid for these properties was 14%

There are a few things to point out about these statistics. The first is obvious. In certain centrally located and desirable neighborhoods, properties are still selling above asking price, especially in those neighborhoods that have a very limited supply such as Potrero Hill.

Another thing is that the average value in Bernal Heights is higher than that in Glen Park. Glen Park has always been a step above Bernal Heights in price, but as far as this study is concerned, the opposite proved to be true.

The last detail that really stands out is the difference in number of houses sold. There is much more available at any given time in Bernal Heights. You would think that the average overbid would be lower in the neighborhood with the most options. This shows that the larger home, the 3 bed/2 bath, is a very popular item and people are willing to pay top dollar.

Wednesday, December 5, 2007

Weekly Sales Report

Coldwell Banker got together again this morning to discuss the past week's activity. While many people are looking forward to 2008 and creating their business plans, setting their goals, and thinking about new year resolutions, other people are still working on wrapping things up for 2007. Real estate continues to be bought and sold in San Francisco.

The majority of the properties that received offers this past week were single offer situations. Only 25% received multiple offers. This house on 39th Avenue did receive 5 offers, but only after a price reduction. It was listed at $749,000 originally and sat on the market for a month and a half with no activity. They reduced the price to $699,000 and received five offers within the week. Doesn't it always come down to price!

We have just lowered the price on our loft at 1605 18th Street; hopefully we will get a similar response! It is now $669,000 and will be open both Saturday and Sunday this weekend. Come, enjoy the view, and make us an offer!

As far as the sold properties go this week, a majority of them (56%) sold under asking price. Only 33% sold over asking, and the remaining 11% sold at asking price. The largest overbid for the week was 1921 Page Street in the Haight/Ashbury neighborhood. It is a three bedroom two bath fifteen hundred square foot condominium in a three unit building. The systems were upgraded and the kitchen and bathrooms were nicely remodeled. It also came with two parking spaces which is a rare find, and a large shared landscaped garden. It was listed at $949,000 and sold for $1,075,000. That is 12% over the asking price which we don't see nearly as often as we used to. I believe it was also a cash offer.

It is interesting to see that even in this market, you do still have to bid up on certain properties. Whether you are trying to outbid competitors or meet the seller's expectations which may be above their asking price, offering above the asking price is sometimes the only way to get a property. It is hard for buyers to understand this as everyone wants to feel like they've gotten a great deal. The important thing to know is that the asking price is no more than a seller's strategy; a means to an end. Don't compare your offer price with the asking price. Instead, use the recent sold properties in the neighborhood as comparables. If your offer price is in line with those, you are paying the right price.

Monday, December 3, 2007

Lending Options

After the fall of the sub prime market this past August, home buyers have growing concerns about their own financing. Initially people thought they wouldn't be able to get a loan at all. That is definitely not the case. We have asked all of our clients, old and new, to get a new pre-approval letter if the original had been done before August as some restrictions have changed.

Being approved by a lender is one of the first necessary steps in the home buying process. It will give you a clear idea of what you can, and want to afford. Many people don't know where to begin when looking for a lender. It is wonderful if you know somebody in the mortgage business or can get a referral from a friend, but if not here are some basics.

There are different types of lenders, each with their own set of restrictions and loan programs. The three most common types are banks, mortgage brokers, and credit unions. Credit unions are known to offer the lowest rates but have the strictest guidelines, and you must already be a member. Banks are second in line in terms of guidelines, and mortgage brokers have the most leniency as they can shop around with different lenders to find one that fits your needs.

We recommend doing some comparison shopping. Have a conversation with your bank and a mortgage broker. Make sure to compare with your own numbers. Don't compare your scenario with the loan your friend got as there are many factors that go into it.

Get as much information up front as possible. Ask to see different loan scenarios based on the same purchase price. Make sure they include property tax and insurance in the equation. Don't let them make any assumptions; tell them you want to see all of the possibilities based on your purchase price, down payment, and income to debt ratio. There are many options from a two year fixed to a thirty year fixed and everything in between.

The shorter the fixed period of the loan is, the lower your interest rate will be. A thirty year fixed loan is the most conservative and safe, but also the most expensive with the highest interest rate. If you are on the conservative side, the thirty year fixed loan is your best bet. If your goal is to keep your monthly payments as low as possible, you might want to go with a five year adjustable rate mortgage which is fixed for the first five years and then adjusts according to a predetermined schedule.

Once you submit a loan application, you should receive a good faith estimate from your lender which itemizes your closing costs. You don't want there to be any surprises at the end.

One more piece of advice. Monitor your credit score to make sure there aren't any mistakes or surprises. Make your payments on time, especially from the time you applied for the loan to the time you close escrow on your home. The lender will pull your credit report a second time at the end, and if there are changes they may reject the loan in the eleventh hour. Don't make any big purchases in this time.

Everybody is extremely busy, especially this time of year. If you are in the home buying process make sure you take the time to inform yourself. There are many options available to you, but if you wait until the last minute you may be stuck with whatever you get.