Wednesday, January 30, 2008

Weekly Sales Report

It has been another week of limited activity here in the San Francisco real estate market. Overall, statistics look very similar to last week's numbers. Half of the properties that received offers this week were multiple offer situations. The most offers received on a property was three.

All of the properties that sold this week were either at or under the asking price. This should be a message to sellers that pricing the home where you are willing to accept the offer is very important at the moment. The idea of pricing low to generate activity and drive the price up is not getting the results it once did. Sellers are then left with their property sitting on the market at a price lower than they want to accept.

There is a single family home on the north slope of Potrero Hill, located on Rhode Island and Mariposa listed at $1,195,000. It is a large Victorian with three bedrooms, lots of light, and sits just a block away from the new Whole Foods. The sellers are in a hurry to sell and set an offer date just days into the marketing period. Due to the lack of inventory in Potrero Hill, it was a zoo at the open house that first weekend. I spoke to the listing agent on the offer date, and they only expected one offer. There are probably hundreds of buyers at this moment waiting for a single family home on the north slope of Potrero Hill. Granted, this one house wouldn't have been right for all of them, but only one party ready to pull the trigger really speaks volumes. It may very well only sell at asking; maybe even below.

Mortgage Minute

On the financial front, which along with the Presidential race is all we seem to hear about these days, the Fed announced another rate cut this morning of 0.5%. This will most directly affect those with HELOCs, or home equity lines of credit. Some adjustable rate mortgages will be affected as well, although not directly.

The key message to buyers is that rates are the best they have been in two and a half years. Get yourselves ready to go. Get preapproved and underwritten if possible. Being underwritten means that you have met the conditions that were outlined by the lender. There will be conditions specific to you, the borrower, and another set of conditions for the property. Buyer conditions will be your documentation such as pay stubs, W2s, landlord referral, credit report, etc. The property specific conditions will of course wait until you have entered into contract on a home. These are things like an appraisal and a satisfactory preliminary title report.

Because conditions are tighter at the moment, do as much work as possible on your pre-approval. That way you are really ready to go once you locate a property, and there will be fewer bumps along the road when you least need them.

Lastly, we are hearing that more loan programs are being pulled off the market daily. This limits your options when choosing or qualifying for a loan. Areas that are most affected are 95% loan to value ratios, which means that your down payment is 5%. Also stated loans are much more difficult at the moment; your credit score needs to be higher than it used to in order to qualify for a stated program. If you fall into one of these categories, have a conversation with a lender as soon as possible.

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