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.

Avoid the Salesperson

When you walk into a retail store, you are often greeted with a smile and a hello from the salesperson. Quite often, the next thing you hear is, "Is there anything I can help you with" or "Let me know if you need anything". If you are like me, you avoid eye contact, head the other way, and flash the "I'm just looking" smile. This is all fine if you don't have a goal and you are in fact simply browsing for fun, but I've learned something lately.

If you are looking for something specific, even if you don't quite know what that is yet, the salespeople are actually there to help you. Maybe you are looking for a gift for somebody; you describe that person and some ideas you have, and they can help narrow down your options. At the very least they can steer you to the section of the store where you can find what you are looking for.

It works for anything: clothes, jewelry, even cheese! Next time you step up to the cheese counter and don't know what you want ask the person standing behind the counter what he/she would recommend. They will blow you away with their knowledge of cheese.

You'd better believe the same thing goes for house hunting. When you walk into an open house, the salesperson standing there is not only an expert on that house; they are an expert in the San Francisco real estate market. They know the neighborhoods and what it costs to live in each one. They are a resource for you and have the ability to help you find what you are looking for; even if you don't quite know what that is yet.

Oh, We're Just Looking

Much of my time is spent talking to home buyers I meet at open houses on the weekend. We talk about many things; families, schools, the city, neighborhoods, but out of everything, the most common thing I hear people say is, "Oh, we're just looking". While there is nothing wrong with "just looking", and "looking" is a necessary part of "finding", our jobs as Realtors is to make sure you are ready to buy when that time comes. That time is, of course, when you walk through the doors of a house and it suddenly feels like you are home. It can happen suddenly, unexpectedly, and it can catch you off guard. Yes, folks, I am talking about falling in love! Cheesy, perhaps, but true. Much of buying a home is about financial planning, crunching numbers, making sure you are making a sound investment, but another huge part of it is emotional. If you are in "just looking" mode, and you are not properly prepared to buy, you might not be ready when you do find the right house. There are a couple of important preparation steps you can take so that when you have finally found what you've been looking for, you can make an offer without hesitation.

Getting Pre-Approved

The first thing you need to do is figure out how much you can afford. You do this in two ways: you decide how much you want to spend each month, and the bank decides how much money they want you to borrow. These two amounts don't always match up but the important thing is that you do not stretch yourself beyond your comfort zone. You may actually qualify to borrow more than you want to spend. When figuring out comfortable monthly payments, be sure to include property taxes (1.14% of purchase price in San Francisco) and hazard insurance. Part of the process of being approved by a lender is filing out a loan application. They will ask you about your income, debt, and assets, and they will run your credit. Credit is important; your credit score will dictate what interest rate you qualify for. The bank will run the numbers and come up with an amount they feel comfortable lending. They will also provide you with something called a "Good Faith Estimate" which is an itemized estimation of your closing costs at the amount you have been pre-approved for. They will also give you a pre-approval letter stating that they have reviewed your finances and will lend you a certain amount of money provided the property you are purchasing is worth the amount you have offered. In San Francisco, you cannot make an offer without this letter. Your offer would not be taken seriously.

Building Your Team

Another very important part of your preparation is finding a Realtor. Just like your loan consultant, you want to work with a Realtor you feel comfortable with and trust. Your Realtor can help you understand what goes into making an offer before it's time to sit down and do it. There is a mountain of paperwork involved in this transaction; Anja and I like to sit down with our buyers early on and take them through things little by little so that you are not overwhelmed when it comes time to submit the offer. If you are actually thinking of buying, make sure you are ready to find the right house. Get your team in place. Your Realtor and your loan consultant are your best friends in this process.

Grand Tour

It's time for Sunday Opens! The count of open homes in San Francisco has more than doubled from last week. Many homes that were on the market didn't have open houses because of the Labor Day weekend, and other sellers like to wait to put their homes on the market until after the holiday weekend. September and October tend to be strong months in the San Francisco real estate market, so we are all anxious to see how it will go this year amidst the credit crisis. The consensus I am hearing from the buyers who are visiting my open houses is that they feel it is a good time to buy; they realize that prices haven't dropped in most cases but have leveled and aren't shooting up, at least at the moment. The buyers are out there, and they are looking for deals. I used to say that there are no deals in San Francisco but these days you may be able to find one. Especially if you aren't looking where everybody else is looking, or for the same thing everybody else is looking for.

Anja and I offer something to our clients called the Grand Tour. You tell us what your price range is, and we will take you through the city and show you, in each neighborhood, what you can get for your money. You may find neighborhoods you didn't know existed, or rediscover places you'd been but hadn't yet considered. $700,000 may barely get you a one bedroom condo in a place like Noe Valley, but in Mission Terrace you can get a two bedroom single family home with a garage and a garden! And it's close to Bart! I'm not saying everybody should up and move to Mission Terrace; maybe the one bedroom in Noe is better for you, but it's good to know your options. That way when you make your final decision you know you've made an informed one. Also, when you first set out to look you may think you know what you want, but you may end up with something completely different; sometimes it all comes down to the feeling you get when you walk in the door. Anja had some clients last year who were looking for a fixer in a cozy neighborhood and ended up with a brand new condo on Geary! You just never know.