Pondering more on the value of a real estate agent over at daniellelazier.com, I can summarize the main value of today’s Realtor by saying that we take all of the information, much of which is either overwhelming, inaccurate, misleading or all of the above, and put it into context. We break it down, organize it and make it transparent. We help you clarify what you want and help you make good decisions. We translate, decipher and save you time. Or at least we should be doing that if we want to remain relevant in today’s real estate world of online-everything.

Much of real estate can be automated or outsourced through technology but the role of the Realtor as the “in the trenches, on the street advisor” cannot. I should clarify that I am speaking specifically about the type of Realtor who is a consultant or advisor rather than the typical salesperson of days past.

Do your research. Know your stuff. Don’t trust blindly but do align yourself with an experienced real estate professional who will help you sort through the crap so you can make an easy, informed decision about when to sell your home or what home to buy. Maybe that’s why this For Sale By Owner sign was on clearance at the Office Depot San Francisco?

Money Mistake #5 – Getting Stuck in the Past & Overpricing Your Home For Sale

(Money Magazine) — Remember what your home was worth in 2005? Wipe that number from your memory. When you let an old value — of a stock or a fund or your house — get in the way of a smart financial decision, what might seem like harmless nostalgia can become a costly mistake.

Investors have long suffered from this problem, refusing to sell underperforming stocks and funds in the hopes that the price will bounce back. Today home sellers are the ones having trouble letting go of the past.

June 2011 Money Magazine cover story is “Fix Your 5 Biggest Money Mistakes” and lists overpricing your home for sale as Money Mistake #5 and they are right.

Just as in the rest of life, you’ll be happier, richer, and live with more joy, if you focus on the present moment and leave the past in the past. The value of your home today is the value that a buyer today is willing to pay for it. Period. Bottom line. End of story.

How to know if you’ve overpriced your home.

If your house has been on the market for 3-4 weeks and has not sold (assuming that offers have not come in that you have refused), it is time to reduce the price…significantly. Usually, this means at least a 5% price reduction. If another month goes by & still no offers, it’s time to reduce it again. Unless your listing was totally mis-marketed (not on the MLS, not online, no public showings, no photos), the reason your home has not sold is almost always because the asking price is too high.

What are the 5 most crucial factors affecting the sale of a home?

Unless you bring a “House Mover”, the location of your home is immutable; it cannot be controlled by any of us.

By financing, I refer to the current state of the mortgage and lending markets. How easy or difficult will it be for buyers of your home to get a home loan for their SF real estate purchase? This varies greatly depending on the economic climate, the price range of your home and the type of property (loft, condo, single family home, TIC, multi-unit).

As a real estate agent, I personally feel that in order for me to do the best job for my clients, I must be knowledgeable about the economy & the mortgage market so I can figure out ahead of time what types of loans a prospective buyer for one of our listings can access.

For example, last year, I listed 2 condos at Dolores Plaza in Mission Dolores, San Francisco. We helped get the building FHA-approved for low down payment 30-year fixed interest rate condo home loans. So, this year when I was hired for a new listing at the Mission Dolores San Francisco condo complex, I knew that the buyers for the listing had a lot of great low interest-rate loan options. As it turned out, the buyer had 20% down and got a conventional loan but we were able to market the property as a great fit for SF first time home buyers, thus increasing the potential pool of buyers.

Ah, the condition…the condition is what you do (or do not do) to prepare the home for sale. Another word for it is presentation and/or staging.

How will the home present on the market? How will it photograph? Is it cluttered? Is the paint dull & peeling? Is it full of your very personal (and distinctive) decor and memorabilia?  Or is it staged and immaculate, filled with tasteful furniture & neutral colors so the buyers can imagine themselves living there rather than looking at your personal photos and wondering if you are the same guy they met at last week’s art opening. Get my drift? Watch HGTV and get packing! BTW, we project manage this entire process for our clients and can offer money-saving tips and techniques.

Exposure! This is what your Realtor does (or does not do) to promote your real estate listing both to the public and to the San Francisco real estate agent community.

Is the property on the San Francisco MLS? Does the listing have photos? Does the listing have gorgeous, professional photos? Is there a website for the individual listing with an easy to remember URL on the For Sale sign?

Does your real estate agent use blogging, Twitter, Facebook, YouTube, Zillow, Trulia, Craigslist, etc. to promote the listing and open house schedule? Do the most productive agents in San Francisco know about your listing? Is there targeted marketing to the most likely pool of buyers and their SF buyer agents?

Although a diligent, ethical real estate agent will do their homework and tell you the truth about your home’s value in today’s market and recommend the most strategic list price, ultimately, you are the home owner and the decision-maker. (It took a lot of restraint not to call you the decider. You’re welcome.)

You get to decide if you want to price your home in alignment with the current competition (active listings) and recent pending & sold homes (the reality of market value)…or not.

The sales price is not really a factor affecting the sale of your home but it is important to point out the basic truth of sales…the buyer determines the sales price. What a buyer is willing to pay for an item becomes its value.

If the buyers’ price is below yours and you choose not to sell, then, in essence, you become the buyer of your home because you are the buyer willing pay the highest price for it.

This is a roundabout way to say that if you are serious seller, you are ready, able and willing to accept (the highest possible) market value for your home. Of course, market value can be influenced so it’s crucial to do your best to get the other factors working in your favor as much as you can. The method of such influence varies. My job is to continually stay ahead of curve so we can outsmart the competition and get to the highest possible sales price.

Tales of the City, Real Estate Edition

Real Estate Realities: Tales from the front line of buying and selling San Francisco real estate, Forest Hill edition.

Forest Hill Diamond in the Rough

Siblings Mary, Quinn and Jack had fond memories of their childhood home, a Forest Hill San Francisco single family home, but the time had come to let it go. They knew they needed to sell but how? There was a lot of deferred maintenance, and they did not know how to present the home in its best light. Plus, since they all live outside San Francisco, how would they coordinate the home preparation and sale?

They were referred to me by a past client, and I was quickly able to assess the situation and get the ball rolling. Working with all three siblings, I coordinated their plans, ideas and yes, differences of opinion, to help produce an outcome that benefited all of them. In order to maximize profit and show the home as a “diamond in the rough” (rather than a “fixer”), some repair work was necessary. This is Forest Hill, after all! Using my reliable and inexpensive sub-contractors, we oversaw a speedy face-lift. After a month on the market, we negotiated a solid deal and closed escrow 30 days later!

San Francisco Neighborhood Walk Scores

What is a walk score?   Washington Post wrote, ”Walkscore.com ranks communities nationwide (and soon, globally) based on how many businesses, parks, theaters, schools and other common destinations are within walking distance of any given starting point.”

Being in San Francisco most properties have a high walk score.  We have been showing our listing’s own walk score as a marketing point.  It almost seems obvious that a higher walk score can add value to your property.  Wall Street Journal just wrote an article about this.  Check it out and look to the right to find your neighborhood’s own walk score.

A: This question is about control. Who controls what in real estate? There are many factors, both global and local, that will affect your results when it is time to sell your San Francisco home, whether it’s a Bernal Heights single family house or a Mission Dolores condominium.

Here is our Cheat Sheet to the 6 most important components that will affect your results (both sales price and time on the market) when it comes time to sell your home. I hope you find it helpful. Buzz us if you have questions!

Who controls what in a San Francisco home sale?

• Location, as in where your property is located.

  • Are you on a quiet block or a loud thoroughfare? Are you convenient to public transit and local restaurants & shops? Or, must you drive everywhere? Do you have a view or a pleasant outlook? Or, do you look out onto a parking lot or into another unit? You can the drift.
  • This item is FIXED. Neither you, nor I, can control the location of your property. It is where it is.

• Financing, as in what financing will be available for the home buyer.

  • Depending on the economy, interest rates may be high, low, or in-between. Financing guidelines may be loose or strict. It may be very hard for a home buyer to qualify for a home loan or it could be easy. How much down payment will be required of the buyer? Is the property a single family home, a condo, or a TIC?
  • There are many issues to consider. While we are not mortgage specialists, we make it a point to stay current on financing conditions. We want to know what types of home loans are available and what it takes to qualify.
  • Current financing options has a direct impact on your home sale but, you guessed it, this item is also FIXED.

• Property Condition, as in what shape is your home in?

  • A real estate professional will advise you on the condition of your property. We take the time to help our home seller clients decide what is important and what would be a waste of money when it comes to fixing up your property for sale. Generally speaking, you want your home to show as well as possible because it will mean that you will sell your property for more money in less time.
    • Some combination of cosmetic repairs, wood floor refinishing, painting, garden clean-up, and staging (both clearing clutter and furniture staging) are often on the to-do list.
  • The property’s condition is controlled by THE SELLER and property owner. We’ll give you our best advice based on what works in the marketplace to drive up the sales price but, ultimately, it is your home and your decision.

• Market Exposure, as in getting the right offer to the right people at the right time.

  • Real estate marketing is about targeted exposure. What’s most important about marketing a home for sale is promoting your home’s listing to serious, qualified home buyers and the local San Francisco real estate agents who work with them. Although we do want some degree of broad exposure because we don’t know who will be that right buyer, we want to pin-point our efforts to create buzz amongst the folks who are most likely to buy and qualified to make the purchase at a price that will be acceptable to you as the seller. Marketing a home for sale in San Francisco is an art and will be specific depending on location, say Noe Valley real estate or Pacific Heights.
  • Aha, finally, something controlled by yours truly! Yes, in real estate, proper marketing and exposure is controlled by THE AGENT.

• List Price

  • Choosing a correct list price from the start of marketing a home is crucial and will have a direct impact on your net proceeds or walk-away money. Correct pricing requires your real estate consultant to have savvy market knowledge. We will consider relevant properties (your home’s competition) and how many real buyers exist for a type of home like yours. We also want to consider the other items on this list: location, financing, condition, and exposure. How much home preparation and staging you agree plays an important role in choosing a list price.
  • Alas, as much as I wish I could say that the agent controls the list price, it is actually controlled by THE SELLER. We’ll do our best to help you choose a smart list price, but it is your house and your decision.
  • CAUTION: Please do not choose your agent based on the list price they promise you. This is called “buying the listing” and is a totally ineffective way to sell your home. Typically, the agent who promises you the moon is, as fellow Texan Laurie Moore-Moore would say, “All hat and no cattle.” This leads me to the final factor affecting your San Francisco real estate sale….

• Final Sales Price

  • Real estate is a capitalist market and is governed by the Law of Supply and Demand. Ergo, the final sales price is controlled by the Market. The Market speaks through THE BUYER and it is THE BUYER who controls the sales price of your home. Of course, there is a lot that a trained real estate professional and a cooperative home seller can do to positively affect the sales price (and your net proceeds which is more important) but we don’t control it.

“After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing.

Despite the housing downturn, attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers.

Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.”

Recently, a gorgeous 4 Bedroom home in San Francisco’s family-friendly Noe Valley neighborhood (San Francisco, CA 94114), listed for about $1,700,000. Within a week, the Seller had received 4 offers, 2 of which were “All-Cash” and with no contingencies!

In San Francisco, if a home is priced right for today’s market and in a desirable neighborhood, it will sell. This is just not the depressed market that you read about… That’s good news for Sellers, especially those who have owned their homes for a while and/or have other savings and are looking to trade-up.

Buyers, don’t despair. Prices remain significantly down from the peak. Yes, you may have competition and need to write an over-asking offer BUT you are competing at a price point 10-20% off of peak prices. And with today’s LOW mortgage interest rates, real estate in San Francisco remains a killer deal.

Under many circumstances, it is smart to trade up in a buyer’s market. How can this statement be true? Let’s look at an example.

Example:  Let’s follow two San Francisco properties from peak to trough of a SF real estate market cycle.

• Home #1 – The starter home: Inner Mission 1 Bedroom Loft Condo
• Home #2 – The desired trade-up home: Noe Valley 2+ Bedroom Single Family Home

Scenario #1 – Real Estate Downturn, aka Buyer’s Market when home prices declined 10% from the peak

• Home #1: At the top of the market:  $575,000. During the downturn:  $517,500.  That’s a $57,500 decrease.
• Home #2: At the top of the market:  $1,100,000. During the downturn: $990,000. That’s a $110,000 decrease.

If you were to sell your starter home and buy the trade-up home during the buyer’s market, you would actually save money, approximately $52,500.*

Not to mention, that the real reason you want to sell your loft and move into the single family home is that you’ve outgrown your current digs and are ready for a house in San Francisco or the Bay Area for you and the growing family.

So, yes, you’ll have to swallow the reality that your current Mission condo is worth less than it was at the market’s peak. But, you’ll be able to achieve a much more important goal – owning the right home for your current life circumstances.

But wait, there’s an added bonus. Check out what happens when the market recovers.

Scenario #1 – Real Estate Recovery = Home prices increase 10%

• Home #1: During the downturn: $517,500. During market recovery:  $569,250 = $51,750 increase.
• Home #2: During the downturn: $990,000. During market recover: $1,089,000 = $99,000 increase.

When the real estate market rebounds (and inevitably, it will), the trade up home, whether a nice house or spacious condo, is better positioned than the starter home for price appreciation. In this example, the single family home will appreciate $47,250 more.

When I counsel clients who are considering selling their current home so they can upgrade to a more spacious property in a new San Francisco neighborhood (or even to the East Bay, Marin, or Peninsula), I advise that they consider both sides of their transaction: the sale of the current home and the purchase of the new one. For most of us, it’s impossible to buy in a buyer’s market and sell in a seller’s market. So, look at the big picture, and do what’s best for you!

* This scenario assumes that you have the financial ability to purchase the new home (home equity, savings, stable employment).

SF Real Estate Transfer Tax Rate

If you are selling a home in San Francisco, you’ll encounter 2 major closing costs: sales commission and transfer tax. Transfer tax is the tax a City and County charges for the sale or transfer of real estate. Although technically negotiable, most often, as the Seller, you’ll pay this closing cost through the close of escrow. (One exception is the first sales of new construction when the Buyer typically pays the transfer tax.)

The amount of transfer tax varies by City and County. For example, in San Francisco, the transfer tax is as follows:

• For homes priced $250,000 to $1,000,000, the tax is $6.80/$1000 (of sales price).
• For homes worth $1-5 million, the tax is $7.50/$1000 (of sales price).
• For homes worth $5 million or more, it is $15/$1000 (of sales price).

As you can see, this is a hefty hunk of change and a major source of revenue for the City of San Francisco. One would think that given the current financial crisis, the Board of Supervisors would do all they can to encourage real estate sales rather than their current agenda of the opposite! But that, my friends, is another story.

For more info, click here for a chart of how to calculate Real Estate Transfer Tax by California City and County.

414 Lawton St. #A and B

Here is our newest featured property: 414 Lawton St. @ 10th Ave.  in the Inner Sunset in San Francisco.

• Unit A – Lower – $544,500
• Unit B – Upper – $554,500

Showing Schedule:

• Open House – Sundays from 2-4pm
• Broker’s Tour (all welcome) Tuesday March 16th 1-2:30pm
• Broker’s Tour (all welcome) Tuesday March 23rd 1:30-3pm

Want to buy a home in Inner Sunset? Email us to get started.

Thinking of selling your home and want a Realtor with skill and experience but without the “typical agent” drama and ego? Oh, c’mon. We know you do.

Find out what your Inner Sunset home is worth in today’s market or email us for some help.

How’s the market doing? Recent Inner Sunset Real Estate Market Data here.