SF Home Buyer Guide to Askhole Sellers (3/3)

So you’ve found that gem of a home with an attractive price that seems too good to be true. Spoiler alert: It probably is.

What should you do? Follow our pro tips to identify and deal with an askhole seller, of course! Drop us a line and we will gladly be your guide.

› Listen to your agent › An agent frequently representing buyers and sellers in San Francisco should have near-infallible intuition about true value, and know that real estate values can vary dramatically from one block to another within a single neighborhood. Also, a local agent likely has some sense of who the listing agents are that habitually underprice.

 

› Let the numbers guide you › Buyer consideration of any home should be accompanied by an analysis of recent comparable sales. This is often the most revealing information in knowing how high potential overbids may go. Additionally, last minute offer preparation should include gathering intel from the listing agent regarding number of disclosure packages that’ve been shared and how many offers are expected to come in.

 

› Prepare to give it everything you’ve got › We’re talking mentally and financially. They don’t call it a bidding war for nothing, so be ready to go in with guns blazing. If your offer is not one of the top three outright, you probably won’t be included in any seller counter offer. What you do with a seller counter is up to you – just do your best each step of the way, and know when you need to walk away.

 

› Expect the worst, hope for the best › There can only be one winning offer. The more underpriced a listing is, the more prospective buyers you will be competing against, usually. If your offer is not accepted, take solace in knowing that you are not alone.

 

› Don’t take it personally › The seller is an askhole. Being a home buyer in San Francisco isn’t for the faint of heart, and here you are making it happen. *fist bump*

If dealing with an askhole seller isn’t for you, perhaps new construction homes are a good option. Customarily, brand new condos being offered for sale for the first time are priced transparently. In softening markets, buyers may even be able to score a price cut and/or incentives like comped HOA dues and an allowance for design upgrades.

That brings us to the final piece of this article: Evidencing a robust real estate market, as promised in SF Home Buyer Guide to Askhole Sellers (1/3).

Nothing quite grinds our nerves like an agent who exploits their underpriced listing to promote themselves and boast a success story about getting their seller dozens of offers and an extreme overbid. These “success stories” can misrepresent the market and lead buyers to make financially dangerous choices in the interest of FOMO. No bueno!

Take a sip of this T: Just about any agent in San Francisco can price their listing at $1 and get $1,000,000+ over list. In our opinion, that’s not an achievement to be proud of – rather it tells us that the agent is not doing their job, and they’ve likely breached their fiduciary duty. And more than that, it damages the credibility of the real estate profession, it discourages would-be buyers, and it creates an absurd amount of waste for everyone involved.

Is the pre-COVID sellers market *really* now coming roaring back like could be implied by the Condo/TIC overbids in SF Home Buyer Guide to Askhole Sellers (2/3)? Well, numbers don’t lie… so let’s examine those for an answer, and we’ll let you be the judge.

Note: As the San Francisco real estate market is a fragmented one, it makes sense to break it down: Single Family Homes, Condos/TICs/Coops, and — for dramatic effect — Condos/TICs/Coops specifically in the South of Market neighborhood.

Single Family Homes, All San Francisco

› Months Supply of Inventory, May 2021: 2.4 (down 14.3% year over year). After reaching a pandemic peak of 4.6 in November 2021, MSI has declined dramatically to its lowest point since August 2018. Buyers have had a strong appetite for houses!

 

› % of Listings Sold Above List Price, May 2021: 70.9% (up 1.1% year over year). This figure is just about back to pre-pandemic levels although short of the October 2015 peak of 85.6%.

 

› Median Sales Price, May 2021: $1,710,000 (up 10.7% year over over). Highest price on record!

Condos/TICs/Coops, All San Francisco

› Months Supply of Inventory, May 2021: 5.2 (up 18.2% year over year). MSI more than doubled during the pandemic from 3.8 in March 2020 to 9.6 in November 2020. Given that condos are owned by a younger demographic on average (relative to single family homes), and that younger folks disproportionately left San Francisco for greener pastures, this shouldn’t be too surprising. Moreover, buyer preferences have shifted toward the comforts of single family houses. We attribute the partial rebound to historically low mortgage rates and price-sensitive buyers recognizing this opportunity to buy the dip.

 

› % of Listings Sold Above List Price, May 2021: 39.5% (down 23.6% year over year). Look at that free-fall from July 2020 to January 2021! For what it’s worth, there was a trend in the 2nd half of 2020 to price condo listings closer to true value, anticipating there may be trouble ahead for sellers relying on pent-up demand to achieve their desired sales price.

 

› Median Sales Price, May 2021: $1,185,000 (down 1.3% year over over). Surprising consistent from January 2020 to present.

Condos/TICs/Coops, South of Market

› Months Supply of Inventory, May 2021: 7.7 (up 63.8% year over year). New construction homes coming on the market were already causing MSI to tick up from mid-2019, and then the pandemic skyrocketed it. From March 2020 to November 2020 it more than tripled to a whopping 12.4 — the highest since September 2009. *Cue the tumbleweeds blowing down Howard Street*

 

› % of Listings Sold Above List Price, May 2021: 35.9% (down 25.8% year over year). Just like the citywide trend, but more pronounced.

 

› Median Sales Price, May 2021: $840,000 (down 20% year over over). Ouch! Definitely an opportunity to buy the dip!