Hey, listing agents, take off those 2009 glasses!

Here’s a little trip down memory lane about buying property in San Francisco over the last dozen years or so. Not just buying property, but HOW property is bought — i.e., with financing, with or without financing contingencies, or cash buyers.

bag of cash

2002: Mortgage broker: “No down payment, bad credit, but you’ve got a job? You can get a loan! Or two!”

2005: Buyer: “Man, these properties are getting expensive and the market is competitive. I’m glad it’s so easy to get a loan that I don’t need a financing contingency!”

2007: Seller: “I know it’s easy for buyers to get a loan, so I’m not worried about accepting an offer with a loan.”

2008: Everyone: “Oh S&%$.”

2009: Buyer’s agent: “My buyer client won’t remove his loan contingency until his loan funds.”

2010: Seller’s agent: “Take the all-cash offer. That way we don’t need to worry about the buyer not being able to get a loan.”

2012: Mortgage broker: “This is a solid preapproval. Banks have tightened their underwriting guidelines and if a buyer is preapproved, he or she will get the loan (unless there’s something drastically wrong with the property or it doesn’t appraise).”

2013: Buyer’s agent: “My buyer has gone through the complete underwriting process and only needs to have the contract and title report approved. There are no issues with this property so please don’t toss our offer in favor of the cash buyer offer!”

2014: Seller’s agent: “I know your client wrote the highest offer, but we took one that was lower because it was an all cash buyer.”

Back in the 2003-2007 timeframe, it was easy — ridiculously so — to get a loan. So easy, in fact, that even buyers who didn’t have a down payment were able to write offers with no loan contingency. At the same time, there wasn’t a whole lot of cash in the market, so the playing field was at least somewhat level: if a property received seven offers and all had financing, the relative strength of the offers was determined by who had a bigger down payment, who had one loan vs. two, and who had a contingency (or not).

Fast forward to 2008, when everyone in the whole world said a collective, “OH S&%), what just happened?” and the economy imploded. Lenders tightened up their underwriting guidelines and anyone with less-than-stellar financial details was out of luck. No loan for you!

That meant that sellers started to care a lot more about the financial picture of their potential buyers, which translated to anyone with less than 20% down being moved to the back of the line or kicked out of the line completely. Buyers with the biggest down payments came out on top, and of course, a cash buyer would trump all.

Fast forward another couple of years. The stock market was on an upward trajectory, property values were starting to rebound, tech companies were expanding…and the market became flush with cash. At the same time, though, lenders were starting to exhale and loosen up their guidelines just a little bit, and there was no longer a risk that the lender would pull the funding at the last minute before closing (as had happened in 2008-2009).

Which brings us to 2014, a year in which we are seeing a deluge of cash into the real estate market — and a time when some agents look at a 2014 buyer with 2009 eyes. Say a property gets five offers — one all cash and four with financing. Providing those buyers are preapproved with reputable lenders who have sent the buyers’ files through underwriting, there is very little risk that their loan won’t be approved. It’s not a 100% guarantee, but it’s solid enough that we advise our sellers to evaluate the whole offer, not just if it’s a cash offer or not.

What does this all mean? It means that agents should take off their 2009 glasses and stop penalizing buyers who need a loan to buy a house. Yes, they should do their due diligence about a potential buyer before advising a seller to accept an offer, but they should also match their advice with the lending situation as it is *today,* not as it was in 2009.

New Zephyr Listing at 163 Laidley St, San Francisco, CA 94131 for $1,390,000

163 Laidley St, San Francisco, CA 94131

PANO views including Downtown skyline. Quiet Laidley St location on desirable north slope of Glen Pk. Enchanting gazebo garden. Unique, custom home. Well maintained during seller’s 30 yrs of ownership. Numerous upgrades, improvements and creation of large work studio on lower level. 2100 sqft (per appraisal), eat-in gas kitchen w/SubZero + hi-end appliances, formal dining rm, wood-burning FP in living rm, hdwd floors, tilt-cleaning windows. Expansion potential. One-year pre-paid Home Warranty for buyer. EZ street prkg. Close proximity to tech bus stop. EZ access to BART, J-Church Muni, I-280.

View Listing

Preliminary Title Notice: Things to Know

I often joke that every page in a disclosure package represents a lawsuit. I assure you that the next document in our look at a typical disclosure package, the “Notice to Buyers and Sellers Regarding Preliminary Title Reports (possible re-sale restrictions for San Francisco Affordable Housing Programs)” originated with a lawsuit. Let’s just call it the “Notice Regarding Preliminary Title Reports” document.

// This post is a part of our series: Your Guide to a San Francisco Disclosure Package //

The Notice Regarding Preliminary Title Reports is a *general* disclosure.

Screen Shot 2014-09-12 at 12.02.45 AM

A law-enforcement official purchased a condominium home (with a buyer’s agent representing them) and paid market rate for the residence. So what’s the problem?

The problem came about when they sold it, and discovered that the home was a “Below Market Rate” (aka Inclusionary Housing Program) condominium, which is a property with deed restrictions that limit the price at which it can lawfully be sold and also sets requirements the buyer must meet to be eligible to purchase the property. Needless to say, the market rate paid by the seller was far above the “below market rate” they discovered they could sell it for.

Below Market Rate homes – because they have numerous documents recorded against the property record – typically have preliminary title reports with a rather long list of exceptions (these exceptions being all of the documents that place the home in the BMR program). And sometimes the exceptions are pretty clear, and sometimes they make reference to maps with 4-point type. It’s always the 4-point type you’ve got to look out for, right?

So the moral of the story is this: understand the exceptions that are listed on your preliminary title report, and don’t sign off on the prelim until you are certain you understand all of the documents referenced in the list of exceptions. Because otherwise, you might just have paid market rate for a below market rate home!

Listings we Love: 1919 Octavia #4

1919 Octavia #4 is a beautiful condominium on a non-through block just a short walk (about 1/2 a block) from Lafayette Park. We aren’t the listing agent, it is listed by Kim Barnes of McGuire Real Estate. We know Kim and have her permission to write about her listing here.  If you’d like to learn more about it, the MLS listing details are below:

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1919 Octavia St Unit T4, San Francisco, CA 94109

$1,795,000 - 3.00Br/2Ba -  for Sale in San Francisco
Price: $1,795,000
Status: Active
MLS #: 424819
Beds: 3.00
Baths: 2
Living Area SqFt: 1,901
Property Type: Condominium
Listing Office Name: McGuire Real Estate

All data subject to ERRORS, OMISSIONS, or REVISIONS and is NOT WARRANTED. - Copyright: 2014 by San Francisco Assoc of REALTORS Equal Opportunity Housing * All information deemed reliable, but not guaranteed. * Search listings at http://www.SFOpenHomes.com


This is what we love about it:

  • 1919 Octavia is about as close to Lafayette Park as you can be without actually, um, living in the park. And if you haven’t experienced Lafayette Park on a sunny San Francisco afternoon, you’re missing out. It’s a great park, regardless of whether you want to hang with your dog, catch some rays and read a book, or take your kids to the children’s playground.
  • The rooms all have nice scale and flow. It’s a very traditional layout, with a full-width living room at the front that flows back into a formal dining room, which flows into the nicely remodeled kitchen, which flows back before making a 90 degree turn and reconnecting with the hallway. As we head down the hallway, we head towards the private rooms of this residence. There are three bedrooms and two bathrooms, in a traditional Edwardian layout.
  • The building has recently undergone significant foundation upgrades and has a new garage with two car parking for this home. And two car parking for your Range Rovers or Lexus LS – these aren’t compact parking spots we’re talking about. And if two car parking wasn’t enticing enough, how about an elevator that goes directly to your home?

Location, location, location is the old real estate cliche. And while 1919 Octavia #4 definitely is in a prime Pacific Heights location, near transit, shopping, parks, and so much more, it also has a lot of character and charm. It’s a listing we love.

Our First 3D Matterport Scan

I like to think of myself as being pretty skeptical. Or maybe, I should say that I find myself growing more skeptical. As the years go by, every piece of technology I try but discard because it fails to deliver on its marketing promises just makes me that much more skeptical. So I’m thrilled to report on a new technology, a unique 3-D camera made by Matterport that does an amazing (not yet perfect, but hey, neither are we) job of creating virtual layouts, virtual home tours, and virtual walkthroughs in one awesome embeddable link, like this one (shameless self-promotion ahead) for our listing at 239 Bonita:

What I love About Matterport 3D

The turn-around was fast. We had to give the company with the Matterport 3D camera technology a little heads up (but right in line with normal real estate service lead times) to schedule our Matterport Scan day but Nicholas Khoe of ING Studios was great to work with. Both he and his assistant were professional, friendly, and easy to work with both over e-mail and on-site. Once the scan was done, we had it in our inbox in just a few hours. Which is amazing!

What I can’t wait to see Get Better

Size. I can’t wait to see the files get smaller as their compression technology and magic algorithms do the magical math stuff that made my eyes glaze over in high school and college. But programmers, apparently, thrive on such things and I have no doubt that the engineers at Matterport can make it happen.



SFAR Publishes Advisory about Prop G in SF

Prop G in SF, if you aren’t familiar with it, is a November 2014 ballot measure that will, if passed:

increase the total transfer tax for transfers occurring after December 31, 2014 (the specified “effective date” in the proposition is January 1, 2015) regardless of whether the underlying purchase and sale agreement was entered into by the parties beforehand. Its proposed added tax would be as follows:

 For a sale during the 1st year of ownership: 24% of total gross sales price;

 For a sale during the 2nd year of ownership: 22% of total gross sales price;

 For a sale during the 3rd year of ownership: 20% of total gross sales price;

 For a sale during the 4th year of ownership: 18% of total gross sales price; and,

 For a sale during the 5th year of ownership: 14% of total gross sales price.

Properties held for 5 years or more prior to resale would not be subject to this additional tax.

If enacted, there would be few exemptions from this additional transfer tax

As you might imagine, we don’t support Prop G in SF and we will talk about why in the coming days and weeks. Now that we’ve shared our opinion, we’d love to hear yours. But we’d also remind everyone that in our experience, the best conversations are the most respectful ones. Although, as the real housewive’s franchise proves, trashy conversations are the funnest to watch.


SFAR, the San Francisco Association of Realtors, has published a new advisory form for buyers and sellers of real property (homes in all the various shapes and sizes this city imagines for them) in San Francisco. The form is available to members of the association, so if you are thinking of buying or selling in the city, please be sure to use someone qualified to represent your best interests. You should expect to see it in most disclosure packages in SF in the near future (or now).