August 4, 2006
188 King Street: Sales Update
Trying to make sense of what’s been happening over at 188 King is challenging at best.
Three months ago, 188 King priced the first of what was to be three releases of condos. This initial release consisted of 16 units, three of which (#206, #404, #505) were already marked pending, and two of which (#603, #604) we believe were penthouse units. Of these 16 units, we believe as many as 11 are currently available (including #404 which was originally pending), and we suspect that the two penthouse units were removed from the release.
In other words, it’s possible that there has only been one sale (#305) of these initial 16 units over the past three months. (The two wildcards are #404 and #503 which are both marked as “Sold” on the 188 King pricing sheet, but are both listed as Active on the MLS.)
At the same time, and as best we can tell, six more units have been “released” at various times over the past three months:
∙ 188 King #207 (1799 sq. ft.) - $1,650,000 (“Sold”)
∙ 188 King #307 (1123 sq. ft.) - $925,000 (“Sold”)
∙ 188 King #405 (1123 sq. ft.) - $995,000
∙ 188 King #502 (1900 sq. ft.) - $1,800,000
∙ 188 King #507 (1123 sq. ft.) - $1,075,000 (“Sold”)
∙ 188 King #508 (1070 sq. ft.) - $1,025,000 (“Sold”)
Of these six units, four are pending, and two (#405, #502) are still available. Assuming no other pre-sales, that would leave 24 units left to be released. And if we’re even close to being correct, there are at least 35 units (or 80%) that remain available for sale.
First Published: August 4, 2006 5:07 PM
Comments from "Plugged In" Readers
Yet more fraudulent marketing? Shouldnt it be illegal to market units as sold when they are not? Doesn't this give the false impression of high demand at their asking price points?
Posted by: lord_truth at August 4, 2006 6:11 PM
We've had our eye on 188 King since they came on the market. We think they're great units save for some storage issues (that can be worked out w/ built ins) and for the mish-mash kitchens (Bosch dishwasher - Viking range - Amana refrigerator). We just wonder when Makras RE will figure it out and convince the developer to CUT THE LISTING PRICES by at least 10%!
Posted by: deshard at August 4, 2006 6:40 PM
They are releasing units for sale bit by bit. Since when did developers release all units at once?
Nice units. I think the prices are reasonable.
Posted by: duhhhh at August 4, 2006 8:46 PM
I'm a Realtor representing a buyer in this building. We aim to close by 8/18/06. Nobody expected these things to close sooner than July 30-- the public report was pending.
I believe that everything in the building marked 'pending' has a buyer.You would do well to call the listing agent, Jim Hurley at San Francisco Marketing for your information instead of interpreting MLS data.
If anyone would like info on price, terms, etc. AFTER we close, please feel free to call me at 415-738-7040. Thanks.
Paragon Real Estate
[Editor’s Note: Thanks for the comment Cece (and for "plugging in."). We did attempt to contact Jim Hurley when we first profiled 188 King Street and never received a response. As far as units #404 and #503 which are both currenlty “Active” on the MLS, it is possible that both are “sold” (as noted on the 188 King pricing sheet), but as you are well aware the MLS tends to frown upon listing properties as “Active” when they’re not, so we’d be surprised. And as far as the distinction of closing escrow, we were actually trying to be conservative by counting anything that’s not currently “Active” (including “Contingent” and “Pending”) as being "sold."]
Posted by: Cece Blase at August 4, 2006 8:49 PM
Like the "Realtors" would be any more informed by the developer than the general public as to the "true" inventory/releases, right?
Posted by: Whatever at August 4, 2006 8:57 PM
We've been to look at 188 King twice, once in mid-June and then a couple of weeks ago and we got the distinct impression that they aren't selling.
As well, what's wrong with trying to "interpret" MLS data, especially when unscrupulous realtors and developers indeed engage in questionable marketing practices? After all, we're not looking to buy a pair of pants here, we're talking a near million-dollar purchase of a home.
Posted by: NotBuyingIt at August 4, 2006 10:11 PM
Realtors & developers are both equally guilty of peddling lies.
Posted by: Overpriced Lies at August 4, 2006 10:24 PM
We wouldn't need to call you AFTER you close for the sales info; it's public information ... duuuh.
Posted by: Double Duhhh at August 4, 2006 10:27 PM
Overpriced Lies pretty much hit the nail right on the head.
They will smile and tell you that you are getting in on the bestest best deal while they laugh all the way to the bank. No different than dealing with shady slim down on the old used car lot.
What really gets me is how these people are able to look at themselves in the mirror and live with themselves everyday. I truly believe in karma and most if not all of these horrible people will get theirs in the end. What goes around comes back around 15-fold worse.
All newbies should do their research and definitely get 'plugged-in' before embarking on any purchase. Trust no-one except yourself, a reputable realtor really experienced in representing buyers and strange enough , in most cases a good real estate attorney who is truly your real advocate in case anyone, including an agent on anyside, decides to put the screws to you. --- unfortunately, I am speaking as a Monday-morning quarterback...but I surely do know better now.
Posted by: TheyAreAllUnethical at August 4, 2006 10:45 PM
The problem with accurate data regarding status of new home/condominium sales/availability is one with lack of or NO rules.
A real estate developer has no responsibility to release information as to inventory that is for sale, pending, held back, to be released or sold to the public, to possible buyers, to buyers in escrow, to real estate agents, his own in house agents or to anyone.
This has been the way the market has been allowed to operate throughout the US for decades. It is BUYER BEWARE!!
It is virtually impossible to find out when a property actually closes escrow, unless you are the buyer or lender or have intimate information from the escrow/title company.
Most developers have found various ways to hide the closed sale information from public record - Assessor's Office, which is supposed to know the final selling price, for property tax purposes.
Presently in San Francisco, the Assessor's Office will not reveal sales data on new projects for some times up to 3 years. Go to the Assessor's Office and try to find the selling price (tax stamps) for the original sales on the St Regis (106 condo's closed escrow), the Four Seasons (144 closed sales) the Beacon (500+ sales), etc.
The data colleting/sales firms like DataQuick or Metro Scan also refuse to get accurate data from the Assessor's Office, regarding the sales of new homes and to report those sales. This leads to misinformation as to how many sales are really being completed.
The San Francisco Association of Realtors, that is supposed to report all sales, as of 8/4/06 is stating in its MLS data base that there were 53 condominiums sold for over $2,000,000 in the past year. Not one of those sales includes the 106 sold at the St Regis in the same time period. So 66% of that market does not exist according to Metro Scan, Data Quick or the SFMLS.
This is the same for numerous new projects in SF.
If you are a developer or developer's agent, it does not help you to get the best selling price, by telling future buyers and or their agents what units have previously sold for in your project! So they don't. Unless you can talk to a buyer who has bought a unit in that building, you can not find out what discounts the developer may have given to keep the selling price as the asking price.
Bottom line, new home/condominium sales data is a closely held secret.
And it is very frustrating to any real estate agent that is trying to represent a buyer or seller as to the real data in today's market of new product.
In addition to in accurate data, developers usually use purchase agreements (contracts) that are very favorable to the developer and not to the buyer. Most buyers have very little experience with real estate contracts and do not retain the advice of real estate attorneys nor real estate agents, before they enter into those contracts.
In fact, until recently, most developers in San Francisco paid a 1% brokerage fee to agents representing buyers (as compared to 2 ½ or 3% that is normal for a buyers agent), in an effort to discourage brokers/agents from representing buyers. Therefore most buyers ended up not being represented by a professional in one of their most important financial decisions.
Experienced brokers/agents and their real estate attorneys are familiar with terms and conditions that developers use to protect themselves and have been successful in modifying those terms to protect their buyers.
All Buyers should consult with someone with professional expertise (brokers, agents, attorneys, etc) before they agree to a contract to purchase from a developer or from anyone (all purchasers of real estate). Not only are the contracts full of conditions that may not be favorable to a buyer, but how is a Buyer to interpret local environmental issues; proposed, planned and/or approved new developments; adequate reserves for future maintenance; and all the 100's of factor's that are part of the real estate puzzle?
Good luck in your future house hunting, and as I stated above “BUYER BEWARE”
Posted by: Frederick at August 4, 2006 11:13 PM
Frederick--Fantastic informative post! Developer, developer agents, etal have all these unbelievably one sided contracts that seriously protect the developer from anything and penalizes the buyer from just about anything.
I'd be happy to share a few blurbs word for word on a contract from a new development to illustrate how one sided it has become. I'm guessing this is something relatively new to the industry (past few years during the crazy boom) and it will probably revert back to more standardized contracts as the market starts to stabilize a bit.
indeed it is truly a buyer's beware industry/market....limit the amount of information to the public to keep all potential buyers in the dark.
"A hunter sometimes becomes the hunted"
Posted by: TheyAreAllUnethical at August 5, 2006 12:30 AM
Heard the McDonald's will soon be up for sale. That what little light (and parking lot views) that were available to rear facing condos will ultimately go away.
Posted by: SomaSleuth at August 5, 2006 7:30 AM
First off, thanks to Frederick for his superlative post. Words of wisdom, indeed. As for 188 King and the McDonald's; funny, an agent at 188 King told us that the McDonald's has ten years left on its land lease, with an option for early termination in five years. Also was told that whoever builds there in the future cannot build any higher than the building on the opposite corner (200 Townsend- 4 or 5 stories). Interesting.
Posted by: deshard at August 5, 2006 8:16 AM
We've owned homes in San Francisco, Laguna Beach, Dallas, Austin and currently own a vacation home in Rancho Mirage (near Palm Springs), but we do rent here in SF now.
No, we're not bitter, nor are we stupid enough to sign a contract on a home purchase for nearly a million dollars without making sure we're: a. not paying an inflated price due to sketchy marketing schemes by real estate brokers on behalf of developers, b. not entering into a contract we'll regret later, worded to provide the buyer with little or no recourse against the developer and, finally, c. are sure we are getting the absolute most out of our real estate investment dollar.
Posted by: deshard at August 5, 2006 1:18 PM
Hun, very interesting comments. Lively debate. Nice blog btw Adam.
It's a little depressing I must say so many of the readers are so negative towards both agents and developers. I've been selling real estate for 12 years mostly in South of Market and over that time it wasn't until 88 King (not 188 King) also known as 1 Embarcadero South and most recently the 'Towers' - as it went through so many marketing companies, came to market in 2000 that the first people who bought in, didn't see an immediate appreciation in the value of their property once the building sold out.
Interestingly enough you could tell that building was overpriced which is why I steered most of my clients away from it, until the reduced resales started happening.
I agree the contracts on these new developments are weighted heavily in the developers favor, which is why it's important to do your due diligence prior to entering into a contract with any of them. Never hurts to have someone who can point the small 'outs' there are. Having said that we wouldn't have any new properties to purchase, nor the new amenities aka Whole Foods, that accompany them without someone willing to risk building a property that is by no means a guaranteed fortune.
I can name more than a dozen properties where the developer(s) lost millions or in the end were sued for everything they made on the property over the course of the buildings history - AND not because they were evil developers trying to do everything on the cheap, but because it's often difficult to construct something that doesn't have some problem that arises despite your best efforts over the course of the life of a building.
My point being there is a tremendous amount of risk involved for both the developers which is ongoing, as well as the buyers in many cases and the city would be a sad place indeed without the new housing going in.
As far as 188 King is concerned I happen to know a number of the agents representing the buyers in the units that are listed as sold. So that is not a lie unless of course you assume ALL agents are liars as TheyAreAllUnethical seems to hold - which is not to say properties dont fall out of contract because they do. Particularly in a nervous market such as we are in now.
Posted by: Meredith Martin at August 8, 2006 4:20 PM
Sorry, couldn't help but add one more. There isn't a conspiracy about keeping the condominium data of new developments from the public's hands. It is logistics. It sometimes takes the assessors office well over a year to break down the individual units to reassess them for tax purposes. A sore topic for me (try selling a property that hasn't been reassessed the first time for tax purposes) which happens repeatedly in new developments.
It used to be old systems and inefficiency at the assessors office was the sole culprit but they have gotten much better in the last couple of years and you very rarely see records taking more than six months to reassess these days.
(Any condo building is assessed on the land without the improvements - basically on the price the developer paid - and get's reassessed when a sale happens. When you have over a 100 simulaneous closings it takes a lot longer for the city to catch up).
There is a way to 'hide' the sales price of any property to the public which the multi million dollar estates have been doing for years in San Francisco but you rarely see people doing it. I for one support a person's right to do so in the name of privacy, and again it's not done that often.
As for the Four Seasons and the St. Regis sales data not being available through the tax assessors office, both are not just condominiums, they are also commercial hotels and restaurants, so the tax assessement on that may never be available through the normal channels. The Beacon is a land lease right now, so I'm not sure how the city is assessing it but likely the land lease situation is why it is not showing up. The same goes for any coop in the city, you will not find tax assessors records on those ever, as those buildings pay their taxes as a part of their homeowner's dues on the entire building instead of their individual units. What are the 'etc' buildings Frederick's post refers to? I'm sure there is a logical reason for each.
Buyer beware buyer beware. GEEZE! I as an agent do not get repeat business if I throw a client into an overpriced property or don't negotiate the best deal I can for them, even in a new development. And yes, those new development contracts are brutal, but in general there is always one 'out' and if not (there are a few that are rock solid) then all my clients sure as hell know their money is at risk the moment they put pen to paper and if they have the slightest reservation dont.
Posted by: Meredith Martin at August 8, 2006 5:28 PM
Thank you for the response to by post of August 4th.
Regarding individuals selling condominiums or single family homes in San Francisco, I have had most of my clients request that the title (escrow) company to not disclose the selling price in the documents that get filed with the Assessor's Office, upon the close of escrow. This still allows the Assessor to know the selling price for property tax purposes, but to record the tax stamps on a document that is not normally picked up by firms like MetroScan or DataQuick. So those sales are recorded as completed sales but the selling prices are not disclosed. You can discover that data, at the Assessor's Office if you have patience and speak with the right person.
As to the Four Seasons, they collected the property tax payments for their owners and paid them as a lump sum payment to the Assessor, which hid the individual selling price, again from MetroScan & Data Quick.
The St Regis, had their buyers sign a confidentially clause and then had the tax stamp portion of the deed referred to as a separate memorandum, which is still hard to locate. But possible if you are persistent. The fact that both of these properties are part of a mixed use complex (hotel attached) has nothing to do with the fact that each condominium has it's own assessors parcel number and is a separate taxable property.
You are correct about cooperative apartments, they pay one tax bill, but the assessor reserves the right to re-assess the building whenever there is a re-sale, which adjustment for the whole building is passed along to the new owner.
There are ways of obtaining valuations at Coop's as well, but I can't tell you all of my secrets.
Other projects, that you could not find the original selling prices include all 3 buildings at The Brannan, 200 Brannan, and most new projects in SF.
It seems interesting to me that the Assessor's Office can send a new owner a supplemental tax bill relatively quickly, but can not gather the real selling price, upon which the future property taxes are based on, sometimes for several years!!!
To me it is all designed to protect the developer from the public finding out what prices the new properties are actually selling for.
Again Buyer Beware, get some advice from professionals who can help you in an interesting market.
By the way, which way is the market going? Some areas the asking prices are being reduced, some areas (Lake Street), are still having offers over asking price with multiple offers!!
The answer is that each price point and neighborhood is an individual market unto itself.
Posted by: Fredereick at August 8, 2006 8:14 PM
Oh, sure, those poor developers who lose millions ... boo-stinkin'-hoo. Talk about contracts being weighted in the developer's favor, I just recently had a developer's agent try to tell me that the great thing about this building is that "if there are defects, you can call the developer, and they will come in and fix it at any time for the whole 10-year warranty. You don't have to sue or go to court over fix-its/defects." Woo-hoo, yeah, I totally want to give up that right. So when the toilet is leaking through the ceiling from the unit above, I'm sure the developer will pick up his phone when I call, throw on his Bruno Maglis and grab the first Ermenegildo Zegna polo he could put his hands on and be right over, huh?
Posted by: Sexy & Sassy in SF at August 8, 2006 8:20 PM
Ah Sassy...what can I say, you've obviously made up your mind. I have yet to see a developer wearing Bruno Maglis - but hey makes a good HBO series visual.
The law you refer to doesn't take away your right to sue. It only forces you to go to the developer first to give them an opportunity to fix an issue before you sue, and they have to respond in a certain time frame and so on. It applies to every new development and is a small speed bump in the road of your god given right to sue your developer...never fear.
Frederick, great response, I see you know your stuff. And here I was pegging you as new to the biz. I have long been annoyed by the assessors office but I respectfully disagree that its done solely to protect the developer.
As for the confidentiality clause at the St. Regis goes, my opinion is that it was enacted as much to protect the image of exclusivity and privacy that the building depends on to get it's healthy sale prices, as any attempt to protect the developers interests (although I will admit it serves both purposes nicely). That being said, I hardly see any Buyer at the St. Regis as an unseasoned purchaser of real estate and therefore not as susceptible to the predatory marketing practices that seem to be in question here. Which for the record I don't deny exist, it's just I have found them to be more of the exception than the rule.
The idea that developers are innately evil doesn't sit well with me any more than categorizing buyers as prey does. I've found some developers I thought should go to jail, but I've found far more that took great pride in their work, strive very hard to make sure the people that buy their properties are happy long after they are sold, and hope to cash out big. Not all do.
In the end, all of the previous sales prices from the height of 2000 would have done more harm than good if used to try to assess 2001/2002 values as the market took it's huge hit in the dot.com days - depending on what block you were on South of Market primarily of course. The rest of the city recovered much faster and fell a much shorter distance, much to my chagrin at the time.
A great rule of thumb to use when purchasing, if you stay in your place for five years, the high odds are you will end up making money on your property, whether you think you overpaid now or not. So buy a place you can afford to keep for five years and one that you will be able to live in for that long and chances are you wont be sorry.
Enough said, I will go back to enjoying everyone else's comments from now on. I just couldn't resist jumping into this one.
Posted by: Meredith Martin at August 9, 2006 12:33 AM