December 24, 2007
525 Laidley Sells For Over Asking! (But Less Than Previously Paid)
It’s a plugged-in tipster that notes 525 Laidley in Glen Park recently closed escrow rather quickly for “over asking” (listed for $1,295,000 and closed for $1,340,000) and quite possibly with “multiple offers.” And we’ll note that the “median sales price” for single family homes in District 5 (which includes Glen Park) is up 4.1% over the past year.
And while all those stats (over asking, multiple offers, and median sales price up) are sure to be seen as signs of market strength by some, the sellers might have a different perspective:
The previous owners bought it in a private sale for $1,406,000 in April 2007 (yes, eight months ago). This was not intended to be a flip but they put it on the market two months later because one of them got a new job out of state. In the meantime, they had put maybe $10K into the house. The listing price was $1,395,000. They received multiple offers but it didn't sell because "the number" they were holding out for was $1,465,000, as anyone who attended an open house was told. I guess that was the number that would cover their brokerage cost?
They then took it off the market for a while and relisted it a few weeks ago with a new agent at $1,295,000. They did no work on the house in the meantime but the major positioning change was that they now quoted and advertised the number of square feet (3200). Before, that number had been left blank. The house sold quickly for $1,340,000, much less than the offers they had turned down a few months before.
All of which leaves our tipster wondering: 1) “I understand pricing a house lower than you think it will sell for in order to spark a bidding war. But why would you price a house lower than you will accept?” And 2) “Under what circumstances does an agent NOT list the square footage and what could have changed in a couple of months? My guess was unwarranted additions but I don't see any permits filed to correct that.”
First Published: December 24, 2007 3:30 AM
Comments from "Plugged In" Readers
The main reason why the square footage number is left off of a listing is because disputes regarding square footage have historically been the number one cause for litigation in the residential real estate world. Plain and simple.
Posted by: Miles at December 26, 2007 8:50 AM
What do you know -- this place sold at a loss of 5.5% from April 2007 and the CSI numbers (out today) show the SF MSA market has seen price declines of 4.5% in the same time period. So it looks like this data point is in line with the broader trend that others who make a living compiling such data have reported.
(Yes, I know that is an oversimplification and ignores lots of other relevant issues -- the CSI "tiers" and MSA, the much bigger loss once costs/fees are factored in, etc.)
One market point I'm curious about -- anyone have any insight into December SF sales numbers? Typically December comes in right about at November's numbers.
Posted by: Trip at December 26, 2007 9:09 AM
very interesting. i like glen park a lot more than bernal. maybe we'll see glen hold these type of bernal values and bernal will finally come back down to earth.
Posted by: james at December 26, 2007 9:28 AM
Ouch. That's going to be a loss of over $200k, or just under $30k a month.
That hurts. Sure owning a home in SF ALWAYS pays off if you own it long enough (according to some around here), but sometimes that's not always possible. I'm sure these folks weren't planning on owning a home for just two months.
Figures are here:
As always, suggestions and corrections are welcome.
Posted by: missionite at December 26, 2007 9:29 AM
Give them time. They'll be sorry they paid even this price by end of summer '08.
Posted by: S&S at December 26, 2007 10:15 AM
Trip - December count stands at 211 today, but this should jump significantly when the final month reportings are in. However, Dec 07 probably will be way short of the Nov 07 count of 409 and the Dec 06 count of 503. The active inventory is down to 894.
Posted by: FSBO at December 26, 2007 10:36 AM
Details aside, I love Laidley St.
Posted by: EH at December 26, 2007 10:57 AM
Same Home Sales offer the best benchmark for pricing metrics. I wonder what this place would fetch in 8 more months? Anyone care to venture a guess.
Posted by: eddy at December 26, 2007 12:23 PM
I guess this is as apples-to-apples as you can get. A particularly interesting point (assuming it has any factual basis) is that there were "multiple offers." So this is not a dump that nobody really wanted. Several potential buyers were willing to buy the place, yet none (not even the "winner" of the bidding war) was willing to pay more than a significant amount less than it went for 7 months earlier. A pretty good indicator of the current mindset.
Missionite's numbers notwithstanding, I still think the sellers should consider themselves fortunate that the need-to-sell came now rather than a year from now.
Posted by: Trip at December 26, 2007 12:39 PM
"Need to sell"? What is that? Why wouldn't they just refinance and pull out some equity until things get better? Doesn't real estate in SF ALWAYS go up? What's going on??
This house did, after all, sell "over asking" didn't it?
I'm so confused...
Posted by: Jimmy (Bitter Renter) at December 26, 2007 1:13 PM
The bulls are strangely silent. Fluj? Anyone?
Posted by: missionite at December 26, 2007 3:56 PM
I love the northwestern stretch of Laidley, with its downtown views, but this house is on the less desirable southern stretch. $1.34 million is still a lot of money for that block. PropertyShark lists the square footage at 2250, so it is possible that 30% of the square footage of the home is unwarranted.
I don't think that first paying much more than other houses on the block have sold for, then trying to sell the house 2 months later, then turning down good offers, then finally pricing the house at a more reasonable level months later is anyone's strategy for making money in real estate.
Posted by: Dan at December 26, 2007 8:22 PM
$1.34 m for a very modest home in Glen Park? Yea, I'd say the SF real estate market is still going strong.
Posted by: sanfrantim at December 26, 2007 8:39 PM
I think that the sellers probably overpaid in the first place back in April. As sanfrantim states, 1.34MM in GP is a sign that the San Francisco market for single family homes in good locations is still very strong.
Posted by: Willow at December 26, 2007 9:53 PM
Both legal and illegal additions will not show up in the public record building area figures. Public records only show the original building area for when it was built a long time ago. There is no legal requirement for a house's area to be recorded in the public record and most newer houses do not have this info recorded just as pretty much every addition in the city (both legal and illegal) will not show up on public records.
Posted by: Miles at December 26, 2007 11:37 PM
USA Today is reporting that SF has experienced a 6.2% drop so these people are lucky.
Posted by: eddy at December 27, 2007 7:24 AM
"I think that the sellers probably overpaid in the first place back in April."
Willow, I couldn't agree with you more. In fact, I think you can say the same thing for just about every SF real estate purchase over the last three years. However, I don't see how you can conclude that a 5 1/2% price decline in 6 months is a sign that the market is "still strong" -- that is a huge drop for such a short period.
Posted by: Trip at December 27, 2007 7:39 AM
That must be "going strong" for the realtors that generated $130K in fees on this property in under a year rather than for the people who bought it from them. I can see it now:
$1.34 m for a very modest home in Glen Park? Yea, I'd say the SF real estate market is still going strong.
$1.24 m for a very modest home in Glen Park? Yea, I'd say the SF real estate market is still going strong.
$1.14 m for a very modest home in Glen Park? Yea, I'd say the SF real estate market is still going strong...
Posted by: Michael at December 27, 2007 7:55 AM
Posted by: missionite at December 27, 2007 9:34 AM
"SF has experienced a 6.2% drop..."
Again, that is single family homes in the SF metropolitan area. Single family homes in SF make up only a small fraction of the total.
There is no perfect measure. Median prices (which have risen in SF and in Glen Park) can be skewed by sales volume by price category. Case Schiller is weighted towards what is happening in Contra Costa and Alameda counties, where there are far more single family homes than in SF. The resale of a single home reflects the range one home can sell for, for which there can be considerable variation, regardless of market conditions.
Posted by: Dan at December 27, 2007 9:52 AM
As the agent representing the Sellers when they bought the property in April 2007 and again as the second listing agent on the sale in December 2007, I'll chime in here.
The former owners bought the home off-market at a price that was set by their appraiser. In retrospect one could take the position that they overpaid at that time. If the property had been exposed via a thorough marketing effort then it may have sold for closer to the price at which it closed the second time.
The sellers chose another listing agent at first who brought in zero offers despite being encouraged by the Sellers to bring in anything regardless of interest level. The high marketing price did not fly and the property did not sell. I then got the listing and we recieved six offers on the second round within a few days of marketing commencement, so clearly the property sold for market value at that time.
About 1000 square feet of the property was unwarranted, but was built to code specifications and very usable. Although few appraisers will value unwarranted square footage at the same price per foot as warranted, in this case it had strong value. overall, the property sold for a bit over $400 per foot, a VERY low price per foot for Glen Park. Frankly, I was suprised it didn't go for more.
The house was in very good condition; additionally the sellers had put in about $40K in improvements to ready it for sale, including floors, paint, carpet, appliances, etc. It is within a couple of blocks of the Glen Park shopping district on a block that has ongoing redevelopment efforts and will continue to improve.
I appreciate the points of the naysayers, but it's too early to hypothicate that the market is beginning to fall. SF Buyers' agents will tell you that there is a good deal of pent-up demand for SF real estate as many folks are reaping the benefits of a 10-year economic boom. Conversely, many sellers are deliberately keeping their properties off-market in response to the continuing national negative press, making the situation worse for buyers. And rates are still at historic lows and appear to be heading downward, which will surely bring more SF buyers off the fence and back into the market.
In some areas of the City it is simply impossible to find a property to buy, with Sellers dribbling 1-2 properties a week onto the market in certain categories, such as North Side condos. On the south side, 1039 Noe is certainly an interesting reference point, selling for more than $400K over asking to one of 20 offerors.
In any event, time will tell, but as you may have gathered I'm bullish for the next 12 months.
Posted by: Travis Pacoe at January 17, 2008 9:34 AM
I was the seller of this property in 2003. I was the trustee for the selling estate at that time. The property sold for 400K. I was well aquanted with the property. I toured the property during it's listing. It was interesting to see the updates and changes that had taken place.
The during the listing, both the Master Bath and the "inlaw bath" had work done. ( in contrast to the statement that no additional work was performed between the listings) When I sold the home in '93 it had a one bedroom inlaw suite on the main entrance level. ( not warranted ). The kitchen has been removed and replaced with the current wet bar. The lower garden level bathroom was Illegal at the time (my owner) purchased the property. At the time of that purchase, the owner was required to remove the garden level studio suite. The kitchen ( located were the garden office is now ) and bath were removed. There seems to be the loop hole for the square footage discrepancy. I believe the home was built in the late 70's as a 3 bedroom 3 bathroom home. The family room may have been used as a 4th bedroom. This home was Never a 5 bedroom - 4 bath home and I doubt if the permits could be obtained to legalize all the space for current uses.
Posted by: bill at February 27, 2008 5:38 PM