638 Banks: Map
638 Banks in Bernal Heights changed hands in September of 2005 for $780,000 and then again August of 2006 for $658,744 (likely a sale to the bank). And after a month on the market at $549,000, the list price has been reduced $100,000 (now asking $449,000).
Do keep in mind that according to the listing it’s an “investor/contractor special” and there’s a “non permitted garage conversion.” And while not mentioned in listing (at least to the public), there’s a protected tenant as well. Now about those “comps” back in 2005…
∙ Listing: 638 Banks (2/1) – $449,000 [MLS]

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Comments from “Plugged-In” Readers

  1. Posted by Returning to SF

    Super scary neighborhood, too, if I remember correctly.

  2. Posted by sb

    Wow, I’d love to hear the story behind this. Did someone scam a bank out of more than $100,000?
    This property sounds like a nightmare. No bank in their right mind would offer a loan for a distressed, non-OO property. Good thing a few banks still appear suicidal. :)

  3. Posted by diemos

    Dang. Only 57% off of peak price. I’m still waiting for the first scalp on my 50% off peak prices prediction.

  4. Posted by garrett

    though i don’t see record of that transaction in ’05, i’ll believe it to be true. that said, $449K actually seems closer to market value to me seeing as though the place is boarded up, has a protected tenant and needs a ton of work. the house is not in the greatest bernal location, has been on the market for over a month and seems to have been bank owned for several months. sb (comment above) is right, getting a loan for this is going to be pretty damn tough.
    personally, i think people need to get out of the habit of comparing the current asking price to the previous list price to assess value. the home is worth what it sells for, no matter what it was previously listed at. just because a home is reduced in price, does not mean you are getting a great deal. instead, it means that it was incorrectly priced for the open market. if this house was listed at $1mm (which is perfectly legal to do) and sold for $200K, is that a sign that the market is tanking? Is it a better “deal” than if it sells for $200K when priced at $500K?

  5. Posted by Satchel

    So, Banks is the street where the foolish bought in 2005!
    This one is down 57% (based on listing – wishing – price). Propertyshark has the details, and you can see that the loans totalled $782K, or slightly more than 100% financing! Propertyshark shows the sales price as $780K. But the tax records show something interesting – a “taxable” value of $1MM!! See https://services.sfgov.org/ptx/PropertyBill_Print.asp?ID=WHCQMXILXQBOBLIZPICMXQXQXONFZIBMEGBTLFLAOHYONUEXUZ
    So, something seems really fishy here. Maybe the city came and saw the unwarranted apt and raised the tax assessment? Does anyone have any insights here?
    About this being a foolish street, didn’t we just see a house a few blocks up from here (330 Banks) asking a wishing price of $599K, which would represent a greater than 14% DECREASE from its 2005 price:
    http://www.socketsite.com/archives/2008/01/back_on_the_market_but_not_the_mls_in_bernal_330_banks.html
    The comments on the 330 Banks article are really worth going through, especially the comment from the apparent realtor that it’s a legitimate reason to keep a listing off the MLS:
    “A very good reason why properties are not in MLS is that the seller might be trying to refinance.”
    I guess no one would want the potential refinancing bank to know that the property is no longer owner occupied (330 Banks was on craigslist for rent) or that a sale is being pursued!

  6. Posted by Greg Angilly

    Oh Garrett — stop making sense on Socketsite – if we don’t compare prices, how are we supposed to prove that the end of the San Francisco real estate market is upon us. Silly Realtor!

  7. Posted by Anna

    http://sanfranciscoschtuff.com/2007/11/27/falling-over-with-29-offers/
    Over asking and multiple offers? Strong Market! Under asking and previous sales price? Meaningless nonsense. Realtor logic at its best.

  8. Posted by curmudgeon

    This is really not the nice side of Bernal. A view of 101 and the Bayshore industrial area is not my idea of “views”, and that’s basically what you get on this slope. Oh, and great proximity to Home Depot for this fixer upper….
    Bernal has benefited greatly from proximity to 101 and south bay jobs…but there’s only so much silk purse in a sows ear, imho.

  9. Posted by garrett

    anna–
    i never said that multiple offers and over asking signaled a strong market. in fact, if you take my words from my previous comment, you’ll notice that i said you should not use stats like sales price and compare it to the asking price as that is a meaningless measurement as the house is worth what somebody will pay for it. a sale over the asking price does not signal a strong market, to me it says that the house was priced incorrectly. if it sells for under the asking price, to me it says that the house was priced incorrectly.

    a better measurment would be actual sales prices as compared to other years or decades.

  10. Posted by Miles

    With regard to the protected tenant, usually it’s not as big of a deal for a house as you can OMI evict a protected tenant from a house but still have to pay the $4,500 per tenant eviction fee. This may be problematic for a contractor though who would have to prove that they lived in the property for 36 months to avoid be sued for treble damages by the evicted tenant. So the protected tenant factor, or even any kind of rent controlled tenancy, is problematic for a contractor special where you’d want to flip it in a shorter time period.

  11. Posted by tipster

    Garrett,
    Your comments re ask price vs. listing price are of course correct. That doesn’t stop Realtors from exclaiming that X property listed at 80% of value got 15 offers and therefore the market is “still strong”.
    But this is an entirely different situation. At least one person (the buyer) felt that the price they actually paid back then was equal to the value of the home. This fact was then used to convince 20 other buyers of other properties that this price was what homes sell for, and they need to raise their prices for other homes accordingly.
    The whole thing was just a giant ratcheting scam, where a buyer who wanted to defraud a bank paid whatever price they needed to, to get their hands on a property, and to them, the price didn’t matter because they were not going to pay the bank back.
    That price was then used to convince other buyers to increase their prices on other property. The value of properties WAS increasing, but solely because of their scam value, and innocent buyers had to then pay a higher price that they would not be able to realize because they had no intention of scamming the bank.
    The scam value of houses has started to evaporate. Thus, their prices have (in areas like Modesto or Phoenix, where conforming loans are available to purchase them) dropped to reflect the elimination of this value.
    You can argue til the cows come home about whether a change to conforming loan limits will really occur, we’ll know soon enough, but it doesn’t serve to change the fact that the scam value of homes is dropping and therefore prices will follow. Just about every home in Phoenix qualifies as a conforming loan and prices are dropping like a rock. Standing under that FM/FM umbrella isn’t going to change much of anything, because it is much harder to scam a FM/FM – backed loan, and getting harder by the minute. That genuine value was what drove the prices higher and it is leaving.
    Did this person overpay. Yup, but that caused 20 others to overpay and the whole thing snowballed. So the point of the post, I think, is the fact that with the scammers (which included people who may have been honest, but had no real ability to repay their loans other than a hope they could refinance) out of the market, prices have to fall.
    BTW, your comments regarding the price vs. former price are valid. NO SF house is still worth double the value it was in 2001. If people took your advice, volumes would be way down. Which is exactly what is happening.
    As for the protected tenant, or any tenant, if one evicts the tenant, you can pretty much expect to have a stern notice from the city to tear out the unpermitted work, with penalties levied against the house each month the work is undone. The tenant will report the unpermitted addition to the city on their way out the door. Unpermitted work typically prevents an eviction because the cost and loss of value of such a notice from the city is much higher than any reasonable sum you could use to buy the tenant out.

  12. Posted by garrett

    tipster–
    good comment. i agree with you.

  13. Posted by EH

    “Bordered up” LOL

  14. Posted by Mike

    Dealing with “protected tenant” can be a very costly and difficult proposition. My guess that it could cost at least $20,000 and a minimum of one year’s time. I personally would not touch this property.
    $9,000 assuming 2 tenants
    $11,000 legal fees
    $20,000 total

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