3731 Fillmore #2
Asking $699,000 when originally marketed by Brown & Co. but then re-listed, reduced and withdrawn at $549,000 last month, 3731 Fillmore Street #2 is back on the MLS with a “list price” of $295,888 (from the listing: “Must sell by tuesday, february 24th. Auctioned to the highest bidder at the property.”).
Keep in mind it’s one of six units in a TIC building and the parking is leased. And do let us know if you go (or figure out at what time).


UPDATE: Additional insight from a plugged-in agent:

5 of the 6 are vacant, so expect 4 more to hit the market soon. #6 sold for $710k in Oct ’08.

My guess is they are about 800 SqFt, maybe a bit more. Definitely could be sold as a 2BR since the dining room has a closet and window. Also has laundry hook ups in each apartment, and there is a garage, but they are selling spots separately. Roof deck is spectacular, small shared yard is just OK.

Not great news for the buyers of number six (who might share the last name of Brown).
∙ Listing: 3731 Fillmore #2 (1/1) – $295,888 (auction) [MLS]

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by Jimmy

    I like the strategy; something different to determine true market value. I suspect it will go for ~$450k. Non-ellis building so there will be investors there too.

  2. Posted by Eoral

    My take on the stratedgy is: ouch!

  3. Posted by tipster

    $466K

  4. Posted by resp

    i saw these units when they were listed and what i can’t figure out is why all the other units sold at such ridiculous prices. the remodel quality/size was far below what tim brown normally puts his name on.
    in this case, i’d be more worried about my TIC partners solvency than what i’m paying to get in bed with them. does anyone know the status of anyone else involved in the building? group loan or individual?
    i’ll bet Bank of Marin has a high interest in getting this sold vs. foreclosure since there has never been a TIC foreclosed in SF, right?

  5. Posted by Jay

    Yawn. Still overpriced. Small TIC no parking + high HOA. A quick redfin shows dozens of $300-400k 1 BR units that aren’t selling all over the city.
    For this particular unit, just HOA + Parking = $750!
    1 BR + parking in the same area in the Marina (maybe same apt??) is $1400!
    http://sfbay.craigslist.org/sfc/apa/1042936762.html
    Therefore to get to rent parity this unit should be in the $150-200k range.

  6. Posted by gh

    I live a block away and this isn’t a $1,400 apartment, get your facts straight. A one bedroom apartment next to mine in our building rented this week for $2,925, has a bay view though, but no parking.
    Sells for $435K, not a bad deal for the location.

  7. Posted by D

    I think Jay’s Craig’s List rental is fake. That’s way too low for the Marina *with parking*.

  8. Posted by resp

    cmon, somebody chime in. has any TIC in SF ever gotten to this close to foreclosure?
    this could be a big deal.

  9. Posted by ester

    Must Sell by Tuesday, February 24th. Auctioned to the Highest Bidder at the Property at 1pm. Lockbox Code: XXXX. Please Show First, Then Contact Agent. Disclosure Package to Follow. 6-Months of Free Parking Paid by Seller.

  10. Posted by rr

    I agree with resp’s first post-
    Who would buy this? I wouldn’t drop 100’s of k’s of cash into a TIC in this market because you are buying into a bucket of liability and will get left holding the pieces if your TIC neighbors go belly up like this one did. You’d also have the hardest thing to resell, as TIC loans are some of the hardest to qualify for, and you lose most of your rights as a landlord if you want to rent it, since you can’t ellis or OMI without approval of everyone else.
    That HOA seems small too, so it must be excluding property taxes.
    Since it went to auction instead of foreclosure, I’m guessing that it’s probably a group loan. I don’t think banks have a vested interest in keeping TIC loans ‘clean’, since they are the ones writing them. (i.e., the bank isn’t going to trick itself into thinking no one has foreclosed)

  11. Posted by tipster

    Rent for this place would be in the range of $1900-2100.
    Both of you are being ridiculous: it isn’t particularly helpful to state the extreme low end or the extreme high end, neither of which applies to this unit.
    Rents are falling about 10% per year, and a lot of units are rent controlled in this area, so it wouldn’t be hard to find something comparable for about $1600-1700 in a year or two that would be pretty stable.
    At $400K, your HOA, and property taxes will be about half that, even after taxes. Mortgage interest after taxes would be another $1K at least.
    Buying this place is just dumb. You’ll lose at least $40K in the next year. Goodness, just lease a place for a year, you can find something every bit as nice for no more than you’d pay to own it.
    And if this is for weekends in the city, during downturns hotel rooms are cheap, cheap, cheap, so you’d be better off going that route.

  12. Posted by ester

    tipster, I can’t follow your math. can you spell it out a little bit more??

  13. Posted by D

    As per SF Rent Stats, the average 1 bed in the Marina over the last 90 days is going for $2,311/mo.

  14. Posted by EH

    Dear Agents,
    Srsly, you can buy a Canon SD1000 for $150.

  15. Posted by anonm

    I predict that this will go for over $295k with multiple (low) bids, and that someone will then claim that the multiple bids demonstrate that there is still a lot of pent up demand for SF real estate.

  16. Posted by ester

    How big is this unit?
    I am going to take a look tomorrow. If it is over 600 sq feet, I am going to the auction on Tuesday.

  17. Posted by Delancey

    I prefer this one, a genuine wall street original:
    http://www.calculatedriskblog.com/2008/03/bear-stearns-building-today.html
    (Bear Stearns personnel bet the company they could offload their MBS & CDO toxic waste before the world got wise. They lost.)

  18. Posted by Delancey

    Whoops, the above is supposed to be on the TARP/crane thread.

  19. Posted by blaise5000

    i rent a similar 1br apartment on the same block for $2100/mo. been there for 2 yrs.
    the outside of this building is hideous, and conveniently is not shown on MLS.
    my guess is $350,000.

  20. Posted by sfrob

    this is about 1,000 SqFt and is staged as a 2BR, plus it is remodeled… not a great remodel, but most of the $2,000 1BR’s in the area are pretty crappy/old and definitely smaller. So this easily rents for $3,000 or so. If you don’t believe that then you don’t live in the area.
    btw, this is the same auction firm as the Sunset auction http://sfishomeblog.blogspot.com/2009/02/auctioned-san-francisco-property.html
    I doubt this will get anywhere near the level of interest that home supposedly got, but since not everyone reads SS, and many people believe the Marina won’t come down anywhere near the levels predicted here, I agree with the high $400k predictions… my guess is $500k. If this were a condo it would easily fetch $650k, and a 20% to 30% discount to condos is about right for a TIC in a 6-unit bldg

  21. Posted by Jimmy

    So many uninformed renters acting as wanna-be buyers; classic Socketsite!
    ‘i’d be more worried about my TIC partners solvency than what i’m paying to get in bed with them’
    I don’t particularly like the property, but an 800 ft. formal 1BR in the Marina will absolutely sell for at least $450k.
    We’ll know soon enough.

  22. Posted by spencer

    $342,525

  23. Posted by blaise5000

    This apartment for $2500/mo looks nicer:
    1701 North Point #102
    http://www.peakrealtygroup.com/RentalBldg_Summary.aspx?x

  24. Posted by anonymous

    anonymous guess it right under $475k.

  25. Posted by tipster

    From the post above:
    Must Sell by Tuesday, February 24th. Auctioned to the Highest Bidder at the Property at 1pm. Lockbox Code: XXXX. Please Show First, Then Contact Agent. Disclosure Package to Follow. 6-Months of Free Parking Paid by Seller.
    Posted by: ester at February 20, 2009 11:19 AM

    ester, you weren’t supposed to let on that you are a real estate salesperson. You’re supposed to be the “real estate is always profitable” landlord, remember?

  26. Posted by EBGuy

    I wonder what the disclosure packet looks like. I know I’d want to see:
    1. Number of units owner occupied
    2. Length of occupancy
    Well assessed value June, 2008 was 273k for the whole building, so this is recently converted. (maybe I need to work on my sfgov-fu)…
    Okay, not to great at the recorder’s summaries but it appears:
    1. The Belli’s were the “TIC developers”
    2. Other (co)owners: Wagner-penision plan, Brown, and Wasserman.
    Hmmm… this could get dicey for the condo lottery (depends on tenant occupancy, etc…). Would rather see more co-owners, than less.

  27. Posted by looker

    “D”
    where can one find rent stats?

  28. Posted by spencer

    you can’t find actual and useful rent stats from any good source. You can find stats on what rentals are being listed for and you can find stats onwhat large companies like citapartmetns rents for.
    A reasonable stat is to take 2-30% of what the rental listings look like.
    So if the average 2bd room on CL is $2500/mo, you can reasonable assume that the average is around 2000

  29. Posted by D

    SF Rent Stats is here:
    http://mullinslab2.ucsf.edu/SFrentstats/
    It pulls directly from Craigs List, so you may be missing the rental equivalent of “pocket listings.”
    To find the averages, look on the left hand menu for Neighborhood Data. Then, click on “Last 90 Days.” You’ll get a nice table.
    I wish you could get more specific statistics (e.g., whether it includes parking, whether it is covered under rent control), but it’s the best I’ve found.

  30. Posted by resp

    i think most people here are still barking up the wrong tree. its not about square footage or number of bathrooms or comparable rents. remember you’re buying 1/6 of the building, not unit #2.
    what matters is the financial condition of your partners. anyone got the disclosures yet? EBGuy – is that Tim Brown as a co-owner?
    in a sick way this could be a good investment if your partners go belly up and you have enough capital to take over their share(s) of the building for a pittance.

  31. Posted by EBGuy

    EBGuy – is that Tim Brown as a co-owner?
    Jeffery V. and Bonnie M. Brown. No idea if they are any relation to Tim Brown.

  32. Posted by EBGuy

    in a sick way this could be a good investment if your partners go belly up and you have enough capital to take over their share(s) of the building for a pittance.
    resp, you may be on to something. I know that in our TIC agreement there was a “right of first refusal” clause, so if the auction price come in low, a co-owner has the right to purchase it for that price. The auction could be a sham…

  33. Posted by Grimwood

    I think Jimmy is close but slightly low. So – I say $342,526.

  34. Posted by 45yo hipster listening2: the cars/candy-o

    I think this is the first fractional TIC auction/pre foreclosure and so yes, it is a big deal! I wonder how bank of marin feels about this.
    This was not one of tim browns personal developments, as he works with others ( inc. me).
    I wonder if the right of first refusal applies to this auction. If this does come in low, it could be interesting.
    I say $450-500k.

  35. Posted by SFisHOME

    Not my listing, but had to check it out. I took 2 videos and posted them along with additional info posted at http://SFisHomeBlog.blogspot.com
    First video of roof deck and #5. 2nd video is of the unit in question.
    5 of the 6 are vacant, so expect 4 more to hit the market soon. #6 sold for $710k in Oct ’08.
    My guess is they are about 800 SqFt, maybe a bit more. Definitely could be sold as a 2BR since the dining room has a closet and window. Also has laundry hook ups in each apartment, and there is a garage, but they are selling spots separately. Roof deck is spectacular, small shared yard is just OK. Again, not my listing.

  36. Posted by SF Banker

    Oh wow an auction in my hood – so much for so called “prime”! How quickly things are changing each and every day! I wouldn’t want to own a place like this at any price. Stuck with 5 other “co-owners”, small/bad layout, ugly inside and out. Places like this make far more sense as a rental than a condo.
    An entire building (3 flat down the street on Scott) went for 1.8 not long ago, so if you assume this approximately the same size, divided by 6 you are at around $300K per unit. Minus a discount(premium) for not owning the entire building and minus again for the TIC or should they say “TICing Timebomb”, fair value ain’t much higher than the starting price.
    Very excited to see how this one plays out. Some lucky knife catcher is going to get a “great” deal.

  37. Posted by EBGuy

    5 of the 6 are vacant, so expect 4 more to hit the market soon.
    Sfish, Thanks for posting the info (much better than me trying to read the tea leaves from the public record). I agree with your assessment (see below). The Browns bought unit 6 and Wasserman and Wagner are probably partners with the Bellis… From the SFish meditation blog:
    To speculate even more, I’ll guess that the auction is designed to determine the true market value of these TIC units. #2 is probably the least desirable in the building, although not a bad apartment at all. #6 almost definitely set the high price because it went into contract before the financial crisis became national news. The auction of #2 without parking is likely to set the bottom price. Then all other units may then be brought to market with prices in between.

  38. Posted by SFisHOME

    SF Banker, the only Scott St building that matches your description is 3551-3553 Scott St sold for $1.827 this past November.
    It was a 2-unit building in which the lower unit had a “bonus room” which is probably why you saw it as a 3-unit. That lower unit was not remodeled, and had a tenant.
    I imagine this updates your analysis?
    EBGuy, glad it was appreciated. It was far too interesting not to make the video-taking trip.

  39. Posted by RogerRabbit

    One word: TIC

  40. Posted by SF Banker

    SF is home – Yeah that is the one. I actually know very little about it, but someone mentioned it in passing if I recall. I assumed it was a 3 unit like our place – what about in the back on the ground floor behind the garage? We have a small studio in our building – probably 600 square feet that opens up into the garden which is only usable by the tenant of this unit. May not be warranted though, not sure. All the buildings in this area are very similar in size and layout so pretty much apples to apples. I live what appears to be an identical building in down the street – we have a “bonus room” area in the back (probably 7 x 12 feet) which I think was an add on expansion at some point. It is a “sunroom”, although we use it as an office. No closet, and you have to go through one of the other 2 bedrooms to get to it. 1.8 seems to be WAY below what they were putting single units on the market for as early as the summer. I remember seeing a few in the neighborhood – virtually identical floor plan from 1.2-1.3 (on divis – discount) to 1.4 (on Alhambra – premium). 1.8 is a pretty big haircut – 900k per unit and you own the whole thing.

  41. Posted by SFisHOME

    Yes, the Marina flats are pretty typical with only minor variations from each other. Right now there are quite a few individuals flats on the market – mostly Condos, but some TIC’s.
    3514 Pierce is a top floor TIC in a 2-unit asking $1.349 and is in contract. The lower unit, #3516 is asking $1.17 after a price drop and not yet in contract. They are reodeled, so if you dropped $200k into the Scott St building you’d be at the $1.1 mark.
    The inventory is definitely building, so prices are coming down on these units. I know quite a few buyers who will begin to jump in when these hit the $1 million mark or so. Unfortunately that’s another 20% for most of them.
    Fillmore on the other hand is just in a totally different price range, and will draw in a completely different crowd. I’ll be there just to see how it goes.

  42. Posted by suzyq

    it’s an auction it’s a 1pm – went to one last week by the same auctioneers in Central Sunset (1206 32nd)the property was listed at $349k and went for 800k and there wer 3 people that bid that much. the bidding stopped at that and then they said the top person had 10 days to remove all contingencies or it went to the next one (remember all offers are not necessarily created equal even if the offering prices may be the same)
    It will be interesting to see if the property appraises BTW there wer about 300 people at the auction

  43. Posted by Michiko

    @Suziq,
    Who are the auctioneers?

  44. Posted by mrfister

    What’s the concensus on 3551-3553 Scott, good purchase for two flats at 1,675SF each plus a remodeled bonus room at 400SF? And with a large 3-4 car garage and fully earthquake retrofitted. Lower tenant pays $2,000/mo. the listing broker told me.
    I’m looking at the purchase of an entire building in the same hood.

  45. Posted by simoleon

    tim brown and his cohorts esler and conomous
    profited hugely off the “only in SF” tic market.
    They have 2 other unsalable 8 unit tic projects
    on cole street and anza street. Brown and Co.
    is nearing extinction.

  46. Posted by fake_name

    No more open houses before tuesday? Did we miss it already?
    Simoleon might be right. This could be the start of the San Fran TIC house of cards. Tim and his cohorts have made tons of money – but it’s probably gonna take a more than a couple buildings gone bad to make him extinct

  47. Posted by ester

    is this on busline? but nice water view nevertheless.

  48. Posted by Jimmy (No Longer Bitter)

    I think this is an excellent way to discover the market-clearing price of these TICs. No way it is as low as $295k right now (as much as some of us wish it were true …). The auction results will be interesting.

  49. Posted by San FronziScheme

    I do not think we can discover anything from one-time-deal auctions like these. If everything was sold with auctions, then yes, it would be a significant piece of data.
    This market downturn is about fundamentals and the psychology is the force that brings us towards or away from these fundamentals.
    Auctions are all about psychology. Just like with open houses where your judgment will be influenced by all people around you, the novelty of these auctions and its 100s of gawkers/bidders will distort the outcome.
    Generalize auctions and then we’ll truly discover the market with this alternate selling medium.

  50. Posted by sfrob

    suzyq – are you around? I’d like to know more about the Sunset auction. I brought it up last week and no one seemed to give a hoot. I heard it went for $775k and you’re saying 3 people bid $800k. I was trying to say it pointed to pent up demand, but on a site that is full of anecdotes, the bears didn’t like my anecdote.
    suzyq – you were there, tell us more.
    As for Brown-Co. Do you think they care what TIC’s sell for? Just so long as they are the Listing agents. Sellers will eventually get with the program and sell at FMV, and when they do, Brown-Co will be making a killing as usual. TIC’s aren’t going anywhere, they are just completely out of line on pricing, but once they are a “deal”, they will sell again. And I think this auction tomorrow will be much more realistic than Fronzi thinks because it requires a large down payment, it’s the least desireable unit in the building, and bidders will stop when it is no longer a “deal”.

  51. Posted by fake_name

    sfrob – What you said is generally true but i don’t think you’re aware of brown & co’s complete business model. It’s not just playing agent. He helps create new TICs also. When TIC’s become a “deal” as you suggest, their creation may no create enough investment upside

  52. Posted by San FronziScheme

    sfrob,
    I understand your point. I still think the “pack effect” is crucial behind this business model.
    A small anecdote on group psychology in auctions:
    A long time ago at UCSB I used to build my own bikes with spare parts. More like a hobby. The best source for that was the UCSB CSO bi-annual bicycle sale. Something like 200 bikes were up for auction and around 100 people would show up. The CSO helpers would pull bikes randomly. Crappy bikes, OK bikes, good bikes, old bikes. Totally random.
    The UCSB kids would come in early and bid what the fair price they thought would be. Most bikes would sell for $60 whatever the condition. Some kids would “carry” their rusty bikes out and paid $100. People in the know would just wait for the crazies to get their bikes and get the hell out of the game. After the riff raff was gone, that’s when you could buy decent bikes for less than $10.
    Of course, bikes are not TICs or condos, and students are not RE investors.
    Auctions are a lot about psychology. You might be coveting something but knowing, SEEING someone coveting the same thing makes you want it MORE. That’s the pack effect auctioneers are looking for.
    To go back to the Fillmore property:
    The Litmus test will be whether the auction commands more than last asking price ($549K). If the highest bid goes over that, then we can say psychology played some role. Otherwise, it will be pure price discovery.

  53. Posted by michiko

    Like sfrob, I would like more information about the auction. It was handled by Stateside (in Kensington) but will the property actually close at the price bid at auction. Seems like if a buyer might have second thoughts the next day if they overbid at auction. Unless all cash is required, the buyer still has to put up or shut up.

  54. Posted by sfrob

    Fronzi – if it sells for $549k or anywhere near that, you’ll have proven your theory for all eternity. I’m going to try to be there tomorrow just to take it in and see if it gets nutty or not. That is why I’m so dang curious for suzyq’s telling of the Sunset story.
    fake_name – how is Brown & Co involved? You mean as an investor or flipper? Or they have some other way of making money when a building goes from rental to TIC?
    I don’t know their biz model other than the obvious, they sell a lot of TIC’s. In general setting up a building as a TIC is as simple as hiring an attorney to draw up all the proper paperwork, or earlier hire one to Ellis Act the building. But I don’t see how or why Brown & Co would get involved in that other then to encourage it along since I believe (or thought I knew) that Brown & Co made 99.9% of their money off the commissions of selling TICs. Do you have some other insight?
    Of course I would completely agree that if TIC’s start to sell for 30% discounts to condos (about right for 6-unit building TIC’s like Fillmore), then maybe fewer building owners will want to go TIC and Brown & Co will suffer. But like any smart business, they will adapt. They can just convert to another speciality, or to regular transactions…. like listing all those underwater owners they have sold to over the years as Short Sale and REO specialists 🙂

  55. Posted by chuckie

    I was told by an agent that Tim Brown is one of the largest developers of TICs in the city.

  56. Posted by fake_name

    You may find that Brown & Co. represented the sellers of many of these TIC buildings when they were buying those buildings. (i.e. commission both in and out of the flip). You may also see some equity/partnership in some cases cleverly disguised. You may also see some relationships with appraisers & banks that are less than arms length.

  57. Posted by resp

    just checking back. anyone know how much the group loan is (if there is one)? and how much cash down is needed for this share of the TIC? the broker never called me back and i didn’t puruse it since i wasn’t seriously interested. not sure it they had too many people interested or just didn’t want to answer the tough questions. forget Tim Brown, what’s Andy Sirkin gonna do next?

  58. Posted by auden

    What time is the auction? I may go watch out of curiousity.

  59. Posted by auden

    Nevermind, found it. 1PM.

  60. Posted by 45yo hipster

    time out on all the brown & co speculation. i have know tim brown for many years, and he and his firm do sell alot of tic’s, but they also sell sfh’s condos, etc. they do work with developers/property owners interested in converting their bldg’s to tic’s, since they have alot of experience in that area. and there is nothing wrong with that, it’s a value added service that works for both broker and seller. they do have connections with several tic attorneys, local banks that do group loans, etc., but i am not aware of any shady or improper activities that fake_name implies.
    they are not usually involved in equity/partnerships with tic’s. tim has his own projects (usually larger condo bldg’s.) they are actually one of the better RE agencies in town, as they’re on top of their game, and well respected in the RE community.
    brown & co did help validate the tic model and especially with the advent of group loans, they became widely accepted in SF. (this is not much different than the trajectory to respectability of manhattan co-ops.) so i suppose this can make them a lightning rod for tic criticisms. but at the end of the day, if you don’t like tic’s, don’t buy one. their existance is a good thing to many people with limited means trying to buy in the city.

  61. Posted by settingrecordstraight

    Just to set the record straight, I have reviewed the disclosures. The unit diagrams say 798 square feet, so you all were dead on when you said ~800 sq.ft.
    I had clients who were interested in showing up to the auction today, but who could not pull it together by this afternoon. Good thing we did not waste our time! Read on…
    I have been going back-and-forth with the listing agent/auctioneer over the past few days. I also exchanged e-mails with the previous listing agents at Brown & Co. Turns out that this is just a decision that the Seller made in an effort to sell this sh** and sell it fast.
    Well, it turns out after all that there was a confidential “reserve price” (i.e., minimum accepted bid price) set by the Seller, which the auctioneer was aware of, of course.
    Apparently this price was $550k and tons of people showed up today but nobody went up that high, and therfore nobody walked away owning 1/6 of this building today w/the exclusive right to occupy #2 or any unit for that matter.
    The listing agent told me this morning prior to the auction that the other 4 vacant units may very well go up for auction today as well if things went in the right direction; but OF COURSE nobody wanted to offer anything above $550k. Duhhh!
    I told the listing agent to let me know when his Seller gets back in touch with reality and the current economy/market. What a frickin scam and a waste of time!

  62. Posted by settingrecordstraight

    To answer your question Resp….25% minimum down payment for a Bank of Marin fractional TIC loan. 20% down for a loan from Sterling Bank.

  63. Posted by diemos

    “Well, it turns out after all that there was a confidential “reserve price” ”
    False alarm, no capitulation sighted at 3731 Fillmore.

  64. Posted by SFisHOME

    Video of the auction at SFisHomeBlog.blogspot.com
    Agreed, was a farce. I had not heard what the reserve was, but it was clear the highest bidder at $410k was no where near what they were hoping for. The auction was a comedy of errors which didn’t help. But if the $550k reserve is true, they were all smoking something because OBVIOUSLY they were never going to get that since a $549k MLS listing go nothing.
    Nut shell of the auction with details at my blog: about 75 people, 20 to 25 who signed up to bid, but probably only 5 or 6 people who raised their hand to bid. It went slow and cautiously. Highest bid $410k (well, someone bid $411k and they refused to acknowledge it, one of the many whacky on the spot decisions)

  65. Posted by resp

    So let’s review the information given above and public disclosures.
    1. 6 unit TIC goes up for sale in the fall. only one unit (with the least desirable location in the building) sells for $710K to someone with the same last name as the selling agent.
    2. 4 months later nothing else in the building has sold despite listing prices as low as $550K.
    3. The seller apparently changes “strategy” and calls for an auction of the one unit which now has the least desireable location within the building.
    4. the MLS listing by the agent states “property MUST be sold at auction on Feb 24”.
    5. Come auction day the auctioneer (with the seller present) decides to auction 3 out of 5 units instead of one based on the number of people that showed up. Even a half hour before the auction, the number of units to be sold hadn’t been decided but there was no prior public announcement about anything but one unit to be sold.
    6. The potential buyers don’t have to enter any kind of legally binding agreement prior to the auction. They just write a number on a piece of paper. There are no disclosures of any kind to be found on site.
    7. Right before the auction, the auctioneer reveals one minor detail – that a “secret” reserve price must be met for any of the units to sell. Only the high bidder will be revealed that number.
    8. After the price is driven up to $410K the auctioneer informs everyone that we’re back to selling only one unit cuz it ain’t high enough for the seller to accept for all 3 units.
    9. After the “hammer goes down” everyone is essentially informed that the secret reserve price wasn’t met and everyone goes home pissed.
    IMO this was a sham, a gimmick, a marketing technique that I could never have imagined. It should be investigated.

  66. Posted by settingtherecordstraight

    Wow, thanks for the update SFisHome. Great video too, by the way. What a bummer this all turned out to be. And HOW SAD that Realtors did not check the MLS Property History to realize that it is a TIC and not a Condo. Oh man, people can be SO sloooow sometimes. Not to mention the fact that I really strongly believe that if you are practicing Real Estate in San Francisco, understanding the ins and outs of TICs is an absolute *must* whether you like them or not. Come on people! My goodness…
    When reviewing disclosures and the Statewide Real Estate Auctions website prior to the auction, I knew this “reserve price” issue *could* come up (http://www.statewiderealestateauctions.com/default.aspx?pp=63769)
    BUT…since they were advertising on MLS at $295k or whatever, I figured that either (a) they were not doing it this way; or (b) if there was a reserve price, it would NOT be anything in the $500k range! LOL! Ah well… life goes on. What a crock!
    It seems that legally they should have disclosed their auction terms on MLSor *at least* in their disclosures. The fact that they advertised in at ~$295k on MLS and were technically offering a 2.5% commission w/o any contingencies or caveats (e.g., 2.5% commission subject to the highest bid meeting the reserve price or auction terms per our website)…. I mean, seriously (no joke) the agent of the higest bidder probably could legally argue that they should be paid a commission for showing up with the highest bid today. Oh how I would love to be an attorney right now (first, so that I could understand the law just a bit more. second, so that I could help that Realtor argue for their $10k in commission).
    Thanks for listening and for letting me vent! 🙂

  67. Posted by settingtherecordstraight

    Resp…you posted your last posting while I was typing my long one. I agree with you! Someone should really investigate this. Something went wrong here & I will not tolerate it; this undermines the integrity of Realtors, Real Estate and property auctions. It f-ing pisses me off, if ya have not yet noticed 😉
    My clients were seriously interested in this property & in potentially participating in the process. Had we shown up, it would have made ME look bad amongst other things. Bad form! Not cool.

  68. Posted by resp

    settingtherecord – thanks for pointing out the reserve price on the auctioneers website. guess we should have all seen that but i assumed the MUST SELL in the mls meant must sell.
    at least we all figured out the market price isn’t much above $410K (the questionable auction ethics probably drove away higher bidders). I would’ve paid $425K for any/all of the 3 units if I didn’t think the rules of the game were gonna change.
    It was so hilarious to hear the auctioneer try to use the last sale of $710 to try to drive the price up. Of course that unit included the only parking spot in the building – “but maybe the owner of that spot will negotiate a sale of the parking to the new buyer.” puluease. Does anyone really think that unit sold at arms length for $710? Can anyone search public records to get anymore info? Also can anyone find what the whole building was purchased for?
    For Rent signs go up now?

  69. Posted by David Esler

    Hi,
    David Esler here, from Brown and Company. I’d like to first respond to this:
    “tim brown and his cohorts esler and conomous
    profited hugely off the “only in SF” tic market.
    They have 2 other unsalable 8 unit tic projects
    on cole street and anza street. Brown and Co.
    is nearing extinction.”
    I am the listing agent and part owner of 960 Anza Street. I have three out of eight units in contract within one month of marketing and am expecting an offer on a fourth today. I don’t think that constitutes “unsaleable”.
    Brown and Company does sell the most TIC’s. One of many reasons for this is Tim Brown set up the first fractional loans with the Bank of Marin in 2005. There was and still is a huge demand for fractional financing in SF as TIC sales have been increasing annually. Tim is a SF native and has been in real estate in the city for thirty-years. His expertise goes well beyond tenancy-in-common.
    The SF market is down but we are still seeing the right location and the right product move. Please look at 901 Union or 960 Anza as examples of this.

  70. Posted by David Esler

    “To answer your question Resp….25% minimum down payment for a Bank of Marin fractional TIC loan. 20% down for a loan from Sterling Bank.”
    Incorrect, Bank of Marin will allow 20% down with a 5% seller carry. They will do exceptions below 20% with excellent credit.
    Sterling Bank will allow 10% down with a 10% seller carry.

  71. Posted by San FronziScheme

    sfrob,
    You were correct. These auctions do show the level of demand as well as the level of disconnect between sellers and buyers.
    You win, but in a way we all win.
    What we need in this market stalemate is price discovery and kudos to the sales guys for jumping into the shark pond there. Too bad it backfired but we have to welcome everything that will show where this market stands.

  72. Posted by chuckie

    “tim has his own projects (usually larger condo bldg’s.) they are actually one of the better RE agencies in town, as they’re on top of their game, and well respected in the RE community”
    well respected in the RE community?
    Not after this auction fiasco (scam??).

  73. Posted by settingtherecordstraight

    Dave,
    Thank you for your comments on the Bank of Marin & Sterling Bank down payment requirements. I am well aware that the carry backs are allowed with both banks (I too do the majority of my work in the TIC biz); but the carry backs do not apply in the context of this auction unfortunately, due to what the current listing agents/auctioneers told me. Unfortunate, as I am sure that carry backs were A-OK when Tim & John had the listing. What a mess, eh?

  74. Posted by John Farnham

    This is John Farnham, I was the co-listing agent at 3731 Fillmore and have been co-listing properties with Tim Brown for more than seven years. One of the reasons I went to work for Tim, and have continued to work for Tim, is his ethical committment to real estate in San Francisco. This is evidenced by more than thirty years experience and being nominated to the SFAR Board of Directors. When I started in the real estate business, many senior agents in the City told me I was going to work for one of the most respected people in the City and I have found that to be true. Some of the allegations printed above are absolutely ridiculous.
    I would like to make it clear that Brown & Co. had nothing to do with this auction, and that we are on record as recommending against such a tactic. The Seller unilaterally decided to hold this auction and, being the owner, can do whatever he likes with his property. Property rights, remember?
    Although it is true that we are the #1 TIC sales team in the city for the past five years, it is also true that we have an expansive business that includes single family homes, condo developments, and commercial/mixed use properties. If you check MLS statistics you will find that Tim and I have consistently ranked in the top ten for total MLS sales volume in the City. In fact, out of our current listings, we have a new “Green” house at 538 Laidley, five condos at 425 14th Street & two condos at 417 & 421 Carl.
    I take issue with the idea that TIC’s are not selling – just look at 901, 903, 905, 907 & 911 Union that have all closed in the past week. Why doesn’t anyone write about that? Also, regarding our project at 675 Cole, we have four units closed, two in contract & offers pending on the remaining four. Doesn’t seem like too much of a disaster, right?
    After reading all the multiple comments, I am alarmed at how much misinformation/slander is spewed out on this site. If everyone would spend as much time working instead of complaining, we all would be better off.
    If anyone has specific questions about any of our listings, TIC sales in San Francisco, fractional financing, or anything else related to Brown & Co’s real estate business, I invite them to send me an email @ john@brownandco-sf.com.

  75. Posted by settingtherecordstraight

    Amen John! I would like to think that Socket Site was created and should be used for a positive purpose (i.e., spreading knowledge & sharing the facts); rather than the negativity, personal bashing and slander that typically occurs here. Kudos to you for standing up for your firm!

  76. Posted by Trip

    John, I assume you are planning to sever your business relationship with this seller in the name of ethical commitments and integrity. Correct?
    Also, certainly you realize that the SF real estate industry dominates the flow of (mis)information regarding the market to an extreme degree. SS is, as far as I know, the only real source of such info that is not sponsored by the realtor industry. I certainly can understand why you therefore are not too pleased with the information presented on this site.
    Lastly, I have to comment on one part of your otherwise very good post: “The Seller unilaterally decided to hold this auction and, being the owner, can do whatever he likes with his property. Property rights, remember?” This was stated sarcastically, right?

  77. Posted by [David]

    “Also, certainly you realize that the SF real estate industry dominates the flow of (mis)information regarding the market to an extreme degree. SS is, as far as I know, the only real source of such info that is not sponsored by the realtor industry. I certainly can understand why you therefore are not too pleased with the information presented on this site.”
    LOL, but socketsite appears to be a bunch of bitter renters who never did and most likely never will get into the SF real estate market. JMHO
    [Editor’s Note: Not quite, but if you prefer facts over fiction: The Average SocketSite Reader (Is Anything But).]

  78. Posted by fake_name

    John, just please tell us who the buyer of unit #1 was and if there was any family relationship and you’re free to go. not asking for anything that’s not public information.
    otherwise you are right, it was the auction company and seller who we feel crossed the line of ethics.
    thanks.

  79. Posted by San FronziScheme

    LOL, but socketsite appears to be a bunch of bitter renters who never did and most likely never will get into the SF real estate market. JMHO
    This horse died 3 years ago. Stop beating it!
    There are quite a few potential/existing landlords/homeowners here. And some are very bearish. As a landlord myself (bought really low, therefore no bitterness on that side, plus I unloaded big time before the crash) I am planning to re-load up once this business makes sense again. But at 250 times rent, there’s no way you can make a living in the current market as landlord. Plus, rents are coming down!

  80. Posted by John Farnham

    The buyer of Unit #1 was a very nice couple from the Peninsula who is using the flat as a home in the City. There is no relation to the Seller or the agency, and they were represented by their own agent.

  81. Posted by Anna

    “I would like to make it clear that Brown & Co. had nothing to do with this auction, and that we are on record as recommending against such a tactic.”
    Then why was Tim Brown there?
    “In walks Tim Brown of Brown & Co, and while I was on the street and can’t verify, I believe they all got together and decided to auction the middle two units as well as #2.”
    http://sfishomeblog.blogspot.com/2009/02/auction-story-how-it-started.html

  82. Posted by LMRiM

    Please tell me that some couple didn’t just plunk down $710K for a place that can’t even garner $420K now? Wow, 40% down in less than 5 months? Good luck, and I hope they really like that place. It’ll be more than 15 years (at least) before they see that price again IMO.

  83. Posted by resp

    LRMiM – the $710k unit did have the only garage spot but even if u value that at $75K they still paid a stupid amount. the agent is willing to stand by the fact that it was an arms length transaction. Guess it was just a dumb one. what i really can’t figure out is why they paid that much for the worst unit in the building (lower front). I

  84. Posted by Rubicon

    “I am alarmed at how much misinformation/slander is spewed out on this site”
    — John Farnham
    ” . . . slander that typically occurs here”
    — settingtherecordstraight
    be careful, publicly accusing others of criminality can be libel

  85. Posted by the backi

    To file a complaint against Bodhi Kroll and his scam operation, go here:
    http://www.dre.ca.gov/cons_complaint.html

  86. Posted by SFisHOME

    fyi, I thought the auctioneers made mistakes, but I’m not questioning their ethics. TIC’s are complicated, and unless you’ve got a lot of experience with them, it’s easy to misunderstand them. They clearly don’t have much TIC experience and it showed. But to call it a scam, or accuse them of anything illegal or unethical, is way off base IMHO.
    I also pointed out that I saw Tim Brown show up, and that I did NOT verify that he was involved in any discussions with the auctioneers or seller. As Mr. Farnham points out, Brown & Co wasn’t for the auction idea, and didn’t participate in it. Tim being there doesn’t mean he condoned it, or was involved. Maybe he was there because he lost his keys, maybe he was there to whisper in the Seller’s ear “see, I told you so”, or maybe the Seller asked him to be there to help advise him during a process that he wasn’t getting paid for, and Tim did so to maintain a relationship. It’s all speculation… but to speculate there was a scam is ridiculous.
    While I was critical of the execution of this particular auction, overall I like the auction concept for real estate. But for TIC’s in 6-unit buildings, with fractional financing, being auctioned by a non-TIC expert? Not so much.
    If anything the failure of the auction solidified the need for a firm like Brown & Co. with TIC expertise and experience.

  87. Posted by bobTrouser

    If the above is true, why were other units mentioned as being available in the auction? Who owns those units?

  88. Posted by fake_name

    SFisHOME now sucks up to Tim Brown since Tim knows who he/she is by the camera angle of the video. real estate is a small industry.
    of crooks.

  89. Posted by ernbrck1

    Shenanigans are going on all over Northern California not just S.F. I am a licensee and a Realtor in two states. I frequently review markets around the country to purchase rental property. Northern California is the WORST when it comes to accurate information on MLS listings. I am from here and very ashamed of the realtors I have contacted who want to take me to listings that they don’t have accurate information on. For example, there was a condo off Van Ness that stated there were over 600 units at the property. I looked at the on line photo of the exterior of the building which was no more than three stories high. My knowing about the neighborhood and the cross streets, I emailed the agent back (who was holding the open house no less) to ask if the other 550 units were underground perhaps near the sewer and extending into City Hall. Just kidding! I asked if she could kindly verify the number of units in the building, the HOA fees, the parking situation and how many square feet the condo was. She said “I don’t know”. If I don’t get the straight skinny, I don’t step out the door, call you back or respond to your emails. Got it?! I say politely to all realtors who have been spoiled by good times, good economy and excellent location: I am begging you, get off your well dressed tushy and ask your assistant (s) to do a little more typing, pick up a phone and ask as many questions of your sellers as you would your buyers. Unless you are planning to hypnotize buyers when they get there with your ‘Beamer or ‘Benz parked on the sidewalk, I highly recommend knowing more than all of the details! Thank you so much for this blog. It is the best!! Certain types of exposure tend to change people and systems for the good. I am wondering if your readers can obtain automatic updates.

  90. Posted by SFisHOME

    fake_name – why don’t you be specific with what ethics were violated?
    I said on here the auction was a farce – per wikipedia “A farce is a comedy… which aims to entertain the audience by means of unlikely, extravagant, and improbable situations…”.
    But I never questioned anyone’s ethics, and I posted my retort because it seemed like my words were being used to say otherwise.
    We Realtors can be touchy when it comes to ethics issues. We can lose our licenses, our Realtor affiliation, and our means of supporting ourselves, if we violate ethics. No one transaction or client is worth that.
    Sure there are unethical agents, but mostly the ones who upset you just aren’t very good. They aren’t informed, experienced, educated, etc. So do yourself a favor and INTERVIEW agents before you hire one. And fire your agent if he/she isn’t meeting your needs. If the consumer policed us via the above process better, we’d have a better reputation as an industry, and some of us would have a lot more business.
    Meanwhile, if you think there were ethics violations at the auction, my guess is that you just weren’t happy to learn that there was a reserve price once you showed up. Or that some people bid the TIC above its’ $293k list price. But that’s how auctions work. Ever buy anything on eBay, win, but not get it because it didn’t meet the reserve price? Happens all the time.
    The anger at the auction was almost entirely focused on the decision to only speak to the highest bidder when they had said they would sell to the 3 highest. But they also said they would not sell to ANYONE if the reserve wasn’t met.
    Some commenters here also seem to be missing the fact that many disclosures are made only to the Buyer once they are in contract. And you, as the Buyer, have the right to cancel the contract and get a full refund of your deposit if something is disclosed that you are not willing to accept. So ‘if’ Tim Brown were to be financially involved, and he doesn’t advertise that to the genereal public, but DOES disclose it to the Buyer, he’s not violating anything. And please don’t say that I just said he has an involvement. I didn’t because I haven’t seen it.
    By the way, I was the 3rd highest bidder, and since they said they would sell to the 3 highest, I had more right to be angry than anyone. But I wasn’t BECAUSE they had previously announced there was a reserve and at the end they made it be known that low $400’s was no where near it.
    Was I disappointed, yes. Did I think the whole thing was a train wreck, yes. Were there ethics violations? None that I witnessed.

  91. Posted by SFisHOME

    I just read the other thread on this topic where a couple of attorney’s pointed to possible misleading and false advertising issues. In light of that, then I agree, these guys were anything but clear in their MLS advertising. I can also see someone getting angry at leaving their job for the afternoon when they would not have had they known about the reserve.
    If that’s what fake_name was referring to, then fine. But that still has nothing to do with Brown & Co. And I still think an auction is in the public’s interest if done properly. It’s certainly much better than offer deadlines where you have to bid in the dark.

  92. Posted by fake_name

    I admit that Brown and Co is probably not due any blame here and I was probably wrong in this case. However there are still some unanswered questions that I don’t want to beat into the ground. Sorry, I still do not believe a rational, independent, arms length buyer paid $710 for the worst unit in the building in October 2008.
    So here’s what I would view as unethical practices by the auctioneer. Ethics is in the eyes of the beholder.
    – using $710K in any way as a comp to imply a value. Would you as an agent advise your client to do so?
    – changing their minds multiple times on the number of units to be sold, and especially not stating up front that multiple units may be sold.
    – false advertising that the units had to be sold that day.
    – the reserve fiasco (not sure but i believe on ebay the reserve is disclosed once it is hit, not when the auction is over). the seller was standing there and could’ve changed his mind on the reserve on the spot.
    – the preapproval process which consisted of verbally asking people their credit scores and if they had $125K in the bank
    – changing the rules of how the top 3 bids would be allocated.
    In summary these guys wasted everyone’s time with a fake auction. The reserve price was the same as the last listing price and they were just hoping that one stupid buyer would get sucked into a bidding frenzy. Thank god the market is smarter.
    Whether Brown was involved in anyway or not will always remain unknown but anyone associated with this property in the past or future will be tarnished. The next agent who takes over better be good at polishing turds.

  93. Posted by San FronziScheme

    I hope this SNAFU will not stop future auctions from happening. They are a great medium to make buyers’ expectations meet the sellers’ in a more direct fashion. People need to be realistic about their offers/demands (pick your camp) and find some middle ground. Homes need to be moving again.

  94. Posted by Bodhi Kroll

    Reading half of a civil code is a dangerous thing. We read the whole code and are in full compliance with all of the laws. There was not one thing illegal or unethical about our auctions. I will say this about the Filmore st. Auction, I was shown a flyer of the property listed at 599K and was not informed that it had failed to sell for $549K or we would never have agreed to a reserve of $549K. We only discovered just before the auction that this was the case and we decided to give it our best shot anyway. Furthermore the auction rules clearly state that there is a reserve price which if not met the seller is not obligated to sell. Your slanderous statements about the legality of what we did are groundless and blatantly untrue. As far as our Montery Deal in Berkeley, that is now sold thank you very much and as far as Anson Way a second auction has netted us a new buyer after the previous buyer and two back ups backed out. Furthermore, there are acusations, groundless again, by angry agents that can’t figure out how to make a living in this market, about our heavy use of Craigslist and advertising other peoples listings. Yes we did it and yes many agents reported it and yes after review by the board we were allowed to continue the practice because we know how to do it legally. Yes legally. If you want to know how to do it we are hiring and as a trainee here you can learn how to do it too. Its tough to make a living these days but while re-max and Century 21 down the street from us have closed their doors we are growing so check out our website if you want to see how to make money in this market. Sure not every place sells but what we sell is sold in 1 week with a 30 day close and multiple offers. Many of our agents are able to pick up 1-3 auction listings per week. I know its a scary time but perhaps if those of you who spend all this time slandering our company got to work or came to work for us you might not be so bitter and have so much time on your hands to hate the winners. Our team is growing and we had our best month ever in April.

  95. Posted by eddy

    There was not one thing illegal or unethical about our auctions
    That whole fiasco on 3731 Fillmore was about as shady a thing I’ve ever seen. Shady and unethical live on the same block.

  96. Posted by Rillion

    >Shady and unethical live on the same block
    It’s all micro bro!

  97. Posted by El-D

    Reading half of a civil code is a dangerous thing.
    Didn’t this get posted a few weeks ago?
    http://www.socketsite.com/archives/2009/02/a_pluggedin_reader_calls_shenanigans_and_sets_the_recor.html
    Posted by: Bodhi Kroll at May 12, 2009 5:55 PM

  98. Posted by eddy

    Nice catch. Hey, there isn’t anything illegal or unethical about posting the same comment in multiple threads!! 😉

  99. Posted by tipster

    Bodhi,
    Glad to hear that you have been so successful. All of your antics sure sound like they worked in a simpler time before the Internet. However, now that we can see just how you operate, I think I can speak for a lot of people when I say I wouldn’t come near you or your operation with a ten foot pole.
    How do you think your success will change with sites like Socketsite exposing what certainly appeared to be a sleazy transaction? Perhaps you’ll have to do a little more due diligence than you have been, to ferret out sellers who tried to sell at one price, failed to sell at that price, and then use that price as the reserve? Perhaps “looking at a flyer” might be insufficient due diligence for the future, though I’m sure that was an awful lot of work, you poor tired thing!
    Perhaps advertising the reserve price clearly in your advertisements will be a better approach, as much as I am sure that you can NOT relate to a group of people who took time off of work to attend an “auction” for which no reserve was specified? Ha ha, you sure stuck it to them when there really was a reserve! Too bad you stuck it to yourself at the same time!
    And perhaps your reputation is what is affecting your inability to hire people who know that they will be tarred with it the same way you now are. Permanently.
    WHEN YOU ACT THAT WAY, EVEN IN COMPLIANCE WITH THE LAW OR NOT, NO ONE WHO KNOWS ABOUT IT WANTS TO DEAL WITH YOU NOW THAT WE KNOW, CAPICHE?
    Let me tell you how one businessman with ethics and a reputation might have handled it instead of claiming how no laws were broken:
    I’m Brodhi Kroll and I just want to say how sorry we are for what happened. We didn’t check out the situation carefully and we caused a lot of people to take time off of work for nothing, and we will work diligently to make sure it does not happen again. Our fliers now post the reserve price clearly. And we verify that the reserve price is at least 20% under the lowest asking price or we won’t take the project. We feel badly about what happened, and we hope to earn your trust in the future. We would shut our doors before we would mislead another buyer, and we truly will make sure this sort of thing never happens again.

  100. Posted by Bodhi

    Hi you brave anonymous person named tipster. I already admitted I was guilty of making an assumption about the previous price without checking the MLS to see if I was being misled. For that I apologize. However, Reserve prices are always confidential. The fact that there is a reserve was mentioned verbally and in writing in the auction rules. A reserve price is the price that a seller is obligated to sell at if achieved. That doesn’t mean that a sale doesn’t sometimes occur even if the reserve isn’t met. We didn’t invent the reserve concept. It is age old in the auction business. You should get out more and feel free to publish your name or is it that you are to spineless to sign your name to your comments. Or is it just that your mom and dad named you tipster? Oh and feel free to check our corporate site on the DRE and note the list of agents that have joined our team. You will find our record un-blemished and in fact with the sea of crime that has been rampant in our industry we have run a sqeaky clean, Zero Fraud operation. Remember all those buyer credit backs and “creative” financing solutions virtually all agents ingaged in over the last 10 years, not us. I think I have made my point and I am going to try to resist responding to any further jabs and slanderous statements. I hang my name on the window at our office and I sign my name to my comments and I can hold my head high as I treat people fairly and operate legally and ethically.
    Bodhi Kroll

  101. Posted by San FronziScheme

    I won’t enter that debate but I’ll restate what I said earlier:
    Kudos to Bodhi for at least doing this auction. I think auctions help a very needed price discovery. Anything that can fluidify this frozen SF housing is welcome.
    May I suggest a dutch auction next time?

Add a Comment

Your email address will not be published. Required fields are marked *