December 21, 2011
It Would Have Been 50 Percent Over Had They Priced At A Million...
Listed for $1,100,000 last month, the 1,810 square foot Albert Lanier designed home at 4378 Cesar Chavez quickly went into contract. As a plugged-in reader soon reported, "The sign in the Herth window says…22 offers received," and as another reader soon followed:
That's lame. Those guys missed the price point and they were the first to admit it during showings.
They wasted a lot of people's time. Yet there they are, touting how badly they gauged the market. Great.
The sale of 4378 Cesar Chavez closed escrow yesterday with a reported contract price of $1,540,000. And yes, that’s 40 percent "over asking" which could have been 50 percent over had they listed it for a million.
∙ Channeling Mid-Century Modern Flair At 4378 Cesar Chavez [SocketSite]
First Published: December 21, 2011 4:45 PM
Comments from "Plugged In" Readers
Mispriced? I think not. The realtors and the seller are laughing all the way to the bank. Its called a bidding war. Get them in and excited at a low price, and watch it go to the sky. The good news from my viewpoint is that good architecture sells. Even if the real estate and banking communities don't understand that, there are a sufficient number of sophisticated buyers who value design and will pay what it takes. Hurrah for the late Albert Lanier and his fine architecture.
Posted by: Jim at December 21, 2011 7:49 PM
Obviously low inventory drove the bidding war ;)
Posted by: Eddy at December 21, 2011 9:43 PM
Classic. There's no way to win with socketsite. The market is awful, and that's all we're going to hear about it.
Posted by: sour grapes at December 21, 2011 10:21 PM
sour grapes, where do you get "the market is awful" from this? My only takeaway is that "over asking" means utterly nothing even though realtors often tout it as if it meant a whole lot. Yeah, it's an old point, but the shibboleth remains alive and thus so must the mockery of it.
Posted by: A.T. at December 22, 2011 8:09 AM
underpricng is usually the best strategy
humans are irrational
witness 2002-2007 for exhibit #1
preying on their willingness to overextend via emotional longings is the smartest strategy - I'm amazed more listing realtors are either unable or unwilling to get their clients to understand this fact...
Posted by: polip at December 22, 2011 8:59 AM
They did not purposely underprice by $440K. Maybe they thought someone would pay $1.2M so they went for th under/bring-in-the-crowds pricing, but this is just wild.
This place needs a bunch of work. Could have bought some other fixer for $840K and had $700K to work with. Again, that would just be to get to this price, not to get this place done up.
Posted by: sparky-b at December 22, 2011 9:13 AM
The thing is, in person the realtors honestly went out of their way to make the point that they didn't get the initial pricing right. In hindsight it worked out great for the seller, sure.
Posted by: [anon.ed] at December 22, 2011 9:13 AM
Underpricing take a lot of confidence on the part of the realtor and trust by the homeowner. 135 Locust comes to mind.
The best offers always come from someone who has fallen in love with the property. Getting them in the door is the first step and getting them to place a bid is the second step. No better way to get offers than to under price a home although it sounds more like they lucked into this situation. I was joking about the inventory issue below but there is an element of truth. There is demand out there but buyers are looking for the right place. The underlying belief that home ownership is desirable still comes into play and buyers / demand do come into play. I would love to see the figures behind the other 21 bids.
Personally, I feel the buyer agent here didn't do their client a favor. That said, I hope whoever owns it now has an unlimited budget, a great architect and designer because the base design and layout are great.
Posted by: eddy at December 22, 2011 9:54 AM
i'm not so sure about the "unlimited budget, a great architect" part. i couldn't find anything wrong with the place. for comparison, here's another similar lanier house that sold not too long ago: http://www.droubiteam.com/listing.php?l=142. i think they totally ruined the kitchen. i would have kept the period galley kitchen with the butcher block and all (assuming that is what was there, too). the mark brand house directly north on a similar lot sold for 2m (http://www.redfin.com/CA/San-Francisco/622-27th-St-94131/home/1997971), and it doesn't have any of the views. you've got to assign some premium to the views and the notoriety of being designed by albert lanier.
Posted by: foobar at December 22, 2011 10:15 AM
Not sure where you are going to find a place with parking, great views, and a relatively good location for 840K, no matter now much work it needs. This place also (according to the showing agents) has a view easement on the place next door -- even Larry Ellison doesn't have that.
Not sure what 'bunch of work' this place 'needs' The foundation is in good order, although some minor seismic stuff could be done. Its a great architect-designed home with great integrity. I guess you could paint over the impossible-to-find-again clear redwood-veneer panneling or blow out the carefully laid out kitchen....
Posted by: around1905 at December 22, 2011 1:11 PM
I am with "foobar" and "around 1905". Great original modern house just as it is, with relatively minor deferred maintenance. And comparing this "some other fixer" misses the whole point. That is like comparing a hamburger at McDonalds to a NY Steak at Harris's. To someone with an educated palette, there is no possible comparison.
Lets not forget 4015 21st Street, the little William Wurster that sold in March 2010 for $1.875m, some $300k over asking if I recall. What do these three properties have in common? Excellent architecture. Today SF is being populated by the new creative class that have the educated taste and will compete for the rare modern architect-designed house in SF.
Posted by: Jim at December 22, 2011 2:34 PM
sorry, that should have been the 26th street mark brand house in the comment above: http://www.redfin.com/CA/San-Francisco/4381-26th-St-94131/home/804186
Posted by: foobar at December 22, 2011 2:34 PM
Agree with sour grapes, so typical of socketsite propaganda...there's no way to win. Every exception to his "rule" has an explanation. Notably, he posts all sales consistent with his viewpoint and conveniently disregards all sales inconsistent.
Posted by: rejunkie at December 22, 2011 3:02 PM
@rejunkie (and sour grapes) for that matter, I think you have to cut the editor some slake on this one, and in general. This home was underpriced so touting over asking is a bit much even if this place went "over expectations". More generally, although the editor has a tone on the site - there isn't a totally one sided point of view and readers are welcome to post up counterpoints; and do so regularly.
And without sucking up here too much, which isn't my intent (and I've been known to throw out the "C*" word around these parts); it has to be a major pain in the ass to keep this site updated with regular content. I mean, I actually think the guy drove out and snapped a photo of Denslow Drive, or perhaps maybe someone sent it in; either way, it was up on the site pretty quickly and helpful. Point is, there is a decent forum here to somewhat openly (although I was content edited just yesterday :( unfortunately) discuss real estate in SF. So use your big brain, accept that your on a site with a perspective (unstated)
Speaking of websites and maintaining them.... does anyone know what became of the Get Lit SF website. It was truly a treasure. If you read this note, know you are missed.
*C = Cherry Picked. :)
Posted by: eddy at December 22, 2011 4:46 PM
"Not sure where you are going to find a place with parking, great views, and a relatively good location for 840K, no matter now much work it needs."
I just used that number for simplicity. But A look on recent solds, in contract, and for sale D5 shows a good amount.
"Not sure what 'bunch of work' this place 'needs' The foundation is in good order".
I haven't been there but it looks like old single pane windows. No ceiling insulation. Bathrooms could use some work. New buyer probably won't want all that redwood panelling (hopefully some of it). Wiring? Galvanized pipes? appliances? Finish the luandry room and office.
It adds up.
Posted by: sparky-b at December 23, 2011 8:55 AM
I've seen places for under a mil with two out of three (real parking, great views, good location) but not all of them. The view easement alone might be worth 100K+. My essential points are agreement with the editor's implication -- this place was deliberately underpriced, and also that this house is especially nice, making it stand above many seemingly similar, but typically impaired, properties that are selling for less.
The really odd thing is that the underpricing strategy is an up-market thing to do; in down markets, folks price higher and then let the buyer 'negotiate' a bargain. The only reasonable conclustion is that we are still in an up market for this kind of (wonderful) property.
The place indeed has single paned windows. This is kind of a good thing however since you are not allowed to put them in anymore and they are more authentic to this style of house. Some people aren't big on the multiple reflections between doubled panes of glass either, let alone the moisture that eventually collects inside the space between the glass panes.
A lot of these 70s beam-ceilinged places have a certain amount of insulation -- its added above the ceiling so that the beams can still show from below. Not certain that this place has it but the roof is thick enough that it might. In any case, its not a lot of money to add it with rigid foam.
As for the redwood panelling..... all the edges were planed after they were sawn; the outside corners are detailed wonderfully as well. The pics make it look kind of makeshift washed out; in person, it had a wonderul glow and a nubbly texture, as if it was rough sawn, but without the raised grain. The panels butt up perfectly against each other.
Truly, in this case it indeed added up.
*caveat: the pit-tub in the floor of the master bathroom probably does need to go, unless the new owner is going to cover it with branches and leaves and use it to trap large game animals...
As for the redwood panelling..... it is
Posted by: around1905 at December 23, 2011 11:11 AM
"I've seen places for under a mil with two out of three (real parking, great views, good location) but not all of them."
You can't make the view, but you can make the parking and you would have lots of money to do it with. And good locations occur a lot, this place is only a good location at best.
Posted by: sparky-b at December 23, 2011 11:43 AM
Went through this place on the open house. Truly wonderful. Open and flowing yet lots of intimate spaces. A superb example of late mid-century Bay Region modern residential design. Hopefully, the new owners appreciate it and won't fuss to much with it.
Posted by: inmycountry at December 23, 2011 12:31 PM
A few more thoughts on this house:
Single Pane Windows: First of all, the percentage of glass to floor area is not high, especially for a modern design. The windows are high quality and in very good condition. Most heat loss in SF is not through the glass, but via infiltration through the window frames. Half of the glazing faces the private courtyard in front, which is south. That means you are taking advantage of passive solar heating to warm the main level much of the time.
Insulation: Following the '73 energy crisis, California enacted energy conservation measures for residences. These measures are the precursor to the Title 24 energy requirements which took effect in 1978. The roof likely has a layer of rigid insulation over the wood decking and the walls have batt insulation.
Structural: Following the Simi Valley earthquake of 1971, seismic codes were stiffened in California. As this house was built in 1976 it would have some shear walls and a bolted foundation among other measures.
Redwood: Priceless. Would you remove or paint the redwood in a Maybeck?
Galvanized Pipes: Not a chance. Copper since at least the 1950's around here.
Posted by: inmycountry at December 23, 2011 5:38 PM
I was just throwing out some stuff, like I said I haven't been in the house. Sounds like it doesn't need any of that stuff and was just horribly priced by the agent and not bid up over it's worth by the bidders.
Posted by: sparky-b at December 23, 2011 5:59 PM
Same old socketsite BS, if it sells over asking the pricing was wrong. If it sells under asking it is proof of market weakness, never evidence of a pricing error.
Many have found that you get better offers if you start with a price that is very sweet and allow buyer demand to create the dear price.
Posted by: joe shmoe at December 24, 2011 8:26 PM
Curious about the pricing strategy of starting artificially low: if you indeed priced it lower (say $1m) than your initial estimate of what the house is truly worth (say $1.5m), and the best offer (say $1.2m)that comes in is less than desired , wouldn't you still have to pay the commission to your seller agent at the pro forma price (say 2% on $1.2m), if you decide to not accept the bid?
We are agonizing over how to set our listing price, as you can imagine.
Posted by: jack at December 25, 2011 12:52 PM
I'm no attorney jack but I believe that you only pay the commission if there is a sale. And as the seller your approval is needed to complete the sale. So if you underpriced and didn't hit your "reserve price" and you turn down the above asking offer then you don't need to pay the commission.
That's not to say that missing the mark with underpricing is a good idea because that will ultimately waste a lot of people's time including your own. Your agent should be on board with any pricing strategy before you list. His/her experience with the local market will be valuable with any pricing strategy.
In any case please run this past a real lawyer before signing anything.
Posted by: The Milkshake of Despair at December 26, 2011 9:16 AM
If you put your house up for sale and a buyer meets your asking price or greater, aren't you by law, obligated to sell it to them?
Posted by: inmycountry at December 26, 2011 10:29 AM
No, you can back out of the sale at any point prior to the closing. That's why they call it "closing". You will have to return any deposits, and might plausibly be liable for reimbursing costs the buyer has incurred (eg. inspections). I have run into some agressive buyers who thought just presenting an offer tied up the property, learning early that they are a PITA helped weed them from the buyer pool.
Only gotcha I can think of is if the buyer could claim racial or religious discrimination, but that would be very hard to prove against a typical homeowner who sells only a few houses over several decades.
Usual disclaimer, I am not a laywer, and do read the fine print on any offer you accept.
Posted by: Delancey at December 26, 2011 11:09 AM