A "Gift" from the MTA?

Despite all the recent hoopla over the proposed plan to extend parking meter hours, we seem to be the beneficiaries of a gift from the SF MTA – meters along our block of Market St. now allow up to two hours of parking. I don’t want to talk about it too loudly because … but at least you can now park on the street without having to run out to feed the meter every 55 minutes.

Waiting Periods for Re-establishing Credit

Here's some information from our mortgage partner, Prospect Mortgage, on waiting times imposed by Fannie Mae for approval of mortgages for people who have had bankruptcies, foreclosures etc.:

FNMA- Waiting Periods for Derogatory tradelines; BK's, Foreclosures, Deed in Lieu, Pre-Foreclosure

• Bankruptcy (Chapter 7 or Chapter 11)

A four-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action. Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action.

• Bankruptcy (Chapter 13)

A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The time period required to re-establish credit for Chapter 13 bankruptcy actions is measured as follows: This policy recognizes that borrowers have reestablished credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a two-year time period to elapse. A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four year time period for reestablishing credit. Exceptions for Extenuating Circumstances: No exceptions are permitted to the two-year time period after a Chapter 13 discharge.

• Multiple Bankruptcy Filings

For a borrower with more than one bankruptcy filing within the past seven years, a five-year period is required to re-establish credit, measured from the most recent dismissal or discharge date. Note: The presence of multiple bankruptcies in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default. Exceptions for Extenuating Circumstances: A three-year time period is required to re-establish credit, measured from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances.

• Foreclosure

A five-year period is required to re-establish credit, measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower. Additional requirements apply after five ears up to seven years following the completion date: Exceptions for Extenuating Circumstances: A three-year period is required to re-establish credit, measured from the completion date of the foreclosure action. The additional requirements listed above apply after three years and up to seven years following the completion date, except the minimum credit score of 680 is not required. • two years from the discharge date, or • four years from the dismissal date. • The purchase of a principal residence is permitted with a minimum 10% down payment and minimum representative credit score of 680. • The purchase of a second home or investment property is not permitted. • Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time. • Cash-out refinances are not permitted for any occupancy type.

• Deed in Lieu of Foreclosure

A four-year period is required to re-establish credit, measured from the completion date (the date the deed-inlieu was executed). Additional requirements that apply after four years and up to seven years following the completion date: Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit, measured from the completion date. The additional requirements listed above apply after two years and up to seven years following the completion date.

• Preforeclosure Sale

A two-year period is required to re-establish credit, measured from the completion date. Exceptions for Extenuating Circumstances: None.

Brian Fisher
Northwest Regional Underwriting Manager
818-854-1454 blackberry 818-661-1712 fax

Thanksgiving

It's that time of year when we celebrate and ponder those things for which we are thankful.  To be honest, most of us spend more time eating, drinking, and having good times with friends and family than we do "pondering".

Sometimes it takes a little perspective to make you realize just how thankful we should be.  Read this from a recent editorial in the Toronto Star:

Back in Uganda, President Yoweri Museveni is taking the low road by letting a bill worm its way through parliament that declares war on homosexuals. Sponsored by government MP David Bahati, it would impose the death penalty on HIV-positive gays or lesbians who have sex, consign any other homosexuals to life in prison, and slap three-year jail terms on anyone who fails to report such "crimes."  Stephen Lewis, the Canadian who led UN AIDS efforts in Africa, rightly denounces the bill as "a twisted world of sexual paranoia" and "lunatic." Harper's government yesterday called it "vile and hateful."

Think about what your life would be like if this were the law where you live.

Zillow Accuracy - Buyer and Seller Beware

Prompted by a periodic e-mail we receive from Zillow about the "value" of our house (apparently its value has gone up $50K in 30 days -- really? in this market?), I took at look at Zillow's own statistics for how accurate their value estimates are.

In San Francisco more than 25% of properties that that sold had a selling price that was different than the Zillow estimate by more than 20%. Half of sold properties had Zillow estimates that were at least 10% different than the selling price.

In Marin county it's worse. 40% of properties that sell have Zillow estimates that are off by 20% or more.

Zillow is certainly a popular web site for home owners and would-be home owners who like playing the "I wonder what it's worth?" game and it has an appeal to those of us who are hooked on tracking stock market indexes. But as a serious valuation tool in our market, it's not at all useful. In fact it can actually get in the way of a realistic assessment of the value of a particular home but setting unrealistic expectations.

I find some disturbing parallels between the Zillow process and processes in use these days by mortgage lenders who try to create second appraisal opinions using similar tools. Ask any real estate agent with current experience and I'll bet he/she will be able to regale you with tales of deals gone bad because of a flawed appraisal process.

Tip of the Week

I don't know if this will be exactly a weekly feature but I wanted to share with you various resources we run across from time-to-time that may be useful for you.

Today's tip is a web link:
http://dbiweb.sfgov.org/dbipts/

This link takes you the the San Francisco Department of Building Inspection site where you can see the permit status for a property. You can search by street address or APN number. In addition to showing construction permits, it also shows electrical and plumbing permits (which are not shown on the 3R report) and any building complaints filed against the building/owner. While not a substitute for a formal 3R report, it's an easy way to get an early look at the current permit history of a property. One of the shortcomings of the service is that older building permits are not on line. For example, the 3R report for our current listing on Chenery shows permits starting in 1961; the online system only shows more recent permits.

Cautious Signs

Lord knows I'm not one to be ahead of the bandwagon. I never install 1.0 software and never buy a car in the first year of manufacture. And maybe we're looking a little too hard for signs of improvement in the economy.

So, with those disclaimers out of the way, consider these two items:

• 
  
  The Conference Board Employment Trends Index (ETI)™ saw a small uptick in May. The index now stands at 89.9, increasing 0.2 percent from the revised April figure of 89.7, and down 20 percent from a year ago.
  "While it is too early to say that the ETI has bottomed, the moderation of the last two months is certainly a sign that the decline in job losses is real and signals that the worst is over," said Gad Levanon, Senior Economist at The Conference Board. "However, as the economic recovery over the coming months is likely to be very slow, we still expect the unemployment rate to continue to increase to double digits by the end of this year and into 2010."

• The U.S. unemployment rate was the highest in 26 years, but the loss of 345,000 jobs in May, fewer than expected, was seen as a sign that the job market was no longer in free fall.

Sales of Multi-Unit Buildings are Way Down

All aspects of the housing market have been hit hard in one way or another. In San Francisco, an area that hasn't been much talked about are small, multi-unit properties (2-4 units). The average sales price of all 2-4 unit buildings which sold this May is down 30% compared to where it was a year ago. That's more than double the decline in average sales prices for single family homes and condos.

What's worse is the decline in the number of sales. A year ago in May 47 buildings sold. Compare that to just 25 last month. In February this year, no (as in zero, none, nada) 3-unit buildings sold. In March no 4-unit buildings sold. Granted, these months are historically slow but this was no statistical glitch. In the past three months we've averaged only 3 sales of 3-unit buildings. There are 84 on the market! That's more than a 2-year supply!!

The situation is just as bad for 4-unit buildings. There are 40 on the market and we're only averaging 2 or 3 sales a month.

This is not a healthy situation for owners or, ultimately, their tenants.

A large part of the problem is the difficulty in obtaining financing. If you think it's tough to qualify for a single family home or condo mortgage, try arranging for a mortgage on an investment property.

Some Tax Credits Running Out

The $100 million allocated by the state of California to cover $10,000 tax credits for buyers of new construction (never lived in) homes has received applications for more than 80% of the fund total. Applications had been averaging about 600/week but last week more than 1,000 were received. At that rate the $100 million will be exhausted in a couple of weeks.

Since applications can only be submitted after you've closed escrow, if you're not already in contract you're probably out of luck. If you are in contract, do everything you can to close before the well runs dry.

The state provides a web site where you can check the most recent statistics.

As of today, it looks like this:

Fun with Numbers

Even though there are sporadic reports that median home prices inched up slightly in April compared to March, generally median sales prices have been down across the board for some time.

The median sales price is the price point where half the homes sold for more and half sold for less. One of the problems with "median" is that it's often thought to be an indicator of overall value of homes. But in our current market, most of the activity has shifted to lower priced homes. In some parts of the larger Bay area, these sales are dominated by foreclosures.

In Marin county, here's a little graph that shows this change:

This year so far there are almost 20% more properties selling in the below $1million range than was the case in any of the previous four years.

I like to think of "median" as more of an indicator of where the action is. There are better measures of value.

New Listing Coming Soon ...

• A Glen Park beauty that can be used as a single family home (which is how the current owner used it), two TICs (eligible for fast-track condo conversion), or an investment property with two rentable apartments without the new owner having to make any changes.
• One of the prime features that makes this property special is a flat side yard that's big enough to let you indulge your yen for gardening, provide a fun and safe places for the kids play on the newly sodded lawn, relax on the patio, and entertain.
• The top floor has two bedrooms, bath, remodeled kitchen, formal dining room, formal living room, breakfast room arranged around a center atrium. There's a one-car garage for this unit.
• The lower floor has two bedrooms, two baths, and remodeled kitchen open to the living area. This unit has direct access to the side yard.

Search for Open House Listings at the Source

The San Francisco Association of Realtors has created a new web site that provides public access to all listings in the MLS that have open house dates/times scheduled.

You can search by area, price, type of property, number of bedrooms etc.

Bookmark this site for future use!

First-time Home Buyer's Credit Explained

Here's a summary of the tax credit for first-time home buyers passed by congress earlier this year:

Who Qualifies?
First-time home buyers who purchase homes
between January 1, 2009 and December 1, 2009. To qualify as a “first-time
home buyer” the purchaser or his/her spouse may not have owned a residence
during the three years prior to the purchase.
Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
>>The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
>>The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.The credit
decreases for buyers who earn between $75,000 and $95,000 for single buyers and
between $150,000 and $170,000 for home buyers filing jointly. The amount of the
tax credit decreases as his/her income approaches the maximum limit. Home buyers
earning more than the maximum qualifying income—over $95,000 for singles and
over $170,000 for couples are not eligible for the credit.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax
credit, if he/she occupies the home for three years or more. However, if the
property is sold during the three-year period, the credit will be recouped on
the sale.

Click here for a document published by the National Association of Realtors® with more details.

Some good news on the mortgage front

Conforming loan limits are now up to $729,750.

With a good credit rating and 20% down, loans are available with 4.875% interest rates (1 point original fee).

... and some not-so-hopeful news

... yet there are still plenty of signs that it will be a while before signs of recovery begin impacting most folks:

Census Bureau reports residential mover rate lowest on record

The U.S. Census Bureau recently reported that the national mover rate declined from 13.2 percent in 2007 to 11.9 percent in 2008, the lowest rate since the bureau began tracking these data in 1948. In 2008, 35.2 million people one year and older
changed residences in the U.S. within the past year, representing a decrease
from 38.7 million in 2007 and the smallest number of residents to move since
1962, according to the report.

Some Hopeful Signs ... April Consumer Confidence Jumps

As reported by the California Association of Realtors:

Consumer confidence rose more than 12 points in April to 39.2 (1985=100),
compared with 26.9 in March, according to a recent Conference Board report. The
Board’s Present Situation Index increased to 23.7 in April from 21.9 for the
previous month, while its Expectations Index jumped more than 19 points to 49.5
in April compared with 30.2 in March."Consumer confidence rose in April to its
highest reading in 2009, driven primarily by a significant improvement in the
short-term outlook,” said Lynn Franco, director of The Conference Board Consumer
Research Center. “The Present Situation Index posted a moderate gain, a sign
that conditions have not deteriorated further, and may even moderately improve,
in the second quarter. The sharp increase in the Expectations Index suggests
that consumers believe the economy is nearing a bottom, however, this Index
still remains well below levels associated with strong economic growth."
Consumers' short-term outlook improved significantly in April. Those
anticipating business conditions will worsen over the next six months declined
to 25.3 percent from 37.8 percent, according to the report, while those
expecting conditions to improve increased to 15.6 percent from 9.6 percent in
March.

March and 1st Quarter 2009 Statistics

Fun with numbers.

Our monthly report on sales and listing activity in San Francisco has been published on our website: www.boldsf.com/Statistics

The quarterly report is also available at the same site.

Hightlights:

• increasing inventory, especially condos
• very low sales levels, especially condos
• combine the two previous bullet points -- definitely a buyer's market, especially for condos
• both inventory and the number of sales were up in March compared to February -- as you would expect for this time of year
• average selling prices are down across the board

Realtor Association Doing It's Part

Last week the California Association of Reatlors announced a program to provide some peace of mind to prospective buyers in what continues to be a very nervous real estate market by launching a "Mortgage Protection Plan".

To help provide first-time home buyers with peace of mind when purchasing a home, the California Association of REALTORS® Housing Affordability Fund (CARHAF) is offering a new mortgage protection program to first-time home buyers.

Through the Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. CAR’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.

To qualify for the Mortgage Protection Program, applicants must:

• Be a first-time home buyer—someone who has not owned a home in the last three years
• Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
• Use a California REALTOR® in the transaction
• Purchase the property in California
• Be a W-2 employee (cannot be self-employed or military personnel)

First-time home buyers must request an application for the HAF Mortgage Protection Program from their REALTOR®.

SF Revenue increasing -- but costs increasing faster

According to a story in the Chronicle and a recently released report from the City looking three years ahead we're facing increasing city deficits assuming nothing is done.

Next year's projected deficit is $438 million, which is higher than budget analysts had projected. Newsom said that with midyear cuts made to balance the current fiscal year budget of $6.5 billion, he'd hoped to see next year's deficit fall below $400 million. But those midyear cuts, which were supposed to save the city $115 million next year, will save about $87 million.


The Chronicle report goes on to say that the cause is largely because "the city continues to struggle through an economic recession that has gutted revenue from property taxes and other sources".

But it turns out that the City's report shows that tax revenues are actually projected to increase over the next three years, including property tax revenues. The only major source of tax revenue for the City projected to be down is the real estate transfer tax (down $31 million). Overall, the City is projecting total revenues will reach over $3 billion in 2010-11 up from this year's (2007-8) revenues of $2.8 billion.

So it's clearly incorrect to attribute the projected budget deficits to "gutted revenue from property taxes". The real culprit is alluded to by the Major who is quoted as saying that property tax revenues are only going to grow at 1% per year compared to previous years when they grew at more than 10% per year.

The conclusion has to be that we've built a budget based on obviously unsustainable growth in property taxes and other sources and we've committed to costs that continue to grow at a rate that outstrips our slower growing revenue. Although clearly an oversimplification, in theory it ought to be possible to continue providing the same level of service as today by simply freezing all of our costs at current levels.

In the current economic environment, I suspect that most cities would be thrilled to have the problem of revenues increasing "only" 1%.

Sign of the Times

As if we need more signs of the stagnating real estate market in Marin county, the Marin IJ has published two articles recently that bring the point home.

First, as we reported earlier in our latest monthly report a couple of weeks ago, average selling prices continue to fall.

Second, yet another mortgage broker has called it quits. First Security Loan in San Rafael will close up shop -- just the latest in a series of firms to do so. Not only does this highlight how few real estate transactions there are, it also adds to the unemployment rolls and reduces the sources available for home loans. You see the same signs in the halls of previously bustling escrow/title offices and, of course, some real estate brokerage offices -- empty desks, few people, and phones not ringing.

Change to IRS Rules Excluding Capital Gains from Sale of Principle Residence

Included in the Housing and Economic Recovery Act of 2008 passed last October was a new restriction on how much capital gains from the sale of your principle residence you can exclude from income taxes. This change relates to rental properties or second homes that were subsequently converted to your principle residence. Basically, "the exclusion from capital gains recognition will be reduced by the amount of time the property was not used as a principal residence". It does not apply to situations where you rent out the home after you lived in it as your principle residence for two years or more.

Simple example 1 -- Buy a home and live in it for three years, then rent it for two years. You can exclude up to $250,000 ($500,000 for married couples filing jointly) -- no change.

Simple example 2 -- Buy a property and rent it out for three years, then live in it for two years. You can only exclude two fifths of the capital gains.

These rules are complicated and my examples are intended only to alert you to the change -- certainly not as individual tax advice. We always recommend talking to your professional tax advisor for guidance in your specific situation.

Today's Grumble

We work out of two offices in parts of the city that are particularly susceptible to parking tickets.

Our office staff is always warning us when the parking enforcement hawks come zooming down the street. Many of us know the various quirks of individual meters. Nevertheless, let's just say we contribute mightily to the City's revenue stream.

So it's particularly annoying to see this:

And, no, the enforcement officer was not writing tickets. In fact he/she was nowhere to be seen -- I imagine shopping at Trader Joe's or one of the other stores next door.

Spring - 2

Speaking of spring (and finding the silver lining in the gloomy cloud), we've gone through our annual exercise of summarizing what's positive about the current real estate market in San Francisco and Marin counties.

1. It's a Buyer's Market The calendar and the weather indicate spring has arrived and, for the most part San Francisco is a buyer's market for the first time in most people's memory.
2. Prices are Down Prices have moderated in almost all 10 real estate districts in San Francisco and throughout Marin and are expected to remain stable for the next few months.
3. Selection is Outstanding Buyers have not seen this number of available homes for sale, at competitive prices, in the last five years. And the available number of condominiums has never been this high.
4. Interest Rates are Down Loan rates are the lowest they've been in over 30 years.
5. Tax Benefits President Obama's stimulus plan offers new tax incentives for first-time buyers with additional California tax incentives for purchases of newly constructed homes.
6. Full Service Prudential's one-stop shopping helps minimize the work involved in hunting for a home mortgage, insurance and home warranty -- everything you need for a smooth, efficient closing of your escrow.
7. Knowledgeable Agents Our agents keep a constant watch on all segments of the real estate market, tracking the vital, fast changing trends and keeping our buyers informed. As always, we remain committed to getting your lowest and best price possible.
8. Technology Our unique WebTop technology allows us to deliver daily e-mail notifications of new listings throughout the Bay area that meet your specific needs. No need to hunt through multiple web sites.
9. The Extra Mile We want and appreciate your business and are prepared to go the "extra mile" to earn it.
10. Now Is the Time If you're waiting for the market "to hit bottom", we believe that any further delay will mean that you missed it again. As with most markets, by the time you know we've hit bottom, it's already passed.

Spring - 1

Spring has arrived officially, according to the calendar. Of course, the blooming trees have long since lost their flowers and the magnolias are already past their peak. This time of year our garden's pride and glory is usually the old Wisteria vine that adorns the back of the house.

Last year at this time it completely full of blossoms:

This year looks like it will be a bit of a disappointment. A week ago the vines were full of buds but we had quite a strong (but brief) rain storm last Saturday night and it seems to have knocked many of the buds off before they had a chance to bloom.



On the other hand, our orchids have been spectacular for months.

New Flood Insurance Requirements in Marin

Apparently coming as a surprise to many of the property owners directly affect, the Marin IJ has reported on new flood zone maps being issued by FEMA that will result in requiring hundreds of property owners in Marin County to purchase flood insurance for the first time.

As many as 1,300 properties are affected. Here's the breakdown as reported in the IJ:

San Rafael 300
Marin County (unincorporated) 261
Belvedere 200
San Anselmo 177
Corte Madera 150
Ross 80
Tiburon 50
Mill Valley 50
Novato 15
Larkspur 10-13
Sausalito N/A

Even though FEMA has been working on the new maps since before Katrina and most town/city managers were aware of the coming update, some affected residents only found out recently.

Today's Grumble

We rely on carefully drafted forms for all phases of most transactions -- from listing, to offers, counter offers, contract, addenda -- you name it, we have a form. And generally this is a good thing. It keeps us out of trouble and helps us avoid trespassing into lawyer territory.

There are approximately 50 forms specific to San Francisco, and another 200 or so that are used state-wide.

Today I was looking for a form that asks tenants to provide their landlord with a statement if they claim to be a member of a protected class. I've used this form in the past but couldn't remember the correct name. Searching for "tenant" or "protected" turned up nothing (the search function of our on-line forms system only searches the title of the form, not the body).

Turns out it's called "Request for Information under Title 39.1(i)(4)". Come on! About as helpful as e-mails with the subject line "hi!"

Marin sales are way down

While some were seeing a glimmer of hope in recent sales on the south side of San Francisco, the numbers coming in from Marin don't seem to be showing any such spark.

While inventories are up as you would expect this time of year, the number of properties sold last month (February) is down compared to January (heading in the wrong direction). Compared to February last year, the number of single family home sales is down more than 30%!
Our full monthly report has just been posted on our web site.

This continues a trend of the past several months (see first graph).

And, the first two and a half months this year has seen the smallest number of sales since before 2001. (see second graph).

On the Rebound?

There was a lot of flurry yesterday about a report broadcast on one of the local TV stations pointing out "Signs Of Real Estate Rebound In San Francisco".

The quote that seemed to catch everyone's attention was: "more San Francisco properties have gone into escrow in the last two weeks than at anytime in the last six months". The more likely interpretation of that particular data is our normal bounce from the lows around the end-of-year holiday period.

But that doesn't diminish what our agents have known for a while now -- areas that were hit early and hard by a wave of foreclosures are now seeing a significant uptick in sales activity. In San Francisco that area is concentrated in the south of 280 neighborhoods. In the wider Bay area, Antioch is a major example.

And the reporter was right in pointing out that a lot of qualified potential buyers have been on the sidelines for months trying to figure out what's going on and waiting for some signs of stability both in the real estate market and the broader economy.

Two of the properties used to illustrate this "rebound" were notably under priced when they were brought on the market and that strategy has a solid record of producing multiple offers in almost any market conditions. Nevertheless, even in the worst real estate market most of us have ever experienced, properties will sell if they are properly priced taking into consideration their condition and location.

Statistics 'r Us

We put together reports each month which we hope are helpful to our clients as they make their decisions about buying and selling homes in San Francisco and Marin. Most of these are prepared in the 2nd week of the month since the data all comes from the multiple listing service and agents aren't always as timely as they should be recording sales and status changes.
There's all kinds of interesting info buried in the numbers. Here are some highlights:

• Overall, sales in February were still down compared to the February last year which, in turn, was down from the year before that.


• Overall, average sales prices in February are down compared to the February last year but up compared to January.


• Sales activity is focused largely in the lower price ranges. In the last two years, sales of homes under $1million have represented approximately 70-75% of all sales. So far this year, sales in that same price range represent over 80% of total transactions.


• There is a huge inventory of condos and TICs compared to the average number being sold each month (for example, 285 active listings of 1 bedroom units as of 3/8/09 compared to an average number of 25 sales each month over the past four months). Similar disparities exist in most of the other common configurations of condos.

The detailed reports are posted on our website: http://www.boldsf.com/ click on "Statistics".

Quote of the Day

Perusing the new listing information on the MLS this morning, I came across the following comment by an experienced agent that is probably shared by a lot of agents, buyers and sellers in this market. He's referring to a single family home listing in the Richmond.

"I took it off the market for the holidays, but then an offer was ratified shortly thereafter. It was on the market for months last year - this market is weird."

Sunshine and Irony

How come, for the first sunny Sunday in what seems weeks, I'm not doing an open house or showing properties?

Here's the view from my living room window today!

Why am I complaining? Let's face it -- properties show better and buyers are in a better mood when it's not pouring rain.

Pocket Listings Out of the Pocket

There's been a lot of whispering among agents, particularly in Marin, about pocket listings (see previous post). Everyone seems to have one.

The sales pitch seems to be two-fold. First, a certain exclusivity -- here's an opportunity that a lot of other people don't know about -- a chance to snag a property you might not otherwise have a chance to get. Second, the agents who have one or more pocket listings are "in the know" and agents who are aware of pocket listings are part of an exclusive club of agents who are somehow better and more knowledgeable than other agents.

But just how effective are pocket listings at achieving the primary goal of selling a property?

A quick look at tax records for the first two months of this year shows 125 properties that changed hands in Marin. Of those, five were intra-family sales. Of the remaining 120, only 8 were not listed on the MLS.

We don't know the actual story behind the 8 but it's reasonable to assume they weren't all pocket listings. For two of these sales, an agent did enter the information into the MLS after the fact for "comp purposes" so we can assume these were pocket listings.

One agent with a pocket listing was very frank about his and his client's reasoning for keeping it off the MLS: they didn't really expect the property to sell in the current market and near the current price but thought they would give it a try. If it didn't sell, they could always put it on the MLS later without the baggage of extra "days on market". The agent mass e-mailed electronic flyers back in November to most agents (so much for it being exclusive) and it apparently attracted some attention from buyers agents. But the property didn't sell and has now been listed on the MLS priced $100K below the pocket listing price.

Draw your own conclusions, but pocket listings don't seem to be an effective way of selling property. They seem more about fluffing up an agent's reputation and a tacit acknowledgement that the property isn't properly priced for the current market and/or that the seller isn't particularly motivated.

Pocket Listings?

Interesting post from one of Marin's brokerages describing how many "not on the MLS" listings are currently available. Apparently sellers and their agents don't want the listing on the MLS because if it doesn't sell, you don't want that history available for all and sundry to see in the MLS.

There's only a couple of things wrong with this strategy.

1) If you're sincerely interested in selling your property, why would you not list it in the MLS which is by far and away the single best advertising medium for residential real estate -- could it just be that you're pretty sure your property is overpriced and will never sell at the asking price?

2) Your agent is probably going to broadcast the availability of the property through other media (electronic flyers, an open house ad, etc.) which, although worthwhile, are no substitute for the MLS. This is not a great strategy for getting the best price for the property.

A long "unsold" history of a property in the MLS simply means the property was overpriced and/or under prepared. It's also an indication that the seller is not really motivated. At the end of the day, the actual value of the property will be based on what a buyer is willing to pay (and what the lender is willing to lend), not on what the seller wants.

One-time Condo Conversion Opportunity?

A sensible idea was floated today via the mayor's office and published in the Chronicle. "The goal is to generate more revenue for the cash-strapped city and to create building-industry jobs, because condo conversions generally require some construction work to bring buildings up to code. "

There are upwards of 2,000 units occupied by owners who would like to convert their units to condo status. Given the city's limit of 200 conversions (units) per year, the wait is getting longer and longer.
Allowing these folks to complete their conversion without waiting for their number to come up in the lottery could have some additional benefits.

• It gets owners out of the limbo world of TIC percentage ownership with shared mortgages.
• It removes an unfair, arbitrary and convoluted lottery process that is currently used to determine who gets to condo convert (at least on a one-time basis).
• It doesn't displace any renters (these folks are, by definition, owner occupants).
• There will be downstream benefits to the city in terms of transfer and property taxes since it will make buying and selling these units easier.

Predictably, there will be knee-jerk opposition (read the comments following the Chronicle article, if you can bear it) but the only real argument being advanced is that this will create a precedent that will encourage future unfair Ellis Act evictions of tenants in other rental properties in order to convert to TICs and, eventually, condos. This seems highly unlikely given the very stringent rules that restrict or prohibit condo conversion altogether in buildings with certain eviction histories.

The truth (via the City's own Rent Board statistics) is that Ellis Act and owner move-in evictions have remained relatively flat for the last four years. Total evicitions are up in the last year but that's because there are more people not paying their rent or committing a "nuisance", both of which the City classifies as "just cause" evictions.