I’ve dropped out of the blogsphere for the last few weeks, because I stepped through a looking glass into a world crazier than even Alice could imagine. It’s the San Francisco Real Estate Bizarro World and it’s just as whacko whether you are buying or selling. We, of course, were selling. Selling our Victorian that we’ve had for more than thirty years. Obviously, we quickly learned that the real estate game has changed drastically in the last three decades. I told you earlier that our first big shock is that, unlike in the Eighties when we purchased and when Victorians were all the rage, nobody, but NOBODY wants a Victorian these days. Over thirty years, we lovingly restored our little Queen Anne painted lady, inside and out, to its former Victorian self — from molding, to ceiling rosettes, to refinished floors, period hinges, lighting and decor. (It helped that we each brought a boatload of “grandma hand-me-downs” to the marriage.) The ubiquitous stagers quickly skooled us that this place was not going to sell unless all possible traces of Victoriana were wiped out. But that was only the first lesson. The things we learned after that!
1. Real estate agents — all real estate agents in San Francisco — have LOST THEIR MINDS. Maybe I’m expecting too much, but with all the hyperbole out there about the San Francisco real estate market, you’d think agents would be the one group of people to see beyond the headlines to the reality. They don’t seem to. When we decided to sell, I plunged into reading every line in every real estate blog I could find, especially the biggest ones like Curbed.com and Redfin. I also spent hours online looking at the last six months of sales and analyzing what the median selling price was for houses that are completely comparable to ours. But apparently, no real estate agent has the InterWebs or does math. Because, as I reviewed agents and asked them how they would price my house and what they thought it would sell for, they all named an astronomical figure — astronomical even for San Francisco. With the exception of the agents I ultimately chose, each agent said, “No problem, this is gonna sell for at or near $3 million dollars.” THREE MILLION DOLLARS? When there is not a single comparable house in San Francisco that has EVER sold for that much. By comparable, I mean a Noe Valley Victorian with roughly the same square footage, three bedrooms/3 baths with a two car garage. Houses in my neighborhood that have even gotten within spitting distance of that figure have two or more of the following features: 1. Larger square footage 2. A killer view 3. A completely redone interior where the Victorian has been blasted away for a glass and steel open plan layout and 4. A much deeper lot which features a long back yard space or multi-level, entertainment ready decking. Needless to say, our Victorian has none of those things. I also noticed there is a huge jump up from three bedroom to four bedroom. If you can take a large closet, slap a daybed in it and call it a fourth bedroom, that nets you up to $500,000 more. We absolutely had nothing that, in any way, could be converted or used as a bedroom, even for a Harry Potter-like orphan that you wanted to shove under the stairs. Needless to say, my research told me that our house was in the $1.9 million to $2.1 range with most sales of comparable houses much on the lower side. So $3 million dollars? Where the hell was that coming from?
2. Real Estate in SF is a game and the first rule is list it low. And I mean really low. The agents I interviewed wanted to list the house at a quarter to half a million BELOW what I thought the market was telling me it was worth. You know how all the real estate stories are breathlessly telling you that EVERY HOUSE IN SAN FRANCISCO IS SELLING WAAAAAAAY OVER ASKING! Well, that’s because half the time, buyers, who presumably also have the InterWebs, have done their homework and approach an artificially low listed house by offering what the house is worth on the market. Once you look behind the bidding frenzies, you find that in almost all those cases, the end price was still just about what the house was worth. Here’s the game: real estate agents will tell you that if you underprice the house, that sends the signal that the furious and frenzied bidding should begin. “But”, we said naively, “What if our buyers haven’t gotten the memo and don’t even bid it up to what it’s worth?” “Well”, was the answer, “you don’t have to sell. But, of course, now you have to pursue a different strategy.”
3. Somebody set the selling window at two weeks. Violate that at your peril. Here’s what every agent wanted to do: schedule two consecutive weekends of open houses over a period of ten days with plenty of broker tours and private tours in between. Then bids are collected unopened and only read at the end of day ten. At that point, the bidding begins. Now from my perspective, two weeks doesn’t seem like enough time to rope in the interested pool of bidders that will guarantee at least a couple of good offers. But read the real estate blogs and count the number of stories about “tainted houses” that were on the market for a month or two before selling. God forbid, you don’t get the price you want after those magic ten days. Then apparently, you have to take the house off the market, quietly relist it a year later and hope nobody notices that you once were not successful in unloading it the first time. Unfortunately, real estate blogs do have the InterWebs and they will write snarky articles about your house, analyzing why it didn’t sell, speculating that it still won’t sell and generally branding your house as a cursed Amityville/Poltergeist house of horrors.
So here’s what we did, against all advice: we had the house listed at just about what it was worth: $1.9 million — which, ironically, made our house one of the highest priced in Noe Valley during that period. We bowed to the two week thing. We got two good offers at about what we were asking. And despite our nervousness, the real estate agent talked us into demanding competitive bids. Of course, each bidder doesn’t know what the other is bidding and we don’t know what their home buying budget is so the whole process is not unlike playing poker over the phone or having a Mixed Martial Arts showdown with bags over your heads. As one wag on Facebook put it: “I’d raise you if I could see your face, but in lieu of that I’ll just launch a poorly aimed kick.” The negotiations went back and forth for a bit — not with wild $100,000 raises — but with $10,000 here and there and back and forth on the length of closing. At the end of the process, we had a cash deal at a good chunk, but not a crazy chunk over asking and with a hair-raising 7 day close. And as I obsessively check Redfin and other listing blogs, it looks as if we got more than any comparable 3 bedroom/3 bathroom Noe Valley Victorian of this size has gotten in the last ten months without any of the special price-hiking added extras I outlined above.
So we are where we would have been if we’d just showed everyone the data and said: “This is empirical evidence that proves what the market says our house is worth. Who wants to buy?”
Seems as if that would have saved ulcers on all sides. And the lesson? Even in the context of the crazy, out of control San Francisco real estate market, the market is still in control. You’ll probably get what the market dictates you’ll get. And if you want more, you better figure out a way to get a view, a fourth bedroom, open plan or tons more square footage. Not unlike any real estate market anywhere and at any time.
I actually think you will make your $3million. Strike while the (and the real estate market) is hot! 🙂
Nope, not even close. But no data anywhere supported that the market thought the house was worth anything like that figure.
Beautiful home I am an old soul and love vuctirian charm wish I had the cash as I live on 24th and Noe but doubt I could ever be a home owner in this beautiful community.
Whew! Seattle’s market is not as nuts as SF’s, but it’s close. You’re right; essentlally it’s Econ 101 and the market finds its own number based on supply and demand…and location, condition, etc. Still, sounds like you got a great price so it’s kinda like childbirth: when you get that check at closing, you’ll forget all the pain! Off to London and in passing, will check out a client’s house for sale in Kensington, currently entertaining multiple offers in the €15m range and it’s not all that big. Now THAT’S nuts!
I hope this is a good time to ask…can I borrow a million dollars?
I love the photos of your house, especially the floors. Wow. Nobody makes quality wood flooring like that anymore, and if they did, who could afford it? I love old wood and millwork. And the pub looks like a great space for entertaining.
I am so happy to hear that you didn’t fall into the trap of hiring an agent who “bought” your listing with an overly exuberant value estimate. Congrats on the sale!