Four surprising factors that can lower S.F. home prices
In a trend we started noticing this past spring, San Francisco’s home market seems to be slowing down. That slow down is all relative, of course. We’re still seeing many homes sell for well over asking with multiple offers. But we’re also seeing homes begin to sit longer or even take price cuts, especially at the higher end.
Given that a quick sale is no longer a sure thing, we asked some San Francisco agents for some reasons they’ve seen homes sit unsold or sell for below asking. Their answers may surprise you.
Crimes and Misdemeanors
Contrary to popular belief, a death in a home doesn’t actually impact the price very much, said Butch Haze of the TeedHaze Group. That’s especially true if the death was peaceful; a violent end can impact a sale, as can other disturbing crimes associated with the home or the seller, but not as much as you might think. Buyers can usually get over these issues if they otherwise love the home.
More important than a criminal past may be ongoing litigation, according to Heather Stoltz of Berkshire-Hathaway Home Services. “If there is litigation from the HOA against the original developer because of a major structural concern, such as the windows were improperly installed and are leaking, the foundation wasn’t bolted correctly or they didn’t install flashing, then these are risks and the majority of financial institutions will no longer lend on the complex,” she said.
If banks won’t loan on the property, the buying pool immediately becomes limited to all-cash buyers, depressing value—but usually only temporarily. “Once litigations are over we find the complex will generally see a spike in property values as the HOA has collected the monies from the lawsuit, the repairs are completed and all lending options become available again,” she said. “I encourage my cash buyers to look at litigation buildings and to strongly consider them as I frankly think they are good buys if all dynamics are considered, the buyer fully understands worst-case scenarios and is willing to ride it out to the end.”
Noise Can Trump Location
We’ve all heard the phrase: location, location, location. And that’s true, to a point. But noisy neighbors or street traffic can diminish the attractiveness of a home even when the location is otherwise perfect. “A busy street or being next to a fire station all factor into value,” said Ted Bartlett of Bartlett Real Estate.
“A busy road can be a deal killer more than any other noise factor,” added Haze. “We recently had a listing in a location that we would consider ‘prime’, but buyer after buyer felt that the street noise offset the location.” There have been instances when Haze’s company, which also provides renovation services, has added water features and other soundproofing measures for both its buyer and seller clients in order to mitigate noise.
Which brings us to the next big factor that impacts prices…
No Projects, Please
Forget what you’ve heard about people looking for fixer-uppers. “We are seeing clients fearing taking on a project,” said Haze, who added that part of his job is teaching hesitant buyers that there can be a major upside to doing some work. That being said, there is a definite ding in value for homes that are not turnkey. “New is the most desired because time is everyone’s most precious asset and construction is a nightmare for most people,” he said.
Also problematic are homes that have been recently redone but in a “uber-modern” style, Haze said. “Modern homes’ sleek and minimalistic looks have run their course and people want texture and design,” he explained. “S.F. buyers desire a home with character and warmth that some of those modern homes lack.”
Stoltz said many of her buyers would actually prefer to take on a project rather than be stuck with a kitchen or bathroom that is renovated, but not to their tastes. “If it’s in original condition and good condition, those are getting a lot of interest because buyers want to make it their own and not feel guilty about ripping out newly renovated—but badly designed—choices the seller made.”
The “S” Factor
And speaking of sellers, they are certainly the biggest factor to impact a home’s quick sale. Pretty much any S.F. home will still sell quickly as long as the seller is realistic about the accurate value of the property, said Bartlett. “Our market is still very strong and active with a major imbalance of supply and demand,” he said. “[But] buyers have access to most market data so they are well-educated and are only willing to pay what a property is worth.”