Are you a recent transplant to San Francisco trying to get your sea legs in the city by the bay and thinking about buying a home? Are you a first-time home buyer? Are you a buyer who has owned a home for many years and is thinking about downsizing? Even if you have read about the high price of San Francisco real estate and the competitive nature of making an offer on a home, the realities of the market will be quite an eye opener.
“You don’t need to sugar coat the information you give me,” a buyer who had just moved to San Francisco wrote in an e-mail. I replied that another client who was a recent transplant said to me after looking at property for some time and getting to know the market, “I’ve learned that in San Francisco, real estate is a blood sport.” I had to agree it was not for the faint of heart or a buyer who was not committed to living in the City. Only the most aggressive and focused buyers meet with success.
Following the request to not sugar coat information, here are some things to keep in mind.
- Since the beginning of 2013, real estate in San Francisco has gone up 15–25 percent, depending on whose information you are considering. It may feel like it is time to wait for prices to settle down or even go down. Waiting to buy is a serious mistake. This is the beginning of what most informed people believe is a 20-year growth period in the Bay Area.
- There are so many high-rise buildings under construction today or in the works that single- family homes are going to be under extraordinary demand in years to come. New transplants continue to flow into the City at a pace that will keep the demand for housing high.
- The pace of sales in recently completed and soon-to-be-completed buildings is amazing to even the most experienced developers.
- The market is moving fast, and desirable homes are in contract in 10 days or less. This will leave you breathless when it comes time to make an offer and you have little time to consider what to do. This is when you must trust your real estate agent for advice.
- Winning offers often have few or no contingencies. This is difficult for new buyers to understand and makes it extremely important that they carefully read the disclosures.
- Don’t let the cash offers discourage you. Investors and others with cash are closely comparing their investment options and often believe they should pay less since they are paying cash. Remember the bank’s money is green too! In the end most sellers are looking at how much money will be in their bank accounts when the deal is done.
- Inventory is so low that few homes fall out of escrow and come back on the market.
- Buyers submit back-up offers. This means that the seller has accepted another offer, but will take a back-up offer in case the first offer falls out of contract. The contract price and terms are settled and the contract is fully ratified and in back-up position. Believe it or not, there may be as many as three back-up offers on a desirable home.
- Because so many homes have back-up offers, even fewer homes come back on the market if they fall out of escrow.
- It may take six months or more to find a home that works for you. Patience is key to buying a home.
- If a house comes up early in your search that you love, don’t pass it up to save on a few month’s rent that are left on your lease. It is difficult to believe but true that in San Francisco, rarely are two homes alike. Over the years, owners have remodeled and updated their homes. Homes here have little in common with the track homes of the suburbs or other cities.
- Before you start your search online or go to your first open house, memorize this simple mantra: San Francisco is different. Once you have begun your search and find yourself thinking, “Oh my God, I cannot believe the price,” this is a time for your mantra to kick in and automatically say to yourself: San Francisco is different. The mantra will be helpful. It will inspire you to think differently and carefully walk around the home and ask the agent questions. No question is too small, and the agent’s job is to answer questions.
Remember San Francisco is different. It is a mecca for people seeking a better, more enjoyable life. A city of parks, restaurants, and neighborhoods where you can walk to coffee, use public transit, and bike to work in many areas. We all pay more to live here. When I leave San Francisco for a vacation or to visit family and friends, I always feel very fortunate when I return that I live in such a fabulous city.
