OceanView Village Property Values 2015

Another banner year for OceanView Village

427491-23_0 A phenomenal 2015 for owners at OceanView Village; 28 owners took advantage of the market this year. All units in the complex enjoyed the fruits of the market to varying degrees.

Most enjoyed multiple offers and over asking prices, if they took advantage of value pricing, which generates interest and gets buyers in the door.

The sold prices ranged from $10,000 below asking to $82,000 over asking. Where a home fell in that range depended on where it started in list price and what else was on the market the same week. Generally, those who started high, took less. Where you were in building contributed of course; top floors, corners, good views and patios dominated.

One bedrooms saw amazing appreciation of between 25 and 39% appreciation for the year, while two bedrooms saw between eight and 14%. Two bedrooms retreated in value in the last quarter by approximately three percent, highlighting the upward pressure on the least expensive starter homes.

A surprising twist: the 669 square foot one bedrooms sold for more than the larger one plus dens in the final quarter of the year.

In the end, OceanView Village has been found, being one of the last remaining affordable condo options in San Francisco-and it’s about time.

 Eric Castongia, Broker Associate at Zephyr Real Estate (BRE Lic. No. 01188380) provided the information in this article. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service and Eric’s observations in the marketplace; he is available to discuss your situation or any questions you may have. He can be reached by e-mail at Eric@SFHotBuy.com, or via mobile phone at (415)307-1700.

OceanView Village Property Values

Third Quarter 2015 Real Estate Update for OceanView Terrace; one of the last deals in San Francisco

427491-24_0 Luckily for residents of OceanView Village, there simply aren’t many places out there that offer the price range and accessibility that it enjoys. Contrast that with instances of no offers on properties citywide at the end of the second quarter, that has lingered throughout the third quarter-further complicated by an infusion of properties on the market after Labor Day. For those properties that received no offers, it seemed to be one of several things: an issue that was difficult to resolve; it was priced too aggressively; or buyers had choices of multiple properties.  At OceanView Village:

  • At the close of the third quarter of 2015, we had one active, four pending and nine sold. Of the nine, all sold over their asking price. Compare that to the second quarter, which had five sales; four of them over asking.
  • Overbids ranged from $3,000 to $60,000. The amount of overbids has come down since the second quarter; I think in large part because of higher list prices.
  • Across the board, values remained constant between the second and third quarter.
  • Appreciation from the same time last year seems to be between 16 and 20 percent.
  • If you should decide to sell, be sure to establish your list price by looking strategically at comparable sales and trends in the marketplace and taking geographical competition into consideration-in this case Daly City and South San Francisco. Once we start seeing price reductions and withdrawn properties commonly in the marketplace, historically, that has been the start of a market change.

Eric Castongia, Broker Associate at Zephyr Real Estate (BRE Lic. No. 01188380) provided the information in this article. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service and Eric’s observations in the marketplace; he is available to discuss your situation or any questions you may have. He can be reached by e-mail at Eric@SFHotBuy.com, or via mobile phone at (415)307-1700.

The last bargain in San Francisco

Oceanview Terrace is not well-known, but it could be.

A client and friend hired me to sell his condo at Oceanview Terrace.  A nice two bedroom with a patio and a courtyard view.  We got it ready for sale, and it really came out really nicely.  As part of that process, I also got to know and love the development.  427491-1_0

The development is convenient (a few blocks from BART), well-maintained and affordable.  It really was a bargain at the bottom of the housing market, while the development was going through construction defect litigation-requiring cash buyers.  That was the perfect time to snap up units if you could swing it.  Now that the litigation is settled and the association is making their repairs, financing is available and people are less worried about when and if repairs will get made. That has raised prices, as has the current supply and demand problem.

Like any larger development (this one has 370 units), there is always going to be turn over. Generally speaking, that lowers sales prices because there is almost always competition.  More first time buyers in the marketplace needing access to public transportation has taken care of that competition problem.  Nearly everything that has come up in that complex over the last few years has been snapped up, over asking with multiple offers.

To give you a flavor, 2014 ended with a total of 23 condos being sold.  The price of two bedroom units we427491-24_0nt from $475,000 in March, to the last sale in December at $575,000!  1 Bedrooms ranged from $370,000 in March to $481,000 in December.

The average price for all units sold in 2013 compared to 2014 increased 21.8%!

Prices have remained very strong in 2015.  And since it’s one of the last nice, affordable developments in SF, I see that being a selling point for a long time to come.

Factors affecting an investment property’s value

Investment Property Value Considerations

Property values will be determined taking the following variables in mind:

  1. Vacant Buildings.
  2. One unit currently owner occupied or vacant
  3. One or more units to be recovered for owner occupancy and/or extended family occupancy.
  4. Completely tenant occupied to remain that way (leased, month to month,  or protected rentals).
  5. Evictions already performed on the building creating a ‘tainted unit’.
  6. Ellis Act evictions on the premises.

In establishing marketing strategy, there are several options:

  1. Approach the tenant/tenants as buyers.
  2. If the tenant plans to move at any point in the future, be flexible with them on expected time lines, offer to help them with moving expenses, or wait until the unit becomes vacant.
  3. Wait to market the building until the tenant, or tenants vacate.
  4. Sell the building now at a value consistent with its income.
  5. Consult an attorney to explore your options.

Consider talking to an attorney who specialized in real estate law; particularly landlord-tenant law.  The City and County of San Francisco has implemented varied legislation over the years; sometimes in contradiction to each other.  Have a firm understanding of the impact of your tenancy on how you may market your building and in how you can use it after you own it.  If you need any resources for local attorneys, please don’t hesitate to reach out to me.

How do I make a purchase offer on a property?

The real estate purchase contract, also known as a purchase offer, or offer, is meant to be binding and spells out in detail your obligations and responsibilities. Some key points are:

Purchase Price

  • The purchase price should be looked at as part of the strategy for negotiation.
  • Are there multiple offers?
  • Is it priced low?
  • Is it priced high?
  • How long has it been on the market?
  • What have other similar homes sold for?
  • What is the condition of the property?
  • Is it unusual in the marketplace (i.e. is this a one-of-a-kind property)?

Ratification / in contract / in escrow
These are the terms used to convey that you are in the process of purchasing a property.  It means that buyer and seller have agreed to price and terms and are moving toward transferring ownership of the property.

Deposit / Good faith deposit / Earnest Money Deposit
A good faith deposit is most often a personal check made payable to a title/escrow company, which accompanies your offer; an offer must have ‘consideration’ to be valid.  The check is deposited after you get into contract and is applied toward your down payment and closing costs.  You will generally make three deposits to escrow prior to closing.

Your offer should be made contingent upon your obtaining, reviewing and approving thorough and professional inspection reports so as to be satisfied with the properties condition.  These may include reports by inspectors such as licensed pest control and general contractors, underground storage tank specialists, and additional reports by structural engineers, roofers, sewer inspectors, and chimney sweeps if applicable.

Most sellers of residential properties and involved agents are required by law to disclose any information, which may materially affect the value of your property.  A few exceptions to this requirement are probates and foreclosures.

Loan Contingency
If you are obtaining a loan to finance the purchase of your property, you will most likely need time to obtain a loan from a lender at terms acceptable to you.

Close of Escrow and Physical Possession
Close of Escrow (COE) and physical possession of the property are negotiable and may not occur on the same day.  A typical COE is scheduled for 30 to 60 days after the contract is accepted.  If the property is tenant occupied, or if the sellers request to rent back the property after the COE, your possession of the property would occur after your ownership begins.

Liquidated Damages, Mediation, and Arbitration of Disputes
These three sections of the purchase contract address what happens if the buyer and seller get into a dispute and have difficulty coming to agreement.  You should review these paragraphs prior to writing a purchase offer.  If you are unclear as to what they mean, or how they may impact you, please consult with a real estate attorney to better understand these clauses.

How to get started with financing

Getting started with financing

Property purchases usually include some kind of institutional (bank or savings and loan) financing.  There are many types of financing to consider depending on your long-term financial goals.

Mortgage brokers are popular because they have relationships with multiple lenders.  Mortgage brokers will search for the best loan programs with several lenders, and provide options for you, saving you time and energy.

Direct lenders (such as Wells Fargo or Bank of America) may be the right fit for you if you already have a relationship with a lending institution or credit union, or if the specifics of your situation call for it.  Direct lenders will usually have fewer programs available to them than a mortgage broker, so you’ll be doing your own due diligence to make sure you have the program right for you.

On-line mortgage brokers are available, but I have found that often times these brokerages are not local, nor familiar with our real estate market.

My recommendation will always be to work with a local broker or direct lender that you can meet in person.  If you need a few referrals, let me know.

Brokers and lenders will look at various financial information to get the best snap shot they can of your financial picture.  This will help them establish you as a credit risk and how much of a risk (the amount they will loan you) they will take.  They will look at such things as:

  • income, including documentation about additional income such as alimony, child support, or pension
  • assets
  • debt
  • late payments
  • bankruptcies or foreclosures
  • your work situation, length of employment, and job changes
  • two years tax returns
  • bank statements
  • source of your down payment (will this be your own money, proceeds from a stock or retirement account sale, or a gift from family)
  • reserves and retirement plans
  • credit report and FICO score

Types of Financing

Adjustable Rate Mortgage (ARM)-have a mortgage interest rate that changes over the life of the loan, usually tied to an index and can adjust as often as once a month or as little as once a year.  The type of loan carries more risk to the borrower, as the interest can go up frequently over the life of the loan.

3, 5, 7, or 10-year fixed rate loans-have a fixed interest rate for a period of time usually three, five, seven or ten years, then turn into an ARM which adjusts once a year.  Once the loan changes to an ARM the payments fluctuate and the loan is amortized-meaning set to pay off for the remaining duration of the loan.  This type of mortgage gives borrowers a steady payment for a period of time, usually with an interest rate lower than a 30 year fixed rate mortgage.  This is a good option for borrowers who plan to sell or refinance their home within 5-8 years who want some stability in their payments.  Some of these loans also offer an interest only option, meaning that no principal is paid on the loan for a period of time.

Fixed Rate Mortgage-has a fixed mortgage payment for the loan’s entire duration-usually 30 years.  A portion of the mortgage payment goes to interest and the other to principal (the amount borrowed).  Payment to principal is smaller in the earlier years, and increases over time.

Loan Limits

You’ll hear the term ‘loan limits’ as you talk more and more about financing. There are three types of loan limits: conforming, super-conforming and jumbo.  This is important, because the government buys loans in the secondary market, which puts more money back into lenders’ pockets to lend out even more money.  The government has limits on the size loans they will buy, so they will only buy conforming and super-conforming loans.  The loans that fall outside these categories are jumbo loans.

The conforming loan limit is a permanent limit (subject to change by the government) and the super-conforming limit is temporary, based on median income in a region.  Interest rate pricing for the conforming loan limit is generally the lowest of the three.

Jumbo loans are financed through private investors, and not eligible to be purchased in the secondary market.  When financing tightens, it’s generally in this category, as there may be fewer investors willing to risk their money to people borrowing money at this level.  Pricing for this financing is generally higher than it is with conforming.


Questions to Ask Your Lender or Mortgage Broker

  1. What loan programs and options are available to me?
  2. Will my loan be Conforming, Super-conforming, or Jumbo?
  3. What type of loan is available to me?  Adjustable, Fixed, or a hybrid?
  4. What loan program would be best for my situation?
  5. So I qualify for any special programs such as Below Market Rate Units, Mortgage Credit Certificate Programs, Mayor’s Office of Housing Programs, or FHA programs?
  6. Will private mortgage insurance be required in my loan?  How much will it cost?
  7. How long is the approval process?
  8. What information is necessary to get my approval?
  9. What documents are necessary from me to approve my loan?
  10. How much will be closing costs be?  What will they include?
  11. How much are your fees, and who pays them?
  12. How much is a loan lock, and how long is it good for?
  13. If rates go down during the escrow period, will I be able lower my rate?
  14. How long will it take to close my loan?
  15. Is there are prepayment penalty on my loan?
    1. Why?
    2. How long?
    3. How much will the penalty cost if I pay my loan off early?
  16. Who will service my loan?

Finding the right financing for you does not have one answer; there are many different options which may work for your situation.  The above is broad in scope, and may not cover your specific situation; please consult a mortgage broker and/or accountant to help you in your financing goals.

I am ready to sell my property

The good news is that San Francisco is and has been for a long time, a very desirable place to live.  Supply has historically been short of demand, so prices remain stable in down markets and appreciate in up markets. With equity in property and changes in personal financial ability, many homeowners find it possible to make the next move-either moving up, or accumulating property for retirement.

There are many things to consider in the sale of your property, such as establishing the target market, marketing schedule, and an appropriate list price that will generate maximum exposure to the property.  If you are selling a property to purchase a replacement, timing will be even more important. Then there is the discussion about what repairs, remodeling, or market preparations are needed.

You may need to refinance to pull cash out for a down payment (if that is possible financing wise-that will depend on what is available at the time), or find out what you can afford once you sell. Check out my posting on this site ‘Getting started with financing’

The key to making the marketing and sale of a property go smoothly is when there is planning and preparation.  That means getting your house looking ship-shape and ready for interested buyers to view, and having presale inspection reports and disclosures available for review when marketing begins.

A comprehensive list of the items that should be considered to be accomplished to make your home the most presentable for a prospective buyer can be found in my posting on this site ‘Presenting your Property Checklist’

What paperwork do I need to pull together to sell my investment property?

Investment Property Checklist

The following is a checklist for you to work from to generate the tenant related information to provide tenant related disclosure to a potential purchaser:

  1. Rent History.  Understanding the tenancy and rules of the building will be critical in the building’s sale because investors will want to know what they are buying. Calculate the allowed banked increases on each unit, note when the last increase was done and identify what is allowed.
  2. Consider banking increases with notification to the tenants, or raise them as allowed.
  3. Pull together copies of leases, 6.14 notices, and all tenant/landlord correspondence.
  4. Pull together documentation on capital improvements and operating and maintenance expenses, which can be passed through to your tenants.  The city’s form is lengthy and time-consuming; you may want to hire someone to do this for you.
  5. Pull together any rent board hearing information or small claims court information.
  6. Consider getting some necessary repairs or deferred maintenance fixed.
  7. Empty units generally are a premium and will raise the value of the building; if you have vacant units, consider selling the building with the unit(s) vacant.
  8. Have structural pest control inspections.  This gives a clear picture of the condition of the building and will take some of the negotiation away from the purchaser of the building.  The condition of the building may contribute significantly it’s value in the marketplace.
  9. Serve Rental Questionnaires and Protected Status Addenda.  A rental questionnaire is a statement completed, on a form provided by the landlord or real estate agent, by a tenant on their understanding of the tenancy; it should match the landlord’s interpretation, but occasionally this does not happen, this mis-match needs to be worked out between landlord and tenant in advance.
  10. The protected status addenda is also significant in that it is intended to identify protected status claims for tenants who are elderly, disabled or catastrophically ill which would protect them from eviction for an owner moving into their unit.  Children under 18 years old who have lived in the property for 12 months or more, are on their way to becoming protected tenants in a legislation currently under consideration.  A protected tenant does significantly affect property value.
  11. Tenants are not required to fill out either one of these forms.  By trying to get them completed by the tenants in advance, we will have a clear picture on how to market the building, if the tenants will be cooperative, or if there are documents that are not available to provide to a prospective buyer.

For more information about the rent control ordinance, contact the Rent Board information line at: (415) 252-4600 or visit their web site: www.ci.sf.ca.us/rentbd/.  You can download a copy of the latest rent ordinance and rules and regulations.

Negotiation 101

I found this article referenced at SF Curbed.  I like the article because it shows two things-the market is getting better.  Rentals are not being negotiated as drastically as they were last year AND practice the golden rule in negotiation.  When you think you are doing yourself favors by pushing hard, you may get more (or less) than you want.

‘Smart Money’ article

Proposed bill to limit seller financed real estate deals

This article happens to be from the Orlando Business Journal, but it does talk about a Federal bill that would limit seller financed real estate deals.  I find this particularly disturbing, as not the feds are getting involved in making sellers banks that are being regulated.  Given the economy and the difficulty of some buyers getting financing, seller financing may be the only option.

Bill to limit seller financed real estate deals-Orlando Business Journal