808 Minnesota St UNIT 354, San Francisco, CA 94107

The son of a past client scored a good job in San Francisco a few years back, and is looking at 1-bedroom condos going for $700,000 – $800,000.

They wondered if I had any tips.

Good golly, at that rate I better come up with something!

HOMEBUYING TIPS

1.  Get a good realtor.  These high-dollar areas pay big commissions and thus, attract plenty of real estate licensees.  But you need a great agent who knows more than you do, and brings extra value to the equation.  Ask how many times they’ve talked someone out of buying a home recently.

Not only will a great agent make you feel comfortable about the price/value equation, but their market cred will help too – because good agents want to work with good agents.  It happens regularly that my personal relationship with the other agent makes a difference in the outcome.

How do you find a good agent? The best luck I’ve had is searching for agents at Zillow, but you have to read through sales histories and testimonials (in that order) of each agent to find the right fit.  Also check their recent sales history to see if they have been selling similar homes and/or working your area.

I don’t care what company an agent works for, because real estate is an individual sport.  I’m not impressed by the big realtor teams either – I want individual attention.  I reviewed the first two pages on Zillow for San Francisco agents, and found this one:

http://www.zillow.com/profile/Deborah-Nguyen/

An agent’s recent sales is the best measure, and not only is she selling 3-4 per month but she also lists her annual production too – and she was consistent during the downturn.  She has been a realtor for 20 years, and has over 300 closings submitted to Zillow.

She has three listings, which, in this market, is about right – if you are good, they should be selling, not sitting.  Plus she has a 1-bedroom listing for $735,000!  I don’t know if she  passes you off to an assistant, but if not, she’s a qualified possibility.

The agents input their own listings and sales history, and Zillow provides a form for them to email to past clients to solicit their testimonials.  But all of her client ratings were the full five stars, which is exceptional.

2.  Buy For the Long-Term.  You may get stuck with this one for a while, so make sure you get what you want and need.  Keep exploring other areas for alternatives you haven’t thought of yet.

3.  Know the Inventory.  You may only have minutes to make decisions, be prepared.  Get auto-notifications of new listings to stay up on the market, and go to open houses – not just to find a home to buy, but also to study the market patterns.  You may not buy this one, but when you see it go pending, know why somebody else found it attractive.  If nothing else, at least be an online expert that follows the data closely – and don’t be surprised if you keep seeing crazy sales; they are almost always attributed to buyer frustration and lousy representation.

4.  Get Pre-Qualified.  Once you select a realtor, get pre-qualified for a mortgage using their recommended lender – they might bring some street cred too.  You either use a 20% down payment or you don’t, and either is fine.  If you don’t want to use a 20% down payment, you can do an 80/10/10 (1st and 2nd loans) that will at least lock you in to a low-rate 1st mortgage for the duration.  If you end up with less than 20% down and only want a first mortgage, you need PMI – private mortgage insurance. But if you get lucky, you can have the seller pay the entire premium up front (around 3%), so it won’t cost you anything monthly.

5.  Know the Contract. With Docusign, the electronic-signature process, signing a contract goes a little too fast.  Instead of reading the contract together with your agent in the corner booth at the local coffee shop, today you just rapid-click on your phone or PC to imprint your initials and signatures and whoosh, off it goes.  Know what you are signing!  The two most important paragraphs are 3K and 14.

6.  Time is of the Essence.  It is likely that most buyers will lose at least one property because they don’t react fast enough.  I just had a case where I called the listing agent of a house that my clients had just decided to buy.  The listing agent told me that she had been working back-and-forth with a buyer and other agent, and had just received a counter-offer that was acceptable to her sellers – and she was about to send it to them for final signature!

In these moments, your agent has to say the right thing.  In this case, not only did I stop the agent from signing a cash offer, I got her to accept my financed buyers’ offer instead!

This is a fast-moving environment and each day the best deals get picked up – if you like a home, chances are somebody else does too.

7.  Consider Fixers.  Be picky about location and floor plan, because you can’t change those.  But most buyers shy away from homes that need work, which can open up opportunities.  Get comfortable with the costs of fixing in advance, and know what you are looking at.  You can get a full evaluation and cost estimate during your contingency period.

8.  Make Offers.  Once your first salvo goes over the bow, the comfort level improves greatly.  Include a love letter that tugs at the sellers’ heartstrings.

9.  What to Offer.  The price to offer is directly related to the time on market.  If it is the first week of the listing and you recognize it to be a good value, you will probably have to pay all the money. But I hate to offer full price, because in the first week the sellers want to dicker, and full price doesn’t give them anywhere to go.  If you know there aren’t any other offers, then come in $20,000, $30,000 or $40,000 under the list price so the math is easy for the seller to split the difference.  If you hear subsequently that there are other offers, re-submit your offer with a higher price so you don’t get forgotten.

10.  Use Bubbleinfo.com as a Resource – You may not get any local-SF specific data but general information is available by using the Search feature at the top of the front page here.  For example, I typed in ‘Bidding Wars’ and got this link to a wide-ranging set of blog posts about winning a bidding war:

https://www.bubbleinfo.com/?s=bidding+war&x=0&y=0

You and your agent need to be bidding-war experts.  The low-end is what’s moving the fastest, and though $700,000-$800,000 sounds insane for one-bedroom condos, it is what it is.

Plan on devoting time and energy to this project.  The more invested, the better the results!

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