20 Things You Learn Trying To Buy A House In San Francisco
1. Everything is expensive.
MTV
Duh. San Francisco’s insanely expensive housing market is nothing new, and not mentioning it would be like not saying anything about a huge elephant chilling in the room with you and Russell Brand. Premier spots in the city go for $1,000 a square foot, and median home prices were more than $1 million over a year ago.
2. And prices are continuing to rise — like by 76% in the past four years.
The city is only seven by seven miles, which keeps inventory tight, and as a result, prices are continuing to skyrocket. In fact, since 2011, prices in some SF neighborhoods have risen by as much as 76%. With prices continuing to rise at this rate, my partner and I — like so many San Francisco couples – honestly became worried that we might get priced out of our target neighborhoods if we waited too long to act. When we were trying to put in offers, our agent would routinely say things like, “Well, that listing was two months ago, so add another $20K.”
4. Leaving SF proper won’t provide much relief.
NBC
Long gone are the days of finding an affordable home by driving 10 minutes outside of San Francisco. Oakland actually beat SF in terms of home price increases last year and ranked the fourth-most expensive city to buy a home nationwide.
5. Hope you’re ready to put down a hefty down payment!
Although salaries are high in San Francisco, they aren’t really high enough for wage-earning employees to buy property without putting a huge amount down. If you currently own property in San Francisco, then odds are you’ve got significant equity that can be used toward a down payment. If not, then it might be in your best interest to find a cheaper place to rent so that you can save up a decent down payment. My partner and I were fortunate in that we each owned property separately before pooling our resources (and equity) to buy a house in SF.
6. Just like everywhere else, putting in an offer is no guarantee.
My partner and I put in about two dozen offers before we finally had one accepted and ratified. In San Francisco, it’s almost better to put an offer in even if you aren’t 100% in love with the property. Luckily, if you win and decide against the home, you can get out of the deal pretty easily if you haven’t already put money down. Since properties usually receive multiple offers, sellers will just move on to the next best one.
As a result, being selected as a first or second backup offer could possibly lead to being able to buy the property. “I’d say, maybe 5% of the time backup offers get moved up,” our agent said when I asked about the hope for one of the backup offers we submitted.
7. Proximity to tech shuttles is the new holy grail of SF real estate.
I was constantly surprised by how many listings would say things like “easy access to multiple shuttle bus stops” in their descriptions. Properties close to the shuttle stops are highly desirable and thus, more expensive.
8. Off-market listings are almost always overpriced.
Funnily enough, off-market listings seem to be treated with the exact opposite pricing strategy of those that appear on the MLS. These properties are usually marketed toward the über-wealthy and typically start with a price above the actual value. Since there’s no documentation of the price, it’s an approach where you see if you can get your dream price, then, if not, list with an aggressive under-budget price point.
9. Properties always have offer deadlines, and winning offers become ratified within hours.
Agents usually assign offer deadlines just a few days after the home hits the MLS, and their sellers typically select a winning offer and go into contract within just a few hours. If you miss the offer deadline, even by just a few minutes, then you could miss out on the property. In SF real estate, transactions happen very quickly, and it’s not uncommon for buyers to include seven-day close windows in their offers.
12. Parking at open houses is always a mess.
Agents schedule tiny windows of time for open houses, then list the property way under value to attract huge crowds — which can become disastrous if the house is located near a busy street, on a one-way street, or is pretty much anywhere in San Francisco with only street parking.
13. A death on the premises definitely won’t scare off any potential buyers.
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Not even mummified corpses scare off buyers in this market!
But seriously, having a recent death from natural causes isn’t that uncommon for single-family houses in San Francisco, and they don’t deter most buyers at all. “You do not have to disclose any death that happened longer than three years ago,” our agent told us while viewing one home.
14. All cash always wins.
“All cash” means that the buyers have the entire value of the property sitting in their bank accounts ready to go, which unfortunately isn’t a rarity in San Francisco. Cash offers are SUPER desirable to sellers because there’s no possibility that a mortgage won’t fund, and all cash offers usually have significantly shorter closing windows.
Before going into contract for our home in Ingleside, my partner and I were the runner-up offer on another nearby property. We later found out that the winning offer had been less than ours, but was all cash. The seller chose to make $10,000 less in profit just to work with an all cash buyer.
15. Inspections are often waived.
Disclosures are a good start, but even basic disclosures aren’t always offered by sellers. In this aggressive market, most sellers often won’t even consider offers that contain contingency time periods or requirements for inspections.
16. Sellers don’t give a fuck about your life story.
Don’t waste your time writing a letter to include with your offer. Bay Area sellers don’t really care, and most agents won’t even present personal letters. They just send sellers details on the top offers and recommendations on which to select. There are, however, things you can do to make your offer stand out, like including a free rent-back agreement.
17. Multigenerational families bid aggressively for properties with in-law units.
ABC
Although you might have heard about San Francisco’s rich “tech buyers,” multigenerational families are often the real competition to be worried about, especially in more of the up-and-coming neighborhoods. With numerous family members contributing to the mortgage, these people can afford to make super-aggressive offers.
18. You’re also competing with absentee owners.
Disney
Like so many other major cities worldwide, out-of-town investors are gobbling up new construction condos in San Francisco. According to estimates, there are some buildings in the city where absentee owners make up 60% of occupants. These super-wealthy owners buy up properties (paying cash) so that they have luxury vacation accommodations, then often rent them for obscene amounts on short-term rental sites like Airbnb.
19. Employment verification can be a pain in the ass.
Loan underwriters from outside the city don’t seem to understand how employment in SF works, especially for tech employees. Things like contract work and employment gaps due to a successful exit create issues that require documentation and explanations. Additionally, they often require verbal confirmation of prior employment going back two years, which can be difficult if you were at a startup that is no longer in business.
20. Agents, inspectors, contractors, and pretty much everyone making money from the industry have become jaded.
With so much money being made and properties in such high demand, finding quality people to work with can prove quite difficult. My partner and I were lucky enough to find a good agent, but found many of the inspectors and contractors we interviewed were dismissive, condescending, or downright rude. They seem jaded by the huge amounts of money being thrown around and were quick to dismiss anyone trying to keep expenses down. But hey, we aren’t all wealthy tech buyers!
