Selling A Fixer? Read This First!
Look on my Works, ye Mighty, and despair!
This house in the Sunset District of San Francisco isn’t even in that bad a shape considering what is possible…It was listed for $699,000 and sold for $770,000 all cash. Typical banks like Bank of America etc won’t lend on houses in this state of disrepair. Essentially a house must be habitable in order to qualify for a loan.
Take a look at some of these other photos…
Want to know more about selling a San Francisco Fixer Upper? Read on!
530 Day Street Before and After
There are strategies for selling every type of property, and San Francisco fixer uppers are no different. Fixers (fixer upper, fixer, flip, tear down, distressed property, cash deal) come with their own set of issues, obstacles, and special considerations. Often it has been years even decades since the property was maintained in any fashion whatsoever, and it may be unclear where to even begin updating the property before putting the home up for sale in order to receive the highest return. Sometimes fixer properties have been issued Notices of Abatement or even “Red Tagged” by the city meaning they are unsafe for habitation. In some instances the neighbors are so fed up with the dilapidated appearance of the home that they have begun calling the city to investigate.
That was the case with our listing at 530 Day Street in Noe Valley pictured above. There were abatements filed against the property, the neighbors were upset, and on the face of things it seemed like the home was unsalable. When selling a San Francisco fixer it is important to see the big picture realizing issues such as abatements must be cleared in order for title to transfer and escrow to close once a buyer is in contract. Our clients at 530 Day Street really needed someone to step in and deal with the city, which we were thankfully able to do.
Do you have a probate, a trust, or a fixer upper you are considering selling? We will put together a free analysis of the property’s value and show you the best way to market the home. Call or email us!
A good example of how complicated things can get when selling a San Francisco fixer upper is the house we sold at 1507 Noe Street in Noe Valley. This property sat without any upkeep for so long that it had begun to slide down hill off its foundation. The seller hired a contractor to replace the foundation. The contractor removed the foundation and put the whole house on box cribbing. When my business partner Mike Ackerman and I got the call to list the property, 1507 Noe Street was balancing on blocks of wood without a foundation on a hillside. The interior was packed with storage and things from wall to wall with a dozen cats to boot. Our client really needed someone to come take the reins and help her make the best return she could in order to move to a comfortable place in the East Bay.
1507 Noe Street Before
The question when selling any fixer is what to do to the property before bringing it on the market. Sometimes perhaps the better question is what NOT to do. A house like 1507 Noe Street really needed to be demolished and rebuilt as something completely new, which was something our client could not afford to do. The most likely buyer for the property was going to be a developer of some sort. At the same time if only investors and developers showed up to purchase the home they were going to understand the costs of improvement very clearly calculating a return after redevelopment of about 30%. These buyers will not offer very much for a fixer in a truly poor state particularly when there is no competition. It was important for us to make the correct changes to the property in order to make the best return for our client!
Three types of buyers interested in San Francisco fixer upper homes:
Owner Occupied Property
This is a buyer who has seen what their money will/won’t buy in San Francisco and have started to look for properties in poor condition other typical buyers just won’t put up with. The issue with Owner Occupiers is that they can accept a certain amount of deferred maintenance but will typically have limited funds left over after the purchase in order to improve the space. This means a house like 1507 Noe Street without a foundation is just too much of a fixer for them. The key for attracting this kind of buyer is cleaning up a property to the point where they can see a value in making smaller scale improvements such as a bathroom, kitchen, and some less complicated layout upgrades. In San Francisco, and particularly in Noe Valley, houses that need small scale improvements are not true fixers, really I would call them Cosmetic Fixers, and the majority of buyers in a coveted neighborhood will be interested in making an offer on a cosmetic fixer. Few buyers are unwilling to update a bathroom or kitchen, there is little discount for properties in need of this kind of “cosmetic” upgrade.
Property Developer Intending To Occupy
Developers, architects, and contractors have to live somewhere too. From time to time they will be looking for a fixer property they will intend to occupy after putting their skills to work creating the house of their dreams. For the right property they are willing to pay a premium and compete against any buyer that may come along. They are also very savvy having dealt with the many issues and roadblocks that come with fixing up property in San Francisco. They can quantify accurately the costs of improvements, which is extremely helpful when preparing to out-compete other potential buyers. They can deal with the big questions and have good answers for the “unknowns”, which most normal buyers just aren’t equipped to do. Not to mention the overhead and holding costs that come with waiting for plans to be approved and permits to be issued by the city which can take months (years!).
Property Developer As Investment
Investor developer buyers are interested in fixer homes purely from a business perspective. They do not intend to work for free and have to keep a certain amount of value aside as profit, often 30% or more. Essentially they need to believe they can put time and money into the project and in the end sell it with an expectation of making a sizable profit above all their costs including holding costs, improvement costs, and the opportunity cost of their time. Investor developers are very savvy, understand how to deal with the San Francisco city bureaucracy, and have real and tested design-build skills. They often have an excellent idea of what their end consumer will want in terms of finishes and details, these guys know the market. The one thing the investor developer cannot do is compete with an owner occupier. The investor developer won’t live in the home, won’t wait for appreciation to increase the value of their investment, and they have calculated in a sizable percentage of profit, a buffer an owner occupier does not expect. Property developers hate seeing regular buyers interested in fixer uppers because for them it means spending more money to compete. The more “hair” on the deal the better, which can include the need to tear down the property, new foundation, or the mother of all property issues, tenant issues.
Investor Developers provide an excellent service by improving homes that a typical home buyer just can’t deal with. By doing this neighborhoods are improved turning eye soars into dream homes.
310 Duncan Street Fixer Upper
310 Duncan Before Photos
310 Duncan After Photos
My business partner Mike Ackerman and I recently sold this fixer property in Noe Valley at 310 Duncan Street between Church and Sanchez. This property had many levels of issues but also opportunities. First off the city’s records stated it was unclear if 310 Duncan Street was a multi-unit or single family home. For many Owner Occupiers this is a problem. Most likely they have had limited experience dealing with the department of Building and will be completely in the dark about what use the city will ultimately allow. On the other hand developers may actually LIKE that the use is “Unknown” because it will give them some flexibility when later deciding how to develop the property.
In the case of 310 Duncan, even though it did not have a kitchen, which can make lending difficult, and the rest of the property including the rear decking was in a dilapidated state, it was decided to completely clean out the property, redo the hardwood floors, and paint the interior and exterior. The strategy was to improve the curb appeal enough to attract all three of the San Francisco fixer upper buyers and create the sense that 310 Duncan was closer to a Cosmetic Fixer than a true demolish (not that the city would have ever allowed 310 Duncan Street to be actually demolished) and rebuild fixer upper. By doing this the pressure was on for all the buyers as suddenly there were many ways for buyers to look at the property, and make the numbers work.
In the end we listed 310 Duncan for $998,000 and after receiving 21 offers the property sold for $1,675,000!
We love working out the complicated situations. Call us with your probate, trust, fixer upper scenario, and we can give you some great ideas for accessing the best return possible! – 415-244-5846
Oh did I mention the two fixer churches we sold in Mission Dolores?
601 Dolores Street
The City of San Francisco had filed a suit against the church requiring the property to be retrofitted, which the congregation could not afford. They reached out to Mike and I in order to prepare the property for market. After a lot of hauling and careful compiling of the paperwork we marketed 601 Dolores finding a buyer who purchased the property with the intent to use it as a single family home! 18,000 square feet of living space, not bad. After a few years he sold the property to the Children’s Day School which is how it is being used today.
651 Dolores Street
For years the congregation of the Second Church of Christ Scientist had been trying to redevelop 651 Dolores Street to include residential space that could help them finance the continuation of their ownership. In the end it proved to be too difficult, and the congregation called Mike and I to help them sell.
Want to know more about how to sell a San Francisco Fixer Upper? Give us a call and we will do a free walk through of your property giving you an accurate assessment of the value and marketing plan for how best to achieve the highest price for your property. We have lots of experience working with trusts and probates as well!
Recent San Francisco Fixers Sold by Mike & Oliver
37 Turquoise Way -Diamond Heights- SOLD
Mike and I recently sold this excellent home in Diamond Heights at 37 Turquoise Drive, and since this blog post is about fixers I thought I would show some photos of the work we did to prepare the home for sale and photos after the property was painted, cleaned and staged.
37 turquoise Drive had been well maintained but was still in original condition. The house was built in 1963 and our clients moved in in 1964. The green and orange carpet laid down by the builder, Galli Construction, was still in place, the kitchen and baths were unchanged from the day they moved in.
Mike and I help our clients every step of the way. We have the contractors needed to get any fix up job completed and we manage the process from start to finish. Our clients gave us the keys, we scheduled all the vendors, and made sure all the work was completed on time and in the budget.
This is what 37 turquoise Drive looked like after the clean up.
Great clients, excellent buyers and a smooth transaction. Mike and I really enjoyed working on this project.
What Our Clients Had To Say…
The “Team” of Mike and Oliver were amazing. Our primary communications were with Oliver who was proactive in contacting us all along the way to update us on the property. The Team went above and beyond what I would expect any RE agent to do. My sister and I were faced with not only selling the house when our mother passed but also liquidating the contents and refreshing the look inside and out (flooring, painting, etc.). I live in Southern California while my sister lives in The City and busy running her business. The Team had recommendations for the estate liquidator, contractors, and the staging artist. While my sister and I approved all recommendations, the Team took care of the hiring process and overseeing the completion of the work in a timely manner. My sister and I sat back and watched as the Team did all the work. Everyone and everything went without a hitch.
Contact Mike & Oliver
426 8th Avenue – Inner Richmond – SOLD
426 8th Avenue, our fixer property in the Inner Richmond between Geary and Anza Street, closed escrow yesterday for $1,200,000. It was a bit of a strange property with an awkward layout upstairs but with a large lot and designated RM-1. Before bringing it on the market we cleared out all the sellers belongings, removed old carpet, refinished the hardwood floors, and painted the interior of the upstairs living space. There were eight sellers with three trusts, and several inter-spousal quitclaim deeds required by the title company in order transfer title, which all needed to cleaned up before opening escrow with an accepted offer.
We listed 426 8th Avenue for $849,000, which was quite low, but was intended to entice buyers to take a good hard look at the property in order to understand what the opportunity was. We figured it would attract two types of buyers: owner occupiers interested in the neighborhood and willing to live in the current space as is, and buyers interested in developing the property into a very large single family home or perhaps several units which is where the RM-1 designation was helpful. Even at $1,000,000 it is difficult to find a home in the Inner Richmond, so we guessed there would be buyers willing to put up with this property’s shortcomings if the price was right. We wanted developers to see that with units selling for between $500,000 and $1,900,000 in the Inner Richmond there was a lot of margin with 426 8th Avenue if they decided to redevelop the property into a multi-unit building.
In the end we received 13 offers, several of which were all cash, and the property closed escrow for $1,200,000.
726 7th Avenue – Inner Richmond – Sold
726 7th Avenue is a great house in the Inner Richmond steps to Golden Gate Park. Our client asked us what should be done to the house to prepare it for sale. His family had owned the property for 40 years, and while the bones are very good, the house did seem a bit worn. The walls were stained, the floors were covered in 30 year old carpet, and the appliances were going on 50 years old.
As with every listing, there isn’t infinite monies available to make upgrades, and fixes and upgrades have to be done economically. Mike and I have a crew of trusted contractors who are able to do the job quickly, cleanly, and at a reasonable price. We always get quotes before hand so we know exactly what the costs will be. With over 30 years in combined experience we know surprises are what ruins relationships, and we do everything possible to minimize unexpected problems.
Our Inner Richmond fixer features 3 bedrooms, 2 bathrooms, and over 1600 square feet (per appraisal) with a huge flat yard. The garage can easily fit two cars and still has room for plenty of storage.
In the past few weeks the floors have been sanded and stained, the walls have been painted, the appliances have been swapped out for new stainless steel models, the yard has been spruced up, and every nook and cranny has been cleaned including the garage. Before coming to market we updated all the light switches and changed out a few light fixtures.
When everything was done this Inner Richmond house was staged and professionally photographed. Take a look