Let’s talk about you and me. Let’s talk about all the good things and the bad things that may be..

Salt N Pepa 4 Eva!

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Let’s not talk about…, let’s talk about San Francisco real estate and the difference between list price and market value. I’m here to help you make sense out of the madness that is our local SF housing market.

So, let’s talk about list price. What it is. What it is not.

When I meet with a prospective home buyer, we discuss their goals in detail, they ask and I answer questions about the home buying process and we talk about current market conditions.

Based on the buyer’s general home buying criteria (neighborhoods, price range, size, type of home, etc), my team and I will prepare a couple of comparative market reports to show an overview of the market. We use this accurate San Francisco MLS data to point out the peculiarities of our local market and in particular, the difference between list price and sales price.

In San Francisco, one of the most prevalent and maddening trends is the tendency to list a house for less – often much less – than what the seller and listing agent expect to get for the listing.

Price low to sell high is the lay of the land here. Why? Because it really does drive the price up to the maximum potential of market value. This is good for the Seller and frustrating for the Buyer. But, there are no signs of this strategy dissipating anytime soon so we better learn how to master the strategy.

I call the San Francisco real estate practice of listing well below market value to create an auction effect the “eBay pricing strategy.” My team and I make it a point to educate our home buyer clients up-front about how this process works. To quote an entirely different genre of songwriting, “If you’re gonna play the game, boy, you gotta learn to play it right.”

The key to buying a home in San Francisco:

One of the most important things you need to know about buying a home in San Francisco is that LIST PRICE does NOT equal MARKET VALUE. It could be higher, lower, or at market value. The LIST PRICE is the MARKETING PRICE and is determined by mutual consent between the Seller and Listing Agent. And whether we like it or not, the best way to net the most money when you are selling a home in San Francisco is to price UNDER market value.

So, yes, when a property sells for $256,000 over list price, it does make for a good headline but in many situations, the list price is purposefully 10, 20, 30% under market value. What’s most important as a home buyer is to focus your search to the best options for you and get comfortable with the market so you have a realistic sense of actual market value, regardless of the list price strategy used for any particular listing. This way, when the right property comes along, you can decide with the counsel of your Realtor (hopefully, us!) what that winning offer price is…

Focus on market value, not list price, and you’ll be in good shape!

Recently, I met with potential clients who wanted to buy a home in Bernal Heights. They had found me on Yelp and came into my Climb Real Estate office in Potrero Hill for an initial consultation. They were very concerned about all of the “competition” and worried that it would take months and countless offers before they’d be successful & get a home.

I told them that my clients get their first or second choice property. Period. This is not BS and it’s not because they are overpaying. It’s because we take the time up-front to educate and explain how our crazy market works. If you understand the rules from the beginning, you’re in a much better position to win at the game. Yes?

Less than a month later when we were at the home inspection, on the first house they decided to make an offer on, my client, Anne, told me that she was skeptical during our first meeting when I said she’d get her first or second choice home.

While we love be proven right, we love it more when our clients get the home they want and start on a new chapter in their lives. We think life is too short to bullshit people.


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