627 York 2009.jpg
Listed for $699,000 as an owner occupied two-unit building last August, the sale of 627 York closed escrow with a recorded sale price of $690,000 in October (as it looked above).
Since then a permit was issued to replace windows, reconfigure the front stairs (from “L” to straight) and relocate the garage door. And an application was filed to enclose the rear porches, reconfigure and remodel the units, and seismically improve the structure.
627 York 2010
And while the property has been scrubbed, spruced and painted, and a stove replaced, it would appear, however, that neither the permitted work nor that for which has been filed has been completed. But the property has returned to the market asking $799,000.
∙ Listing: 627 York (3/3) – $799,000 [MLS]

Comments from Plugged-In Readers

  1. Posted by bdb

    06/15/10 02:00 – 03:30 On Tour as New First tour! This property couldn’t be cuter! Hipster central

  2. Posted by mikey woodz

    I remember seeing this one back last year, so whats the guess on how much they put into this little “cleanup”? Im wondering if it was worth it for the carry and realtor fees etc. I love the way they painted the cheap ass door bright orange, this reminds me of that HGTV show.

  3. Posted by sfrenegade

    It’s worth noting that the prior listing didn’t even have pictures of the inside. This apparently went from a 3/2 + 2/1 to 2/2 + 1/1. I don’t expect too much re-working based on the selling price, so I don’t know if I have too many criticism there. But I’m not convinced about living in this as a SFR without interior stairs and whatever bureaucracy may be required.
    A cosmetic cleanup like this would have fetched more than $109K extra during the boom, but the real question is whether it’s worth this now.
    Also in this neighborhood, I passed by 812 Hampshire, which is similar — two units (2/1 + 2/1 with month-to-month tenants at $1825 and $1600) listed for $795K. The listing has been active continuously for more than a year with an original listing of $800K. What’s odd is that there’s a sale listed in public records for $241K last month. Does that mean the units were sold separately?
    It’s worth noting that the units at 812 Hampshire don’t pencil out with 20% down, since $639K at 5% fixed is $3430/mo for mortgage alone. Ideally, if you were to rent 627 York as two units, you’d be able to get higher rent.

  4. Posted by The Milkshake of Despair

    So this started out as a bigger development project and ended up as a superficial flip. Perhaps the speculator expects the downturn to continue and wanted to minimize the carry time exposure ?
    My guess for the cleanup costs would be in the $20-40K range. This assumes that the seismic retrofit was not done (impossible to tell from the photos)
    (someone had better get rid of that hornet’s nest over the front door 🙂

  5. Posted by FormerAptBroker

    I like the new address numbers. Does anyone know of a good local (or on line) source for high quality address numbers?

  6. Posted by meep

    now this is what i’m talking about! a superficial remodel for about $20,000 and a $80,000 profit 9 months later . real estate bust? not in san francisco. woo hoo!

  7. Posted by tipster

    Remodel: $30K
    Real Estate Commission: $40K
    Seller Paid Closing Costs and Transfer Tax: $20K
    Holding Costs while unlivable:10K
    I’m sort of missing the profit part here.

  8. Posted by anon

    Seller Paid Closing Costs and Transfer Tax: $20K
    on what planet?

  9. Posted by tipster

    C’mon, blog entries like this are all over the place.
    http://blog.franklyrealty.com/2010/02/seller-closing-costs.html
    Note that sly statement about how it helps on resale because it makes it look like the buyer paid more than he did. It also gooses the commissions, and it makes it look like prices have suddenly jumped when in fact they haven’t, so I doubt even you would oppose it
    Paul’s famous Marina client stated that he wouldn’t pay the real estate commission or closing costs. If seller paid closing costs from a different planet, why the need to specifically exclude it? I’ve seen places go out, then increase their price by several percent so that the buyer could appeal to people with little downpayment money and this place has FHA written all over it.
    The transfer tax is over $5K. That leaves less than 2% for closing costs. I think the seller pays at least the $20K I mentioned.

  10. Posted by bradk

    i don’t mind the porch light, it’s the cheap looking windows that bug me.

  11. Posted by Troy

    It’s worth noting that the units at 812 Hampshire don’t pencil out with 20% down, since $639K at 5% fixed is $3430/mo for mortgage alone
    dunno, I’m no real estate investor (the opposite in fact, I’ve been a serial tenant to 5 different LLs in my time on this planet), but my spreadsheet says cost of money less tax bennies runs around $3500/mo for this property, so there’s a $75/mo hit on cash flow, a 0.1% annual appreciation will fix that up.

  12. Posted by anon

    You are really pretty far away from the current market then. This isn’t a condo in the Palms. This house is over 2000 feet, right in the 800,000 dollare sweetspot, and it’s in a good part of the Mission on York. The idea that the sellers would need to pay for much besides transfer tax is pretty far fetched. This is going to go over asking, in a hurry.

  13. Posted by tipster

    I cannot imagine why it is far fetched. You mean to say if I offer $3M for this place and ask them to pay $15K in closing costs they wouldn’t do it? For the right price, they’ll do it.
    And that price is the amount of the closing costs above the highest offer that doesn’t require them to pay closing costs. If I offer $800K and ask for $15K in closing costs and the next highest offer is $780K w/o closing costs, they’ll take my offer. And don’t worry flujie, you’ll be right there telling them to take it because it increases your commission and makes it easy for you and every other realtor in town to say how things are on the upswing when they aren’t.
    Doesn’t matter whether it goes over asking, under asking, or sideways; in the Mission, in the Marina, Palms or St. Regis. It’s just a dollars and cents issue.
    It’s more likely to occur at the low end of the market and this is the low end.

  14. Posted by anon

    sorry tipster but i’m just a guy who gets a kick out of your tall tales.

  15. Posted by sfrenegade

    “dunno, I’m no real estate investor”
    Indeed, sir. If you were a real estate investor, you’d be looking for a profit on a rental property instead of depending on appreciation to make it cash-flow positive in the future. 🙂

  16. Posted by R

    This is tipster’s new talking point..
    This is nothing new. But Tipster’s take that this is a certainty on all transactions today is the new part.
    Problem is, just cause he says it a lot, doesn’t mean it’s true.
    I’ll quote myself here, and try again:
    “Tipster, we await patiently your back up (you know, some data or something) for:
    “closing costs that the seller almost certainly had to pay”
    Posted by: R at June 3, 2010 2:26 PM”

  17. Posted by A.T.

    10 seconds of googling pointed to this:
    http://www.trulia.com/voices/Home_Buying/In_San_Francisco_is_the_buyer_responsible_for_clo-131304
    First broker states “it is not uncommon to get sellers to credit for all or part of the closing costs.”
    But I suppose he could be wrong. Any contrary proof?

  18. Posted by R

    AT: Nobody’s saying it doesn’t happen (i.e. “not uncommon”). Heck, I did it.
    But that’s a far cry from Tipster’s “almost certainly”

  19. Posted by Rillion

    “If I offer $800K and ask for $15K in closing costs and the next highest offer is $780K w/o closing costs, they’ll take my offer”
    And why would a buyer do that? Can you please explain to me Tipster why a buyer would want to have the property tax value based on a higher “sales” price? Seems to me the smarter buyer would rather offer $770K and pay the $15K in closing costs themselves (total expenditure of $785K) then offer $800K and have the seller pay $15K in “buyer’s” closing costs.
    Perhaps I am missing something here though. I know when I bought a place there were costs involved on both sides. I paid the costs associated with my side (buying) which consisted primarily of the costs on my loans, while the seller paid (out of the sales price) the costs associated with the property transaction, r/e commissions, transfer taxes, etc. Assessed value for property taxes was the “sale price” so it included everything the seller paid but did not include my buyer costs. Why would I want to shift my costs to the seller by adding them to the sales price? So I can pay property taxes on those costs for the rest of my ownership?
    Now I can see if someone was trying to flip a house or commit some type of fraud where they wouldn’t care about what the price slapped on the house was, but to just come out and assume that somehow it benefits buyers to increase the “price” on a place by including their costs in the price just doesn’t seem to make much sense.

  20. Posted by Rillion

    I am aware of things that were done in the past where someone over pays for a house then gets cash back from the seller, again usually a lot of that was borderline fraud in places where there was 100%+ financing.

  21. Posted by Gee Ess

    If you’re a buyer and you’re going to flip the place, do closing costs count as part of your investment basis? If not, then rolling them into the sale price would be beneficial because your tax basis increased, meaning you pay less tax on any profit you make. Or, for the bearish, you get to deduct your actual losses instead of just the loss in investment value.

  22. Posted by tipster

    And why would a buyer do that?
    -Because they don’t have the money.
    OR
    -Because they can put more down and get a better loan rate or avoid PMI
    And yes, the property tax basis goes up. By 1%. 1% of 20K is $200 per year. If it helps you get a better rate, the $200 per year is cheap – the total loan costs could go down by more than that. If it helps you get a loan you couldn’t otherwise qualify for, then it’s just $17 more per month you are paying. Not a material cost here. If people were entirely rational about this, they’d rent. $17 isn’t going to make a huge difference.
    If you have $500K in the bank you wouldn’t pay the extra $17, but then you probably wouldn’t buy this place either. On the other hand, even if you have the down payment, wrapping the closing costs into the loan lets you walk away with almost no skin in the game if prices go down. $17 is cheap insurance.
    This is NOT fraud. You can disclose this to a lender and the lender will usually allow it. FHA automatically allows up to 6% of the purchase price to be closing costs. The buyer discloses it to the lender and the lender allows it. Not fraud: just wrapping the costs into the loan that the lender agrees will be financed. As long as the banks comply with accepted procedures, they can resell the loan.
    Almost certainly? You bet. Too many reasons NOT to include it. I’m quite confident this is why you are seeing some places get listed, then RAISE the price, so that they can appeal to buyers with no money.

  23. Posted by R

    So no actual data. But you’re “quite confident”.
    Well heck, that’s good enough for me. It’s settled.

  24. Posted by loftlover

    @FormerAptBroker
    I like the new address numbers. Does anyone know of a good local (or on line) source for high quality address numbers?
    Try DWR.com on sale now. http://bit.ly/agUgfA
    or a little better priced allmodern.com
    http://bit.ly/bktjVf

  25. Posted by Willow

    The Mission (btw, do people really refer to it as “The Mish”?) does seem to be showing incredible strength…2154 square feet is pretty big too. This should sell quickly. (I like the orange door. However as other have stated I’m not crazy about the bee hive porch light or the windows.)
    Lets say they buyers spent 25K on cosmetic fixes. With commission and transaction costs, (monthly mortgage payments, taxes, commission etc.), based on my rough calculations, the sellers are going to break even or more likely incur a small loss if it sells at list. They want this baby to go at least 10% over asking to really have been worth the trouble.

  26. Posted by ex SF-er

    And why would a buyer do that?
    I agree with tipster on this… because they don’t have the cash. many people buying in the lower segments of the RE markets don’t have the cash to put down.
    as example, data from FHA insured loans shows that this is happening in a very high percentage of FHA loans.
    Although I won’t paint myself into a corner saying it’s a “certainty” that it will happen with this or any other particular property, it is happening with alarming frequency in the lower segment of the national RE market (note, I said national, I have not pulled the data specific to the lower priced SF market)
    Can you please explain to me Tipster why a buyer would want to have the property tax value based on a higher “sales” price? Seems to me the smarter buyer would rather offer $770K and pay the $15K in closing costs themselves (total expenditure of $785K) then offer $800K and have the seller pay $15K in “buyer’s” closing costs.
    Perhaps I am missing something here though.

    why would people take out option ARM loans that would eat up 60-70% of their take home pay to buy a home? why would people put their home at risk to pay of credit card bill?
    simply put, because a lot of people are not financially savvy.
    the point that you’re missing is that a lot of buyers don’t have the cash to put down, or they don’t want to lock their money into the home for whatever reason.

  27. Posted by anon

    none of that has to do with this sweet mission place. like everything else decent in the mission it’ll sell to somebody with a lot of cash. and it will be competitive. you guys are way out of touch with the sF market AND/or smokin some real good stuff

  28. Posted by R

    exsfer.. can you share the data that you reference? that’s all I’ve been looking for since Tipster started down this path.

  29. Posted by hangemhi

    it’s pointless to argue with someone who is “certain” about any delusional thing that supports his own imaginary world… but here it goes….
    while “not uncommon” it is a blip on SF’s radar. if you are arguing it is smart to do on the buyer’s part – fine. but those of us who work with buyers and sellers every day all year long know better in the City know “not uncommon” does NOT mean “common”. Why don’t you call up Lance who’s quote you took and ask for every 10 transaction sides he works how many get get seller’s to throw in closing costs, or buyers get them financed. i bet it’s along the lines of 1 in 10
    btw, nice Realtor website there. he must be your cousin because his points are stupid. $10k added “helps with comps”????? helps what? do masses of buyers really get fooled into bidding things up because a few people do it? or if “everyone is doing it” then don’t all other buyrs realize it and therefore understand the market?
    but why listen to logic, experience and common sense when it doesn’t support your view point.

  30. Posted by 45yo hipster

    “btw, do people really refer to it as “The Mish”?”
    I do. But of course that’s while sipping on my ‘spro after eating ironic ice cream at humprey sloclombe while contemplating a locally sourced sando over at local: mission 🙂
    Onto this prop. I think the guy got chicken shit and just spent $20-30k on a superficial remodel so he can dump it. But I gotta admit, the face lift (and staging) sure look good for a quickie! It still amazes me what shiny paint can do, even on crappy, uneven wood surfaces.

  31. Posted by hangemhi

    “the point that you’re missing is that a lot of buyers don’t have the cash to put down, or they don’t want to lock their money into the home for whatever reason.
    are we talking SF and this $799k price range or are we talking $200k antioch homes with fha buyers? FHA loans are no panacea – at least ot in SF and high price ranges. With only 3% down – or as you guys think – 0% down – the monthly payments are outrageously expensive. some SF buyers i’ve had liked the idea of a low down FHA loan until they saw the monthly payment and that was the end of that idea. my business continues to be dominated by cash rich buyers – some of who pay all cash and some who put 20% or 30% or whatever amount of cash they need to get the best loan. i know i know – smart people don’t do that with their cash….. oh wait, you just said that most aren’t financially savvy…. so which is it?
    all i know is the hypothesis proposed by tipster and added onto by exSFer is not common. if it were, there would be a LOT more transactions than are happening now and i’d have less time to comment on SS

  32. Posted by sfrenegade

    “btw, nice Realtor website there. he must be your cousin because his points are stupid. $10k added “helps with comps”????? helps what? do masses of buyers really get fooled into bidding things up because a few people do it? or if “everyone is doing it” then don’t all other buyrs realize it and therefore understand the market?”
    Regardless of whether this is still happening today for homes in this price range (it is certainly happening for less expensive homes on government-subsidized financing), this DEFINITELY happened during the boom, and I know someone who did this. Their realtor convinced them that they should pay $900K instead of $870K, and that he would kick them $30K out of her pocket (double ended fee) in order to “keep up the comps” and make the sale. He made a convincing argument to them that it would help with their future resale too, and they bought it (in both ways). They wanted to kick themselves when I pointed out that they would be paying interest on that extra $30K for 30 years and would be paying property tax on it indefinitely, prop 13 or not, as well, especially when values started falling.
    They did not disclose it to the bank, but it was the boom, so the bank probably wouldn’t have cared anyway.

  33. Posted by missionite

    I’m not going to wade into Tipster’s delusions regarding the frequency of seller picking up closing costs. I wish it were true. Sure wasn’t in my case.
    I *will* wade into this house though. I toured it when it was for sale last. Cute quickie facelift, but I don’t see how the seller is going to make money on this. The pictures don’t show how utterly bad the flow of the house is. If you like going out the front door and down a flight of stairs to get to the living room that is pictured you’ll love it. The upstairs has one of those “is it a living room, or is it a hallway?… no this is a hallway” deals.
    Perhaps more importantly, I will tell you that prior to my home purchase in October I lived the next block over on Hampshire. So I can tell you the biggest problem is not the house. No sir. It’s the neighbor you will see all the time from your new backyard. It’s a couple who keep all their doors open, and scream at each other all hours of the night. It’s a combination of meth and alchohol. He’s a senior citizen, and she… well, here’s a picture of her:
    http://missionmission.wordpress.com/2009/04/20/im-aware-it-is-hot-outside-but-wtf/
    That isn’t an “outfit”, that’s how she dresses all year long. And hangs out in her house with all the shades open. She’s so out of it, she yells at him when he isn’t even there.
    Police are called several times a week. And when I left some of the neighbors were trying to figure out how to get a public nuisance lawsuit.
    When I toured the house I asked the Realtor if they were putting it in the disclosure package. The Realtor played dumb.
    I know I would want to know if I was buying the place.

  34. Posted by Kathleen

    Please take my photo down.

  35. Posted by ex SF-er

    exsfer.. can you share the data that you reference? that’s all I’ve been looking for since Tipster started down this path.
    R:
    YOU OWE ME
    it took me hours and hours to find a free source (I get a lot of my data through proprietary services).
    highlights:
    in Q1 2007 41.1% of all FHA loans had an LTV of 96-98%
    an additional 24.9% of FHA loans were part of the Down Payment Assistance.
    in 2010 the number of DAP loans has fallen to 0 (because they were made illegal).
    However, now 65.3-69.1% of all FHA loans have an LTV of 96-98%, which is a 68% increase from 2007.
    How to explain this? in part through seller concessions and the First Time Homebuyer credit.
    (the removal of downpayer assistance should have reduced LTV… but it didn’t because of concessions and FTHB credit)
    this is terrible.
    http://www.hud.gov/offices/hsg/comp/rpts/rtc/fhartc_q2_2010.pdf
    if you want more info on this, you can read Congressional testimony from Ed Pinto, ex Fannie exec and current financial consultant
    warning: pdf.
    also it’s 94 pages long.
    The first 5-10 pages are most interesting as well as Figure 3 which is on page 39. I’m not sure why he didn’t use an updated chart though, that one stops around 1998. the data now shows about 96% LTV instead of the old fuddy duddy 50-80% we you see in his chart.
    but in sum:
    there is no longer a question that the #1 determinant of foreclosure is LTV ratios. Even moreso than income, FICO, geography, etc.
    as LTVs go up, foreclosure rates go up.
    FHA’s foreclosure rates are skyrocketing (and thus it will very soon be bankrupt and need a taxpayer bailout… quelle surprise!)
    =============
    THUS:
    although I’m not as confident as tipster that EVERY sale has seller concessions (including the future sale of the house in this thread)… in the FHA world a striking number do have these concessions, and it is rising rapidly the last 2-3 years.

  36. Posted by snark17

    Those windows are hideous. Fake-paned windows are a crime against nature.

  37. Posted by SanJoseRenter

    R:
    Sure it’s nice to have charts and all, but 3 observations make it very likely that American buyers are rolling fees into the closing price, without even seeing the charts:
    1) Most Americans are not savers, so don’t have the money up-front to have many options when financially planning the “purchase” of a house.
    2) The whole cash-out closing and instant equity / MEW craze indicated that “buyers” did not have the funds to comfortably handle the “purchase.”
    3) The concept of going back to traditional 20% downpayments scares the hell out of current buyers and realtors.
    Buyers and purchase are quoted above because with 3% down, it’s a put option, not a purchase in any meaningful sense of the word.

  38. Posted by FormerAptBroker

    Troy wrote:
    > dunno, I’m no real estate investor
    > (the opposite in fact, I’ve been a
    > serial tenant to 5 different LLs in
    > my time on this planet), but my spreadsheet
    >says cost of money less tax bennies runs
    > around $3500/mo for this property, so
    > there’s a $75/mo hit on cash flow,
    > a 0.1% annual appreciation will fix
    > that up.
    It looks like you forgot to back out a vacancy factor and the cost of management and other expenses (use $2K a year + property tax for apt. units and $3K a year + taxes for homes). Only a small number of poor (I forget the exact number, but you need to make less ~$100K and manage the property youself) get to use the mortgage interest deduction on a rental property to reduce their W2 income.

  39. Posted by Marin folk

    Can’t tell you how common it is but I had the seller pay closing costs. Why should I? It’s a down market and I need my cash for the 20% down.

  40. Posted by Jimmy (No Longer Bitter)

    In my most recent purchase (last week) of a home in San Mateo, we had to prove sufficient W-2 income to carry both the new house, and our old house that we’re in the process of selling, with the combined PITI payments for BOTH homes less than 33% of our gross income. (that is $850k for the new one and $500k for the old place).
    We had to demonstrate the sources of our downpayment funds and prove that our downpayment was not a loan of some kind (i.e. settled funds in the account prior to opening escrow).
    Credit scores, naturally close to 800 for each of us.
    Lastly, as it was a short sale, the seller (i.e. the bank) paid the agent’s fees, back taxes and the transfer tax (0.55% in San Mateo), and our agent got us a no-cost 5% 30-year fixed rate loan (a so-called “Jumbo Conforming”) for the balance.
    So other than the 20% downpayment, we paid nothing out of pocket in fees.
    I figure this is normal for buying real estate? Am I wrong? I am a first-time buyer; my wife owned our current home prior to us meeting so I was not involved in that purchase.

  41. Posted by NRGplay

    This is a nice little house. I saw it at 699K and thought the numbers penciled quite nicely. I’d much rather live here than the many condo’s in the area that are fetching the same price range plus HOA. It’s a nice block. Garage, in-law suite or whatever you want to call the second unit. Someone will be happy with it.

  42. Posted by SocketSite

    The sale of the spruced up 627 York closed escrow this past Friday with a reported contract price of $825,000 (3% over asking).

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