1462 14th Street
A plugged-in reader reports:

Thought you might be interested in this: 1462 14th Avenue was on the market and priced at $769,000. It’s a proper 3-bedroom SFR in the Inner Sunset, near the N-Judah so it drew a lot of interest. However, the home is in an awful state and needs a *tremendous* amount of updating. And yet, it received 51 offers and sold for…..$1,005,000.

Clearly, it was under-priced, though comps for this area would indicate that theoretically, it was only slightly off. We’re would-be first-time buyers looking for a home suitable for a young family and have been encountering fierce competition for the few suitable properties in decent neighborhoods at this price point. But this is unlike anything we’ve seen thus far…

Interested indeed (although it was probably the “I love your site, by the way and read it daily” line that really caught our attention) and thank you for “plugging in.”
∙ Listing: 1462 14th Avenue (3/1.5) – $769,000 (Sold $1,005,000) [via MLS]

53 thoughts on “A Reader’s Report: The State Of Single Family Fixers”
  1. Very interesting- this is what anyone in the market has been seeing despite all claims the market is bad….

  2. I’m interested in knowing how you know there were fifty-one offers. Are you, or were you, the agent? I ask, because, theoretically, that information should be confidential and to disclose it, is a breach of responsibility to your client.
    Alternatively, it could be heresay.

  3. The market for a home that you can add a couple of rooms without expanding the envelope, redo and resell at 800 psf, is still quite good because you can still make money doing it, or at least not lose any.
    This home becomes a completely redone 2000 sq ft home with one car parking for no more than $250K more than you paid for it. It resells for 1.6M, subtract about $100K for staging, realtor’s fees, property taxes, insurance etc. giving anyone who buys it a relatively easy $200K profit for 6-8 months worth of work. If the price per square foot drops to 700, you don’t lose any money on the deal, so your downside is protected, though you may be working for free for 8 months.
    The comps don’t capture its improvement potential, so it was really underpriced. And the type of work that it needs is not beyond most contractors’ capabilities.

  4. Why would it be so interesting if it’s what “anyone has been seeing”? I’m in the market and I don’t think the market is “bad”. But what happened to this house is NOT what we “have been seeing” either. For every one of these sold “over asking” there are dozens sold under. If anyone is looking for a bidding war just for fun, there are several homes in Marina that I think are fairly priced. They are just sitting there and probably waiting for their own war to start, which could happen any day now(?).

  5. I have been watching this part of the market fairly closely, as my wife and I have been considering purchasing a SFH. And I completely agree with what the original ‘tipster’ here reports; the market is still extremely competitive for SFHs in some neighborhoods and at this price-point. While the information I have gotten on actual # of bids could represent hearsay, there is no denying the fact that there are multiple bidders who are pushing final sale prices over asking. I have yet to see a property that we’ve had any interest in go for under asking (and I’ve kept track of all final sale prices). If what ‘blahh’ says is true, maybe I should add the Marina to my list of ‘good neighborhoods’ (definitely not our ideal location though – we’ve been focusing on Noe Valley, Duboce Triangle, Corona Heights, Glen Park)

  6. Assuming it is true that the home received 51 offers, each of those unsuccessful 50 offers represent a ready, willing, and able buyer who could afford between the asking price and $1 million. So there is still a bit of pent up demand.
    I doubt that the home’s sellers could have expected this windwall. By pricing it low, they got more than expected. If they priced it at $1M, I doubt that they would have got it. To the would be homebuyers, keep looking because there are still more SFRs coming down the pipeline.

  7. I’ve said it before; SanFran is not typical. There are a lot of wealthy people with a lot of financial resources. This market is not likely to tank short of something catastrophic. Don’t expect big returns, but if you are looking for a long term home- buying here is probably a better investment than buying outside the city where prices are more likey to move downward in the event the housing boom continues to bust… Just don’t expect big housing gains in the short term.
    Oh, and this property isn’t that bad. Seems like an easy fixer. I hope a nice family got it and can make it a project. I’d hate to see a nice place like this get flipped. Oh well.
    To Anon 11:49, I was in your shoes a year ago and decided to rent. Given the developments over the past 6 months, I sort of wish I did buy into the market but I got freaked out with all the bubble crash talk. I got out bid on 3 properties. All of those properties are probably worth 4-8& higher now based on what I’m seeing in the market now. I’m sort of in disbelief actually and starting to believe my own wisdom. I’m just not sure if I can commit to SF for the 5 years that I think you need to B/E in this market. Just a little feedback from someone who was where you are now.
    Good luck,

  8. SF may not be ‘typical’ but the Case Shiller Index is negative and is expected to stay that way for the foreseeable future.
    The median for March was negative according to DataQuick, although April numbers should be out tomorrow.
    San Francisco $769,500 $753,000 -2.1%
    And Inventory appears to be out pacing sales activity.
    “new listings have slightly outpaced new sales as Active listed housing inventory increased nominally.”
    While I wouldn’t describe SF as ‘crashing’ or ‘affordably’ every indicator shows the market has slowed substantially and prices are dropping.

  9. “51 offers” might mean the total number of offers submitted during several rounds of competetive bidding. eg. 10 buyers averaging 5 offers apiece, or any combination thererof. I doubt it means 51 unique buying parties making offers.

  10. my friend sends me the asking price and eventual sales prices for SFHs in Bernal and Noe and this pretty much fits with what I see there. Anything decent still gets overbid

  11. Eddy,
    We bought a TH for 400k in 2002, sold it for $650k three years later, and purchased a SFH in district 4 with some of the additional equity. We used part of the remaining equity for remodeling. We have our LL to thank for buying some propery because he raised our rent substantially (non rent controlled apartment), and had us pay a portion of the common area expenses(water, electrical, garbage) during the dot com era, and frankly, we were scared he would keep raising the rent.

    BTW, we were outbidded on two properties(100k over listing price) before we ended up buying the TH from a friend.

  12. ** This was NOT a “proper 3 BR.” It was a 2 plus sunroom with 1.5 baths and SERIOUS potential at garden level – think family room plus master and en suite bathroom – which is what people fighting for buying here… Something that on top is extremely cute and livable, with something on the bottom that will ultimately add more value to the home.**

  13. Delancey, It typically does in fact mean 51 unique buying parties.
    blahhh, You are right. There are many, many properties selling under, and many, many Stalefish deals to be had.
    Here’s another one for you: 3711 Clay the 4 bed, 4 bath, 3700 (approx) square foot home in Presidio Heights that was built in 1891, listed at $1,950,000. They handed out 30 disclosure packages, set an offer date of May 1st. They received 10 offers. It will most likely be selling over $2,775,000. Details on our site.
    Oh…one more, 4065 25th Street. Three pre-emptives and we’re wagering on our site about the sales price.

  14. Hmmm – well, this property isn’t quite the lower end bargain basement of the Sunset – those can still be had in the $650-$750K range for a small junior 2 bed/1 bath on a smaller than typical lot. Normal size 2 bed/1 bath houses with some updating and remodeling in the Sunset generally go for $800-$1 mil. This property has a pretty desirable
    location at 14th/Judah which is close to the 11th/Irving neighborhood commercial uses and UCSF. Properties in the Inner Sunset definitely sell at a premium to those properties on the other side of 19th Ave, but yeah, $1 mil plus sounds a bit steep for something that needs work without any lower level improvements even for that location.

  15. “This market is not likely to tank short of something catastrophic. Don’t expect big returns, but if you are looking for a long term home- buying here is probably a better investment…”
    Hmmmmm. Catastrophic and long term. Does San Andreas ring a bell? Anyone? Probably not……..
    Keep focusing on marble counter tops and uebercool staging.

  16. FWIW… My wife and I have been outbid on 12 SFH over the 11 months in District 5 and Portrero Hill. All went for over asking, in the $ 800k – 1 million price range. They all had multiple bids, though all were priced competively or under priced.

  17. Agreed with the above comments about this being a nice looking home for the Sunset. Put this home anywhere else in the City ie. Forest Hill, Marina, Noe Valley, and you are looking at a price between $1.5M+ w/o any additional improvements.

  18. Forgot to add that this is one of my favorite neighborhoods in the city. Great location and very convenient, with a diverse mix of residents. Not the best weather in the city…
    But when a fixer in the Sunset tops $1.0 million, the froth starts to spill over the top of the mug.

  19. “with a diverse mix of residents”
    Read: gang warfare at night. Oh yes, reselling this thing in the diverse hood, should bring in 1.6M – at least.

  20. “Read: gang warfare at night. Oh yes, reselling this thing in the diverse hood, should bring in 1.6M – at least.”
    Not at all what I was implying. I meant the Sunset, among other areas of the city, is a true neighborhood in that you have white collar & blue collar, old and young, singles & families, etc. You get a cross-cut of the city by living there, and you can feel it by walking the streets. The restaurants are full of locals, not business people in suits fiddling with their blackberries.
    On some streets of the Marina and Pac Heights, the only diversity you see is different-colored BMWs.

  21. For April 13 – May 11, there were 32 sales below asking, 15 sales at asking, and 110 above asking in SF. Average sale was 105.34% over asking.
    I am currently the beariest bear, but those numbers sure aren’t indicative of a market in free fall. I bailed out of SF 2 years ago at the “peak”, but it seems that now someone else ( a few months ago I would have tagged them the greater fool, but market data is softening my derision) had a more accurate or lucky vision of the market than I did.

  22. the market data shows prices falling in SF. Just because a home sold ‘over asking’ doesn’t mean it sold for more then it would have for last year.
    The Case Shiller Index for SF Area is negative
    The Median for the Bay Area and SF Proper is also negative.
    Sales volumes are flat or down and inventory is outpacing sales.
    I agree SF isn’t ‘typical’ but it is subject to the same market forces as any other area.

  23. Thnx for highlighting this SFH, as we were lacking examples of prices going way over asking in the Sunset/Richmond area. It is great to see constant examples of Noe Valley, Pac Heights, Marina condos and houses selling for 5-10% more than last year’s prices, and it’s always good to see examples from different neighborhoods. I can’t believe anybody would pay more than $1million for a fixer, and pseudo 3bedroom with 1 bath in the Sunset, but it is what it is.
    I’m very satisfied to observe a change of sentiment on this board from a year ago. It’s good to see people realize that properties all over the city are rising.
    Keep up the good work on awesome examples all over the city. I also want to see more examples of overpriced SOMA condos. SOMA is overpriced by 30-50% given its Tier 3, need-to-carry-a-weapon location

  24. To SFNewsletter,
    Do you really think 3711 Clay is going over $2.775 million? I do believe $1.995 million is an obvious steal, but $2.775 million? How much money do you think one has to spend on this corner house to make it right? 500K? 1 million and a year of remodelling?
    I don’t know why anybody with $3million bucks would bother with the headache of remodelling and planning for 1 yr. Got to live life now.

  25. Badlydrawnbear:
    1) Case Schiller includes mostly poorly performing suburban areas in addition to SF, so Case Schiller says more about Pleasanton tract home prices than it does about SF prices.
    2) The Dataquick median in SF has been pretty level around $750K since late 2005 – yes, it moves up and down month to month – mostly due to the change in the sample. It doesn’t appear to be showing a significant appreciation or depreciation trend.
    3) Sales volume is off about 15% from peaks in 2004-2005 – these were frenzy multiple bid periods, so a little pullback from that brings us to a pretty level market.
    Yes, some desirable properties with good locations get multiple bids while other product sits around – it just depends what you want to look at.

  26. 2155 9th Ave was recently listed for $1,295,000 and sold immediately for $1,948,000. While it was well located and was essentially mid century modern style, it still needed a total upgrade and had NO rear yard. Because the neighborhoods are going through the roof pricewise, this provides a strong underpinning for areas like SOME while will not fall as others are predicting. What we are seeing is partly the result of our supervisors trying to legislate affordibility. The have effectively put a moratorium on new construction and this is the result, skyrocketing prices.

  27. Oh please, this is indicative of…what?
    The realtor knew full well this thing would be bought for it’s expansion potential. How many listings have you seen where there is a big photo of the interior of the unfinished garage in the listing?
    They list it at a price as if there is no expansion potential, and 45 suckers bid at or below the asking price. 6 Contractors know exactly what it’s worth and all of them bid right around the final asking price. Then the realtors sit back, barely able to contain their laughter, and state, “My! The market must be on fire. 51 Offers!”
    If the U.S. government put $10 bills on ebay for $6, they’d get lots of offers too, in spite of the fact that $10 bills are going DOWN in value. If that happened, would you think, “Hey, the dollar is going up, better buy some soon!” Or would you think, “What a nutty idea. Someone is out there trying to manipulate the market”. Would you state that there were 50 other people who all MUST have $10 bills, or would you realize that there will always be a large pool of people trying to buy $10 bills at $6. Would the dollar continue to go down in value in spite of this large pool. You bet.
    This is what the realtors were doing in Palo Alto during the dot com days. They’d price every top tier house under the comps by $1Mil. Every house would go for multiple offers WAY over asking, and the realtors would feign surprise at every one, then price the next one $1M under. Why didn’t they just price them at comps? It was free publicity and it created a sense of hysteria.
    Connect the dots, folks. If two real estate brokerages wouldn’t play along, they get acquired. Wanna make some real cash: start a brokerage and don’t play along.
    In the meantime, you’re being played. Go back and look at the photo of the garage and you’ll realize how silly you were to bid at asking.
    And the next one that has NO expansion potential that you feel like bidding way over “because you’ve lost out so many other times,” without looking at the value that any dispassionate observer could easily see, well, you’ve been played worst of all.
    There IS a large pool of money supporting this habit: it’s called buyers of Alt-A loans. Call me next year and we’ll see how large that pool still is.

  28. You’ve got to give ‘Badbear’ some credit for trying though. I think he’s been citing this statistic, and that index forever while prices in SF keeps going up. It is important to justify one’s decision not to buy, otherwise, one could go crazy posting all day, everyday.
    Badlydrawbear will believe a graph even if his neighbors on his block sell for 10% more than the highest comps last year 🙂

  29. Prime,
    I do not know for exactly what it sold, I only know that I was privy to an offer that was placed at that amount ($2.775) and it was not accepted. And that offer was all cash, two day C.O.E. So it is pretty safe to say it went around that price. The sellers would be crazy if they left an offer like that on the table.
    How much work did it need? Hard to put a dollar amount on it, but it needed a ton…a ton. But in that location, even if they put $1MM into it, they’ll still come out on top.
    Here’s a quote from our newsletter on 4/6/07 regarding 2155 9th: “We understand that Overbids are largely a result of under-pricing, but every so often a property comes along that really just makes you shake your head and think. Here is a property that did just that, 2155 9th Ave., a 4 bed, 2.5 bath, 2727 square foot “custom built view home on a large corner lot in Forest Hill,” asking $1,295,000. In our opinion, it needed new baths, new kitchen and a bit more. Everybody we spoke with saw this home going to about $1.65, maybe at the most getting into the mid $1.7’s. Say it ain’t so…$1,948,000…cash! That is $653,000 above asking. One of our readers actually had a friend bid on this and they were $200,000 shy of top honors and in 9th place. Join us by bowing your head and praying this is not an indication of things to come in our market.”

  30. Hi Sfnewsletter,
    Thanks for the color. 2,727 sqft is pretty large. What is the average p/sqft in that area, as I’m not familiar at all. What is the area called? Sorry for my ignorance. Would love to see the original list link if you have it.
    Regarding Clay, if a $2.75 million “cash” offer was not accepted, and not even offered as backup, or countered, then the final selling price must be at least $100K over $2.75 no? At anyrate, i’d love to get an update when you find out. That is a great area for family indeed. $1million in remodel sounds like it will take close to a year.
    I’ll got check out your site more often!

  31. 1. This house is not a “fixer upper”. Just a bit dated in the kitchen, expansion potential down, etc etc.
    2. The market is very strong for single family houses in most neighborhoods at prices less than $2,000,000. The market is also very strong for classic SF house like properties…ie, flats in smaller buildings that have been converted to condos.
    3. The market is definately weaker for condos in large buildings, new construction, lofts, TIC’s etc.
    4. There is a relatively low supply of quality SFR and Flats in residential neighborhoods on the market. There are a number of buyers bidding on these in demand properties.
    5. Prices are not really all that much changed from the peak of the market in spring/early summer of 2005. They “feel” stronger than a year ago and definately stronger than last fall. 2006 was a tough year.
    6. Prices have been holding up well or in some cases increasing over 2006 levels because of several factors unique to SF. 1. low inventory is paramount. 2. Not many foreclosures or bank owned property being dumped. 3. Economy doing well (tech) and people are making good incomes here. 4. We don’t have builders of tract houses dumping them on the market…except for SOMA 5. Interest rates are still quite attractive.
    I think things will stay much the same unless we have a dramatic change in interest rates or if the economy and job creation and wages were to fall off substantially like post dot.bomb and 9/11.

  32. One other thing I’ve noticed about the SF market which makes it unique: Many properties are intentionally priced below what the market will probably allow. It’s a de-facto auction without a reserve. In the unlikely event the seller doesn’t get the “reserve” price, the property can always be pulled from the market. It creates a very emotional, highly charged bidding atmosphere. Of course, if you’ve been the loser in a few of these auctions, you are really motivated the next time. The overall effect is undoubtably to add a “premium” to prices.
    It’s probably just my nature, but it makes me nervous as I recall the same atmosphere surrounding the dotcom stocks of 1999.
    I know owning a home is highly desirable, but ultimately, we are all “renting”, so be careful.

  33. Cary you are absolutely right. The system is set up for bidding and to take advantage of the emotions of buyers. So is staging…an appeal to emotions. However the very worst thing a seller and their agent can do is overprice their property. It sits and sits and often sells below reduced prices. So the system ends up being 1. make the property look its very best with expensive staging (that really adds no value to the property but adds substantially to the emotional appeal), 2. price it somewhat below a market value if there are good comps to suggest a true market value. If no good comps, price it even lower. 3. Do appropriate marketing, open houses, exposure, disclosures and pre-inspections. 4. let the market determine the “value” of the property through blind bidding.
    It may not be fair to buyers, but it is how it is done most of the time. A good buyers agent will help dig through the fluff, determine good comps, feel out offer situation, and help determine an offer price.
    And not many other markets have this process of real estate sales. It is very SF.

  34. The issue is whether a seller has to accept an offer at asking price. If sellers are allowed to simply say “never mind” and relist at a different (i.e. lower) price to ignite a bidding war, the whole scheme is skewed. An honest brokerage firm would request their seller clients to actually sell at any price at and above asking. That way the seller would at least bear the risk of selling at asking if the expected bidding war doesn’t materialize. It seems common practice in SF to strike a deal with the listing agency that the nominal asking price is not the price the seller will ultimately accept. And that in my mind is tantamount to fraud.

  35. Joe – Prices of properties I have tracked in District 7 are about 15-20% more than the Spring of 2005. In fact, there are many examples on this sight alone which prove that point, if not more than 20%. It’s so funny that people think 2005 is the peak, when 2005 showed a 10-15% rise, and 2006 showed another 5-8%.

  36. “Prices of properties I have tracked in District 7 are about 15-20% more than the Spring of 2005.”
    Just because you type it doesn’t make it so. Send Socketsite the spreadsheet of properties you’re tracking and see if they’ll publish it. Otherwise give it a rest and go away.

  37. “That way the seller would at least bear the risk of selling at asking if the expected bidding war doesn’t materialize.”

    Generally speaking, the agent is the one that develops and implements the marketing plan, and recommends the listing price. If he/she has a marketing plan to drive up the price through a price strategy why would seller be forced to sell at the listing price? A lot of times in the agent’s marketing notes it’s stated that the seller reserves the right to accept or reject any offer. I don’t know if that protects the seller or not from other agents wanting the offer to be accepted but at least it’s out there for everyone to see.

  38. “Read: gang warfare at night. Oh yes, reselling this thing in the diverse hood, should bring in 1.6M – at least.”

    Obviously, anon if you knew SF you would where this property is located. I think that spoke volumes about your post.

  39. “If he/she has a marketing plan to drive up the price through a price strategy why would seller be forced to sell at the listing price?”
    Because the seller signed an agreement with the agent that states that if the agent provides an able and willing buyer, the seller owes him his/her commission. So even if the seller decides not to accept the offer, he would still be on the hook for the commission since the agent fulfilled his part of the sales contract.

  40. Well, after the initial heart stopping at “Hey! That’s our house!!!” when we were sent this link, we read on to hear what you had to say about how much we paid for our house…
    Interesting to say the least.
    For any who are curious, here is who we are:
    father and daughter looking for a two unit house casually for 3 years and seriously for about 5 months. Open houses on Tues/ Thurs/ Sat and Sunday since December. Made 6 previous offers, out bid on all, sold our condo so that we could make a non-contingent offer, we know the market and the ups and downs- I feel like I could pass a real estate test with all the stuff I know about buying houses now! My dad says he will die in this house, so we are not flipping it for any of you who are looking for it. (so, see… it DID go to a nice family!)
    The things you got right:
    51 offers, sold for $1,005,000.
    The things you got wrong:
    its not even close to a “contractors special” the kitchen needs new cabinets and a new floor, we need some updated wiring, but that is all easy. We want to build the bottom out- it is zoned RH2 after all.
    So, thank you, “tipster”, for explaining how it really works with pricing stuff below asking! Don’t get me wrong!- We were ecstatic when we found out we won, then the next thought was “OMG- does that mean we paid too much?!” But, it is a great house with period details, original fixtures and knobs, etc. Its got a great back yard and an easy build out on the bottom. It’s in a family neighborhood, we’re family, not speculators, and, so far we love it! Yes, we were priced out of our old neighborhood (Duboce Triangle) and couldn’t buy up from our old condo, but we think its a great location and also think that anyone that thought it was going to sell for “asking” hadn’t looked at comps or anything in the area.
    Good luck with your search, and I’m with you that I don’t think the market has slowed! 😉

  41. A&B, a big congrats to you and your father for finding and getting the house!!! Having lived in the nearby neighborhood (Forest Hill) for over 30 yrs., I can attest to the fact that the Inner Sunset is a great place. Great shopping and restaurants, public transportation, and public library. Rest assured that there is still plenty of room for your house to appreciate.

  42. Yes, by definition you paid too much. Sorry. Anybody that wins a 51-person auction should be sorry they did.

  43. What “definition” are you talking about? Clearly the buyers were fortunate to get a property that 50 other people wanted to buy also. I live in this neighborhood too and it will only go up in value over time. This is a great purchase and one that you are obviously insanely jealous of. Get over it!

  44. “So despite its dire-sounding name, the winner’s curse does not necessarily have ill effects”
    So there !

  45. “Yes, by definition you paid too much. Sorry. Anybody that wins a 51-person auction should be sorry they did.”
    Doesn’t make much sense to appeal to common sense here. The frenzy will finally run out of steam. With the latest “winners” holding the bag. Let’s hope A&B is not one of them.

  46. It is a “bag” they will be holding for 20 plus years, and very happily and profitably I bet.

  47. A&B: We sold our (very similar) house on the 1400 block of 15th Ave about 18 months ago… your new hood is a wonderful place and I’m sure you will very much enjoy it. We only left because the fog got to us…
    BTW- our 15th Ave house was filthy and neglected but with intact with plenty of original 1924 detail when we bought it in 1999. After 6 years we sold it for $700K more than we paid for it. The inner sunset, despite the fog, is hot. We made quite a bundle even though the major work we did pretty much involved cleaning, new windows, new paint and Ikea.

  48. A&B, I am curious. Was there multiple rounds of bidding, or was there only one round and you put in 1005K from the beginning?
    I can understand that extra 5K….you want to outbid whoever put in 1M. However, how did you arrive that 1M figure? I just want to understand the valuation process.

  49. My agent informed me that the Clay Street fixer went for 2.8 million – our dreams of moving to the Presidio area were dashed….

  50. Nice Wikipedia touch! lol.
    There was only one round of bidding. We arrived at the figure through research of comps, past experience, and, of course, advice of our real estate agents. We originally bid $905 and signed the papers with our agent at 7pm. Then we had an agonizing night of – well do we really want it? What will it take to get it? Should we do that? Can we still afford what we want to do with it after paying that much? We went to bed at midnight and left a message for our agent at 7am to change the offer. We do not know the exacts, but there were supposedly 3 offers at $1m.
    Crazy. But worth it. We are worried about the fog, too. But we will play it by ear and see what happens. I think it was a sound investment either way.
    Good luck with yours!

  51. “Because the seller signed an agreement with the agent that states that if the agent provides an able and willing buyer, the seller owes him his/her commission. So even if the seller decides not to accept the offer, he would still be on the hook for the commission since the agent fulfilled his part of the sales contract.”
    This only works for you because you want it at lower price. The seller wants x price and the agent is helping him/her to fulfill that through the pricing strategy.
    That’s the real world. Try to get 100% of the earnst deposit on a failed deal and see how much you really net.

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