CFAH

141-143 Willard
Two months ago two new construction TICs hit the market in Lone Mountain. The lower unit (141 Willard) was priced at $1,280,000 and offers four bedrooms, three and one half baths, and a “deck, patio, & garden” off the master suite. The upper unit (143 Willard) was priced at $1,295,000 and offers four bedrooms, three and one half bath, and a “sitting area & spectacular view deck” off master suite.
According to a “plugged-in” tipster, a bidding war erupted on the upper unit (currently in contract) and on 4/9/07 the sellers raised the asking price on the lower unit $75,000 to $1,355,000 (which might suggest a contract price of around $1,370,000 on the upper). On 5/11/07 the price on the lower unit was reduced $45,000 to $1,310,000. And as of today, it’s still available.
The question of the day: were the views of the upper unit simply undervalued relative to the garden below, or is this commentary on what happens when the bidding breaks out?
∙ Listing: 141 Willard (4/3.5) – $1,310,000 (TIC) [MLS]
∙ Listing: 143 Willard (4/3.5) – $1,295,000 (TIC) [MLS]

Comments from Plugged-In Readers

  1. Posted by Bob

    Out of curiousity, why does “new construction” need to be a TIC? Why wouldn’t new construction be built as condos?

  2. Posted by zzzzzzzz

    I was going to ask the same thing. What conceivable advantage could there be for a new building to be sold as TIC’s rather than condos? Even though 2 unit buildings are currently exempt from the condo lottery, that exemption might not last given the constantly tightening rules on condo conversions. Long story short: the buyers of this building could be stuck with a semi-permanent TIC.

  3. Posted by Miles

    Agree with the condo/TIC issue – the developer would be pretty inept to do new construction and not get a condo map (can you say red flag?). As for the top floor/bottom floor premium, I’ve always felt this differential was under priced in the city. Top floor you don’t have anyone stomping around on the floor above you, you get way more natural light being higher up along with having a bunch of skylights usually, and you’re farther away from the street noise. Lower floor you get the noise of the garage below you and the noise of the upstairs unit above you and less light. A lot of times they throw the garden in for private use of the lower unit to offset this (and a really nice garden is a huge plus for some buyers), but if the top floor unit has a decent outdoor space amenity like enough deck space or private rooftop access, well, it’s worth more than the $50,000 premium you commonly see. Sounds like the bidders think so too.

  4. Posted by D_INC

    Will it appraise? What kind of comps exist for 1.3 million dollar Lone Mt. TICs?

  5. Posted by Someone

    I’m not certain, but I believe that it’s not easy for a developer to convert an existing building even if it was demolished to condos.
    Property Sharks shows a one story SFH. Looking at sf building inspection site shows a demo permit 200305225283
    “DEMOLISH A TWO DWELLING UNIT STRUCTURE-ONE STORY OVER GARAGE”.
    The developer started the process FOUR years ago, and it took 3 years to get the permits.
    Given that the property was probably a 2 unit before, the new structure stays that way and only the new owner would be able to convert it.
    Probably that’s a very easy conversion.

  6. Posted by Wayne

    As a builder myself I am pretty sure the reason for TIC is that the builder was not able to get the condo map through DPW in a timely fashion and he was likely running out of money. It is a really simple process especially for 2 units but these matters can sit at DPW for a couple of years without even being acted on. You need to have gone through the process as I have several times to truly comprehend how they do business there.

  7. Posted by JoeTZ

    Wayne,
    The new DBI chief is apparently looking to improve the process there. Do you see any chance for improvements at DPW and Planning too?
    Joe

  8. Posted by TIC atty

    The question is not “why do a TIC” the question is “why do a condo?” TICs provide the same practical result as a condo at a lower cost to the buyer. TICs are becoming widely accepted – even outside of SF. It is not necessarily a red flag to a buyer. Why should a developer spend the money and the time to do a condo plan, map, CC&Rs, to subdivide the property, when all he is going to do is pass that cost on to the buyer. TICs are much simpler to create and are making housing affordable again.

  9. Posted by JoeTZ

    TIC atty – I was wondering the same thing. The separate TIC financing has solved the mortgage issue. Can a TIC agreement provide the same essential protections as a condo? Also, are TIC’s treated like condos for compliance with the Stirling-Davis requirements?
    Also, how can the condo map process take multiple years to get through DPW?

  10. Posted by Wayne

    It is true that the new head of DBI is making major changes for the better, however DPW is a different dept. They have a really antiquated system and are woefully understaffed. There is no way of explaining how it takes so long. It just does. A big part of the problem is that it has to pass through so many hands and can easily spend 3 months at each stop. And then after all that it can be appealed to the Board of Supervisors.

  11. Posted by Cece Blase

    I’m a fan of TIC’s, but it’s a mistake to think a TIC is just as good as a condo. While fractional financing has simplified the financial entanglements for TIC partnerships, there is still no HOA insulating you from a shared liability with your partners for care, upkeep, insurance and property taxes. TIC agreements can provide for all kinds of scenarios, but they aren’t the equivalent of CC&Rs.
    The other, very significant difference between a TIC and a condo in San Francisco is that a TIC is subject to rent control, which is a whole other can of worms. . .

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