CFAH

1515 Lyon: Exterior

Twenty-one months ago 1515 Lyon was listed at $1,450,000. Two weeks later the asking price was reduced to $1,350,000. And five months after that it closed escrow with a reported contract price of $1,275,000 (on 10/25/06).

Back on the market with a list price of $1,389,000 (and no permits to suggest any major renovations), a sale at asking would represent annual appreciation of 6.4% over the past couple of years. And if you plan on playing the “I told you so” card (when it sells for over, under, or at asking), now’s the time to go on record with your “tell.”

Comments from Plugged-In Readers

  1. Posted by Jimmy (Bitter Renter)

    Only up 6.4% in two years? Looks like the Western Addition isn’t as chic and trendy as it once was…
    [Editor’s Note: That’s annual appreciation of 6.4%.]

  2. Posted by Lee Duncan

    Help me out with my math — if the sellers are asking $1,389,000 and they’re paying 5% (say) in commissions, then they pocket $1,319,000 and change. So their profit is $44,000. Which gets shaved down by whatever other fees they paid when buying and are paying when selling. So, oh, heck — say another 10K to make 34K, if it sells at asking. So maybe they’re asking just a little more than they need to — if the place sells for 30K or so less, it sounds like me they were trying to break even. Does that make sense, or am I missing something?

  3. Posted by anon

    You forgot about transfer tax (about 0.7%), and the fees when buying were almost certainly more than $10K. But yes, they are targeting “break-even” IMO (ignoring opportunity cost and the reality that they basically “rented” their house for $5-8K in real after tax dollars when it is all said and done). That tells you that they don’t think the market is very strong (otherwise they would have “underpriced it” and gotten a bidding war started. They run the serious risk that they signal to the market that there is no demand for that particular house at or near $1.389M if it dosn’t sell quickly.

  4. Posted by Sleepiguy

    One of those bathrooms is 100% Ikea… Not a good sign.

  5. Posted by Jimmy (Bitter Renter)

    Who can blame them for wanting to break even on their purchase? Its a nice looking little house with enough space to be livable for a family. I do object to realtors who use the words “sun drenched” however. That phrase personally annoys me.

  6. Posted by gotoutin2001

    And the dreaded chopped pillows . . . .

  7. Posted by fluj

    Maybe they just need to move though. Sometimes it happens. We assume nothing was done, right? The previous owners who bought it for 759K in ’03 are the ones who profited. Not doing much to a property such as this amounts to betting on apprecition, solely. And I think there are projects right there on Sutter, correct? I’d say emerging with any net gain at all is pretty lucky.
    This neighborhood would be a good bet for a longterm hold. In my opinion it will remain a relative bargain due to the proximity of the public housing. Those PJs are pretty decrepit, but these blocks are surrounded by nice neighborhoods. And 21 moS? They should be happy if they make any sort of return.

  8. Posted by satchelfan

    The previous owners made out like bandits! If I’m reading the propertyshark documents correctly, they had a variable rate loan for 557k, and then a year later tacked on another one for 200k.

  9. Posted by Mole Man

    Nice ferns and moss in back! Their presence pretty much wrecks the “sun-drenched” theory, though.

    The kitchen is creative in a using cheap granite and shelves instead of some cabinets helps save money kind of way.

  10. Posted by tipster

    And the staged (!) “finished attic” looks perfectly useable, ala “Being John Malkovich” floor 7-1/2.

  11. Posted by Robert

    anon, your comment doesn’t make any sense – you suggest that if a real property in SF is priced at or above its actual value, the seller/listing agent must not “think the market is very strong,” because they are not seeking to start a “bidding war” by underpricing it.
    So if the property were priced at $1,289,000 instead of $1,389,000, it would show greater confidence in the SF market?? Whew, let me ponder that for awhile. (ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder, ponder)
    OK nope, still don’t get it.
    Moreover, consciously underpricing a property to incite a “bidding war” might be a great strategy when the market is red hot, but it is a bad strategy (and possibly unethical if the seller is not actually willing to sell at the stated price) when the market is not.

  12. Posted by PacHeights Renter

    Great location if you smoke crack and drink malt liquor out of a bag since the Royal Market with one of the best selection of malt beverages in 40oz. bottles is just a block away. Any time of the day or night there will be at least one nice gentleman from the projects across the street to sell you all the crack you want. I don’t see a garage so the Realtor better warn the new owners to park north of California every night since you will not make it a week witout a break in on that block.
    http://www.yelp.com/biz/royal-market-san-francisco

  13. Posted by LB

    This just kills me. location sucks. decor is cheap. no garage. no security. surrounding bldgs are in disrepair. and they are asking almost 1.4. puh-leazzzze. maybe they misread the comps… As for the $$ aspect, my money is that the owners purchased, moved in and realized that cleaning up piss and bottles got a bit old on the second weekend.

  14. Posted by fluj

    TYeah, but the comps will bear that pricepoint out. There are properties 100 yards away that are in another stratosphere. It’s just these few troublesome blocks over there.

  15. Posted by albin_sf

    Robert, I suspect you’ve never been in a selling situation like the one described here. I have been in such a situation and anon makes complete sense to me……but you do not and you in fact contradict yourself.
    Low pricing works great when a hot market will likely guarantee a substantial over bid, but it can hurt when the offer might actually come in at asking. Better in a slow market to price at the likely actual value. But anon points out, “They run the serious risk that they signal to the market that there is no demand for that particular house at or near $1.389M if it dosn’t sell quickly”….and if the sellers are not in a position to lower their price to flush out the actual market value, then it could spell trouble for the sellers.
    I think pricing depends on a host of variables we never can consider as outsiders here; variables and circumstances such as job/career, family considerations, financial security, quality of life. All of these things drive pricing decisions more than simple, dry economic theories.
    Regarding your contradiction, you write:
    “Moreover, consciously underpricing a property to incite a “bidding war” might be a great strategy when the market is red hot, but it is a bad strategy (and possibly unethical if the seller is not actually willing to sell at the stated price) when the market is not.”
    anon writes:
    “That tells you that they don’t think the market is very strong otherwise they would have “underpriced it” and gotten a bidding war started”.
    You both are making the exact same point!
    This was my first posting after reading this site for about a year – how’d I do?

  16. Posted by Robert

    albin_sf, good posting and nice first attempt!
    However there actually is a very significant difference between my point and anon’s point, I believe. But you are right that both postings posit a weak market, yes I agree!
    The point/distinction I was trying to make/draw was that I disagreed with the premise underlying anon’s point that “normal” or “confident” sellers naturally and logically underprice properties in strong markets. He/she didn’t say that in so many words, but that was the premise – that had the seller been more confident of the market, they would have priced the property lower.
    I was just trying to make the point that the underpricing anon refers to is a recent and unfortunate phenomenon that fortunately, only a small minority of sellers/listing agents engage in. Thus, you really can’t draw any conclusion whatsoever from someone NOT doing it.
    Silly analogy, but to make the same point, if you were in a grocery store and the cashier left the cash drawer open, and the first person in line had the opportunity to reach over and take the money but didn’t, it wouldn’t be logical to say that the person “must have been afraid of getting caught”. In fact, a more logical conclusion is that it’s behavior that they wouldn’t engage in. So anyway, that was the point I was trying to make.

  17. Posted by albin_sf

    Robert, some might say excellent back pedal, but I’m feeling generous today and thus am inclined to give you the benefit of the doubt.:-)
    I found it logical for him to have drawn that conclusion because good agents realize price is a selling tool. It’s a tool of marketing. That rattles the sensibilities of a lot of people who want to live in a more “orderly” world, and I am guessing your in this camp because of your comments above and because your analogy is about ethical behavior.
    May I ask if you’ve ever lost out in a competitive bidding situation? Have you ever sold a house? Do you own in San Francisco?
    Just curious about where you might be coming from with your perspective.

  18. Posted by suttergal

    Some of you are confused as to the location. The projects and Royal Market are not across the street. Would be if this house were on Baker. But it’s on Lyon, right across from The Little School. This is actually a quiet street (other than the line of expensive cars picking up at the Little School at 4:30pm) with car break-ins quite rare. The house does have an odd two-level backyard. And if memory serves me right, the floor-plan was a bit funky, too.

  19. Posted by Robert

    albin_sf, in the end I guess I’m simply saying that it’s absurd to suggest that the general rule is that sellers/listing agents who price properties higher are more pessimistic about the housing market, and that those who price properties lower are more optimistic about the housing market
    It just ain’t so!

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