A pocket listing at $3,500,000 in April, listed on the MLS for $2,985,000 in October, and subsequently reduced to $2,585,000, the sale of 1342 Shrader closed escrow today with a reported contract price of $2,370,000.
Purchased for $1,900,000 in 2003 prior to being completely remodeled and expanded (in terms of finished living space) including the addition of that sweet little guest studio/office in half of the garage out back.
∙ The New New 1342 Shrader (And Guest Studio/Office Out Back) [SocketSite]
∙ 1342 Shrader: Out Of The Pocket And Into The Open (And MLS) [SocketSite]
Wow, a 33% discount from the original asking. I wonder if the sellers were fishing for someone willing to overpay or whether they seriously thought that $3.5M was the FMV for this property.
It’s a nice place and I’m sure that the new owners will enjoy it as much as the $1M that they saved here.
Craaaack!
That’s the sound of the San Francisco real estate market shattering. Finally! New comps are being established, and they’re a huge disconnect from 2007 and Spring/Summer 2008 prices.
The sellers here are to be applauded for finally facing reality, because prices will surely be lower next year, at all price points and all neighborhoods. This house probably could have sold for $2.8 million or more in 2007, so I’m sure there’s plenty of “shoulda, coulda, woulda” regrets on the seller’s part.
Let this be a lesson: anybody who is serious about selling needs to lower their price sooner rather than later.
San Francisco buyers are too smart to buy at yesterday’s prices when tomorrow’s will be so much lower.
Fantastic for everyone all around. Buyer got $1M off the asking and pays way less property tax. Seller got his 2003 price back, the $250K for the remodel, and an extra $220K, or $105K after the realtor fees, or about $85K after their closing costs are factored in (assuming they didn’t pay the buyers closing costs, which would mean they netted about $65K). Had the seller bought in 2004-now, he’d be underwater, but fortunately he bought before that.
Man do I ever feel awful about missing that gravy train!
Though it was almost exactly 5 years of ownership, they are hardly in need of money (or otherwise an “overly motivated seller). Read about the happy dot com couple (and their well connected families) who bought the place in October of 2003 here:
http://query.nytimes.com/gst/fullpage.html?res=9D0DE0DF173BF937A3575BC0A9649C8B63
This is still selling at $600+ per square foot. That’s not exactly giving it away…
I think the property is about 3000 sqft, so it’s more like $800 psf. But they started out asking $1200 psf as apocket listing in April, listed on MLS for $1000 psf in October and accepted $800 psf.
“the $250K for the remodel”
There is no way that remodel was only $250K. I would bet closer to $400K based on the finishes.
@tipster: I believe you forgot to include the debt service payments in your calculations, no?
@chuckle: “I think the property is about 3000 sqft”
According to the house’s website it’s 3870 sq ft per the architect.
Pretty nice house. I’m impressed that anything north of $2 million is selling in these economic times.
Obviously the sellers have deep enough pockets to take a $100k-$200k loss on the property and move on without worrying too much. If they couldn’t take the loss then we would be reading a sob story about this house sitting on the market for another few years.
A very decent price indeed both for the buyer and the seller. No free lunch for anyone, though.
– The buyer still pays $2M+ for a great house with no view
– The seller is probably close to breaking even and even losing some skin. So much work for that? Over 5 years? Where are the $100K of potential sweat equity to unlock?
That will discourage the upper crust “fixer” crowd.
Does 3,000 sq ft include the studio out back? Technically, this cottage should not be included in overall square footage. Also, this house has a large space on the lowest level (kids’ play room)–not really a basement, but the ceiling wasn’t very high and not finished.
If neither the cottage nor kids’ area is included, then the house was much bigger than 3,000 sq ft. Which is anther way of saying the price/sq ft is lower than $790.
The finishes on this house were very nice, but master closets small with slanted weird room, and tiny backyard.
I am a big believer in the detached studio cottage, especially for smaller houses (not that this house is small), especially with bay area weather.
According to the BLS inflation calculator, $1,900,000 in 2003 is $2,236,351.63 in 2008 dollars. (I’m not trying to make a specific argument, just though I’d point this out.)
This house is infinitely nicer in its current form than its former form. So basically it means that $1.9 was too much back in 2003. Wonder what the untouched place in 2003 would sell for in todays market?
The untouched place would sell around 1.5 MIL right now.
The $ 2.4 MIL selling price is about right and actually a pretty strong price for cole valley/ash heights the few higher nearby sales have been better locations and views.
The original ask over $ 3 MIL was just way out of touch and didnt make sense.
I dont think this is a cracking market just realistic.
How hard would it be for the buyer to dig out the basement to allow for proper full length beams and a legal ceiling height.
Is it really that hard to dig down an extra 2 feet and replace the foundation on that part of the house, or do you end up with moisture problems and such that makes it problematic?
“Is it really that hard to dig down an extra 2 feet and replace the foundation on that part of the house, or do you end up with moisture problems and such that makes it problematic?”
The last time I looked into a very similar project, the costs were about the same to excavate an extra 2 feet versus excavating an entire new 8′ basement. You have to put the house up on temporary supports, demolish the old foundation, excavate, and then construct a new foundation and slab floor. Then you have to repair all of the superficial damage on the floors above caused by moving the house up and down.
It might be easier to jack the house up 2 feet and replace the cripple walls. That’s still a large expensive project though.
Just get to work down in the basement with a pick-axe, tipster. I bet you’d have the whole place dug out in a couple of months. You can carry the dirt out in the pockets of your overalls and spread it around the yard surreptitiously (Shawshank style) so as not to alert nosy neighbors.
Don’t dig right up to the edge of the old foundation, though, or else you’ll be in trouble! Perhaps you can make the annoying 2′ step that’s leftover into an attractive bench that goes around the perimeter of your new “reclaimed” basement living space?
Just get to work down in the basement with a pick-axe…
My old landlord tried this without permits on our hillside home in Glen Park. I eventually had to drop a dime on him. The work got stopped just as he completed the excavation without doing any of the new foundation work. We moved. Last I checked, the place is re-rented and still standing.
San FronziScheme– No way the seller broke even after real estate commissions. This is not a decent price for the seller. These guys were end users, not contractors. I don’t know the full extent of the work done, but I have been inside the house, and I would say they have put AT LEAST 400k-500k into it. This plus 5 years of carrying costs means they are underwater at this price. Which is sad, because they did a great job with it. It’s a beautiful house.
My question is- why did they pocket list the place for so long (at an unrealistic price)?
I got all sorts of pocket listing offers in 2004-2005 when I was looking. They were all over priced. I realized the pocket listing served one of two purposes:
1) The seller had an unrealistic price and the agent was afraid to list at that price and then drop the price, figuring the buyers would smell blood and underbid. The agent just wanted a small number of people to come and look at the place and walk away so that they could use it to reset the seller’s expectations.
2) The seller had a deal with a neighbor/friend/family member to buy the property at x% of market, but they needed a price. So they would pocket list the thing, get the first offer, ditch the realtor and sell it to the neighbor/friend/family member.
More than once, when I got there to look at this fantastic “off market secret deal”, the sellers agent or the seller had “another interested party” also touring it with me, who literally raved about the place, loudly, and loudly informed the agent that they were certain to make an offer (making sure I knew that little secret), but (what a surprise!) never actually did. Once it was a whole family playing along who went from room to room and literally screamed (and I mean screamed!) at how perfect it was for them – I was pretty impressed that they managed that. Of course no offer materialized from such an enthusiastic bunch.
I finally told my agent to stop bringing me pocket listings. They were a complete waste of time and I never saw a deal from one of them.
So the answer to the question is the sellers were probably literally in love with a place they had spent so much time and effort improving, only to realize that, in spite of the fact they had gotten in early, and had done everything right, were about to lose a hundred grand or more. The agent knew what it would sell for, probably to the penny, but couldn’t convince the sellers.
The pocket list was probably done to create a buzz around the house. Apparent scarcity is always a good way to get attention. Buyers think the seller knows something they don’t, like “no need for MLS as the place is almost already sold”. That’s marketing psychology 101. We could hear last year that “fence sitters will be sorry” and this tactic worked in SF until late 2007.
Where did they add square footage? Both this sale and the previous have tax records that default to 2152 sq ft. So it makes one think the architect’s number includes not only the lower room,and the cottage, but also the garage. How else could 3800+ be possible? So that makes the “main house” not all that big, and again sans views. Still tho, I thought this one would sell for 2.5 myself. Pretty sure they got a few offers in that range a few months back.
Six months ago our intrepid rehabber had visions of sugar plums dancing in his head and fully expected $1M dollars of free money to fall out of the sky and into his lap. Sadly the free money tap has been turned off and now he is lucky to get out with his skin intact.
How quickly things change.
They were end users, not flippers, well off, and what pray tell did they do to insult you diemos? Just because information is visible doesn’t mean it can be characterized.
“They were end users, not flippers,”
The moment you buy a house you are an investor, whether you like it or not. Unless ~$2.5M is beer money that can be tossed away.
“and what pray tell did they do to insult you diemos?”
Nothing. But I doubt they listed it at $3.5M just for a larf.
“Just because information is visible doesn’t mean it can be characterized.”
Yes it does.
Ah fluj, it’s so good to have you back.
Another thing we have to account for as they are end-users is the time they enjoyed the place. For many, this is priceless if you love your home.
Did they move in first then redid the place or was it the other way around?
First of all, tipster, I am a little uncomfortable with the link to the marriage announcement. All of us posters get to be anonymous, for my taste posting that link about people you don’t know (or even if you do know them) seems a bit like stalking, especially given the somewhat venomous attitudes being expressed toward people who can afford such homes. Let’s keep it about the properties and not the people. (At the same time I appreciate that you have succeeded at demonstrating for some buyers and sellers the money is less central).
Diemos, an investor need not be a flipper. Perhaps after living there a while they decided that the soccer little league and the over competitive parents that take over Grattan Playground every Saturday were impairing their enjoyment of the property (not that I object to soccer, but as a father of one of the playground’s users, the soccer league does overwhelm the capacity and the parents seem uninterested in picking up their trash or telling their kids to look out for babies and toddler playing in the younger part of the playground). In all honesty, we would only know why the sellers moved on if they chose to tell us. It could be the call of the suburbs, corporate relocation, or they wanted more room for more children (or they saw a ghost).
From the point of view of the market, I think they priced it as if they had done more work than they have. It looks as if there is still foundation work to be done if you wanted to really call it retrofitted. While there is some outdoor space it is limited. I don’t know the window situation, but I don’t recall any new windows being put in (Some readers may recall a much larger property owned by flippers near bv park, where the flippers had done neither the foundation nor the windows, there were some 150 about half in need of replacement or maintenance. One of the questions always with flippers’ renovations is whether they were cosmetic or really addressed structural issues… For a house with a new foundation and steel framing you can buy private earthquake insurance with a 10% deductible that costs less than the state pools with a 25% deductible and inadequate reserves. With the state of the credit markets, you need your property to be earthquake insurable to be certain that buyers’ can get a mortgage).
“an investor need not be a flipper.”
Correct. But I reiterate, everyone who buys a house is an investor. (Unless they got a zero down loan and then the bank/taxpayer is the investor.)
re: remodeling the basement to get appropriate headroom-
assume you want a new headroom of 8′-0″.
remove exist. slab. trench under existing footings to add and reinforce for new conc. walls and footings.
add new wood stud walls, and interior finishes, including lighting.
budget about $150/sf..and ah..don’t forget to get a permit.
@diemos – Housing is also a consumption choice. Nobody needs a fancy house when a clean sturdy one is adequeate. By payin g up for touches, finishes, etc, your making a choice to consume that rather than other good or services, assuming your budget for such choices is fixed