From the listing for 1482 Underwood in November 2007 asking $445,000 (purchased for $250,000 in August 2000): “Needs some TLC…A very motivated seller….”
In April 2008: “$100,000 Price Reduction…Needs cosmetic work. A short sale…” Two weeks later: “Handyman special! $130,000 Price Reduction!” And in May of 2009 at $279,900: “Great for contractors.
Today at $205,900 and now bank owned: “Contractors special…Foundation is poor.
∙ Listing: 1482 Underwood (2/1) – $205,900 [MLS]

14 thoughts on “From “Needs TLC” To “Contractors’ Special” (And Now Bank Owned)”
  1. Hmm… let’s play the game of ‘at what price is this a good deal?’ I suck at this game, but I’ll get us started
    It’s $220 psft right now, but of course it’s not directly comparable because of the foundation problems.
    You’re looking at what, $200,000 to get it into livable condition? Can you then sell it for $405k? I bet not.
    Best bet may be to buy it and start slowly filing permits to fix it, but in reality let it become so derelict that you have to tear it down. At that point, hope that part of town undergoes a renaissance and you can sell the lot with ‘plans approved!’

  2. Interesting that this went from needing cosmetic repairs to major structural problems in just two years. Foundations don’t degrade that abruptly.
    It is possible that the foundation problems are not so severe that they need to be immediately fixed. So an entry level buyer could move in and limit their upgrades to just cosmetic stuff.
    Not everyone needs a home in top notch condition, especially in this entry level neighborhood.
    My guess is that the seller had a few offers fall through when the buyer’s inspection revealed the foundation flaws and then the buyer countered with a deduction equivalent to replacing the foundation. Now they just want to put it right on the table and get the sale over with. Plus I think that once a buyer discloses the negative findings on their inspection, the seller is obligated to relay that disclosure to subsequent buyers.

  3. The Milkshake of Despair wrote:

    I think that once a buyer discloses the negative findings on their inspection, the seller is obligated to relay that disclosure to subsequent buyers.

    I think you’re right about this, legally (‘course I’m not a lawyer).
    For this reason many home inspectors would refuse to document their findings if they identified a serious problem on the for-sale property (transmitting the information only verbally), because they’d face pressure from the real estate agents involved not to “stop the deal from going through”. If the deal did go south, and the sellers found an inspector/appraiser with a different opinion, the sellers could sue the inspector who documented a problem that caused a buyer to back out.
    Of course I only have several anecdotes, no real data, to back this up; I’m not a real estate agent but my friends who are said the practice was not uncommon during the boom years up ’till 2007.

  4. I live on this very block, but i dont know the extent of the foundation issues on this house and have not been in it. It is a small house, and actually the only single story home on the block, aside from the house at 1475 Underwood which is currently stuck 20 ft in the air after getting caught by DBI trying to double its square footage but only pulling a permit to only legalize an in-law.
    This is clearly a starter home, but with the foundation issues addressed it is likely livable for far less than an additional $200k. Depending on the extent of the foundation issues, this may just be bound to be just like the home around the corner at 2025 Keith St. which lanquished and sold for 100k at auction. Contractors bought it and are now replacing mechanicals, bathrooms, plumbing, electrical, windows, flooring, kitchen, roof, and likely exterior.
    At $150K (purchase) with a contractor on board to address the foundation, do some interior remodeling and actually pour a driveway for some off street parking, or just some elbow grease and DIY I would guess that at even at $275k (total spent) there would still be some decent equity given that 1467 Underwood sold for $340K with only 400 more sq. ft. back in Dec. ’09.

  5. “they’d face pressure from the real estate agents involved not to “stop the deal from going through”
    who does the home inspector report to? the listing agent, the buying agent, or the buyer?
    i would hope that as a buyer, if the inspector found a serious problem and was afraid of documenting it, his duty would be to tell it to me first.

  6. “who does the home inspector report to? the listing agent, the buying agent, or the buyer?”
    That’s an interesting question. In other states I’ve lived in, typically the buyer hires an inspector and often there’s an inspection contingency. If I remember correctly, the cost is often reimbursed by the seller at settlement, but I’d have to dig through files to confirm. It’s a good idea to have the inspector give you a list of the types of things they look at beforehand, but the reports I’ve seen have been pretty comprehensive.
    In California, it seems like the seller often hires the inspector and provides the report to the buyer, along with the normal disclosures. Some people believe that the disclosure rules in California are so strict that problems are avoided. Just eyeballing, it looks like the disclosure documents in California tend to be much thicker than what I’ve encountered elsewhere, but that hasn’t given me enough comfort. I’d recommend an inspection contingency to pretty much everyone, although it seemed like it was common not to have one during the boom, in which case caveat emptor.

  7. “Hell, $200k is still below lot value.”
    Apparently, 1467 Underwood sold for $340K. It has the same size lot, but is a 4/2 vs. a 2/1, and at least looks like it had some work done to it.
    Given that number, are you sure 1482 is that far below lot value? Maybe I’m not used to determining lot value in SF, since you often can’t demolish something and rebuild like you can other places. A teardown here seems so much more of a hassle than other places I’ve lived.
    For the record, 2025 Keith sold for $130K, although the first accepted bid was $100,100. Note that it was a probate sale and had a previous tax value of under $19K.

  8. Editor,
    My mistake, I thought i had seen 2025 Keith close for just over $100K. Thanks for getting it right, and i figure that even at $130K and the complete redo that the contractor is doing that his cost isnt going to exceed $250k which should set resale up for a decent profit to be taken, even if it sells in the mid $300k’s.
    Hipster, 2025 Keith hadnt had anyone living in it for over 10 years and there was no upkeep and i do believe at one point had squatters living in it. But as you said $200k is near lot value, actually a bit over given that the vacant lot on the corner of Keith and Underwood just sold for $148K, but otherwise to sell anywhere around $200k with maybe $50-$60k of work still means there is some value in it and might make for a hell of a small cottage home for someone.

  9. Sfrenegade,
    1467 Underwood is actually a 2/1, with an unwarranted 1/1 that the previous owner built and subsequently ripped out due to being pissed off at the bank as it was a short sale. Currently the new owner is still trying to rebuild all that was ripped out (Bedroom, Bathroom, Kitchen, full 1 bd/1 ba apartment essentially). Even the third of the 3/1 is a questionable bedroom.
    If you look at lot value, a vacant lot recently sold on the corner of Keith St. and Underwood Ave. about 50 ft from the 1482 Underwood Ave property. I dont know exact address but the MLS # was 80954432 and it sold for $148K down from original asking of $189K.

  10. re: TMOD “It is possible that the foundation problems are not so severe…”
    I live in a dubious property. I’ve had several contractors and inspectors both tell me that SF’s housing stock contains a lot of buildings with foundations needing work — brick, cracks from settling, old concrete getting brittle from salt air, poor drainage allowing water to seep through, etc. My own experience is that — because of this — they’ll give a pass to “definitely less than ideal” conditions. For it to be serious enough that the home won’t move without calling for replacement tells me this must be pretty bad.

  11. Thanks Rob. Based on what you’re saying, it doesn’t necessarily look like this is above lot value. I believe you’re thinking of 1501 Underwood:
    Also, 1904 Keith, just around the corner, was recently listed for $99,888, after an initial listing of $199,888:
    So things are weighing in favor of lot value being below $200K.

  12. Foundation problems? In much of SF, the foundation problems lie well below the foundation of the building itself. Lets be real — our city is 30% built on landfill, and no window dressing will help when the big one hits. We roll with it.

  13. Thanks for all the pricing feedback folks. I don’t invest in that part of town so had little recent info. But in very general terms, at the market height, if a nice fixed up home sold for say $500k, it will go for $300-350k now. So yes, I could see lots, and especially small total POS’s selling for under $200k. It’s like a mini Stockton/Vallejo market right in the city.
    There could be real opportunities in this market, especially if you can get rent to cover costs and hold for 5-10 years. Of course, if (a BIG IF) that neighborhood gentrified anywhere close to what the mission has done (and where I primarily invest btw) it could be a great play for a 5-10 year investment horizon. Not my cup of tea, but I do wonder about it’s potential, especially with some of those fire sale prices!
    Any investors playing or contemplating these neighborhoods, feel free to comment.

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