CFAH

1160 Mission #501

Asking $800,000 on Craigslist last February with a view photo from a unit 17 floors higher that faced a completely different direction, the sale of 1160 Mission #501 closed escrow this past Friday with a reported contact price of $699,000 ($582 per square foot).

The 1,184 square foot Soma Grand two-bedroom had been purchased for $738,000 in February 2008 ($623 per square). And yes, a view-blocking Trinity Place has popped up since but shouldn’t have come as any surprise.

Comments from Plugged-In Readers

  1. Posted by eddy

    So it only sold 4 thrones below its Feb 2008 price? I honestly thought it would have sold for less than -5%. Also, its sold -4% below its ask of $725 and sold in only 2 months. It actually went contingent 11 days after they reduced the price to 699 (where it closed). Not a terrible outcome for the seller, or the other owners in the building.

  2. Posted by chguy

    eddy, a $39,000 loss in two years, plus closing costs at the start and RE commissions at the end, is a terrible outcome for the seller. just not as terrible as many of the other terrible outcomes lately.

  3. Posted by curmudgeon

    chguy…everything is relative, and I think Eddy realizes that. I too am surprised at the modest drop, given the negative figures for SOMA/South Beach condos in general. I would think given the somewhat iffy location, any drops would be magnified for SOMA Grand compared to the other recent condo developments.

  4. Posted by eddy

    @chguy, I tend not to care or factor much about transaction costs or individual losses for that matter. But in a 2 year hold during one of the worst housing crisis of the past half century, with far worse comps in the condo market out there, I’d be happy with a 39k haircut. It could have been much worse for the seller. It has fared worse for other out there as well so I think this guy is ‘lucky’.
    FWIW, I don’t factor transaction costs since they are a constant in all transactions and an eventuality, they are variable between 2.5 to 8%, they are often times paid for by companies relocating employees in full or part, and bear no influence on the raw comp (i.e., the selling price for market trending purposes).

  5. Posted by chguy

    hello, these are real people. this is not a parlor game to them. yes, everything is relative–and they are losing sums of money that, to them, are quite large. it’s nice that eddy finds the outcome not terrible and that curmudgeon think the loss is modest. i suspect the seller, who probably does care about his or her individual losses, thinks otherwise.

  6. Posted by Your equity will be assimilated.

    Here’s another sale at the building that shows a 17% decline.
    1/2008 sale price $649K
    12/2010 sale price $540K
    http://www.redfin.com/CA/San-Francisco/1160-Mission-St-94103/unit-1802/home/17306800

  7. Posted by Sambo

    This is a good number, and bodes well for the building. Take into account that the upper floors – 18th, 19th, 20th – went for $645K to $680K just one year ago. And those were view units that didn’t face a gigantic wall.
    [Editor’s Note: Keep in mind and take into account that’s not exactly apples-to-apples as none of those upper floor units offer that big deeded terrace you see through those windows and isn’t included in the square footage figure.]

  8. Posted by spencer

    the new buyer paid too much.

  9. Posted by pobeb

    “Here’s another sale at the building that shows a 17% decline.
    1/2008 sale price $649K
    12/2010 sale price $540K”
    A foreclosure is not exactly an apple.

  10. Posted by eddy

    I’m more moderate these days on the market as a whole but I have no real issues with using short sales as a comp. They will almost always be the most extreme down comp but it does represent an agreed upon price between 2 parties. Forclosures are not comps. Is #1802 a foreclosure? Selling at 707/psf isn’t exactly a deal IMO.

  11. Posted by sfrenegade

    “A foreclosure is not exactly an apple. ”
    I never understand these statements. Assuming the house otherwise qualifies, of course a foreclosure can be an apple!
    If you are suggesting that the foreclosure price is somehow not a market price, I disagree. If the foreclosure price were somehow systematically lower then market price, the implication is that every single foreclosure sale means a guaranteed windfall if you flip 30 seconds after the auction closes. I am not a market fundamentalist, but if this were the case, then everyone with the means to do so would want to buy every single house off auction to obtain the guaranteed windfall, and the efficiency of the market would eliminate the windfall.
    Foreclosure or short sales always count as comps.

  12. Posted by The Milkshake of Despair

    I think that the issue is that financing for auctioned foreclosures is much more difficult (“cash” sales) so the market is smaller.
    You may not be able to flip 30 seconds later because it takes a while to find a buyer who can arrange financing. And during that period there is some risk that the value drops.
    Higher risk, greater requirements, lower cost.
    Now if you could have a financing contingency on your auction bid then a foreclosure could be a viable comp.

  13. Posted by eddy

    @TMoD, exactly. The foreclosure is not an open process due to the financing restrictions. And we do see foreclosure flips from time to time. The Lake Street flip with no handrails comes to mind.

  14. Posted by sfrenegade

    Then the question becomes how “clean” does an offer have to be to be a comp? Or what conditions make an sale fail as a comp?
    Does it count if on an organic sale:
    no loan contingency is allowed?
    no inspection contingency is allowed?
    no sale contingency is allowed?
    no contingency of any sort is allowed?
    bank approval is required?
    seller owes cash at closing?
    buyer puts more or less than 20% down?
    anything else occurs other than a normal-commissioned sale with 20% down?
    Realtors constantly assert that many sales are “all cash.” If as many sales as claimed in Ess Eff are all cash, then why would foreclosures fail as a comp?
    “You may not be able to flip 30 seconds later because it takes a while to find a buyer who can arrange financing. And during that period there is some risk that the value drops.”
    In my hypothetical, if there is risk that the market value drops to below the foreclosure price within 60 days, then either the foreclosure price was the market price or the buyer actually overpaid. 🙂
    “Higher risk, greater requirements, lower cost.”
    If it’s the case systematically that foreclosure sales are lower than market price, then we could derive a market price calculated over the aggregate from foreclosure prices. If a foreclosure price is a derivative of market price, then it’s still a comp, but we just need to adjust the foreclosure price via calculation to a market price to determine a comp.
    Either way, it’s a comp.

  15. Posted by pobeb

    “I never understand these statements. Assuming the house otherwise qualifies, of course a foreclosure can be an apple!”
    sfrenegade, there’s the flaw in your logic – you assume that the foreclosure qualifies and is otherwise on the same presentation as a regular sale; and the problem is, foreclosures never are.
    I’ve seen about 40 foreclosures in the last four years, every one of them, and I do mean every single one of them have major issues. There’s the 1/1 in Beacon that has major leaks and lost the parking space. The studio in Twin Peaks where half the kitchen is missing. a SFH in Alamo with $150k worth of damage. And many others where you walked in and go “Ewww..” and they looked fine from the pictures.
    The point is, foreclosures always come with some drawbacks that you usually don’t find in regular sales. They are not good apple unless you like comparing a fresh apple to a rotten one.

  16. Posted by EH

    LOL @ “4 thrones?”

  17. Posted by eddy

    I don’t entirely disagree with sfren and its foolish to exclude foreclosure comps as a data point; but you’re not going to find much support if you are actively looking to buy a home on the MLS or in a private sale using foreclosure comps as the basis for your logic. No one does this in the real world. Foreclosure data points are just that, data points. But the market moves based on market comps for the most part. Sure, bears will scream all day about Foreclosure Comps, and I’m not entirely sure they are incorrect insofar as they are indicators of future direction to some extent. But actual MLS sales and private sales will 99.9999% of the time yield higher prices than a foreclosure for all the reasons we all know. If this were not true than we’d see more short sale; and in fact we are seeing a lot of short sales versus foreclosures.
    Anyway, back to #501, I still think this is a good outcome and could have been a lot worse.

  18. Posted by R

    I don’t think anybody is arguing a foreclosure is not a comp. It is. As long as when used as a comp it is highlighted as a foreclosure.
    But it’s not an apple.

  19. Posted by A.T.

    I think a distinction needs to be made between different types of “foreclosure” sales. While a court steps purchase, generally requiring all cash and basically sight unseen and as-is, might not be a valid “comp,” an MLS-listed REO certainly would be. As I’ve noted before, where foreclosures have become common enough, they become “the market” and a seller won’t be able to garner a materially higher price just by explaining that his place isn’t an REO. If REOs are viable substitutes for a buyer they are in the same market, by definition, and are proper comps.

  20. Posted by tipster

    “every one of them, and I do mean every single one of them have major issues”
    I don’t recall seeing more than about 10% of the NON-REO inventory that didn’t have at least one major issue that anyone would need to fix. “In the same family for 30 years!” is a code word for “EVERYTHING needs to be fixed”.
    For every REO that had the appliances taken out, I can show you ten non-REO listings that needed a complete redo anyway, and the former owner would have been doing the next owner a favor taking out the appliances on his way out the door, and tossing them in the trash.
    If you were going to exclude from comps every home that had a major issue, I don’t think there would BE any comps.
    As for the units in this building, they have held up pretty well. Their 2007/8 prices were held down by a big unknown: the impact of the construction next door. That was going to generate a lot of noise and dust and potential view problems that many people decided to avoid. The people who took the risk and suffered through the construction are now able to sell — and it’s still AT A LOSS!!!
    But the noise and risk of construction is over and so the price hit isn’t as big as in other areas. They also benefit from the D8 “value” designation that few were interested in, in 2007 when money was free, but everyone is interested in now. Demand shifted from other areas to D8 and to here, while the sticky prices deflated elsewhere. As other places lose value, the value proposition for them will become more apparent and the interest in these lower priced places will wane, but for now, $650 per month HOA, including two $50 housekeeping visits per month makes this a price performer.

  21. Posted by Your equity will be assimilated.

    Foreclosures are not a comp until they are the comp.

  22. Posted by sfrenegade

    “sfrenegade, there’s the flaw in your logic”
    It’s not a flaw, if I say specifically that I’m excluding the situation. 🙂
    If all the copper pipe gets ripped out and all the kitchen appliances taken, of course it’s not apples to apples. No one ever asserted that it was. But at least some of these foreclosures in the city of SF have been civilized foreclosures.
    At a minimum, however, the adjustment factor that I described above would account for what eddy said. A.T. also makes a good point that sufficient REO/foreclosures/short sales create the market in themselves sometimes.

  23. Posted by pobeb

    tipster, I think you confused a specific with a general. We’re referring specifically to unit #501, which has none of the issues you mentioned. Sure, sometimes it may be ok to compare a fixer with a beat-up foreclosure, but this does not apply here unless unit 501 is a complete mess which I don’t think it is.
    sfrenegade, I don’t doubt that “some” of the foreclosures are in presentable and healthy conditions, but I don’t know what they are. I do know that most have major flaws. Hence you can’t just grab any foreclosure and use it as an apple. The foreclosure has to be examined carefully before it can be used as one. If you know of a sound foreclosure to use as an apple to unit 501, let’s expound it.
    AT, foreclosures in SF are nowhere near common enough to form the market. If you want to know what such a market looks like, check out Brentwood or Antitoch. I’d hope there is more foreclosures since I a shopper but those are few and far between.

  24. Posted by sfrenegade

    Come on, pobeb, there’s even one featured on SocketSite right now. Sheesh:
    https://socketsite.com/archives/2011/01/the_full_2209_9th_avenue_scoop_sold_and_coming_soon.html
    It is not an apple because of the first remodel.

  25. Posted by sfrenegade

    Btw, before you jump on it, I am certainly not suggesting that I can find an apple for Unit 501 because I never said I would do that. The only thing I am saying is: a foreclosure does not disqualify a house from being an apple if it would otherwise be one. EOM

  26. Posted by A.T.

    “foreclosures in SF are nowhere near common enough to form the market”
    I agree SF is not like Antioch on this front. But my point above was not that foreclosures are a distinct market in SF, but that they reach a point (a guess — 25% of sales) where they become common enough to put substantial downward pressure on the entire market. REOs will sell – no stubborn owner to just pull it and hope for things to improve – and it is just a matter of finding the highest bid.
    And when it gets to the point that non-REOs have to compete with REOs for the same pool of buyers, the REO price becomes the market price. Those unwilling to sell at bid simply lose the sale to an REO (or short sale).
    SF has been seeing some of this for a while but we’re still seeing it only as a downward pressure point not a complete definition of the market price. We have way more sellers than buyers in SF right now, so if it weren’t for the fact that many sellers simply refuse to sell at bid or they cannot bring a check to the close (i.e. the market does not “clear”) we’d already see the “REO effect” here. Of course, buyers also have the ability to just “withdraw” so there is no seller edge here. We can all debate whether all the MLS withdrawals are due to sellers unwilling or unable to sell at the lower price potential buyers are willing to pay. The answer to that question would go a long way to predicting the REO/short sale trend going forward.

  27. Posted by tc_sf

    My take on the forclosure issue is as follows:
    It seems reasonable that an auction sale or “as-is” sale would be under market due to the burden this imposes on the buyer.
    It seems reasonable that a house that has been “trashed” would sell for less then a house in more normal condition.
    Barring other information it seems reasonable to use foreclosure status as a proxy for the above two situations. i.e. a foreclosure has some a greater chance of being an auction sale and/or trashed.
    But if there is a specific transaction where people have specific knowledge of the house being in good condition and traditionally sold, then I don’t see a basis for discounting the sale price or denying it apple status.
    As a side point, my working assumption is that since as-is or trashed status affects the structure value rather then the land value and since SF properties have a higher percent of price being land value, the discount percentage for as-is/trashed status is probably less in SF then for the state or country as a whole.

  28. Posted by sfrenegade

    “It seems reasonable that an auction sale or “as-is” sale would be under market ”
    Except that no one has yet explained to me how an contract made without an inspection contingency would similarly be an under market sale since that is also sale as-is. Anyone care to explain the inconsistency?

  29. Posted by goodness

    curmudgeon, the soma grand, while in an entirely below average neighborhood, is nowhere near south beach. A friend of mine who lives there walks 2 blocks to work at Hastings. Most of the new developments in soma are over by the ballpark or the transbay terminal.

  30. Posted by tipster

    Another data point on this building: unit 1503 just dropped $50K to a price that is 13% off what the owner paid three years ago.
    1503 is not a foreclosure and tried to get the same under 5% off deal as the subject of this thread, but has now moved closer to the discount of the REO sale at 13% off (the REO sale was 17% off its 2008 price).
    As an indication of the fight they think they are going to have and the offers received thus far, they note in the listing that the “List price is firm”.
    So that tells me that the REO was much closer to the market price at the time than those arguing that it was not would care to admit.
    http://www.redfin.com/CA/San-Francisco/1160-Mission-St-94103/unit-1503/home/17306100

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