Last year, real estate prices started to tick upwards again all around the Bay Area. So far in 2013, in San Francisco at least, prices have started shooting up. Tim J Gullicksen of Zephyr Realty offers a few rules of thumb to help orient individuals to the new real estate reality:
1) High rents and low mortgage interest rates have driven an ever increasing number of people into the purchase market. Meanwhile levels of inventory are at historic lows. High demand plus low supply equals competition, and rapidly increasing prices.
2) "Asking prices" are not that at all. They are "marketing prices." Buyers should never reflexively assign any validity to the price advertised on any particular property. Listing agents purposely under price their properties for sale and set an offer date. "Why?" individuals may ask. They do it because it works.
3) Contingencies are so last season. Throughout 2012 no matter how competitive the offers got, buyers were still able to have contingencies for inspections, appraisals and loan approval. Unfortunately those days are over. In 2013, if people want to beat out the competition they need to seriously consider waiving most or all contingencies. It exposes buyers to more risk, but as they say, “if you don't play the game you aren't likely to win.”
4) Determining the right offer price is harder than ever. If customers rely on the comparable property sales from the past few months their offer will likely be behind the curve. When prices are skyrocketing upward, as they are now in this market, looking back in time at previous sales is also looking down the price curve; sometimes way down. Be prepared to offer more than what those comps justify.
The good news is that customers are competing to live in a highly desirable place so the investment in San Francisco real estate is a fairly good bet. Remember that the primary purpose of buying a property is to provide individuals with a home. If people can love their home and can afford it, then those are the most important considerations. If the place bought can serve the needs of the owner for at least the next 5 to 7 years they are likely to be in a fine position to sell or rent it in the future regardless of how outrageous the prices seem now.
“So grit your teeth, close your eyes and jump in,” says Gullicksen.
About the Company:
Tim Gullicksen of Zephyr Realty is a San Francisco real estate agent who specializes in a broad spectrum of San Francisco real estate property types, from affordable units sold through the Mayor's Office of Housing to multi-million dollar buildings and single-family homes. Gullicksen works with experienced and first-time homebuyers in San Francisco to find them the right home.
For more than 30 years, Zephyr Realty has been one of the most respected real estate firms in San Francisco. Its reputation as a highly professional and effective group of agents is recognized by both clients and the entire real estate community as the most successful independent real estate firm serving San Francisco, with more than $1 billion in gross sales annually, its real estate agents understand the San Francisco market like no one else.