The first house is done to the “9s” in dwell-magazine perfection and presented with professional panache.  The 2nd house is smaller and in somewhat dated condition and presented with underlit photos and so-so marketing.  They are a block apart and both 3 bedrooms, 2.5 bathrooms.

Guess which one sells for more?  The smaller, less polished one.  In fact it sold in 8 days on the market, while the other home took nearly six months before garnering an acceptable offer.  Why? I’ll get to that.  But first, so you can be even more amazed, take a look at the houses (click on the pictures to view more photos):

House #1 – 701 3rd Avenue:  Larger and Stylish House #2 – 726 4th Avenue:  Smaller and Dated

In this case, it all came down to pricing strategy and a realistic attitude on the part of the sellers.  The first home was priced 17.25% higher than the price it actually sold for. The 2nd home was also over-priced, but by just about 5%. The first home was marketed for a full 2 months at a whopping $1,885,000 before it was reduced by 90k to $1,795,000. Then 2 months later it was reduced by another 100k to $1695,000 before finally selling 2 months after that for about 135k less ($1,560,000). By the time it finally sold, the phrase “motivated seller” was on all the marketing materials. This is a tragic story of a seller’s failure to listen to what the market is telling them and potentially, the failure of their agent to forcefully tell them. They likely would have gotten one of their intermediary prices if they had only started there in the first place. In any event, anyone who’se ever had their house on the market knows how hard it is to live always at the ready for a showing.

The story of the 2nd home is much happier. It was initially priced at $1,649,000 and accepted an offer six days later for $1,566,000. This shows that the seller was accepting market facts, like the fact that the average sale price for a 3br home in the neighborhood was $1,430,857 in that time frame. And the fact that if you get an offer or two in your first two weeks of marketing, these are likely to be as good as it gets.

Although our example doesn’t perfectly fit, houses that sell quickly are closing, on average, for a little over asking price. (Quick-selling Condos & TICs average 98% of asking.) As time on market increases, the discount off original list price grows dramatically. Interestingly, whatever the time on market, homes sell on average within about 4% of final list price (after price reductions) – indicating that buyers generally won’t make offers on homes they consider significantly overpriced.

If you would like an estimate of your home’s value and my analysis of how to price it to get it sold for the highest possible price, please just let me know. Paragon has the highest performance statistics for original list price to sale price of any major brokerage in San Francisco, and I am proud to be part of that team.

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We have a lot to be thankful for in San Francisco. We have largely survived this real estate downturn without the enormous declines we are seeing on the news. However, they have been significant. Anyone in the market today on the seller side certainly can tell you that.

I thought it was a good time to check in and update the article from earlier this year “How Much Have San Francisco Home Values Declined Since their Peak?” Thankfully, many neighborhoods have not had a change since April, when values were even lower than in February, and some have even climbed a percent or two.

Below is an analysis of San Francisco neighborhoods comparing Average Dollar per Square Foot ($/sqft) at what is estimated to be peak value, to the average for sales occurring 10/15/08 – 4/1/09 (the market period right after the 9/15/08 financial markets meltdown), and then to the average for more recent sales occurring 5/1/09 – 10/30/09 (as home sales volume – and financial markets – surged again).

Different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales included were chosen to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high end and the ultra low end, which often distort averages.

Dollar per square foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, or exterior spaces. These figures are usually derived from appraisals, tax records or condo maps, but are sometimes unreliable (especially for older homes) or unreported altogether. There are often surprisingly wide variations of value within neighborhoods, and averages may be distorted by one or two sales substantially higher or lower than the norm. They may also be distorted by confidential sales, which are not uncommon at the upper end of the market. (For confidential sales, the list price, and not the sales price, is used for the calculation.)

Key to Estimated Peak-Value Period for the Chart Below:
*             Peak values estimated to have been reached 1/1/06 – 6/30/06
**           Peak values estimated to have been reached 1/1/07 – 6/30/07
***        Peak values estimated to have been reached 1/1/08 – 6/30/08

Changes in Average Dollar per Square Foot Values
for Selected San Francisco Neighborhoods & Property Types

Neighborhood
or District
Property Type
Price Range
Avg $/sq.ft. at Peak Value 10/15/08 – 4/01/09 5/1/09 –
10/30/09
Change from 4/1/09 Total Change from
Est. Peak Value
Bayview* House
$300k – 800k
$507/sq.ft. $294/sq.ft. $280/sq.ft. – 5% – 45%
Ingleside/ Hghts / Oceanview* House
$400k – 800k
$580 $449 $444 – 1% – 23%
Excelsior/Portola* House
$400k – 800k
$600 $457 $450 – 1.5% – 25%
Central/Outer Richmond ** House
$700k – 1.4m
$569 $488 – 14%
Inner Mission** Condo
$500k – $800k
$621 $496 – 20%
Central/ Outer   Sunset** House
$500k –  900k
$626 $533 $501 – 6% – 20%
Miraloma/ Sunnyside** House
$500k – 1m
$677 $598 $550 – 8% – 19%
Hayes Valley/ Alamo/ NOPA*** Condo
$500k – 900k
$684 $602 $559 – 7% – 18%
SOMA** Condo
$500k – 900k
$689 $553 $562

+ 2%

– 18%
Neighborhood
or District
Property Type
Price Range
Avg $/sq.ft. at Peak Value 10/15/08 – 4/01/09 5/1/09 –
10/30/09
Change from 4/1/09 Total Change from
Est. Peak Value
Bernal Hghts*** House
$500k – 1m
$651/sq.ft. $556/sq.ft. $567/sq.ft. + 2% – 13%
St Francis Wd/W.
Portal/Forest H **
House
$800k – 2.5m
$687 $585 – 15%
Noe & Eureka Valleys*** Condo
$500k – 1m
$751 $675 $613 – 9% – 18%
South Beach*** Condo
$500k – 1m
$785 $681 $640 – 6% – 18%
Potrero Hill** House
$700k – 1.4m
$753 $648 – 14%
Russian/Nob/
Telegraph Hills***
Condo
$600k – 1.2m
$798 $692 – 13%
Noe & Eureka Valleys*** House
$800k – 1.5m
$891 $755 $707 – 6% – 21%
Pacific Hghts/  Marina (Dist 7)*** Condo
$600k – 1.2m
$809 $763 $733 – 4% – 9%
Most Expensive North SF Areas*** House
$1.5m – $4m
$975 $797 – 18%


Averages are generalities and cannot account for the varieties in location, condition and amenities found in SF homes. Averages may be affected by unusual events or short-term trends, and do not necessarily reflect values for specific properties.  Average dollar per square foot values fluctuate even in a stable price market as they are impacted by individual sales, and changes of less than 3-4% should probably be ignored. All data from sources deemed reliable, but not guaranteed and may contain errors and omissions. Sales not reported to MLS – such as many new condo-development sales – are not included in this analysis.