There are currently 328 condos for sale in San Francisco. And 184 of them have been on the market for 30 days. It’s highly likely that these 184 sellers are wondering why their particular properties aren’t selling if the San Francisco market is so hot.
I reviewed the details of these 184 properties, and came away with the top five most frequent barriers to condo sales. I thought it might be helpful information for sellers to note, particularly if you’re planning to put your condo on the market soon.
These are issues that came up most frequently among the current listings, and which have traditionally been obstacles:
1. Very high HOA dues. This is probably the biggest factor when a buyer considers a condo purchase. Buyers are preapproved with a certain monthly HOA range—most typically between $300-$500. However, when condos carry HOAs in excess of this range, the buyer pool immediately narrows. Add to that any known HOA increases to come, and that condo becomes more challenging to sell.
What you can do: Cover six months’ or a year’s worth of HOA dues. This eases the initial financial burden, and gives a buyer time to prepare.
2. No parking. In San Francisco’s parking-challenged streets, deeded or assigned parking makes all the difference in the world. Especially in central neighborhoods that are destinations in and of themselves, such as the Mission or Russian Hill.
What you can do: Arranging for a leased garage within a reasonable walking distance of the property can sometimes help immensely. Even better, offer to cover the first year’s worth of parking. In that timeframe, a buyer can get established with the owner of the leased spot, or simply seek alternatives. You can also locate the car-sharing pods in the immediate area, and point those out to prospective buyers. Not everyone needs a car, but the ability to get around with one is preferred.
3. Only one bedroom, or one bathroom with more than two bedrooms. One-bedroom condos have a narrower market, especially in neighborhoods like Noe Valley, which attracts buyers who may want to start families in the near term—or simply have an office area that’s not in their bedroom. Also, a three-bedroom condo with only one bathroom is tricky. The right buyer will eventually come along, but it may take time.
What you can do: Maximize any space that could potentially accommodate an office or nursery. Staging is very helpful with this strategy. If there’s a closet that could easily be transformed into a half bath, make sure your agent points that out. The latter is not a terribly expensive undertaking. Above all, make sure you’re priced in a true one-bedroom range, or not listing your 3BR/1BA for the same price as the condo around the block that had two full baths.
4. Your condo is listed at $1.5M or higher. You’re in the luxury condo category here, and the buyer pool is smaller. There are 38 condos that have been on the market for 30 days or more that are priced at $1.5M or above. Luxury condos also need the right buyer to come along, because single-family homes are also options at this price point.
What you can do: A successful sale will largely depend on effective marketing. Preview showings for Realtors who work frequently in your neighborhood can sometimes connect buyers to your property even before it goes on the market. At this level, buyers expect to see staging, and for the unit to be in extremely good condition. Don’t cut corners just because you think the market is hot. Making the effort to wash windows, paint and do all the things necessary to stand out is totally worth it. In the end, be cognizant of your competition. If you’re priced well above the unit that sold recently and was three floors up, you may want to review your asking price.
5. There’s litigation happening with the HOA. If there is current or pending litigation happening in your building, it will be a challenge for a buyer to obtain a loan. Lenders such as First Republic can usually come through, but it’s likely that a buyer will have to bring in at least 25%-30% down, as well as accept an adjustable-rate mortgage at a slightly higher interest rate. That’s where the buyer pool starts to shrink.
What you can do: Gather all litigation documentation together for the disclosure package, and make sure your agent is well versed in the nature of the litigation. Set up financing through a lender like First Republic so buyers can get preapproved with a lender that understands the litigation and can lend around it.