Driven by high buyer demand for single-family homes, the fixer market is going gangbusters in San Francisco.
There are generally two categories of what you’d call “fixers” in San Francisco real estate. The first is the contractor special—not habitable, needs work on the foundation, roof and everything in between. Then there’s the habitable house with a clunky floor plan and expansion potential that could be transformed into someone’s dream house.
Fixers don’t come on the market all that frequently. When you consider that only 58 of the 1,530 houses sold from June 2016-present were fixers, this sub-market seems like a pretty small one. So if you’re going to pursue a fixer, it’s good to know what to expect.
Here are some important things to know:
The average price of a fixer is $1,058,560. A good portion of the fixers sold from June 2016-present were in the $800,000-$1.M range.
The more expensive the neighborhood, the higher the price will be. Seven fixers sold for $1.5M or more in the last half of 2016, including ones in neighborhoods like Noe/Eureka Valleys, Buena Vista Terrace, Mission Dolores, Corona Heights and Lower Pacific Heights. A 4,800-square foot new construction house on 26th Street and Diamond in Noe Valley was recently listed for $6,800,000, raising the bar for what a developer can expect to fetch in the market.
The most popular fixers are two stories over a garage. Everyone wants three bedrooms up and parking. If the fixer has any potential for that—or those elements already in place—you’ll have company on the offer date. For example, the total teardown at 572 Funston in the Inner Richmond was a classic Edwardian with potential for attic and garage development. Listed in November 2016 for $1,200,000, it closed escrow in an all-cash sale for $1,820,000.
Large view homes are also prime buyer targets. The two-bedroom, one-bath house with 2,000 square feet situated on a great block in Corona Heights was listed for $899,000 at the end of October 2016 and changed hands for all cash for $1,500,000.
There are typically multiple offers. Most fixers attract a combination of buyers aiming to do their own renovation and owner occupy, and contractor/developers looking to renovate and flip. The fixer pictured above on 23rd Avenue in the Parkside recently came on the market and the seller received 27 offers. The house is reportedly in contract at well over the $795,000 list price.
Cash sales and no contract contingencies are common in the fixer market. The steeper the competition, the more likely that the prevailing buyer will have no sale conditions—such as financing and inspections—and will pay in cash.
Expect to pay well over the list price. The average fixer overbid citywide was 11%. However, 30% of the fixers sold in the last half of 2016 found their buyers paying 30-67% over the list price in neighborhoods like Westwood Highlands, Glen Park, Mission Dolores, and Bernal Heights.
Many fixers are sold through the court confirmation process. Fixers often come on the market after their occupants have passed away. As a result, many of the sales are sold with trusts as the sellers, or through probate. Court confirmation is often required. Make sure you understand what’s involved; here’s a cheat sheet for you.