Driven by high buyer demand for single-family homes, the fixer market is still going gangbusters in San Francisco. The average price for a fixer over the past year was $1,260,000, with many contractor-developers jumping into the game for a quick flip.
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 come on the market fairly regularly. But they aren’t for the faint of heart or inexperienced buyers. If you’re going to pursue a fixer, it’s good to know what to expect.
Here are some important things to know:
The more expensive the neighborhood, the higher the price will be. Fixers often pop up in neighborhoods like Noe/Eureka Valleys, Buena Vista Terrace, Mission Dolores, Corona Heights and Lower Pacific Heights. It’s often not about what the home looks like now, but it what it can become. For example, the fixer at 438 Duncan (see photo) is a three-bedroom, two-bath home with 2400+ square feet. It’s listed for $1.4M, but will likely sell for closer to $1.7Mish.
The most popular fixers are two stories over a garage, and homes with views. 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. And if there are views, expect that multiple buyers will jump at the opportunity to be in that location and create their dream home.
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. A small two-bedroom house in the Outer Richmond listed in the Fall for $699,000 attracted 15 offers—all of which needed to be cash due to the condition of the property. If you’re thinking of creating your dream home, make sure you’re already hooked up with a contractor, and you know your budget. Construction costs are very high right now, and contractors are booked out months in advance.
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. Like many homes in San Francisco, sellers and agents price fixers well below their target sale price. Make sure you’re factoring in overbidding if you expect to compete.
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.