Building on a Vacant Lot

Building on a Vacant Lot

This is my personal favorite way to get exactly what you want in Real Estate!

I always thought it was so challenging for a Buyer or Buyer’s Agent to look for a house with exactly all the demands  on the Buyer’s list. It can be so frustrating unless the buyer is willing to accept certain compromises and be able to make some modifications either immediately through escrow, or later on as time and money warrant.

I also always think it is quite challenging for a Seller to make upgrades to a house to prep it for sale. In the process, they try to second guess the tastes of the buyer. Some buyers will like granite, stainless, and hardwood, some will not!

But, building your dream house on a vacant lot…or doing what’s called a “90% teardown”…a Buyer will be able to get exactly what they want, ready for them the day they move in.

The requirements are…

  • Finding the lot – Like they say, “They aren’t making any more land”. Especially in desirable areas with good views, schools, etc.  
  • Up front money – most construction loans require at least 20% “participation” in the project. As a rule of thumb, that’s about 50% ownership in the lot before construction. The construction loan and the lot loan can then be rolled into a mortgage when the final inspection is successful.
  • Most importantly, you’ve got to visualize the finished house before it’s built. An architect can be helpful, but is not really necessary…they may charge as much as 30% of the construction cost, and then design the house for THEIR taste and their professional ego. If you have at least some experience with building and have access to a good general contractor, engineer, and drafting service, you can do the design yourself. I highly recommend having a model build after the design is complete. You’ve GOT to be able to visualize walking, sitting, sleeping…living in the house BEFORE it’s built!
  • When you’re satisfied and totally SURE this is the design of the house you want, the fun begins. You’re got to get permission with the HOA or the neighborhood review board. When you get that, it’s time to apply with the city for the actual permit.
  • Finally, there’s the “soft costs”. The developer (YOU!) has to pay for the permits, the water, sewer, and gas hookups, the lot prep and the plans and engineering costs.

Here’s a real life, current example…

I have a lot on the west slope of Bernal Heights for sale right now. The seller wants $649,000. It’s only 25’ X 70’, but has the most primo view in the city, in my opinion. Looking west to Twin Peaks as the fog oozes over the hills!  Construction costs for a 3bd, 3ba, 2200sq ft, three level house are at least $1,200,000. The best comparable existing house sold recently for $1,800,000.  So, my targeted Buyers are NOT builders or Flipper Investors. (no immediate profit). I will have to find someone willing to do what I did, myself 25 years ago…buy the lot, design the house, jump through all the hoops to get it built, and then live in it for 20 or 30 years.

One universal truth in Real Estate is that if you have enough TIME, you WILL make money!

And… you’ve got to live somewhere…why not ENJOY it !       

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Unsolicited CMAs?

Unsolicited CMA’s???

A Comparative Market Analysis (CMA) is a sophisticated, report on a property requiring quite a bit of research and time and effort. I’ve done many of them using all kinds of sources from MLS to manual searches on commercial web sites.

I have also received several CMAs from other agents who wanted to list my own personal residence.  Occasionally, they just appear at my door, unsolicited! WOW!

I’m guessing these very aggressive agents have selected my house as something they wanted to list and sell. They can’t be doing a lot of these reports. They are not something to take lightly like some piece of junk mail. These are expensively printed and nicely bound, thick bond paper, presentations. Just a hundred or so could break the bank as far as your marketing budget. But, you can just do as many as you can afford right now.

So, I thought…why not give it a go myself?!

Therefore, recently, I have taken it upon myself to create CMAs for houses that I felt are ripe for listing. Here are some of my criteria…

  • A previous client who backed out, or fell out of a deal.
  • A house that is just about complete in a rehab project.
  • An expired listing.
  • A probate property.  
  • A neglected property.
  • A recently retired couple.

I’m sure there’s more, that’s just a sampling. If they just happen to be thinking about listing at that time and they receive a nice CMA, don’t you think they would call you first over some agent sending a postcard or newsletter?

Of course, the difference in the cost and time and effort limits your prospecting using this method. But, you can be very specific as opposed to just blanketing a huge farm. I think it’s worth a try!

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Anybody need a Burger King?

Almost Sold a Burger King

A few months ago, I got a call from a Guy who said he owned the Burger King at Valencia and Mission.

I know it well. I often park in their parking lot while picking up my burrito across the street.

He said he wanted to meet me to discuss listing the property. I was ecstatic! I did my research, ran my comps, and did the commercial analysis on the property.

It was a gold mine. He had a NOI of $150,000 on a triple-net with no mortgage! This means that the tenants were paying all the taxes, insurance, and maintenance and he was raking in $150,000 a year! NICE!

But, I couldn’t make it sound that good or I surely wouldn’t get the listing. Besides, his motivation was that they lived in the foothills and this property was passed down to him and he wasn’t able to get down here very often.

My only sales pitch was to emphasize that he could do a 1031 tax-free exchange for a similar property closer to his home. In my CMA, I suggested a listing price of $1,500,000.

It was a pleasure talking with this Guy and his wife. They thanked me for the good information and that was that. I even referred him to the local 1031 attorney for San Francisco who could then refer them to a similar local attorney where they lived.

I followed up a few times, but never heard back. I guess they realized that you shouldn’t look a gift horse in the mouth.

Next time I go down there, I’ll actually eat at that Burger King ;-)   

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A Quick Short Sale Solution

I Have a Quick Short Sale Solution

After having gone through several traditional short sales, I wondered if there was a better way to get a Client’s distressed property sold quicker and with less stress.

Then, through my own research and networking, I found it !!!

It’s a business partner who will buy your short sale outright, negotiating directly with your bank(s) and buying your note(s).  The sale then becomes a traditional sale at a much lower price than the comparable properties. It will then sell very quickly, especially in today’s hot low-inventory, high-demand market!

This is, of course, much better and faster than a short sale or deed in lieu. Seller receives a waiver of deficiency. No 1099 is issued. No black marks on their credit from us. No seven-year waiting period to buy a new house because of bad credit. This program is discreet, no multiple walk throughs or countless people visiting your home.

If you are underwater and want out, call ME!

Let’s talk!

Alan C Pursell (415) 425-2014 

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Hello world!

Welcome to my website.

Whether you’re a first time buyer or an experienced investor, you’ll find useful information about how to choose the “right” property, making an offer, negotiating, financing, mortgage rates, moving, and everything involved in making an informed home buying decision in today’s market. If you currently own property and are thinking about selling it, this site contains information about preparing your home for sale, selecting the right agent, pricing your home appropriately, marketing it effectively, going through the inspection process, and receiving a timely market evaluation.

Please use my website as a continued resource and if you need more information on anything, please feel free to call or email me. My contact information is listed on the About page.

Thanks for visiting!

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A Peace of Bernal Heights

A Peace of Bernal Heights

They say that real estate value improves with altitude.
If this is true, it is certainly true with Bernal Heights.

Up here on the quaint narrow streets of Bernal Heights, all the hustle and bustle of the city below is lost to the serenity and peacefulness of this beloved hill.

One doesn’t really have a good appreciation of one’s surroundings and the natural aspects of the geography unless you attain a good focal point from which you can view the surrounding hills, valleys and city. A little altitude can do that for you.

It can also affect your weather. Bernal Heights is actually part of the famed “Banana Belt”. This is a term given to the Noe Valley, The Mission and the Bernal Heights areas where the twin peaks hill serves as a natural barrier for the onrush of fog on a typical summer’s afternoon and evening.

One of my favorite relaxations is to walk my dog to one of the many local parks or just sit on my roof top and watch the sun setting into the soft pillows of fog, illuminating and enlightening the end of a perfect day and the promise of a brand new one tomorrow.

To own a piece of this peace has got to be one of the most sought after goals of real estate.   

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Housing Activity on Montcalm Street

WOW! In just the past few months, we have had one house “sale pending”, another registered as an “Historical Cottage”, another ripped apart due to severe rot, and yet another registered “Earthquake House” being renovated (as much as can be). Montcalm Street is on the north slope of Bernal Heights, San Francisco and all this is being accomplished from June 15, 2012 lasting until December 31, 2012.   

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To BUY or To RENT???

Humm…there’s a question! How about “stability or insecurity?” Maybe “A future for your family, or everybody’s on their own?” Perhaps “Owning something Real, or owning nothing Real?”
Buying a house is not just a shallow question of interest rates or appreciation or down payment or shadow inventories.
Owning Real property has traditionally, for centuries, been your family’s legacy.
Somehow, over the years, we all got swayed into thinking that Real Estate is just another investment.
It’s so much more than that!
It’s your identity, it’s your power, it’s your independence.
When you own your own house, you are in control.
You can add-on, you can remove walls, you can paint, you can customize.
Or, would you rather be subject to some landlord’s approval, and then later on, be evicted?
Yes, you CAN get evicted, even in SAN FRANCISCO ;-(
As for the investment aspect, yes; values have dropped over the past few years.
12% down on average in San Francisco give or take, depending on which area.
But, that’s not like 50% in the central valley, or 80% in Detroit!
WHY? Because this is GREAT place to live. Everybody likes it here and there will always be strong demand!
Therefore, the market WILL bounce back. It may take several years. But, you gotta live somewhere, right?
9 times out of 10, your mortgage payment can be less than rent payments!
So, I say, don’t hesitate!
The sooner you get in the game, the more your will accumulate…not just equity, but LEGACY!

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Marketing in This Market

My Approach to Marketing a House in 2012

We all know that house values have declined in recent years.  But, here in San Francisco, we are very lucky! The median house value is only down about 12% since 2006.  Still, this does not have to discourage sellers.  I can show you how to recoup that loss with a little marketing trickery…all perfectly legal, of course! 

First, we must realize that there are a LOT of Buyers out there. There is a LOT of pent-up demand for houses. This is mostly because inventory is very low. i.e., there aren’t enough sellers to match the housing demand. But, these Buyers are very particular. They want to buy just want they want right off the bat, not like past years when the market was in a frenzy and Buyers would take whatever they could get. Sellers today really need to satisfy Buyers’ needs in order to be successful.

This can be accomplished by sprucing up your house…giving it a “shoe shine”, as it were. It doesn’t have to be expensive; it just has to be done right.

  • Curb appeal: paint, fix up any obvious flaws, and landscape with multi-colored shrubs and flowers.
  • Paint the entire interior, neutral pastels and bright white ceilings.
  • New carpet where needed, flooring should be upgraded or refinished, and, Buyers LOVE stainless and granite, if you want to spring for it!
  • Clear out all clutter and family photos and keep only your best furniture in there. No real need for expensive staging.   

Ah yes, the PRICE…very important. I suggest the low end of the comps range. Buyers will run the very same comps and a lower price will make them think it’s a bargain.

Now that you’re ready to show off your creation, I will list it in the MLS, put up a nice shinny sign out front, and advertise the first open house in every on-line real estate site that exists. Now for the coup de grace… I will put a “Bid Date” right on the flyer. This will be two weeks after the first open house. I will not accept offers until then. This little technique, along with the lower price, will create a mini-bidding war. Buyers also have little tricks of their own. They will find out what others have bid, by hook or by crook. They will then try to beat the other Buyers! This will only serve to benefit the seller by creating an atmosphere of competition.  If all this works well, we will receive several very good offers on the bid-date. All we have to do is select the best one. Hopefully, it will be OVER the 2006 value.

Wanna give it a try?  Call me!  (415) 425-2014

Alan C Pursell    

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