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November 23, 2015

Extreme Overbidders Place High Value on the Potential


Prices for single-family homes that need work or have great development potential are hitting all-time highs in San Francisco. Buyers looking to fix up properties for themselves are duking it out with developers, particularly if the properties are in desirable neighborhoods.

With prices soaring well past $4,000,000 for large, newly renovated homes in areas like Noe Valley, buyers feel justified paying $2,000,000 or more for their project house.

Take 818 Douglass in Noe Valley (see photo), a Victorian fixer listed for $1,095,000 and snapped up by a developer for $1,810,000. He’ll undoubtedly go on to vertically and horizontally expand the property and flip it for $5,000,0000 or more, justifying the 65% over asking paid.

And then there was 43 Everson in Glen Park, a 4,000-square-foot view home that needed updating and featured this kitchen:

Cash buyers just forked over $2,350,000 for that one.

One of the popular properties on the market now—taking offers today, about a week after coming on the market—is 51 Mirabel ($895,000) in the hot Precita Park area of Bernal Heights. The Victorian home’s kitchen and bathroom are situated at the front of the house, with a bedroom on the main level and an additional room downstairs accessed via the back staircase. Though some may think Mirabel is move-in ready, it’s likely the prevailing buyer will be paying money for a major renovation project.

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