Comments on new developments in San Francisco
This question appeared in The Front Steps, a blog to which we are regular contributors. The questions they get are very thought provoking, and we have chosen to reprint some of our answers here:A reader asked: What is their (the experts') opinion when they see new developments start listing properties on the MLS? Is this a general sign of weakness in sales? For instance, I noticed 310 Townsend has quite a few listings on MLS and it seemed to coincide with their reduction in price and incentives.
Likewise, the Berry street properties and King St. properties in Mission Bay area also have quite a few listings on MLS and word seems to be that they are having a hard time moving their last batch of inventory…
Now I noticed the Radiance, the new property on the other side of Mission Bay… at first word was there were lots of reservations, etc but now they have a listing on MLS…. I’m wondering if that means they may start offering incentives etc.
Or maybe developers just naturally list inventory on MLS since it would reach the most people? If so, then why do they not list inventory when they first release. Thanks.
- T
Our reply: That is a very good question and very observant. In the beginning, these types of developments have sales staff dedicated to their project so the developers are not interested in cooperating with agents because of the commission they have to pay a cooperating broker. Some even make it more difficult for other agents to be paid for clients they may have been working with for years. If the client goes to the project without their agent and is registered with the developer's staff, then the developer will not pay the agent a commission. For this reason it is not in the MLS as they would have to abide by the SFAR rules which does not allow the developer to refuse to pay a cooperating agent whether the client had registered with the developer or not.
However, as the project winds down less units are available and may be harder to sell. Also, people who had reservations may have dropped out. So to get these last units sold, the remaining ones are put on MLS. By that time, developers are ready to move on to the next project. This can be a great time to get a good deal. At the beginning of the project developers are less willing to make concessions unless the market is slow and units are not moving. As the project is being sold out, the developer wants to sell the final units because this is where the profit is usually made. For instance, The Potrero is offering incentives for buying units now, though they have not finished the building yet are over 60% sold. Even so, they are offering a reduced price on some units and throwing in 2 years of dues, a refrigerator and washer and dryer, a value of close to $15,000.
- Janis Stone
posted by SFResidence.com @ 10:18 AM
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