Why is That House So Cheap? 5 Hidden Reasons a Home May be Listed Under Value.

san francisco real estate

A while back, I had a client who was searching for her first home in San Francisco. We had been looking for a home for a while and she was eager to nab her dream home. I knew she was looking online for new property listings on a daily, if not hourly basis. One day she shot me a text with a link to a new listing that she was very interested in looking at (as it ticked off a lot of her boxes), but then asked me, ‘Why is this house so cheap?’

I think most of us who have searched for a home have run into this. You find a house online, think it’s perfect, but wonder why it’s priced so much lower than other comps in the area? Well, there are a few reasons.

Hidden Reason #1 : There is an underlying problem, a.k.a. Lipstick on a Pig

Real talk : We live in San Francisco. The number of fixer uppers built in the early 1900’s far outweigh a buyers new home options. With the right budget and a little luck home buyers might find something that is in ideal condition, but the reality is that this isn’t the case for most of us.

One of the main reasons a home might be priced low is that there is an underlying issue. The smell of freshly painted walls is the biggest indication of this...it’s like putting lipstick on a pig. Now, in some cases it could be as simple as replacing a few walls here and there, but in others there might be surprises lurking behind the walls (plumbing issues, etc).

The good news? Home sellers are required to reveal all information behind what’s not up to code and if updates need to be made. It might take some work, but going in prepared will be your best best -- one of the many reasons why picking the right realtor matters.

Hidden Reason #2 : Location, location, location

There’s more than one reason why in real estate, location matters. The location of a property can heavily influence its price tag, mainly as a result of the demand of the area. There are multiple factors that can affect the demand of a specific area :

Crime Rate

Regardless of location, it is always a good idea to see what a neighborhoods crime rate looks like.

Walkability Score

This is definitely a bigger deal in bigger cities vs. suburbs

Quality of the neighborhood

Is the street kept up/clean? Is it a major street with a lot of traffic?

Hidden Reason #3 : Missing a major feature / Layout is funky

Sometimes, as home buyers, it’s easy to get swept up in the look and feel of a property and compromise on items that were previously a deal breaker. What are some examples? No parking spot/garage. Missing extra bedroom. The only bathroom is off the kitchen.

In some cases it works out fine--living in a place like San Francisco means we all have to compromise a little, right? Yes, but I like to tell my clients that make sure you’re not giving up something with the property that once the honeymoon phase after purchasing your home is over, you regret your decision.

Hidden Reason #4 : Online property pictures are deceiving

This is actually more common than you might think. With filtering being all the rage right now, there is a chance that property images displayed online are made to look a lot more attractive than in person. We’ve all been in a situation in which we look at pictures online and when visiting a property in person, it looks much, MUCH smaller than you had thought. This problem is definitely alleviated by visiting a home you like in person, though, so it’s easy to solve.

Hidden Reason #5: If it’s a TIC, it tends to be priced lower

If you live in San Francisco and have undergone the home buying process, you’re likely no stranger to TICs. TICs have gotten a bad rap and due to the unusual nature of the loan process means they are less in demand, which means buyers can actually get a good deal from them.

At the end of the day you need to decide whether the price of the home outweighs the less popular issues associated with the property. Sometimes, you might get lucky


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Pooja Desai