SF home-buying ‘insanity’ means paying $1 million over list price

Bravo’s reality show “Million Dollar Listing San Francisco” debuts July 8, but I already have an idea for a spinoff — “Million Dollar Over Listing.” Patrick Carlisle, chief market analyst with Paragon Real Estate Group, chalks it up to the “general insanity of the overheated market,” which stems mainly from demand outstripping a long period of below-average inventory. [...] “many agents have adopted a strategy of egregious underpricing,” he said. In San Francisco especially, underpricing is so prevalent that most buyers search for homes well below their target price, knowing the sale price will be much higher. The four-bedroom, four-bathroom home was somewhat dated but had magnificent views, which were hard to value. What he didn’t realize was that particular block of the Inner Richmond, it’s almost like Presidio Heights with large, detached single-family homes. Over in Pacific Heights, a 2,100-square-foot top-floor condo at 3065 Washington St. was listed at just under $2 million in April and sold less than two weeks later for $3.21 million, all cash. Romanov said he tried to list it “a little lower than prices in the area,” but it was hard to find good comparables because there have been so few sales recently. Bay Area home sales have been below the historical average for nine years, according to CoreLogic. “There is no supply and tremendous demand,” said Monica Pauli, an agent with Coldwell Banker Previews International. People selling are selling because of death, divorce or getting transferred out of the city. The phenomenon is not limited to luxury homes. Sometimes contractor specials sell for more than houses that are in decent move-in condition. Agent John Lauer of Keller Williams represented the seller of a 1,359-square-foot home at 410 Marion Ave. in Palo Alto. The seller put it on the market after she was approached by a contractor who wanted to buy it, tear it down and rebuild. The buyer plans to build a new two-story home with full basement on the property. In 1989 it was the earthquake and a stock market mini-crash in October.