Why this uninhabitable San Francisco shack could sell for $2.5 million

SAN FRANCISCO — In the most recent installment of Bay Area
housing market craziness, a
tiny, uninhabitable shack
in a desirable San Francisco
neighborhood has hit the market with a staggering $2.5 million
price tag.

The run-down, 640 square-foot home isn’t safe to enter, but
its real estate agent expects to have no trouble selling it.
That’s because the property comes with something almost as rare
as an affordable home in the Bay Area — a demolition permit. That
means the new owner can tear down the existing structure and build
a new home from scratch — a rare opportunity in a city that
values preserving old, historic homes.

The current owner of the property on Carolina Street in San
Francisco’s Potrero Hill neighborhood started the paperwork
needed to tear down the home and rebuild, before deciding to sell
instead. The Planning Department already has granted permission to
demolish the existing shack and replace it with a two-unit,
four-story, 4,451 square-foot building with four bedrooms, four
bathrooms, a two-car garage and private elevators.

“You end up with a brand-new home with incredible views from
each floor,” said listing agent Anne Laury of Coldwell Banker.
“So I would say it would be worth $5 million-plus.”

A
rendering shows what the view might look like from a four-story
buildingapproved for construction on a Potrero Hill lot. The lot
and the shack thatnow sits there recently went on sale for $2.5
million. (Anne Lauryand Sutro Architects) 

Part of the property’s value comes from its city permits,
which took the current owner two years to get. That gives the new
owner a leg-up in San Francisco’s notoriously lengthy permitting
process. But the new owner would still need to obtain a final
building permit before he or she could break ground, said architect
Stephen Sutro, who designed the proposed four-story building.

Developer Eric Tao of AGI said the permits already issued for
the Carolina Street property are valuable — especially the
approval to tear down the existing shack.

“It’s hard to demolish anything in San Francisco,” he
said.

He estimates it would cost about $500 a square foot to build a
new home on the property. That means it would cost the new owner
about $2.2 million to build the 4,451 square-foot home the lot is
permitted for. Add the list price of the property, and the new
owner would have spent about $4.7 million.

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The property originally went up for sale in January, without much
luck. Laury blames the bad winter weather.

She put the shack back on the market last week, and things look
more promising this time around. On Tuesday the property had been
on the market eight days, and Laury had passed out paperwork to 22
interested potential buyers.

Source: FS – All – Real Estate News 1
Why this uninhabitable San Francisco shack could sell for .5 million