This house is overpriced!
As a full time Realtor, I hear that quite frequently. Guess what? I typically have to agree. NOT always however and let me explain Why?
I have recently been showing executive homes in the Madison AL area.
One particular upscale subdivision in Madison Al boasts homes that range from new to 10 years old. Prices per-square-foot are ranging from the mid 90’s for a foreclosure, up to and over the $150 per square foot mark. And here is where the “You can’t always base a home by the neighborhood comps” theory comes in.
House number one is listed at $114 per square foot:
Features pre-finished hardwoods, some worn carpets, a trim package that consists of standard trim and crown moldings. The kitchen has been “somewhat” remodeled and features granite with older cabinets that are outdated according to industry standards with 30 inch uppers. Brass lighting, door knobs and cabinet pulls run throughout the home.
The rooms are laid out in a very traditional manor…closed off to one another. Todays buyer typically wants an open floor plan. Wallpaper (GASP), tiled flooring that is not quite outdated, but clearly not up to the latest standards. The secondary baths feature cultured marble counters and fiberglass tubs/showers. Outside you’ll find a large patio. The lot is nice, but just a standard neighborhood lot. No fence.
House number two is listed at $145 per square foot:
Features grade A sand and finish hardwoods, including stair risers, nearly new carpet and an outstanding trim package. (9” base moldings and true judges paneling in the formal dining room and extensive crown moldings). A true chefs kitchen featuring a Thermador range, subzero fridge, gorgeous custom cabinetry with roll outs, dove tailed drawers, no slam hinges, pot filler, etc. and 42 inch uppers. Custom built in’s flank a wall in the hearth room that features a vaulted ceiling and a gorgeous floor to ceiling stone fireplace.
The Master retreat features a tiled shower with rain heads and body sprays, marble flooring and a bubble jet tub. Each additional bath features cast iron tubs, tiled surrounds and granite. Of course, all lighting is upgraded along with upgraded plumbing features. Outdoors you’ll find a large screened porch and another large patio. The lot is one of the largest in the neighborhood and features aluminum fencing.
Comparing Apples to Oranges
Let’s say each home is 4000 square feet. At $114 per foot that leaves an asking price of $456,000. At $145 per foot, that puts the newer home at $580,000. That is an obvious $124,000 price difference. A HUGE price difference.
Comparing Apples to Apples
The lot increase could easily have been $50-100,000 by checking the assessed values.
Now let’s factor in kitchen upgrades….easily $40-50,000. Plumbing (including tiled showers, cast iron tubs, etc) could very easily run $15,000. Hardwoods and upgraded tiling, an easy $5,000 upgrade, minimum. Covered and screened porch…again, $5000 depending upon size. Etc., etc., etc …See what I mean?
Always Compare Apples to Apples!
It’s necessary to compare apples to apples when purchasing or selling a home. Be certain you are doing just that! It’s so darned easy to get caught up in the; “But this one only sold for “x” per square foot”. Especially when dealing with executive homes the gap can be enormous…not so in smaller homes where neighborhood comps DO play a larger role.
As a professional working with clients, I have to stand back and assess the reality that these newer/nicer homes are NOT actually overpriced, but have far more to offer.
When I’m working with clients buyer or seller, I have to keep my emotions in check and make sure to price the home properly. Whatever side I’m on in a transaction, I do have to “check out emotionally” and base the list or offer price on factual data.
NOT always a fun thing to do, but a very necessary part of representing my buyers and sellers fairly and getting them the best deal possible.