I had to run the comps for a house in that area between Chevy Chase and UK. My buyer wanted to know what I thought the place was worth. Usually, comps aren’t too hard. In a newer neighborhood, they can be really easy since sometimes you can even find three of the exact same floor plans to use.
Older houses are a little harder to comp. For example, the 3 best ones I had to pick from today were all in the same area, but were very different. A lot of realtors would have just divided the sale price by the square footage, then added/subtracted for number of bathrooms or a garage. It is all a very logical process of averaging data to come up with a number. The only problem is that it doesn’t always work. It’s kind of like the weather man. According to him it was suppose to be a certain temperature, rain, not rain, etc.
Back to my story….
The cheapest one was on the edge of the neighborhood near where the commercial section ends on South Ashland. That corner of the neighborhood has a very different vibe than the one I saw with my buyer. The next one was right around the corner from the house. You’d think that would have been a shoe in. But, it was much bigger, had been converted to student housing a long time ago, had a surplus of bedrooms, and was handicap accessible. That isn’t going to attract anybody from the same buyer pool as the one we saw either! Sorry if this is starting to sound like the real estate version of “Goldilocks”, but the last one was just right.
The last place was similar in square footage, was more updated, had never systems and would attract buyers from a much broader pool. It went for $5000 less than the asking price of the one we saw. I had to tell him that I thought the one we saw was over priced.
I also had to tell him that with old houses, you just never know. Somebody could see that place and totally fall in love with it, with the end result being they paid too much. I try to come up with a price that I think 80-90% of the buyers would pay.
All this reminds me of 2 houses I had listed on Wabash a long time ago. Both of them were totally and tastefully updated. The first one I listed was everything anybody could want in an old house, with the exception of very rough and very steep steps that went up to the converted attic space. It was really nice up there, but getting there was posing a problem. Time after time (not trying to sound like Cyndi Lauper either) we would hear how nice the house was and if it weren’t for those stairs……. Eventually we sold it. I should add that we actually sold it for much higher than the neighbors and a realtor who lived a few blocks away ever though was possible. See, the comps didn’t really support the asking price. We kind of pushed the envelope and it worked. We just needed that buyer who would fall in love with it……or who was transferring from California, had a tight time line and everything looked like a bargain!
The next house I listed on that road was equally nice. They had remodelled the upstairs, bumped out the roofline of the back and added a killer master bathroom and a walk-in closet. Those are 2 things you don’t see often in an older house, especially for the price range we were in. That house posed even more of a problem to me. See, the downstairs rooms were just too small. It was a little too cozy. If you just looked at the comps, you’d have thought the house was worth about $15,000 more than it was. We had to sell it a little under the comps to make up for the small rooms because this time, the buyer who would fall in love with it didn’t show up in time before my folks had to move. Neither did another California tranferee.
So, you really have to have a feel for how buyers will perceive the house as a whole to know where to add or subtract value. That is the art part of the deal. Even to the most unemotional buyer, they still have to like the house to buy it. On the comps sheets all the realtors use, it has the scientific stuff like values for square footage, a bathroom, a finished basement, the number of garages, etc. The problem is that if we don’t throw a little art into the comps we’ll just get them wrong…………unless the house is one of those where 3 identical houses have sold in the past 6 months!