I had to take a different route to get to my kid’s school today since I had to park and go inside. So I’m at a light at the end of a very prestigious street and I see this house that is for sale. I’ve recently been in it, so that is how this all came about.
See, this house is on the corner of a street full of very old and grand homes. It is one of those streets that has the huge old awesome houses where the rich people lived when it was new, and still do. This house is at the very end of that stretch of houses. Beyond this house you start to have commercial zoning, smaller houses, and even some houses that have been chopped up into student housing. It has location…..in theory.
This house has something else working against it too. Like I said, the houses on this street are very grand. The street has elaborately detailed houses of architectural significance…….This house looks like a giant farmhouse. It has wood siding, simple architecture. It really looks like something from a Norman Rockwell painting, just jumbo sized. It doesn’t really fit in with its surroundings.
Then there is the fact that it has a tiny back yard, which is taken up by the 2 car garage that practically sits on the street. When I parked there, my car hung out over the sidewalk. And when you are in the backyard, you don’t feel like you are even in this nice neighborhood, you just feel like you are on a busy, loud corner.
Now that I’ve run though all that, let me tell you a little bit about the recent history of this house. It sold for $400k in 2006. Somebody spent a fortune on it, then tried to sell it less than a year later for $679,900….then $649,900…..then $599,900………then $437,000………then $380,000. They even tried to auction it at one point with no success. Now, you may be thinking that it was just a declining market, and that may have had some effect, but the real issue here is that the house just wasn’t right, despite having “Location, Location, Location.” I am sure when they listed it for $679,900, that the comparable sales for that street supported that price……..again in theory.
So, I guess my real point here is that you really need to step back and take a look at what all is going on with a house before you make an offer. Does it fit well with its surroundings? Is it on the edge or in the middle of its defined neighborhood? What negatives does it have? All those things have market value. See, when a realtor or an appraiser look at the comps, they don’t put a value on things that are more of a vibe issue ( I do though!!) If two houses were the exact same side by side and one had a really steep driveway, which one are you going to buy if they are priced the same? What about one that has power lines running over the backyard? Backs to apartments? You’d pay less for an identical house with any of those negative features, and YOU are the market, even though on an appraisal they would be worth the same. (Maybe I’ll blog about the difference between market value, appraised value, and tax assessment value sometime!)
If I had been the buyer’s agent for this house, I would have told him that even though this house seems to have location, it still has plenty of things that just aren’t right, and those things are going to make it worth much less that the comps. I am sure he has learned all this now, but he has been foreclosed and the house is back on the market, this time for $285,000.
If you ever buy a house with a big negative, you’ve really got to buy it right so you have some room to sell it right when that time comes. The negatives may not bother you, but you need to know about them before you buy because one day you will need to sell.