“But nothing on 5 acres has sold for that!”
“But my listing is 1000 square foot bigger!”
Both of these were replies from other agents when they asked what I thought of their asking prices. I hate to give feedback to agents. Very few are appreciative when you tell them the truth. When I get an agent that is argumentative, I like to save their listing in my cart and see how close I was to its eventual sale price. I’m almost always pretty spot on.
I am working with a client who wants at least an acre in a rural setting, but is willing to have more acres. Like most people who want to live in the country just to have some space, the actual size of the lot doesn’t really matter. If 1 acre gives the same degree of privacy and function as 5 acres, most of these buyers don’t care. I mean, hello, it’s not like they are going to farm it. Yet, an appraiser will add/subtract value for having more or less land when appraising a piece of property like this. That’s why you often see a realtor brag that the asking price is less than a recent appraisal…..It’s cause the market cares more about the quality than they do the quantity.
I am working with another client who is wanting to buy an affordable house downtown. We’ve been looking at houses on the north end of downtown, which takes somebody who loves old houses and the downtown vibe more than they hate the crime that will be around them. Let’s face it, few people with families are willing to live in an area that looks like it could be on that show “COPS”. I’m not trying to say this is right or wrong, only that the buyer pool for most of the cheaper houses downtown is going to be a single person or a couple. To those buyers, square footage doesn’t really matter. They care more about the character of the house and how close it is to the places they want to go. If they can get all that in 1200 square feet, all the better cause it means less to heat and cool…..which is a big deal in hundred year old houses with no insulation in the walls! Again, an appraiser is going to add or subtract for square footage differences, but again, the market doesn’t seem to care.
Most realtors approach determining value in a purely mathematical way. We all have these sheets of paper with values for things like a square foot of space, a bathroom, a fireplace, etc. We all cut and paste value when comparing similar houses to one we are about to list. Most agents stop there. I can’t tell you how many times I have been in a deal where the listing agent says something like “I can’t believe we didn’t get more for this house, all the comps were much higher?” That always tells me an agent doesn’t know the market……which is really about what buyers like and don’t like. See, we don’t have anything on that sheet of paper for subtracting value for things like a half bath in an awkward spot, a bad paint job, a steep driveway, being on the main drag through the neighborhood, or having the ugliest granite counter tops known to man. We also don’t have anything on that sheet saying how much value to add for having awesome closets, a private lot, great landscaping, etc. Those are all subjective things. Things you only learn by spending a lot of time with buyers. That is why I always say the best listing agent is one who also works with a lot of buyers.