This past June, I wrote a blog targeted towards home sellers and their Reasons to be Optimistic if You Can Lure First Time Buyers. Within that post, I pointed out that the current market requires sellers (regardless of which type of buyer they are targeting) to compete more for buyers in three main areas: Location (can’t feasibly change), Condition, and Price. In this post, I want to specifically address the relationship between Condition and Price with some real life examples.
For these examples, I’m using the five most recent sales (within 6 months) in our local neighborhood of Stonegate. Stonegate is a beautiful, yet affordable, townhouse community in the Lansdale, PA area. Its popularity stems from a great combination of features; modern construction and styling, centrally located to job centers and major commuting routes, reasonable price point, low association fees, well kept grounds, close to great schools, shopping, parks – the list goes on.
Here’s a summary of the five sales:
|
|
Street Name
|
Unit Type
|
Basement
|
Selling Price
|
Days on Market
|
|
1
|
Hillcrest Ct
|
Interior
|
Unfinished
|
$246,000
|
57
|
|
2
|
Bloomfield Cir
|
End
|
Unfinished
|
$247,000
|
22
|
|
3
|
Bloomfield Cir
|
End
|
Unfinished
|
$250,000
|
188
|
|
4
|
Hill Dr
|
Interior
|
Finished
|
$267,500
|
10
|
|
5
|
Valley Dr
|
End
|
Finished
|
$268,500
|
23
|
The main features (#bedrooms, #baths, garage, etc) of all these homes are identical. There are some differences in base square footage between the interior and end-units, but they’re relatively small differences. Nevertheless, end-units historically sell for higher prices (I would say on the order of $5,000) than comparably appointed interior units.
Having shown four and sold two of the above homes (the exception being Hill Dr), I can speak firsthand about their showing condition.
The Cosmetically Challenged - In the case of Hillcrest Ct, the home showed okay but nothing more than that. The kitchen and baths were very basic and showed some wear. The carpets and paint also showed wear and the décor was a hodge-podge in terms of color and style. Home #2 on Bloomfield Cir was challenging; very basic kitchen and baths, worn carpets, a partially completed/partially demo’d finished basement, a whiff of pet odor, and the décor (nearly 100% pink interior walls). From what I remember of home #3 on Bloomfield, it was also very basic and worn, but the original hunter green carpets are what really stick in my mind about this one.
The Cosmetically Enhanced - Now for the homes that sold for an average of about $20k more. I didn’t personally tour Hill Dr, but from the photos it looked quite nice. The kitchen and baths had some moderate upgrades as did much of the flooring in the home. It also had a neutral yet warm décor, new carpets in many rooms, crown moulding and chair rail accents, etc. Valley drive had a similar décor and upgraded flooring (hardwood) in much of the first level. The kitchen and baths weren’t really upgraded in terms of the cabinetry and counters, but they were in good condition and again had that warm, neutral décor (get the idea here). Both of the higher priced homes did have nicely finished basements which accounts for some of the price difference, but that’s probably limited to around $5,000-$7,500 on resale for these particular finishing jobs. I also want to point out that these homes did not have extensive kitchen/bath upgrades; no granite, cherry cabinets, high-end ceramic flooring, etc. In fact, I believe the kitchen cabinetry material was a very similar oak in all five homes.
In my estimation, the price differences were largely a result of how the homes showed. And the better showing conditions were really achieved with a few moderate upgrades and attention to cosmetic basics such as carpet and paint.
The points are these:
1) If you spend a modest amount money (or time and energy) improving the showing condition of your home, you can reap significant benefits when you sell. Plus, you’ll get to enjoy those improvements up until the time you do sell your home.
2) If your home is lacking in terms of its showing condition, you need to be realistic about pricing relative to homes that have upgrades or have been recently improved. You home will still sell even in the current market, but you should be prepared to list at and accept a significantly lower price compared to those “improved” homes.
One other interesting note is that the homes on Bloomfield Circle were both bought by investors as opposed to owner occupants; perhaps suggesting that a seller will alienate much of the larger “owner occupied” market with poor showing condition.
Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 to buy or sell a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania. To Search for Homes For Sale in Montgomery County Click Here.
Copyright © 2009, The Scott Loper Team, All rights reserved. The Condition-Price Conflict.
