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VOL. 44 | NO. 21 | Friday, May 22, 2020

2-for-1 HPRs are financial force in Nashville market

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The horizontal property regime continues to baffle Realtors, homebuyers and even attorneys at times. In essence, a horizontal property regime is a legal device by which two residences can be built upon a single lot, or a parcel of land, that previously had one house.

Often referred to as HPRs, the documents that create the opportunity to build two homes on one lot can vary. In most cases, a homeowner’s association is created and the owners of the two residences each own an interest in some of the land that is held in common.

The HPR concept was originally created for condominiums and, as a result, there are many condominium-type features in the ownership. Usually, when the attorney creates the HPR, the ownership is similar to that of a condominium and the ownership of the individual homes may adhere to zero lot line standards, so that each owner may own its unit and the joint ownership is reserved solely for the land.

Some HPRs in Nashville are attached, while others are detached. Builders of attached homes have devised creative ways to attach the homes so that both homes are allowed privacy. This is accomplished by joining the houses with garages or storage sheds. One builder even tried to dig beneath the rules by joining the houses with a tunnel. That did not pass.

One of the reasons for building two houses on one lot is that it cuts the cost of the lot for each new house in half. If a teardown sells for $450,000, and two houses can be constructed on the lot, then each new home would have a lot cost of $225,000.

This situation has proven beneficial inasmuch as it creates twice as many houses in the areas and at prices that are more affordable than they would have been if only one house could be built on the lot.

There is also a downside to the teardown/infill spree the city has experienced.

Suppose the teardown consists of 1,200 square feet and is in mediocre condition. In that area, even in fair condition, the house could fetch a price of $325 per square foot, making the property worth $390,000. A buyer would then have to update electrical, appliances, plumbing, and HVAC at a cost that could easily exceed $50,000.

What many sellers do not understand is that most buyers seek houses at the top of their budget and cannot afford another 15% for improvements. With those visions of those numbers dancing in heir heads, buyers would not pay the $450,000 a builder would. The builders always win, which is unfortunate for buyers desirous of home ownership in those areas.

Builders’ contracts also are much cleaner than someone who wants to buy the property for occupancy since there is no inspection and no repairs. Heck, the owners can keep the door and their knobs, windows, plumbing and electrical fixtures, appliances or even sell the copper from the plumbing as salvage.

One seller gutted his home and sold the materials for $17,000 after selling to a builder, while another received a substantial tax deduction after allowing the Habitat for Humanity Home Store to stop by and help themselves.

Last week, an HPR that rests atop the land at 3416 Golf Club Lane sold for $1.53 million. Described by the dynamic duo of listing agents, Brent McPherson and David Dorris of Village, as a detached HPR, the home is located in Green Hills, but specifically in an HPR described as “Homes at 3418 Golf Club Lane,” even though this property address is 3416 Golf Club Lane.

Boasting a $325-per-square-foot price for 4,737 square feet, the residence sold for as much as many non-HPRs in the area and more than some single-family residences. The house was designed with an open, airy, sleek floor plan and exploded with quality in every aspect of the construction throughout its five bedrooms, five full bathrooms and two half bathrooms.

The buyer was represented by Michael Sohr, who often is referred to as the Thomas Edison of the real estate world for his propensity to invent gadgetry and cost-saving devices useful in construction and life in general. Sohr was one of the first Nashvillians to join the ranks of the successful Keller Williams operation, where he remains.

Sales of the week

3416 Golf Club Lane

This week there were 346 houses that went under contract, with 10 exceeding the $1 million mark.

Green Hills led the way with five pending sales of $1 million or more, followed by Oak Hill with three and Forest Hills, Belle Meade Highlands and 12South, all with one each going pending.

Houses in that range began at $1,099,000 and peaked at $4.95 million for the home owned by Jay Cutler and Kristin Cavallari.

There have been 166 closed sales in Davidson County since the March 22 Safer at Home order was implemented. There had been 250 closed sales during the same period in 2019.

Last week, 10 houses closed for more than $1 million compared to 12 the previous year during the same period.

Green Hills again led the way with three closed sales, while 12South added two. West Meade, Belle Meade, Belle Meade Highlands and the downtown area each had one sale of $1 million-plus.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty. LLC and can be reached at richard@richardcourtney.com.

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