VOL. 38 | NO. 13 | Friday, March 28, 2014
Sellers still rule as winter turns to spring
The thaw will occur soon, perhaps. When it does, look for more inventory in the residential real estate market and more sales to follow. Historically speaking, home sales will double in the next few months compared to the period since November.
Here are some things for buyers and sellers to remember:
There is an adage, a spinoff of the actual Golden Rule: “He who has the gold, makes the rules.”
In residential real estate, that is more accurate in a down market when money is tight, 2008-2011, for example.
Since 2011, the rule is more: “He who has the gold should prepare to part with it.” In today’s market, he who has the keys makes the rules.
While a home is most likely the largest investment a person will ever make, it need not be scrutinized in a manner similar to a stock purchase. People don’t live in stock portfolios.
Well most don’t.
The education of the children and the place they will remember as home has a value that is difficult to translate to dollars and cents. Use the stock diligence for the education funding.
What is the return on wonderful neighbors? What’s it worth to have someone there for the buyer and its family at any time, night or day? Immeasurable. What are good schools worth? As much as $15,000 per child?
Then, there are monetary considerations that must be budgeted, such as HVAC and roof. If the systems are new, the buyer may not incur the expense of $7,500 per HVAC unit and $10,000 to $15,000 for a roof. If they are old, there should be funds to replace the two.
In most cases, the age of the plumbing, electrical, HVAC and roof do not affect the price of the house.
Good houses in upwardly trending locations sell the first day on the market for higher than list price. One thing to be remembered is that a list price should be referred to as guess price, since that is what it is.
A list price is a number agreed upon by a buyer and a real estate agent based on past sales and experiences, with a dose or two of bad information from the seller’s friends and family.
Sale of the Week
The sale of this glorious week is located in the heart of the 12South area at 2418 Craig Avenue off of Clayton, which adjoins 12South itself. This home is characteristic of the post-recession boom in the area and meets the one-house, one-lot philosophy espoused by a number of Nashville residents.
There are others who prefer two homes per lot. These people are often called developers, builders, Realtors and an important group known as buyers.
William Smallman of Benchmark Realty represented the Magness Group and describes the home as “custom luxury craftsman,” and it is.
Smallman, who is of average physical size, sold the 3,000-square-foot home for $762,985, with Barbara Moutenot of Village Real Estate Services delivering the buyer, as she so often does. The home has four bedrooms, with the all-important master down, and three full baths, along with a half bath.
Smallman described the home as having a gourmet kitchen, energy efficiency, open floor plan and a covered deck. This home was designed for today’s lifestyle, as people spend more time outside, prepare their meals at home and want to communicate while they cook, which requires an open floor plan.
In one of the last booms, one of the 1990s booms, the galley kitchen was in vogue since no one wanted to spend time there and, when they did, they didn’t want anyone to see the mess they had made.
There were decks for grilling, or a place for grills to rust, and they were not covered so the home dwellers could sun bathe. Fortunately, all of that is gone now.
A one-home, one-lot home such as this could fetch a price of $250 per square foot or more, as this sale did at $254 per square foot. A townhouse would sell at closer to $200 per square foot.
Such a discrepancy points to the affordability factor. If lots are limited to one house, the prices are higher with costs on the rise. A large percentage of the population will be excluded.
A popular myth is that after a certain price level, money doesn’t matter.
For example, many feel that a person who can buy a $1 million house can afford $1,250,000. It would be similar to suggesting that a $200,000 buyer could afford $450,000.
In many cases, those buying $1 million homes have a few million bucks in cash on their financial statements, but it is often spoken for and not available for home-buying purchases, any more than the $200,000 buyer can rob his retirement account for a home purchase.
Richard Courtney is a partner with Christianson, Patterson, Courtney and Associates and can be reached at Richard@richardcourtney.com