Pricing an Older Home? Knowing How Buyers Value a Dated Property is a Key to Selling Well…
Do you have an older home and are you thinking about selling? Do you own a home that was built fifty years ago and has not been remodeled? We have plenty of this kind of product in desirable Southern and Central Marin County neighborhoods in the San Francisco Bay Area market and the lack of available land in Southern and Central Marin has put pressure on our older neighborhoods to gentrify.
This means there is substantial demand to upgrade homes that were perfectly acceptable when they were built but are not up to the current market’s definition of the highest and best use. For example, in the Belvedere Lagoon, the average quality 1940’s and 50’s three bedroom two bath homes with 1500sf to 2000sf that were just fine when they were built. Now, they are now being torn down and replaced with higher quality 3000sf to 3500sf luxury homes. Some of the replacement homes have walk-in closets in the master suite that dwarf the original home’s bedrooms.
Pricing older product in this situation can be confusing, and it is instructive to know how buyers do it so you can price your home correctly and sell it efficiently. Buyers in our market are smart, they know value, they tend to have upscale taste, an up to date design sense and can afford their dreams. And, buyers set the value that a sellers will receive for their home.
So, here is how they do it: When an older non-updated home comes on the market situated in an attractive location, buyers look at the property in terms of what it will be worth after it is redone and built-out, or to use the real estate term, its highest and best use in the current market. They then attribute a value to this dream home, subtract the cost required to get there, and the residual is what they are willing to pay as a fair price to a seller.
If the kids are grown and you are thinking of down-sizing and selling a home that was perfect when you bought it but doesn’t compete with the new market, call me and I can help you price it perfectly for an expeditious sale and to maximize your return. I’m David Kirchhoff at David Kirchhoff Fine Homes, 415.531.2656 and I can help you understand the ins and outs of this market.