What’s a good value?
Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series:
It's not uncommon for two potential buyers to view the same property and walk away with very different opinions.
One buyer might think that a property is a great value in as-is condition and another might think that it’s overpriced and needs a ton of work. Maybe it's a matter of the buyer's perspective, attitude, or experience. Maybe it just depends on what a buyer needs at this point in their life and what she wants to spend to get it.
For example, someone that is fond of older homes will probably value the history, ambience and original architectural details of an “antique” home. (Older homes are often referred to as “antiques” in real estate lingo.) That buyer will probably understand that the stewardship of an antique home may also involve projects during their term of ownership that may be required to update the home to today’s energy efficiency or other standards. Another buyer might look at that antique home and focus on the “need” for more electrical outlets, larger and/or newer windows, more closet space, a more contemporary floor plan, or whatever they value more than the home currently offers.
A few years ago, I helped buyers purchase a multi-million dollar home with finish workmanship that was not harmonious with the price level. Despite that shortcoming, that home was a good value because of its size, amenities, lot, and location. The buyers were willing to overlook some of the construction flaws (that they could deal with later) because they found good value in the other aspects of the property.
I’ve also sold run down properties in less than desirable locations that were considered good values by their buyers simply because of what the buyers could do with the property. Potential has value.
One thing seems certain; a property that is perceived as a good value gets the most consistent feedback and often receives an offer (or several) sooner than a property that is not viewed as a good value.
When I represent buyers, it is part of my job to understand what my clients consider “good value” so that I can help them find that property. It’s also worth discussing whether it makes sense to look at other ways that might allow the client to create the value they are looking for at a price that works for them today. (For example, a young couple looking for a home on a large lot with room for a future in-law or au-pair suite might consider a smaller home with expansion possibilities.)
When I represent sellers, part of my job is to identify what makes the seller’s property valuable to certain buyers. Then I promote the property accordingly to reach out to the buyers that are most likely to see “good value” in that property.
Like beauty, value is in the eye of the beholder.
Perspective:
For buyers, identifying what a “good value” is to you (and your home buying partner, if applicable) will make the house hunting and decision-making process a lot easier. It will also help you avoid buyer’s remorse, or a bad decision, later.
That brings us to today’s question; what represents good value to you?
Is your “good value” based on price, condition, location or the physical amenities of a home? Or is it based on something less tangible like history, the neighbors, a property’s potential or maybe even its charm?
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As the column states "good value" is highly subjective. For us a "good value" means that we consider the price, condition, location, taxes, school system and the ability to expand. We would really really like a 2 car garage but they are rare particularly in our price range. However if there is land in which it is possible to add a 2 car garage even if that is down the road then that property my be a "good value" for us. The condition of the house may be structurally sound with a layout we like, but if the electrical is old and has ugly wall paper and carpet that is not a good value. However if the structure and electric is sound and has ugly wall paper and carpet well then if the price is right it may be a "good value". I do not mind doing upgrades to the place that we buy if the selling price is low. Cosmetic stuff like counter tops (assuming you don't need to re do the layout of a kitchen) is really cosmetic work but it may be expensive depending on your material and the number of square feet you need to address. Cabinets again get pricey if you have a lot but if you are working with the same foot print you can do a lot with cabinets if they are good cabinets you just don't like if you are willing to invest some time and elbow grease to get them to come out nicely.
Personally the history is not something I am looking for. I do not see a historical home (different from a RE Agent calling it antique) as a good value, I see it as a PITA having to make sure that if I want to paint my house the color is approved and if I want to change the windows that they are the right kind, blah blah blah blah. I want my house to be my house and not a community project to decide if I can paint it blue, purple or white. I also like things level in my house, and things settle as the age, but I do often find myself less patient with old homes that have things slanted that just screams foundation issues.
And yes neighbors are important, I saw one place on a drive by to check out the neighborhood and the house next door had peeling paint, massively like the house was over due by about 4 years for a paint job, uncut grass, and junk in the yard. Makes you wonder if it is worth it to buy the place next door, because looking around the neighborhood that is the only place that looks like it could be the set for Sanford and Sons.
What is the point of using the word "value" here, except as a sales technique? Value is not subjective and it is not emotional. It is established by objective metrics like cap rates, price/rent, renovation costs, teardown costs, and the like.
Things like historic character, neighborhood, and amenities have nothing to do with value. Those are about desirability, which is not the same. A desirable house can be either an absolute steal or a rip-off, depending on the price.
Today there are 15.4 million homeowners who thought value was completely subjective. Reality disagreed. Now their equity has vanished and their houses are worth less than they owe on their mortgages.
a good value is one you can sell the following day for more than you paid. a bad value is one you can only sell for less than what you paid...
Marcus and Harry, you have a point if your only concern is short term value.
As someone who purchased a home with the purpose of giving my children a good place to grow up, there were many non-financial factors that affected the desirability of properties and led me to assign greater values to some properties than others. Access to good school system, availability of child care options (and afterschool/summer care for school-aged kids), a quiet street the kids could cross without holding my hand, a yard to play in. I'll worry about the sales price in 20 years, when I'm ready to move to a condo.
OK, Holly, so you think value is the same as desirability, and that value has nothing to do with price, which you are not concerned with.
So why are you calling it value? Why not call it desirability? Or if words have no defined meanings, why not call it "armadillo" or "Hepplewhite?"
Because, maybe, calling it a good value suggests that someone should pay the asking price?
Personally, I am always leary when a real estate agent or seller refers to a property as one that has "good value". As most of your comments indicate, "value" is determined by the buyer and only the buyer. That is no different than going to see a property that is advertised as beautiful and finding that it is revolting to you, but someone else just loves it.
The dictionary definition of "value" is not solely monetary, although for those that see it only that that way, I love Harry's comment in #3 (that is until he gets to the part about my essay:-)
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