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New Construction: Interior Foibles and Remedies

By
Real Estate Broker/Owner with REAL ESTATE REFERRAL NETWORK 209970

Scenario: The sale of new construction investment property about six(6) months from completion. Investor is a widow. Investor has a devoted daughter who happens to be a prize-winning architect. The daughter  favors the benefits Healthy-Built Homes offer and the principles of smart growth, new urbanism, and green building. We had been searching for the "right" investment opportunity  for our client and she had selected (4) homes as finalists ranging in price from the $130s to $180s similar to those seen here.

     .

Which property  would she select?  In the end, would it all come down to interiors and the ability of the builder to adapt not only to an improved design, but to a growing market demand ? That was the subject on the table and that's how it all was shaping up.

Subject: Interior Room Sizes

$180K Property.  The Bedrooms are 8'6x9'4.  You can not get a double bed and a dresser in these rooms.  You need a minimum of 9' x 11'  for a bedroom and that is still tight.    $168K Property.  The bedroom are 10x10 and 9x10 (generously measuring).  Again too small, but better.  you could actually  get a bed and a dresser in the 10x10, you would just have to sit on the bed to open the dresser and you could only get the drawers open 18".     $144 Property. The living area is 10'x12' and circulation is required through the space.You won't be able to fit a couch, coffee table, tv stand and have more then 24" for circulation.  This will be very uncomfortable.  $133K Property.  Same challenges.

 

REALTOR ®Discovery REALTOR Due Diligence... Since our investor-client assumed that if the builder heard from
REALTORS® the down-side of tiny bedrooms, and tight quarters as well as the market demand for human scale, sustainable buildings, he might rethink room sizes, she requested we make a call to the builder. The conversation.

REALTOR ®"Hello, Mr. X, would you look at plans re-drawn "as a gift"  from Ms. Y, our investor's famous architect-daughter? Would you consider some/all of her suggestions? 

Builder: "Sure, I'll look at them, but I have the bank appraiser to consider, and those people seem just to care about how many bedrooms and baths I have," he tells us.

REALTOR ®"You know," we explained, " in our market (at least) our investor clients are looking for sustainable qualities There has been a huge increase in demand for such homes.

Total homes certified as of 02/26/07: 44
Total homes in progress as of 02/26/07: 375

VERY small bedrooms, washer & dryer in the pantry with the food, no storage for vacuums, could be a detriment to sales, and could easily be remedied at this point... Would you look at a few simple things you could do to make your buildings more attractive to our investor-clients?"

                                                                                                                                     And how do you think he responded?  

 

Insights:

•1)       Simple solutions exist for the interior size and comfort issues.
•2)       The solutions would require a do-able increase in cost to the builder.
•3)       This has been estimated by the architect-daughter to be about $5K for the  $175K property and  $10K  for the lower priced properties.
•4)       This would bring popular "green" features including Low VOC paints, Non-toxic flooring, and generate the  EnergyStar rating.  An added bonus...Rooms happily also could accommodate people and their furniture, comfortably. Sounds good to me, how about you?
•5)      Demand for such features will drive the market by 2010.
•6)      More appraisers who understand the value-added features of "green" building will be in demand in the near future.

Hot Tip: Use insight in any real estate transaction and happy clients result.

Resources: Steps to Certify a Healthy-Built Home   and a Healthy-Built Home Checklist

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Comments (7)

Anonymous
John Thomas
You asked how I think he responded. I am afraid I am a bit more cynical than I would like to be, so I think he responded by saying that he couldn't make the changes. I like your insights especially the one that says, "Demand for such features will drive the market by 2010." That perks up my cynical disposition a little.
Feb 27, 2007 05:16 AM
#1
Sami Forrest
Eco-Steward Realty - Asheville, NC

janeAnne

It seems every magazine and website is extolling the benefits of Energy Star or Healthy Built Homes. So why haven't the lenders gotten the message? The national trend from the NAHB  shows buyers demanding more 'green' and 'healthy' features in their homes each year. What must we as REALTORS so to educate the lenders?

Feb 27, 2007 05:22 AM
ASHEVILLE REALTY REFERRAL RESOURCE 828-776-0779
REAL ESTATE REFERRAL NETWORK - Asheville, NC
CONTACT janeAnne365@gmail.com
John...We have seen an increase in demand for sustainable homes. Last year there were 44 built...this year we are expecting almost 400. HUGE..a n optimistic outlook may well be in order.
Feb 27, 2007 10:08 AM
ASHEVILLE REALTY REFERRAL RESOURCE 828-776-0779
REAL ESTATE REFERRAL NETWORK - Asheville, NC
CONTACT janeAnne365@gmail.com

Sami...Good question.

How can REALTORS educate Appraisers on the value-added features of sustainable properties? We had a meeting with two appraisers and the ECO Certified Agents here is Asheville last month. They said that there HAD been a problem because of limited comps. We told them that that soon would not be a problem. They suggested in the meantime that we supply them with a list of those features that add value.

Check this out: Resources: Steps to Certify a Healthy-Built Home   and a Healthy-Built Home Checklist

Feb 27, 2007 11:35 PM
Brian Brady
Matthews Capital Markets - Tampa, FL
858-699-4590

Thanks for the entry in The "Carnival of the Economics of Real Estate".  I'll be posting the entries and winners by Friday and will be sure to notify the winner about his/her new Forbes subscription.  We had fifteen entries; two from new Active Rain members.  You can see all the entries here with a star next to them.

Each entry was masterful.  One person will win the Forbes subscription but all of you won something from your well thought out posts; increased knowledge.  Be sure to comment on each other's posts.  There is a lot to learn from each other.

Feb 28, 2007 04:23 PM
Sharon Simms
Coastal Properties Group International - Christie's International - Saint Petersburg, FL
St. Petersburg FL - CRS CIPS CLHMS RSPS
The builders probably responded according to their personalities - some willing to do it only their way regardless of cost, some willing to do it if the cost was increased, and others realizing potential value not only in this sale but in future sales and willing to make the changes at his cost, and some desperate for sales willing to go along. I think you and the architect-daughter are offering a wonderful "gift" to the builder. Not only will the builder sell this home, but will have a better floor plan and an increasingly popular green home to sell to others. Go, Builder!
Feb 28, 2007 10:56 PM
ASHEVILLE REALTY REFERRAL RESOURCE 828-776-0779
REAL ESTATE REFERRAL NETWORK - Asheville, NC
CONTACT janeAnne365@gmail.com
Sharon...I alwayslook forward to your comments. The notion that we and our clients can be presenting a "gift" to the builder who will incorporate GREEN features into homes for sale (which we ARE) as you point out, is a perception that might be lost without your underscoring it. Thank you so much.
Mar 01, 2007 11:58 AM