One of the most difficult concepts to place a dollar value on for buyers is that of functionality of a property. The typical market analysis provided by Realtors will contain recent historical data on sales of comparable properties taking into consideration the structure, location, upgrades, and area amenities. This can be analyzed as simply as price per square foot in an area or more detailed to include value of external factors such as mountain views here in Colorado. All in all it comes down to comparing like properties to determine the current fair market value range for a home.
But what if a particular property has significant functionality value to the buyer? As a Realtor it's my goal to provide the most accurate information possible as a guide based upon hard data, but the difficult decision is determining what value to place on a unique property that fits the current agenda for a buyer. Taking into consideration the unique needs of the client could justify paying more for a home than the hard data demonstrates.
Take for instance one of my clients that needs to have a ranch home with a specific space for a home business, separate entrance, handicap accessible, zoning compliant, newer construction, location specific to clients, and room for college age student. Very specific design features especially for the location desired. OK I'm up for a challenge as usual!
I found a home that is a complete new remodel, apartment over garage, home office already ADA compliant with separate entrance, zoning compliant, and move in ready in the specific location she needs. Eureka, accept for the price per square foot compared to the limited comps in this specific area, the potential for resale hurdles of being on a busy street at a corner, limited views in an area that most buyers demand views, next to a church, and very specific floor plan.
The ultimate decision is up to the buyer to determine the functional value above the reasonable market price per square foot for the home. Will she find another home in the near future that has all the elements contained in this one that meet her very specific needs? Does she accept the potential negatives for resale knowing on the front end factors that will determine value on the back end? Of course we go in with the offer based upon factual data but at the end the buyer must make that difficult decision of determining functional value and the ultimate decision of what the home is worth to them.
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