Why you pay more for a home in one neighborhood than another.

By
Real Estate Broker/Owner with (831) 626-4000 CA #01772851 HI #RB-21268

THROUGH THE BUYERS EYES, THEY WERE ALL PRETTY MUCH THE SAME.

This past month I took a client around to view several homes that she wanted to look at. She had been driving around various neighborhoods and certain ones - with the "for sale" sign out front - intrigued her. They all seemed to compare with the each other as seen from the curb.

BUT WHAT SHE DID NOT TAKE INTO CONSIDERATION, ARE THE VARIATIONS OF THE NEIGHBORHOODS.

You see, certain neighborhoods have much HIGHER COMPS than others. This means, that all the homes in certain areas

HAD SOLD CONSISTANTLY FOR MORE THAN IN OTHER NEIGHBORHOODS

Some of the reasons for this:

1. There is "regularity" in the home construction and design. They were all built around the same time, using similar materials.

2. The homes have by and large been maintained well.

3. They are mostly "owner occupied" versus tenant occupied.

4. The above often describes a newer subdivision.

5. The neighborhood has been pretty "stable" during the market's downturn; few foreclosures.

COMPARE THAT WITH NEIGHBORHOODS WITH LOWER COMPS

1. This is an older subdivision than #4, above.

2. If not a subdivision, homes were built at different times, of different sizes, using different grades of material.

3. The maintenance is spotty, some well maintained, others not.

4. AND THEN THE OVERRIDING FACTOR: The "spotty" neighborhood has had a lot more FORECLOSURES and SHORT SALES.

5. THIS HAS BROUGHT THE VALUE DOWN FOR ALL THE HOMES IN THAT NEIGHBORHOOD.

And this disparity can be considerable. The two homes that we looked at in the two neighborhoods that were similar, one was priced $172,500 and the other $110,900!!!!! BOTH ARE HOMEPATH REOs.

Posted by

Hella Mitschke Rothwell, Broker/Owner/REALTOR 

 

Let me be your independent real estate broker for oceanfront and oceanview property in California and Hawaii.  If you are a seller/owner, I will travel to your property to help get it ready for sale, then list and market it. If you are a buyer and we have a Buyers Representation Agreement in place, I will preview property on your behalf anywhere in California and Hawaii.  Please call me to discuss how I can help you.

Search Hawaii Listings on www.HellaHawaii.com

Member: Honolulu Board of REALTORS; National Association of REALTORS; Hawaii Association of REALTORS; Del Norte Association of REALTORS; California Association of REALTORS; MLSListings, Inc., the premier MLS listing service in Northern California.

 

________________________________________________________________

Hella Mitschke Rothwell (R)

Real Estate Broker/Owner/Realtor®
Licensed in California #01772851 & Hawaii #RB-21268

Tel. 808-226-1095 or 831-626-4000 

Fax 1-877-822-9332

www.HellaHawaii.com

www.HellaRothwell.com

www.RothwellRealty.com

HAWAII OFFICE: 1128 Ala Napunani Street, #1809, Honolulu, HI 96818

 CALIFORNIA OFFICE: Su Vecino Court, Lincoln & Dolores between 5th & 6th, Carmel-by-the-Sea, CA 93921

MAILING: P.O. Box 4554, Carmel-by-the-Sea, CA 93921

 
Email: HellaRothwell@gmail.com


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Disclaimer: Hella Rothwell does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

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Ambassador
533,545
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Homes in certain neighborhoods sell for a bit more, for sure.  And they certainly sell faster.  The amount of foreclosures and short sales within a neighborhood takes a toll on the values.  Great post, Hella.

Mar 05, 2013 10:35 AM #1
Ambassador
3,985,028
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Hella, It is all about location, location, location. And it is also about what has sold most recently.

Mar 05, 2013 10:38 AM #2
Rainmaker
686,859
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Virginia: In the case of my buyer, she was not qualified for the higher priced neighborhood. To her, the homes were so similar, she felt they should have been priced similarly. But not so.

Debbie: In this case, the "older" neighborhood also had many foreclosures which brought all the values down.

Mar 05, 2013 10:46 AM #3
Rainmaker
251,251
Joel Weihe
Realty World Alliance - Wichita, KS
Helping you to use your VA home loan benefits

Sometimes our buyers just don't get that. There's a neighborhood here, Riverside, where you can cross the street and add an easy $10,000....and get it!

Mar 05, 2013 10:53 AM #4
Rainmaker
647,193
Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer

It still boils down to location, location, location!  A difference in a school district can have a huge impact on value.

Mar 05, 2013 11:06 AM #5
Rainmaker
686,859
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Joel: Here, the ocean has a lot to do with it as well. On Pebble Beach Drive, more; around the corner, less.

Kathy: You are absolutely right re school districts.

Mar 05, 2013 11:25 AM #6
Rainmaker
1,777,436
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

You touch on some very important points Hella, I think you have hit on something here.

Mar 05, 2013 04:02 PM #7
Rainmaker
2,325,609
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

At a certain price range you post is really important, but some folks just want a place to call their own, not wanting to pay rent any longer and are not buying with any thought about selling.

Mar 05, 2013 04:56 PM #8
Rainmaker
611,246
Judith Parker
ProStead Realty - Charlotte, NC
CRS, GRI, CMRS, Charlotte, NC

Hi Hella, very nice post and right on the money.  A home is an investment and one needs to consider location for one never knows when they may move.  As others have said,,, location is important!!

Mar 05, 2013 10:39 PM #9
Rainmaker
686,859
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Tom: This question came up during a recent showing, so I thought I would put my answer into words here.

Joe: Too true. However, when you PURCHASE a home, why is one $50,000 more than another that look pretty similar was my buyer's question. Which brings me to your answer: it is probably worth it to pay so much more because, if you had to, the resale value is a lot more than in the other neighborhood.

Judith: If you can afford it, you need to at least consider the higher priced home because of its resale value.

Mar 08, 2013 01:10 AM #10
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Rainmaker
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Hawaii & California Real Estate Broker
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