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.