The Perils of Overbuilding

By
Real Estate Broker/Owner with Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes

 

The Perils of Overbuilding

 

When does a big house become too much house?

 

I toured one of these overbuilt homes in western Wisconsin a few weeks ago.  The architect builder took an existing structure and turned it into a two-year remodeling project.  The scope of the project appears to have gotten a bit out of hand, and now he's faced with a mansion that won't appraise and won't sell.

He's proud of the house and I don't blame him.  Some might describe the house as an architectural masterpiece, with innovative design and ultra-high quality finishes and features.  The problem is, it's located in a rural, mostly agricultural area, surrounded by farms, over an hour drive from the east Twin Cities metro area.  There's nothing like his finished masterpiece within miles of its rather isolated location, making the work of finding comparable properties for appraisal a huge challenge.

This remodel was originally intended to be a spec home, according to the builder/owner.  I asked him if he'd thought about who would buy the place when it was completed. I also asked if he'd consulted with an appraiser, real estate agent or area lender before undertaking the remodel. 

The idea of doing some market research before beginning his two year labor of love was apparently forgotten.

Now the seller is struggling to find a buyer. He's quick to point out that he'll be losing money at the current list price.  And he's obviously trying to recover as much as he can in a sale. He needs to find a buyer who is either (1) completely undaunted about the long daily commute to the Minneapolis & Saint Paul metro area, or (2) independently wealthy, retired or otherwise unconcerned about making a living in rural Wisconsin.  He also needs to find a buyer with cash, as he's going to have a terrible time getting his home to appraise at anywhere near the asking price.

The grand vaulted ceilings, beautiful resawn and restored beams and floors, magnificent kitchen and other unique features sadly do not matter enough to get the place sold.  Very few people want to buy this museum piece of a home, mostly because it's located in the middle of nowhere.  It's a long, long drive over winding country roads to shopping malls, grocery stores, banking and service providers.  You've gotta love driving to buy this place.  And in winter, you'll need a truck or maybe a Hummer to get home at the end of the day.

In the course of doing business, we see overbuilt homes in both our Twin Cities real estate market and on Lake Superior.  Some are "McMansions" thousands of square feet in size, with features that were intended to impress, even astound.  We have encountered homes that look more like a lodging establishment or golf course clubhouse than a single-family dwelling.  Some of these overbuilt monstrosities were the grand vision of well-meaning architects and developers.  Others were more of an ego exercise.

Overbuilt homes are agonizingly slow to sell.  And the seller can literally count on losing money in the process.

There's a lesson to be learned from examining these overbuilt dwellings.  Identify your motivations for building something so grand that it puts everything else within miles to shame.  Figure out who is going to buy the place when you tire of living there, as well as how they are going to be able to finance the purchase.  And expect to lose money when the process is finally concluded.

 

 

 

 

Posted by

Contact Broker Eric Kodner with Wayzata Lakes Realty about Minneapolis & Saint Paul area properties, including Lake Minnetonka, Edina and the Minneapolis City Lakes area (Lake Calhoun, Lake of the Isles, Lake Harriet). We also sell on the Saint Croix River and on Lake Superior, including Bayfield, Wisconsin and Madeline Island homes.  With sixteen years experience marketing and selling waterfront properties in Minnesota and Wisconsin, we know Lake Minnetonka and Madeline Island real estate.

Wayzata Lakes Realty LLC (Minnesota) and Madeline Island Realty LLC (Wisconsin)

Real Estate Brokerage licensed in Minnesota & Wisconsin

Phone or Text Message 612.670.2539

EMKodner@Gmail.com  or

MadelineIsland@Gmail.com

Wayzata Lakes Realty

 

 

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Improvement
Groups:
Certified Residential Specialists
Minnesota Real Estate
Tags:
mcmansion
lake superior
twin cities real estate market
overbuilt homes
twin cities metro area
perils of overbuilding
rural wisconsin

Spam prevention
Show All Comments
Rainer
198,833
Randy Shamburger
Movement Mortgage - Greenville, SC
FHA, VA, USDA and Conventional Mortgage Expert

Great information. Thanks for sharing.

Have a Big day,

Randy

Jan 07, 2014 10:08 PM #1
Rainmaker
1,064,087
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

This is a good reason why it is important to speak with a Realtor about market stats and market trends!

Jan 08, 2014 03:14 PM #2
Rainmaker
426,807
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Randy, thanks for commenting.

Sharon - Exactly. a Realtor could have saved this guy some serious money!

Jan 08, 2014 09:39 PM #3
Rainmaker
319,310
Jeff Fisher
RE/MAX Fine Properties - Scottsdale, AZ
RE/MAX Fine Properties

Another great example of knowing your market and potential buyers.  If you never intend to sell, enjoy your castle among huts, but if you do, be prepared to take a loss.

Jan 08, 2014 10:07 PM #4
Rainer
220,151
Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

Maybe this guy should just move into the house himself. It might be his only way out.

It definitely proves the importance of doing your research first!

Feb 12, 2014 09:26 PM #5
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
426,807

Eric Kodner

Wayzata Lakes Realty: Twin Cities, Madeline Island
How Much Is Your Twin Cities Area Home or Condo Worth?
*
*
*
*
Spam prevention