By Richard Montgomery
Reader Question: Our agent’s home pricing is confusing. The area we live developed with colonial style homes that all look the same. Our home is a craftsman style home that is custom-built. We built our home with branded concrete siding, expensive composite decking, and custom maple cabinets with built-ins throughout the home. We have heated tile floors in all four baths. We have five garages (three attached and two detached). The detached garage has a finished loft above. Our agent is using the colonialism as comparables to a custom-built craftsman style, and her argument is that the extra land (the comparables are on ten acres of land), have similar square footage, and they are nearby. Our home is more expensive to construct or replace. How can these homes be comparable?
Monty’s Answer: Without personally inspecting your home, driving by the comparables, reviewing the MLS data sheets, selecting and adjusting the best comparables to your home, and reviewing pertinent market data, there is not enough information to provide you a quality answer. Here are some suggestions that may spark a quality solution.
Is the agent the problem?
It appears your agent has a hunch that the value of your components and features are equal to the higher value of additional land. While it is possible that the net adjustments between your features, quality of construction, and the oversized lots could be similar, the correct way to reach that conclusion is to prove it. Presenting additional comparables without the extra land to show any extra value those properties receive after making all other adjustments may increase the likelihood of accuracy and confirm or debunk the validity of your agent’s presumption. There are also many occasions where the quality of construction and materials trump proximity.
It is unclear whether this conversation with the agent is taking place because you are contemplating putting the home on the market, or it has been on the market for some period and remains unsold. If there is a history of time on the market, the events (or non-events) during the period can impact the discussion. For example, if it has been for sale for three months and you have not had a showing, yet three similar homes in the area have sold, a legitimate question is why didn’t those buyers look at our house?
You need other opinions
Consider seeking at least two additional views of value. Why? It will be difficult to convince your agent that she may not be analyzing the situation correctly. It is important the listing agent believes in the home’s value and can convey that belief to both her colleagues and to prospects. Even well educated appraisers, with years of training, will differ judging the value of the property. Why would real estate agents not do the same? Here is an article at https://dearmonty.com/challenge-home-appraisers that may be helpful.
Seek opinions from agents that have the appraisal fundamentals and skill to be able to justify a range of value for your home through choosing the best comparables and making logical adjustments that will persuade you their logic makes sense. You can get a sense of their expertise by asking for a redacted copy of an actual recent range-of-value opinion they rendered and the outcome of the sale. Was the analysis accurate?
It is possible one of the new opinions may demonstrate that the marketplace in your neighborhood will not pay extra for the quality that was important to you. It may suggest you built in the wrong subdivision, and have evidence to back up that conclusion. The value of taking the time to engage in obtaining two more opinions is new comparable information. Your job will be to look objectively at all three views and decide which one is the most logical explanation.
Help the agents out
It is unlikely you are the only family in the area that values quality. Consider calling your custom builder and asking them to provide you with a list of addresses of homes in the area they constructed similarly to your home during that time frame. Turn those addresses over to the agents to see if any of these custom builds have since sold and become comparables.
Some real estate agents want a fast sale to ensure they get paid. They have seen too many times the seller loses patience before finding the quality homebuyer and switches agents, only to have the new agent benefit from the extended market time.
“Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. Send him questions at DearMonty.com.”