Recently our team has had many discussions with home sellers and home buyers on this topic. We have cautioned all in how it should and should not be used when assessing value. This qualitative metric is a fanastic tool to compare like products over similar timeframes. The reality of our local market is that no two homes are the same. Square footage varies (inside and outside), layouts vary and condition varies widely among our 80+ year old properties.
Most people are cautious today before parting with larger chunks of money and will often pay a premium to purchase a “done” house. Why? They can finance the bulk of the expense (75%-80%) and move right in! Remodeling requires time, the inclination, creativity and large chunks of money.
A few key characteristics that influence perception of value in of Hancock Park, Windsor Square, Fremont Place, Larchmont Village, Brookside and many other neighborhoods in Los Angeles are:
- Location within a neighborhood
- Location on street itself
- Street traffic and congestion – wide vs. narrow, traffic lights vs. none, etc
- Lot size
- Interior square feet
- Interior layout and flow
- Interior storage space
- Light in house
- Bedroom count
- Bathroom count
- System quality & age (foundation, drainage, roof, chimney, sewer, heat & air, etc)
- Architectural style of property – type, consistency
- Quality of craftsmanship – moldings, ceiling height, floors, windows, etc
- Landscaping – front and back, lighting, hard scape and grass, etc
- Upgrades – pool, guest houses, gourmet kitchen, or other special features
- Presentation – style of home & garden (i.e. furniture, art, landscaping, clutter, etc)
- List price relative to recent sales and like homes currently on the market
It is not uncommon to see 2 properties selling in the same neighborhood over the same period of time ranging from $400 a square foot to $1000 a square foot. Hands on market knowledge, seeing properties day in and day out over years, is essential in understanding value in a market with many variables. An excel spreadsheet will not get you there. Some of this knowledge is tacit but the learning curve can be shortened with the help of an experienced professional that you feel comfortable trusting.