Pricing Dilemma!

emilynewhomeJanuary 13, 2010

I hope someone can give me guidance on pricing our 3200 sqft house!

Our home was completed Feb. 2009, it cost us $647K to build .

I've interviewed 3 Realtors, First one thinks $550K would be good starting figure. The other 2 are still looking for comps, as the house is in a new subdivision in a new planned community!

A local appraiser friend (doing it for 30 years) recommended pricing at a price above what it cost to build, he suggests $700K. His reasoning is there are no comps, it is a prestigious neighborhood, the home is very, high quality interior/exterior, and all square footage is not equal.

Last remark prompted by 4200sqft house across the street, 'For Sale' $695K!

If any Realtors out there, is the appraiser correct?

Please help!

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If you were a buyer and went to see your house priced at $700k and noticed the much larger house across the street was for sale for less, what would you think?

Buyers aren't going to care what you paid to build the thing. All they care about it how much it costs compared to other houses they might be choosing from. Unless there is something special about your house that you haven't stated, I would say your appraiser friend is nuts.

    Bookmark   January 13, 2010 at 12:47PM
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1000 sf difference is a lot of home to compete against,regardless of quality..I will agree that all SF is not the same,but that only relates to homes of similar size priced differently...If your 3200 sf at 700k has similar sized homes priced lower,but your home has quality /highend features,you can make a case for your price ..
According to your post, the larger home is priced simliar to where you'd like to price..Unless the other home is in poor condition,needs upgrades,has low-end builder grade features,you are going to have a rough time selling..
Have you been in the home across the street?

Best of luck

    Bookmark   January 13, 2010 at 3:54PM
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sounds like time to tour that house.

I don't know really the difference between the 2 size having really never been in a house as large as 4200sqft

are you in an area where basements count?

1000 sqft sounds like a lot (about the size of my house). however nice things vs builders grade can add large sums

    Bookmark   January 13, 2010 at 4:18PM
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Could the land justify any cost difference? You say it cost $647 to build, but what did you pay for the land? Do you need to sell quickly? If you aren't in a hurry you can wait for the right buyer. But if you need to sell, well...

    Bookmark   January 13, 2010 at 7:02PM
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Our price includes the cost of land and landscaping.

The house across the street was on the market for well over a year at $699K. The listing was eventually dropped this past summer.

Around October/November 2009 carpenters and work crew, started tearing out the staircase, cabinets etc. They are still busy working.

Before we moved into our house, I did check out the neighbors online listing with their first realtor. It was not as upgraded as ours or other homes in this neighborhood.
(Most homes have all wood/tile throughout including upstairs, but not the For Sale house which had mostly carpeting!

Now a new realtor is listing it, I've again checked online and the rooms that are completed look much nicer, They've added painted, wide base and crown molding, wood flooring downstairs, and built in bookcases.

Plus it's been staged with what looks like expensive furnishings and bed linens (compared to the original Internet listing).

I agree as a buyer I would be curious as to why $30K more for 1000 sqft less. Hopefully the realtor we list with will help us by getting more information on the features and amenities offered!

Thank you all for the input!

    Bookmark   January 13, 2010 at 8:41PM
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What area are you in?

    Bookmark   January 13, 2010 at 10:15PM
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I'm sorry, but you picked a bad time to build and try to "flip" so soon. Things are not on you side and I have a feeling you will lose money. If you need to sell now, take your loses and price aggresively. If you have time, just price like the other house and plan to sit on the market for a year. I hope things work out for you.

    Bookmark   January 14, 2010 at 12:52AM
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It truly depends on how quickly you need/want to sell your home. The only information one can garner from listed homes for sale is the price at which they are not selling. The agents will need to consider homes nearby and make adjustments for location, neighborhood, size, etc.

This is not the 90's and I believe we are stuck with this market for a few years.

    Bookmark   January 14, 2010 at 3:53PM
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Do yo think the market has bottomed out yet in your area?
If there is alot of unsold inventory in your area, it might indicate that prices may have to drop further and it might be advisable to price aggressively to sell quickly.I personally feel that once prices do hit bottom, prices in many areas are going to remain relatively flat. You should rely on a seasoned realtor, not an appraiser, neighbor or friend to give you advice about the real estate market in your area.

    Bookmark   January 14, 2010 at 6:03PM
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If I understand correctly, you're selling a 1 year old house in a development where new houses are still being built. I think that you have to keep the new construction prices in mind too. You probably need to price lower than them. With few exceptions, there is no reason to buy a house designed for someone else when you can have a custom house built to your specifications.

    Bookmark   January 14, 2010 at 9:06PM
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I was a broker for 17 years and am currently (and till death do we part) a builder. Today the home inspection was completed and we have sold our personal home that has been on the market sporadically for four years. It went for up to $200K less than nearby homes on identical lots that cost the same to build. Go figure!

No matter what you think--or what you paid--the market tells you what your home is worth.

    Bookmark   January 21, 2010 at 8:24PM
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You will likely need to set your price approx 15% lower than what the builder currently is asking for your floor plan with same options.

Your home is now used even if in perfect condition and only a few months old.

Folks want to buy a brand new home from the builder, including picking their colors/features. They will gladly pay more for this and they don't really care about buying a used home if they can get something "custom", even if it is hardly custom at all.

The only way they will buy your home is if it is a steal. The folks across the street from you figured this out the hard way - by sitting on the market for a year. if you price too high, then your home will also sit on the market until you lower it to a price that will sell.

I know this from living in a large subdivision where they were buiding new homes for 5 years. The used homes(even 1 year old in model home condition) always went for less money over brand new. The only way the used homes started moving for good money is when the new homes were sold out.

In our case, we bought a 1 year old home in the subdivision where the original owners paid $272k brand new - and we got the place for $245k and this was several years ago when home prices were still rising. At that time, most sellers with a resale were either taking a loss or sitting on the market forever.

    Bookmark   January 22, 2010 at 1:35PM
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A follow up on this: Our agent found buyers this past October, after being on the market since January this year. They made an offer contingent on selling their home. It was for the $70K reduced listed price.

This month they removed their contingency even though they have not sold their home. (Like us they own outright). They asked for an additional $20K reduction.

The few custom homes being built around here are still priced comparable to, or more than our original asking price.

Although we had about a dozen showings, this was our only offer. Our Realtor even reduced his commission from 4% to 3% to make this deal go through!

We are closing next Monday.
I am happy and relieved, so why do I feel so ambivalent towards our buyers! I feel a little guilty hoping that what goes around, comes around!

    Bookmark   December 13, 2010 at 12:20PM
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What price did you end up listing at?

    Bookmark   December 13, 2010 at 12:50PM
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It looks like if I followed this correctly that they lost around 100k after the commission.

I know how you feel toward the buyers, kind of like you got taken advantage of. I felt the same way when we sold our house. It's nothing personal, it's just the market.

    Bookmark   December 13, 2010 at 9:38PM
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Yes, we are eating close to $90K, we originally listed at $659,500. The house was 1 year old and cost $647,000 to build, including the lot, and HOA required landscaping. (Since it backed up to the golf course - all four sides).
After 3 months with only 2 showings, and no offers we reduced the price in May to $599,900. We are selling at $580,000 less 3% commission.
I know we're lucky to have a buyer- it could be worse!

    Bookmark   December 14, 2010 at 11:59AM
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