Smart & savvy home buyers looking for a Lake Wallenpaupack vacation home expect to see comparable properties to justify (or not) the asking price of a home before placing an offer. Most home buyers want to make a fair offer; most sellers have already seen a significant drop in the market value of their home and are unwilling to “give their home away.” Coming to a meeting of the minds between buyer and seller is a delicate balance!
When providing comps for my clients, finding homes that closely match the subject home in amenities,
location, and condition can be challenging. Match the location is usually the easiest part: I only compare Hideout homes with other Hideout homes…Hemlock Farms with Hemlock Farms…Wallenpaupack Lake Estates with Wallenpaupack Lake Estates. The uniqueness of many of the available homes, however, makes them equally appealing and difficult to comp! This isn’t suburbia with rows and rows of identical tract houses.
Frequently, buyers will only look at the “sold price per square foot” and base their offer solely on that rather than the whole picture. There are problems with that approach.
Many homeowners bought their homes based on emotion and other subjective reasons that apply to them but not to other buyers. Examples:
- The layout suited a particular buyer’s personal needs especially well, making them willing to pay more than another buyer. (i.e., a home designed to appeal to someone with disabilities vs. someone without disabilities)
- The placement (and condition) of neighboring homes. Some people want more privacy, some people like activity nearby. Some do not want to see the neighbor’s porch (or other factors, such as a dog yard, rabbit hutch, etc.)
- Materials used: granite, hardwood, vinyl siding, architectural shingles, logs, etc. are desirable to some but not as important to others.
- Amenities. Swimming pools, professional kitchens, luxury baths: not everyone wants them! In communities, some want to be “near the action,” others want a more quiet location.
- Terrain. Some buyers desire and highly value a lawn. Other buyers don’t want maintenance so they’d pay more for a home on a wooded lot.
- Accuracy. This is a strangely confusing issue! Square footage should be absolute, but often is not! Some agents do not know how to properly calculate square footage. Without knowing how the agent made the calculations, it’s impossible to say with certainty that the number is correct! Some use outdated and inaccurate tax records that do not take into account additions or remodeling. Some calculate empty space (like cathedral ceilings in a chalet) as part of the square footage (by using foundation measurements and multiplying by 2, since there are 2 stories…but in actuality, only 1/2 of the 2nd floor is usable space).
In order for the “price per square foot” model to truly work as a stand-alone guide for gauging value, one must compare the same apples to the same apples. They must be identical homes on identical lots with identical features, amenities, and neighbor situations. Most often, we are comparing apples to apples – but not necessarily the same kind of apples!
Home A may have sold for $185 per square foot because it backed up to green space and Home B. may have sold for $165 per square foot because, even though it was identical to Home A, the neighbor’s house may have been closer or the yard may not have been as desirable or maybe it was close to a busy intersection. Or maybe it was a less desirable lakefront location (i.e. on a shallow/marshy part of the lake or a much steeper slope to the water as opposed to a more open or level lakefront).
So if you base your offer on Home B as a comp because its price per square foot is more desirable, you must take into consideration if the features of your home, Home C, are in line with Home A or Home B? Or is it somewhere in between?
Price per square foot is just one tool in pricing Poconos real estate. It can be helpful, but in most cases, should not be relied upon as an accurate method of estimating fair market value in Northeast PA or just about any other area with so many variables coming into play.