Pricing A Berks County Home Part #1
My hope is that this article will help you understand factors that I use when valuing a home in Berks County. It is one of the most difficult and criticized things any real estate professional deals with in his or her career. Price a home and it sells within a week. The seller may think it was under priced, and they could have gotten more. Ok, it doesn’t sell in a week. Matter of fact, it still has not sold 6 months later. The seller may think the agent is not doing their best to sell it or have overpriced the home. Sounds like a no win situation. Sometimes it is.
Following is an example of how to assess the value of homes in Berks County:
- My first Berks County home value consideration is a market analysis. This is an analysis of homes that are pending sale, have sold or are actively being marketed in a specific area within a defined period of time. This is the most well-known version of home valuating.
Before venturing out to meet the prospective seller I jump online and research the Berks County home and surrounding area. It is simply amazing what you can find out about a home, neighborhood, Berks County real estate and the market at large online, but that is a blog for another time. I visit the Multi-List, Public Records and a few secret places to see what Berks County homes have sold in the area of the subject property. I normally go back 6 months unless the home and property are very unique. In that case I may go back one year. This time frame is consistent with what many appraisers consider when valuing a property in Berks County. Second on the search list is pending sales. These are tougher to evaluate because the true sale price is not yet published. Last but not least, I review active Berks County real estate listings. This tells me what the inventory level is. I am looking for clues to advise the seller on the value of their home. One clue is the average square footage value of the sold homes that are the same style as the subject home. In this example similarly styled, sold homes located in the area of Berks County where the 2-story styled home I will be visiting is located; customarily sell for approximately $90 per square foot. Other clues include sold land values and rate of sale (time on market).
- My second Berks County home value consideration is a cost analysis. This is what I think the value of the home is after I take it apart and value the components.
The home is measured and reveals 3,000 square feet of living space. Living space is calculated as the measurement of above-grade, climate controlled finished, non-utility area. I have already established the cost per square foot of $90 using the market analysis. This gets me to $270,000. This amount also includes $50,000 for the lot. The land value was also established during the market analysis. The home has a 2-story family room; 9’ ceiling heights and a cathedral or vaulted ceiling in the master bedroom and bath. These can be considered architectural enhancements. They do not add square footage to a home but they certainly increase the cost and Berks County real estate value of the home. I may add $20,000 for these enhancements. The home has a 1,000 square foot finished basement with a full bath and bar area. I will add up to 10% of the homes above-grade square footage value plus architectural enhancement value. Finished basement values are always up for debate. Ask any Appraiser. In this case, I could add up to $29,000. I am now at $319,000. But wait; there is an in-ground swimming pool. Contrary to what you hear about the value, or lack thereof, of an in-ground swimming pool, I give value here. Where there is cost and advantage there is benefit! I may give the pool a $30,000 value. I am now at $349,000. The home is on a larger than normal lot for the neighborhood (say 1+ Acre) and/or has other desirable factors like a view or water front. I may assess the lot’s bare value as $65,000. I must decrease this $50,000 which I included in the $90 per square foot of living space above. This is an addition of $15,000 (lot premium). We are now at a hearty $364,000! This is shaping up nicely. I now look at the garage and it is of the 2-car variety. I check my market analysis and see that any homes in this area that sell for over $340,000 have a 3-car garage. This is a negative on value. It may also hinder the number of people who see the home online (see #4 below). Many may search for a 3+ car garage in this price range and miss this one entirely. I am now at $340,000. Yes, $24,000 off for what would have been an $8,000 additional cost when the home was built. Note to self…Plan well when building or renovating a home. The last part of this evaluation is Depreciation. If the home is 25 years old and the roof and heating system are original this is a biggie. In our example the home is just 7 years old. There is a small amount of depreciation but it is not of consequence. As homes age depreciation can accelerate. Proper maintenance and updating are very important as a home gets up in years. You may have heard the term “They don’t build ‘em like they used to”.
Look for Part #2 of this Advertorial Next Week…
Jeffrey C. Hogue