This article will explore the never-ending dilemma of why someone’s house didn’t sell for as much as the neighbor’s down the street did. There can be many reasons for that, but one, in particular, is the differences in home styles. Home styles can command hundreds of thousands of dollars more. And, make no mistake – this is not a simple topic. We are not talking about granite countertops or upgraded refrigerators that can be installed in a day or two. We are talking about the total design of a home. To get started, look at the following kitchen photo below, which is from a 1918 home in Denver, CO that sold for $750,000 in June of 2019. Beauty is in the eye of the beholder.
This is What You Might Want in a Kitchen Instead…
This kitchen is from a home that sold for $747,450 and was within 1.6 miles from the first home illustrated above. This home was built in 1939 and has, obviously, not in the original condition. This home also sold in June of 2019.
Both Homes are Within 100 Square Feet in Total Size of Each Other. But Wait. You Haven’t Seen Anything Yet!
The picture below is the living room from the 1918 home.
The picture below is the living room (or family room?) from the 1939 home.
Here is the view of the living room from the kitchen of the 1939 home, which shows the second-floor overlook and the open loft area above.
Both homes take your breath away, don’t they? But for vastly different reasons. A picture is worth a million words, and in this case; dollars.
Reality Time! Both Homes Sold for About $750,000 at the Same Time, and are the Same Size. Which One is the Better Deal?
This is the dilemma appraisers face. This is a profound example, but the photos and information here are from real sales. Both of these sales took place within mere days of each other. Both of these homes are within 100 square feet of the total size of each other. If you owned the home that was built in 1918, would you dare think it compares to the remodeled home that was built in 1939? Well, it does as far as a dollar value, to some buyers. Although you may not agree or understand this, the main reasons for the market valuations (in this case) are home styles and location. The original home is located in an area of classic vintage homes that have distinct home styles. The remodeled home is fairly close (within 1.6 miles) but is not considered to be a vintage home.
Here is the Exterior Picture of the Home Built in 1918
Here is the Exterior Picture of the Home Built in 1939
The 1918 home is referred to as a Bungalow, which is a sought after style that has distinct features. The 1939 home would be called a two-story home that has a custom addition. This is not a particular style that is valued by vintage home buyers and sellers.
Are Home Styles Really That Important?
Yes, it is. The market segment that appreciates vintage homes, and can afford them, is a niche market, and that market definitely exists. Style is not the only difference between these homes. Many factors influence the market value of a particular home. In this situation, the location was also a key feature that influenced market value, as well. But keep in mind that these homes are fairly close to each other; being less than two miles apart.
How Much Might a Vintage Home Sell For if it were Extensively Remodeled?
Well, that is a question that would take a lot of research and analysis to answer. However, for a fun comparison, here is are a few pictures of a home built in 1929 that is only a few blocks away from the home in the original condition that was built in 1918. This home is not ideally comparable for many reasons, as it is a different style(!) being a Tudor, and it is much larger in square footage living space. But since it has undergone extensive high-end remodeling, it is included here just for fun.
How Much MORE Might This Remodeled Vintage Home Have Sold For?
Take a guess on how much more the buyer paid for this home. It’s nice, but carefully consider how much cabinets, appliances, and flooring costs before you formulate your answer. This home sold about 30 days earlier than the other two homes, and it is about 1,000 square feet larger in total living space.
It sold for slightly more than one million dollars ** more ** This home sold for $1,765,000 in May of 2019. Nice home. What’s a million dollars here or there? Some homes in this area sold for much more than that. Style!
Here is Why Home Styles Are SO Important
Now we can clearly see that home market values can vary by hundreds of thousands of dollars based on factors such as style, size, location, and condition.
The appraiser’s task is to very carefully collect and analyze data and then identify and quantify the differences between home sales. This does not always make sense, and it is oftentimes difficult and time-consuming. The market does not always follow clear logic, so coming to a logical conclusion is not always easy – but that is what must be done anyway.
For every valuation, there are opposing forces. In a divorce, one party might want a high value, while the other party might want a low value. An appraisal has to carefully study many factors to extract meaningful data that will explain the differences in market values between different homes. This is not like comparing gasoline or grocery prices. Sometimes an appraisal may take many days to properly complete. In the case of a buyer and seller, there are definitely different interests in market value. Many times buyers have to be coaxed into reality to what the market indicates their home is worth, and many times buyers have to realize that some homes command premium prices beyond what they initially expected.
In whatever situation may arise, a meticulous experienced appraiser is the best method to determine market value for all parties involved. This is a skill set that is not automatically included in years of experience, a level of license or a designation (title) from some appraisal organization. Like a college degree, the skill level between appraisers can vary tremendously. A degree, or any other factor, is no guarantee of accuracy or quality.
Since a home is usually the largest investment in someone’s life, take the time to ask hard questions when you are looking for an appraiser. The differences in style could easily surpass $100,000 or more.
For more information, visit my website; RickStillman.com