Picture a 700 square foot condo. It’s about 15×45. It’s a one bedroom, one bath with some living space. It has high end a appliances, solid surface counters, beautiful hardwood floors and great views.
Next door is a 700 square foot condo. It’s about 15×45. It’s a one bedroom, one bath with some living space. It has high end a appliances, solid surface counters, beautiful hardwood floors and great views.
Both condos are listed for $210,000 or $300 per square foot.
Which one is a better buy? Either one, they are the same.
Actually they’re not but you can’t tell that from the above or an RMLS listing. The only discernable difference is that the first has 8 foot ceilings. That is 5600 cubic feet of condo. The second has 10 foot ceilings. That’s 7000 cubic feet of living space.
If all we do is look at the square footage, the condos are identical. Take into account ceiling height and the second unit is 20% bigger than the other. Now granted, we can’t place a sofa in that extra two feet of space but the reality is we do feel and live in that extra space. It also changes your comps. The first condo is listed for $37.50 a cubic foot, the second, $30.00.
It’s not as easy as adding a height field to the listing. What do you do with a drop ceiling, a lofted space or an open foyer?
Discuss!
Is that a standard way to do comps in your area? I haven’t seen that before, but I also haven’t done any condo work yet. curious…
No, that’s my whole point. The difference in size when comparing cubic square feet of the units is huge but we only look at square footage.
My question is whether there needs to be a shift in thinking to address that?
I don’t think the value is in anyone but the buyer. The seller might have 12 foot high walls and the buyers stand 4 foot 8 inches. To the buyer, do you think they care? I think they are more likely to care if there is an outdoor eatting area.
Do you also evaluate and put into the price if carpet is a year old or 5, the yard is mature and manicured or new and undefined?
That’s why a computer cannot place a value on a property. Adjustments have to be made to make comparables comparable. When you look at a full blown appraisal, the subject property either gets bonuses or hits compared to the other compared properties.
Unless the buyer is planning on dying in the property, the buyer becomes a seller at some point and cares that their property is viewed favorably by the next buyer.
When we bought our house in Hollywood (PDX that is), we bought a 2 bedroom, but with 1350 sqft and 10ft ceilings. Doesn’t make a difference? Comps at time were in line with the neighborhood even not accounting for the high ceilings. There was some work that needed to be done that wasn’t that costly, but was sure a PIA. Everytime I go over to a someone elses house, I immediatly notice how cramped the 8 ft ceilings feel. It matters to the buyer if a house has high ceilings. My wife and I are at the point where one of the top items we want in our next house is high cielings. Number of bedrooms, sqft, pics on RMLS, etc can easily mislead a buyer. There is no substitute for seeing the house yourself. Last time we were looking, that was our rule. The “looks good, let’s visit in person” rule. A 20 minuite walk through a house will tell you more than any statistic ever can.
ceiling height matters for two reasons I can think of:
– it’s “true” sqFt if the house is a full 2-story. For a 1-1/2, I usually discount 1/3 of upstairs sqFt as “unusable” (in terms of useability for wall art, high-standing furniture, etc)
– if a house has 10 ft ceilings on main level, and 5-1/2 ft unfinished attic, the main can be reframed to 8 feet, yielding 7 feet attic height. Not a slamdunk, but doable.