I just finished reading an interesting book by Leigh Gallagher titled The End Of The Suburbs. Being a real estate agent in Utah, where almost all we have is suburbs, I was intrigued by the title and had to read it. Though Ms. Gallagher makes several good points regarding demographic trends and individual preferences she was forced in the end to concede that there is in a fact a need for suburbs.
Points of Agreement
The author has a very East-coast-centric perspective and I think that her conclusions are more applicable in the East than they are in the mountain region. Despite her personal perspective there are sever points with which I agree:
- People are moving toward smaller homes. The “Bigger is better” mentality has faded. I even have clients that now set an upper limit on the size of home they will consider (Still only about 1 in 10)
- Buyers want to be closer to services and transportation hubs
- People are more willing to use public transportation
- Poverty is not concentrated in the cities. The suburban poor are a growing population
- Suburbs will evolve to accommodate increasing energy prices
Points of Disagreement
I think some of her conclusions are over wrought and will only apply to areas of significant population decline.
- Suburbs will become “Ghettos” filled with people who are too poor to live in the city
- Suburbs will be bulldozed and returned to native grass or used as farmland
- Builders will move operations to cities and avoid building in suburbs.
- Suburbs are, and will become even more, social and intellectual wastelands
The bottom line is that as a young single woman, the author’s perspective lends itself to a bias towards big city living and away from commuting but even she admits that the suburbs are in general an easier place to raise a family. Hopefully the cities will continue to improve and become home to more full-time residents. I believe that contrary to her conclusions the suburbs will continue to be an important housing option that will continue to evolve to meet the needs of future generations.
In my years of practice, I occasionally come across a home that will “never” sell, but that is simply wrong. The fact is EVERY home will sell as long as the value proposition is correct for a given buyer. To get the very best return on any home it is important to consider how the value proposition will be computed for the average buyer in any given price range. The elements of the value proposition are nearly constant, but the key to remember is that value proposition changes as the price range changes.
The elements of the value proposition are:
- Location – Where a home is located affects the other factors, but it is quantifiable alone.
- Utility – Does the property “Work”. This encompasses floor plans, room counts, and flow.
- Features – This includes things such as yard size, square footage, parking, room size, etc.
- Lifestyle – What does the community offer? How do people live in this home?
- Status – What will my friends think? Nothing more than that, but frequently masked by terms such as curb appeal, landscaping and decor.
- Asterisk – These are the weird ones.
I have tried to come up with other elements, but they eventually all fit into one of these elements. The Asterisk category is NOT a copout. It is just the cases in which a SINGLE factor overcomes all others, such as when someone buys a house next door to a family member because they want to be close, or the house is bought to be torn down for a parking lot. Usually this overwhelming factor is location or intensely sentimental reasons.
The point is that these factors adjust unpredictably in their importance to the individual buyer, but systematically depending on price range. For example consider the extremes; 2 families of 4, one who will spend $100,000 and one who will spend $1,000,000.
As represented above, all of the factors are considered by every buyer, but the ones that become paramount depend on constraints. For example, it is almost impossible to find a million dollar home with less than 3 bedrooms, and it is equally difficult to find a $100,000 home that has 3 bedrooms. So the lower priced shopper must consider a minimal set of utility and feature requirements that are automatic in a higher price range.
Most people do not even know what their own value proposition looks like. As a buyer’s agent, you need to decipher any given buyer’s criteria and understand the criteria better than they themselves do. As a listing agent, you must be aware of a given home’s value proposition to the average buyer in order to price a home correctly. I love this process and have been helped greatly by quantifying this concept in my business.
Everyone has heard the platitude that what matters in real estate is “location, location, location” but that is NOT very useful when you are thinking of what to change or add to your property. Every buyer would put these in a different order, but in most cases I think these 10 would surely be at the top of the list in any home buying decision. (And three of them do relate to location)
This is the city and neighborhood where a home is located. This is the one factor above all others that determines the value of a house. This is what makes a home in certain neighborhoods in California worth $500,000 while the same house in Utah is worth only $200,000. You can’t change it so if you already own, don’t stress. If you are shopping, think it through.
2. Number of Bedrooms and Baths
The number of bedrooms and bathrooms will determine what the potential audience is for any given house. A one bedroom home obviously does not serve the person who wants 5. In general more is better, but the ratio of bedrooms and baths matters. New homes generally stick to no more than 2 beds per bath(2-1). If the ratio is more like 3-1 the home may be considered functionally obsolete. So if you are short on baths, adding one is not a bad idea.
3. Year built
Buyers make a lot of assumptions about a home based soley on the year the home was built. You cannot change this number so if your home is updated, and you are ready to sell, good marketing is crucial.
4. Quality of Design and Construction
These two usually go hand in hand so they are combined. A well designed home is most often well built because the builder took the time to think the project through from beginning to end. There are exceptions, such as when a project runs out of money, but once a buyer is enticed to a property this factor is the intangible that causes love or disenchantment.
You can’t usually go wrong with more garages! WARNING: Sexist stereotype follows. As long as a man is part of the buying decision, I have never seen a house with too many garages.
Has the home been taken care of? This answer to this question is not usually determined by the age and condition of the property, but instead by how old the fixtures, paint and interior style appears. You can make up for a lot with paint, but if you do paint invest in a lot of good masking tape and do it well. A terrible paint job is worse than none at all. Happily bad paint is easy to fix!
This is in reference to the actual style of home. Whether a rambler, a split-entry or a tri-level, each style will appeal to a different set of buyers. Some styles will actually be excluded from consideration. If your home style is one of those that gets eliminated early in a search and you are considering a serious remodel, think about changing the style of your home if possible.
8. Lot attributes
Lot size, dimensions, and street type become a big factor once a buyer gets to a home. This is one more location item. Remember that lot sizes ore one thing and appearance is another. The way a lot is landscaped, or the dimensions can affect the perception of size more than the actual measurements of the property. If you are building, NEVER squeeze a house into a lot. Make sure that the lot and home harmonize and you will get more out of your investment.
9. Master Bedroom/Bath
Having a master bedroom is a plus. Not having a maser bath can decrease the value of a home by up to 10%
By efficiency I mean both energy efficiency as well as quality and condition of mechanical systems, insulation and windows. Most of the time issues with this come up in an inspection and can be a deal breaker. If you are going to be in a home for a long time it is a great place to spend money, but if not you may want to sell your home as it is and let the new owner decide what to do with it.
Do you think I missed any important factors? There may be something else that belongs in the top 10. If you can think of it, please let me know!
One of the best things you can do to make the most of your home is to rearrange rooms to fit their intended purposes. It is amazing how long I have allowed my first attempt at a layout to become the only furniture arrangement used. Since I hate to waste energy I decided to figure out the best tools to layout a room in the least amount of time. So what I ended up with is the old graph paper method vs. Ikea.com vs. BHG.com
If you have any lingering issues from your childhood due to overly demanding art teachers this may be the best method. From a therapeutic standpoint this is a clear winner. You can invest as much time and energy as you like making each piece just the right shape and color. Maybe hand building the perfect model room will provide you with the vindication you seek. As for me, my only interest is being accurate and getting the job done, so I stuck with simple labels and skipped the detail work. It was fairly quick and gave me some good ideas. Still probably just a “C” from my art teacher. The finished project is clear even though it lacks artistic value. Special thanks to BJ Plumbing Supply in American Fork for giving me too much graph paper for my last sprinkler project.
IKEA Office Organizer
IKEA.com has some fun online tools if you are looking for a nice 3D version of your room. You give up a bit of flexibility over the graph paper method because their products are front and center, but you can always add place holders to make it work. It would be better if ALL of their products were available, but you have to make do. I only used the office planner, but they have specific planners for all sorts of rooms. Start Here. I think the finished product is good looking but it was far too time consuming for the reward. My best guess would be a B+ from the art teacher, but I wouldn’t have had time to study for the math test!Fun to play with but too time consuming.
Better Homes and Gardens Arrange-a-room
To be completely honest I did not have a lot of faith in this tool. I had heard about it but could not find it on their website. After searching for far longer than I should have, it showed up as a google ad in one of my on-site searches. I am just wondering if BHG had to pay to get me there…from their own site. To save BHG money you can go directly to the tool here. The only downside is that you have to register, but the BIG upside is that you could save your entire house floor plan and edit it from any computer in the world. The only negative comment I have is that there is no simple way to keep your walls square, other than eyeballing and tweaking.You start by choosing a basic room shape and then adjusting from there. Next you can add furniture and arrange away. The furniture sizes are adjustable within limits, but the whole thing is very quick and by far the fastest method I have found for trying out furniture arrangements. In my opinion the Better Homes and Gardens Arrange-a-room tool is the best option if you are trying to make decisions about where to place your furniture. My old art teacher would probably only give me a “B”, but I would have time to get “A”s in all my other classes, so I am declaring the BHG tool the valedictorian of this furniture arranging class.