Recently there was a home that came off the market with another broker. I’m getting ready to put it back on the market. The reason that it did not sell originally is because it was priced too high, based upon the amenities, and placed on the market in May, which was too late to get top dollar. Why would I say this? Read my blog Timing the Market Part 1, to learn how key timing when placing your home on the market is essential.
How do amenities drive value?
This particular home is unusual in that it presents a compelling buying argument for a perspective purchaser at $680,000. That price buys you a large 3,000 square foot home with an interior boathouse, has an indoor pool, a beautiful large deck overlooking the Piscataway Creek, and a dock. The boathouse has a pulley system with a railroad line that was laid by the owner, to drop his boat into the water and then be able to pull it back out of the water when he’s done and put it behind closed doors. You don’t have to worry about scouring the boat and maintaining the boat. The boat goes dry docked every evening. An oak tree sits overlooking the dock and faces to the north, off the back of the property, so you can enjoy sunset views across the water.
It’s an incredible opportunity. But let’s talk about the down side of the property. You might think, “I thought you were selling this property. Why would you talk about the down side of it?” Well, here’s the reality – you can’t hide the truth from people when they walk through a property. Right? As Warren Buffet says, “price is what you pay, but value is what you get.” You price according to the value of what it is you have to offer. I’ve just described the value and the construction of the property.
The location of the property is Accokeek, which is on the east side of the Potomac River across from Alexandria, so you get a perspective of historic Alexandria. It’s close to DC, only a 10 to 15-minute drive south of 495 on Indian Head Highway. It’s right next to a historical preserve on one side. It’s located in a small community. So, I think the location is compelling. I think the construction quality of the house itself is compelling. The opportunity to have a pool house on the inside and have a boathouse and two finished levels above grade, plus a third grade level that could be finished with a widow’s walk above, gives you a lot of potential.
So where does the house fall down? In other words, why wouldn’t this house have sold for $800,000? Partly due to the lack of high end finishes; as an example, the bathrooms have vinyl floors, and fiberglass shower stalls. You would expect that in a lower priced house because the finishes are not ceramic tile. The property doesn’t have new bathrooms, new tile, etc. The master is a half-bath, not a full bath. So you say half bath in the master? How is that possible?
The owners put a full bath on the level. There are three bedrooms upstairs and a giant rec room. I mean seriously. It’s got to be at least a 600 square foot rec room with a pool table and great place to watch the football game up on the same level as the other three bedrooms. Well, the master is a half-bath but with plenty of room to put a full bath in. But the owner didn’t need to have another full bath so that’s the way they built it. So it doesn’t sell as well.
You might ask me, “Why don’t you put a full bath in? Why don’t you redo the bathrooms?” That becomes a choice between do you put $40,000 or $50,000 in, in order to make $75,000 - $100,000 in return, or do you sell it and give somebody else that opportunity? That was the choice that the owner made. Remember, the house was built in the 1990s. It’s got ubatuba countertops, oak cabinetry, and beautiful oak floors on both levels. The house is very well built. The exterior construction is 2 by 6. The house is built to sustain incredible winds and load. If you’re looking for a place that’s on the water and you don’t really care about the condition of the bathrooms, then you have a place that is very well maintained.
I’m going to throw out a cool bonus on this property. This house has got a second house in front of it. It’s an older home with a bedroom and a full bath, a kitchen and a living room that the current owners are able to rent out for $1,000 a month. Which if you think about it on a $680,000 purchase price, if you put down 20% on a property like this, you’re talking about borrowing about $550,000. If you can cover $200,000 of that $550,000 with rental on another house that’s far enough away from the house that you’re living in that you’re not bothered, and basically requires almost no maintenance, you essentially are only paying the mortgage on $350,000 and you have a waterfront property. That’s a compelling opportunity.
Timing the Market
But I come back to timing. I tell the seller they have a great house, but I would suggest that it isn’t the right time to put it up for sale because it’s October and we’re looking at four months as being the key point. Again, inventory drops like a rock from December into February. So if you want to capture the best demand possibly, have a multiple contract scenario, let’s shoot for mid-February. They’re fine with that. They don’t mind it. They saw the lack of interest in the property before and even a price adjustment, they’re going to see better response in February then in October or November. We’re going to quietly market the property in the meantime.
I didn’t know this until last week, but Accokeek means at the foot of the hill. The land gently rises up all the way towards 495 from Accokeek at this spot. It’s fascinating. The Algonquin Indians used to live in this area until Washington D.C. was settled and then they moved to New Jersey.
So we are looking at both timing in the market and the amenities. The seller made the decision not to focus on upgrading the interior condition, but rather to turn it over to somebody who will buy for the value of the home and make those changes himself.
Let me explain one more thing. I have two appraisals on this property – one is close to what we’re asking and the other is almost $100,000 more than that. I think it’s easy to make the argument that with improvements, if you showed that to a lender, they might even lend you the money necessary to do the improvements you want before you move into it, post closing of course.
Condition of a property
We’ve talked about spending $1.00 and getting a return of $2.00. How by changing the floors, updating bathrooms, things like that. You can read more about this in my Market Ready Guide, which is a free eBook. This guide will tell you all types of things you can do that will bring you the most money.
The second guide I wrote to help you through a downsizing process is what I like to call Right Sizing. It will help you evaluate what you should keep and what you should toss or donate or even sell. The Right Sizing Guide will tell you how to de-clutter and get ready to mover.
For more detailed information or to speak directly with Eric call ESG at 301-424-0900 or email him at eric@ericstewartgroup.com.
