Baltimore homebuyer explains his method
Wonk reader Kevin responded to the call -- by a fellow Wonk reader -- to weigh in with housing-market experiences. He bought a rowhome in the Upper Fells Point/Butchers Hill area of Baltimore last year and offered these thoughts:
During our experience in buying a home in Baltimore City -- Fells Point/Butchers Hill/Canton/Federal Hill areas -- we found that the easiest common denominator to compare homes was price per square foot. City homes don't have that many variables. You get the rowhome and that's it. All you can compare is that rectangle plot of land and all of the livable space. We ended up plotting out homes we saw onto a graph and saw how the price/sq ft compared to one another. Then once we narrowed our search, we got the recent sales or comps in the area and did more comparisons. I'm not sure that Realtors have thought of this when they price homes, but there just isn't much variety in rowhomes aside from a rooftop deck or potential for a finished basement.
When it came down to it, we weren't going to pay a certain price for a 12-foot-wide place when you can pay the same price for a 14-foot-wide place. We might have over-analyzed it, but we ended up with a house at a good price point. Our offer price was determined in another spreadsheet, calculating final sale price (with concessions) versus asking price (both initial and current listing prices). This helped us put in an offer. The owner balked at the initial offer, but two days later, he accepted. It's hard to argue with numbers and hard data.
I would advise people to do their homework. Don't rely too much on Realtors and what they hear. It's a bit more work, but it is worth it. Utilize all data sources. Of course our experience was easier with homes in the city. County homes actually have acreage and "curb appeal" to deal with, so our system might not work as well, but people should try to compare apples to apples. I always cringe when I hear that people make offers on just a Realtor's suggestion. It's just an uneducated way to do things. Do people go into Best Buy and buy a TV without doing homework? Would they take the salesperson's word? They might make a suggestion, but ultimately you have to live with your decision. For a TV, that might be $1,000-$2,000. A house is a bit more than that.Thanks, Kevin, for sharing. If you've got a buying or selling experience you think readers should hear, comment below or send me an email at jamie.smith.hopkins(at)baltsun.com.
We paid around $300,000. … I believe the price per square foot was around $165. … The home was rehabbed around 2000, so things weren't up-to-date, but definitely livable. We could do our upgrades and see some potential return on the investment.
The seller kicked in $9,000 for closing. I think the original asking price was $375,000 and the property sat on the market over nine months. The house went off the market for a bit, came back on at a lower price, went under contract but that fell through, and when we first saw it the price was around $320,000. I think the owner was pretty happy to see a solid deal from us with financial documents.
We ended up calculating that the recent sales in the area were about 7-9 percent below list price for all types of homes. With this, we put the offer in at a 9 percent reduction (factoring in the concessions). A bit nerdy being data-oriented, but it's tangible.
Most homes we saw ranged from $150-$225/sq ft for the two- and three- bedroom rowhomes. The homes that sold for the upper range were "pretty" with all of the latest upgrades (granite, stainless steel, bath + shower in the master). Some probably were worth that price; some definitely were not. We saw some homes that were above that range and sure enough, they sat on the market. This was definitely for two-bedroom places. People thought that if they "did the place nice" then they could ask for $300k+. Would someone really pay $300k for a two-bedroom rowhome? Maybe in the future, but not right now or back then.
Posted by Jamie Smith Hopkins at 9:55 AM | Permalink
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Categories: Housing market experiences
Categories: Housing market experiences
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Comments
There are plenty of neighborhoods in Baltimore without exposed brick or roof decks for far less money or the lyfestyle. What are you pay for square foot or lifestyle?
I can show you a $150k home tommorrow that will blow you away, but doesn't location and icons mean something. It is a lifestyle.
It is like Florida, do you want to live near the beach or 5 miles inland? We have jobs and a certain cool lifestyle.
Posted by: Dunn | March 9, 2009 7:06 PM
I find this, i.e. square footage, to be a fairly unreliable as well as unfair measure. Yes, many homes are similar, but when I was looking for a home in Baltimore I found the most distinguishing factor, without question, was how well a home was kept up over the years. Given several houses of equal size, even identical ones next door, some were in terrible shape and some had been maintained with care and a lot of elbow grease over the years, and it showed. It meant you could walk in and live in it with usually only a coat of paint or other cosmetic changes to suit your own preferences. And that's not even taking into account recent or upscale rennovations and the like. How can you come up with one price/sq measure when homes vary so widely in condition?
Posted by: Lisa | March 10, 2009 4:35 PM