Not Your Typical Property
No wonder Matt Townsend built himself a man-cave.
With eleven children, a wife, and a baby grandchild sharing his modern log house in rural Delaware, Townsend needs a place to get away. But he kept resale value in mind when he included an office with a full bathroom adjacent to the three-car garage he built. The office is perfect as a rental, teen suite, self-contained office for a small business, or creative retreat.
The cave is one amenity that makes the complex unique – and hard to appraise. Appraisers depend on recent sales of similar houses to set values for a property they are researching. The more unique the property, the harder it is to find ‘comparables,’ says Mark Killian, of Amerappraise, LLC., the Bear, DE firm that appraised the Townsend spread. “A log cabin? On 16 acres? Out in the country? Oh, boy,” he said when he reviewed the initial information about the project.
Estimating home value is essential but tough in today’s volatile real estate market – even for one-of-a-kind properties like the Townsend spread. ForSaleByOwner.com offers homeowners a range of tools for figuring out about what their homes would fetch if they were to sell today. From publicly available sales records to formulas for calculating equity to computerized valuation reports, ForSaleByOwner.com equips homeowners with the information and knowledge to correctly estimate the value of their homes.
Townsend was one of four winners in ForSaleByOwner.com’s “Is Your House Priced Right?” contest, which invited homeowners around the country to submit short essays explaining what they thought their houses were worth, and why. Townsend cited the size and versatility of his compound to justify a value of $550,000.
He knows his place is unique. That is why he and wife Rebecca bought it back in 2006. Then, at the crest of the housing boom, they paid $340,000. And, they kept on paying. The vacant bank-owned house needed pretty much everything. The Townsends put on a new roof; replaced 43 windows; installed a new heating and ventilation system; and replaced foundation-level logs that were rotting due to poor drainage. They updated and doubled the size of the kitchen; renovated two and a half bathrooms; and replaced nearly all of the flooring.
But with such a large family, even a 3,700 square foot house runs out of private nooks. The house had five bedrooms plus an adjacent in-law suite with a separate entrance. The Townsends rearranged the space into eight bedrooms.
Those bedrooms were a bit problematic for Killian, the appraiser. The Townsends’ improvements compare well to those of other large country houses in the area. The closest comparables sold for $340,000 and $395,000. Killian added plenty for the Townsends’ efforts: $15,000 for the kitchen and man-cave, $17,000 for two of the bathrooms; plus $40,000 for the extra acreage.
But the layout, fragmented into all those small bedrooms, “is undesirable in a $400,000 – $600,000 home,” said Killian in his appraisal. His bottom line: The Townsend home would sell today for about $505,000.
That kind of thorough research is why ForSaleByOwner.com recommends that potential sellers get a formal appraisal and pricing their homes accordingly. Only an appraisal will validate the price when the home goes under contract, and lenders make mortgages based on appraisals. Basing the asking price on a current appraisal ensures that the price will be sustained all the way through closing.
Though the appraised value is $25,000 over the total of the purchase price plus improvements ($340,000 plus $140,000), Townsend still believes that the property is worth about $550,000 – or even $570,000, if he completed a few more improvement projects. Consumer research indicates that many homeowners share that point of view – that their own homes are worth a bit more than those of their neighbors, despite market trends to the contrary.
Originally, Townsend based his $550,000 estimate on an offer of $540,000 he turned down two years ago. “At its peak, the property was probably worth $700,000, so I’m deducting based on that, and based on a couple of other properties for sale,” he says. As Townsend continues to track the local market, he can take advantage of the tools at ForSaleByOwner.com, which equip all homeowners to assemble the best case for the value of their homes.