Last summer, on a particularly sunny, remarkably humid day, I walked into that house for the first time. It wasn’t much of a house, and the land was wide but not especially unique, and as is the case most of the time, I knew my target value before I ever saw the second bathroom. I surmised the house was worth around $2MM, perhaps lower than it, and if the seller ended up being lucky, more than that. I was confident in this number, perhaps overly so, and so when I didn’t get the listing I wasn’t all that upset. I figured I’d be right, even if it took some time.
My reasoning was based on several factors, but mostly the existence of a devastating comp just down the road. There was a piece of property for sale, with a similarly bad but strangely better house on it, and the lot was bigger. Much bigger. The comp lot was 143′ across the lakefront, and five acres deep. It was heavily wooded, private, and rather spectacular, even if it was sloped a bit more than most would like. The lot that I speculated would be worth around $2MM was 151′ across the lakeside, but only an acre and a half deep, and even that total is deceiving as the strip of land that amassed much of that acreage was so narrow that you could hardly play a proper game of horseshoes on it.
The owner that didn’t list with me, did so for $2.85MM with someone else. No big deal, I figured. Then, somewhat surprisingly, a buyer bit, and paid $2.35MM for that lot that I had underestimated. The land down the road was still for sale, for $2.475MM, with all that frontage and all that wooded depth. And so I did what any good broker would do, and I went out and introduced several buyers to this piece. In time, a buyer liked the idea, and liked my target price point. The goal was sub-$2MM, and in December when I struck that deal between my buyer and another broker’s seller, the price was $1.925MM.
There were many difficulties with this transaction that finally closed last Friday. There were zoning questions and setback questions and CSM issues and Plat concerns. In time, smart attorneys and patient clients figured it all out, and the $1.925MM print price is a decided win for the buyer that I was pleased to represent. Anytime $1.925MM buys 143 of quality frontage, it’s a buyer win. Throw in 5+ acres of heavily wooded land and you have a dynamic property that will easily support the future value of the newly built home that is sure to sprout from that lakefront in the next couple of years.
So which sale is the right sale and which one is the outlier? Scrap the price per foot numbers in this case, and instead just look to the locations, which are rather similar, and the ability to support future, built value. If, in five year’s time, we look at two new builds and both are beautiful but one finds itself on 5 majestic acres with a long, winding private driveway, and the other finds itself on nary an acre with a shared entrance drive, which one wants to more easily hold a $4MM+ valuation? Surprise, it’s another rhetorical question.
The sale last winter for $2.35MM was a reasonable sale, if a bit more to the seller’s liking than mine. The sale of $1.925 last Friday was a significant deal for my buyer, but in this there is a seller truth as well. The seller of this home bought it nearly 25 years ago for a fraction of the final sales price. Was this lot worth nearly $3MM at the peak of the market? Yes. Was it worth a whole lot less now than it was then? Of course. Did the seller still win, because they had a great tenure at their lake house, made a satchel of money along the way and now gets to move on to their next adventure? Well, obviously.