Mid-Century Modern

When selling way above anything else (Q&A)

May 17, 2021 By Ryan Lundquist 47 Comments

There’s no way it will sell for that much…. But then it did. Today I have an interview with a local real estate agent about a property that recently commanded easily about $100,000 more than it looked like it could have on paper. I hope you enjoy this Q&A with Ted DeFazio and my takeaways below. I’d love to hear your take in the comments. Any thoughts?

Ryan: On paper it looked like this property on Clear Circle was going to sell for way less, right? What do you think happened to get the price so much higher?

Ted: I thought the listing price was optimistic from the start. I even fielded emails from other agents asking how I came up with the price and a couple “good luck, you’ll need it” text messages. I think it was the perfect storm of a turn-key property in a low-inventory market. Added to that, it was a mid century modern (which some thought was bastardized by the previous remodel), had a pool (Bay Area and LA people think they will melt without one), and a somewhat walkable location on the southern end of Carmichael. I know a few buyers who mapped out the distance to Whole Foods and the American River Parkway.

Ryan: I get how agents were texting you “good luck” because based on two previous sales it looks like this one easily closed $100-125K+ above where it theoretically would have been able to.

NOTE: The black dots are the subject property sales through the years compared to yellow dots which are properties of similar size. As you can see the most recent sale at $815,000 looks to have gone well above the historic trend. By the way, the subject was remodeled during each of these sales.

Ryan: Are you seeing buyers pay more for unique properties throughout the market? Or is this just in certain price ranges?

Ted: There is another one that comes to mind in Fair Oaks that recently sold in Curragh Downs. Same situation. Mid century vibes and a cul-de-sac lot backing to a greenbelt. I once again thought the listing price was optimistic but every offer was above asking. The seller purchased the home less than a year ago for over $200K less and didn’t really do much as far as remodeling goes. These were both in the $700-800K range. Another I can think of was recently sold on Garfield in Carmichael. I fielded emails and texts from agents asking where the price came from. I have two others in the $500-600K range which are both in contract at nearly 10% above asking.

Ryan: How do you know if something is an outlier able to break away from the price trend?

Ted: The Clear Circle house, Canonero Ct and Garfield Ave properties all shared the unique architectural design theme. I think that is what truly sets these homes apart giving them the potential to be outliers. Check out Bonny Knoll in Roseville. The seller knew it was an outlier and priced it accordingly. I think that’s the constant. As agents and appraisers, we often think we know better. I responded to an email questioning value by saying: I’m going to let it ride and see what happens.

Ryan: What are you seeing happen with modern and mid-century modern home appeal during the pandemic?

Ted: I think these types of properties command a higher price point than that of the traditional Mediterranean or typical ranch home down the street. The Bay Area and LA types tend to appreciate these design styles more than the average Sacramento resident. With the influx of these buyers, we are seeing premiums added to the more modern properties. So I think it has further added to the delta between typical and unique homes.

Ryan: What sort of advice would you give to buyers right now?

Ted: It’s hard out there. The offers stack up and the sellers get overwhelmed. The common theme I am seeing with the winning offer is the high offer price and a removal of the appraisal contingency. This puts buyers who aren’t flush with cash in a tough spot. I am hearing buyers are thinking that the market is overpriced. I often tell them that I stopped commenting on the market. I thought it was overpriced back in 2016. What do I know? Buying in this market is tough but being able to sell helps neutralize the offset.

Ryan: Any advice for sellers?

Ted: You are in the driver’s seat. If you have considered selling or making a move, there is no time like now. What an opportunity.

Ryan: Anything else to add?

Ted: I am seeing a divergent trend of agents either sharing what the other offers are or not. I find this market as difficult as I have ever seen to be in the buyer’s shoes. Add to it the listing agent not sharing what other offers are on the table makes it even harder to do our jobs. I ask my sellers if they are okay with me sharing the current offer terms with the other agents (as long as there isn’t a NDA) and they are usually okay because they understand that it will most likely get them more money in the end. The shot in the dark offer mentality / situation is aggravating and makes me not even want to submit an offer in certain cases. I have seen some seller instructions added to listings of some brokerages and wonder if they are truly acting in the best interest of the seller.

Ryan: Thanks Ted. I appreciate your time and insight. Everyone, please visit Ted’s website and let us know what you are seeing out there.

NOTE: Once in a while I do a Q&A with a local professional. This is never a paid spot and it’s not done to highlight one person either. It’s only when something has piqued my curiosity and contributes to discussion.

——————— some quick thoughts ———————

QUICK TAKEAWAYS from an appraiser’s perspective:

1) Your opinion vs the market: It doesn’t matter what any of us think about a property. As Ted said above, quite a few people looked at Clear Circle and thought the remodel destroyed the character of the home, but the resale market blatantly favored this property despite what purists thought. There were four offers when priced at $749,000. This is a good reminder in the valuation space to divorce ourselves from personal opinions and focus on one question. What does the market think?

2) The previous sale: Sometimes a previous sale can be really useful because it helps us understand how a property has fit into the market. But in other cases we need to completely throw out a previous sale because the market is simply different today (or maybe the prior sale sold too high or low). This is exactly why we have to be careful to give the current market and current comps the most weight while not getting too hung up on a previous sale (even though at times a previous sale can provide really helpful context). This is especially true today where the higher-end market has come alive throughout the country, so what buyers are willing to pay right now could simply be a detour from buyer behavior a few years ago.

3) The pandemic x-factor: Buyers hunting for homes these days are willing to pay extra for something architectural distinct. Additionally, buyers are paying premiums for homes with stellar views and backyard amenities. The idea is people know what it’s like to spend more time at home now, so they seem more sensitive to location as well as what’s actually in the backyard (including the view).

4) Paying way too much: There are situations today where buyers are obviously paying way above normal. Let me be clear. I’m not saying this sale above represented market value at $815,000. I’m also not saying it didn’t. I’ll let you be the judge. I’m just saying buyers in general throughout the market are paying premiums for special properties right now. But backing up there is no mistaking there are quite a few situations where buyers are obviously paying well beyond a reasonable value and the appraisal rightly should be coming in lower.

5) Sellers, don’t price to an outlier: Sellers, this market feels totally lopsided, but buyers can still sniff out an overpriced home. My advice? Be realistic about your house and DO NOT price according to an outlier example like the one in this post. Remember, not everything is getting 20 offers and bid up $100,000. In fact, only 2.8% of all sales last month had twenty offers or more. This is actually a higher than typical number, but it’s important to realize this figure is nowhere near half the market like some real estate narratives might suggest.

Thanks for being here.

Questions: What are you seeing out there relating to modern homes or other “special” properties? Any stories to share? I’d love to hear your take.

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How do you get an appraiser to value vintage features?

September 6, 2017 By Ryan Lundquist 12 Comments

It can be nerve-wracking to have an appraiser come out. So I wasn’t surprised to receive an email from someone worried about his vintage home. Will the appraiser give value to the vintage features? How can an owner ensure the appraiser will give proper value? Let’s talk about that.

Question: How do I get an appraiser to value these vintage features?

Answer: That’s a great question. I’m not trying to be frustrating by not answering directly in the way you might wish, but the most important thing to remember here is that value is found in the market. What do buyers prefer? Are buyers paying more for homes with vintage features or are they paying more for homes that have a vintage vibe but with modern upgrades? I find sometimes in the vintage world an owner will restore a property to its original state. I get that, but just because so much time and money was spent on a restoration does not mean the market is going to pay the same amount as a house that has been remodeled with current upgrades. In some cases buyers definitely pay for older era elements, but at the same time they tend to pay more when the kitchen is modern (and not original). I don’t say this to be offensive, but only to highlight the reality that the proof of value is found in the comps. In other words, if there is more value for being totally vintage, then an appraiser ought to be able to find similar homes that show higher prices. At the same time I get your concern because it’s easy to see blue and pink tile from the 1950s and immediately ding value because it’s outdated. This is why it’s going to be important for the appraiser to be in tune with the local market and be objective by letting the market speak rather than being shaped by his/her personal preferences. To be honest I remember in my early days coming across a Mid-Century Modern home and making the mistake of assuming the original condition was worth less when in fact it was something desirable for the market. Doh!!

Restoring a house can be very expensive, so I recommend making a detailed list for the appraiser about what has been done. This can help the appraiser understand the quality and cost of the improvements. Keep in mind if restoration is a trend in the neighborhood, it might help to mention that or even share specific examples you have seen. I’m not saying to pressure the appraiser to “hit” a certain price point (please don’t), but only highlight what is happening in the neighborhood. Personally I love hearing about what’s happening in a neighborhood from someone who lives there because it’s data for me to consider. Just remember not all the money spent on a restoration or remodel will show up in the value (it always shows up on HGTV remodels though). On a practical note you can use my appraiser information sheet if you wish.

BIG POINT: Just because something is done to a house does not mean the market is willing to pay for it. When it comes to a full vintage restoration, we have to ask if that’s something the market is willing to pay for or if it’s just one owner’s passion for yesteryear. I think of restored cars as a good example of one owner dumping a ton of money into a vehicle only to have the market pay less. I’m not saying that’s the way it always works in real estate in every case, but restoring something to its original state can be very costly and the market might not absorb that cost. The proof is in the comps though.

I hope this was interesting or helpful. Thanks Luis Sumpter for the first photo.

Questions: Have you seen the market pay more for homes that are restored to their original condition? What examples can you think of where the market did NOT pay for certain upgrades? I’d love to hear your take.

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The rage of modern homes in real estate

August 23, 2017 By Ryan Lundquist 11 Comments

Modern homes are all the rage in real estate. I don’t know about you, but I’m seeing them pop up not only in Sacramento, but in many markets throughout the United States. So today I wanted to interview Ted DeFazio, a local real estate agent who specializes in these types of homes. I hope this will be valuable and interesting. Any thoughts?

Ryan: What is a modern home? And what is NOT a modern home?

Ted: The way I describe a modern style home would be the use of clean lines, lack of ornate detailing, open feel, in many cases vaulted ceilings, merging of indoor and outdoor spaces with a combination of large windows and doors and usually has a post and beam angled, commercial style flat or simple gable roof lines. Some homes will have a combination of all three. Carports and clerestory windows (starting beyond the header and into the roof line) are often a trademark of the modern style as well.

Ryan: So how do you describe that home with a few modern upgrades?

Ted: There are a lot of homes that would be considered contemporary and not full on modern. But I think this is all very subjective and up to interpretation. For instance, a ranch home that has had a modern style kitchen remodel with flat front cabinetry and minimalistic touches might feel modern but is it a modern home? I think the architecture from the front elevation and finishes through to the back yard would have to reflect that same style in order to be considered a true modern home. I remember a home in Granite Bay that was a mix of styles with some very modern and some very traditional details. Did it work? Sure. Was it a little confused? Yes.

Ryan: What is the difference between modern and mid-century modern?

Ted: Mid century modern would be homes built in the 1950-1970s era. Eichler style and many Carter Sparks designed (built by Streng Bros) homes fit this style to a T. They are mostly post and beam architecture and have that unique, classic style. Dramatic entry ways and striking front elevations sometimes devoid of regular height windows, carports instead of conventional garages, exposed concrete hallways, flat front cabinetry, skylights, atriums, courtyards, aluminum windows and large sliding glass doors and clerestory windows are all signatures of this style.

Ryan: Do modern homes have to be newer in age?

Ted: Modern style homes are not exclusive to a decade. There are new homes being built in a modern style today. There are some great examples in the Sierra Oaks, Wilhaggin and Downtown Sacramento neighborhoods. Some homes combine styles like say a modern craftsman or modern prairie style.

Ryan: Why do you think modern homes are showing up more and more in Sacramento and beyond?

Ted: The average buyer in Sacramento is getting more sophisticated and open to different styles of architecture. We are slowly shedding the “country bumpkin” label as a city. I think the influx of Bay Area buyers is also pushing the design landscape into a more modern feel. Is it a trend? Probably. But the farther we get away from faking Tuscan style, the better. Some people want to be different and living in modern architecture definitely makes a statement. Some buyers might have grown up in a Streng or Eichler style and want to get back to the feeling of living in one again.

There was a time when modern Streng Bros homes were difficult to sell and earned such descriptions as 70’s architecture or flat-tops. I created SacModern.com to help highlight the many modern and contemporary homes on the market. Give them a stage, in a way. And try to describe them using terms true to their respective styles. I have sold homes to many out of towners through the state who find that Sacramento as a region has a lot of cool architecture. Not only is there a great selection of modern properties but they are cheap compared to the larger metro areas the buyers are coming from.

Ryan: What do buyers of modern homes tend to look for?

Ted: Open concept living, striking architecture, outdoor privacy, creative inspiring spaces and a place to show off their vintage furniture collection. Your home can be seen as an extension of your personality. Someone that is more reserved might want a more buttoned down traditional home whereas a flamboyant or eccentric type might seek something radical or different than the norm as far as design goes.

Ryan: Any tips for valuing modern properties?

Ted: Typically, a modern home will sell for more than the traditional style home down the street with the same square footage. Maybe it’s a premium for the architecture, the special finishes or the time that went into designing the home. I usually ask the appraiser if they are familiar with the style before they meet me at the property just to make sure they understand the unique qualities. In the Bay Area, the modern neighborhoods are becoming historical areas, protected from demolition or odd style-killing remodels. Because the Bay Area usually has a ripple effect in Sacramento, this might be coming down the pipe for our area.

Ryan: Anything else you want to add?

Ted: Some of these styles do better in different areas. In El Dorado Hills for instance, modern is a tougher sell than in a more city-centric area. I find that the farther away from Downtown Sacramento you are, the harder it will be to sell modern style architecture. My Gary Way listing in Carmichael would’ve been sold a lot faster if it was closer to downtown. Is this due to the demographics that typically buy these homes? Not sure. But I have seen it quite often. Professionals and creatives alike are drawn to the modern style. These types tend to work in and around the core and see a suburban commute as a huge negative.

Ryan: Thanks so much for doing the interview. You killed it. Everyone, you can check out Ted’s website here.

Closing appraisal thoughts: My observation is many modern and mid-century modern homes carry a wider appeal, so it’s important to not just choose three ranch homes in the neighborhood for comparison. This means in many cases we might have to go out a little further and find something that is architecturally similar (and in a competitive area hopefully too). For instance, I appraised a Mid-Century Modern home in Fair Oaks recently and I pulled comps from various portions of Fair Oaks and Carmichael because of the custom nature of the property. I couldn’t just keep it nice and tight in the immediate area because the market area was simply wider for these types of properties.

Questions: What do you think of modern homes? Where are you seeing modern homes pop up? Do you think they sell for more than traditional ranch homes? I’d love to hear your take.

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The line between retro and outdated in real estate

September 4, 2012 By Ryan Lundquist 6 Comments

When looking back on design and styles of decades past, it’s hard to believe people bought into the way things were. But then again, our kids will one day check out our iPhone photo albums and think the same thing. When it comes to real estate, homes that have not been updated in many decades are often marketed with slogans like “original condition” or “Grandma’s dream home,” which are not usually compliments. However, some buyers actually prefer a “vintage / retro” feel and value a more dated design – particularly with Mid-Century Modern (MCM) homes.

Check out the following pictures and tell me if you think any of these features are desirable. Are you ready to bring back some of the older styles?