You will either love it or hate it. This owner transformed a tract home built in 2002 into something with serious Midtown modern vibes. When I saw this house, I knew I wanted to write about it, and I think there are some great conversation nuggets. How do we value something when it has really different upgrades? Is there such a thing as going too far? Today I have a Q&A with Ted DeFazio, and I hope you enjoy. I’d love to hear your take in the comments.
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A FEW PICTURES TO BEGIN
Okay, I want to show you what we’re talking about, and I’ll sprinkle photos throughout the Q&A. This is a tract neighborhood built about twenty years ago in the Stoneridge area of Roseville. Here’s a listing if you want to taste the flavor of this builder (a different model though).
Ryan: What was your first impression when you saw the house?
Ted: I remember seeing this home for sale in the past and always thought it was an awesome remodel. Someone had the vision and went for it. Most remodels include a kitchen or bathroom update. Maybe add on a primary suite, if you’re getting adventurous. This guy blew out the entire back wall of the home and added a commercial style window system, completely gutted the kitchen and bathrooms and made the interior virtually unrecognizable from when Elliott Homes originally built it. The level of finishes in this home are more suited for a high-end Midtown Sacramento loft, much less suburban Roseville.
Ryan: How did you price this one?
Ted: I looked at similar square footage homes in the area with something special, like a view or a greenbelt location. I figured someone would appreciate the transformation as much as one of the aforementioned attributes and pay the premium. It worked.
Ryan: What sort of feedback did you get, both good and bad?
Ted: I received all kinds of feedback, especially on the price. Some examples: You will never get that. Where did the price come from? It’s not worth it. Why would someone do this in this neighborhood? Who lives here? What does this person do for a living? Others came from far and wide loving the design and layout. I met multiple families trying to figure out a way to make it work.
Ryan: What type of buyer is looking for something like this?
Ted: I predicted a buyer coming from one of the Roseville hospitals or some other professional who liked the urban style and didn’t mind living in the deep suburbs. I always mention the Venn diagram when listing certain types of homes. This one has a lot going for it. Modern style, quiet interior location and great schools. Problem is, the typical Roseville bionic family buyer doesn’t really value the style. Their list usually includes four bedrooms, a grassy area for the dog and some space to get away from the kids.
Ryan: Is there such a thing as going too far with modern upgrades?
Ted: This one went a little far, especially for a standard production home subdivision. SubZero and Gaggenau aren’t typical in these parts. This is more of a Samsung or Whirlpool neighborhood. The modern flat cabinetry was top of the line and the appliances were fully integrated. All these items made this home a fish out of water.
Ryan: What is happening right now with buyers looking for modern stuff? Are you seeing anything interesting or different in today’s market, whether high-end prices or lower price points? Does Bay Area migration starting to lessen affect the trend?
Ted: The lack of inventory is making it difficult to land a winning offer. Most of the recent modern sales have seen multiple offers. I am seeing some pull back from the payment perspective. Rates aren’t helping affordability, even for “rich” SF Bay Area types. The return to work reality is also present now as I am hearing a lot of people rethinking their moves.
Ryan: What advice would you give to homeowners when it comes to improving their homes?
Ted: Don’t go crazy. Build to your neighborhood. I would never want the most expensive or extensively remodeled home on the block. Think about liquidity and salability. Each neighborhood has a format that works, replicate it.
Ryan: Any tips for valuing properties that have way different upgrades than anything else in the neighborhood?
Ted: I try to find a trade-off component on a comparable sale. As long as it is justifiable, it will be fine. In the example in Roseville, we used properties with views. If that doesn’t work, hope to find a buyer who appreciates the updates and can pay cash or have enough down for a waiver.
Ryan: Thank you for doing this. Very insightful stuff. Everyone, please visit Ted’s website.
CLOSING THOUGHTS
I like this property even though I don’t have the right furniture for it. But it really doesn’t matter what I think about the home. And frankly, it doesn’t matter what you think either. The only thing that matters when it comes to value is what the market will pay. This example is a good reminder of how important it is to set aside personal bias, study the market, and know the buyer profile. I do think a case study could be written about this home since it definitely colors outside the lines, but that’s not what this post is about. If you have some ideas for how to value something like this, please comment. Also, I loved the mention of a Venn diagram when considering the buyer profile.
FUTURE Q&A ON MY BLOG
I’m open to doing other interviews, so hit me up if you have an idea. Just know I’m not looking to market someone or a property (hit up the SacBee for special properties that are active). It has to be something that I think is interesting and useful for readers. I approached Ted about this property because I thought it would be a cool post. Anyway, my inbox is always open. Thanks.
MY ANALYSIS OF THIS SALE
In short, this property sold at the very top of the price market for model match units, and it sold near the top of units with competitive square footage. The subject property sold for $835,000, and the only other house above at $900,000 backed a greenbelt and was built in 2017 (instead of 2002 like the subject). For context, a model match closed at $735,000 without a pool, but it had extensive upgrades and quite a backyard. Another model match sold at $800,000 with a pool and backing open space.
Now let’s look at price per sq ft. Basically, this property sold toward the top of the price per sq ft range for the size. To be clear, I don’t use price per sq ft to value properties, but I do look at the price per sq ft range – particularly when dealing with something unique. Here are some thoughts on price per sq ft and Starbucks cups. I know some people abuse price per sq ft, and I’m not advocating for that, but as a metric it has some usefulness. Moreover, if my value isn’t within the price per sq ft range for the size, then it’s a clue for me to understand and explain why.
NOTE: If you like the two visuals above, I have a free template for making these graphs. Click here and scroll to neighborhood template.
And one more visual. I honestly think the first two graphs are more useful, but here’s another one. The subject property sold twice in recent years. To me it looks like the subject did a little better in today’s market compared to 2020 in terms of its price position.
Thanks for being here.
Questions: What do you think of this house? What stood out to you most about what Ted said? How would you go about valuing something like this? I’d love to hear.
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I like most of it. The bathroom is a bit much, and I hate swimming pools, but it’s nice.
Thanks Alison. I appreciate hearing.
I love the house and that they made it their own without going too far in my opinion. I’m not surprised it sold at the top of their comparable market. They only went too far if they sold it too quickly after the remodel and didn’t have time to recoup their investment.
Thanks Anne. Yeah, this would likely be a very difficult property to pencil as a flip. This remodel had to be substantial in cost. It has owner-occupied vibes.
Overall I personally love the finishes, but I tend to favor modern. I think Ted made some excellent points, including targeting who he thought the buyer would be. I have sold a lot of mid-century homes, including numerous Eichlers, and valuation can be tricky. The demand and price point for these homes can vary greatly from a “standard” ranch home in the exact same neighborhood. I showed up with all my Eichler books and documentation to meet one appraiser, he responded by saying he knew there was something “weird” about the house. I was going for something more like “special”, but ok. However, I have found that the majority of appraisers who might not have familiarity with these types of homes are often open to receiving information, and their subsequent higher valuation reflects that information. Of course cash sales sprinkled for these high demand homes also help to increase values. In the case of this house, think it was a great move by Ted to use comps with something special (like a view) to value this home.
Love it. Solid commentary. And classic “weird” response. I am really glad to hear you are finding appraisers to be open. I think agents who specialize in MCM homes and other types of niche architecture often have a deep knowledge-base. Thanks again Michael.
We run into stuff like this quite often. It would be interesting to know the cost of the remodel. I’m sure it’s exponentially more than small increase in sales price. Good advice to build to the neighborhood, but if they have a lot of money to throw around and/or plan to stay for a very long time, then they should do what makes them happy.
Totally agree. This wouldn’t make sense as a quick flip. What a change in design though with the addition of so much natural light (and expensive). Thanks Gary.
If the current owner likes it, OK, However, what will future buyers think, Only time will tell !!
Thanks Truett. So far this property has sold twice on the open market, and both times it sold toward the top of the competitive range. This doesn’t guarantee the future price position, but it is compelling at least to consider.
The buyer got a bargain (quality of house vs price). I suspect the owner who remodeled this took a bath. If, however, this kind of remodel had been in a closer-to-Sacramento neighborhood, like Sierra Oaks or Wilhaggin, I think the seller could have gotten a much better return. I’ve seen some remodels there get eye-watering prices. Perhaps it’s the old “location” mantra.
Excellent commentary. Yep. Location makes a big difference. Different locations and price points have different expectations. It’s just true.
Homes like this, keep you as an appraiser on your toes. Good job in how you handled it. I like the house, although I can see where it would really be a challenge trying to get comps.
Thanks Ryan for all you do.
Thanks so much Rick. To clarify, I didn’t actually appraise this, but I did do some analysis on the sale after it closed to help show that it looks to have sold at a price premium. It sure does get tricky in real estate to figure out value though. Sometimes there aren’t any true comps to consider, so we have to figure out how to credibly support value. Hope you’re well.
I’d live there!
Thanks Brad. Hey, pool party at your modern tract house. Let’s do it!!!
I like someone the elements and dislike others. To me, the kitchen cabinets are inadequate and are meant for people who don’t cook. The area where the fireplace and TV are, compete with eachother and draw your eye back and forth. Too distracting. The bathroom is not spacious enough with all of the fixtures. I like the backyard.
Thus we see the real estate market and what Ryan and his interviewee are getting at. This is a modern house, unusual in a traditional market, with new and different spatial arrangements, a high-end kitchen (for today’s foodies) and designer fixtures in a minimalist package (not to say simple). If you don’t like it, you walk way. If you like it, and see nothing else like it in the market, you’re more likely to pay extra for it. And that speaks to the appraiser’s conundrum. What constitutes value and for whom?
The struggle is real.
Thanks Helen. I appreciate your critique. I think the thing I like most is the natural light with the extra sliders. Now an accordion door would have taken this to an entirely different level (but those are so expensive).
From an architect’s perspective, this seems like an improvement to the tract home (especially the high-quality appliances you mentioned), but it’s not extravagant at all. The exterior still plays nice with the neighborhood, and the interior finishes are neutral, probably appealing to a lot of people. It doesn’t seem like a risky move (unless, as some pointed out, you take into account the cost of construction). So no, I don’t think they went too far 🙂
P.S. Thanks for the insight into Roseville. I live in Carmichael and wish it was less…rural!
Ha. Thanks for the perspective Yevgenia. I always love to hear from architects, and I find the perspective can be so much different at times because it’s not just about profit (like a flipper might consider). Carmichael and Fair Oaks do have somewhat of a “rural” vibe in terms of larger lots. Roseville is definitely a different feel in that regard. Thanks again. And feel free to pitch in your thoughts whenever.