Price Per Square Foot Fallacy.
I frequently run into other agents and consumers that measure residential housing value by using the price per square foot metric. While using this data can have some value, I do not find it particularly useful. Property condition and layout are two factors that can drastically change the value of square footage, which can make the price per square foot metric less helpful or even useless.
Simply pointing to price per square foot to determine a property’s value ignores the physical condition of the property. Renovated square footage is significantly more valuable than property that has lots of wear and tear. Also, high end appliances or fixtures can greatly increase the value of a property. If the price per square foot of a certain property is really high compared to others in the area, it might be because the space is renovated with high end fixtures. And if the price per square foot of a property seems low, it might be due to ...Read more
Unique Properties Require Patience.
The third “P” in the Triple P Listing Truth refers to the Property. The first two “P’s”, Price and Pictures, will generate showings, but at the end of the day, the Property is what it is. In the current marketplace, too much emphasis is placed on the first “P”, Price. The current mantra goes, “if the house isn’t selling, it must be over-priced.” To borrow a phrase from the esteemed Lee Corso of ESPN: “Not so fast, my friend.” If you have a unique property, you might have to wait for a unique buyer that loves your house.
For example, if a seller owns a contemporary style house in a neighborhood filled with colonial style houses, then the majority of potential buyers in that neighborhood will likely prefer colonials. The seller will likely have to wait until a buyer that prefers contemporary houses comes along. The seller of the contemporary could reduce the price, but if the buyers ...Read more
Do Not Write the Contract for $400,000!
Write it for one penny less. It will save you money in the District of Columbia, and possibly some other areas as well. Please allow me to explain. Occasionally, I will receive an offer for a property where the amount offered in the contract is $400,000. While there is nothing wrong with this number per se, it can be a costly mistake for both the buyer and seller. How? For better or worse, the DC Recorder of Deeds taxes transactions at or over $400,000 at the rate of 1.45% for both the Transfer and Recordation tax. For any transactions under $400,000, the taxation rate falls to 1.1%. The general custom is for the buyer to pay the Recordation and the seller to pay the Transfer Tax.
Here is the breakdown of the math.
$400,000.00 at 1.45% = $5,800.00
$399,999.99 at 1.1% = $4,399.99
Total Savings = $1,400.01
I see this mistake happen more than I should, ...Read more
In prior posts, I wrote about how most real estate marketing is geared towards capturing clients, not necessarily helping consumers. I hope this story helps illustrate my point.
I worked for a client interested in buying a condo in downtown Washington, DC. A nice condo came on the market, and we viewed it the first day of listing in hopes of beating the market. My client was very interested. An agent with the brokerage that represented the seller held an open house the next day. Please note that it was not the listing agent, but an agent affiliated with the listing brokerage. My client said that he might drop by the open house, and I agreed that it was a good idea. I gave him my business card to give to the agent holding the open house. My client inquired as to why he would need to give the agent my card. I indicated that if he signed-in at the open house and gave his personal information, ...
There is a common misconception about Recordation and Transfer taxes in the District of Columbia, and if you aren’t careful, it’ll cost you a lot of money. When real property is bought or sold in the District of Columbia, the Recorder of Deeds charges two hefty taxes, the Transfer Tax and Recordation Tax. The taxes are calculated on a percentage of the sale price and easily run into thousands of dollars. I’ve noticed that there is a misconception in the industry that there is a law requiring the Seller to pay the Transfer Tax and the Buyer to pay the Recordation Tax. I’m here to tell you, there is no such law. The split of the taxes is customary, but they are entirely negotiable. And if you aren’t careful, you can end up paying both and it’ll cost a ton. Let’s do some math:
On an $800K sale, the Transfer Tax is $11,600. The Recordation Tax is $11,600. If you don’t negotiate a split, you’ll ...Read more