127 North St, Lexington

Market Analysis for:

Glenn & Jacquie Kesner

I've done a market analysis on your home at 127 North St in Lexington and have prepared this document to help explain how I've arrived at a price for your home. I perform a market analysis and calculate a price taking into consideration a home’s location, size, configuration, number of bedrooms and baths, lot size and general condition. I also scrutinize the home for issues that, in my experience, will impact the price of a home making it more or less valuable. Then, I look at your current competition - the other homes that buyers in your price range will be viewing, to help determine your price. I will also include in this report an analysis of what a builder would pay for your home as a teardown as part of the 'Buyer or Builder' program.

Contents

  1. Description of Home
  2. Market Dynamics
  3. Analysis of Relevant Properties
  4. Pricing Recommendation
  5. Marketing

Description of home

Please note that these comments do not relate to marketing, but are included purely to ensure that we have captured the information and reflect the major components of your home.

Your home is located in a desirable environment, surrounded by conservation land, ponds and privacy.  You own 2 parcels of land, one having the home located on it and is 0.74 acres, and the other smaller parcel of adjacent land being 0.12 acres, totaling 0.86 acres. Your home was built in 1946 and has 3 bedrooms and 2 full bathrooms on the first floor with a half bath in the lower level along with a shower in another room behind the half bathroom. According to public record there is 1016 sq ft on the first floor, 690 sq ft on the second floor, 422 sq ft in the finished lower level, 312 sq ft in the finished sunroom. We will include this in total sq footage and will note that it is unheated (?), and the total sq footage we will use for this market analysis is 2440 sq ft.

Your home is an expanded cape style home. As you enter the front door you enter into the living room. The living room is large, has picture windows and has an open plan with the dining room directly in front and the main part of the living room off to the left. The dining room has picture windows overlooking the backyard and there are french doors leading out to the sunroom off to the right. There is a wood burning fireplace in the center of the wall toward the sunroom. The sunroom has walls of windows with ceramic tile floors and sliders out to the deck and backyard beyond. Off the living room is a full bathroom which is fresh with ceramic tile floors and walls. Adjacent to the full bathroom is a small bedroom/office. From the living room you go through a cased opening through to the kitchen. The kitchen is smaller with a granite countertop, white appliances, and a breakfast bar. There is a mudroom off from the kitchen leading out to the patio & garage beyond. From the kitchen is another bedroom/family room with an attached bathroom. It has sliders out to the deck from this area.

Upstairs there is a large room currently being used as the master bedroom. It has picture windows over the stunning views of the pond. Access to a roof deck over the sunroom is from this room. There is a wood burning stove in the master bedroom.

Downstairs in the lower level is a finished room with wood paneling, wall to wall carpet, a french door out to the hall to the exterior. To the back of the stairs there is a half bathroom with a shower in the laundry room behind the half bath. There is another finished room with wood paneling adjacent to the half bathroom.

There is a 1 car garage with a carport and 5 car off street parking.

The location of your home has surrounding conservation land and wetlands. Builders will need to investigate further with the town the ability to build a new home on your land so we should allow them time to do their due diligence in order to get the highest price possible.

Upon talking to 5 builders their biggest concern is the flood zones that are shown in the GIS map below with the flood zone theme turned on. Builders have commented that with the flood zones being across a large part of the land the risk is that a wetlands assessment which will be required by the Conservation Commission before approval to build, may find species of vegetation which show wetlands existing. If they find this then they are very restricted as to what they can do with the land.

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Market Dynamics

We have been experiencing shortages of housing inventory in Lexington over the last 5 years or so. There are always a number of buyers looking to buy in Lexington because of the strong school system, the community dynamics and vibrant downtown. People like the feeling of the downtown area, and want to stop and have a coffee, or have dinner at the many restaurants, or just watch the world go by, chatting with folks who are out and about. The Minuteman bike path and conservation areas close by pull those who desire an outdoor lifestyle while still remaining within commuting distance to Boston.

The Lexington market has seen increasing prices over the last few years given the limited inventory. The demand for homes in Lexington far outweighs the supply and each month a snapshot of available homes for sale shows the declining inventory levels.

Average prices in Lexington are well above average prices obtained in the peak of the market in 2005. Average single family home prices have been increasing steadily since 2009. The real estate market downturn that existed for the last few years is well and truly over and prices are continuing to increase each year.

Sales distribution statistics for single family homes show that the $1M-$1.5M price-range is the most active in Lexington. The next busiest price range in Lexington is the $1.5M - $2M price range. This is an indicator that new construction is having a significant impact on the average single family home prices in Lexington. The number of new construction homes being built in Lexington in 2013 was 55 homes, 70 homes in 2014, 71 homes in 2015, 66 homes in 2016, and 55 homes in 2017.

Before reviewing the price per sq foot charts it is important to throw in a caveat of using the average as the definitive guide. There is wide variability among agents as to what is included in the living area reported in MLS. In some instances, agents will include a finished component of the basement in the living area and this is acceptable so long as how the living area is calculated is disclosed. Others report the living area reported in public record, which never includes finished areas in the basement, but note in MLS that there is a finished basement. To this end, it is important to review each individual listing to determine the ‘true’ price per sq. ft. of above ground living area, but we also need to factor into this when a home has a finished basement.

Reviewing the price per sq. foot charts for single family homes shows us that the average price per sq. ft. in Lexington around the $700K price range is around $446 per sq. ft. It’s important to note that the maximum price per sq. ft. achieved varies across most price ranges, along with the minimum obtained for each price range.

When the year built in the 1940’s the average price per sq. ft. is $448.

The chart below shows that single family homes in Lexington of similar size to your home in the 2,000 square foot range, have an average price per square foot of $403 but it increases to $477 per sq. ft. when you decrease to the 1,000 square foot range. It is common across municipalities to see an increase in the price per square foot for smaller sized homes, as it reflects the minimum cost of a home in a town irrespective of the property size.

The chart below shows how many months’ supply of inventory there is in a given price range. It uses the assumption that given the same rate of sales over the prior 12 months, and considering current inventory available for sale, how many months it should take to sell the available inventory. This is referred to “Absorption” in the real estate world. 

Any price range where there is more than 7 months’ supply, we consider there to be an oversupply of inventory, also known as a ‘buyer’s market’. Anything between 4 – 6 months is considered a balanced market. Anything less than 3 months’ supply is considered a shortage of inventory on the market at this price range, also known as a ‘sellers’ market’. As can be seen, currently, absorption rates for all homes in the $700K price range are under 1 month’s supply showing a severe shortage.

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Analysis of Relevant Properties

The following map shows the  homes that we believe to be of value in determining the price of your  home. Below the map you will find basic information  provided for each home including the price the home was  listed at, and the price the home sold at (if sold), the listing date, Days on market, Bedrooms, Bathrooms, living area size and lot size.  Noted for each home is a classification of Relevance which outlines whether we think the  property is valued Less (L), Relevant/Comparable (R) or Higher (H) than  your home. The notes for each home outlines the similarities and differences between  your home and the one being analyze

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage

This home is smaller than your home at 1489 sq ft which include a finished basement. Your home is 1489 sq ft which includes the sunroom and the finished room in the basement. It has the same number of bedrooms as your home at 3 bedrooms, and has 1 bathroom less with 1.5 bathrooms versus your 2.5 bathrooms. It has no garage whereas your home has 1 garage and carport. It was being sold 'as is' and needed a coat of paint at least. It was built in 1963 whereas your home was built in 1946.  It was located on a 0.72 acre lot but the difference with this acreage was that it was long and thin so would be difficult for an appealing home to be built on it. Competing offers took the price higher than asking price.

Relevance: Less.  Given the smaller size of the home, inferior lot, inferior presentation I believe your home will sell for more.

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage


Relevance:

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage

This home is smaller than your home in living area at 1686 sq ft which includes the lower level. Yours is 2440 sq ft which includes the finished room in the basement and the sunroom. It has the same number of bedrooms as your home at 3 bedrooms, and has a half bathroom less at 2 bathrooms. It was built in 1960 whereas your home was built in 1946.  It has a similar desirable aspect as yours in that it is on a similar lot size, and also backs onto conservation land, but is on a side street. The home is a split level home which has a living area wing and a bedroom wing which buyers prefer more than your layout where bedrooms are not co-located. The kitchen in the home was quite large with lots of cabinetry and white appliances. There was no garage whereas your home has a 1 car garage and carport.

Relevance: Relevant. Given the similar lot size, smaller living area, similar environment yet on a side street, superior room configuration and layout I believe this home is relevant to your home.

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage


Relevance:

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage

This was our listing. This home is smaller than your home at 1938 sq ft which includes the finished basement. Your home is 2440 sq ft which includes the finished basement and the sunroom. The home had the same number of bedrooms as your home with 3 bedrooms and has 2 full bathrooms versus your 2.5 bathrooms. It was on a smaller lot of 0.37 acres on a quiet side street. The home had a carport, whereas your home has a garage also. The home had been completely painted inside and sparkled. The kitchen and bathroom cabinetry had also been painted. We had 14 offers on the home and sold it for well over the asking price.

Relevance: Relevant, but higher. Given the smaller size of the home, smaller lot size, superior layout, superior condition I believe this home is relevant to your home but it will sell for more.

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage


Relevance:

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage

This was our listing. The home is slightly smaller in size than your home but the 1644 sq ft was all above ground living area whereas yours at 2440 sq ft includes the finished basement and the sunroom. The home has the same number of bedrooms with 3 bedrooms, and has 2 full bathrooms versus your 2.5 bathrooms. The home was on 0.51 acres versus your 0.86 acres. This home had been completely renovated for sale with fresh paint everywhere, new roof, new kitchen and new bathrooms. We had multiple offers on the home and most were buyers, but a builder ended up buying the home to tear it down. I contacted the builder who bought this home and he was worried about the flood zone/potential wetlands.
A sad situation as a realtor had bought the home to flip the home, did all the work, and just prior to coming on the market he passed away suddenly. His wife contacted me to sell it as the realtor had told her that I would get them the highest price which was lovely, but still sad that it happened that way.

Relevance: Higher. If we are talking purely from a buyers perspective, then given the superior condition inside I believe it will sell for higher than your home.

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage

This was our listing.  This home is smaller in size than your home at 1666 sq ft which is all above ground living area. Your home is 2440 sq ft which includes the finished room in the basement and the sunroom. It has the same number of bedrooms at 3 bedrooms and has 2 full bathrooms versus your 2.5 bathrooms. It is located on a similar size lot of 0.69 acres, yours is on 0.86 acres. It does not have a garage whereas yours does. The home had been completely renovated inside with a stunning kitchen opening to a family room which overlooked the wooded backyard and was very private. There was a bedroom wing and a living area wing which the buyers prefer because the bedrooms are co-located. The master bedroom had a master bathroom attached.

Relevance: Higher. Given the smaller living area, but superior condition and layout I believe this home will sell for more than your home.

Your details: Living area 2440 sq ft | 3 beds | 2.5 baths | Lot size 0.86 acres | Built 1946 | 1 car garage

This home is a similar size to your home at 2376 sq ft in size, whereas yours is 2440 sq ft in size which includes a finished room in the basement and the sunroom.  It is on a larger lot than your home at 1.27 acres, yours is 0.86 acres. It has Vine Brook running through the lot so it has the similar conservation/wet lands potential issues with regard to building. It has the same number of bedrooms as your home at 3 bedrooms. It has 1 full bathroom less than your home. This home was sold to a builder and the comments note that the home was in need of renovation and was an estate sale. Competition pushed the price well up from asking price.

Relevance: Relevant, when considering a builder. Given the similar living area, similar condition, larger lot I believe it is relevant when you consider the buyer was a builder. Some of the land was the other side of Vine brook so it is a similar size with regard to buildable area.

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Pricing Recommendation

My analysis of the relevant homes outlined above suggests a final market value for your home of $760,000-$800,000 when selling to a buyer.  

If you were to sell to a buyer, then given the current market dynamics in Lexington, I would suggest listing your home at the lower end of this price range to attract more interest and potentially multiple offers.  If the market deems your home to be worth more than the list price, then the price will be pushed over the market value of your home, and sometimes well over when we get multiple offers. You can see many examples above that came on the market for a lot less, and competition pushed them up to the price they sold for. The challenge in estimating a price for a home is ‘would this home have sold for this price if they had priced it higher?’ or was competition the driving factor that got to this price.  Experience tells me that competition is why they sold for what they did, so we have to be careful with pricing. A couple of good examples of competition pushing a price higher than market value is our listing at 18 Middle St which came on the market for $699,000 and sold for $803,000, and our listing at 234 Woburn St which came on the market for $749,000 and sold for $850,000. 

When homes are overpriced they end up sitting on the market and ultimately selling for less than market value, whereas homes priced realistically can often sell for well over market value. Competition is what will get us the highest sales price. As we see time and time again, if the buyers consider the market value of your home to be realistic in relation to the asking price, then competition will push the price up higher and often over the market value of the home. The challenge with overpricing is that the buyers are very educated – they go week after week to see homes in their price range so they KNOW what the prices are and what ‘feels’ right.

I have to stress that these are recommendations.  We would bring your home on the market at whatever price you deem to be appropriate.  

Buyer or Builder

As part of our Buyer or Builder initiative I have asked 5 builders to review your lot to propose a tear down value for your home.  

All of the builders I contacted in this initial phase elected not to offer a price as their concern was the wetlands assessment which might mean that they cannot tear down the home and build new. If the wetlands assessment meant that they cannot expand beyond your current foundations then they would be limited as to the size of home they could build.

If we were to sell to a builder, there are a couple of differences in selling to a builder: 

  1. is that you don't need to do any work to the home to prepare it, you take what you want from the home when you leave and the builder will dispose of your belongings that you don't want. 
  2. A builders offer will not have an inspection contingency, nor a mortgage contingency.  
  3. Most builders will also work with you with regard to closing date, and potentially allowing you to stay a little longer in your home after closing. Each sale is different and the builders are quite flexible when compared to a buyer because a buyer needs to have somewhere to move to, to live in, so there is less flexibility.
  4. When selling to a buyer there is a 5% selling fee. This selling fee is split equally between the listing agent's company and the buyers agent's company.  So your net when selling to a buyer is the market value - 5%. When selling to a builder there is no fee, as the builder pays the agent when the subsequent new construction is sold. So your net when selling to a builder is the price offered minus attorney fees, and typical closing costs.

If selling to buyers, determining the right price all depends on your motivation and your risk tolerance level. We know that homes that are priced at the 'strike price' will sell quicker and may generate more than one offer.  I’m an excellent negotiator and know how to push a price up if we have the market activity. I also know that some sellers want to put their home on for a higher price than I might recommend, which I’m willing to do, so long as it is understood that putting the home on for more than the majority of buyers perceive its value, could mean that your home will have a much longer market time and sell for less than it should have had it been priced properly out of the gate.

I DO NOT DETERMINE THE PRICE - the market dictates the value - what a buyer is willing to pay. My job is to make sure that you have the best market exposure and that your home is positioned well in the market.   I do not believe in projecting more money than I think your home will sell for just to get your business.

My team and I know how to stage and market your home, and I understand its value, but I can only sell it for what the market or a buyer will pay. I strongly believe that a home should be priced compared to the current competition, not just on what has sold in the last six months.  At the end of the day, you will be competing for the buyers looking for a home like yours and in the same price range. You can do far more 'damage' to the resultant price we get for your home if we overprice. The prospective serious buyers will see your home within the first weekend of your home coming on the market, and they will have seen everything else in this price range.  In other words, the serious buyer knows what is priced well.  If they don't see value in your home at its listing price and are not motivated to make an offer, then they will move on and keep looking.  In times of increasing prices, it is often hard to predict what a home will sell for, but be assured that even if we price your home lower than what market value is currently, market dynamics will bring the price of the home up to where it should be.  Prospective buyers should walk in thinking the price 'feels right' and are motivated to make an offer in the short term, rather than letting several months’ pass.

It is important to stress the value of marketing your home to capture the highest price.  In times of low inventory, we know your home will sell by doing the bare minimum to market it, BUT that is not going to get you the maximum price for your home.  Key to getting the maximum price for your home is to prepare a comprehensive marketing plan that incorporates all avenues available to us to expose your home to the maximum number of buyers out there looking.  Exposure, and feet in the door, is what will get you the highest price for your home. Basic ratios help explain this.  If 10% of the buyers who walk in your door fall in love with your home, then if you only have 10 buyers walking in, then potentially there is only 1 buyer - if you have 100 buyers walking in your door then using the same ratios, you will potentially have 10 buyers falling in love with your home.  10 buyers will push the price up versus only one buyer.

 New statistics state that over 100% of potential buyers search the web as their primary search vehicle.  Thankfully, your home will show fabulously in photos. With historically low interest rates likely to increase and inventory at a 7-year low, there are still homes that do not sell in this market.  I’m making my recommendations to ensure that you are one of the sellers who will have success in the first month of being on the market, but optimally the first weekend.

Summary

I believe there are 2 options at this point.  

  1. Obtain a wetlands assessment (potential cost anywhere up to $2K) and then I contact all builders in the town with the wetlands assessment in hand, and ask for their offer.
  2. Bring your home on the market with just minor paint work, and we stage your home for the buyers. You price the home realistically and let the buyers and builders compete for the home.  In this instance it would be unlikely that the builders will offer more than a buyer because of their concern with the 'unknown' potential wetlands circumstance.

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We look forward to working with you!   Please reach out if you have any questions at all about this market analysis or our plans to market your home! 

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