GDoN “Adjacent property just sold/settled for $1,035,000” edition

This house is located at 3628 New Hampshire Avenue, Northwest. The listing says:

“Great location! Renovated! Move in ready. Huge back yard! CAC. Lovely Hardwood Floors! Balcony off upstairs back bedroom. Great open rear view. Easy access Off street parking for 2 or more cars. In law suite with separate kitchen, full bath and rear walkout entrance. 2 blocks to the metro, restaurants, and shopping! [Adjacent property (3630) just sold/settled for $1,035,000]”

You can see more photos here.

This 4 bed/2.5 bath is going for $679,000.

30 Comment

  • Here is the real question – is the house that sold for over a million there worth more than a million?

    • Axiomatically, yes. That is how real estate is ultimately valued; by whether or not it sells for a price. There is no assessor in the sky handing down valuations some other way.

      • HaileUnlikely

        It’s not quite that simple. A rich guy could offer $10M to buy back his childhood home that was not for sale but would have sold for $150k on the open market. A developer recently bought a bunch of adjacent houses near me for close to $1M each, until he owned the whole block, and then demoed the whole block. Each would have otherwise sold for less than half that, but for a guy who already owned most of the block but wanted to own the entire block, they were worth a lot more. Sometimes what something sells for is different from usual notions of value. (not saying that is or isn’t the case here, just that it can be)

        • +1. Also, if someone paying all cash, he/she doesn’t have to worry that if the property doesn’t appraise for the offered price, he/she will be denied a loan.
          .
          What an individual will pay for a property is one thing, and it may not line up with what the bank thinks the property is actually worth.

          • Those assessors just tell banks what they want to hear, but even if taken at face value, they base their assessments on a few comparable homes nearby. I don’t know that they drop outliers or dig into whether the buyers of nearby homes were eccentric millionaires buying childhood homes, so it stands to reason than even an assessor’s valuation of a house is going to be brought up by a sale one step later in the process (e.g. this house’s valuation will be affected by the house next door).

          • HaileUnlikely

            Of course its valuation will be affected by the house next door, as opposed to being completely 100% independent of the house next door. That’s not what we’re talking about here, though. The point under discussion here is whether the house next door is really worth $X just because there exists one person in the world who is willing to pay that much for it. And I’m not saying it isn’t; I’m only saying that it is not as simple matter of definition.

          • It’s worth it if someone’s willing to pay for it. The question is whether there’s a critical mass of similar properties going for that amount, such that, if given another property comparable in every general way (location, size, construction quality, finish quality, zoning for potential redevelopment), it would sell for similar with high certainty.
            .
            And maybe now I’m making a semantic argument, but it matters. It’s easy to say “that’s too much because I wouldn’t pay for it”; it’s harder to say “I’m sure that sale is an outlier.” It’s extremely common for a person to see a sale that they wouldn’t personally engage in, it’s much much less common for a sale to occur that’s a complete outlier, with a lucky seller and a sucker for a buyer.

          • HaileUnlikely

            Well, most of the other legitimate comps of the one in question (respectable looking full gut renos within a couple blocks) sold in the high $800K range; the highest in the past year was $949K and it was on one of the quieter side streets. It is also notable that this one was listed for $1.1M and went for $65K under asking. I think there’s a pretty solid case to be made that they sold some sucker a ~$900K house for $1.035M and tricked him into thinking he got a good deal.

        • There are any number of variations in the motives of a buyer (“oh, well he has several kids so the space mattered more”, “his job was so close to the house he was more motivated to buy it”). I don’t see the point to parsing them all out and setting aside some “true” value. If there’s some unique developer interest situation with one house, it’s presumably likely to exist in a similar house, all things being equal. Some rich person buying their childhood home is a pretty contrived narrative that probably doesn’t occur in real life, if only because a person who makes a lot of money doesn’t pay extra for something and a person selling doesn’t generally gather enough information to extort the person over it. I use “generally” loosely, since I don’t know that this has ever happened in real life.

        • @HaileUnlikely, so then the condos down the street (also not direct comparables) that each sold for $520k should be factored in as well?

  • I think this is priced pretty close to what the house will ultimately sell for.
    .
    I think the house next door sold without ever being listed on the market. Can’t imagine paying that much to live directly on NH Ave though.

  • Will go above listing. Maybe 725-750? That said I would not want a house there. Too much traffic along Nw Hampshire for it to be a pleasant place for a SFH. More appropriate for condos.

    • I think it’ll land somewhere +/- $20k of 775. Good bones, nice sized lot, yard + off-street parking, plus location? As far as esteem for Metro has fallen, this is still really close to a stop.

      • doubtful since it was on the market for $750K in January

      • Bones are irrelevant. Almost certainly a developer will buy this. It just doesn’t make sense to buy an expensive SFH on a busy street that will only get busier.

        • This may be too expensive for a developer given that it isn’t falling apart. They like to buy low (and that ain’t low) so they can make more on the sale. This is also likely true if there is going to be enough competition that they may have to pay more than the list price.

          • It’s on the upper end for a developer and with a shallow lot limiting how far back it can be extended, likely too expensive to make the financials work. I live around here and the most I’ve seen a simple rowhouse sell for pre-conversion is ~$660K, and that was on a much quieter street with a larger lot. Big detached houses on Otis, 11th, and 13th have gone for more pre-conversion but you’re talking about a much larger buildable footprint in that situation.

        • This is not a developer’s kind of house…They prefer the run down, gut everything lower priced crapholes

    • This is already priced at $500/sq. ft, which seems really high for a house in this condition. I have a hard time seeing it go for even $725.

      • HaileUnlikely

        I think the stated square footage might be lower than actual. I’ve been in another house in this row that looks to have the same physical footprint. My house is 1240 square feet, and it’s way more than 120 square feet larger than my house. I’d guesstimate the actual square footage is about 1600 excluding basement.

    • I live on New Hampshire on the other side of the Georgia metro station and what you said about not being pleasant as a SFH is ridiculous.

  • Wow, that house — and yard — needs some work.

    • What kind of work do you think the house needs? It looks perfectly livable as-is, and already has central air.
      .
      Sure, the kitchen cabinets are slightly out of date, and I don’t dig the tile shown on the bathroom floor… but those are pretty minor considerations.

  • If the one next for sold for over a million, and you aren’t asking anything near that for this one, then this one clearly isn’t worth that, and the house next door is no comparable for this one, or you’d use it as such.
    .
    The one next door was a complete gut reno – this one is not. While many would prefer house like this (original floors in good condition, renovated but simple K and B and basement, rather than pay for the usual flipper’s terrible taste), the fully gut renovated one will be worth more.
    .
    Now I haven’t followed prices around there to know whether the house next door was worth that, but it doesn’t really matter, does it? What matters are the real comps, not any outlier.
    .
    There’s a condo in my building that sold for far, far more than anything with similar size and layout – I saw the photos, it was nice, but no way so nice as to justify the price differential. All I can figure is someone wanted to transfer some money to someone else and not have it show up (fraud? avoidance of the gift tax? don’t know, don’t care.) All I know is that it isn’t a true comp, given what everything else in the building that is similar sells for.
    .
    Though I suppose an outlier can skew comps for financing, just like one random foreclosure in a building that sells for far less will – in this case, the price direction is not a problem for buyer financing. But buyers aren’t dummies about what they’ll offer.

    • I guess the selling price of the house next door is potentially useful as an indicator of what someone could get if they choose to invest in a renovation of this property. So maybe that information might be useful to a flipper. But as a potential owner/occupier, I would not feel compelled to buy a house just because the one next door sold for $300k more than what is being asked for the house I am considering.

  • 2 doors down sold for $650 at the end of 2014 (was my house). Main differences were that kitchen was more updated (though not amazing) and master bath was gorgeous, custom, done by us. So yeah I’m curious about this from a “what could have been” if we’d waited another year to sell POV. Of course, they’re now trying to sell a place a block away from our new house for $1m so. How high is up.

    The street didn’t bother us too much; we replaced the front windows & door to improve sound barrier.

  • I walked through this house in January when it was on the market. The listing price then was closer to 750, which was way too high (and the agent at the open house seemed to agree). The current listing is much more reasonable. The place needed some work, but most of it seemed cosmetic. It had some nice original features including pocket doors and woodwork. The house is a good size and has parking. A lot of the annoying reno work (like central air and kitchen updates) has been done, so this is a good option for someone who wants to live in while renovating. I think the price is fair, but it’s May now so it might sell for more.

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