Flat But Up

Posted by Dave Fratello on Tuesday, March 8th, 2011 at 5:29am.

There's a new flat walkstreet dirt option in the South End.

For starters, the sellers are thinking big.

The listing is 324 8th (3br/2ba, 1225 sq. ft., 4050 sq. ft. lot), and the rather high $2.6m start price partly reflects scarcity.

That high lot value also reflects a unique feature of the property – it's a 1 1/2-size lot. You don't find these often. Maybe they're thinking big because it is big. 

Where else could you find a 1 1/2-size lot in the area?

Oh, right – next door.

And we have a fairly recent trade there to use as a measuring stick.

Turns out, 316 8th (also a 4050 sq. ft. lot) is the same-size lot. It's the next-door neighbor, currently a construction site – surrounded by red to the right here. (The new foundation is in and much of the framing is in; a few exterior walls are up.)

So, before the scrape, what did the neighbor sell for?

How about $2.150m, in Sept. 2009?

That would put 324 8th up a not-insignificant $450k (+21%).

Really?


Here's some more. We hear that 316 8th was in escrow in 2008 well below $2.5m when the financial market crash/murmur hit in Fall of that year.

So if the neighbor was worth less than $2.5m before everyone lost their shirts, is the neighbor worth more than that today?

One factor you'll have to settle for yourself is the Crest vs. No Crest factor. 316 8th (the construction site) runs along Crest, a fairly quiet alley/street. One advantage to this location is having no neighbors on one side, meaning more afternoon sun. Another plus is that your home's footprint (maybe) could utilize Crest as a garage entry, opening up some other design options. (As it happens, the new home going up has a garage entry off 7th Place at the rear.)

To be one lot in from Crest, as 324 8th is, means dodging the (modest) traffic issues. But you're hemmed in on both sides.

You can see people viewing the pros & cons either way.

So 324 8th needs both a clear location plus and market boost since Q3 '09 to reach a 21% bump. Yeah.

There's one more quirk with the listing.

MBC readers know we'll support alternatives to the dominant RE sales paradigm. But it sure seems that experience argues against a choice made by the sellers here. They're offering 2.0%, not the 2.5% or even 3.0% sales commission typically offered to buyers' agents.

Sure, a $52k commission (at 2.0%) looks great for a dirt trade. Many escrow issues vanish in a lot sale.

But by using an out-of-town discount broker, overpricing the property and offering less than the norm for buyers' agents, the sellers have set up a game they likely can't win, unless and until they show they're more realistic than all of that suggests.
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