Adding Value, Getting Paid

By Dave Fratello | November 11th, 2020

Two recent Tree Section sales show the value of making major upgrades.

608 15th Street Manhattan Beach CAFirst, in the Martyrs area, 608 15th (5br/6ba, 5050 sqft.) has just closed for $6.250M.

That price puts it in rare air.

It's one of only 8 houses in the Tree Section ever to sell for $6M or more.

It's also the 4th Tree Section home this year to sell for $6M or more.

(We're excluding a couple of double lot sales and a recent land sale for a supersized lot.)

Moreover, this sale came together quickly. The listing posted only 11 Days on Market.

All of this action came after a head-to-toe remodel that the home had been crying out for, for years.

Before the remodel, the same house got stuck on the market twice in two prior attempts to sell. First, from June 2016-Jan. 2017, the home took big price cuts and pulled a bogus re-list to try to refresh it. With a start at $5.199M, the property ended up selling for $4.438M in March 2017.

Remarkably, the home's 2017 sale price was less than $250K above its price when new in Oct. 2007 ($4.200M). A lot happened between 2007-2017, but seeing a home in the cherished Martyrs area appreciate only 5.6% over 10 years must have been a complete and utter shock.

A resale of the property in last year also required several months (Feb.-Oct. 2019) and a bunch of price cuts, going down from $5.300M down to $4.500M, once again a tiny value increase over the prior sale ($62K over 2 1/2 years).

Now, we mused there about how a lot happened between 2007-2017 and it was so odd to see a small amount of appreciation. What really happened in that time that limited the appreciation? Styles changed.

Details and finishes that were current for a Mediterranean in 2007 had really gone by the wayside by the time the home was up for resale. While the home was pretty, clean and had ocean views, time had passed it by.

Hence the major stylistic remodel, they even call it a "reimagining" in the listing for the 2020 version. The photos above just show the current state. It hits every note for today.

The party who got it in Nov. 2019 for $4.500M gave it that current style. It looks like a labor of love, but here, 364 days after buying it, they've sold... for $1.750M more. There's something to love in that, too.

3400 Palm Avenue Manhattan Beach CAPerhaps a more drastic series of updates also brought nice profits at 3400 Palm (5br/5ba, 3435 sqft.).

This is a mid-1980s original that is distinguished by its unusual extra lot size. Compared to the 4800 sqft. lots nearby, this one is about 30% larger, with a 6200 sqft. lot. That means adequate outdoor space plus a pool, and a floorplan that benefits from the extra width.

While pleasant, the home was quite dated and a bit run down when it was on the market back in 2018. Though listed in February, it didn't go to a new owner till November. It sold then for $2.475M.

The new owners went to town.

Walls were moved to create a fantastic open-floorplan feel for the kitchen and family room, opening to the yard.

In every room, flooring and fixtures were vastly upgraded. More baths were added.

In many respects, the home had the feel of quality new construction. That's really not easy to do with a legacy floorplan and older systems. Had the sellers been doing the work purely on spec as flippers, it's doubtful they would have gone so far. (Story was they changed their minds and moved to a different area after finishing a remodel they intended for themselves.)

In the end, the sellers came out $250K high, asking $3.750M. (Full disclosure: Dave's clients made an earlier offer on the property while it was at that price.)

The end result: a sale at $3.500M, more than $1M higher than acquisition, surely with a good amount of profit built in beyond the costs of the remodel.

Buyers want current style, and typically would rather step up and pay for it than have to do the work themselves.

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