Well, in this case, two examples, but you get the idea. Let us consider the case of two recent sales:
85 Indian Head Road, in the Riverside section of town, and
82 Winthrop Drive, also in Riverside.
In the case of 85 Indian Head, a tear-down land sale, it had sat around for years and years, starting back in 2011, asking $2,999,999, gradually getting reduced to $2,745,000 by Dec. 2012. Finally, the listing expires, but the owners bring it back on in May for $3,195,000 and bam! , it sells instantly for asking price!
Likewise 82 Winthrop…sells in Dec 2011 for $1,495,000, then comes back on Feb. 2013 for $1,875,000, gets one price reduction, to $1,775,000, attracts a bidding war, and fetches $1,675,000.
People ask me constantly, “How much is the market up?” (or down, sometimes) and I look to examples like the two above. 85 Indian Head couldn’t make a deal at $2.745M at the end of 2012, suggesting its market value then was $2.6M, maybe less? Five months later, it gets $3.195M, almost 23% higher than my earlier guesstimate.
But what you don’t know is that the owners hired D’Andrea surveyors to map the property’s wetlands, locate a suitable septic reserve-area, and generally provide answers to all possible property development questions. And they hired an architect who designed a house for the property, with a full set of floor-plans. Consequently, they removed much of the value-lowering mystery about the property.
So did the price go up because of that, or because the market has improved dramatically?
Likewise for 82 Winthrop Drive, also considered a tear-down by some (.64 acres in the R-12 zone), but the new owner sank around $85,000 into windows, hardware, fixtures, and added a critical third bath upstairs. So where did that $180,000 higher price come from, the relatively minor house improvements, or market improvement?
By the way, I thought that the owners of 85 Indian Head hiring that architect to design a proposed house for the site was brilliant, but guess who ended up buying? A builder, and he never even looked at the drawings.