February 2, 2018

By Sean Hess

Broker and Owner, SA Realty

904-386-8327, Sean.Hess.Brk@gmail.com

How I Got Angry Eating Ice Cream

Last Saturday I took my kids to Cold Cow for ice cream to celebrate good grades. While I was there my phone rang, and since part of the deal in real estate means you can’t predict when and where you will need to talk to people, I answered it.

A Negative Nellie real estate agent was on the line, and she just wanted to beat up one of my homes. She couldn’t find comps. She couldn’t understand the price. She had all these reasons why my home wasn’t good enough, and shouldn’t it be priced less? It would be a favor to take it off my hands.

Now as you know—though I have yelled a time or two on the soccer pitch—I am, generally speaking, a gentle soul. “One with the universe” and all that.

But after this phone call I was a bit chuffed by Nellie’s attitude toward my listing, and as I drove home I got angrier and angrier.

See, this wasn’t the first agent that wanted to put 402 Zorayda Avenue in a neat little box. She, like they, seemed to think that homes should be priced like oranges in the supermarket: by the dozen, or by the pound. Presumably she seemed to think that a 2-bedroom/1-bath home in Haskins, Ohio, should price exactly the same as one in St. Augustine, Florida.

Having spent considerable time in both locations I can assure you that is not the case, nor can homes be priced by the pound like oranges.

What she definitely indicated was that this home should be priced less than homes that flooded, but were since renovated. Even though this home still sits two feet in the air, and those renovated homes still sit flat on the ground…

Lawyers are advocates for people; I see myself as an advocate for homes. So when I got home I got busy and wrote a legible response to my new friend, Nellie. If you think I was too “Father Bear” defending my home and advocating for its price, I hope you at least enjoy the response (which is below). It has been edited (just a bit).

About the Author

Sean Hess is the owner and broker of SA Realty in St. Augustine, Florida, and the author of the How To Buy A House series. Currently an MBA candidate at the University of Utah, David Eccles School of Business, he delivers opinions here on business and real estate.

As one of his past customers wrote, “Sean Hess is a true professional. His client’s needs are primary.”

Contact Sean:

904-386-8327 (cell)

Sean.Hess.Brk@gmail.com

MeetSeanHess.com

The Response:

Hi Nellie:
I was getting ice cream as you called and couldn’t hear you very well, nor form a coherent response about 402 Zorayda Avenue.

Thus:

You aren’t buying square footage. You aren’t buying comps. You are buying location.

Location, location, location.

What is location?

Location is opportunity.

This particular location. Four minutes and 34 seconds, walking, to the Bridge of Lions. I lived in Davis Shores for three years. It took me 13 minutes to walk to the Bridge from my apartment. I would have killed for a 4-minute walk to the Bridge. Or 8 minutes 30 seconds to the center of the span (while still having time enough to sight-see).

Location means you never, ever have to own a car again at 402 Zorayda Avenue. Because you have restaurants, and groceries, and the Historic District amenities, and what you can’t walk to you can bike to (and the Sunshine Bus will even get you most places). And if you get that odd bug to get out of the neighborhood, well the occasional Uber costs a lot less than even the cheapest Hyundai.

But let’s say you’re a rebel and you want to keep the car.

Location means you’ll never, ever have to park downtown, unless you want to. Location means every Holiday season and July 4th you’ll have more friends than you’ll know what to do with, because they’ll all be staying at your house. And when they’ve enjoyed the merriment they’ll all be walking back on nearly-empty Arpieka Street, three quiet blocks and whole world away from the crowds.

Try it sometime. Park there on a Saturday night. Notice how quiet it is? With a short walk you can be in the heart of the Historic District hubbub. And when you want to cast the crowds aside and have it quiet again, you simply walk back home. It’s like that magical closet in The Lion, The Witch, and The Wardrobe: It’s a magical place that transports you between worlds.

And what a world to live in! Location means athletes jogging by, and families walking by on their way home from dinner.

Have a family? I do. Five minutes to both Cathedral Parish School and RB Hunt Elementary by car (I videoed it if you don’t believe me). And the soccer fields. And the lighthouse. And the alligator farm. …and the Surf Station (or Blue Sky, if it matters) … and the state park entrance … and the farmer’s market…
If I were a younger man, without two kids and a wife who works I would be back there. Because for all this, this one home, this one, perfect, singular location…

$289,900? Are you kidding? I’d pay over list just to make sure I got it! Because there is only one (count ‘em!) location like it, and there is no other location like it, certainly.

You say, “It needs updates.”

I say you’re right. Yes, the roof and A/C are newer. Yes, the electric service box outside is brand new. Wood floors refinished. Yada, yada, yada. Let’s talk about what really needs done.

Did you know there is an honest-to-goodness knob-and-tube fuse box in the kitchen? Check it out; it’s in the pantry. Does it function? No idea. There’s a modern fuse panel connected to the new service in the garage. I’d probably call an electrician and have it sorted out for a few hundred bucks.

And those counters and backsplashes. Newer, yes. But maybe I’d harmonize them a bit better.

The garage door … it won’t raise all the way up! Who installed it? Were they on drugs? At least it’s new. A few hundred bucks to sort that out, too.

Oh, and don’t forget the asbestos shingles. Likely original to 1947. But you know what? If they are original that means that home came through Hurricane Dora in ’64 with flying colors, just like it came through Hurricane Matthew with no flooding (except some in the garage) and no damage in ‘16, just like it came through Hurricane Irma in ’17 with no flooding and no damage.

How much does a house have to prove?

Now let’s talk about comps. You were really concerned about comps.

The thing about comps is that they have to be apples-to-apples (as much as possible). The thing about that vacant lot two doors down that sold for $231,700 is that it wasn’t priced that way to begin with. It was bid up. That original list price was two-seventeen and two parties wanted that location so bad that they fought for the right to pay over list price for it.

So that lot was an outlier, right? The listing agent poured magic fairy dust on the mailbox and people went crazy? I’m sure the agent was good, but not that good. I’ll prove it: Another hurricane teardown 4 minutes from the Bridge sold recently for land value only: 155 Arricola, for $192,000.

So: Location 4 minutes from the Bridge, and $200,000 is shaping up to be the vacant land value with the footprint for a building in place. Assuming 402 Zorayda prices the same (we’re talking about comps, now), that’s $200K for the lot and $89K for the structure.

“Nah! I’ll find something else,” you exclaim. “I want to be Closer!”

Well, let’s look at locations just as close on the Davis Shores side.

  • 24 Vista Circle is available (it’s not as close as 402 Zorayda): $824,000
  • 112 Zoratoa, ooh, it’s nice. $399,000
  • [address omitted], Also $399,000. Wait, shoot, it’s withdrawn (flooded a second time during Irma).
  • 46 Dolphin? $375,000. Finally coming down a bit.
  • [address omitted] $245,000. Nice price. Nice home. Really far away though. A 15-18 minute walk to the Bridge, and you’ll have to weigh the $90,000 – $100,000 cost to lift it 24 inches in the air to avoid any future flooding. Just something to be aware of.

Let’s look on the other side of the Bridge. Surely there’s something there! Let’s look at things within a 4-minute walk in the Historic District.

  • 200 Charlotte Street? $3.9M.
  • 3 Palm Row, $849.9
  • 53 Marine Street $1.3M
  • 20 Hypolita, $799

And don’t even get me started on closed listings.

The point of all this verbiage is this: The areas on both sides of the Bridge of Lions are Really Expensive Neighborhoods.

And the list price for 402 Zorayda ($289,900) represents a Bargain Hunter price for a home in a Really Expensive Neighborhood.

People who live that close can and do put up traffic backing up over that damn bridge every time there’s a parade downtown. They can and do put up with homes built for the lifestyles of 50 years ago (or longer). They can and do put up with the City of St. Augustine and its sometimes confusing rules. But they put up with it because they love it so dearly.

Carpe Diem, fellow agent, Carpe Diem. Some buyers win, and some live in Ann Arbor. To each his own.