Why are ranches and 2 stories not comparable?

[wyecoyote]

It depends on the market here. In some areas the 1 story design will sell for the same price as the two story design. In some areas there is no market preference for difference in design style just overall finished square footage regardless if it is a basement (daylight) or above grade. In other markets the 1 story will sell for more. Then again in some the two story will sell for more it just depends here.

Ryan

 

[Mike Garrett RAA]

Compare apples to apples and oranges to oranges unless the subject is a grape fruit!

Typically, ranch style homes (IN MY MARKET) sell for more than two story homes of similiar size, function, and features.

Ask yourself why two story, split level, and bilevels became popular with builders? Because they cost less to build going up rather than going out!

Comparing Boston to Denver would difficult. Repeat after me.....It's the market, it's the market, it's the market!

 

[Farm Gal]

Mike:
I'll go you even one further:

It's the SUB-market, it's the SUB-market Its is the itty bitty little individual subsection from which your subject draws competing sales!

Some of our submarkets seem to care less about stairs, some care a great deal, and like Ryan's Tacoma area, I have observed that frequently as SF increases, typical buyer concern about the stairs decreases!

Low end and high dollar areas generally could not care less, and median houseing areas are all different!

My observations indicate that: main level master or upper level master bedroom makes a big difference~ sometimes !

If the area is big on families with very young kids, that upper level master or ranch becomes more important.

If the kids are older, mom and dad may well WANT them on a different level of the house!

If the typical buyer is from an older empty nest or retired, main level masters on two stories are often percieved in similar light to the ranches.

so as always, it depends, it depends, it depends!

 

[Steve Owen]

The cost is different, you guys all got that right - it's cheaper to go up than out. In some areas of the country, there would also be a difference because of cost of land; I suspect that's a bigger issue in Boston than here in the Midwest.

Several people also mentioned design and appeal factors such as an aging population and not having to climb steps. Those factors are certainly important to some segments of the market, and those segments appear to be growing.

All of that being said, the question at hand is whether you can use a two-story to compare to a ranch. The answer is yes, you certainly can, if better comparables (read recent sales of ranches in the same price range and marketing area) are not available. I have only had to do this a few times.

Would I adjust for the difference in design? That depends. I would not adjust because of any of the factors listed in the first two paragraphs. (It's not a question of rationalizations of what the market will bear; it's a question of market evidence based on analysis of sales of properties with these differing characteristics.) If there is market evidence of a difference in the value between the two different styles, then I would adjust.

In a few of the cases where I have had to use these houses as comps, I have made an adjustment (it's always worked out to be ranch superior, so far). In a few cases I could find no market evidence for an adjustment.

Speaking of underwriters. I once had an underwriter ask of two more comps that were tri-levels. (I had given them one, and the other two comps were a split foyer and a one and one-half story.) I told them to go fish.

 

[Thomas N. Morgan]

Pamela,



You asked why are ranches and 2-stories not comparable? I would restate it to say, why don't they make good comparables in a report?

What a house LOOKS like is the main thing. If your comp photos look like the subject, you will get very few questions about your report. Otherwise, lending people say, They don't look like the subject!. Or the homeowner will emphatically say: These don't even LOOK like my house!

So, it's not so much whether an appraiser can base an opinion of value on such a mix (althoug it is more difficult) The main thing is, if used as comps, will the report convince the reader?



Regards,

 

[Bemis Pownall]

Why do some markets call them Ranchers????

 

[Verne Hebert]

A lot of discussion about cost to build. I am a big cost man; love the cost approach. But the market is buying utility; if you think the market is aware of the cost to construct based upon design.......You are giving them alot more credit than is warranted.

Most realtors here don't understand that cost reality.

If you want to continue to reflect the market---continue to get dumber, and continue to reflect the market.

 

[aprazer]

In my area it's two different buyers. Older couples like the one story aspect, or its first time buyers looking at the smallest/cheapest homes available. New ranch houses are simply not built, due to the economics. Land value is too high for it to be practical.

In some higher end neighborhoods the older ranch style homes are in demand for their "footprint". Some towns have been trying to restict over-building and have limited a new home to the size of the existing footprint. You can add a second level to the ranch, but cannot significantly expand an existing 2 story house.

 

[Restrain]

There is not a differential between 1 story and 2 story in most subdivisions of similar quality. However, there is a market differential showing up where the Master suite is upstairs vs. the Master suite downstairs, generally in higher priced subdivisions. As to cost, the builders are building up as opposed to out due to land costs and abaitment fees for roads, sewer, schools, etc. The net result is a better profit margin for 2 story homes for the builder. It does not result in a differential in sale price.

Roger

 

[Tim The Enchanter]

Doesn't seem to be any difference in values for 1 story versus 2 story here. Most new construction seems 2 story due to the high land costs etc., but not all. Most of the large homes are 2 story. But in some areas of more average size homes there's a lot of 1 stories mixed with 2's. There seems to be no difference in prices based on that factor, but we've got a real diverse mix of people here, and high demand. Saw one big house where the elderly owners apparently did not go upstairs anymore. Beds set up in the office on the first floor. Still had plenty of room though. Maybe it's just one of Austins places where the laws of science don't apply. The laws of logic are sure ignored by plenty of folks. :lol: