Case Studies - Page 2
White Rock Lake Case Study
The estate lots and historic homes located at White Rock Lake provide an interesting case study of a niche neighborhood that was grossly undervalued. The location, attributes of the sites overlooking the lake, and the limited potential number of properties available created far more value than what was easily recognized. There were many reasons the homes and the 2- to 5-acre lots were undervalued by the real estate community and potential buyers.
White Rock Lake is the largest urban man-made lake in the country. It is found in an East Dallas neighborhood next to Lakewood, about five miles from downtown and a few miles east of Highland Park. Several decades ago, all of the Old East Dallas neighborhoods went through a cycle of decline. Lakewood was one of the few neighborhoods that kept its homeowner base including third generation families. Most of the home sales in Lakewood were rather insulated, with most homes selling to other residents of Lakewood. White Rock Lake was one of the best-known areas in Dallas, as it was the only substantial lake in the city but it, too, went through a period of decay and deterioration. It became more associated with fraternity keggers and motorcycle groups riding around the lake that needed to be dredged rather than a beautiful backdrop for homes. When I was asked to sell a 4-acre property and a small 3,600 square feet historic home for a prominent family, I quickly recognized there was another obstacle. The Lakewood realtors who handled most of the sales in the Lakewood area adjacent to White Rock Lake would join the Lakewood homeowners at the Lakewood Country Club and agree that the acreage price of land on West Lawther Drive at White Rock Lake should be less than $1 million per acre. They said that is how much land sold for before and so that is what it is worth.
Another challenge was White Rock Lake was nine miles around, so it created an illusion of a large residential area. There were also several vacant 2- and 3-acre lots that had been for sale on and off for years, indicating a lack of demand and an oversupply of lots. In addition to vacant estate lots, the homes on West Lawther Drive overlooking White Rock Lake were relatively small houses – 3,000 square feet to 4,000 square feet. Historic homes across the city were being torn down on 0.25-acre lots, so it did not seem older homes would have much value on a 2.5-acre lot that had ten times as much land.
This is how I approached selling this 3,600 square foot 1920s home on 4 acres and subsequently selling 10 other homes for two or three times the price that land had sold for just a few years earlier.
- Redefine the White Rock Lake neighborhood and its attributes.
- Identify the 14 homes that make up a specific niche estate neighborhood at White Rock Lake.
- Define and name this niche neighborhood as the “Estate Cove of White Rock Lake.”
- Create a White Rock Lake video, not of the home for sale, but of White Rock Lake, with the theme that this was the best-known area of Dallas and the best kept secret.
- Market White Rock Lake and its homes to buyers across Dallas and the Park Cities and other parts of the country, not just to the pool of Lakewood homeowners who were considered the prime potential buyers.
- Rather than comparing land prices to Lakewood sales, compare the positive attributes and value of the White Rock Lake estate properties with large estate properties in other parts of Dallas, like the estate areas of Preston Hollow and Bluffview.
- Take an inventory of all the multiple acre lots in Dallas to demonstrate how few would be available even if every large estate lot or estate home were for sale.
- Illuminate the value of both the site and the existing historic home, recognizing that many potential buyers are more interested in the beautiful land and view and the graceful site for the home than just having a large new home that they could find anywhere in Dallas.
My instincts were correct. I contacted a sophisticated Highland Park homeowner who purchased and beautifully renovated this historic home and landscaped the acreage that resulted in landscape awards. Like many of the original homes at White Rock Lake that were built as summer homes just a few miles of unpaved roads away from downtown Dallas, this buyer renovated the home for a weekend home. The home was a fabulous retreat just 20 minutes from their Highland Park home, not 90 minutes or two hours away from one of the popular Texas lakes.
The more I became involved with selling properties on White Rock Lake, the better I understood the value of these properties that I was able to successfully convey to buyers that came from Highland Park, University Park, Lake Highlands and from out of town. While initially Lakewood buyers were too close to the forest to see the trees, buyers from other neighborhoods and states saw the unequaled benefit and attraction of living on White Rock Lake.
Prejudices that were formed over decades and were still lingering became erased by the ongoing improvements to White Rock Lake that had been dredged, new bike paths installed, and other improvements that made White Rock Lake an urban paradise. The trend was totally in favor of the buyers even as I was able to sell White Rock Lake homes and properties at prices 50% higher than the prices Lakewood Realtors were telling their clients these properties were worth. Once several properties had sold and the majority of the vacant lots had sold, there was a pool of 20 to 30 buyers and no lots or homes for sale. As a result, when Lakewood homeowners who had rejected properties as too high-priced several years ago, are now paying three times as much for a property that they had an opportunity to buy earlier at the much lower price.
Case Study of Public Company CEO and Architecturally Significant Home
When a CEO of a public company was moving to Dallas fifteen years ago, he was looking—preferably—for a modern home on a good lot. He was both an outdoorsman and an artist, in addition to being an incredibly successful business leader. I was enthusiastic about this home because it was designed by a very good architect, David Stocker, with a design and materials that accentuated an exceptional site on 1.3 acres backing up to a free-flowing linear lake.
Attributes of Modern Home and Site Outweigh Deficiencies
The home did have some drawbacks, including a kitchen and master bathroom that were somewhat awkward, and one bedroom that had been built with three built-in bunk beds for the previous owner’s triplets. The interior finishes also did not enhance the home. These drawbacks—reflected in the purchase price—were minor when compared to the underlying architecture, space, proportions, and the beauty of the lot.
My Client Enhanced an Architecturally Significant Home
My client who purchased the home did not simply hire a contractor to modify the kitchen and master bedroom. Instead, he retained the original architect, David Stocker, to redesign these rooms and make additional refinements. He also engaged a landscape architect to enhance the landscape. The landscaping alone added well over a million dollars in value.
Most properties on a creek or body of water have a boundary line that more or less runs down the middle. In this case, the homeowner owned land on both sides of the linear lake. Ten feet across the water was enough room to plant trees and foliage that completely screened the homes on the opposite side. What had been a pretty lot was transformed into an urban paradise—a curving lake disappearing into forested boundaries in the distance. A crisp edge of landscape design, combined with organic and softened planting, accentuated both the modern architecture and the woodsy character of a property that felt removed from the city.
What a Current Homeowner Loves About Their Home — a Buyer Will Love
I often say that what a current owner loves most about a home, the next buyer will as well.
The next buyer was an architecture aficionado. He had commissioned homes in and out of Texas that were featured in national design magazines and presented through the Dallas Architecture Forum lecture series. He understood good design and was highly discerning. When he called me, he said he was on my website often and knew that I had a deep understanding of architect-designed and architecturally significant homes in Dallas. He asked whether I knew of anything that might be coming up in Preston Hollow. I told him I might and would get back to him. And I did get back with him in two months.
A Listing Agreement Well Before the Home Goes on the Market
The homeowner had already asked me to represent him in the eventual sale of the property, and we entered into a written agreement. While he did not yet know when, within the coming year, he would be ready to put the home on the market, we agreed to begin the preliminary work. This is a phase I always enjoy and believe is essential.
An Agent’s Preliminary Work Always Pays Off
Some agents prefer to pursue a quick off-market sale or move rapidly to MLS before investing real effort in presenting a home. I prefer that any potential buyer have a full understanding of the property, which I believe leads to a good and graceful sale. Preliminary work may include a fresh survey, preliminary title work, architectural floor plans that are easy for a buyer to understand, professional photography, and a written narrative of the home. There is a dedicated section for the home and property on my website, where it is presented as an example of good architecture and its neighborhood.
This Home was Brought to the Attention of the Potential Buyer
Once the homeowner was comfortable with my mentioning the property to a prospective buyer prior to formally placing it on the market, I shared the home with him and sent all of the material and images that had been assembled. The buyer responded very favorably. Seeing the home in person simply confirmed his impression.
The Buyer Confirmed He Loved the Home
It then became a matter of defining the closing date and the two-month period following closing during which the seller would remain in the home. Within those parameters, the buyer made an offer that was acceptable to the seller.
Graceful Transaction
This is a good example of working with a buyer who has a strong eye and being able to negotiate the purchase of a home that is superior to others on the market—and capable of becoming even better. When it came time to sell, the qualities the homeowner had identified, valued, and enhanced made the property irresistible to a sophisticated and knowledgeable buyer. By doing the preliminary work, the buyer had a clear understanding of the home and was able to evaluate and purchase it with confidence and clarity.Discuss Representation of an Architecturally Significant Home with Douglas Newby
Here is How Your Architect-Designed Home Can Outperform the Market When it Sells
Most houses sell at generic prices and there is a reason why. The real estate industry is geared for homeowners to sell their homes for the same prices as their neighbors. The whole industry—realtors, lenders, appraisers, homeowners and homebuyers—accept the current concept of comparables. Legislators and regulatory agencies even dictate the restrictions on comparables—the maximum distance between comparables, the age of the sale, the percentage of adjustments that can be made between comparables and specifically ignoring the most important qualities of a home, site, design, and construction.
“Comparables” are the culprit. Homes may be the same size, age, and in the same neighborhood, but they are quite different in real value. If college admissions were based on student comparables, every student from the same age and from the same class and same school would be admitted to the same level of colleges. Only when the specific qualities and characteristics of each student are evaluated, do some students get accepted at community colleges and others at Harvard. In the same way, special qualities and characteristics of homes can be taken into account for a seller to obtain a more elite price that is superior to the “comparables.”
Here are the Five Steps That I Take When I am Representing a Client So That the Sale of Their Home Can Outperform the Market
1) I Identify the Architect
This is important for several reasons. The prestige and importance of the architect adds value to the home. The architect is also the starting point of understanding the home. An architect may be associated with a particular style or look that resonates with a buyer. Every architect has a personal way in which they approach a site and how a home relates to the neighborhood. Knowing the architect who designed the home may also convey the quality of construction and materials that were used to build the home.
2) I Illuminate the Architect
It is not enough to just mention an architect’s name in MLS remarks. Most homebuyers will not be familiar with the architect and just mentioning the architect’s name by itself only adds marginal value. Buyers want to know about the architect and, even more important, how does my client’s architect-designed home relate and embrace the architect’s approach and the architect’s vision of architecture.
I am reminded of a conversation I had with the widow of the late architect Charles Dilbeck, one of the most prolific and most loved architects in Dallas. He designed homes that had elements of Texas Modern and European whimsy. Late in his career, in the 1970s, he designed a home for his wife. He told her that once he dies and she goes to sell the home, no one will want a “Dilbeck.” He went on to tell her that for this reason he was going to design a fashionable home that she would be able to sell for more money. Dilbeck’s architectural trend prognostication resulted in a one-story, French style home with a mansard roof. This was a style that was maybe fashionable for six months and quickly fell out of favor and stayed out of favor. As a result, the widow of Charles Dilbeck realized she was stuck with the most unsightly house in Highland Park—the only Dilbeck that wasn’t a Dilbeck. Even for the wife of Charles Dilbeck, a Dilbeck home has to be a good Dilbeck, reflecting his vision of architecture, not his forecasting of trends.
The value of a home is much more apparent if a buyer understands the architect and their architecture.
3) With Care and Insight, I Educate the Audience Interested in Architecture and Architecturally Significant Homes About Why My Client’s Home Is Significant
Advocating a home’s attributes raises the value of a home. Generic homes get lost in the quagmire of thousands of generic MLS listings. How does an MLS listing stand out when MLS remarks are limited to about 50 words? Prominent real estate companies or offices working in expensive neighborhoods might have 300 agents. If each agent has five listings, that means the office is offering 1,500 expensive homes for sale at any one time. Some of these may even be superior homes, but who would know from a 50-word description in MLS remarks. Even if a large office wants to single out an exceptional house, how can they do it without diminishing their several hundred other listings? While I take great care to capture the essence of the home in the 50-word MLS remarks, I also write extensively about the home on my website.
As the broker and owner of a small firm, I can very carefully curate the homes I offer for sale. This allows me to honestly and enthusiastically convey the attributes of each one of my listings.
Many of the architectural photographs of the homes I offer for sale, I take myself. I do this for two reasons. I know what I want to capture about the home, which is more than a pretty shot of a dining room table set for dinner. I want to capture how the home relates to the site and how the site relates to the home. Also spending time selecting my shots for photographs gives me the opportunity to better understand the home and its special attributes and characteristics. Many real estate agents have an assistant, team member or office staff member write the MLS remarks on their listings. This is the reason so many houses sound alike, whether they cost $500,000 or $10 million. All the text on my site is written by me because I care about how my clients’ homes I am offering for sale are received.
4) I Prominently Broadcast the Homes I Offer for Sale Locally, Nationally and Internationally
My Website Comes Up on the First Page for Virtually Every Google Search for Architecturally Significant Homes, Highland Park Homes, Architect-Designed Homes, Dallas Modern Homes, or Other Relevant Terms Buyers Might Associate with Quality Homes in Dallas’ Best Neighborhoods
Every MLS listing is on the internet and can be found online anywhere in the world. The problem is for buyers to quickly sift through and find anything that has particular merit. Print ads may raise the profile of agents or even help agents obtain listings, but it is the internet where 95% of buyers first learn about a home. That is the reason I spend time and devote resources communicating on my website about architects, homes, neighborhoods and homes I offer for sale. When a buyer is looking for a modern home, an architecturally significant home or a home in a specific neighborhood like Highland Park, I want the homes I offer for sale to come up first on their searches. When my clients’ homes I offer for sale come up first on the internet searches, I know my clients’ architect designed homes are not going to get lost in the MLS shuffle of hundreds of houses.
Just as important, I want to help buyers understand the neighborhoods and how these neighborhoods relate to Dallas and the evolution of the city. A home has more value if buyers have an intimate understanding of the home and a wide understanding of how their future home relates to its site, its neighborhood and the city.
5) It Helps the Sale of a Home Outperform the Market When I Can Help Appraisers Understand the Value of the Home and Provide the Best Approach for Them To Satisfy the Lender and Appraisal Guidelines When They Are Reaching the Needed Price
Many of the buyers I represent are cash purchasers. Another large percentage are using a line of credit. Other buyers are obtaining a bank loan from their personal bank that offers more flexibility than a conventional mortgage lender. However, when a cooperating agent brings me an offer and their buyer is obtaining a conventional appraisal, I can still be of help.
Some years ago, the foremost appraiser for the most expensive homes in Dallas, Highland Park and University Park did a pre-appraisal on one of my listings before it went on the market. When he arrived at the figure, I told him that this was a good appraisal, but he didn’t add in the 10% premium that the home would bring because it was designed by an architect. He gave me a puzzled look, but two weeks later when I had sold and closed on the house for 10% more than his pre-appraisal, he was convinced. He told me a year later that he was routinely adding a 10% premium to a home designed by an architect. His proteges are continuing to do this today.
But there are other ways that I can help appraisers understand the real value of the home and satisfy the lender’s requirements. This is not me just telling the appraiser this is a fantastic house. It is hand-selecting homes that may not be on the same block but are homes in neighborhoods with the same characteristics and homes of the same caliber that may have also sold for prices that outperform the market. Appraisers only need three comparables. Often, I have sold three homes that have outperformed the market that I can offer as comparables and will satisfy the lender’s appraisal requirements.
When Homebuyers, Other Agents and Appraisers Better Understand the Merits of an Architect-Designed Home, the Home Will Sell for More Money
I am always pleased and happy for my clients when they sell a home that outperforms the market. Agents do not generally care about the marginally higher commission, but sellers like obtaining a several hundred thousand or million dollar premium when they sell their home. I am even more proud of the fact that the buyers of these homes have not overpaid for them. Just the opposite. The majority of the time, when these buyers go to sell the home, these architecturally significant homes have appreciated more than other homes that sold at the same time. When I represent a seller and buyer and act as an intermediary, I am able to give both parties directly the same information about the home. Good and accurate information about the home contributes to a better sales price for the seller and a better investment for the buyer.
Discuss Representation of an Architecturally Significant Home with Douglas Newby
