Several people responded to last months article and all had the same basic message for me – “Why do you have to be so negative with your gloom and doom views of the real estate market?” I thought about the comments and felt it appropriate to give the readers of the West Ranch Beacon an “insiders” look at the not too distant real estate past in the West Ranch area. Keep in mind – the dates, names and events noted in this article are 100% authentic – this is not a parable or anecdote. This article will explain how the sales and marketing of two Southern Oaks Manor homes redefined the values of an entire tract of homes overnight!

My friends and past clients Cody and Marion had a gorgeous Southern Oaks Manor home with a gorgeous view, upscale décor, beautiful furnishings, nice pool and spa that was about to come onto the market Spring 2004. The sales comparables at the time for similar model homes in the same tract were in the high $900,000’s. At the same time there were new construction homes (Westridge/Tesoro) selling in the high nine hundred thousand range to the low million dollar range that had no exterior landscaping, no pool/spa and no designer paint or custom molding. There was an obvious value gap between the new construction homes and the resale homes at that time. As we analyzed the market and factored in the supply and demand effects that were in place we decided to push the market and listed the home for $1,250,000. Some neighbors laughed. Others neighbors were amazed. At the Open House there were two basic groups of people that viewed the home – Santa Clarita Valley residents who had a knowledge of the Manor Homes (they saw them as new construction, knew the original cost, knew the comps, etc.) and those that were new to the Santa Clarita Valley viewing this area as a potential new location for their family.
The “newbies” were blown away with the model home feel, the view, the completed landscaping and fact the home was move-in ready. We had two families interested in purchasing the home at full value within the first 10 days!! The potential buyers of that time had seen all the new construction homes available with comparable square footage priced at around a million, but all those homes needed lots of time and money to be completed. It was a no-brainer – based on what was available this home offered great value.

You must keep in mind that without a satisfactory appraisal you typically have no deal. Without a couple of closed sales justifying the price the underwriter that works on the lenders behalf will not accept an appraisal 25% higher than similar recent sales. This is where fate stepped in. The buyer for Cody and Marion’s home had exceptional credit and was obtaining non-traditional financing which did not require a typical appraisal.
Several weeks after this home entered escrow we listed the neighbor’s home across the street. It was the same model with a less desirable view, less interior upgrades and a magnificent pool/spa. This home closed escrow on July 30, 2004 at a phenomenal $1,230,000 price. This home would not have been able to appraise at value unless we had the closing from several weeks earlier. In a matter of a few weeks we saw the values in the neighborhood change by a quarter of a million dollars!!! This phenomenon was simple – there was a huge gap in the new home versus resale homes that had not been closed. These two sales paved the way for the gigantic price increases of Stevenson Ranch, Sunset Pointe and the Enclave. They also validated the prices of new construction at that time in the marketplace.

What does all this have to do with current home values in West Ranch?
EVERYTHING! This will be addressed in the next article as well as how to make your home stand out as a “Top 10 % Home” (being one of the 10 percent of homes that SELLS rather than SITS.

Patrick Abbott
Realty Executives West Ranch
[email protected]