Just when Nashville starts buying into its “Itness,” Niall McCarthy of Statista sends an e-mail to Music Row mogul Rick Sanjek with some staggering data.
“When the super-rich snap up luxury real estate, more often than not London is their city of choice,” McCarthy writes, citing information from the Knight Frank real estate firm that shows prime real estate in London is rising faster than any other city in the past 10 years.
For example, in 2009, McCarthy states, there were 524 properties in London that sold for $5 million or more. Manhattan had 476 and Hong Kong 388.
For the record, the Nashville area had, well, let’s see… that would be three.
In 2014, London grew to 1,638 sales of more than $5 million, with Manhattan growing to 976 and Nashville had … hold on ... I have it right here ... three.
OK, so we’re not London, New York or Hong Kong, but things are going frightening well. The fact that other cities sell more $5 million homes is of no consequence unless you have a $5 million home for sale. If there are less than three of you, you are in good shape. If there are more, you are not going to fare as well.
The other 3,000 or so out there with homes for sale are in better shape as there are more buyers than sellers. Economics 101 has an easy rather simple model for price determination, that being high demand + low supply = higher prices.
In real estate terms, if there is less than a six-month supply of inventory, then it is a “seller’s market,” meaning sellers have an upper hand in terms of negotiating.
And that’s true when negotiating price, but after the contract is binding, the scales are tilted toward the buyer.
The buyer is able to lock the property in their possession for a certain period for the inspection. In today’s world in Nashville, the usual inspection period is 14 days, as most of the reliable inspectors are booked that far in advance.
Then follows a ‘resolution period,” during which the sellers must cave to the buyers’ demands. In a sellers’ market, one might wonder why sellers must cave. The answer is that the buyers – by contractually locking themselves into the contract – have robbed the sellers of valuable marketing time.
Sellers are perplexed, as they have renovated, restored, replaced and used the best of the best in all categories of updates during their home ownership. Now, there are $3,000 to $7,000 of seemingly insignificant, arguably unnecessary repairs. “Why should we do these?” they ask.
The answer is simple. If they don’t, the buyers will terminate. Nothing else matters.
The repairs are unnecessary. The sellers have been good homeowners and made repairs and updates along the way. Even, the people hired to make the repairs say they are not necessary, and that they are over the top.
But the buyers demand perfect houses, and perfect by the inspector’s standards. The whole process stinks. On behalf of my profession, I apologize.
Sale of the Week
Horizontal Property Regimes (HPRs) are often referred to as duplexes since there are two single-family houses that are attached or detached. In Nashville, they are the zoning of choice for developers and builders, all cashing in on the two-for-one sales.
With HPRs, they get two lots for the price of one teardown. The property located at 1131 Granny White Court is attached.
As far as resale goes, there does not seem to any significant change in the value if the homes are stand-alone units or if they are connected by some means, often a garage or storage shed, usually an uninhabited space.
And they are selling well, as quickly as the contractors can complete construction. The buyers enjoy the smaller yards with plenty of green, but no overpowering lawn to maintain. They are built on infill lots, hence walkability in most cases.
The home located at 1131 Granny White Court was listed by the brilliant siblings Ginger Holmes and David Pruett, both hailing from Berkshire Hathaway HomeServices Woodmont Realty Group, a firm co-founded by their father – Woodmont Realty that is, not Berkshire Hathaway. Their father is Ray Pruett, not Warren Buffett, and they are quite content with that.
DeAnne Cotthoff of RE/MAX Fine Homes, who has sold nearly as much real estate as Warren Buffett – with this $549,000 sale adding to her total – delivered the buyer.
The Holmes/Pruett duo noted the home has a “designer kitchen with a large island, great trim work, and newly remodeled hardwood floors.” The house has three bedrooms, three full baths and a half bath within its 3,532 square feet.
Richard Courtney is a real estate broker with Christianson, Patterson, Courtney, and Associates and can be reached at [email protected].