How not to sell a multi-million dollar spec house!

Question

$2.5 Million dollar spec house in Berkeley Lake GA

This house is fairly near where I live and I've driven and walked by it multiple times.  I thought someone was a little bit insane to be putting up an expensive spec house only a few houses away from an $800K house which had set for for four years before selling last year.  I kept thinking that they are probably asking somewhere around $8-900K for it.  I had checked the price out of curiosity a few months ago, but it wasn't given yet.

However, over Thanksgiving weekend as we were walking our dogs, I stopped to check the price on Zillow and I was stunned when it turned out they are asking $2.49 million.  Yes there are a few million dollar homes not too far away, but they are substantially cheaper than this one and they are in their own s/d. This one on Berkeley Lake (pond) has houses on both sides which are substantially cheaper, maybe $5-700K.  It also is at a three way stop sign junction so there will be constant road noise.  Both my wife and I said that price was absolutely insane.  (We used much more colorful language.)

I didn't believe that Zillow had it right so I checked it out on realtor.com and sure enough that is the correct price.  I looked through the pictures and they are at least two months out of date.  The house is almost totally complete yet the listing pictures show a house that is halfway through being finished on the insides.

For that kind of money at the very least I would expect new pictures every few weeks.   I don't know what the builder was thinking but I really doubt he will be able to command a price anywhere near his asking price for quite some time.  Also the realtor doesn't have any other property listed for more than $998k.  I would absolutely have someone listing my property that dealt almost exclusively in multi-million dollar properties.

Now watch some idiot will put it under contract in the next few days.  Maybe I'll go try and sell him/her some of my dog properties.  :)

Karen Margrave · Answer

@Cal C.  It will be an interesting one to follow along on for sure, so keep us posted! If they get a good price, you might want to start snatching up the other properties around, if not there may be a really super deal on a beautiful house!

Here in southern California that body of water is called a lake, and justifies million dollar plus homes, in Redding, CA where I moved from, we had Lake Shasta, with 365 miles of shorelline, now that was a LAKE, though the Feds don't allow anyone to build around it.

On the pics, you're right!

Cal C. · Answer

Forgot my other point about posting this was making sure your realtor kept up to date photos as the house gets finished.  Lagging two months or more behind is just unacceptable.

Cal C. · Answer

Just a quick update on this property, which they are still working on.  The builder has apparently let the realtor go and has his own sign up now.   It was delisted last month after 6 months on the market.  Atlanta market is pretty hot overall but this house was so far above the price range and the fact that they are still not finished with it makes it a difficult sale.

Cal C. · Answer

I went to an open house yesterday for this house.  Its pretty obvious the builder is out of money and is trying to sell it nearly finished.  There are tubs still not installed and there is no carpet installed anywhere.  The bathroom floors are unfinished.

Overall the house is pretty nice and it is has some great lake views, but it lacks a lot in the way of finishes. For example the granite in the kitchen looks cheap.  The cabinets look like they are cheap cabinets made to look upscale.  The toilets are pretty basic ones, which would be fine if the house wasn't so dramatically higher priced than surrounding properties.

As I mentioned previously in this thread people who live here tend to stay a very long time.  In fact, some other nosy neighbors were looking at the house at the same time mentioned that they had lived in their house across the lake for forty years.

@Karen Margrave @Max M.

Cal C. · Answer

Yeah we have a real lake-Lanier with about 700 miles in shoreline about 15 miles from here.  That's where most of the lake houses are in this area.  But you certainly have a point about if they get a good price but quickly.  If so then I'll be looking at some lakeside teardowns myself.  I should be able to match J's recent $91 a square foot.  So $400K to buy, $360k to build a nice 4,000 sq ft house and sell for high nines or more...  But that million dollar figure is daunting.

Cal C. · Answer

Yes, it is beautifully done but that really isn't much of a lake, pond would be a better term. In fact, the guy who built the pond and subdivided the properties surrounding it in the Fifties wanted to sell to Atlantans with money looking for a summer home, hence the name Berkeley Lake.  I'd agree with you if the guy was going for $1.2-$1.5 million, but asking six times what the average house in the area is worth is too much pioneering IMHO.

The other houses in the area have mostly been occupied by the same residents for decades and those residents will likely stay there until they die.  So turnover will be very slow.

There is money in this little town and there always has been, in fact, it has the highest per capita income in the state.  But that hasn't translated into significant appreciation of house prices.  Tear downs have been tried a few times, but either the developer and/or the first buyer have been stuck with houses that take years to sell.  The one $800K property, a few houses away from the subject property- the one which sat for four years, certainly didn't affect the value of the properties surrounding it.  Also the million dollar house subdivision also hasn't affected the house prices near it at least not to a significant degree.  We are just now getting back to 2007 prices.   Believe me I wish it was otherwise since I'm in a house that I bought ten years ago and it is underwater.

Additonally, there was one teardown, also on the lake and only a few houses away from the subject property which sold in less than a year back in 2011.  But the original asking price was $1.25 million and the sales price was $725K- which is $525K lower.   That represented a price about 2.5 times the average house price in town.

My point for posting about this house was people need to be careful where they decide to plunk down a very upscale house.  There are certainly locations for those type of houses, but IMHO this certainly isn't one.  At least if you want to be able to sell or resell it in a reasonable amount of time.

Karen Margrave · Answer

@Cal C. Maybe the developer of this house has the vision that you and your wife do not. The house is beautifully done, with very high end finish work, and it's on a lake!

Maybe the other houses that have sold for the lesser amounts were bought by those wanting to get in while the market was down, with the hopes of being able to remodel, or tear down and build a mini mansion in the future, and the developer of the property you have shown is the first one to start the redevelopment of the area. This house will definitely set the standard for new development and the area, and raise the values of the other properties.

What other information do you have on the area? Economy, industry, types of buyers, etc.?

Sometimes there's a larger picture at play, and sometimes, someone just likes a lot, wants a big home on the lake, and is willing to overbuild for the area!

Cal C. · Answer

BTW the average price of houses for Berkeley Lake is $400,000.  So this place is 6 times the cost of the average house.  I think there are about 600 houses in town.

Cal C. · Answer

This house definitely stands out!

Max M. · Answer

I'd like to see how this one turns out.

Me personally if I was loaded I wouldn't care if my house was overvalued for the neighborhood, as long as it didn't stand out as some kind of ostentatious castle or something like that next to smaller houses (standing out = a big no no for me).

But I wouldn't want to be near an intersection if I could help it. I like to be cozily implanted among big trees.

How not to sell a multi-million dollar spec house!

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