Stock Standard Vs Unique
16 May 2016
What do most of us want when we are looking for a home? Or maybe it should be a question of what can most of us afford!! Some of us might want the nice renovated villa or bungalow with the 2.3 kids and the white picket fence while others of us will want the brand new low maintenance brick and tile 200+ m² four bedroom, two bathroom home with two living areas and internally accessed double garaging. The good thing about these types of homes is that you can be sure there will always be a market for them and that they will appeal to the wider property market.
But, let’s say you don’t want the house which looks just like the neighbors and that you would rather have a home that is made for you, which incorporates all of your personality, which sets you apart from everyone else, one which stands out from all the rest, a home with a certain amount of individuality. You want the type of home we Valuers refer to as an “outlier”.
A property which is considered an outlier will usually have the following attributes.
- It is unique in nature
- Possesses special properties
- Is difficult to establish Value
- Limited market
Homes which are unique in character come in many shapes and forms from homes with Heritage Status, with special features like the Gypsy and Dome homes featured below, homes built under ground, eco friendly homes, converted buildings, castles, container sheds and the list goes on.
The risk of purchasing a home which is an outlier is that others may not necessarily see the same value in this home. Homes which are unorthodox compared to your more conservative stock standard homes like those found in many of the new subdivisions around Auckland for example, typically appeal to a smaller number of buyers and often experience longer marketing periods particularly given the size of the New Zealand Population being so small that it makes it difficult to support the market for these type of unique homes.
The reason valuing an unconventional home can become difficult is because often it is likely that there will be a large variance in a person’s perception of value coupled with a lack of readily available directly comparable sales evidence. The benefit of having a property which is difficult to establish value of course is that, with the right marketing and a suitable purchaser, you could well achieve a higher price than you could have ever dreamed. On the other hand, if you were trying to assess what the market value of your property is, it is likely a Valuer, depending on the type of uniqueness that the property offers, may choose to be more conservative in their assessment of market value as the property reflects a higher risk in terms of it’s saleability.
Unique homes are also often costly to build and this is often not reflected in the end value. A good example that I have seen of this is of a home which was constructed to be economically and environmentally friendly but at a completely uneconomical cost. The home was marketed extensively on the cost savings that the eco friendly home would provide for the potential purchaser and was advertised for sale in a strong market, the problem was, no one was prepared to pay any more for the home than they would for your typical renovated villa in the area even though it would have cost substantially more to construct and that there would be significant cost savings over a period of time.
The same can be said for buildings with a Heritage Classification. Often when one looks at renovating a home with a Heritage classification it will come at a significantly higher cost than a standard home as there may be specialists reports that need to be involved in assessing any impact the renovation may have on the character of the building. Completing the renovations may also prove costly requiring experts to construct the build and expensive materials. Then you also have the problem with the Heritage classification with some categories allowing very limited changes/alterations to be made to the building in which case you are going to want to make sure you love the property just the way it is. While these buildings do benefit from a certain amount of prestige, the market for these types of properties tends to be limited due to the fact that what owners are able to do to the building is hindered by the rules and regulations put in place to protect the Heritage of these buildings.
A little something to Ponder over….Do I or Don’t I, for me I will be playing it safe and sticking to the conservative home but if I had money burning a hole in my pocket, it might be a different story.