Once a home is labeled a McMansion, can it be redeemed?

McMansionHell recently examined a home in Flower Mound, Texas. A real estate insider asks what the listing agent is now supposed to do:

I post this not to be mean, because obviously this home has people who love it and it is someone’s home, no matter how much of a “mound” it is. There are some very pretty parts. I post it because I truly want your opinion: what would you do with a listing like this to make it more appealing?

A good question for either a real estate agent or a homeowner. With McMansion almost never serving as a positive term, I assume having a home labeled a McMansion is not going to (1) help with the selling price or (2) entice buyers. Even when such homes were really popular, I don’t think too many people would label the homes McMansions to help their cause.

Crazy idea: could you shame people and damage their lives by outing McMansion owners and agents who sell such homes? If you don’t like suburbs – and there are plenty of people who can’t stand them, including a number in academia – this could be an individual level strategy to discourage people from living there. Or perhaps some wealthy McMansion critic could buy up such homes and redevelop the property (presumably with structures they liked better or they could provide a memorial garden).

When realtors dislike McMansions

Realtors sell homes. So how do they feel about McMansions? A piece at Realtor.com offers some hints:

We’ve struggled to cover McMansions. For starters, they’re not pleasing to the eye. And, more importantly, we can’t put our finger on exactly what it is about these sad but pricey structures that inspires such a visceral negative reaction…

Q: We’ve grappled with this one for a long time here at realtor.com®. McMansions are like the classic definition of obscenity—”I know when I see it”—but we’ve never come up with a concrete definition for them…

All of the mail from realtors I’ve gotten has been really positive as well. I think that realtors are generally tired of McMansions, especially since they’re so difficult to sell. They find a lot of catharsis in reading McMansionHell.

Does this mean that realtors wouldn’t help sell or buy a McMansion because of their refined architectural sensibilities or because McMansions use of a lot of resources? While McMansions could generate profits for builders, they could also be good for realtors who could make larger commissions.

Based on this, I would enjoy seeing some realtors discuss their approach to McMansions. If I had to guess, I would imagine fewer realtors would be openly critical of such homes because it might limit their business. Perhaps some want to sell such homes while others avoid them like the plague. If they have strong feelings either way, would they openly share these opinions with buyers and/or guide them in certain directions? How many realtors live in homes that could be considered McMansions?

Illegal wealth funneled through luxury urban housing?

The higher end of the real estate market is booming in many American cities but it may involve tainted money:

It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.

The initiative is part of a broader federal effort to increase the focus on money laundering in real estate. Treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like limited liability companies, often known as L.L.C.s; partnerships; and other entities…

Officials said the new government efforts were inspired in part by a series last year in The New York Times that examined the rising use of shell companies as foreign buyers increasingly sought safe havens for their money in the United States. The investigation found that real estate professionals, especially in the luxury market, often do not know much about buyers. Until now, none of them have been legally required to.

The use of shell companies in real estate is legal, and L.L.C.s have a range of uses unrelated to secrecy. But a top Treasury official, Jennifer Shasky Calvery, said her agency had seen instances in which multimillion-dollar homes were being used as safe deposit boxes for ill-gotten gains, in transactions made more opaque by the use of anonymous shell companies.

It would be fascinating to hear what local officials, developers, and real estate professionals have to say about this in private. I imagine few would be willing to appear to publicly condone illegal uses of money, yet such a move could threaten status and profits. If there are indeed numerous cases of this, does this taint particular developments or cities? Or is the wave of luxury building simply too strong (and advantageous) to be derailed by a few negative instances?

Trying to revive “obsolete” suburban office parks

Declining interest in space in suburban office parks means a number of people are looking for ways to use that same space:

A report from the real-estate-service firm NGKF released late last year provides new numbers on an ongoing phenomenon: the slow, agonizing death of the American office park. The report looks at five far-flung office-tenancy submarkets—Santa Clara, in the San Francisco Bay Area; Denver; the O’Hare area of Chicago; Reston and Herndon, outside of Washington, D.C.; and Parsippany, New Jersey—and finds a general aura of decline.

Between 14 and 22 percent of the suburban-office inventory in these areas is, the report found, “in some stage of obsolescence,” suggesting that between 600 million and 1 billion square feet of office space are unnecessary for the modern company and worker. That’s about 7.5 percent of the country’s entire office inventory…

There are models that developers are using to transform older office parks throughout the country, to measured success. They mostly involve turning definitely-suburban office parks into urban-like, albeit still isolated, office “cities.” (It is worth noting that many of these projects involve extensive rezoning efforts.) A facility in the community of Edina, Minnesota, is in the midst of transforming from a sprawling office center into what one local developer called “not your father’s or mother’s office park.” In practice, that means linking the park to 15 miles of bike trails, big-box-store-free retail, and green space. Other developers managing struggling office parks are considering adding farmers’ markets, hotels, and housing.

Such efforts have been going on for a while now whether from New Urbanists trying to introduce mixed uses (office parks are notoriously empty for much of the day outside of business hours) or edge cities trying to diversify their portfolio of uses and revenues (see an example like Tysons Corner). Of course, such efforts require funds and demand for the new or renovated space and it can often be easier for developers and investors to move on to new hot locations or construct all new buildings and properties.

One other idea for these office parks: why not seriously look at converting them into housing? A good amount of the infrastructure would already be present – major roads, utilities, parking lots – and many metropolitan regions are in desperate need of more housing units (particularly affordable ones). Many of these office parks are located in existing job centers so the housing would be convenient for a number of workers. I don’t know what it would cost to renovate office space to residential space but it would be interesting to see some proposals.

NYT on wealthy suburbanites moving back to the city

Who is buying those expensive downtown condos in places like New York or Chicago? One article suggests it is wealthy suburbanites:

Like Dr. Fader, who lives in Bryn Mawr, west of Philadelphia, most of these new high-end buyers are coming from the suburbs, developers say. This is a group that loves its mansions and large homes but is finally, not so reluctantly, trading them in for high-end city adventure.

“Things just lined up in the last few years,” said Patrick L. Phillips, the global chief executive of the Urban Land Institute, a research organization in Washington. “The peak of the baby boom is right around 60 and these wealthy folks have a lot of embedded equity in their homes. They have the wherewithal to move into something with space in the city.”

And cities have prepared for people with money, at least in their downtowns, Mr. Phillips said. They have concentrated theaters, arenas, upscale shopping and refurbished or new parks and museums there.

Two questions come to mind:

  1. Just how many people are doing this? How many people could afford such a move? The key here is that these people are already living in expensive suburbs and have all sorts of housing options.
  2. What happens to other parts of the city where there is less money to be made for developers and builders? Cities like to trumpet new buildings in their downtowns and the growth of cultural and entertainment options. But, these are not necessarily available to everyone.

Subjective decisions can affect home appraisals

The final appraisal price for a home can be influenced by numerous subjective factors:

A massive, first-of-its-kind study of 1.3 million individual appraisal reports from 2012 through this year conducted by real estate analytics firm CoreLogic offers a suggestion: You should look at what are called adjustments to appraisals that involve relatively subjective estimations — the appraiser’s opinions on the overall quality level of your house, its condition, location and view — rather than more objectively determinable items such as living space square footage, lot size, number of baths and bedrooms, etc…

Adjustments are made in 99.8 percent of all appraisals, according to the CoreLogic study. The most frequent adjustments involve objective features of houses: Living area, rooms, car storage, porch and deck were all adjusted in more than 50 percent of the study’s 1.3 million appraisals, according to CoreLogic. (As a rule, the adjustments on objective features were not large in dollar terms. For example, room adjustments were made in nearly three-quarters of all appraisals but averaged only $2,246 and did not affect the final appraised value dramatically.)

Adjustments involving more-subjective matters — the overall quality or condition of the house — were less common, but they typically triggered much bigger dollar changes. The average adjustment based on quality was nearly $15,000, which is more than enough to complicate a home sale. Some subjective adjustments on the view or location of high-cost homes ran into the hundreds of thousands or even millions of dollars…

Research released last week by Platinum Data Solutions, which reviewed 300,000 appraisals made between July and September, found that fully 39 percent of “quality” or “condition” ratings conflicted with previous ratings on the same property. That inevitably invites controversy.

In other words, appraisals are an inexact science. What makes it particularly frustrating is that the stakes can be big as sellers and buyers are dealing with one of the biggest financial investments of their lives.

Two more thoughts about these findings:

  1. In order to cut down on the variation in findings, would it be better to regularly have multiple appraisers for the same property or some sort of blinded review?
  2. Here is how an example of big data can help reveal patterns across numerous properties and appraisers. But it would be particularly interesting – and perhaps some money could be made – if research identified individual appraisers who consistently had high or low findings.

TerribleRealEstateAgentPhotos.com

I’ve discussed bad real estate photos before (here and here) but here is a full website devoted to the topic. Some of the pictures are indeed bad photos: poorly chosen emphasis, bad angle, catching the photographer in the picture. However, a number of have more to do with the home or the homeowner themselves; why do so many people have so much clutter when having these photos taken?? Of course, it could be argued that the agent/seller shouldn’t take such a picture in the first place but agents may have little control over what the owner has and having no photos of a house or major room (kitchen, primary bathroom, etc.) is not a good option.

The moral of the website? You want photographs that emphasize the better traits of the home without letting the bad photography skills or odd stuff the homeowner has get in the way.

And there are ways to prevent this from happening: make professional videos and photoshop furniture into the scenes.