You made the classic mistake of over improving for your neighborhood. Yes, those are comps. Comps are more about location first and square footage second. Condition next. Amenities fourth. An non updated house that is in good condition with a new electrical panel and PEX plumbing may well sell for more than one that has current styles, but needs a new roof and a new sewer line to the house. Updated can get you a bump, but if your neighborhood sales are mostly 400K houses, you're not getting 800K for any house in that neighborhood, even if you put in Italian marble and stain grade mahogany trim. You might get 420K because of the remodel, but not 800K.

well, I'm not sure i agree with that. the area we live in is very desirable. a lot of celebrities live here and we have 2 million dollar homes down the street. we are in the 780k range. the issue is some old folks live here and they don't do upgrades. there are MANY properties exactly like ours that are upgraded as well with complete remodels etc. they just haven't sold in the last 3-6 months. we didn't over improve anything.

thanks for the input. well appreciated.

previous comps were in the range they should be.

Where is Thousand Oaks/Westlake Village?

Near Los Angeles.

I think it will have somewhat of a negative effect. You will get more than your unimproved neighbors but the level of your improvements will not be completely recognized either.

I live in a desirable neighborhood of mixed housing sizes and values and the prices are clustered by square footage and general amenities and within these clusters the sold prices come in very similar per square foot. A house in poor condition will always go for less. But a house with a Subzero and customized details will not go for a lot more than a more ordinary similar house in my experience.

I'm in the Midwest and updated homes (in sought after areas) in the SAME neighborhood can sell for 50-75k more. And I'm talking about homes that are priced between 400-500k.

You can ask whatever price you want. If there are million dollar homes nearby then that's good. The worst that can happen is the home will sit. But I'd ask for more first, before just listing it low because a couple nearby homes are outdated and sell for less.

If somebody loves it and is paying cash it doesn't matter what the comps are.

I think the key here is "no expense spared".

Improved or updated properties will definitely sell for more than properties with old finishes, systems, kitchens and baths. That's pretty much a given.

But in most areas people are going to compare "updated" to "needs updated" but not go into an analysis of the quality of the improvements (within reason).

Most people will look at updated, clean, new and functional. Only a very discerning buyer who is looking for it will care whether the woodwork is custom or whether it's off the shelf from Home Depot. In a typical neighborhood where people have $1500 stainless steel refrigerators, buyers typically are not going to pay a dollar for dollar premium to make up the difference for your $7000 SubZero.

As a buyer myself right now, it's tricky. We've been looking at both upgrade and non-upgraded houses in the same neighborhood. When there are some upgrades it's always a plus because we don't have to completely overall the house. However when the owner wants a ton money for the upgrades, we get gun shy because inevitably they haven't done things exactly how we would do them. So although its not as much work as the others, there are still things we would want to do so. We start to wonder should we pay a premium for things that we will rip out anyway.

I think there is definitely a sweet spot for upgrades. It's obviously worth more than a non-upgraded house. But often not as much as the upgrades cost and the owners want. In our experience, these houses often start high on the price and then start falling in a few weeks. Others hit the sweet spot on pricing right away and are snatched up within a day or two, but I would say those folks are asking a price between the upgraded houses and non-upgraded houses so they feel like a bargain and often even have bidding wars.

I have a little development nearby where there's a 200K spread (ranging from 700-900K) on sometimes identical floor plans. Bottom range is original to early 1980s, medium has been updated, top range looks super nice (the usual, marble tile bathroom, the in wall paint colors, quartz counters, etc.) but no updated roofs, windows, or HVAC. This is an area where people will pay premium for move-in. In fact, I had a long chat with one of the RAs who specializes in updates for, say 30-50K, to get top dollar.

If you end up listing your home for significantly more than the comps, it might be difficult to get people even in the door. Not impossible just potentially limiting your exposure when they know what 3/2's are going for in your location.

I think the greater issue is the appraisal. Let's say you get an offer for 900K but the appraisal comes in at 700K. Your buyer would have to make up the difference in cash and very few have the means to do that. Have you had your home appraised yet? I hope some Realtors pop in here to give you some advice.

When 3 houses sell for a similar price, ihow can you say they all sold 'under market'? To me that is the very definition of the actual market. Unless they don't meet the appraisal requirements for comps - which I believe is a marketed arms-length transaction.

Second - are the buyers upgrading these non-updated homes? If so, that's of course a good thing - and undoubtedly there are buyers out there who want an updated home like yours without doing the work themselves (hence the existence of flippers).

For a stab at the correct value for your home, I would take the selling price of those non-updated homes, and add to it the type of upgrades a flipper would do - i.e. the bare minimum to keep it code-compliant, and finishes which are more about looks than quality - so MDF stock overlay cabinets, not semi-custom plywood inset, for example, $2/sqft porcelain tile, the cheapest hardwood floors lumber liquidators offers.

From what I understand LA is a very hot market, so if people value your updates beyond the typical flipper ones they will not hesitate to make above-list offers.

I am going to respectfully disagree with many of the people here. The role that comps play in a sale are not quite what many people think they are.

First, they are somewhat more important in entry and mid-level homes. Comps help establish the appraised value of the house which effectively limits the amount the bank will loan. Buyers with the financial means to make up the difference and who are less worried about resale may simply not care.

Second, there are transitional markets where buyers and appraisers are aware of dual markets. This is the market type my previous house was in, we sold for 580k, yet in the past year the 4 sales in my neighborhood that were all around the same size were sub 300k. They are 100 year old houses and the difference is updated vs. not.

Finally, I am only a little familiar with the California market and in so many ways it is an exception to the rule. I have a close friend/previous client who bought in Westwood. Before he moved in he had an offer for the price plus 20%. He now gets mailings all the time offering a significant amount more than the 20% bonus. I can't imagine being an appraiser anywhere between San Diego and San Francisco.

As for my advice, talk to a realtor, or several realtors, in your area. They are the real experts in your market.

Here's my thought - if I had $780,000 to spend, I wouldn't spend it on a house sitting in the midst of this neighborhood: "None of these homes are upgraded. They are all ugly and from the 80's.
Ugly insides, old cabinets, etc. Really outdated and not maintained."

Instead, I would spend my $780,000 in a neighborhood with homes similar to mine.

That's what it can mean to overimprove for the neighborhood.

I think that really depends on the neighborhood. My neighborhood has three types of housing stock: late nineteenth century, 1965-1975 specifically, and 2014. Original; slum clearance era; and property values have gone up enough to tear more things down era.

A lot of the 60s-70s stuff is looking a bit worn. I live in one of them. There is an empty complex of 19th c. buildings that have been empty for a decade plus waiting to see what will happen. And across the street from that are the 2014 houses: Average price slightly over $2M, highest price $2.5M. The average price for the other houses in the neighborhood when these were selling was about $450K or so.

Snapped up quickly. at least one of the six was a total cash sale. If I had $2M to spend would I live in this neighborhood? Nope. But the owners of the six most expensive houses in the neighborhood disagree.

Ideally you never want to be the most expensive or most updated house in the neighborhood. However if the neighborhood is climbing in property values and it's a very desirable neighborhood, you may be ok, IF you haven't over improved.

For example, if the neighborhood warrants Bosch appliances and you're putting in SZ and Wolf appliances, you'll get the price for upgrading but most likely not the full upgrade price for putting in the more pricy appliances. What will happen is your house will sell before one that hasn't been upgraded, IF you haven't priced yourself out of the market.

And there's the question of finding the buyer who likes what you did. If someone comes in and hates travertine flooring, they're looking at what it will cost to remove the floors and put in something more to their liking.

Thank you all for taking the time to respond. Something to clarify is, this is one of those neighborhoods with tons of really amazing homes upgraded like ours, so no one has over improved. The downside is that right now, not a lot of people are selling, they are holding out because the market is still on the way up and they're all sitting unless they are moving out of state or something. The homes that are selling unfortunately are the ones that were bought in the 80's/90's for around 200k, so they are happy to cash out at 600. I got in in 2012 at the very bottom of the market for roughly 540. Over the course of several months, about 6-9 months ago, we had three very nice upgraded homes go for 799+, with our specs exactly. If the current comps for exactly what I have are 3/2 and a few hundred sq ft on the dwelling and few hundred on the lot size are what I'm stuck with, that is what concerns us. Just bad luck on what is up for sale I guess. This market has been on a steady climb for 4 years straight, its on fire. Maybe I will just wait, because no way am I leaving that money on the table if they won't go back and use comps that are upgraded and style comparable along with the standard real estate specs. We don't have to sell now. Thank you all for the insight. :)

To add onto my earlier comments and to Lily's Mom's comments, celebrities may live near you but do they for example live overlooking water and you're more inland? Or like one area near where I live, on one side of the road are million dollar homes and on the other side are families struggling to make ends meet. Yes that's an extreme example, that's part of the equation too.

If the million dollar homes are on your block, that will help your resale. If they're blocks away overlooking water, while you only overlook your neighbor, it won't.

And as someone else mentioned, market value is only what someone is willing to pay for the house. Just because you think they sold for under market value, doesn't mean the buyers did and doesn't mean it was under market value.

And lastly, we all tend to feel our own home is worth more. Just the nature of the beast.

I was posting the same time as you. And I did use extreme examples because of course Thousand Oaks is a very nice, upscale area. :)

Some other thoughts based on your comment:

Maybe I will just wait, because no way am I leaving that money on the table if they won't go back and use comps that are upgraded and style comparable along with the standard real estate specs. We don't have to sell now. Thank you all for the insight. :)

You don't know if they will or will not use the comps until you bring in a few RE agents to see what your house is worth

Also, you say the market is on the upswing right now. Wouldn't that mean that even if you don't get exactly your price, you'll still be able to buy new at a slightly reduced price?

I did that with my second place (first house). Technically when I sold it 6 years later I "lost" money because we had put in a new kitchen. It was a starter home so the kitchen we put in wasn't expensive, but we had also converted from oil to gas heat, and did a few other things. However we looked at it as enjoying the house for less than rent would have cost us for a comparable home and when we sold in a down market, we were able to get a much larger and better home in a better school district than if we had waited 1 or 2 years for the market to catch up. If we had waited, we would have gotten back our total investment plus a little, but the house we wound up in, would have risen too much for us to afford.

And this is an election year. My feeling is always better to sell before the election, than after. It's why we sold our FL condo this past May instead of waiting until our house was finished sometime hopefully next year.

Yes, thank you so much. Makes sense for sure. The reason we want to sell is due to the election. We want to cash out of California and go retire somewhere very suburban off the grid.

I was only using that "celebrities" and much more expensive homes to clarify to the person who told me we over improved. We didn't over improve, and neither did the other 200 homeowners that have upgraded in this neighborhood. Its a mixed market with really awesome homes and some that people are just living in and not maintaining. The carpets, cabinets, kitchen tops, bathrooms are from the 80's on the most recent comps. Half a year back we have exact match comps, fully upgraded that sold for 100K more than these current comps that aren't upgraded. This whole process is so tricky, and there are so many things for these appraisers to look at, I have no idea how they can get it right. I don't think my home is worth more. No sentimental attachment, it's just really disappointing to have to wait until I can get a couple upgraded comps to ensure that we don't have issues getting the value out due to appraising guidelines that are challenging. Oh well, we shall see. If I can't get the traction, we will wait and let someone else grind it out with the non upgrade comps and then ride their coat tails in six months. :)

You can ask anything you want for your house. But it is only worth what a buyer will pay for it. If you want to create an environment where the buyers feel a sense of urgency in getting their bid in, you price it under its market value. In a hot market, that generates multiple offers. Of course, you run the risk of buyers not valuing the home's modifications quite as much as you do. It is rare for a remodel to give more value than it's cost. That is TV fiction. 80% would be a good return.

If you want more help with specifics, you need to post pictures of your potential listing.

As a retired appraiser, let me chime in. An appraiser will look for the most similar comparable properties. The unrenovated properties are not really comparable. They won't be ignored due to their location, but they will be adjusted to reflect their inferior condition and finish.

Appraising is as much a art as it is a science. We would much rather find a comparable that requires no adjustments. In this case, the appraiser may have to go outside of the immediate area to find properties that are similar. While we would not ignore inferior sales in the neighborhood, they won't be the primary comparable.

Have a couple of realtors do price analysis and see if it is close to your expectations. You well ahead of yourself in the process.

Could you remove the expensive appliances/light fixtures and use them in a future house you'll purchase, and replace with *nice* but inexpensive ones? Add up what you've spent to see if it's feasible and if the benefit would be worth it to you. I built my home and made many upgrades. I will take certain things with me when I sell since since I know those upgrades added to the final cost of the home, but will probably not add to it's value, unfortunately.

homechef59--what you describe is exactly what happened in our situation. We built a new home in an older neighborhood. Our square footage and overall quality was similar, but nothing has been completed here in 20 years and what has turned over isn't really comparable. So our appraiser looked farther outside our immediate area to come up with a few comparable newer properties. I think we got a very fair appraisal from this approach.

Here's the question IMO... For those three homes that recently sold, are they being gutted and rehabbed or are the new owners just doing the common fixes and improvements to the homes? If the three homes were purchased by flippers or homeowners that have rehabbed everything, then the value of your home will be fine, as the neighborhood is a dual market, as Bry was saying. Appraisers, buyers and Realtors will know what id going on with the big value swings. On the other hand, if the three sold homes still look like they did prior to the sale, then you are probably over improved.

I built my home and made many upgrades. I will take certain things with me when I sell since since I know those upgrades added to the final cost of the home, but will probably not add to it's value, unfortunately.

I did that with light fixtures in my home. I had expensive craftsman style light fixtures that I loved. I removed them and replaced them with nice but inexpensive fixtures that also went with the style of our condo and will be using the light fixtures in our new build.

Cpartist, you're smart TOO! ;)