Case Study 1

Take the floor plans of the two houses below. Both properties are single-fronted weatherboard homes on the same land size, and the same street. The question is: would you pay $60,000 more for floor plan A? We would. In fact, we would pay more than that.

In many cases, however, floor plan A will cost the same price or only slightly more than floor plan B. And we wouldn't buy floor plan B for any of our clients without some clear warnings.

For a start, floor plan A has a north-facing living area that floor plan B does not and, even if they were facing the same way, "A" would let a lot more light into the living areas than "B". Floor plan A has the toilets and a bathroom in a central area to the bedrooms. With Floor plan B, you have to traipse through the living areas in your birthday suit or move the bathrooms at considerable cost. And that’s just for a start.

We think "B" is a dud because its third bedroom is not really a bedroom, the whole back area doesn't work, and if you paid much above land value for this, then you would be paying too much.  

This is just one example of what we think about when we are looking at floor plans and "house worth". It’s very easy to get the worth of a home very wrong, and to underestimate the cost of “simple” renovations.

On the million dollar plus homes we are asked to purchase, some of the floor plan considerations are less obvious and the ramifications involve many more dollars. Sometimes there is value in a 1970's home and none in a 1950's one.

In a brand new house or apartment, the view can be spectacular but it can be built out, or its design can be such that, under normal living conditions, you wouldn't look at any of those views because the floor plan does not allow a practical placement of your TV, double bed or dining room table.

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Case Study 2

These two properties…

46 Northcote Road, Armadale (below)

and 92 Finch Street, Malvern (below)

…did not sell at auction. Why did they not rush out the door? After all, they are large, classic, period family homes (admittedly in need of work) on “biggish” blocks.

The homes themselves are beautiful homes but the land is all wrong.

In the case of the Armadale property, it's a grand old lady with her dignity removed. By this, we mean too much land has been taken away and there is no space for the renovations that really need to be done (see arrow no 2). It would have a north-facing backyard if it did (see arrow no 1). In addition, the triangular shape of the block is not at all usable. Therefore, in some ways, it's really a big house on a small block.

 

The Malvern property case is like a big ship with a lean at the back. The whole house, which is gorgeous but needs a lot of work, is in the north-east corner meaning north light (see arrow no 3) is not good and therefore all the expansion works (arrow 4) are going to be on the south side, which is not ideal. Plus, from a flow point of view, it is not easy to see that being very logical. I'm sure money can solve both the issues to some extent, but then you have to ask the question, are you over-capitalising on an inferior block?

 

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