From: Rea, Douglas
Sent: Monday, September 10, 2001 12:49 PM
To: 'Ralph Simpson'
Subject: research you requested
OK, my head is still spinning from all these numbers, but here we go! I spoke with a new construction specialist
in our Saratoga Coldwell Banker office and was able to get the phone number for JEff Wyate. I left Jeff a message
and received a voice mail back. He gave me the following details:
There are two homes on Staich Ct that will be put on the MLS once completed (around 4-8 weeks). The 5,200 sq. ft.
model sits on nearly 1/2 acre and will list between 5-5.2 million. The 5,000 sq. ft. model also sits on 1/2 acre
and will list at 4.5-4.75 million. The larger 6,000 sq. ft. model down the footpath on Hayfield will list at 5.75-6
million, but won't be ready for the market as quick. He spoke very quickly and didn't answer my questions regarding
how much negotiation room there was on the price or about the home that had sold (that you saw in the paper). I
called him again, thanking him for the info, and restated those two questions. Haven't' heard back yet.
Now to determine value. I poured through the MLS for over 2 hours attempting to determine value on the above
mentioned homes. There has been very little sales activity in the immediate area surrounding the development. I
did find a new home on Douglass Ln that is active- priced at $2,488,000 with 3,100 sq.ft. on a bit over 1/4th acre
lot ($802/sq.ft.). I found another active new home on Kenosha Ct listed at $4,999,000 with 4,900 sq.ft. on a 1 acre
lot ($1020/sq.ft.). There are no recent new construction sales in that area, so I had to try something else.
I decided that average square foot value needed to be determined. I pulled up all homes between 1-2 million that
had sold in the last 6 months or so in the immediate area surrounding the new development. there were 20 listings
that came up- mostly older homes. In calculating the sq.ft. value for each I learned the following: The low end
ran between 550-650/sq.ft. There tended to be older homes on lots smaller then 1/4 acre. The size of the home
didn't seem to matter as much as the size of the lot. Homes that had lots in the 1/3-1/2 acre range averaged
around 700-750/sq.ft. As you approached the 2/3-1+ acre the values hit 800-850/sq.ft. Then I separated the
newer homes from the older and found that they tended to run higher then the older homes, more so if they had
a 1/2 acre or larger lot.
Next I ran all new construction home throughout Saratoga (not including ones way, way back in the hills). It
was very similar to above- the lot size seemed to have the most influence on the sq.ft. value. The low end for
a sub-3000 sq.ft. home on a 7,000-10,000 sq.ft. lot was between $600-700/sq.ft. There weren't to many of these. The
average ran around $850-900/sq.ft. for homes running between 2800-4,000 sq.ft., on lots around 12,000-15,000 sq.ft.
As the lot size exceeded 15,000 sq.ft., the value rose another $100-200 per sq.ft.
Next I sorted out the new homes that had between 4000-6000 sq.ft. with 1/3+ acre lots. These all ran between
$800-1100/sq.ft. By now my head was hurting, but I had enough info to work with. $900/sq.ft. seemed to be a good,
conservative number to work with. I used this to calculate my estimated value of the three new homes and found that
the proposed list prices will be around 600K or so higher then my calculations.
Great! I just got a reply from Jeff Wyate. He apologized for not answering my question earlier- he was just a bit
rushed. He confirmed that two of the homes were sold towards the beginning of '99, prior to construction, in the 3
million range. They were only completed and closed escrow recently. These were sold quickly and privately, without
agent involvement, to assist in financing the rest of the development. The buyers of these homes may have handled
upgrades outside of escrow, so the sales price doesn't necessarily reflect the true value of the home. Since then,
four other homes have sold for 5.75, 7.1, 6.96 and 5.3 million. The upcoming new releases are already priced below
these four sales in consideration of the softening market.
I also did a smaller, less complicated version of my research in Monte Sereno/Los Gatos. Over all the list prices
averaged between $700-800/sq.ft.- very similar to Saratoga. This threw me off a bit until I realized that there is
a much higher percentage of homes in Los Gatos/Monte Sereno with lots over 1/2 acre then in Saratoga. The high end
in Los Gatos didn't exceed $950/sq.ft. The low end was between $500-650 sq.ft. But unlike Saratoga, I also have
three good pending sale comparables for Los Gatos/Monte Sereno. These are Eaton ($617/sq.ft.) you saw this one
right before Blanchard, it has 4,050 sq.ft., 22 years old, 1 acre lot and is priced at 2.5 million; Ayala Ct
($659/sq.ft.), which is in Heritage Grove (you're wife liked this development) but doesn't have Los Gatos schools-
priced at $2,195,000, 3,326 sq.ft., 14,000 sq.ft. lot; and Massol Ct ($713/sq.ft.), 2.6 million, 3,642 sq.ft.,
16,000 sq.ft. lot. None of these homes are new construction and all sold recently. I don't know what they sold
for, but if you subtract roughly 20% from the list price it lowers the sq.ft. cost by apprx. $100-$120.
Ralph, you got Blanchard Drive for $650/sq.ft.- and I'm using 5,000 sq.ft. as the size and not 5,100. The pending
sale home on Eaton is roughly the same neighborhood, but was 22 years old and very dated (remember the old tennis
court they were offering to re-pave?). Say they accepted a 2.1 million offer (listed at 2.5). That's $518/sq.ft.
and it needed a lot of work. The one on Ayala Ct isn't really Los Gatos, but on the Cambrian border to Los Gatos.
It was listed at 2.195 million, say the only got 1.9 million- that's still $571/sq.ft. And Massol Ct- say they only
got 2.1 million (priced at 2.6), that's $576/sq.ft. All of this research I've done is making me feel better and
better about the price we got Blanchard for. It's a brand new, move in condition home. You
don't even have to
worry about landscaping. Instead, you could apply your time to planning the swimming pool I know your wife and
I hope the contradictions and lack of detailed organization on behalf of the listing agent haven't prejudiced
you against the home. It's a truly beautiful place and I think you guys would be very happy there. My offer
stands to take care of the A/C situation. It's not something I've ever done in an escrow, but then I usually
have more luck with unreasonable listing agents. Besides, I don't mind! You guys put a lot of trust in me and
I would like to show my appreciation by helping out with a sticky situation.
Talk with you later... and have a safe flight home!
Doug Rea, Realtor