Re: Establishing unit pricing
From: katie-henry (katie-henryatt.net)
Date: Mon, 9 Jan 2006 14:05:36 -0800 (PST)
I can tell you what NOT to do, and that is to get too attached to a price per 
square foot. Our developer initially priced all units by square foot, with the 
only variable being a 5% increase for units on the first floor since they had 
higher ceilings. This approach made a certain amount of sense at the time. It 
was a total rehab of an abandoned office building, so unit designs were 
changing depending on what they found during demolition, plus not that many 
units are clearly "better" than others. (For example, the units with the best 
views overlook a noisy street.) And it gave us a useful way to determine what 
we could afford.

A lot of our members got totally married to their price per square foot. 
Unfortunately, measurements taken during and after construction revealed that 
most units turned out bigger or smaller than stated in the contract, ranging 
from a few sq. ft. to about 80 sq. ft., as I recall. (Not counting Jessie's 
unit, heh heh.) I understand that this is not unusual, plus I think they were 
using a different measuring scheme, but it caused a HUGE amount of 
consternation in our community. People who lost space wanted their sales price 
reduced, even if it was just 2 or 3 sq. ft., while people who gained space 
refused to even consider paying more. (Not that anyone was asking them to.) We 
have members who are still bitter about that 20 sq. ft. of space that they 
really needed and were counting on and had to pay for but didn't get, even 
though they didn't realize it was missing until well after they'd moved in. 
Then there was a huge crisis about recalculating our HOA dues based on the new 
mea
 surements. And another crisis about whether the measurements (and thus the 
price) should include the air space in the hole in the floor where the loft 
units have their spiral staircase. What a mess. So the moral of my story is 
that a price-per-square-foot model can be useful in the beginning, but get away 
from it as quickly as possible. Having an outside expert, maybe an appraiser, 
set sales prices sounds like an excellent idea.

Katie
Eastern Village Cohousing
Silver Spring, MD

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