Re: Unit pricing | <– Date –> <– Thread –> |
From: David L. Mandel (75407.2361compuserve.com) | |
Date: Fri, 31 Mar 95 01:14 CST |
In response to Diana's question from Jewell Hill Coho: >We are trying to establish criteria which will help determine the pricing >for units. >How did you apportion the cost of land, common facilities, unit construction >and soft costs relative to the size of units and sales price? >Any other suggestions or thoughts for this issue?? It was a can of yucky worms for us. Our multiple difficulties included: @ An initial pricing schedule set by someone at our hired project manager's office who made a guess based on early cost projections and what he thought relative market values would be for the various-size units. @ Major cost increases along the way that necessitated lots of cutbacks in plans and much higher prices for everyone than the initial estimates, making us all grumpy. @ A serious schism in the group. About the only thing the two sides agreed on was that our prices had to add up to our costs, since we as self-developers had taken on all the risk of construction. Beyond that, we were divided into two camps. The naive idealists (my biased label) who 1) for a while believed (wrongly) that the initial price schedule was based on relative cost of construction and supported that as the basis for pricing; 2) rejected the idea of appraisal-based pricing, calling that "capitalist" and (correctly) noting that real estate appraisal is far from an exact science; in fact it is very subjective and often manipulated depending on the desired outcome according to the person paying for the appraisal; and 3) nevertheless wanted to keep the long-familiar original projected prices, adjusted proportionately for cost overruns, even though their origin was a guesstimate of -- yep -- market value. The other camp, while conceding the subjectivity of appraisal, nevertheless rejected any attempt to apportion construction (and other) costs in a supposedly accurate way. Too complicated, we argued, and besides, it's a known truth that larger units are considerably cheaper to build per square foot than smaller ones, yet may not fetch a correspondingly high price on the market. Instead, we favored consulting appraisers and other real estate professionals, add our own input regarding special cohousing factors and come up with the best estimate we could of relative market value. No, I don't like the fact that housing is a commodity in our capitalist society; in fact I despise it. But given that it is, I would prefer to try to put all our members on equal footing when it comes to protecting the value of what for most of us is the largest investment we'll make in our lives. Eventually, most of us will probably resell our units, and I want to make at least an honest effort to prevent some from reaping windfalls while others get screwed. This debate became particularly bitter when those of us in the second camp sought to assign differentials to certain factors, like whether units have private back yards (a plus) or whether they are sandwiched between two other units (a minus) as opposed to being on an end. The naive idealists went nuts over this, but in reality, the various appraisers we consulted were far more unanimous about these differentials than about the absolute value of the units. It just seemed unfair to us realists to charge the same for a three-bedroom end unit with a back yard as a three-bedroom sandwiched unit with no back yard -- and our project includes both these examples. In the end, we compromised, adjusting the relative prices most of the way toward the proportions of the median appraisal figures; and making allowances for back yards and sandwiched units, though not as much as the appraisers thought appropriate. The best part is that everyone felt pretty OK in the end and we now live here. But at times, the issue can still provoke an argument, particularly in my household, where my partner, Susan, who was on the other side, just looked over my shoulder as I was writing this and may now well want to add her ------ opinion. So stay tuned. I hope some of you future cohousers find this helpful. David Mandel, Southside Park Cohousing
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