Pricing

Comps

Comps, of course, are a controversial subject in real estate. Everyone has their own method of comparing home values. While you may not agree, here is the methodology we used to value 5703 Admiral.

There are subjective, and objective, characteristics of a home. The more objective ones are things like number of beds, baths, and square footage. The subjective ones are things like location, and architectural style. What we have attempted to do is build a comps set that includes homes with very similar properties in the subjective category. This is not meant to be a simplistic list, from which we simply average the price to determine listing price. It is meant to isolate the factors which are subjective, and hard to compare to dissimilar homes, leaving us with only differences in more objective features that can be reasonably adjusted up or down to compare to 5703 Admiral.

Many chose comps lists to include only homes sold within a very recent time period. The rationale is that prices change over time (usually rising), so older sales cannot be compared to today's market prices. I think this thinking is wrong. We have good tools to make a straighforward adjustment of a price from the not-too-distant past, to present day. While not perfect, this is a vastly more objective adjustment to make than picking a recent sale from a different neighborhood, or a recent sold home with a different style.

In addition, even if a sale is from just 3 - 6 months ago, it will still need adjustment to be comparable to today's market, since average annual appreciation in real estate prices in a thriving city like Seattle is substantial, and historically outpaces overall inflation, to say nothing of seasonality.

Therefore, we searched for comparable homes sold in the last 3 years, and then adjusted their final sale price using Zillow's Zestimate. It is widely known that real estate professionals are skeptical of Zillow's estimates, and some of that is legitimate. But, not all. Zillow's estimate is going to be best right after a sale, and then slowly diverge over time, as the algorithm is unable to account for all the changes in the home which aren't known to it. But, limiting the use of the algorithm to less than 3 years is keeping within their estimate's sweet spot, in my opinion. Also, if the estimate fails to increase its value of a home upgraded since a recent sale (< 3 years), that's not a problem here. Again, it's not being used to place bids on those comps. It's being used to bring a recent sale price into equivalence to today's prices. People can then make their own interpolation between all my comps, and in doing so, they'll only be comparing the homes based on the same publically available description of the home that Zillow is using to estimate current value. Nobody is going to go down our list of comps and actually tour those off-market homes to see how they compare (today) to ours :)

So, with that being said, we picked a list of sales in West Seattle within the last 3 years. "West Seattle", for this list, does not include Delridge, or White Center. Sorry, to be blunt, those are not comparable locations! The homes must be Craftsman era builds, to match age and style (subjective for a buyer). With I think only one exception, we restricted the list to brick homes. Brick is a premium cladding, and the styles of these homes are very close matches to ours. Comparing to a basic cedar lapped-siding home from the 1920s is just not an apples-to-apples comparison. We also tried to restrict the list to homes with a total [beds + baths] number within 2 of ours. I will admit that I did not consider homes with exactly 2 beds and 2 baths (=4). That's a significantly smaller home than 5703 Admiral, and going from 2 (beds/baths) to 3 is a 50% increase, whereas going from 3 to 4 is only a 33% increase. To the extent that this might bias the list towards larger homes, I reiterate that the list is not being used to produce a straight average price. It is meant to enumerate some reasonable homes above and below our value, to then adjust by only changing the more objective characteristics of a home (e.g. size, beds, baths, etc.). Also, the average square footage of 5703 Admiral is actually higher than the average of this list.

This methodology produced a list of about two dozen comps to use, which should easily be enough to even out the highs and lows of homes with special issues (defects), differences in condition and upgrades, and other sellers with different motivations (e.g. financial hardship or emergency moves).

Please note that some of the above homes are clearly much more valuable than 5703 Admiral. Again, the purpose of this list is to give firm data points within which to interpolate a value for one home. However, the existence of the more valuable homes is also useful for a buyer to assess the potential upside of their purchase, in light of upgrades (e.g. kitchen or bath remodel) they might make after closing. There really isn't a firm ceiling (or not a low one), even on an older home. See this current listing for a Crafstman brick tudor in West Seattle with all the high-end upgrades.

History

As referenced above, the Seattle area has undergone significant economic success since 2006. This is reflected in area home prices. Per the Case Shiller Seattle Home Price Index, a $627,500 sale price in Aug 2006, would scale to $1.37m in July 2024 (most recent data as of writing). Per Zillow's last off-market Zestimate for 5703 Admiral (7/30/24), the value was $1,408,600, fairly close to the simple estimate obtained by scaling the last sale price by the Case Shiller index.

NB: A (Aug) 2024 sale price of $1.295m represents a 4.1% annualized appreciation of the 2006 sale price ($627.5k).