Odd balls: Geodesic domes, underground dwellings, and those homes that make you ask, “Why?” These are atypical for our market area, but they exist and they sell, so there is supply and demand and therefore a market. If there is a real estate market, then there is a market area. In the past 10 years there have been 11 sales of geodesic domes in the entire West Penn Multi List. So if someone wants a home of this style, where are they willing to consider - in other words, what are the boundaries of the market? An entire region. The more unique a property the wider the market boundaries and the need to expand.
For a less extreme look, lets consider log homes. These are not typical for the market, but certainly more common than domes. In the past 3 years there have been 11 log homes sold in Armstrong County. If a buyer is committed to this style of home, where will they consider? Given the relatively low supply, they would like consider the whole county. They might also consider looking in neighboring counties as well. They might also consider constructing their own. So, with such low supply why aren’t there log cabin sales people on every corner? Due to the equally low demand. Low supply and Low demand = stable markets.
When a property is typical for a market, your market area can be as small as a single street.
However, when the property is unusual, the market area will expand quickly. Imagine for a moment being asked to sell 1600 Pennsylvania Ave NW, Washington, DC 20500. The White House. How would you determine a fair price? What would your comparables be? Aside from “priceless,” if we had to place a dollar amount, our comparable search would be global in scope, including historic homes from various countries and cultures.
When pricing a property consider the buyer motivations at work. Get in the head of the buyer pool and ask the questions they’re asking. Its the tough assignments that make you grow.