When Bigger Isn’t Better
Just like the discount for a one-car garage varies, so, too, does the discount for a home with no basement (at least in the Twin Cities housing market, where single family homes routinely come with — and Buyers expect — finished basements).
The biggest variable driving the discount for no basement?
The home’s size.
Specifically, the bigger the home, the wider the discount locally.
Anecdotally, I’d peg the range from 10% to more than 30% (or, in the case of a Buyer for whom no basement is a deal breaker — an infinite discount).
(Note: a one-story home on just a slab is sometimes referred to as a ”California rambler.” They’re not common in the Twin Cities, but are most often found near bodies of water and where the water table is high).
Likely Buyer Profile
The reason that the discount increases with size is because larger homes usually appeal to a family Buyer with a couple of kids.
Unfortunately, it’s precisely those larger families . . . who also want a basement for their kids to hang out, the extra storage space a basement affords, etc.
By contrast, a smaller home with only one car stall or no basement is more likely to be bought by a single or couple, who might easily make do.
Downsizing — But Not to a Condo
Medium and smaller homes with one-level living (and sometimes no basement) are increasingly attractive to downsizing retirees, typically younger (50′s – 60′s) and active, who may still want a yard for gardening, pets, etc. but no longer need their 5 BR/4 Bath, 4,000 FSF two-story (and the related maintenance, utility bills, and property taxes).
Meanwhile, condo’s and townhomes don’t meet some downsizers’ space/yard/pet/privacy needs.
Discount for Condition; “Paying Wholesale”
Of course, the other scenario where bigger house size is a liability is a whole-house remodel.
The cost to tackle a dated +4,000 FSF home could easily exceed $300k, if you include a new Kitchen, multiple bathrooms, new windows and HVAC.
It’s a lot harder to find a Buyer capable of biting that off than updating a 3 BR/2 Bath home with 1,800 FSF that might only cost $100k to remodel.
P.S.: The more extensive the remodeling needs, the more likely it is that a home will be bought by a professional remodeler — who then needs to re-sell at a profit (and be compensated for their risk).
When that’s the case, the discount expands considerably.
If you want a more succinct way of putting it: ”the pro’s pay wholesale (prices).”
See also, “Discounting For a One-Car Garage.”