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JUDY STARKEven with a million-dollar price, a home can be a handyman special when it's dated and sits on prime waterfront property. The question becomes: build or bulldoze?
A "handyman special" with a price tag of more than $1-million? The classified ad, which has run in the St. Petersburg Times during the past month or so, is an attention-getter.
The house - three bedrooms and four baths in 4,200 square feet with a dock and boat lift on deep water - is in a prime location: Driftwood Lane in Largo, a cul-de-sac in the desirable Harbor Bluffs neighborhood. The back of the big pie-shaped lot measures 165 feet on the Intracoastal Waterway. To the north is the Belleair Causeway; to the west, Belleair Shore, the beaches, the Gulf of Mexico. They're not making home sites like this anymore.
And then there's the house.
"It's dated," the listing agent, Cheri Boudreau of Coldwell Banker Residential in Belleair Bluffs, acknowledged of the house, built in 1968. "It's sound, everything works great, but it needs updating. For $1-million, people have a preconceived idea of what that should look like."
And what should it look like? Well, for $1,095,000, many buyers don't want ceilings between 8 and 9 feet high. They don't want laminate countertops. They don't want plank-and-pole closets. They don't want dated lighting or out-of-fashion tiles in the Florida room, or a screen room with a pond, or limited waterfront views, or a small pool, or a floor plan Boudreau calls a "tad quirky." They don't want an unglamorous galley kitchen without granite counters and top-of-the-line appliances.
Times change. Tastes change. Styles and building materials change. Our notion of how we want to live changes. The story of this house - a serviceable duckling with swan potential - is becoming an oft-told tale in built-out Pinellas, where any buildable land is at a premium, and even a dated house can command a high price if it's on desirable waterfront property.
"The buyer of this house is one of two things," said Boudreau, who sells a lot of waterfront property. "It's someone who wants, literally, a panoramic view of the water, an enormous lot on a cul-de-sac, and privacy. They can bulldoze and build whatever they want. Or it's someone who wants to be on the water and wants to negotiate a good deal. If you can move in as it is, and over time update it and make it into what you want it to be, you'll get your money back. But it is a project."
Four years ago, the owners built a two-story addition that includes what could be in-law or guest quarters with a separate entrance and a second-floor room. That addition is probably one reason, Boudreau said, why some lookers have said: "It's too nice to tear down. It's an in-betweener, not bad enough to tear down but a challenge to work with in its present state."
Challenge is right. Buyers will face the "50 percent rule," a Federal Emergency Management Agency restriction that applies in some waterfront areas. They can spend no more than half the value of the house (not the land, but the structure alone) at any one time to remodel it.
"So the problem with waterfront property is, people spend $1-million on it, but the house is worth only $200,000," said Daniel E. Ashline, whose St. Petersburg remodeling company carries his name and who has worked on many waterfront properties.
Windows, roofing, flooring, cabinets, built-in appliances, plumbing, electrical work - anything attached to the house counts against the 50 percent, Ashline said. So in his hypothetical example, if a waterfront house were valued at $200,000, a homeowner could spend only $100,000 to remodel it at any one time. And you can blow through $100,000 in no time.
"You do have to consider the 50 percent rule. Buyers have to do their due diligence," Boudreau said. As for the value of the house, "That is the hardest issue right there. Who will put a value on it?" Every appraisal, she said, brings a different opinion.
The Pinellas Property Appraiser's Office puts a "just market value" on the house of $839,200 (and acknowledges that these values traditionally lag sales prices). It estimates the "improvements" - the structures - represent 28 percent of that figure, or approximately $235,000. The rest of the value, $604,224, is in the land.
Municipalities put different time frames on their interpretation of the 50 percent rule. Some say, 50 percent during five years. Some say, 50 percent in any one year. Some say, 50 percent per permit. After each remodeling project, of course, the value of the house increases, so the next 50 percent is higher than the last, "and eventually you'll get the gold faucets," Ashline said.
Determining when it's worthwhile to remodel and when a teardown is the best choice depends on a number of factors, he said. Recently he was asked to remodel a home on Bay Point Drive on Snell Isle in St. Petersburg. He drew plans, "but even when I got done, it would have been all chopped up, and I would have had trouble getting it past FEMA," he said. The constraints of remodeling an existing structure meant compromises on the floor plan and the sight lines. "What you'll end up with is not worth the money you'll put into it," he told the owners. "You'd be better off tearing down and building new." The owners agreed, "and we're in drywall now," Ashline said. "Without a good floor plan, it's a teardown."
Michael Bracewell, a property appraiser in Largo, agreed. "The value in waterfront property is in the land," he said. "Most of the houses on the beach that are older than 10, 15, 20 years old, they're all teardowns."
He recalled one recent sale, a 1956 waterfront house in Indian Rocks Beach "that had had not one thing done with it for 45 years, an eyesore in the neighborhood." It was 1,200 square feet with a one-car garage. It sold in December 2003 for $475,000 and again in August for $567,500, "and if they had torn the house down, they could have got more money than they did with the house on it."
The buyer, Cindy Hummer, an agent with Keller Williams Gulf Coast, said she and her husband plan to clean it up, move in and eventually add on. Neighbors who see them working on the house stop by to give them high-fives and encourage them, she said.
As an appraiser, Bracewell said, "I go out and look at property like this and pretend the house wasn't there. The house could even be a negative." A piece of property could be worth more without a house, given that demolishing a house costs between $12,000 and $20,000.
"Endless possibilities!" Boudreau's listing says. "Home needs updating - a handyman's dream!"
"It's a sound home that for many people would be workable to remodel," she said. It is a question of "What's your definition of a dream house and how expensive is it going to be when you finish? Beauty is in the eye of the beholder, and there are all kinds of beholders out there."
- Judy Stark can be reached at 727 893-8446 or stark@sptimes.com