Contender or . . . Pretender?

"They're Asking How Much??"

Where: 5500 Park Place, in Edina's South Harriet Park neighborhood
Asking Price: $549,900 (white picket fence included)
Key Stats: 3 BR/2BA; 1,500 FSF. Year built: 1947
Lot Size: 60' x 134.8'
Time on Market: 64 days

In any other Twin Cities neighborhood, this unassuming 3BR/2BA home with a white picket fence would be worth $150,000, tops. If there were any foreclosures nearby, that number could easily drop to $100,000.

But it's not (in just any neighborhood, that is).

It's just south of Minnehaha Creek, in Edina's up-and-coming South Harriet park neighborhood. The lots are nice-sized, and the location is prime -- just south of Edina's tony Country Club area. Best of all, the existing stock of housing is older and undersized.

Voila! Tear-down territory.

As someone whose clients have bought and sold several tear-down's the last few years, I've found that a good rule of thumb is to multiply the projected selling price of the would-be tear-down by 3.5. If the resulting number makes sense for new construction on the immediate block . . . the house is a bona fide tear-down candidate.

So if a house is worth $300,000, to be a tear-down, the neighborhood would have to support new construction over $1 million (I call this "tear-down leapfrog," or "the last shall be first" phenomenon, because the former tear-down often gives way to the nicest home on the block).

Contender . . or Pretender?

So is this house for real? Or more to the point, is the land underneath it worth anywhere near the asking price?

To find out, you start at the end -- namely, by determining the upper price limit of the immediate block (and to lesser extent, the surrounding neighborhood).

In this case, a brand-new, 4,000 FSF house just sold for $1.5 million a block away (in fact, it sold before hitting the market, a good omen). So clearly, the block has lots of upside.

The next step is sizing up the particular lot.

At 60' x 138', it's not gigantic, but it's still more than 30% bigger than a typical, 40' x 120' city lot. It's also comparable to other East Edina lots that now have new construction.

It's also a corner lot, which is a plus to some, and a negative to others. Net those out, and it's a wash.

More important is the fact that the lot gently slopes towards the rear. That makes it suitable for a walkout, which allows more light in the lower level and allows better access to the backyard.

So what's the verdict?

Contender. (If you want to know what it's likely to sell for, though, you'll have to call me . . .)