Playing Detective... Pricing Historic Homes in Urban Neighborhoods - Step 3

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Education & Training with Sell with Soul

Umatilla

Here's the third, well, kinda the fourth (if you count the introductory teaser) installment in my series "Pricing Historic Homes in Urban Neighborhoods." You can read the rest of the series here:

Introduction
Step One
 - Before you price, prepare!
Step Two - Preview, preview, preview

I've had a few comments come in to the tune of "Wow - that's a lot of work - is it really necessary to spend so much time pricing a home?" Well, I say - YES! It is necessary! After all, our product is property, and our sellers pay us darn good money to know our product and move THEIR product off the shelf... so I believe with all my heart that we owe it to our future adoring fans to do our homework and make the most knowledgeable recommendations we're capable of.

Although... we'll never be perfect. Sigh.

Back to Pricing.

In the last installment, I talked about how important it is to preview preview preview. The more competing listings you preview, the better sense you'll have of where your listing falls into the mix.

Remember, the houses you're previewing are 1) the competition for your listing and 2) houses that haven't sold.

Why is it important to check out the active listings? Some agents don't preview because they don't think the active listings are relevant. "All that matters is SOLD." Eh, I disagree. First, what's SOLD is not competing with your upcoming listing, and when you're dealing with older homes, buyers don't always have a lot of options that meet their criteria. In many cases, the buyer will only find one or two homes that even come close, so knowing what they're comparing your listing to is critical.

Second, it's important to know WHY that active competition hasn't sold. Especially if it appears to be "priced well." You'll never know for sure why a house hasn't sold by looking at the MLS, although you may have your suspicions. It's not as if the listing agent is going to tell you that the house reeks of cat urine or point out that there's no bathroom on the main floor.

So, when you're previewing, ask yourself...

  • WHY hasn't this house sold?
  • WHAT makes it superior (or inferior) to "my" listing?
  • HOW could the listing agent do a better job marketing this home?
  • WHO is the ideal buyer for this property and is it the same ideal buyer as "mine" will attract?
    (I can't think of a "when" or a "where," so I'll move on).

Training yourself to ask these questions at every house you preview makes you a better previewer, and therefore, a better pricer. It also helps you to remember each house so you can speak intelligently about the competition with your seller when discussing pricing, as well as down the road when that homes' status changes (sells, withdraws or reduces the price), you'll be able to nod and say to yourself, "Hmmmm, I thought so!"

Speaking of down the road... this is another important reason to preview. When or if the competition sells, you'll be familiar with it in case appraisal problems come up on YOUR property and the appraiser wants to use comparables that aren't appropriate. If you've been IN all the comparables, it's much easier to make a compelling case!

Okay, ‘nuff about previewing. Next time, we'll talk about how to evaluate the SOLDs in your CMA to help you price your historic home in your urban neighborhood!

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Marian Pierre-Louis 11/06/2009 10:34 PM
  2. June Piper-Brandon 11/07/2009 12:46 PM
Topic:
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Rainer
146,122
Debbie Cullen
REMAX Realty Team-Cape Coral, FL - Cape Coral, FL
Your Cape Coral, FL Specialist

Thanks Jennifer!  Previewing the competition is the sign of a great Realtor!

Nov 06, 2009 10:20 PM #1
Rainmaker
1,362,096
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566

I like the "who ,what, where, when" type questions you ask  yourself and the conept of having valuable information later on if you need to recall this listing.

Nov 06, 2009 10:29 PM #2
Ambassador
2,738,698
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

This series is a classic in valuation skills.  Much of which applies to all types of housing, not just historic properties. 

Great job.  This skill, valuation, is one of the more difficult for agents to acquire. 

Nov 06, 2009 10:40 PM #3
Rainmaker
484,157
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Lenn - I agree. And it takes practice. My first CMA took me 48 hours - straight - to put together. Now I can price a home in maybe 3 or 4. But never 30 minutes...

Cheryl - I can't tell you how many times being knowledgeable about the market (which means you're OUT IN IT) has helped me with appraisers.

Debbie - And after all, isn't that why we got into this business? 'Cause we loved looking at houses??!!

Nov 06, 2009 10:49 PM #4
Rainer
176,189
Julia Odom
Select Realty Professionals - Chattanooga, TN
Chattanooga Homes for Sale

Great point about actives. I use solds to figure out whether an appraisal will come through OK but I usually put more weight on the actives. I want to make sure that this is the best house out there for it's price.

Nov 06, 2009 10:53 PM #5
Rainmaker
484,157
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Julia - Exactly. If there are only 2 buyers for every 10 houses, I want MY listing to be a slam-dunk for the next "real" buyer who comes along. And luckily, in my market, that doesn't mean it has to be a give-away, it just needs to be perceived as a slightly screaming deal!

Nov 06, 2009 10:58 PM #6
Rainmaker
438,271
Debbie Cook
Long & Foster Real Estate, Inc - Silver Spring, MD
Silver Spring and Takoma Park Maryland Real Estate

Thanks Jennifer!  I felt like this post was written just for me! Very helpful in the area I work - Old Silver Spring.

Nov 06, 2009 11:10 PM #7
Ambassador
837,516
Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

in our area there are very few historic homes. (The Civil war thing you know). This makes pricing tough. And the ones that are ther vary greatly. So I have enjoyed, and learned from this series. Thanks

Nov 06, 2009 11:30 PM #8
Rainer
86,308
Bob Murphy
Keller Williams Realty Consultants - New Albany, IN

Jennifer - I have even had skeptical sellers preview active listings before listing their home when I can't help them understand their home is really not worth twice the value of the home down the street.  It has helped in many cases.

Nov 06, 2009 11:58 PM #9
Rainmaker
342,754
Elizabeth Bolton
RE/MAX Destiny Real Estate Cambridge, MA - Cambridge, MA
Cambridge MA Realtor

Hi Jennifer ~ With our weekly office tour and broker open houses I preview properties four days per week.  I'm always taken aback by agents who won't take the time or say "I don't have anybody for that".  You never know what the next phone call will bring.  How you can expect to price a property - for a seller or a buyer - if you're not familiar with the inventory?

Liz

Nov 07, 2009 01:45 AM #10
Rainmaker
191,252
Christa Ross
RE/MAX Select Realty - REALTOR and Green Homes Specialist - Pittsburgh, PA
Helping you buy and sell Pittsburgh's Best Homes

I agree that active listings are very important to the pricing process. I have been told by other agents that comps are only SOLDs but the truth is the buyer is going to be looking at the active homes and pick the best one for their needs. You better be in the mix, regardless of what the SOLD tell you to price.

Nov 07, 2009 03:43 AM #11
Rainmaker
2,781,349
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Jennifer - Wouldn't it be great if more agents previewed and raised their game on effective pricing.  I spend countless hours previewing so I know my market ... I tell my clients we don't want to just hit the target when we price ... we want to hit the bulls-eye.  Great post ... thanks!!!

Nov 07, 2009 03:54 AM #12
Rainmaker
235,778
SEO Expert: Michael George
Phoenix, AZ
Real Estate and Law Firm SEO

Great informative post as usual Jennifer.  Your writing is always excellent.

Nov 07, 2009 04:45 AM #13
Rainmaker
1,079,379
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Jennifer, valuing homes, along with negotiating contracts, is what separates the pros from the wannabes. This is an excellent series and previewing the competition is important. Active listings are extremely relevant.

Nov 07, 2009 04:46 AM #14
Rainer
44,496
Dave Hymes
RE/MAX Gold - Placerville, CA

Jennifer, I am a fan! This series was so great I sent it to a few friends (agents). And I couldn't agree more, it's worth all the trouble, all that research can net your client thousands of dollars. They deserve that from their agent.

Nov 07, 2009 05:15 AM #15
Rainmaker
147,836
Hawaii homes
Century 21 iProperties Hawaii - Honolulu, HI

Thanks for the useful tips!

Nov 07, 2009 06:20 AM #16
Rainmaker
662,099
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Thanks for the interesting post today.

Patricia/Seacoast

Nov 07, 2009 01:15 PM #17
Rainmaker
398,751
Kerry Lucasse
eXp Realty - Nest Atlanta Team - Atlanta, GA
Your Nest Atlanta Real Estate Consultant

About 90% of the homes I sell are historic or just older (60+years ago) and it can be such a challenge to price it correctly when you can't compare apples to apples.  Fantastic post!

Nov 08, 2009 12:02 AM #18
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Jennifer Allan-Hagedorn

Author of Sell with Soul
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