Pricing Historic Homes in Urban Neighborhoods, Step Four - Analyzing the SOLDs - Dealing with the Outliers

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Education & Training with Sell with Soul

Denver Bungalow

Thanks to those who are sticking thru this series with me! While I think that the process of properly pricing homes is fascinating stuff, I know it's not nearly as sexy as other topics! (Although SELLING your properly priced listing is very sexy, indeed.)

In the previous installments...

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

...we talked about how to effectively preview the competition to figure out where your potential listing falls into the scheme of things.  So, what about the SOLDs?

The problem with using SOLDs in your market analysis is, unless you've been a previewing mad(wo)man over the last eight months, you probably haven't seen the inside of the properties, and now it's too late. So you have to go off the MLS description - a very risky proposition!

But we'll do our best.

Print off all the SOLDs that seem to be comparable, even if they're much higher or lower than your assumption of the market value of "your" listing. Drive by all of them! Pay special attention to the outliers - the ones that seem to have sold way out of whack to the rest of the market, or whose Days on Market statistic is unusually low or high.

There's a good chance your drive-by will reveal the reason for the out-of-line price or DOM. Perhaps there's a commercial building next door, behind or across the street. Or, common in Denver, a corner lot that doesn't have a private back yard, or any back yard at all. Maybe it's a pop-top done wrong and doesn't fit in with the neighborhood. Busy street with a bus stop in the front yard?  

Or conversely, you might see that it has a stellar location with an extra-large lot, a mountain view, or around the corner (at a suitable distance) from a popular coffee shop.

If the reason for the outlying price and/or DOM isn't obvious from your drive-by, go line-by line through the MLS listing. Is it missing a garage in a market that expects garages? No basement? One bathroom? Obviously, if the interior photos show that it needs work, that's relevant. Check the showing instructions to see if there are any obvious limitations on access.

If all else fails, and you really feel a particular house is a good comparable, call the listing agent. Hopefully they'll be helpful in helping you understand why the house sold at the price it did. Or, maybe not. But give it a try.

It really is the outliers that give you the most grief when looking at the SOLDs. There probably are some sold listings that fall right in line with what you're thinking the price of your listing ought to be, but the ones that don't give you fits. The more research you do on these outliers will not only make your CMA stronger, but will give you an air of confidence when going through your CMA with a seller.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. June Piper-Brandon 11/11/2009 02:11 PM
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

I guess this gives a new meaning to the phrase "drive by."  We use it a lot with appraisers, but what you're suggesting makes sense.  You don't know, often times, until YOU see.

Nov 10, 2009 12:23 AM #1
Rainmaker
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Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Good Morning Jennifer... great points. any unique home needs a little more TLC in pricing it.  Much the same as an appraiser would. I have had some difficult ones in the past where appraisers had to go to 3 different towns to come up with a value, with an Historic home I would imagine the same holds true!

Nov 10, 2009 12:42 AM #2
Rainmaker
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Kevin J. May
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida

I really like your comment "pop-top done wrong".  It's never too late to view the sold competition.  I find that most new owners of this type of property are more willing to allow us to view their homes than any other just by being the distinctive property that it is.  If there are a few very similar to your subject and all other factors being equal by all means knock on that door.  I believe you'll be glad you did.       

Nov 10, 2009 12:41 PM #3
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Jennifer Allan-Hagedorn

Author of Sell with Soul
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