Earlier this week (or maybe last week?) I promised to do a little series with tips on how to properly price historic homes in urban markets. Here's where I promised that - you might want to read it first.
Got distracted by conversations ‘bout Real Estate Reality Shows, but here I am again, back to the more mundane issues of our daily grind... pricing homes to sell. Yawn. (I say that a little sarcastically; I totally love this 
stuff).
Pricing historic homes in urban markets is a bit (a lot?) more time-consuming than pricing newer homes in planned developments. But, at least to my way of thinking, it's a whole lot more fun! Hope you think so, too...
Step One is to Drive by the Home. Never, ever, ever begin the pricing process until you've at least driven by the subject property. You need to have an accurate mental picture of the home and its general location on the planet in order to take the next step. When you drive by, be sure to look for any locational challenges such as nearby railroad tracks, overhead high-tension power lines, undesirable neighbors (either commercial or residential) or obvious parking issues. If the home has an alley, drive through it to see what the back of the house overlooks.
Very few older urban homes are in a perfect location; almost all have some locational "amenity" that buyers will object to. You need to be aware of any such objections upfront. On the other hand, if the subject property IS in a perfect location, that's something you need to know as well, because most of the comparables you'll be using won't be.
While we're on the topic, it's far better if you can get inside the house before you prepare your CMA. I usually handle this by doing a 2-step listing presentation - the first being an information-gathering/rapport-building meeting and the second focusing on the current market - i.e. pricing. (Actually, I do a three-step listing presentation, but I'll talk about that later).
That said, whether you do a one-step, two-step or even three-step listing presentation, never meet face2face with a seller without first, driving by the house, and second, perusing the relevant market data online. You need to be at least conversational about the local market, even if you haven't done your detailed research yet. Remember, the general public thinks all we do all day is drive around and look at houses, so if you stutter, stammer and hedge when the seller asks you about his neighborhood's market activity during your first meeting, he'll certainly doubt your professionalism and expertise. Being able to casually toss out a few neighborhood statistics or hyper-local market factoids will do wonders for your confidence and credibility.
If there are any homes for sale or any that have recently sold within one block of the seller's home, know the details of the listings or sales, even if they aren't comparable. Your seller knows all about them and he'll expect you to as well.
Homeowners in urban markets tend to be pretty enamored with their neighborhood and will expect their real estate agent to be, too. So, be as prepared as you can, as early as you can.
Next Time - Step Two - Gentlemen (and ladies), Start Your Research!
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Good morning Jennifer,
You have some litigement points and they even work with non-historic homes. Driving by the property and getting to know what the neighborhood offers gives you many things to converse on in your initial meeting. Sellers want to identify with someone who knows and works in the neighborhood and can answer questions buyers will have about the home and surroundings.
Dorie - I agree that my advice is probably applicable to all types of homes, but especially so with older ones. However, I'm always surprised at how many agents DON'T do any reconnaissance prior to preparing a CMA!
Jennifer, with that historic home we listed I did a 3 step listing appointment that included going through the house on the first visit, going back and taking pictures and a trip to the historic archives and much discussion with the seller and back again for the actual listing. Historic homes can be challenging but oh so beautiful and full of charm and character. You can't treat them like any other listing, there is so much to know and so much to do to prepare.
June- Hmmm, your first comment seems to have poofed! Anyway, I almost always do 3-step presentations, but I never thought about it being due to the market I work in - that it simply just takes more time! I've always worked in the Central Denver market, which is almost all old stuff, so maybe my fascination with proper pricing came from a more difficult training ground!
I've recently had the opportunity to look at 2 Historic homes. With one, (it was over an hour and 30 minutes away) I looked at the home, talked to the seller, and told him I was going to look at the other homes like his first. I asked him if he wanted to visit the homes with me and he jumped at the opportunity. He got the chance to see what his competition looked like and it reinforced all that I suggested that he do to his home to be able to sell it.
Great blog, can'g wait for part 2.
Can't go wrong with your approach. And being the courteous Boy Scout approach will only help matters. Sounds like a lot of people in our industry need to pay attention to Part II.
Like yourself, these homes have "soul" and it's very difficult to place a value on that. If you don't fully complete your analysis of all facets of these masterpieces their total value may be either lost or overestimated. It's interesting to step back in time and understand the perfection of their location when they were new and why. Thanks Jennifer!
Kevin - Ooooh, I love that! Yes, indeed, the homes have SOUL! Don't you wish you knew the history of how these houses came to be? What I find curious is when you see three Victorians (built in the 1890's) side by side on tiny lots, with 30's Tudors and 50's ranches right down the street. How did this street develop this way? What did it look like back in 1920?
Larry - Oh, yes, indeed.
Linda - I used to offer my sellers the chance to preview with me, but hardly any ever did. Always amazed me... I guess they had lives outside of real estate - go figure!
Jennifer,
I do a 2 step listing process with all listings for the reasons that you mention.. I want to get a grasp on the property and the client before I wade off too deep into it.
Sometimes it turns into a 3 step because the home may not be ready for pics even on the second trip.
Enjoyed reading the post.
Judi - My third step is similar to yours - I do it because I never give the final price until we're ready to hit the market which is often a month or more after they've hired me...
Hi Jennifer,
As always, a great post. I am in this section in your new book. Great book,too!
all the best...
Jennifer -
This is good advice for pricing almost all properties. We have a lot of unique properties in our area also and the comps aren't very good. Knowing a lot about the property and doing your research is the only way to come up with a price estimate.
http://activerain.com/blogsview/1319058/pricing-historic-homes-in-urban-market-step-two-preview-preview-preview-
Here's the next installment...