Just another installment in the series: Pricing Historic Homes in Urban Markets...
In the last installment, I recommended that you always, always, always drive by your subject property before doing anything else. If you can get inside, so much the better...
So after you have a good visual of your subject property, it's time to go check out the competition - otherwise known as "previewing." (If your market frowns on previewing, and many do, please share with the audience how on earth you properly price homes!).
When I interview to list a property, I often find myself bonding with the home, to the point where it's almost as hard for me to be objective about it as it is for the sellers. I really have to fight the temptation to be overly critical of "my" listing's competition, while excusing "my" listing's challenges and flaws. Sometimes I'll take another agent with me on my previewing tour to help keep me objective.
SELECTING THE HOMES TO PREVIEW
Which homes should you preview? In a word (okay, a phrase) - as many as you can. Even if they aren't exactly comparable. With every house you tour, you gain a little better grasp on the up-to-the-minute marketplace, which makes it much easier to pinpoint the proper price range to recommend. It just happens naturally. As you look at the competition, you'll start to get a feeling for where your listing falls in the scheme of things, and the more you look at, the more confident you'll be in that feeling.
I try to preview at least 10 houses when I'm pricing a home. Sometimes I'll get lazy and only hit five - and I always regret it. It seems that it's right around the sixth or seventh house that I start to trust my gut about pricing. And that gut feeling is further confirmed on the eighth, ninth and tenth.
Depending on my price range, I'll preview all comparable houses within $50,000 (on each side) of where I think my listing will fall. By "comparable," I mean homes that offer similar square footage for the money. I probably won't preview a 1,000 sqft Bungalow if I'm listing a 2,000 sqft Victorian; they just won't attract the same buyer, even though they may very well be priced similarly. I always preview any homes within one block of my seller's property, even if they aren't comparable at all. It's just good practice in case the seller asks you about it.
Always preview the low outliers. A "low outlier" is a house that looks good on paper, but seems to be a screaming deal. You need to know why it's priced so well... but hasn't sold. There probably is a good reason. If there isn't, then this is the listing to beat. But we'll talk about that later.
How about the high outliers? The houses that are priced way above the rest, which are probably getting your seller all excited? Look at those, too. Chances are that they're just grossly overpriced (and the more houses you look at, the more sure you'll be of this). If they aren't overpriced, there's something really fabulous about them, and you need to know what it is.
As you're setting your previews, note if any homes are difficult to show. That will definitely affect market value. And frankly, if they are, I'll skip them. Lazy? Maybe, but on the other hand, a difficult-to-show home is not going to be comparable to MY listing because I don't take difficult-to-show listings!
Effective previewing in an urban market entails a lot more than just looking at a bunch of homes. Sure, that's what you're going to do (look at a bunch of homes), but in order to really evaluate the information you're gathering, you need to go in with the heart & mind of a detective.
We'll talk about that next time.
Subscribe to
The Daily Seduction
Tips & Inspirations to Generate Business from the Very Important People Who Know You
Great info. In the REO marketplace we see BPOs come in that it is obvious the agent did not preview and did not look at many comps. All to often, they sit at a desk and bang out fiction.
Preview, preview, preview. I may preview homes within $100,000 on either side and adjust by sq. ft., lot size, taxes, etc.
I find that many agents consider a cell in the basement a bedroom and price along with homes with the proper bedroom value. Oh well.
Great informative post. These are "unique" properties and need special attention for pricing, as with the log homes, the contemporaries (in my area, there are often no real comps), updates, etc.
It's a tough job but someone has to do it.
Great stuff here Jen.....I work with a top agent in all of Illinois. If you don't know your product, why take the client shopping.
I agree with Lenn and this is an essential component for any real estate agent and NOT just limited to historic homes. The fact of the matter is that in the areas where I work an agent has to look at homes through realtor tours and open houses at least twice a week to be up on the inventory. Of course they can also rely on whatever pops up in MLS and fly by the seat of their pants...Nah, I think I will stay on top of my market!
Great information! Many surprises can happen when you don't look at a home first. The outside is not always what the inside is - it can be better or worse. Historic homes are hard because it seems like a bit of history and many don't appreciate the value even though it may need some work.
Great information and comments! In my marketplace (Oahu), most realtors preview. We see everything out there on the market in the price range and it helps tremedously. And it shows, as most homes, in most areas sell for 96-99% of list price.
I have lived most of my adult life in homes that were built from 1910 to 1939. I hope in your series, and I bet you will, that you talk about pricing as it relates to whether updates have happened and when. Fiber covered wiring, lack of insulation, and other issues are not undertood by even the listing agents. I have also seen horror stories about people trying to pier foundations on old houses and causing more damage by doing it. Historic homes, listing them, buying them, and pricing them is not for the rookie or uninformed. Thanks for an important series.
Hi Jennifer -- Yes, you are on the mark with this post. I have listed and sold older and architecturally significant homes and they are very unique. One really has to get a sense of everything with unique properties: flow, design, functional and external obsolescence, updates remaining true to the character of the home, etc. Measure twice, cut once as the saying goes, but in this case, measure it 4 times as it can save a lot of headache down the road.
Here in Lincoln County and other rural communities, it is especially important to preview a home because of the "lay of the land." The irregular lot sizes and slope vary so much that it is impossible to get a feel for what is surrounding the house unless you go there. A house may look great on the MLS, but you go there and there is a steep hill of with water cascading down either side of the home, trees too close to the house, mobile homes right next to new builds, wells that go dry, old septic systems with rusted holding tanks, the list goes on. Thanks for a great post!
Great post and so true. Especially with historic homes - they can be much more difficult to comp and you have to be able to explain that to your buyer or seller. If you have been in the home, you can do that much better than from the MLS.
I work in an area that has newer homes with similar floor plans and I still feel I need to preview. Because when taking a listing, I am asked about the competition. While the seller is boasting about their updated kitchen and their salt water pool, I need to let them know that down the street, there is a property just like theirs or better selling for less.
In other words, you have to know your market or your service as a professional is severely diminished.
A gold star for a blog on pricing? Neato!
Susan - Your comment just inspired another blog... stay tuned!
Lenn - I don't run into too many atypical homes (e.g. log homes, domes, etc) in Denver, so that's a whole different topic. Would love to hear your thoughts on the matter!
Larry - But agents do it every day...
Russell - Frankly, staying on top of your market is what makes this business fun! I can't imagine winging it on a regular basis and sleeping well at night...
Chris - It also helps if you have an understanding of the Old House buyer and what's important to them... I always get a kick out of the feedback I get from suburban agents who clearly don't understand WHY ON EARTH anyone would want an old home!
Barbara - Exactly! Very good point.
Joyce - Seems obvious, doesn't it? As if the listing agent is going to POINT OUT the home's flaws in the MLS description for you!
Terri - I always preview when I work in newer communities, too. It is shocking how much wear and tear a 10 year old house can have... but I find that there just isn't as much wiggle room on pricing as there is in older markets - do you think that's true?
James. Yes. Exactly what you said.
Just 700 points away from 200k!!!
Looking forward to the next one...
Previewing definitely keeps you up to date on the current market. It makes you a better, more intuitive agent, and you never know what's going to happen. I was once previewing a great looking duplex near L.A. International Airport. I was wondering how much noise from the planes there was so I hung out for a little while and a freight train rolled by.
Good advice Jennifer. I often have the same problem as you, bonding with a home and losing objectivity. The flip side of that is, if you really love your listing it does make it easier to enthusiastically promote it.
Jennifer that really is great advise. I'd be willing to bet most of the agents in my market should take this advise to heart, I think you have to know what else is being offered in your price range in order to get a listing listed correctly so it will sell.
How do you compile your information about previewing? Do you take notes and have a pile of MLS printouts with scribbles, a journal, or do you just remember? I think it would be hard to keep everything straight if you have more than one listing at a time.
Wow, Jennifer, you really work this! I do House Tour every Tuesday but this really takes the research to a precise, new dimension!
Thank you for the great information today.
Patricia
Jennifer, That's exactly right...in some markets; high end, historic, water, golf...and any other little niche. Niche=specialty and you better have a good down home feel for what you are talking about, because your seller will! Great Post...my favorite part, was how you start to lose your impartiallity towards a property....I tend to do the same thing...tough to be objective in a niche market...they all tend to have something exceptional!
Why on earth wouldn't you preview? You have to know the product, duh. I may be new at this, but you have to know as much as possible to do the best job.
Let us know when you get to 200,000 points. I was excited when I got to 3700!