Determining the proper price for your Louisville Home
Now that you understand Why Pricing Your Home Correctly is so important, the next step is to actually understand the process. Determining the proper list price for your home is a lot like constructing a puzzle.
Start with the Outside
The process starts by constructing the framework. Your real estate agent --that's me of course:)-- will review information from you, past and current homes for sale, tax records, and Google Maps to determine the basic characteristics of your home. Among other things, I am looking for
- Style
- Square Footage
- # of Bedrooms
- Number of Baths
- Presence of a Garage
- Presence of a Basement
- Features (Hardwood, Granite, Tile, Deck, Fireplace, Pool, etc)
- Lot Size and Description
- Surrounding Amenities that help values (golf course, parks, playground) and,
- Those which hurt (cemetaries, highways, and prisons).
Gathering and organizing all of this data is equivalent to assembling all of the edge pieces. The borders are now defined, but a lot of work still needs to be done before the picture is clear.
Working on the Big Picture
The next step is to start filling in the center. This is often best accomplished by gathering similar pieces that define large or unique sections of the puzzle. Likewise, your agent researches the homes in your area of Louisville that have been on the market in the last 6-12 months. As I look at each home, I try to determine whether it is related to yours or if it needs to be set aside and worked into the puzzle later. The most similar properties are studied in attempt to determine why they sold (or didn't sell) for a given price. Your home is then compared versus each of the similar properties to identify strengths and weaknesses. After some time, a very large section of the puzzle is defined.
Filling in the Fringe Details
Neighborhood data comes next. During this portion of research, my main concern is to see how the market is doing. Louisville real estate is hyper-local and one neighborhood may be flourishing while the next is floundering. I'll look at how long it takes homes to sell, number of homes on the market, recent sales, number of foreclosures or short sales, etc. Most likely, I'll drive through the neighborhood and past your house to make sure I understand why the data is what it is. Once these trends are understood, the puzzle is 95% complete. I am now able to see enough to determine a fairly accurate price range and am ready to visit your home.
The Final Pieces
The puzzle comes together during the tour of your home and our subsequent conversation. No CMA can completed accurately without seeing the home. (This is why I have such disdain for "Automated CMAs," but that is the subject of another post). The condition of your home is a major factor in determining whether you will be able to sell at the top of the price range or whether an Arsonist would be a more appropriate hire.
After touring your home, we'll discuss your motivations and schedule for moving. Any items that need to be corrected will also be discussed. These are the last pieces of the puzzle. I can now recommend a sales price and listing price that will give you the best chance to get your house sold.
Special Note
At no point in the process do I consider what you owe, need, or want to get out of the house when determining price. Simply put, the market doesn't care whether you own the house free and clear or are so far underwater you can't even tell which way is up. I, of course, care deeply about making sure you get every last penny you can. Later in this series, I'll discuss a few tips that will put a few coins in your pocket but pricing unrealisitically is not one of them.
This the 3rd post in a 7-part series. For more, click the following link...How to Sell a Louisville Home
*Photo licensed via Creative Commons from Jared on Flickr.
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Erik Hitzelberger is a licensed REALTOR with RE/MAX Alliance in Louisville. If you need a Louisville Real Estate agent please email me or call 502.921.3989.
I specialize in the following areas of the Metro Louisville Area: Prospect, Middletown, Jeffersontown (J-Town), Fern Creek, Okolona, Shepherdsville, Mt Washington, Hillview, Brooks and Pewee Valley. Click the following links to learn more about Louisville and Bullitt County Real Estate or to Search for Louisville Homes
Erik, definitely good pointers for pricing - and I dislike automatic CMAs too- there is too much room for innacuracy !
Thanks Sheldon. I always struggle with whether I should have automated CMAs on my website. People seem to want them, but the valuation can be dangerous if you don't understand the limitations.
That pricing piece is always so important in the successful sale of a home. These day more than ever my friend.
Hi Erik -- selling and buying -- it's all about getting it RIGHT! This market is fickle, so your pointers should be very well-taken!
Erik - "At no point in the process do I consider what you owe, need, or want to get out of the house when determining price." I love when seller's tell me what they "want." Great breakdown!
Good points no matter where you live!
And some people say that Realtors don't earn their commissions. Very good points and well done, Erik! Good luck.
Erik, very informative. Good information for not only sellers, but anyone wanting to know the selling process.
Erik, nice job on this post. You are so right about automated CMAs. Recently I ran numbers for a condo and thought that I was really at the right price. How different can a condo be, right? Wrong. I didn't mention the list price to the seller to begin with. I went and saw the place and realized I was way off. Thankfully I didn't just throw a number out there. The condition of a home counts for a lot!
JL - You are so correct. In my area the market is getting better, but seller would be foolish to get to try to stretch the List Price. There are too many substitutes and buyers are still very cautious. One day, the market may boom again, but that day is not anytime soon.
Carla - Fickle is a perfect description. People want to buy and sell, but are very tentative. The smallest things scare them away. And, an overpriced thing is damn scary.
Michelle - Unless they're using it as "We want you to tell us exactly what to do to get our house sold" it gives me chills.
Damon - Most of the points do apply to real estate in general.
David - Thanks! This upfront work is unseen but really makes a difference in whether a house sells.
Deborah - This is my third post in a series about How to Sell a Home. Hopefully, it will be a benefit to anyone considering the process.
Jen - I'm going to cover this a little more in one of my later posts, but sellers can earn huge ROIs just by getting their homes ready to sell. Buyers discount dirty and cluttered homes at a ridiculous rate. On the other hand, I recently RAISED my suggested price on a home by 2% because it was immaculate. (Sold in 1 day)
Hi Erik -- Exceptional advice. We renovate homes in addition to redesign and staging for sellers and as you stated in the above comment to Jen, it can be huge, and has been for our sellers.
Chris - You actually renovate/remodel the homes yourself? I have a separate investment company for rehabs and have been thinking of offering services to sellers, but was concerned about a perceived conflict of interest. How do you handle that part?
Erik - I love it when I see another agent that takes pricing as seriously as I do. This is a great series of posts - thanks for turing your re-blog on for this one. :)
Kristina - I am a numbers geek. Since, it is pointless to deny it, I might as well show how it benefits potential clients. Pricing just happens to be one of the most important ways. Thanks for the Reblog.
Awesome work with this Erik. Pricing is the most important consideration in selling a home and you have described the key considerations very well.
Thanks Bill. As you well know, if it isn't priced correctly, all of the preparation and promotion in the world will most likely be wasted effort.
Erik, this is great advice, not just for Louisville sellers, but for just about anybody on the planet!
Lol - That's me, "The WorldWide Realtor."
LOL @ Worldwide Realtor! THanks for doing your part to help people realize that PRICE DOES SELL in this series!
Renee - Just the first step towards my goal of world domination. If you are going to dream, dream BIG.