Later today I will be setting the asking price for a home in Redmond near Microsoft, and thought it would be interesting to some to follow how my brain wraps around the task.
The goal is to find the house they will be moving to first, but I always go to the house they will be selling in order to buy, ASAP after meeting them. This way the owner has plenty of time to do everything they need to do, and will be ready to list the property the minute they find the house they want to buy. It also assists by making sure their Net Proceeds Expectation on the home they are selling is not over-stated, BEFORE they make an offer thinking they are getting more than they will. That can be a very dangerous mistake, in my experience.
So laying out their net proceeds from the sale of their home, before they make an offer or even establish a firm purchase price target, is the first step in the home buying process.
First I pull the tax records of the “Subject Property” and note the layout as to main floor footprint, basement square footage and anything over the main floor. In this case there appears to be a bedroom or bonus room on the 2nd/3rd floor. Tax records call it 3rd, I call it 2nd. Then I look to see if the property had been listed for sale in the mls when they bought it. No luck there. The timeframe is available, but the house was apparently not listed in the mls when they bought it. An off-market transaction. That likely means the price they paid was not market-tested, so I’m putting no relevance in its accuracy.
I just thought of David G. since my next step is finding their Significant Other Sold Property, which reminded me of Zillow. Since I already know where I value this one, I’ll go peek at Zillow…be right back.
WOW! That was an eye opening experience. OK then. David G., call me if you want to know what I saw. Glad I took that step. I also saw one of my favorite agents and neighbor, Mike Moghaddas, on a Zillow ad in the sidebar. OK, enough on Ardell’s Field Trip to Zillow.
The Significant Other Sale, which is just a house or two from the subject property, tells me everything I need to know to get a ballpark value before I go to see the house later today. Zillow told me everything else and more. While the Significant Other sold in 2007, it sold in early 2007, so I have to try to calculate change and I can already tell you that I’m pricing this one UP and not DOWN. No, the market is not down as to price for this home. Only question is how much up is it.
No agent can make recommendations as to work to be done to get the home ready for market, until they have a ballpark value in their head that they come up with on their own, without owner input. I already know that if he lists it at X price, he doesn’t need to do anything. If he lists at at Y price, then we have our work cut out for us and some major staging and aesthetic and cosmetic fixing to do. In fact this is one case where I will likely recommend a pre-inspection. Something I rarely if ever do.
I know exactly what the interior looked like on the Significant Other sale. Original, but good, condition. I also have a pretty good feel for being able to get 5% more than the early 2007 comp would indicate. Now I go to see the house and add the missing pieces to the puzzle.
Before all of this technology, and Zillow, we often had to see the house first and then go back and do the homework. Today, technological advances have turned the tables on the way we work. Homework first, see house second. The advantage this technology affords the agent and the owner, is that we can now give the owner the list of things they need to do at first visit.
The owner should only do things if doing those things is going to assist in the sale and get a higher price. And that is not always the case. Sometimes a lower price is warranted due to price breaks. For example, if without the work the home would list at $599,950 and doing the work might put it at $615,000, maybe better to go with the 5 on the front and just clean it up and lightly stage it. If the owner does a lot of work in those cases, it would be a waste of time and money. This is one of those cases, and I can already tell that before going to see the house. Ain’t technology great! Only question is, how much work was already done to the house since the time it was purchased. Zillow didn’t help me with that one, so a trip to the house is the final step rather than the first step.
Had the property been on market last year, cancelled and I was re-listing a property that was already tested, the steps would be different. This is not one of those cases. Never listed for sale since the owners purchased it.
Valuing property is one of the most important things we do for buyers and sellers. It’s fun and rewarding and very meaningful to the lives we touch day in and day out. No computer program will replace us, but clearly they are very helpful to us. Speaking from someone who knows as when I started in real estate the mls was a DOS version with no photos, and the mls was a weekly book with black and white thumbnail exterior photos only. No access to tax records or square footage when I started either. I love technology…and Seattle Area does it best.