This blog is written for the general public. This should bore most realtors. The purpose of this blog is to help inform buyers how a legitimate market analysis is really done.
First of all the purpose of a market analysis is to find the price at which the home will sell in today's market. I emphasis today, not yesterday, not three months ago, not 6 months ago and certainly not a year ago.
So here is how I determine the real market value of a home. By the way this is a real example of a home I listed on Marquis Avenue a couple of weeks ago.
First, I drive around the neighborhood and survey the general condition of other homes.
This is quite important even when I know the neighborhood well. What if the neighbors next door suddenly start a large remodeling project and there are piles of building materials, foreman's trailers and workers cars parked up and down the street? If you are going to try to sell your home with all that activity and mess you better not expect to have a lot of viewings. In Lexington the average home needs to be shown twelve times before it sells. The number of showings will affect when the house sells.
Secondly I carefully study the specific location of the home.
459 Marquis avenue is in the Hollywood Subdivision. Hollywood is within two or three blocks of the University of Kentucky and 459 Marquis is also just a couple of blocks from the Chevy Chase boutiques and restaurants. This particular home is between Chevy Chase and the Universtity of Kentucky. If it were in Chevy Chase it could easily sell for 50,000 to 100,000 more than in being in Hollywood. However 459 Marquis is in a better location than most of Hollywood. It is closer to Chevy Chase and the general appearance of Marquis has more of a neigborhood feel than much of the college rental district. 459 Marquis is also right next to the Mount Vernon Subdivision. Mount Vernon is still on the west side of Tates Creek or High Street which means it is more like Hollywood than Chevy Chase when comparing prices. In fact the general appearance of much of Mount Vernon has more of a rental feel than Marquis street does. Woodland Park is also adjacent to Hollywood and a comparable subdivision.
Now I am ready to go to the Multiple Listing Service.
I first do a search of all the homes that have sold within the last three months, are currently listed for sale and for homes in which the listing expired within the past three months. Why three months? Because appraisers will try to find the most recent transactions and like to limit it to three months when possible. I do this search first in just the Hollywood subdivision. If I cannot find similar properties in the same subdivision then I will go to the next closest subdivision that is comparable.
I found only one home in Hollywood that was a recent comparable property so I used a home in Mount Vernon and another in Woodland Park. All three comparables are within a quarter of a mile of 459 Marquis avenue. The computer does a quick and simple Comparative Market Analysis but it does not do a detailed analysis similar to what an appraiser will do. So the next step is to take the Rector Hayden Comparative Analysis sheet and meticulously fill in all the data.
This sheet has a column for the subject property 459 Marquis and then a column for the three comparable homes. This analysis has things such as location, square footage details for all levels and what type of garage the home may or may not have. After listing these many details then I go back and add or subtract the value of each item that is different. Some examples: one of the comps only had one and a half baths and 459 Marquis has 2 full baths. So I add a specified amount which is on a sheet which is used by Rector Hayden and is similar to what an appraiser will use. You always add to the comparable homes when they do are missing something or have something of less value than the subject home. You always take away from the comparable homes when they have something the subject home does not have or they have something of greater value. The whole purpose is to find what the comparable properties would sell for if they were exactly like the subject property.
It is critical to note the difference between this process and Zillow. Zillow uses public information to guesstimate values. It does not use detailed information to analysis the real factual detailed differences in the homes.
Once I have found the comparable values for the three homes I enter those values on the Rector Hayden Market Analysis and Pricing Evaluation packet.
Next I do a search for three comparable homes that have expired recently, the past three months if possible.
The last search is for three comparable homes that are currently for sale. This gives the homeowner a good idea of what the competition really is, right now!
The seller is presented with all this information and then they are asked to set the price. When I do a good job researching it is obvious to the seller and they will almost always choose a realistic price.
The Jubilee Team of Rector Hayden Realtors
Lexington's Green Thumb Realtor
The Jubilee Team, Paul Campbell and Dorothy LaBar
Paul's Contact Info: 859.684.5890 firstname.lastname@example.org
Dorothy's Contact Info: 859.608.0724 email@example.com
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