I thought I would share a great video from my friend Jay Seville about how to arrive at an offer price for a sales contract. Jay sells real estate in Great Falls Virginia, but the techniques he uses are the same ones I use when working with buyers and sellers in the Miami area. Enjoy!
Below is a transcription of the video:
Jay: So the first thing I’m going to do, I’m going to take the listing. I’m going to take the address. I’m going to take the address. I’m going to go into a general search. Going to go to my map and put it in, put in Great Falls Virginia real estate. Then find out where we are on the map, okay? Then I’m going to extend it out, okay it again. Zoom out a little bit, going to use my handy-dandy rectangle-radius device over here and grab these listings. I’m going to focus on homes sold since, homes listed since, let’s say, November. And we’ll look at homes between 1.3 million and 1.8 million.
Now that one has at least four baths. I really think we need a four or five bath to match it and a four to six bedroom home to match it. Let’s see what we get in that area, what things are closing for, solds and other contract and the active. What we want to take into account is the acreage as well so I’m going to be flip-flopping back and forth to compare the house to this one.
All right, 27 listings to choose from. I’m going to go through, weed this out, pick them down, but first thing I need to do is go reacquaint myself with the listing in question.
Let’s see what’s these pictures are. Okay, this is definitely a high level home, Brazilian cherry wood floors, gorgeous completely, elegant inside and stately, very classy. It shows extremely well. They’ve really done an excellent job presenting this house. Look at that kitchen, really fancy lights etcetera. Let’s see if we can get a better view of the front, nice. And then let’s head over to some of the other pictures, going afterwards to the rec room etcetera.
All right [unintelligible][00:04:03] …this was a foreclosure. I’m sure it was in terrible condition. Let’s just click on the pictures real quick and confirm. Yeah, I mean look at that mirrored thing. We don’t want it. Move on to the next one.
Not nearly as classy on the front end. A smaller lot, very big though. It boasts a chef kitchen so there must something good about this house. It’s supposedly 8,000 square feet. I’m a little bit suspicious of that though but let’s see. Okay, you can see the backside. It’s completely a step down in terms of how classy and elegant it is.
The inside of the house is really nice. It just isn’t as elegant as the other one although it has some great features but you can tell it’s just a step down especially surrounding the house on the outside. It’s not the same. It’s not nearly as elegant inside as either.
However, it closed for 1.5 million. It’s a reasonable comp to compare and priced backwards from like towards.
This one on Miller Avenue, it closed for 1.5. It was a brand new house which is interesting there. It also was listed 1.65 million. So I think it’s a nice comp for us. Just want to see since it’s not you know, mostly empty with terrible photos of it. It’s sort of hard to really take in how nice it was or wasn’t, dark, swamped photos. So we’ll definitely keep this one as a comp.
Then Seneca Knoll. This one listed 1.799 and it closed 1.799. Brand new kitchen, mahogany panel, den, over 300 grand in upgrades. So we definitely want to look at this one because if it’s that good, we can price backwards from this one that closed 1.8 million and get a good idea what’s happening.
Okay, huge, pretty big lot, looks like they have a swimming pool back there as well. Interesting, big kitchen. Oh it’s a narrow kitchen. It’s a little bit dysfunctional. I wonder, I mean it’s got some neat things the kitchen, but it sure is different. Gosh, it doesn’t seem as nice to me as the home we’re trying to run numbers on.
What we want to check is make out a map where is it located in relation. Anyway, it closed 1.79 million. That’s really interesting. I wouldn’t have thought it would have closed that high.
This one is two acres, under contract, Lake Windermere, lakeside, waterfront haven. Now below comps for two irresistible acres. Okay. Getting a look at these pictures, go through and see how it relates. Completely not as classy inside. You know, some big functional rooms but it’s not near the elegance. That closed for, well it’s under contract for six months. It was listed 1.35 million. Probably they’re getting there somewhere around 1.3 million based on what I’ve seen lately. So we’ll include this in our numbers.
Great Passage, this is also under contract. Listed 1.5 million, one acre, five and a half baths. That extra bath, that’s quite pertinent. Let’s look at these photos and see how it measures up. Hmm, it’s nice, big, open space, a lot of sunshine. Big, modern kitchen, wow. Now that style is not for everyone but obviously a lot of money has gone into this thing. This is a great house, very interesting. So not as finished as well either on that lower level, just very open and plain. That sort of where it falls behind the other one. Let’s say 1.5 million under contract. We can price up from there.
Well you get the idea…I had to weed through 27 listings to pick out the comps we would use. I’ll spare you and move on to comparing our best comps.
Example of Running the Numbers on High End Great Falls Virginia Real Estate
All right, so we have our list here of comps for Great Falls Virginia real estate listings. We went from 27 listings. We narrowed them down to 12 comps and based on those, now we examine these more intensely. For these homes that are in the upper price bracket, it takes a lot longer to figure out where you’re going to come in with your initial offer price. Regular homes, you can usually run numbers for them 30 minutes. These homes sometimes take an hour and a half to do. So I’m going to take a couple of pieces of this and show them to you.
So 759 Miller closed for 1.5 million this year. It was new home, very classy inside. Seneca Knolls under contract, closed for 1.8 million. Let’s compare it to the one we have and confirm we can go backwards from it. Its weakness is that kitchen, that funky, narrow kitchen that does not seem to open up in a grand way. Yet it closed for 1.8 million. I mean my initial impression is somewhat I would have pay for that but Seneca Knoll is a special neighborhood in Great Falls. Homes do close higher there.
Lake Windermere, under contract 1.35 million. Great Passage, this one is under contract, 1.5 million. If I recall, we looked at these photos and we thought ours was, home we’re looking at is much nicer than this. Now this had the modern flavor to it. That’s right. Really neat home, very modern, crisp and clean, not nearly as sort of stately inside. Its weakness was, I have a feeling it’s a smaller space down. Anyway, it is a good home. This is a good comp. It’s listed 1.5 million. It was under contract right now.
Falls Pointe, 1.575, listed just the same price ours listed at. It closed at 1.575. Now these photos are really good. It would be a great comp for us. It has a great backside. It has some nice features to it. This is a great, we would use this in our [unintelligible][00:11:29] 1.7 million dollar home. It’s not worth that.
This one listed 1.65. It closed for 1.65. Smaller home. Get these photos, very plain inside, not all that fancy but clean, crisp.
Okay, yeah our home is a step up from this one yet it still closed 1.65 million, very interesting. I’m very surprised. The one we’re looking at is priced 1.695. So it’s interesting that our home is a step up from this one yet this one closed 1.695.
At the same time, this one closed all the way down 1.575. Sort of conflicting messages we’re seeing here. The initial impression that’s coming to me, I need to see them on the map how close are these two to our listing for example.
What we want to do is one, get our comps together, get an idea on what it’s really worth. Then two, we want to pick the most strategic comps, put our case out there. Sometimes with like video email, that way the listing agent can pass it directly on to the seller. So it’s like a one-on-one negotiating with me directly speaking to the seller and making my point of why their home is not worth this but it’s really worth this. Therefore, it’s in their interest to negotiate with us and come down and be realistic about it.
So our listings right here, this one here closed for 1.65 and this one here closed for 1.575. So we would focus on this listing here when we get back with them later and make our initial offer price.
Then our home is much nicer than some of these other homes. I really think that the home in question based on all these we’ve been doing, this home will appraise easily for 1.65 million. My impression is that we would offer 1.5 million and try and make our case to them that the economy has dealt dipping in the recession. The days on the market are going up for Great Falls, real estate etcetera, and get them down into the, to come down under 1.6 million because it probably is 1.65 million. There’s a good chance though they would come under 1.6 million. They would get down into the 1.5’s. So we would offer them 1.5 million and see what happens from there.