As agents, the trickiest question that a potential vendor can ask us is, “how much is my property worth?”
It’s the trickiest question because whatever answer you give, you know this will set the relationship moving forward. We know it may not always be positive, whether you’re being conservative, or generous in your quote. A vendor could react in many different ways with everything from disappointment, satisfaction, or even complete disbelief.
That said – providing the value of a property remains the single most important question to answer!
At this point, an agent needs to navigate the minefield that can be industry provided valuation models.
The system prompts you to ‘just enter your address’. From there a number appears with the same challenges to address: “Low” “Medium” or “High”. Either joy, validation, or horror.
These systems use all sorts of algorithms. Machine learning “hedonic” “regression” formulas attempt to place a value on the property. In simple terms, they line up ‘like for like’ properties, get the middle amount, and there’s your value.
Personally I love it when these algorithms get it wrong. When that happens, the agent now has an opportunity to demonstrate their expertise to position the property value correctly.
Facts don’t always sway people, and the way vendors come to believe the true market value of their home can vary. Bringing a person to a marketable value with facts and numbers helps, but doesn’t always work, and of course leaves you open to a different opinion. The current market is even more difficult with vendors choosing to ignore the current conditions, and buyers making ridiculous offers in a cooling market.
How does an agent list and sell in a cooling market, against their competitors?
Firstly they build trust, and when the vendor is truly convinced of the market value, it’s hard for a competitor to come in and overstate the value. Vendors won’t be convinced – and will distrust the agent over quoting on the market value.
Agents who build this type of trust and confidence bring the vendor on the same journey, clearly explaining how they came to the market value of the property. Simply providing a list of comparable properties may not work. The vendor often is convinced of the superiority of their property, and will sometimes double down on their perception of the value or market price.
So how do agents seemingly gain trust, and convince an owner? The answer is to have the owner engaged in the process, so they own the final number.
One of the best ways is to use the “Better” “Same” “Worse” system in collaboration with the comparables.
Your CMA (Comparative Market Analysis) starts with a number using the algorithms from the market comparables:
Using your selected comparables, start with the first, and describe the reason you have included this in your list. The agent then asks for an opinion on the property: is it better, same, or worse? An adjustment is made to the starting number, according to the answer.
The agent then repeats this process for comparables relevant to the property. The agent’s expertise on the comparable shines through – but, the most important thing that happens is the owner drives the conversation, and actually positions the property themselves within the price range of comparables.
There are some good systems out there that will create the starting number, and adjust as the agent runs through this process, but all the agent needs is a good idea on how the changes to features and attributes affect the pricing model.
It’s a great idea to use the modeling tools available to get used to how the value changes as you position the comparables into the “better” “same” or “worse” categories.
The agent now has a strong market value that works with the current conditions, but the most important aspect to using this methodology is the vendor hands you the price. So when a competing agent comes in with a much higher price, it will be difficult for that agent to justify the amount. They lose confidence and trust, and the original agent gains and strengthens trust.
National Property Group’s data platform provides simple, quick and accurate property search comparisons to make the workday of an agent more productive to deliver greater opportunities to reach more customers, and more sales. Find out more about our property data insights platform.