In Part I, I detailed just what a CMA was and how how to look at it.
In this episode, I am going to talk about how is is put together.
Very carefully.
This is not a science, although there is a bit of science involved. And any appraiser or agent that tells you otherwise is probably pulling your leg. There are a few circumstances where value can be pegged hard, but as soon as the properties aren't exactly the same... art is introduced.
So, your agent is going to assemble the comps in the 4 different catagories.
- Solds
- Pendings
- Actives
- Expireds and Withdrawns
Here comes the art... and the science... The next step is to adjust the comps to more closely reflect your home. Of course, the closer the comps are to the subject, and the more comparable they are, the easier and more accurate the CMA can be. This is also where agents and sellers tend to disagree.
Here is where I REALLY break from tradition...
I don't walk in and drop a CMA on the table and then fight for a price I want to list the property at. Instead, I give the sellers the data, and walk them through a few other key items (absorption rates, inventory, etc.) and help them reach their own decision.
We talk about marketing, and what they expect from me. And what I expect from them... We might even work in visits to some of the other competing listings.
Price is really just a strategy...
This is what it comes down to. The price is what gets the property on the "Show List." The property has to sell itself. Price point is a marketing strategy. We don't change the price in order to make people feel better about the property... we change the price so that different buyers will SEE the property.
Warning <valuable information>
After the property is rejected... it is rejected. Let's say that Mr & Mrs Buyer run across the Property and the price is $455,000. They see that it is too much (they think that $450,000 is the most they would spend in the neighborhood), and decide not to look at it. Later, Mr & Mrs Seller drop the price to $440,000. The vast majority of the time, Mr & Mrs Buyer won't revisit the decision to even look at the Property. It is old hat, and has been rejected.
The effectiveness of the price reduction is to get it in front of new people. In this case, Mr & Mrs Newbuyer might see the property in their search for the first time... since they had a criteria limit at $450,000, and the new price is below that.
And we can also see that $452,500 would not have accomplished that.
And neither would a selling bonus to the Selling Broker.
The bottom line is that the price is going to be set by the market. Not the agent, and not alone by the seller... or the buyer. The goal is to make the price part of a winning strategy to get the home sold.
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
I'd love to hear from you...
I have been taking my tablet PC with me to the presentation and doing the research with the seller so they can see the market andhave some input in the decisions to include some properties and avoidothers. The more I have the seller involved in the research the more they seem to agree with the results.
Terry - I love my Tablet PC... never going back to a regular one. And I also like to sit down with sellers so that they can derive the value on their own.
"After the property is rejected... it is rejected." This is a very powerful post! Price it right the first time!
Eleanor - That is the goal... price right... make it sold.