Listing and selling property efficiently requires several components. One of the fundamental keys is to price a property accurately. Not too high, not too low but in the middle to help the client get the most money possible. The salesperson and the seller must agree on the final number. Often the most important “sale” in the whole transaction is helping the seller price their home correctly the first time.

There is a logical process to helping the seller agree to a realistic price.

Here are some keys to help you be powerful in pricing:
  1. Know your overall market statistics and have them at your fingertips (volumes, days on market, sale price to asking price).
  2. Have a hands-on knowledge of the existing inventory, what is selling and what is not (consistently inspect homes in their price range).
  3. Present the comparables in a simplistic, easy-to-understand fashion (not too much detail). Preferably put them on one page only.
  4. Tell them the truth. Help them use logic, not emotion when pricing.
  5. Don’t complicate things. You are the messenger. Help them look at the facts. It is not rocket science.

Finally, if you are going to take a listing and you know it is overpriced, be sure the sellers know this and have agreed to a strategy of reducing the price in two weeks. If your board will allow it, have a post-dated price reduction form signed when you take the listing. No excuses.

Advertising has changed: Digital over traditional media

The Emmy-winning TV series Mad Men is all about the advertising industry and Madison Avenue in the 1960s. It reminds me of the oft-presented objection: “Why aren’t you advertising my home more often?”

It might have been a good question in 1965 but not today. Why not? Because that approach for promoting a property doesn’t work anymore! Consumer habits have changed. Here is an excellent (and modern day) response to that old objection.

  1. “Mr./Mrs. Seller, let me ask you, nowadays if you wanted to know something would you try and find the answer in a book or would you simply Google it?” (I guess I’d Google it.)
  2. “Exactly. Would it surprise you to know that in today’s market, more than 93 per cent of homebuyers start out looking on the Internet? Ninety-three per cent!” (Makes sense I guess.)
  3. “So you can see that if we’re going to get a maximum exposure for your home, we need to move away from traditional approaches and we need to have great coverage on the Internet, right?” (I suppose.)
  4. “Great. Let me show you how we’re going to do that. Let me show you how our marketing will position your home so the bulk of the qualified buyers are going to find your home easily. That’s what you really want isn’t it?” (You bet!)

Learn this approach. Be current. Let the competition keep watching Mad Men. Help the client see how you are using today’s technology. They’ll love your strategy! No excuses.

  • Alan M.

    The five listing points that Bruce Keith has itemized certainly aren’t to be confused with “rocket science” – as a matter of fact it’s the kind of basic advice that probably gets thrown at every newbie. However, I don’t see what the wisdom was for treating the subject with disdain by implying the task is relatively simple, with the claim: “It is not rocket science.”
    When I first entered the business, I felt that I would be better than most when it came to the task of completing a Market Analysis, and I probably was better than most. However, I paid attention to a few of the senior agents who liked to share their time and took notice of the list prices they would endorse for some of their new listings. In short, I came to appreciate that properly pricing a home was something that required a fair bit of skill.
    As an industry, we need to be clear regarding our value, and we need to be clear about the value we offer through internet exposure. As a industry, I’m sure we figured out quite early on with the advent of the internet that the old lament around how much exposure a property perhaps wasn’t receiving, was soon to become a moot point. Bruce’s four points regarding the relevance of internet exposure are correct, but unless you’ve just come out of a ten year coma, a practitioner should already be up to speed on this logic.
    Bruce seems to recognize the importance of the internet phenomenon “Google”. I would be more interested to hear Bruce’s thoughts on whether or not he believes we are taking full advantage of Goggle, in terms of how individual listings are duplicated any number of times simultaneously (regarding a single address search) as a result of certain other real estate industry initiatives.

  • Jeff Stern

    I agree that Bruce brought forward very important information to aid in getting a fair market asking price, however I would not only bring a one page summary of comps, I would arm myself with the full details of each company as not all prospects want the Coles notes bersion. Some sellers have the “I need supporting evidence” of information they are to consider so having that at your fingertips is crucial for that personality type.

    I do however disagree with Brian (and this is a first as I truly respect all he has said in other posts) as I have seen incorrect appraisals as well as “bought cma’s” from agents.

    A true professional real estate opinion of value is just as, if not more valuable than any appraisal in my opinion as we agents are on the street viewing and showing all properties so we know what other homes truly compete for the current inventory of buyers and therefore are in the best position to show both sides of the coin.

    Both agents and appraisers obtain the raw data from the same source but only an active agent can properly provide the full spectrum of information to provide an opinion of value.

    • PED

      Jeff, my understanding of the appraisal is that an appraiser has to use two methods one of which takes into consideration cost of differences adjusted for depreciation. Brian?

      I like the idea of the independent appraisal not as a replacement for a (detailed) CMA but in addition to precisely because the CMA should also reflect what we view on the street and which should be delivered before the appraisal is performed. The two together should allow for Realtor and seller to identify differences and determine adequate pricing in accordance with the current market. Plus it would, or at least should, give the seller some comfort that the listing isn’t being bought.

      • Carolyne L

        Yes, PED.

        I often used this approach, throughout my career, suggesting a would-be seller who simply had their own ideas of their property value, employ the services of a professional appraiser, even so I provided comprehensive reports that validated my results.

        Fortunately it wasn’t often that anyone disagreed with my pricing, because the information I provided was always reliable and provable. Well-documented.

        That’s why it is vital that new agents be taught to “study” the MLS, and private seller, information. And visit other properties regularly, take notes and build their own reliable files, building business for the future. That alone is a full time job.

        Difficulty sometimes surfaced with custom-built homes or with cookie-cutter ones where major modifications had been made; I actually wrote an article on the topic of how overimproving your property can actually cost you money when you sell.

        And often sellers have no realization that depreciation enters the equation.

        Appraisers I believe are required to visit comparable properties also, but it isn’t always easy for them to get into the “look-see,” especially if the best comps are already sold. Not every owner will accommodate an appraiser appointment, not related to their own business requirements.

        Inaccurate information on an agent’s listing can cause a property being used as a comp, to create wrong appraisal information.

        If the appraiser is local he/she may catch such inaccurate information, such as wrong lot size, number of bathrms, etc. due to knowing like properties in the area, and repetitive ones appraised over the yrs. where they can revisit their own prior appraisal files to confirm.

        Appraisers from outside the area often are not privy to everyday subject-specific information, and rely heavily on what is provided in like-property listings.

        Where my system differed, was I had the seller pay for the independent appraisal, themselves, and I signed that I would reimburse that cost as a closing adjustment through the lawyer’s invoicing, picking up the costs.

        This way, it didn’t appear that I was steering to the appraiser I might have chosen, knowing they would be local, given my choice.

        A CMA is also market-driven and therefore subject to the same conditions an appraiser would be required to implement.

        It is important for the listing agent to provide adjusted information to the seller, if and when required, driven by appropriate changes in market conditions.

        Typically appraisals are only valid for the day on which they are written, and beyond that, only applicable as a point of reference. Likewise, a CMA should stand on its own legs.

        Carolyne L

      • Brian Martindale

        Hi Ped:
        On every AIC Appraisal form there is a category for the cost approach. Then-current costing factors are massaged into that slot, usually as agreed upon by numerous Appraisers within a region. To that end when I was in the business a form would be filled out each year by each of us estimating the values of certain items within a structure. We also worked from a CMHA approved builders’ estimate grid based upon then-current market costing for house construction. We then applied depreciation values depending upon the age of a structure in concert with its then-current condition and/or upgrades. The cost approach was used as a secondary approach which buttressed the market approach, bearing in mind that the final result of the cost approach usually, but not always, exceeded the value of the market approach.
        Obviously purchasers do not generally have the experience and/or knowledge to factor in cost approach methodology when viewing a property, but they do exercise a general subjective decision about what appeals to them on the surface (patently). We as Appraisers had to factor in to our opinions, as much as possible, potential latent factors as well when rendering opinions of value. This skill was not always applied on an equal basis, as not all Appraisers had a construction background or a conciliation/inspection background as had I.
        don’t like to come across as a know-it-all on this site, but because I seemed to not be able to stick with a job for more than five years throughout my work career (often due to boredom I usually quit to do something new…got fired once) I thus was able to experience much more variety real estate-related than the average bear lol.

    • Brian Martindale

      Reply to Jerry Bresser should have been directed to Jeff Stern. Wrong key. Sorry Jerry.

  • JerryB1020

    Message to every listing agent reading this: Pay attention to Bruce. His five points are dead on.

    • Brian martindale

      Thank you for disagreeing with my position in such an agreeable manner.
      If you read my response to Johnson you will see a partial answer to your position.
      The reality of the Appraisal profession is this: Different opinions of value will be arrived at on a particular piece of real estate by a singular Appraiser at any point in time depending upon the purposes of the Appraisals. One may want an Appraisal for a number of reasons, being: for tax purposes; for the settlement of an estate; for the awarding of a mortgage or a re finance; for a marriage split (there will be two appraisals here) as well as for a simple sale price to be established etc., and even then regarding the last category, whether one wants to sell very quickly (fire sale) or whether one is prepared to wait for top dollar via having the property exposed to the market place for ninety days, one hundred-twenty days, six months or more (in a then currently ascending market) etc. All of these separate considerations must be included/stated within the Appraisal document. Therefore, each category will demand that a different set of comparables be used regarding ‘their’ time periods, for instance, on the market and reasons for selling etc. before finally selling. That procedure will take into consideration just that one variable amongst others etc. Thus, one property can be Appraised at different values, and said values will only apply for the exactly specified purposes of the Appraisals at hand for a specified time period. Appraisals cannot be used for any other purposes that those which they were commissioned for. So if you see an Appraisal for a mortgage approval, that opinion of value will not necessarily reflect what the property would be expected to actually sell for within 30, 60, 90, 120 or more days. Lenders do not realistically expect clients to default soon after receiving their funds. This is just the nature of the often complicated Appraisal business that can understandably be difficult to understand by untrained outsiders. This is also why the courts and lenders will use only Appraisals completed by Canadian Residential Appraiser accredited Appraisers affiliated with the Appraisal Institute of Canada. Even then they may use multiple Appraisals on a single property to arrive at a conclusive number. Two heads are better than one. Are there unethical and/or corrupt Appraisers out there? Yes. I dealt with some when I was an Appraiser, just as I dealt with corrupt Realtors when I was a Realtor. Wherever there are humans dealing with money and the potential to line their own pockets unethically, easily and quickly, especially when they are in positions of power and/or within the category of possessing superior education and/or knowledge over another, corruption under the claimed guise of incompetence will occur. Then our policing organizations need to be harsh with the offenders. Two strikes and you’re out!…unless the first offense is particularly bad and not due to incompetence, but due to knowingly committing criminal behaviour. Then it should be one strike and your ass is grass with a jail sentence.
      I still believe though that it is in the best interests of consumers to tap into as many areas of expertise as possible when dealing with real estate matters. One may look at it as a cheap insurance policy…provided that one hires competent practitioners, be they Realtors, Home Inspectors or Appraisers.
      Thanks for your input. It allows for the opportunity to attempt to clarify things.

  • Brian Martindale

    From 2002 until 2008 I worked as a real estate appraiser affiliated with the Appraisal Institute of Canada. During that time period I appraised numerous residential properties solely for the purpose of establishing then-current market values for clients who were about to offer their properties up for sale. I advised those clients to interview numerous Realtors (after receiving my appraisals) in order to get the Realtors to submit written estimates of what they believed the properties to be worth, and why they believed so. After interviewing said Realtors, and after also understanding the methodology used to determine ‘my’ opinions of value, thus using my appraisal figures as benchmarks, those sellers were then able to make more informed decisions regarding who to hire as their Realtors as well as establishing what numbers to list their properties at. I told them that the market would soon tell them all (within a few weeks) if they were on the mark or not price-point-wise after awarding the listings.
    I followed the history of those listings from time to time, and found that most of them sold fairly quickly (within 30 to 45 days).
    If it were me selling my property today I would not rely solely on what a Realtor comes up with regarding what a property should be listed for. I would award a listing to my Realtor of choice (after having agreed upon the commission rate and what the listing price would be) based upon his/her agreement, in writing, that the cost of the appraisal would be deducted from the final commission owing upon closing. Using this method for establishing an accurate price-point for-sale number threshes out the amateurs and the bull-shit artists. A Realtor can spout every scripted line under the sun about his/her marketing system, but if the property in question is over-priced, it’s going to sit…and sit…and sit. An over-priced property will often only be shown by shrewd Realtors who will use said over-priced property to sell other more accurately-priced properties (maybe even their own listings, allowing them to cop the desired double-end commissions) to their buyer clients. The game is full of twists and turns, most of which are unknown to the average consumer. The foregoing example is just one commonly practiced modus operandi of many Realtors out there.
    Moral: Hire an appraiser prior to hiring a Realtor.
    Why? The appraiser works for a fee. He/she has no vested interest in what he/she comes up with, thus, he/she has no conflict of interest. The same cannot be said for a scripted, unethical, financially hungry commissioned Realtor who has you in his/her sights as his/her next meal ticket. Get your Realtor of choice to agree to pay for the appraisal and use this system to separate the wheat from the chaff. Use your brains, not your cash. No excuses.

    • PED

      I like that idea Brian.

    • JB

      Except that around here appraisers have a long history with the banks and price homes waaaaay to high. If I had an appraiser valuate my listings I’d never sell them. Of course they are just as arrogant…

    • Johnson

      Moral: Hire an appraiser prior to hiring a Realtor –>
      Moral: DO YOUR HOMEWORK, Hire an appraiser prior to hiring a Realtor, cause some appraisers are clueless as well !

    • Johnson

      Why? The appraiser works for a fee. He/she has no vested interest in
      what he/she comes up with, thus, he/she has no conflict of interest.
      The same cannot be said for a scripted, unethical, financially hungry
      commissioned Realtor who has you in his/her sights as his/her next meal
      Talk about one brush tainting the whole industry, most agents are honest and hardworking. Haven’t you come across “appraisers” in collision with developers and real estate agents to sell hugely overpriced properties to unsuspected buyers ?! Pot calling the kettle black !

      • Brian Martindale

        To Johnson and JB:
        I understand your concerns regarding some Appraisers. The idea is to research, find and hire a competent Appraiser, just as one would do to find a competent Realtor.
        But to your point Johnson regarding inflated Appraisals for lenders etc. When a lender commissions an Appraisal for the purpose of granting a mortgage for a purchaser or for a refinance, the purpose of the Appraisal must be noted within the Appraisal document. Thus, an Appraisal putting forth an “opinion” of value is only valid for that particular property at that point in time in relation to how much the lender needs the Appraisal to come in for in order for the lending officer to approve the requested mortgage amount. The Appraisal can not be used for any other purpose. Therefore, the lender is asking for a targeted amount from the Appraiser to justify the mortgage, quite aside form the potential mortgagor’s ability to pay the monthly payments. That is why one might see inflated Appraisals on certain properties. Bank lending officers are pushed to meet monthly quotas re placing mortgage funds. Mortgage brokers get paid only when arranging the selling of money. The lender only wants a number from the Appraiser that it can stuff in a drawer somewhere after approving the mortgage, and upon which he/she can rescue his/her ass from a firing if the mortgagor defaults. However, when one commissions an Appraisal requesting a fair market evaluation/opinion for the purpose of ‘sale’ (within 90 days for instance), that reason for the Appraisal must also be noted within the document. This will be the only potentially accurate Appraisal that an Appraiser ever produces based upon current market value at the date of the Appraisal being released. There will be no set figure that is being requested in advance in this case. Whilst Appraisers will say that they do not work to targeted figures, the fact is that many do, even though within the attendant disclosures attached to an Appraisal there is an Appraisal Institute of Canada direction/statement that no such thing has been effected within said appraisal. I saw this going on all the time during my time as an Appraiser. In fact, I was instructed to not kill deals (mortgage deals) all of the time by my boss/head Appraiser who said that if I did not hit the marks on Appraisals he would not co-sign them. He wanted to keep the lenders’ business from going elsewhere.
        Note: I would often call the lender directly when completing an Appraisal inspection if I believed that the subject property would not meet expectations, and ask if I should complete to contract or walk away. Most of the time the lender would tell me to go ahead, complete the assignment and that he/she would deal with the final result during a meeting with the mortgage applicant.
        When hiring an Appraiser, ask around for opinions from industry insiders, much as one would do when researching Realtors. The Appraisal business is a political business, as you well know Johnson. Therefore, be smart when selecting an Appraiser…simple.
        There is a big difference between an Appraiser and a Realtor, and it is this: An Appraiser must have a certain level of education (I have a University degree, which is the desired education for an Appraiser candidate), must complete a pre-screening course, then must complete six (maybe more now) University level courses whilst completing literally hundreds upon hundreds of Appraisals overseen by and co-signed by a head Appraiser prior to writing the final exam, usually written about three to four years after starting the candidate process. This amount of preparation cannot be squared against what is currently required of a candidate to become a licensed Realtor. The two vocations are not now even in the same league, but hopefully, thanks to RECO’s pending initiatives, Realtors en masse will be someday able to deserve the same respect for their what-should-be-by-then “profession”. Yes, there will still be scoundrels out there in both fields, as there are now, but their numbers should be substantially reduced. It will not be so easy a few years from now to get in on the real estate big-commissions game, as many see it from the outside looking in. Question: Why do you think that there are so few Appraisers in relation to the numbers of Realtors these days?
        Answer: The Appraisal profession employs the above noted demanding educational and experiential apprenticeship experience over numerous years before one becomes licensed. The rigorous requirements tend to weed out those looking for an easy-to-get job.
        The goal is to get rid of unethical blackened pots in ‘both’ fields.
        To JB’s point: I agree; it is still up to consumers to do their own homework when it comes to choosing with whom they want to do business with. Lazy consumers risk losing their gambles when it comes to choosing Realtors and/or Appraisers. Life has a way of evening up the score over time as one progresses through life and learns, often the hard way, how to deal with others in business relationships.
        Go RECO GO!