Our group has just completed its 12th Real Estate of Origin event, a group wide appraisal drive where the entire Ray White network hits the phones, generating appraisal opportunities.
The logic behind the event is that there is no more important activity for a real estate agent to engage in outside of the appraisal.
The appraisal is the opportunity to get belly to belly with the potential client, it’s the number one relationship progression tool and most importantly, it’s also the point where our greatest sale is made.
As a group of more than 6000 agents we generated 8772 appraisals.
It’s an impressive number, but when you look at our scale, it’s equivalent to not even 1.5 appraisals per head.
You may expect a higher output with an event that has such a strong focus on this activity.
It’s an interesting observation, can you take this event as a reliable representation of how we as an industry approach this aspect of the business?
As a point of reflection, this article will consider some of the opportunities and failures associated with the humble appraisal and how to course correct if you find yourself wondering how to drive growth in your business.
First, we must start with a question: Do you know the difference between an appraisal and a listing presentation?
This might seem reductive, of course we know the difference between an appraisal and a listing presentation.
But sadly, what happens as agents progress in their career and ‘level up’, is some start to lose connection with the importance of an appraisal appointment when a seller isn’t in ‘decision-making mode’.
The appraisal – a meeting to discuss the potential value of a property, which isn’t necessarily connected to the property being listed, can often be devalued.
We are so desperate to be at the pointy end of things that we can lose sight of the real value of physically connecting with our potential future customers.
You might rationalise that a busy agents’ time could be better spent closing, however the impact of getting face-to-face can’t be underestimated for the following reasons.
Real estate agents are, first and foremost, marketers.
We market ourselves to our databases and communities every day, either through physical marketing collateral or via telemarketing and community activities.
Marketing relies on three key factors to be effective; reach, frequency and impact.
Reach – how many customers are you connecting with?
Frequency – how often are they hearing from you to become sticky in their minds?
Impact – is your marketing activity cutting through, having enough of an impact to become memorable?
Did you know that getting face-to-face with a potential seller is one of the most high impact marketing activities you can conduct?
Getting into the property and discussing market conditions with a property owner makes you much more memorable than if you were to pursue that relationship via telemarketing or more passive methods such as letterbox drops.
We know, through our analysis of our data, that when an agent has conducted an appraisal on a property that they are four times more likely to list the property when it does eventually come to the market.
The main reason for that is trust and rapport is accelerated when the agent and vendor have been face-to-face, essentially either putting the agent at the top of the shopping list, or at least reserving a place for them on the list when the vendors engage in selling mode.
The other opportunity of conversion is around influence.
Take for example, a vendor who says they’re not selling in the short-term, once furnished with the facts of market conditions, may decide that it is the time to sell.
We are in the business of trust and we know that personal recommendations are incredibly powerful when it comes to large financial decisions.
While the person you are sitting with may never sell, your time spent with them may not be wasted.
Developing a flock of raving fans can magnify your marketing efforts and start the flow of referrals to customers you may not otherwise have had access to.
Taking the appraisal value proposition from the other side of the coin, and looking at why agents may not have a strong enough focus on driving appraisal numbers, here are some thoughts around where there is room for an adjustment in thinking.
‘It’s important to have a high appraisal-to-list ratio.’ False.
When was the last time you set a goal in your business and reverse engineered your numbers?
So, starting with a GCI target, working backwards from how many sales you need to make in order to achieve that dollar value target; onto the number of listings you need to secure to make that number of sales and then, how many appraisals to create the listing opportunities.
Frequently, when I do this exercise with agents, their own estimation of appraisal-to-list ratio is high, in the 30 to 50 per cent range and above.
I think it comes back to a need for credibility or demonstration of skill, but a high appraisal-to-list ratio often highlights an appraisal volume that is way too low.
Taking skill and tenure out of the equation, when your appraisal-to-list ratio gets much above 25 per cent, you may need to ask if you are providing enough opportunities in your business.
Many agents who have a strong focus on generating a high volume of appraisals will sit between 10 and 20 per cent appraisal-to-list ratio.
Are you filtering out appraisals that you think are too cold?
Could this cost you the opportunity to build a strong sales pipeline?
‘There is no point in doing ‘cold’ appraisals.’ False.
For reasons mentioned above, there is so much value in simply getting into the property and meeting physically with the potential vendor.
When agents get overly fixated with how hot an appraisal is, or whether it’s ‘just a price update’ versus a listing presentation, that’s usually a signal for the business tipping into decline.
If you find yourself over-qualifying appraisals, you may start to over-filter and then minimise your pipeline of future prospects.
‘Desktop appraisals are worthwhile.’ Worthwhile for who?
I have noticed a proliferation of ‘desktop’ appraisals, where an agent provides potential sale value information and sometimes breakdown of selling costs via email without ever meeting the seller.
While I understand this information would be incredibly valuable for a potential seller or investor, I ask the question, what’s the value to the agent?
This information is a powerful currency.
The trade is the opportunity to meet and progress the relationship.
If you are finding yourself offering and delivering desktop appraisals without meeting with the vendor, I would ask you why?
With off site owners, the plethora of video meeting platforms is certainly better than a phone call or no dialogue at all.
Remember what the appraisal is for.
So in closing, a call to action.
Do you know your appraisal numbers? What is your target? How committed are you to hitting it?
I challenge you to shift your focus to increasing your appraisal numbers, commit to conducting them in person and stop filtering them out if you think they’re too cold.
There’s a mountain of opportunity if you’re willing to put in the work.