When did we become Valuers?

It’s time to face the facts – and get your sellers to face them too. Your understanding and use of research and data could be the most effective device in your sales tool kit. Ric Mingramm gives his opinion.

Ultimately as an agent we are employed to make the sale on the seller’s behalf. We should achieve this by providing them with evidence not empty promises.

As agents we get so worried about how much a property is worth! Since when did we become valuers? We have all heard about agents who buy listings – good on them! Who wants listings? Much better to have a pool of properties which are correctly priced than a bag of overpriced, aged stock.

It is important to note that as agents we don’t set the sale price. We may set the advertised price, or we may indicate where we believe a property may fit in the current market but we do not set sale prices.

We need to understand that there is no exact price for Real Estate. The reason for this is that the market determines the value and the agent and seller determine the list/advertised price. As much as we would like to, we do not control the sale price and sellers should be made very aware of this and early. In fact, at the listing presentation ask, “I assume you will not be appointing the person who tells you the highest value for your property to be your agent?” Most agencies should be aware of their List Price to Sale Price ratio and those of their competitors. These are great facts to bring out and show during a listing presentation.

Remember at all times that evidence defeats disbelief, and in an industry where on a list of trusted professions Real Estate agents are ranked at number 36, research and data is critical. So how do we defeat disbelief?

D – Demonstration (point out other homes on the market for them to inspect)
E – Evidence (show them other sales using a CMA)
F – Facts (share List Price to Sale Price ratios)
E – Examples (use relevant current examples of properties and list-sale histories)
A – Analogy (share stories)
T – Testimonials (have a swag of these in your listing kit)
S – Statistics (use research and show them unemotional data on what is really happening in the market, not your educated/uneducated guess or gut feeling)

The seller should also be aware that there are five recognised factors that determine whether a property sells. It is worthwhile understanding who controls these factors:

Finance: Those men in clean, pin striped suits determine this.
Location: Well, it is what it is!
Property condition: That is something the seller controls.
Listing Price: That is something the seller controls and it’s the market that determines if this price can be achieved
Marketing: This is managed by the agent in consultation with the seller.

Buyers determine the buy price using research and take into consideration the above criteria. Every seller believes their property is the best, however, location is the fundamental control of value and represents what the majority of a home is worth, then size (yes, size does matter!) and from there buyers compare a property’s amenities, features and quality.

Just remember everyone has an opinion on the value or price for a property. Buyers believe it is lower and sellers believe it is higher, the market is the only one that really counts. The market may seem harsh, but it is never wrong.

DEFEAT those seller doubts by using the evidence as described. Competitive Market Analysis provides factual data on market conditions (at a particular time) as a way of indicating market value. Expired listings show properties that did not sell and probably represent over priced properties. Properties currently ‘For Sale’ show the competition they are competing with (most sellers don’t understand that buyers have choice) and those that are ‘Sold’ represent the market value at that time.

Ultimately as an agent we are employed to make the sale on the seller’s behalf. We should achieve this by providing them with evidence not empty promises. Sellers need to understand that you understand the market. This includes absorption rates, pricing trends, competitive stock, and that you aren’t going to value their home or buy the listing because once a property joins the stock list there are only three outcomes possible:

  • It sells,
  • It stays on the market for a long time and becomes aged stock, or
  • The listing expires and some other agent re-prices it and benefits from all the hard work you have done.

Good luck, be honest and use research to provide quality advice.

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Ric Mingramm

Ric Mingramm is a licensed Real Estate Agent and Auctioneer in NSW and QLD and has recently joined PRD Nationwide North Lakes as Sales Manager.