We believe that real estate agents know what they are doing. They are actively participating in the market on a daily basis, interacting with clients, mortgage brokers, appraisers, office managers, attorneys and other agents. They are holding open houses, touring neighborhoods, advertising, showing homes, handling phone duty, writing contracts, taking classes, negotiating deals, losing deals, searching MLS databases and much more.
All of that develops knowledge and experience.
The problem that agents have in dealing with clients and pricing, is that knowledge and experience has to compete with any number of superficial estimates of the value of the clients’ home in an atmosphere that is complicated by the clients’ emotional investment in the property and by his ignorance of important elements of the real estate market.
The real irony is that the real estate agent is the only party that is likely to have the clients’ true interests at heart in pricing a home for sale or advising a buyer on a fair purchase price. None of the other information sources are focused on the clients’ real objective, which is to sell his home at the highest price possible with a minimum of stress and inconvenience.
For example, tax values are often used as a measure of market value, but they could not be more misleading. Tax values are calculated to generate tax revenue, not a market value to sell the home. They are not contemporary, are calculated on thousands of homes at a time, are based on erroneous records and are supervised by people who never see the home and have no client interest. Any relationship to market value is pretty much coincidental.
AVMs (Automated Valuation Models) usually found on the Internet and used by some agents and CMA programs are notoriously unreliable. They usually use the same erroneous public record system and depend on a one-size-fits-all computer model run by a machine that obviously has no first hand knowledge of the home in question. Even worse, the real purpose of these models is not to help clients better understand their homes’ value, but to attract customers or clients to a particular website or promotion program.
Zillow, one of the best AVMs, claims an accuracy rate of 46% – 52% when measured by their own standards of accuracy, while, by the same standards, the rate for real estate agents is 76%.
The result of all of this is that all too often the agent is defeated by the circumstances. The client has the authority, but no real knowledge, and the agent is unable to be convincing because the CMA is his or her only recourse.
In the eyes of the client, that is just another number being presented by a non-objective party.
To solve this problem, agents need to be able to clearly demonstrate their knowledge and experience to the client. The CMA alone clearly does not do that.
First, RealPrice offers a Price Limits analysis which clearly demonstrates to the client the risks and penalties of overpricing. This is not a generalized statement of some kind, but is real data that is specific to the clients’ neighborhood and to his home. And it is convincing.
When properly explained, it greatly improves the clients’ understanding of what is really required to price to sell for maximum return.
But that is only a starting point. To follow up on this, instead of a simple CMA, RealPrice produces a work product in the form of a 25 to 35-page report that enables the agent to clearly communicate all of the pricing and marketing data specific to the clients’ home and immediate local area.
That report is understood and appreciated by the client as a thorough, complete, credible and convincing application of the agents’ knowledge and experience to his most important concern.
So the RealPrice system first educates the client in the importance of pricing correctly. This puts the client on the same page with the agent. It then delivers a very robust CMA. Finally it accompanies all of that with the market information that is so vital to making the correct pricing judgments, together with all the backup information to address questions about the assumptions used.
The bottom line is that RealPrice enables the agent to present what he or she knows about pricing and the market in a way that proves to the client that the agent is a knowledgeable, experienced professional with credible information and sound advice.
Which of course is what we knew all along.