The Best Way to Conduct a Comparative Market Analysis on a Listing Appointment
While at your listing presentation appointment, often a seller will ask: “What can you get me for my home?” And often he will go with the agent who promises the highest number. To avoid this, and to avoid giving your “opinion”, try the method shown below to actively have a discussion with the seller based on the closest Active, Pending and Sold comps for the property. This will allow you to decide together what range the home should be priced at based on current market activity and conditions. This also allows you to set realistic expectations on what the property might actually sell for. If after this experiment, the seller is still insisting on a price that is much too high, you can then decide if you still want to take the listing.
Prior to your listing appointment, you will print out data sheets from your MLS of the closest comparables to your subject property. It is best to print a 1-page fact sheet, along with a second page of photos so its easy to compare each property.
Start with the seller’s dining room table.
First you will lay out all the ACTIVE listings in order of price, from lowest to highest.
Next, add any of the current PENDING listings as the second row.
Now on the third row, add the recent SOLD listings, also in order of price, lowest to highest. You now have a perfect visual snapshot of their local market.
Take out a blank sheet of paper. This will represent the seller’s property.
Starting with ACTIVE listings, determine where the seller’s property fits in best. You can slide the sheets around and actively discuss the pros and cons of each property, and together you will decide where you think their home fits in.
Now that you can visually see where the home fits in with the ACTIVE listings, take the two prices from the homes your subject property is in between, and write them on your blank paper. Notice, that you are not determining price, the comps are doing this for you.
Now you can do the same with the SOLD listings. Determine together where their property fits in best. You’ll see that this process is ultra transparent and very difficult for the seller to push high in price. The numbers are plain as day in front of them.
Now write down the prices of the two closest SOLD properties.
You now have a visual snapshot of where their home fits in with the competition, and what to expect for a selling price range. The comps have set these values for you. Now it does not have to be your opinion, or the seller’s opinion. The facts are there right in plain sight.
Now determine a listing price for their property. Additional factors such as seasonality and prices trending up or down can be factored into your discussion. The PENDING properties may help push price one way or the other. Remember, let the comps set the price.
Often a seller may still want to push a little high on price. You can agree with the condition that if not sold within 30 days, you’ll have a pre-set price reduction at your recommended price. You can pre-sign this reduction with the normal listing paperwork.