Well I just finished reading my blog on Market Value. If I knew how to use that thing that makes the words blue, I would have linked Market Value to the blog. I don’t, so if you want to read it you will have go back and scroll down and locate that tome.
Market value is bandied about quite a bit in our profession. I would like to address one specific place we seem to use it. Listing appointments. Most agents, during a listing presentation, mention that their goal is to sell the house for the highest possible price. They then go on to say that the “market” (market value) will determine that price. It sounds very good and most sellers are elated that their agent is going to get them the most money possible in the sale of their home.
I have a question for any of you. How?
If the home is entered into the MLS, it will be viewed by agents that happen to search using criteria that includes that home’s information. (i.e. – price, style, area, beds, baths, etc.). Statistically this is a small portion of the potential market at any given time.
If a sign is placed in the front yard, it is only visible to those that live close by or those that happen to pass the home. This opens the funnel somewhat but it also presents the home to those that may or may not be looking for a home. That may be more people but the increased exposure may not have any impact on the “market”.
If the agent holds an open house, a significant portion of those that come by will be the result of signage. There is no guarantee that any of them have the ability to purchase the home much less afford the toaster on the kitchen counter. Again, exposure in general may not have much impact on the “market”.
If the home is adverstised in print, the exposure is limited to those that actually read print advertising. Each year the reduction in print impressions is a pretty good indication that print advertising does not have much impact on the “market”.
The NAR has done studies that seem to indicate that most consumers begin their search on line. Agents far and wide have jumped on this bandwagon and have made sure that their personal site has idx capability, so any visitor can search for homes from the comfort of their computer screen. There is nothing to show that this exposure has had a great impact on the “market”. For every qualified serious search, there are a least ten or twenty folks “just looking”. An entire industry has grown around capturing these lookers, selling the information to agents who in turn add them to email campaigns ad infinitum. Often these emails are responded to with “who are you and why are you sending me email?”
It would seem to me that the market value of a home is directly impacted by the number of people that are seeking a home in that range that can be exposed to the existence of that home. I know that sentence is a bit awkward, but it is the best I can do when trying to have my fingers keep up with my brain right now.
The greater the exposure to interested parties that have the ability to pay the price, the more likely a full price, fair market value offer will be generated.
If you peel back the layers of the onion, when you tell a seller that the market will determine the price, you should be prepared to explain how you will create the greatest “true” exposure for the home.
Don’t think that entering it in the MLS will do the job. You will be depending on the action of others to expose your home. Don’t think that putting that pretty sign in the yard will do the job. The only accurate information on the sign is your name and number. Flashing and hoping does not develop long term relationships. Don’t think an open house will do the job. It rarely sells houses and always sells you. Don’t think that print advertising will do the job. Most newspapers cost a buck and real estate magazines are free. It will take a bit more financial where with all to make a solid offer. Don’t trust the NAR to have any answers. Remember this is the group that continues to claim the real estate market is fine.
What can you do?
Use the information that is available to you and target potential buyers. The more that you reach, the larger the funnel and the more likely you will have a true “market” value on your property.
I have been telling agents for a long time determine who might buy that house and go tell them it is available. This is not brain surgery. If you are selling a home in the $400,000 range, you can reasonably expect that your buyer may be someone that is selling a home in the $250,000 to $300,000 range. Each area of the country will be a little different, but the concept that people sell and move up is not new. Your potential market is advertising their presence even as we speak. The information is available on line.
Now, different associations have different rules about using the MLS for marketing purposes. Well, don’t use the MLS. Use any of the other sites that list property for sale (most of them pull the information from the MLS anyway.) Find the homes that are in the “move up” range for your listing. Make a list of each address. Use that list to cross reference a tax record list and get in touch with those people. Every one of them that is exposed to the information regarding your listing increases the possibility that you just might get a market value offer on the home.
I really believe that “market value” is only accurate if you do everything possible to increase the awareness of the potential buying pool. If you just sit and hope it will come to you, you are denying your client the best you have to offer and subsequently reducing your income as well.