Surfing through the waters of real estate marketing advice you encounter a lot of hype.
Some of the stuff is downright comical. As I’ve argued many times on this and my other sites, most of it is about agents marketing themselves and not about marketing their listings.
Last week I came across this video that met all those criteria but is worth sharing because it inadvertently makes a point I’ve been struggling with. What the narrator, Jay Kinder, is proposing is that you should never do another CMA or Competitive Market Analysis for a listing client.
The hype is right up front; he calls it a “ninja move,” the “competition crusher” and the “finishing move” of his listing appointment. Kinder is a young guy, very energetic and according to his own account has been in the business for 10 years and has been very successful. I don’t doubt it. Even as he stumbles over the pronunciation of “differentiation” he is nonplussed and comes across as likable and enthusiastic.
CMA as the rear view mirror.
The differentiation he is focusing on is that he doesn’t do CMA’s because they are looking into a rear view mirror for pricing help. To his credit he advises that before you do your pitch you need to have all the market data, and more, that would lead to a CMA. So he’s not advising you to take some shortcut and avoid the work that normally goes into one.
As he points out, and my own experience confirms, just having some data and a few charts is usually enough to convince people that you know what you’re talking about, whether you really do or not.
If you’re like me you struggled with every CMA that you’ve ever done, choosing the right comps and making adjustments trying to be as scientific as you can but always with the nagging feeling that it may all be crap.
Recently, I’ve been using software that is as sophisticated as anything I have ever seen especially showing the consequences of overpricing and documenting historical appreciation. But how good can it be in an environment with so many short sales, foreclosures and a downward slope in prices?
Besides trends that you can grasp of from all that data, Kinder notes five factors that might have affected the prices of the comps that make them less useful. These factors are:
1. Market conditions at the time of the sale. (Was it an active spring market or a slow winter market?)
2. What were the motivations of the sellers? Desperate sellers lower their prices.
3. What were the conditions of the comps? Well staged? In great repair?
4. Who did the pricing? An agent looking for a quick sale who didn’t want to do hard marketing work?
5. Was the seller’s agent a good negotiator? Or did he just cave for a quick sale?
Kinder’s points are accurate but because most agents still have the boom mentality, he left out what may be the most important factor in the price a seller actually gets for a home…the marketing ability of the listing agent.
Some how, some way you have to come up with a price to put in MLS.
Even if you are a firm believer in variable pricing you have to establish a range. But the real price is not what goes into MLS. Everyone recognizes that that is nothing but a point where negotiations start.
So, how do we take Kinder’s insights one step beyond how to get the listing to how to sell the listing? If a CMA tells you what a “typical” listing would sell for, how to you create value to do better than typical?
A 4 P’s marketing plan is not about setting a price but getting a price that maximizes the seller’s net.
As Kinder alludes, a home in good condition and well staged will command a better price.
In assessing the motivation of a seller, the tendency is to think of a seller willing to take a low price. A better alternative is a seller that is willing to work with her listing agent/marketing director to prepare the home for market and make showings convenient. Is the seller willing to absorb marketing costs upfront? A seller with skin in the game, is more likely to be motivated.
How do you prepare to out negotiate the buyer agent? The answer is to have all that trend info that you didn’t use for the CMA and absolutely WOW the potential buyers during showings.
If you watch Kinder’s video you will see that he focuses on selling technique… selling himself that is…but a careful analysis of his tactics also reveals how good marketing sells the home in a tough environment.