You’re headed to an appointment with a potential seller to discuss listing their home.
- Do you think they may have already done some online research into other homes for sale in their area? Very likely.
- Maybe they’ve gotten a few numbers from websites that offer some type of AVM (Automated Valuation Model)? Possibly.
- Might they have some personal, emotional ties to their home that make it feel “special”? Probably.
So how do you head off the challenges or objections that can come up when you tell them what you think they should list for? Make sure you first validate the CMA before giving them that number.
The challenge we have in presenting CMAs is when we first tell a homeowner how much we believe their home should be listed for, then we use a CMA to justify that opinion. It can be hard to sway or change the opinion that a homeowner already has in their head of how much their home is worth.
Instead of presenting your CMA and then trying to explain its importance, you should begin by educating the homeowner about its purpose and the value it brings to the conversation. Then, you can present the price and comps.
Here’s how that conversation may go:
“Mr. And Mrs. Seller, let’s say we list the house for more than an appraiser would appraise it for. Then we find a buyer that is willing to buy your home for that amount and we go into contract.
The buyer then goes to the bank to make the application to get a loan for the money. The bank is loaning at least 70%-90% of that property. So, they are not an “equal partner” with that buyer. They are a majority owner, so they have a vested interest to make sure that they don’t overpay.
So, the bank sends an appraiser to your house, the appraiser comes out, and they come up with a number that is less than the high offer the buyer agreed to. The appraiser then tells the bank, the bank tells the buyer no, the buyer tells us, then the deal possibly falls apart.
Worse than that, the entire cycle of all of that could take up to two months to go through – costing you really valuable time. We don’t want that to happen.
Let me share something with you. The reason banks lean on Realtors and the MLS system is because that’s where the majority of the data is. They look to us to get that input.
What I am about to show you is actually the very same comps the banks are going to look at but we’re seeing it before they even do! Isn’t that cool?”
So, that’s the first part of the conversation. As you can see what I did was
The other very important thing to do is to print out that full CMA. Unlike many agents who might present this, you shouldn’t have it bound in a fancy plastic folder. Make sure that each comp is on its own full individual sheet of paper. Each page should be a printout of the comparable houses that have sold in the area. Then, I want you to lay them all out on the table.
For example, “Here’s a house that sold for $500K. Here’s a house that sold for $525K. Here’s a house that sold for $530K.” Just keep laying them out until you have eight closed properties spread out on the table.
Now you say to the homeowner…
“If you were a bank appraiser looking at this data – this house is $500K, this one is $525K, this one is $530K, and you want to be conservative and ensure that you’re not overpaying for the property, which price would you come up with?”
Now the homeowner is pricing out their own property based on the data. Will there be times when a homeowner is going to say something that is not even on the table? Of course. Then you can ask them, “I’m sorry, you said $590K, I don’t see that on the table, where do you see that on the table?”
They might come back with, “Well, my house is nicer!”
Your response would be, “The problem Mr. and Mrs. Seller, is that a bank appraiser is not going to see the inside of all the other comparable homes. They will see the inside of your home and yes, your 14K gold toilet, but that doesn’t matter to them because banks appraise by numbers, not emotion. They base their appraisals on things like square footage, number of bedrooms and number of bathrooms, not how well they are finished.
Let me give you an analogy. You can take two identical paintings – put one in an elaborate custom frame that costs $500 and stick the other one in a $20 frame from Amazon. Despite one frame costing more, the bottom line is that both are considered a ‘framed painting’. That’s kind of how bank appraisers look at things.
Is it a bedroom or is it not a bedroom? Is it a finished basement or not a finished basement? It doesn’t matter if it was finished with mahogany or plastic, in the appraiser’s eye it checks the box as a finished basement. Do you see what I’m sharing with you?
Now, based on everything you know about the recently closed homes in this market that are comparable to yours, and what you now know about how the bank is going to look at your home, what price do you feel we should ask for your home today? Let’s figure that out and get the ball rolling!”
Part of your job as a real estate professional is to coach your sellers to make the best possible decisions for their investment and their families. One of the best ways you can do that is to help take some of the emotion out of the equation and present logic and facts, so they can come to a good decision on their own.
There’s a very strong likelihood that no other agent has explained the CMA in quite this way and that’s good. This will help you when it comes to a “the other agent said they’d sell it for more” conversation.
You’ll see that I used stories, metaphors and analogies throughout these conversations. They can be your best friends when you are learning to communicate the tools that you use as an agent to get a home sold. The benefits of all of the tools you use like the CMA, MLS and open houses should be a part of your listing appointments.
Stories and analogies are connectors in conversation. They’ll allow you to move away from “canned speeches” and speak from the heart in a more human way because people can relate to stories. They can “picture” analogies and metaphors.
Of all the skills that you need to master in this business, and there are many, the more masterful you are at communicating, the more successful and profitable you will be.
Darryl Davis is a speaker, coach, and the bestselling author of How to Become a Power Agent in Real Estate, as well as the CEO of Darryl Davis Seminars. He currently hosts weekly free webinars to help agents navigate market change and design careers worth smiling about. Learn more at www.DarrylSpeaks.com/Online-Training. Connect with him on Facebook or YouTube.