Your market

Hey all, Before we get into the listing presentation, it's important for you to do an honest assessment of your ability as an agent. Can you look into the mirror and feel, deep down, that you're the very best person to represent your seller client? If you can't do that (regardless of the approach you use), it would be unethical to offer you services to this client in the first place. In fact, you'd have a fiduciary obligation to recommend your fellow agent as the best agent to help him. So how do you go about creating in yourself the best agent to represent your client? You need to do your homework! You need to study your market. You need to know the market statistics. You need to have a clear-cut marketing plan that will yield results superior to those of the competition. Otherwise, you'll have nothing to offer your client! Would you list with yourself? If the answer to that question isn't an immediate "yes!", then you need to become the ideal agent before you read another email about this presentation. Trust me about this: your client will recognize whether or not you know what you're talking about. If you're bluffing, he'll sense it. How often have you encountered another agent who had their facts wrong? Here's the basic market data you should know before you go to your first listing appointment: 1) Days on Market (DOM) Before you skip over this section because you saw the monthly DOM stats pop up on your MLS hot sheet this morning, you should know there is a problem with most DOM statistics. Most MLS databases have a much-manipulated DOM number which is invariably skewed low--often by a LOT! How can you know what the real number is? Is is possible to determine the actual DOM for your market even without being a rocket scientist? Of course! Just use the absorption rate to calculate the true DOM. Here's how to get the real DOM. Find out how many homes sold in your market last year and how many are currently on the market. For example, if 10,000 homes sold last year, and there are currently 5000 on the market, what those numbers indicate is that the inventory turned twice last year (10,000/5000 = 2.0). Now there are 12 months in a year and 12/2.0 = 6.0, which is the absorption rate, meaning that the average time actually on market is 6.0 months. So to convert the absorption rate to days on market, you simply multiply this last number by 30 (6.0 *30 = 180). And if you figure out DOM this way, you'll eliminate all manipulation in your market from sellers who withdraw their listings, or agents and builders who re-list stigmatized homes. The best part is that if you aren't up for the simple math, we made it even easier. Check out our DOM calculator at http://www.recalculators.com. 2) DOM Standard Deviation (STDEV) You may think I am completely out of my mind at this point, but this number offers you a powerful advantage for you once you know it. The problem with DOM statistics (even when they are accurate) is that what sellers hear from a DOM and what is statistically accurate can sometimes be off. If you report an average days on market of 180 days, a seller hears that their home will sell in 180 days. Unfortunately, that is not statistically accurate and could set you up for future disaster. By calculating the standard deviation, you will know with statistical accuracy the probability that your future client's home will sell in ANY given amount of time. Now, you can calculate this the long way by opening up your favorite spreadsheet program and copy/pasting the data for all closed residential properties for your community from the last year. By running those numbers through the STDEV function on your spreadsheet program, you might see a graph that looks something like this: If that might as well be hieroglyphics to you, then let's break it down briefly. The largest part of the familiar bell curve is where most of the homes in your market are distributed--right around the average DOM. As you move to either extreme, there are fewer and fewer homes being sold on those timelines. A standard deviation is a set point on the curve marking the extent of deviation of the whole. With this data, you can tell your seller with complete certainty that the statistical probability of selling their home in this theoretical market in 15-30 days is next to none. Realistically, it would take at least the average plus one standard deviation-- 239 days. And if they want a 93% probability of selling their home, it would take 292 days. And not only are you setting realistic expectations for your customer, but it can also dictate how long your listing agreement should be. In this example market, it would be a waste of yours and the customer's time to list the home for 90 days because there is less than a 16% chance their home sellers in that amount of time! Of course, just like with the DOM, we built a calculator you can use called our Sale Probability Calculator and you can use it for free at http://www.recalculators.com. 3) Average Markdown (List-to-Sale Ratio) Now if you calculated the standard deviation by hand earlier, you have a leg up on this number, but many MLSes have this number built into their calculations. Simply take an average for the list price in your market, and the sale price in your market. Then, subtract the average sale price from the average listing price and divide the difference by the average listing price. Example: Average Listing price - $175,000. Average Sale Price $169,000 $175000-$169000 = $6000 $6000/$175000 = .034, or 3.4% markdown In other words, your client should understand that it's normal in your market to expect a markdown (or discount) of 3.4% from the listing price. Setting expectations shows him that you understand the market and you'll help prepare him for the offers that will be coming in. You'll also have an advantage in negotiating with other agents when you know that the average markdown in a certain neighborhood is only 0.5% while they're offering 4% below asking price! Here's one more trick for preparing your listing arsenal: I recommend bringing your phone or iPad with your full listing of buyer leads in your Pipeline Database (or CRM of your choice). When you can confidently show a seller that you and your team are actively working with hundreds of buyers in your market. If you don't have a database of hundreds of active leads, you owe it to yourself to check out Pipeline Pro Tools. It's dirt cheap to get started (no setup fees, no contracts) and you just have to check to see if we have availability in your market first. Until next time, Levi Jones Guerilla Realty This email was sent to dsoldit.blogpost@blogger.com . You probably joined our list by signing up for one of our amazing free tools, free guides, or you wanted to be notified when we announce new stuff. 99% of everything we do for agents is totally free, no strings attached. The other 1% is even better. Don't let our updates make you mad. If you don't like them, do us both a favor and unsubscribe. Our stuff isn't for everyone.  Unsubscribe | Forward this email to a friend