| Hey all, Yesterday I shared with you all an out-of-the-box CMA method that will save you time, get you a better valuation and stand up to any amount of scrutiny. I wanted to take it a step further and show you how easy is it is to use our free tools to complete a CMA for a real property in Fayetteville, NC. https://youtu.be/8cEj7JvTa4o < - Check it out In less than 10 minutes, I valued the property and I was able to avoid manipulating the numbers with one or two outlier properties. After you have a chance to try out our CMA method, shoot us a quick email and let us know how it went. We love to hear from our readers. Until next time, Levi Jones Guerilla Realty |
Friday, August 17, 2018
How to accurately value a property in 10 mins
Thursday, August 16, 2018
Weekly Update: new listings, contracts and sales
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My exact CMA method (.mp4)
| Hey all, Yesterday I shared with you all an out-of-the-box CMA method that will save you time, get you a better valuation and stand up to any amount of scrutiny. I wanted to take it a step further and show you how easy is it is to use our free tools to complete a CMA for a real property in Fayetteville, NC. https://youtu.be/8cEj7JvTa4o < - Check it out In less than 10 minutes, I valued the property and I was able to avoid manipulating the numbers with one or two outlier properties. After you have a chance to try out our CMA method, shoot us a quick email and let us know how it went. We love to hear from our readers. Until next time, Levi Jones Guerilla Realty |
How I do a CMA
| Hey all, All month we will be talking about a new type of listing presentation that helped us to list 114 homes in a single year, all at 8% or more. Last week, I began laying a foundation for the presentation by talking about where to get seller leads and busting some of the commonly held myths about listing properties. This week we will dive in the presentation. And the starting point for any good listing presentation is a great valuation for the property you want to list. Anyone who knows numbers can tell you that, as a listing agent using the traditional method of doing a CMA, you can make the numbers say anything you want. Here's what I mean. With the traditional CMA method, the agent selects three recently-sold properties that closely represent the subject home (or the home being valued). In most markets, it's easy to find three properties that sold high, three that sold average, and three that sold low and still have many other comparables from which to choose. What many agents do (and what they teach) is to use the least expensive set of comps for the CMA. This method makes the case for listing the home as inexpensively as possible and allows it to sell quickly. However, as a seller's agent you should be getting your client the most money for his property, not co-conspiring in a giveaway. Zig When Everyone Else Zags What I do in preparing a CMA is to take data from three sources: tax records (sale and assessment data), the closed comparable listings in the MLS, and the active comparable listings in the MLS. Let me explain. 1) Tax Records "Adjusted" First I look at the tax records to determine what I feel to be the "adjusted" current value of the home. For example, if it sold three years ago for $150,000, and there's been an appreciation rate in that area of 12-14% per year, I calculate the appreciation (3 x 13% = 39%, or $58,500), and then I add that figure to the purchase price. If the home hasn't been on the market for a long time, I'll use the most recent assessment value and adjust it the same way. Certainly this particular method is rather subjective, but an experienced agent who knows his market can get close to a realistic number by using it. However, this is only one part of my valuation. 2) Closed Comparables Next I pull up all the closed comparables in the area or subdivision, going back a reasonable period of time, and I can usually find between ten and twenty of these. (In extremely hot markets where homes appreciate at double-digit rates, you shouldn't go back farther than a few months or so in order to prevent the CMA from being skewed downward.) Don't forget that the amenities and how nice a home looks will affect the curb appeal and saleability of the property but have very little impact on appraised value, so it's best to use as many comparables as possible. In selecting my comps, I use the subdivision, the square footage (with a range of plus or minus 10%), and the number of bedrooms and baths. I then calculate the average sale price of the group, eliminating any outliers up or down (e.g. homes that were foreclosures or distress sales). 3) Active Comparables Finally, I pull up all the active comparable listings. Again, I use the subdivision, the square footage, and the number of bedrooms and baths, but your market may be a little different in how the appraisers select comps. The point is to get as much data as possible! Using the Numbers Together Now we put it all together. Take the adjusted value from the tax records, add the average price from the closed comps, and then add the average price from the active comps. Now take that number and divide by three, and you'll have the true average value for the subject property. Write down this new number somewhere, add 5% and subtract 5% from it, and you'll have a "reasonable range" for the value of the home, which tends to be plus or minus 5% from the average. In most markets it's reasonably easy to support a value within 5%; so once the property sells, getting the appraisal shouldn't be an issue. I know this is an out-of-the-box way of doing a CMA, but it will absolutely stand any amount of scrutiny by clients, other agents, or – most importantly – appraisers. Moreover, using this method will protect you from accidentally over-pricing or under-pricing a property. Most importantly, it will reinforce the fact that you're a market authority and know what you're talking about. If a seller client should be harboring a suspicion that you're trying to skew the numbers, his or her fears will quickly be allayed because you've considered every possible comparable in the current value of the home. Nothing except a pre-appraisal could be fairer. Tomorrow, I am going to show you a tool for how to do this valuation in less than 10 minutes. If you have any trouble at all implementing this CMA, shoot us an email. We would love to hear from you. Until next time, Levi Jones PS. We give away most of our tools and training for free, but if you haven't checked out Pipeline Pro Tools, you owe it to yourself to look into it. The system is dirt cheap to get started and there is no longterm contract. Guerilla Realty |
Wednesday, August 15, 2018
Best CMA on earth
| Hey all, All month we will be talking about a new type of listing presentation that helped us to list 114 homes in a single year, all at 8% or more. Last week, I began laying a foundation for the presentation by talking about where to get seller leads and busting some of the commonly held myths about listing properties. This week we will dive in the presentation. And the starting point for any good listing presentation is a great valuation for the property you want to list. Anyone who knows numbers can tell you that, as a listing agent using the traditional method of doing a CMA, you can make the numbers say anything you want. Here's what I mean. With the traditional CMA method, the agent selects three recently-sold properties that closely represent the subject home (or the home being valued). In most markets, it's easy to find three properties that sold high, three that sold average, and three that sold low and still have many other comparables from which to choose. What many agents do (and what they teach) is to use the least expensive set of comps for the CMA. This method makes the case for listing the home as inexpensively as possible and allows it to sell quickly. However, as a seller's agent you should be getting your client the most money for his property, not co-conspiring in a giveaway. Zig When Everyone Else Zags What I do in preparing a CMA is to take data from three sources: tax records (sale and assessment data), the closed comparable listings in the MLS, and the active comparable listings in the MLS. Let me explain. 1) Tax Records "Adjusted" First I look at the tax records to determine what I feel to be the "adjusted" current value of the home. For example, if it sold three years ago for $150,000, and there's been an appreciation rate in that area of 12-14% per year, I calculate the appreciation (3 x 13% = 39%, or $58,500), and then I add that figure to the purchase price. If the home hasn't been on the market for a long time, I'll use the most recent assessment value and adjust it the same way. Certainly this particular method is rather subjective, but an experienced agent who knows his market can get close to a realistic number by using it. However, this is only one part of my valuation. 2) Closed Comparables Next I pull up all the closed comparables in the area or subdivision, going back a reasonable period of time, and I can usually find between ten and twenty of these. (In extremely hot markets where homes appreciate at double-digit rates, you shouldn't go back farther than a few months or so in order to prevent the CMA from being skewed downward.) Don't forget that the amenities and how nice a home looks will affect the curb appeal and saleability of the property but have very little impact on appraised value, so it's best to use as many comparables as possible. In selecting my comps, I use the subdivision, the square footage (with a range of plus or minus 10%), and the number of bedrooms and baths. I then calculate the average sale price of the group, eliminating any outliers up or down (e.g. homes that were foreclosures or distress sales). 3) Active Comparables Finally, I pull up all the active comparable listings. Again, I use the subdivision, the square footage, and the number of bedrooms and baths, but your market may be a little different in how the appraisers select comps. The point is to get as much data as possible! Using the Numbers Together Now we put it all together. Take the adjusted value from the tax records, add the average price from the closed comps, and then add the average price from the active comps. Now take that number and divide by three, and you'll have the true average value for the subject property. Write down this new number somewhere, add 5% and subtract 5% from it, and you'll have a "reasonable range" for the value of the home, which tends to be plus or minus 5% from the average. In most markets it's reasonably easy to support a value within 5%; so once the property sells, getting the appraisal shouldn't be an issue. I know this is an out-of-the-box way of doing a CMA, but it will absolutely stand any amount of scrutiny by clients, other agents, or – most importantly – appraisers. Moreover, using this method will protect you from accidentally over-pricing or under-pricing a property. Most importantly, it will reinforce the fact that you're a market authority and know what you're talking about. If a seller client should be harboring a suspicion that you're trying to skew the numbers, his or her fears will quickly be allayed because you've considered every possible comparable in the current value of the home. Nothing except a pre-appraisal could be fairer. Tomorrow, I am going to show you a tool for how to do this valuation in less than 10 minutes. If you have any trouble at all implementing this CMA, shoot us an email. We would love to hear from you. Until next time, Levi Jones PS. We give away most of our tools and training for free, but if you haven't checked out Pipeline Pro Tools, you owe it to yourself to look into it. The system is dirt cheap to get started and there is no longterm contract. Guerilla Realty |
Tuesday, August 14, 2018
What does it mean to “know 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.
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 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 |
Monday, August 13, 2018
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.
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 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 |
Sunday, August 12, 2018
Listing Myths - Special Weekend Edition
| Hey all, Yesterday we began tackling five of the most common listing myths we hear in the industry and we have a few more "sacred cows" to tackle. If you missed our email yesterday and want to see the rest of the list, shoot us an email. We would love to hear from you. Myth #6 " You should always include the price in your advertising" As with ads that say sold, any ad that includes the price will prompt very few calls. We actually ran an experiment, and the results were clear: ads with prices got two-thirds fewer calls than those without. And the disparity is even greater in online advertising where information is usually a click away. Think about it: what's the first thing someone asks you when he calls about a property? The price. It's the same everywhere. Put the price (or sold) in the ad, and you'' get many fewer leads. And since the only reason you should advertise is to get more customers, don't shoot yourself in the foot by minimizing your ad's effectiveness. Make the price a mystery, and watch that phone ring! Myth #7 "You have to stage it or fix it up in order to sell it" Back before we opened our own company, we worked for one of the big box brokerages you have heard of and we would have fun teasing one of the other listing agents in the office. When she listed a home, she was relentless. Before the owners knew what was happening, she would have them pressure-washing, repainting, re-carpeting...one time she even talked a client into sodding the yard! Her sellers spent half their equity in the home just trying to sell it. It is true that cute homes with perfect curb appeal sell more easily than "dog" houses. But an agent with a good marketing strategy can sell even those dog houses. When you use price to sell your home (the traditional approach), the overall perceived value is paramount, and part of that whole process is making the home look as close to perfect as possible, so as to have the highest perceived value. This idea is the very heart of feature-benefit sales. However, our listing approach relies on high traffic to sell the property so the condition is less important. The reason is simple: when you're selling by price, you're making the sale because features and benefits eventually present a compelling case to the buyer. On the other hand, the "traffic" approach works on a different human motivator--the fear of loss, as in "Somebody else might get my dream home!" Create competition for your client's property, and those cosmetic traits become less important in the buyer's mind. Myth #8 "Ads sell houses" One of the little-known secrets of advertising homes for sale is that ads don't sell houses. In fact, less than one-fourth of one percent of buyers actually purchase the home that's featured in the advertisement to which they've responded. That statistic doesn't mean that we shouldn't advertise; what it means that we need to know why we advertise. We advertise to generate a continual flow of leads. And having a continual flow of buyers allows you to build your business and increase your income and freedom. Show me an agent who is afraid to take some time off, and I will show you an agent without a steady flow of customers. When you advertise, you should do it for yourself and not because your listing client wants you to. You're spending your money and you should be doing it to build your business. Myth #9 "FSBOs and Expireds are the best sources for listing leads" All of us have heard this one again and again. The truth is if you want to market to those people who've been singled out by nearly every aggressive agent, go after FSBOs and expireds. The best source of listing leads, however, are your buyer leads. Just because someone came to you as a buyer doesn't mean he's not a seller as well. According to NAR, as many as 52% of all buyer leads are sellers too. And the beauty of these leads is that most other listing agents aren't marketing to them--yet. You can have them virtually all to yourself. Find the sellers among your buyers, and you'll have found the very best source for listing leads. Myth #10 "If it doesn't sell, the reason must be the price" I once heard a nationally known speaker and coach tell an audience that there's only one reason a home won't sell: price. And since then I have heard agent after agent repeat this same nonsense. The very foundation of economics is the law of supply and demand. Where the supply meets the demand, there you find price. In other words, the price is dependent on supply and demand. Obviously! If there's a large supply of something, but few buyers for it, prices will drop. On the other hand, when there's a scarcity of product but many buyers, prices will rise. As professionals, we have a responsibility to market our clients' homes properly. Accordingly, it's very important that we do so in a way that best represents their interests. And every seller I have ever met has the same two objectives: to net the most money and to sell his home in the least amount of time. In order to meet the seller's needs, you must market in such a way as to create the appearance of scarcity while generating an abundance of demand--and the easiest way to do this is by enlisting the buyer's agent. Together you can develop a sense of urgency by marketing, not to the public in general, but to the agents who'll be bringing their buyers. By using the traffic approach, you can generate higher-than-normal traffic and sell the client's home in half the time while netting more money. And that's what we are going to dive deep on in next week's emails. Until then, Levi Jones PS. Advertising should be about generating customers. If you don't already have a plan for generating 2-3 new leads every day with your advertising, check out our Pipeline Pro Tools system. Or you can skip straight to the point and get a live demo of our lead generating tools--click here. Guerilla Realty |
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