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Posts tagged ‘pricing strategies’

8
Jan

Top Ten RealtyLab Posts for 2013

top ten of 2013Every year, around this time, I surf through my blog statistics and try to get some idea of how I did over the course of the year. Did I pick up subscribers? what posts got the most views? which received the most comments? The goal of this exercise is to see what’s working and what isn’t. Pretty simple, really. So, without further ado here are the top ten posts of 2013.

Number 10. We have seen it a fair bit this year, and lets hope the tide is turning as more and more people get reported but it still never fails to surprise me when an agent uses other agent’s pictures to create fake ads on 3rd party sites like Craigslist or Kijiji. Surprisingly, the public hasn’t heard the old expression….if it is too good to be true, it probably is. We call it Gaming the System.

Number 9. I had a lot of fun with this one because it combines two of my favourite things; office meetings and infographics. I asked agents at my office how they went from a phone call at the office to a listing a home. I called it The Ultimate Pricing Guide.

Number 8. My friendly neighbourhood Coburg agent Dave Chomitz, who follows me everywhere (or is it I that follows him) gave me the idea for this post. He had an idea…and doesn’t it all just start with an idea, on how to build his own real estate market. Check out his success and then come up with your own Niche Marketing Ideas.

Number 7. Surprisingly 3 of my top 10 of 2013 were actually written and published in 2012. Talk about longevity. But when the content is still relevent, that can happen. In this case I wrote about a seller who wanted to sign back for more than the asking price. What should stand out in any agent’s mind is that if you list a home low in order to get multiple offers, you need to explain to sellers what could happen if the plan doesn’t work.

Number 6. Saw a few cases of this during the year. A house is sold and the appliances that were thought to be included were different when the buyer took possession. This made us conclude that listing agents need to CLEARLY educate sellers about inclusions and exclusions,but more importantly, buyer agents need to do their own due diligence in marking down the important stuff. I called this one, The Old Bait and Switch

Number 5. Another hit from 2012. I did a bunch of research on this one and then, while attending NAR in Orlando I learned a fundamental thing about open houses. After 20+ years in the business it never occurred to me that people who went into your open house weren’t there to look at the house. They were there to check you out. I guess it is true…Open houses aren’t for suckers.

Number 4. How many times have you heard Sellers say ‘boy, I should have taken that first offer’? Probably never because that would be like admitting defeat. Still it was fun to write about The First Offer is the Best Offer.

Number 3. This one is my proudest blog post because it’s a video (featuring ME!) and most viewed video on YouTube. The content is pretty good too and drove this post to become the most shared on 2013. Nuff said. Here’s your opportunity to watch How to Become a Real Estate Super Hero. Blammo

Number 2. The last man standing of 2011. The anatomy of a Canadian Realtor. Funny how two of the top ten posts are infographics.

And finally, drum roll please, the Number 1 blog post of 2013 remains my post on agent statistics that I did in 2012. Probably due for an update soon but I suspect the ratios will remain pretty consistent. It seems that agents want to know how they stack up to the other 38,000 agents in their market.

Well thanks everyone for a fun year. Look forward to another year of fun and discussion.

mark mclean

4
Oct

How Can I Get Better At Pricing Homes?

better pricingCheck out the latest guest post from my good friend and stellar Real Estate coach Suze Cumming. If you haven’t already, please check her out and subscribe to her blog because it is awesome. Suze has trained many top agents in Canada and is responsible for my of the successful agents at Bosley Real Estate. You can check out her website http://www.thenatureofrealestate.com/

Dear Zuess,
How do you get good at pricing homes? Twice now I’ve lost a listing because my price was wrong. Once it was too high and the other time it was too low and the house ended up selling for $40k more than I thought. I am not only losing the listings, I’m starting to second guess myself all the time. Is there a course or something that I can take?
Yves.

Dear Yves,
Pricing matters in real estate and unfortunately, it’s not an exact science. By definition, market value is uncertain as it estimates the value based on what we think buyers and sellers will agree on. To make this estimate, we look at what different buyers were willing to pay for different properties in the recent past. There are a lot of variables in this process and this creates a large margin for error.
Let’s look at the formal definition of market value:
“The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue influence”
I recommend that you keep a copy of this definition with your listing presentation material. It will help you focus on what you are trying to estimate when you are pricing homes and it will help your potential clients understand that your price is an estimate based on factors that we cannot always determine accurately.
The most difficult thing about market value is that it can change very quickly. It can jump up if there are several buyers desperate to get a home in a certain neighbourhood and there is nothing for sale. It can drop significantly due to changes in the economy, world news, threats, rumours, and such. Many of these things are beyond our ability to predict.
I had several listings when the World Trade Center Disaster occurred and their value changed significantly in an instant.
To get good at pricing, understand the definition and then practice. Inspect as many homes as you can in your market place. Estimate what you feel they will sell for. Think deeply about how buyers will perceive this product in this market at this time. Make notes about what you think the home will sell for and why you think that. Then go back when these homes sell and see how accurate you were. If you are way off, speak with your broker or other agents in your marketplace to uncover what information you are missing when estimating values.
I use to underestimate home prices on busy streets. It was my own personal bias because I really value quiet and couldn’t imagine living with the traffic noise. As a result, I only ever sold one home on a busy street in 28 years in the business and I felt guilty about it. (They are still living happily on Mt. Pleasant Avenue in Toronto after 16 years). It’s challenging to keep our biases out of the process but awareness and practice will get you there.
A course on pricing? Good idea. I’ll work on it.

Zuess
Columnist, The Nature of Real Estate

mark mclean

23
Feb

Mastermind for February 22nd, How NOT To Price a House

File this Mastermind post under the heading “Scratch Your Head Part Two”. Last week I talked about a market that defies logic, see http://bit.ly/zCZYeP , well if there was ever any further proof, we talked about one of the strangest stories we have heard in a long time. If you didn’t make it to mastermind this week you missed a great example on how not to price a house.

A few weeks ago an agent in our office listed a home for $549k. The research showed that he priced the home pretty close to market value. Despite that, he received eight offers and sold the house for $725k, exactly $176k over asking. Given the current market conditions, I suppose we can only be mildly surprised, but the story gets even more interesting. A week later, the neighbour puts his house on the market. It is a similar house but has two distinct advantages, it has a bigger garage and a better kitchen. The house gets listed for $589k through a different brokerage. Despite the fact that seven people lost out on the house next door, the house did not sell on offer night. Ultimately the listing agent found his own buyer and the home sold after 13 days on the market, for $7k under the asking price.

What gives? How is it possible that two similar houses, located next door to each other, selling a week apart, can sell for a difference of over $140k? While the story is shocking, some of the more experienced agents that attended our Mastermind session have seen it happen before and certainly our hearts go out to the second sellers. So here is our best explanation. The first house got caught up in what the Roman’s called “auctio febris” also known as “auction fever”. When the second house came on the market, the people who came to view it probably felt that the sellers were expecting significantly more and made the judgement call that it either wasn’t worth the money or they didn’t want to get into a heated bidding war.

Without speaking to the listing agent, it is impossible to get the full picture but from a purely casual observer point of view, it seemed that there were some lost opportunities along the way. Our agent wondered why the agent for the second house didn’t call him to find out who the other 7 agents who missed out on the first house were. I have mentioned it in previous posts, it is critical to have good relationships with agents in your neighbourhood so that you can share information. Finally, we all agreed that if the first house was actually worth the eventual sale price then the agent probably should have listed it for $719K and not held back offers. The logic behind that strategy is simple. The value has already been established so setting the price significantly under “market Value” was off-putting to potential buyers. Once again proof that the pricing a home is not as easy as it seems.

As usual, I look forward to your comments, so please drop me a line when you can. RealtyLab works because we all share great stories. Have a great week!

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