Pricing Strategies in the Market
This first episode of the Center for REALTOR® Development podcast focuses on pricing strategies. Our guests provide some different perspectives on pricing strategies in today’s real estate market for both buyers and sellers. Melanie McLane and Rob Mehta share their expertise on both basic and more advanced areas to consider when pricing homes. In addition, they talk about how Realtors® can work best with appraisers, AVMs, and how to use Realtors Property Resource® (RPR®) tools.
In a comparative market analysis (CMA), a Realtor® will want to look at solds, current listings, and expireds. Solds should be as similar as possible to the subject property, and current listings allow Realtors® to share how a seller’s home compares to others on the market. Expireds often exhibit aspirational (wishful) pricing - which in turn can help set a realistic prices for sellers. Other things to look at when comparing cost, value, and price for a client are absorption rates and supply and demand. Melanie talks about how all these factors can work together to test the market and get the best options for your clients.
Melanie shares some of her experience as an appraiser and in working with appraisers. As a realtor®, it is important to form a good relationship with appraisers. Take them out to lunch and ask them questions and learn from them - you can use each other as a resource! The more they know, the better than can accurately appraise a property. A good appraiser will check the comps to find similar properties and take into account adjustments - which will never be the same across different prices ranger in the market - and compile a report that should then be reviewed by the agent to ensure the facts are right.
In today’s market, Automated Valuation Methods, or AVMs, are very popular. A standard AVM (such as Zillow) uses public record data; for an AVM to work, the data has to be correct. It will not pick up the difference between some sales and comps, or closing costs. There are new processes being rolled out concerning AVMs that may prevent people from getting appraisals done. Melanie discusses Fannie May’s Collateral Underwriter and Day 1 Certainty, and how they may affect other aspects of the market.
In the second half of the show, Rob Mehta discusses some of the same strategies above from the perspective of a seller. For AVMs, he checks multiple sources to pull reliable data, then will fine-tune the data by looking for nuances in the market. Rob is very big proponent of RPR® tools. With RPR®, you can see public data as well as MLS data; you also have the ability to modify your research and searches to reflect public record information more accurately. It is a great way for agents to obtain high-quality data that clients want, without having to look in too many places.