1 hot new strategy to get sellers to realistically price their listings
With interest rates soaring above 7%, inflation continuing to rise, and trillions of dollars of our wealth wiped out by the stock market, real estate prices could be on the verge of an unprecedented free fall. How can you price a property accurately in this environment and, more importantly, persuade wise sellers to lower their prices now before prices fall even further?
In my article “Are you ready for a bear market? » I explained how to use the various automated valuation models (AVM from Realtor.com plus their links to Collateral Analytics, Core Logic and Quantarium AVMs,) Redfin and Zillow AVMs, to get the best estimate of true value of a home in today’s declining market. While showing sellers these 5-7 AVM values usually works, today’s market may require even more ammo.
The tools you need for today’s fast-paced market
Since its creation, NAR Real estate agent real estate resource (RPR) has provided real estate agents with access to the largest real estate database in the country, allowing them to generate beautiful 15-25 page real estate reports.
RPR’s Reggie Nicolay and Genie Willett joined me recently to share their brand new suite of pricing tools that answer the question “How’s the market doing?” with the most detailed and compelling data available. Best of all, NAR gives you these tools for free.
AVMs don’t tell the whole story
Nicolay explained that relying solely on AVM ratings and/or a CMA does not tell the whole story. RPR’s new tools, updated app and website now allow you to fix these issues within as little as ½ a mile of the property, provided there have been at least three recent sales in that area. local area.
The updated RPR app
The RPR app is one of the few tools in real estate that allows you to instantly convert leads no matter where you meet them. Simply ask the prospect for the address or area they want to know. Once they respond, ask for their cell phone or email address so you can send them the information they want now. The result? Instant lead conversion with just a few simple clicks.
The screenshot below shows you the five main search screens on the updated version of the RPR app. You can search by address, map or within a specific radius of the property.
In most cases, sellers will give you a property address. This is the screen that will appear and includes data based on the median selling conditions. You can also access this data using the map screens above.
The next step in the process is to select the reports you want to include. For potential sellers, Nicolay suggests sending the Mini Property Report and the Market Activity Report. Since the seller’s report can be 15-25 pages long, he recommends using this report during your enrollment appointment.
Using the RPR app with buyers
For buyer tours, Nicolay recommends providing them with the Buyer Tour which allows your buyer to see the different properties you will present to them in a side-by-side comparison. Once they have identified the properties they are most interested in, you can provide them with the Mini Property Report and a Market Activity Report.
If your buyers are writing an offer, give them the seller’s report and the market activity report. If they have school-aged children, include the report card as well.
The new RPR website
To take full advantage of NPR’s most comprehensive data, you’ll need to visit their website, as much of this functionality isn’t currently available on their app. Here’s a sampling of what’s available (there are over 30 different reports), along with how to discuss these charts with your salespeople to help them understand exactly what’s happening in their local market.
Additionally, since RPR updates these charts every 30 days, these numbers are the most recent and complete snapshot of what is happening at the local market level.
The neighborhood summary
In the example above, note the type of market with the arrow. Follow this month since you can show sellers which way the market is moving. For the property used in this example, Nicolay said the arrow has moved from a strong seller’s market to a balanced market. Keep in mind that in previous market declines, it took 8-18 months to go from a seller’s market to a buyer’s market.
During a listing appointment, the key metrics you would want to discuss with the seller are months of inventory, list price at sale price (which is currently at 96.5 percent), median days in RPR (42 days and this is up 75 percent in a single month indicating a market slowdown), plus the median sale price, which is down 3.88% month on month other.
Translate these numbers into plain language for your salespeople:
A list price to sale price percentage of 96.5% indicates that most properties are selling below the asking price. To illustrate this point, a house listed today at $1,000,000 on average would sell for $965,000 after being on the market for 42 days (six weeks).
Here’s how to convince sellers to be realistic about their price.
Last month, median selling prices in this area fell 3.88%. If this rate of decline continues, that means your property is declining at a median rate of $38,800 per month. If the market stays on the same trajectory, in three months your value will have decreased by $116,400.
Therefore, it is essential that you list your property at a price where it will sell in today’s market with today’s interest rates. Otherwise, you risk chasing the market for months.
The Neighborhood Housing Report provides a quick second look at what’s happening at the zip code, local city, county, state and country level. The most important numbers to note are the “list price change over 1 month” which you can use to show your clients the market trend at the moment.
Detailed tracking reports
Retrieving MLS data for properties within a half mile radius of your listing can be time consuming. In contrast, RPR provides these reports with a single click.
Included are reports for new listings, active listings, pending new listings, pending listings, monthly inventory supply, public records sold, and home sold statistics. A particularly useful part of this chart is the trend line showing how the market has changed since August 2017.
To identify the direction the market is moving, compare the median price per square foot of active listings, newly pending listings, and sold listings.
For the property referenced above:
- The median price per square foot for active listings was $496.
- The last listings on the market were priced at $475 per foot.
- New pending listings (graph not shown) were at $453 per foot.
- Listings sold (graph now shown) were at $408 per square foot.
The difference between the median price per foot between active and sold listings was $88 per foot (17.7%). Assuming the property is 2,500 square feet, this would translate to a listing price of $1,240,000 and a sale price of $1,020,000, a change of $220,000.
So what this data tells you and your seller is that if your listing is typical of the area (median priced, not totally redone, or a disaster area), the seller should probably be listed on the pending price per foot from $453 to high, with the expectation of selling at $408 per foot, provided interest rates do not rise.
When it comes to answering the question “How is the market? RPR’s new suite of tools is your go-to resource for not only converting potential leads, but also helping buyers and sellers clearly understand how your local market is changing.