You’re on a listing appointment, you know where the property should be priced, and when you share your CMA with the sellers they say, “But Zillow says our house is worth more! ” There’s an easy way to win this pricing battle if you know what to do. 

Zestimates (Zillow’s automated valuation model that estimates your home’s value) have been a thorn in the side of listing agents since Zillow first launched. They continue to be a source of angst today among listing agents who lack the skill set to overcome this common seller objection. 

Consumers love talking about real estate. Zillow has made it possible for almost anyone to determine the “value” of a property without having to talk to a pushy salesperson. As a result, when these people decide to list their homes, they often check their Zestimate. If it supports the price they want, they won’t hesitate to say, “Your CMA is wrong—Zillow is right.” 

The Problem with Computer Pricing Models (AVMs—automated valuation models)

No matter who is using a computer algorithm to price property, there are certain inherent problems. The first issue is that the algorithm has no real way to take the condition or the interior of the property into consideration. Instead, it is limited to working with mathematical averages. According to Corelogic: 

Automated valuation models are based on mathematical assumptions and are not able to consider special factors that may make your home more valuable.  Do you live on a lake?  Did you refurbish your kitchen?  Use this valuation estimate only as a starting point. 

Sampling Error

In reality, pricing algorithms actually generate a range of prices rather than a specific sales price. This results due to something called “sampling error.” In the case of Zillow, their “sampling error” is about +7.5 percent. This means that on a $300,000 property, the price has a 95 percent probability of being between $277,500 and $322,500. That’s a $45,000 range. On a $300,000 listing, most competent agents can predict the price within $5,000-$10,000.  

Better Mousetraps?

The simple way to overcome the Zestimate objection is to show the seller the other AVMs as well as the prices that they generate. You can use these other models not only to quickly generate a CMA when you don’t have time to do more thorough research as well as to persuade sellers to be more realistic. 

HomeSnap

HomeSnap is currently the easiest of all the existing AVMs to use. All you have to is to snap a picture of the property and the system uses your phone’s GPS to locate the property. It then checks the HomeSnap comparable sale database and generates a price. 

CoreLogic’s ePropertyWatch.com

Since CoreLogic operates a large number of Multiple Listing Services nationally, they have very accurate comparable sales data in many places. While they have the same statistical issues that any of these tools have, their MLS access makes ePropertyWatch a tool that can be quite useful to you. 

To use ePropertyWatch, you are limited to one address per email. They also ask you to verify that you are the owner of the property. Once you sign up for this service, the system will notify you via email when there are shifts in the value of your property. They also provide you with a list of foreclosure and auction activity as well. This not only keeps you abreast of the market, it allows you to track potential opportunities for investment and/or builder clients. 

Moveup.com

If you live in a state where prices paid for property are available through the public records, this tool is far and away the best AVM on the market. Onboard Informatics, one of the most highly regarded data sources in the real estate industry, supplies the sales data for Moveup.com. 

What differentiates Moveup.com from its competitors is that you can actually see the properties they are using to calculate the property’s value along with address and square footage information. They actually allow you to delete properties that are not appropriate comparable sales. Moreover, you can adjust their algorithm for property condition, market activity, as well as several other key variables. 

Overcoming the Objection

To overcome the Zestimate Estimate objection, simply use each of these tools to generate a price and then ask, “Which one is correct?” 

For an example, for a house where I used to live, the current Zestimate is $443,000. EPropertyWatch placed the valuation at $332,000, HomeSnap placed it $422,000, and Moveup.com placed it at $494,000—that’s a $162,000 difference in these four computer-generated prices! 

Since Moveup.com gave me the actual comparable sales they used, I was able to spot why their estimate was too high. They had one sale that was located in a better area that was $60,000 higher than any of the other comps. When I left this sale out of the mix, the price was $425,780. So which one is correct? My personal CMA and knowledge of the area put the property value at about $425,000. 

So, here’s the bottom line. The next time your seller says, “But Zillow says my house is worth more!” generate the numbers from these other sites and then ask the sellers, 

“Which of these prices would you believe if you were the buyer for this home?” 

Virtually all buyers will choose the lowest price. 

Continue the conversation by saying, “Let’s take a look at the actual comparable sales, the interior photos of the property, and then come to a price based upon as much complete information as possible.”

Austin Allison’s and Chris Smith’s book, People Work is part back story on Dotloop, advice on how to run a company, as well as some gems for agents about how to run their business in a “people first” environment.  

I recently interviewed Chris Smith about a book he wrote called People Work. Smith believes that we have gone through the process of connecting people digitally and now it is time to shift our focus back to what has always mattered most: people. 

We now have more user names and passwords than we do customers! As a result, the same things that connected us, in many ways, disconnected us by creating physical barriers. Sure, we are always connected, we never turn off; we also never look up to see who is standing right in front of us. 

People Work outlines a variety of ways to put people first in your business. Here are five strategies that you can use to put People Work to work in your business. 

1. Family: The Best Model for Lifetime Retention, Period

To run your business more effectively in the People Work era, Allison and Smith argue that you must care about your customer as you would for family or close friends. A pivotal point is to shift from short-term to long-term thinking. How would you treat this customer if you wanted to maintain a lifelong relationship with him or her? When you care for your customers as if they are family or friends, trust grows. So does their support and passion for your business. 

2. Quality First

As Steve Jobs once put it, “Quality is more important than quantity. One home run is much better than two doubles.” Allison and Smith suggest that the most important place to follow this advice is in the area of customer service: 

If you believe that amazing service is enough to keep people coming back and to get them to tell others about it, that is all you need to know. Put your eggs in that basket because investing in service will produce better results as a sales and marketing tool over time. 

To make this shift, avoid trying to be everything to everyone. Great customer experiences result when every aspect of the transaction meets or exceeds the customer’s expectations. It’s about quality, not quantity. 

A fundamental part of this shift is looking at your database differently. Instead of thinking of it as your “sphere of influence,” focus on your “network of influence” instead. In other words:   

You cannot just think about leads as numbers anymore, because that is not sustainable. Every ‘lead” is being sold multiple times, which means the person on the other end is bombarded constantly by companies vying for their business. The only thing that will set you apart is experience. 

Improve your clients’ customer service experience by focusing narrowly on a specific niche as well as your customer’s needs and expectations. The business will follow. 

3. The Lifetime Value (LTV) of a Customer

Every year real estate professionals spend hundreds of millions of dollars on sales and marketing. All this money and effort is designed to generate leads, yet 50 percent of the web leads go unanswered.  

The authors argue this results from short-term thinking. Most agents focus on the immediate transaction rather than considering the lifetime value of the customer. 

To illustrate this point, the authors use three different LTV models to determine how much a $300,000 buyer would be worth to your business over 30 years. Assume you earn a three percent sales commission, you are on a 70-30 split with your broker, you close your buyer leads 50 percent of the time, and your clients purchase on average once every five years. 

The lifetime value of this customer using the average of three LTV models is $121,500. As the authors explained: 

“If you want to make $120,000 per year for the next thirty years, just get thirty of these customers.” 

4. Create a Real Community

“People want to be part of something that matters.” Once you have customers, you have an opportunity to create a community that supports both your customers as well as your business. Survey them to see what matters most. Ask their advice. Invite them to share resources. These steps allow you to leverage your brand and grow your business. 

Keep in mind that building a community is like investing. It takes time. It’s the consistent process of constantly taking small steps to build your community that ultimately leads to a better business for you. 

5. Exist for a Greater Purpose, Not to Sell Products

“Communities are built around passion and purpose, not features and functions.” Are you passionate about giving back to your community? Are you someone who focuses on helping your clients to make the best possible decisions about the home they will purchase rather than treating them like a lead with a commission attached to it? If so, you are tapping into the power of People Work, and if not, it’s a great time to make the shift. 

Ultimately, your role as an agent or as a company is implement the People Work approach by visualizing your plan, delivering value without expecting anything in return, and providing a service that is better than merely useful. Following this model, you will not have to ask for anything in return.