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UP! Magazine - October 2019, Vol 2, Issue 10
It’s October—Do Your 2020 Business Plan Now!
by Bernice Ross, Editor-in-Chief
PODCAST OF THE MONTH:
Bringing Real Value to the Transaction
with James Sheppard
OFFICE MEETING TOPICS
Offer Generation 21st Century Style
Four Reasons to Focus Your Energy on Gen X
Rewire Your Brain for Top Performance
Navigating Troubling Times
QUICK HINTS: Weekly Tips to Build Agent Profitability
Podcast of the Month
James Sheppard: Bringing Real Value to the Transaction
This month we are pleased to welcome James Sheppard, the CEO and co-founder of Centriq (https://centriqhome.com/). The Centriq app is available on both Android and IOS. Centriq provides homeowners one place to turn for fixing, maintaining, and using their home. This app is free and is something you can use on your listing appointments to distinguish your services from the competition. You also have the option of private labeling it for $5.00 per year, per listing. The app typically produces 15-40 impressions per year as homeowner responds to the app’s recommendations and other communications. James joins us to explain how you can stand out from competitors by delivering real value. Here’s what he will be covering.
- Value is what separates top producers from the rest—a simple way for you to stand out.
- How to locate all those missing product user manuals in almost any home.
- There are over 50 million product recalls—discover if the house you’re listing, your clients are buying, or even if your own home has a defective product or appliance that has been recalled.
- Why millennials need a guide to homeownership and how Centriq fits that need.
- Does your listing have an unusual feature such as a well? A simple strategy for helping buyers to not become intimidated. Confident buyers make cleaner offers.
Easy Ways to Overcome the “Zestimate Estimates” Objection
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.
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.
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 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.
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 (https://www.epropertywatch.com/ 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.
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, while sellers want the highest 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.”
That’s the way to win the client and make sure you’re the one who gets the deal.
The Millennial Revolution—Are You Prepared to Cope?
I recently heard Travis Robertson outline how Gen Y is reshaping the buying and selling experience to fit how they do business. Are you prepared to cope?
You’re at a party and a long time friend introduces you to a Gen Y (millennial) attorney who has just relocated from New York City to join their local firm. The attorney wants to buy a loft condo within walking distance of their firm, which just happens to be the area where you specialize. Will you be the agent who captures the business?
The answer to that question will probably be based upon what happens in the five minutes immediately following your introduction. If you haven’t done so already, search your name on Google and see what turns up on the first page of the search.
That’s exactly what that young attorney did within seconds or even minutes of leaving you. Millennial buyers and sellers will search your name on Google to see if you would be a good fit. In fact, many will make the decision to work with you based upon what they find in that search. If you haven’t embraced social and mobile and if your profile doesn’t show that you specialize in the downturn urban lifestyle, chances are that buyer will continue to search for someone who does meet those criteria.
In fact, Robertson argues that when a millennial reaches out to work with you, they have already checked you out thoroughly and have decided that you are the right agent for them. As Robertson says, “Don't botch it up!”
On the other hand, millennials don’t make decisions in a vacuum. A recommendation from a friend or colleague often carries a great deal of weight with them in terms of their choice of agent.
I Want Someone Who Gets What I Want
Here are some of the most important factors that matter most millennials. A major mistake that many older agents make is failing to pay attention to what matters to their millennial clients. As Robertson put it, they want an agent who:
Understands that I think differently and that I want things that are different from what they may want in their life. I also want an agent who uses the tools I use and understands how to communicate with me.
Friends and Family Nearby
While Baby Boomers are comfortable living 20-30 miles from friends and family, the typical millennial stays within a radius of 10 miles. In fact, 65 percent say being near family is important in their purchase decision while 67 percent cite being near friends as being important.
This matters because millennials want input from both family and friends, especially when they are making a major decision. As a result, don’t be surprised when four sets of parents show up (because their parents have divorced and remarried) plus several carloads of friends to see the house they would like to buy.
Robertson advises that rather than being upset by this situation, look at it as just having been invited to meet the most important people in their personal sphere of influence. The millennial is telling you, “I trust you with my family and friends.”
Robertson also suggests that you immediately check out their friends on their Facebook page and friend them as well. If your buyers have a great experience with you, they will be posting about it to their Facebook friends. Since you have already met their friends and family face-to-face, this greatly increases the odds that these people will do business with you in the future.
Millennials value speed of communication over depth of communication. They won’t answer your phone calls because they fear being trapped on the phone in idle chitchat with their Realtor.
To address this issue, Robertson suggests that you ask your millennial clients, “How do you prefer me to communicate with you?”
He also suggests that you advise the client that there are times when a text or Facebook message won’t get the job done. Here’s what Robertson recommends that you say:
There will be times when we can’t handle certain issues in a text message. If I call you, I need you pick up the phone because it’s important. Is that cool with you.
An important secret to working with millennials is to set their expectations up front.
Embrace Education Marketing
Realtors are no longer the gatekeepers to listing information, but they are the interpreters. One of the most important roles that you can play with a millennial buyer or seller is to help them to understand the processes involved throughout the transaction. Be a resource for where they can discover facts about the local lifestyle, what makes living in your area fun, as well as which properties are the best match for them based upon these factors. As Robertson puts it:
Our value is in being education providers.
The percentage of millennials purchasing real estate will continue to increase as more people in this age group advance along their career path, marry, and have children. Are you ready to be the agent that they hire and will tell their all their friends and sphere about, or will you miss this major opportunity?