The market is overpriced. So if you are a real estate agent trying to communicate with sellers, how do you get someone who wants to test the market at $500K to realize a more reasonable price is $375K? There are surely many strategies, but today I want to mention the power of graphing neighborhood sales. I don’t mean to beat the dead horse by bringing this up again, but knowing how to graph will help you communicate effectively, stand out from other industry professionals, and seize your role as a market trend expert instead of letting Zillow have all the glory. Sure, you can show your client a graph of city or zip code trends by using Trendvision, but it’s hard to argue with neighborhood-specific data.
A letterhead to give your sellers: Before we dig in, here is a letter I wrote for sellers about things to consider when pricing in this market. This letterhead is based on a post I wrote recently, but I tweaked a few things. See the image below and DOWNLOAD here (PDF). Feel free to email or use as you see fit. Obviously the letter does not address a specific property. If you need a letterhead for your specific property, let’s talk about some consulting.
Excel Tutorial: I know, you don’t use Excel because it’s only for nerds. But let me break it down for you below so you can join the club. Previously I shared a tutorial on how to graph with Gnumeric, but I had a few requests for using Excel instead since that’s what most people already have on their computers.
This graph shows the range of similar-sized neighborhood sales is between $300-375K for the most part (instead of $500K). This can be a very powerful visual, especially when you begin to show the sales at $375K have been remodeled.
A tutorial on how to show the market: I recommend watching the tutorial below and then pulling up some MLS data for a neighborhood you are working in so you can create a graph by following the steps I took. This is perfect for Sacramento MLS, but as long as you can export data from your MLS system, you should be okay too. You may need to pause my video several times or rewind at moments. Whenever we do something new, it takes a while to catch on. If you don’t have Microsoft Paint to paste the graph like I did, you can use a different photo editing program, or maybe use a snipping tool on your computer. Additionally, you can open up Paint and simply start a new file, and then paste your graph (as opposed to opening an existing photo like I did). Watch below (or here if it’s too small below).
Please let me know if you have any questions. I hope this was helpful. Perhaps this will spur on a new skill set for you that can make a difference in your business.
Questions: Was the tutorial helpful? Anything you need clarity on?
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Graphs for realistic pricing — good idea. Although the US has recovered most of the jobs lost since 2008, these new workers are now being paid 22% less (US News and World Report). And student loan debt now is about 1.6 trillion. The long term trend seems to indicate that people are going to have less money to buy houses. But it’s human nature for people to believe what they want to believe.
Thanks Ricardo. I sure hope this economy can take some bigger leaps forward in coming years.
Ryan does it again! Sacramento area Real Estate Agents should all be subscribing to the inimitable Sacramento Appraisal Blog… so be sure to share this will all your Sacramento area social media friends! Do it now, they will thank you for it! http://youtu.be/06B6UAHZTxs
Thanks Mike.
Nice tutorial Ryan. I too did some graphing while doing work in a local neighborhood and the trends were very obvious. I had one outlier that stuck out like a sore thumb but most of the other sales were within a certain range. Graphs can speak volumes.
Thanks Tom. If it was the most recent graph on your blog, I can definitely see what you mean by one outlier. I agree about graphs speaking volumes. When we show the trends to clients, it can really help. I am working on a litigation case right now, and one big way for me to support the value in the report is to show the market visually.
Shouldn’t pick on individual listings but MLS 14057607 seeks $330/SF in an area that averages $230/SF. Plus, it’s priced 10% higher than what it sold for mid-2013, back when the market was hot. Sure, it’s a desirable location, but that’s already baked into the $230/SF. Buyer/agent coulda used your chart method 😉
Jim, thanks for the comment. You’re picking a fight with someone by listing the MLS number. I think I’ll stay out of that one. Ha ha. We’ll see what the market says. One of the best ways to find out if value is there is to expose the property on the open market. Thanks again.
Ryan,
Great post – yet again! I find value in your posts, even though I sell in Michigan!
Last year was the toughest year of my career – all because of appraisal issues. Keep up the flow of information.
Thank you Scott. I appreciate the comment very much, and I’m so grateful you’re finding value here. I’m sorry to hear about the issues. Did the market change and contract prices just couldn’t be substantiated? Or were the appraisals just too conservative? Were the buyers using one particular lender or did the issue come from multiple lenders? Just curious. I’d love to hear more here or via email. I hope this year is profoundly successful for you.
Ryan, that is all well and good in a tract housing market, I work in a rural market where properties go from one end of the spectrum to the other, and the idiot real estate agents add the finished area in the basement and report it as GLA, then I am expected to defend this data that I have had to dissect to get anything close to correct from UW that hasn’t a clue???? I wonder why I am in this industry?????
Hi Patty. Working rural markets is surely more challenging than tract markets, but graphs can still help tell a story, and it’s a skill that can help earn different types of clients too. It should be interesting to watch how Fannie Mae’s Collateral Underwriter plays out – especially for more challenging properties. Graphing certainly won’t solve all problems for appraisers, but increasing skills and having a progressive vision for moving business forward can certainly be a game-changer for appraisers. Have a nice day! Thanks for stopping by.