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The Big Picture on The Competition

pricing real estate tips Jul 15, 2020

“The house down the street is listed for $500,000, and it’s junk! So, our house should sell for at least $600,000!”

You concentrate hard to keep a straight face. Must. Not. Roll. Eyes. πŸ™„

You patiently explain that it’s the SOLD listings that determine a realistic list price.

The SOLDS are reality. The ACTIVES are fantasy! πŸ€ͺ

You show them the SOLDS, but they’re still not convinced. Time to show them The Big Picture on The Competition.

What’s the Big Picture? It’s the opposite of The Small Picture (3-4 active listings in the same neighborhood).

How many active properties do you need to demonstrate the true scope of the competition?

Assuming you’re in a big city market, how about 50?

Wait! Don’t leave! Let me explain! πŸ›‘

First, tell me I’m not 100% correct on these two points:

  1. Your target buyer (for whatever listing) is NOT looking ONLY in the same neighborhood for the exact same size and style home as the subject property. 
  2. The price itself is the most significant limiting factor for most buyers.

If you agree, consider increasing your analysis to a wide variety of different home styles and sizes, in surrounding neighborhoods, limited only by a specific price range, πŸ’°

Now that you’ve got a BIG list, you can pick out the STRONGEST competitors and use those for comparison. Here’s how I would present this to my seller:

“Mr. and Mrs. Seller, your target buyer has a lot of options available to them. That’s why I think it’s smart to be aware of ALL our competitors, including other neighborhoods, within a specific price range.”

Now, you can show them your giant list of 50 active listings, and say this:

“Of course, many of these listings won’t sell. Some of them are grossly overpriced, just like the one down the street that you mentioned! But I picked out a few good ones, so you can get a better idea of what we’re really up against, in terms of our current competition.”

Now, show them the details on the few you’ve selected that are offering the best value for the money. 🏑

Is this misleading? Of course not! It’s the BEST listings that you are competing against, not the overpriced junkers.

You know what IS misleading? The Small Picture!

How are your sellers supposed to make intelligent decisions based on such limited and skewed information? 🀷‍♂️

“The more information you provide to your clients, the greater their ability to make informed and intelligent decisions.” – Ted Greenhough

This is a fundamental truth that I teach throughout the Knowledge First Real Estate Master’s Program. It’s so much easier to be a great agent when you simply provide the right information and stop providing the wrong information.

The trick is to know WHAT information and HOW to present it. They don’t teach you this stuff in Real Estate School. That’s WHY Knowledge First exists.

For more information, refer to module #10 - The Big Picture CMA.  

—Coach Ted

I teach GOOD REALTORS® how to become GREAT REALTORS®, with a simple, logical, easy-to-follow, easy-to-implement, inspirational step-by-step program.

Ted Greenhough

Knowledge First Real Estate Training

Knowledge + Action = Skill

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