FSBO Training Course
Property Analysis
Doing A Property Analysis
The seller will often ask you, “So we are thinking about XYZ price, what do you think?”
And they will go on and say, “We won’t hold you to it.”
Actually, they will hold you to it. I recommend that you respond with, “We get paid well for short term relationships therefore I would prefer to be right, vs just winging it. I have already run quite a bit of data about your property. So I will finish it up and then share my price opinion.
Then ask a question and change the topic. “Seller, could I ask you – have you determined – an ideal move date?”
If you find yourself in a position where you are being asked a question that you are not wanting to answer nor are prepared, it is often best if you have a prepared response, and better yet a prepared question to ask them.
Let’s dig into a SAFE market analysis.
After you see a FSBO (or any property you may list or possibly write an offer on), we will need a little bit of data.
It may seem like a lot as you look at this for the first time. But after doing a few it will not take long to produce this information.
THE MAIN QUESTION
When you look at property in all SAFE statuses you will most likely see a pattern and answer the question, “is the property over or under priced.?” You will keep asking yourself if the SUBJECT property is “inferior to the other property…or if the SUBJECT is superior.” If you do it in this manner you will begin to determine property value.
S.A.F.E. Records
Solds
Actives
Failed (expired and or withdrawn and or terminated)
Everything in the “under contract” status that applies
It is not always necessary that we have records in every status, however there will be times when there are no sold records that help us figure out the price of the subject property.
SOLDS
Ideally the only comps/closed sales are from the immediate subdivision.
The same style as the subject. (ranch style with ranch style or two story with two stories)
Similar age. It can be 5-10 years difference but even then styles change.
It really does not matter that much if a property is
3 bed and 2 bath and the comp is 3 bed and 2.5 baths
or if one property has a 2 car and the other has a 3 car garage
We can make adjustments for features.
It is better to pull too much data than it is to pull too few. Ideally there are 2-3, perhaps 4 solds that are relevant in the subdivision. But sometimes there is no subdivision data. That is why we look at SAFE records in every status. The back up plan if we cannot find recent or nearby closed sales is to expand the research to a larger RADIUS. However, the further you go away from the subdivision the less likely the sold comp is relevant.
ACTIVES
Once again, ideally you can find LIKE KIND properties very close to the subject property. The philosophy behind ‘active comps’ is to be able to say to a seller, “if this property down the street is not selling, and it is 150 square feet larger, and it has all these amazing features, and yet it is not selling….is it not selling because of the price or the marketing effort of the listing agent?”
Ideally you find 2-4 actives that help the seller get perspective on how their property should be priced. Actives are a great way to show a seller “what price they are not.”
FAILED LISTINGS
2-4 properties that expired or withdrawn or canceled or terminated.
Powerful part of the presentation. Most sellers think very highly of the area they live in. That the darkness of depreciation did not touch their doorstep. They often feel “that the other area may be affected but not their own area.”
EVERYTHING UNDER CONTRACT
2-4 pendings and or pending contingent or any status your MLS has for property under contract. In some MLS systems the under contract may be called pending or sometimes “active contingent” known as AC. In this final group, we want to see “everything that is under contract.”
DO WE REALLY NEED 12-16 PROPERTIES?
Sometimes it is very clear with just 2-3 properties, and we can determine the value. It is not a natural skill for a person to get a license and be able to explain the value of a property. It takes a look at all properties that are SOLD, or ACTIVE, or FAILED, or UNDER CONTRACT.
In the beginning of your analysis career it is best to over pull data. The seller cannot know more than you do.
WHAT ELSE IS NEEDED
We need to see your CMA REPORT also known as VELOCITY REPORT. We must be able to see the CRITERIA you used in running the report. This will show up at the bottom of your report.
Plus we want to view whatever you provided to the seller or took with you on your initial walk through.
ONCE YOU HAVE SELECTED YOUR S.A.F.E. RECORDS
1. Tell us what the seller is asking and tell us what you think could be the right list price
2. Tell us which properties of those you pulled are the BEST properties to show the seller
SUMMARY
We will load it all to a system called the CONCEPT BOARD. We will review what we feel is the summary price for the house and how we will present it to the seller. Then you can BOOK the meeting with the seller. If for some reason they will not take the meeting we will send an email offer for their property.
What will happen after that? With the rapport and trust you built on the walk through, we will work with you on the follow up system to convert the prospect into a listing. Remember, they only met you once, they may not be ready to turn the keys over to you to list the property. It may take 5, 6, 7 or so follow ups. But…..if you can get two listings every month, you will know with confidence that you are one of the few agents that can go out anytime they want and secure a listing.
LASTLY….
Your first analysis will be the one that takes the longest to prepare. MLS may be newer to you. Selecting properties is a learned skill. Soon you will be able to complete the property selection in 10 minutes. It is a process so be patient but know that it is worth it.
IF YOU HAVE A PROPERTY THAT YOU WANT TO REVIEW WITH ME
1. please send the realist record
2. please send me the VELOCITY report that you took
with you to the appointment
3. the zillow link
4. what do you think of the list price – is it overpriced? right
where it should be? underpriced?
5 did they say ' we know we are a bit high '
6. do they have any buyer with interest
7 why are they selling bought another divorce
inheritance or others
8 what can you say about the house condition / what
looked dated / worn out / upgraded / give as much insight
as you can
9 what was the discussion about the broker fee
10. are they potentially able to buy thru us / have they
already purchased
11 was this property rental / inherited / their
residence (???)