Analyzing a market is frustrating for a beginning agent. What are some tips and suggestions for being able to determine a market's value?

Asked by DC Cole, Los Angeles, CA Sun Apr 18, 2010

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Keith Sorem, Agent, Glendale, CA
Mon Apr 19, 2010
The most important step you can take as a new agent is to work in a firm that specializes in training. Most brokers look at agents as simply numbers...some will make, some will not, and they do not invest a lot of time in training.

It is a self-fulfilling prophecy - most new agents quit within two years because they cannot make enough money to stay in the business. Being a Realtor looks like easy money - but it is quite challenging in fact!

Fewer than 35% of Realtors are full time, and with the market as tough as it is, that number is probably lower now.

Why is all this important to you and your question?

You need to know if the advice you are receiving is good advice. I remember finishing my first year in real estate. I asked the top five agents in my office what they were doing to generate business. All five of them told me that they did not know where their next transaction was going to come from, nor when it would arrive. I told myself, "this is crazy". If the top five agents don't know what they are doing, then how am I going to survive? It was a moment that really make me question whether I was going to make it in this business.

So let's talk about market value. If you look at listings that have sold in the last month, by market time, you will see that some listings sell within 30 days, usually about 25-20%. The remaining 76-80% sell 60, 90, 120 days. What does this mean?

It means that 75-80% of listings are overpriced. If they were priced right they'd have sold in 30 days, right? The good deals always sell first, the reminder sit there are accumulate market time.

Also, look at the list price versus sale price ratio. Properties that sell in the first 30 days sell closest to asking price, sometimes over asking ( in my market for the last quarter the average was 101.44%). On the other hand, the other properties sell below asking price....at 120 days 94.70%.

So that means that most properties are over-priced...by professionals!

That also means that a Realtor that can properly determine market value is going to be a rare find. How will you know the person whom you are relying for advice knows what they are doing?

The best thing for you to do is talk with the top Realtor in your market and ask them for advice. Do some CMAs on your own, then ask them to review them.

When I am working with sellers, I take five to ten listings that are similar to their property, cover up the price with a Post It note, and sit down with the seller to see if they can figure out the right price. Sounds goofy, but sellers eventually learn the market value and it is better than me lecturing them.

I recommend The Millionaire Real Estate Investor by Gary Keller, Jay Papasan, and Dave Jenks. Also by the same offers SHIFT and The Millionaire Real Estate Agent.
1 vote
Debra (Debbi…, Agent, Livingston, NJ
Mon Apr 19, 2010
Hi DC

I would suggest making sure you know your market top to bottom. Make sure you see all the new listings, and even older inventory. Preview what's out there, and then check the mls daily to see what sold and what it closed for. Look for trends in prices ranges and areas. Look to see what percentage of asking price homes are selling for. Follow the dayson market.

You can't do a comprehensive cma unless you know your market.
Even still, I think pricing is 75% statistics, and 25% gut feeling ...based on having the information I mentioned above.

Let me tell you - analyzing today's market can be difficult for experienced agents, too, as things are volatile and unpredictible.

If, as a newer agent, you are unsure of yourself with pricing a home...........ask a more experienced agent to come along when doing your first few cma's (or to at least go over them with you)............or, ask if you can come along with them

Knowledge of your market is vital. Knowledge will give you confidence.

Good luck!
1 vote
Mack McCoy, Agent, Seattle, WA
Sun Apr 18, 2010
Realistically, DC, I suggest that beginning agents concentrate on prospecting, learning the inventory, and building on their strengths. Frankly, I think that if you're going to try to understand residential real estate from an investment perspective, it would help if you were already an investor in real estate.
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