Becoming the market authority is job one (continued).
The final two pieces of market data I want you to learn are the average markdown (also know as the list to sale ratio), and the general market climate. We’ll cover them both in this segment, and once you’ve mastered them, you will be a real market authority and you will stand out when being compared to your fellow agents.
Average Markdown (List to Sale Ratio). Now let’s go back to the statistics that we worked on earlier. Remember my asking you to calculate the average for list price and sale price? Here’s the reason: you need to be able to advise your client as to the “typical” discount in your market. Let’s assume that the average listing price is $175,000, and the average sale price is $169,000. Now, subtract the average sale price from the average listing price, and then divide the difference by the average listing price. Here is the math: $175,000 – $169,000 = $6000; $6000 divided by $175,000 = 0.034, or 3.4% markdown.
In other words, your client should understand that it’s normal in your market to expect a markdown (or discount) of 3.4% from the listing price. Setting expectations shows him that you understand the market and that you’ll help prepare him for the offers that will be coming in.
You’ll also have an advantage in negotiating with other agents when you know that the average markdown in a certain neighborhood is only 0.5%, while they’re offering 4% below the asking price! You can tell an agent that it’s unreasonable to expect your client to accept such a figure and that he should encourage his client to make a more reasonable offer. I can’t tell you how many times this simple formula has meant thousands of dollars for my clients because I knew the market statistics, and the other agents didn’t.
Buyers in the Current Market (Buying Climate). Let’s always remember what the seller is actually looking for: to net the most money at closing and to sell the home in the least time. What this means is that sellers are acutely interested in how many buyers you’re in touch with. In fact, when I would tell a seller that I didn’t personally work with buyers, there was a perceivable concern in their minds until I quickly pointed out that I had a team of buyers’ agents who worked with all of my hundreds of buyer customers. Then I went on to demonstrate that I was very much in touch with the buying climate. Here’s how I recommend you do it.
I recommend that you maintain statistical information on how many new buyer leads you generate each week. Now, since the average home search lasts eight weeks (according to the NAR), it is easy to tell approximately how many buyers you are working with at one time. All you need to do is simply take the sum of the last eight weeks, and that’s how many buyers you are currently working with. That’s exactly how I did it, and it is very powerful when you present it to your listing clients.
I want you to imagine what the reaction of a seller was when I told him that my team was currently working with 462 homebuyers in our local market and that I had the names, phone numbers, and email addresses of all of them! And if I hadn’t had my lead capture gateway technology in place, I would’ve had only a fraction of those customers, and there would have been no simple way to track my leads.
Here’s one more little trick that I recommend for preparing your listing arsenal. I recommend printing out each lead as it arrives by email and then adding it to a home-buyers notebook that you keep on hand. In an upcoming segment I’ll show you how this homebuyers notebook can become a very powerful listing tool and how you can use it to cinch the listing.
Okay, let’s talk about credibility.
Let me show you how this statistical knowledge can influence your credibility. Imagine a potential listing client with a nice home worth roughly $500,000, and now imagine you’re going up against the top listing agent in your market. How do you feel? Are you nervous? This agent has lots of signs all over the area. Who are you? Just some new agent without very many listings?
Now imagine that the top dog is a typical agent who doesn’t know anything, really, about the local market. He’ll talk in generalities about how good he is at selling homes and how quickly he expects to sell this one. He is like many top-producing agent: full of himself — a legend in his own mind! And because your potential client has seen his signs everywhere, and possibly his ads in the various homes magazines, he is predisposed to think well of your competitor.
But, because you know the market data, you go into the listing presentation ready. You tell the seller that homes in his price tier have a DOM of 240 and that, he has an 76.8% chance of selling his home within 360 days (basically a year) if he uses the traditional approach. The other agent who’s promising to sell the house in only a few days is being dishonest or, at the least, confused (or overly optimistic!) because the probability of selling the home in less than a month is 10.1%. (If you’re having problems with the statistics, don’t hesitate to contact me, and I’ll be happy to help you.)
Then you begin to show your potential client a better way, a way that will more than double the chances of selling his home while netting him more money. Guess what? You’ve just landed a really nice listing. And why? Because you’re the best agent to sell it! And now that you’re the best, you can sell the listing with authority. You’re the best, you know it, and now the client knows it too. Most importantly, you’ve got the listing!
Summing it up.
I think you’ll agree that this is a lot of information to digest! So I suggest that you look through it a few more times until it makes perfect sense. It’s important that you master the basics before we build on them with the listing presentation. Why? Because the presentation requires that you be utterly confident in whatever approach you use. You need to become the best agent you can be. You owe this much to your clients, and you owe it to yourself.
To summarize: we’ve learned that it’s ethical to list at 8% (assuming that the listing will net your client more money and sell his home in less time); but we’ve also learned that it’s unethical not to use this approach if you know it’ll deliver better results (which it will). Your seller client is entitled to the best representation he can get. Let it be you!
So how do you start off down the path toward becoming a great listing agent? First, you need to assemble the technology and the advertising to give you more inbound business than you can possibly handle. That will give you a “take it or leave it” attitude. Believe me when I tell you that customers can tell when you’re desperate. I know from experience. I once was desperate, and my clients could tell. The only way to solve that desperation is by having an abundance of business, allowing you to pick and choose.
Next you need to be the best agent for the job. You have to know your market numbers cold. Statistics can be mind-numbing, but the few simple statistics we’ve mentioned are absolutely worth learning. When we get into the listing presentation, we’ll discuss how to take this knowledge base and convert it into premium listings.
You’ll be amazed when clients actually ask you to list their homes at 8% or even more! Not only can it happen; it will happen when you use this approach to selling houses. Do your homework! Learn your market numbers. In only a few hours you’ll have them nailed down, and then you’ll truly be the best agent for the job.
Now you’ve started taking the steps toward becoming the dominant listing agent in your market! So what’s next? In the next chapter, we’ll be discussing the nuts and bolts of the listing presentation itself. Until then, work on getting your technology and advertising in place. Then nail down your numbers so that you’ll be the best agent for the job. There’s never going to be a better time to start than right now.
View all articles in this series:
- The New Ultimate Listing Presentation (Part 1)
- The New Ultimate Listing Presentation (Part 2)
- The New Ultimate Listing Presentation (Part 3)
- The New Ultimate Listing Presentation (Part 4)
- The New Ultimate Listing Presentation (Part 5)
- The New Ultimate Listing Presentation (Part 6)
- The New Ultimate Listing Presentation (Part 7)
- The New Ultimate Listing Presentation (Part 8)
- The New Ultimate Listing Presentation (Part 9)
- The New Ultimate Listing Presentation (Part 10)
- The New Ultimate Listing Presentation (Part 11)
- The New Ultimate Listing Presentation (Part 12)
- The New Ultimate Listing Presentation (Part 13)
- The New Ultimate Listing Presentation (Part 14)
- The New Ultimate Listing Presentation (Part 15)
- The New Ultimate Listing Presentation (Part 16)
- The New Ultimate Listing Presentation (Part 17)
- The New Ultimate Listing Presentation (Part 18)
- The New Ultimate Listing Presentation (Part 19)
- The New Ultimate Listing Presentation (Part 20)
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Matt Jones is the founder and CEO of FavoriteAgent.com, nationally syndicated columnist, broker, and best selling author of LCM: The Secret to Success in the New Age of Real Estate, The Ultimate Listing Presentation, Traffic: How to Sell Fast and Net More, Becoming a Mega-Producer, The Science of Online Marketing, 10 Steps to Real Estate Success, 20 Questions: Everything You Always Wanted to Know about Real Estate but Were Afraid to Ask, The Virtual Office Model, Max-Bang!, and The NEW Ultimate Listing Presentation. Jones' North Carolina-based company has been profiled by major media outlets as an innovator and a pioneer in the industry, and CNN's Pulse on America claimed FavoriteAgent.com is "changing the way real estate is being done in America." This article is syndicated in the following locations: iTunes, YouTube, Stitcher Radio, BlogMattBlog.com, RealBlogging.com, NewsGeni.us, TheCommissionCheck.com, RevampedAgent.com, and now Amazon Kindle.