YOUR EBOOK TITLE THE NEW CMA: COMPETITIVE NOT COMPARATIVE
bubble or theoretical pricing and in the real world. This leads to being unsure as an agent, which in turn creates the other two commonly used pricing methods that we see, asking customers where they think they should be priced OR asking other agents for their “input” and averaging their responses. Both methods are not only inaccurate but also make you no longer the real estate expert and can cost you listings, referrals and a career.
THE TAKEAWAY
So, all these pricing models have their issues, but they are used today so there must be something good about them. Each one has a piece of the puzzle that’s very important and is needed to truly Competitively Position a home. Price Per Square Foot: Using historical data to establish defendable backed value that lets you know whe- re a rough value would be expected. Absorption Rate Pricing: Introduces the idea of positioning against current competition and establishing relative value. Compare 3: Introduces the idea of looking at specific features and seeing what is valued more and by how much.
The New CMA needed to incorporate all the good but none of the bad. How is this possible?
The New CMA starts with a focus on the area, looking at the neighborhood and establishing a pricing range using historical data and accounting for differences in specific features and inclusions. ( price per square foot & compare 3 ) Then using that pricing range you expand to a competitive range to do a second search with a buyer’s perspective, then position against competition to match market value. ( absorption rate pricing ) You also include in this positioning step, market momentum , desirability , timing and visibility to avoid the other pitfalls of old pricing methods. What does this do for your pricing? Well that brings us to the third reason we need to adopt the New CMA .
Reason # 3: The New CMA is more accurate.
The main reason that the New CMA will soon be the standard in pricing is that it is more accurate. A comparative market analysis will get you in the ballpark, but a competitive market analysis will navigate all the different factors to make sure you’re throwing strikes. It helps you understand value and historical pricing as well as the current climate of the real estate market. You can truly establish value and the right pricing with the Competitive Positioning Process . You find the true market value. It helps guide your thinking to find not just the value but find the real price at which the home will sell. There are many cases where you might find the perfect value but the home doesn’t sell. If the home is not priced at the right market value that not only elicits showings and offers but actually closes, then it does not matter how perfect your pricing was or how historically great your algorithm is. This all works together to help you find the pricing that will get the house sold so that you can then be part of that statistic that actually was a closing or transaction.
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