First off – what is an AVM? An AVM is an Automated Valuation Model – it’s when the internet tells you how much a home is worth… I have some personal insight on this; however, let me share this article from Realtor.com
Some sellers base their list price on inaccurate online home valuation tools. Remember there are apps for everything – but somethings like real estate, need the human touch…
Jamie McCurdy wanted to sell her house in Houston quickly so she could move back to her home state of Missouri to be closer to family. McCurdy wasn’t concerned with making a big profit on the sale—after all, it was December 2013, and the local market was still trudging through the recovery of the last housing downturn. She just wanted a short timeline to close. So she researched home values online and was satisfied to list her 2,280-square-foot ranch-style house according to what the internet said her home was worth. Zillow’s “Zestimate” and other automated valuation models valued her home at $189,000. But her real estate agent, Penny Brockway, RSPS, broker-owner of Brockway Realty in League City, Texas, flinched at the figure.
Brockway wanted to respect McCurdy’s wishes for a quick sale, but given that the three-bedroom, two-bath home sat on 10,000 square feet of land, she knew AVMs were undervaluing her client’s property. So Brockway further researched local market data using the Realtors Property Resource®, including comparable listings, home upgrades and special features, and neighborhood dynamics. She found that most homes in the area sat on 7,000 to 9,000 square feet of land and didn’t have comparable features, such as a tiered deck, spa, and detached two-car garage. “Her house had everything,” Brockway says. “Beautiful wood floors and plantation shutters. It was really at the high end in the neighborhood, and I knew we could get more money.”
To McCurdy’s surprise, Brockway suggested listing the home for $227,000—$38,000 more than McCurdy envisioned. “I’d only been in the house for a year, and the market at the time was improving but not great yet,” McCurdy says. “I didn’t think it would sell for that price.” Brockway would have to ease McCurdy’s concerns and dissuade her of the common misconception that AVMs provide an accurate price point.
It’s an ongoing issue agents continue to face: How do you convince sellers that you are a better resource for accurate market data than third-party real estate sites? “These sites are basically for entertainment purposes only,” says Tim Harris, cofounder of Tim and Julie Harris Real Estate Coaching. “Agents need to approach every single seller with the assumption that the seller is looking at these sites, and they have to prepare accordingly.”
In order to do that, agents must be educated on the hyperlocal stats that matter most to a client’s sale and present a detailed price analysis that covers items AVMs don’t. “The Zestimate or any of these other AVMs aren’t going to take into account the intricacies of the area or the upgrades on the home, and a prepared agent can show a seller how those variables affect price,” Harris says. That will go a long way toward building trust with clients, which is essential if they are going to feel comfortable accepting your guidance and advice. “The consumer has to have more confidence in the agent than they do the internet. To build this confidence, agents must to be able to present a detailed CMA with a high level of authority.”
After Brockway supplied a more detailed market analysis, McCurdy realized she could potentially leave thousands of dollars on the table. “Once I considered the information Penny brought to me, I realized I had to put a little faith into my agent,” McCurdy says. They eventually compromised on the list price, putting the home on the market for $220,000. Six days after listing, a buyer offered the full asking price.
“I definitely didn’t expect it,” McCurdy says. “I thought we would still have to come down from the asking price, and here was a full-price offer.” The transaction closed soon after, and McCurdy pocketed $30,000 more than she thought she would on the sale. “I’m really happy Penny provided so much information on the value of my home. I was able to put faith in my agent, and I couldn’t have asked for a better experience.”
It wasn’t difficult for Brockway to take control of the narrative of her client’s home value with the right information, she says. “I always make sure I’m prepared ahead of time and bring my laptop with me when I meet a client. I think that’s really important,” Brockway says. “It’s important to me that I take care of my clients, and getting them the most money for their home is part of that.”
The Caton Team has gone through this many times – where the AVM is either too high or too low. As much as I love technology – there are some things that still require the human touch. The Caton Team is more than an app – we are a resource.
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I read this article at: http://realtormag.realtor.org/sales-and-marketing/success-stories/article/2018/03/overcome-client-misconceptions-about-avms?tp=i-H43-Bb-1ma-2WEoU-1p-EHi7-1c-2WFwg-15LVaY&om_rid=37236114&Om_ntype=RMOdaily&om_mid=6856
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