Competitive Market Analysis |How Accurate Are They?

The competitive market analysis may be a tool realtors use to assist home sellers in determining what their marketing price should be in today’s current market. The great news is it is a free service; the not so excellent news is how accurate they could be. When it is time to sell a home, it’s recommended that every home seller should interview several agents before choosing the simplest one. It’s during the interview that competitive market analysis is completed.

Logically speaking, all of the Realtors will use an equivalent database of data (MLS) when establishing a marketing price, so you’d think it might be a simple process with all results pointing towards an equivalent number. Unfortunately, this is often not always the case leading to inaccurate home prices and unusually long marketing times.

Let’s investigate the two main reasons why the competitive market analysis provided by realtors won’t be accurate.

BUYING an inventory

The real estate industry is one of the foremost competitive industries within the nation. At this writing, there are 1.2 million licensed realtors in America competing against one another for business. How does a realtor compete with such a lot of competition?

They ‘buy the listing’, of course!

Suppose you interview three agents. The primary and second agents say your house is worth $250,000 and $255,000, respectively and that they show you evidence backing up their analysis.

However, the third one comes in brimming confidently and says the primary two realtors are absolutely crazy, and at those numbers, you will be giving your home away. “I think your home will sell for a minimum of $275,000,” then provides new ‘evidence’. (Important point: it’s extremely easy for a realtor to control data to JUSTIFY a price. A justified price doesn’t equal what a buyer is willing to pay!)

Well, gosh, what’s a home seller to do? It is a no-brainer. They’re going to accompany the realtor that said they might get the foremost. Who wouldn’t? Over subsequent 30-60 days, the realtor will encourage price reductions until it’s at a worth that interests potential buyers.

And that is what you call ‘buying a listing’. It’s when a realtor ‘overvalues’ the house so as to urge the listing. The probabilities are extremely high that competitive market analysis isn’t accurate in the least. It wasn’t meant to be. The goal of the realtor is to urge the listing, albeit it meant stretching the numbers.

IN CONCLUSION

Of course, not every realtor is inept at pricing homes. In many cases, the realtor will suggest an accurate price only to possess the house seller come up with a special suggestion. Because the cliché goes, you’ll only lead a horse to water…

When interviewing agents, the simplest thanks to getting the foremost accurate value is to question everything the realtor says. Switch your state of mind to a buyer rather than a seller — play devil’s advocate with the realtor.

LACK of data

According to the National Association of Realtors Member Profile 2009, forty-two percent of all Realtors are within the business for fewer than five years. Forty-five percent of those rookies completed but five transactions per annum.

The bottom line is there’s a really good chance the realtor you’re interviewing has little to no experience in performing an accurate competitive market analysis. It isn’t that they do not care or have an honest heart or want to try to to the simplest for you; they simply lack the knowledge to offer accurate real-world numbers.