How to adjust seller expectations with AVMs
June 27 2018
These days, when sellers decide to put their homes on the market, the first thing many will turn to is an online home valuation tool. These tools use an automated valuation model (AVM) to calculate a home's value based on an analysis of "comparable properties."
Unfortunately, AVMs are often incomplete.
AVMs are unable to discern crucial differences between properties, such as efficiency upgrades, local amenities and other variables that are not part of public records. These factors can significantly affect a home's value, causing sellers to approach listing agents with unrealistic expectations of their home's value.
Adjust sellers' expectations and add value.
To convince sellers that you have professional insight beyond that of an automated, third-party tool, you need to come prepared with detailed, hyperlocal statistical data. A Comparative Market Analysis (CMA) can help you show a seller precisely what makes a property unique and valuable in the local market.
Clients should understand that CMAs are based on sold property records in the relevant market to ensure a highly accurate property valuation. Plus, CMAs assess and adjust value based on the unique features of the property and location. In other words, it's not an automated guess based on a random database of property listings.
Accuracy is key.
Some clients may want to see CMAs from multiple agents in hopes of getting a higher estimate. Again, the importance of accuracy should be emphasized. Discuss the pitfalls of listing at an inflated value, such as how it could prolong the sales process and cause the property to sell for less than it's worth.
By being transparent and showing sellers exactly how each variable affects price, you can establish yourself as a trusted and reliable resource for the duration of the home selling process.