6 strategies for bullshiting your clients into a lower list price
If you don’t have real data or skill in interpreting and presenting data so your clients can make good decisions you can always take the advice of Inman columnist Bernice Ross in this article and just use bullshit. Her six strategies and why they are bullshit.
1. Absorption Rates
Absorption is probably one of the biggest fallacies in real estate. Ross takes the concept even further into bullshit land by expressing the meaningless number as a probability of sale. This is nonsense because absorption doesn’t take into account the list price and it assumes no other properties will enter the market. Properties sell when a buyer believes they won’t be able to find the same features and benefits for less by continuing their search. If a property is perceived by the market to be above market value it has a 100% probability of not selling. As long as a property is priced above market value, it won’t sell no matter how long it is on the market or how many other properties enter or leave the market.
2. Holding Costs
Holding costs are only a valid argument if the property is not the owner’s primary residence. If the property is the owner’s primary residence than the mortgage payments, taxes and insurance are housing costs and selling the property does not make those costs go away. We all have to live someplace.
3. Price per square foot CMA
Size matters, but it is only one element that makes up the value of a property. Basing a CMA only on size is disingenuous.
4. What properties have "qualified for" in your area
5. Show them comparable sales in person or online
Good luck with this. First, how exactly do you show a house that has already sold in person? Second, this strategy totally ignores the issue you are trying to help your sellers work through in the first place; the well proven psychological principle that people assign more value to anything that they own. Compare two cans of paint and a person will figure a way to convince themselves that the can in their possession is worth more.
6. Use online pricing tools
Ross must be taking money from Zillow because even my grandmother knows that Zillow can be wildly inaccurate.