The property market and the way we all view property changed the moment the business went online. Property websites, search engines and mobile applications have altered the way the buyer, agent and client are able to communicate with one another.
In the old days almost everything was done in hard copy and passed on either by hand or verbally. Buying a home was a whole-day process of contacting agents, heading to Sunday show houses and deep analysis of the hundreds of classified images in the newspaper. The changes towards a digital property market have been swift and entirely for the better. Updated information, images and local property price comparisons can be done in seconds, allowing the buyer the chance to gather more information than ever before.
Not only can the buyer find more information but can easily pre-qualify for a home loan through similar channels. By pre-qualifying for a home loan the buyer not only knows exactly what he or she can afford but they go into any negotiation with an extra edge. The guess work it taken completely out of the equation and speeds up the entire process. These technological boosts have meant the seller needs to start thinking like a buyer, using all the tools at their disposal to get the most out of their property. But what is that value?
With the ability to instantly compare properties in an area, buyers have a far greater understanding of the property values. Many service providers also offer a comparative market analysis (CMA) that provides information about the properties sold in that neighbourhood. The CMA provides the buyer with a whole host of general information related to the property in question, including an estimation of the property’s current worth, local price trends, recent sales and selling history. Armed with this knowledge, the buyers can compare “apples with apples” and figure out exactly what they should be paying for a property in that area.
There is a significant danger to this overload of information. The value of a good estate agent is to get the seller the best possible price on their property, while still earning a commission on the sale. Most estate agents will do a property valuation of their own and then try to secure the sole mandate by offering a mark-up they believe that can achieve in that area. Sometimes the mark-up is purposefully too high, a point that can be avoided with a proper CMA beforehand.
The seller is almost obligated today to do some form of research to protect themselves against any “price padding”. However, there is a point to increasing an asking price in an area. The only way a property market can grow is through an increase in sales prices, and it is the job of the estate agent to do this. There would be almost zero growth, resulting in a stagnant market, if every seller stuck to the CMA value of the property.
The obligation of an estate agent is achieve the best possible price in the shortest period of time. The use of a CMA not only helps the agent figure out the best possible price but also helps against any undervaluing, allowing the seller to get the maximum return on their investment.
So what does this new era for property sales mean? Quite simply it’s a more open, honest and upfront way of selling property. Not only can buyers see exactly what is happening in the market around them but estate agents and sellers can use that information wisely to create steady growth in the market. Harnessing tools like the CMA benefits all parties and, when used properly, ensures everyone involved can walk away from the table satisfied they got the best deal possible.
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