The New Ultimate Listing Presentation (Part 10)

Becoming the market authority is job one.

Before we get into the listing presentation, it’s important for you to do an honest assessment of your ability as an agent. Can you look into the mirror and feel, deep down, that you are the very best person to represent your seller client?

If you can’t do that (regardless of the listing approach you use), it would be unethical to offer your services to this client in the first place. In fact, you’d have a fiduciary obligation to recommend your fellow agent, the one who is the best, as the right agent to help your client.

So how do you go about becoming that best agent to represent your client? You need to do your homework! You need to study your market. You need to know the market statistics. You need to have clear-cut marketing strategies. You need to have a specific marketing plan that will yield results superior to those of the competition. Otherwise, you have nothing to offer the client!

Doesn’t that make sense? Why should your client list his most valuable asset with you if you don’t know what you’re doing? Would you list with yourself? And if your answer to my last question is not a resounding “Yes!” – then you need to become that ideal agent before you read another word.

Prior to listing my first house, I knew our market statistics cold. I pulled the raw data from our local MLS and crunched the numbers. Was it fun? Of course not! Nevertheless, I needed to know what I was talking about. I needed to be the best prepared agent my client would ever talk to. I needed to be the best agent for the job, or I couldn’t look my seller in the eye.

Trust me about this: your client will recognize whether or not you know what you’re talking about. If you’re bluffing, he’ll sense it. You can’t “fake the funk,” as they say. I wish I could tell you how many times a listing client has quoted an agent on something that I’ve known to be incorrect.

Because I was completely familiar with my market, though, I would be able to explain that the other agent, while very likely a nice person, had his facts wrong. Then I would present the statistics to the seller, and it was quite obvious to both of us who knew what they were doing and who didn’t. It doesn’t take that much work to become an expert, so do it. You owe it to yourself and to your clients.

OK. Here’s the basic market data you need to know before you go to your first listing appointment:

Days on Market (DOM). Average days on market is critical to your seller client for several reasons: it’s important in setting realistic expectations about the time needed to sell a home; it will help you evaluate any offers that come in and make an educated decision about whether it’s advisable for the client to wait for another offer or take what’s on the table; and, if you know the DOM for your market (or, better, yet, for the client’s neighborhood), you’ll be able to guide him or her through the process like a professional – which is exactly what you are!

There’s a problem with DOM statistics, however. Most MLS databases have a very manipulated DOM number which is invariably skewed low. So how can you know what the real number is? Is it possible to determine the actual DOM for your market even if you’re not a rocket scientist? Absolutely! Just use the absorption rate to calculate the true DOM for your area. Let me explain.

Before writing The New Ultimate Listing Presentation, I thought I would pull the latest DOM figures from my local MLS and compare that statistic with the actual calculated DOM. The latest number as reported in my MLS is 77 days. However, when I calculated DOM using the absorption method, the actual average DOM is 240! And believe me, your MLS is off as well – maybe not by as much as mine, but it is typically off by more than 50%.

So why the huge disparity? Because the MLS calculates the average DOM as the average days on market for the listings that actually sold. What it leaves out of its calculation altogether are homes that were withdrawn, listings that expired, listings that were withdrawn for a day and then re-listed to restart the clock, or those that were never put in the MLS until they sold (like new construction where they might list only one home in a subdivision, but actually have 20 for sale). And all of those affect the reported DOM.

Here’s how you get the real DOM. Find out how many homes sold in your market last year and how many are currently on the market. For example, if 10,000 homes sold last year, and there are currently 5000 on the market, what those numbers indicate is that the inventory turned twice last year (10,000 divided by 5000 = 2.0). Now, there are twelve months in a year, and 12 divided by 2.0 = 6.0, which is the absorption rate, meaning that the average time actually on market is 6.0 months.

Then, to convert the absorption rate to days on market, you simply multiply this last number by 30 (6.0 x 30 = 180). And if you figure DOM this way, you’ll eliminate all manipulation in your market by builders and agents who re-list stigmatized homes due to their excessive time on market.

I wanted you to know how to do the math, but I have great news. Now, as part of The New Ultimate Listing Presentation, I have made your job much easier. Because I got so many calls and emails from agents wanting help on the math, I built a calculator for you to use. So try it out. Never settle for those inaccurate numbers from your local MLS again.