Your question: Yommy
Eye-opening
Your 3-point valuation model sounds like a well-thought-out approach.
How do you find it differs from the valuation methods used by other estate agencies?
My Answer: Mike @ Tortoise Property
Hello Yommy,
Thank you for your insightful question.
At Tortoise Property, our primary objective is to ensure that our clients, who are property owners, perceive the genuine value of their homes. To accomplish this, we employ a method that integrates logic and statistics, providing our clients with a comprehensive understanding of the most likely price range at which their property will sell. Our approach relies on a combination of algorithms, property indices, and comparable reports, which are three distinct sources that, when aligned, provide a cohesive story.
It’s important to note that some real estate agents adopt an approach that capitalises on a client’s fear of missing out (FOMO) and attempts to set a price that breaks the area’s price per square foot record. However, based on our extensive experience, we recognise that this strategy is often unrealistic and unsustainable. We often refer to this as “pyramid pricing,” where the initial asking price is set excessively high, and the agent progressively reduces it until it aligns with the supply and demand dynamics, eventually leading to a sale.
In contrast, other agents primarily rely on comparable pricing. This approach empowers agents to craft a narrative and gently guide clients towards their desired outcome. Comparable pricing considers properties similar to the client’s, as well as those superior and inferior in quality – think of it as the “Goldilocks approach.”
Without a robust check-and-balance system, a narrative can be easily manipulated. Agents have the discretion to present:
* A wide or narrow range of prices.
* Homes currently on the market (typically indicating a higher range of value).
* Homes both on the market and “Sold Subject to Contract” (often representing a mid-range value).
* Homes that have been sold subject to contract only (typically reflecting the true market value).
The ultimate aim of the agent becomes crucial in these scenarios.
Here at Tortoise Property, our pricing methodology seeks to provide clients with a marketing price that is effective right from day one. We are committed to selling every property we market through our ‘Race to SOLD!’ marketing plan.
The pricing pyramid strategy is employed by some to list as many homes as possible, with the understanding that certain clients may need to progressively lower their marketing price until a sale is achieved. This approach is designed to build and maintain a robust agent’s register.
In contrast, the Goldilocks approach offers a flexible valuation method. It allows for the use of multiple reports for the same property, serving as an adaptable approach to competing for listings in highly competitive markets.
Pricing strategies are prevalent in various industries, and in real estate, they serve to align with the goals of both clients and agents, depending on the chosen approach.
Best regards,
Mike Matthews
Tortoise Property