Educating Your Sellers By Knowing Your Numbers

Have you heard of the HPPI? Probably not, which means your clients almost certainly haven't. It is a statistic that measures the difference in appraisal value from a professional appraiser, and the expected list price of a home. Over the years, homeowners have at most times, valued their home more than an appraiser did. But that is not always the case. Take a look below:

* A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

A median-priced home in Chicago is $270,000. Realtors there are likely struggling with their clients, because they haven't adjusted their clients expectations on likely selling price. If appraisers value homes there 2.12% lower than homeowners, that means homeowners think their homes are worth $275,000 and appraisers think it is more like $265,000. Not the end of the world. But switch to Los Angeles, and have that kind of discrepancy, and you have bigger differences, into the $15-$25,000 range. 

Obviously, your clients are going to self-educate themselves as best they can, but the HPPI suggests some do it better than others. That's where a good Realtor comes in.

Knowing your numbers at all times is one of the top 5 skill sets a Realtor must have. Armed with the proper knowledge, including median list price vs. sold in a neighborhood, monthly supply of homes, price per square foot and median days on the market, an agent can help the homeowner set the correct listing price. Setting the correct price is 80% of the battle in getting the home sold.

Do you know how to calculate the absorption rate in your market? The rate is calculated by taking the number of homes sold in the given time frame—say, over 30 days—and dividing that number by the total number of available homes in the market.