I had an newer agent call me the other day, a bit consternated about how to evaluate a property for which his client had requested a CMA. Sometimes — often — it is hard to evaluate certain properties in this changed/changing market; it can help to get other opinions.
The conversation went something like this:
Agent: “I have a client who is selling the townhouse I sold him last year.”
Me: “Okay. Did you find any any good comparable sales?”
Agent: “Oh yes, there’s an identical unit that just sold in the same complex for the same price my client paid and another one that is on the market for a few thousand dollars more.”
Me: “Well that helps. What does that tell you about what your subject property is worth?”
Agent: “It seems like it’s worth what he paid for the place, maybe a little less. So should I just add the other closing costs to what he paid and list it for that price? I’d hate for him to take a loss!”
I know, this seems silly when you read it from the sidelines. Of course, we have to be honest and direct with our sellers, especially in this market. Sometimes it’s brutal honesty that clients appreciate the most, and it hurts a lot less than trying do something that can’t be done — like sell this townhome for 10% more what it sold for last year. So the answer is, price the unit at what the market will bear — which is what the direct comp unit just sold for, or more advisedly, for maybe a few points less.
For years we’ve been the bearers of great news: “Guess what? I sold you this little Wallingford bungalow in ’93 for $161,000, and now it’s worth $650,000!” Sure it was worth maybe $735,000 last May, but still, it sounds pretty good telling your client they have this nearly $500k windfall. And since ’91, our conversations with sellers have been something similar to that. But now, times have changed. This isn’t news to any of RCG’s readers, but it’s really important for agents, for professionals, to deliver the goods: Clear, honest, and yes, sometimes brutal, information to our clients.