SO WHAT IS THE REAL ESTATE APPRAISAL REALLY ABOUT?

So what is the Real Estate Appraisal really about?

Success in any business is about controlling the stock and ensuring you have enough on your shelf, so that when a customer comes in you will have something that suits.
A real estate office is like a retailer – if you haven’t got it on the shelf, then you can’t sell it! They will have to go and shop elsewhere.

So like any sales organization the real estate sales person has a prospecting programme that sets out to create opportunities to present their services. Whether you are selling photocopiers, houses, insurance cover or cars, all the prospecting and marketing will not make the sale of your product or service – it is only there to create an opportunity for YOU to do that.

Having done the Prospecting and marketing, you must now make certain that the opportunity is turned into a transaction. That is – make the Sale.

Real estate provides a classic environment to study the sales process from two angles.

1 The selling of you and the service, you and your brand can provide, and for a fee.

2. The sale of the hard product – the house, to a third party so you can release the fee that number 1 above, can provide.

In this article I want to discuss the elements of the Real Estate Appraisal and its role in the selling process. That is the selling of Service and Marketing through an agency appointment to act as agent for the sale.

Firstly the whole concept of an Appraisal has been hi-jacked. All the initial training, and even the rules of the industry, has too many people hoodwinked that the appraisal is about assessing the value of the home. Oh so wrong! There is little chance to develop key relationships when Price is the only commodity you go to discuss.

There are still training programmes that run whole sessions on "The Appraisal" and a separate session on "Qualifying Buyers". Isn’t it time to re-name the Appraisal as "Qualifying Sellers"?

When a sales professional is invited to appraise a property by a potential seller there is a danger in getting caught up in the traditions and rules. This all too often has a carload of salespeople land upon the home. In fact the rules dictate that a salesperson of less than 6 months experience should be accompanied by a manager or senior salesperson before giving a price appraisal on a property. Firstly this could demonstrate that 3 aren’t busy enough building their own business or that someone is lacking in confidence or competence.

If it’s assistance you need with pricing, then get it later, once you have empathy and have assessed that this vendor’s motivations justify using use other sales people’s time.

It’s about appraising the potential client. The house isn’t going anywhere. The house is staying put and won’t be doing any negotiating or making any decisions. It just sits there with the potential to have a new owner.

So it’s the home-owner that the sales professional appraises. Put this way it would be best to call an appraisal a Presentation that you haven’t quite finished

So what’s the Sales Person’s Agenda?

To assess whether this vendor has sufficient motivation to go through the sales and marketing process required to achieve a sale.

To create a credible and professional relationship so that they become the preferred agent and obtain the listing, once they have determined the vendors needs.

The key is to assess whether this home-owner has a problem that requires your professional input.

To secure the sole marketing rights to the property with an appropriate marketing programme tailored to target the right markets and meet the vendor’s objectives.

So what is the Homeowners Agenda?

To tell the agent as little as possible, whilst finding out as much as they can. Of course they want the most money possible in the shortest possible time at the lowest fee they can find. So, if at all possible they will attempt to limit their choice of agent to the price realization promised and the fees that agent will charge.

Vendor’s probably plan their listing and sales strategy before contacting any agent. So the unwary and un-trained can walk into a trap. The vendor will already have price expectations and some thoughts on how the property will be sold. So before you go off down your preferred options you had better find out their previous experiences and any prejudices against current real estate marketing strategies. Yes I know the very best agents have excellent credentials and referral networks, and because of those factors they have a preference in the minds of many vendors. But the bulk of the industry is always in a competing position when meeting vendors for the first time and making their pitch to get the listing. And all too often in the vendors mind this will revolve around price and fees.

Whether it is past experience or advice from their advisors, vendors have already got a vision of how it will all happen. Yes they get several agents to price their property, average the prices and add a bit for negotiation. Then list with them all if possible.

They want to tell the salesperson as little as possible as they want to make their own decisions in their own time. To this end they want to know what the salesperson thinks their home will sell for. So the appraisal in their mind is aimed at getting a "price" from you then using it against you in the process of selecting who will sell their home.

The Real Considerations are:

Managing the sale of any property is an investment on the vendors behalf, is a huge investment in your sales and marketing resources.

So before trying to secure the business there are some crucial questions you need to ask:

Why are you at this home talking with this vendor?
Selling a home is not a hobby – it’s a pain. So why do these vendors want to use your services? What will they be able to do when they sell here? Equally, and often more importantly, what won’t they be able to do if they don’t sell?

Have they any special time frames to meet?
e.g. Is there another house purchase to confirm or a job to start that means there is a time commitment that must be met?

Have they sold before?
What was that like? How did it go? What type of listing was it?

Have they had this house on the market already?
How long? What type of listing? What sort of marketing? Why do they think it didn’t sell? What were they considering doing differently this time?

What feedback had they received during the previous period on the market?
What did you think of that? Did you get any offers? What did you think if them?

Did you have any plans in mind for the next phase?
Can I ask why you have decided that?

What happens if your home doesn’t sell?
What are the consequences of no sale in your time-frames?

So if they need an agent – i.e. They have sufficient motivation to meet the market, how do you sell your service and secure the listing?

How do you get their permission to educate them about the current market and to demonstrate the marketing tools you have. How do you get their permission to demonstrate how successful these have been for your other clients?

Three things immediately spring to mind:

1. Your ability to relate to people and establish empathy. To understand the issues they are facing and to provide a solution that they see reason and value in. I guess that’s empathy.

2. The skills you have when presenting your services. I call this Stagecraft. This reflects on your ability to use the information you have gathered, and to start selling you, your services and your brand. Yes they buy you first!

Guide your vendors through the process of making their selections in this order

Choosing you as their sole, sales and marketing consultant.
Choosing the best Marketing Strategy for their property.
Tailoring and investing in the right marketing programme
Agreeing with you on your start date.

3. Selling your skills as a Negotiator.
No matter how good the marketing the icing on the cake is achieved in the final negotiations.
It seems incredible to me that some vendors want you to negotiate your fee down, but still expect you to negotiate hard with the buyer on their behalf. The two simply don’t match. As most agents only seek to find 1 buyer and put them in a contest with their vendor, it seems obvious that negotiation skills are paramount in ensuring the best deal for your vendor

Surely the professional sales person is selling their services here by adding that our intention is not to find just one buyer, but to market the property to attract multiple buyers, and have them compete with each other, rather than just with the vendor.

Your job as a Negotiator is to find the buyer who will pay the most and make sure they do.

So the Appraisal goes far beyond providing a free valuation service. It’s about Vendors Qualifying you, and you Qualifying them. Your skill is in assessing if they really need you and then making sure you have the presentation and sales skills to secure the business.

So I guess we could finish with a little positioning statement for you to use when calling on a Vendor for the first time:

"If they are going to pay a fee it’s going to be me"

In securing the business as an agent for service, the Appraisal is simply an opportunity for you to present your services and skills.

IAN KEIGHTLEY