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A "Free" Market Analysis?

The phrase "free" market analysis really rubs me the wrong way. Do we use the word free as an enticement for a homeowner to have us come into their homes and have a discussion about what their home is worth? We are saying it won't cost you anything, it is free so why not, you might as well.

It's Free, We Might As Well!

I don't know about all the other agents out there but I know that it takes me hours to fully analyze a property, to carefully consider the market, to position a price so it will get the proper showings and offers. Hours. So, why would I do that for free. I wouldn't. I will be glad to talk to you, to answer your questions, to have a preliminary discussion, so meet you, to visit your home and then see we if want to have another meeting.

You see while you are interviewing me and checking me out, I am also interviewing you. I need to know that we have a good rapport, that you respect my knowledge and expertise. It has to work for both of us. That's why i and other agent's don't take all of the listings that they are offered. Sometimes it just isn't a good fit. A seller has to realize that I am there to list their property and sell it. Not list a property.

The largest asset and a "free" market anaylsis. Interesting isn't it.

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Posted by Miriam Bernstein,Westchester County Real Estate on 09/05/2009 02:06 PM

Comments (48)

selling, listing

48 Comments on A "Free" Market Analysis?

SEP

Yes, Miriam, I agree, We are professionals and should act like such. Who else is giving away free services? Not too many people in different industries. Maybe none. So why should we? Yes, some may argue saying we want to help people. True. But I make a living by helping people sell and buy real estate. What kind of a living I would make by giving away free services? A few hours there, a few hours here......it all adds up.

Oh, and for those who do that: "complimentary" sounds better. :-)

Just my $0.02.

Miriam,

I have never advertsied it. It seems rather trite to do so.

I would have simply offer it. In cases where there is no listing, then it's not going to be free.

Brian

Seems to me that when an agent is contacted for a "free" CMA, there is an expectation that the seller is interested in selling their home. If that be so, the agents needs to tour the property, discuss the condition, location and a "range" of pricing based on many factors.

Once there is a meeting of the minds that the agents is going to become the listing agent/broker for that buyer, a firm price can be determined based on a "review" of the agents CMA. At no time, however, does that document in written form become the property of the seller.

The CMA is the agent's work product. Giving the agent's work product to a seller simply encourages them to continue shopping for agents and gives them your work product to shop.

The CMA becomes a part of the listing agreement, once accepted by the agent/broker and the seller.

The FREE CMA merely encourages agents to suggest higher than market list prices, buying the listing and then watching it sit on the market.

WANT MY CMA REPORT? ENGAGE ME TO LIST YOUR HOME AND IT WILL BE IN YOUR LISTING PACKAGE.

Something to think about, for sure. Only in our profession do we talk about offering services to clients before they actually are our clients and don't get any compensation for it. Too bad it is a situation that can't be easily fixed.

Send me all those people who want to waste your time finding out what their house might be worth. I'll take care of them for you.

Free CMA is not good - as Lenn states, we would assume the customer is thinking of selling their home. I do offer free MLS searches though, to give people a better idea of what is currently listed on the market in their neighborhood. Without interpretation on my part until they become a client.

Ally, you are right complimentary does sound better.

Brian, offering it when it seems right is a much smarter way to do business.

Lenn, a good lesson for anyone reading this, a CMA is part of the listing,

J. Philip, don't think so don't need your help. I don't like the way "Free" sounds and how it reflects on us as professionals, to each their own.

Susanne, sometimes they are not thinking of selling sometimes they just want the information and sometimes they just want to confirm what another agent told them, we need to work smart.

This FREE CMA has been bothering me for 20 years! I have not used it but see it used all the time. What I have done is offered a complimentary 20 minute consultation and free MLS searches via IDX. I agree that we are professionals and this just demeans our professionalism.

I will be happy to offer free quick & dirty price analysis on any property. With the incredible search functions in the MLS, I can nail down the value of any residential property to within about 5% of what it is worth in a matter of about 5 minutes without even leaving my computer. Zillow and Cyberhomes are already competing for this business now. So why not? It gets the phone to ring.

Miriam, I will prepare and give out a free CMA to anyone at anytime. It trakes me about 10-15 minutes to prepare a "rough" analysis. Included in this analysis is a disclosure that I will need to see the property to give a more precise number. By the way I do not advertise a free CMA.

Rob, in my area we have very unique homes not cookie cutter and Zillow is way off. I don't believe that will work in all areas.

Bryant, I can imagine that this is different in different parts of the country. I believe and may be wrong that the architecture and property styles are different in your area than in my area. In 15 minutes trying to compare tudors with splits and knowing which agents included lower levels, basements, etc to determine the correct square footage takes times. If my property's were more cookie cutter and similar I think 15 minutes might work.

Hi Miriam -- As a former real estate appraiser, when I do a CMA, I do a very thorough analysis, and provide a range of options and prices: selling as-is, staged vs. not staged, cosmetic improvements vs. not, renovations vs. not, etc. along with their various price points. This takes me 5-8 hours to do and I'm not doing it for free and tell sellers as such. If they just want a quick 15 minute analysis with a broad range, I am happy to give that to them for free but I also tell them the risks of this type of analysis with a varying degree of % error.

I have never understood why this industry would do this, but it's a catch-22. I've seen sellers list with whoever gives them the highest price and guess what, sometimes they get lucky and sell at a price and it appraises when there was no way the comps supported it, even in this market. That said, the seller was right to choose the highest price. Like Lenn said, it can also backfire, and oftentimes does. But because of this unknown outcome, it's a catch-22.

I'm with you on the word "free"...but, in marketing that's the word that gets the most attention. (I've never felt comfortable using it as a hook...I happen to like the word complimentary much better for any type of special offer.) I've always thought the "down and dirty" 5-minute market analysis (as Rob put it) is probably what most agents tend to do if they are using the "Free CMA" advertising gimmick. Once the "customer" actually becomes a "client," a more thorough report should be provided...based on the specifics of their property. Real estate professionals should always remember to work smarter, not harder. Our time is a valuable asset.

Miriam,

How about a postcard soliciting short sales that states "our services are never at a cost to you". That one left me with a bad taste as well.

Miriam:

I like your message. There is a realtor out there for every kind of person. Some will work well with me, and some won't. We shouldn't take everyone on as a client. If the chemistry isn't right, don't do it. The same thing goes for our services. If we undervalue them, so will the client. "FREE" is not part of my vocabulary.

Miriam, In this day and age, it's hard to give anything away for free, especially when everyone is more than willing to take advantage of you. As you point out, a good market analysis can take several hours. I sometimes think sellers believe we pull numbers out of the air and don't realize the work it takes to put together a smart and more important, realisitc analysis, to help them price point their home. For me, I've found the best approach is to complete the CMA as part of the listing presentation, but I do not provide the seller a copy of it until after they have listed with me. I review it with them so they can understand how I arrive at a suggested list price, but I do not give them a copy if they decide not to list. In the past, I've found sellers who will use my CMA as their springboard for listing with another agent or even try to list the home themself. I do not however, advertise Free Market Analysis on any website.

Miraim, You are right about that. Most of Florida is "cookie cutter" housing. Especially in my market. Very easy to do a CMA.

Interesting discussion - I have never really thought about this - perhaps I should quit advertising a "free CMA" on my blog...

Hi Miriam ~ You got me thinking too. I guess I always thought sellers expected it. You're right though, we're selling ourselves short by making it free. That basically means it has no value and of course it does! Great point - I definitely need to revise my strategy.

Denise

Miriam, it's the same mentality that we see sometimes, "X PERCENT-TOTAL TO LIST YOUR HOME" (without mentioning that X percent does NOT include a cooperating broker, or MLS exposure)..."free" draws interest, but educated sellers with complicated properties (different ages, styles, etc.) aren't going to accept the "free" without engaging other brokers to compete- would they?

On the other hand, let them do 5000 "free" market analysis for the loads of people considering a refi, or curiousity- their time, their call! I've always hated those ads, because they seem misleading and tawdry somehow- very antiquated. Hope you had a great vacation!

Unfortunately I think that many people just like to pump us for whatever "free" information they can get! Then they want to beat us up over our commission.

it is amazing that in order to buy any thing or service we usually get a free estimate.

Oh boy this posts is good!! I've been a Realtor for 22 years and I "hate that phrase....free CMA" I think it's so tacky!

I don't advertise a FREE CMA.....When I do an analysis of a house I explain that it's done in steps.

First I go and look at the house, both inside and outside. The place can look good on the outside and lousy inside, or vice versa. The condition and upkeep is key to pricing it on the market.

Then I'll go back and look up all homes that are comparable in size, area, style, # rooms etc and see what is ACTIVE or UNDER AGREEMENT or PENDING.

Then I run all the information through the system we have in the computer and see where the final pieces fall.

I put together all "paperwork needed like the company information, listing agency forms, disclosures etc.

Lastly I put the information altogether in a package with photos, and explanation of ALL COMPETITIVE HOMES.Then call to make an appointment to go to the house and explain the package to the sellers and answer questions.

Now I ask you who else do you know works for free. The doctor, lawyers, consultants, etc....all get paid up front.

Hmmm.....I guess it is a FREE ANALYSIS AFTERALL...

Patricia Aulson/portsmouh nh homes

Russ, don't see that getting a free estimate for let's say redoing a bethroom is the same as a CMA, please explain. To me if I told a homeowner how much it would cost to hire and pay me for my services would be equivalent to a free CMA, not doing the work for free.

Sybil, that's right. It is up to us to not let them.

Laurie, still on vacation not past tense.

Denise, then this post was worth it.

Tom, I agree with you

Emily, perhaps you should.

lots of businesses offer free samples and free introductory services to build traffic. Lots of lawers offer a free initial consultation. I can usually get a free lunch when shopping at Cosco from the sample ladies. Oil changes are often priced as a loss leader I recent bought a package of 6 for $40. The way I look at it after the first two the rest are free. I went to a realtor trade show last week where the businesses that bought booth space, were all handing out free stuff. I went home with a bag full of free stuff. and a full belly (they offered free meatballs, and chicken wings). Free is a very powerful word in marketing.

I dont do many listings but I wont take one unless the seller will price it at market value so I need to do the market analysis before I can decide to compete for a listing or not, Since Im going to do it anyway, why not advertise the fact. I dont, but why not?

Since doing a free cma is against you principles, I assume that you charge for your services...What would a cma cost me if I was thinking of listing my home with you.

Ron, offering a free sample, offering introductory services, offering a free initial consultation are all different than doing the work of a CMA, bringing it to a seller. Doing a free CMA is not against my principles, working smart is the point. Why give away the services you earn your living at. A lawyer giving a free initial consultation is not doing the necessary work where realtors are doing the work. A Realtor trade show giving out free meatballs! What was the point of that.

Don Knox in his video on how to do a listing presentation sudgests that you go through your whole presentation on what a CMA is and what you offer by way of marketing ect. Then you ask them if they would like to list with you and if they say know you thank them for letting you interview and pack up and don't tell them what their house could sell for.

If they complain you just explain that thats info you share with clients and who ever they decide to list with you are sure will be happy to share that info with them as well.

I offer a free one-hour consulation, but I don't provide the customer with client level services. A CMA is, to me, is client level.

Miriam - I have never advertised that I offer "Free" CMA's. If someone is just curious about finding out what the value of their home is with no interest in selling I will take the time to e-mail them recent sales. However if they are interested in selling I will take the time to meet with them and prepare a "free" CMA.

Won't do them. Bank of America pays me $55.00 for a BPO, same thing. Used to do them, learned most are never in the market to sell, just want to know how much. I truly believe this is one thing that should never have been started. If however an owner expresses a true interest in selling, then I'll take a CMA with me, but they don't get to see it until I know I am hired.

Miriam - I have never liked the term "FREE CMA or FREE Market Analysis" either. I feel it just adds to the perception that this is an activity of little value to a seller who does not understand the time and effort it takes to put one together. I prefer to call it a Pin-Point Price Analysis which opens up a whole new dialogue with sellers who contact me about listing their homes.

I have seen so many simply want to know what their home is worth and not have any intentions of listing their home. I used to do this as well. It is a way to get interested sellers to call, at the same time we get those who just want to know.

SEP

Miriam: It was pointed out above, that our industry is maybe the only industry that offers this unique "hook" for marketing ... plus ends up getting paid in the manner that we do. AFTER we do all the work for free and ONLY if the transactions end up closing. Otherwise, all is for naught. Seems absolutely crazy when you compare it to other professions, doesn't it?

We mortgage lenders are guilty of offering this same little gimmick to get the phone to ring ... FREE credit reports. It does seem to get them ringing, but the quality of the call is somewhat in question at times. Until we stop placing ourselves in this non-professional position, we will most likely continue to be viewed as less than true professionals. We deserve more for our efforts, our expertise, and our abilities.

Good post and food for thought ...

It is human nature to want something for nothing. While it is true it takes a little work to put one together, (it is not that complicated) some of the comments and styles of presentation are equally interesting. Before you go on a listing presentation, don't you as a professional, want to know approximately what the value of that potential listing may be? I do. Particularly in this market.

We have seen a drastic decline in sellers asking for a CMA in contrast to when the market was on a sharp rise. (Back in 2006)

Depending on what local area you are servicing, here in Florida, there are fewer private sellers than lender controlled properties. Sellers who may still have some remaining equity left in their properties are for the most part, waiting it out. As a result we see more homes going to pending and sold than are coming on.

But I wonder, if I were a homeowner contemplating selling my home and an agent came and would not disclose to me his or her opinion of what my home may be worth, would I really feel that agent is knowledgeable-? Likely not.

I agree no CMA should left behind- but leaving the seller with an approximation of what the property is likely to achieve in this market, even verbally-would convey you have a grasp on the sales in that local area.

Florida Pines, I do believe that sellers should be more concerned about the skills of the agent than the price they might place on the listing. I would be more concerned that the agent convince me of their experience, negotiating skills and m rapport with that agent. The price should not be the defining factor in the decision. It takes hours in my area because of market trends, sales analysis and the architecture which is not cookie cutter. I would rather not throw numbers out there without doing the necessary homework and if I were a seller I would respect an agent saying that.

Miriam:

I equate people who want a free CMA to those who want to know what their house is worth before I perform an appraisal. The simple truth is that I don't know what a property is worth until I have done an inspection of the subject, analyzed the subject market and potential comparables and listings, done an exterior inspection of the potential comparables and listings, and completed an appraisal report. This is a process that takes hours of my time and years of experience and training.

Anyone who gets a "free" CMA (especially on a mid- to high end property in your market area) will get something that is worth exactly what they paid for it - nothing.

I live in the land of non-cookie-cutter houses - every neighborhood and community is unique. There are often apartment houses, duplexes, mansions, cottages, historical homes, and modern architectural phenomena all on one block and maybe one block from the beach . . . so many variables that doing a CMA can be time-consuming. At the same time, I agree that advertising a "free" CMA is misleading, in the sense that I don't know anyone who charges for them. I also do not like leaving them at a listing appointment for the reason Lenn stated. They do constitute work for which agents in my market are not paid . . .

I don't advertise FREE market analysis in any ads or on my website. I think it cheapens our image/value.

Miriam

Free meatballs was just another example of a business that provided a free "hook" to move me to to do business with them. Much like a free cma is a "hook" to encourage a potential seller to do business with us.

Our whole business model is based on the assumption that we do the work and then we get paid and our fee structure assumes that we will do a lot of work without pay at all. (the deals that do close compensate us for those that dont) It seems to me that a listing agent must do a cma before a listing agreement is signed. Unless you get a listing agreement signed without a target price for the home. Buyers agents should also do a cma before making an offer. Without some analysis, how can I advise my client regarding their offer.

In either case, whether done for a buyer or seller, the cma is usually done without direct payment, with the hope that we will be paid later. Why not advertise the fact. I understand that you wont do a cma without a guarantee of payment, but that's not the only way of doing this business.

Im still curious..what would you charge me for a cma done in advance of a signed listing agreement?

Ron, that is the difference between us. Free meatballs will not make me want to do business with the company giving them out but I will eat and enjoy them. You are incorrect when you say I will not do a CMA without a guarantee of payment, I won't be used for the information, I will be glad to do a CMA if and when a seller has decided that I am the right agent for them to hire. No need to be curious as you know that the question is ridiculous. It is about working smart.

Miriam,

I'm delighted to give folks a CMA but not one I've spent hours tweaking - and I never advertise anything for FREE. They get in-depth details only if they intend to sell. Why?

Had one local lawyer sending all his bankruptcy clients to me for a free CMA because my analysis and reports were so wonderful. Yet that attorney never steered a piece of real-estate business my way. (Yeah, refer leads to the mediocre, Mr. Lawyer!) Once I woke up and smelled the coffee, it ended!

SEP

In sales, there is the philosophy of "give to get." When you give a prospect something, it is supposed to make them feel obliged to do business with you. But that does not mean we have to give everything. The idea of a 20-minute consultation with a brief report should suffice. If you've asked the right questions and know the seller's motivation, you'll know whether you have a serious seller on your hands.

I usually leave the report with the prospect but not the marketing plan. Don't want the seller showing THAT to competing agents!

Our market is full of neighborhoods with conforming homes (cookie cutter!) So preparing a preliminary CMA is usually not a terribly time consuming process. I always welcome sellers who would like to meet and talk over their options. After I see the property and have a commitment from the sellers that I am listing the property, then we get down to the intricate details that determine the final price.

I think free is a word that many people are attracted to. Regarding CMA's, like BB, I do a rough analysis with price range and explain I'll need to see the home to really drill down on a more accurate price. It's a way to get a foot in the door.

SEP

If a person values their work at $0 that's fine. Personally, my work is worth more. To each their own.

Miriam, thank you for bringing this up! To be honest, I have been advertising a "Free CMA" on my website, but have now taken it down and replaced it with something else. I kept the same graphic, but just changed the words on it.

I just always thought of "Free CMA" as being a single term, like "Free Sample" -- in which the customer would get a down and dirty "quickie" CMA-- and understand that this was NOT the same as the "REAL" CMA that would follow should they become a client. I really don't think any customer would even THINK that the "Free CMA" would be something that we spent lots of time on-- why on earth would we do that unless we are insane or just like to work hard for no reason?? I think customer's expectations on a "Free CMA" would be about what my expectations would be for a "Free Sample" at an ice cream store. The BIG SCOOP will be later, when things get "real". So, in this respect I really don't have a problem with a "Free CMA" advertisement. Besides, some people really and truly are just trying to get a BALLPARK figure for their property.. and I don't see a problem with that, either. Just be glad they are turning to US to get them!!

I still changed my graphic though. I went with "One FREE Consultation" --- replacing "FREE CMA" . And using other ideas from this post added: "Call for a complimentary, no obligations consultation...."

It makes my time seem valuable-- which it is. Perception is reality.

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