We have a listing - The home of a former co-worker of one member of our team. He's a bright guy, and understands the way things work. He has a couple of things he wants to accomplish in his deal, and is in no hurry either way.
After a number of showings, and a price reduction, we received an offer. Before the buyer's agent wrote the offer she asked for some comps because she was thinking the price was a little high. The current price of the housew as $245,500- The CMA provided showed a market value of $260,000. We do cherry pick the listings used for a market analysis - we use the homes that are very most like the subject, in the nearest proximity possible. Seems pretty straight foward, right?
She sends and offer with her own CMA as she didn't like the comps used. Her CMA showed a price of $232,000 so the offer she sent was $238,000 and they asked for 3% in closing costs be paid by the seller. In other words - she came down $14,000 from the seller's asking price on a home alread priced very fairly.
So let's talk about numbers, pulling comps and determining a fair price.
The subject is 3,148 square feet (2,004 finished and above grade - 1144 in an unfinished basement) 2-Story built in 2007 with a 3 car garage (3rd bay is legitimately 2 cars deep).
How did the buyer's agent end up with such a discrepancy in value?
Her comps included a 2 story with 2,388 square feet (including the mostly unfinished basement, and a 2 car garage. She also include a 2600 square foot (includes basement sq ft) rambler with half the basement finished and a 2 car garage.
At this point frustration is starting to set in. Our MLS has a CMA feature - input the MLS # or a Tax-ID number and it'll take the information and pull comps based on a formula. We don't typically use it because it reaches a little far geographically speaking, it also includes a year's worth of SOLD, Active, Under Contract (Pending) as well as Expired listings.
For the sake of total objectivity we used it to continue and defend price. Input the MLS # and came up with $258,000. Limited the property status to include only SOLD listings - as they are the only numbers that truly tell us what the market will bear anyway - the price came up around $254,800.
They countered our counter of $250,000 with $242,000 and still asking for their closing costs to be paid for by the seller. We rejected their counter.
Upon further review - the buyer's agent has presented our comps to the buyer. They are revisiting the house today. Surely they've seen the others on the market in the area - including one that's the same model a block away priced at $270,000. They'll decide today if they're writing a new offer - we've told them the price we need to see or don't waste their time. The value is there - shown multiple times by different formulas. Even at our seller's bottom line they are getting a great deal...
Our team works with buyers as well as sellers and understand helping them the best deal possible. We always encourage them to at least be in the ballpark of fair market value - which we believe doesn't always relates to asking price. By the time our buyers write an offer they have a solid idea of what's in the area they're looking in, and the range of asking prices. Then we show them how the active listings compare to the sold listings in the area.
Seems easy and straight forward. One of Keller William's basic tenents is "Win-Win" - means both sides have an opportunity to get what they need out of a transaction.