The Numbers Do Not Lie.

By
Commercial Real Estate Agent with Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker AZ BR 528507000
https://activerain.com/droplet/5l4q

Real estate valuation is art and science - mostly, IMO . . . SCIENCE!

 

Sure, you have to figure in the occasional intangible - views, proximity to schools, power lines or nearby development, and tangibles like deferred maintenance and upgrades for residential properties . . .

 . . . and future development, location specifics, rarity of zoning/use allowances and such for commercial real estate . . .

 

But real estate professionals know that the numbers don't lie.


Numbers such as list/sale ratio, average/median price per square foot, and if you've got decent ones, market comps for the area.

Income, expenses, utilities, reserves, appreciation, depreciation, cash flow for a commercial property.

AND YET . . . so many agents won't  tell their clients to quit playing!

A client I'm working with on an improved commercial property was surprised to find out that the vacant lot right next door sold 2 weeks ago for 225k. He was thinking/feeling like the 6000 SF of improved property next door's value was 'about that' and since investment value is specific to the investor, to him, it may be.

Regardless, you can't ignore that there is probably 225k in land value in the property. Numbers don't lie.

Sellers love to say they are motivated, then overprice their property thinking they will get low offers 'anyway'. They might. They may also get ignored as unrealistic.

And, some secretly suspect that 'their agent is trying to underprice them for a quick sale' which isn't how it's supposed to be unless that's the objective, but does happen (ALTHOUGH when priced to move, the result MAY be multiple offers driving price up in some markets!)

Also, savvy and/or paranoid consumers perceive, if they have not actually experienced firsthand, that there are agents who stubbornly stick to inflated pricing because they told the seller he/she could 'get that much' and don't want to eat crow, and when price goes down  . . . so does their fee.

We know that's bad practice. And before you bash me, I'll go on record believing agents who do that are a small minority.

 

So back to numbers.

Rene Descartes wisely stated that 'Mathematics alone avoid sophisms'.

Sophisms. I love that word.

'A fallacious argument, especially one used deliberately to deceive.'

 

EXACTLY what sticking to THE DATA will eliminate.

Your building is worth 200k. The FFE (fixtures furniture equipment) in your building is worth either nothing, pennies on the dollar or has negative value if a buyer can't use it and can't sell it and now must pay someone to remove it.

Your building is then worth . . . 200k.

Max.

 

Or, you have an income producing property or a business with real estate. For years, you have expensed out your entire life to the IRS so you had virtually no income showing on your P/Ls, and now you want us to consider potential income absolute truth?

 

Only in some circumstances (like a rapidly developing area with appreciating rents, or a signed lease by a national tenant) may that hold up.

 

 

Remember that you have to impress a buyer, agent, appraiser and underwriter!

 

ESPECIALLY if it's a government loan being underwritten, such as SBA or VA Business Financing (via SBA -- yes, that is a thing. Tell your veteran clients!)

 


Your home is in a neighborhood of 250k homes (not this one - the Painted Ladies of Huntington Beach, CA. So cool!). You have kept up with maintenance and have appropriate appliances, paint, flooring and landscape for 'today's market'. Nice job!

 

So why are you asking 300k for your house?

 

The home down the street with an extra garage, RV parking and hookups, an outdoor kitchen and deluxe upgrades sold for that? Okay.

But the REST of the homes in the area sold in the 250k range.

Do NOT price your home at 299k and say 'motivated seller, bring all offers'.

Your agent should not be advising that, and if you are interviewing agents and you're enthralled by the one who is . . . you need to ask yourself why they are the only one!

 

Beware those who will 'buy a listing', and although we don't want to leave a dime of our seller's money on the table, zero dollars from no sale, or a languishing listing bleeding opportunity cost won't help.

Stick to the numbers. They don't lie.

 

Miss Sakamoto approved this. Good heavens, she's beautiful.

 

 

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Rainmaker
1,210,679
Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417
United Real Estate - Addison, TX
Real Service. Real Results. Real Estate

Numbers don't lie but people do. Then, of course, there are statistics and manipulated statistics. You can't win sometimes.

Oct 15, 2019 07:37 AM #1
Rainmaker
1,510,607
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

I wish every seller, every homeowner can read this Candice A. Donofrio. Numbers don't lie but unfortunately those who want the listing so bad do. Sellers believe what sounds good only to end up sitting on the market. 

Oct 15, 2019 08:12 AM #2
Rainmaker
3,423,432
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Candice - this topic practically guarantees a lively discussion. Who would have ever thunk numbers would ever be so inspiring? Go figure. 

Oct 15, 2019 08:54 AM #3
Ambassador
835,525
Mimi Foster
Falcon Property Solutions - Colorado Springs, CO
Voted Colorado Springs Best Realtor

I am finding in our market that anything slightly overpriced isn't even getting an offer. I had one listed at $310,00 (because that's what Zillow said it was worth and the Seller insisted that would be right. It was close enough that we went with it.)

Feedback repeatedly was If it was listed at $300,000 we would have made an offer. HUH???

Oct 15, 2019 09:22 AM #4
Ambassador
2,909,726
Anna Banana Kruchten CRB, CRS
Phoenix Property Shoppe - Phoenix, AZ
602-380-4886

Hi Candice A. Donofrio numbers do NOT lie! Right now in my area there a bunch of overpriced listings. Some by 50 to 150K high. I had a seller tell me recently he wanted to net 300K.  Really?  And you owe what?  And what repairs do you intend on doing?  None.  Not realistic. If you call an investor type company expect to take 150k less in as is condition.  I let them move forward with 'being right' and I moved on.

Oct 15, 2019 10:33 AM #5
Rainmaker
135,097
Raymond Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

She blinded me with Science...nice touch!  

Oct 15, 2019 10:36 AM #6
Rainmaker
4,569,030
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Candice,

You reminded me of a seller who was selling his "horizontal highrise", and wanted an unrealistic price...We could not wait to leave the meeting, catch and release!  A

Oct 15, 2019 10:56 AM #7
Rainmaker
814,712
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Great post, and so true. With a market that is termed a sellers market though, they all want TOP dollar and think that includes a 20% markup for low offers. Wish every seller would read this post.

Oct 15, 2019 01:04 PM #8
Rainmaker
536,502
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

When sellers suggest a higher than market price with the strategy of 'we can always lower it' --that is NOT the way to price a home!  The market determines pricing--study the comps and it will be clear the range the house needs to be in. WIth the expert advice of a Realtor!

Oct 15, 2019 06:17 PM #9
Rainer
483,689
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Excellent illustrations and agree wholeheartedly with Mary Hutchison, #9. Most buyers or sellers agents, IMO are ignorant about the psychology of a buyer and/or the different types of buyers in the market. Great post.

Oct 16, 2019 01:05 AM #10
Rainmaker
2,643,156
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Your words are true and your clients would be wise to lean on your expertise when it comes to selling their property for top dollar!

Oct 16, 2019 10:15 AM #11
Ambassador
3,440,054
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Oh my gosh, this is SO spot-on, Candice! I tire of seeing agents selling themselves with fake reviews and fake numbers. In fact, I recently did a post and created this meme I was so ticked at an agent stealing my marketing idea and citing numbers that weren't even CLOSE to her own! 

 

That look...

 

As I mentioned in that post - ASK to see the MLS data. It doesn't lie! I think the fake reviews is as bad though - they are all obviously written (or spoken) by a real estate agent, not a consumer. AND, how one has one review every single week and only sells 10 houses a year is beyond me - yet another little tidbit I'd love the consumer to know. 

 

I have a good book of business - it's not about being jealous or envious (that is WAY off base). It's about integrity and what we, as professionals, present to the public. The consumer is none-the-wiser until they experience the real estate transaction from hell! 

Oct 17, 2019 09:36 AM #12
Rainmaker
982,163
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Spot on Candice!  So very frustrating. Perceptions about real estate prices can be frustrating.  At the end of the day, how fast do they want to sell/  next week/month or next year!  Great post!

Oct 17, 2019 08:49 PM #13
Rainmaker
641,499
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Carolina Life RealEstate & Relocation 919-602-8489

Great advice for home sellers Candice!

Nov 14, 2019 05:56 AM #14
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Candice A. Donofrio

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