Are you savvy in recognizing market signals that call for you to make a market adjustment?
A market adjustment is a change in market parameters or conditions brought about in response to one or more market signals. They can include price changes from shifts in supply and demand and often is referred to as cycles, fluctuations, or trends.
In many areas a shift or correction in the market is being seen. It’s important to monitor active and pending properties just as closely as solds. Being hyperaware of your current competition is crucial as buyers now have more options with inventories increasing.
Recently I took a continuing education course offered by Independence Title Company. They are a title company I depend on for excellent service and their courses are taught by the best business development people. Leslie Van Burkleo was the presenter on this class and the materials were an eye opener.
I learned in preparing a market analysis for a seller there are 5 technical calculations to adjust for fluctuation.
- 1. Calculate the difference between the average sold price of the current month and the average sold price of the same month last year.
- 2. Divide the price difference by 12. This is called the Rise Per Month.
- 3. Figure the difference in number of months between the current month and the month the comp sold. Multiply the difference against the rise per month. This is called the Total Rise.
- 4. Calculate the percent of total rise by dividing the Total Rise by the Current Month’s Average closed price than multiply by 100. Total Rise/Current Month X 100 = Percent in Total Rise.
- 5. Multiple the Percent in Total Rise against the closed price of the comp you’re using adjusting. This is the total you should adjust the comp by.
Taking the time to calculate the 5 adjustments will be like finding all the pieces in a puzzle. It will give you an accurate picture of how market fluctuation affects your seller's property. Knowledge is power and knowing how to add something more of value to your current CMA’s for sellers set you apart from your competition.
It's just adding another dimension to the overall assessment when reviewing all aspects of the market as it relates to pricing a seller’s home and setting proper expectations. The more data that we have in our tool box the more we can help our sellers make an informed decision.
“Strategy is about setting yourself apart from the competition. It’s not a matter of being better at what you do – it’s a matter of being different at what you do.” Michael Porter