In today's market, there is often a large difference between the buyers and sellers of farm and ranch properties. Sellers are often producers who have an emotional connection to the land, whereas buyers may be corporations or builders. For this reason, real estate agents must approach the pricing discussion with this understanding in mind and use pricing models as the foundation of their listing presentation.
As panel facilitator Kasey Mock explained, farm and ranch agents often don’t have the luxury of pulling equal comps out of the MLS. Instead, they must think strategically and pull together the information necessary to educate their seller. After all, if a property is not priced correctly, all the marketing in the world won’t help it sell.
Successful real estate agents educate their sellers from the start so that there are no unrealistic expectations of what their property is worth.
Model 1: Comparative Market Analysis (CMA)
Panelist, Craig Bowen of the Plateau Land Group LP, discussed his preferred pricing strategy- comparative market analysis (CMA). Bowen does all of his research prior to taking the listing so that he is armed with the benchmarking information that will help determine the appropriate price for the property. At minimum, Bowen wants to gain an understanding of how many listings currently exist in his market.
Bowen’s key piece of advice was to not immediately try to dissuade a client who has unrealistic price expectations. “You’re dealing with a giant bundle of emotion” says Bowen, “the only way to get them out of it is with comparison”. Approach the problem as an appraiser would and use research to build your case.
A second piece of advice: when on listing sites, look at the number of views the property has versus how many times the property has appeared in a search. If the number of views is not proportionate, there’s something wrong and you need to investigate.
Model 2: Income-Producing Property
Analysis of an income-producing property begins with an understanding of what premiums exist, whether it be resources such as water, timber, aggregates, oil, gas, or minerals. As panelist Travis Bard of the The Bard Group explained, “There is value literally in the dirt!”
Bard’s approach to using numbers to price income-producing properties begins with pulling data from multiple sources in order to form the bigger picture. A wealth of information is available to agents if they know where to look. Just a few sources include universities, government agencies, tax returns, and financial and audited statements.
Model 3: Auctions
Panelist Suzy Moore explained that auctions are just another tool in your marketing toolbox. Auctions have the unique ability to change the perceived value of a property.
What is different about an auction?
- Advertises with a low opening bid, driving competing offers
- Auction companies charge 6% to the seller
- A buyer premium may apply
- An advertising fee is paid up front by the seller
- A seller can set a reserve
- A seller may maintain the right to reject the highest bid
With this form of sale, a property either sells or it doesn’t. Since it’s not on-going like a typical real estate deal, the seller receives an offer by the end of the day and maintains the option to accept or reject it.
Many of the topics covered in the presentation can be traced back to simple concepts in SHIFT: How Top Real Estate Agents Tackle Tough Times. Key takeaways include:
- Don’t chase the market – let the market chase you!
- Be a student of your market. (Research! Research! Research! And know your data!)
- A “walk-away-point” is not necessary if you have the right script and presentation. (Remove emotion for the equation with data)
- The first 2 weeks on the market are critical for a listing. Price right to begin with because you’re either in the market or you’re out!
- Utilize SHIFT as a resource! Add tables and graphs from the book to your listing presentation.