Category: 10. The Big Picture CMA

We all learned how to evaluate a property in ‘Real Estate School’ using the Price Adjustment Approach. It works great in the textbooks.

Not so much in the real world.

Over time, I developed my own evaluation system that makes waaaaay more logical sense to both myself and my clients, The Big Picture CMA.

This system takes up an entire module in the Master’s Program, but the information is actually spread across three modules: Setting the Stage, the Big Picture CMA, and Pricing Psychology.

It’s not complicated. It’s just not possible to fully comprehend it within the confines of a tiny blog post. You know what they say about a little bit of knowledge being dangerous.

However, I will explain why I believe that the price adjustment approach is not particularly useful in the real world.

Pricing is an Art and a Science

There’s no way that anyone can accurately predict the future sale price of a property. There are way too many moving parts at play, including that it’s impossible to know when and where the perfect buyer might appear.

We play the averages, and those of us who are skilled and experienced can get closer to the price than those of us who are unskilled and inexperienced. 

But it’s still an educated guess, at best.

It’s not reality that you can dump all the data into a giant spreadsheet and out pops the exact sale price. Engineers and accountants hate this fact! But you’re doing them a disservice to suggest anything otherwise.

That’s why I dislike the price adjustment approach to valuation. It’s too exact.

The Blank Stare

Other agents used to pop their head into my office all the time and ask me pricing questions.

“Hey, Ted. Most of the houses in this neighborhood have double-car garages, but this one has a triple. How much should I adjust for that?”

I’d stare at them with a blank face and say nothing while thinking, “How the hell should I know?”

To me, this was like giving me one piece of a jigsaw puzzle and asking how I liked the complete picture.

To provide a reasonable answer, I’d ask approximately 1,000 questions about the property, the neighborhood, the comparables, the target buyer, etc. Then I’d give a general overview of how important I thought the triple-car garage might be considering all the other factors. I never provide an exact number, which is what they wanted.

Those agents never poked their head in my office ever again. I guess my system sounded complicated (?).

It’s not, actually. But it’s like not understanding a sport until you know all the rules; then it makes perfect sense.

Once you understand The Big Picture CMA’s core logic that I teach in the Master’s Program, it’s actually a much more sensible way to look at things. From your perspective and your clients’.

Why Argue About It?

One of the problems I have in using the price adjustment approach is that you open yourself up to an argument with your clients over every single line item.

I think the triple-car garage is worth this much.

“Are you serious? It’s worth way more than that!”

Argue all you want. Right or wrong, you’ve already lost credibility with this client, and they’re probably not going to hire you.

This doesn’t mean that I don’t talk about the pros and cons of every comparable and every major feature. I do! 

Just like a recipe, I show them all the ingredients, mix them together, and skillfully guide them towards the most logical starting list price.

And, I prepare them ahead of time to adjust quickly, in case the recipe doesn’t turn out as well as we hoped.

It’s all about using the right ingredients.

Learning The Big Picture CMA is one way to create a raving fan base and build a business that thrives on a never-ending stream of incoming referrals. This is the foundational doctrine of the Agent Skills Master’s Program.

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This article was inspired by module #10 – The Big Picture CMA – part of the Agent Skills Master’s Program. 

In ‘The Big Picture CMA,’ I explain step-by-step how to use the Criteria Manipulation Approach (CMA) to quickly determine the correct price for any property, efficiently and with full agreement from your sellers.

Here’s another article inspired by the same module: The Target Buyer.

“The house down the street is listed for $500,000, and it’s junk! So, our house should sell for at least $600,000!”

You concentrate hard to keep a straight face. Must. Not. Roll. Eyes.

You patiently explain that it’s the SOLD listings that determine a realistic list price.

The SOLDS are reality. The ACTIVES are fantasy!

You show them the SOLDS, but they’re still not convinced. Time to show them The Big Picture on The Competition.

What’s the Big Picture? It’s the opposite of The Small Picture (3-4 active listings in the same neighborhood).

How many active properties do you need to demonstrate the true scope of the competition?

Assuming you’re in a big city market, how about 50?

Wait! Don’t leave! Let me explain!

First, tell me I’m not 100% correct on these two points:

1. Your target buyer (for whatever listing) is NOT looking ONLY in the same neighborhood for the exact same size and style home as the subject property. 
2. The price itself is the most significant limiting factor for most buyers.

If you agree, consider increasing your analysis to a wide variety of different home styles and sizes, in surrounding neighborhoods, limited only by a specific price range,

Now that you’ve got a BIG list, you can pick out the STRONGEST competitors and use those for comparison. Here’s how I would present this to my seller:

“Mr. and Mrs. Seller, your target buyer has a lot of options available to them. That’s why I think it’s smart to be aware of ALL our competitors, including other neighborhoods, within a specific price range.”

Now, you can show them your giant list of 50 active listings, and say this:

“Of course, many of these listings won’t sell. Some of them are grossly overpriced, just like the one down the street that you mentioned! But I picked out a few good ones, so you can get a better idea of what we’re really up against, in terms of our current competition.”

Now, show them the details on the few you’ve selected that are offering the best value for the money.

Is this misleading? Of course not! It’s the BEST listings that you are competing against, not the overpriced junkers.

You know what IS misleading? The Small Picture!

How are your sellers supposed to make intelligent decisions based on such limited and skewed information? ‍

“The more information you provide to your clients, the greater their ability to make informed and intelligent decisions.” – Ted Greenhough

This is a fundamental truth that I teach throughout the Agent Skills Master’s Program. It’s so much easier to be a great agent when you simply provide the right information and stop providing the wrong information.

The trick is to know WHAT information and HOW to present it.

Sales are slow.

But they haven’t stopped! Homes are being sold EVERY day, all across North America, in EVERY market.

What about you? Are you getting your listings sold?

Or, are you feeling frustrated and unsure what to do? ☹️

If so, you’re not alone.

Here’s some practical advice to help you get your listings priced right and sold. There’s nothing like racking up a couple of sales to cheer you up!

At the very least, you’ll be providing your seller clients with some critical information that they need right now.

“The more information you provide to your clients, the greater their ability to make informed and intelligent decisions.” – Ted Greenhough

Here’s how I suggest you consider the current situation for every one of your listings:

1. Determine who is the ideal target buyer for your listing, and which other homes and neighborhoods that target buyer might consider.
2. Determine the likely price range of that target buyer. For example, if your listing is $450K, might the target buyer be looking up to $500K? Yes, probably.
3. Save a search with a price range approximately 5% less and 10% more compared to your listing, including numerous communities your target buyer might consider. Resist the urge to add too many other limiting criteria. For example, might your target buyer be interested in a newer or older home, at a similar price? Yes, they might.
4. Try to come up with a BIG list of 50-100 active competitors. If it’s much bigger than this range, you can tighten up the criteria to eliminate weak competitors. The point is to ensure your sellers understand they have a LOT of strong competitors in the same price range, not just the 2-3 similar homes in the same neighborhood.
5. Using the same list, switch the status from “active” to “sold” for the past 30 days only. There’s no point showing them sales that occurred BP (Before Pandemic).
6. Make sure there are no outliers (properties that sold for an unexplainably high price) on your sold list. If there are, adjust the criteria as necessary to eliminate them.
7. Send a link to your seller so that they can review every listing, along with the following explanation:

“Dear Seller – Attached are all the sales in the last 30 days with the following criteria (list the criteria, including neighborhoods, price range, etc.)  I will also send all the current active listings, with the same search criteria, under a separate email.”

You can follow that up by having a conversation, something like this:

“There have only been three sales in the last month, and we’ve got 63 active competitors. There’s nothing much we can do about this, under the circumstances, except being a bit more competitive on the list price.  With only three sales in the last month, there will probably only be around three in the next month, so we may need to consider positioning ourselves a bit more aggressively.”

Provide the information. Have the conversation. Use your skills to get the price where you know it needs to be.

Now, here’s something you probably didn’t expect. This is the exact same methodology I teach in the Big Picture CMA module, using the Criteria Manipulation Approach (CMA). Pandemic, or no pandemic!

But it does seem particularly relevant, right now.

Is determining the perfect list price the hardest part of your job?

I’ll let you in on a deep dark secret.

It’s the hardest part for all agents.

Either you agonize about pricing, or you’re terrible at it, and don’t even realize it. Pick one.

“Why the heck isn’t this house selling? I don’t get it!”

Oh, I dunno. Maybe cuz you’re $50K over? Or $100K over?

Yes, pricing is the most challenging part of being a great agent, and—as is often the case with difficult things—the most important.

You’ll make WAY more money by perfecting the science/art of pricing than you will with every other Real Estate skill combined.

You know the price adjustment methodology they taught you in “Real Estate School?”

Throw that in the garbage. ️

I’m serious. Leave that for appraisers who need to show “proof” on paper, in a way that bankers understand.

I can out-guess any appraiser on the sale price of any property, 99 times out of 100.

Yes, I said, “guess.” Because pricing is an inexact science/art, so let’s call it what it is, an educated guess.

Why am I better at guessing than any appraiser?

1. I understand how to identify the target buyer better than any appraiser.
2. I understand market conditions, including the big picture, seasonality aspects, and supply and demand, better than any appraiser.
3. I use a unique system—the Criteria Manipulation Approach—to lead me to the correct price, every time. Never heard of it?

I know. I’ve used this method for my entire career, but I just now gave it a name.

Google doesn’t have all the answers.

But in this case, I do.

You want proof? OK.

I made between $590,000-$865,000 every year for twelve consecutive years, all as an individual agent, and I rarely carried more than 5-6 listings at a time.

How could I make that much money and yet carry so few listings?

Because I sold them ALL. Quickly. For top dollar. With minimal hassle incurred by my sellers.

I never understood why other agents wanted “inventory.” They would beam with pride at their giant whiteboards, filled with listings.

I’d think to myself, “Wow! That’s quite a list of failures you’ve got there!”

Years ago, I trademarked the phrase, “Do you want to LIST? Or do you want to SELL?®”

You cannot legally use my trademarked slogan, by the way. But, you can adopt the exact same methodology.

Can it be explained in a few paragraphs in a blog post? No. Sorry.

The ‘Big Picture CMA’ and ‘Pricing Psychology’ comprise two of the fourteen modules in the Agent Skills Master’s Program. It’s a lot of information. And, you have to complete nine other modules before you even get there. Yes, it takes an investment of time and study and practice.

When I was a busy, active agent, I never had free time to learn new skills and systems and procedures. The truth is, I learned it the hard way, by the seat of my pants.

What about you?

Maybe NOW is an ideal time to improve your knowledge and skills and take a giant leap forward in your career. Perhaps, all this extra time you have on your hands is a blessing in disguise.

Time is a precious gift. Don’t waste it.

The Agent Skills Master’s Program includes ‘Ted’s Ironclad Guarantee” that you’ll earn at least 50X the cost of the course within six months, EVEN IF YOU DON’T DO THE HOMEWORK.

Stay safe. And healthy.

If you’re a typical Real Estate agent, you’ve probably got about $100,000 worth of uncashed commission checks in your desk drawer, or as some people refer to them—your collection of over-priced listings.

It’s kind of like that stamp collection you had when you were a kid. You still have the stamps; you just never look at them anymore.

The only difference is your stamp collection is probably NOT worth $100,000.

Here is the standard list of excuses used for NOT fixing your problem, and NOT being $100,000 richer. Pick your favorite!

1. You’re too busy (chasing after new business, rather than taking care of the business you already have)
2. Your clients are stubborn and won’t listen to you
3. You’re bad with confrontation
4. You’ve got a showing booked for Friday, and you’re hoping for a miracle!
5. The market is awful, so there’s nothing you can do
6. You feel dumb for recommending the price in the first place
7. (Insert your ‘unique’ lame excuse here)

An excuse is simply a challenge that you’ve decided has power over you. – Jen Sincero

Let’s just cut to the chase right now and give you a list of the real reasons why you’re not cashing out your $100,000 stamp collection:

1. You’re not giving your clients ENOUGH information
2. You’re not giving them the RIGHT information
3. You’re not giving them ANY information!

Remember last week when I talked about sending the right information BEFORE the Listing Appointment, and how if you do it right, your clients will figure out the price for themselves?

Click here to see last week’s ‘Memo.’

The same principle applies:

The BETTER the information you provide, the more likely people will make informed, intelligent decisions.

Would you like to see the EXACT step-by-step strategy I used to ensure that over 99% of my listings sold within the first listing period, even if the price was too high at the start?

Would you like to know why my clients called me regularly, asking if they should reduce their price, and how I frequently had to talk them out of it?

I’ll send you a copy of my step-by-step guide, “The Intelligent Price Reduction Strategy,” in return for a simple favor (see below).  But first, there are three reasons I’m NOT including it within this ‘Memo.’

1. It’s extremely valuable. Besides liquidating your $100,000 over-priced-listing collection, this document provides a permanent and logical solution.
2. It’s a simple strategy, but to explain it adequately requires more space than is available inside this ‘Memo’ format.
3. My competitors are already “borrowing” from me. (Thanks for the compliment!)  I know they’ll get their hands on the information anyway, but it’s only sporting to make them work for it a bit.

There’s a fourth reason, too:

If you’re too lazy to do me this simple favor, there is a 100% chance that you’re also too lazy to implement the strategy I’m going to give you.  It does require some work on your part, after all, specifically in the area of customer service.

In fact, “The Intelligent Price Reduction Strategy” is a misnomer.  But my original title seemed a bit long, “The Intelligent Way to Run Your Business with a System that Easily and Consistently Delivers Powerfully Convincing Information to Your Clients”.

As with all effective business strategies, it’s not about how you react to calamity, but instead, it’s about proactive planning and having a system to ensure highly-effective ongoing communication. “The Intelligent Price Reduction Strategy” reveals the exact method I used, and one of the key reasons for my success as a top-producing agent, who made his living from a steady stream of referrals.

So, here’s the simple favor I am requesting, in return for this extremely valuable 2-page document:

Please ask two of your REALTOR® friends to sign up for the Real Agent Memo.

Then, I’ll send you my step-by-step guide, “The Intelligent Price Reduction Strategy.” It’s only three steps, by the way.  I love simple!

After you receive it, please DO NOT share this document. After all, I’m asking very little (two sign-ups) to get it.

If your friends want it, all they have to do is sign up two other friends. If that’s not entirely fair, I don’t know what is. So, please honor this request.

Your REALTOR® friends can be anywhere in North America, as long as they are licensed agents and not current subscribers. After they subscribe, simply email me and tell me their names. Even if they unsubscribe an hour later, at least you tried. This is in the spirit of helping each other.

Deal?