We have seen many marketplaces shift nationally in recent years. The skill of price value counseling from your realtor is a more essential tool than others in the last five years.

The fundamental mistake that most Agents are guilty of is using the wrong terminology. The buzzword most Agents use is price or price of the home. This word is incorrect because it’s not about price; it’s about value. The first step in effective price value discussion is beginning to use the word value instead of price. We need to focus the client on what the value of the home is today, in today’s marketplace and market conditions.

When we look at price and the influence of price, it’s really fundamentally connected to marketing. The raising or lowering of the price of something creates a layer or smaller pool of potential purchasers, based on how the potential purchasers perceive the value. We all make our buying decisions based on value. Our job as Champion Agents is to position the property relatively close to the value to widen the pool of prospective purchasers. Price is clearly a function of marketing, not value.

As an example, a ten-year-old BMW 7 Series car has a certain value. You can price it at $100,000, but the real value of the car is substantially less than that. In fact, the Kelly Blue Book value is right around $15,000. What are the odds (pricing this car at $100,000; $50,000; or even $25,000) that you would receive even close to those figures? As they say in Texas, slim to none, and slim just left town.

To demonstrate our value and why we should be hired, we need to separate price from a value discussion. We must secure agreement on the value of the property before we proceed to a strategic marketing or price discussion. In the end, the value of the home is what we are trying to reflect through our CMA.

Too many Agents still believe that price and value are interchangeable, but they are not. Value relates to what something is really worth; what one could expect to receive in money in the free market. It doesn’t matter what the value was last year, last month, or even last week. Value is determined by the conditions and influences of the marketplace today. Too often, sellers get hung up on that fact when the marketplace shifts against them so to speak. They don’t want to view the reality that their home was worth $750,000 a year ago and today, based on supply and demand, is only worth $680,000. Value is extended by the scarcity of something and the ease of replacement with similar, equal, or better products or service. In essence, this all reconnects with the law of supply and demand; real estate is a commodity and not a product.