As realtors, we have a very narrow definition of what constitutes a comparable property. And when we generate a CMA for a prospective client, we carefully comply with the strict REALTOR’s definition. But the comparables for a property are just one factor we use when establishing the price we suggest to market and sell a client’s property – given their desired time frame
There’s another ‘comp’ that is often overlooked when realtors attempt to determine a suggested listing price; COMPetives. At Walter Group, our job as listing agents is to establish a price that will generate offers and sell our client’s property, and Comparables only tell part of the story. The best marketing plan cannot be effective unless considered in the context of the homes with which we’re competing for buyers’ attention.
Luxury waterfront real estate in our market is competitive, and therefore it’s important to consider not only the price at which narrowly defined comparable have sold, but also the short-list of properties that are likely to come-up in a prospective buyers’ searches as they’re starting to become familiar with the market.
The economic principle that underlies the validity of comparables, requires a substantially large population of properties (and buyers) to create statistically valid indications of proper pricing. The smaller the population of similar properties – the less we can rely exclusively on the REALTOR’s definition of comparability. In larger markets with relatively homogeneous properties, comparable are fine. But the more unique a property, the less we can rely on that standard.
Many of our buyers begin their home search with criteria such as ‘Sarasota Deep Water Estate home’, or ‘Longboat Key Beach Estate‘. By considering the perspectives of our potential buyers, we’re able to understand what competitive properties will be returned by that search. It is critical that we are aware of how our clients’ listings will compare to the other properties that are returned in that initial broad search. If we were to add additional CMA derived constraints (eg. Narrowly defined community/geography), we risk over-valuing the significance of a particular property attribute – such as community.
A buyer with a budget, for example of $3mm, may not necessarily be looking only for properties on Bird Key. In the examples above, the prospect’s search did not constrain their query to ‘Bird Key’ – so we should not either. If we infer too much weight on ‘Bird Key’, we have fallen into the marketing myopia trap – which is that what appeals to us (or the buyer) is the de facto buying motivation that will apply to prospective buyers. What constitutes a short-list worthy property for ‘Sarasota Deep Water Estate home’ may also include Sarasota Mainland, Lido Key, Longboat Key, or even Anna Maria Island or Casey Key properties.
For more information on our unique process for marketing and selling luxury properties, give us a call. we’d be glad to share our process for generating more offers.
