A different way of looking at how to maximize the selling price for home owners in today's market.

1. An Agent’s guide to
beating the market
Tony Morrison
( When selling a house)

2. Definition of market value
• The first step to beating the market is understanding what is fair market
value?
• The standard definition of fair market value is
• ‘Market value is the estimated amount for which an asset should exchange
on the date of valuation between a willing seller and a willing buyer in an
arms length transaction after proper marketing wherein the parties each
acted knowingly, prudently and without compulsion.’
• (Spencer vs. Commonwealth 1910)

3. My definition of Fair market value -FMV
• Fair market value is a price that
• Most banks will lend
• Most people money on
• Most of the time
• to purchase a house

4. What are sellers paying for?
The second step is to understand the mindset of someone selling a
home. They are not paying agents to get market value. They are
paying agents to get more than market value, in reality to ‘beat the
market’. If market value was all that they wanted they would do it
themselves, because at least in their mind, getting market value is not
that hard.

5. Lets stop the game playing
A lot of game playing goes on between home sellers and agents when
it comes to selling a house. Owners are reluctant to tell the agent their
bottom dollar fearing that if they do then that will be all the agent tries to
achieve.
Agents are very reluctant to tell the seller what they really think the
house is worth for fear that their honest opinion will put the owner off
listing with them as some other agent will undoubtedly tell the owner a
very convincing story as to how they can achieve much more.

6. Total trust is the ideal situation
To have the best chance of beating market value the agent and home
owner need to work together in a relationship of total trust.
A relationship of total trust is not easy to achieve if there is no existing
relationship between the seller and the agent but that is what’s needed.
If the appraisal is a cold prospect the best the agent can usually hope
to achieve is trust with a mild level of suspicion.
The higher the level of trust the greater the chance that the owner will
let down their guard which can at times prevent them from seeing and
understanding the best marketing strategy and restrict them from being
open minded in the negotiation process.

7. Elements needed to beat the market
As mentioned on the previous slide, trust is the most important element
required to ‘beat the market’. Great marketing is also obvious to
hopefully foster competition between more than one buyer.
A network of potential buyers and a great negotiator will also help ‘beat
the market’ but behind ‘trust’ the next most important element to get
right when selling (an element which so often is messed up) is the
correct pricing structure or marketing method.
E.g. – Set Price, Price range, Auction ,Tender, Best offers over, By
Negotiation etc;

8. 1 Trust If you have trust everything else just falls into place
Ability to win trust will have a lot to do with length of relationship,
your reputation and your integrity
2 Correct Pricing/
Method of Marketing
Your marketing can be average, you can be a weak negotiator but
if you can create more than one buyer, then the buyers will do the
negotiating for you
The correct pricing/method is the easiest way to create more than
one buyer, (make the phone ring, create fear of loss and sense of
urgency).
3 Great Marketing Great negotiation skills won’t necessarily create more than one
buyer but great marketing might?
4 A network of buyers The bigger the pool of potential buyers the better chance that
competition will see buyer pitted against buyer instead of buyer
against seller
5 Contract Negotiation
skills
It is very hard to sell a house for maximum price unless you have
the majority of the points 1-4 in place. If points 1-4 are in place the
need to negotiate will not be as strong.
Elements in order of importance

9. The process to work out the best
method of selling / Price
Before you work out what the best pricing structure or method of
marketing you need to work out what fair market value (FMV) is.
Knowing FMV is the first step towards beating market value. It is hard
to choose the correct marketing method or pricing structure unless you
know what this is.
More often than not though FMV will be less than what the owner wants
or needs and if this situation is not handled carefully then the agent can
come across as negative to the owner.
And no one wants to list with a negative agent

10. The Process to work out the best
method of selling/Price
The more traditional way of handling this situation is that the agent tells
the owner more than what the house is worth to win the business and
then gradually over time talks the owner down to market value.
Putting the wrong price on the house when the house is fresh to the
market means that the majority of buyers see the house when the
home is priced at it’s worst. This does not bode well for creating
competition which is what you need to beat the market.

11. The normal method of Pricing
Buyer
Interest
Seller Power
Priced to create
interest
Weeks on market
1 2 3 4 5 6 7 8 9 10 11 12
HighLow
Priced to
Scare off buyers

12. It is not the price you set but
the strategy you adopt

13. Confirming fair market value
To beat the market you have to capitalise on buyer interest and
therefore seller power by having the price or method of marketing
working for the desired outcome instead of against it.
Whilst there are lots of things that can be done to research fair market
value (FMV) the two most important are the comparative analysis of
recent sales of similar properties and a summation of the property.

14. Comparative market Analysis

15. Calculator: Size (m2
) Rate ($) Sub Total
House Main Level 0 -$ -$ Instructions:
House 2nd Level/Downstairs 0 -$ -$ You are limited to entering information in the Yellow squares and the orange [Other] fields
Price ranges are set out below to provide assistance
Garage 0 -$ -$ An approximate guide calculation will appear in the pink field
Verandah 0 -$ -$ Note: Chattels to be included in m 2
rate
Decks 0 -$ -$
[Other] 0 -$ -$
EXTERNAL IMPROVEMENTS
External Improvements -$ Garage
[Other] -$ -$ Under Roofline 1/2 - 2/3 Main House Value
CB Detached - Single $5,000 - $6,000
Land Value -$ -$ CB Detached - Double $10,000 - $12,500
BV Detached - Single $7,000 - $10,000
BV Detached - Double $15,000 - $20,000
TOTAL
Carport
Metal Frame Good Cond. Single $3,000
Metal Frame Good Cond. Double $7,000
HOUSE VALUES Under Main Roof BV Pillars 1/3 - 1/2 Main House Value
New House
Architecturally Designed/Executive $1,400 - $2,000 Verandahs
High End $1,200 - $1,300 Basic (per m2
) $100 - $250
Standard $1,050 - $1,150 Character (per m2
) $300 - $400
Budget $950 - $1,050
Decks(per m2
) $100 - $200
Brick/BV 20-30 Years Old
Totally Revamped $950 - $1,050 Pools Above Ground
Well Maintained $850 - $950 Minor Deck Nil
Poor-Average Condition $750 - $850 Substantial Deck + Solar Heat < $10,000
Units Pools Inground
Top of the Range Townhouse* $2,500 < Older with average services < $10,000
High End-New $1,450 < $2,500 Modern With Good Heat $15,000 - $20,000
Standard-New/Good Condition $1,250 - $1,450 Pool House with all services $50,000 - $60,000
*Rate inclusive of land value when no footprint
Landscaping**
Weatherboard Minimal Landscaping $5,000
High End $1,400 - $1,700 Driveway, Paving etc $5,000 - $25,000
Quality Character $1,050 - $1,250 **Includes good quality fencing 3 sides +
Standard $850 - $1,050
Poor-Average Condition $650 - $850
SUMMATION METHOD CALULATOR
-$
Summation

16. Strategy to beat fair market value
Once Fair market value is understood there are six questions that need
to be answered to confirm that the correct marketing strategy or pricing
structure has been chosen to maximise the sellers opportunity to beat
fair market value.

17. The six questions
1. Will the chosen disclosure or non disclosure of the price open the
house up to all segments of the market?
2. Will the chosen price make the phone ring?
3. Will the chosen price create fear of loss, competition and sense of
urgency?
4. Will the price help the seller, or the opposition find a buyer? It can
only be one or the other.
5. Will the price create cash buyers?
6. Does the pricing strategy put a ceiling on the price?

18. Pricing Effectiveness Rating 5 4 3 2 1
Will the price or marketing method
open the house up to all segments of
the market?
yes No
Will the price/marketing method make
the phone ring?
A lot Very little
Will the price/marketing method create
fear of loss, competition, sense of
urgency?
Yes No
Will the price/marketing method help
the seller or the opposition find a
buyer?
You Opposition
Will the price strategy create cash
buyers?
Yes No
Will the pricing strategy put a ceiling on
the price?
No Yes
/30

19. The solution will appear
If the agent puts those six questions to a
A)Range of prices that they could market the home at,
B)Different pricing structures (e.g. Best offers over, Price
range) and
C)Various methods of marketing where price is not
disclosed (e.g. Auction, Tender or By Negotiation)
it will become very obvious which is the correct pricing
structure or non disclosure of price to maximise the
absolute best price for the seller.

20. The result (Beating the market)
• Competition is created
• A sale occurs in a short time frame
• The maximum price is achieved that is available in the
market at that time
• With little or no hassles
• The result that all sellers want. (Beating the market)