1. Initial Consultation.
This first meeting, typically held at the property to be sold, is designed to answer questions, find out what you’re hoping to accomplish, and explain how my approach to selling property is different from other agents’. For starters, unlike most, I will not suggest a listing price on the spot because I need to do research to make an informed recommendation. This will be a recurring theme. Note: A CMA or Comparative Market Analysis (aka comps) does not count as research! Once we decide on a price, the research doesn’t stop there. When the property is listed, I continue to track it, solicit feedback from agents and buyers, and make adjustments to the listing. In other words, I track your house, on the market, in real time in addition to tracking what other people’s houses sold for six months ago, not just the latter.
2. Sign a representation agreement.
But do your research first: read the sellers’ testimonials on this site!
3. Develop a strategy.
I get right to work with research and development of a sales strategy including the listing price, marketing, photography/videography, 360 floor plan, and a focused, well-crafted listing.
4. On the market.
Once on the MLS, research continues using custom analytics. In response, the listing is tweaked and fine-tuned to find the highest price that will bring offers.
5. Receive offers & negotiate.
Try and improve the terms and increase the sale price.
6. Sign the contract.
Once terms are propitious.
7. Prepare for closing.
I will communicate with your attorney, help you negotiate inspection items and work in liaison with loan officers, appraisers and the buyers agent.
As with buying, you’ll think I’ve abandoned you because there’s a conspicuous silence between signing and closing after the constant contact of being on the market. The buyer has to be at the closing, and I’ll be there, too, but I counsel my selling clients to stay home. Why? Because you can’t argue with someone who’s not there. So congratulations!
An indispensable guide to selling… even if you’ve done it before.
Evan Kane, Lead Real Estate Scientist
Member American Real Estate and Urban Economics Association
Almost all real estate agents have an infinite supply of confidence but most of the advice and recommendations they give are made with anecdotal, arbitrary, subjective, and incorrect information. This paper will provide the reader with information to quickly tell if a real estate agent is a credible expert or not.
There are two simple methods used to expose the uninformed real estate agent. The first method is to identify an agent that is parroting tried and true (but incorrect) talking points, some to the extent that they become memes(1). The second is to examine the methodology (if any) used to make predictions of a properties’ market value.
Talking Point: Long Market Times Lead To Low Sales Prices
Since the mid-1970s researches (Miller,1978; Asabere, Huffman and Mehdian, 1992; Yava and Yang, 1995) have been looking at the relationship between sales price and time on the market (TOM). The empirical evidence on the relationship has been unpredictable and inconclusive. What is interesting to note is that all of the studies were very clear in showing that market time has no impact on sale price, but price can have an effect on market time. In fact Miller’s full sample model showed a positive correlation of market time on sale price.
But Miller is clear to point out that there is no apparent benefit of longer marketing periods in terms of achieving greater real selling price(2). What is most clear from all of the research is that list price, home atypicality, and the degree of over or under pricing are very important determinants of market time.
Talking Point: We’re #1
In a study looking at the effects of brokerage on residential home sales (Jud, Seaks, Winkler; 1996) found that within a multiple listing service no one group of agents or firms has an advantage over any other. Specifically the number of sales of the listing and selling agents had no statically significant influence on market time, nor did the number of sales of the listing and selling offices, nor did the franchise the broker belonged. Additionally, homes that sold within the same broker office did not sell any faster than homes listed and sold by different broker offices. A separate study (Jud and Winkler, 1994) shows that there are no differences among brokers in the sale price of homes within an MLS.
Talking Point: Offering a Bonus to Selling Agents Will Reduce Market Time
Perhaps the most naïve and damaging idea among uninformed agents is that offering a bonus to the selling agent is a way to reduce market time or increased sale price. An award winning study on the impact of agent bonuses (Johnson, Anderson and Benfield, 2004) showed conclusively that offering a bonus resulted in a lower sale price (decrease of 3.6%) and a longer time on the market (35 days)
Methodology of Price Analysis: EDA vs. CMA
Predicting the most likely sale price of a property can only come from analyzing the comparable market assets (property features) effect on observed transactions (sold properties). The most common and accepted method used by investment analysts, researchers, expert witnesses, and economists is Exploratory Data Analysis (EDA). EDA was developed by Princeton University professor John Tukey and was a groundbreaking approach to learning from data.
Working from an exploratory point of view and primarily using statistical regression analysis, the expert agent detects patterns and formalizes a hypothesis from the patterns of correlation discovered. Primary to this task is to explain variation in sale price between similar properties. To do this the expert agent considers quantitative (continuous numerical values) and categorical variables (groups an observation belongs) and then measures the effect of those variables on sale price. Once the effects of variables are know they can then be applied to the subject property. It should be pointed out that not all variation can be explained, some will be naturally random and other variation will be caused by (the not necessarily rational) human behavior of home buyers.
In comparison to EDA the Comparative Market Analysis (CMA) favored by most real estate agents contains a very high potential for data bias because supporting data is “hand picked” by agents from a very narrow data set. A CMA does not keep the analysis of the data independent from the subject property, very often resulting in a self fulfilling prophecy. Most CMA reports do not make any attempt to make quantifiable adjustments for differences in property features and those that do have not been empirically verified.
This paper has shown how a consumer can quickly ascertain the competency of any real estate agent by listening for un-factual talking points and asking they type of analysis used for property valuation.
As defined by Richard Dawkins in The Selfish Gene (1976): “a unit of cultural transmission, or a unit of imitation.” “Examples of memes are tunes, ideas, catch-phrases, clothes fashions, and ways of making pots or of building arches. Just as genes propagate themselves in the gene pool by leaping from body to body via sperms or eggs, so memes propagate themselves in the meme pool by leaping from brain to brain via a process which, in the broad sense, can be called imitation.
Real Selling Price is the sale price minus opportunity costs.
Yavas, A., and Yang, S., 1995. The Strategic Role of Listing Price in Marketing Real Estate: Theory and Evidence. Real Estate Economics (23): 347-368
Asabere, P., Huffman, F., and Mehdian, S., 1992. Mispricing and Optimal Time on the Market. The Journal of Real Estate Research (8): 149-155
Jud, G., Seaks, T., and Winkler, D., 1996. Time on the Market: The Impact of Residential Brokerage. The Journal of Real Estate Research (12): 447-458
Knight, J., 2002. Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes. Real Estate Economics (30) 213-237
Miller, N., 1978. Time on the Market and Selling Price. AREUEA JOURNAL (6) 164-17
Pasymowski, E., 2006. Econometric Solutions for Real Estate Valuation Automated Valuation models – Friend or Foe. Pan Pacific Congress of Real estate appraisers, Valuers and Counselors 2-4
How to vet. Read this before signing a contract with
a real estate agent.
“Smart, persistent, motivated, and knowledgeable. … We were in a serious bind, he was able to sell our house quickly, even though it was off season. He was very professional, and beyond helpful. The man knows how to get it done. We highly recommend him.”
— PAM COFRE, SKOKIE
“We came to Evan after being frustrated by an agent who managed our listing for six months. Evan helped us understand why the other listing failed to attract potential buyers by doing his homework, providing us an amazing analysis of the current market conditions, and helping us create an out of the box solution to market the house and get results. He gracefully helped us manage our expectations in a slippery real estate market, while leaving all decisions in our court. It’s a pleasure to work with someone who is passionate about his work. I unhesitatingly recommend Evan Kane.”
— SHARI HELMER, HIGHLAND PARK
“Evan was amazing in all aspects of my very long, enduring sale process with unforeseen challenges along the way with uncertain buyers. Namely, his approach with regard to market analytics and his ability to communicate financial expectations at closing was tremendously helpful – and something I did not receive with past realtors. In my case, with a financial loss, this was crucial information for me.
Another quality of Evan I truly appreciated was the candor in which he discussed each step of the listing – from price point to representing the property to negotiating an offer. Not many realtors are willing to tell you the ‘truth’ for fear of losing your business. That’s unfortunate and I’m grateful that is not Evan’s approach. His approach is to get you the best possible deal no matter what side of the coin you’re on – buying or selling. I truly appreciate that approach.
I would absolutely recommend Evan as someone who ‘knows his stuff!’ He is very responsive and takes care of the details you’re thinking about/wondering if you should do – he’s already done it for you. He’s patient when anxiety of a sensitive deal causes stress and has a keen ability to bring things back to the facts and ease worry.
“After an arduous process with would-be buyers, Evan was instrumental in getting me a great offer in the end with no hassle.”
— CANDY SPARKS, CHICAGO
“Evan Kane helped me market and sell a property before a bad market got worse. He also educated me on what it really means to “sell a property” – dare I say it here? It’s marketing. And Evan knows marketing. If you need to move a property and you’re trapped in the box of traditional marketing, have a conversation with Evan about his creative life outside of the box. Not only will he inspire you to think creatively and try new things with measurable results, he’ll surely help you learn in the process. I definitely consider Evan an expert in his field and highly recommend him to anybody looking for a reliable, trustworthy and pleasant Residential Real Estate Broker/Agent.”
— BRIAN C. JANES, WESTCHESTER
“Evan was great, he spent more time evaluating my house than any other agent and put the most effort into coming up with the right price. He took beautiful pictures and with his help we received two offers after the first weekend of showings. I couldn’t recommend him more.”
— DOMINIC ROTI, CHICAGO
“After nearly two years of working with an agent who clearly did NOT know how to sell in a buyer’s market, my husband and I hired Evan based upon some of the marketing techniques I’d seen him using (YouTube, Twitter, & other social media). At our initial meeting, he showed us examples of how he would improve the listing (wording, photos), and how he used statistical analysis to determine when we were getting near the right pricing sweet spot. We were simply amazed. A man with a plan! After we signed on with Evan, he kept us very informed on the various marketing methods he was using, and was very adept at letting us work through the emotional side of accepting what was a “good” sale price in a slow market. I cannot say enough how glad I am that we worked with Evan, and would highly recommend him as someone who is at the forefront of evolving the real estate business, despite the market ups & downs.”
— HEATHER RICHTFORT, MUNDELEIN
“We first worked with Evan several years ago when he recommended specific renovations to our house and discussed how they might affect a future sale. Although we were not planning on selling at that time and not looking for an agent, he was extremely generous with his time. When it finally came time to sell our house he was a great help in all areas of the process, from spending an entire afternoon taking professional quality photographs and video to assisting us with counteroffers when we were negotiating with potential buyers. Evan was instrumental in getting our house sold despite the slow market and I would recommend him to anyone.”
— PAUL CALLAWAY, CHICAGO
“Evan represented us in the sale of our condo in Chicago and in the purchase of a foreclosed property in Highland Park. On the selling side, he showed great talent and ability in presenting our condo and creatively dealing with its disadvantages (small). He drove a lot of traffic to our place and had it sold in under two months – during a very tough market. We were pleased with the money we made. He then represented us as we purchased a foreclosed property. The process of this was extremely difficult for many reasons. Evan provided excellent guidance. He knew when to be patient, when to get aggressive and was an excellent negotiator. If/when we need to sell our place or buy another home, Evan will be representing us.”
— BRAD DUNN, CHICAGO, HIGHLAND PARK
“Evan was always available to answer questions. He was very helpful though the entire process and he got our home sold quickly!!!!!!!!!! He uses internet services to make the process quick and easy. I would definitely recommend him!! Thanks Evan for everything.”
— DORIS RHINE, CHICAGO
“Evan was referred to me as one with superior experience & expertise with short sales. He accomplished this for me in a mere 5 mos, a very short period of time for this type of sale. He’s very knowledgeable and happily explains the process and is always available for status updates. Evan shines with compassion and understanding and worked diligently with my legal counsel…which is so important to achieve the seller’s goal. Not only did Evan sell my house but he also found me a very desirable home to rent. I am extremely thankful for his guidance and I gained a great new friend in the process!”
— JUDY COWLES, NORTHBROOK
Former clients review our services.
Evan Kane, Lead Real Estate Scientist
Member American Real Estate and Urban Economics Association
Use good scientific methods to get results.
• Make sure sample size is big enough to have sufficient statistical power.
Note: Empirical data is information that is acquired through observation or experimentation and is an essential part of the scientific method. Good empirical data is evidence based and must be gathered in sufficient quantities in order to conduct valid statistical analysis. Without sufficient quantities even good data can lead to inaccurate conclusions.
Example: Flip a fair coin 3 times and the chances you will get tails 100% of the time are very good (even though each flip is independent of the other). Flip that same coin 100 times and tails will always come up around 50% of the time. One house has similar features to your subject and sold for $X, could be a fluke, 50 houses have those features and sold for $X could be a correlation.
• Identify correlations between variables.
• Account for random variation.
• Check inferences against existing literature.
Note: It’s important to go beyond simply reporting observations. One must also accurately analyze the data using standard and accepted statistical methods in order to form logical and valid conclusions. Regression analysis, t-test and ANOVA have been used extensively and successfully to uncover correlations and make sound predictions and minimize the negative effects random variation can have on those predictions. It is critical to remember that statistical models do not produce “proof” but can only support a hypothesis, reject it or do neither. Once an analysis is made, research journals like that of The American Real Estate and Urban Economics Association should be checked for similar or dissimilar results.
Example: Does time on the market effect sale price? Most research suggests that it doesn’t. There is a correlation between homes with granite counters and a higher sale price, do granite counters themselves cause a house to sell for a higher price or do they usually accompany other features and benefits that directly contribute to a higher sale price?
Note: You have collected the data, analyzed it and made a prediction; now what? Right or wrong, guessing a future sale price is only a small skirmish in the war to sell the house. Use your price prediction and data on how long it typically takes to sell a house when the correct list price is obtained to build a pricing plan. Use findings from behavioral economics and behavioral marketing experiments to build marketing.
Example: Using the “!” in the remarks about a property have been shown to correlate negatively with price and market time, probably best not to use “!”.
• Make sure client understands data.
• Make sure client is comfortable with pricing and marketing plans.
Note: There is one thing and one thing only that will keep a house from selling and that is the owner. If the owner doesn’t understand or doesn’t feel confident and comfortable with your data and recommendations the house is unlikely to sell. Make sure your clients understand and are confident and comfortable!
Note: Scientific “truths” are held conditionally. Keep collecting, testing and analyzing as conditions might have changed or new data become available after initially listing a house. Make sure the homeowner knows this is an important part of the process.
How we use scientific methods to get the best results.