COMPETITIVE VALUATIONS INC.

Case Study Residential Real Estate - June 2011

The Owners of the property at XXXXX NE XXth St, Bellevue, Wa were introduced to their Real Estate Broker through a mutual acquaintance and past client of the Broker in early January 2011.

Image of Subject Property

The Bridle Trails property, being a single family residence of 3 Bedrooms, 2.5 Baths, and ~3,0 square feet, was 3,000 built in the early 1980s. While situated on a pond, having a 4 car garage, being in good to excell . excellent condition, and having excellent landscaping, the residence of the home did endure 1980s style country wall paper and mild to moderate noise from the proximate freeway. Broker An initial meeting occurred between the Owners, their extended family, and the Real Estate Broker. While discussing the property, the owners articulated that Zillow had offered a Zestimate associated with the , property at approximately $925,000, and that the local King County Tax Assessors Office had estimated the value of the property to be $867,000. Also, the mortgage company holding a first position lien against the home, and requiring an updated appraisal on the property for insurance purposes, had the property appraised in early January. That appraisal came in at $850,000. The Real Estate Broker, after personally driving to a dozen local comparables, estimated the current salable e value of the home to be between $750,000 and $855,000. After sharing this with the Owner of the property, it was decided, by the Owner, that the home w would be listed for sale in January 2011, at $865,000. , In late March 2011, just over 3 months on the market, and still early in the spring, an offer was received for $775,000, from a family friend. The Owner responded to the offer with a counteroffer of $855,000. The potential buyer and the Owner were unable to come to a purchase and sale agreement. er Five or six weekend open houses were utilized over the next 3 month, with 6 10 potential buyers attending 6-10 those open houses. Two sets of buyers claimed to have fallen in love wit the house, but neither made offers. with ouse, In early June 2011 the Real Estate Broker, during a discussion with the Owner, shared that it seemed appropriate roker, with the soft real estate market, that the price of the listing be reduced to $835,000. One week later the Owner called the Real Estate Broker, to say that the home should be taken off the market temporarily, just to take a break, and until we figure out how to get more people through the house. At this point the Real Estate Broker recommended that a Competitive Valuation of the home take place, because in the

opinion of the Broker, a high price was the biggest issue. The Owner agreed to split the cost of a Competitive Valuation with the Real Estate Broker. A few days later the Competitive Valuation was complete. These competitors were paid a minimal amount for providing estimates, and the winner of the Competitive Valuation was given and additional prize. Note, the goal of a Competitive Valuation is to offer the Median Valuation. One Valuation Provider articulated, Its not about the money, I just want to do a quality job. The Valuation Providers answered the statement, In my professional opinion, the most appropriate listing price for this home, to have it under contract within 30 days, is $ __________________. Those estimates came in at $725,000 $775,000 and $825,000. These numbers, while coming from Objective Competitors and not sale-motivated professionals, came as quite a shock to the Owner. The next day, mid June, 2011, the owner reduced the price of the listing to $819,999. As an interesting aside, when these Real Estate Professional were giving their most accurate Valuations of the property, having seen the comparable properties firsthand, their Valuations still spanned the average by 6% from the median estimate. This seems to indicate that the opinion of one professional may not be enough to accurately portray the true value of a property, and that more professional opinions is necessary. After the Valuations, in a discussion between the Owner and the Broker, the Broker asked, Dont you wish that we had accepted the offer of $775,000 back in March? How many mortgage payments have you made since that time? The owner replied, I think I have paid about $12,000 in mortgage payments since that time. I have wondered many times if I should have taken that offer. While driving home, the Broker thought to himself, I almost lost this listing, and even though I am listing this property for only a 1% listing commission, even still, that $8,000 commission is a lot of money. If we had not purchased this Competitive Valuation, then I may have lost that $8,000 and the Owner would have made additionally 2-14, mortgage payments more than he already has at this date; (assuming that the competing valuations of the professionals will get us closed in 60 days). For that matter, we should have had this Competitive Valuation when the listing first hit the market, as we would have been closed two months ago. Two weeks later the Home Owner called the Real Estate Broker to inform him that the property would be taken off the market while some updating was done on the property. The Real Estate Broker expressed tha, as written in the Competitive Valuation Report, that the home had not yet been listed at an appropriate price. The listing was then removed from the MLS, homes floral wallpaper was removed, and walls repainted white. A week later the Homes was relisted with another Real Estate Broker at $775,000. Two weeks later the home was under contract for $760,000. The listing closed 30 days after that point. In the end, the sale of the home was delayed 5 months after the initial appropriate offer. The home sold for $15,000 less than the original offer and the Seller spent $20,000 on mortgage payments during those 5 months. The cost of the Competitive Valuation could have been $750 upfront.