Who’s the Most Important Person in a Real Estate Transaction?


July 24, 2019

Students tell us that one thing that makes Garden State Real Estate Academy New Jersey’s best real estate school is that we don’t just teach from a book. Our instructors are all very successful, experienced real estate brokers, so we include hundreds of lessons throughout the course to help them once they earn their real estate license. This came into play this week when we were teaching the licensing class about how to value a seller’s house in preparation for a listing appointment.

It’s Not about You!

Time and again, REALTORS® will have spent an hour preparing a detailed comparative market analysis (CMA) for a listing appointment. Their conclusion is that the home should sell for, say $325,000. Then they site down with the seller, and the client says, “I disagree with you. I think my house is worth $375,000.”

What’s a person to do? You don’t want to get into an argument with a person whom you know is going to talk to three other agents. Yet you know that if you give in and list the house for $375,000, the client will soon be angry with you because you haven’t yet sold their house.”

You gently probe. “What makes you think your home is worth $375,000?” After a career of selling over 450 homes, I can tell you, the answers are almost always from a bevy of the same responses:

I NEED $375,000 to pay off this mortgage and be able to buy my next home.

My sister in Denver used to be a real estate agent, and she told me she agrees with my opinion.

I’d like to sell my home, but I’m not going to give it away.

Those comps you showed me are nowhere near as nice as my home. I just painted this room three years ago, and I just had a brand new roof put on 8 years ago.

No Secrets.

When I started selling real estate 31 years ago, there were no computers in everybody’s home, no cell phones, and no internet. So the REALTOR® had all the market knowledge and the client had none.

Today, by the time a person speaks to their agent about a home in which they have some interest, they have checked online and know how much the seller paid for it and when they bought it, how much they owe on the home, and what similar homes have recently sold for. They have probably even gone to a website like Zillow and it told them the current value of the home.

Listing a property way over the market price today is a fool’s game. The home will have your “For Sale” sign out front for months on end, sending a signal to the neighbors that “This real estate agent isn’t very good at selling houses.” Worse yet, since none of us like admitting we are wrong, the seller will often become increasingly acrimonious over why you have not delivered the results “I am paying you all that commission for.”

About “Market Value.”

We define market value to our real estate licensing students as being “The price a ready, willing and able buyer who is not in a hurry to buy will pay a seller who is not under duress to sell, after comparing the home to similar properties.”Price and cost are not the same as value. An example is the new car which cost you $30,000 and by the time you had driven it from the dealer to your home it would be worth hundreds of dollars less in market value.

So Who is the “Most Important Person in the Real Estate Transaction?

When I ask sellers that question, they usually say, “Me? Because I’m your client?”


“Hmmm. Oh of course! The buyer!”


They think for a moment and then say—now somewhat hesitatingly—“I guess the mortgage loan officer, because without him, the buyer couldn’t buy my house?”

Wrong again!

“Oh, I get it! It’s YOU, because you are going to sell my house for me!”

Absolutely not. Humility is a virtue!

At that point they give up and ask, “OK, who is the most important person in the real estate transaction?”

It is the appraiser. Buyers buy on emotion: “Oh honey, the view of the lake from the kitchen window is so beautiful!” And sellers have often felt emotional ties to buyers. In my last sale before I bought the real estate school, the seller turned down more generous offers from two other buyers because my buyer wrote him a letter saying how he grew up a few doors away and now longed to give his young family the same joyful childhood memories.

But appraisers are deprived of emotion at birth! They are under tremendous pressure to protect the bank’s interest and not over-value the property. The bank is lending the buyers X dollars and want to be assured that if they default, the bank could recover that amount in foreclosure. If the appraiser over-appraises the value and the underwriter realizes that, he can be banned from future work for that, and other mortgage companies. The appraiser is not even allowed to talk to the loan officer and has absolutely no interest in whether the sale goes through or falls apart. He is simply there to render his honest opinion.

The appraiser has gone through thousands of hours of education, apprenticeship and field experience to come in at a truly accurate market valuation. The appraiser will look at similar homes that have sold recently, will make adjustments to their sale price to make them as close as possible to the subject property, and then he signs his name on that appraisal certifying that it is, in his professional opinion, the true current market value. The appraiser doesn’t care that the seller used $50 a gallon paint instead of $20 a gallon paint on the walls.

The number is the number.

Which brings me back to the listing appointment. You and I can never suggest that we are qualified to give an appraisal. But if we think like an appraiser, if we construct our market value opinion the way an appraiser does it, we should be able to explain to the client how we have gone the extra steps to set a realistic sale price—and not one which would cause the sale to fall through two weeks before settlement when the appraiser told the lender that the house was valued at $20,000 less than it had sold for. When that happens, which agent wants to have to tell their seller that they must either reduce the price $20,000 below what they were expecting to receive, or unpack all those boxes and put the house back on the market?

David C. Forward is a licensed real estate broker and instructor and was first licensed as a Realtor® 31 years ago. During his career, David and his business partner sold more than 450 homes in South Jersey.  He is now School Director of Garden Real Estate Academy, has won numerous awards for real estate sales, is a much-requested public speaker who has addressed audiences on six continents and is the author of 14 books. David can be reached at Support@GSREacademy.com

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