For most real estate agents that is a simple question to answer or talk around. That question however was not asked to your classic real estate negotiation trained agent, it was asked to an engineer. Tim Deleon had just transitioned from a 27 year career as a programmer and manager at Hewlett Packard. That background and his engineering mindset made that question more of a puzzle to solve than just the standard simple question. His background had taught him that if the data was there he could find an answer to that question. If he could answer that question, with a real concrete proof, he must. So rather than saying a cliche like, "There's always opportunity," or "With me, any time is great", he told told the customer that asked him that exact question... let me find that out and get back to you.

​So Tim dove head first into the data stream in his MLS and thought about how he could use a simple graph to answer that exact question. Well he found the answer to that question, and put it in a basic chart so that it was easy explain.

Before Tim could even present this graph to his client an epiphany hit him. That wasn't the only question clients had been asking him. If he could answer that question, what else could he answer with real concrete data. This led to a discovery period for Tim that yielded amazing results. He was able to answer all the questions that he'd heard and felt like he should be able to give true data backed responses too, which them led him to the ultimate question.

"What is my house worth in today's market?"

He had always had an issue with the traditional pricing model. Something about only pricing today on what something sold for in the past didn't sit right with Tim. He understood that no other market, no other business priced that way. Most would price based on what else is available and how much demand there was. It was basic economics, but real estate in the majority of cases wasn't commoditized so it became a guessing game of worth that was for most agents only ever a process of looking at past sales then making informed estimates for adjustments. That seemed less data driven and more gut instinct, the opposite of what an engineer strives for. Was there a better way?

​They say the mark of a genius is the ability to make the complex seems simple. Real estate is a very complex market comprised of moving pieces that are often outside of one's control and very rarely is one property ever alike to another. Because of this you're always weighing non-matching alternatives in a moving puzzle that can shift based on seasonality, government intervention and many other factors. How could you ever make something so grand and convoluted something that can be harnessed and systematized? Perhaps that question and the difficulty of answering it tells you why pricing hadn't really changed for hundreds of years. Remember, Tim Deleon was not a standard agent.

In engineering school one of the first things students are taught is how to think, or rather, how to approach problem solving. Many people called this mindset or decision matrix the most important part of learning the engineering career. If you know how to think correctly to solve a problem, it enables you to address issues in ways that others can’t even comprehend.

​The engineers problem solving mindset is a simple step by step way of thinking that can be summarized as:

Tim took this problem solving process and applied it to pricing homes. He knew what he was trying to solve, knew the variables and knew the answers to many of them were listed simply in the MLS. His brain saw each listing whether sold, expired or active as a test case in a grander experiment. So he use use them to create a simple statistcal regression, controlling the variable of location and weighing the others against each other. This basic graph became the first answer to the question of what homes were worth. He called it Scattergram Pricing.

Soon after creating this graph however he realized he was still stuck in the past mindset. The value shown here was tied to what sold (historical) not what was the competition (current) so the answer was incomplete. Tim wasn't satisfied with the result yet. He asked himself, "What is my competition?" That question led to a shift that has led to a revolution in real estate valuation that is changing the landscape of the industry.

Through a mixture of common sense and experimentation Tim discovered that the competition for any listing wasn't simply the neighborhood or houses in a radius from his address, but rather homes that buyers could (1) afford in their budget that included your listing and others less or more expensive, and (2) fall into a unique zone or area where that buyer wanted to live. Often times that meant proximity to a central shopping or downtown area, a certain school zone or an area clearly defined by natural boundaries like major roads.

​What Tim did next was something that has yielded great results for years of home pricing. He used that price range of affordability and buyer zone, then did a second search and compared the competition for those potential purchasers on a Scattergram. What he found was that he could compare and contrast listings easily and see how his home stacked up. Then he was able to find the price that was backed by the historical data, but also matched the market so it was true market value.

Remember a genius has the ability to make the complex simple. Tim had found some answers and graphs that had helped him, but how could he make this repeatable? Making these graphs by hand and experimenting with data was tedious and time consuming. There is enough going on in life. There needed to be a better way. So he built a software tool for himself where he could upload a data export and build them faster. That led to a meteoric rise in his first few years in real estate.

While the traditional CMA process finds value ONLY based on comparing to past sales, the new CMA process created by Tim treats the past sales value as on of two parts of the whole, the second is where you can position against your actual competition to find market value.

The paradigm shift of including your competition is something that cannot be overstated in its value and power for pricing homes in the market.

The process of competitive positioning is a perfect blend of simple and elaborate. It answer most question in most cases so fast and efficiently you'll think you cheated real estate pricing, yet it allows for expanding for those tough cases that need more help. Tim has taught his process in person and online, but the new book The New CMA: Competitive not Comparative has proven to be the best resource for mastering the process on your own time. Tim's mission is to spread this process and improve the level of service agents provide to clients. Because of this his software company even has a FREE eBook of the New CMA you can download and read.