Pricing discussions with sellers is both an art and a science. Comparable listings data have always played a key role in determining asking price, as do algorithmic tools like automated valuation models (AVMs), but real estate agents say those values are a useful starting point—not a final valuation.
That’s where their local knowledge about a neighborhood, the property’s features and the local market come into the equation.
Researchers from Finland and the University of North Carolina published a new study based on interviews with 15 real estate professionals in September regarding the influence of Zestimates on client interactions and professional practices. Their findings suggest something many agents know firsthand—that algorithmic AVMs add more friction into real estate transactions, causing agents and brokers to change how they work and communicate pricing discrepancies to maintain client trust.
When a seller brings him an AVM-generated value, such as a Zillow Zestimate or an output from ChatGPT or Claude, Michael Oliver doesn’t take it personally. Oliver, a real estate broker and owner of Oliver Realty in Tucson, Arizona, uses those conversations to educate clients about what goes into a home’s pricing strategy.
“It’s just another opinion; it’s a very informed opinion,” Oliver says of AVMs. Clients are simply “coming from a place of wanting the best results,” when they bring automated values into the discussion, but Oliver points out it’s an agent’s responsibility to explain local market conditions and what goes into a property’s current market value.
Strategies for setting realistic pricing expectations
AI in real estate has come a long way. But chatbots and Zestimates don’t always see the full picture, like special home or privacy features, recent renovations, how a property smells (and if it requires remediation) or even individual buyer motivations and emotional reactions to the homes they tour, Oliver says.
In transactions where every dollar counts, it’s up to agents to show—not tell—clients the reasoning behind your valuation, says Daniel Kramp, associate real estate broker with Christie’s International Real Estate in New York City.
“When it comes to an estimate of value, I usually give people a range, and I tell them that pricing is a strategy,” Kramp says. “Do you price high and wait and negotiate? That’s one way to do it…or you can price it for competition, and suddenly you have multiple offers.”
Kramp says he sends sellers comps of similar listings and even invites them to look at homes in person so they can see what homes within their asking price range look like. Additionally, he makes sure sellers understand that, in reality, purchase transactions aren’t just about the numbers.
“It’s emotions and psychology; you don’t know what buyers are going through,” Kramp says. Understanding the emotional response you’re triggering in buyers when you list at a certain price point goes further than relying on an AVM or Zestimate.
To combat price discrepancies, Kaylie Curtis with The Gold Standard Brokerage in Denver goes old-school with her visuals, relying on physical comp sheets with highlighted property features. “Sellers love visuals, so get creative with it,” she advises.
Curtis also uses a “buyer’s pyramid” visual with her sellers, showing them how listing a home 10% below market value can capture 90% of interested buyers and get them closer to their asking price versus overpricing a home and getting little to no interest. It makes sense to most people once she explains it, she adds.
Another strategy that the algorithms often don’t take into account? Showing more recent comps (homes sold within the past 30 days versus months ago), which is a more accurate representation of what buyers are willing to pay right now, Curtis adds.
Treading carefully with client objections
With AI all the rage, all three agents say they’re having more conversations around AVMs with both sellers and buyers. But Kramp is quick to remind clients that AI tools like ChatGPT and Claude rely on historical data and square footage but often overlook things like layout, views, renovation quality or other features that can move the needle on pricing.
“Smart clients take (AVMs) with a grain of salt,” Kramp says. “But the first rule of thumb is I never dismiss a client. I never say it’s wrong or right because I have to do my own comps.”
To successfully pivot the conversation toward accurate figures, agents must know their market, the inventory and be prepared with the facts, Kramp says. The same is true when dealing with AVMs from property appraisers and how he translates those values to clients, he added.
“Every building has a different dynamic, so two identical buildings in the same neighborhood could have very different financials or different rules, which affects the value,” Kramp points out.
When Curist encounters AVM objections, she treads carefully. There’s a fine line, she says, between educating them and appearing dismissive of their concerns.
“We don’t want to ever make a seller or a buyer feel like they’re not educated just because we have a little bit more experience,” Curtis says. Instead, she urges agents to “use your resources,” including negotiation to arrive at a happy middle ground for both buyers and sellers.
“We can’t argue with fact-based pricing,” Curtis says. “However, as the market is changing, it’s almost changing day to day right now…the comps that were used six months ago, I really avoid using those.”
Oliver goes into these conversations assuming his clients have good intentions and just want the best outcome. Invite clients to share what they’ve found, listen to their goals (and really listen for their fears) and answer their questions without taking offense if they push back on pricing, he says.
Don’t be surprised if you have more of these discussions during a slower market, Oliver adds. Clients may bring their AI-generated values to the table as a test of your competence, and it’s up to you to deliver.
“They’re also filtering (agents),” Oliver says, noting that clients want to see how you respond to questions, if you can answer them and to gauge your market knowledge. “That’s sales, and they have every right to question your sales ability.”
