Final answer:
A process performed by real estate agents to help clients determine a listing price is known as a comparative market analysis (CMA). It is a thorough examination of recently sold, similar properties in the same area to inform the pricing strategy for a home. Understanding biases like anchoring bias can also play a role in real estate decisions.
Step-by-step explanation:
A process performed by real estate agents to help their clients determine a price to list their home is known as a comparative market analysis (CMA). This method involves analyzing the prices at which similar properties in the same area have recently sold. Agents conduct a comparative market analysis by collecting data on recently sold homes that are comparable in size, location, and features to the home being priced.
The reason a real estate agent might show a range of houses, including run-down and nicer ones that are outside of the clients' initial budget, could be related to anchoring bias. When clients have seen the lower-end options, they may adjust their expectations and be more inclined to increase their budget for a nicer home.
Collecting data such as sale prices for a sample of homes—like recording the sale prices for 35 randomly selected homes recently listed in the county—provides essential information for the CMA and helps ensure the pricing strategy is in line with the current market.