Statistics Don't Have Room for Nuances - True or False?

By
Real Estate Agent with Long & Foster Real Estate, Inc.

Another real estate agent in Crofton recently downplayed the use of statistics in evaluating the market, saying in an online newsletter that "statistics don't always have room for nuances" such as the effect of the tax credit on units sold and sold prices.  True, BUT...

My True or False?very first Activerain post was a market study based on statistics published by MRIS, our regional mls.  Within a week, I listed a Crofton home for sale as a direct result of this first post, and a second listing followed a few weeks later.  Needless to say, I've been a believer in market studies ever since.

In response to my competitor's statement, I will concede that the numbers are the numbers are the numbers... and there's no room for nuances.  Again, however, I say BUT...

 

Statistics are to a Market Report what Comps are to a CMA.

Comps used in a CMA are factual, too, but we wouldn't hand a pile of mls printouts to a seller and say "here are the comps... now YOU figure out the price."  Real estate agents are expected to bring some expertise to the table and make adjustments for the nuances in comps, such as property features and condition, and estimate a likely selling price or price range.  THE BOTTOM LINE:  Comps + professional analysis = CMA

I don't think it's any different when we present statistics to consumers.  We shouldn't just hand them a bunch of charts and graphs and say "here are the numbers... now YOU figure out the market."  Our clients expect us to interpret those numbers to account for the nuances, such as tax credits and current employment figures, and help them understand market conditions.  THE BOTTOM LINE:  Statistics + professional analysis = Market Report.

 

My answer to the question asked in the title of this post, therefore, is this... (drum roll please)... "All of the above."  TRUE because real estate sales statistics themselves have no room for nuances, but FALSE because those statistics are influenced by many factors - factors which we understand and should be communicating to consumers in our role as real estate professionals.

The ability we develop through training and experience to make sense of the facts - whether comps or statistics - is the value we bring to the table in any real estate transaction.  It's probably the main reason home sellers and buyers NEED us to help them buy or sell a home.

 

Don't make the mistake of minimizing the importance of accurate real estate statistics.  In fact, I would suggest that pricing a home today requires both a CMA and a Market Report prepared by a knowledgeable real estate professional like you or me.

Posted by


Margaret Woda

Margaret Woda - Real Estate The Woda Way

 

As a licensed Associate Broker in the Washington, D.C. - Baltimore - Annapolis area, I specialize in Anne Arundel and nearby Prince George's Counties, Maryland, including Fort Meade, Andrews AFB, and the U.S. Naval Academy. If you enjoyed reading this post and want to learn more about Real Estate the Woda Way, please visit my website at Margaret Woda.com or contact me today.

 

Margaret Woda, Long & Foster Real Estate, Inc. (410)451-6245|MWoda@mris.com

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Rainmaker
617,558
Martha Brown
Long & Foster Real Estate, Inc., Annapolis MD 21403 - Annapolis, MD
Your Homes Around Annapolis Agent

Great post Margaret. Just today I went to The L&F Silver Team Conference and the speaker was Steve Harney who is 'big' on statistics and the importance of using them. They help to clear away the mud and help Sellers and Buyers alike understand what is. Spinning the facts helps no one, showing the facts and allowing the consumer to make their own decision is where lies their importance.

Nov 01, 2010 09:15 PM #21
Rainmaker
334,284
Doug Reynolds
Better Homes & Gardens Real Estate - Sacramento, CA
Realtor - Sacramento, CA

Great post Margaret!

Nov 01, 2010 09:42 PM #22
Rainer
40,736
David Langlois
One Percent Realty Vancouver Island - Victoria, BC

"Lies, Damn lies, and Statistics", pretty much sums it up.  We have so many metrics that we can pick and choose from to build the story the way we want to tell it.  Using the numbers not to build a story, but to actually sell a property is where our value lies is.

Nov 01, 2010 09:44 PM #23
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Margaret I just love this post.  First and foremost, the information that we compile from our MLS's in nothing more than statistics.  Yet we have agents who ignore the available data just as many of our buyers and sellers do.

Secondly, one has to understand the numbers themselves before they can explain it to others. I'm not big on "winging it" whether it be real estate or otherwise.  I operate on data and rely on it to prove my case.  When you think about it, how can we ever prove our case if we don't back it up with data and data essentially is statistical information.

Nov 01, 2010 10:10 PM #24
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Margaret... excellent post... I love stats and I so agree with Matt... people can twist stats or lie about them... or just give their opinion within such stats... but overall, yes, you need good agents to explain such stats and to accurately give the correct info such as in the correct values.

jeff belonger

Nov 01, 2010 10:41 PM #25
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Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Numbers are a single frame form a movie.  You can't see what is really happening... just take a guess.  Getting a better picture involves watching the numbers (frames) over time as they change and the story unfolds.

Nov 01, 2010 11:21 PM #26
Rainmaker
682,641
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Statistics don't lie - but they have to be complete. Nuance is part of the art of valuing a property and it comes within the broader context of the statistics that are there.  One of the problems we have here is that in some areas there are very few sales. Statistical gyrations result.  Cutting through that and coming up with value requries nuance. Half art-half science.

Nov 01, 2010 11:59 PM #27
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Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Sorry, I had a busy day and didn't realize this was featured.  Not sure when I can catch up with the comments, but I'll give it a try.  For now, let me say that it's always reassuring when a bunch of people agree with you.  LOL. 

David disagrees, however, so I want to acknowledge that you're right about the bottom line... Get the property sold! 

Along the way, however, most people in my market are looking for information - maybe that's because I'm in a DC suburb, where very little is ever done without a study taking place first.  In other parts of the country, I suspect people may be more direct.

Lane, I agree. My market studies usually show a five year trend Year on Year, or a 12 month trend Month on Month... or both.  One isolated month or week doesn't tell us a lot.

Again... bottom line:  consumers apparently want this info because market studies have been the single greatest trigger for client contacts on both my blogs.  Just sayin'...

Nov 02, 2010 12:05 AM #28
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Margaret!  How true it is!  You have to do alot more research these days too, in order to obtain those statistics!  Now, it means going deep into the archives of two to three listing agents to get the REAL original list price, the real number of DOM, etc.  If you don't provide this information, how are you giving the sellers what they need to make an informed decision?  GREAT post, as always!

Nov 02, 2010 12:12 AM #29
Rainmaker
84,067
Simon Mills
Mills Realty - Toluca Lake, CA

With an accounting background I am partial to number...in reality it is what makes me tick.  I love MLS driven statistics as they are so easily molded into what I want to convey.  It doesn't matter what the numbers say as with a little insight you can interpret them to your benefit in every occurrence.

Nov 02, 2010 12:46 AM #30
Rainer
40,736
David Langlois
One Percent Realty Vancouver Island - Victoria, BC

Hi Margaret, I think you misunderstood the tone of my comment.  The quote is Mark Twain attributed to Benjamin Disraeli.  I was actually agreeing with you, but I guess that wasn't clear.  Of course market studies, reports, cma's etc etc are important.  But it's how we interpret them for a specific reaon, person or property that brings both their and and our own value to the fore. 

Nov 02, 2010 12:51 AM #31
Rainmaker
343,083
Dawn Maloney
RE/MAX Haven - Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson Stow Cuyahoga Falls Silver Lak

Raw Statistics=Vital.

Intelligent Interpretation=Priceless.

Nov 02, 2010 12:59 AM #32
Rainmaker
137,027
Alexsandra Stewart
Remax equity group - Portland, OR
Broker - Portland Oregon Real Estate

Nice post Margaret.  Really think the details are what is important -- have to pull the numbers, take a look at them, think about a year ago's numbers as well as what the trends seem to be, take into account our experience with the neighborhood, etc. etc, etc., and then have a thorough discussion with the clients - buyers as well as sellers.  

Nov 02, 2010 01:11 AM #33
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Fran Gatti
RE/MAX Coastal Redwoods - Crescent City, CA
Realtor, CDPE, RDCPro - Crescent City CA Real Esta

I love statistics and keep basic ones on the tip of my tongue at all times. I always know how many homes sold the previous month, the median price and the average DOM.  I know these facts because I write a monthly real estate report which my readers have come to know, love and count on.  It keeps me in the know and has established me as a local expert. 

Nov 02, 2010 01:39 AM #34
Rainmaker
175,445
Susan Thompson-Solomons
The McNelis Group, LLC - Solomons, MD
MD Real Estate

Our analysis of the facts is a large part of what sets us apart. For those who value statistics/facts, as you said, can result in listings or buyers who also find that information to be their priority. I for one don't know how we can best serve our clients without providing meaningful data.

Nov 02, 2010 09:06 AM #35
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Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

David - I'm really okay with people who don't believe in statistics because that makes me look good.  LOL.  But nice to know you're really in our corner with this.

Nov 02, 2010 11:55 AM #36
Rainer
127,421
Dan Quinn
Prudential PenFed Realty - Silver Spring, MD
Dan Quinn

I'm with you Margaret and today those statistics are getting harder to comprehend it seems.  Current market statistics aren't static by any means.  What we see today is likely not what we will see tomorrow.  It takes a professional, one who is in the trenches every day, to sort it all out.

Nov 03, 2010 11:52 AM #37
Rainmaker
88,555
Frank Harris
Keller Williams Realty Centre - Columbia, MD

Market studies are very helpful. As a listing agent we must or should know the numbers surrounding our listings. I have worked with sellers who did not care as long as that got what they needed, other sellers are very particular about knowing everything going on in their market.

Nov 04, 2010 01:01 PM #38
Rainmaker
648,639
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Margaret, you speak the truth. That one of the major reasonswhy  post market reports. People want the statistics and the interpretation of those statistics., Now I'm off to review that first post of yours to see if I'm doing it right... ;-)

Nov 05, 2010 10:42 PM #39
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Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

I can't believe you found that first market report.  I've come a long way since then... much more comprehensive market reports, but no better results than that first one.

Nov 06, 2010 08:45 PM #40
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Margaret Woda

Maryland Real Estate & Military Relocation
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