There are three kinds of lies; lies, damned lies and statistics. I take a bit of tongue- in-cheek liberty with a phrase attributed to Mark Twain however it is true that the real estate sales business has associated with it more few statistical measures that need to be applied with care when gauging the health of the market, the relative value of a particular property and even the performance of a particular agent. Two commonly quoted statistics are “days on market or DOM” and “% sale price versus list price”. DOM can be a very telling statistic perhaps offering some insight into a Seller’s potential outlook and also, with certain qualifications, a measure of listing agent performance. If the DOM statistic for a particular actively listed property is significantly greater than the average for that property type and area one can perhaps surmise that the property is overpriced or that there is some other issue that has kept it from selling within the average time frame. If the the DOM statistic for an actively listed property is very low, i.e. it was just listed, a Buyer may conclude that they should act quickly or that they should wait and watch the property depending on their particular outlook or strategy. This statistic is also often quoted by agents in seeking a listing to suggest that perhaps they can sell a house quicker on average than another competing agent. % sale price versus list price is a gauge often used by Buyers to calculate a reasonable offer price and by both Buyers and Sellers to establish an expectation of what property might sell for. In evaluating a single property or one neighborhood or price range versus another the two statistics can often together be used to draw general conclusions about the state of the relative markets. Unfortunately these statistics can just as often be terribly misleading.
More than a few agents, and by extension some Sellers, believe that by canceling and re-listing a property that has been on the market, and thus restarting the DOM clock, the listing will get additional exposure or somehow be viewed differently than if the original clock was left to run. What ever the reason for doing so one certain impact is that the DOM statistic for that property and for any neighborhood or market average that includes that property is now inaccurate. While you might think that, with our current limited inventory market conditions, the practice would be less prevalent than in years past there is still a tendency on the part of some agents to cancel and relist a property if it has been on the market “too long” which today can mean just 30 days or even less. They will argue that buyers think that there is something wrong if the property is on the market longer than the area average which is, in a sort of Catch-22, of course impacted by the very practice of canceling and relisting. While the number of times a property has been canceled and re-listed is not readily available to the general public a good real estate agent will point out such a circumstance to a prospective Buyer and allow them to draw whatever conclusions they wish. This practice of canceling and re-listing becomes a particular challenge when evaluating a group of properties or an entire neighborhood where even one such misrepresented property can skew the data for an entire area.
Another favorite statistic of real estate agents is “% sale price versus list price”. For as long as I can remember, in both Lincoln and Omaha, I have heard real estate agents quote that properties typically sell within a range of 96% to 97% of the list price. While there may be a degree of accuracy in that statement the missing and critical word is “last” i.e 96% to 97% of the last list price. If a house is listed for $150,000 and is reduced over time to $140,000 and then sells for $136,000 (i.e. 97% of the last list price) after being on the market for six months just what exactly does that statistic mean? Further complicating the situation is that the MLS data reflects the gross sales price not the price adjusted for Seller concessions to the Buyer. If in that same example that Seller agreed to pay $3,000 of the Buyer’s closing costs resulting in a net sale of $133,000 I would point out that the Seller netted just 89% of the original list price a far cry from the 97% that the common way of reporting the statistic would suggest. Now it may well be, in fact it is assuredly the case, that our example property was over priced for the market at $150,000 but one can only hope that the misguided Seller was not anticipating a sale based on typical market % sale price versus list price statistics as applied to that original asking price.
Real estate sales statistics can be very valuable and very powerful tools but if you feel as did Mark Twain in suggesting that “figures often beguile me” then you should be certain that you are working with a real estate agent that both understands the underlying data and is willing to crunch the numbers in order to present you with an accurate evaluation of a particular property or situation.
Remember whether buying or selling, moving up or downsizing, Lincoln or Omaha, the Vaccaros; Paul & Susan, stand ready to assist you, your family, friends and co-workers. Call or email us today! Lincoln (402)817-0355 , Omaha (402)577-0820, info@WeSellNebraska.com (Paul & Susan Vaccaro – CBSHome Real Estate 15950 W Dodge Road, Suite 200, Omaha, NE 68118 – Woods Bros Realty 3737 S 27th Street, Lincoln, NE 68502.