Five Things You Should Know about Real Estate Market Statistics

Posted on January 2, 2009 by AAR

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A Savvy Blogger and Market Expert Shares Tips on Becoming the Go-To Source


Real estate market statistics are a cornerstone of any successful agent’s business. Spending time analyzing and understanding the numbers not only will ensure that you know exactly what is happening in your market, but you’ll be able to demonstrate that knowledge to your clients and prospects with incredible ease. Next time you need to show someone you know your business, need a price reduction or need a justification for your buyer’s low offer, turn to the numbers.

1. Market Statistics Make You the Expert.

What do buyers and sellers want to know? “How’s the market?” If you can answer that question with real numbers instead of a vague answer, you establish your knowledge and expertise immediately. Being able to quote a few facts about the market with actual values brings credibility to what you say and establishes your expertise. After all, if you can tell them more precisely about the local market than what they hear on the national news, then you become the go-to source for real estate knowledge.

2. People Love Market Stats. Share Them!

Even if someone isn’t actively buying or selling a home, they’re still probably keeping an eye on the real estate market—especially your past client list and sphere of influence. Market knowledge is a valuable thing, so share it! Instead of sending a recipe postcard, try a quarterly market report. If you’re farming a neighborhood, why not include some detailed market knowledge on that offer to prepare a CMA? Sending regular market updates to your sphere of influence is a fabulous, low-pressure way to remind them that you’re in real estate and that you’re the expert. It’s something they’ll not only appreciate, they’ll share it with their friends and family too.

3. Provide Context, Not Just Numbers

Just because I can see what the NASDAQ closed at today doesn’t mean I understand what that means—or know if it is going up or down. There are many sources for people to find the average sales price in a given area. If you can be the agent that answers why, then you’re not only differentiating yourself from the pack, but you’re giving them information that they can really use. Don’t just spew the average sales price and inventory levels. Tell them if those values are going up or down and why that is happening. Think about what you’re seeing in the marketplace that would affect those values: seasonal trends, changes in financing, economic changes, government incentives and so forth. Here’s an example of combining the facts with the why. Always provide an answer to WHY those statistics are what they are.

4. Numbers to Know: Average and Median Sales Price, Inventory Levels.

You don’t need to memorize a large set of market statistics every month. Even knowing just two to three values will be enough to establish your credibility and allow you to talk easily about the market. My top three figures to know are the average sales price, the median sales price and inventory levels. The average sales price will give you a general sense of home values. The median (the home price where half the sales were below that value and half were above) will help you know what price ranges are selling. Together with the average sales price, it gives you the general trend of home values. The level of inventory tells you how quickly homes are selling and if there is an over- or under-supply of homes. Generally, inventory levels (also called months of inventory or absorption rate) are calculated by dividing the number of homes for sale by the number that sold.

5. A Picture (or Graph) Is Worth a Thousand Words.

One of my favorite ways to share and explain market statistics is with charts and graphs. A simple graph of the average sales price for an area can quickly show a home seller that values have decreased sharply over the last 2 years—like this chart of sales prices in southwest Tucson. Showing a buyer a chart displaying steadily decreasing inventory levels over the past few months may give them extra incentive to make a decision now before they have fewer homes to choose from and more competition. Charts tell a whole story of the market in a single glance. They don’t have to be fancy, just easy to read at a glance. If you keep track of just a few market stats every month in a spreadsheet, eventually you’ll have an enormous resource from which you can quickly make charts and graphs.
Don’t be intimidated by statistics. Master a few basics and establish yourself as the source of real estate information for your sphere of influence.

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