Lies, Damn Lies, and Realtor Statistics

It seems straightforward:  if you’re looking for the best Realtor, just find the local agent who sells the most homes, for the highest % of asking price, in the least amount of time.

Simple, huh?

According to at least one pro, however (this one), such statistics are at best a starting point, and can often be misleading or worse.

Parsing “Days on Market”

For example, consider average selling time.

Assume that Realtor Jane’s listings take an average of 78 days to sell, while Realtor Susan’s only need 47 days.

Obviously, Realtor Susan’s the better agent, right?

Not if her listings sell for an average of $175k, while Realtor Jane’s fetch $650k.

That’s because market time varies directly with price point.

In the Twin Cities, $650k homes currently take an average of 100 days to sell, while $175k homes only require 34 days on average.

Ergo, notwithstanding the raw numbers, Realtor Jane is positively a star, while Realtor Susan is a laggard.

Realtor Stars & Laggards; Role of Expired’s

Another way Realtors’ average selling time can be misleading is that it doesn’t take account of “Expired’s” and “Cancelled’s.”

To see how this skews Realtors’ numbers, imagine two agents — Realtor Tom and Realtor Bob — with the following recent sales activity (simplified, for illustrative purposes):

Realtor Bob — Last 3 Listings

Listing #1:  sold in 30 days.
Listing #2:  sold in 45 days.
Listing #3:  expired after 180 days.

Realtor Tom — Last 3 Listings

Listing #1:  sold in 37 days.
Listing #2:  sold in 62 days.
Listing #3:  sold in 79 days.

Guess whose numbers look better?

Agent Bob’s, because Expired’s and Cancelled’s aren’t captured in average sales time (I suppose you can say the sales time for an Expired or Cancelled listing is . . . “infinite”.)

So, Realtor Bob’s 38 day average trumps Realtor Tom’s 59 day average.

But, it’s Realtor Tom who actually has the better track record.

Overpriced . . . By Whom??

Finally, sales price as a percentage of list price has nuances, too.

It’s incumbent upon listing agents to recommend a suggested asking price (or at least a range).

Surprise, surprise, however, clients don’t always heed that advice.

When clients pick a too-aggressive list price, the usual result is serial write-down’s — and often, an ultimate selling price that overshoots fair market value on the low side.

Does that reflect on the listing agent?

Should it??

Of course, there are plenty of instances when it’s the Realtor who selected (or at least blessed) an inflated price.

That can be either intentional, i.e., the agent knowingly quoted a too-high price, to secure the listing (a practice known as “buying the listing”); or accidental, due to the agent’s inexperience and/or lack of skill.

Unfortunately, it’s impossible to glean from MLS statistics alone who is more culpable — the agent or the client — for mispricing a given home.

See also, “The Serenity Prayer ” Realtor’s Version”; “Knowing When to Pass (on an overpriced listing)“; “Perils of Overpricing Even (Especially) in a Rising Market“; “The Centrifugal Force(s) Roiling American Politics, or, “Demographics, Self-Selection & Political Gridlock”; “Realtors vs. Politicians“; and “Political ” and Real Estate ” Incumbents.”

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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