What Do Statistics Really Say?

Numbers and analysis are a big part of real estate. Percentage above asking price. Days on market. Price per square foot. I love math and I love numbers, but the truth is statistics can be very unreliable.

I just had someone ask me how much over asking price homes are selling for in my market. That question comes from news hype. There is a shock value to hearing “homes are selling for 20% over asking price.” There are a whole bunch of things to consider when analyzing how much over asking price homes are selling for.

1. What area is being considered? A particular city? A specific neighborhood? Statewide? Nationwide? There has to be some context for the area being measured.
2. How are the homes priced? Are they all priced at a fair market value? Are they all underpriced? Are they above the fair market value? Or do they range? Likely, they range…by a lot. And that has a huge impact on the statistic. Of course an underpriced home is going to sell for over the asking price. If a home is overpriced or at fair market value and it sells for over asking, that tells a much different story about home sales.
3. What are the market conditions of the area? Is it mostly financed sales, where there is an appraisal process? Are they mostly cash sales where there are not appraisals to influence sales prices? Is it a market with extremely low inventory and 10 offers per listing? Or is the buyer pool lower or inventory higher to where there is 1-3 offers per home? These are all factors in gauging the market and sales prices.

This is just one example where statistics can be very misleading in setting expectations for selling or buying a home. We live in a time where people want quick easy information. The trouble with quick and easy is often it is not solid and reliable. People often ask me “What do you think my home is worth?” I love to get that question, because in this market values are amazing! Homeowners should consider where their home value is. In answering the question, I never want to give an off the cuff value, because most of the time it doesn’t mean anything. I want to view the home in its entirety. I want to see all of the improvements, deferred maintenance, landscaped yard, converted garage…all of the things that affect the value. I want to give solid, reliable information.

So, before you sell your home consult with a local real estate agent. Someone that knows your market and can offer you their knowledge and expertise about what will be the best marketing strategy for selling your home. Don’t rely on the news brief that you heard that said “Home are selling for 20% above asking price.” for setting your expectations.

Your home is likely your biggest asset and your sale should be handled with care.