It bothers me that I so fondly look back at years that have only recently passed. When the market was scary and difficult, I enjoyed leafing through the local Realtor’s Association materials month to month, watching the brokerage rosters to see which agents were no longer agents. During that difficult time, one older lady Realtor remarked to that she had apparently retired, but no one had told her yet. I heard agents screaming UNCLE often in those years, and how I relished the opportunities that these holes in the market were creating for me. Pardon me while I wipe these nostalgic tears from my eyes.
Today, things are entirely and totally different. The roster pages now bloat each month, with smiling faces of agents who just started yesterday. Signs in lawns are changing, with new companies and bigger companies, signs plastering the names of people that I’ve never heard of. There are new agents and there are revitalized agents, those who think that now it’s time to try hard, now that the market has improved and the test for extreme real estate success involves breathing closely into a pane of glass to see if the candidate can fog it. As a special bonus to the consumer, you’ll be pleased to note that everyone of these new agents are experts in their field.
But how can we know that? How can we be certain that, even in spite of any demonstrable record of proficiency, let alone success, these agents are indeed experts? Well, silly, in real estate as in politics there is no need to back up a claim to prove its worth, you must only find the microphone and make that claim. If our culture has provided that we can now self-identify as whatever it is we feel like being, perhaps it’s only natural that Realtors who fogged the glass yesterday are the experts of today.
But some take further measures to convince you of their worth, and while I just write here and try to maintain a professional level of success to prove my worth, in an effort to differentiate there is an old theme making new appearances: The compilation of data to prove a point.
Real estate is a data intensive business, this everyone knows. But unless we are Case Schiller and we’re only looking to smooth out the rough edges of the largest asset class in these United States, we have very little use for macro numbers. Last week, as I do many weeks, I wrote a market analysis for a lakefront home on the north shore. In preparing this report, I could have used broad MLS generated data to prove a point. I could have used a year’s worth of data that involved every segment of the lakefront market. I could have done these things, but the numbers, while factual, would have been misleading. Geneva is a segment specific market, where a 50′ lakefront home in Lake Geneva Beach Association has absolutely nothing in common with a 100′ lakefront lot in Fontana. To compare the two and present a statistic that says one has anything at all to do with the other is disingenuous at best, ignorant at worst.
There is a new angle out, one that aims to convince sellers that the goal of selling is to actually sell. The intent of the effort is correct. The application of the numbers is absurd. That’s because one of the numbers is not at all objective. You cannot contrast the right way against the wrong way, unless you identify the criteria for the differentiation. If I say that my listings are the right way, and your listings are the wrong way, this is fine. But that is subjective opinion, not objective fact gleamed solely from the collection of data.
The lakefront market on Geneva is one that behaves irrationally at times. It is a market that prints sales that should have no business printing. It will reward one seller with a huge gain just as it saddles another seller with a huge loss. It will flood a segment with buyers ($2.5-5MM right now) and skew many of those print prices higher, just as it will vacate a market (entry level lakefront) and cause sellers to sell at prices that are below the 2012 market lows. This market makes very little sense at times, and to attempt to reason with it can lead to futility.
That’s why this market is best approached with highly precise, highly segments comparable statistics. If we’re measuring a 200′ lakefront lot based on its price per foot, then we should be smart enough to ignore 50′ lots. If we’re going to proclaim something a value because it’s our listing, then we should back that up with narrow proof. We should do this, but any explanation of value here should include a highly articulate narrative that defines the nuance that leads to true value. Without the ability to detail these nuances, the collection of data and the blurring of objective and subjective statistics is called marketing, not research.