As REALTORS®, we are deluged with a mind-boggling pile of statistics.
It’s actually a thing now for some marketing companies to turn this data into beautiful, professional-looking charts and diagrams so we can then show them off to our clients.
Those charts sure look impressive!
But consider the possibility that swamping your clients with statistics might be doing more harm than good. 🤔
Fancy charts and diagrams might impress your most hard-core Analytical clients. But even they can get overwhelmed.
You’ve heard of Analysis-Paralysis, right? The more information that you feed an Analytical person, the more confused they get. This leads to bad decisions.
And what if your seller is NOT an Analytical?
Most statistical data is clutter to them. You show them, and their eyes gloss over. 🙄
I find that half of Real Estate stats serve no useful purpose. The other half? I feel like I need to explain why they are inherently unreliable.
“Days on the market?”
Unfortunately, this stat doesn’t tell you how many times some of those properties have been on and off the market.
“Sale price to list price ratio?”
Unfortunately, this stat doesn’t tell you how many price reductions there were before some of those properties finally sold.
I suggest you skip all that explaining and instead show your clients the only statistics that truly matter when it comes to understanding the market:
Supply and Demand, and Absorption Rate. 👍
The absorption rate is simply the ratio between supply and demand. When the absorption rate changes, it affects all the other statistics.
For example, if the absorption rate declines, the ‘Days on Market’ goes up, and the ‘Sale Price to List Price’ goes down.
Every Real Estate statistic is essentially a derivative of supply and demand. So why make your analysis of the market more confusing than it needs to be?
Just use the root information. You’ll look like a genius, and your clients will understand how these statistics directly affect the saleability of their listing. 😃
To demonstrate supply and demand effectively, you’ll need to make monthly graphs.
It will take some effort, but when you’re done, you’ll have a powerful and insightful set of charts to show your clients that your competitors don’t have.
The month-to-month inventory and sales numbers are all available from your local board. Just gather the information for 3-5 years, input it into a spreadsheet, and export the data to create yearly graphs.
You can also indicate the absorption rate (sales divided by inventory expressed as a percentage) on the same graph.
If you don’t know how to build graphs from a spreadsheet, either consult The Google or hire someone much younger than yourself to teach you! 🧒
That’s what I did.
You’ve got your graphs. Now what?
You’ll see… 😉
You’re going to start noticing how supply and demand directly affects pricing and saleability.
After a while, you’ll become skilled at predicting the future quite accurately, and before you know it…
You’re a market expert!