It Pays to Know Your Numbers - Market Data & More!
Find success in real estate by tracking both personal-goal numbers and market stats to build value with your business and customers.
When buyers hear stories on the national news about a market downturn and the lack of competition among buyers, they may be tempted to make a lowball offer that can derail a transaction. To stop the carnage, use your numbers along with your words.
“Lead with facts that back up a strategic plan to sell your listings and get your buyers under contract effectively and with less stress to all parties,” says Julie Harris, founder and educator with Tim and Julie Harris Real Estate Coaching, based in Dorado, Puerto Rico.
SunStats: Our Most Powerful Market Research Tool Yet
For that lowball offer, Julie Harris suggests sharing numbers with buyers this way: “Similar homes that have sold in the past 60 days have closed at an average of 102% of the list price and your offer is 92% of the list price. The sellers have three more showings and an open house this weekend. I’m just concerned that with a 10% disparity in what the facts tell us, they may not take your offer seriously. What are your thoughts now that you know the facts?”
Of course, before you can have that conversation, you need to know your numbers.
Market numbers to know
People typically ask real estate professionals, “How’s the market?” says Garry Creath of Coral Gables, founder of The Paperless Agent, a tech company that provides resources for real estate agents. “The real answer is always, ‘it depends,’ so agents should ask what’s important to the person they’re talking to,” Creath says. “First, almost everyone wants to know the trends for the average sales price for the past three, six or 12 months—locally, not nationally.”
Whether you’re talking to a buyer, a seller or an investor, everyone seems to want to know about mortgage rates, too, Creath says.
“The important thing is to focus on ‘WIIFM’—what’s in it for me? Realtors® must translate the stats to show people what the numbers mean for them personally, whether they’re buying, selling, investing or just want to know the value of their property,” Creath says.
It’s easy for agents to get too deep in the weeds with all the data that’s available to them, says Darryl Davis, a real estate coach and founder of The POWER Program based in Rocky Point, New York.
“Regardless of whether data analysis is your strength, there are a few numbers to focus on that provide value to your clients to demonstrate your knowledge of market trends,” Davis says. “People want to know if it takes a longer or shorter time to sell, and how that impacts their home value.”
Davis suggests that you track:
- Average days on market.
- Average list-to-sales price ratios.
- Number of active listings compared year-over-year.
Julie Harris recommends that agents specialize in five ZIP Codes or fewer to make it easier to focus on data, as well as to understand trends in their geographic area. She suggests focusing on inventory numbers and the average sale price and whether they’re decreasing, increasing or staying the same.
Best practices for sharing market intel with buyers and sellers
“Buyers want to know whether they’re paying too much, and sellers want to know if they’re selling too low,” says Joe Lewkowicz, a Realtor® with Coldwell Banker Realty in Tampa. “Other than that, most people don’t know how to analyze real estate data, so I try not to ram numbers down people’s throats unless they ask.”
Sending an email or newsletter blast with market data—a traditional way to keep your name in front of homeowners and prospective customers—should be done strategically, Creath says.
“I recommend sending market stats monthly or at least quarterly to all customers and connections, always with an interpretation of what it means to various people in your market,” Creath says. “How to do it depends on your audience. For some people, an email with a link to a blog article is the best way, while others are more easily reached with a snippet on social media and a video link.”
Dovi Ettedgui, a Realtor with Corcoran in Delray Beach, uses numbers specifically targeted to his sellers or buyers. “For example, when I’m talking to sellers and they’re upset that their place hasn’t sold in three months, I can show them with data that it may be a timing issue rather than the need for a price reduction,” Ettedgui says. “We can look at more than comps and study the price per square foot for the area and inventory numbers.”
Ettedgui creates a graph to demonstrate active and sold listings in a condo building that includes whether they face east or west and how many bedrooms they have so they may analyze the potential sale.
“When you’re at a listing presentation, share the days on market and inventory trends to create a sense of urgency,” Davis says. “Homeowners tend to look at the highest previous prices, so you need to show them the current competition, and let them know if the market is slowing.”
Homeowners and buyers can get confused by national housing market reports.
“I suggest showing them a headline from a reputable source like the New York Times or the Wall Street Journal if it validates your local market conditions but only the headline,” Davis says. “For example, if there’s a headline about a small drop in interest rates, you can share that with buyers and tell them they’re likely to see some additional competition in the coming days.”
Data you need to monitor your business
Since 2000, Lewkowicz has routinely maintained a meticulously detailed daily Microsoft Excel spreadsheet of calls, door-knocking, emails and more. He uses it to monitor his performance in the neighborhoods he farms.
“I like to know exactly what it costs physically and financially to get each listing,” Lewkowicz says. “I compare my ratio of how much I spend on advertising annually to my return on investment, and I can compare that to every other year I’ve been in business.”
Lewkowicz copies his daily forms into a weekly form that updates his progress toward his goals and ratios, then compares those weekly numbers to weeks and months in previous years.
“I always know exactly what’s needed to hit my goals for the year,” he says.
Internal business stats can be important for agents to track, such as how many conversations result in an appointment and how many appointments lead to a listing agreement, Davis says.
“But it’s too easy to get overly invested in these formulas, such as the need to make 1,000 calls a week,” Davis says. “If you only make 500 calls that first week, then you may feel like you’re too far behind and give up.” Instead, he recommends keeping it simple with one hour of calling each day for a total of six hours per week.
“Focus on the activity, not the scientific formula, and the results will show up,” Davis says.
At the same time, he suggests that you track the number of leads generated, follow-up calls, appointments, showings, offers and closings on a weekly basis, then monitoring performance on a monthly and annual basis in terms of expenses, commissions earned, average sale price, referrals and sales volume.
Creath says that real estate professionals must focus on the best use of their time, which is spending time with customers. “Realtors got into this business to work with people, not to stare at a computer,” he says. “That’s why we created the Agent Goal calculator (agentgoal.com) that Florida Realtors® members can use for free. They just need to know their production goal and average sales price, then the calculator does the rest.”
Creath coaches agents to check their numbers monthly. “But don’t despair if you don’t meet your goals,” Creath says. “They’re made-up numbers based on something such as your previous year’s production, but there are so many external forces that impact agents. Midway through the year, every agent should reflect on whether they’re doing what they said they would do, then recommit to their goals or redo them.”
For Ettedgui, tracking daily activities matters most. “I do a quarterly check-in to review my goals, but it’s the day-to-day activities that get you to your end game,” Ettedgui says. #
Michele Lerner is a Washington, D.C.,-based freelance writer.