You don’t need a degree in maths to be able to use statistics effectively. Luckily, the experts have done the hard work for us but it’s helpful to have an understanding of how you can make data work for you. Tim Lawless, RP Data National Research Director, answers agents’ questions.
How can I get a true understanding of my market? I’m keen to know where the listings are growing, how many potential listings there are and how I can pitch to win business.
Real Estate agents can break their market knowledge down into several distinct areas: what properties are for sale, what properties have recently sold and what properties are likely to enter the market in the near future. Collecting this information was once a full time job. Thankfully, we now have a wealth of local information at our fingertips thanks to the advent of internet services.
Real Estate agents should have a firm understanding of what properties are currently for sale within their catchment area. From a strategic perspective, this is a good way of measuring your market share; how many listings your agency wins compared to the competition. It’s also a useful way to benchmark your performance and ask yourself whether or not you are selling your listed properties faster or slower than the market average. What is the average difference between the original listing price and ultimate selling price?
Using a service like rpdata.com ‘On the Market’provides access to the complete list of properties that are currently for sale – not just in your suburb but across Australia. Together with all the listed properties is the complete marketing history including asking price, changes in the asking price or selling method, who is selling property and how long the property has been listed for sale. Rpdata.com also provides benchmarking statistics such as the average time on market and the average level of vendor discounting.
Analytics are also available so you can track the total number of listings this month compared with the same period last year, break listings down by price categories and get the latest auction results. You can also track which properties have recently sold in a specific area. Knowing what price properties sold for in your local area is critical knowledge and should be used when providing a price estimate on a new listing.
For agents who like to be strategic, knowing what properties are likely to come onto the market in the future is also a good thing! Generally, the average hold period of a residential dwelling across Australia is about seven years. Properties that have been owned for more than seven years may be ideal candidates for canvassing your services. You can search rpdata.com for properties that were purchased at least seven years ago to find this information out.
When discussing price with a vendor, is there a service that provides independent valuations that can take the emotion out of the conversation?
A great way to provide an independent valuation without going to the expense of obtaining a ‘full’ valuation is to use an AVM or automated valuation. AVMs are virtually instant and are a very affordable way of providing an independent assessment of a property’s value. All AVMs are based on mathematical calculations that factor in the attributes of a property such as the number of bedrooms, number of bathrooms and size of the land. The target property is benchmarked against other recently sold properties in the local area to provide an assessment of the value.
All AVMs are associated with an accuracy score called the forecast standard deviation (FSD). The lower the FSD, the more accurate the valuation will be.
How do I understand the recent price movements before appraising a property – such as the average discount level in my area?
One of the best ways to win a listing from a property appraisal is to demonstrate you are the local property market expert. Being able to communicate to a potential vendor what properties have recently sold, what price they were originally listed at and how long they took to sell will demonstrate that local market knowledge.
You can use rpdata.com to monitor what homes have sold and what prices they achieved. You can also use RP Data’s ‘On the Market’ service to track what homes are currently for sale, what (if any) price reductions have been recorded and whether there has been a change in selling method.
How do I know if a prospect is on the ‘do not call register’?
The ‘do not call’ register is a service where households have requested to be removed from direct marketing services and prefer not to be contacted for marketing purposes. It is important you are aware of these registrations before contacting a prospect, as they may have registered not to be contacted.
Rpdata.com provides telephone number details of home owners where available and all numbers are cross referenced against the ‘do not call register’ on a regular basis. You can be assured that if you are using rpdata.com any telephone numbers that are on this register are flagged with this information.
What is a CMA? Do I really need to do this when pitching for a listing? Can it help?
CMA stands for a Comparative Market Analysis and most often used by Real Estate agents to provide a vendor with an estimated selling price for their home. A good CMA will provide recent sales information for comparable homes that have sold close by together with information about those properties – how many bedrooms and bathrooms did they have, what was the land area, how many car spaces etc.
A CMA should also include information about the area – a demographic profile, information about local amenities and maps showing the location of comparable properties.
The benefit of using a CMA is that is takes a lot of the grunt work out of setting up a listings pitch to a vendor. The reports are mostly automated and can be customised depending on the situation.
Vendors appreciate the hard data that a CMA is based on and will be interested to know how a price estimate is formulated. The CMA report makes a listing presentation and price estimate completely transparent and demonstrates the comprehensive nature of how a selling price is determined.