3 Stats Real Estate Agents Need to Know
Market Stats for Real Estate Agents
The top real estate agents wear a lot of hats and they wear them well. One of those skills that every top real estate agent needs is understanding the real estate market and interpreting the data. Understanding your local real estate statistics won’t just help you price properties and understand value, it will also differentiate your in your marketplace. Most agent’s knowledge of stats extend only to basic figures such as average sale price and average days on market. It’s not that there’s anything wrong with this numbers, but they are just the beginning when it comes to understanding market stats.
In this real estate agent training podcast, you will learn 3 stats that all real estate agents need to know.
[00:00:00] Hello and welcome to Rev Real Estate School. The podcast With quick tips and actionable advice to help you sell more real estate in today's world. And now your host Michael Montgomery.
[00:00:11] Hello and welcome back to Rev Real Estate School. I'm your host Michael Montgomery. Today we are talking all about statistics and we're talking about the numbers that you need to know as a real estate agent.
[00:00:23] Unfortunately when you're going through the real estate course there's not much discussion around what statistics are important and what we should be looking at what trends we should be looking at. Then we're thrown into this industry and we read a lot of news reports on prices and potentially even days on market and there's nothing wrong with those numbers. But there are some very important numbers that are oftentimes overlooked in real estate and having an understanding of this will not only help you get listings price listings properly help buyers understand the market but it will also differentiate you oftentimes when we think of stats. We just think OK we need to know what the average prices the average days on market. But if you can go into a listing presentation or a buyer presentation and talk about more in-depth stats and stats that make a big difference to their real estate investment then you have a leg up against the competition. So you can even use this as a differentiation point. Oftentimes we're looking for different differentiation points in real estate. You know you need to be unique in this market when you are dealing with so many competitors that are out there you have to have a unique selling proposition. Furthermore, sometimes it might not be experience it might not be numbers of the number of years that you've been in the industry or it might not even be a community that you're going to do a listing presentation and that you're focused on but where you can differentiate is knowing the market and knowing the statistics. So we're going to jump into three statistics that you should know in real estate in order to best set yourself up for success.
[00:02:00] The first number and probably be most important when dealing with buyers or sellers is months of inventory a lot of real estate agents don't have a full understanding of what months of inventory even means let alone how it can help or hinder you when you're out there trying to get a listing so months of inventory basically you have a certain number of properties on a given market at a certain time and you're looking at the number of properties that sold or left the market over the last month. And then based on that number how many months it's going to take to mop up or sell all of the given inventory. For example if you have 20 homes and 10 sold last month then it would take two months basically to sell all of the inventory so you have two months of inventory if you have 20 homes on the market and only five have sold. Now it's going to take four months of inventory. So it's going to take four months to sell those properties that are on the market. Now this is very important because it dictates what the market is doing. If you have a very high number of months of inventory then chances are the market is soft or softening. And if you have a very low month of inventory you know you can probably push the price a little bit higher. So this number is so important to in pricing homes and the typical way of looking at it is if you have less than four months of inventory you're in a seller's market four to six months and you're in a balanced market and six plus months and you are in a buyer's market. Now if you've ever been in a market that's five or six months sometimes it doesn't feel very balanced. So depending on your market this might shift a little bit. However, these are the universally accepted numbers so that is months of inventory go to a listing presentation with the months of inventory and the trends of months of inventory over the course of time and you will be setting yourself apart like crazy.
[00:03:55] A couple other spin off statistics that you can use with months of inventory is also absorption rate. So that is basically the opposite. So if you have 10 homes that sold and 20 on the market you're doing 10 divided by 20 so your absorption rate is 50 percent of the homes are selling very similar to months of inventory it's just basically the inverse. And then another one that you can use is new listings to sales ratio again very very similar. And this one's very good to look at as far as trends are concerned but knowing what's happening in the market based on sales and based on new listings will honestly be a huge key when you are working with a buyer or a seller.
[04:35] The next number that you should know are builders starts. Builders starts are the number of homes that builders are starting in a given month or a given time period. The reason why this number is important is builders typically have quite a bit of resources when it comes to understanding the market. So the builder behavior can very much not only indicate your inventory levels but it is also something that you can go on because they have a lot of resources when they're looking at the long term health of a market. Looking at builders starts as a trend can show how the builders are interpreting the market. The other piece of this is that it also impacts your inventory levels and sometimes these inventory levels are not reported on your MLS. If you're doing an MLS search for months of inventory but your builders are not having all of their properties on MLS then you could have some skewed numbers. Looking at builder starts is something else to really really gauge the health of the market.
[00:05:38] The third one and this is the statistic that you can use when you have a home listed. It's often times overlooked but very very powerful. Most MLS systems will have some way of reporting the number of views that you've had on MLS or on your listing. And then there's also usually a favorite option. Depending on your MLS system there's very likely something some sort of reporting out there where you're going to be able to see how many people are viewing it and how many people are favoring it. Now this ratio is absolutely key when you are monitoring your listings and you're monitoring to see how the public is interacting with your listing on line. And this is an amazing stat that you can report back to your sellers that again will really give you an edge in your understanding of the market. If you have a lot of people favoring it and not a lot of views then chances are you're priced well and even if you are not getting showings right now chances are you will in the future and you're in a good position now if you're getting a ton of views but you're not getting a lot of favorites then what you could have is your marketing could be perfectly on point because it's looking good and people are clicking on it. However something's not lining up and that's typically going to be the price. So this can then be used to pass off to a seller and say look we're getting a ton of views on your listing. However not a ton of people are favoring it so that tells us that something could be off and that can then lead into a conversation around a price reduction if necessary. Now if you don't have a ton of listing so you don't really have much to compare to. You can always talk to somebody else at your office and see what those ratios are like for them. And then from there you can start to analyze your own one or two listings. Then as you go through your career and you start to carry a certain number of listings you'll be able to compare this and this is such a powerful statistic because if you're in a market that has very few listings and very few buyers but of those very few buyers a lot of them are favorite in your listing then chances are you're in a good position oftentimes. All we're looking at are a number of favorites or number of views. Put these two things together and you will be able to market your property better than anybody else.
[00:07:44] Thank you very much for listening to this episode. I really appreciate it. Remember you can always ask a top producer anything all you have to do rate review the show head over to our website go to the free coaching section and from there you book in your call. Super simple. Thanks so much for listening. We'll see you in the next lesson.
[00:07:59] This episode of Rev Real Estate School has come to a close. Thank you for tuning in. We will see you back here for the next lesson.