Technology and access to data facilitate everything nowadays — and in an effort to avoid being a curmudgeon, I embrace it. Everyone should, right?
Public dissemination of data gives consumers a lot of information and empowers them to make decisions based on that information. The public can see virtually all properties available for purchase as well as their purchase history even if they are in foreclosure or bankruptcy.
Whether or not the data is correct, it gives consumers a benchmark to inform their choices.
But does having all this data make everyone experts now? Absolutely not, the same way that leaving 200 Yelp restaurant reviews does not make you a food critic and using WebMD does not authorize you to make a qualified medical diagnosis.
The public’s lack of expertise is an opportunity point that real estate professionals have to embrace. We interpret the data and the nuance and frame the context. An algorithm can’t do that, nor will a generic market report, which only gives a broad point of view unspecific to the individual consumer.
Here are three areas of expertise that real estate agents excel in with regard to public data — and why the public still needs us to navigate data for them (even when they think they don’t).
1. Interpreting the data
When doing a comp report, do you take an average dollar amount per square foot, or is a median approach better? Does one base the sales only in the building, or is the entire neighborhood taken into account? How much further in a pricing analysis do you go back?
Interpreting data means answering these questions and sharing information your clients don’t already know.
As an example, a colleague and I represented five sellers of an assemblage of properties being sold as a development site in Queens, New York. Through public data, the sellers had an idea of what prices they wanted based on what similar parcels sold for.
They did not, however, know about the special zoning district, which mandated that one-third of the buildable square footage was to be for commercial use and mandatory improvements to the city’s subway system. We brought this to their attention to manage their expectations.
Due to those factors, the values of their properties and air-rights were worth much less than expected. We estimated that they were 30 percent lower than their initial offering price. The sellers were not happy to have gotten several offers and then have the same offers being rescinded because of this.
Fortunately, we sold these parcels at the pricing that we anticipated. Our sellers were happy with the outcome because we stuck to our guns and did the appropriate research and interpretation of the data.
We can only provide information and make suggestions based on our expertise and experiences. As consultants, we need to make sure that our advice has a foundation and is not just based on a whim. Our whims mean nothing, but the consumer’s whims mean everything.
2. Spotting trends
Is it days on market? Price history? Comparable sales? Quick answer: It’s all of those and more. Each variable helps paint the picture. With detailed research, one can find the anomalies, inconsistencies and relevant information out there about the property.
Just like an avant-garde surreal painting where the viewer “fills in the blanks,” public data is open to interpretation. It is a good starting point to get a sense of where your specific real estate market is.
However, not one website, application or market report is the be-all, end-all. You need to triple check your data. Online aggregate websites are not always correct, and local municipalities don’t always record sales immediately. Check with as many data resources as you can.
3. Framing the context
Public data is like a machete — it’s good to have when you are finding your way through the jungle, but in the wrong hands, it could hurt you. No one wants that.
Real estate trends are not only found in data — they are behind the numbers and in the individual communities, subdivisions, buildings and neighborhoods where each property is located.
No matter what you are looking for, there is data out there on it — but when it comes to real estate, trends and context are just as important as the data itself.
Until technology catches up with us, real estate agents will remain the absolute best resource for data interpretation available.
David R. Grossmann is a Long Island City-based real estate agent with Compass.