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To succeed in luxury real estate, agents need to stay current on a lot of information. Clients look to you for intel on every facet of the transaction. Understanding and using data is a differentiator—and according to Michele Schuler and Neda Perrina, a top-producing agent team at Realogics Sotheby’s International Realty in Seattle—it doesn’t need to be difficult.
“Given my background in finance, I find data incredibly empowering,” says Schuler. “I have always been data-driven and rely on it to confirm key decisions such as how to price a home, when to list it, what to offer on a home for sale, and when a price reduction may be called for.”
This instills confidence in their clients. “They know we’re not ‘winging it’, but rather, relying on years of data and our experience,” adds Perrina. “Data is a foundational tool that allows me to become my client’s trusted advisor.”
The data every agent needs to know
As Schuler and Perrina explain, there are six essential data points that agents should always be aware of, whether they’re representing a buyer or a seller:
- The absorption rate (based on pending and closed sales)
- Months of available inventory
- The average days on market
- The list:sell price ratio
- The average cost per square foot
- The appreciation rates (specific to each market you work in)
“With the aforementioned data in hand, ask yourself about the trends you see,” says Schuler. By starting with those six key considerations, you’re providing your client with a comprehensive overview of a home’s value, and how to best navigate an upcoming transaction.
Monitoring the market matters
“Real estate is a business, and we need to treat it as such,” notes Perrina. “A business-driven mindset means quantifying as much data as possible, which can give us leading and lagging indicators of where the market might be headed. Failing to monitor stats and trends will result in potentially providing erroneous advice to clients.”
To that end, Perrina and Schuler highlight additional metrics that can have a tangible effect on home prices:
- Interest rate trends
- Construction costs in your area
- Commission rates in your discrete markets and price points, and your personal average commission per sale
“Knowing the relevant commission rates can help support you in competitive marketing—or it can help you protect your commission via a buyer agency agreement in a market where selling office commissions may be declining,” says Schuler.
Track the bigger picture
Once agents have a good grasp of local inventory data and market conditions, Schuler and Perrina encourage them to expand their analysis even more. “We should constantly be monitoring trends from as many angles as we can consider—marketing, demographics, interest rates, global challenges, economic disruptors—and how those interplay with each other,” says Schuler.
Here are five areas to pay attention to:
Demographics: how are the age and income levels of my audience shifting and how will said shift impact my market? “Do my marketing tools align with the demographics?” says Perrina. “For example, do I need to make a change to appeal to Millennial or Gen-Z buyers?”
Employment data: how many new jobs are being created relative to new housing starts? How might that impact supply and demand?
Consumer resources: where do buyers and sellers find their real estate agent? “I like to align my marketing efforts to reflect the sources that consumers are using to connect with an agent,” says Schuler.
Buyer trends: what are buyers looking for in a home, and how has this been shifting over time?
Movement: how many people are moving into or out of your market area, and where are they moving from or to? “Knowing this helps me tap into referral networks in key feeder markets to facilitate these moves,” says Perrina.
“We also have to evaluate competitive threats, new business models, and trends in the real estate industry that may impact our business,” adds Schuler. “And, of course, we should be paying attention to future trends in real estate to help inform and guide our clients.”
Identify trusted data sources
If that sounds like a ton of information to unpack, don’t worry; the important thing is to collect a stock of reliable resources you can return to on a regular basis. “I use all of the data collected and served up by local appraisers, Trendgraphix, the Case-Shiller indices, various automated valuation models, and demographic tools—it really comes down to anything I can get my hands on,” says Perrina.
Find reports that address your market, such as the MLS in your area. “Don’t be afraid of data!” says Schuler. “It can be your advocate. It will legitimize the information you share, and give you credibility as an advisor that can truly be trusted in the purchase or sale of real estate.”