Massaging the real estate numbers

Statistics can be used to back up most points of view. And as we all know, statistics can be managed in such a way as to strengthen or weaken a point of view. Some stats, too, can be twigged slightly to accommodate the user’s needs. Sadly, the old line ‘statistics don’t lie’ has become simply that – an old line. This is because we all too often hear how numbers were fudged, or that some were conveniently omitted, with precarious results in the end.

In the world of real estate, statistics can be important, and are commonly cited and used. I often use stats supplied by the Toronto Real Estate Board (TREB) for sales figures in my columns, to help illustrate where the Beach market has been, and where it may be heading. Those statistics are broken down for realtors by TREB into neat little piles, enabling me to create a snapshot of the Beach market based on the average price, median price, yearly, monthly and daily sales figures, and housing types. All the sales figure data that TREB collects are the final hard and fast numbers of home sales. For instance, when a home in the Beach sells, the listing brokerage that represented the seller will input several key details of the sale’s transaction into TREB’s Multiple Listing Service (MLS), so all members of the board (other agents) can access this information. Some of this final information will include the original list price as per the current MLS listing contract, the sale price, the percentage number of the sale price to the list price, the date of the sale and the days on the market (DOM).

Agents will commonly use that information, especially the sale price and days on the market, in order to effectively price other homes. Buyers will use this information to figure out a home’s value. It seems pretty simple, doesn’t it?

Most Beach homeowners who may be contemplating selling their property in the future will pay particular attention to the local Beach real estate market, especially when it comes to their own street. Perhaps you notice that one or two homes did not sell that quickly, but maybe took several months. Soon after that home finally sold, maybe in your mailbox will be a flyer proclaiming that the home ‘Sold Over Asking Price in just five days’, or ‘Sold for 110 per cent of List Price’. And yes, that is most likely true. The sale price was over the ‘current’ list price. And yes, it was after just five days. But in some instances, it may not have necessarily been based on the original list price. It may be that the home was reduced in price before it sold.

However, instead of reducing the original list price, a new listing contract might have been drawn up with a new lower price, with the first listing agreement and the original price now cancelled. This is a selling technique that an agent may use in order to keep the DOM (days on market) low. It may also be a new listing with the same brokerage and agent with the same old price, but a new contract resets the DOM, similar to reversing an odometer in a car. Through email and online listings, it may well reappear to a potential buyer as a ‘new’ listing, and garner some needed attention. This technique has been a popular tool in the Beach market.

It’s not illegal in TREB’s eyes, and can be effective. But it could be used to fudge the numbers and the TREB statistics.

Let’s forget about the old adage of ‘buyer beware’. Instead, let’s look at ‘potential seller beware’. There are companies that are not registered MLS users that gather TREB sales stats from the MLS computer system without the express permission or supervision of TREB. Those key details that I previously mentioned, which a listing broker inputs into the MLS computer system when a transaction is finalized, are compiled, categorized and sold to agents and brokerages as listing or recruitment tools. These stats can be used to rate the performance of any brokerage or agent in a specific local marketplace, such as the Beach. An agent’s sales statistics, for instance their sold listings’ average DOM, and ratio of final sale price to list price (how close the final sale price was to the list price), can be displayed and scrutinized by other agents. Or they’re given to potential sellers to highlight an agent’s abilities, or perceived inability to deliver their price within a reasonable time period. An agent’s stats may in fact be true, and well-deserved. But these stats can inadvertently be misleading the potential seller as well. They can be fudged, because the only statistics used and compiled are those that relate to the latest or newest listing agreement. An agent can appear in these stats as being right on their price 100 per cent of the time, with a low DOM average, when in reality the real tale of the tape might have been fudged with new listing agreements at reduced list prices. Sometimes agents might do this without the written consent of the sellers, simply to pad their personal stats on the MLS.

I certainly don’t want to paint all agents or brokerages with the same brush because the vast majority are honest in regards to their personal stats. However, as with most businesses where stats do come into play, a small amount of agents and brokerages have found a simple way to take advantage of the system.

When interviewing agents to sell your property, and an agent trumpets their stats to get your listing, be aware that there are in fact no statistics or rankings compiled for the number of terminated listings, price reductions, overpriced and expired listings that an agent or brokerage may amass en route to achieving the best statistics. Maybe there should be, and you should ask about those stats. As well, it could be important to you as a seller to know if an agent’s statistics   are actually their own personal sales results, or a compilation of their whole group or team of agents being rolled under one agent’s name in order to lift that agent’s own statistics. That’s like one player on a hockey team telling you they had every point, goals and assists, for their team over the season. You may want to find out whether or not the stats they’re presenting to you are actually true and accurate, or an attempt to mislead you from the start.

If you have any questions about this article, or Beach real estate in general, feel free to contact me at tneal@trebnet.com, or through my office at 416-690-5100. Have a great Beach spring!


Did you enjoy this article? If so, you may consider becoming a Voluntary Subscriber to the Beach Metro Community News and help us continue providing the community with more local content such as this. For over 40 years, our staff have worked hard to be the eyes and ears in your community, inform you of upcoming events, and let you know what and who’s making a difference. We cover the big stories as well as the little things that often matter the most. CLICK HERE to support Beach Metro News.

Click here for our commenting guidelines.

Leave a Reply

*