One of the best quotes about statistics is from a Scottish poet named Andrew Lang.
Naturally, you’re thinking, “But how do you pick the best quote about statistics when there are so many good quotes about statistics?!”
It’s a hard task for sure, but listen to this one and you’ll agree it’s one of the best.
Politicians use statistics in the same way that a drunk uses lamp-posts—for support rather than illumination.
He was talking about politicians but he might as well have been talking about Realtors. Whenever the talk turns to statistics with a Realtor on the opposing side of a deal, you end up with a very obvious focus on supporting their viewpoint. Invariably, it’s not about what’s actually going on with the market or this housing type or area, it’s about what specific statistics can be jumped on to try to convince the other side about the “right” price.
- The market is down 14% over the last year? Ah, but in the last three months, the average price for this type of housing has gone up by 2%. So there.
- The comparable home over there sold for $25K less last month? Ah, but a different housing type that sold down the street just two days ago sold for 28% more than ours, and the MPAC assessed value is only 18% more! Ergo, we’re worth a bunch more than the comparable sale you’re referencing. Good day, sir.
While we could go on and on about this sort of back and forth discussion, it is really about whether we’re looking at the statistics to see what is actually happening – or to just find some narrow, specific stat that supports what we want to be happening.
You can definitely understand the appeal of massaging the numbers to get the result you want. After all, if you’re selling your home and can find a way to convince a buyer that your home is worth more, that’s a win!
Similarly, if we can negotiate hard with a listing agent and show them why their listing is worth less than what their client thinks, it is great for us on the buying side.
Overall, understanding statistics is most helpful in three specific situations.
There is a reasonable, but uninformed, person on the other side.
This is actually a relatively common situation.
If we’re working together to buy or sell a home and the Realtor or their client on the other side isn’t very well informed, there can be an opportunity for statistics to be helpful. If they’re basing their valuation of a property on outdated or inaccurate information and we can provide them with current, accurate information, they can adjust their thinking.
The key in this situation is illuminating the market rather than supporting our position. People see through transparent attempts to manipulate statistics for the opposing side’s benefit. They may not know exactly why they don’t believe it, but they just don’t trust that the data being presented is wholly accurate.
If the latest, relevant data is presented as to why we feel a particular price is valid, and the other side hasn’t considered it, it is often effective at adjusting their expectations.
We need to set realistic expectations for what will happen next.
The second situation where it’s very helpful to understand market statistics is when we’re getting started on the purchasing or selling journey.
It doesn’t do anyone any favours to allow an unrealistic view of the market to be held by someone looking to buy or sell real estate.
If they want to buy and don’t understand what is going on in the market, they will either overpay out of a false sense of urgency (in a slower, buyer’s market) or never buy because they aren’t competitive (in a faster, seller’s market).
On the selling side, if they focus on what they want to get for the sale of their home (which is largely irrelevant to a buyer) rather than what homes are selling for in their market, they don’t sell their home quickly, for the most amount of money and with the least amount of stress. Instead, it sits on the market, becomes stale-dated, attracts low ball offers and eventually sells for much less than it would have sold for if it had been priced in accordance with the market at the start.
A manipulative person on the other side needs to be shown that we’re not fooled.
The final situation is where an understanding of statistics is arguably the most emotionally satisfying, namely showing a bullying, manipulative person that we aren’t falling for their nonsense.
We often encounter Realtors who seize on one particular statistic as the only valid data point and ignore everything else that might tell a different story. These types of people often also aggressively push forward their views and are dismissive of concerns or other potential facts that impact value.
In many cases, it is a co-operative approach that gets the best result in real estate, when neither side feels taken advantage of and it is a win-win for both parties.
However, when an agent attempts to bully or intimidate the other side and uses statistics for support rather than illumination, it can be very enjoyable to dismantle their argument. Some of the best deals we have done for clients have been with agents who attempt to steamroll the conversation and not listen to logic. When such Realtors are challenged and rebutted, the only way they often know to move forward is to adopt our logic as their own and convince their client themselves.
Of course, some of these types of people refuse to see logic and no deal is done, but it is surprising how often a firm rebuttal of their logic with supporting data makes them back down .
At the end of the day, an understanding of the statistics that are relevant to our sale or purchase is hugely beneficial, because it allows us to never be taken advantage of by a manipulative agent on the other side.
It puts us in a position of knowledge and power and allows us to make decisions that are reflective of the reality of the situation, rather than what one side hopes is the case.