Real Estate Tech Stuff

My second semester college stats professor had this posted over his desk:

A statistician can have his head in an oven and his feet in ice, and he will say that on the average he feels fine.

Despite the fact that on multiple occasions I wanted to put either his head or mine in an oven, the guy really did teach me a great deal about the power, both good and bad, of statistics.

Now there is no way that six credit hours of statistics makes one an expert. Nor does sitting in meeting after meeting listening to semiconductor engineers drone on about F-tests and kurtosis. Been there, done that, made the charts. (Fair warning, don’t click those links without a bottle of aspirin handy.)

But having a little exposure to statistics does help one sift through the daunting pile of real estate stats that are published on a regular basis out there on the world wide web. Some real estate data analysis is very well done, some is not good but harmless in the grand scheme of things, and some is just flat out wrong.

Lately there seems to be a resurgence in the not good to bad category of real estate statistical analysis. I ran across a chart similar to this a couple of days ago:

What is this chart trying to tell us? The text said that it shows “units sold” in Phoenix, and that the upward trend was “happy news”. OK, I’ll buy that generally speaking, increased sales are a good thing.

But what does this chart really show us?

Absolutely nothing. Conspicuously missing is the Y-axis (vertical) scale. If you want to change the visual impact of a line chart, adjust the scale. Without a scale, we have no clue as to whether this chart means anything. Did sales go up by 10 units or 10,000? Isn’t that knowledge just a wee bit important if you are going to try to draw any conclusions from this data set?

Sadly, this chart (well, not THIS chart, but THIS one) wasn’t done by an individual who simply doesn’t know better. The chart I saw (but can’t copy without permission) was produced by REality, a company that claims to be “the leading provider of real estate market intelligence in North America” (an interesting statement given I’ve never heard of them — wonder if they have any data to support that claim?).

Business Week blows it too

The well-regarded publication Business Week provided an interesting example today of statistical analysis gone bad. In this brief article, BW tells us that traffic to certain markets on Realtor.com has increased and, “What this tells you is that a lot of people are starting to bottom-fish in these markets”.

Really?

Maybe that’s true, maybe not. To take one statistic — increased traffic — and conclude that means something in particular is quite the leap of faith. Traffic to this blog has increased dramatically this year, does that make it safe to say the Phoenix real estate market is booming?

What the BW article fails to explore, completely, are alternatives to why traffic may have increased on Realtor.com. Could it be due to a site redesign (which R.com went through), increased advertising in those markets by either local agents or R.com, a change in searcher demographics, a change in Google’s algorithms, or some weird shift in the space-time nexus? Who knows, all are plausible (well, maybe not the nexus thing, I pretty much made that one up).

“So what is the point Jay?” a bored and weary reader is likely saying right about now.

The point is, very few real estate agents (myself included) are well versed in statistics. Dare I say, neither are most main-stream media writers. Apparently neither is North America’s leading provider of real estate market intelligence. And you know what? The typical person looking for information about real estate is probably not all that familiar with statistical analysis either, though I have no statistics to prove that.

As a real estate agent building charts and tables filled with stats, keep in mind that conclusions you draw based on statistics may, or may not, be accurate. Do you really understand the difference between average, mean and median home price? Do your readers? Do you want to make predictions and draw conclusions from data you don’t really understand.

As a real estate “consumer”, be careful letting other people interpret data for you. You can’t believe everything you read on the Internet — unless it’s on this blog of course, he says dripping with sarcasm. In fact, it’s probably safe to assume the conclusion someone reaches from their “statistical analysis” is nothing more than their opinion that is loosely based on some data set. There is certainly nothing wrong with expressing an opinion, just be aware that’s what it is — an opinion. Do your due diligence, seek out varying opinions and analysis before reaching your own conclusions.

Hat tip to Ines at AgentGenius for the BW link.

Hey there Phoenix area real estate people!

Are you going to the ARMLS Tech Fair tomorrow or Friday?

I’ll be in the booth by our esteemed IDX provider, Diverse Soultions, chatting about blogging and social media type stuff.

Stop by if you’re there and say howdy!

ARMLS Tech Fair
When: Thursday and Friday, August 21-22 — 9:00am through 5:00pm
Where: Monterra at Westworld, 16601 N. Pima Road, Scottsdale, AZ 85260

The Tech Fair will be held concurrently with ARMLS training on the advanced features of flexmls in the same facility, so feel free to drop in after class!

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Inman News just announced the finalists for the 2008 Inman News Innovator Awards.

In the blog category five fabulous blogs were nominated:

1000Watt Blog
AgentGenius
Big Picture Blog
FBS Blog
Homegain Real Estate Blog

I may be slightly biased in that I contribute to two of these blogs (AgentGenius and HomeGain). Benn and Lani are responsible for much of the success of AgentGenius, and while I can’t speak for them, I’m sure they’d graciously contribute the success to the AG contributors. Louis at Homegain would follow right along. It has been my pleasure to work with Benn, Lani, Louis and all of the AgentGenius and HomeGain contributors.

Biased as I may be, I can attest that the other three nominees are all more than worthy to be named finalists.

Marc Davidson (and Brian Boero) at 1000Watt are brilliant writers and innovative thinkers. I’ve had a couple of conversations with Marc and can tell you that he’s as nice a guy as he is smart.

Speaking of nice and wicked smart, Michael Wurzer at FBS fits that mold to a T. For those in the Phoenix area, Michael is the CEO of the company that is bringing us our shiny new FlexMLS system.

I don’t know Barry Ritholtz at Big Picture blog, but I can tell you one thing for sure — if it’s financial info you are looking for, you need look no further.

Congrats to all the Inman Innovator Finalists in the Blog category! (and all the nominees in the other categories too, several of which I’ve had the pleasure of meeting and/or corresponding with.) Whoever ends up winning it will be deserving, and beating out some very tough competition.

See you all in San Francisco!

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Received this wonderful email from a current client:

The speed this client mentions is really all predicated on the use of electronic signatures. We use DocuSign as our “e-signature processor”, which enables us to send, sign and receive real estate contracts and documents at the speed of email. It’s convenient for all involved — the clients, the agent and their clients on the other side of the transaction and the title companies. If you’ve ever tried to read a document that has been faxed repeatedly, you’ll quickly realize there is another benefit to digital signatures — the documents don’t degrade in quality every time they are sent.

Over the weekend we submitted an offer, and it was countered by the seller with this as one of the counter terms:

XXXX Realty needs to see live signatures within 72 hours of completion of contract.

A conversation with the listing agent leads us to believe that he doesn’t seem to think electronic signatures are legitimate or legal.

My first reaction to that was, “This is 2008. Get with the program.” But rather than making some snide remark, it seemed better to take the high road and present some info to the listing agent to prove to him that electronic / digital signatures are indeed legal.

To wit:

From Realtor.org

President Inks Electronic Signatures Bill
President Clinton signed S. 761, the “Electronic Signatures in Global and National Commerce Act,” into law Friday, June 20, 2000 in Philadelphia, PA. This law becomes effective on October 1, 2000 for electronic transactions and March 1, 2001 for electronic records.

This law simplifies the real estate transaction by allowing two parties to treat electronic signatures with the same legal standing as “pen and ink” versions. It also establishes the legal validity of electronic records. This law includes protections that ensure consumers who wish to conduct business using the traditional pen and paper method may continue to do so.

The Electronic Signatures law provides the legal certainty and national uniformity necessary for consumers and businesses to:

Contract electronically for the purchase of goods and services, as well as the sale and lease of real property;

Process mortgage loan transactions electronically;

Receive related state and federal disclosures online;

Transfer promissory notes electronically;

Notarize transactions electronically; and

Obtain and maintain electronic records of transactions.

Note the President and the year… Clinton, 2000.

Arizona Specific Law:

The Arizona Electronic Transactions Act 

The Arizona Electronic Transactions Act (the “ETA”) creates statutory authority for creating contracts electronically, via computer, by adding A.R.S.§44-7001 et. seq.

As a result of this legislation, a contract formed by an electronic record cannot be denied legal effect and enforceability solely because it was formed electronically. A.R.S.§44-7007(B). Similarly, a signature in electronic form cannot be denied legal effect and enforceability solely because it is in electronic form. A.R.S. §44-7007(A). An electronic record and electronic signature satisfies any law that requires a signed writing, such as the Statute of Frauds requirement that a contract for the sale of real property be evidenced by a signed writing to be enforceable. A.R.S.§44-7007(D).

Here is A.R.S.§44-7007 in its entirety:

44-7007. Legal recognition of electronic records, signatures and contracts

A. A record or signature in electronic form cannot be denied legal effect and enforceability solely because the record or signature is in electronic form.

B. A contract formed by an electronic record cannot be denied legal effect and enforceability solely because an electronic record was used in its formation.

C. An electronic record satisfies any law that requires a record to be in writing.

D. An electronic signature satisfies any law that requires a signature.

Here is the catch with electronic signatures (at least in Arizona, it may be different in other states).

The ETA applies only to a “transaction between parties each of which has agreed to conduct transaction by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.” (A.R.S. §44-7005(B)).

So technically, if one side of the party doesn’t want the other side to utilize electronic signatures, they can make that demand.

But why in the world would you?

Yet this is exactly what happened in this transaction. Our buyers signed their offer digitally. The sellers countered requesting “live” signatures.

What a brilliant idea. You’re trying to sell your home in the middle of a buyer’s market, so you make a demand via counter offer that will inconvenience said buyer.  Is that because you don’t know electronic signatures are legally binding, you don’t believe it, you just don’t like them, or you want to make it as difficult as possible for the people attempting to buy your home?

(Of note, these same sellers also countered the closing date the buyers requested. Our buyers wanted to close on July 31. The sellers countered with a closing date of…. July 30. This prompts a response along the lines of, “WTF?!? Are they just attempting to be as difficult as possible?”).

Home sellers — think, really think about what you want to counter. If you’ve got a ready, willing and able buyer that has submitted an offer on your home this is a good thing. Pissing them off with petty demands is just silly. I’m not saying you should blindly accept any offer you receive — of course you shouldn’t. But to counter items that in the end run make absolutely no difference to your bottom line is putting a great deal at risk. Our buyers have hundreds of other homes to choose from. Making petty demands is a sure-fire way to make their decision to look elsewhere a whole lot simpler.

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