Relationship Management – Have you Checked the Numbers Yet?

    On February 28th, we sent a Cup o’ Joe (see attached) that provided an approach for predicting what the real estate market will be like in 2012. We listed many challenging issues that will impact the housing industry and the economy as a whole. Despite these challenging issues, the most effective you can make an educated guess on what will happen with real estate this year, is to do the following:

1. Compare the number of sold properties in January and February of this  year to the number that sold in January and February of 2011. If the number is higher, expect a better year. If the number is lower, or the same, expect another challenging year.

2. Pull the total number of active listings within the same area. Calculate the months supply of inventory by first taking the total number of sales in 2011 and dividing it by 12 months. This will give you the average number of sales per month in 2011. Second, divide the total number of active listings by the average number of sales each month in 2011. Your answer will be better than the data provided by the trend forecasters because they calculate months supply by only looking at the number of sales the month before. This can skew the numbers.

3. Check the number of pending listings and project how many closings that will lead to in the next 60 days. Is it more, less or about the same as the number of properties that sold during the same time last year?

By evaluating the 3 indicators above, you should have a pretty good idea of what will happen in real estate this year. Best of all, next month, you can check the data again and see if your predictions were accurate.

The purpose of doing this exercise and sharing then data you compiled with your buyers, sellers, and entire sphere of influence, is to create interest in trends as they are occurring. The more addicted you contacts are, the more likely they are to want to read your information. Also, keep in mind that the data is more valuable when it applies to trends within a neighborhood or small community. The newspaper reports the data for larger areas. Your clients’ neighborhood or community may not be similar.

If you haven’t run these numbers yet, for goodness sake, run them now and start sharing your thoughts with everyone you know!