Of Redfin, Brad Meltzer, ESPN, MLS Data and the Freemasons

To gear up for this season’s debut of Brad Meltzer’s Decoded, I DVR’d last season’s episodes and spent a chunk of the weekend working my way through them. (It was the episode on Confederate Gold, that first caught my interest in the spring and led me to start reading his novels, some of which I’ve reviewed on my Today’s Reading List site.)

Some has been interesting but most episodes remind me of life caught in the 24-hour news cycle – throw a thought out there, corroborate it with nothing in particular, then take off running with it as if it’s fact.

Oh, and at the end of the day, say that blaming the Freemasons for everything is cliche … and then blame the Freemasons for everything.

No matter who gets the blame, the key to the show is remembering that everything around us is part of one large, sinister conspiracy.

Which brings me to the MLS and Redfin’s attempt this week to publish sales data for agents in the markets in which Redfin works, including Phoenix. If you want to get into the details, you can check out my broker’s blog. Suffice it to say, the issue Redfin ran into (other than apoplectic agents in various markets), was data intengrity.

I was shocked (shocked!) to learn that not all MLS data is accurate. (Perhaps the Masons should have accounted for this when they invented the MLS … wait … they didn’t? I’m sure there’s a hidden symbol on the welcome screen.)

For instance, Redfin says agents tend not to accurately record when buyers are represented by “out-of-town agents,” an issue I never really realized was an issue here in the Phoenix market.

As Glenn Kelman, Redfin’s fearless leader, wrote:

But I still think the folks most violently opposed to Scouting Report didn’t hate it because it was wrong but because it was right. I know that consumers loved it and now they can’t get it anywhere else. And I still believe that brokers should be the ones to tell regular folks how agents have performed in different neighborhoods, because we’re the only ones with reliable data.

To the first point, Glenn’s correct to some degree. Many agents would prefer the data not be displayed because it may cast them in a poor light. But that doesn’t mean that agents and brokerages did not have issues with the data because it was faulty. Let’s not lose sight of that issue.

To the later point, at least here in Phoenix, the idea of neighborhood-level sales is dicey at best. To whit, I’ve lived in my neighborhood for eight years and have been in real estate for seven of those years. To date, I’ve not sold a house here.

Does that mean I’m a poor agent for someone looking across the street from my house because I’ve only sold dozens of homes elsewhere in Glendale and the Valley?

Even if the data is accurate, what was missing was context.

Back when I was at Century 21, the corporate goal was for its agents to average in the area of seven to eight transaction sides per year. At most places in the Valley, an average of six sales per year per agent is considered decent (remember, this is only an average across how ever many agents are there.)

There are real estate teams where all the data is lumped under one name no matter who does the deal, and the number of agents involved isn’t disclosed so no one really can find out who sold what.

(This alone leads to fun things like friends once insisting they hired a “neighborhood expert” to sell their home when it actually was a large-scale team and the person on the sign likely hadn’t stepped foot in the neighborhood in 20 years.)

Here’s my own personal reality – I’m a one-person, three-beagle shop. Though I’ve since added a buyer’s agent, I’m pretty much it – agent, transaction coordinator, muscle to yell at lenders and title companies, everything. Running solo, there are logistical limits to how many transactions can be handled at once before balls drop and sanity fades.

Through nine months I’m sitting at right around two transactions per month – one sale every two weeks, give or take a day or two – through the whole of 2011.

So … right now, I’ve closed 16 with two more pending. Redfin, just for the sake of argument, has sold 26 homes per the Arizona Regional MLS.

With no context or perspective to those numbers, does this mean I’m more or less effective than Redfin?

According to the MLS, Redfin has two working agents in town. So does that mean I’m more or less effective than Redfin?

Redfin’s average sales price has been higher than mine. Does that mean I’m more or less effective than Redfin?

And here is where my problem with the data really comes – perspective.

A couple of months back, ESPN released to grand fanfare a new method of rating quarterbacks that took into account not just the stats but also the quarter in which passes were thrown and completed, the actual distance thrown versus the distance run by the receivers and a host of other factors that only can revealed by studying game tape.

And that was the problem. To my mind, any statistic that can’t stand alone, that can’t be readily calculated and understood with little more than a pencil and paper is ineffective.

So it goes with MLS data. If a buyer or seller can’t look at a raw number and know instinctively whether the figure is “good” or “bad” it’s largely useless. Since few seem to understand what constitutes a good or bad performance in real estate (I think the eight sales per agent per year metric is ludicrously low), the raw number has little merit.

Not that this will keep some of the worms Redfin released from the can from wriggling back out. Let’s just hope the next attempt comes not just with accurate data but with some context surrounding the raw numbers as well.

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.