Data Is Not King
Our world seems to be increasingly driven by statistics and data harvesting. This information is being disseminated in ever more imaginative ways to theoretically enhance our knowledge and give greater insight into a specific sector. From graphs to percentage ratios, from analytical datasets to statistical predictions, our thirst for information is insatiable.
No more is this evident than in the property sector where data companies and website portals enlighten us with their take on the market. Within moments one can instantly get detailed information on historic and predicted property trends, previous brochure details and sold prices. Quite a leap forward over the past ten years!
But is all this information a good thing? I would argue not. Too much information can be confusing for both buyers and sellers.
A recent buying client of mine produced a very detailed spreadsheet, which he had put together from downloading data from various sites and merging them together. He was evidently an advanced spreadsheet user and felt that his spreadsheet put him at the cutting edge of the property market. He was comparing bedrooms, locations, historic sales in the area, time on the market, percentage achieved of asking price – you name it, he had it.
He thought all this information was essential knowledge (and it was very impressive). But when it came to him considering making an offer for a property, he was left bewildered. All this information had overwhelmed him. When I looked at his data, I noticed that he had omitted a key piece of information – the square footage of the properties. He was therefore not comparing like-with-like, and his data had mistakenly assumed that all four-bedroomed properties were the same size. As a result all his calculations were heavily skewed. The data he once thought as giving him greater insight, had actually done the opposite.
Property agents often hear people referring to Zoopla and its valuation tool. By looking up a property, Zoopla comes up with an ‘estimate’ of what a property is worth. On the face of it, you might be forgiven for thinking that this magical tool can actually value a property with the click of a mouse. However I am sorry to disappoint you, that all this tool actually is, is a clever piece of marketing which taps into our data hungry appetites, while driving more web traffic to Zoopla itself. The figures it churns out are a clever algorithm and should never be relied upon as an effective valuation tool.
The best example I can give to demonstrate this, is a sizeable property I went to recently. The vendor had looked up their ‘value’ on the website. It came up with a figure no less than £1m below the correct asking price. Imagine if they had sold at the lesser figure!
In this data-driven age, estate agents are also finding it more difficult to promote properties as they get lost in the mountain of information out there in the ether. While it’s great to get properties on to social media, websites and the like, estate agents still need to physically talk with buyers. If you are putting out photographs of every room, virtual tours, floorplans, maps and more, where is the incentive for a prospective viewer to call the agent? There isn’t one, as they think they have all they need at their fingertips to make a decision. They will draw an instant conclusion at their computer screens, without actually talking with anyone.
Yes, the world has moved on with impressive leaps in technology and how we use data. But in property, we must always remember that it is a ‘people’ business. Data is great, but unless you have the full picture you might miss what is actually happening.
So when it comes to information, sometimes less is more.