Michael Olenick: NAR’s Big Miss on Home Sales Underscores Lack of Transparency and Accuracy in Mortgage/Housing Data
By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)
The National Association of Realtors (NAR) has announced that their estimates for home sales have been materially incorrect since 2007, and that they plan to restate the number of homes sales downward. Apparently the NAR derives their homes sales information from the Multiple Listing Services, the proprietary “want-ads” real-estate agents use to list houses for sale.
Their error stems from several causes, but one of the biggest is overestimating the number of people who sell their homes without a real-estate agent. During the height of the housing boom many people skipped real estate agents, and their 6% commissions, opting to sell houses on their own.
I can see how some people would have decided to skip an agent back then. When I moved from CA to FL in 2005, I went on a weekend vacation with the family, left the house with a real estate agent for an open-house, and came back to nine bids, all well above asking price. I was amazed, but also wasn’t sure what the real estate agent did since my former house obviously sold itself.
NAR took the number of people who came to this same realization, and projected many people were selling homes without real estate agents. They ignored one small factor — the national housing collapse — and the apparently difficult to infer fact that when houses became harder to sell more people hired real estate agents. They also used old Census data to project population trends and they didn’t factor in changes based on consolidation in the MLS market. In other words, they massively blew it.
Check out the rest here…