One of the questions potential clients ask us is "do you have polygon maps?", and the answer is no.  For some groups, that's a must-have on their vendor evaluation checklist, and that's a mistake.  While polygon selects can be a great tool for helping a client search for a home, they too often come up short for market statistics.  I thought I'd use our recent home shopping experience to illustrate this point.

We're what you might call "regular home shoppers".  That is, we aren't actively looking for a new home, but we love open houses, and if we ever happen upon the perfect house then we just might buy it.  We've found three houses this way in the last 10 years.  The first one was just out of our budget, and the second house was already under contract by the time we saw it.  We found the third house a few weeks ago.  We ultimately decided it wasn't exactly the right house for us, but it was that experience that crystalized our position against using polygons for market analysis and statistics.

Here's how it went down.  During a lengthy chat with the listing agent, she offered to create a comp analysis for our current residence in case selling was a contingency for us to make an offer.  To give you some background, there are 3 neighborhoods right next to each other where we live.  The listing agent's primary business is in one of those neighborhoods, the house we looked at was in the second neighborhood, and our home is in the third.  These are not subdivisions of different builders that no one but the owners can tell apart - these are three very distinct neighborhoods with very different pricing.  It is very obvious, especially to the agent who works in one of them ALL THE TIME, where each neighborhood starts and ends.  However, the MLS doesn't capture neighborhood data, so the agent pulled comps for us using a polygon map.  Unfortunately, the map she drew accidentally included a street in her primary (and much higher priced) neighborhood, dramatically skewing the results and making the comp analysis useless.

Now you may be saying "it was a mistake, just redraw the map."  But that's the whole point.  It should have been trivially easy for an agent who was an expert in our area to draw the map correctly.  If she can't get it right--an experienced agent who knows the area incredibly well--what hope is there for an agent who isn't as well versed in this side of town or technologically savvy?  They may seem cool and powerful on the surface, but from a technical perspective, polygon maps are a lazy work-around for incomplete data management.  Don't let the razzle dazzle fool you - the MLS platforms are responsible for maintaining quality, persistent, useable data that can be consumed by all agents.  We've lived in our house for 18 years, and our neighborhood hasn't changed one street in that time--why make every agent draw a polygon every time they want to analyze the neighborhood?  That local, specific knowledge should be defined once in the MLS and made available to all agents.  Polygons force agents to execute a low-value manual step that is unnecessarily complex, repetitive, and time-consuming, which is obviously prone to errors.

So we got this email...

It all started with a client email, as these things tend to do.  Bob Bemis, the MLS Director of the Park City Board of REALTORS®, sent out one of his well-done weekly market reports.  Bob has a long MLS history, and he's a big data nerd like us.  His report was titled "The Law of Unintended Consequences", and he examined how New Construction contracts were impacting Days on Market (DOM).  Coincidentally, we'd been talking a lot about DOM internally, as you'll see in the next few blogs, so we reached out to chat.  Here's a summary of what Bob wrote:

Part of the Clear Cooperation policy adopted last year requires developments to report their Pending listings when they go under contract, even if the specific units being purchased were not listed.  (Developers typically put in just a sampling of models as listings but have more inventory to sell than what appears in the MLS.)  Thanks to the developers that are doing just that, we are seeing a growing number of listings being Added and Pended on the same day.  But the DOM and CDOM averages are thrown way off because of these entries.  In just the past week, 23% of all Pendings were 0 or 1 DOM.  Agents should look at those averages closely, and look at the underlying data when doing a market analysis where such new developments are prevalent.  DOM and CDOM are likely very inaccurate as a result.

Based on our discussions and Bob's additional insight, we said "What do you think about excluding New Construction 0 DOM listings from DOM calculations?"  While it turned out to be a simple adjustment, the analysis showed us a lot more than just 0 DOM listings making their impact on the calculations.

New Construction and DOM

Conclusion