27 Aug Overcoming analysis paralysis – Cate Bakos
This week we ask buyers agent Cate Bakos if she would tell us a few of the sites she looks at or where she goes to get her property data. There is so much data. Sometimes we can go into paralysis by analysis, just analyzing too much stuff.
Kevin: Buyer’s agent Cate Bakos joins me to talk about the research tools that she uses to help her identify properties that she can recommend to her buyers or her clients.
Cate, lovely to have you on the show, and welcome. Nice to be talking to you again.
Cate: Great to back, Kevin. Thanks for asking for me.
Kevin: So, that is the challenge. I asked you if you could tell me a few of the sites you look at or where you go to get your data. Just let me position it up-front by saying that I think there is so much data. Sometimes we can go into paralysis by analysis, just analyzing too much stuff, Cate.
Cate: Yes, you are absolutely right. I meet so many people who get themselves into a real spin. There’s conflicting data and there is a lot of data out there, and deciding on which data segments you would like to rely on and how you need to extract data in order to make a judgment call is really important.
Kevin: Yes, so where do you start?
Cate: Obviously, the portals that are advertising the properties are a great start, and they have come a fairly long way, so we wouldn’t just rely on a search engine on its own. But we can certainly extract a lot of data, particularly when we look into the sold section and when you segment properties by type or by street, and we can see what has been selling and get a really good feel for the stock levels that are out there, the prices that they are achieving, the rents that are being asked, etc. So, they are obviously, the first port of call.
Kevin: I know there are a lot of other sites around that have some really good detailed data, and they analyze it quite well, but you are exactly right; REA, Domain, places like that, to get a feel for a demographic of an area, how long it is taking to sell, and list prices to sale prices. There’s some really good data on those sites.
Cate: Yes, without a doubt, and they’ve worked out how to make it quite user-friendly, and people can really navigate around quickly when they get to know the search engine.
Kevin: What are some of the other sites that you go to, to get a little bit more detailed information, Cate?
Cate: Yes, it’s a good question. ABS is my rock-solid port of call, and you have to have a lot of time to pour over the Bureau of Statistics website because there are so many ways that you can cut that data. But if you know what growth drivers you are looking for and you know what rate of change information you are trying to check, you can get a lot out of that with some careful planning. So, ABS is a favorite of mine, but it is a really serious site to try and navigate around.
Kevin: Yes. Some of the others?
Cate: We have our own industry portals. In Victoria, we have the REIV, and I know that each state has their own portals. And there is some really good data on those portals, and they have got heat maps, they have capital growth rates, quarterly reports. You can get lost in one of those sites for hours on end. And it is almost in real time, so I think we can’t go past those sites, as they are readily available to members.
Kevin: Yes, they are, the institute sites. There is an institute for each state. Do you have to be a member to get that detailed data?
Cate: You have to be a member to get the most detailed data, but it certainly does offer data for the general public as well. And it’s great data. I think anyone could have a look on there and agree that what they’ve enabled the public to have access to is really useful.
Kevin: There are some data sources that we know of that are quite public, like CoreLogic, or as it used to be known, RP Data. There is PriceFinder. There is a number of others. Do you use them as well?
Cate: Yes, in combination, I will use those. There is another one, On the House. When you run all of that data into them, you crosscheck various properties against each other, and have a look at the different ways that data is reported and cut, you can see growth rates that might be over differing periods. And so, when you are compiling your findings, you get a great overview if you can bounce around between all of these sites.
Kevin: There is another one, too – it comes out of Melbourne – that I know you’ve had a look at that’s now a national site, and that is called View, or it used to be known as Real Estate View. They have some great data, and their Kent Lardner has been a guest on our show on a number of occasions talking about what they look at. So, once again, I put those beside the REAs and the Domains in terms of some great information that you can get.
Cate: Absolutely, it’s a very clever site indeed.
Kevin: Can I just ask you about CMAs, competitive market analysis. These can be very heavily manipulated, can’t they?
Cate: I don’t like these at all, Kevin. You’ve hit a sore point with me. I think that people assume that they can be relied upon, and without understanding how a comparative market analysis report is put together, it can fall into the wrong hands and be a very dangerous piece of paper.
It’s an algorithm and it’s a combination of five different factors, and if there are any data integrity issues – so, for example, the land size isn’t actually reported for one of the key ingredients, or perhaps a bedroom has been listed as the incorrect number, or the maybe the property has undergone some refurbishment or even a really extensive renovation – the computer does not know that.
I’ve seen many buyers going out to the market, armed with the CMA that a friendly well-meaning broker or accountant has generated for them, and they already have the wrong idea of value in their head. And it’s because they have not cross-checked it, and they might find that the report suggests that they could secure a property within a $430,000 to $470,000 price interval , and we look carefully at the property and realize that it is just over $600,000.
I am referring to a real-life example, just from a couple of weeks ago, and the integrity of the data was lacking, and the client didn’t know any better and didn’t understand how to carefully cross-check that data and see if it was, in fact, a reliable report.
Kevin: Yes, I get a bit frustrated. I’ve seen some television ads for a major bank touting their desktop valuations, all done on that CMA-type algorithm, and touting these as being an accurate way to work out what a property is worth. Really, by and large, if you really want to know what a property is worth, you should get a property valuer.
Cate: Yes, I agree. And have a look at some recent comparable sales if you are not wanting to stump up the costs for a valuer. You have to look at these properties yourself and understand the size of the dwelling, the size of the land, whether the location is superior or inferior or comparable.
There’s a lot to look at behind the scenes, and buyers who are familiar with an area and familiar with other properties that are selling, comparing to what they are looking for are actually a pretty good judge of appraised value themselves because they are looking at a segment that is very tight and they’re becoming specialists in their own area. So, they shouldn’t discount their own ability to understand price and to not rely on an algorithm like this.
Kevin: Very, very true. Great advice. Cate, thank you so much for your time. Always great talking to you. Cate Bakos from Cate Bakos. The website, is it just CateBakos.com.au?
Cate: That’s right. Thank you, Kevin.
Kevin: Too easy. Okay. Good on you, Cate. Lovely talking to you. We’ll catch up again soon.
Cate: Thanks so much, Kevin.