The Limits of Data Analysis

In my business as a real estate broker, I built a reputation as someone who could sell homes that other agents couldn’t sell.

When a home isn’t selling, most real estate agents assume the problem is the price, so they keep lowering the price until a buyer makes an offer.

In 18 years as a real estate agent I’ve learned that while price might be a factor, it’s rarely the leading factor when a home isn’t selling. While I’ll still run numbers to make sure the home is priced in the appropriate ballpark, I also know that a data analysis won’t always reveal the reason the home is not be attracting offers.

I look at how the home is being marketed, how easy it is to get access for showings, and how the in-person experience in the home matches expectations set by the marketing.

Buying a home is a uniquely human endeavor, and humans are not purely rational or logical. The decision whether to check out a home in person and whether to make an offer on it is a confluence of factors that involve expectations, stories, emotions, and trust.

My qualitative assessment turns up better intel to explain why a home isn’t selling.

Once I have the full picture of the marketing efforts to date, a quantitative analysis — based on views, inquiries, showings, and offers — can be useful to support the qualitative assessment. But the numbers support the story; they don’t create the story.

I recently took on a project to assess an apparently under-performing class a local fitness studio. Although it was a different context, my process was the same. Before I embarked on my quantitative analysis, I looked at the unquantifiable issues first: the studio’s schedule, behaviors of students, what factors may influence them on different days of the week.

The numbers didn’t give me new or different information; they reinforced the story that was already obvious from my assessment.

Human beings are more complex than data analysis will show. If you’re looking only at the numbers, you’re likely missing the full story.