One of the most important reasons a seller or a buyer hires a real estate agent is that an experienced agent knows the market price.
Sounds basic, but in practice, it has always been one of the most elusive and challenging things for a real estate agent to know.
This is a big deal because, for most people, a home is usually the largest financial asset they will ever own and getting the price wrong has real consequences.
If I had to make an estimate, I’d guess that real estate agents are right only about twenty percent of the time.
According to Redfin and other sources, about 25% of homes sold in the United States last year traded above the asking price, and about 56% sold below the asking price. If the object is to price a home correctly and sell it at the asking price, the data suggests that agents are more likely to be wrong than right.
Some agents will argue that this is intentional. That pricing includes built-in negotiability. That the asking price is simply a starting point and yes, sometimes that’s true….
But the reality is that the market is much smarter than any individual agent.
Pricing has always been more art than science. Most agents look at the most recent comparable sale, make a few adjustments for condition, light, or view, and then throw a dart at the dartboard: experience and instinct help, but neither guarantees accuracy. We don’t have a crystal ball.
Even appraisers and data specialists struggle with this. They are excellent at analyzing historical data and backward looking trends, but when it comes to determining the real-time value of a person’s most valuable asset, precision remains elusive.
A few years ago, I was hired to take over a development project where the original agent had projected a total sellout of roughly $360 million. After taking a fresh look at the project, I adjusted the pricing strategy. By the time my team finished selling it, the total sales came in at $470M. The sponsor avoided what could have been a very costly error.
Now, there may be an almost foolproof solution to “accurate pricing” using a formula that has existed for thousands of years.
Money. And risk.
Predictions become more accurate when people are required to put their money where their mouth is.
Prediction markets are trending across everything from sports to politics. What great about them is that they don’t care about your politics, agendas, or how strongly you might feel about where the market should go.
There’s a new company - Parcl, which is a real time housing data and onchain real estate platform, that recently announced a partnership with Polymarket, (the world’s largest prediction market). They are launching housing focused markets that settle against Parcl’s daily housing price indices.
Polymarket will list and operate the markets, and Parcl will provide independent index data and settlement reference values that will answer the questions “does a city’s home price index finish up or down. It’s not yet as granular as predicting a specific home price, but it’s a move in the right direction and in time, it might get there.
And for our industry, which has spent decades trying to predict the future by looking backward, this is a hopeful way to more accurately forecast the future. Using old school logic with new technologies.
For the first time, accurate pricing might become a little less elusive.
Let’s do this!
Shaun