As Warren Buffett famously said, “Price is what you pay, and value is what you get.”
But what happens when the metrics that instruct value are hidden?
We are all consumers of things, and when we decide to spend our hard-earned money on an item, we are entitled to know as much as possible before we pony up. If you have ever considered buying a home, some of the first things you consider is the price and the days the home has been on the market. These metrics reveal information that is important to you as the buyer.
A real estate leader told me that he believes that “ days on market” and “price changes” are a killer of value for the seller, and therefore, we are not required to offer that information.
Is that same seller able to reconcile that he or she may one day be a buyer and want this information? Or is this short-term, no thinking about the long-term impact, way of doing things now acceptable?
Market transparency matters
I strongly assert that this is a huge, ginormous mistake, as our market operates best when untethered and transparent, even if the metrics aren’t pretty. The days a home has been for sale tell a story that no one should have the power to cover up. The market feeds off of truth, and you can’t lie to it and think it will all work out.
Adam Smith coined the term the “invisible hand” of the market, implying that the market works best when good information is given to consumers and, therefore, they behave accordingly. Facts are funny little things that exist, even if some people say otherwise.
This is a wake-up call to regulators and industry leaders. We must be vigilant in being transparent about the life of a listing and, perhaps as important, making sure everyone has access to a property that is for sale.
Of course, there are situations where a home is sold quietly. Sometimes, a seller is going through a rough patch, or they are high-profile. These transactions are handled discreetly and exceptionally. But this narrative that the strategy used by some housing developers, emphasizing exclusivity and soft launches, should be applied to any existing inventory is just comparing apples to oranges.
When a new building announces it is going to have units for sale, perhaps you don’t know the timing of when they all will be available, but you have a rough idea of where to look and how to inquire. With private listing networks, unless you are operating within that network, you have no idea what’s on the market, how long it’s been for sale or where to even look.
We are in a national inventory crunch, so further fragmenting the market is the last thing we need.
Exclusion and opaque metrics are taking us back to the days when consumers get duped and discriminatory practices are permitted. Our transparent market, though not perfect, remains the envy of most foreign real estate markets because of how efficient it is.
You can hide days on market and inventory all you want, or try to pretend it’s not “on the market,” but it’s still for sale. The truth is non-negotiable, no matter how you spin it.
Bess Freedman is the CEO of Brown Harris Stevens in New York City.
