NTREIS MATRIX Average Calculation is Wrong for Price per Square Foot SqFt
and Sold Price to List Price ratio SP%LP
Legend:
CMA: (Comparative Market Analysis)
MLS: (Multiple Listing Services)
NTREIS (North Texas Real Estate Information System)
NTREIS Matrix
is the primary MLS system and includes both search and input functions.
The CMA generated report from
NTREIS MATRIX provides an average Sold Price per Square foot, Percentage
of the Sold Price vs. Listed Price for selected sold properties, and average
Listed Price per Square foot for selected Active/Active Option/Cancelled/Expired
and Pending properties. See Figure 1 for more information.
Currently, the Matrix adds all
numbers under each column in a group (e.g., Active Status) and divides that by
the number of items in the group. This calculation is correct for all columns
except columns for $/SqFt and SP%LP. In the example shown below, this results in
Avg $/ SqFt =$280.24 which is WRONG and
should be $276.98. All incorrect
numbers are circled red and their respective correct number shown with
blue color.
Question: One may ask how the calculation is correct for other columns except $/SqFt
and SP%SL.
Answer: The answer is because
all other columns are independent of each other, where as Average Price per Sq
Ft ($/SqFt) is dependent on the Listed or Sold Price AND Sq. Ft. of each
property and therefore calculated based on these two numbers. One cannot assign
an arbitrary numbers for these two columns, they are calculated.
Solution: The correct way is to
add all numbers under each column of List Price (or Sold Price) and divide that
by total numbers added in column SqFt in a group to derive the correct averages
for $/SqFt and SP%LP. This also can be achieved by simply by dividing the
calculated Average for List Price (or Sold Price) and calculated Average SqFt.
Example: Calculate the Average
$/SqFt for ACTIVE list in Plano with Listed Price =>$2,000,000 (See Figure
below)
1.
Average $ per SqFt = $Total List Prices / Total Sq.Ft = $24,158,000/87215=
$276.99 OR simply
2.
Divide Average List Price (OR Sold Price) by Average SqFt = $2415800/8722 =
$276.98
Note
the 1 Cent difference is due to round off (the actual Average of SqFt is 8721.5
but used as whole integer 8722).
I caution each agent in North Texas to be aware of these
inaccuracies. I have reported these to NTREIS Matrix Committee too, hope to be
fixed.
To show my points and better understand the problem, please
see the following scenario for illustration purposes only.
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Average Calculation Example |
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Scenario: |
Example |
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A Computer store sells 100 computers at
$100,000 and 1 refurbished computer at $100. |
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Question: |
What is the Average sell price per computer? |
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Answer: |
(Total sales Price) / (Total number of
computers sold) |
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(100 * $1000 + $100) / (100+1) = $100,100 /
101 = $ 991.09 |
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Number of Computers Sold |
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$Total Sale Price |
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$Avg. Sale Price/ Computer |
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100 |
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$100,000 |
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1 |
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$100 |
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Total |
101 |
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$100,100 |
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$100,100/101= |
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$991.09 |
CORRECT |
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Incorrect: Way: |
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First Calculate the Avg. Sale Price per each
computer in each line. Then calculate the avg. of all calculated
Averages: |
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Number of Computers Sold |
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$Total Sale Price |
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$Avg. Sale Price/ Computer |
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100 |
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$100,000 |
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$100,000/100= |
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$1,000.00 |
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1 |
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$100 |
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$100/1= |
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$100.00 |
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Total |
101 |
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$100,100 |
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($1000 + $100)/2= |
$550.00 |
INCORRECT |
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This Incorrect way, is the way Matrix CMA
calculates Average $/Sq.Ft. |
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Averages Calculations in Matrix for $/SqFt
and SP%LP are Not Correct |
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CMA 1 Line |
Residential |
Status="Active" |
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City is Plano |
Current Price is $2,000,000+ |
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Average $/SqFt Calculation in Matrix vs. the
Actual (Correct) $/SqFt |
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#BTH |
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Listing# |
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#Bed |
#FULL |
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HALF |
GAR/ |
CP/ |
TCP |
Yr Blt |
Pool |
SqFt |
$/SqFt |
List Price |
CDOM |
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1 |
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5 |
5 |
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0 |
3 |
0 |
3 |
1992 |
Yes |
6,556 |
$305.06 |
$ 2,000,000 |
48 |
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2 |
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5 |
6 |
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1 |
3 |
0 |
3 |
1996 |
Yes |
7,935 |
$264.65 |
$ 2,100,000 |
154 |
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5 |
4 |
/ |
2 |
3 |
0 |
3 |
2001 |
Yes |
7,128 |
$314.96 |
$ 2,245,000 |
237 |
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5 |
7 |
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5 |
4 |
0 |
4 |
2004 |
Yes |
8,367 |
$274.53 |
$ 2,297,000 |
569 |
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7 |
6 |
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1 |
4 |
0 |
4 |
1996 |
Yes |
7,700 |
$311.04 |
$ 2,395,000 |
224 |
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6 |
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6 |
8 |
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1 |
4 |
2 |
6 |
1998 |
Yes |
8,756 |
$276.95 |
$ 2,425,000 |
182 |
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7 |
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6 |
7 |
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2 |
5 |
0 |
5 |
2006 |
Yes |
10,852 |
$230.28 |
$ 2,499,000 |
280 |
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5 |
6 |
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1 |
3 |
0 |
3 |
1996 |
Yes |
9,100 |
$274.62 |
$ 2,499,000 |
177 |
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6 |
7 |
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2 |
4 |
2 |
6 |
2001 |
Yes |
10,766 |
$232.12 |
$ 2,499,000 |
119 |
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7 |
7 |
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1 |
4 |
0 |
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2003 |
Yes |
10,055 |
$318.15 |
$ 3,199,000 |
305 |
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From |
Medians |
6 |
7 |
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1 |
4 |
0 |
4 |
2000 |
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8,562 |
$275.79 |
$ 2,410,000 |
203 |
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Matrix |
Minimums |
5 |
4 |
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0 |
3 |
0 |
3 |
1992 |
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6,556 |
$230.28 |
$ 2,000,000 |
48 |
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CMA |
Maximums |
7 |
8 |
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5 |
5 |
2 |
6 |
2006 |
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10,852 |
$318.15 |
$ 3,199,000 |
569 |
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Calculation |
Averages |
6 |
6 |
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2 |
4 |
0 |
4 |
1999 |
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8,722 |
$280.24 |
$ 2,415,800 |
230 |
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Matrix calculates Average $/SqFt = Add all
$/SqFts / Number of Listings= |
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Avg=($305.06+$264.65+$314.96+$274.53+$311.04+$276.95+$230.28+274.62+$232.15+$318.15)/10
=$2,802.36/10=$280.24 |
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This method is not correct for $/SqFt,
because $/SqFt numbers are NOT independent, they are dependent and
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are calculated based on two numbers (List
Price)/SqFt. |
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Actual |
Total |
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87,215 |
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$ 24,158,000 |
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Correct |
1. Averages= $Total List Pri |
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Total Sq.Ft = $24,158,000/87215= |
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$276.99 |
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Calculation |
2. Averages= $Average List Prices / Avg.
Sq.Ft= $2415,800/8,722= |
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$276.98 |
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2 Methods |
Difference from Actual vs. Matrix Calculation
Per SqFt is= |
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$3.25 |
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This wrong Averages calculation in Matrix
CMA, results in a $32,500 higher for a Buyer with a house around 10,000
SqFt. |
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For more information please see
http://www.texasfivestarrealty.com/Matrix_Avg_Calculation_is_Wrong_2015.asp
Contact Bahman Davani at: http://www.texasfivestarrealty.com/Contactus.asp
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