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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.

Average Calculation Example

Scenario:

Example

A Computer store sells 100 computers at $100,000 and 1 refurbished computer at $100.

Question:

What is the Average sell price per computer?

Answer:

(Total sales Price) / (Total number of computers sold)

(100 * $1000 + $100) / (100+1) = $100,100 / 101 = $ 991.09

Number of Computers Sold

$Total Sale Price

$Avg. Sale Price/ Computer

100

$100,000

$100

Total

101

$100,100

$100,100/101=

$991.09

CORRECT

Incorrect: Way:

First Calculate the Avg. Sale Price per each computer in each line. Then calculate the avg. of all calculated Averages:

Number of Computers Sold

$Total Sale Price

$Avg. Sale Price/ Computer

100

$100,000

$100,000/100=

$1,000.00

$100

$100/1=

$100.00

Total

101

$100,100

($1000 + $100)/2=

$550.00

INCORRECT

This Incorrect way, is the way Matrix CMA calculates Average $/Sq.Ft.

	Averages Calculations in Matrix for $/SqFt and SP%LP are Not Correct
	CMA 1 Line		Residential			Status="Active"				City is Plano		Current Price is $2,000,000+
Average $/SqFt Calculation in Matrix vs. the Actual (Correct) $/SqFt
			#BTH
Listing#		#Bed	#FULL	/	HALF	GAR/	CP/	TCP	Yr Blt	Pool	SqFt	$/SqFt	List Price	CDOM
1		5	5	/	0	3	0	3	1992	Yes	6,556	$305.06	$ 2,000,000	48
2		5	6	/	1	3	0	3	1996	Yes	7,935	$264.65	$ 2,100,000	154
3		5	4	/	2	3	0	3	2001	Yes	7,128	$314.96	$ 2,245,000	237
4		5	7	/	5	4	0	4	2004	Yes	8,367	$274.53	$ 2,297,000	569
5		7	6	/	1	4	0	4	1996	Yes	7,700	$311.04	$ 2,395,000	224
6		6	8	/	1	4	2	6	1998	Yes	8,756	$276.95	$ 2,425,000	182
7		6	7	/	2	5	0	5	2006	Yes	10,852	$230.28	$ 2,499,000	280
8		5	6	/	1	3	0	3	1996	Yes	9,100	$274.62	$ 2,499,000	177
9		6	7	/	2	4	2	6	2001	Yes	10,766	$232.12	$ 2,499,000	119
10		7	7	/	1	4	0	4	2003	Yes	10,055	$318.15	$ 3,199,000	305

From	Medians	6	7	/	1	4	0	4	2000		8,562	$275.79	$ 2,410,000	203
Matrix	Minimums	5	4	/	0	3	0	3	1992		6,556	$230.28	$ 2,000,000	48
CMA	Maximums	7	8	/	5	5	2	6	2006		10,852	$318.15	$ 3,199,000	569
Calculation	Averages	6	6	/	2	4	0	4	1999		8,722	$280.24	$ 2,415,800	230
Matrix calculates Average $/SqFt = Add all $/SqFts / Number of Listings=
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
This method is not correct for $/SqFt, because $/SqFt numbers are NOT independent, they are dependent and
	are calculated based on two numbers (List Price)/SqFt.

Actual	Total										87,215		$ 24,158,000
Correct	1. Averages= $Total List Pri			/	Total Sq.Ft = $24,158,000/87215=							$276.99
Calculation	2. Averages= $Average List Prices / Avg. Sq.Ft= $2415,800/8,722=											$276.98
2 Methods	Difference from Actual vs. Matrix Calculation Per SqFt is=											$3.25

This wrong Averages calculation in Matrix CMA, results in a $32,500 higher for a Buyer with a house around 10,000 SqFt.

Average Calculation is Wrong in NTREIS Matrix

Avg Calculation is Wrong in NTREIS Matrix

For more information please see

http://www.texasfivestarrealty.com/Matrix_Avg_Calculation_is_Wrong_2015.asp

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NTREIS MATRIX Average Calculation is Wrong for Price per Square Foot SqFt and Sold Price to List Price ratio SP%LP