This article is shared here with permission from Mike DelPrete of Inman Intel, the data and research arm of Inman that provides insights and market intelligence on the residential real estate and proptech businesses. Subscribe now.
There is a negative correlation between the likelihood of something happening and the amount of attention it receives—a phenomenon a friend calls the “Delprete paradox of probability.”
why this is important: This causes attention to be focused on very exciting but least likely scenarios, thereby weakening focus and clarity while creating noise and distraction.
- Being informed and entertained are two different things; boring headlines don’t sell newspapers.
Real estate is full of possibilities — News headlines and conference agendas are filled with topics that exist in the field possible and Like yes like nobut not necessarily possible.
Probability spin Around the existence of data, facts and evidence – the more we know, the more certain the predictions will be.
- The most unlikely events—those that are possible—usually exist in reality that is fact-based and rife with speculation.
- Facts matter; they form a trajectory of possibilities—plotting them over time and triangulating data points can identify possible outcomes.
For example: Opendoor’s IPO prospectus makes a very reasonable argument in favor of its ability to attach adjacent services to real estate transactions.
- The company claims that because it successfully attaches title and escrow services to its sales, it is able to attach other adjacent services, such as home loans.
- The story made sense to people outside the industry, but ultimately it didn’t work out and Opendoor closed on the home loan. Yes, it seems plausible, but unlikely.
rule of inertia: Newton’s first law states that an object in motion will remain in motion unless acted upon by an external force. In other words, the system tends to remain unchanged.
- Consider the share of homeowners who sell their homes through a real estate agent: Even after the launch of Zillow, Opendoor, and billions of dollars in venture capital to drive alternative models, that share remains at a 40-year high.
Speculation is rising Recent NAR settlement; my thoughts summarized as this wealth article.
- “Right now, everyone is trying to make this ruling what they want it to be,” said Mike Delprete, who teaches real estate technology courses at the University of Colorado, Boulder.
- “Some people say not much will change. Others want this story to show that this is a seismic shift in the industry. The whole thing is driven by fear and uncertainty.”
bottom line: Don’t confuse news with entertainment—the purpose of news is to inform, and the purpose of entertainment is to distract.
- Making informed decisions requires cutting through noise, gathering evidence, pattern matching, and refining insights.
- But people are easily distracted, and that’s the key to Delprete’s paradox of probability: The less likely something is to happen, the more attention it gets.
