Thanks to Scott Hunt, our son and real estate partner, for raising questions that form the basis for today's column. Here are the questions he asked:

(1) On average, how many days does it take for an REO (a bank-owned foreclosed property) to sell compared to the length of time it takes for a standard or conventional sale?

(2) Which sells for closer to list price, an REO or a standard sale? While I certainly didn't have any numbers, I had a strong feeling – as many readers may have – that REOs sell faster and for closer to the listed price. MLS data confirmed this.

In our market area (south Orange County, California), there have been just below 3600 closed sales in the past six months. 23% of those were REOs. The REOs averaged 41 days on the market (from listing to closing) and, on average, sold for 97% of the original list price. Non-REOs averaged 91 days on the market and sold for 91% of their original listed price. (Original list price is specified, because there might have been price reductions along the way.)

It is not a fair comparison, though, to consider REOs against those that are not bank-owned. That is because the latter group contains that infamous class of listings known as short sales. Short sales averaged 142 days on the market (this will come as no surprise to those who have had the pleasure of dealing with a short sale) and sold for 89% of the original list price. So we took out the short sales, leaving what we might call "standard sales" – neither REOs nor short sales. Standard sales averaged 70 days on market, selling at 93% of the original list price.

A standard sale remains on the market 75% longer than does an REO, and it requires twice as much discount from its listed price. Why should this be so? No doubt most will say, "because the REO is priced better." We agree; but Scott adds a particular twist to this. It is that REOs are practically never advertised. (By this we mean no print advertising, such as newspapers and magazines. REOs that are in the MLS can be found on all the internet sites that take their feed from the MLS – which is to say, practically every internet site.)

Now, no one is saying that the lack of print advertising causes the REOs to sell faster; we know it is the pricing. Rather, we note a converse point. Advertising doesn't seem to be of any particular help to make standard sales sell faster, or for higher prices. This was confirmed another way. We looked at the days-on-market and sale-to-list-price ratio of listings sold by companies in our area that engage heavily in print advertising. (No, of course I am not going to name them.) Their statistics were virtually identical with the group at large. That is to say, considering standard sale listings, those who engaged heavily in print advertising had no better statistics than those who did not.

This would not be news to the companies who advertise heavily. They are not oblivious to these data. Which leads to the question, if print advertising does not help properties sell more quickly or at better prices, why do real estate companies do it?

The answer is twofold.

(1) Anyone in any kind of retail business knows that they must deal with perceptions as if those perceptions represented reality. For marketing purposes, perceptions are reality. Many, many people believe that print advertising is a strongly beneficial marketing tool. Despite ample data that show that it isn't, they still believe that it is. It is this belief that many real estate companies feel compelled to deal with. They advertise in print, because their customers, and potential customers, think that they ought to. The fact that they do helps them to acquire listings.

(2) There is an important sense in which print advertising does work. It puts potential buyers in touch with real estate agents. Recent data from the National Association of Realtors® showed that 47% of people looking for a new home used print advertising as one of their sources of information. Never mind that only 3% of buyers actually found the home that they purchased through this medium. Many of them may have called a real estate office and established a relationship with an agent who ultimately sold them a home. Albeit not the one they called about. Thus the print advertising worked for the real estate company and its agents, even if it was of no discernible benefit to the would-be sellers whose property was advertised.

Data and facts have an inconvenient way of contradicting long-held beliefs. We know that this has been true in the history of science and culture at large. No reason to think it would be different with respect to real estate.