ARG-159

The following appeared in a letter from a homeowner to a friend.

"Of the two leading real estate firms in our town—Adams Realty and Fitch Realty—Adams Realty is clearly superior. Adams has 40 real estate agents; in contrast, Fitch has 25, many of whom work only part-time. Moreover, Adams' revenue last year was twice as high as that of Fitch and included home sales that averaged $168,000, compared to Fitch's $144,000. Homes listed with Adams sell faster as well: ten years ago I listed my home with Fitch, and it took more than four months to sell; last year, when I sold another home, I listed it with Adams, and it took only one month. Thus, if you want to sell your home quickly and at a good price, you should use Adams Realty."


Write a response in which you examine the stated and/or unstated assumptions of the argument. Be sure to explain how the argument depends on these assumptions and what the implications are for the argument if the assumptions prove unwarranted.


In this letter, the author argues that Adams Realty (A) is better at selling houses than Fitch Realty (F). He based this conclusion on the following evidence: that A has more real estate agents, that last year A had twice as much revenue as F, that A sells houses for a higher average price than F, and that ten years ago it took F four months to sell a house while last year it took A only one month. While the author's argument is plausible to some extent, the author's conclusion relies on several assumptions that, if proven wrong, severely undermine the author's conclusion.


First, the author mentions that A has more real estate agents, while F has fewer and part-time real estate agents, leading to the conclusion that A is better at selling houses. Here, the author assumes that the number of real estate agents and whether or not they work full time is the only indicator of the quality of a real estate company. However, this assumption is likely to be flawed. For example, A's real estate agents are inherently inefficient, and thus require more full-time employees to get the job done. In contrast, F is more efficient and has a better standard operating procedure than A. In that case, even if the number of employees is small and there are part-time employees, we should not underestimate the strength of F. So, the author's assumption is not valid, and the conclusion is not credible.


Second, the author also assumes that the revenue of a real estate company reflects its ability to sell properties. However, this assumption is not necessarily true: A's income could be twice as much as F's for some reasons, such as the unit price of the house, the commission, etc. If the fact is that A sells expensive homes, while F sells smaller and cheaper ones, or if A's commission is much larger than F's, then we can't assume that the company's revenue reflects the company's actual ability to sell houses.


Third, the author uses the average price of the houses sold by the two real estate companies to conclude that it is possible to get a good price for selling homes through A. Here, the author assumes that the average price of the houses sold reflects the company's ability to sell the houses. But this assumption could be incorrect. For example, if A sells a house worth more than $168,000, then the actual average price of $168,000 indicates that A cannot sell the house because they sold it too cheaply. If this is true, then the author's conclusion is weakened.


Finally, by comparing the speed at which the two real estate companies sold their homes ten years ago and last year, the author concludes that A sold his house faster. Here, the author assumes that the houses he sold twice were comparable and that the economic conditions were similar before and after ten years. However, there are obvious loopholes in this assumption. First of all, it is very likely that the house that the author sold ten years ago through F was slow to sell because it was in a bad location or the asking price was too high, while the house that he sold last year through A was in a better lot or the author voluntarily lowered the price in order to sell it as quickly as possible. It is also possible that the house was not selling well ten years ago due to an economic recession. If any of these happened, the author's assumption would not hold up, and the conclusion would be challenged. In addition to this, the author assumes that real estate firms A and F have not changed in strength over the past decade. But this assumption is problematic. For example, ten years ago, when F was founded, its level was naturally not good, but now it is very mature; in the past year, some of A's outstanding real estate agents left for F, making A's level much lower. If this were true, the author's conclusion would still be weakened.


So, to sum up, while the author's argument seems appealing, the assumptions mentioned above would deprive the validity of the argument.



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