Real Estate and Rolled Throughput Yield (RTY)

There are so many tasks, process steps, milestones, deliverables, actors, inputs, outputs, rules, boundaries, and definitions of quality within the real estate purchase process that small errors can drastically reduce the success rate of any single participant in the process.  Rolled Throughput Yield (RTY) is a fancy way to describe the error rate based on the error rates of all individual tasks and process steps within the complex purchase “system”.

This may be the single word that God would say is the secret to life:  Yield.

An example of simple Yield is the number of correct answers given on an exam.  First Time Yield is the number of correct answers given on the first try, before re-examining and changing the answer.  Using this example, the Rolled Throughput Yield could be the FTY’s of all students taking the test.  For reasons of simple math, the RTY would be lower than the lowest FTY in the equation.

Here is a simple flowchart showing a process and Rolled Throughput Yield:

RTY

The success rate of Filling out the requisition correctly the first time is 75%.  That is the lowest FTY in this complex process.  The Rolled Throughput Yield is 52% – lower than the lowest FTY.

Now imagine, if you will, this real estate process which, in this depiction, is missing about 80 other processes and tasks:

Seller Process

Seller Process, Level 0

If there is any participant (lender, appraiser, underwriter, agent, buyer, inspector, et al.) who is not successful on their first try in accomplishing a required process step, the entire complex process becomes even less successful.

The Rolled Throughput Yield will never be 100% successful UNLESS everyone and every process step is 100% successful (correct) on the first try.  That’s not going to happen unless we get rid of all human foibles and frailties.  Darn those humans!

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